This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
31 May 2024
Ascent Resources plc
("Ascent" or the "Company")
Final Results
Ascent Resources Plc (LON: AST), the US onshore gas and helium processing and production focused company, announces its final results for the year ended 31 December 2023.
Highlights:
· Filed its memorial under the International Centre for Settlement of Investment Disputes ("ICSID") registered Energy Charter Treaty ("ECT") claim against the Republic of Slovenia in relation to a damages claim for €656.5 million
· Secured After The Event insurance policy for the ECT claim
· Achieved positive resolution in mediation with Petrol Geo resulting in reduced payment of €1.436 million (versus claims of €2+ million) and successfully restructured monthly fixed fee under the service agreement down from €40k+VAT per month to the higher of i) €20k+VAT per month; or ii) 35% of Ascent Slovenia Limited's ("ASL") share of monthly hydrocarbon proceeds produced from the Pg-10 and Pg-11a wells
· Successful partial resolution to JV partner dispute in mediation, with the recognition of outstanding amounts owed to ASL from Pg-10 and Pg-11a production from January 2022 to February 2023 of €1.725 million
· Receipt of binding Arbitration interim decision in favour of ASL's continuing claims against JV partner to receive share of production above the baseline production curve for all wells in the concession area which ASL calculates to be approximately €8 million in revenue owed to ASL
Corporate
· Production of 1.14 million scm of gas and 44,860 litres of condensate in 2023 from Pg-10 and Pg-11a wells
· Introduced new cornerstone and strategic investor for £1.5 million in new equity at a 35% premium to the prevailing share price at that time
· Engagement with shareholders over concept to distribute a portion of the net proceeds received from a successful ECT claim outcome to qualifying shareholders on a future record date
· Board changes with the resignation of Stephen Birrell as non-executive director of the Company and the appointment of Jean-Michel Doublet as independent non-executive director of the Company
Post Balance Sheet Events
· New funding for up to $2.7 million with an initial issue of $700k in new equity at spot price at that time plus a senior secured loan note facility for up to $2 million with an initial $1 million drawn down
· New investment into operational US onshore gas and helium processing business with a 60mmscfd gas processing plant with 1.1mmscfd of helium purification capacity and 550mscfd helium liquidation unit and which is fed by over 500 miles of gas gathering system in the helium rich Paradox Basin in Utah and Colorado
· JV partner, Geoenergo, initiated self-declared insolvency proceedings, resulting in the subsequent appointment of an administrator followed by termination of the Restated Joint Operating Agreement (effective as of 19 January 2024) and expiry of the concession contract (effective as of 19 April 2024)
· Filing of ASL's claim in the Geoenergo insolvency proceedings for a total of circa €11million, comprised of ~€8 million relating to monies received by Geoenergo and owed to ASL plus a precautionary claim for ~€3 million relating to ASL's share of JV property in the event a suitable termination agreement is not able to be achieved
· Director changes with the resignation of Mr Marco Fumagalli and Mr Malcolm Graham-Wood and the proposed appointment of Mr David Bullion and Mr Edouard Etienvre
· Completion of distribution of entitlement to 49% of the gross proceeds received by the Company in the event of a successful ECT claim result to qualifying shareholders on the 19 February 2024 record date
Enquiries:
| Ascent Resources plc Andrew Dennan | Via Vigo Communications
|
| WH Ireland, Nominated Adviser & Broker James Joyce / Sarah Mather | 0207 220 1666 |
| Novum Securities, Joint Broker John Belliss
| 0207 399 9400
|
STATEMENT FROM THE CHAIRMAN
The Company announced on 23 April 2024 its maiden investment in a revenue generating, low risk and growing North American, mid-continent gas processing and helium purification business. This is an exciting development for the Company and represents our first shaping move following a long period of deal origination / screening. We have now, together with our partners in country, huge scope to invest further to accelerate into the premium markets of processing and selling liquified helium and position ourselves as a leading revenue generating listed onshore gas and Helium business across the upstream and midstream. The investment cements the Company's new forward US onshore gas and helium strategy and initiates the journey of navigating Ascent towards an exciting space with significant upside potential and running room. Despite continued weak capital markets, 2023 was year of solid progress and preparation for the Company, focused on continuing its claims against the Republic of Slovenia ("Slovenia" and "State") and its State controlled actors, securing a new cornerstone investor and preparing for this introduction of the first new industrial asset post Slovenia. The specific achievements during the year include:
• filing its memorial under the International Centre for Settlement of Investment Disputes ("ICSID")
registered Energy Charter Treaty ("ECT") claim against the State with a revised damages claim of €656.5 million;
• securing a successful mediation outcome with the JV's service provider resulting in a material reduction in both amounts historically owed the fixed monthly fee;
• achieving revenue recognition of outstanding amounts owed from Pg-10 and Pg-11a production;
• initiating and winning the interim arbitration claim for right to payment from production of other wells totalling €8M for the period October 2019 through to December 2023;
• securing a suitable after the event insurance policy in relation to the State ECT claim and defending the adequacy of the adverse claim cost coverage following multiple challenges by Slovenia;
• introducing a new cornerstone investor at a significant premium.
During the first quarter of 2024, the Company, with a view to protect shareholder interests from future
dilution prior to introducing our new industrial asset, distributed a 49% economic interest in the net proceeds the Company would receive from the State ECT claim to qualifying stakeholders.
Having secured this distribution, in April 2024 the Company announced its new forward strategy and initial investment, structured as a convertible loan of US$1 million, into GNG Partners LLC ("GNG"), a private US holding company that has been formed to acquire the assets of Paradox Resources LLC out of Chapter 11Bankruptcy. The Paradox Estate comprises primarily a midstream gas processing and helium purification business with a liquefaction unit and 521 miles of gas gathering pipelines as well as a downstream helium truck distribution business. Most notably this includes the 60MMcfd Lisbon Plant, in Utah's Lisbon Valley (35 miles southeast of Moab). The convertible loan note converts, exclusively at the election of Ascent, into 1 million new units of GNG, which would represent 10% of the current issued share capital of GNG. Ascent will collaborate with GNG to potentially provide further capital over time to accelerate the business into a premium US liquefied helium producer and distributor.
As we move forward with our new onshore US gas and helium strategy, alongside protecting our claims in Slovenia, we continue to be grateful for our shareholders' continuing support and look forward to delivering value.
James Parsons
Executive Chairman
STATEMENT FROM THE CEO
Legacy Slovenian Investment & ECT Damages Claim
2023 saw the Company continue to find traction on the initiatives launched in previous years with the continued defence of its working interests in Slovenia, both against breach of the ECT by the State and an abrasive partner seeking to deprive Ascent of its contractual entitlements. As the year progressed the Company prevailed on a number of fronts and has strong momentum behind it as it continues to seek redress for the losses which have been forced upon it.
The beginning of the year saw the Company and its subsidiary, Ascent Slovenia Limited ("ASL"), make progress in mediation and arbitration processes with related counterparties Petrol GEO (JV service provider) and Geoenergo (JV partner) respectively. In April the Company announced a successful mediation outcome with Petrol GEO, which involved settling claims for €2+million in disputed amounts since 2019 for a final settlement of €1.436million, representing an approximately 30% discount to the amounts claimed. Furthermore the JV agreed reduced monthly fixed fees with Petrol GEO, down from €44k a month to the higher of i) €20k; or ii) 35% of ASL's share of the Pg-10 and Pg-11a monthly production. At the same time ASL was able to agree with Geoenergo for payment of hydrocarbon revenues produced from the Pg-10 and Pg-11a wells for the period January 2022 through to February 2023 which totalled €1.725million. The resultant situation was that ASL received net cash payment of €288,689 and a reduced fixed fee.
Meanwhile ASL continued to pursue its domestic arbitration dispute with Geoenergo in relation to the partners different interpretations of the RJOA. Following a tribunal hearing in June, ASL prevailed in October with announcement of the arbitration tribunals binding interim decision in favour of ASL's claims to receive 90% of the production above the baseline production profile (as defined in the RJOA) for all wells on the concession area (except for Pg-1 which is included entirely within the baseline production profile) whilst it was still in a preferential recovery position (i.e. until it had received back its investments of €54million). Accordingly, the tribunal ordered Geoenergo to disclose the required (and previously withheld) production data and invoices so that ASL can calculate its claim size. ASL received the bundle and announced that it was owed approximately €8 million in relation to production owed and unpaid since October 2019 through to December 2023.
Post period in review, the JV partner filed for voluntary insolvency, the Company saw this as a direct attempt at Geoenergo to try to dispose of a valid claim against them and ASL filed a number of appeals. Following the court then cancelling a hearing in relation to the appeals the Slovenian court appointed an administrator. Ultimately ASL's appeals have been overturned and Geoenergo is in administration. The Administrator notified ASL that it has taken the view that the RJOA is immediately cancelled as of their appointment in 19 January 2024. Furthermore the concession contract expired on the 19 April 2024. At the same time the RJOA was unilaterally terminated the Service Agreement with Petrol GEO was also simultaneously terminated. The Company filed an €11million insolvency claim with the administrators ahead of the deadline. The Claim includes amounts of approximately €8million relating to monies received by Geoenergo and owed to ASL as well as a claim for ~€3million relating to the value of ASL's share of expropriated JV assets.
In relation to the Company's ECT damages claim against the Republic of Slovenia, 2023 saw further progress with the appointment of the arbitrators allowing the Tribunal to be constituted in accordance with Article 37(2)(a) of the ICSID Convention. Following a preliminary case conference meeting in April 2023, Ascent and ASL together as claimants filed their memorial (a lengthy case document which includes the narrative and legal reasoning of our claim together with factual and expert evidence) in July. At the same time the Company announced that its damages experts had valued the Company's claim at €656.5 million. It should be cautioned that in the event the Company is successful in its claim, any amount actually received by the Company may be significantly lower than the full claim.
In September the Company announced it had successfully contracted an after the event ("ATE") insurance policy in relation to the ECT claim. ATE insurance is a protective policy for claimants which is expected to provide cover against the majority, if not all, of an award to pay adverse legal costs and disbursements in the event a claim is unsuccessful and is an insurance product with the potential to provide a highly effective mechanism by which parties involved in arbitration can manage their financial risk. The Company has secured this policy following the filing of its memorial and supporting evidence and as a pre-emptive action to secure proof of ability to pay adverse costs ahead of the respondent potentially requesting the claimants to do so. Post period in review the Company announced that the tribunal had comprehensively rejected the State's subsequent application for security for costs and the claim continues to progress without delay.
In relation to the Company's ECT damages claim, the Company announced in October that it was considering distributing to qualifying stakeholders on a future record date, an assignment to part of the proceeds which would be received by the Company in the event of a successful ECT damages claim monetary payout. Shareholders were invited to discuss their views on this as well as other matters. Following this, in December the Company updated shareholders that it was starting a process to be able to distribute an entitlement to an economic interest in 49% of the net proceeds received (after all legal fees, costs and expenses relating to the claim) in the event of a successful claim outcome against the Republic of Slovenia. The intention of this distribution is to give qualifying stakeholders the opportunity of having ring-fenced access to a significant portion of the net proceeds received by the Company from the ECT claim. As part of this process the Company created a new subsidiary special purpose vehicle and following further announcements post period in review, completed the proposals and distributed the relevant SPV shares to qualifying shareholders.
Slovenia Operational Update
Throughout the year the wells in the concession area have continued to produce small volumes of gas with sales continuing to local industrial buyers through the low pressure pipeline. Total production from the Pg-10 and Pg-11A wells in 2023 was 1,139,686 scm of gas and 44,860 litres of condensate and the average realised gas price for this production was €41.87/MWh resulting in invoiceable hydrocarbon revenues of €0.505 million due to ASL from the PG10 and PG11A wells only. Of these amounts only €0.315 million were paid during the year under review and the unpaid balance (plus late interest) is being claimed as part of the insolvency proceedings of Geoenergo which were initiated post period in review.
During the period in review ASL was not able to progress the wellhead works it had proposed on Pg-11A, which included a fishing operation to potentially increase production, due to failure to receive all necessary authorities from collaborating parties to allow the proposed work to proceed. However, Geoenergo successfully submitted a concession extension application (ahead of the deadline) to renew the concession to enable continued production and then shortly after were able to apply for new 30month automatic concession extension which was made available for concessions due to expire in 2023 or 2024 (previously the Petišovci concession was due to expire in November 2023) due to the continued administrative backlog as a result of the impacts caused during COVID-19 pandemic. Accordingly, in December the concession was approved to have received the 30 month extension and the concession termination date became 26 May 2026. However, post period in review the JV partner and concession holder, Geoenergo, filed for insolvency and an administrator was appointed. Despite several appeals lodged by ASL, the administration event was confirmed and the Administrator unilaterally terminated the RJOA and Service Agreements. Furthermore the concession expired on 19 April 2024. Following these post period events the RJOA and the corresponding Service Agreement have been terminated. The Company is pursuing a €11 million insolvency claim against its insolvent JV partner (of which ~€8million relates to monies received by Geoenergo and owed to ASL and the balance relates to precautionary claim against the value of ASL's expropriated interests in JV assets) and continues to vigorously pursue its €656.5 million ECT damages claim.
Corporate Developments
The Company pursued a number of avenues in 2023, including the proposed introduction of Beryl International as a strategic investor which was subsequently terminated by the Company to avoid dilution ahead of the partner arbitration process and following delays to close the transaction with Beryl's international subsidiary. The Company also considered a bid for the outstanding shares of Amur Minerals Corporation, which contemplated merging Amur's cash balance (post payment of their special dividend) with Ascent's natural resource opportunity set and see an enlarged and combined entity focused on environmental, social and governance metal ("ESG Metal") processing business opportunities with an initial focus on South and Latin America. However, following initial discussions the potential transaction was terminated. In October the Company signed a new strategic collaboration agreement with new cornerstone investor MBD Partners. The Company has been continuing to review a number of natural resource opportunities in upstream oil and gas and ESG metals for some time. Post period in review the Company announced its maiden investment away from Slovenia in to a US onshore oil and gas processing and distribution company called GNG Partners LLC.
On 24 October 2023, Stephen Birrell resigned from the Board and Jean-Michel Doublet was appointed to the Board on 21 November 2023. The Board would like to thank Stephen Birrell for his valuable contribution over the last three years. Jean-Michel joined the Board as an independent non-executive director with strong M&A experience, from working with independent oil and gas companies with a focus on emerging markets.
On 23 April 2024 it was announced that David Bullion, CEO of GNG would join the Board as a non-executive director together with Edouard Etienvre, as an independent non-executive director subject to regulatory checks and Marco Fumagalli and Malcolm Graham Wood would be retiring from the Board by the end of May 2024. Marco Fumagalli stepped down from the Board on 13 May 2024.
Investment into US Helium Business
Post period under review, the Company launched its maiden investment away from Slovenia with an investment into US onshore gas and helium processing, via an initial $1million convertible loan into GNG Partners LLC ("GNG"). GNG is a private US holding company, that was formed to acquire onshore US midstream gas distribution and processing facilities which includes helium purification and liquefaction. The Paradox Estate, according to the Chapter 11 documentation, comprises primarily a midstream gas processing and helium purification business with a liquefaction unit and access to over 500 miles of gas gathering pipelines as well as a downstream helium truck distribution business. Most notably this includes the 60MMcfd Lisbon Plant, in Utah's Lisbon Valley (35 miles southeast of Moab).
GNG has acquired the Paradox Estate for an effective consideration of ~US$11.5M plus cure costs relating to the assigned contracts and leases related to the continuing operations of approximately US$2M ("Consideration"). The Consideration has been paid via a 7-year loan note for an amount of ~US$7M with interest accruing at 6% per annum (payable in kind) ("PIK Note") provided by some of the Paradox pre-insolvency creditors alongside new equity capital for the balance. Ascent has provided an initial investment of US$1 million into GNG via a zero coupon unsecured two-year convertible loan note which converts, exclusively at the election of Ascent, into 1 million membership units of GNG, which would represent 10% of the issued member units of GNG if converted on the day of the initial subscription. Ascent will collaborate with GNG to potentially provide further capital over time to accelerate the business into a premium US liquefied helium producer and distributor.
The Chapter 11 documentation sets out that the Lisbon Plant is the sole operating natural gas processing plant in the Paradox Basin and is fed by over 500 miles (of which 279 miles are wholly-owned by GNG) of helium rich gas gathering pipelines which have access to helium rich gas sources with 7-8% He concentration in the four corners region, most notably in SE Utah and NW New Mexico. The Lisbon Plant is a 60 MMcfd (million cubic feet per day) gas treatment plant which has a 1.1 MMcfd processing capacity for helium, a 45 MMcfd cryogenic plant and 10 MBpd (thousand barrels per day) fractionation train. The plant was built specifically to process the Paradox Basin natural gas that often has high CO2, H2S, N2 and He content. GNG believe that the Lisbon Plant can produce approximately 3.4% of the US liquid helium production (or 1.7% of the World's liquid helium). The Lisbon Plant is currently operational and processing gas and purifying helium which is sold as gaseous helium directly to industrial consumers via truck. The Lisbon Plant has a liquification unit which has been in care and maintenance since around 2013 (when the liquified helium price was only ~US$62.25 /Mcf versus the US$750-1,250 /Mcf range available today).
Underpinning the acquisition of the Paradox Estate and Ascent's investment in GNG is a plan to quickly recommission the liquification unit to rapidly move back into premium markets of producing and selling liquified helium, as well as further opportunity to invest in iso-containers which would provide the business with even greater price command. Ascent and GNG have agreed to work together with a view to Ascent potentially providing capital for this critical value enhancing development.
Revenue Recognition & Fundings
During the year the company recognised revenues of £1.775million, which is made up of revenue relating to a positive outcome achieved in the tri-party mediation process between ASL, Geoenergo and Petrol GEO, in which ASL was successful in being able to recognise the hydrocarbon production revenues from the Pg-10 and Pg-11A wells for the period January 2022 through to February 2023, which totalled €1,724,689. Additionally, ASL received full payment for the Pg-10 and Pg-11A wells for the months of May through to September 2023, but received only partial payments in March and April and no payments from October onwards. Separately to the above Pg-10 and Pg-11A revenues, ASL initiated an arbitration process against Geoenergo in December 2022 relating to the parties different interpretations of the RJOA clauses which ASL believed entitled it to further revenues produced above the baseline production profile from other wells on the concession area. In October the Arbitration Tribunal found in favour of ASL's interpretation of the RJOA and ordered Geoenergo to disclose the materials required to enable ASL to accurate calculate its claim amounts, which were subsequently confirmed to be approximately €8million (including late interest). In January 2024 Geoenergo filed for self-declared insolvency and an administrator was appointed. ASL has subsequently filed an insolvency claim for the amounts it is owed and will only recognise these revenues when the corresponding cash amounts are paid and received. There can be no certainty of recovery of the amounts being claimed in the insolvency proceedings.
In relation to costs of production, the Company successfully agreed settlement with Petrol Geo in the tri-party mediation which involved agreeing to pay €1.436million as full and final settlement of the claimed amounts of €2,083,491 (plus interest) relating to disputed invoices issued under the tri-party service agreement for Petrol Geo to operate the field covering the period since 2019 through to February 2023. Furthermore the JV successfully renegotiated the continuing monthly fee through to the concession expiry such that it was reduced from €44k per month to the higher of i) €20k a month; or ii) 35% of ASL's share of Pg-10 and Pg-11A production.
The loss for the year after taxation was £0.833 million (loss for 2022: £41.5 million). The Company loss for the year was £1,486,000 (2022: loss of £44,159,000). During the year the Company successfully raised £1.9million in new equity to support its continuing endeavours. In February the Company announced a strategic investment with Beryl International (Pty) Ltd ("Beryl") which involved a subscription buy their Mauritian investment entity for £1million in new equity at a price of 3.6 pence, being a 11% premium to the prior closing price. However the Company terminated the subscription following delays by Beryl in closing the transaction and to manage dilution ahead of ASL's partner arbitration process. In April the Company raise £400k in new equity from existing shareholders to allow the Company to continue to execute at full capacity across various initiatives. In October, the Company introduced MBD Partners SA as a new strategic cornerstone investor and they subscribed for £1.5million in new equity at 3.5 pence per new share, which represented a 35% premium to the closing bid price on the previous day. This investment represented 20% of the enlarged share capital of the Company and came with the right for MBD to appoint one non-executive director to the Board and following the successful partner arbitration interim decision MBD were issued 45million new warrants exercisable at 5 pence per new warrant share at any time over the next 5 years.
During the year the Company also redeemed £368,366 of an outstanding loan owed to Riverfort, such that the Company debt at year end had materially reduced down to £184,183.
Summary
The Company continues to accelerate on its claims in Slovenia with pursuit of its ECT claim, which is now well advanced, alongside executing its claim for over ~€8million in revenues owed from its (now insolvent) JV partner Geoenergo. Post period in review the Company has had its contractual relationships under the Restated Joint Operating Agreement in Slovenia terminated by the administrator and repositioned itself with huge upside exposure from the in play Slovenian claims whilst putting a solid foot down in America with an investment into GNG Partners which owns a gas processing and helium purification business it acquired out of Chapter 11 bankruptcy in the Paradox Basin. The Company and its shareholders are now well positioned to still receive what is contractually owed to them from the Company's legacy Slovenian investment whilst we focus on a future founded on a cash generative business operating in an exciting area with a strong US onshore gas and helium story supporting it.
Andrew Dennan
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
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The consolidated balance sheet should be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
For the year ended 31 December 2023
| Assets | Notes | 31 December 2023 £'000s | 31 December 2022 £'000s |
| Non-current assets | | | |
| Property, plant and equipment | 9 | 3 | 4 |
| Prepaid abandonment fund | 12 | 262 | 300 |
| Total non-current assets | | 265 | 304 |
| Current Assets | |
| |
| Trade and other receivables | 12 | 323 | 11 |
| Cash and cash equivalents | | 475 | 325 |
| Total current assets | | 798 | 336 |
| Total assets | | 1,063 | 640 |
| Equity and liabilities | |
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| Attributable to the equity holders of the Parent Company | |
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| Share capital | 18 | 8,495 | 8,214 |
| Share premium account | | 77,889 | 76,298 |
| Merger reserve | | 570 | 570 |
| Share-based payment reserve | 22 | 574 | 2,131 |
| Translation reserve | | (258) | (276) |
| Retained earnings | | (87,648) | (88,457) |
| Total equity attributable to the shareholders | | (378) | (1,520) |
| Total equity | | (378) | (1,520) |
| Non-current liabilities | |
| |
| Borrowings | 14 | - | 516 |
| Provisions | 15 | 690 | 663 |
| Total non-current liabilities | | 690 | 1,179 |
| Current liabilities | |
| |
| Convertible loan notes | 14 | 5 | 5 |
| Borrowings | 14 | 184 | - |
| Trade and other payables | 16 | 562 | 976 |
| Total current liabilities | | 751 | 981 |
| Total liabilities | | 1,441 | 2,160 |
| Total equity and liabilities | | 1,063 | 640 |
The consolidated balance sheet should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
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| Share capital £'000s | Share premium £'000s | Merger reserve £'000s | Share base payment reserve £'000s | Translation reserve £'000s | Retained earnings £'000s | Total £'000s |
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| Balance at 1 January 2022 | 7,998 | 75,021 | 570 | 2,129 | (594) | (46,566) | 38,558 |
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| Comprehensive income | | | | | | | |
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| Loss for the year | - | - | - | - | - | (41,891) | (41,891) |
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| Other comprehensive income | | | | | | | |
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| Currency translation differences | - | - | - | - | 318 | - | 318 |
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| Total comprehensive income | - | - | - | - | 318 | (41,891) | (41,573) |
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| Transactions with owners | | | | | | | |
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| Issue of ordinary shares | 216 | 1,366 | - | - | - | - | 1,582 |
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| Costs related to share issues | - | (89) | - | - | - | - | (89) |
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| Share-based payments | - | - | - | 2 | - | - | 2 |
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| Total transactions with owners | 216 | 1,277 | - | 2 | - | - | 1,495 |
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| Balance at 31 December 2022 | 8,214 | 76,298 | 570 | 2,131 | (276) | (88,457) | (1,520) |
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| Balance at 1 January 2023 | 8,214 | 76,298 | 570 | 2,131 | (276) | (88,457) | (1,520) |
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| Comprehensive income | | | | | | | |
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| Loss for the year | - | - | - | - | - | (851) | (851) |
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| Other comprehensive income | | | | | | | |
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| Currency translation differences | - | - | - | - | 18 | - | 18 |
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| Total comprehensive income | - | - | - | - | 18 | (851) | (833) |
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| Transactions with owners | | | | | | | |
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| Issue of ordinary shares | 281 | 1,619 | - | - | - | - | 1,900 |
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| Costs related to share issues | - | (28) | - | - | - | - | (28) |
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| Share-based payments - charge | | | | 103 | - | - | 103 |
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| Share-based payments - expired | - | - | - | (1,660) | | 1,660 | - |
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| Total transactions with owners | 281 | 1,591 | - | (1,557) | - | 1,660 | (1,975) |
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| Balance at 31 December 2023 | 8,495 | 77,889 | 570 | 574 | (258) | (87,648) | (378) |
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The consolidated balance sheet should be read in conjunction with the accompanying notes.
Consolidated Cash Flow Statement
For the year ended 31 December 2023
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The consolidated balance sheet should be read in conjunction with the accompanying notes.
Notes to the Financial Statements
Reporting entity
Ascent Resources plc (Company no: 05239285) ('the Company' or 'Ascent') is a company domiciled and incorporated in England. The address of the Company's registered office is 5 New Street Square, London, EC4A 3TW. The consolidated financial statements of the Company for the year ended 31 December 2023 comprise the Company and its subsidiaries (together referred to as the 'Group'). The Parent Company financial statements present information about the Company as a separate entity and not about its Group.
The Company is admitted to AIM, a market of the London Stock Exchange.
Statement of compliance
The financial statements of the Group and Company have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006.
The Group's and Company's financial statements for the year ended 31 December 2023 were approved and authorised for issue by the Board of Directors on 30 May 2024 and the Statements of Financial Position were signed on behalf of the Board by James Parsons.
Both the Parent Company financial statements and the Group financial statements give a true and fair view and have been prepared and approved by the Directors in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006.
Basis of preparation
In publishing the Parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements. The Company loss for the year was £1,395,000 (2022: loss of £44,159,000).
The presentational currency of the Group is British Pounds Sterling ("GBP") and the functional currency of the Group's subsidiaries domiciled outside of the UK in Malta, Slovenia and Netherlands are in Euros ("EUR"). The functional currency of Ascent Resources PLC, the parent company, is Sterling ("GBP").
Measurement Convention
The financial statements have been prepared under the historical cost convention. The financial statements are presented in sterling and have been rounded to the nearest thousand (£'000s) except where otherwise indicated.
The principal accounting policies set out below have been consistently applied to all periods presented.
Going Concern
The Group and Company financial statements have been prepared under the going concern assumption, which presumes that the Group and Company will be able to meet its obligations as they fall due for the foreseeable future.
The Company raised £0.4 million in new equity in April 2023 from new and existing investors and has settled revenue disputes with its JV partner and settled invoice disputes with its JV operator such that a net €288,000 was received by the Company.
In October 2023, the Company signed a Strategic Collaboration Agreement with investment company MDB Partners SA ("MDB') alongside a cornerstone equity investment by MDB of £1.5m into the Company. This investment will allow the Company to evaluate a number of opportunities consistent with the Company's strategy to grow in onshore oil and gas, oil services, mining and ESG Metals.
Post period in review the Company successfully raised £555,000 by way of new equity issue with proceeds used to fund its investment into GNG and general working capital. The Company also entered into a new US$2 million senior secured fixed coupon loan facility with institutional investor RiverFort Global Opportunities PCC Ltd, of which $1m has been received and a further draw down of $1m is available at any time within the first year following announcement, subject to mutual agreement between the parties.
Under the Group's forecasts, the funds raised together with existing bank balances provide sufficient funding for twelve months as at the date of this report.
In addition to the need to raise additional funding in the second half of 2024, the forecasts are sensitive to the timing and cash flows associated with the continuing situation in Slovenia, and discretionary spend incurred with executing the strategy to grow in onshore oil and gas, oil services, mining and ESG Metals. As such, the Company will need to raise new capital within the forecast period to fund such discretionary spend.
Negotiations with potential new investors is ongoing and based on historical and recent support from new and existing investors the Board believes that such funding, if and when required, could be obtained through new debt or equity issuances. However, the ability to raise these funds is not guaranteed at the date of signing these financial statements. As a consequence, there is a material uncertainty to the going concern of the Group.
New and amended Standards effective for 31 December 2023 year-end adopted by the Group:
The new standards effective from 1 January 2023, as listed above, did not have a material effect on the Group's financial statements.
i. Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements which have not been adopted early:
| Standard | Description | Effective date |
| IAS 1 amendments | Non-current Liabilities with Covenants; and Classification of Liabilities as Current or Non-current | 1 January 2024
|
There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.
Estimates and judgements
Exploration and evaluation assets (Note 11) - exploration and evaluation costs are initially classified and held as intangible fixed assets rather than being expensed. The carrying value of intangible exploration and evaluation assets are then determined. Management considers these assets for indicators of impairment under IFRS 6 at least annually based on an estimation of the recoverability of the cost pool from future development and production of the related oil and gas reserves which requires judgement. This assessment includes assessment of the underlying financial models for the Petišovci field and requires estimates of gas reserves, production, gas prices, operating and capital costs associated with the field and discount rates (see Note 11) using the fair value less cost to development method which is commonplace in the oil and gas sector. The forecasts are based on the JV partners submitting and obtaining approval for an environmental impact assessment, and also the renewal of the concessions. The Board considers these factors to be an ordinary risk for oil and gas developments.
In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. The Company believes that this ban has substantially destroyed the economic value of the Petisovci field. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. The result of the impairment review resulted in the exploration assets fully impaired by £17,800,000 to a carrying value of nil in the year ended 31 December 2022.
Reserves - Reserves are proven, and probable oil and gas reserves calculated on an entitlement basis and are integral to the assessment of the carrying value of the exploration, evaluation and production assets. Estimates of commercial reserves include estimates of the amount of oil and gas in place, assumptions about reservoir performance over the life of the field and assumptions about commercial factors which, in turn, will be affected by the future oil and gas price.
Carrying value of property, plant and equipment (developed oil and gas assets) (Note 9) - In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. The result of the impairment review resulted in the developed oil and gas assets fully impaired by £21,193,000 to a carrying value of nil in the year ended 31 December 2023.
Depreciation of property, plant and equipment (Note 9) - Upon commencing commercial production we began to depreciate the assets associated with current production. The depreciation on a unit of production basis requires judgment and estimation in terms of the applicable reserves over which the assets are depreciated and the extent to which future capital expenditure is included in the depreciable cost when such expenditure is required to extract the reserve base. The calculations have been based on actual production, estimates of P50 reserves and best estimates of the future workover costs on the producing wells to extract this reserve. The depreciation charge for the year was £1,000 for the remaining office equipment assets, (2022: £214,000, including both depreciation associated with the unit of production method and straight-line charges for existing processing infrastructure). This is included in Notes 10 and 11 below.
Deferred tax (Note 7) - judgment has been required in assessing the extent to which a deferred tax asset is recorded, or not recorded, in respect of the Slovenian operations. Noting the history of taxable losses and the initial phases of production, together with assessment of budgets and forecasts of tax in 2023 the Board has concluded that no deferred tax asset is yet applicable. This is included at Note 7.
Decommissioning costs (Note 16)
Where a material obligation for the removal of wells and production facilities and site restoration at the end of the field life exists, a provision for decommissioning is recognised. The amount recognised is the one-off amount to the Company's JV partner as per the Revised Joint Venture Agreement. A change in the key assumptions used to calculate rehabilitation provisions could have a material impact on the carrying value of the provisions.
The carrying value of these provisions in the financial statements represents an estimate of the future costs expected to be incurred to rehabilitate each well, which is reviewed at least annually. Future costs are estimated by internal experts, with external specialists engaged periodically to assist management. These estimates are based on current price observations, taking into account developments in technology and changes to legal and contractual requirements. Expectations regarding cost inflation are also incorporated. The carrying value of these provisions have not been discounted to provide a present value of these future costs due to the near-term uncertainty of when these costs may materialise.
Intercompany receivables - Company only (Note 13b) - In line with the requirements of IFRS 9 the Board has carried out an assessment of the potential future credit loss on intercompany receivables under a number of scenarios. Arriving at the expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receivables, the possible credit losses that could arise and the probabilities for these scenarios. In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. Recognising the loss in economic value, management took the decision fully impair the receivable in the Company accounts by £130k (2022: £32 million).
Investments - Company only (note 11) - Judgement has been made in respect of the carrying value of the Company's carrying value of its investments in the subsidiaries. The process for this is the same as the consideration given in respect of both Intangible Assets and Property, Plant and Equipment (see above). At the year ended 31 December 2022 and 2023, the investment is fully impaired.
Basis of consolidation (Note 12) - Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Inter-company transactions and balances between Group companies are therefore eliminated in full.
The results of undertakings acquired or disposed of are consolidated from or to the date when control passes to or from the Group. The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Income Statement from the date that control commences until the date that control ceases.
Where necessary, adjustments are made to the results of subsidiaries to bring the accounting policies they use into line with those used by the Group.
Business combinations (Note 9) - Business combinations are accounted for using the acquisition method. The
consideration transferred for the acquisition of a subsidiary comprises the:
• fair value of assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity instruments issued by the Group;
• fair value of any asset or liability resulting from contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any noncontrolling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the noncontrolling interest's proportionate share of the acquired entity's net identifiable assets. Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest and fair value of pre-existing equity interest over the fair value of net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets acquired, the difference is recognised immediately in profit or loss as a gain on bargain purchase.
Joint arrangements - The Group is party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of the arrangement to the Group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as either joint ventures, where the Group has rights to only the net assets of the joint arrangement, or joint operations where the Group has both the rights to assets and obligations for the liabilities of the joint arrangement.
All of the Group's joint arrangements are classified as joint operations. The Group accounts for its interests in joint operations by recognising its assets, liabilities, revenues and expenses in accordance with its contractually conferred rights and obligations.
The Group has one joint arrangement, the Petišovci joint venture in Slovenia in which Ascent Slovenia Limited (a 100% subsidiary of Ascent Resources plc) has a 75% working interest, however whilst in a cost recovery position the Company is entitled to 90% of hydrocarbon revenues produced.
Depreciation of property plant and equipment - The cost of production wells is depreciated on a unit of production basis. The depreciation charge is calculated based on total costs incurred to date plus anticipated future workover expenditure required to extract the associated gas reserves. This depreciable asset base is charged to the income statement based on production in the period over their expected lifetime P50 production extractable from the wells per the field plan. The infrastructure associated with export production is depreciated on a straight-line basis over a two-year period as this is the anticipated period over which this infrastructure will be used.
Foreign currency
The Group's strategy is focussed on developing oil and gas projects and ESG metals funded by shareholder equity and other financial assets which are principally denominated in sterling. The functional currency of the Company is sterling.
Transactions in foreign currency are translated to the respective functional currency of the Group entity at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated to the functional currency at the rates prevailing on the reporting date. Exchange gains and losses on short-term foreign currency borrowings and deposits are included with net interest payable.
The assets and liabilities of foreign operations are translated to sterling at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to sterling at the average rate ruling during the period. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity. Foreign exchange differences arising on inter-company loans considered to be permanent as equity are recorded in equity. The exchange rate from euro to sterling at 31 December 2023 was £1: €1.1537 (2022: £1: €1.1308).
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated income statement as part of the profit or loss on disposal.
Exchange differences on all other transactions, except inter-company foreign currency loans, are taken to operating loss.
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents include, deposits held at call with banks with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at fair value through profit or loss (FVTPL).
Taxation (Note 6)
The tax expense represents the sum of the tax currently payable and any deferred tax.
The tax currently payable is based on the estimated taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using the expected tax rate applicable to annual earnings.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Equity-settled share-based payments
The cost of providing share-based payments to employees is charged to the income statement over the vesting period of the related share options or share allocations. The cost is based on the fair values of the options and shares allocated determined using the binomial method. The value of the charge is adjusted to reflect expected and actual levels of vesting. Charges are not adjusted for market related conditions which are not achieved. Where equity instruments are granted to persons other than directors or employees the Consolidated Income Statement is charged with the fair value of any goods or services received.
Grants of options in relation to acquiring exploration assets in licence areas are treated as additions to Slovenian exploration costs at Group level and increases in investments at Company level.
Provisions (Note 16)
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by estimating the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Convertible loan notes
Upon issue of a new convertible loan, where the convertible option is at a fixed rate, the net proceeds received from the issue of CLNs are split between a liability element and an equity component at the date of issue. The fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the CLNs and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity and is not remeasured.
Subsequent to the initial recognition the liability component is measured at amortised cost using the effective interest method.
When there are amendments to the contractual loan note terms these terms are assessed to determine whether the amendment represents an inducement to the loan note holders to convert. If this is considered to be the case the estimate of fair value adjusted as appropriate and any loss arising is recorded in the income statement.
Where there are amendments to the contractual loan note terms that are considered to represent a modification to the loan note, without representing an inducement to convert, the Group treats the transaction as an extinguishment of the existing convertible loan note and replaces the instrument with a new convertible loan note. The fair value of the liability component is estimated using the prevailing market interest rate for similar nonconvertible debt. The fair value of the conversion right is recorded as an increase in equity. The previous equity reserve is reclassified to retained loss. Any gain or loss arising on the extinguishment of the instrument is recorded in the income statement, unless the transaction is with a counterparty considered to be acting in their capacity as a shareholder whereby the gain or loss is recorded in equity.
Where the loan note is converted into ordinary shares by the loan note holder; the unaccreted portion of the loan notes is transferred from the equity reserve to the liability; the full liability is then converted into share capital and share premium based on the conversion price on the note.
Non-derivative financial instruments
Non-derivative financial instruments comprise of investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.
Financial instruments
Classes and categories
Financial assets that meet the following conditions are measured subsequently at amortised cost using effective interest rate method:
• The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and,
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets for which the amount of future receipts are dependent upon the Company's share price over the term of the instrument do not meet the criteria above and are recorded at fair value through profit and loss.
Measurement
Financial assets at amortised cost.
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
Impairment
For trade receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. The Group's trade receivables are generally settled on a short time frame without material credit risk.
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at amortised cost. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a twelve-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next twelve months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
Lifetime expected credit losses (ECLs) for intercompany loan receivables are based on the assumptions that repayment of the loans are demanded at the reporting date due to the fact that the loan is contractually repayable on demand. The subsidiaries do not have sufficient funds in order to repay the loan if demanded and therefore the expected manner of recovery to measure lifetime expected credit losses is considered. A range of different recovery strategies and credit loss scenarios are evaluated using reasonable and supportable external and internal information to assess the likelihood of recoverability of the balance under these scenarios.
Financial liabilities at amortised cost
Financial liabilities are initially recognised at fair value net of transaction costs incurred. Subsequent to initial measurement financial liabilities are recognised at amortised costs. The difference between initial carrying amount of the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using the effective interest rate method. This category includes the following classes of the financial liabilities, trade and other payables, bonds and other financial liabilities. Financial liabilities at amortised costs are classified as current or non-current depending on whether these are due within 12 months after the balance sheet date or beyond.
Financial liabilities are derecognised when either the Group is discharged from its obligation, they expire, are cancelled, or replaced by a new liability with substantially modified terms.
Share-based payments
Share-based payments relate to transactions where the Group receives services from employees or service providers and the terms of the arrangements include payment of a part or whole of consideration by issuing equity instruments to the counterparty. The Group measures the services received from non-employees, and the corresponding increase in equity, at the fair value of the goods or services received. When the transactions are with employees, the fair value is measured by reference to the fair value of the share-based payments. The expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
Warrants
Warrants granted as part of a financing arrangement which fail the fixed-for-fixed criteria as a result of either the consideration to be received or the number of warrants to be issued is variable, are initially recorded at fair value as a financial liability and charged as transaction cost deducted against the loan and held subsequently at fair value. Subsequently the derivative liability is revalued at each reporting date with changes in the fair value recorded within finance income or costs.
Equity
Share capital is determined using the nominal value of shares that have been issued.
The Share premium reserve relates to amounts subscribed for share capital in excess of nominal value less costs of shares associated with share issues.
Share based payments relate to transactions where the Group receives services from employees or service providers and the terms of the arrangements include payment of a part or whole of consideration by issuing equity instruments to the counterparty. The Group measures the services received from non-employees, and the corresponding increase in equity, at the fair value of the goods or services received. When the transactions are with employees, the fair value is measured by reference to the fair value of the shares issued. The expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
Equity-settled share-based payments are credited to a share-based payment reserve as a component of equity until related options or warrants are exercised or lapse.
The Merger reserve relates to the value of shares, in excess of nominal value, issued with respect of the Trameta acquisition in 2016.
The Translation reserve comprises the exchange differences from translating the net investment in foreign entities and of monetary items receivable from subsidiaries for which settlement is neither planned nor likely in the foreseeable future.
Retained losses includes all current and prior period results as disclosed in the income statement.
Investments and loans
Shares and loans in subsidiary undertakings are shown at cost. Provisions are made for any impairment when the fair value of the assets is assessed as less than the carrying amount of the asset. Inter-company loans are repayable on demand but are included as non-current as the realisation is not expected in the short term.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Chief Executive Officer ("CEO").
Revenue recognition
Sales represent amounts received and receivable from third parties for goods and services rendered to the customers. Sales are recognised when control of the goods has transferred to the customer. Condensate, which is collected at a separating station and transported via trucks to a customer in Hungary is recorded on delivery according to the terms of the contract. At this point in time, the performance obligation is satisfied in full with title, risk, entitlement to payment and customer possession confirmed. Revenue is measured as the amount of consideration which the Group expects to receive, based on the market price for gas and condensate after deduction of costs agreed per the Restated Joint Operating Agreement ("RJOA") and sales taxes. The Company follows the five step process set out in IFRS 15 for revenue recognition.
Revenue is derived from the production of hydrocarbons under the Petišovci Concession, which Ascent Slovenia Limited holds a 75% working interest, however whilst in a cost recovery position the Company is entitled to 90% of hydrocarbon revenues produced. Under the terms of the RJOA, and in accordance with Slovenian law, the concession holder retains the rights to all hydrocarbons produced. The concession holder enters into sales agreements with customers and transfers the relevant portion of hydrocarbon sales to Ascent Slovenia Limited for the services it provides under the RJOA.
During the year the revenue recognised was £1,412,000 (2022: £581,000). The on-going dispute with the JV partner was partially resolved in August 2022 resulting in the recognition of revenue, and receipt of funds, from the hydrocarbon production for the period April 2020 to December 2021, as a result revenue of £581,000 was recorded in the year to 31 December 2022. Hydrocarbon production for 2022 was subject to dispute and therefore was not recognised until 2023 following a tri-party mediation between ASL, Petrol Geo and Geoenergo. Sales from Jan, Feb, and May through to Sept 23 as well as partial payments for March and April were also recognised in 2023.
The sales invoices were netted off against the costs due to Petrol GEO (JV Service provider). The claim was settled at €1.436million (£1,249million). The total sales for the period January 2022 through to September 2023 totalled €1.725million (£1.5million), and were netted off, resulting in a net cash payment of €288,689 (£251k) to ASL.
Payments are typically received around 30 days from the end of the month during which delivery has occurred. There are no balances of accrued or deferred revenue at the balance sheet date.
Under the RJOA, the Group is entitled to 90% of hydrocarbon revenues produced whilst in a cost recovery position in the Petišovci area and the Group records revenue on the entitlement basis accordingly.
Credit terms are agreed per RJOA contract and are short term, without any financing component.
The Group has no sales returns or reclamations of services since it has only one costumer. Sales are disaggregated by geography.
2. Segmental Analysis
The Group has two reportable segments, an operating segment and a head office segment, as described below. The operations and day to day running of the business are carried out on a local level and therefore managed separately. The operating segment reports to the UK head office which evaluates performance, decide how to allocate resources and make other operating decisions such as the purchase of material capital assets and services. Internal reports are generated and submitted to the Group's CEO for review on a monthly basis.
The operations of the Group as a whole are the exploration for, development and production of oil and gas reserves.
The two geographic reporting segments are made up as follows:
Slovenia exploration, development and production
UK head office
The costs of exploration and development works are carried out under shared licences with joint ventures and subsidiaries which are co-ordinated by the UK head office. Segment revenue, segment expense and segment results include transfers between segments. Those transfers are eliminated on consolidation. Information regarding the current and prior year's results for each reportable segment is included below.
| 2023 | UK £,000s | Slovenia £'000s | Elims £'000s | Total £'000s |
| Hydrocarbon sales | - | 1,412 | - | 1,412 |
| Other income | 363 | - | - | 363 |
| Total revenue | 363 | 1,412 | - | 1,775 |
| Cost of sales | - | (626) | - | (626) |
| Administrative expenses | (1,681) | (279) | - | (1,960) |
| Material non-cash items | | | | |
| Depreciation | (1) | - | - | (1) |
| Impairment | (130) | - | 130 | - |
| Net finance costs | (38) | (1) | - | (39) |
| Reportable segment profit/(loss) before taxation | (1,487) | 506 | 130 | (851) |
| Taxation | - | - | - | - |
| Reportable segment profit/(loss) after taxation | (1,487) | 506 | 130 | (851) |
| Reportable segment assets | | | | |
| Total plant and equipment | 3 | - | - | 3 |
| Prepaid abandonment fund | - | 262 | - | 262 |
| Investment in subsidiaries | - | - | - | - |
| Intercompany receivables | - | - | - | - |
| Total non-current assets | 3 | 262 | - | 265 |
| Other assets | 765 | 33 | - | 798 |
| Consolidated total assets | 768 | 295 | - | 1,063 |
| Reportable segment liabilities | | | | |
| Trade payables | (289) | (273) | - | (562) |
| External loan balances | (189) | - | - | (189) |
| Inter-group borrowings | (209) | - | 209 | - |
| Other liabilities | - | (690) | - | (690) |
| Consolidated total liabilities | (687) | (963) | 209 | (1,441) |
Other income of £363k relates to the recharge of the ATE insurance premium.
| 2022 | UK £,000s | Slovenia £'000s | Elims £'000s | Total £'000s |
| Hydrocarbon sales | - | 581 | - | 581 |
| Intercompany sales | 417 | 12 | (429) | - |
| Total revenue | 417 | 593 | (429) | 581 |
| Cost of sales | - | (504) | - | (504) |
| Administrative expenses | (719) | (642) | (111) | (1,472) |
| Material non-cash items | | | | |
| Depreciation | (1) | (213) | - | (214) |
| Impairment | (43,622) | (25,795) | 29,696 | (39,721) |
| Goodwill impairment | (203) | - | - | (203) |
| Decommission provision | - | (326) | - | (326) |
| Net finance costs | (31) | (1) | - | (32) |
| Reportable segment profit/(loss) before taxation | (44,159) | (26,888) | 29,156 | (41,891) |
| Taxation | - | - | - | - |
| Reportable segment profit/(loss) after taxation | (44,159) | (26,888) | 28,156 | (41,891) |
| Reportable segment assets | | | | |
| Carrying value of exploration assets | - | 18,463 | - | 18,463 |
| Impairment to exploration assets | - | (18,820) | - | (18,820) |
| Effect of exchange rate movements | - | 357 | - | 357 |
| Total plant and equipment | 4 | - | - | 4 |
| Prepaid abandonment fund | - | 300 | - | 300 |
| Investment in subsidiaries | - | - | - | - |
| Intercompany receivables | - | - | - | - |
| Total non-current assets | 4 | 300 | - | 304 |
| Other assets | 326 | 10 | - | 336 |
| Consolidated total assets | 330 | 310 | - | 640 |
| Reportable segment liabilities | | | | |
| Trade payables | (219) | (757) | - | (976) |
| External loan balances | (521) | - | - | (521) |
| Inter-group borrowings | - | (34,536) | 34,536 | - |
| Other liabilities | | (663) | - | (663) |
| Consolidated total liabilities | (740) | (35,956) | 34,536 | (2,160) |
Revenue from customers
Revenue for 2023 was £1,412,000 (2022: £581,000). The on-going dispute with the JV partner was partially resolved in August 2022 resulting in the recognition of revenue, and receipt of funds, from the hydrocarbon production for the period April 2020 to December 2021. Hydrocarbon production for 2022 was subject to dispute and therefore was not recognised until 2023. The performance obligations are set out in the Group's revenue recognition policy. The price for the sale of gas and condensate is set with reference to the market price at the date the performance obligation is satisfied.
3. Operating loss is stated after charging:
| | Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
| Employee costs | 885 | 825 |
| Impairment charge for the debtor | 72 | - |
| Shared based payment charge | 105 | 2 |
| Depreciation | 1 | 214 |
| | | |
| Auditor's remuneration: | | |
| Audit fees | 50 | 52 |
| | 1,041 | 1,093 |
4. Employees and directors
a) Employees
The average number of persons employed by the Group, including Executive Directors, was:
| | Year ended 31 December 2023 | Year ended 31 December 2022 |
| Management and technical | 7 | 7 |
b) Directors and employee's remuneration
| | Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
| Employees and directors |
| |
| Wages and salaries | 768 | 667 |
| Social security costs | 101 | 91 |
| Pension costs | 3 | 1 |
| Bonuses | - | 53 |
| Share base payments | 105 | 2 |
| Taxable benefits | 13 | 13 |
| | 990 | 827 |
c) Director's remuneration
Please see Remuneration report in the Annual Report and Accounts.
5. Finance income and costs recognised in the year
| Finance costs | Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
|
|
| |
| Interest charge on loans | (37) | (30) |
| Bank charges | (2) | (2) |
| | (39) | (32) |
Please refer to the accompanying notes to the accounts for a description of financing activity during the year.
6. Income tax expense
|
| Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
|
|
| |
| Current tax expense | - | - |
| Deferred tax expense | - | - |
| Total tax expense for the year | - | - |
The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation tax to the loss before tax is as follows:
|
| Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
| Loss for the year | (855) | (41,891) |
| Less tax expense | (5) | - |
| Income tax using the Company's domestic tax rate at 19% (2022: 19%) | (162) | (7,959) |
| |
| |
| Effects of: |
| |
| Effect of tax rates in foreign jurisdictions | 126 | - |
| Other non-deductible expenses | 196 | 7,959 |
| Net increase in unrecognised losses c/f | (160) | - |
| Total tax expense for the year | - | - |
7. Deferred tax - Group and Company
|
| Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
| Group |
| |
| Total tax losses - UK and Slovenia | 850 | (95,118) |
| Unrecorded deferred tax asset at 19% (2022: 19%) | 162 | 16,170 |
| |
| |
| Company |
| |
| Total losses | (1,544) | (59,249) |
| Unrecorded deferred tax asset at 25% (2022: 19%) | 387 | 10,072 |
No deferred tax asset has been recognised in respect of the tax losses carried forward, due to the uncertainty as to when profits will be generated. Refer to critical accounting estimates and judgments.
8. Earnings per share
|
| Year ended 31 December 2023 £'000s | Year ended 31 December 2022 £'000s |
| Result for the year |
| |
| Total loss for the year attributable to equity shareholders | (851) | (41,891) |
| |
| |
| Weighted average number of shares | Number | Number |
| For basic earnings per share | 171,105,556 | 133,972,082 |
| |
| |
| Loss per share (pence) | (49.74) | (31.27) |
As the result for the year was a loss, the basic and diluted loss per share are the same. At 31 December 2023, potentially dilutive instruments in issue were 78,745,880 (2022: 65,969,404). Dilutive shares arise from share options and warrants issued by the Company.
9. Property, plant and equipment
| Cost | Computer Equipment £'000s | Developed Oil & Gas Assets £'000s | Total £'000s |
| At 1 January 2022 | 11 | 22,963 | 22,974 |
| Additions | 1 | - | 1 |
| Effect of exchange rate movements | - | 1,203 | 1,203 |
| At 31 December 2022 | 12 | 24,166 | 24,178 |
| At 1 January 2023 | 12 | 24,166 | 24,178 |
| Additions | - | - | - |
| Effect of exchange rate movements | - | - | - |
| At 31 December 2023 | 12 | 24,166 | 24,178 |
|
| | | |
| Depreciation | | | |
| At 1 January 2022 | (6) | (1,857) | (1,863) |
| Charge for the year | (2) | (212) | (214) |
| Impairment | - | (21,193) | (21,193) |
| Effect of exchange rate movements | - | (904) | (904) |
| At 31 December 2022 | (8) | (24,166) | (24,174) |
| At 1 January 2023 | (8) | (24,166) | (24,174) |
| Charge for the year | (1) | - | (1) |
| Impairment | - | - | - |
| Effect of exchange rate movements | - | - | - |
| At 31 December 2023 | (9) | (24,166) | (24,175) |
|
| | | |
| Carrying value | | | |
| At 31 December 2023 | 3 | - | 3 |
| At 31 December 2022 | 4 | - | 4 |
Impairment of nil (2022: £21,193,000) has been recognised during the year. In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. Details of the impairment judgments and estimates in the fair value less cost to develop assessment as set out in Note 1.
10. Exploration and evaluation assets - Group
| Cost | Slovenia £'000s | Total £'000s |
| At 1 January 2022 | 18,463 | 18,463 |
| Impairment | (18,820) | (18,820) |
| Effects of exchange rate movements | 357 | 357 |
| At 31 December 2022 | - | - |
| At 1 January 2023 | - | - |
| Impairment | - | - |
| Effects of exchange rate movements | - | - |
| At 31 December 2023 | - | - |
|
| | |
| At 31 December 2023 | - | - |
| At 31 December 2022 | - | - |
Impairment of nil (2022: £18,820,000) has been recognised during the year. In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. As at 31 December 2022 the net present value was significantly lower than the carrying value of the assets which indicated that an impairment of 100% of intangible oil and gas assets was warranted. Details of the impairment judgments and estimates and the fair value less cost to develop assessment as set out in Note 1.
For the purposes of impairment testing the intangible oil and gas assets are allocated to the Group's cash- generating unit, which represent the lowest level within the Group at which the intangible oil and gas assets are measured for internal management purposes, which is not higher than the Group's operating segments as reported in Note 2.
11. Investments in subsidiaries - Company
|
| 2023 £'000s | 2022 £'000s |
| Cost |
|
|
| At 1 January | - | 16,102 |
| Additions | - | - |
| At 31 December | - | 16,102 |
| Accumulated impairment | | |
| At 1 January | - | - |
| Impairment | - | (16,102) |
| At 31 December | - | - |
|
Net book value | | |
| At 31 December | - | - |
In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. As at 31 December 2022 the net present value was significantly lower than the carrying value of the assets which indicated that an impairment of 100% of investment in subsidiaries and £16,102,000 was recognised as an impairment expense.
The Company's subsidiary undertakings at the date of issue of these financial statements, which are all 100% owned, are set out below:
| Name of company & registered office address | Principal activity | Country of incorporation | % of share capital held 2023 | % of share capital held 2022 |
| Ascent Slovenia Limited Tower Gate Place | Oil and gas exploration | Malta | 100% | 100% |
| Ascent Resources doo Glavna ulica 7 9220 Lendava | Oil and gas exploration | Slovenia | 100% | 100% |
| Trameta doo Glavna ulica 7 9220 Lendava | Infrastructure owner | Slovenia | 100% | 100% |
| Ascent Hispanic Resources UK Limited 5 New Street Square London EC4A 3TW | Oil and gas exploration | England and Wales | 100% | 100% |
| Ascent Hispanic Ventures, S.L. C Lluis Muntadas, 8 08035 Barcelona | Oil and gas exploration | Spain | 100% | 100% |
| Ascent Claim Entitlement SPV Ltd | Holding Company | England and Wales | 100% | - |
All subsidiary companies are held directly by Ascent Resources plc.
On 6 December 2023, the Company purchased 1 ordinary share of £1 in Ascent Claim Entitlement SPV Ltd, making it a 100% owned subsidiary and therefore included in the consolidated accounts.
Consideration of the carrying value of investments is carried out alongside the assessments made in respect of the recoverability of carrying value of the group's producing and intangibles assets. The judgements and estimates made therein are the same as for investments and as such no separate disclosure is made.
12. Trade and other receivables - Group
|
| 2023 £'000s |
2022 £'000s |
| VAT recoverable | 9 | 33 |
| Prepaid abandonment liability | 262 | 300 |
| Prepayments & accrued income | 314 | (22) |
|
| 585 | 311 |
| Less non-current portion | (262) | (300) |
| Current portion | 323 | 11 |
The prepaid abandonment liability represents funds the Group has deposited into a bank account to be made available for the purposes of decommissioning wells that are currently in production.
Post year end, the claim for the repayment of the prepaid abandonment fund has been put forward in full, given that the wells have been transferred to Geoenergo. See the notes to the accounts for further details.
13. Trade and other receivables - Company
a) Trade Receivables
|
| 2023 £'000s | 2022 £'000s |
| VAT recoverable | 10 | 14 |
| Prepayments & accrued income | 345 | 10 |
|
| 355 | 24 |
b) Intercompany Receivables
| | Cash £'000s | 2023 Services £'000s | Total £'000s | Cash £'000s | 2022 Services £'000s | Total £'000s |
| Ascent Slovenia Limited | - | - | - | - | - | - |
| Ascent Resources doo | - | - | - | - | - | - |
| Trameta doo | - | - | - | - | - | - |
| Ascent Hispanic Ventures | - | - | - | - | - | - |
| | - | - | - | - | - | - |
Cash refers to funds advanced by the Company to subsidiaries. Services relates to services provided by the Company to subsidiaries. The loans are repayable on demand but are classified as non-current reflecting the period of expected ultimate recovery.
Management have carried out an assessment of the potential future credit loss the loans classified as 'stage 3' under IFRS 9 and assessed for lifetime expected credit loss given their on-demand nature under a number of scenarios. In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the operational and development review conducted by the Company determined that further field development was not economically viable and that the current producing wells had a remaining production life of 5.5 years. As at 31 December 2022 the net present value was significantly lower than the carrying value of the assets which indicated that an impairment of 100% of intercompany receivables at the Company level was warranted. Impairment for the year under review was £130,000 (2022: £27,520,000).
14. Borrowings - Group and Company
| Group | 2023 £'000s | 2022 £'000s |
| Current | | |
| Borrowings | 184 | 368 |
| Convertible loan notes | 5 | 5 |
| Non-current | | |
| Borrowing | - | 148 |
| | 189 | 521 |
| Company | | |
| Current | | |
| Borrowings | 184 | 368 |
| Convertible loan notes | 5 | 5 |
| Non-current | | |
| Borrowing | - | 148 |
| | 189 | 521 |
In December 2022, the Company reprofiled its outstanding debt with Riverfort Global Opportunities such that it will incur a coupon of 8 per cent. During the year £368,366 was repaid and interest of £36,836 accrued, leaving an outstanding balance of £184,183 due within one year. In 2022 the total balance due to Riverfort was classified as a non current liability, this has now been corrected to show that £368,366 was due within one year.
The current convertible loan was due for redemption on 19 November 2019 and at the balance sheet date £5,625 remains unclaimed.
15. Provisions - Group
| | £000s |
| At 1 January 2022 | 312 |
| Foreign exchange movement | 13 |
| Provision | 338 |
| At 31 December 2022 | 663 |
| At 1 January 2023 | 663 |
| Foreign exchange movement | 27 |
| Provision | - |
| At 31 December 2023 | 690 |
The amount provided for decommissioning costs represents the Group's share of site restoration costs for the Petišovci field in Slovenia. The Company has placed €300,000 (£262,000) on deposit as collateral against this liability see Note 13.
Post year end, the claim for the repayment of the prepaid abandonment fund has been put forward in full, given that the wells have been transferred to Geoenergo. See the notes to the accounts for further details.
16. Trade and other payables - Group
|
| 2023 £'000s | 2022 £'000s |
| Trade payables | 489 | 437 |
| Tax and social security payable | 29 | 44 |
| Accruals and deferred income | 44 | 495 |
| | 562 | 976 |
17. Trade and other payables - Company
|
| 2023 £'000s | 2022 £'000s |
| Trade payables | 210 | 138 |
| Tax and social security payable | 29 | 28 |
| Accruals and deferred income | 50 | 53 |
| | 289 | 219 |
18. Called up share capital
|
| 2023 £'000s | 2022 £'000s |
| Authorised | | |
| 2,000,000,000 ordinary shares of 0.5p each | 10,000 | 10,000 |
| | | |
| Allotted, called up and fully paid | | |
| 3,019,648,452 deferred shares of 0.195p each | 5,888 | 5,888 |
| 1,737,110,763 deferred shares of 0.09p each | 1,563 | 1,563 |
| 109,376,804 ordinary shares of 0.5p each | 763 | 763 |
| 13,333,333 ordinary shares of 0.5p each | 67 | - |
| 42,857,143 ordinary shares of 0.5p each | 214 | - |
| | 8,495 | 8,214 |
| | | |
| Reconciliation of share capital movement | 2023 | 2022 |
| At 1 January | 152,418,015 | 109,376,804 |
| Issue of shares during the year | 56,190,476 | 43,041,211 |
| At 31 December | 208,608,491 | 152,418,015 |
The deferred shares have no voting rights and are not eligible for dividends.
Shares issued during the year
• On 4 April 2023, the Company raised total gross new equity proceeds of £0.4 million from the issue of 13,333,333 new ordinary shares at a placing price of 3 pence per share.
• On 17 October 2023, the Company issued 42,857,143 ordinary shares of 0.5p each at a subscription price of 3.5p per share to MBD Partners SA.
Reconciliation of share capital and share premium:
| Reconciliation of share capital movement | Share capital £'000s | Share premium £'000s |
Total £'000s |
| At 1 January 2023 | 8,214 | 76,298 | 84,512 |
| 13,333,333 ordinary shares of 0.5p each | 66 | 333 | 399 |
| 42,857,143 ordinary shares of 0.5p each | 215 | 1,286 | 1,501 |
| Costs related to share issues | | (28) |
(28) |
| At 31 December 2023 | 8,495 | 77,889 | 86,384 |
Shares issued during the prior year
• On 19 January 2022, the Company raised £600,000 via a placing of 18,181,818 ordinary shares with investors.
• On 19 January 2022, the Company issued 303,030 ordinary shares at a price of 3.30p to a professional advisor in lieu of fees.
• On 3 February 2022, the Company issued 1,636,363 ordinary shares at a price of 3.30p to professional advisors in lieu of fees and to staff in lieu of bonus.
• On 14 April 2022, the Company received £242,500 in respect to a warrants exercise over 6,062,500 new ordinary shares.
• On 1 December 2022, the Company raised £600,000 via a placing of 15,000,000 ordinary shares with investors.
• On 1 December 2022, the Company issued 1,232,500 ordinary shares at a price of 4.00p to professional advisors in lieu of fees.
• On 1 December 2022, The Company issued 625,000 ordinary shares at a price of 4.00p to Riverfort Global Opportunities as a repayment of loan.
19. Exploration expenditure commitments
In order to maintain an interest in the oil and gas permits in which the Group is involved, the Group is committed to meet the conditions under which the permits were granted and the obligations of any joint operating agreements. The timing and the amount of exploration expenditure commitments and obligations of the Group are subject to the work programmes required as per the permit commitments. This may vary significantly from the forecast programmes based upon the results of the work performed. Drilling results in any of the projects may also cause variations to the forecast programmes and consequent expenditure. Such activity may lead to accelerated or decreased expenditure. It is the Group's policy to seek joint operating partners at an early stage to reduce its commitments.
At 31 December 2023, the Group had exploration and expenditure commitments of £Nil (2022 - Nil).
20. Related party transactions
There is no ultimate controlling party for the Company.
Directors
Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the Group. In the opinion of the Board, the Group's key management are the Directors of Ascent Resources plc. Information regarding their compensation is given in Note 4.
2023
There were no transactions involving directors during the year (2022: nil).
21. Events subsequent to the reporting period
On 8 January 2024, the insolvency proceedings were initiated. On 19 January 2024, Geoenergo d.o.o., the Company's Slovenian joint venture partner, had its application to enter voluntary insolvency approved. The Company is now filing an appeal against the decision of the court in relation to this unprecedented situation and will register its claim with the competent court, whilst continuing to pursue civil and criminal areas of redress against the former management and stakeholders of Geoenergo d.o.o.
Shortly after the year end, On 23 April 2024, another fundraise took place which raised up to $2.7million with an initial issue of $1.7million, of which $1million will be used as an investment into GNG Partners LLC. The investment is to fund's Ascents participation in a newly formed vehicle which has acquired onshore US midstream gas distribution and processing facilities which includes helium purification and liquefaction.
Post year end, the claim for the repayment of the prepaid abandonment fund has been put forward in full, given that the wells have been transferred to Geoenergo. See note 25 for further details.
22. Share based payments
The Company has provided the Directors, certain employees and institutional investors with share options and warrants ('Options'). Options are exercisable at a price equal to the closing market price of the Company's shares on the date of grant. The exercisable period varies and can be up to seven years once fully vested after which time the option lapses.
Details of the Options outstanding during the year are as follows:
|
| Shares | Weighted Average Price (pence) |
| Outstanding at 1 January 2022 | 7,348,142 | 253.72 |
| Granted during the year | 500,000 | |
| Outstanding at 31 December 2022 | 7,848,142 | 50.05 |
| Exercisable at 31 December 2022 | 6,689,404 | 248.72 |
| | | |
| | | |
| Outstanding at 1 January 2023 | 7,848,142 | 50.05 |
| Granted during the year | 4,600,000 | - |
| Expired during the year | (2,874,138) | - |
| Outstanding at 31 December 2023 | 9,574,004 | 50.05 |
| Exercisable at 31 December 2023 | 8,172,438 | 41.20 |
The value of the options is measured by the use of a Black Scholes Model. The inputs into the Black Scholes Model made in 2022 were as follows:
| Share price at grant | 4.55 |
| Exercise price | 5.00 |
| Volatility | 54.4% |
| Expected life | 5 years |
| Risk free rate | 3.23% |
| Expected dividend yield | 0% |
Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 5 years. The expected life is the expiry period of the options from the date of issue.
Options outstanding at 31 December 2023 have an exercise price of 5p (31 December 2022: 2.9p and 7.78p) and a weighted average contractual life of 5 years (31 December 2022: 4.5 years). The amount recognised in the income statement for the year ended 31 December 2023 was £105,069 nil (2022: £2,000).
In 2023, an adjustment of £1,660,000 was recognised in retained earnings in respect of previously expired options.
Details of the warrants issued in the year are as follows:
| Issued | Exercisable from | Expiry date | Number outstanding | Exercise price |
| 4 April 2023 | Anytime until | 3 April 2025 | 13,333,333 | 5.00p |
|
| Warrants | Weighted Average Price (pence) |
| Outstanding at 1 January 2023 | 58,121,262 | 5.20 |
| Granted during the year | 13,333,333 | 5.00 |
| Exercised during the year | - | - |
| Expired during the year | - | - |
| Outstanding at 31 December 2023 | 71,454,595 | 5.00 |
| Exercisable at 31 December 2023 | 71,454,595 | 5.00 |
The warrants outstanding at the period end have a weighted average remaining contractual life of 2.2 years. The exercise prices of the warrants are between 4.00 - 7.50p per share.
Details of the warrants issued during the year ended 31 December 2022 are as follows:
| Issued | Exercisable from | Expiry date | Number outstanding | Exercise price |
| 27 January 2022 | Anytime until | 26 January 2024 | 20,303,030 | 5.00p |
| 27 January 2022 | Anytime until | 26 January 2024 | 1,000,000 | 5.00p |
| 14 April 2022 | Anytime until | 14 April 2025 | 9,093,750 | 4.00p |
| 1 December 2022 | Anytime until | 1 December 2024 | 15,000,000 | 5.00p |
| 1 December 2022 | Anytime until | 1 December 2024 | 4,600,000 | 5.00p |
|
| Warrants | Weighted Average Price (pence) |
| Outstanding at 1 January 2022 | 21,914,254 | 6.80 |
| Granted during the year | 49,996,780 | 4.82 |
| Exercised during the year | (6,062,500) | 4.00 |
| Expired during the year | (7,727,272) | 5.50 |
| Outstanding at 31 December 2022 | 58,121,262 | 5.20 |
| Exercisable at 31 December 2022 | 58,121,262 | 5.20 |
23. Financial risk management
Group and Company
The Group's financial liabilities comprise CLNs, borrowings and trade payables. All liabilities are measured at amortised cost. These are detailed in Notes 15.
The Group has various financial assets, being trade receivables and cash, which arise directly from its operations. All are classified at amortised cost. These are detailed in Notes 12, 13, 16 and 17.
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk (including interest risk and currency risk). The risk management policies employed by the Group to manage these risks are discussed below:
Credit risk
Credit risk is the risk of an unexpected loss if a counter party to a financial instrument fails to meet its commercial obligations. The Group's maximum credit risk exposure is limited to the carrying amount of cash of £475,000 (2022: £325,000) and trade and other receivables of £394,000 (2022: £11,000). Credit risk is managed on a Group basis. Funds are deposited with financial institutions with a credit rating equivalent to, or above, the main UK clearing banks. The Company's liquid resources are invested having regard to the timing of payment to be made in the ordinary course of the Group's activities. All financial liabilities are payable in the short term (between 0 to 3 months) and the Group maintains adequate bank balances to meet those liabilities.
The Group makes allowances for impairment of receivables where there is an ECL identified. Refer to Note 14 for details of the intercompany loan ECL assessment.
The credit risk on cash is considered to be limited because the counterparties are financial institutions with high and good credit ratings assigned by international credit rating agencies in the UK.
The carrying amount of financial assets, trade receivables and cash held with financial institutions recorded in the financial statements represents the exposure to credit risk for the Group.
At Company level, there is the risk of impairment of inter-company receivables if the full amount is not deemed as recoverable from the relevant subsidiary company. These amounts are written down when their deemed recoverable amount is deemed less than the current carrying value. An IFRS 9 assessment has been carried out as per Note 1.
Market risk
i) Currency risk
Currency risk refers to the risk that fluctuations in foreign currencies cause losses to the Company.
The Group's operations are predominantly in Slovenia. Foreign exchange risk arises from translating the euro earnings, assets and liabilities of the Ascent Resources doo and Ascent Slovenia Limited into sterling. The Group manages exposures that arise from receipt of monies in a non-functional currency by matching receipts and payments in the same currency.
The Company often raises funds for future development through the issue of new shares in sterling. These funds are predominantly to pay for the Company's exploration costs abroad in euros. As such any sterling balances held are at risk of currency fluctuations and may prove to be insufficient to meet the Company's planned euro requirements if there is devaluation.
The Group's and Company's exposure to foreign currency risk at the end of the reporting period is summarised below. All amounts are presented in GBP equivalent.
| | Group | Company | ||
| | 2023 | 2022 | 2023 | 2022 |
| Trade and other receivables | - | - | - | - |
| Cash and cash equivalents | 65 | 29 | 1 | 6 |
| Trade and other payables | (220) | (314) | - | - |
| Net exposure | (155) | (285) | 1 | 6 |
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the European Union (the euro).
The Group operates internationally and is exposed to currency risk on sales, purchases, borrowings and cash and cash equivalents that are denominated in a currency other than sterling. The currencies giving rise to this are the euro.
Foreign exchange risk arises from transactions and recognised assets and liabilities.
The Group does not use foreign exchange contracts to hedge its currency risk.
Sensitivity analysis
The following table details the Group's sensitivity to a 10% increase and decrease in sterling against the stated currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents the management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis comprises cash and cash equivalents held at the balance sheet date. A positive number below indicates an increase in profit and other equity where sterling weakens 10% against the relevant currency.
|
| Euro currency change | |
| Group | Year ended £'000s | Year ended £'000s |
| Profit or loss | | |
| 10% strengthening of sterling | 20 | 124 |
| 10% weakening of sterling | 78 | (151) |
| | | |
| Equity | | |
| 10% strengthening of sterling | 29 | 69 |
| 10% weakening of sterling | (6) | (85) |
| | | |
| Company | | |
| Profit or loss | | |
| 10% strengthening of sterling | - | - |
| 10% weakening of sterling | - | - |
|
| | |
| Equity | | |
| 10% strengthening of sterling | - | - |
| 10% weakening of sterling | - | - |
ii) Interest rate risk
Interest rate risk refers to the risk that fluctuations in interest rates cause losses to the Company. The Group and Company have no exposure to interest rate risk except on cash and cash equivalent which carry variable interest rates. The Group carries low units of cash and cash equivalents and the Group and Companies monitor the variable interest risk accordingly.
At 31 December 2023, the Group and Company has GBP loans valued at £184,000 (2022: £521,000) with a rate of 8% per annum.
iii) Liquidity risk
Liquidity risk refers to the risk that the Company has insufficient cash resources to meet working capital requirements.
The Group and Company manages its liquidity requirements by using both short- and long-term cash flow projections and raises funds through debt or equity placings as required. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short-, medium- and long-term funding and liquidity management requirements.
The Group closely monitors and manages its liquidity risk. Cash forecasts are regularly produced, and sensitivities run for different scenarios (see Note 1). For further details on the Group's liquidity position, please refer to the Going Concern paragraph in Note 1 of these accounts.
| | Group | Company | ||
| Categorisation of Borrowings - Group | 2023 | 2022 | 2023 | 2022 |
| Less than six months - loans and borrowings | 184 | - | 184 | - |
| Less than six months - trade and other payables | - | - | - | - |
| Between six months and a year | - | - | - | - |
| Over one year | - | 516 | - | 516 |
Capital management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the balance between debt and equity. The Group reviews the capital structure on an on-going basis. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through new share issues and the issue of new debt or the repayment of existing debt.
There are no externally imposed capital requirements.
Fair value of financial instruments
Set in the foregoing is a comparison of carrying amounts and fair values of the Group's and the Company's financial instruments:
| Categorisation of Financial Assets and Liabilities - Group | Carrying amount Year ended 31 December 2023 | Fair Value Year ended 31 December 2023 | Carrying amount Year ended 31 December 2022 | Fair Value Year ended 31 December 2022 |
| Financial assets | | | | |
| Cash and equivalents - unrestricted | 475 | 475 | 325 | 325 |
| Cash and equivalents - restricted | - | - | - | - |
| Trade receivables | 394 | 394 | 11 | 11 |
| | | | | |
| Financial liabilities | | | | |
| Trade and other payables | 562 | 562 | 599 | 599 |
| Loans at fixed rate | 184 | 184 | 516 | 516 |
| Capital management - Company | Carrying amount Year ended 31 December 2023 | Fair Value Year ended 31 December 2023 | Carrying amount Year ended 31 December 2022 | Fair Value Year ended 31 December 2022 |
| Financial assets | | | | |
| Cash and equivalents - unrestricted | 410 | 410 | 302 | 302 |
| Trade receivables | 355 | 355 | 26 | 26 |
| | | | | |
| Financial liabilities | | | | |
| Trade and other payables | 289 | 289 | 283 | 283 |
| Loans at fixed rate | 184 | 184 | 516 | 516 |
Convertible loan at fixed rate
Fair value of convertible loans has been determined based on tier 3 measurement techniques. The fair value is estimated at the present value of future cash flows, discounted at estimated market rates. Fair value is not significantly different from carrying value.
Trade and other receivables/payables and inter-company receivables
All trade and other receivables and payables have a remaining life of less than one year. The ageing profile of the Group and Company receivable and payables are shown in Notes 13, 14.
Cash and cash equivalents
Cash and cash equivalents are all readily available and therefore carrying value represents a close approximation to fair value.
24. Commitments and contingencies
Decommissioning costs for the JV wells (Pg-10, Pg-11a and D-14) were agreed to be €345.2k between the JV partners and the relevant Slovenian ministry in 2013 when the RJOA was signed. Decommissioning costs become payable at the end of a wells operational life and a provision for decommissioning costs is made only when a well is put into production. With the change in the Slovenian mining law in in April 2022 creating a ban on hydraulic stimulation, further development of the concession through hydraulic stimulation is now impossible. A provision of £690,000 (Note 15) has been made for the decommissioning of the PG10, PG11A and D-14 wells and represents the Company's estimate of the Group's share of the restoration costs for the JV wells (i.e. non-baseline wells) in the Petišovci field.
Post period in review we received correspondence from Petrol Geo (the field operator) who had produced a new estimate on the abandonment liability that was significantly higher at €2.3M for the three JV wells only. As part of the Geoenergo insolvency process the Ministry of Natural Resources requested that Geoenergo post €2.3M in an unfunded abandonment liability for the whole concession area (of which the Company ASL is only responsible for Pg-10, Pg-11a and D-14, which totals €345.2k). Ascent had previously already prepaid €300k to Geoenergo's private abandonment fund as part of the RJOA. The RJOA was terminated with an effective date of 19 January 2024 by the administrator via a letter received from them dated 10 April 2024. Furthermore on 19 April 2024, the concession expired and according to the RJOA the parties agreed that upon expiry of the Concession Contract, Ascent shall transfer the title to the Existing Joint Venture Property on an "as-is" basis to Geoenergo without any compensation. The Company believes that the Existing Joint Venture property relates to all JV assets which are reflected in the accounts of Ascent prior to signature of the RJOA in 2013 which most notably is the three wells (drilled 2004 and 2011).
Publication of the Annual Report
The Company confirms that the Company's annual report and financial statements for the year ended 31 December 2023 (the "Annual Report") will be published to shareholders and will be on the Company's website shortly.
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