Ascent Resources plc

("Ascent" or the "Company")

Posting of Circular, Notice of General Meeting and Board Changes

Posting of Circular and Notice of General Meeting

Ascent announces that it is posting a circular to Shareholders containing a Notice of General Meeting at which resolutions will be proposed in order to grant authority to the Directors to issue and allot equity securities of the Company up to an aggregate nominal value of £1,500,000 for cash, without being required to offer those equity securities on a pre-emptive basis.

The General Meeting is to be held at the offices of finnCap Ltd, 60 New Broad Street, London, EC2M 1JJ at 3:30 p.m. on Thursday 3 September 2015. 

A copy of the circular will be available on the Company's website at www.ascentresources.co.uk.

Board Changes

In recognition of the Company's current funding position, management changes are being implemented with a view to conserving the Company's funding, in particular until the IPPC permit is awarded in final form. The principal change is that Len Reece, Ascent's CEO over the past 3 years, resigned as a Director of the Company on 14^th August 2015 and the Company has commenced a redundancy process in relation to his role as CEO.

Enquiries

Ascent Resources plc

Colin Hutchinson                                                                                                                            +44(0) 20 7251 4905

finnCap Ltd (Nominated Adviser and Broker)

Christopher Raggett / Emily Watts                                                                                          +44(0) 20 7220 0500

Timetable

Each of the times and dates above are subject to change. Any such change will be notified to Shareholders by an announcement on a Regulatory Information Service.

Introduction

The Directors are in negotiations with several potential sources of additional financing, although no terms have yet been agreed.  Whilst the Company has the £7 million loan facility from Henderson to support its working capital requirements, draw down of the facility is at the sole discretion of Henderson and therefore this should not be relied upon as a sole source of financing.  Accordingly the Directors believe that it is prudent to have the ability to procure additional funds through the issue of new Ordinary Shares on a non-pre-emptive basis.

Background

Ascent, with its partner Geoenergo, continues to work to develop the Petišovci field in Slovenia.  To date some €42 million has been spent on the project, which it is hoped will supply a significant proportion of Slovenia's gas requirement for well over a decade.  In recognition of the key strategic importance of the project, earlier this year the Slovenian government designated Nafta Lendava, the state owned oil and gas company, which holds an interest in the Petišovci project through its shareholding in Geoenergo, as one of 21 important national assets.

The preferred field development plan consists of the installation of a gas gathering and separation station ("GGSS") for dew point control and to reduce the CO₂ content of the gas to meet national pipeline specifications; the upgrade of a measuring station at the entry point to the national grid and the construction of pipelines and flow lines to connect the wells to the GGSS and the GGSS to the measuring station.

IPPC permit

Under EU Directives adopted by the Slovenian Government the installation of the GGSS requires an IPPC permit.  In July 2014 the application was completed and submitted to the Environmental Agency ("ARSO") for approval.  In December 2014 ARSO announced that the IPCC permit was approved subject to a public consultation. 

Current position

In June 2015 ARSO announced that following the public consultation the Permit had been provisionally awarded subject to a period for appeals.  In August 2015 the Company received formal notification that two parties had lodged appeals. 

The response to the appeal has already been submitted.  The appeals will be heard in the first instance by the Environment Ministry with potentially a further appeal to the courts.  Until the appeal process has been exhausted, the Company and its partners are not able to finalise bank funding to start construction work.

Although there can be no guarantee that the IPPC permit will be issued, based on legal advice received to date the Board of Ascent remains firmly of the view that the required IPPC permit will be issued in final form.  What is less certain is the time that the appeal process will take; guidelines suggest that the first appeal should take a maximum of two months and the second a maximum of three months, however in practice these guidelines are sometimes exceeded.  Should the process be referred to the Slovenian courts it is likely that the final permit would not be awarded until 2016.

It is therefore the priority of the Company to minimise expenditure until the IPPC permit award is unconditional.  In the meantime work continues to explore alternative routes to market for the gas.

Current Funding

In May 2015 the Company agreed a £7 million facility with Henderson Global Investors.  Whilst the facility was not intended to be used to cover delays in permitting, the Company has recently agreed the drawdown of the first £250,000 of this facility to fund its immediate working capital requirements.

Without the Additional Authority, the Company is currently reliant on Henderson permitting drawdown of the facility to fund its working capital. The Company is conscious that using a short term overdraft to bridge this funding gap is not an ideal solution to meeting its funding needs, but is constrained on raising fresh equity capital by the need to convene shareholder meetings to grant the Directors the authority required to issue shares for cash to investors, who might not agree to be committed during the notice period required for a general meeting seeking those authorities.

The Board therefore wishes to give the Company the option to bring such new investors and new investment into the Company through the issue of new equity.  To that end we are proposing to put the Resolutions to Shareholders, which if passed would allow the Company to issue 1,500,000,000 shares for cash without further recourse to Shareholders.

Other funding discussions

As previously announced, the Company has held discussions with a range of parties interested in participating in a farm out.  Discussions are well advanced with several parties.  Discussions are expected to continue until the end of Q3 2015 and there is no certainty that any transaction will result.

The Company also continues to have positive discussions with banks who, following lengthy due diligence, have expressed firm interest in providing up to €20 million of debt funding to the project.  These funds would only be available once the IPPC permit has been declared valid and additional equity investment has been secured.

Board Changes

In recognition of the Company's current funding position, management changes are being implemented with a view to conserving the Company's funding, in particular until the IPPC permit is awarded in final form. The principal change is that Len Reece, Ascent's CEO over the past 3 years, resigned as a Director of the Company on 14^th August 2015 and the Company has commenced a redundancy process in relation to his role as CEO.

General Meeting

Set out at the end of the Circular is a notice convening a General Meeting of the Company to be held at 3.30 p.m. on Thursday 3 September 2015 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ, at which the Resolutions will be proposed.

The Company is proposing that Shareholders pass the Resolutions in order to:

(a)  grant authority to the Directors under section 551 of the Act, to allot relevant securities in the Company; and

(b)  empower the Directors, pursuant to section 570 of the Act, to disapply statutory pre-emption rights in relation to the allotment of equity securities.

Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:

A reference to £ is to pounds sterling, being the lawful currency of the UK.