Consolidated Statement of Financial Position

As at 30 June 2016

Consolidated Statement of Cash Flows

for the six months ended 30 June 2016

1.     Accounting Policies

Reporting entity

Ascent Resources plc ('the Company') is a company domiciled in England.  The address of the Company's registered office is 5 New Street Square, London EC4A 3TW.  The unaudited consolidated interim financial statements of the Company as at 30 June 2015 comprise the Company and its subsidiaries (together referred to as the 'Group').

Basis of preparation

The interim financial statements have been prepared using measurement and recognition criteria based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted for use in the EU.  The interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial statements for the year ended 31 December 2016 and were applied in the Group's statutory financial statements for the year ended 31 December 2015.

All amounts have been prepared in British pounds, this being the Group's presentational currency.

The interim financial information for the six months to 30 June 2016 and 30 June 2015 is unaudited and does not constitute statutory financial information.  The comparatives for the full year ended 31 December 2015 are not the Group's full statutory accounts for that year.  The information given for the year ended 31 December 2015 does not constitute statutory financial statements as defined by Section 435 of the Companies Act.  The statutory accounts for the year ended 31 December 2015 have been filed with the Registrar and are available on the Company's web site www.ascentresources.co.uk. The auditors' report on those accounts was unqualified and included an emphasis of matter drawing attention to the importance of disclosures made in the annual report regarding going concern.  It did not contain a statement under Section 498(2)-(3) of the Companies Act 2006.

Going Concern

The financial statements of the Group are prepared on a going concern basis.

During June 2016 the Company raised £1 million (£977,500 net of costs) in two separate equity placings.  These funds are sufficient to fund current trading obligations of the Company until Q1 2017.

On 1 August 2016 the Company announced that it had signed a gas sales agreement with INA, Croatia's leading Oil & Gas Company, to sell joint venture gas production at the Croatian border.  Additional funds will be required to complete the capital programme required in order to make existing wells and facilities ready for production however there is currently no committed expenditure in relation to this programme.

Additionally, the Company has £8.2million of convertible loan notes currently due for redemption on 19 November 2016.  While the share price is currently significantly above the conversion price there can be no guarantee that all of the notes will have converted by the redemption date.

As such the Company will require further funding to finance the capital programme in Slovenia and repay the loan notes as they fall due.  The Directors have a range of different options including, but not limited to, new borrowings or new equity placings.  However, there can be no guarantee over the outcome of these options and as a consequence there is a material uncertainty of the Group's ability to raise the necessary finance, which may cast doubt on the Group's ability to operate as a going concern. Further, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors, however, remain confident of the Group's ability to operate as a going concern given the signing of agreements which give the Company a clear route through to first gas and in light of the significant recent support from new and longer term shareholders.

Liquidity and Capital Resources:

The Company continues to be an emerging business and currently has no production cash flows; consequently, it manages its working capital and liquidity position by balancing the timing of critical expenditure with available funds.  Further information on future funding arrangements and the Directors' assessment of the Group's going concern position is set out above.

Principal Risks and Uncertainties:

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 50-52 of the Annual Review 2015, a copy of which is available on the Company's website at www.ascentresources.co.uk. 

2.     Operating loss is stated after charging

3.     Finance income and costs recognised in loss

The liability written off represented a creditor dating back more than five years which the Company no longer deems to be payable.

Convertible loan notes were restructured during the prior periods and a full commentary is contained within the audited financial statements for the year ended 31 December 2015 and are available at www.ascentresources.co.uk.

4.     Loss per share

The weighted average number of shares for six months ended 30 June 2015 has been adjusted for the share consolidation.  The previously presented total was 1,514,219,096 which equated to 77,060,955 as if the share consolidation had taken place at the start of 2015.

Potential shares to be issued are antidilutive so the basic earnings per share is equivalent to the diluted earnings per share.

5.     Exploration and Evaluation Costs

6.     Borrowings

7.     Share Capital

In total 484,923,471 new ordinary shares were issued during the period in three equity placings and a number of loan note conversions which are detailed in note 6 above.

On 7 April 2016 the Company raised £500,000 (£477,500 net of costs) via the placing of 35,714,285 new ordinary shares of 0.2pence each in the Company at a price of 1.4pence per placing share with investors using the PrimaryBid platform.

On 1 June 2016 the Company raised £500,000 (£477,500 net of costs) via the placing of 83,333,333 new ordinary shares of 0.2pence each in the Company at a price of 0.6pence per placing share with investors using the PrimaryBid platform.

On 7 April 2016 the Company raised £500,000 (£500,000 net of costs) via the placing of 83,333,333 new ordinary shares of 0.2pence each in the Company at a price of 0.6pence per placing share to Henderson Global Investors.

These funds have been used to confirm the alternative route to market and to begin planning and ordering of equipment for the connection of our existing wells and the refurbishment of processing facilities.

8.     Events subsequent to the end of the reporting period

On 1 August 2016 the Company reported that, together with our Slovenian partners, it had signed the conditional agreements necessary to allow commercial gas production to commence as early as January 2017.

The Company and its Slovenian partners have negotiated a gas sale and purchase agreement with INA, Croatia's leading oil & gas company, which will enable the Joint Venture to sell untreated gas, within our partner's production systems, at the Slovenian / Croatian border.

The Company also announced the signing of a condition sale and purchase agreement to acquire 100% of Trameta doo. a company which owns access to a key section of pipeline in Slovenia in return for the issue of up to 75 million Consideration Shares plus Options over a further up to 7.5 million Subscription Shares. 

On 22 August 2016 the resolutions necessary to approve these agreements were approved by shareholders.