Interim Results
Ascent Resources PLC
28 September 2006
Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas
28th September 2006
Ascent Resources plc ('Ascent' or 'the Company')
Interim Results
Ascent Resources plc, the AIM-traded oil and gas exploration and production
company with assets in six countries across Europe, announces its results for
the period to 30 June 2006.
Overview:
• Asset base with interests in 20 oil and gas projects onshore in Italy,
Spain, Switzerland, Hungary and Romania, with applications pending offshore
in the Netherlands
• Commencing a drilling programme of six exploration wells in Hungary,
Italy, and Spain in the next few weeks which will use two separate drilling
rigs
• Planning a further six wells to be drilled in 2007, including in its gas
exploration permits in Italy's Po Valley
• Farmed out an interest in the Nyirseg Hungarian gas exploration project to
Dual Exploration of Canada to drill two wells, with an option to drill two
more
• Generating revenue from oil production in Spain and shortly also from gas
production in Romania
• Further strengthened Board of Directors with two key appointments
• Assessing selected additional oil and gas opportunities across Europe
Managing Director Jeremy Eng said: 'Having compiled a high quality portfolio of
oil and gas projects across Europe, we are moving into the next stage of the
Company's development, which will include drilling six wells in Hungary, Italy
and Spain. We have concluded an advantageous farm-out in Hungary, and are
looking at other similar possibilities within the Company's portfolio.
'Our emphasis is now on exploring and developing the Company's assets, but we
are still considering some carefully selected acquisitions that would be
complementary to the existing properties. I believe that the Company is now
very well-positioned to create value for our shareholders and to define our
reserves.'
Chairman's Statement
This has been an active period for Ascent Resources and I am pleased to report
that we continue to make good progress. Your Company has expanded its interests
across Europe and now has assets onshore in Spain, Italy, Hungary, Switzerland
and Romania, as well as applications for offshore exploration acreage in the
Netherlands. During this period, most of our efforts have been directed towards
developing this portfolio by implementing an aggressive exploration programme in
Hungary, Italy and Spain which will culminate in the commencement of drilling
operations in the next few weeks.
Six-Well Drilling Programme
The six-well drilling programme, with two wells each in Italy, Spain and
Hungary, is backed by geological and seismic exploration work conducted both by
the Company and by previous holders of the leases. Despite the worldwide
shortage of rigs and drilling resources, this programme is starting in a few
weeks, with two rigs deployed. One rig will drill the first two Hungarian wells
with an option to continue with a third and fourth; the other rig will commence
working in Italy and will then transfer to Spain.
In Hungary, the seismic acquisition funded by Ascent in 2005 has generated
valuable results. The drilling locations that have been selected based on these
data are the subject of the farm-out to Canadian company, DualEx Energy
International Inc. The farm-out agreement provides for the parties to jointly
explore gas targets in the Nyirseg Del and Nyirseg Szatmar exploration permits
in Hungary. DualEx is to fund 75% of the first two wells with an option to
extend the agreement for a second two wells.
Other Developments
In Spain, where we now control 88.5% of the producing Ayoluengo oil field in the
Sedano Basin following the purchase of a further 25% interest, production
currently averages a net 100 barrels of oil per day.
In Romania, through the purchase of Millennium International Resources
Corporation Ltd, we have a 5% interest in three exploration blocks in the
Carpathian Thrust Belt, one of Romania's principal oil and gas producing areas.
The consortium, which is led by Aurelian Oil and Gas plc, expects to commence
gas production imminently from the Bilca Development. An active exploration
programme is underway in all three blocks, including new seismic work. Four
exploration wells are to be drilled during the next twelve months.
In Switzerland, we have been awarded a third exploration permit. This permit in
the Canton of Vaud, in addition to the two already held in the Canton of Bern,
contains the Essertines oil discovery drilled by BEB in 1962.
Peter Earl and Nigel Moore have recently joined the Board as Non-Executive
Directors, and between them bring considerable industry experience. These
appointments complete our strategy of assembling a first-class board with the
expertise to develop our oil and gas assets. We now have a Board in place
capable of managing Ascent's development into a substantial producing entity. In
line with the Boards' expectations, the Company is reporting a pre tax loss of
£599,072 for the period ended 30 June 2006 (6 months to 31 December 2005: loss
of £561,265) on a turnover of £232,130 (6 months to 31 December 2005: £nil).
To summarise, we have assembled an extensive array of oil and gas assets at
various stages of development across Europe. We have a demanding drilling
programme and importantly, our overheads are covered by production from the
Ayoluengo field in Spain. We look forward to taking the Company to its next
phase of development and crystallising what we believe to be the huge potential
of our portfolio.
John Kenny
Chairman
27 November 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2006
Unaudited (Unaudited) (Audited)
six months ended six months ended Year ended
30 June 2006 31 December 2005 30 June 2005
Note £ £ £
Group turnover 232,130 - -
Cost of sales (140,067) - -
Gross profit 92,063 - -
Administrative expenses (801,512) (601,529) (438,228)
Group operating loss (709,449) (601,529) (438,228)
Interest receivable 51,332 47,026 15,594
Interest payable - (6,762) -
Share of operating profit of
associated undertaking (net of
related goodwill) 59,045 - -
Loss on ordinary activities
before taxation (599,072) (561,265) (422,634)
Taxation (716) (198) -
Loss on ordinary activities (599,788) (561,463) (422,634)
after taxation
Minority interest 3,994 265 1,314
Loss for the period (595,794) (561,198) (421,320)
Dividends - - -
Retained loss for the period (595,794) (561,198) (421,320)
Loss per share
Basic 2 (0.23)p (0.25)p (0.33)p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30 JUNE 2006
(Unaudited) (Unaudited) (Audited)
six months ended six months ended year ended
30 June 2006 31 December 2005 30 June 2005
£ £ £
Retained loss for the period (595,794) (561,198) (421,320)
Exchange differences 10,672 41,809 -
Total gains and losses relating
to the period (585,122) (519,389) (421,320)
Prior period adjustment as (20,188)
explained in note 7
Total gains and losses recognised
since the last annual report and
the interim results for the six
months ended 31 December 2005 (605,310)
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2006
(Unaudited) (Unaudited) (Audited)
30 June 31 December 2005 30 June 2005
2006
Notes £ £ £
Fixed assets
Intangible assets 3 3,758,400 2,090,644 164,973
Tangible assets 65,467 16,303 -
Investment in an associated
undertaking 4 338,448
4,162,315 2,106,947 164,973
Current assets
Current asset investments 44,675 192,794 987,629
Debtors 5 563,623 1,051,941 57,418
Cash at bank and in hand 2,327,653 3,306,401 3,673,353
2,935,951 4,551,136 4,718,400
Creditors: amounts falling due
within one year (699,592) (55,544) (54,984)
Net current assets 2,236,359 4,495,592 4,663,416
Total assets less current
liabilities 6,398,674 6,602,539 4,828,389
Provision for liabilities and
charges (94,052) - -
6,304,622 6,602,539 4,828,389
Minority interest 3,890 (104) (369)
Net assets 6,308,512 6,602,435 4,828,020
Capital and reserves
Called up share capital 6 256,671 253,820 208,518
Share premium account 7 7,524,123 7,269,136 5,020,634
Share based payment reserve 7 53,549 20,188 20,188
Profit and loss account 7 (1,525,831) (940,709) (421,320)
Shareholders' funds 8 6,308,512 6,602,435 4,828,020
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2006
(Unaudited) (Unaudited) (Audited)
six months ended six months ended 31 year ended
December 2005
30 June 2006 30 June 2005
Notes £ £ £
Net cash inflow/(outflow) from
operating activities 9 121,697 (976,610) (410,447)
Returns on investments and
servicing of finance
Investment income 51,332 47,026 15,594
Interest paid - (6,762) -
173,029 (936,346) (394,853)
Taxation - (198) -
Acquisitions and disposals
Cash acquired with subsidiary
undertakings 24,922 77,533 -
Acquisition of subsidiary
undertakings 11 (422,990) (1,508,509) -
Acquisition of an associated
undertaking 4 (100,995) - -
Loan to an associated undertaking 4 (131,902) - -
Payments to acquire tangible (5,832) (18,068) -
assets
Net funds for investing in
exploration 3 (732,029) (955,652) (70,000)
Receipt from sale of current asset
investments 206,549 1,392,811 -
Acquisition of current asset
investments - (585,144) (387,629)
Net cash received from a minority
shareholder of subsidiary
undertaking - - 1,683
Net cash outflow from acquisitions (1,162,277) (1,597,029) (455,946)
Net cash outflow before financing (989,248) (2,533,573) (850,799)
Financing
Proceeds from issue of shares 10,500 2,166,621 4,838,410
Issue costs - - (314,258)
Cash inflow from financing 10,500 2,166,621 4,524,152
(Decrease)/increase in cash 10 (978,748) (366,952) 3,673,353
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2006
1. Basis of preparation
The financial information is prepared in accordance with the historical cost
convention and in accordance with applicable accounting standards and the
Statement of Recommended Practice 'Accounting for Oil and Gas Exploration,
Development, Production and Decommissioning Activities'.
The financial information has been prepared on the basis of a going concern.
The results for the six months ended 30 June 2006 are unaudited and do not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. They have been prepared using accounting bases and policies consistent
with those used in the preparation of the financial statements of Ascent
Resources Plc for the year ended 30 June 2005 except that FRS 20 'Share-based
payment' has been adopted for the first time and comparative figures restated
accordingly. The effect of FRS 20 was to increase administrative expenses by
£33,361 (six months to 31 December 2005: £nil, year ended 30 June 2005:
£20,188).
The comparative figures for the year ended 30 June 2005 are extracted from the
statutory financial statements which have been filed with the Registrar of
Companies and which contain an unqualified audit report.
The Company changed its accounting reference date from 30 June to 31 December.
The financial information has, therefore, been prepared for the period from 1
January 2006 to 30 June 2006 and the statutory accounts for the next period will
cover eighteen months ending 31 December 2006.
2. Loss per ordinary share
The basic loss per ordinary share has been calculated using the loss for the
financial period of £595,794 (six months to 31 December 2005 - loss of £561,198;
year ended 30 June 2005 - loss of £421,320) and the weighted average number of
ordinary shares in issue of 254,577,960 (six months to 31 December 2005 -
222,144,713; year ended 30 June 2005 - 127,879,476).
No diluted loss per ordinary share has been disclosed because the conversion of
share warrants would decrease the net loss per share.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2006
3. Intangible assets
The movements during the period were as follows:
Exploration
and appraisal Positive Negative
Goodwill
expenditure Goodwill Total
£ £ £ £
Cost
As at 1 January 2006 2,755,484 164,754 (853,478) 2,066,760
Additions 732,029 719,760 - 1,451,789
Acquired with a subsidiary undertaking 234,922 - - 234,922
(note 11)
At 30 June 2006 3,722,435 884,514 (853,478) 3,753,471
Amortisation
As at 1 January 2006 - (18,790) 42,674 23,884
(Charge)/credit for the period - (61,629) 42,674 (18,955)
At 30 June 2006 - (80,419) 85,348 4,929
Net book value
At 30 June 2006 3,722,435 804,095 (768,130) 3,758,400
At 31 December 2005 2,755,484 145,964 (810,804) 2,090,644
The Directors have assessed the value of the oil and gas exploration expenditure
and in their opinion, no impairment provision is considered necessary. Details
of additions to positive goodwill, arose on the acquisition of the Company's
subsidiary undertakings, Teredo Oils Limited and Millennium International
Resources Corporation Limited, are set out in note 11. Goodwill is being
amortised over the Directors' estimate of its useful economic life of 10 years
until the production commences. On commencement of production, it will be
amortised on a unit of production basis based on proven and probable reserves.
4. Investment in an associated undertaking
Group Associated
undertaking
£
Shares
Additions (note below) 148,217
At 30 June 2006 148,217
Loans
Granted in period (net) 131,902
At 30 June 2006 131,902
Share of retained profits
Profit for the period (net of tax and related goodwill) 58,329
At 30 June 2006 58,329
Net book value
At 30 June 2006 338,448
At 31 December 2005 -
4. Investment in an associated undertaking (continued)
The group's share of net assets of the associated company at 30 June 2006 is
£160,729 and the related unamortised goodwill as at date is £177,719
representing the total investment in that company of £338,448.
The Company acquired 50% of ordinary shares of Northern Petroleum Exploration Limited, a
company incorporated and registered in England and Wales for £148,217.
The goodwill on acquisition has been calculated as follows:
£
Fair value of net liabilities acquired (77,713)
50% thereof (38,857)
Consideration paid (settled by issue of 370,370 ordinary shares
at 12.75p and cash of £100,995) (148,217)
Goodwill on acquisition 187,074
Northern Petroleum Exploration Limited is the Operator and 22.5% equity interest
holder in the La Lora concession in Northern Spain. The La Lora concession
contains the Ayoluengo field.
5. Debtors
30 June 31 December
2006 2005
£ £
Deposits (includes the value of the shares issued on acquisition of Northern - 181,870
Petroleum Exploration Limited)
Other debtors 563,623 870,071
563,623 1,051,941
6. Share capital
30 June 2006 31 December 2005
£ £
Authorised
10,000,000,000 ordinary shares of 0.1p each 10,000,000 10,000,000
Allotted, called up and fully paid
As at 1 January 2006 253,820 208,518
Shares issued 2,851 45,302
As at 30 June 2006 256,671 253,820
The movements in the share capital are summarised below:
Number of
Shares
As at 1 January 2006 253,820,167
Shares issued in lieu of services provided 572,705
Shares issued on acquisition of Teredo Oils Limited 1,500,000
Shares issued on acquisition of Millennium International Resources Corporation Limited 678,906
Shares issued for cash 100,000
As at 30 June 2006 256,671,778
7. Reserves
Movements in the share premium and profit and loss account during the period
were as follows:
Share based payment Share Profit
reserve Premium and loss
£ £ £
At 1 January 2006
- As previously stated - 7,269,136 (920,521)
- Prior period adjustment 20,188 - (20,188)
- As restated 20,188 7,269,136 (940,709)
Issue of shares - 254,987 -
Cost of share options in issue 33,361 - -
Retained losses - - (595,794)
Exchange differences - - 10,672
At 30 June 2006 53,549 7,524,123 (1,525,831)
The prior period adjustment arises from adoption of FRS 20 as an accounting
policy on share based payments.
8. Reconciliation of movements in shareholders' funds - equity only
Six months to Six months Year ended
to 30 June
30 June 2006 31 December 2005
2005 (as restated)
£ £ £
Loss for the period (595,794) (561,198) (421,320)
Dividends - - -
(595,794) (561,198) (421,320)
Cost of share options in issue 33,361 - 20,188
Shares issues less costs 257,838 2,293,804 5,229,152
Exchange differences 10,672 41,809 -
Opening shareholders funds 6,602,435 4,828,020 -
Closing shareholders' funds 6,308,512 6,602,435 4,828,020
9. Reconciliation of operating loss to net cash outflow from operating
activities
Six months to Year ended
Six months to 31 December 30 June 2005
30 June 2006 2005 (as restated)
£ £ £
Group operating loss (709,449) (601,529) (438,228)
Decrease/(increase) in debtors 628,633 (325,499) (57,418)
Increase/(decrease) in creditors 183,852 (45,887) 54,458
Goodwill charged/(credited) 18,955 (34,437) 10,553
(Profit)/loss on disposal of current asset investments (56,357) 38,439 -
Increase in value of current asset investments (2,073) (51,271) -
Share based payment charge 33,361 - 20,188
Depreciation 14,103 1,765 -
Exchange differences 10,672 41,809 -
Net cash inflow/(outflow) from operating activities 121,697 (976,610) (410,447)
10. Analysis of changes in net funds
1 January 2006 Cash flow 30 June 2006
£ £ £
Cash at bank and in hand 3,306,401 (978,748) 2,327,653
11. Acquisition of subsidiary undertakings
During the period, the Company acquired the following subsidiary
undertakings:
Subsidiary undertakings Principal activity Percentage of ordinary
share capital held
Teredo Oils Limited Oil and gas exploration 100%
Millennium International Resources
Corporation Limited Oil and gas exploration 100%
These purchases have been accounted for using acquisition accounting.
Cash Shares
Teredo Oils Limited £ £
Effective date of acquisition: 30 September 2005
Completion date: 30 June 2006
The fair values of the assets and liabilities acquired
at the effective date of acquisition were:
Fixed assets 57,436
Net current liabilities (62,716)
Net liabilities acquired (5,280)
Total consideration paid 342,791 192,791 150,000
Positive goodwill 348,071
Teredo Oils Limited holds a 52.5% interest in the producing Ayoluengo oil field
in Northern Spain.
Cash Shares
Millennium International Resources Corporation Limited £ £
Effective date of acquisition: 24 March 2006
Completion date: 24 March 2006
The fair values of the assets and liabilities acquired
at the effective date of acquisition were:
Exploration and appraisal expenditure 234,922
Current liabilities (318,705)
Net liabilities acquired (83,783)
Total consideration paid 287,906 230,199 57,707
Positive goodwill 371,689
Millennium International Resources Corporation Limited, a British Virgin Island
registered company, holds a 5% interest in Brodina, Cuejdiu and Bacau
exploration blocks, covering 3,800 square kilometres of the Carpathian Thrust
Belt in the north eastern part of Romania.
12. Subsequent Events
The major events subsequent to 30 June 2006 are set out in the Chairman's
statement.
* * ENDS * *
For further information please visit www.ascentresources.co.uk or contacts:
Jeremy Eng Ascent Resources plc Tel: 020 7251 4905
Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477
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