Investor Presentation. Clive Carver, Chairman Colin Hutchinson, Chief Executive Officer Nigel Moore & Cameron Davies, Non-Executive Directors

Transcription

1 Investor Presentation Clive Carver, Chairman Colin Hutchinson, Chief Executive Officer Nigel Moore & Cameron Davies, Non-Executive Directors 7 March 2018

2 2 Disclaimer The information contained in these slides and this presentation is being supplied to you by Ascent Resources plc on behalf of itself and its subsidiaries (together the Company ) solely for your information and may not be reproduced or redistributed in whole or in part to any other person. This document has not been approved by a person authorised under the Financial Services and Markets Act 2000 (as amended) ("FSMA") for the purposes of section 21 FSMA and therefore these slides and this presentation is being delivered and made only to a limited number of persons and companies who are persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 of the FSMA (Financial Promotion) Order 2005 (the Order ) or are high net worth persons within the meaning set out in Article 49 of the Order or are otherwise permitted to receive it. 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3 3 Summary AIM listed, exploration & production company focused on onshore European gas. Operator of the Petišovci concession in Slovenia. We have de-risked the asset over the past 12 months on financial, operational and regulatory level. Debt free & cash generative. Potential for material increases in production and pricing over the next 24 months.

4 Organisation

5 5 PLC Board of Directors Clive Carver, Non-executive Chairman Clive Carver has worked in the City since 1986 and focused exclusively on the small cap sector since Chairman of Caspian Sunrise plc, an AIM listed oil and gas exploration and production company operating in Kazakhstan. Also Non-executive Chairman of Tax Systems plc, appscatter Group plc and Non-executive Director of Darwin Strategic Limited & Primary Bid Limited Fellow of the Institute of Chartered Accountants in England and Wales and is a qualified Corporate Treasurer. Colin Hutchinson, Chief Executive Officer Fellow of the Institute of Chartered Accountants in Ireland, law graduate with an MBA from Warwick Business School. With Ascent since March 2013 and previously served as the Company's Finance Director. CEO since September 2015, has overseen the rebalancing of the financial structure, positioning for growth and first gas sales Nigel Moore, Non-executive Director Chartered Accountant and previously a partner at Ernst & Young for 30 years, specialised in the oil and gas sector, advising a wide range of client companies. Since retiring from EY, Nigel has served on around 12 Boards as an NED mostly in the oil & gas and mining industries. Chairman of the audit committee Cameron Davies, Non-executive Director Cameron Davies is an energy sector specialist and the founder & former CEO of Alkane Energy plc. Also Non-executive Chairman of PowerHouse Energy plc. A geologist, Dr Davies has over thirty-five years experience in the oil and gas sectors. PhD from Imperial College, is a Fellow of the Geological Society of London and a member of the European Petroleum Negotiators Group and the PESGB. Chairman of the Remuneration Committee.

6 6 Ascent organisational chart Board of Directors CEO Expert Technical Advisers PLC Office Manager Slovenia Country Manager Financial Controller Technical Manager Operations Coordinator Office Manager Petroleum Engineer

7 7 Technical advisers Reservoir Engineering - Dr Clive Ninnes, UK based expert. - 7 years with project - Prepared reservoir model & long term production forecast. - Advising on field development priorities. Geology & Geoscience - Geomega (Budapest based) - 10 years with project - Carried out 3D and identified locations for Pg-10 and Pg-11A - Advising on field development priorities. Completions / Drilling Engineer - Reagan Nelson, Canadian drilling expert. - Worked on recompletions of Pg-10 & Pg-11A - Planning well re-entries & enhanced recovery plans. Facilities Consultant - Vern Aarflot, Norwegian Oil & Gas professional. - With project since Designed new CPP and INA infrastructure. - Advising on future facilities.

8 Project

9 9 Slovenia EU Member Since 2004 Schengen Member Since 2007 Currency Capital Government Euro Ljubljana Parliamentary representative democratic republic. Last elections were 2014; next should be Population Language Religion 2 million Slovenian 58% Catholic GDP Composition as of 2016 Annual gas consumption as of 2016 Services 65%, Industry 33%, Agriculture 2% 761m cubic metres / 27 Bcf (99.9% imported)

10 10 Achievements in 2017 Revenues for the year of close to 1 million. Debt reduced from 8.7 million to 49k. Commenced production locally in April & export in November. Executed the work programme: Recompleted two wells. Constructed flow lines. Refurbished existing processing equipment. Installed metering & pigging station. Recertified export pipeline.

11 11 Production to date Production rates - MMscfd Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 MMscfd Production to local industrial company from April. Production suspended in October while export infrastructure put in place. Rate increased from 2.1 MMscfd in November to 2.6 MMscfd for January. February production slightly down on January due to shutdowns for installation of the filter separator.

12 12 Targets for 2018 Increase production from Pg-10 and Pg-11A. Acquire permits to re-enter Pg-10, Pg-11A, Pg-7 & Pg-9. Prepare permit applications for Pg-6 & Pg-8. Pre-fracture production test Pg-6 & Pg-9 (no permit required). Assess the potential of a conventional deviated side track from Pg-8. Investigation of shallow oil recovery. Receive IPPC permit in full. Extend INA gas sales agreement. Develop other opportunities.

13 Corporate

14 GB millions GB millions 14 Financials six mths to twelve mths to six mths to twelve mths to six mths to 30-Jun Dec Jun Dec Jun-15 unaudited audited unaudited audited unaudited 000s 000s 000s 000s 000s Balance sheet Exploration assets 40,024 37,541 35,214 32,711 31,455 Property, plant & equipment Trade and other receivables Bank and cash 2,708 3, TOTAL ASSETS 43,292 40,730 36,101 32,807 31,838 Trade and other payables (292) (254) (297) (508) (535) Borrowings (2,392) (6,162) (9,424) (11,239) (9,691) Other current liabilities (2,779) Provisions (460) (447) (434) (386) (370) TOTAL LIABILITIES (3,144) (6,863) (10,155) (12,133) (13,375) TOTAL EQUITY 40,148 33,867 25,946 20,674 18,463 Income statement Revenue Cost of sales (154) Gross profit Administrative expenses (921) (1,382) (675) (1,888) (1,011) Operating loss (921) (1,382) (676) (1,888) (1,011) Net Finance costs (298) (1,294) (668) (1,756) (1,673) Loss (1,219) (2,676) (1,344) (3,644) (2,684) Revenue generating Net Cash (Virtually) Debt free Cost control Net cash (2.0) (4.0) (6.0) (8.0) (10.0) (12.0) 30-Jun Dec Jun Dec Jun-17 Net cash (9.5) (11.2) (8.6) (3.0) Assets Jun Dec Jun Dec Jun-17 Exploration assets Net asset value

15 15 Shares & shareholders 2.50 Share price (p) & market cap ( m) Market Cap 28m Share price (PENCE) Volume (M) / Value 000s traded monthly Daily volume 20m 12 month high 2.75p 12 month low 1.00p Shares in issue 2,269m Mkt Cap Average price Retail owned company Heavily traded share Broker target 3p+

16 16 Funding Cash in the bank of over 1.0 million at year end. Cashflow from existing wells will fund near term work programme (pre-frac tests etc). Future infrastructure will be funded by debt or vendor finance. Potential future equity requirement for first well re-entry depends on cash generated & timing.

17 Asset

18 18 Petišovci Joint Venture 50% 50% 100% 100% Service provider to the Joint Venture. Owns infrastructure and drilling equipment. Concession holder. 25% 75% Operator Petišovci Joint Venture

19 19 Asset Pannonian basin. Production of oil & gas from shallower zones since 1940s these are pressure depleted but there remains oil in place. Ascent and partners main focus has been the deep gas reservoirs. Two wells drilled in 2011 proved commercial production was viable. P50 reserves 88 Bcf plus best estimate recoverable resources 76 Bcf to Ascent. Valued by the Company at c 200m.

20 20 Structure Recomplete upwards as reservoirs deplete, getting multiple uses from each well structure.

21 BCF recoverable to Ascent 21 Reserves & resources 60% 50% 40% 30% 20% 10% 0% Ascent (P50) reserves and resources 53% 31% 28% 23% 11% 10% 4% Pg-10 Pg-11A 11% 8% 5% 3% 2% 4% 3% 5% A1 B3 C D1 D2 E1 E4 F K L M N O P Q Reservoir Recoverable net to AST % Reserves Resources Reserves Resources A % B % C 18 23% D1 3 4% D2 9 11% E % E4 9 10% F 3 3% K 4 5% L 2 2% M 4 4% N 7 8% O 8 11% P 3 3% Q 4 5% % 100% Reserves Resources NPV10 of resources 92m Ascent (P50) reserves & resources - BCF NPV10 of proved reserves 107m Pg-10 currently completed on the F Sand which accounts for 3% of the P50 resources in the field. Pg-11A currently completed on the L,M & N Sands which accounts for 14% of the P50 resources in the field. Reserves They represent a small proportion of the potential in the field. Resources

22 Permits

23 23 Permitting process Criteria for environmental permit Preliminary screening required for drilling, fracturing, constructing mining facilities and infrastructure. Or where production will exceed 280,000 m 3 /d of gas. EIA required fracturing with more than 7,500 m 3 of water or where production will exceed 500,000 m 3 /d. Preliminary screening Company prepares a project document which describes intended activities and evaluates all potential emissions to the environment (air, soil, underground waters, noise). This document should contain expert studies. Document reviewed by Environment Agency (ARSO) if they decide there is a significant risk to the environment then EIA is required. If no significant risk permit can be awarded. Preliminary screening decision can be appealed to Environment Minister and the Court. Environmental impact assessment A more detailed project document is required. Project is subject to Public Consultation at which locals and environmental NGOs have the right to make objections. First appeal is reviewed by ARSO. Second appeal is reviewed by the Environment Minister. Final appeal is to the court.

24 24 Permitting process No Commence project Environmental Permit required? No Permit awarded subject to appeal Yes Prepare Preliminary Screening ARSO determine if significant risk Ascent s experience on timing: - ARSO decision: 3 to 6 months - Minister s decision: around 3 months - Court decision: around 6 months Yes Carry out EIA & Public consultation

25 25 IPPC History June 2014 December 2014 July 2015 November 2015 May 2016 November 2016 March 2017 November 2017 March 2018 IPPC Application submitted. ARSO approve application and start public consultation. ARSO award permit after public consultation appeal made. Environment Minister confirms ARSO decision appeal to court made. Court rules that application should have been under new (preliminary screening & EIA) procedures introduced in July ARSO approves Preliminary Screening document Environment Minister confirms ARSO decision appeal to court made. Court approves ARSO s decision to apply Preliminary Screening. ARSO outline amendments to the original project document to comply with changes to legislation since the document was submitted (baseline report).

26 Field development plan

27 EURO millions EURO millions Well activity Wells producing Average daily production (MMscfd) 27 Five year field development plan CAPEX & Revenue ( m) Wells producing & daily production CAPEX ( m) Revenue ( m) Wells producing Average daily rate (MMscfd) CAPEX & Workovers Five year plan CAPEX ( m) Revenue ( m) Wells producing Average daily rate (MMscfd) Annual production (BCF) Workovers & new wells CAPEX ( m)

28 28 Field development plan Year Drilling & workovers Permitting Facilities 2018 Perforate and pre-stimulation test production on Pg-6 & Pg-9. Potential re-entry of Pg-10 or Pg-11A if required. Receive the final IPPC Permit. Submit application for wells Pg-7 and Pg-9. CPP procurement and engineering Re-enter Pg-7 and Pg-9. Potential re-entry of Pg-10 or Pg-11A if required. Drill conventional extended reach well from Pg-8 Submit application for wells Pg-6 and Pg-8. EIA for new wells in 2022 & PS for upgrading the CPP CPP construction and commissioning Re-enter Pg-6 and Pg-8. Submit application for Pg-1, Pg-5 and D Re-enter Pg-1, Pg-5 and D-14. Expand the processing capacity of the new CPP Drill two new in-fill wells.

29 29 Well locations Existing well locations to be re-completed during the five year field development plan. All wells are already connected to the CPP via intra-field pipelines. All wells drilled to 2,000+ metres.

30 30 Pg-7 Date drilled 1988 Total depth Historic production (cubic metres) 2,993 metres 15,591,000 Workover starts 2019 Sands targeted Perforations N,M,K,F 2 intervals from 2,705m to 2,790 Application ready to submit. Will be deepened to target lower sands. Forecast flow rates of around 2 MMscfd

31 31 Pg-9 Date drilled 1989 Total depth 3,011 metres Historic production (cubic metres) 204,000 Workover starts 2019 Sands targeted E4, E3 & E2 Perforations 7 intervals from 2,735m to 2,975m Application to stimulate ready to submit. Forecast flow rates of around 3-4 MMscfd. Intend to carry out a pre-stimulation test during 2018 and sell gas produced to INA

32 32 Pg-6 Date drilled 1981 Total depth Historic production (cubic metres) 3,200 metres 8,815,000 Workover starts 2020 Sands targeted Perforations E4, E3 & E2 4 intervals from 2,866m to 3,149m Application will be prepared during the year and submitted once Pg-7 & Pg-9 have been approved. Forecast flow rates of around 5 MMscfd. Intend to carry out a pre-stimulation test during 2018 and sell gas produced to INA

33 33 Pg-8 Date drilled 1989 Total depth Historic production (cubic metres) 3,014 metres 5,639,000 Workover starts 2020 Sands targeted Perforations E4, E3 & E2 2 intervals from 2,807m to 2,978m Application will be prepared during the year and submitted once Pg-7 & Pg-9 have been approved. Forecast flow rates of around 3 MMscfd. Investigating the possibility of an extended reach well which would require less permitting.

34 Rate (bpd) Wellcount / Watercut % 34 Shallow oil Around 6 million barrels produced since 1940s from 110 wells. Principally produced by depletion. No field wide secondary recovery project. Seven wells currently producing small quantities of oil using gas lift. We will initially pilot secondary recovery initiatives using pumps. Future water and / or gas re-injection Year Oil Water Fluid Wellcount Watercut

35 35 Export production Significant technical and operational challenges have been overcome. Export agreement with INA for untreated gas. Initial 12 month agreement, scope to extend term and materially increase volumes. Initial revenues expected at around 300k per month based on around 2.5 MMscfd.

36 36 Gas to grid Construction of our own treatment facility is long-term plan, to sell gas into Slovenian national grid, achieving highest possible price Acquiring IPPC Permit needed to construct our own gas treatment facility has been a lengthy process. Administrative court dismissed final appeal in November 2017, ruling in favour of Ascent and partners. Permit expected from Environment Agency in 2018 amendments requested in February Debt & cash flow expected to fund new plant.

37 GBP millions GBP millions MMscfd wells producing 37 Petišovci economics 60.0 Revenue 35.0 Production Revenue Average wells producing Average daily MMscfd Free cash flow - after CAPEX Summary 50.0 NPV Millions Gross cash flow Revenue 18 years to Millions Preferential recovery 44 Millions CAPEX Millions Other costs - 81 Millions Tax - 85 Millions Net Cash 500 Millions Total Production 4, % MMm3 BCF Recovery Cash Total wells 15 Current 2 Old wells deepened 7 New wells drilled 6 Source: internal management estimates.

38 38 Growth strategy Within Petišovci Increase production from high value gas asset to 35 MMscfd over five year period. Investigate shallow oil reservoirs. Within Slovenia Target other concession areas seismic acquired in the past during a previous joint venture. Within the region Actively reviewing three value-enhancing transactions.

39 39 Summary Producing from our high value gas asset. NPV10 of project is a significant multiple of current market cap. Profitable and cash generative. Virtually debt free. Potential to increase production through well recompletions. Supportive retail shareholder base. Share price significantly below analyst s and company target.

40 Thank you