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TRANSCRIPT
Investor Presentation
Clive Carver, Chairman
Colin Hutchinson, Chief Executive Officer
Nigel Moore & Cameron Davies, Non-Executive Directors
7 March 2018
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2
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.
3
Organisation
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 1994.• 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.
5
Ascent organisational chart
6
Board of Directors
CEO
PLC Office Manager
Slovenia Country Manager
Financial Controller
Office Manager
Technical Manager
Petroleum Engineer
Operations Co-ordinator
Expert Technical Advisers
Technical advisers
7
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 2013- Designed new CPP and INA
infrastructure.- Advising on future facilities.
Project
Slovenia
EU Member Since 2004
Schengen Member Since 2007
Currency Euro
Capital Ljubljana
Government Parliamentary representative democratic republic. Last elections were 2014; next should be 2018.
Population 2 million
Language Slovenian
Religion 58% Catholic
GDP Composition as of 2016
Services 65%, Industry 33%, Agriculture 2%
Annual gas consumption as of 2016
761m cubic metres / 27 Bcf (99.9% imported)
9
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.
10
Production to date
▪ 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 forinstallation of the filter separator.
11
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18
Production rates - MMscfd
MMscfd
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.
12
Corporate
Financials
▪ Revenue generating
▪ Net Cash
▪ (Virtually) Debt free
▪ Cost control
14
six mths to twelve mths to six mths to twelve mths to six mths to
30-Jun-17 31-Dec-16 30-Jun-16 31-Dec-15 30-Jun-15unaudited 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 4 4 4 3 2
Trade and other receivables 556 32 23 61 142
Bank and cash 2,708 3,153 860 32 239
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 l iabilities 0 0 0 0 (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 154 0 0 0 0
Cost of sales (154) 0 0 0 0
Gross profit 0 0 0 0 0
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)
30-Jun-15 31-Dec-15 30-Jun-16 31-Dec-16 30-Jun-17
Net cash (9.5) (11.2) (8.6) (3.0) 0.3
(12.0)
(10.0)
(8.0)
(6.0)
(4.0)
(2.0)
0.0
2.0
GB
£ m
illi
on
s
Net cash
31 3335
3840
1821
26
34
40
0
5
10
15
20
25
30
35
40
45
30-Jun-15 31-Dec-15 30-Jun-16 31-Dec-16 30-Jun-17
GB
£ m
illi
on
s
Assets
Exploration assets Net asset value
Shares & shareholders
▪ Retail owned company
▪ Heavily traded share
▪ Broker target – 3p+
15
Market Cap £28m
Daily volume 20m
12 month high 2.75p
12 month low 1.00p
Shares in issue 2,269m0.0
10.0
20.0
30.0
40.0
50.0
60.0
0.00
0.50
1.00
1.50
2.00
2.50
Vo
lum
e (M
) /
Va
lue
£ 0
00
s tr
ad
ed m
on
thly
Sha
re p
rice
(PEN
CE)
Share price (p) & market cap (£m).
Mkt Cap Average price
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.
16
Asset
Petišovci Joint Venture
Petišovci Joint
Venture
Service provider to the Joint Venture.Owns infrastructure and drilling equipment.
Concession holder. Operator
18
100% 100%50% 50%
25% 75%
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.
19
Structure
20
▪ Recomplete upwards as reservoirs deplete, getting multiple uses from each well structure.
Reserves & resources
21
Reserves Resources Reserves Resources
A1 27 31%
B3 40 53%
C 18 23%
D1 3 4%
D2 9 11%
E1 25 28%
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%
88 76 100% 100%
%Recoverable net to AST
31%
4%
11%
28%
10%
3% 2%4%
8%
53%
23%
5%
11%
3%5%
0%
10%
20%
30%
40%
50%
60%
A1 B3 C D1 D2 E1 E4 F K L M N O P Q
BC
F re
cove
rab
le t
o A
scen
t
Reservoir
Ascent (P50) reserves and resources
Reserves Resources
8876
Ascent (P50) reserves & resources - BCF
Reserves
Resources
Pg-10 Pg-11A
• Pg-10 currently completed on the F Sand whichaccounts for 3% of the P50 resources in the field.
• Pg-11A currently completed on the L,M & N Sandswhich accounts for 14% of the P50 resources in thefield.
They represent a small proportion of the potential inthe field.
NPV10 of
resources
£92m
NPV10 of
proved
reserves
£107m
Permits
Permitting process
Criteria for environmental permit
• Preliminary screening required for drilling, fracturing, constructing mining facilities and infrastructure. Orwhere production will exceed 280,000 m3/d of gas.
• EIA required fracturing with more than 7,500 m3 of water or where production will exceed 500,000 m3/d.
Preliminary screening
• Company prepares a project document which describes intended activities and evaluates all potentialemissions to the environment (air, soil, underground waters, noise). This document should contain expertstudies.
• Document reviewed by Environment Agency (ARSO) if they decide there is a significant risk to theenvironment 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 makeobjections.
• First appeal is reviewed by ARSO.
• Second appeal is reviewed by the Environment Minister.
• Final appeal is to the court.
23
Permitting process
24
Environmental Permit required?
Commence project
Prepare Preliminary Screening
No
Yes ARSO determine if significant risk
No
Permit awarded subject to appeal
Yes Carry out EIA & Public
consultation
Ascent’s experience on timing:- ARSO decision: 3 to 6 months- Minister’s decision: around 3 months- Court decision: around 6 months
IPPC History
25
June 2014 IPPC Application submitted.
December 2014 ARSO approve application and start public consultation.
July 2015 ARSO award permit after public consultation – appeal made.
November 2015 Environment Minister confirms ARSO decision – appeal to court made.
May 2016 Court rules that application should have been under new (preliminary screening & EIA) procedures introduced in July 2014.
November 2016 ARSO approves Preliminary Screening document
March 2017 Environment Minister confirms ARSO decision – appeal to court made.
November 2017 Court approves ARSO’s decision to apply Preliminary Screening.
March 2018 ARSO outline amendments to the original project document to comply with changes to legislation since the document was submitted (baseline report).
Field development plan
Five year field development plan
27
0.0
7.5
17.5
23.7
11.6
3.8
12.3
33.3
57.4
73.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2018 2019 2020 2021 2022
EUR
O m
illio
ns
CAPEX & Revenue (€m)
CAPEX (€m) Revenue (€m)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
0
2
4
6
8
10
12
14
2018 2019 2020 2021 2022
Ave
rage
dai
ly p
rod
uct
ion
(M
Msc
fd)
Wel
ls p
rod
uci
ng
Wells producing & daily production
Wells producing Average daily rate (MMscfd)
0
3 3 3
2
0
1
2
3
4
0.0
5.0
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25.0
2018 2019 2020 2021 2022
Wel
l act
ivit
y
EUR
O m
illio
ns
CAPEX & Workovers
Workovers & new wells CAPEX (€m)
Five year plan 2018 2019 2020 2021 2022
CAPEX (€m) 0.0 7.5 17.5 23.7 11.6
Revenue (€m) 3.8 12.3 33.3 57.4 73.0
Wells producing 2 4 6 9 12
Average daily rate (MMscfd) 2.4 6.6 15.3 26.0 32.6
Annual production (BCF) 0.9 2.4 5.6 9.5 11.9
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.
2019 • 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.
2020 • Re-enter Pg-6 and Pg-8. • Submit application for Pg-1, Pg-5 and D-14
2021 • Re-enter Pg-1, Pg-5 and D-14. • Expand the processing capacity of the new CPP.
2022 • Drill two new in-fill wells.
28
Well locations
29
▪ 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.
Pg-7
Date drilled 1988
Total depth 2,993 metres
Historic production
(cubic metres)
15,591,000
Workover starts 2019
Sands targeted N,M,K,F
Perforations 2 intervals from 2,705m to
2,790
30
▪ Application ready to submit.
▪ Will be deepened to target lower sands.
▪ Forecast flow rates of around 2 MMscfd
Pg-9
31
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
Pg-6
Date drilled 1981
Total depth 3,200 metres
Historic production
(cubic metres)
8,815,000
Workover starts 2020
Sands targeted E4, E3 & E2
Perforations 4 intervals from 2,866m to
3,149m
32
▪ 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
Pg-8
Date drilled 1989
Total depth 3,014 metres
Historic production
(cubic metres)
5,639,000
Workover starts 2020
Sands targeted E4, E3 & E2
Perforations 2 intervals from 2,807m to
2,978m
33
▪ 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.
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.
34
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1940 1950 1960 1970 1980 1990 2000 2010
Year
Rate
(b
pd
)
0
10
20
30
40
50
60
70
80
90
100
Well
co
un
t / W
ate
rcu
t %
Oil Water Fluid Wellcount Watercut
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 around2.5 MMscfd.
35
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 2018.
▪ Debt & cash flow expected to fund new plant.
36
Petišovci economics
Source: internal management estimates.
37
Summary
NPV10 219 € £199 Millions
Gross cash flow
Revenue £730 Millions
Preferential recovery £44 Millions
CAPEX -£108 Millions
Other costs -£81 Millions
Tax -£85 Millions
Net Cash £500 Millions
Total Production 4,939 174 38%
MMm3 BCF Recovery
Total wells 15
Current 2
Old wells deepened 7
New wells drilled 6
18 years to 2035
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
GB
P£
mill
ion
s
Revenue
Revenue
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
wel
ls p
rod
uci
ng
MM
scfd
Production
Average wells producing Average daily MMscfd
0.0
5.0
10.0
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50.0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
GB
P£
mill
ion
s
Free cash flow - after CAPEX
Cash
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.
38
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.
39
Thank you