Annual Report and
Financial Statements
2022
Company Number: 05239285
Ascent Resources plc
(“Ascent” or the “Company”)
Ascent Resources Plc is a London Stock Exchange AIM listed energy and natural resources operating
company focused on onshore gas production and ESG metals across Hispanic Americas and Europe.
Contents
Chairman’s Statement ......................................................................................................................................... 2
Chief Executive Officer’s Statement .................................................................................................................... 3
Strategic Report ................................................................................................................................................... 8
Summary of Group Net Oil and Gas Reserves ................................................................................................... 19
Directors’ Report ............................................................................................................................................... 20
Board of Directors ............................................................................................................................................. 24
Directors and Advisers ....................................................................................................................................... 25
Corporate Governance Report .......................................................................................................................... 26
Audit Committee Report ................................................................................................................................... 31
Remuneration Committee Report ..................................................................................................................... 32
Statement of Directors Responsibilities ............................................................................................................ 34
Independent Auditor’s Report .......................................................................................................................... 35
Consolidated Statement of Comprehensive Income ........................................................................................ 41
Consolidated Statement of Financial Position .................................................................................................. 42
Company Statement of Financial Position ........................................................................................................ 43
Consolidated Statement of Changes in Equity .................................................................................................. 44
Company Statement of Changes in Equity ........................................................................................................ 45
Consolidated Cash Flow Statement ................................................................................................................... 46
Company Cash Flow Statement ......................................................................................................................... 47
Notes to the Accounts ....................................................................................................................................... 48
Ascent Resources plc Annual Report and Financial Statements 2022 I 1
Chairman’s Statement
Ascent Resources plc has been focused in recent years on defending its investment interests following the
Republic of Slovenia’s ban on stimulation, effectively expropriating the Company’s flagship oil and gas assets.
Having secured a binding damages-based agreement, successfully registered the claim and very recently
constituted the Tribunal, the arbitration process is now firmly in play. This includes, as announced in August
2022, making a formal submission of the request for arbitration against the Republic of Slovenia, which
included an updated preliminary damages assessment in excess of €500 million (it should be cautioned that
in the event the Company is successful in its claim any amount actually received by the Company may be
significantly lower). It also includes the Tribunal being constituted.
Whilst these arbitration proceedings alone, we believe, already make Ascent Resources plc a unique and
compelling proposition for shareholders, the Company has also been preparing for its maiden ESG Metals/
tailings transaction. Despite recent political turmoil in Peru, the company’s near-term focus remains on Latin
America with its deep-rooted mining legacy and attractively priced opportunity set. Once delivered, the
Company’s maiden transaction is expected to provide balance to the portfolio, dovetailing in assets that can
exhibit sustainable and low risk cash flow generation with the binary outcome of our potentially highly
material claim. Our recent intended bid for Amur Minerals Corporation is one component of a carefully
planned funding strategy for this maiden transaction, which seeks to minimises equity dilution.
Gas production at the Petisovci project in Slovenia has continued with the PG-10 and PG-11A wells producing
a total of 1,164,500 scm of gas during 2022. Despite significant partner complexity in country, the Company
received a net payment of €651k in 2022 as payment for hydrocarbon revenues related to the 2020 and 2021
production years. For the 2022 production, a further €1.3million net revenue remains outstanding at year end
and due to the uncertainty of settlement has not been recognised in the 2022 financial statements (Note 1 –
Revenue recognition). Accordingly in December 2022 ASL initiated arbitration proceedings to ensure its
partners compliance with its obligations to pay owed amounts from the PG-10 and PG-11A wells in addition
to ASL’s claim to receive, whilst it is in a preferential cost recovery mode (i.e. until it has earnt back its
investment) its share of production above the baseline production profile for the other wells on the concession
area. In April 2023, after the period in review the arbitration tribunal has been constituted. The parties have
agreed ASL’s recognition of PG-10 and PG-11A hydrocarbons for January 2022 through to February 2023 which
is a total payment of €1.4m (net of VAT). The arbitration proceedings in relation to ASL’s claim for revenue
from the other wells took place in mid-June 2023 and the Company awaits the tribunal decision shortly.
We thank our shareholders for their patience and ongoing support as we continue to navigate the Company
away from its legacy Slovenian business and towards the exciting opportunities that we see elsewhere in ESG
mining/tailings whilst continuing to pursue our arbitration claim. We look forward to updating shareholders
on our progress in what we believe will be a very exciting and rewarding year for Ascent shareholders.
Ascent Resources plc Annual Report and Financial Statements 2022 I 2
Chief Executive Officer’s Statement
Legacy Slovenian Investment & ECT Damages Claim
2022 has been a year of significant change directly impacting the Company’s flagship project in Slovenia, with
the Government of Slovenia, in April 2022, voting to implement changes to the country’s mining laws which,
specific to the Company, included a ban on the production of hydrocarbons with the use of any form of
stimulation which then came quickly into effect in May. Given that the future development plans of the
Petisovci field have always included the use of low volume hydraulic stimulation (in conformity with the EU
definition on stimulation levels), which has been conducted some thirty or more times on the field during the
last fifty years, the ban has now destroyed the full economic value of Ascent’s investment in Slovenia given
that the Company will now no longer be able to execute the field development plan to be able to produce the
400+bcf discovered gas in place in the tight rock reservoirs. As such, the Company undertook a review of the
Petisovci field at the end of the year and recognising that the economic value had been substantially
destroyed, took the decision to recognise a 100% write down of the historical PPE and capitalised exploration
costs totalling £39.7m.
The Company responded quickly to these law changes and served the Republic of Slovenia (“Slovenia” or “the
State”) with a new notice of dispute of further breaches under the UK-Slovenia bilateral investment treaty
(“BIT”) and the Energy Charter Treaty (‘ECT’) on 5 May 2022. The Company then entered into a binding
damages agreement, appointing Enyo Law LLP to represent it in its dispute with the State, as announced on
30 May 2022. Enyo Law LLP is a specialist arbitration and litigation legal firm who filed both of the Notices of
Disputes on behalf of the Company and who represented the Company in 2021’s pre-arbitration negotiations
with the Republic of Slovenia. On 15 August 2022, the Company formally initiated arbitration proceedings
against the Republic of Slovenia with a revised monetary damages claim in excess of €500 million, which was
accepted and successfully registered by the International Centre for Settlement of Investment Disputes
(“ICSID”) on 1 September 2022. It should be cautioned that in the event the Company is successful in its claim
any amount actually received by the Company may be significantly lower.
The Company appointed Mr Klaus Reichert (German/Irish) as its arbitrator in November 2022. Mr Reichert is
a very experienced arbitrator having participated in over 250 disputes. In December 2022, Slovenia appointed
Ms Brigitte Stern, a French professor and experienced arbitrator. Post period end Dr Raed Fathallah (Canadian,
French, Lebanese) was appointed as president arbitrator and accordingly on 7 March 2023 the Tribunal was
constituted in accordance with Article 37(2)(a) of the ICSID Convention. Following a procedural first session
in April 2023 the case will continue to progress through the structured arbitration process. It should be
cautioned that in the event the Company is successful in its claim any amount actually received by the
Company may be significantly lower.
The claim results from what the Board believe to be a populist campaign carried out by Slovenia against the
Company and its investment, which has prevented the development of the Petišovci oil and gas field. In
particular, Slovenia has prevented the restimulation of two wells (PG-10 and PG-11A) in 2017, which was
necessary to maintain the levels of gas produced from the tight rock reservoir (as has been done multiple
times over the last fifty years). This frustration of the ability to develop the field was initiated via a decision of
the State’s regulator, the Slovenian Environment Agency (“ARSO”), which determined that an Environmental
Impact Assessment (“EIA”) would be required to be approved in order to conduct the low-volume hydraulic
stimulation, even though such an EIA was not required and never had been previously under Slovenian law,
and ARSO's conclusion was contrary to the conclusion of Slovenia's own expert bodies. This decision
significantly slowed down the development of the field by the Company. Pending such low-volume hydraulic
Ascent Resources plc Annual Report and Financial Statements 2022 I 3
stimulation, the amount of gas produced by the field was very significantly reduced, resulting in a significant
loss of the Company’s revenues.
At the same time, the Minister of the Environment and Spatial Planning of Slovenia repeatedly made public
statements portraying Ascent, as well as the Petišovci project, in a negative light, and the Company believes
that leaks were made by ARSO to the press. This further demonstrates that ARSO was biased against the
Company and that the ARSO's decision was politically motivated. Slovenia's campaign against the investors
culminated in a complete ban on low-volume hydraulic stimulation, which came into effect on 5 May 2022.
The Board believes that statements made during the parliamentary debate on the ban leave no doubt that the
Investors were being specifically targeted by it. This has left Ascent with no choice but to execute on its claim
in relation to Slovenia's measures that have destroyed the value of Ascent's investments in the Slovenian
energy sector, and which have de facto deprived Ascent of its right to produce gas in Slovenia. Ascent's rights
have been unlawfully expropriated by Slovenia, in breach of the country's obligations under international law
and both the ECT and the BIT. The Company has therefore sustained losses for which it is seeking
compensation. The Company remains amenable to discussing settlement with the Republic of Slovenia
following its review of the matter or otherwise pursuing this significant damages claim through to a binding
result for the Company.
Slovenia Operational Update
Throughout the year the wells in the concession area have continued to produce small volumes of gas into the
buoyant gas market with sales continuing to local industrial buyers through the low pressure pipeline. Total
production from the PG-10 and PG-11A wells in 2022 was 1.1 million scm of gas and 37,855 litres of condensate
and the average realised gas price for this production was €125/MWh, resulting in net invoiceable
hydrocarbon revenues of €1.3 million due to ASL from the PG10 and PG11A wells only.
The Company’s subsidiary, Ascent Slovenia Limited (“ASL”), continued to manage the ongoing disputes with
its joint venture (“JV”) partner Geoenergo as well as the JV’s service provider Petrol Geo. (Geoenergo is 50%
owned by Nafta Lendava which is a 100% Slovenian government controlled entity and 50% owned by Petrol
which is a publicly listed 30% Slovenia State controlled company, Petrol Geo is a connected party by virtue of
being a 100% subsidiary of Petrol). Whilst these disputes resulted in a continuing commercial stalemate
throughout the period under review, ASL made some progress when in August 2022 it was able to agree
recognition of payment for the outstanding hydrocarbon sales proceeds from the PG-10 and PG-11A wells for
the period April 2020 through to December 2021 which was a total gross sum of €832k. As part of the
agreements with Geoenergo for Ascent to receive these proceeds, ASL also agreed to recognise costs of €181k
which Geoenergo claims to have paid in relation to the concession extension, as a result the Company received
a net payment of €651k in August 2022. ASL was also successful in agreeing its share of the PG-10 and PG-11A
revenues for the first half of 2022 amounting to €857k, however despite Geoenergo’s prior confirmation that
they would make this outstanding and owed payment in August as well, at the financial year end this amount
was still outstanding as is the amount for the invoices raised and sent through the second half of 2022.
The revenue recognition dispute has been through a mediation process in September 2022, following which
in December 2022 the Company raised some new equity proceeds to lodge its arbitration claim against
Geoenergo in pursuit of a binding and enforceable resolution to this matter as well as resolution over ASL and
Geoenergo’s different interpretations of the joint venture contract relating to ASL’s entitlement to
hydrocarbons produced above a contractual base line performance profile whilst ASL is in a preferential cost
recovery mode (i.e. until it has earnt its investment back). The arbitration is in process and has a long stop
date, according to the Ljubljana Arbitration Centre rules, of 26 October 2023 to reach a binding result. The
Company expects to make meaningful progress on this claim in the summer months of 2023, with the
Company and its in country legal advisors remaining confident in the merits of ASL’s claims which seek
Ascent Resources plc Annual Report and Financial Statements 2022 I 4
payment for in excess of €3 million from Geoenergo over the last three years. The tribunal hearing to decide
on entitlement happened in June 2023 and the decision is expected to be rendered shortly. Separately, Petrol
Geo had a claim against the joint venture over monthly fixed fee service invoices which the joint venture has
rejected since April 2020 until February 2023 based on a significant change in circumstances. At the financial
year end, Petrol Geo were claiming a total sum of approximately €1.7 million is owed by the joint venture in
rejected monthly invoices. Post period under review, the JV and Petrol Geo entered into a dispute mediation
process, which in April 2023 resulted in a mutually agreed resolution to this matter. Petrol Geo's claims against
invoices claimed since 2019 through to February 2023,
the JV over disputed and rejected
totalling €2,083,491 (plus claimed interests and costs), were agreed to be settled for €1,436,000, representing
a discount of approximately 30% to the face value. For the year under review €501,000 (net) of this settlement
amount has been recognised against the 2020 and 2021 revenue noted above. Furthermore, the JV
successfully renegotiated a reduction in Petrol Geo’s fixed fee until the concession expiration in November
2023 to the higher of i) €20,000 per month, being a 55% discount to the prior fee level; or ii) 35% of ASL's
share of the hydrocarbons produced from the PG-10 and PG-11A wells. The previous fee was a
fixed €44,000 per month, which was unstainable when the gas prices were lower and as production levels
continue to naturally decline.
Post the year end, Slovenia has approved new amendments to its mining concession legislation which
proposes to give automatic 30 months extensions to those concessions which are due to expire in 2023 and
2024. Accordingly, the concession was previously due to expire on 28 November 2023 and is now expected,
upon submission by Geoenergo of the relevant information, to be extended to 28 May 2026.
New Environment, Social & Governance (‘ESG’) Metals Strategy
The Company remains very focused on executing on its new ESG Metals growth strategy and confirmed this
during the year announcing that whilst the Company continues to evaluate a number of ESG Metal
transactions across Latin and Hispanic America, it has identified Peru as a primary target geography. Peru is
widely recognised as one of the largest and most diversified mineral producers with some of the most
extensive reserves in the world with mining the most important sector in the Peruvian economy (some 10%
of national GDP). Peru is currently the world's second largest Copper, Silver and Zinc producer and Latin
America's largest Gold, Zinc, Tin and Lead producer. Peru's Long-Term Credit Rating is rated as BBB by most
agencies, which is amongst the strongest in the region. The country also benefits from a long history of mining,
a robust mining legal framework and a significant pool of local expertise. Similarly, a lot of these traits are
shared by neighbouring Chile, which is the world’s largest Copper producer and has a long history or mining
and mineral processing giving rise to large accumulations of surface stockpiled materials consistent with the
Company’s ESG Metals strategy.
The Company sees significant opportunity for attractive entry points in mining following the global pandemic
which has triggered international capital flight and significant capital constraints for small-scale miners. The
Company therefore initially expects to focus its attention on small-scale operations (up to 350 tpd), which the
Company considers affordable, of an efficient operational and commercial scale and which have multiple local
operating and permitting benefits. The Company is actively developing a number of potential transactions in
the gold tailing re-processing and artisanal gold ore processing theme, however given the political disruption
in Peru towards the end of 2022 and beginning of 2023, the Company expects its first transaction in ESG Metals
may be in a neighbouring territory, with the expectation that a new country entry to Peru focused on precious
metals would still materialise in the Company’s near future.
Ascent Resources plc Annual Report and Financial Statements 2022 I 5
Corporate & Funding
The Board have continued to manage costs and relationships with JV parties while its legacy disputes continue
to be resolved, managing various historical outstanding balances and raising additional funds to enable the
pursuit of the Company’s damages claim against Slovenia, its Slovenian JV partner and for the new ESG Metals
initiatives. The Company successfully funded its significant monetary damages claim against Slovenia through
the damages-based agreement to appoint Enyo Law LLP to represent it. Consequently the Company remains
positioned as a clean vehicle with a strong Board, access to capital, a funded significant damages claim and a
clear growth trajectory.
In January 2022, in support of the Company focusing its ESG Metal strategy on Latin America, the Company
successfully raised new gross equity proceeds of £0.6 million to fund working capital requirements and wider
business development activity at a price of 3.3 pence per new share, which represented a nil discount to the
closing bid price on the prior day. The subscribers received one new equity warrant per new share subscribed
for, with the warrant being exercisable at 5p per warrant share at any time in the next two years. In April 2022,
the Company agreed with the holders of the remaining 4p equity warrants that were issued on 6 August 2020
to an immediate warrant exercise whereby all 4p warrants were exercised, realising new equity proceeds of
£242,500 for the Company. In exchange for this accelerated warrant exercise, the Company awarded one and
half new warrants for each warrant exercised, with each new warrant being exercisable at 5p per new warrant
at any time over the next three years. In December the Company successfully raised new equity proceeds of
£0.6 million by way of issue of 15 million new shares at 4p, being the closing bid price on the night before.
Each placing share was issued with a warrant at 5p.
Alongside the December 2022 placing, the Company agreed with its only lender, RiverFort, to restructure its
debts and to repay £50,000 of the total outstanding payment obligations of £561,620, with £25,000 in cash
plus £25,000 which will be satisfied with the issue of 625,000 new shares. The remaining balance of £511,620
was re-profiled such that it will incur a coupon of 8 per cent and now be redeemable in six equal cash
instalments of £92,091.60 as of 14 September 2023 and monthly thereafter with final payment on 14 February
2024.
Additionally, the Company was successful in recognising some revenue in the 2022 financial year with receipt
of a net payment (after certain concession related costs) of €651k in August 2022. Post the year end the
Company also recognised €1,724,689 of revenue for January 2022 through to February 2023, against which it
also agreed to acknowledge and pay the discounted amount of €1,436,000 to Petrol Geo in full and final
payment of all amounts claimed to be owed and outstanding since 2019 to February 2023. Post the year end
the Company therefore received net cash payment of €288,689 as a result of a successful mediation process
involving the negotiation of a discount to historic and future fixed processing costs being charged by Petrol
Geo.
In February 2022, Mr Ewen Ainsworth stepped down from his position as Non-Executive Director following his
acceptance of a full-time executive position elsewhere. In December 2022 the Company appointed Mr Marco
Fumagalli to the Board. Marco is a Founding Partner at Continental Investment Partners SA, a Swiss-based
investment fund. Marco is a well-known Italian businessman and industrial investor who was previously a
group partner at 3i. He is a qualified accountant and holds a degree in business administration from Bocconi
University in Milan and has many years' experience as an AIM company director. Subsequently, Marco
became Chairman of the Audit Committee.
Post the year end, the Company has raised £400k through a placing of new shares at 3p (being the spot price
on the day before announcement) with a one for one warrant attached that is exercisable at 5p per new
warrant share. Additionally the Company is pursuing a claim to recognise its share of the hydrocarbons
Ascent Resources plc Annual Report and Financial Statements 2022 I 6
produced in the concession area above the baseline production profile and if successful expects to be able to
recognise further revenues of circa €3+ million over the last three years.
Summary
The Company has gained traction with its Slovenian operational disputes and recognition of revenue for the
first time in several years, alongside positioning its shareholders with exposure to a funded significant
monetary damages claim, in excess of €500 million, against the Republic of Slovenia under the Energy Charter
Treaty (it should be cautioned that in the event the Company is successful in its claim any amount actually
received by the Company may be significantly lower) and is well placed to complete on its continuing ESG
Metals business development activity during the 2023 financial year.
Andrew Dennan
Chief Executive Officer
James Parsons
Executive Chairman
28 June 2023
Ascent Resources plc Annual Report and Financial Statements 2022 I 7
Strategic Report
Strategic Report
Section 414C of the Companies Act 2006 (“the Act”) requires that the Company inform its members as to how the
Directors have performed their duty to promote the success of the Company by way of a Strategic Report which includes
a fair review of the business, an analysis of the development and performance of the business and analysis of financial
position and key performance indicators.
We have incorporated these requirements into the information set out below.
Company Overview
Ascent Resources plc is a natural resources operating company that was admitted to trading on AIM in November 2004
(AIM: AST). Ascent has been involved in Slovenia for well over 10 years where it operates the Petišovci gas project. To
date, the Company’s operating subsidiary has invested over €50 million in this project. This asset, despite significant legal
and permitting complexity, has significant oil and gas reserves and resources and an established, local production
infrastructure with connections to local and export customers.
During 2017, the Company brought the PG-10 and PG-11A wells, which were drilled (and stimulated) in the Petišovci field
in 2011, into production and started exporting production via high pressure pipeline to INA in Croatia. In 2019 sales of
gas to INA stopped as a result of wellhead pressure falling below the pipeline pressure which was not able to be rectified
as a result of Slovenia’s administrative delays resulting in the permits to re-stimulate the wells not being forthcoming
within the deadlines. Consequently, the wells have continued to produce declining volumes of hydrocarbons which has
not been able to be rectified with further stimulation. In May 2022 the Government of Slovenia enacted changes to the
country’s mining law that prohibit the production of hydrocarbons with the use of any form of stimulation, accordingly
the Company will no longer be able to implement its development plan which has always included the use of low volume
hydraulic stimulation to produce the tight gas reservoir, as has been done over thirty times on the field in the last fifty
years. The wells on the concession area have continued to produce small volumes of unstimulated gas, with such
production being sold to local industrial buyers via the low-pressure domestic pipeline. The Company successfully
received payment for 2020 and 2021 hydrocarbons produced from the PG-10 and PG-11A wells, however as at the
financial year end it had not yet received agreed amounts owed for 2022, however pursuant to an arbitration process
initiated by ASL in December post period in review the Company successfully recognised over €1.7M in revenue for the
PG-10 and PG-11A wells for January 2022 through to February 2023. ASL continues to pursue arbitration against its
partner in relation to ASL and Geoenergo’s different interpretations of the joint venture agreement relating to ASL’s belief
that it is entitled to a percentage of hydrocarbon production above a baseline production profile for the other wells on
the concession area. ASL expects the make material progress on this claim over the summer months and before the
statutory deadline for the arbitration to complete which is October 2023.
Given that the future development plans of the Petisovci field have always included the use of low volume hydraulic
stimulation (in conformity with the EU definition on stimulation levels), which has been conducted over thirty times on
the field during the last fifty years, the May 2022 ban has now destroyed the full economic value of Ascent’s investment
in Slovenia given that the Company will now no longer be able to execute its approved development plan and produce
the 400bcf+ discovered tight gas resource. The Company responded quickly to these law changes and served the Republic
of Slovenia (“Slovenia” or “the State”) with a new notice of dispute of further breaches under the UK-Slovenia bilateral
investment treaty (“BIT”) and the Energy Charter Treaty (“ECT”) on 5 May 2022. The Company then entered into a binding
damages agreement to appoint Enyo Law LLP to represent it in its dispute with the Republic, as announced on 30 May
2022. Enyo Law LLP is a specialist arbitration and litigation legal firm who filed both of the Notice of Disputes on behalf
of the Company and represented the Company in 2021’s pre-arbitration negotiations with the Republic of Slovenia. On
15 August 2022, the Company formally initiated arbitration proceedings against the Republic of Slovenia with revised
monetary damages claim in excess of €500 million, which was accepted and successfully registered by the International
Centre for Settlement of Investment Disputes (“ICSID”) on 1 September.
The Company appointed Mr Klaus Reichert (German/Irish) as its arbitrator in November. Mr Reichert is a very experienced
arbitrator having participated in over 250 disputes. In December, Slovenia appointed Ms Bridgette Stern a French
Ascent Resources plc Annual Report and Financial Statements 2022 I 8
professor and experienced arbitrator. Post period in end Dr Raed Fathallah (Canadian, French, Lebanese) was appointed
as president arbitrator and accordingly on 7 March 2023 the Tribunal was constituted in accordance with Article 37(2)(a)
of the ICSID Convention. Following a preliminary case conference meeting in April 2023 the case will continue to progress
through the structured arbitration process. It should be cautioned that in the event the Company is successful in its claim
any amount actually received by the Company may be significantly lower.
The claim results from what the Board believe to be a populist campaign carried out by Slovenia against the Company
and its investment, which has prevented the development of the Petišovci oil and gas field. In particular, Slovenia has
prevented the restimulation of two wells (PG-10 and PG-11A) in 2017, which was necessary to maintain the levels of gas
produced from the tight rock reservoir (as has been done multiple times over the last fifty years). This frustration of the
ability to develop the field was initiated via the significantly delayed decision of the State’s regulator, the Slovenian
Environment Agency (“ARSO”), which determined that an Environmental Impact Assessment (“EIA”) would be required
to be approved in order to conduct the low-volume hydraulic stimulation, even though such an EIA was not required and
never had been previously under Slovenian law, and ARSO's conclusion was contrary to the conclusion of Slovenia's own
expert bodies. This decision significantly slowed down the development of the field by the Company. Pending such low-
volume hydraulic stimulation, the amount of gas produced by the field was very significantly reduced, resulting in a
significant loss of the Company’s revenues.
At the same time, the Minister of the Environment and Spatial Planning of Slovenia repeatedly made public statements
portraying Ascent, as well as the Petišovci project, in a negative light, and the Company believes that leaks were made
by ARSO to the press. This further demonstrates that ARSO was biased against the Company and that the ARSO's decision
was politically motivated. Slovenia's campaign against the Investors culminated in a complete ban on low-volume
hydraulic stimulation, which came in effect on 5 May 2022. The Board believes that statements made during the
parliamentary debate on the ban leave no doubt that the Investors were being specifically targeted by it. This has left
Ascent with no choice but to execute on its claim in relation to Slovenia's measures that have destroyed the value of
Ascent's investments in the Slovenian energy sector, and which have de facto deprived Ascent of its right to produce gas
in Slovenia. Ascent's rights have been unlawfully expropriated by Slovenia, in breach of the country's obligations under
international law and both the ECT and the BIT. The Company has therefore sustained losses for which it is seeking
compensation. According to preliminary estimates, the losses sustained are in excess of €500 million. It should be
cautioned that in the event the Company is successful in its claim any amount actually received by the Company may be
significantly lower. The Company remains amenable to discussing settlement with the Republic of Slovenia following its
review of the matter or otherwise pursuing this significant damages claim through to a binding result for the Company.
During this reporting period, the Company narrowed down its new growth strategy in ESG Metals to focus on Latin
America, and specifically historical mining jurisdictions with approximately 100 years of industrial mining activity which
includes most notably Peru and Chile. ESG Metals includes secondary mining and recovery opportunities typically
involving the reclassification, through highly efficient recovery techniques, of stockpiled surface mining waste (often
previously viewed as a liability for mining companies) as a valuable asset for reprocessing and commercial sale to industry,
governments and metals traders. The Company sees waste management, remediation and restoration of land impacted
by historic and on-going mining activities as a critical element in the global ESG agenda and integral to the transition to a
low carbon economy. The Company is looking at a number of potential projects in Hispanic America and South Africa as
well as Europe. In particular, the Company believes that there are good opportunities in gold, silver, platinum, battery
metals and ferrochrome, where the economics are especially attractive and the opportunity set has the ability to deliver
lowest cost quartile sustainable metal production from legacy mining tailings, with low geological risk. Such opportunities
have the potential to provide strong cash returns without exploration risk and only require modest upfront capital outlay.
Asset Overview
Slovenia - Petišovci Tight Gas Project
The Petišovci gas project is in an area that has been exploited since 1943. The project targets the significant deeper gas
reserves and resources in the Middle Miocene Badenian or Petišovci-globoki (“Pg”) gas reservoirs.
Using the results of an extensive 3D seismic survey conducted in 2009 by Ascent and its partners, the locations of two
new wells were determined. These wells, Pg-10 and Pg-11A were successfully drilled, completed and stimulated between
Ascent Resources plc Annual Report and Financial Statements 2022 I 9
2010 and 2012. In 2017, following the acquisition of pipeline infrastructure and securing a commercial gas sales
agreement, the JV brought both of these wells into production and started exporting gas from Petišovci to INA in Croatia.
Cumulative gas production from the Pg gas field since 1963, including fuel and flare use and accounting for the gas
equivalent of the historical condensate production, is 12.7 Bcfe (360.1 MMsm3). This is 3% of the currently estimated gas
initially in place (“GIIP”) of 430 Bcfe, (12.2 Bsm3), based on independent third- party estimates.
Further details of the asset and current reserves and resources can be found on page 19.
Ascent manages the Petišovci project on behalf of the Joint Venture between Ascent Slovenia Limited and Geoenergo.
Ascent has a 75% working interest in the project and carries 100% of the costs. Until Ascent has recovered its costs in full
it will receive a preferential recovery share of 90% of the net revenues from hydrocarbons produced above the Baseline
Production in the Concession Area.
Our Strategy
Historically the Company has focussed all of its resources on its Slovenian project, directing available funding towards
bringing Petišovci into production.
The commencement of production during 2017 was a significant milestone, however the development of the project
stalled during 2018 due to the delays and arbitrary decision making involved in the Slovenian environmental permitting
process. The appointment of a new government and the award of the IPPC permit in April 2019 gave some optimism,
which was removed in June 2020 with the Administrative Court of Slovenia upholding the environmental agency ARSO’s
delayed view that an EIA would be required in order to re-stimulate the wells.
During the reporting period, the Republic of Slovenia approved amendments to its Mining Law which prohibit the use of
mechanical stimulation for the purpose of exploring or producing hydrocarbons. Furthermore, the amendments confirm
that it is now no longer possible to get a concession contract approved if it contemplates the use of mechanical
stimulation for the purpose of producing hydrocarbons. Consequently, the Company does now not expect to complete
certain workstreams relating to the permits and applications to re-stimulate the PG-10 and PG-11A wells. The Company
assess that these actions are targeted specifically at the Company as a foreign investor and constitute a loss of the full
investment value of the Company’s Slovenian investment given that it has always expected to be able to continue the
historic practise of conducting low volume mechanical stimulation techniques in order to flow the tight gas reservoir.
This development is a further breach by the Republic of Slovenia of its obligations under the Energy Charter Treaty
and UK-Slovenia Bilateral Investment Treaty. Accordingly, the Company appointed Enyo Law LLP on a damages-based
agreement to represent the Company in a €500+ million Energy Charter Treat damages claim, which was registered with
ICSID on 1 September 2022 and post the period in review the Tribunal has been constituted in March 2023 and first
procedural meeting took place in April 2023. Shareholders are now positioned to see the Company’s investment in
Slovenia monetised/compensated by resolution of the arbitration process or a settlement agreement if achieved sooner.
Following an international special situations strategic review concluded in May 2020, the Company launched an
international growth strategy focused on ESG Metals in Latin and Hispanic Americas to complement its focus on onshore
gas development projects. ESG Metals includes secondary mining and recovery opportunities which the Company sees
as being consistent with Environmental, Social and Governance (“ESG”) principles. Typically, these involve the
reclassification, through highly efficient recovery techniques, of stockpiled surface mining waste (previously viewed as a
liability for mining companies) as a valuable asset for reprocessing and commercial sale to industry, governments and
metals traders and/or getting exposure to mineral processing plants that enfranchise local mining communities.
The Company sees waste management, remediation and restoration of land impacted by historic and ongoing mining
activities as a critical element in the global ESG agenda and integral to the transition to a low carbon economy. The
Company is looking at a number of potential projects in Hispanic America. In particular, the Company believes there are
material opportunities in gold, silver, platinum and battery metals, where the economics are especially attractive and the
opportunity set has the ability of delivering lowest cost quartile sustainable metal production from legacy mining tailings,
with low geological risk. Such opportunities have the potential to provide strong cash returns without exploration risk
and only require modest upfront capital outlay.
This strategy is set to see the Company diversify and evolve into a portfolio of assets. Thematically the Company remains
focused on getting exposure to a hard commodity price deck, migrating away from taking sub-surface and geological risk
Ascent Resources plc Annual Report and Financial Statements 2022 I 10
and focusing its efforts on transactions that can provide the Company with a short term pathway to receiving new, long
term and sustainable income streams, either in the form of profit participation interests or straight off the project’s top-
line in the form of a royalty stream. This strategy is focused on aligning the Company with existing in-country mineral
mining and/or processing operations that can achieve short term inflection points with the receipt of sums of capital that
the Company believe are affordable for its future international expansion purposes.
The Company further updated its ESG Metals strategy to focus initially on Latin America with a specific focus on precious
metals in Peru and which has subsequently been broadened to include battery metals most notably in neighbouring Chile.
Both nations are widely recognised as one of the largest and most diversified mineral producers with some of the most
extensive reserves in the world with mining the most important sectors in their economies. Peru is currently the world's
second largest Copper and Silver producer and Latin America's largest Gold, Zinc, Tin and Lead producer. Chile is the
world’s largest Copper and second largest Lithium producer. Both countries have experienced significant industrial
historic mining and are situated with accumulations of tailings as well as supply of fresh small scale and artisanal mined
ores.
The Company sees significant opportunity for attractive entry points in mining following the COVID-19 pandemic which
has triggered international capital flight and significant capital constraints for small-scale miners in the regions. The
Company therefore initially expects to focus its attention on small-scale operations (up to 350 tpd), which the Company
considers affordable, of an efficient operational scale and which have multiple local tax and permitting benefits.
Our Markets
Dependency on imported gas is very high throughout the EU, particularly in Slovenia. This, and the history of relatively
stable gas prices in Europe, has underpinned our historic strategy of exploration, development and production in this
region. Our wells are connected to existing processing facilities, intra-field and international pipelines, ensuring low-cost
connection and easy access to the market.
The Board recognises the attractiveness of the European region for oil and gas development and many countries outside
of Slovenia have well organised regulatory frameworks and a history of oil and gas development.
The Company has identified Latin and Hispanic America region as highly prospective for oil and gas as well as ESG Metals
deals.
In Latin America, specifically Peru and Chile are both countries with a long history in mining and natural resources. They
are two of Latin America’s most significant producers of precious and base metals and have some of the region’s best
credit ratings. They also benefit from a long history of mining, a robust mining legal framework and a significant pool of
local expertise.
Directors’ Statement under Section 172 (1) of the Companies Act 2006
The Section 172 (1) of the Companies Act obliges the Directors to promote the success of the Company for the benefit of
the Company’s members as a whole.
The section specifies that the Directors must act in good faith when promoting the success of the Company and in doing
so have regard (amongst other things) to:
a)
b)
c)
d)
e)
f)
the likely consequences of any decision in the long term;
the interests of the Company’s employees;
the need to foster the Company’s business relationship with suppliers, customers and others;
the impact of the Company’s operations on the community and environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the Company.
The Board of Directors is collectively responsible for the decisions made towards the long-term success of the Company
and how the strategic, operational and risk management decisions have been implemented throughout the business is
detailed in this Strategic Report on pages 8-18.
Following restructuring of the Company’s Board, strategy and portfolio in 2020, the Company’s new strategic platform is
taking shape and will be for the benefit of all stakeholders. The Board has made significant progress in the Slovenia
Ascent Resources plc Annual Report and Financial Statements 2022 I 11
dispute and damages claim and the completion of the damages-based agreement appointing Enyo Law LLP to represent
it in its dispute with the Republic of Slovenia, following which it submitted its arbitration claim which was successfully
registered with ICSID in September 2022. The Company’s wholly owned subsidiary, ASL, continues to defend is working
interests in Slovenia with successful mediation with Petrol Geo and partial settlement of the arbitration dispute with
Geoenergo over revenue recognition, with the Company still pursuing arbitration over claims to production from other
wells in the concession area whilst in a preferential cost recovery mode. The ESG metals strategy has been focused in
LATAM and specifically Peru and Chile which have long histories in mining. The Company’s strategy is focused on
originating ESG Precious and Battery Metals processing transactions in Peru and Chile. This has been combined with
capital raises to fund the business moving forward for the benefit of all stakeholders: shareholders, employees and
suppliers alike.
Stakeholder engagement
The Board recognises that our employees are one of the key resources of our business which enables delivery of The
Groups vision and goals. Annual pay and benefit reviews are carried out to determine whether all levels of employees
are benefited equally and to retain and encourage skills vital for the business. The Remuneration Committee oversees
and make recommendations for executive remuneration and any long-term share/option awards. A scorecard is prepared
annually and reviewed half yearly. Bonus awards are based on achievement of scorecard targets. Employees are
informed, both of results and important decisions, and are encouraged to feel engaged and to improve career potential.
The Board acknowledges that a strong business relationship with suppliers and customers is a vital part of the growth.
Whilst day to day business operations are delegated to the executive management, the Board sets directions with regard
to new business ventures. The Board uphold ethical business behaviour and encourages management to seek comparable
business practices from all suppliers and customers doing business with the Company. We value the feedback we receive
from our stakeholders and we take every opportunity to ensure that where possible their wishes are duly considered.
Policies and processes
The Board considered a number of governance matters during the year. These included amongst others the review and
update of the existing group policies on sanctions, employee dealing and accounting.
The Board is responsible overall for reviewing the effectiveness of the policies and processes, while the role of senior
management is to implement Board policies and processes.
Maintaining High Standards of Business Conduct
The Company is incorporated in the UK, governed by the Companies Act 2006 and carries out its business in Slovenia as
well as having business development interests in Latin America, most notable Peru and Chile. The Board guides
management and the employees to conform with relevant statutory and regulatory provisions in the United Kingdom
and any other prevailing regulations and best practices at other operative locations.
The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 and the Board recognises
the importance of maintaining a good level of corporate governance, which together with the requirements to comply
with the AIM Rules ensures that the interests of the Company’s stakeholders are safeguarded. The Board receives training
periodically, and in Q1 2021 the Company’s external lawyers gave the directors a refresher on the requirements around
disclosure of inside information.
The Board has insisted that ethical behaviour and business practices should be implemented across the business. Anti-
corruption and anti-bribery training are provided to staff and contractors and the anti-bribery statement and policy is
contained in the Company’s Employee Manual. The Company’s expectation of honest, fair and professional behaviour is
reflected by this and there is zero tolerance for bribery and unethical behaviour by anyone relating to the Company.
The importance of making all employees feel safe in their environment is maintained and a Whistleblowing policy is in
place to enable staff to confidentially raise any concerns freely and to discuss any issues that arise. Strong financial
controls are in place and are well documented.
Ascent Resources plc Annual Report and Financial Statements 2022 I 12
Shareholders
The Board places equal importance on all shareholders and recognises the significance of transparent and effective
communications with shareholders. As an AIM listed company there is a need to provide fair and balanced information
in a way that is understandable to all stakeholders and particularly our shareholders.
The Company values the views of its shareholders, the directors are keen to engage with shareholders and work with
them so that they are aligned to the strategy and growth of the business.
The primary communication tool with our shareholders is through the Regulatory News Service, (“RNS”) on regulatory
matters and matters of material substance. The Company’s website provides details of the business, investor
presentations and details of the Board and Board Committees, changes to major shareholder information, QCA Code
disclosure updates under AIM Rule 26. Changes are promptly published on the website to enable the shareholders to be
kept abreast of Company’s affairs. The Company’s Annual Report and Notice of Annual General Meetings (AGM) are
available to all shareholders. The Interim Report and other investor presentations are also available on our website.
The AGM is an annual opportunity for shareholders to meet with the Company and receive a full update of the business
from both the Board and management. There is full transparency of the voting on the resolutions at the AGM, with the
Company disclosing the proxy votes received on each resolution in the RNS released shortly after the AGM.
In order to increase shareholder awareness, the Company has recorded a number of media interviews which are available
to view and/or download on leading investor- focused websites and from the Company’s social media accounts. An email
alert service has also been established to which shareholders can subscribe to receive company announcements as and
when they are released.
Community and Environment
The Board places utmost importance of matters pertaining Environmental, Health, Safety and Social Responsibility and
guides the Company on following due policies and processes in order to protect the Community the Company operates
within.
Health and Safety measures are reviewed periodically and the necessary improvements are recommended for better
practices. The Company recognises its role as an oil and gas exploration and production company and is aware of the
potential impact that it may have on the environment. The Company ensures that its subsidiary companies comply with
the local regulatory requirements with regard to the environment and seeks to engage local specialised subcontractors
where applicable.
Financial Report
Revenue for 2022 was £581,000 (2021: nil). The on-going dispute with the JV partner was partially resolved in August
2022 resulting in the recognition of revenue, and the receipt of funds, from the hydrocarbon production for the period
April 2020 to December 2021. Hydrocarbon production for 2022 was still subject to dispute and remained outstanding at
the financial year end and therefore was unable to be recognised in the 2022 year. Post period in review amounts of
€1.7m, relating to production from January 2022 through to February 2023, were agreed and recognised as part of a
settlement between the JV stakeholders.
Cost of sales for 2022 was £504,000 (2021: nil) consisting of a £427,000 accrual for costs relating to the JV operator that
are currently under dispute but relate to the period of revenue recognition. Post the period in review this dispute was
resolved and amounts of €1.4m relating to all outstanding costs relating to the JV operator from 2019 to February 2023,
were agreed and recognised as part of a settlement with the JV operator.
Administrative expenses decreased from £1.597 million in 2021 to £1.472 million in 2022. Administrative costs principally
comprise staff costs, overheads and listing related expenses. During the year under review there was £2,000 non-cash
related long-term employment incentive charges (2021: nil).
The Group loss for the year totalled £41.5 million (2021: £1.971m) of which £39.7m consisted of impairment costs related
to the Petisovci project. This impairment consisted of 100% impairment of PPE and capitalised exploration costs for the
Petisovci project (see notes 10 and 11 of the consolidate financial statements). Additionally, the Company’s intercompany
Ascent Resources plc Annual Report and Financial Statements 2022 I 13
receivable and investment in its Slovenian subsidiaries were also impaired in full resulting in a write down of £32m at the
Company level.
Operating cash flow was an outflow of £1.211 million in 2022 versus an outflow of £1.472 million in 2021, reflecting a
slight decrease in expenditures.
Cash at the end of the period was £325k versus £97k at the end of 2021. This was due to the partial resolution with the
JV partner and the revenue recognition of £581k, £1.2m being raised during the year in share placings and a further
£242.5k being raised in warrant exercises.
Borrowings at the end of the year were £516k mostly constituted of the Riverfort Investment Agreement announced in
March 2020 and was reprofiled in December 2022.
Financial KPI’s
Revenue
Cost of sales
Administrative Expenses
Impairment expense
Operating Cash Flow
Cash Balance
Operational Performance
2022
£’000s
581
(504)
1,472
(39,697)
(1,211)
325
2021
£’000s
-
(19)
1,596
-
(1,472)
97
Variance
£’000s
485
(124)
(39,697)
261
228
The Company produced 1,164,500 standard cubic metres of gas and 37,855 litres of condensate from the PG-10 and PG-
11A wells during the year. Production has declined over the 2021 period where the Company produced 1,529,980 cubic
metres of gas and 52,196 litres of condensate.
Production KPI’s
Jan 2022
Feb 2022
Mar 2022
Apr 2022 May 2022
Jun 2022
Total gas (k scm)
Total gas (M scf)
Average daily gas (k scm)
Average daily gas (k scf)
Total condensate (litres)
CGR (litres per 1,000 scm gas)
BOE – gas
BOE – condensate
Total BOE
123.10
4.35
3.97
140.23
1,728
14.04
636.67
10.85
647.53
98.29
3.47
3.51
123.96
3,764
38.30
508.35
23.64
531.98
144.57
5.11
4.66
164.69
2,445
16.91
747.72
15.35
763.07
108.05
3.82
3.60
127.20
5,468
50.60
558.86
34.34
593.19
108.11
3.82
3.49
123.16
4,250
39.31
559.14
26.69
585.83
89.98
3.18
3.00
105.92
4,230
47.01
465.38
26.56
491.94
Production KPI’s
Jul 2022
Aug 2022
Sep 2022
Oct 2022
Nov 2022
Dec 2022
Total gas (k scm)
Total gas (M scf)
Average daily gas (k scm)
Average daily gas (k scf)
Total condensate (litres)
CGR (litres per 1,000 scm gas)
BOE – gas
BOE – condensate
Total BOE
10.96
0.39
0.35
12.49
900
82.12
56.69
5.65
62.34
64.87
2.29
2.09
73.90
2,700
41.62
394.87
16.96
411.83
63.07
2.23
2.10
74.24
1,500
23.78
383.89
9.42
393.31
117.69
4.16
3.80
134.07
2,670
22.69
716.36
16.77
733.13
146.08
5.16
4.87
171.96
4,200
28.75
889.21
26.38
915.59
89.73
3.17
2.89
102.22
4,000
44.58
546.17
25.12
571.29
M= Million k= Thousand scm= standard cubic meter scf= standard cubic foot
Ascent Resources plc Annual Report and Financial Statements 2022 I 14
Our Principal risks and uncertainties
Slovenia Disputes
Risk
Dispute with the Republic of Slovenia
The Company formally first notified the Government of Slovenia of the existence of disputes
under the UK-Slovenia Bilateral Investment Treaty (the “BIT”) and the Energy Charter Treaty
(the “ECT”) on 24 July 2020. Following the issuance of the Notice of Dispute, the Company
triggered a compulsory minimum three month ‘cooling-off’ period, designed to allow the
parties to attempt to resolve their dispute ahead of arbitration proceedings.
On 22 October 2020, ninety days after the serving of the Notice of Dispute, the Company
announced that it was entering into direct negotiations with the Government of Slovenia, with
a view to potentially settling the claim in an amicable manner.
The Company announced on 19 March 2021 that, following a letter received from the State,
an amicable settlement was then not achievable. As part of direct pre-arbitration settlement
discussions, the Company had submitted a damages calculation to the State totalling
significantly in excess of €100 million.
On 8 November 2021 the Company announced that it had signed a binding conditional
damages-based agreement with Enyo Law LLP, a specialist arbitration and litigation legal firm
who had previously filed the Notice of Dispute and represented the Company in the pre-
arbitration negotiations, to commence proceedings against the Republic of Slovenia under the
Energy Charter Treaty and the UK-Slovenia Bilateral Investment Treaty. As part of this
arbitration claim funding, Enyo are to fund the payment of advanced disbursements which are
expected to be incurred in the pursuit of the claim, and these sums along with the time of
Enyo’s lawyers will only be paid out of the proceeds of the arbitration in the event of a
successful damages award or execution of a binding settlement agreement (if achieved
sooner). The closing of such funding arrangement was confirmed on 30th May 2022.
The company also filed a second Notice of Dispute on 5th May 2022 given that the recent
legislative developments in Slovenia which banned any form of stimulation for the purpose of
producing hydrocarbons constitute a new breach that would reinforce Ascent’s claim against
the Republic of Slovenia, given that the joint venture has always expected to be able to
continue the historic practise of conducting low volume mechanical stimulation techniques in
order to flow the tight gas reservoir and therefore these latest developments could lead to a
significant increase in the Company’s damages claim.
ICSID registered the company’s ECT damages claim, which is estimated to be for damages in
excess of €500 million, in September 2022. The tribunal was constituted in March 2023 and
the first procedural hearing was successfully convened in April 2023. The company is pursuing
an ECT damages claim for over €500 million, relating to the loss of the full economic value of
the company’s investment as a result of Slovenia’s actions in breach of the country’s
obligations under international law. The claim is expected to progress through the arbitration
process, whilst the company remains amenable to settlement of its claim sooner if achievable.
Although the Company considers that it has a strong claim, there is an inherent risk when
carrying arbitration proceedings that the full amount of damages might not be recovered.
The Company is mitigating such risk by instructing a reputed London based law firm specialised
in investment treaty arbitration to manage such claim together with local Slovenia counsels
with previous arbitration experience, with the internal support of the Company’s inhouse
lawyer.
JV Update
Post period in review the dispute with service provider Petrol Geo was resolved pursuant to a
successful mediation process, a part of which also involved the successful agreement of
outstanding agreed hydrocarbon revenues to ASL from Geoenergo, which resolved part of the
arbitration dispute initiated in December 2022.
Ascent Resources plc Annual Report and Financial Statements 2022 I 15
Commodity
Prices
Permitting risk
In April 2023 the Company announced ASL had successfully resolved the JV’s dispute with
operating service provider, Petrol Geo, settling alleged amounts owed from mid-2019 through
to February 2023 of over €2M plus costs claimed, for a discount of at least 30% with a full and
final settlement payment of €1.4M. The Company also successfully recognised over €1.7M in
revenues from the hydrocarbon sale proceeds for the PG-10 and PG-11A wells for January
2022 through to February 2023.
ASL and Geoenergo had an unsuccessful mediation process, which ASL escalated to an
domestic Slovenian arbitration process in December 2022 further to which ASL is also pursuing
arbitration against its JV partner, in relation to the parties different interpretations of the RJOA
relating to the entitlement to baseline production and the application of the baseline
production profile. The tribunal held its hearing on the merits of ASL’s claim to a share of
production from all the wells on the concession areas in June 2023, with the decision expected
to be received shortly. The Company and its legal advisors remain confident in the merits of
ASL’s claim which is for €3+ million over the last three years.
The Board continues to defend its investments in Slovenia and reserves its right to pursue all
available remedies and actions and in order to mitigate such risk has appointed a local counsel
to defend its position.
* The JV partner Geoenergo is 50% owned by Nafta Lendava (which itself is an entity 100% owned by the Republic of
Slovenia) and 50% owned by Petrol (30% of which is directly and indirectly controlled by the Republic of Slovenia).
The JV Service Provider, Petrol Geo, is a 100% subsidiary of Petrol.
The Group is exposed to risks arising from fluctuations in the demand for, and price of,
hydrocarbons. Oil and gas prices depend on numerous factors over which the Group does not
have any control, including global supply, international economic trends (such as the current
downturn caused by COVID-19), currency exchange fluctuations, inflation, consumption
patterns and global or regional political events. This risk impacts revenues from the Group’s
existing asset portfolio in Slovenia, projects under development and evaluation of business
development opportunities where commerciality depends on assumptions around future
commodity prices.
In terms of evaluating and sanctioning new investments, the Group adopts a conservative
price forecast to ensure capital is allocated to projects with robust economics, even in lower
commodity price environments
The single biggest issue when carrying out operations in Slovenia over the past seven years
has been the environmental permitting process with the Company being made aware in June
2020 that the Administrative Court of the Republic of Slovenia had ruled that an EIA would be
required to enable the re-stimulation of PG-10 and PG11A wells. This is not unique to Ascent
and it is our opinion that inefficiencies and uncertainties within the environmental permitting
process are a significant hurdle to economic growth in Slovenia. However, in May 2022
Slovenia approved amendments to its mining law which prohibit the granting of mineral
concessions where the use of hydraulic stimulation is used to explore for or produce
hydrocarbons. Accordingly the Company will no longer be able to attain the permits to re-
stimulate the PG-10 and PG-11A wells as has always been planned. There are currently no
identifiable new technologies that could be used to replace the hydraulic stimulation
production method identified as required to economically produce the 400+bcf tight gas
resource.
Permitting risk exists for any element of the field development plan which requires an
environmental permit; mainly well stimulation and the installation of processing equipment.
This risk is managed by our detailed understanding of the process and our actions to ensure
Slovenian and EU regulations are followed properly by Slovenian officials. On 5th May 2022 The
company issued a second notice of dispute against the Government of Slovenia based on the
new changes to the mining law which are, in the opinion of the Company, directly targeted at
Ascent and in September 2022 the Company successfully registered its €500+ million Energy
Charter Treaty damages claim against the Republic of Slovenia under the International Centre
for Settlement of Investor Disputes. The Company and its advisors see this development as
further reinforcing its claim against the Republic of Slovenia under the Energy Charter Treaty
Ascent Resources plc Annual Report and Financial Statements 2022 I 16
and UK-Slovenia Bilateral Investment Treaty, given that the joint venture has always expected
to be able to continue the historic practice of conducting low volume mechanical stimulation
techniques in order to flow the tight gas reservoir and therefore these latest developments
have resulted in the Company losing the full economic value of its Slovenian investment, which
is estimated to be in excess of €500 million. Any further irregularities in the processes and
unnecessary delays will also be legally pursued. It should be cautioned that in the event the
Company is successful in its claim any amount actually received by the Company may be
significantly lower than the full claim.
Concession
extension risk
The current concession expiry date is 28 November 2023. The Company and its JV partner have
been currently whether a further extension is possible given the recent legislative changes in
Slovenia which ban any form of hydraulic stimulation, such extension would at least allow the
Company to recover some of the losses caused by Slovenia’s legislative changes.
Sanctions Risk
Before the changes to the mining law, Ascent was confident that an extension would be
granted as a matter of course, based on the provisions under Slovenian Mining Law, but there
is no guarantee that this will be the case anymore given Slovenia’s targeting of Ascent. Should
an extension not be granted the economic uncertainty of the concession may result in
potential impairment of the value of the asset.
Post period under review, Slovenia approved amendments to its mining laws which included
a further 30 month automatic extension for mining concessions currently due to expire in 2023
and 2024. The Company is advised by in country counsel that this extension is expected to
apply to the Petisovci concession. Ascent has advised the concession holder, Geoenergo, to do
all that is necessary to secure an extension, however given the uncollaborative approach the
Company experiences from Geoenergo from time to time, there can currently be no certainty
of the renewal application being made or approved although they advised that they had filed
the ordinary extension awaiting for the new law to be published in the official gazette. The
new law came into affect on 10 June 2023, following which Geoenergo have 30 days to apply
to the 30 month extension which shall then be automatically granted.
Ascent Resources Plc (“Ascent”) and all subsidiaries and members of its global corporate group
(collectively the “Ascent Group”) are committed to ensuring that all parts of our business and
all our employees fully comply with all sanctions laws applicable to our work. These include all
applicable European Union (“EU”) and United Kingdom (“UK”) sanctions laws and associated
regulations.
The Ascent Group is generally not subject to US sanctions laws; if Ascent Group had
established operations in Cuba which came under US jurisdiction they would be prohibited
according to US sanctions laws. During the time in which the Ascent Group was evaluating
different opportunities in Cuba, the Ascent Group sought to comply with US sanctions laws
where applicable. The Group has not been directly affected by the recent international
sanctions imposed to Russia.
During the time in which the Ascent Group was evaluating different opportunities in Cuba, in
order to mitigate this risk the company complied with its International Sanctions Compliance
Policy (“Policy”) that aimed to ensure that the group had effective procedures and resources
in place to determine what sanctions laws applied to its activities and to implement a clear
and robust approach to ensuring sanctions compliance and prevents U.S. Persons (as defined
in the previous AoA) from becoming shareholders or directors of the Company. Following
specialist advice, the Company opened a subsidiary in Spain in 2021 to ensure any potential
future Cuba entry was executed in a way to secure it benefits from EU legislation protection
on Sanctions.
The Board of Directors of the Company decided to cease evaluating projects in Cuba on 15
August 2022, further to which the Sanctions Policy was revoked and the AoA of the company
modified accordingly since the US Sanctions Risk was no longer applicable.
Availability of
funding Risk
Ascent’s asset portfolio does not yet generate the cash necessary to grow the business at a
rate in keeping with its ambition and the Group will need to raise additional funds to
implement its strategy. The ability of the Group to raise funds will depend and factors not
Ascent Resources plc Annual Report and Financial Statements 2022 I 17
Failure secure new
ESG Metals deal
wholly with the control of management, including general market sentiment and attitudes
toward small-cap energy companies. As a result there can be no assurance that the required
funding will be available on favourable terms, if at all. Failure to raise required funds could
have a material adverse effect on the Group’s business, operating results and financial
condition, and may result in erosion of value for shareholders.
The Group’s strategic focus on acquiring and developing an asset portfolio, which is aligned
with ESG metals strategy partly mitigates the risk posed by negative sentiment towards the
hydrocarbon industry. Management also seeks to mitigate risk through prudent management
of costs and rigorous evaluation of investment opportunities to ensure these will be attractive
to investors in the debt and capital markets.
Following a strategic review in 2020 and 2021, the Company has set out an ‘ESG Metals’
growth strategy focused on Latin America. This strategy is focused on originating, negotiating
and securing new precious and battery metals mineral processing/reprocessing business
opportunities in LATAM, most notably focused on a new country entry into Peru and/or Chile.
The Company believes that this asset class offers opportunities for the Company to acquire
significant business interests which can offer lower geological risk entry into near term cash
flow generative mineral processing businesses in economies underpinned by many decades of
historic and inefficient mining practices. The Company is focused on closing its maiden ESG
Metals deal in the 2023 financial year, however there can be no certainty that such a deal
materialises on terms that are agreeable within the timeframe that the Company aspires to
achieve its new business goals.
How we operate
The Company utilises a full range of advanced geophysical, geological and other state-of-the-art technology to evaluate
and de-risk projects and to reap maximum benefit from its appraisal, development and production activities. Our
Petišovci project is operated through a local entity in a joint venture.
Our people
Ascent has a small executive team implementing a clear growth strategy. This is supplemented, as the need requires,
with regional technical, legal, compliance and operational expertise to ensure the highest standards are delivered on our
projects. As an important local employer in our area of operation we take our environmental and social responsibilities
seriously and always strive to be a good corporate citizen.
Approved for issue by the Board of Directors and signed on its behalf.
James Parsons
Executive Chairman
28 June 2022
Ascent Resources plc Annual Report and Financial Statements 2022 I 18
Summary of Group Net Oil and Gas Reserves as of 31 December 2022
Net Reserves and Resources
Net Attributable Producing Reserves
(bcf gas)
P90
P50
P10
Net
Reserves (bcf gas)
P50
P90
Attributable Non-producing
Total Net Attributable Reserves
(bcf gas)
P90
P50
P10
76
157
307
P10
145
Net Ascent
41
84
162
35
73
In May 2022 the Government of Slovenia enacted changes to the country’s mining law that prohibit the production of
hydrocarbons with the use of any form of stimulation, has and the Company’s development plan had always included the
use of low volume hydraulic stimulation to produce the tight gas reservoir, as has been done over thirty times on the
field in the last fifty years. The existing wells on the concession area have continued to produce small volumes of
unstimulated gas, however the Company no longer considers further development of the Petišovci area to be
economically viable and therefore extraction of the above stated reserves is unlikely.
These figures are based on RPS Energy “Updated Independent Volumetric Review of the Petišovci area” gas-in-place
estimates with a management assumption of a 50% recovery factor and Ascent’s 75% participating interest.
Tested and/or producing commercial sands are included as Producing Reserves while untested and unproduced sands
remain as non-Producing Reserves. The condensate content of gas is not included.
Remaining gas reserves have been adjusted to take into account historic field production since 1963, including estimates
of process flare and fuel, which to the end of 2021 were 12.9 bcf.
Proven Reserves (P90) are those quantities of petroleum which can be estimated with reasonable certainty to be
commercially recoverable, from known reservoirs and under current economic conditions, operating methods and
government regulations.
Proven + Probable Reserves (P50) includes those unproven reserves which are more likely than not to be recoverable.
For the P90 (P50 and P10) Reserves there is at least a 90% (50%; 10%) probability that the quantities actually recovered
will equal or exceed the estimate.
The range of estimates shown for each category of reserves is a measure of the uncertainty inherent in the estimation of
producible volumes and includes the current perceptions of geological, operational and commercial risk.
Ascent Resources plc Annual Report and Financial Statements 2022 I 19
Directors’ Report
The Directors present their Directors’ Report and Financial Statements for the year ended 31 December 2022 (“the year”).
Principal activities
The principal activities of the Group comprise gas and oil exploration and production. In 2021 the Company announced
the launch of its ESG metals strategy. The Company is registered in England and Wales and is quoted on the AIM Market
of the London Stock Exchange.
The Group’s corporate management is in London and its oil and gas interests are in Slovenia. The Group operates its own
undertakings both through subsidiary companies and joint ventures. The subsidiary undertakings affecting the Group’s
results and net assets are listed in Note xx to the Financial Statements.
Future developments
The Company has identified ESG metals as a new target sector alongside its current resource focused business. ESG
Metals includes secondary mining and recovery opportunities which the Company sees as being consistent with
Environmental, Social and Governance (‘ESG’) principles. ESG metals is a method of low-cost sustainable metal
production from legacy mining waste (simultaneously detoxifying and/or rehabilitating past environmental damage) into
valuable assets for reprocessing and commercial sale to industry, governments and metals traders.
The Company is looking at a number of potential projects in Hispanic America. In particular, the Company believes there
are good opportunities in gold, silver, platinum and battery metals, where the economics are especially attractive and
the opportunity set has the ability of delivering lowest cost quartile sustainable metal production from legacy mining
tailings, with low geological risk. Such opportunities have the potential to provide strong cash returns without exploration
risk and only require modest upfront capital outlay.
The Company’s ESG metals strategy is initially focused in LATAM, specifically Peru and Chile, which are both countries
whose economies are underpinned by the mining and metals processing industries and who have seen large scale mining
activity for many decades over the past.
With regards the Slovenia operations, the Company’s investment in Slovenia was destroyed in May 2022, with the
Republic of Slovenia adopting changes to its mining law which excluded the use of any form of mechanical stimulation
for the purpose of exploring for or producing hydrocarbons. This law change is in breach of Slovenia’s obligations under
international law and the minutes from the parliamentary debate which specifically reference the “British Corporation”
leave it in no doubt to the Company’s directors that the Company has been specifically targeted with the enactment of
this law. Accordingly, the Company submitted its request for arbitration against the Republic of Slovenia, which was
registered by ICSID under the Energy Charter Treaty in September 2022, in relation to a €500+ million damages claim
relating to the law changes implemented by Slovenia in May 2022 which have destroyed the full economic value of the
Company’s investment. The Tribunal was constituted in March 2023 and the first procedural hearing was successfully
convened in April 2023. The damages claim is expected to continue to follow the structured ICSID arbitration process. It
should be cautioned that in the event the Company is successful in its claim any amount actually received by the Company
may be significantly lower than the full claim.
The concession expiry date for the Slovenian operations is 25 November 2023. Post period in review the concession
holder and the Company’s JV partner, Geoenergo, informed ASL that it had submitted a concession extension application
on the 26 May 2023. However, the Republic of Slovenia adopted new legislation to further automatically extend mining
concessions that were due to expire in 2023 and 2024 by a further 30 months and the law came into affect on 10 June
2023, following which Geoenergo has 30 days to submit the addendum to secure extension through to at least 28 May
2026.
Ascent Resources plc Annual Report and Financial Statements 2022 I 20
Financial risk management
Details of the Group’s financial instruments and its policies with regard to financial risk management are given in Note
26 of the Financial Statements.
Results and dividends
The loss for the year after taxation was £41.5 million (2021: £2.0 million). The Directors do not recommend the payment
of a dividend (2021: Nil).
Post balance sheet events
In April 2023 the Company announced ASL had successfully resolved the JV’s dispute with operating service provider,
Petrol Geo, settling alleged amounts owed from mid 2019 through to February 2023 of over €2M plus costs claimed, for
a discount of at least 30% with a full and final settlement payment of €1.4M. The Company also successfully recognised
over €1.7M in revenues from the hydrocarbon sale proceeds for the PG-10 and PG-11A wells for January 2022 through
to February 2023. The Company is also pursuing arbitration against its JV partner, Geoenergo, in relation to the parties
different interpretations of the RJOA relating to the entitlement to baseline production and the application of the baseline
production profile. The Tribunal held its hearing on the merits of ASL’s claim to entitlement of these disputed proceeds
in mid-June 2023 and the decision is expected to be received shortly. The Company and its legal advisors remain confident
in the merits of ASL’s claim which is for €3+ million over the last three years.
In April 2023 the Company also raised new proceeds of £400,000 by issuing new shares at 3p, being the spot price on the
night prior to announcement, with a one for one warrant attached exercisable at 5p.
For further information on post balance sheet events please see note 23.
Directors
The Directors of the Company that served during the year were as follows:
James Parsons
Andrew Dennan
Ewen Ainsworth (resigned 28 February 2022)
Stephen James Birrell
Malcolm Graham-Wood
Marco Fumagalli (appointed 22 December 2022)
Relevant details of the Directors, which include committee memberships, are set out on page 24 and 28.
Directors’ interests
The beneficial and non-beneficial interests in the issued share capital of the Company were as follows:
Ordinary shares of 0.5p each
James Parsons
Ewen Ainsworth (resigned 28 February 2022)
Andrew Dennan
Stephen Birrell
Malcom Graham-Wood
Marco Fumagalli (appointed 22 December 2022)
Directors’ emoluments
At 31 December 2022
500,900
454,545
2,140,000
-
-
-
At 31 December 2021
500,900
454,545
2,140,000
-
-
-
Details of Directors’ share options and remuneration are set out in the Remuneration Committee report on pages 32-33.
Ascent Resources plc Annual Report and Financial Statements 2022 I 21
Third party indemnity provision
The Company has provided liability insurance for its Directors. The annual cost of the cover is not material to the Group.
The Company’s Articles of Association allow it to provide an indemnity for the benefit of its Directors which is a qualifying
indemnity provision for the purposes of the Companies Act 2006.
Share capital
Details of changes to share capital in the period are set out in Note 20 to the Financial Statements.
As at 27 June 2023 the Company has been notified of the following significant interests in its ordinary shares, being a
holding of 3% and above:
Bank of New York (Nominees) Limited
ISI Nominees Limited
Seguro Nominees Limited
Interactive Investor Services Nominees Limited
Vidacos Nominees Limited
Bank of New York (Nominees) Limited
Cantor Fitzgerald Europe
Interactive Investor Services Nominees Limited
Hargreaves Lansdown (Nominees) Limited
Redmayne (Nominees) Limited
Shareholder communications
Number of ordinary shares
23,464,647
10,740,350
9,421,600
9,218,792
7,505,657
7,376,005
7,026,820
5,497,449
5,200,519
5,036,665
%
14.16
6.48
5.68
5.56
4.53
4.45
4.24
3.32
3.14
3.04
The Company’s website, www.ascentresources.co.uk provides a platform for the purposes of improving information flow
to shareholders, as well as potential investors.
Employees
The Company’s Board composition provides the platform for sound corporate governance and robust leadership in
implementing the Company’s strategies to meet its stated goals and objectives.
The Group’s employees and consultants play an integral part in executing its strategy and the overall success and
sustainability of the organisation. The Group has a highly skilled and dedicated team of employees and consultants and
places great emphasis on attracting and retaining quality staff.
The Group holds its employees and consultants at all levels to high standards and expects the conduct of its employees
to reflect mutual respect, tolerance of cultural differences, adherence to the corporate code of conduct and an ambition
to excel in their various disciplines.
Disclosure of information to auditors
In the case of each person who was a Director at the time this report was approved:
-
-
so far as that Director was aware there was no relevant audit information of which the Company’s auditors were
unaware; and
that Director had taken all steps that the Director ought to have taken as a Director to make himself aware of
and relevant audit information and to establish that the Company’s auditors were aware of that information.
This information is given and should be interpreted in accordance with the provisions of Section 418 of the Companies
Act 2006.
Going Concern
The Financial Statements of the Group are prepared on a going concern basis as detailed in Note 1 to the financial
statements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 22
The Group and Company financial statements have been prepared under the going concern assumption, which presumes
that the Group and Company will be able to meet its obligations as they fall due for the foreseeable future.
The Company has raised £0.4 million in new equity since the balance sheet date from new and existing investors and has
settled revenue disputes with its JV partner and settled invoice disputes with its JV operator such that a net €288,000
was received by the Company. Under the Group’s forecasts, the funds raised together with existing bank balances provide
sufficient funding for at least two months, as of the date of the publication of this report, based on anticipated outgoings.
In addition to the need to raise additional funding in the next two months, the forecasts are sensitive to the timing and
cash flows associated with the continuing situation in Slovenia, and discretionary spend incurred with executing the ESG
Metals Strategy through acquisition. As such, the Company will need to raise new capital within the forecast period to
fund such discretionary spend.
Negotiations with potential new investors is ongoing and based on historical and recent support from new and existing
investors the Board believes that such funding, if and when required, could be obtained through new debt or equity
issuances. However, the ability to raise these funds is not guaranteed at the date of signing these financial statements.
As a consequence, there is a material uncertainty to the going concern of the Group.
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution for the reappointment of PKF Littlejohn LLP as
auditors of the Company is to be proposed at a General Meeting to be held prior to 30 September 2023.
Approved for issue by the Board of Directors and signed on its behalf
James Parsons
Executive Chairman
28 June 2023
Ascent Resources plc Annual Report and Financial Statements 2022 I 23
Board of Directors
James Parsons
Executive Chairman (5 March 2020 to present)
In addition to his role as Executive Chairman at Ascent Resources plc, which is part time,
James is currently Chairman of Corcel Plc, Coro Energy plc and Echo Energy Plc. James
has over 20 years’ experience in the fields of strategy, management, finance and
corporate development in the energy industry. He started his career with the Royal
Dutch Shell Group where he spent 12 years working in Brazil, the Dominican Republic,
Scandinavia, the Netherlands and London. James was previously Chief Executive at
Sound Energy Plc for eight years, is a qualified accountant and has a BA Honours in
Business Economics.
Andrew Dennan
Chief Executive Officer/Executive Director (5 May 2020 to present)
Andrew has a wealth of corporate finance, merger, asset funding and corporate
transaction experience on AIM. Throughout his career he has been involved in
leading proprietary
stockbroking and asset management
investment decisions, capital raising, risk oversight and portfolio management. He was
formerly Chief Financial Officer and Director of Coro Energy Plc. Andrew holds the CFA
Investment Management Certificate and has a BA(Hons) in Actuarial Science from City
University.
in prominent roles,
Stephen Birrell
Non-Executive Director (1 October 2020 to present)
Stephen is a Spanish speaking, geoscientist who has worked in the upstream oil and gas
industry for over 35 years with a deep focus on Central Eastern Europe. He has operated
across multiple jurisdictions including the Caribbean and CEE with Britoil, BP and Elf. He
is currently a Director of Ossian Energy Ltd and up until 2020 was the President of
ROPEPCA, the upstream oil and gas operator association of Romania. He also holds a
non-executive board role with Live Company Group Plc and Coro Energy Plc. Stephen
has a BSc Honours in Applied Geology.
Malcom Graham-Wood
Non-Executive Director (1 October 2020 to present)
Malcolm has over 40 years’ experience in the energy business and is a well known
corporate broker and market commentator to both private and institutional audiences.
Malcolm is a Founding Partner of HydroCarbon Capital which provides independent
advisory services to the oil & gas sector and is also a Director of the Maven Income and
Growth VCT 4 PLC, a venture capital trust listed on the premium sector of the London
Stock Exchange where he chairs the risk committee.
Marco Fumagalli
Non-Executive Director (22 December 2022 to present)
Marco is a founding partner at Continental Investment Partners SA, a Swiss-based
investment fund, and a well-known Italian businessman and industrial investor who
was previously a group partner at 3i. He is a qualified accountant and holders a degree
in Business Administration from Bocconi University in Milan.
Ascent Resources plc Annual Report and Financial Statements 2022 I 24
Directors and Advisers
Company’s registered number
Directors
Company Secretary
Registered Office
Nominated Advisor Joint Broker
Joint Broker
Independent Auditors
Solicitors
Bankers
Share Registry
PR & IR
05239285
James Parsons
Andrew Dennan
Stephen Birrell
Malcom Graham-Wood
Marco Fumagalli
AMBA Secretaries Limited
5 New Street Square
London EC4A 3TW
WH Ireland Limited
24 Martin Lane
London EC4R 0DR
Novum Securities Limited
8-10 Grosvenor Gardens
London SW1W 0DH
PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
Barclays Corporate Banking
1 Churchill Place
London E14 5HP
Computershare Investors Services PLC
The Pavilions
Bridgerwater Road
Bristol BS13 8AE
Vigo Consulting
Sackville House
40 Piccadilly
London W1J 0DR
Ascent Resources plc Annual Report and Financial Statements 2022 I 25
Corporate Governance Report
Chairman’s Corporate Governance Statement
As Chairman, it is my role is to ensure that the Company has both sound corporate governance and an effective Board.
My responsibilities as Chairman include leading the Board effectively, overseeing the Group’s corporate governance
model, communicating with shareholders and ensuring that good information flows freely between the Executive and
Non-Executive Directors in a timely manner.
The Company has adopted the Quoted Companies Alliance Corporate Governance (QCA Code), which requires AIM-
quoted companies to adopt a ‘comply or explain’ explain approach in respect of the application of guidance contained
within.
The Board believes that corporate governance is a framework which underpins the core values for running the business,
including a commitment to open and transparent communications with stakeholders. We believe that good corporate
governance improves long-term success and performance. The corporate governance framework within which Ascent
operates, including Board leadership and effectiveness, Board remuneration and internal control is based upon practices
which the Board believes are proportional to the size, risks, complexity and operation of the business.
2022 has been a year of restructuring and strategic development as we finalised the non-recourse funding for Slovenia
ECT and BIT damages claim and develop our ESG Metals strategy. Engaging with our shareholders remains vitally
important and we ensure that there are opportunities for investors to engage with the Board and the executive team.
The Company has an Executive Chairman and Chief Executive Officer, which the Board recognises does not comply with
the requirements of the QCA Code. The reasons for this are to provide the skills and expertise to grow the business and
deliver the strategy for the benefit of the Company’s shareholders. During 2022, the Board saw the departure of Ewen
Ainsworth and the appointment of Marco Fumagalli. The Board has three non-executive directors, all of whom are
considered to be independent.
The Company continues to monitor the performance of the Board, ensuring that the require skill set and balance of
independent non-executive directors is present. Whilst the Company has not undertaken a formal Board evaluation in
recent years there is on-going consideration given by the Board to ensure the requirements of the business are met by
the Board and its performance.
The Board is committed to leading the business in a way which is honest, transparent and accountable.
James Parsons
Executive Chairman
28 June 2023
Ascent Resources plc Annual Report and Financial Statements 2022 I 26
Quoted Companies Alliance Corporate Governance Code
The Quoted Companies Alliance Corporate Governance Code (“QCA Code”) is the Company’s chosen corporate
governance code to comply with. The QCA Code was published in April 2018 which is constructed around ten broad
principles. The Board firmly believe that the QCA Code is the most appropriate corporate governance code for the
Company to comply with. This report sets out our approach to the QCA Code and governance. Our compliance with the
ten principles is also available to view on the Company’s website: www.ascentresources.co.uk.
The Company’s statement in relation to the QCA Corporate Governance code can be found on the Company’s website at
https://wp-ascentresources-2021.s3.eu-west-2.amazonaws.com/media/2022/06/01.03.2022_Ascent-QCA-disclosure-
clean-copy.pdf
QCA Code
Principle
One
Two
Three
Four
Five
Six
Seven
Eight
Nine
Required Disclosure
Establish a strategy and business model which
promote long-term value for shareholders.
Reference
See pages 8-18 of the Annual Report, the ‘Strategic Report’.
See website disclosures at the above link.
Seek to understand and meet shareholder needs and
expectations.
Explain the ways in which the Company seeks to
engage with shareholders.
Take into account wider stakeholder and social
responsibilities and their implications for long term
success.
Explain how the business model identifies the key
resources and relationships on which the business
relies. Explain how the Company obtains feedback
from stakeholders.
See page 8-18 of the Annual Report, the ‘Strategic
Report’.
See website disclosures at the above link.
See website disclosures at the above link.
Embed effective risk management, considering both
opportunities
the
organisation.
throughout
threats,
and
See pages 26-30 of the Annual Report – Corporate
Governance Report.
Maintain the board as a well-functioning, balanced
team led by the Chair.
See page 24 of the Annual Report ‘Board Composition’, and
26-30 Corporate Governance Report.
Ensure that the Directors have the necessary
experience, skills and capabilities.
See page 24 of the Annual Report.
See website disclosure at the above link.
objectives,
Evaluate board performance based on clear and
relevant
continuous
improvement.
A description of the Board performance evaluation
process.
seeking
Promote a corporate culture that is based on ethical
values and behaviours.
Explain how the Board ensures that the Company has
the means
to determine ethical values and
behaviours.
Maintain governance structures and processes that
are fit for purpose and support good decision- making
by the Board.
Roles and responsibilities of the Chair, CEO and other
directors with commitments. Describe the roles of the
Committees.
See page 24 of the Annual Report ‘Board Composition’.
See website disclosures at the above link.
The Board firmly believes that sustained success will best be
achieved by adhering to our corporate culture of treating all
our stakeholders, including our employees, fairly and with
respect. Accordingly, in dealing with each of the Company’s
principal stakeholders, we encourage our staff to operate in
an honest and respectful manner.
See page 24 of the Annual Report ‘Board Composition’.
See website disclosures, Principle Eight for further detail.
See website disclosures Principle Nine under
AIM Rule 26.
Ascent Resources plc Annual Report and Financial Statements 2022 I 27
Ten
Communicate how the Company is governed and is
performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
Outcomes of votes cast by shareholders to be
disclosed in a clear and transparent manner. If a
significant number of votes were cast against a
resolution put to a general meeting (20%) explain the
reasons behind the votes cast.
See page 29 of the Annual Report, ‘Communication
with Stakeholders, Corporate Governance Report.
See website disclosures Principle Ten under AIM Rule 26.
Board Composition
Membership of the Board and information on each member can be found in the Directors’ Report.
James Parsons, Executive Chairman
James Parsons is the Group’s Executive Chairman and chairs the Board, setting high standards of good corporate
governance throughout the business. He leads in the development of strategy and setting objectives and oversees
communication between the Group and its shareholders.
Andrew Dennan, Chief Executive Officer
Andrew Dennan is the Chief Executive Officer and has overall responsibility for managing the day-to-day operations of
the Company and is responsible for implementing the Company’s strategy.
Whilst the Board recognises that having an Executive Chairman is not considered best practice under the QCA code, it
has been identified that the role of the Chairman in an executive capability is extremely important to the Company in
leading the business forward. Since late 2022 the Board has three non-executive directors who are considered to be
independent and provide a healthy level of independence on the Board.
Ewen Ainsworth resigned on 28 February 2022 and Marco Fumagalli joined the Board on 22 December 2022. Following
Marco’s appointment, the composition of the Board Committees was re-considered. Marco was appointed as Chair of
the Audit Committee, with Malcolm Graham-Wood remaining a member. Stephen Birrell remained Chair of the
Remuneration Committee with Malcolm Graham Wood being a member.
A separate Technical & Reserves Committee was formed in 2021 and Stephen Birrell was appointed Chairman. Stephen
Birrell is the Chairman of the HSE Committee.
Each director is committed to spending sufficient time to enable them to carry out their duties as a director.
Skills and competencies of the Board
The Chairman believes that, as a whole, the Board has a suitable mix of skills and competencies in order to drive the
Group’s strategy and is best placed to secure the future of the Company and create long-term value for all stakeholders.
The Board has significant industry, financial, public markets and governance experience, possessing the necessary mix of
experience, skills, personal qualities and capabilities to deliver the strategy of the Company for the benefit of the
shareholders over the medium to long-term.
The Board updates its operational skills through active involvement in the industry. In addition, the Board keeps abreast
of ongoing changes relating to governance and compliance, the AIM Rules for companies, QCA Code, the UK Market
Abuse Regulations and other statutory and regulatory developments. All directors have access to the Company’s Nomad,
Company Secretary, lawyers and auditors and are able to obtain advice from other external bodies as and when required.
The Company embraces diversity and is dedicated to encouraging inclusion without compromising professionalism,
experience and expertise.
The Board is supported by its Audit Committee, Remuneration Committee, Technical & Reserves Committee and HSE
Committee. The number of Board and Committee meetings held throughout the course of the financial year is set out at
the end of this Corporate Governance Report.
The Board firmly believes that sustained success will best be achieved by adhering to our corporate culture of treating all
our stakeholders, including our employees, fairly and with respect. Accordingly, in dealing with each of the Company’s
Ascent Resources plc Annual Report and Financial Statements 2022 I 28
principal stakeholders, we encourage our staff to operate in an honest and respectful manner. This is monitored on an
ongoing basis by the Company’s executive directors. Compliance with this principle is considered an important part of
the annual assessment of staff and in setting their pay for future periods.
Communications with stakeholders
The Board places a high priority on transparent and effective communications with shareholders. As an AIM listed
company there is a need to provide fair and balanced information in a way that is understandable to all stakeholders. The
Board recognises the importance of engaging with all stakeholders including employees, investors, partners, suppliers,
media and communities.
The primary communication tool with our shareholders is the Company’s website, https://www.ascentresources.co.uk.
The shareholders are also kept up to date through Regulatory News Service, (“RNS”) on regulatory matters and matters
of material substance.
The Company reports formally to its shareholders and the market twice each year with the release of its interim and full
year results. The Company’s Annual Report and Notice of Annual General Meetings (AGM) are published for all
shareholders. These reports contain full details of all the principal events of the relevant period together with an
assessment of current trading and future prospects. The Reports together with other investor presentations are also
available on the website. The Company has full electronic communications in place, so that shareholders (unless they
elect otherwise) will have access to communications through the Company’s website. A much more effective and
environmentally friendly way of interacting with shareholders.
Upon conclusion of Shareholder meetings arrangements are made that the outcomes of votes cast by shareholders can
be disclosed in a clear and transparent manner. If a significant proportion of votes (20%+) was ever cast against a
resolution, the Company would provide, on a timely basis, an explanation of what actions it intends to take to understand
the reasons behind that vote result, and, where appropriate, any different action it has taken, or will take, as a result of
the vote.
Board and committee meetings
The Board holds five scheduled board meetings or conference calls throughout the year and ad-hoc calls are scheduled
as and when the business demands.
Attendances of Directors at board and committee meetings convened in the year, and which they were eligible to attend,
are set out below:
Director
Number of meetings in year - Attendance
James Parsons
Andrew Dennan
Ewen Ainsworth (resigned 28 February 2022)
Stephen Birrell
Malcom Graham-Wood
Marco Fumagalli (appointed 22 December 2022)
Board Meetings
(14 in total – scheduled
& ad-hoc)
Remuneration
Committee (3
in total)
Audit
Committee (2
in total)
HSE
Committee (1
in total)
14
14
5
14
14
-
-
-
1
3
2
-
-
2
-
2
2
-
-
1
-
1
-
-
Committees of the Board
The Committees of the Board comprise of non-executive directors.
Audit Committee
The membership of the Audit Committee during the first part of 2022 comprised of Ewen Ainsworth (chair) and Malcolm
Graham-Wood. Following Ewen’s departure from the Board in February 2022 Malcolm assumed the role of Chair of the
Committee with Stephen Birrell joining the Committee. In early 2023 when Marco Fumagalli joined the Board Malcolm
stepped down from the Chair and Marco assumed the role of Chair of the Audit Committee. Stephen Birrell stepped down
from the Audit Committee. The Audit Committee determines and examines any matters relating to the financial affairs
Ascent Resources plc Annual Report and Financial Statements 2022 I 29
of the Group including the terms of engagement of the Group’s auditors and, in consultation with the auditors, the scope
of the audit.
The Report of the Audit Committee for 2022 is set out on page 31.
Remuneration Committee
The membership of the Remuneration Committee during 2022 comprised of Stephen Birrell (chair) and Ewen Ainsworth.
Following Ewen’s departure from the Board in February 2022 Malcolm Graham Wood joined the Committee. The
Remuneration Committee is responsible for reviewing the performance of the Executive Chairman and the Executive
directors, for setting the scale and structure of their remuneration, paying due regard to the interests of shareholders
and the performance of the Group. It also reviews the performance of the senior management, sets and reviews their
remuneration and the terms of their service contracts and considers the Group’s bonus and option schemes, determining
targets for any performance- related pay schemes operated by the Company.
The Report of the Remuneration Committee for 2022 is set out on pages 32-33.
The terms of reference of the Audit Committee and the Remuneration Committee are set out on the Company website.
The appropriateness of the Group’s governance structures will be reviewed annually in light of further developments of
accepted best practice and the development of the Company.
HSE Committee
The HSE Committee is chaired by Stephen Birrell. The Terms of Reference of the HSE Committee were reviewed and
approved by the Board in September 2021. The Committee meets as and when required. The Committee met once during
2022.
Technical and Reserves Committee
The Technical and Reserves Committee was set up in September 2021 and is chaired by Stephen Birrell. The Terms of
Reference of the Technical and Reserves Committee were reviewed and approved by the Board in September 2021. The
Committee meets once a year.
Internal controls
The Board acknowledges responsibility for maintaining appropriate internal control systems and procedures to safeguard
the shareholders’ investments and the assets, employees and the business of the Group.
The Board has established and operates a policy of continuous review and development of appropriate financial controls
together with operating procedures consistent with the accounting policies of the Group.
Internal audit
The Board does not consider it appropriate for the current size of the Group to establish an internal audit function.
Bribery and corruption
The Bribery Act 2010 came into force on 1 July 2011. The Company is committed to acting ethically, fairly and with
integrity in all its endeavours and compliance with legislation is monitored. The Company has a zero-tolerance approach
to bribery and corruption and has an anti-bribery policy in place to protect the Company, its employees and those third
parties to which the business engages with. The directors and employees of the company receive training on this subject.
Ascent Resources plc Annual Report and Financial Statements 2022 I 30
Audit Committee Report
Committee composition
On 28 February 2022, Ewen Ainsworth stepped down as a Non-executive Director of the Company. Malcolm Graham-
Wood was appointed as Chair of the Audit Committee and Stephen Birrell was appointed to the Committee. Following
Marco Fumagalli’s appointment to the Board Malcolm stepped down as chair and Marco assumed the role. Stephen
Birrell stepped down as a member of the Committee.
The role of the Audit Committee includes:
Financial reporting – ensure the integrity of the financial statements including the annual and interim reports.
Internal controls and Risk Management Systems – review the effectiveness of internal controls and risk management systems.
•
•
• Review the need for an internal audit function.
• Monitor and review the external audit, including their independence.
•
•
To review the annual audit plan.
To approve fees in respect of non-audit services.
Terms of reference of the Audit Committee are available on the Company’s website.
During 2022 the Audit Committee met to review and approve the 2021 year-end financial results and the 2022 interim
results. The terms of reference of the Committee were reviewed during the year. The Committee met with the Auditor
without Management present, there were no issues of concern raised.
Key matters considered
• Assessment of going concern forecasts and associated disclosures.
• Assessment of oil and gas assets for impairment and the underlying assumptions used by management.
• Reports of the external auditor concerning its audit and review of the financial statements of the Group.
• Corporate governance practice and disclosure
• Risk Register
• Anti-Bribery and Corruption policy
• Gifts Register
• Accounting Policies
Going concern
The Group and Company financial statements have been prepared under the going concern assumption, which presumes
that the Group and Company will be able to meet its obligations as they fall due for the foreseeable future.
The Company has raised £0.4 million in new equity since the balance sheet date from new and existing investors and has
settled revenue disputes with its JV partner and settled invoice disputes with its JV operator such that a net €288,000
was received by the Company. Under the Group’s forecasts, the funds raised together with existing bank balances provide
sufficient funding for at least two months, as of the date of the publication of this report, based on anticipated outgoings.
In addition to the need to raise additional funding in the next two months, the forecasts are sensitive to the timing and
cash flows associated with the continuing situation in Slovenia, and discretionary spend incurred with executing the ESG
Metals Strategy through acquisition. As such, the Company will need to raise new capital within the forecast period to
fund such discretionary spend.
Negotiations with potential new investors is ongoing and based on historical and recent support from new and existing
investors the Board believes that such funding, if and when required, could be obtained through new debt or equity
issuances. However, the ability to raise these funds is not guaranteed at the date of signing these financial statements.
As a consequence, there is a material uncertainty to the going concern of the Group.
Approved for issue by the Board of Directors and signed on its behalf:
Marco Fumagalli
Chair of the Audit Committee
28 June 2023
Ascent Resources plc Annual Report and Financial Statements 2022 I 31
Remuneration Committee Report
The Remuneration Committee during early 2022 comprised of Stephen Birrell (chairman) and Ewen Ainsworth both
independent non-executive directors. On 28 February 2022, Ewen Ainsworth stepped down as a non-executive director
and Malcolm Graham-Wood was appointed to the Committee.
The Committee is responsible for reviewing the performance of the Executive Chairman and the executive directors, for
setting the scale and structure of their remuneration, paying due regard to the interests of shareholders and the
performance of the Group. It also reviews the performance of the senior management, sets and reviews their
remuneration and the terms of their service contracts and considers the Group’s bonus and option schemes, determining
targets for any performance-related pay schemes operated by the Company.
The Remuneration Committee has amongst its main functions the review of the structure, size and composition of the
Board based upon the skills, knowledge and experience required to ensure that the Board operates efficiently and
effectively. It will also identify and nominate suitable candidates to the join the Board when vacancies arise and make
recommendations to the Board for the re-appointment of directors. Given the size of the Company the Board do not feel
that it is necessary at present to have a separate Nominations Committee and currently matters relating to nominations
are dealt with by either the Remuneration Committee or the Board as a whole.
The Remuneration Committee will keep the remuneration of the executive directors and members of the executive team
under review and ensure that they are remunerated at the right levels taking into account delivery of strategy and growth
of the business. The Committee will seek external advice if necessary.
The terms of reference of the Remuneration Committee are set out on Ascent’s website. The Committee met three times
during 2022.
Remuneration policy
The Group’s and the Company’s policy is to provide remuneration packages that will attract, retain and motivate its
executive directors and senior management. This consists of a basic salary, ancillary benefits and other performance-
related remuneration appropriate to their individual responsibilities and having regard to the remuneration levels of
comparable posts. The Remuneration Committee determines the contract term, basic salary, and other remuneration for
the members of the Board and the senior management team.
Executive Directors – Remuneration package
The Company offers a remuneration package which consists of basic salary, bonus payments, share options or other
incentive plan awards and a pension to Executive Directors. The level of bonus is based on individual performance and
that of the Group as a whole. A Company scorecard with performance targets, which are set by the Remuneration
Committee, is agreed and upon which the level of bonus award is judged. The scorecard is set at the beginning of the
year and reviewed mid-year and at the end of the year. The target bonus range is up to 100% of base salary.
The executive directors have a six month notice period and upon change of control would receive a payment equivalent
to 18 months base salary.
Non - Executive Directors – Fees
The Company pays non-executive directors fees which are set at a level in line with market and appropriate to the size of
the business. Fees are paid monthly in cash and include the payment for chairing a Board Committee.
Ascent Resources plc Annual Report and Financial Statements 2022 I 32
Remuneration of Directors
The following remuneration table comprises Directors’ salaries and benefits in kind that were payable to Directors who
held office during the year ended 31 December 2022:
Executive Directors 2022
J Parsons
A Dennan
Non-Executive Directors
E Ainsworth
S Birrell
M Graham-Wood
M Fumagalli
Total
Salary/fees
£
150,000
250,000
Salary/fees
£
6,500
34,583
34,583
-
475,666
Bonus
£
22,500*
37,500*
Bonus
£
-
-
-
-
Pensions
£
12,000
20,000
Benefits in Kind
£
4,931
5,224
Pensions
£
-
Benefits in Kind
£
-
-
-
-
-
-
-
Total
£
189,431
312,724
Total
£
6,500
34,583
34,583
-
60,000
32,000
10,155
577,821
*Bonuses were awarded by the independent Remuneration Committee for the period 2022 however the executives have elected not
to receive the cash until the Company’s funding situation has improved.
The following remuneration table comprises Directors’ salaries and benefits in kind that were payable to Directors who
held office during the year ended 31 December 2021:
Executive Directors 2021
J Parsons
A Dennan
Non-Executive Directors
E Ainsworth
S Birrell
M Graham-Wood
M Fumagalli
Total
Salary/fees
£
150,000
242,100
Salary/fees
£
30,000
30,000
30,000
-
482,100
Bonus
£
32,400
54,000
Bonus
£
-
-
-
-
Pensions
£
12,000
12,600
Benefits in Kind
£
4,645
3,531
Pensions
£
-
Benefits in Kind
£
-
-
-
-
-
-
-
Total
£
199,045
321,231
Total
£
30,000
30,000
30,000
-
86,200
33,600
8,176
610,276
The following table sets out the Directors’ incentive share options awarded to directors who held office at 31 December
2022:
2022
J Parsons
A Dennan
S Birrell
M Graham-Wood
M Fumagalli
Opening
1,385,894
1,385,894
-
-
-
Granted /
(Lapsed)
-
-
-
-
-
Closing
1,385,894
1,385,894
-
-
-
Date
Granted
05.03.2020
14.04.2020
-
-
-
Share Price
at Grant
£0.045
£0.034
-
-
-
Approved for issue by the Board of Directors and signed on its behalf:
Stephen Birrell
Chair of the Remuneration Committee
28 June 2023
Exercise Period
Exercise
Price
End
Start
£0.05 05.03.2023 04.03.2025
£0.05 13.04.2023 13.04.2025
-
-
-
-
-
-
-
-
-
Ascent Resources plc Annual Report and Financial Statements 2022 I 33
Statement of Directors Responsibilities
The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have elected to prepare the Group and Company financial in accordance with UK-adopted international accounting
standards and, as regards the Company financial statements, as applied in accordance with the requirements of the
Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of
the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules
of the London Stock Exchange for companies trading securities on the AIM Market.
In preparing these financial statements the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with UK-adopted international accounting standards, subject
to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a
website. Financial statements are published on the Company’s website (www.ascentresources.co.uk) in accordance with
legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of
the Directors. The Directors’ responsibility also extends to the ongoing integrity of the Financial Statements contained
therein.
Ascent Resources plc Annual Report and Financial Statements 2022 I 34
Independent Auditor’s Report to the members of Ascent Resources plc
Opinion
We have audited the financial statements of Ascent Resources Plc (the ‘parent company’) and its subsidiaries (the ‘group’)
for the year ended 31 December 2022 which comprise the Consolidated and Parent Company Statements of
Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and
Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and
notes to the financial statements, including significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and UK-adopted international accounting standards.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2022
and of the group’s and parent company’s loss for the year then ended;
have been properly prepared in accordance with UK-adopted international accounting standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which indicates that the group will require further funds to be
raised over the next 12 months in order for the group to fund its discretionary spend as well as working capital
requirements. As stated in note 1, these events or conditions indicate that a material uncertainty exists that may cast
significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s
and parent company’s ability to continue to adopt the going concern basis of accounting included a review of the cash
flow forecasts prepared by management, a review of management’s assessment of going concern and post year end
information impacting going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report. Our application of materiality
Our application of materiality
Materiality
Basis for materiality
Group £51,000 (2021: £564,000)
1.5% of net assets (2021: 1.5% of net assets)
Company £50,000 (2021: £394,000)
1.5% of net assets (2021: 1.5% of net assets)
We consider net assets to be the most significant determinant of the group’s financial position and performance used by
shareholders, with the key financial statement balances being intangible exploration and evaluation assets and cash and
cash equivalents. The going concern of the group is dependent on its ability to fund operations going forward, as well as
Ascent Resources plc Annual Report and Financial Statements 2022 I 35
on the valuation of its assets, which represent the underlying value of the group. The basis for calculating materiality was
unchanged from the prior year.
Whilst materiality for the group financial statements as a whole was set at £51,000 (2021: £564,000) and £46,000 for
income statement testing , materiality for the parent company was £50,000 (2021: £394,000). Performance materiality
at 70% (2021:70%) was set at £35,700 (2021: £276,360) for the group, £35,000 (2021: £48,300) for the parent company.
We applied the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements.
We agreed with the audit committee that we would report to the committee all audit differences identified during the
course of our audit in excess of £2,550 (2021:£28,200) for the group and £2,500 (2021:£19,740) for the parent company.
Our approach to the audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial
Statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors
and considered future events that are inherently uncertain such as the impairment of intangible assets, investments
(parent company) and in and assumptions used in calculating the fair value of financial assets. We also addressed the
risk of management override of internal controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
The Group holds five (active) companies that are consolidated within these financial statements, two based in the UK and
three based in Europe. We identified two significant components, being the parent company, Ascent Resources Plc and
Ascent Slovenia Limited, which were subject to a full scope audit by a team with relevant sector experience from the PKF
London office. No component auditors were engaged.
In addition, we identified components which were not significant to the group and performed an audit of specific account
balances and classes of transactions to ensure that balances which were material to the group were subject to audit
procedures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. In addition to the matters described in the Material uncertainty
related to concern section we have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter
How our scope addressed this matter
Carrying Value of Exploration Assets (note 11)
The group holds intangible assets in relation to
capitalised exploration costs in respect of its projects
in Slovenia. There is the risk that these assets have
been incorrectly capitalised in accordance with IFRS
6 and that there are indicators of impairment as at
31 December 2022.
Particularly for early-stage exploration projects
where the calculation of recoverable amount via
value
is not possible,
management’s assessment of impairment under IFRS
calculations
in use
Our audit work included:
•
Confirmation that the Group has good title
to the applicable exploration licences and
has fulfilled any specific conditions therein
(including
expenditure
minimum
requirements).
• Obtaining a copy of any available Technical
Reports and challenging the inputs into the
report against the carrying value of the
assets.
Ascent Resources plc Annual Report and Financial Statements 2022 I 36
6 requires estimation and judgement. For this reason
along with the financial significance of the account
balance, we have assessed this to be a key audit
matter.
In addition there are a number of disputes ongoing in
relation to Slovenian assets, including claims brought
by the company against the Republic of Slovenia
under the Energy Charter Treaty and the UK-Slovenia
Bileteral
Investment Treaty, and commercial
disputes between the company and its JV partner
Geoenergo and JV service provider Petrol Geo. These
disputes present a further risk of overstatement of
these assets.
Carrying Value of Producing Assets (note 10)
Management are required to assess the producing
assets for impairment indicators under IAS 36. In this
case, impairment indicators include but are not
limited to a decline in revenue generated from assets
and the disruption in operations due to dispute in
Slovenia as detailed above. The production levels in
Slovenia have not yet reached the desired levels and
no significant progress has been made in relation to
the ongoing dispute with the Republic of Slovenia, as
well as continue disputes between the company and
its JV partner.
The varying value and ultimate recoverability of the
assets is linked to the outcome of these disputes and
appropriate renewal of the concession contract.
There is a risk that the carrying value of these assets
is overstated as management’s assessment of the
carrying value is based on estimates and judgements
regarding future cashflows. For this reason along
with the financial significance of the account balance,
we have assessment this to be a key audit matter.
Carrying value of investments and recoverability of
intragroup balances (Parent Company) (Note 12
&22)
At 31 December 2022, the Investments in
subsidiaries and intragroup receivables were
significant assets in the Parent Company's financial
statements. The recoverability of these balances is
directly linked to the recoverability of the tangible
and intangible assets held by those entities, and
hence may not be fully recoverable.
•
• Assessment of progress at the individual
projects during the year and post year-end.
Consideration of management’s impairment
reviews,
including challenge to all key
assumptions and sensitivity to reasonably
possible changes.
Considering the status of the ongoing
disputes in Slovenia.
Considering
disclosure
statements.
appropriateness
the
the
included
of
financial
in
•
•
In April 2022, the Republic of Slovenia approved
amendments to its Mining Law which include a total
ban on hydraulic stimulation. This triggered an
impairment review by management which resulted in
a full impairment to the E and E assets held.
Our audit work included:
• Reviewing
•
•
the
latest
Consideration of management’s impairment
reviews,
including challenge to all key
assumptions and sensitivity to reasonably
possible changes in the impairment model.
developments
regarding the permit applications, including
obtaining relevant correspondence where
appropriate and any legal advice obtained
by the Group, assessing the status of
disputes in country and whether or not
hydraulic stimulation can be done.
the
Considering
included
disclosure
statements.
appropriateness
the
of
financial
in
As above, the amendments by the Republic of
Slovenia to its Mining Law triggered an impairment
review by management which resulted in a full
impairment to the producing assets.
Our work in this area included:
•
Confirmation of ownership of investments.
• Assessment of expected credit losses against
intragroup balances in accordance with IFRS
9 criteria.
• Assessing
the
methodology applied by management in
their assessment of the recoverable amount
the appropriateness of
Ascent Resources plc Annual Report and Financial Statements 2022 I 37
The recoverability of the underlying assets are
subject to significant management estimates and
judgements regarding the future cashflows.
Therefore, for this reason along with the financial
significance of the account balance, we have
assessed this to be a key audit matter.
of intragroup loans by comparing it to the
Group’s accounting policy.
•
• Assessing management’s evaluation of the
recoverable amounts of intragroup loans
including the review of the impairment
provisions and net asset values of
components that have intercompany debt.
Checking that intragroup loans have been
reconciled and confirm that there are no
material differences.
Considerations
of
of
investments and intra company loans by
reference to underlying net asset values and
exploration projects.
Considering
disclosure
statements.
appropriateness
the
the
included
of
financial
recoverability
in
•
•
As the investments and intragroup receivables are
directly linked to the carrying value of exploration
and producing assets, both intercompany receivables
and investments were impaired to a carrying value of
from £16m and £32.4m (respectively) to £nil at the
year end.
We draw attention to the findings disclosed within
the other Key audit matters above, which are relevant
to
investments and
carrying value of
recoverability of intragroup receivables.
the
Other information
The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the group and parent company financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 38
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of
the group and parent company financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group
and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they operate to
identify laws and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through discussions with management, application
of audit knowledge and experience of the sector. We ensured that the audit team collectively had the
appropriate experience with auditing entities within this industry, facing similar audit and business risks, and
of a similar size.
• We determined the principal laws and regulations relevant to the group and parent company in this regard to
be those arising from:
o AIM Rules;
o UK employment law; and
o
Local tax laws and regulations.
• We designed our audit procedures to ensure the audit team considered whether there were any indications of
non-compliance by the group and parent company with those laws and regulations. These procedures included,
but were not limited to:
Ascent Resources plc Annual Report and Financial Statements 2022 I 39
o Making enquiries of management;
o A review of Board minutes;
o A review of legal ledger accounts; and
o A review of RNS announcements.
• We addressed the risk of fraud arising from management override of controls by performing audit procedures
which included but were not limited to: the testing of journals, reviewing accounting estimates for evidence of
bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal
course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the
more that compliance with a law or regulation is removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding
irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
29 June 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
Ascent Resources plc Annual Report and Financial Statements 2022 I 40
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Revenue
Cost of Sales
Depreciation of oil & gas assets
Gross loss
Administrative expenses
Decommissioning provision
Goodwill impairment
Impairment expenses
Operating loss
Finance cost
Net finance costs
Loss before taxation
Income tax expense
Loss for the year
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Notes
2
2
10
3
16
9
10,11,12
5
6
Year Ended
31 December
2022
£’000s
581
(504)
(214)
(137)
Year Ended
31 December
2021
£’000s
-
(19)
(328)
(347)
(1,472)
(326)
(203)
(39,721)
(41,859)
(32)
(32)
(1,596)
-
-
-
(1,943)
(28)
(28)
(41,891)
(1,971)
-
(41,891)
-
(1,971)
318
(41,573)
(1,621)
(3,592)
Earnings per share
Basic & fully diluted loss per share (Pence)
8
(31.27)
(1.83)
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 41
Consolidated Statement of Financial Position
Company Number: 05239285
As at 31 December 2022
Assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Goodwill
Prepaid abandonment fund
Total non-current assets
Current Assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Attributable to the equity holders of the Parent Company
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings
Total equity attributable to the shareholders
Total equity
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Current liabilities
Borrowings
Contingent consideration on acquisition
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2022
£’000s
Notes
31 December
2021
£’000s
10
11
9
13
13
25
20
24
15
16
15
17
18
4
-
-
300
304
11
325
336
640
8,214
76,298
570
2,131
(276)
(88,457)
(1,520)
(1,520)
516
663
1,179
5
-
976
981
2,160
640
21,111
18,463
653
300
40,527
8
97
105
40,632
7,998
75,021
570
2,129
(594)
(46,566)
35,558
35,558
536
312
848
5
450
771
1,226
2,074
40,632
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 28 June 2023 signed on
its behalf by:
James Parsons
Executive Chairman
28 June 2023
Ascent Resources plc Annual Report and Financial Statements 2022 I 42
Company Statement of Financial Position
Company Number: 05239285
As at 31 December 2022
Assets
Non-current assets
Property, plant and equipment
Investment in subsidiaries and joint ventures
Intercompany receivables
Total non-current assets
Current Assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Retained loss
Total equity
Non-current liabilities
Borrowings
Total non-current liabilities
Current liabilities
Borrowings
Contingent consideration on acquisition
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2022
£’000s
Notes
31 December
2021
£’000s
12
22
14
25
20
24
15
15
17
19
4
-
-
4
24
302
326
330
8,214
76,298
570
2,131
(87,623)
(410)
516
516
5
-
219
224
740
330
-
16,102
27,520
43,622
28
88
116
43,738
7,998
75,021
570
2,129
(43,464)
42,254
536
536
5
450
493
948
1,484
43,738
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been
separately presented in these accounts. The Company loss for the year was £44,159,000 (2021: loss of £1,550,000) which
included an impairment of £43,622,000 (2021: nil) to investment in subsidiaries and intercompany receivables.
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 28 June 2023 and signed
on its behalf by:
James Parsons
Executive Chairman
28 June 2023
Ascent Resources plc Annual Report and Financial Statements 2022 I 43
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Balance as at 1 January 2021
Comprehensive income
Loss for the year
Other comprehensive income
Currency translation differences
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Costs related to share issues
Equity value of convertible loan
Total transactions with owners
Balance at 31 December 2021
Balance at 1 January 2022
Comprehensive income
Loss for the year
Other comprehensive income
Currency translation differences
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Costs related to share issues
Share-based payments
Total transactions with owners
Balance at 31 December 2022
Notes
Share
capital
£’000s
7,928
Share
premium
£’000s
73,863
Merger
reserve
£’000s
570
Equity
reserve
£’000s
73
-
-
-
70
-
-
70
7,998
7,998
-
-
-
216
-
-
216
8,214
20
-
-
-
1,216
(58)
-
1,158
75,021
75,021
-
-
-
1,366
(89)
-
1,277
-
-
-
-
-
-
-
570
570
-
-
-
-
-
-
-
76,298
570
-
-
-
-
-
(73)
(73)
-
-
-
-
-
-
-
-
-
-
Share
base
payment
reserve
£’000s
2,129
-
-
-
-
-
-
-
Translatio
n reserve
£’000s
1,027
Retained
earnings
£’000s
(44,595)
Total
£’000s
40,995
-
(1,971)
(1,971)
(1,621)
(1,621)
-
(1,971)
-
-
-
-
-
-
-
-
(1,621)
(3,592)
1,286
(58)
(73)
1,155
38,558
38,558
2,129
2,129
(594)
(594)
(46,566)
(46,566)
-
-
-
-
-
2
2
2,131
24
-
(41,891)
(41,891)
318
318
-
318
(41,891)
(41,573)
-
-
-
-
-
-
-
-
1,582
(89)
2
1,495
(276)
(88,457)
(1,520)
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 44
Company Statement of Changes in Equity
For the year ended 31 December 2022
Balance as at 1 January 2021
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Costs related to share issues
Equity value of convertible loan
Total transactions with owners
Balance at 31 December 2021
Balance at 1 January 2022
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Costs related to share issues
Share-based payments
Total transactions with owners
Share
capital
£’000s
7,928
Share
premium
£’000s
73,863
Merger
reserve
£’000s
570
Equity
reserve
£’000s
73
Share base
payment
reserve
£’000s
2,129
Retained
earnings
£’000s
(41,914)
Total
£’000s
42,649
-
-
70
-
-
70
7,998
7,998
-
-
216
-
-
216
-
-
1,216
(58)
-
1,158
75,021
75,021
-
-
1,366
(89)
-
1,277
-
-
-
-
-
-
570
570
-
-
-
-
-
-
-
-
-
-
(73)
(73)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
2
(1,550)
(1,550)
(1,550)
(1,550)
2,129
2,129
(43,464)
(43,464)
(44,159)
(44,159)
(44,159)
(44,159)
-
-
-
-
-
-
-
-
1,286
(58)
(73)
1,155
42,254
42,254
1,582
(89)
2
1,495
(410)
Balance at 31 December 2022
8,214
76,298
570
2,131
(87,623)
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 45
Consolidated Cash Flow Statement
For the year ended 31 December 2022
Cash flows from operations
Loss after tax for the year
Depreciation
Impairment of PPE and exploration asset
Goodwill impairment
Decommissioning provision
Change in receivables
Change in payables
Increase in share-based payments
Exchange differences
Net cash used in operating activities
Cash flows from investing activities
Payments from fixed assets
Net cash used in investing activities
Cash flows from financing activities
Loans advanced
Loans repaid
Interest paid
Proceeds from issue of shares
Share issue costs
Net cash generated from financing activities
Net increase / (decrease) in cash and cash equivalents for the year
Effect of foreign exchange differences
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
(41,891)
214
39,721
203
326
3
205
2
6
(1,211)
(1)
(1)
-
(20)
(32)
1,581
(89)
1,440
228
-
97
325
(1,971)
328
-
-
-
42
75
12
42
(1,472)
(3)
(3)
375
-
-
1,140
(58)
1,457
(18)
-
115
97
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 46
Company Cash Flow Statement
For the year ended 31 December 2022
Cash flows from operations
Loss after tax for the year
Adjustments for:
Change in receivables
Change in payables
Change in intercompany receivables
Impairment of Investment in subsidiaries
Increase in share-based payments
Change in contingent consideration in acquisition
Exchange differences
Net cash used in operating activities
Cash flows from investing activities
Property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Loans advanced
Loans repaid
Interest paid
Proceeds from issue of shares
Share issue costs
Net cash generated from financing activities
Net increase / (decrease) in cash and cash equivalents for the year
Effect of foreign exchange differences
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
(44,159)
(1,550)
4
(274)
27,520
16,102
2
(450)
-
(1,255)
(4)
(4)
-
(20)
-
1,582
(89)
1,473
214
-
88
302
42
76
(79)
-
12
-
22
(1,477)
-
-
375
-
-
1,140
(58)
1,457
(19)
-
107
88
The Notes on pages 48 to 76 are an integral part of these consolidated financial statements.
Ascent Resources plc Annual Report and Financial Statements 2022 I 47
Notes to the Accounts
1. Accounting policies
Reporting entity
Ascent Resources plc (Company no: 05239285) (‘the Company’ or ‘Ascent’) is a company domiciled and incorporated in
England. The address of the Company’s registered office is 5 New Street Square, London, EC4A 3TW. The consolidated
financial statements of the Company for the year ended 31 December 2022 comprise the Company and its subsidiaries
(together referred to as the ‘Group’). The Parent Company financial statements present information about the Company
as a separate entity and not about its Group.
The Company is admitted to AIM, a market of the London Stock Exchange.
Statement of compliance
The financial statements of the Group and Company have been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006.
The Group’s and Company’s financial statements for the year ended 31 December 2022 were approved and authorised
for issue by the Board of Directors on 28 June 2023 and the Statements of Financial Position were signed on behalf of the
Board by James Parsons.
Both the Parent Company financial statements and the Group financial statements give a true and fair view and have
been prepared and approved by the Directors in accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006.
Basis of preparation
In publishing the Parent Company financial statements here together with the Group financial statements, the Company
is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income
statement and related notes that form a part of these approved financial statements. The Company loss for the year was
£44,159,000 (2021: loss of £1,550,000).
The presentational currency of the Group is British Pounds Stirling (“GBP”) and the functional currency of the Group’s
subsidiaries domiciled outside of the UK in Malta, Slovenia and Netherlands are in Euros (“EUR”).
Measurement Convention
The financial statements have been prepared under the historical cost convention. The financial statements are
presented in sterling and have been rounded to the nearest thousand (£’000s) except where otherwise indicated.
The principal accounting policies set out below have been consistently applied to all periods presented.
Going Concern
The Group and Company financial statements have been prepared under the going concern assumption, which presumes
that the Group and Company will be able to meet its obligations as they fall due for the foreseeable future.
The Company has raised £0.4 million in new equity since the balance sheet date from new and existing investors and has
settled revenue disputes with its JV partner and settled invoice disputes with its JV operator such that a net €288,000
was received by the Company. Under the Group’s forecasts, the funds raised together with existing bank balances provide
sufficient funding for at least two months, as of the date of the publication of this report, based on anticipated outgoings.
In addition to the need to raise additional funding in the next two months, the forecasts are sensitive to the timing and
cash flows associated with the continuing situation in Slovenia, and discretionary spend incurred with executing the ESG
Metals Strategy through acquisition. As such, the Company will need to raise new capital within the forecast period to
fund such discretionary spend.
Ascent Resources plc Annual Report and Financial Statements 2022 I 48
Notes to the Accounts continued
Negotiations with potential new investors is ongoing and based on historical and recent support from new and existing
investors the Board believes that such funding, if and when required, could be obtained through new debt or equity
issuances. However, the ability to raise these funds is not guaranteed at the date of signing these financial statements.
As a consequence, there is a material uncertainty to the going concern of the Group.
New and amended Standards effective for 31 December 2022 year-end adopted by the Group:
i. The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January
2022. Their adoption has not had any material impact on the disclosures or on the amounts reported in these
financial statements:
Standard
Description
Amendments to IFRS 3
Business Combinations – Reference to the Conceptual Framework
Amendments to IFRS 16
Property, Plant and Equipment
Amendments to IFRS 37
Provisions, Contingent Liabilities and Contingent Assets
N/A
Annual Improvements to IFRS Standards 2018-2020 Cycle
The new standards effective from 1 January 2022, as listed above, did not have a material effect on the Group’s financial
statements.
ii. Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of
these financial statements which have not been adopted early:
Standard
Description
Effective date
IAS 1 amendments Presentation of Financial Statements and IFRS Practice Statement 2:
1 January 2023*
Disclosure of Accounting Policies
IAS 8 amendments Accounting policies, Changes in Accounting Estimates and Errors – Definition
1 January 2023*
of Accounting Estimates
IAS 12 amendments Income Taxes – Deferred Tax related to Assets and Liabilities arising from a
1 January 2023*
Single Transaction
IAS 17 amendments Insurance contracts – Initial Application of IFRS 17 and IFRS 9 – Comparative
1 January 2023*
Information
*Subject to UK endorsement
There are no IFRS’s or IFRIC interpretations that are not yet effective that would be expected to have a material impact
on the Company or Group.
Estimates and judgements
Exploration and evaluation assets (Note 11) – exploration and evaluation costs are initially classified and held as
intangible fixed assets rather than being expensed. The carrying value of intangible exploration and evaluation assets are
then determined. Management considers these assets for indicators of impairment under IFRS 6 at least annually based
on an estimation of the recoverability of the cost pool from future development and production of the related oil and
gas reserves which requires judgement. This assessment includes assessment of the underlying financial models for the
Petišovci field and requires estimates of gas reserves, production, gas prices, operating and capital costs associated with
the field and discount rates (see Note 10) using the fair value less cost to development method which is commonplace in
the oil and gas sector. The forecasts are based on the JV partners submitting and obtaining approval for an environmental
impact assessment, and also the renewal of the concessions that are currently scheduled to expire in November 2023.
The Board considers these factors to be an ordinary risk for oil and gas developments.
Ascent Resources plc Annual Report and Financial Statements 2022 I 49
Notes to the Accounts continued
In April 2022, the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic
stimulation. The Company believes that this ban has substantially destroyed the economic value of the Petisovci field.
Consequently, the operational and development review conducted by the Company determined that further field
development was not economically viable and that the current producing wells had a remaining production life of 5.5
years. The result of the impairment review identified an impairment charge of £17,800,000 and the carrying value of
exploration assets at 31 December 2022 are nil (2021: £18,463,000).
Reserves – Reserves are proven, and probable oil and gas reserves calculated on an entitlement basis and are integral to
the assessment of the carrying value of the exploration, evaluation and production assets. Estimates of commercial
reserves include estimates of the amount of oil and gas in place, assumptions about reservoir performance over the life
of the field and assumptions about commercial factors which, in turn, will be affected by the future oil and gas price. (See
page 15)
Carrying value of property, plant and equipment (developed oil and gas assets) (Note 10) – In April 2022, the Republic
of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently,
the operational and development review conducted by the Company determined that further field development was not
economically viable and that the current producing wells had a remaining production life of 5.5 years. The result of the
impairment review identified an impairment charge of £21,665,000 and the carrying value of property, plant and
equipment assets at 31 December 2022 was nil (2021: £21,106,000).
The developed oil and gas assets are assessed for indicators of impairment and tested for impairment at each reporting
date when indicators of impairment exist. An impairment test was performed based on a discounted cash flow model
using a fair value less cost to develop approach commonplace within the oil and gas sector. Key inputs requiring judgment
and estimate included gas prices, production and reserves, future costs and discount rates. With regard to the financial
inputs, a weighted average cost of capital (“WACC”) was used as the discount rate, and calculated as 12.0% (post-tax,
nominal) and for gas prices, the Company has used a combination of futures rates for the local region.
Gas prices in the near term are forecast based on management’s expectation of market prices less deductions under the
INA contract, before reverting to market prices with reference to the forward curve following the approval of the IPPC
permit and transition to gas sales taking place into the Slovenian market. The forecasts include future well workovers to
access the reserves included in the model together with the wider estimated field development costs to access field
reserves. Refer to Note 9. As with the exploration and evaluation assets, judgment was required regarding the likelihood
of the necessary environmental permits being granted and the status of legal matters which are key to the commercial
value of the assets.
Depreciation of property, plant and equipment (Note 10) – Upon commencing commercial production we began to
depreciate the assets associated with current production. The depreciation on a unit of production basis requires
judgment and estimation in terms of the applicable reserves over which the assets are depreciated and the extent to
which future capital expenditure is included in the depreciable cost when such expenditure is required to extract the
reserve base. The calculations have been based on actual production, estimates of P50 reserves and best estimates of
the future workover costs on the producing wells to extract this reserve. The depreciation charge for the year was
£214,000 (2021: £328,000) including both depreciation associated with the unit of production method and straight-line
charges for existing processing infrastructure. This is included in Notes 9 and 10 below.
Deferred tax (Note 6) – judgment has been required in assessing the extent to which a deferred tax asset is recorded, or
not recorded, in respect of the Slovenian operations. Noting the history of taxable losses and the initial phases of
production, together with assessment of budgets and forecasts of tax in 2022 the Board has concluded that no deferred
tax asset is yet applicable. This is included at Note 7.
Decommissioning costs (Note 16)
Where a material obligation for the removal of wells and production facilities and site restoration at the end of the field
life exists, a provision for decommissioning is recognised. The amount recognised is the one-off amount to the Company’s
JV partner as per the Revised Joint Venture Agreement. A change in the key assumptions used to calculate rehabilitation
provisions could have a material impact on the carrying value of the provisions.
Ascent Resources plc Annual Report and Financial Statements 2022 I 50
Notes to the Accounts continued
The carrying value of these provisions in the financial statements represents an estimate of the future costs expected to
be incurred to rehabilitate each well, which is reviewed at least annually. Future costs are estimated by internal experts,
with external specialists engaged periodically to assist management. These estimates are based on current price
observations, taking into account developments in technology and changes to legal and contractual requirements.
Expectations regarding cost inflation are also incorporated. He carrying value of these provisions have not been
discounted to provide a present value of these future costs due to the near-term uncertainty of when these costs may
materialise.
Intercompany receivables (Note 22) – In line with the requirements of IFRS 9 the Board has carried out an assessment
of the potential future credit loss on intercompany receivables under a number of scenarios. Arriving at the expected
credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receivables, the
possible credit losses that could arise and the probabilities for these scenarios. In April 2022, the Republic of Slovenia
approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that further field development was not
economically viable and that the current producing wells had a remaining production life of 5.5 years. Recognising the
loss in economic value, management took the decision fully impair the receivable in the Company accounts (2021: £32
million).
Investments (note 12) – Judgement has been made in respect of the carrying value of the Company’s carrying value of
its investments in the subsidiaries. The process for this is the same as the consideration given in respect of both Intangible
Assets and Property, Plant and Equipment (see above).
Basis of consolidation (Note 12) - Where the Company has control over an investee, it is classified as a subsidiary. The
Company controls an investee if all three of the following elements are present: power over the investee, exposure to
variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control
is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single
entity. Inter-company transactions and balances between Group companies are therefore eliminated in full.
The results of undertakings acquired or disposed of are consolidated from or to the date when control passes to or from
the Group. The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Income
Statement from the date that control commences until the date that control ceases.
Where necessary, adjustments are made to the results of subsidiaries to bring the accounting policies they use into line
with those used by the Group.
Business combinations (Note 9) - Business combinations are accounted for using the acquisition method. The
consideration transferred for the acquisition of a subsidiary comprises the:
•
•
fair value of assets transferred;
liabilities incurred to the former owners of the acquired business;
• equity instruments issued by the Group;
•
•
fair value of any asset or liability resulting from contingent consideration arrangement; and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date. The Group recognises any noncontrolling interest
in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the noncontrolling interest’s
proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest and fair value of pre-existing equity
interest over the fair value of net identifiable assets acquired is recorded as goodwill. If those amounts are less than the
Ascent Resources plc Annual Report and Financial Statements 2022 I 51
Notes to the Accounts continued
fair value of the net identifiable assets acquired, the difference is recognised immediately in profit or loss as a gain on
bargain purchase.
Joint arrangements - The Group is party to a joint arrangement when there is a contractual arrangement that confers
joint control over the relevant activities of the arrangement to the Group and at least one other party. Joint control is
assessed under the same principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as either joint ventures, where the Group has rights to only the
net assets of the joint arrangement, or joint operations where the Group has both the rights to assets and obligations for
the liabilities of the joint arrangement.
All of the Group’s joint arrangements are classified as joint operations. The Group accounts for its interests in joint
operations by recognising its assets, liabilities, revenues and expenses in accordance with its contractually conferred
rights and obligations.
The Group has one joint arrangement, the Petišovci joint venture in Slovenia in which Ascent Slovenia Limited (a 100%
subsidiary of Ascent Resources plc) has a 75% working interest, however whilst in a cost recovery position the Company
is entitled to 90% of hydrocarbon revenues produced.
Oil and Gas Exploration Assets
All licence/project acquisitions, exploration and appraisal costs incurred or acquired on the acquisition of a subsidiary,
are accumulated in respect of each identifiable project area. These costs, which are classified as intangible fixed assets
are only carried forward to the extent that they are expected to be recovered through the successful development of the
area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence
of economically recoverable reserves.
Pre-licence/project costs are written off immediately. Other costs are also written off unless commercial reserves have
been established or the determination process has not been completed. Thus, accumulated cost in relation to an
abandoned area are written off in full to the statement of comprehensive income in the year in which the decision to
abandon the area is made.
Transfer of exploration assets to property, plant and equipment - Assets, including licences or areas of licences, are
transferred from exploration and evaluation cost pools to property, plant and equipment when the existence of
commercially feasible reserves has been determined and the Group concludes that the assets can generate commercial
production. This assessment considers factors including the extent to which reserves have been established, the
production levels and margins associated with such production. The costs transferred comprise direct costs associated
with the relevant wells and infrastructure, together with an allocation of the wider unallocated exploration costs in the
cost pool such as original acquisition costs for the field. The producing assets start to be depreciated following transfer.
Depreciation of property plant and equipment - The cost of production wells is depreciated on a unit of production basis.
The depreciation charge is calculated based on total costs incurred to date plus anticipated future workover expenditure
required to extract the associated gas reserves. This depreciable asset base is charged to the income statement based on
production in the period over their expected lifetime P50 production extractable from the wells per the field plan. The
infrastructure associated with export production is depreciated on a straight-line basis over a two-year period as this is
the anticipated period over which this infrastructure will be used.
Impairment of oil and gas exploration assets
Exploration/appraisal assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6.
‘Exploration for and Evaluation of Mineral Resources’ and tested for impairment where such indicators exist.
In accordance with IFRS 6 the Group considers the following facts and circumstances in their assessment of whether the
Group’s oil and gas exploration assets may be impaired:
• whether the period for which the Group has the right to explore in a specific area has expired during the period
or will expire in the near future, and is not expected to be renewed;
Ascent Resources plc Annual Report and Financial Statements 2022 I 52
Notes to the Accounts continued
• whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific
area is neither budgeted nor planned;
• whether exploration for and evaluation of oil and gas reserves in a specific area have not led to the discovery
of commercially viable quantities of oil and gas and the Group has decided to discontinue such activities in the
specific area; and
• whether sufficient data exists to indicate that although a development in a specific area is likely to proceed,
the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful
development or by sale.
If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with
the provisions of IAS 36. In such circumstances the aggregate carrying value of the oil and gas exploration and assets is
compared against the expected recoverable amount of the cash generating unit. The recoverable amount is the higher
of value in use and the fair value less costs to sell.
The Group has identified one cash generating unit, the wider Petišovci project in Slovenia. Any impairment arising is
recognised in the Income Statement for the year.
Where there has been a charge for impairment in an earlier period that charge will be reversed in a later period where
there has been a change in circumstances to the extent that the discounted future net cash flows are higher than the net
book value at the time. In reversing impairment losses, the carrying amount of the asset will be increased to the lower of
its original carrying values or the carrying value that would have been determined (net of depletion) had no impairment
loss been recognised in prior periods.
Impairment of development and production assets and other property, plant and equipment
At each balance sheet date, the Group reviews the carrying amounts of its PP&E to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell (otherwise referred
to as fair value less cost to develop in the oil and gas sector) and value in use. Fair value less costs to sell is determined
by discounting the post-tax cash flows expected to be generated by the cash- generating unit, net of associated selling
costs, and takes into account assumptions market participants would use in estimating fair value including future capital
expenditure and development cost for extraction of the field reserves. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit)
in prior years. A reversal of an impairment loss is recognised as income immediately.
Foreign currency
The Group’s strategy is focussed on developing oil and gas projects and ESG metals funded by shareholder equity and
other financial assets which are principally denominated in sterling. The functional currency of the Company is sterling.
Transactions in foreign currency are translated to the respective functional currency of the Group entity at the rates of
exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated to the functional currency at the rates prevailing on the reporting
Ascent Resources plc Annual Report and Financial Statements 2022 I 53
Notes to the Accounts continued
date. Exchange gains and losses on short-term foreign currency borrowings and deposits are included with net interest
payable.
The assets and liabilities of foreign operations are translated to sterling at foreign exchange rates ruling at the balance
sheet date. The revenues and expenses of foreign operations are translated to sterling at the average rate ruling during
the period. Foreign exchange differences arising on retranslation are recognised directly in a separate component of
equity. Foreign exchange differences arising on inter-company loans considered to be permanent as equity are recorded
in equity. The exchange rate from euro to sterling at 31 December 2022 was £1: €1.1308 (2021: £1:€1.1900).
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve
relating to that operation up to the date of disposal are transferred to the consolidated income statement as part of the
profit or loss on disposal.
Exchange differences on all other transactions, except inter-company foreign currency loans, are taken to operating loss.
Taxation (Note 6)
The tax expense represents the sum of the tax currently payable and any deferred tax.
The tax currently payable is based on the estimated taxable profit for the period. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated
using the expected tax rate applicable to annual earnings.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the corresponding tax bases used in the computation of taxable profit. It is
accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Equity-settled share-based payments
The cost of providing share-based payments to employees is charged to the income statement over the vesting period of
the related share options or share allocations. The cost is based on the fair values of the options and shares allocated
determined using the binomial method. The value of the charge is adjusted to reflect expected and actual levels of
vesting. Charges are not adjusted for market related conditions which are not achieved. Where equity instruments are
granted to persons other than directors or employees the Consolidated Income Statement is charged with the fair value
of any goods or services received.
Grants of options in relation to acquiring exploration assets in licence areas are treated as additions to Slovenian
exploration costs at Group level and increases in investments at Company level.
Provisions (Note 16)
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle
the obligation. If the effect is material, provisions are determined by estimating the expected future cash flows at a pre-
tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Convertible loan notes
Upon issue of a new convertible loan, where the convertible option is at a fixed rate, the net proceeds received from the
issue of CLNs are split between a liability element and an equity component at the date of issue. The fair value of the
liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference
between the proceeds of issue of the CLNs and the fair value assigned to the liability component, representing the
embedded option to convert the liability into equity of the Group, is included in equity and is not remeasured.
Ascent Resources plc Annual Report and Financial Statements 2022 I 54
Notes to the Accounts continued
Subsequent to the initial recognition the liability component is measured at amortised cost using the effective interest
method.
When there are amendments to the contractual loan note terms these terms are assessed to determine whether the
amendment represents an inducement to the loan note holders to convert. If this is considered to be the case the
estimate of fair value adjusted as appropriate and any loss arising is recorded in the income statement.
Where there are amendments to the contractual loan note terms that are considered to represent a modification to the
loan note, without representing an inducement to convert, the Group treats the transaction as an extinguishment of the
existing convertible loan note and replaces the instrument with a new convertible loan note. The fair value of the liability
component is estimated using the prevailing market interest rate for similar nonconvertible debt. The fair value of the
conversion right is recorded as an increase in equity. The previous equity reserve is reclassified to retained loss. Any gain
or loss arising on the extinguishment of the instrument is recorded in the income statement, unless the transaction is
with a counterparty considered to be acting in their capacity as a shareholder whereby the gain or loss is recorded in
equity.
Where the loan note is converted into ordinary shares by the loan note holder; the unaccreted portion of the loan notes
is transferred from the equity reserve to the liability; the full liability is then converted into share capital and share
premium based on the conversion price on the note.
Non-derivative financial instruments
Non-derivative financial instruments comprise of investments in equity and debt securities, trade and other receivables,
cash and cash equivalents, loans and borrowings and trade and other payables.
Financial instruments
Classes and categories
Financial assets that meet the following conditions are measured subsequently at amortised cost using effective interest
rate method:
• The financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and,
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets for which the amount of future receipts are dependent upon the Company’s share price over the term
of the instrument do not meet the criteria above and are recorded at fair value through profit and loss.
Measurement
Financial assets at amortised cost.
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a
business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms
of the financial asset represent contractual cash flows that are solely payments of principal and interest.
Impairment
For trade receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance
is available. The Group’s trade receivables are generally settled on a short time frame without material credit risk.
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at amortised
cost. The measurement of the loss allowance depends upon the Group’s assessment at the end of each reporting period
as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a twelve-month
expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that
Ascent Resources plc Annual Report and Financial Statements 2022 I 55
Notes to the Accounts continued
is attributable to a default event that is possible within the next twelve months. Where a financial asset has become
credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the
asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the
probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original
effective interest rate.
Lifetime expected credit losses (ECLs) for intercompany loan receivables are based on the assumptions that repayment
of the loans are demanded at the reporting date due to the fact that the loan is contractually repayable on demand. The
subsidiaries do not have sufficient funds in order to repay the loan if demanded and therefore the expected manner of
recovery to measure lifetime expected credit losses is considered. A range of different recovery strategies and credit loss
scenarios are evaluated using reasonable and supportable external and internal information to assess the likelihood of
recoverability of the balance under these scenarios.
Financial liabilities at amortised cost
Financial liabilities are initially recognised at fair value net of transaction costs incurred. Subsequent to initial
measurement financial liabilities are recognised at amortised costs. The difference between initial carrying amount of
the financial liabilities and their redemption value is recognised in the income statement over the contractual terms using
the effective interest rate method. This category includes the following classes of the financial liabilities, trade and other
payables, bonds and other financial liabilities. Financial liabilities at amortised costs are classified as current or non-
current depending on whether these are due within 12 months after the balance sheet date or beyond.
Financial liabilities are derecognised when either the Group is discharged from its obligation, they expire, are cancelled,
or replaced by a new liability with substantially modified terms.
Share-based payments
Share-based payments relate to transactions where the Group receives services from employees or service providers and
the terms of the arrangements include payment of a part or whole of consideration by issuing equity instruments to the
counterparty. The Group measures the services received from non-employees, and the corresponding increase in equity,
at the fair value of the goods or services received. When the transactions are with employees, the fair value is measured
by reference to the fair value of the share-based payments. The expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are to be satisfied.
Warrants
Warrants granted as part of a financing arrangement which fail the fixed-for-fixed criteria as a result of either the
consideration to be received or the number of warrants to be issued is variable, are initially recorded at fair value as a
financial liability and charged as transaction cost deducted against the loan and held subsequently at fair value.
Subsequently the derivative liability is revalued at each reporting date with changes in the fair value recorded within
finance income or costs.
Equity
Share capital is determined using the nominal value of shares that have been issued.
The Share premium reserve relates to amounts subscribed for share capital in excess of nominal value less costs of shares
associated with share issues.
Share based payments relate to transactions where the Group receives services from employees or service providers and
the terms of the arrangements include payment of a part or whole of consideration by issuing equity instruments to the
counterparty. The Group measures the services received from non-employees, and the corresponding increase in equity,
at the fair value of the goods or services received. When the transactions are with employees, the fair value is measured
by reference to the fair value of the shares issued. The expense is recognised over the vesting period, which is the period
over which all of the specified vesting conditions are to be satisfied.
Equity-settled share-based payments are credited to a share-based payment reserve as a component of equity until
related options or warrants are exercised or lapse.
Ascent Resources plc Annual Report and Financial Statements 2022 I 56
Notes to the Accounts continued
The Merger reserve relates to the value of shares, in excess of nominal value, issued with respect of the Trameta
acquisition in 2016.
The Translation reserve comprises the exchange differences from translating the net investment in foreign entities and
of monetary items receivable from subsidiaries for which settlement is neither planned nor likely in the foreseeable
future.
Retained losses includes all current and prior period results as disclosed in the income statement.
Investments and loans
Shares and loans in subsidiary undertakings are shown at cost. Provisions are made for any impairment when the fair
value of the assets is assessed as less than the carrying amount of the asset. Inter-company loans are repayable on
demand but are included as non-current as the realisation is not expected in the short term.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker has been identified as the Chief Executive Officer (“CEO”).
Revenue recognition
Sales represent amounts received and receivable from third parties for goods and services rendered to the customers.
Sales are recognised when control of the goods has transferred to the customer. Condensate, which is collected at a
separating station and transported via trucks to a customer in Hungary is recorded on delivery according to the terms of
the contract. At this point in time, the performance obligation is satisfied in full with title, risk, entitlement to payment
and customer possession confirmed. Revenue is measured as the amount of consideration which the Group expects to
receive, based on the market price for gas and condensate after deduction of costs agreed per the Restated Joint
Operating Agreement (“RJOA”) and sales taxes. The Company follows the five step process set out in IFRS 15 for revenue
recognition.
Revenue is derived from the production of hydrocarbons under the Petišovci Concession, which Ascent Slovenia Limited
holds a 75% working interest, however whilst in a cost recovery position the Company is entitled to 90% of hydrocarbon
revenues produced. Under the terms of the RJOA, and in accordance with Slovenian law, the concession holder retains
the rights to all hydrocarbons produced. The concession holder enters into sales agreements with customers and
transfers the relevant portion of hydrocarbon sales to Ascent Slovenia Limited for the services it provides under the RJOA.
During the year the information required to determine the transaction price of the revenues relating to producing assets
under the Petišovci Concession was not available. The contractual terms under the Joint arrangement in Slovenia are
under dispute and it was therefore unclear at the year end whether the performance obligations had been met. For these
reasons, no revenue has been recognised during the year in accordance with IFRS 15.
Payments are typically received around 30 days from the end of the month during which delivery has occurred. There are
no balances of accrued or deferred revenue at the balance sheet date.
Under the RJOA, the Group is entitled to 90% of hydrocarbon revenues produced whilst in a cost recovery position in the
Petišovci area and the Group records revenue on the entitlement basis accordingly.
Credit terms are agreed per RJOA contract and are short term, without any financing component.
The Group has no sales returns or reclamations of services since it has only one costumer. Sales are disaggregated by
geography.
Goodwill
Goodwill arising from business combinations is included in intangible assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units for the purpose of
impairment testing. The allocation is made to those cash-generating units or groups of cash- generating units that are
expected to benefit from the business combination in which the goodwill arose.
Ascent Resources plc Annual Report and Financial Statements 2022 I 57
Notes to the Accounts continued
Contingent Consideration
Contingent consideration is measured at fair value at the time of the business combination and is considered in the
determination of goodwill.
Contingent Liability
A contingent liability is recognised when the group has a possible obligation (legal or constructive), as a result of a past
event, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the group, or the amount of the obligation cannot be measured with sufficient
reliability.
If the likelihood of an outflow of resources is remote, the possible obligation is neither a provision nor a contingent
liability and no disclosure is made.
Contingent Asset
A contingent asset is recognised when the group has a possible asset, as a result of a past event, and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the group.
Such contingent assets are only recognised as assets in the financial statements where the realisation of income is
virtually certain. If the inflow of economic benefits is only probable, the contingent asset is disclosed as a claim in favour
of the group but not recognised in the statement of financial position.
2. Segmental Analysis
The Group has two reportable segments, an operating segment and a head office segment, as described below. The
operations and day to day running of the business are carried out on a local level and therefore managed separately. The
operating segment reports to the UK head office which evaluates performance, decide how to allocate resources and
make other operating decisions such as the purchase of material capital assets and services. Internal reports are
generated and submitted to the Group’s CEO for review on a monthly basis.
The operations of the Group as a whole are the exploration for, development and production of oil and gas reserves.
The two geographic reporting segments are made up as follows:
Slovenia
UK
exploration, development and production
head office
Ascent Resources plc Annual Report and Financial Statements 2022 I 58
Notes to the Accounts continued
The costs of exploration and development works are carried out under shared licences with joint ventures and
subsidiaries which are co-ordinated by the UK head office. Segment revenue, segment expense and segment results
include transfers between segments. Those transfers are eliminated on consolidation. Information regarding the current
and prior year’s results for each reportable segment is included below.
2022
Hydrocarbon sales
Intercompany sales
Total revenue
Cost of sales
Administrative expenses
Material non-cash items
Depreciation
Impairment
Goodwill impairment
Decommission provision
Net finance costs
Reportable segment profit/(loss) before taxation
Taxation
Reportable segment profit/(loss) after taxation
Reportable segment assets
Carrying value of exploration assets
Impairment to exploration assets
Effect of exchange rate movements
Total plant and equipment
Prepaid abandonment fund
Investment in subsidiaries
Intercompany receivables
Total non-current assets
Other assets
Consolidated total assets
Reportable segment liabilities
Trade payables
External loan balances
Inter-group borrowings
Other liabilities
Consolidated total liabilities
UK
£,000s
-
417
417
-
(719)
(1)
(43,622)
(203)
-
(31)
(44,159)
-
(44,159)
-
-
-
4
-
-
-
4
326
330
(219)
(521)
-
-
(740)
Slovenia
£’000s
581
12
593
(504)
(642)
(213)
(25,795)
-
(326)
(1)
(26,888)
-
Elims
£’000s
-
(429)
(429)
-
(111)
-
29,696
-
-
-
28,156
-
Total
£’000s
581
-
581
(504)
(1,472)
(214)
(39,721)
(203)
(326)
(32)
(41,891)
-
(26,888)
28,156
(41,891)
18,463
(18,820)
357
-
300
-
-
300
10
310
(757)
-
(34,536)
(663)
(35,956)
-
-
-
-
-
-
-
-
-
-
-
-
34,536
-
34,536
18,463
(18,820)
357
4
300
-
-
304
336
640
(976)
(521)
-
(663)
(2,160)
Ascent Resources plc Annual Report and Financial Statements 2022 I 59
Notes to the Accounts continued
2021
Hydrocarbon sales
Intercompany sales
Total revenue
Cost of sales
Administrative expenses
Material non-cash items
Depreciation
Net finance costs
Reportable segment profit/(loss) before taxation
Taxation
Reportable segment profit/(loss) after taxation
Reportable segment assets
Carrying value of exploration assets
Additions to exploration assets
Effect of exchange rate movements
Total plant and equipment
Prepaid abandonment fund
Investment in subsidiaries
Intercompany receivables
Total non-current assets
Other assets
Consolidated total assets
Reportable segment liabilities
Trade payables
External loan balances
Inter-group borrowings
Other liabilities
Consolidated total liabilities
Revenue from customers
UK
£,000s
-
-
-
-
(1,520)
-
(27)
(1,547)
-
(1,547)
-
-
-
-
-
16,099
27,526
43,625
115
43,740
(494)
(541)
-
(450)
(1,485)
Slovenia
£’000s
-
13
13
(19)
(89)
(328)
(1)
(424)
-
(424)
18,753
-
(290)
21,111
300
-
-
39,874
(10)
Elims
£’000s
-
(13)
(13)
-
13
-
-
-
-
-
-
-
-
-
-
(15,446)
(27,526)
(42,972)
-
38,694
(42,972)
(277)
-
(32,677)
(312)
(33,266)
-
-
32,677
-
32,677
Total
£’000s
-
-
-
(19)
(1,596)
(328)
(28)
(1,971)
-
(1,971)
18,753
-
(290)
21,111
300
653
-
40,527
105
40,632
(771)
(541)
-
(762)
(2,074)
Revenue for 2022 was £581,000 (2021: nil). The on-going dispute with the JV partner was partially resolved in August
2022 resulting in the recognition of revenue, and receipt of funds, from the hydrocarbon production for the period April
2020 to December 2021. Hydrocarbon production for 2022 is still subject to dispute and has not been recognised in the
2022 year. The performance obligations are set out in the Group’s revenue recognition policy. The price for the sale of
gas and condensate is set with reference to the market price at the date the performance obligation is satisfied.
Ascent Resources plc Annual Report and Financial Statements 2022 I 60
Notes to the Accounts continued
3. Operating loss is stated after charging:
Employee costs
Shared based payment charge
Depreciation
Auditor’s remuneration:
Audit fees – PKF
Fees payable to the Company’s auditor for other services
Year ended
31 December
2022
£’000s
812
2
214
Year ended
31 December
2021
£’000s
1,067
-
328
52
-
52
45
-
45
4. Employees and directors
a) Employees
The average number of persons employed by the Group, including Executive Directors, was:
Management and technical
b) Directors and employee’s remuneration
Employees and directors
Wages and salaries
Social security costs
Pension costs
Bonuses
Share base payments
Taxable benefits
c) Director’s remuneration
Please see Remuneration report on pages 32-33.
Year ended
31 December
2022
7
Year ended
31 December
2021
7
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
667
91
1
53
2
13
827
826
145
2
86
-
8
1,067
Ascent Resources plc Annual Report and Financial Statements 2022 I 61
Notes to the Accounts continued
5. Finance income and costs recognised in the year
Finance costs
Interest charge on loans
Bank charges
Please refer to Note 15 for a description of financing activity during the year.
6.
Income tax expense
Current tax expense
Deferred tax expense
Total tax expense for the year
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
(30)
(2)
(32)
(26)
(2)
(28)
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
-
-
-
-
-
-
The difference between the total tax expense shown above and the amount calculated by applying the standard rate of
UK corporation tax to the loss before tax is as follows:
Loss for the year
Year ended
31 December
2022
£’000s
(41,891)
Year ended
31 December
2021
£’000s
(1,971)
Income tax using the Company’s domestic tax rate at 19% (2021: 19%)
(7,959)
(375)
Effects of:
Net increase in unrecognised losses c/f
Effect of tax rates in foreign jurisdictions
Other non-deductible expenses
Total tax expense for the year
7,959
-
-
-
375
-
-
-
Ascent Resources plc Annual Report and Financial Statements 2022 I 62
Notes to the Accounts continued
7. Deferred tax – Group and Company
Group
Total tax losses – UK and Slovenia
Unrecorded deferred tax asset at 19% (2021: 19%)
Company
Total tax losses
Unrecorded deferred tax asset at 19% (2021: 19%)
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
(95,118)
16,170
(53,277)
9,049
(59,249)
10,072
(15,080)
1,548
No deferred tax asset has been recognised in respect of the tax losses carried forward, due to the uncertainty as to when
profits will be generated. Refer to critical accounting estimates and judgments.
8. Earnings per share
Result for the year
Total loss for the year attributable to equity shareholders
Weighted average number of shares
For basic earnings per share
Loss per share (pence)
Year ended
31 December
2022
£’000s
Year ended
31 December
2021
£’000s
(41,891)
(1,971)
Number
133,972,082
Number
108,007,151
(31.27)
(1.83)
As the result for the year was a loss, the basic and diluted loss per share are the same. At 31 December 2022, potentially
dilutive instruments in issue were 65,969,404 (2021: 29,262,396). Dilutive shares arise from share options and warrants
issued by the Company.
9. Business combinations
There have been no acquisitions during the period, however the Board strategically expect acquisitions to be a common
component of growth in the future.
In April 2020, the Company acquired 100% of the share capital of Energetical Limited, a UK Company with exclusive rights
to secure a Production Sharing Contract (“PSC”) on a producing onshore Cuban oil licence. The initial consideration for
the acquisition of Energetical comprised of the issue of six million new ordinary shares valued at £203,000 and a further
£450,000 (see note 17) of contingent consideration that would be payable on the execution of production sharing
contracts.
Consideration – new ordinary shares issued at 3.38p
Contingent consideration (note 17)
Total consideration and value of goodwill
203
450
653
Ascent Resources plc Annual Report and Financial Statements 2022 I 63
Notes to the Accounts continued
The exclusive MOU covering the rights to negotiate PSCs with the exclusivity lapsed on 31 December 2021 and the MOU
remaining on a non-exclusive basis until the end of April 2022. The Company took to decision to cease evaluating assets
in Cuba on 15 August 2022 and to fully impair the value goodwill.
Goodwill
At 1 January 2022
Impairment
At 31 December 2022
10. Property, plant and equipment
Cost
At 1 January 2021
Additions
Effect of exchange rate movements
At 31 December 2021
At 1 January 2022
Additions
Effect of exchange rate movements
At 31 December 2022
Depreciation
At 1 January 2021
Charge for the year
Effect of exchange rate movements
At 31 December 2021
At 1 January 2022
Charge for the year
Impairment
Effect of exchange rate movements
At 31 December 2022
Carrying value
At 31 December 2022
At 31 December 2021
At 1 January 2021
653
(653)
-
Total
£’000s
24,600
5
(1,631)
22,974
22,974
1
1,203
24,178
(1,817)
(328)
282
(1,863)
(1,863)
(214)
(21,193)
(904)
(24,174)
4
21,111
22,783
Computer
Equipment
£’000s
6
5
-
11
11
1
-
12
Developed Oil
& Gas Assets
£’000s
24,594
-
(1,631)
22,963
22,963
-
1,203
24,166
(6)
-
-
(6)
(6)
(2)
-
-
(8)
4
5
-
(1,811)
(328)
282
(1,857)
(1,857)
(212)
(21,193)
(904)
(24,166)
-
21,106
22,783
Impairment of £21,193,000 (2021: nil) has been recognised during the year. In April 2022, the Republic of Slovenia
approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that further field development was not
economically viable and that the current producing wells had a remaining production life of 5.5 years. Details of the
impairment judgments and estimates in the fair value less cost to develop assessment as set out in Note 1.
Ascent Resources plc Annual Report and Financial Statements 2022 I 64
Notes to the Accounts continued
11. Exploration and evaluation assets - Group
Cost
At 1 January 2021
Effects of exchange rate movements
At 31 December 2021
At 1 January 2022
Impairment
Effects of exchange rate movements
At 31 December 2022
At 31 December 2022
At 31 December 2021
At 1 January 2021
Slovenia
£’000s
18,753
(290)
18,463
18,463
(18,820)
357
-
-
18,463
18,753
Total
£’000s
18,753
(290)
18,463
18,463
(18,820)
357
-
-
18,463
18,753
Impairment of £18,820,000 (2021: nil) has been recognised during the year. In April 2022, the Republic of Slovenia
approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that further field development was not
economically viable and that the current producing wells had a remaining production life of 5.5 years. As at 31 December
2022 the net present value was significantly lower than the carrying value of the assets which indicated that an
impairment of 100% of intangible oil and gas assets was warranted. Details of the impairment judgments and estimates
and the fair value less cost to develop assessment as set out in Note 1.
For the purposes of impairment testing the intangible oil and gas assets are allocated to the Group’s cash- generating
unit, which represent the lowest level within the Group at which the intangible oil and gas assets are measured for
internal management purposes, which is not higher than the Group’s operating segments as reported in Note 2.
The residual value of the intangible oil and gas assets represents the amount provided for decommissioning costs (note
16) less the amounts in the Prepaid Abandonment Fund (note 13).
12. Investments in subsidiaries - Company
Cost
At 1 January
Additions
At 31 December
Accumulated impairment
At 1 January
Impairment
At 31 December
Net book value
At 31 December
2022
£’000s
16,102
0
16,102
-
(16,102)
-
-
2021
£’000s
16,096
6
16,102
-
-
-
16,102
Impairment of £16,102,000 (2021: nil) has been recognised during the year. In April 2022, the Republic of Slovenia
approved amendments to its Mining Law which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that further field development was not
economically viable and that the current producing wells had a remaining production life of 5.5 years. As at 31 December
2022 the net present value was significantly lower than the carrying value of the assets which indicated that an
impairment of 100% of investment in subsidiaries.
Ascent Resources plc Annual Report and Financial Statements 2022 I 65
Notes to the Accounts continued
The Company’s subsidiary undertakings at the date of issue of these financial statements, which are all 100% owned, are
set out below:
Name of company &
registered office address
Ascent Slovenia Limited
Tower Gate Place
Tal-Qroqq Street
Msida, Malta
Ascent Resources doo
Glavna ulica 7
9220 Lendava
Slovenia
Trameta doo
Glavna ulica 7
9220 Lendava
Slovenia
Ascent Hispanic Resources UK
Limited
5 New Street Square
London EC4A 3TW
Ascent Hispanic Ventures, S.L.
C Lluis Muntadas, 8
08035 Barcelona
Principal activity
Oil and gas exploration Malta
Country of
incorporation
% of share capital
held 2022
100%
% of share capital
held 2021
100%
Oil and gas exploration
Slovenia
100%
100%
Infrastructure owner
Slovenia
100%
100%
Oil and gas exploration
England and Wales
100%
100%
Oil and gas exploration
Spain
100%
100%
All subsidiary companies are held directly by Ascent Resources plc.
Consideration of the carrying value of investments is carried out alongside the assessments made in respect of the
recoverability of carrying value of the group’s producing and intangibles assets. The judgements and estimates made
therein are the same as for investments and as such no separate disclosure is made.
13. Trade and other receivables - Group
VAT recoverable
Prepaid abandonment liability
Prepayments & accrued income
Less non-current portion
Current portion
2022
£’000s
33
300
(22)
311
(300)
11
2021
£’000s
42
300
(34)
308
(300)
8
The prepaid abandonment liability represents funds the Group has deposited into a bank account to be made available
for the purposes of decommissioning wells that are currently in production.
14. Trade and other receivables - Company
a) Trade Receivables
VAT recoverable
Prepayments & accrued income
2022
£’000s
14
10
24
2021
£’000s
19
9
28
Ascent Resources plc Annual Report and Financial Statements 2022 I 66
Notes to the Accounts continued
b)
Intercompany Receivables
Ascent Slovenia Limited
Ascent Resources doo
Trameta doo
Ascent Hispanic Ventures
Cash
£’000s
-
-
-
-
-
2022
Services
£’000s
-
-
-
-
-
Total
£’000s
-
-
-
-
-
Cash
£’000s
17,368
2,951
11
56
20,386
2021
Services
£’000s
5,404
1,730
-
-
7,134
Total
£’000s
22,772
4,681
11
56
27,520
Cash refers to funds advanced by the Company to subsidiaries. Services relates to services provided by the Company to
subsidiaries. The loans are repayable on demand but are classified as non-current reflecting the period of expected
ultimate recovery.
Management have carried out an assessment of the potential future credit loss the loans classified as ‘stage 3’ under IFRS
9 and assessed for lifetime expected credit loss given their on-demand nature under a number of scenarios. In April 2022,
the Republic of Slovenia approved amendments to its Mining Law which include a total ban on hydraulic stimulation.
Consequently, the operational and development review conducted by the Company determined that further field
development was not economically viable and that the current producing wells had a remaining production life of 5.5
years. As at 31 December 2022 the net present value was significantly lower than the carrying value of the assets which
indicated that an impairment of 100% of intercompany receivables at the Company level was warranted. Impairment for
the year under review was £27,520,000 (2021: nil).
15. Borrowings – Group and Company
Group
Current
Borrowings
Convertible loan notes
Non-current
Borrowing
Company
Current
Borrowings
Convertible loan notes
Non-current
Borrowing
2022
£’000s
2021
£’000s
-
5
516
521
-
5
516
521
-
5
536
541
-
5
536
541
In December 2022, the Company reprofiled its outstanding debt with Riverfort Global Opportunities. The total
outstanding obligation stood at £566,000 with the Company repaying £50,000 of the total outstanding payment
obligations of £561,620, with £25,000 in cash plus £25,000 which will be satisfied with the issue of 625,000 new shares.
The remaining balance of £511,620 was re-profiled such that it will incur a coupon of 8 per cent and now be redeemable
in six equal cash instalments of £92,091.60 as of 14 September 2023 and monthly thereafter with final payment on 14
February 2024.
The current convertible loan was due for redemption on 19 November 2019 and at the balance sheet date £5,625 remain
unclaimed.
Ascent Resources plc Annual Report and Financial Statements 2022 I 67
Notes to the Accounts continued
16. Provisions – Group
At 1 January 2021
Foreign exchange movement
Provision
At 31 December 2021
At 1 January 2022
Foreign exchange movement
Provision
At 31 December 2022
£000s
328
(16)
-
312
312
13
338
663
The amount provided for decommissioning costs represents the Group’s share of site restoration costs for the Petišovci
field in Slovenia. The most recent estimate is that the year-end provision will become payable after 2037. The Company
has placed £300,000 on deposit as collateral against this liability see Note 13.
17. Contingent consideration due on Acquisition
Group
Non-Current
Ascent Hispanic Limited (formerly Energetical Limited)
2022
£’000s
-
-
2021
£’000s
450
450
The contingent consideration is based on the defined contingent consideration in the acquisition of Ascent Hispanic
Limited (Formerly Energetical Limited), comprising £100,000 in cash and a further £350,000 in shares. The Company has
not discounted the contingent consideration since the impact would not be material. The Company took to decision to
cease evaluating assets in Cuba on 15 August 2022 and as such write down the value of the contingent consideration in
full.
Please refer to note 9 of the financial statements for the consideration in the acquisition of Ascent Hispanic Limited.
18. Trade and other payables - Group
Trade payables
Tax and social security payable
Accruals and deferred income
19. Trade and other payables - Company
Trade payables
Tax and social security payable
Accruals and deferred income
2022
£’000s
437
44
495
976
2022
£’000s
138
28
53
219
2021
£’000s
581
16
174
771
2021
£’000s
309
10
174
493
Ascent Resources plc Annual Report and Financial Statements 2022 I 68
Notes to the Accounts continued
20. Called up share capital
Authorised
2,000,000,000 ordinary shares of 0.5p each
Allotted, called up and fully paid
3,019,648,452 deferred shares of 0.195p each
1,737,110,763 deferred shares of 0.09p each
109,376,804 ordinary shares of 0.5p each
Reconciliation of share capital movement
At 1 January
Issue of shares during the year
At 31 December
2022
£’000s
2021
£’000s
10,000
10,000
5,888
1,563
763
8,214
5,888
1,563
547
7,998
2022
number
109,376,804
2021
number
95,283,281
43,041,211
14,093,523
152,418,015
109,376,804
The deferred shares have no voting rights and are not eligible for dividends.
Shares issued during the year
• On 19 January 2022, the Company raised £600,000 via a placing of 18,181,818 ordinary shares with investors.
• On 19 January 2022, the Company issued 303,030 ordinary shares at a price of 3.30p to a professional advisor in lieu
of fees.
• On 3 February 2022, the Company issued 1,636,363 ordinary shares at a price of 3.30p to professional advisors in lieu
of fees and to staff in lieu of bonus.
• On 14 April 2022, the Company received £242,500 in respect to a warrants exercise over 6,062,500 new ordinary
shares.
• On 1 December 2022, the Company raised £600,000 via a placing of 15,000,000 ordinary shares with investors.
• On 1 December 2022, the Company issued 1,232,500 ordinary shares at a price of 4.00p to professional advisors in
lieu of fees.
• On 1 December 2022, The Company issued 625,000 ordinary shares at a price of 4.00p to Riverfort Global
Opportunities as a repayment of loan.
Shares issued during the prior year
• On 6 January 2021, the Company issued 208,991 ordinary shares at a price of 5.74p to a professional advisor in lieu
of fees.
• On 11 January 2021, the Company received £62,500 in respect to a warrants exercise over 833,333 new ordinary
shares. Additionally, the Company issued 66,667 new shares at 7.5p in lieu of the 8% cash coupon.
• On 12 January 2021, the Company received £55,000 in respect to a warrants exercise over 1,000,000 new ordinary
shares.
• On 2 February 2021, the Company received £7,500 in respect to a warrants exercise over 187,500 new ordinary
shares.
• On 4 February 2021, the Company received £62,500 in respect to a warrants exercise over 833,333 new ordinary
shares. Additionally, the Company issued 66,667 new shares at 7.5p in lieu of the 8% cash coupon.
Ascent Resources plc Annual Report and Financial Statements 2022 I 69
Notes to the Accounts continued
• On 5 February 2021, received £62,500 in respect to a warrants exercise over 900,000 new ordinary shares.
• On 11 February 2021, the Company raised £1m via a placing of 9,997,032 ordinary shares with investors.
21. Exploration expenditure commitments
In order to maintain an interest in the oil and gas permits in which the Group is involved, the Group is committed to meet
the conditions under which the permits were granted and the obligations of any joint operating agreements. The timing
and the amount of exploration expenditure commitments and obligations of the Group are subject to the work
programmes required as per the permit commitments. This may vary significantly from the forecast programmes based
upon the results of the work performed. Drilling results in any of the projects may also cause variations to the forecast
programmes and consequent expenditure. Such activity may lead to accelerated or decreased expenditure. It is the
Group’s policy to seek joint operating partners at an early stage to reduce its commitments.
At 31 December 2022, the Group had exploration and expenditure commitments of £ Nil (2021 - Nil).
22. Related party transactions
There is no ultimate controlling party for the Company.
Directors
Key management are those persons having authority and responsibility for planning, controlling and directing the
activities of the Group. In the opinion of the Board, the Group’s key management are the Directors of Ascent Resources
plc. Information regarding their compensation is given in Note 4.
2022
There were no transactions involving directors during the year (2021: nil).
23. Events subsequent to the reporting period
In February 2023 the Company granted an aggregate of 4,600,000 options over ordinary shares as had been announced
by RNS on 11 November 2022.
On 23 February 2023 the Company announced that it had signed a Strategic Collaboration Agreement with Beryl
International (Pty) Ltd in which the parties agree to work together to identify and potentially fund both those LATAM ESG
Metals opportunities already identified by Ascent and new African opportunities introduced by Beryl. In support of the
collaboration, Beryl has agreed to subscribe for£ 1,000,000 in new equity via a direct subscription at 4 pence per new
share. The Subscription will be conducted in two tranches, with a first tranche of £300,000 in new equity closing on 21
March 2023 and the balance of £700,000 closing on or before 30 June 2023.
On 21 March 2023 the Company announced that, following the inclusion of South Africa to the FATF's 'grey list' on 24
February 2023 and the consequent additional processes required to complete international funds transfers out of South
Africa, the direct subscription from Beryl, as announced on 23 February 2023, has now been delayed. It is now expected
that settlement of the £1 million subscription at 4 pence per new subscription share will take place in one full £1 million
tranche on completion of the capitalisation of the Mauritius domiciled special purpose vehicle created by Beryl for this
investment.
On 4 April 2023 the Company announced that achieved a positive resolution in the mediation process between ASL and
Geoenergo as joint venture ("JV") partners and Petrol Geo as JV service provider. Geoenergo has agreed to settle all
outstanding hydrocarbon revenues owed to ASL from January 2022 to February 2023 which total €1,724,689 and ASL has
agreed to settle all outstanding JV operating costs owed to Petrol Geo for €1,436,000.
Ascent Resources plc Annual Report and Financial Statements 2022 I 70
Notes to the Accounts continued
24. Share based payments
The Company has provided the Directors, certain employees and institutional investors with share options and warrants
(‘options’). Options are exercisable at a price equal to the closing market price of the Company’s shares on the date of
grant. The exercisable period varies and can be up to seven years once fully vested after which time the option lapses.
Details of the share options outstanding during the year are as follows:
Outstanding at 1 January 2021
Outstanding at 31 December 2021
Exercisable at 31 December 2021
Outstanding at 1 January 2022
Granted during the year
Expired during the year
Outstanding at 31 December 2022
Exercisable at 31 December 2022
Weighted
Average Price
(pence)
53.12
53.12
248.72
253.72
5.00
50.05
248.72
Shares
7,348,142
7,348,142
1,450,763
7,348,142
500,000
-
7,848,142
1,450,763
The value of the options is measured by the use of a Black Scholes Model. The inputs into the Black Scholes Model made
in 2022 were as follows:
Share price at grant
Exercise price
Volatility
Expected life
Risk free rate
Expected dividend yield
3.85
5.00
59.45%
5 years
1%
0%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 5
years. The expected life is the expiry period of the options from the date of issue.
Options outstanding at 31 December 2022 have an exercise price in the range of 2.9p and 7.78p (31 December 2021:
2.9p and 7.78p) and a weighted average contractual life of 4.5 years (31 December 2021: 4.5 years). The amount
recognised in the income statement for the year ended 31 December 2022 was £2,000 (2021: nil).
Details of the warrants issued in the year are as follows:
Issued
27 January 2022
27 January 2022
14 April 2022
1 December 2022
1 December 2022
Exercisable from
Anytime until
Anytime until
Anytime until
Anytime until
Anytime until
Expiry date
26 January 2024
26 January 2024
14 April 2025
1 December 2024
1 December 2024
Number outstanding
20,303,030
1,000,000
9,093,750
15,000,000
4,600,000
Exercise price
5.00p
5.00p
4.00p
5.00p
5.00p
Ascent Resources plc Annual Report and Financial Statements 2022 I 71
Notes to the Accounts continued
Outstanding at 1 January 2022
Granted during the year
Exercised during the year
Expired during the year
Outstanding at 31 December 2022
Exercisable at 31 December 2022
Weighted
Average Price
(pence)
6.80
4.82
4.00
5.50
5.20
5.20
Warrants
21,914,254
49,996,780
(6,062,500)
(7,727,272)
58,121,262
58,121,262
The warrants outstanding at the period end have a weighted average remaining contractual life of 2.2 years. The exercise
prices of the warrants are between 4.00 – 7.50p per share.
25. Notes supporting the statement of cash flows
Group
Cash at bank and available on demand
Cash held on deposit against bank guarantee
Company
Cash at bank and available on demand
Cash held on deposit against bank guarantee
Significant non-cash transactions are as follows:
Interest charged on loans
26. Financial risk management
Group and Company
2022
£’000s
325
-
325
302
-
302
2022
£’000s
30
2021
£’000s
97
-
97
88
-
88
2021
£’000s
26
The Group’s financial liabilities comprise CLNs, borrowings and trade payables. All liabilities are measured at amortised
cost. These are detailed in Notes 15 and 18.
The Group has various financial assets, being trade receivables and cash, which arise directly from its operations. All are
classified at amortised cost. These are detailed in Notes 13, 14 and 25.
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk (including
interest risk and currency risk). The risk management policies employed by the Group to manage these risks are discussed
below:
Credit risk
Credit risk is the risk of an unexpected loss if a counter party to a financial instrument fails to meet its commercial
obligations. The Group’s maximum credit risk exposure is limited to the carrying amount of cash of £97,000 and trade
and other receivables of £42,000. Credit risk is managed on a Group basis. Funds are deposited with financial institutions
with a credit rating equivalent to, or above, the main UK clearing banks. The Company’s liquid resources are invested
Ascent Resources plc Annual Report and Financial Statements 2022 I 72
Notes to the Accounts continued
having regard to the timing of payment to be made in the ordinary course of the Group’s activities. All financial liabilities
are payable in the short term (between 0 to 3 months) and the Group maintains adequate bank balances to meet those
liabilities.
The Group makes allowances for impairment of receivables where there is an ECL identified. Refer to Note 22 for details
of the intercompany loan ECL assessment.
The credit risk on cash is considered to be limited because the counterparties are financial institutions with high and good
credit ratings assigned by international credit rating agencies in the UK.
The carrying amount of financial assets, trade receivables and cash held with financial institutions recorded in the
financial statements represents the exposure to credit risk for the Group.
At Company level, there is the risk of impairment of inter-company receivables if the full amount is not deemed as
recoverable from the relevant subsidiary company. These amounts are written down when their deemed recoverable
amount is deemed less than the current carrying value. An IFRS 9 assessment has been carried out as per Note 1.
Market risk
i) Currency risk
Currency risk refers to the risk that fluctuations in foreign currencies cause losses to the Company.
The Group’s operations are predominantly in Slovenia. Foreign exchange risk arises from translating the euro earnings,
assets and liabilities of the Ascent Resources doo and Ascent Slovenia Limited into sterling. The Group manages exposures
that arise from receipt of monies in a non-functional currency by matching receipts and payments in the same currency.
The Company often raises funds for future development through the issue of new shares in sterling. These funds are
predominantly to pay for the Company’s exploration costs abroad in euros. As such any sterling balances held are at risk
of currency fluctuations and may prove to be insufficient to meet the Company’s planned euro requirements if there is
devaluation.
The Group’s and Company’s exposure to foreign currency risk at the end of the reporting period is summarised below.
All amounts are presented in GBP equivalent.
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Net exposure
Group
Company
2022
£’000s
-
29
(314)
(285)
2021
£’000s
-
9
(277)
(268)
2022
£’000s
-
6
-
6
2021
£’000s
-
7
2
9
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the European Union (the euro).
The Group operates internationally and is exposed to currency risk on sales, purchases, borrowings and cash and cash
equivalents that are denominated in a currency other than sterling. The currencies giving rise to this are the euro.
Foreign exchange risk arises from transactions and recognised assets and liabilities.
The Group does not use foreign exchange contracts to hedge its currency risk.
Sensitivity analysis
The following table details the Group’s sensitivity to a 10% increase and decrease in sterling against the stated currencies.
10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and
represents the management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity
analysis comprises cash and cash equivalents held at the balance sheet date. A positive number below indicates an
increase in profit and other equity where sterling weakens 10% against the relevant currency.
Ascent Resources plc Annual Report and Financial Statements 2022 I 73
Notes to the Accounts continued
Group
Profit or loss
10% strengthening of sterling
10% weakening of sterling
Equity
10% strengthening of sterling
10% weakening of sterling
Company
Profit or loss
10% strengthening of sterling
10% weakening of sterling
Equity
10% strengthening of sterling
10% weakening of sterling
ii)
Interest rate risk
Euro currency change
Year ended
31 December 2022
Year ended
31 December 2021
124
(151)
69
(85)
-
-
-
-
40
(48)
(3,598)
4,398
-
-
(3,045)
3,722
Interest rate risk refers to the risk that fluctuations in interest rates cause losses to the Company. The Group and Company
have no exposure to interest rate risk except on cash and cash equivalent which carry variable interest rates. The Group
carries low units of cash and cash equivalents and the Group and Companies monitor the variable interest risk
accordingly.
At 31 December 2022, the Group and Company has GBP loans valued at £521,000 rates of 8% per annum. At 31 December
2021, the Group and Company had GBP loans valued at £536,000 rates of 8% per annum.
iii) Liquidity risk
Liquidity risk refers to the risk that the Company has insufficient cash resources to meet working capital requirements.
The Group and Company manages its liquidity requirements by using both short- and long-term cash flow projections
and raises funds through debt or equity placings as required. Ultimate responsibility for liquidity risk management rests
with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of
the Group’s short-, medium- and long-term funding and liquidity management requirements.
The Group closely monitors and manages its liquidity risk. Cash forecasts are regularly produced, and sensitivities run for
different scenarios (see Note 1). For further details on the Group’s liquidity position, please refer to the Going Concern
paragraph in Note 1 of these accounts.
Categorisation of Borrowings - Group
Less than six months - loans and borrowings
Less than six months - trade and other payables
Between six months and a year
Over one year
Group
Company
2022
£’000s
-
-
-
516
2021
£’000s
-
-
-
536
2022
£’000s
-
-
-
516
2021
£’000s
-
-
-
536
Ascent Resources plc Annual Report and Financial Statements 2022 I 74
Notes to the Accounts continued
Capital management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return
to shareholders through the optimisation of the balance between debt and equity. The Group reviews the capital
structure on an on-going basis. As part of this review, the directors consider the cost of capital and the risks associated
with each class of capital. The Group will balance its overall capital structure through new share issues and the issue of
new debt or the repayment of existing debt.
There are no externally imposed capital requirements.
Fair value of financial instruments
Set in the foregoing is a comparison of carrying amounts and fair values of the Group’s and the Company’s financial
instruments:
Categorisation of Financial Assets and Liabilities – Group
Financial assets
Cash and equivalents – unrestricted
Cash and equivalents - restricted
Trade receivables
Prepaid abandonment fund (refundable)
Financial liabilities
Trade and other payables
Loans at fixed rate
Capital management - Company
Financial assets
Cash and equivalents – unrestricted
Trade receivables
Financial liabilities
Trade and other payables
Loans at fixed rate
Convertible loan at fixed rate
Carrying amount
Year ended 31
December
2022
Fair Value Year
ended 31
December
2022
Carrying amount
Year ended 31
December
2021
Fair Value Year
ended 31
December
2021
325
-
11
300
599
516
325
-
11
300
599
516
97
-
8
300
771
536
97
-
8
300
771
536
Carrying amount
Year ended 31
December
2022
Fair Value Year
ended 31
December
2022
Carrying amount
Year ended 31
December
2021
Fair Value Year
ended 31
December
2021
302
26
283
516
302
26
283
516
88
28
493
536
88
28
493
536
Fair value of convertible loans has been determined based on tier 3 measurement techniques. The fair value is estimated
at the present value of future cash flows, discounted at estimated market rates. Fair value is not significantly different
from carrying value.
Trade and other receivables/payables and inter-company receivables
All trade and other receivables and payables have a remaining life of less than one year. The ageing profile of the Group
and Company receivable and payables are shown in Notes 13, 14, 14, 18 and 19.
Cash and cash equivalents
Cash and cash equivalents are all readily available and therefore carrying value represents a close approximation to fair
value.
Ascent Resources plc Annual Report and Financial Statements 2022 I 75
Notes to the Accounts continued
27. Commitments and contingencies
On 10 March 2021, the Company announced that its JV Service Provider, Petro Geo, issued a local enforcement order
attempting to claim payment for an unsubstantiated amount of €662,288 plus interest of €12,103. Post the period under
review the Company settled this dispute with Petrol Geo settling all outstanding invoices from 2019 to February 2023.
Decommissioning costs for the Petišovci Project are estimated to be €9m, consisting of €0.5m for each of the 16 proposed
wells plus an additional €1m for pipes and related infrastructure. Decommissioning costs become payable at the end of
a wells operational life and a provision for decommissioning costs is made only when a well is put into production. The
estimate for pipes and infrastructure is based on all wells being put into operation. With the change in the Slovenian
mining law in in April 2022 creating a ban on hydraulic stimulation, further development of the concession is uncertain
as is the development of additional wells. A provision of £663,000 (Note 16) has been made for the decommissioning of
the PG10 and PG11A wells that are currently in production and represents the Group’s share of the restoration costs for
the Petišovci field.
Ascent Resources plc
5 New Street Square
London
EC4A 3TW
ascentresources.co.uk
Ascent Resources plc Annual Report and Financial Statements 2022 I 76
Perivan.com
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