TIDMAST
RNS Number : 3484X
Ascent Resources PLC
09 August 2018
Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and
Gas
9 August 2018
Ascent Resources plc
("Ascent" or the "Company")
Permitting update
Following the operational update on Monday 6 August 2018, the
Board of Ascent is pleased to provide an update on the positive
outcome of recent discussions with the Slovenian authorities. The
Company has been assured the required permits will be processed
without undue, further delay, which the Company takes to mean they
should be issued in final form in the next two months.
The Company sets out at the end of this announcement, for
completeness, the background to the permits and the permitting
process, including the current position and a detailed timeline of
events dating back to the summer of 2014.
Background
The need for the permits
The IPPC Permit ("The Permit") is required to enable Ascent (and
its partners in Slovenia) to construct a processing plant adjacent
to the Petišovci gas field near Lendava in Slovenia.
The processing plant is required for phase two of the
development plan, and the anticipated increased production from the
field. The Company is currently exporting production (raw natural
gas) from the first two wells, Pg-10 and Pg-11A, via an export
pipeline to INA in Croatia. Average monthly production from these
wells over the first nine months of export production has been
between 1.0 and 2.4 MMscfd.
While there is capacity to significantly increase production
through the existing export facilities, with the levels of
production projected in the field development plan, it would be
more economic to treat these through a facility in Slovenia. This
facility would allow Slovenian gas to be treated in Slovenia and
sold to Slovenian customers thereby ensuring that the country
captures the maximum amount of added value from the resource.
The estimated reserves and resources of the Petišovci field are
very significant in the context of Slovenia's national, annual
natural gas consumption while the country currently imports a large
majority of its natural gas requirement.
Progress since summer 2014
The permit was first applied for in mid-2014 and within 6 months
received initial approval from the Slovenian Environmental Agency
("ARSO") subject to a public consultation.
Since then however the pace at which the permit has moved
through the regulatory process has slowed dramatically. Initially
this was due to the time taken by ARSO and later the Slovenian
courts in dealing with repeated appeals against the permit by one
particular non-governmental organisation ("NGO"). More recently the
delays have been the result of repeated requests for additional
information from ARSO.
On each occasion that the Slovenian courts or the Environment
Ministry have reviewed the application it has been approved.
Following the court decision in November 2017, the Company and
its partners anticipated that the permit would be awarded in full
within a short period of time. It was expected that a request for
amendments to the original application would be made to ensure that
the application complied with any new regulations enacted in the
interim.
The Board has been frustrated by the length of time it has taken
for ARSO to prepare the requests for amendments and the multiple
different requests for amendments that have been received.
Recent developments
On 2 June 2018, the Ascent CEO (Colin Hutchinson) gave an
interview with the major Slovenian newspaper 'Delo' in which he was
highly critical of the permitting process in Slovenia and the
detrimental impact this was having on the project and further
investment in the country.
Ascent, together with the Joint Venture partners, developed a
strategy with the British Chamber of Commerce in Slovenia and the
British Embassy in Ljubljana to raise the issue of permitting
delays in Slovenia with the relevant authorities.
It is therefore pleasing to report that at a meeting this week
between staff from the British Chamber of Commerce in Slovenia, the
Environment Ministry and officials from ARSO, undertakings were
made by ARSO to review the outstanding amendments as a priority, in
a timely fashion, once they are submitted by the Joint Venture
partners.
Shareholder restraint now required
It was noted that ARSO has been receiving a considerable volume
of emails from people claiming to be Ascent shareholders, the
content of some of these emails was felt to be inappropriate. While
the Company understands shareholders' frustrations, it does not
believe that shareholders contacting ARSO directly can have any
positive impact on the process and has apologised to ARSO, in
particular for those emails which have been threatening and
abusive.
Current position
As at today's date there are two open amendments; the response
to the first, which can be prepared by Ascent and its partners will
be submitted by 17 August 2018. The response to the second, which
is reliant on information from a third party, should be submitted
at the beginning of September.
Based on the assurances received by ARSO this week, the Company
believes that the permit should finally be awarded in September
2018, although there can be no guarantee of this.
Additional permits
In addition to the permit required for the processing plant,
Ascent and its partners have also submitted applications to carry
out additional stimulation procedures on Pg-10 and Pg-11A, which
are expected to significantly increase the flow of gas by accessing
additional gas bearing reservoirs.
The procedures which the Company intends to carry out are almost
identical to those already performed on the wells in 2011. The
impact of this activity was analysed in detail by independent
parties immediately following the work and no negative consequences
were noted.
These procedures are, in the opinion of the Company, clearly
covered by preliminary screening legislation. The Company and its
partners submitted the preliminary screening application in May
2017. In January, May and June 2018, ARSO requested amendments to
the application which were all submitted by the partners in due
time (the last one on 5 July which was supported by expert opinions
from the Geological Survey of Slovenia and the Ljubljana Faculty of
Mining).
The Company has not currently had any feedback on its last
amendments but are encouraged by recent communications and hope
that this permit can also be moved forward in a timely fashion.
Summary
The announcement of 6 August seems to have provoked action in
Slovenia, which, in the Company's opinion, should result in the
permits being awarded in the next two months. The recent measures
to reduce administrative expenditure ensure that the Company has
sufficient income and cash resources to maintain operations in
Slovenia and meets its listing obligations in London in the
interim.
The permits are crucial to the future development of the Company
and once these permits are received it will be possible for the
Company, either as it currently exists or potentially with a new
partner coming through the strategic review, to take the project
forward.
Colin Hutchinson, CEO of Ascent Resources plc, commented:
"Following the assurances that have been made over the past few
days we have fresh optimism that the long-awaited permits should be
delivered in short order."
Detailed Timeline in relation to the IPPC application
As described above, the application process has now taken over
four years. Notable events along the way are set out in the table
below.
June 2014 IPPC application lodged with ARSO by Petrol Geoterm
(a service provider to the Joint Venture).
July 2014 Legislation introduced which amends procedure
to require preliminary screening or Environmental
Impact Assessments - law stipulates that the
previous legislation applies to those already
in the system.
-----------------------------------------------------
December 2014 ARSO review application and approve subject to
a public consultation.
-----------------------------------------------------
July 2015 Public consultation completes and ARSO award
permit subject to appeal.
-----------------------------------------------------
2 NGOs appeal against the award of the permit
-----------------------------------------------------
November 2015 Environment Minister confirms the original decision
of ARSO to award the permit.
-----------------------------------------------------
1 NGO appeals against the award of the permit
-----------------------------------------------------
May 2016 Administrative Court rules that the new legislation
should have dictated the applications already
submitted should be re-submitted under the new
legislation.
-----------------------------------------------------
July 2016 Request for Preliminary Screening lodged with
ARSO.
-----------------------------------------------------
November 2016 ARSO approves the Preliminary Screening as the
correct procedure.
-----------------------------------------------------
1 NGO appeals against the decision.
-----------------------------------------------------
March 2017 Environment Minister confirms the original decision
of ARSO to approve Preliminary Screening.
-----------------------------------------------------
1 NGO appeals against the decision
-----------------------------------------------------
November 2017 Administrative Court rejects the appeal and confirms
the preliminary screening as appropriate.
-----------------------------------------------------
March 2018 ARSO outlines amendments required to update the
application to comply with amended legislation.
-----------------------------------------------------
April 2018 Amendments are submitted by Ascent and the partners.
-----------------------------------------------------
June 2018 Further amendment requested by ARSO (#37).
-----------------------------------------------------
Partial response submitted by Ascent and the
partners to #37.
-----------------------------------------------------
Further amendment requested by ARSO (#39)
-----------------------------------------------------
July 2018 Remaining responses submitted by Ascent and the
partners to #37
-----------------------------------------------------
August 2018 Further amendment requested by ARSO (#41)
-----------------------------------------------------
Process for amendments
When a request for amendment is requested by ARSO a notification
is posted to the Consultant who is managing the process for Ascent
and the partners. They then have 15 days to formally sign for the
post. Once the post has been signed for the partners usually have a
deadline of around 30 days (depending on the complexity of the
amendments requested) to submit their response. The dates used in
the table above relate to the date the amendments were notified to
the partners, in some cases the date on the official document will
be different.
Ascent Resources plc
Clive Carver, Chairman
Colin Hutchinson, CEO 0207 251 4905
WH Ireland, Nominated Adviser & Broker
James Joyce / Alex Bond 0207 220 1666
Yellow Jersey, Financial PR and IR
Tim Thompson / Harriet Jackson / Henry
Wilkinson 0203 735 8825
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END
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