Ascent Resources Regulatory News (AST)

Ascent Resources plc

("Ascent" or the "Company")

Cuba New Market Entry

Board Changes

Issue of Equity

14 April 2020

Ascent Resources Plc (LON: AST) the onshore European and Caribbean / Hispanic American oil and gas company, is pleased to announce its first acquisition in its wider international strategy, a change of Directorate and the issue of equity.

Highlights:

· First transaction in the Company's Caribbean entry comprising the acquisition of Energetical Limited ("Energetical"), a UK Company with exclusive rights to secure a Production Sharing Contract ('PSC') on a producing onshore Cuban oil licence. Energetical delivers exclusive rights to the 9B Block in Cuba ("Block 9B") that contains the onshore Majaguillar and San Anton fields, located on the North coast of Cuba and currently producing 190 bbls/day gross from three wells.

· The Company is reviewing potential further acquisitions to develop a broad Cuban portfolio across both oil and gas and potentially mining, alongside the existing oil and gas asset in Slovenia and further European growth opportunities which are under active consideration.

· Andrew Dennan joins as Chief Executive Officer, subject to regulatory due diligence, to implement the wider international strategy.

Executive Chairman James Parsons commented:

'Cuba is one of the last remaining largely untapped hydrocarbon provinces of scale.

We see here, despite the recent market turmoil and oil price collapse, the unique ingredients for a new, highly material, growth trajectory across oil, gas and mining when the cycle turns. We also see near term inflection points for Cuba, including the approaching US elections.

We are therefore positioning Ascent as an advantaged platform for counter cyclical acquisitive growth with a focus on low cost production, manageable initial capital commitments and near term re-rate potential. We intend to leverage off our operated position in Slovenia.'

Cuban Oil and Gas Market

The Company announced on 24 March 2020 that it had identified the Caribbean and Hispanic America region as highly prospective for oil and gas, even when taking into consideration current volatile markets and the recent decline in global oil prices. This is a region where the new team's industry experience, existing relationships and skill set can add material value for shareholders in a short timeframe. The Company is pleased to be able to announce a transaction so soon after the recent restructuring.

The Republic of Cuba is one of the few remaining world-class, yet largely unexploited hydrocarbon systems. The Company sees clear first mover opportunity for a quoted oil and gas Company to counter cyclically deploy its operational skill and access to capital in a country which has been starved of investment and technology and impacted by US Sanctions.

Cuba currently produces approximately 45,000 bopd of mostly heavy oil with c. 100 mscf/d of gas with clear targets for growth in their E&P sector to fuel electricity generation in the country which currently often experiences black outs. Cuba has the advantage of offering an international investor access to good infrastructure and an educated workforce alongside significant under exploited hydrocarbon resource potential. To promote international investment Cuba enacted a new law in 2014 to offer protections to foreign investors, allowing payments in foreign currency and withdrawal of funds from the country. Cuba currently offers excellent fiscal and commercial terms for oil and gas operators, including nil cost entries into PSCs and the right to sell all crude at the wellhead priced in foreign currency, thereby securing oil commercialisation.

The Company has identified and taken steps in seeking to secure counter cyclically, a portfolio of onshore assets in Cuba with significant potential with Energetical being the first transaction. This targeted portfolio is primarily low cost barrels with a blend of development, appraisal and exploration potential, representing a balance of opportunities across the cycle, with selective mining assets also being considered.

Acquisition of Energetical

As a first step towards building its Cuban portfolio, the Company announces that it has signed and completed an agreement to purchase Energetical. The initial consideration for the acquisition of Energetical comprises the issue of six million new ordinary shares ("Consideration Shares") to the selling shareholders ("Sellers") of Energetical. A further £450,000 of deferred consideration will be payable on the execution of production sharing contracts covering the 9B Block, of which £350,000 will be satisfied by the issue of new ordinary shares ("Deferred Consideration Shares"), priced at the 30 day VWAP at the time of issue and £100,000 will be paid in cash. The Sellers have agreed not to dispose of any of the Consideration Shares for a period of one year. The Company has agreed to a carve-out to this lock-in which permits the sale of up to an aggregate of one million Consideration Shares following the expiry of an initial three month period. It is expected that the Consideration Shares will be admitted to trading on AIM on 20 April 2020.

Block 9B, containing the Majaguillar and San Anton onshore fields, is on the North coast of Cuba, some 120 km East of Havana and currently produces 190 bbls/day gross from three wells.

The Company has initially assessed that recovery rates could be significantly rejuvenated with the simple and relatively low cost addition of basic equipment and reservoir management. It is also assessing the viability of new deviated onshore wells drilled into the crest of the fields which it expects to flow with an initial production rate in excess of 1,000 bopd. None of these operations require new seismic and none of the wells have yet to produce any water and no oil water contact has been identified. There are another three wells at Majaguillar and the San Anton field that are shut in at this time mainly due to the lack of basic equipment such as pumps.

Energetical has entered into a Memorandum of Understanding with CUPET (the Cuban National Oil Company) giving it exclusive rights to enter into a PSC over Block 9B.

The Company, following the acquisition of Energetical, is targeting signature of a Production Sharing Contract with CUPET (which entitles the Company to benefit from any uplift in production above the incumbent base production rates). In summary there are eight wells on these fields, all of which have previously produced and have workover potential (many of the wells have deteriorated with age due to old completion techniques and lack of further field investment). For the 12 month period to 30 June 2019 Energetical made a loss of £7,239.

The Company is also currently in negotiation with CUPET regarding a variety of other onshore blocks and further announcements will be made in due course.

Board Changes

Ascent has appointed Andrew Dennan as Chief Executive Officer with immediate effect. Mr Dennan will join the Board following completion of the prerequisite regulatory checks. Andrew has a wealth of corporate finance, merger, asset funding and corporate transaction experience on AIM. He was formerly the Chief Financial Officer of Coro Energy Plc where he retains the position of Non Executive Director and he is also a Non Executive Director of Nu-Oil and Gas Plc.

Andrew Dennan currently holds 1.9 million shares in Ascent Resources. He has today been granted three year vest, five year expiry options over 1,385,894 new ordinary shares at a price of 5 pence per share.

Further to the announcement of 14 February 2020 and following successful completion of the prerequisite checks, the Company confirms that Leonardo Salvadori has also now been appointed an independent non-executive director of the Company with immediate effect. The disclosures required by Schedule 2 (g) of the AIM Rules can be found in the appendix to this announcement.

The Company also announces that John Buggenhagen is leaving the Company and will step down from the Board with immediate effect as a result of the restrictions that could be placed on him as a US citizen from the Company's new strategy. John will continue to consult to the Company, however exclusively for its European growth projects.

Issue of Equity

The Company, consistent with its policy to preserve its cash balances, has issued 623,777 new ordinary shares of 0.5 pence at a price of 3.5 pence per share to a previously contracted professional advisor in lieu of fees (the "Adviser Shares").

Application for admission to trading on AIM for the 623,777 Adviser Shares has been made and admission is expected to take place on 20 April 2020. The Adviser Shares will rank pari passu with the existing ordinary shares in issue.

In accordance with the provision of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the Company confirms that, following the issue of the Adviser Shares and the Consideration Shares, its issued ordinary share capital will comprise 47,291,213 ordinary shares of 0.5 pence each. All of the ordinary shares have equal voting rights and none of the ordinary shares are held in Treasury. The total number of voting rights in the Company will therefore be 47,291,213 on admission of the Adviser Shares and the Consideration Shares. The above figure may be used by shareholders as the denominator for the calculations to determine if they are required to notify their interests in, or change to their interest in, the Company.

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Enquiries:

APPENDIX:

The following details in relation to the appointment of Mr. Salvadori, aged 61, are disclosed in accordance with Schedule 2(g) of the AIM Rules:

There are no other disclosures in accordance with Schedule 2(g) of the AIM Rules.