Ascent Resources Regulatory News (AST)

Ascent Resources plc

("Ascent" or "the Company")

Final Results for the Year ended 31 December 2012

Chairman's Statement

Review of 2012

The year to 31 December 2012 was very disappointing. The Company was unable to progress the Petišovci project in Slovenia as a result of the failure to receive the joint venture partner consents required to release the necessary bank funding. Additionally, no significant progress was made across the rest of the Company's portfolio of assets.

As a direct consequence the Company ran extremely short of funds towards the end of the year. On 24 December 2012, to allow the Company to continue to trade, new investment of £5.5 million was sourced from Henderson Global Investors ('Henderson'). Following an Open Offer £690,105 of this amount was taken up by existing shareholders on the same terms as Henderson.

Current position

Focus on Petišovci

Your Board firmly believes that the gas field at Petišovci is its outstanding prospect and is therefore focusing the Company's resources on the development of this asset.

We have now agreed all of the points of principle with our joint venture partners, to ensure that the historic impasse and resultant problems should not occur in the future.

We have also commenced discussions with BNP Paribas (BNPP) to agree a new bank facility, which better fits the requirements of this development project. The current facility expires toward the end of this month.

We expect the documentation between the joint venture partners to be executed in the next few weeks and anticipate the discussions on the associated bank facility to be completed by the end of the summer.

An important step in the process has already been completed with the recent acquisition by a consortium led by Petrol one of our local partners, of Nafta Geoterm, a company based in Lendava. Nafta Geoterm owns and operates easement rights necessary for Petišovci development and operates pipelines and facilities necessary for handling oil and gas production from the field. This is a key component in the processing and transport of natural gas, allowing harmonised access to infrastructure and a more rapid development of the Petišovci oil and gas field.

Disposal of non-core assets

In line with the Company's new strategy we have already sold our interest in our producing Hungarian assets for €450,000 (£379,395), which was broadly equivalent to the revenues we expected to receive before the field became non-commercial. We expect to have concluded a sale of our Dutch assets shortly and have received an offer for our Italian assets.

Funding

Development funding

As set out in the circular relating to the open offer, the £5.5 million funding received from shareholders will allow the Company to operate through to the fourth quarter of 2013. We will therefore need to raise additional funding later this year to allow the progress at Petišovci to continue. We will consider new funding from both industry and financial sources. The terms on which the required funding will be available will depend on the progress we can report over the summer months.

Cost savings

The events of the past twelve months have highlighted the need to operate in a manner designed to make the most of our financial resources. We have identified and begun to implement significant cost savings, in part from reduced headcount and focusing on just one asset, which we expect on annualised basis, will result in costs reductions approaching £400,000.

Management and staffing

Leonard Reece was appointed Chief Executive Officer in September 2012 with a mandate to focus on bringing the Petišovci asset into production. However, it was not until the departure of the previous Chief Executive that he had a free hand to push through the required actions both at Petišovci and since the first quarter of 2013 with our new strategy for our other assets.

Despite the distractions in dealing with the lack of funding and the dispersed nature of our asset portfolio Len has managed in short time to make substantial progress, establishing strong working relationships with the authorities in Slovenia and with our partners, staff and contractors alike.

Additional financial and operational staff have been identified and recruited, so that once the required consents and funding are in place the project will be able to move forward without delay.

Outlook

I conclude this chairman's statement with the message that in the past few months we have made and are continuing to make real progress at our Petišovci asset, which remains well regarded by the industry and offers the opportunity to significantly enhance shareholder value.

Clive Carver

Chairman

22 May 2013

For further information please contact:

Ascent Resources plc

Clive Carver, Chairman

Tel: +44 (0)20 7251 4905

finnCap (Nominated Adviser and Broker)

Tel: +44 (0) 20 7220 0500

FirstEnergy Capital LLP (Financial Adviser)

Hugh Sanderson / Travis Inlow

Tel: + 44 (0) 20 7448 0200

About Ascent Resources

Ascent Resources plc has a diversified portfolio of hydrocarbon exploration and development interests across Europe: Italy, Switzerland and Slovenia. Its portfolio contains a solid base of field redevelopment projects with selected exposure to exploration upside. The portfolio is focussed on gas and all of its projects are located onshore where operating and development costs are substantially lower than they would be offshore.

Ascent Resources full Annual Report is available from the Company's website www.ascentresources.co.uk

Operations Review

Petišovci Project, Slovenia

The Petišovci Tight Gas Project is located in a 98 km2 area in Slovenia close to the Hungarian and Croatian borders. The project targets the development of substantial tight gas reservoirs that are known to be in Miocene clastic reservoirs.

Ascent has a 75% interest and Geoenergo d.o.o. (Geoenergo), the concessionaire of the Petišovci Exploitation Concession, has a 25% interest in the Petišovci joint venture. Geoenergo is a company jointly owned by Nafta Lendava d.o.o., the Slovenian state oil company, and Petrol d.d., Slovenia's leading energy trading enterprise.

There are three structural highs present in the project area, over which Ascent and its joint venture partners acquired 3D seismic in 2009 and 2010. Shallow conventional Upper Miocene oil and gas reservoirs in the three principal structures within the project area have historically been exploited in the area since the 1940s, but are now essentially depleted. By contrast, in the deeper, lower permeability, Middle Miocene reservoirs, only a small percentage of the recoverable gas has been produced to date. These deeper Middle Miocene reservoirs were first put on production in 1972 but, due to the limited hydraulic stimulation (fracturing) capabilities at the time, they produced limited volumes of gas from area. Since then, there have been major advances in stimulation techniques which, in conjunction with modern 3D seismic methods, now make efficient commercial development of these low permeability reservoirs possible. Ascent's early acquisition of 3D seismic over the whole project area in 2009 has proved vital to the success of the new Pg-11A and Pg-10 wells drilled in 2011, mainly by guiding the wells into zones of better reservoir quality, which are evident as high amplitudes on the 3D data.

In late 2010/early 2011 Pg-11 well (Pg-11) was drilled. It was the first deep well to be drilled in the project area for 22 years and it evaluated previously unproduced reservoirs that are deeper in the Middle Miocene section. Later in 2011 Pg-11A, a sidetrack of Pg-11, and the Pg-10 well (Pg-10) were drilled, completed and successfully fracture stimulated. Pg-11A is proven productive from the deeper 'K' sands and Pg-10 from the 'F' sands. Advances in hydraulic fracturing methodology in the last twenty years contributed to flow rates of over 8 MMscfd from Pg-10, productivity over three times greater than previously achieved. The fracture stimulation in three stages of Pg-11A resulted in a more modest flow rate of slightly above 2 MMscfd which should be commercial.

The most recent independent report by RPS of GIIP (gas initially in place) defined a gross P50 estimate of 456 Bcf and a mean of 592 Bcf for the Slovenian part of the project. The well results also confirmed the gas productivity, through an open-hole test of the shallowest 'A' sands. The evaluation work included extensive coring and state-of-the-art electric-line log acquisition, the analysis of which has provided important new data that has been invaluable in planning the redevelopment of the reservoirs.

Leading on from the well results, a two phase redevelopment was designed. This redevelopment plan takes into consideration the existing infrastructure as well as the expected productivity of gas in the longer term.

Phase 1: After the recompletion of Pg-10 and Pg-11A with custom designed production strings, it is planned that gas from these wells will be brought on-stream via dedicated well-site facilities, through the modified, existing, gas central processing plant (CPP) and, from there, to the national gas pipeline terminal. Previously, gas produced from the Petišovci wells was processed at a local methanol plant, but this is currently shut down. The modifications to the CPP are therefore required to upgrade the gas to the national pipeline specifications; these will reduce the CO2 content from approximately 3% to less than 1.5%, remove the condensate in the gas for sale separately and ensure dew point control by dehydration. The Phase 1 maximum production rate is set at 8,000 m3 per hour, approximately equal to 7 MMscfd. In May 2012 the Company announced it had secured a €15 million facility from BNP Paribas (BNPP) to enable Phase 1 to move ahead and for production to commence. Unfortunately this facility was subject to the obtaining of certain consents from its Joint Venture Partners and additional signatories to the Joint Venture Agreement. The consents from four additional signatories to the Joint Venture Agreement have yet to be secured. The Company continues to apply pressure at a number of levels in order to secure a resolution to the current impasse.

Phase 2: Once the medium term performance of the wells is established, and subject to obtaining the necessary consents, a new 'greenfield' processing facility will be designed. It will perform the same function as the modified existing CPP but will be of substantially higher capacity. This will necessitate enlarged gas export capacity and modifications to the national grid connection. It is estimated that 30 or more new wells are expected to be required to maintain these flow rates for a period of over 10 years and to be able to maximise the recovery from the reservoirs. The Phase 2 facility is expected to take at least 30 months to design, permit, construct and commission, and during this time the first of the new wells will be drilled.

Assets For Disposal

Frosinone and Strangolagalli, Latina Valley, Italy

The Strangolagalli concession lies in a proven oil producing area. The project involves the redevelopment of the Ripi field, originally developed in the late 1960s without the benefit of any seismic data. The oil is of good quality from shallow reservoirs less than 1,000 m deep. Seismic was acquired in 2010 so that drilling based on the interpretation of the acquired data can be planned. A drilling permit has yet to be issued.

As with Strangolagalli, the Frosinone exploration licence targets shallow oil lying at less than 1,000 m. New 2D seismic acquisition is needed to follow up on satellite reconnaissance undertaken in 2011 that confirmed existing targets and identified new ones.

Ascent Resources Italia srl (ARI) has a 50% interest in the Strangolagalli concession and an 80% interest in the Frosinone concession.

North Sea Block M10/M11, Netherlands

The M10/M11 blocks are located in the shallow waters off the north coast of the Netherlands in the southern North Sea. The licence area includes three structures, all of which contain gas discovery wells with gas present in the Slochteren unit of the Rotligendes sandstones.

A conceptual development plan has been prepared and a final appraisal well is needed for the Terschelling Noord discovery, a structure that lies partly within the M10/M11 licence area and partly in the area to the south, to confirm reservoir parameters for the detailed project design.

Ascent holds a 54% interest in the project along with its partners EBN B.V. with 40% and GTO Ltd with the remaining 6%.

Back-in Rights

Hermrigen and Linden, Switzerland

The exploration permits cover undeveloped discoveries made by Elf Aquitaine in 1972 and 1982 with a combined estimated gas resource base of over 360 Bcf. As the original Hermrigen well was drilled before gas pipeline infrastructure was built in the area, the discovery has remained unappraised. eCORP is the operator of the project and, despite selling its interest in 2010, Ascent retains various back-in rights on any successful outcome of six conventional appraisal prospects, provided relevant apportioned costs are covered.

eCorp has reported that detailed operational planning, initiated after receiving permits, revealed that the selected surface location for the Hermrigen-2 well entailed an unacceptable health risk to local residents due to the existence of poisonous gas (hydrogen sulphide) underground. This had also been discovered during the drilling of the Hermrigen-1 well. No feasible alternative surface location has been identified, however recently acquired additional 2D seismic confirmed closure in another prospect in the Seeland-Frienisberg permit area. This prospect is being discussed as a possible substitute to the Hermrigen-2 well.

Consolidated Income Statement

for the year ended 31 December 2012

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2012

Consolidated Statement of Changes in Equity

for the year ended 31 December 2012

Consolidated Statement of Financial Position

As at 31 December 2012

Consolidated Cash Flow Statement

for the year ended 31 December 2012

Notes to the Financial Statements

1. 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.

2. Going Concern

The financial statements of the Group are prepared on a going concern basis.

On 24 December 2012 the Group entered into an agreement with Henderson Global Investors Limited and Henderson Alternative Investment Advisor Limited (together, 'Henderson') for the subscription by Henderson of convertible loan notes of up to £5.5 million in principal. This loan was secured to provide funding for existing debts and to cover overheads through much of 2013.

On 29 May 2012 the Group secured a €15 million (£12 million) facility from BNPP. This was secured in order to finance the primary capital expenditure requirements of the Group, being the Petišovci project in Slovenia. However, due to various problems obtaining consents from signatories to the Joint Venture Agreement, the Group was unable to draw down on the loan and the loan expires on 29th May 2013. Nevertheless, BNPP have remained supportive and we would hope to be able to enter into a new loan should the aforementioned issues be resolved, although there can be no certainty of this.

Existing cash resources are sufficient to meet overheads for the 6 months from the publication of this report. In order to fund the core work programme and overheads for the required 12 month period further funds will be required. The Group has a SEDA facility in place which could bridge this gap; drawdowns on this facility are dependent upon both liquidity and the prevailing share price; additionally we would look at issuing equity to existing or new investors.

The Directors have also undertaken a Strategic Review, as announced at the end of 2012, which might enable them to consider non-equity financing such as farm-in agreements or asset sales. These options are currently under negotiation with various counterparties and on this basis the Directors are confident of the Group's ability to continue as a going concern.

However, there can be no guarantee over the outcome of these negotiations and as a consequence there is a material uncertainty of the Group's ability to raise additional finance, which may cast significant doubt on the Group's ability to continue as a going concern. Further, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors, however, remain confident of the Group's ability to operate as a going concern given the funding discussions that have and continue to take place and in light of the significant recent support from Henderson.

3. Segmental Analysis

The Group has five reportable segments, as described below, which are based on the geographical areas in which the Group's activities are carried out. Each area is then subdivided into a number of different sites based on the locations of the wells. The operations and day to day running of the business is carried out on a local level and therefore managed separately. In addition, each site has different technological requirements based on their stage of development which are coordinated based on their geographical location. Each operating segment reports to the UK head office which evaluates the segment's 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 five geographic reporting segments are made up as follows:

Italy - exploration and development

Hungary - production and exploration

Slovenia - exploration and development

The Netherlands - exploration and development

UK - head office

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. Transfer prices between segments are set on an arm's length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and segment results include transfers between segments. Those transfers are eliminated on consolidation.

Information regarding the current and prior years' results of each reportable segment is included below. Initial performance is measured by the results that arise from the exploration and development works carried out. Once producing, other production performance measures are based on the production revenues achieved. This is reported to the Group's CEO by the level of capitalised exploration costs and the results from studies carried out at the individual locations of the wells. The CEO uses these measures to evaluate project viability within each operating segment.

All revenue in the year derives from one customer.

4. Loss per share

The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares. Dilutive shares arise from share options and the convertible loan notes held by the Company. A calculation is done to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to outstanding share options, warrants and convertible bonds. Further details of the dilutive effect of potentially issuable shares are in Notes 5 and 27. In both 2012 and 2011 share options were not dilutive due to the loss in the year.

5. Exploration and evaluation costs - Group

Net

For the purposes of impairment testing the intangible oil and gas assets are allocated to the Group's cash-generating units, 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 amounts for intangible exploration assets represent costs incurred on active exploration projects. These amounts are written off to the income statement as an impairment expense unless commercial reserves are established or the determination process is not completed and there are no indications of impairment. The outcome of ongoing exploration, and therefore whether the carrying value of intangible exploration assets will ultimately be recovered, is inherently uncertain.

The impairment charges in the year in Italy of £1,836,000 and in Hungary of £448,000 are as a result of Ascent writing down its assets to their net realisable value following the sale of the projects post year end. For further details see Note 26.

During the prior year, Ascent entered into an agreement with EnQuest PLC ('EnQuest') to acquire their 48.75% interest in the Petišovci project in Slovenia. As per the terms of the agreement, Ascent issued 150,903,958 new Ordinary Shares of 0.1p each in the Company to EnQuest. Additionally, at completion, Ascent granted a nil cost option over 29,686,000 new Ordinary Shares of 0.1p each in the Company to EnQuest. The cost of both the share issue and the grant of the nil cost option (£14,243,000 combined) have been treated as additions to Slovenian exploration costs in the period at Group level.

The impairment charge for the prior year in Hungary of £1,599,000 relates to the plugging of the PEN-104AA well at the Penészlek development, the write off of balances held in respect to the Pelsolaj exploration permit and an internal assessment as to the estimated financing risks and therefore the associated carrying value of other Hungarian projects.

The impairment charge for the prior year for both Italy (£1,750,000) and the Netherlands (£122,000) relates to an internal assessment of the estimated carrying value of the Company's assets held in those countries.

6. Events subsequent to the reporting period

Disposal of interest in PetroHungaria Kft

On 25th April 2013 the company announced that it had agreed to dispose of its 48.66% interest in PetroHungaria Kft, which held its interest in the Penészlek field, to their joint venture partners, DualEx Energy International, Swede Resources and Geomega for a cash consideration of €450,000 which was received on 13 May 2013.

Repayment of the Yorkville Facility

Following the successful completion of the Open Offer funding, the company repaid the remaining balance of £786,677 due under the Yorkville facility on 17 May 2013.