Ascent Resources Regulatory News (AST)

Ascent Resources plc

("Ascent" or "the Company")

 Open Offer of up to 500,000,000 Ordinary Shares at 0.5 pence per share or 2,500,000 Convertible Loan Notes at 100 pence per Convertible Loan Note on the basis of 1 Offer Share for every 2.05 Existing Ordinary Shares or 1 Convertible Loan Note for every 410 Existing Ordinary Shares, Issue of the Incentive Loan Notes, Introduction of Incentive Scheme,Approval of the Waiver by the Takeover PanelAndNotice of General Meeting

Further to the announcement of 24 December 2012 regarding the 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 amount, £2.5 million of which were to be placed with Henderson subject to clawback from investors in an open offer ("the Open Offer") to all Ascent shareholders, the Directors are pleased to announce the terms of the Open Offer ("the Fundraising").

Open Offer

Qualifying Shareholders are invited to apply for Offer Shares under the Open Offer at a price of 0.5p per Offer Share or for Offer Loan Notes at a price of 100 pence per Convertible Loan Note, payable in full on application and free of all expenses, pro rata to their existing shareholdings on the basis of:

1 Offer Share for every 2.05 Existing Ordinary SharesOr1 Offer Loan Note for every 410 Existing Ordinary Shares

held at the Record Date and so in proportion for any other number of Existing Ordinary Shares then held. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares or Offer Loan Notes. Fractional entitlements which would have otherwise arisen will not be issued.

The Open Offer is conditional, inter alia, upon Admission and also upon the passing by Shareholders of the Fundraising Resolutions at the General Meeting which will give the Directors the necessary authorities to allot and issue equity securities and to dis-apply statutory pre-emption rights in respect of the allotment of the Offer Shares and Convertible Loan Notes in connection with this fundraising.

Rule 9 Whitewash

If the Convertible Loan Notes were to be fully converted by Henderson, Henderson would hold approximately 58.9 per cent. Of the total voting rights of the Company, which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige Henderson to make a general offer to Shareholders under Rule 9 of the Takeover Code. The Takeover Panel has agreed, however, to waive this obligation subject to Independent Shareholder consent.

Incentive Arrangements

Leonard Reece and Clive Carver, as demonstration of their commitment to Ascent, have agreed to purchase 81,144 Incentive Loan Notes on the same terms as the Offer Loan Notes.

In addition, the Company has set up an option style scheme to incentivise and reward the key contributors to Ascent's future success. The total value of the underlying shares to be issued under these arrangements has been set at 10 per cent. of the total fully diluted shares in issue, assuming full conversion of the Loan Notes.

Circular

A Circular will today be posted to shareholders, the purpose of which is, amongst other things, to provide Shareholders with details of the Fundraising, to explain the background to the Company's current position, provide details of the incentive arrangements put in place, and to explain why the Board considers that the Fundraising is for the benefit of Shareholders as a whole and how the Board intends to develop value for Shareholders. Extracts from the Circular can be found below.

Expected Timetable

Save for the date of publication of the Circular, each of the times and dates above are subject to change. Any such change, including any consequential change in the Subscription and Open Offer statistics above, will be notified to Shareholders by an announcement on a Regulatory Information Service.

Other

Unless otherwise defined, all capitalised terms in this announcement shall have the meaning given to them in the Circular.

Enquiries:

Ascent Resources plc

Scott Richardson Brown, Finance Director

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

Press Enquiries - Cardew Group

Tel: +44 (0) 20 7930 0777

A copy of this announcement will be available on the Company's website at www.ascentresources.co.uk as soon as possible.

Rule 2.10 Disclosure:

In accordance with Rule 2.10 of the Code, the Company confirms that it has 1,025,509,722 ordinary shares of GBp 0.10 each in issue and admitted to trading on the AIM Market of the London Stock Exchange with the ISIN GB00B03W6Y84.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

The following has been extracted from the Circular which will be sent to Shareholders today.

LETTER FROM THE CHAIRMAN OF THE COMPANY

1. Introduction

As most shareholders will be aware, towards the end of last year your Company was extremely short of funds. The principal reason for this was the failure to bring our Slovenian gas project at Petišovci on stream as originally planned. On 24 December 2012, to allow the Company to continue to trade and to provide shareholders with the best chance of maximising their investments, your Board was pleased to conclude a fundraising with Henderson by way of the subscription by Henderson of Convertible Loan Notes of up to £5.5 million.

The terms negotiated with Henderson were, in the opinion of the Directors, the best possible in the circumstances and reflect the commercial reality of the Company's position and prevailing market conditions. Under the rules of the Takeover Panel, the Company has an obligation to seek a Whitewash, so allowing Henderson to convert the Convertible Loan Notes into Ordinary Shares and potentially own 30 per cent. or more of the Company.

Your Board has also agreed with Henderson that £2.5 million of the £5.5 million rescue funding will be made available for Shareholders to purchase Convertible Loan Notes on the same terms as Henderson, by way of an Open Offer. As an alternative, Shareholders have the option to purchase Offer Shares at a price of 0.5 pence per Offer Share.

The purpose of the Circular is, amongst other things, to provide you with details of the Fundraising, to explain the background to the Company's current position, provide details of the incentive arrangements put in place, and to explain why the Board considers that the Fundraising is for the benefit of Shareholders as a whole and how the Board intends to develop value for Shareholders.

The terms of the Open Offer, and the steps required for qualifying Shareholders to participate, are set out in the accompanying letter from finnCap.

2. Background

The Company failed to make the expected progress in obtaining the required third party consents at our Petišovci project in 2012. Concerns over on-going leadership problems, progress with the asset portfolio and funding led the Board to appoint Leonard Reece as Chief Executive Officer in September 2012 with a mandate to focus on bringing the Petišovci asset into production.

In October 2012, First Energy Capital LLP was appointed to evaluate all options open to the Group. In December 2012, shortly before the dismissal of the former Managing Director, the Group entered a formal strategic review. This process remains on-going, but did not affect the need for the Fundraising. Whilst we are hopeful, based on early interest, that it will produce asset divestment options to rebalance the portfolio, or even possibly produce a merger partner for the Group as a whole, there can be no certainty that any transactions or offers will be consummated or forthcoming.

The Board, having been so advised by FirstEnergy Capital LLP, does not believe that the Proposals or the Waiver will result in any offer or bona fide possible offer being frustrated or in Shareholders being denied the opportunity to decide on its merits.

3. Funding

The Directors believe the £5.5 million fundraising gives the Group sufficient capital to continue trading through to the fourth quarter of 2013 and allows the Company the best opportunity to make significant progress at the Petišovci asset. However, further funding will be required for the next phase of development, to get the Group to a point where revenues from the Petišovci asset commence.

Additionally, the BNPP Facility cannot be drawn until BNPP has waived the defaults on the BNPP Facility and the Company has obtained the JV Consent and various other required contracts. In the event that these waivers, the JV Consent and other required contracts have not been obtained by 29 May 2013, the BNPP Facility shall automatically cancel and cease to be available.

Your Board is therefore considering the benefits of introducing a further investor sooner rather than later and has held discussions with a variety of financial and industry partners to this end. Although we cannot be certain that further funding will be available from a new investor, subject to the receipt of the required consents, the Board is confident in the value in the underlying assets and the ability to raise further funds.

4. Current Trading and Prospects

The year to 31 December 2012 proved to be very disappointing for the Company. The finalisation of a €15m credit facility with BNPP to fund development of the Petišovci asset was, in the opinion of the Board, a glowing endorsement of that project. However, the Company was unable to progress the Petišovci project in the second half of the year, as a result of failure to receive the JV Consent. Additionally, due to lack of adequate financial resources and efforts to focus remaining funds on our key project in Slovenia, no significant progress was made across the rest of the Company's portfolio of assets.

The jewel in our crown remains the Petišovci asset in Slovenia. We believe that under the new leadership we should be in a better position to unlock the current impasse during the course of 2013 to allow the belated commencement of production in 2014. Development of this project is the focus of the Board and it is critical for developing value for Shareholders in 2013 and beyond.

5. Strategy

Your Board firmly believes that the gas field at Petišovci is its outstanding prospect and therefore intends to focus the Company's resources on this project. Our Hungarian asset continues to produce positive but declining cashflow which is expected to cease within the next 6 to 9 months. We also believe that now is an appropriate time to seek new partners for, or to divest, our assets in Italy, Hungary and the Netherlands. Discussions are underway with several potential purchasers for our non-Slovenian assets. While the aggregate consideration is unlikely to be material in the context of the funding required for our Slovenian asset, disposals will reduce the amount we will have to spend on these non-core assets.

Our strategy is to focus the bulk of our available funding on bringing Petišovci into production. In the event we are unsuccessful in completing these disposals, we will seek to preserve the value of our other assets either through third party funding, or by making modest financial commitments to extend their lives, where such action is deemed appropriate.

6. Changes to the Board

I will leave the Board at the General Meeting.

It is also with regret that I report that Scott Richardson Brown and Graham Cooper have decided to retire from the Board at the conclusion of the General Meeting; Scott to pursue other business interests and opportunities and Graham following the dilution of EnQuest's interest and greater demand on his time elsewhere. We all want to thank them both for their time, effort and wisdom. Scott has performed an excellent job as Finance Director under very difficult circumstances, raising significant money for the Company, and also securing the important BNPP Facility. Graham has provided excellent support and advice, on an unremunerated basis, for the past two years.

Following the General Meeting, Clive Carver, who was nominated by Henderson under the Subscription Agreement, will become Chairman. Clive is an experienced Chairman of AIM Energy and Petroleum companies and has recent hands on experience of turnaround situations in the sector. I am pleased to welcome him to the Board. He will work closely with Len Reece in attempting to bring the Petišovci project into production.

The Board is also seeking to appoint a new non-executive director, a condition of the funding by Henderson. In due course the management team will be strengthened to ensure the correct financial and technical skills are available to develop the Petišovci project.

Nigel Moore and Dr.Cameron Davies will remain on the board as independent non-executive directors.

This team will take the lead in implementing the new strategy as described above. With the support of Henderson and a potential new financial or strategic partner, I am confident that the new management team will be able to develop the Petišovci project to its full potential.

7. Management Incentives

7.1 Incentive Loan Notes

Len Reece and Clive Carver, as demonstration of their commitment to Ascent, have agreed to purchase 81,144 Incentive Loan Notes.

In the case of Len Reece this will be funded by an upfront retention payment from Ascent of £63,644, which will be used to buy the 63,644 Incentive Loan Notes. These will be purchased as soon as practically possible after the retention payment is made. Len Reece's base post tax salary will for a period of up to two years be reduced by the corresponding amount. He will also earn the coupon on the Incentive Loan Notes. In the event that Len Reece does not stay for the full three year qualifying period or until an event of exit the number of Incentive Loan Notes he would retain would be the number pro rata to the percentage of salary then sacrificed, with any unvested Incentive Loan Notes reverting to the Company. Clive Carver will acquire 17,500 Incentive Loan Notes funded by his own resources.

7.2 The Ascent Resources 2013 Long Term Incentive Plan ("the Incentive Scheme")

The Board believes that the success of the Company will depend to a high degree on the new management team and other staff being appropriately motivated and rewarded.

The Company has set up an option style scheme to incentivise and reward the key contributors to Ascent's future success. The total value of the underlying shares to be issued under these arrangements has been set at 10 per cent. of the total fully diluted shares in issue, assuming full conversion of the Loan Notes.

The initial awards under the Incentive Scheme have been capped at 5 per cent. in part in recognition that as the Company progresses new staff will be required who would also expect to participate in the incentive arrangements.

The strike price for the Scheme Shares to be awarded on the closing of the General Meeting has been fixed at 1 penny per Scheme Share. Of the current Board Len Reece will be awarded 69,079,066 Scheme Shares and Clive Carver will be awarded 26,568,871 Scheme Shares, representing 3.25 and 1.25 per cent. respectively of the fully diluted issued share capital. Other awards will be made to staff but no other current Directors will participate in these incentive arrangements.

The Scheme Shares will vest at the earlier of three years from the date of the General Meeting or upon an event of exit, which is broadly defined as a change of control or the sale of the Company's Slovenian assets for more than £40 million.

In the event that a participant in the incentive arrangements leaves before vesting the value of the Scheme Shares they would be entitled to will depend on whether they were deemed under the rules of the scheme as a Good Leaver, an Intermediate Leaver, or a Bad Leaver.

For a Good Leaver, all the Scheme Shares would fully vest but the share price used to calculate the reward would be that at the end of three years or on an event of exit. In this way a Good Leaver would be rewarded in the same manner as shareholders generally.

For an Intermediate Leaver the number of shares to be received would time pro rata but the value of those Scheme Shares would be capped by reference to the price on the date they left.

For a Bad Leaver, all Scheme Shares will lapse on cessation of employment.

For the avoidance of doubt, the entitlements of a director under the Management Incentive Scheme will not be affected if a director retires by rotation or fails to be re-elected as a director.

Further details of the incentive arrangements are set out in paragraph 8.11 and 8.12 of Part VII.

finnCap has confirmed that it considers both the purchase of Incentive Loan Notes by Len Reece and Clive Carver and the terms thereof, and the grant of options to Len Reece and Clive Carver under the Incentive Scheme are fair and reasonable in so far as Independent Shareholders are concerned.

8. Independence

With the exception of Clive Carver, who was appointed a non-executive director of the Company on 24 December 2012 at the instigation of Henderson under the terms of the Subscription Agreement, all of the Directors of the Company are deemed to be independent for the purposes of making a recommendation on the terms of the Subscription. Furthermore, Henderson, as the party subject to the Whitewash, will not vote on the Whitewash Resolution at the General Meeting.

9. Irrevocable undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolutions from Directors holding in aggregate 1,169,500 Ordinary Shares representing approximately 0.11 per cent. of the existing issued share capital of the company. In addition, the Company has received an irrevocable undertaking to vote in favour of Resolutions 1 and 3 from Henderson who have a beneficial interest in respect of 151,601,970 Ordinary Shares representing of 14.78 per cent. of the existing share capital of the Company.

10. Recommendation

Subscription

The Independent Directors believe that the funding offered by Henderson provided it with the greatest opportunity to generate shareholder value, particularly from the Petišovci Project in Slovenia, which has been stalled as described above.

Accordingly, the Company entered into the Subscription Agreement as described in greater detail elsewhere in the Circular and has drawn down the first £3 million already to enable the Company to continue to trade. Under the rules of the Takeover Panel the Company is required to obtain Shareholder approval for the terms of the funding by Henderson.

The Independent Directors, having been so advised by finnCap, believe the Proposals and the Waiver are fair and reasonable and in the best interests of Independent Shareholders generally. In providing advice to the Independent Directors, finnCap has taken into account the Independent Directors' commercial assessments. Accordingly, Independent Directors recommend that Independent Shareholders vote in favour of the Resolutions to approve the Proposals and the Waiver.

Shareholders are advised that in the event that the Fundraising Resolutions are not passed at the by 31 May 2013 ("the Long Stop Date") and the Long Stop Date is not extended by Henderson, the Convertible Loan Notes that are not capable of conversion into Ordinary Shares pursuant to the Company's current authorities shall be treated as Phantom Shares and a finance fee equal to any value attributable to those shares (after deducting the face value of any Convertible Loan Notes redeemed for cash) shall be paid to Henderson by the Company on the 31 January 2015 or such earlier redemption date in accordance with the terms of the Convertible Loan Note Instrument.

In the absence of any other financing arrangements, your Company does presently not have the funds to make such a payment and the likelihood, should Henderson make such a request, is that the Company would be unlikely to be able to continue to trade and in such circumstances your Board would be obliged to place the Company into administration without delay and that it would be probable that all Shareholders' investment to date would be lost under such circumstances. Accordingly, Independent Shareholders are urged to vote in favour of the Resolutions to be put to the General Meeting convened for 30 April 2013 to approve the Proposals and the Waiver. The Board intend to vote in favour of the Resolutions in respect of their aggregate shareholdings of 1,169,500 Ordinary Shares representing approximately 0.11 per cent. of the Company's existing issued Ordinary Shares.

Participation in the Open Offer

In deciding whether to participate in the Open Offer Shareholders, should be aware that while the rewards could be significant in the event the Petišovci project is brought on stream as your Board hopes, there can be no guarantee that either the required partner consents will be obtained and associated contracts will be signed, or that the said formalities will be resolved before additional, more dilutive funding is required. Shareholder's attention is drawn to the Risk Factors contained in Part III of the Circular.

Accordingly, Shareholders electing to take up Offer Shares or Offer Loan Notes pursuant to the Open Offer are advised that while they may benefit therefrom they may also lose all their investment.

Yours faithfully,

John KennyChairman

LETTER FROM FINNCAP LIMITED

1. Introduction

Your Board announced on 24 December 2012 that it had entered into an agreement with Henderson for the subscription by Henderson of Convertible Loan Notes of up to £5.5 million in principal amount. The Convertible Loan Notes will be convertible at any time, when pursuant to the terms upon which they are issued they are capable of conversion, prior to repayment or subject to automatic conversion into ordinary shares of 0.1 pence each in the share capital of the Company at the holder's option, at a conversion price, fixed at 0.5 pence. Each Convertible Loan Note of £1 will therefore be convertible into 200 Ordinary Shares. The Convertible Loan will be drawn in two tranches. The first tranche of £3 million Convertible Loan was drawn on 28 December 2012 and the second tranche of £2.5 million will be subscribed for by Henderson subject to clawback from investors in the Open Offer, and subject to the terms and conditions of the Subscription Agreement. The Company's existing Shareholders are therefore being provided with the opportunity to subscribe for Offer Shares or Offer Loan Notes at the same price and on the same commercial terms as Henderson.

The purpose of the Circular is, amongst other things, to provide you with details of the Fundraising, to explain the background to and the reasons for these proposals and to explain why the Board considers that the Fundraising will provide an opportunity to promote the success of the Company for the benefit of its members as a whole.

The terms of the Fundraising are described in the Circular. The net proceeds of the Fundraising are expected to be approximately £5.15 million and will provide the Group with capital to manage the business in 2013 and progress the Group's business interests, largely focused on the project in Slovenia.

The Open Offer is conditional, inter alia, upon Admission and also upon the passing by Shareholders of the Fundraising Resolutions at the General Meeting which will give the Directors the necessary authorities to allot and issue equity securities and to dis-apply statutory pre-emption rights in respect of the allotment of the Offer Shares and Convertible Loan Notes in connection with this fundraising.

Furthermore, if the Convertible Loan Notes were to be fully converted by Henderson, Henderson would hold approximately 58.9 per cent. Of the total voting rights of the Company, which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige Henderson to make a general offer to Shareholders under Rule 9 of the Takeover Code. The Takeover Panel has agreed, however, to waive this obligation subject to Independent Shareholder consent.

2. Funding

A key cash requirement of Ascent is the repayment of the Yorkville loan of £2.3 million. The Yorkville Loan bears interest at a rate of 9% per annum and at 31 December 2012 approximately £1.9 million of this loan was outstanding, in addition to approximately £0.9 million of debt that is payable through to 1 July 2015 to Cento Bank in the Company's Italian subsidiary.

In 2013, the Company has to continue making interest payments and loan repayments to Yorkville and Cento bank of approximately £1.9 million and approximately £0.42 million respectively as well as meeting its monthly overheads and to fund its modest 2013 capital expenditure programme. Monthly revenues from the sale of hydrocarbons are declining, as expected, as the Peneszlek field nears the end of its life over the next 12 months and hence the Company does not currently have the capital resources to make its loan repayments and also meet its other obligations. The Company has therefore sought other sources of financing, including additional loans from major shareholders and other third parties.

Having reviewed a number of different funding options, the Directors concluded that the Henderson rescue funding provided it with the greatest opportunity to generate shareholder value in the next twelve months, particularly from the Petišovci asset in Slovenia, which has been stalled awaiting various consents as described above.

Ascent has therefore agreed terms, pursuant to the Subscription Agreement, for the subscription by Henderson of Convertible Loan Notes of up to £5.5 million in principal amount. The Convertible Loan will be drawn in two tranches. The first tranche of £3 million Convertible Loan was drawn on 28 December 2012 and the second tranche of £2.5 million will be subscribed by Henderson subject to clawback from investors in the Open Offer, and subject to the terms and conditions of the Subscription Agreement, described in more detail elsewhere in the Circular.

The £5.5 million rescue funding on its own is not expected to be sufficient to fund the Group until revenues from the Petišovci asset come on stream, even if the required consents are received in the next few months.

Additionally, the BNPP Facility cannot be drawn until BNPP has waived the defaults on the BNPP Facility and the Company has obtained the JV Consent and various other required contracts. In the event that these waivers, the JV Consent and other required contracts have not been obtained by 29 May 2013, the BNPP Facility shall automatically cancel and cease to be available. 

3. Open Offer

The second tranche of the Convertible Loan Notes of up to £2.5 million will be subscribed for by Henderson subject to clawback by Shareholders under the Open Offer. The Open Offer will be made to Qualifying Shareholders on the register on the Record Date. The Open Offer will provide Shareholders with the option to subscribe for Convertible Loan Notes at a price of 100 pence per Convertible Loan Note, or for new Ordinary Shares at a price of 0.5 pence per Ordinary Share. Qualifying Shareholders' entitlements to apply in the Open Offer will be pro-rata to their holdings of Ordinary Shares in the Company at the Record Date.

Henderson has agreed to underwrite the Open Offer by undertaking in the Subscription Agreement that, in the event the proceeds of the Open Offer fall short of £2.5 million, it will subscribe for further Convertible Loan Notes equal to such shortfall.

Any participation in the Open Offer by Shareholders will reduce Henderson's underwriting commitment. The Company will pay Henderson an underwriting fee of 2% of the aggregate amount of the Open Offer.

Qualifying Shareholders are invited to apply for Offer Shares under the Open Offer at a price of 0.5p per Offer Share or for Offer Loan Notes at a price of 100 pence per Convertible Loan Note, payable in full on application and free of all expenses, pro rata to their existing shareholdings on the basis of:

1 Offer Share for every 2.05 Existing Ordinary SharesOr1 Offer Loan Note for every 410 Existing Ordinary Shares

held at the Record Date and so in proportion for any other number of Existing Ordinary Shares then held. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares or Offer Loan Notes. Fractional entitlements which would have otherwise arisen will not be issued.

The Open Offer is subject to the satisfaction, amongst other matters, of the following conditions on or before 2 May 2013, (or such later date being not later than 31 May 2013, as the Company may decide):

• passing of the Fundraising Resolutions; and

• to the extent that Offer Shares are to be issued pursuant to the Open Offer, Admission becoming effective by 8.00 a.m. on 2 May 2013 (or such later time or date not being later than 8.00 a.m. on 31 May 2013 as the Company may decide).

The Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Settlement and dealings

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence on 2 May 2013. Further information in respect of settlement and dealings in the New Ordinary Shares is set out in paragraph 7 of Part IV of the Circular.

Offer Loan Notes will be credited to CREST accounts on 2 May 2013. It is not currently expected that the Offer Loan Notes will be listed on any stock exchange or other market.

Overseas Shareholders

Certain Overseas Shareholders may not be permitted to subscribe for Offer Shares pursuant to the Open Offer and should refer to paragraph 6 of Part IV of the Circular.

4. Terms of the Subscription Agreement

Henderson also have the right, whilst the Convertible Loan Notes are outstanding, to nominate for appointment two non-executive Directors to the Board of Ascent, one of whom shall be the Chairman. To that end, Clive Carver has been appointed to the Board as a non-executive Director and will become Chairman at the conclusion of the General Meeting and a further non-executive Director may be appointed in the future.

The Subscription Agreement also contains certain negative pledges, providing Henderson with certain rights of consent in relation to certain matters concerning the Company and its business, including in relation to acquisitions or disposals, the conduct of the business of the Group and incoming indebtedness.

The Subscription Agreement is summarised in paragraph 8.1 in Part VII of the Circular.

5. Use of Proceeds

The first tranche of £3 million of the Convertible Loan Notes was drawn down on 28 December 2012 and has been used to make interest payments and a partial repayment under the Yorkville Loan Facility Agreement, make interest payments and capital repayments to Cento bank, meet certain capital expenditure requirements and to provide Ascent with on-going working capital.

It is expected that the second tranche of £2.5 million will, when received, be used to make interest payments and a final repayment under the Yorkville Loan Facility Agreement, to meet certain capital requirements and to provide Ascent with on-going working capital for much of the rest of 2013.

It is currently anticipated that the net proceeds from the issue of the Convertible Loan Notes to Henderson and from the Open Offer, alongside forecast net revenues from hydrocarbon sales, will provide the Company with sufficient working capital to meet its current expected capital requirements through to the fourth quarter of 2013 and therefore provide more time for the Company to focus its efforts on unlocking the potential for the Petišovci asset to generate significant cashflow.

6. Darwin SEDA

Pursuant to the terms of the Subscription Agreement, the Company has agreed, subject to the repayment of the Yorkville Loan Facility and the termination of the existing Yorkville SEDA, to enter into a standby equity distribution facility with Darwin. The Darwin SEDA will be substantially identical in terms to, and in any event on terms no less favourable to the Company than, the Yorkville SEDA. Further information relating to the Yorkville Loan Facility, the Yorkville SEDA and the Darwin SEDA is set out in Part VII of the Circular.

7. Directors' Share Purchases

In the announcement of 24 December 2012, it was noted that it is was a term of the Subscription Agreement that Len Reece, CEO, and Scott Richardson Brown, Finance Director, will enter into a binding commitment to invest by way of convertible loan notes on the same terms as the Convertible Loan Notes the equivalent of 50% and 25% respectively of one year's annual post tax salary over a 24 month period, to be invested on a monthly basis commencing on 31 January 2013.

Since then Scott Richardson Brown decided to leave the Company to pursue other interests and step down from the Board at the conclusion of the General Meeting. Accordingly, all parties to the Subscription Agreement have agreed to waive this requirement. Details of the arrangements covering Len Reece and Clive Carver are set out in the Chairman's Letter and in paragraph 7 of Part Part I.

8. Rule 9 Whitewash

The Code governs, inter alia, transactions which may result in a change of control of a public company to which the Code applies (a "Code Company"). Ascent is a Code Company. Under Rule 9 of the Code any person who acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a Code Company, that person is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, Rule 9 of the Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person.

Rule 9 of the Code further provides, among other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a Code Company, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

An offer under Rule 9 must be in cash and must be at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the Code Company in question during the 12 months prior to the announcement of the offer.

Potential interests in Ordinary Shares of Henderson following any conversion of Convertible Loan Notes

On the assumption that (a) the full underwriting participation is taken up, (b) the Convertible Loan Notes held by Henderson are fully converted, (c) no disposals of Ordinary Shares are made by Henderson and (d) no issues of Ordinary Shares are made by the Company in the meantime, the interests in Ordinary Shares of Henderson and the percentage of the voting rights in the Company attributable to such interests (assuming no other party converts options or warrants) would be approximately 1.25 billion Ordinary Shares, representing 58.9 per cent. of the total voting rights of the Company. At that time, without a waiver of the obligations under Rule 9 of the Takeover Code, Henderson would be obliged to make a general offer to Shareholders under Rule 9 of the Takeover Code. The Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise on Henderson as a result of the conversion of any Convertible Loan Notes taking their holding to more than 30.0% of Ordinary Shares subject to approval on a poll by the Independent Shareholders of Resolution 2 as set out in the Notice.

The Waiver described in Resolution 2, which is conditional upon the passing of Resolution 1, applies only in respect of increases in the percentage interest of Henderson resulting from any conversion of Convertible Loan Notes and not in respect of other increases in Henderson's interests in Ordinary Shares. Henderson has agreed not to vote on Resolution 2 (the Resolution to approve the Whitewash).

Unless the Whitewash has been approved by Independent Shareholders or unless Henderson makes a takeover offer as required by the Takeover Code, Henderson will not be able to convert any Convertible Loan Notes to the extent that as a result of such conversion, Henderson would hold more 30% or more of the total voting rights of the Company.

If the appropriate shareholder approvals are not received by 31 May 2013, the Convertible Loan Notes and interest thereon will become repayable at any time thereafter at the election of Henderson. In such circumstances, on redemption a further sum will be payable as compensation for the loss of the conversion right calculated as the value (if any), determined in accordance with the provisions of the Convertible Loan Note instrument, attributable to the Ordinary Shares into which the Convertible Loan Notes would have converted had conversion taken place. The Convertible Loan Notes will be repayable immediately if the Company enters into any formal winding up or insolvency process, stops or suspends payment of all or a material part of its indebtedness, or seeks to reschedule all or a material part of its indebtedness. As Shareholders should be aware that if the Fundraising Resolutions are passed and Henderson converts all of the Convertible Loan Notes, Henderson may have a direct interest in more than 50 per cent. of the voting rights of the Company, and will be able to increase their aggregate interest in the Company without incurring any obligation under Rule 9 of the City Code to make a general offer to all Shareholders to acquire their shares in the Company.

The intentions of Henderson

Henderson have confirmed to the Company that they are not proposing, following any increase in their percentage interest in Ordinary Shares or voting rights as a result of any conversion of Convertible Loan Notes to seek any change in the composition of the Board or the general nature of the Company's business.

9. Further information

Your attention is drawn to the additional information set out in Part VII of the Circular.

10. General Meeting

Set out at the end of the Circular is a notice convening a General Meeting of the Company to be held at 9.30 a.m. on 30 April 2013 at the offices of finnCap Ltd, 60 New Broad Street, London, EC2M 1JJ, at which the Resolutions will be proposed.

The Company is proposing that Shareholders pass the Resolutions in order to:

(a) grant authority to the Directors under section 551 of the Act, to allot relevant securities up to a maximum aggregate nominal amount of £1,100,000 (being the maximum required in order to complete the Fundraising);

(b) empower the Directors, pursuant to section 570 of the Act, to dis-apply the statutory pre-emption rights in relation to the allotment of equity securities required in order to complete the Fundraising ;

(c) approve the waiver granted by the UK Panel on Takeovers and Mergers of Henderson's obligation to make a general offer to the Shareholders for the entire issued and to be issued share capital of the Company pursuant to Rule 9 of the Takeover Code as a result of the allotment and issue of, equity securities to Henderson pursuant to the terms of the Subscription (this resolution requires voting on a poll by Independent Shareholders);

(d) grant authority to the Directors under section 551 of the Act, to allot relevant securities up to a maximum aggregate nominal amount of £550,000 (for general purposes, to expire at the conclusion of the Annual General Meeting to be held in 2013); and

(e) empower the Directors, pursuant to section 570 of the Act, to disapply the statutory pre-emption rights in relation to the allotment of equity securities up to a maximum aggregate nominal amount of £250,000 (for general purposes, to expire at the conclusion of the Annual General Meeting to be held in 2013).

The above authorities and powers will be a substitution for to those granted at the 2012 Annual General Meeting, will enable the Directors to complete the Fundraising and will expire at the conclusion of the next Annual General Meeting of the Company in 2013.

11. Action to be taken in respect of the General Meeting

Please check that you have received the following with the Circular:

• a Form of Proxy for use in respect of the General Meeting; and

• a reply-paid envelope for use in connection with the return of the Form of Proxy (in the UK only).

Whether or not you propose to attend the General Meeting in person, you are strongly encouraged to complete, sign and return your Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post at Computershare, Corporate Actions Project, Bridgwater Road, Bristol, BS99 6AH or, during normal business hours only, by hand, at Computershare, The Pavilions, Bridgwater Road, Bristol, BS13 8AE by no later than 9.30 a.m. on 26 April 2013 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting.

If you hold your shares in the Company in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of the Circular). Proxies submitted via CREST must be received by the Company's agent (ID 3RA50) by no later than 9.30 a.m. on 26 April 2013 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting).

This will enable your vote to be counted at the General Meeting in the event of your absence. The completion and return of the Form of Proxy or the use of the CREST Proxy Voting service will not prevent you from attending and voting at the General Meeting, or any adjournment thereof, in person should you wish to do so.

12. Action to be taken in respect of the Open Offer

If you are a Qualifying Shareholder you will find an Application Form accompanying the Circular which gives details of your Open Offer Entitlement (i.e. the number of Offer Shares or Offer Loan Notes available to you). If you wish to apply for Offer Shares or Offer Loan Notes under the Open Offer, you should complete the enclosed Application Form in accordance with the procedure set out at paragraph 3 of Part IV of the Circular and on the Application Form itself and post it in the accompanying prepaid envelope (for use within the UK only), together with payment in full in respect of the number of Offer Shares or Offer Loan Notes applied for to Computershare Corporate Actions Projects, Bristol, BS99 6AH so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 29 April 2013, having first read carefully Part III of the Circular and the contents of the Application Form.

The latest time for applications to be received under the Open Offer is 11.00 a.m. on 29 April 2013. The procedures for application and payment are set out in Part IV of the Circular. Further details also appear on the Application Form which has been sent to Qualifying Shareholders.

If you are in any doubt as to the procedure for acceptance, please contact Computershare by telephone on 0870 889 3201 from within the UK or on + 44 (0) 870 889 3201 if calling from outside the UK. Calls to the 0870 889 3201 number cost approximately 10 pence per minute. Other network providers' costs may vary. Calls to the helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Computershare cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

If you are in any doubt as to the contents of the Circular and/or the action you should take, you are recommended to seek your own personal financial advice from an independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended) if you are in the UK or, if you are outside the UK, from an appropriately authorised independent financial adviser, without delay.

Yours faithfully

finnCap Limited

SUBSCRIPTION AND OPEN OFFER STATISTICS

Notes

(1) Statistics are prepared on the basis that all of the Offer Shares are subscribed for and that no Ordinary Shares (other than the Offer Shares) are issued following the date of the Circular and before the completion of the Subscription and Open Offer.

DEFINITIONS

The following definitions apply throughout the Circular unless the context otherwise requires:

"Act" the Companies Act 2006, as amended

"Admission" admission of the Offer Shares to trading on AIM becoming effective in accordance with the AIM Rules

"AIM" the market of that name operated by the London Stock Exchange

"AIM Rules" the AIM rules for Companies published by the London Stock Exchange from time to time

"Application Form" the application form to be used by Qualifying Shareholders in connection with the Open Offer

"Articles" the articles of association of the Company (as amended from time to time)

"Bad Leaver" a leaver of the Incentive Scheme who is summarily dismissed or who resigns to join a competitor

"Basic Entitlement" the entitlement of Qualifying Shareholders to apply for Open Offer Shares or Offer Loan Notes on the basis of 1 Offer Share for every 2.05 Existing Ordinary Shares or 1 Convertible Loan Note for every 410 Existing Ordinary Shares

"BNPP" BNP Paribas (Suisse) SA

"BNPP Facility" the conditional facility to be provided by BNPP of up to £15 million in connection with the Petišovci project, which expires on 29 May 2013

"Business Day" a day (other than a Saturday or Sunday) on which commercial banks are open for general business in London, England

"Computershare " Computershare Investor Services PLC

"certificated form" or "in

certificated form" an ordinary share recorded on a company's share register as being held in certificated form (namely, not in CREST)

"Change of Control" means the acquisition of a controlling interest in the Company (as defined in section 1124 of the Corporation Tax Act 2010) by any person or persons acting in concert (as defined in the City Code on Takeovers and Mergers) with them or where there is a change of control by reason of a transaction treated for the purposes of the AIM Rules as one of, a reverse takeover, a fundamental change of business or a substantial transaction.

"Circular" the circular containing information about the Subscription, Open Offer and General Meeting

"Closing Price" the closing middle market quotation of a share as derived from the AIM Appendix to the Daily Official List of the London Stock Exchange

"Company" or "Ascent" Ascent Resources plc

"Convertible Loan Notes" or

"Convertible Loan" the 9% convertible loan notes of £1 each, convertible into 200 Ordinary Shares, each repayable on 31 January 2015, the principal terms of which are summarised in paragraph 8.2 of Part VII of the Circular

"Convertible Loan Note Instrument" the convertible loan note instrument dated 23 December 2012 pursuant to which Convertible Loan Notes are constituted, the principal terms of which are summarised in paragraph 8.2 of Part VII of the Circular

"CREST" the relevant system (as defined in the Uncertificated Securities Regulations 2001) in respect of which Euroclear is the operator (as defined in those regulations)

" CREST Manual" the rules governing the operation of CREST, consisting of the CREST Reference Manual, Crest International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline rules, CREST Courier and Sorting Services Manual, Daily Timetable, CREST Application Procedures and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996, as amended) as published by Euroclear

"Darwin" Darwin Strategic Limited, majority owned by a subsidiary of Henderson, AlphaGen Volantis Fund

"Darwin SEDA" the standby equity distribution agreement made between Darwin and the Company, details of which are set out in paragraph 8.6 of Part VII of the Circular

"Directors" or "Board" the directors of the Company as at the date of the Circular whose names are set out on page 10 of the Circular, or any duly authorised committee thereof

"Euroclear" Euroclear UK & Ireland Limited

"Existing Ordinary Shares" the 1,025,509,722 Ordinary Shares in issue at the date of the Circular, all of which are admitted to trading on AIM

"finnCap Ltd" finnCap Ltd, the Company's nominated adviser and broker

"Form of Proxy" the form or proxy for use in connection with the General Meeting which accompanies the Circular

"FCA" the UK Financial Services Authority (or its successor), the single regulator under FSMA

"FSMA" the Financial Services and Markets Act 2000 (as amended from time to time)

"Fundraising" together the Subscription and the Open Offer

"Fundraising Resolutions" together, Resolution 1 and Resolution 2, as set out in the Notice of General Meeting contained in the Circular to be proposed at the General Meeting

"General Meeting" or the General Meeting of the Company convened for 9.30 a.m. on 30 April 2013

"Good Leaver" a leaver of the Incentive Scheme for reasons of death, ill health, injury, disability or the sale of the business or subsidiary that employs him, someone adjudged by an employment tribunal wrongfully dismissed, or for any other circumstances if the Board decides in any particular case

"Group" the Company and its existing subsidiaries and subsidiary undertakings

"Henderson" (1) Henderson Global Investors Limited in its capacity as discretionary investment manager of The Strathclyde Pension Fund and Henderson UK and Irish Smaller Companies Fund, and (2) Henderson Alternative Investment Advisor Limited in its capacity as discretionary investment manager of The Alphagen Volantis Fund Limited, Henderson UK Small Cap Best Ideas Fund and The Citigroup Pension Plan Investment Committee, both of 201 Bishopsgate, London EC2M 3AE, or either of them as the context shall require

"Henderson Group" Henderson Group plc, the ultimate parent company of Henderson Global Investors Limited and Henderson Alternative Investment Advisor Limited

"Incentive Loan Notes" in total 81,144 Convertible Loan Notes to be purchased on behalf of Len Reece and by Clive Carver as summarised in paragraph 7.1 of Part I

"Incentive Scheme" Ascent Resources 2013 Long Term Incentive Plan, as summarised in paragraph 7.2 of Part I and in paragraph 8.12 of Part VII

"Independent Directors" directors of the Company other than Clive Carver

"Independent Shareholders" shareholders of the Company other than Henderson

"Intermediate Leaver" a leaver of the Incentive Scheme who is not a Good Leaver or a Bad Leaver

"ISIN" International Securities Identification Number

"JV Consent" the consent of the Group's joint venture partners and signatories to the joint venture to the security arrangements required by BNPP under the BNPP Facility

"London Stock Exchange" London Stock Exchange plc

"Money Laundering Regulations" the Money Laundering Regulations 2007 (SI 2007/2157) (as amended)

"New Ordinary Shares" the Offer Shares to be issued pursuant to the Open Offer

"Notice of General Meeting" or "Notice" the notice of General Meeting set out at the end of the Circular

"Offer Loan Notes" up to 2,500,000 Convertible Loan Notes which are to be made available to Qualifying Shareholders under the Open Offer

"Offer Price" for subscription by Qualifying Shareholders under the Open Offer 0.5 pence per Ordinary Share or 100 pence per Convertible Loan Note

"Offer Shares" up to 500,000,000 Ordinary Shares which are to be made available for subscription by Qualifying Shareholders under the Open Offer

"Open Offer" the offer to Qualifying Shareholders to subscribe for the Offer Shares or Offer Loan Notes at the Offer Price, as described in the Circular

"Open Offer Entitlements" entitlements to subscribe for Offer Shares or Offer Loan Notes, allocated to a Qualifying Shareholder pursuant to the Open Offer

"Options" an option over Ordinary Shares granted by the Company

"Ordinary Shares" ordinary shares of 0.1 pence each in the capital of the Company

"Overseas Shareholders" Shareholders resident in, or citizens of, jurisdictions outside the United Kingdom

"Phantom Shares" means the calculation of the economic value payable to a holder of Convertible Loan Notes pursuant to paragraph 8.2 of Part VII of the Circular and by reference to the Ordinary Shares which would have been issued had the Convertible Loan Notes held been capable of conversion

"Proposals" the proposals set out in the Circular including the Subscription and the Open Offer

"Prospectus Rules" the Prospectus Rules published by the Financial Services Authority

"Qualifying CREST Shareholders" Qualifying Shareholders whose Existing Ordinary Shares on the register of members of the Company on the Open Offer Record Date are held in uncertificated form

"Qualifying non-CREST Shareholders" Qualifying Shareholders whose Existing Ordinary Shares on the register of members of the Company on the Open Offer Record Date are held in certificated form

"Qualifying Shareholders" holders of Existing Ordinary Shares at the Record Date

"Receiving Agent" Computershare

"Record Date" 6.00 p.m. on 11 April 2013

"Registrars" Computershare

"Resolutions" the resolutions set out in the Notice contained in the Circular to be proposed at the General Meeting

"Restricted Jurisdiction" the United States, Australia, Canada, Japan, the Republic of Ireland, New Zealand, the Republic of South Africa and any other jurisdiction where the extension or availability of the Open Offer would breach any applicable law

"RIS" a regulatory information service approved by the London Stock Exchange for the purposes of the AIM Rules

"Scheme Shares" the New Ordinary Shares to be issued pursuant to the Incentive Scheme as set out in the Circular

"Securities Act" the US Securities Act of 1933, as amended from time to time and the rules and regulation promulgated thereunder

"Shareholders" holders of Ordinary Shares

"Subscription" the subscription for Convertible Loan Notes by Henderson on and subject to the terms and conditions of the Subscription Agreement

"Subscription Agreement" the agreement dated 23 December 2012 between the Company and Henderson, details of which are set out in paragraph 8.1 of Part VII of the Circular

"Subscription Loan Notes" 3 million Convertible Loan Notes subscribed for by Henderson on 23 December 2012

"Takeover Code" or "City Code" The City Code on Takeovers and Mergers issued by the Takeover Panel, as amended from time to time

"Takeover Panel" the Panel on Takeovers and Mergers

"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland

"United States" or "US" the United States of America, each State thereof, its territories and possessions (including the District of Columbia) and all other areas subject to its jurisdiction

"uncertificated" or "in

uncertificated form" an ordinary share recorded on a company's share register as being held in uncertificated form in CREST and title to which, by virtue of the Uncertificated Securities Regulations 2001, may be transferred by means of CREST

"Waiver" the waiver of the requirements of Rule 9 described in paragraph 8 or Part II of the Circular

"Whitewash" the approval of the waiver of the mandatory offer obligations under Rule 9 of the Takeover Code

"Whitewash Resolution" Resolution 2 in the Notice

"Yorkville" YA Global Master SPV Ltd, an investment fund managed by Yorkville Advisors LLC

"Yorkville SEDA" the standby equity distribution agreement made between Yorkville and the Company, details of which are set out in paragraph 8.5 of Part VII of the Circular

"Yorkville Loan Facility Agreement" the standby equity distribution backed loan facility agreement made between the Company and Yorkville, details of which are set out in paragraph 8.4 of Part VII of the Circular

A reference to £ is to pounds sterling, being the lawful currency of the UK.