Ascent Resources Regulatory News (AST)

6 Feb 2008 07:01

Ascent Resources PLC06 February 2008 Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas 6 February 2008 Ascent Resources plc ("Ascent" or "the Company") Portfolio Update Ascent Resources plc, the AIM-traded oil and gas exploration and productioncompany, continues exploration and development work across its portfolio ofassets in six European countries. Seven wells have been drilled in the last twoyears and a further 10 are planned over the next two years. 2008 is expected tosee gas production from the Company's Hungarian assets and work is progressingwhich will also enable production from the Slovenian Petisovsci project. Overview •Seven wells drilled 2006-2007 including the successful PEN-104 gas discovery in Hungary, which is planned to produce gas in 2008. •Portfolio continues to grow and improve in quality through rigorous management of risk and value. •European platform provides a balance of low risk and high potential with managed exposure to upside value through the mix of Development, Appraisal and Exploration projects. •Focus remains on drilling and testing to prove hydrocarbon reserves - 10 wells planned during 2008-2009. •Ready access to drilling rigs as a result of 22.5% strategic interest in Perazzoli Drilling srl ('Perazzoli'). •Farm-outs in place enabling acceleration of projects - further risk reduction and provision of exploration capital from partnerships being explored prior to moving focus onto development and cash flow from production. Ascent Managing Director Jeremy Eng said, "The Company's strategy is to operatein Europe where it can benefit from highly profitable development projects, welldeveloped infrastructure with deregulated local market access and both politicaland financial stability. In line with this, our portfolio continues to improvein quality and value as the Company's technical staff work to reduce risk andcalibrate the value of each asset within the portfolio. As our portfoliomatures, the drilling and testing to prove hydrocarbon reserves will remain theprimary objective, with development and cash flow from production a secondaryfocus. "The Company has gained a competitive advantage in the countries of operationand farm-outs for the time being will be the predominant source of explorationfunds. Over the past 12 months, we have used our specialist local knowledge toacquire additional assets in Slovenia and Hungary and aim to use our minorityinterest in the Italian drilling contractor Perazzoli to take advantage of theseverely limited rig market in Europe." Key Activities for 2008 The most important activities for 2008 are summarised below whilst thegeoscience, engineering and administration work that ultimately generates thedrilling plans continues across the portfolio. •Up to €14 million of third party funds through farm-outs have already been secured for exploration and appraisal drilling in Italy's Po Valley and for the Hermrigen appraisal well in Switzerland. The two wells planned in 2008 are both to be drilled by Perazzoli's new build 200T low environmental impact drilling rig. •Two production projects in Hungary: •The Peneszlek gas processing facilities are being manufactured and the export pipeline has been successfully tested. The PEN-104 well will be completed in March subject to rig availability and production will follow shortly after. •The Bajcsa gasfield rehabilitation project that is anticipated to produce gas in 2008 is in the final stages of permitting. •The Szolnok exploration project with Toreador in Hungary is to drill two shallow gas exploration wells and to acquire 3-D seismic, all scheduled to start in April. •Acquisition of 2-D seismic in the Frosinone Permit in Italy to better define the Anagni structure is scheduled to commence in March 2008 and plans are underway to acquire regional seismic lines to improve the understanding of the thrust features in the south-eastern part of the permit. Value Added During 2006-2007 Of the seven wells drilled in 2006 and 2007, the successful PEN-104 gasdiscovery will commence production later this year. The results of each of thesewells are summarised below. •One commercial discovery: •PEN-104 in Hungary - currently being prepared for production •Two technically successful wells: •Arrone-1 in Italy encountered a sub-commercial tight gas reservoir •Anagni-1 in Italy discovered excellent quality reservoir with oil shows both in core samples and from testing operations •One suspended well: •PEN-102 in Hungary - awaiting additional seismic to determine sidetrack options •Three dry holes: • FGY-1 in Hungary - found good reservoir but no gas • VAM-1 in Hungary - encountered thin coals at the target depth • Hontomin-4 in Spain - found down-faulted reservoir below the oil water contact Summaries of Projects in the Company's Portfolio Development Peneszleck Gasfield Development (Hungary - 52.5% interest) Facilities construction is underway following the discovery of gas in thePeneszlek-104 well in November 2006. The PEN-104 well is planned for completionin March, and the facilities are to be delivered in April. Production willcommence once hook-up to the pipeline is completed and production authorisationsreceived. In addition to the planned tie-in of the PEN-9 and PEN-12 wells,further appraisal of the area will be undertaken by the acquisition of circa 100sq km of 3-D seismic including the area of the partially depleted Peneszlekfield, which is a candidate for re-development. Bajcsa Gasfield Redevelopment (Hungary - 45% interest) A study of the Bajcsa field subsurface over the past six months has confirmedthe presence of un-produced gas in at least two of the seven reservoirs thathave been identified. Ascent's geologists and engineers have been working on themost cost effective way to access this gas and have considered several optionsincluding re-entry or workover of old wells and the drilling new wells. Theproject is now ready to progress and as soon as delays in the permitting havebeen resolved, drilling will commence. The most attractive part of therehabilitation projects is that the production infrastructure is already inplace and so production can realise immediate cash flow Petisovsci Shallow Reservoirs (Slovenia - 45% interest) Ascent acquired an interest in these fields in February 2007 and has beenassimilating the data provided by the former operator. During the 1950s and1960s the field underwent a trial gas and water injection programme in anattempt to halt the decline in production. Currently, production from the fieldvery low and the Ascent technical team is working hard on rebuilding thesubsurface model with the intent of restarting full scale production. Petisovsci Deep Reservoirs (Slovenia - 15.75% interest) Ascent has recognised that the existing geological model of the deep gas fieldis not adequate to plan for new production. During September 2007, Ascent workedover the D14 well and produced minor amounts of gas following a coiled tubingintervention on a previously untested reservoir. Ascent recognises furtherprospectivity and is reworking the geological model in order to effectivelymanage the exploitation potential. Further data acquisition is planned in theD-14 well to determine its productivity. Appraisal Seeland Exploration and Appraisal (Switzerland - 80% interest) Ascent has completed the geoscience work in the area and plans to drill theHermrigen-2 well as an appraisal to the 1982 Hermrigen-1 gas discovery. Thiswell tested gas from reservoirs at 2,250m but due to drilling complications itdid not reach its deeper, primary target. The Hermrigen-2 well is planned as a3,000m vertical well that will re-test the productive gas reservoir and drillthe deeper target. It is planned to drill the Hermrigen-2 well in the secondhalf of 2008, subject to the issue of a construction permit and the consent ofthe local community. The well will be drilled with Perazzoli's newly built,latest generation, low environmental impact 200 tonne rig. Offshore blocks M10 and M11 (Netherlands - 27% interest) The blocks contain an extension of the Terschelling Noord gas field and twodiscoveries drilled by the M11-1 and M10-1 wells. Ascents geologists andgeophysicists have completed their work and Ascent engineers are now studyingthe flow characteristic and economic potential of the reservoir and options toenhance the production rate. Well planning started in December last year andAscent is investigating the options for maximising future value in these assetsincluding a possible farm-out. Exploration Frosinone Exploration (Italy - 80% interest) Plans for the plugging and abandonment of the Anagni-1 well have now beensubmitted to the authorities. Whilst testing failed to realise more thansignificant shows of oil, importantly the analysis of the oil recovered from thewell shows that the oil is similar to the oil from the Ripi oilfield located40km to the south-east. Seismic recorded in the well to supplement the lowresolution conventional surface seismic indicated that the well was drilled in aless than optimal subsurface location on the flank of the Anagni structure. Newseismic acquisition is planned during March 2008 and detailed mapping will beundertaken in order to more fully assess the potential of the Anagni structure. Cento and Bastiglia permits, Po Valley Exploration (Italy - 50% interest) Ascent completed its technical work on the Gazzata prospect and now wellplanning is underway with the Gazzata-1 well expected to spud in the second halfof 2008. Under the terms of the farm-out announced in November 2007, the firstwell is fully funded as will be a second well if the Gazzata-1 well is acommercial discovery. Fiume Arrone exploration (Italy - 56% interest) The Arrone-1 well, drilled in August 2007, found sub-commercial gas because thereservoir was both thin and low permeability. The presence of all the otherrequirements for a commercial gas field were conclusively demonstrated by theArrone-1 well and future plans are under discussion with the partners in thisproject. Szolnok exploitation Project (Hungary - 27.5% interest, subject to farm-in) Ascent's regional work in Hungary recognised the potential of the Szolnok blockand in particular the shallow, amplitude driven plays. Two wells are to bedrilled on the Szolnok block in the first half of 2008. A 3-D seismic surveywill also be acquired to de-risk several other prospects identified in thesouthern part of the block. Nyirseg exploration project (Hungary - 52.5%) It is expected that the 3-D seismic survey planned for the Peneszlek field areawill also provide information on the prospectivity of the area surrounding theprevious three discoveries. There is also further gas exploration potential bothin the southern and western parts of the permits where seismic reprocessing hasjust been completed. Offshore block M8 (Netherlands - 27% interest) During the evaluation of the adjoining M10 and M11 blocks, two prospects wereidentified on the M8 block in 2007. It is expected that the M11-1 and M10-1discoveries will be the prime focus for this area and that the M8 prospects willprovide additional upside. Rocamundo Exploration application (Spain - 50% interest) Ascent submitted an application for exploration acreage in northern Spain during2007 and it is expected that a licence will be issued during 2008. This permithas previously had two deep exploration wells drilled, which encountered gasshows. Strangolagalli Exploration (Italy - 50% interest) Ascent's geoscientists are progressing the interpretation of the deeperstructures in the concession which contains the Ripi oilfield currentlyproducing small amounts of oil from shallow reservoirs. The regional lines thatare planned to be acquired in the neighbouring Frosinone permit will continueinto the concession. Linden Exploration and Appraisal (Switzerland - 90% interest) The Linden-1 well was drilled by Elf Aquitane in 1972 and tested gas from a deepTriassic reservoir. An appraisal well is being considered for this Lindendiscovery but will require a large drilling unit capable of reaching a depth of5,000m. Vaud Exploration and Appraisal (Switzerland - 90% interest) The Vaud concession includes numerous active oil and gas seeps and theEssertines-1 well drilled in 1962 which tested oil from Jurassic reservoirs.Although an appraisal of this discovery is a possibility, the exploration ofnearby Triassic gas prospects is also under consideration. Offshore block P4 (Netherlands - 27% interest) The geological interpretation has identified several undrilled structures andthe Company's technical experts are reviewing the future work programme for thisarea. In addition to the oil and gas assets, Ascent owns a minority (22.5%) interestin the Italian drilling contractor, Perazzoli Drilling srl. This company ownstwo rigs, a 40T Ballerini and a 100T Cosrsair 300 and has a 200T Drillmec HH200on order. Drilling contractors are very busy in Italy and the company has astrong order book The technical information contained in this announcement has been reviewed andapproved by Gavin Ward, Ascent's Exploration Manager (member of the AAPG) whohas 19 years relevant experience in the oil industry. * * ENDS * * For further information visit www.ascentresources.co.uk or contact: Jeremy Eng Ascent Resources plc Tel: 020 7251 4905Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7236 1177Max Hartley Cenkos Securities plc Tel: 020 7397 8924 Notes Ascent Resources plc has a diversified portfolio of over 20 hydrocarbonexploration and development projects across six countries in Europe: Italy,Switzerland, Hungary, Spain, Slovenia and Netherlands. Ascent's portfoliocontains a solid base of field redevelopment projects with selected exposure toexploration upside. The portfolio is focussed on gas and with the exception ofthe shallow water Netherlands project, all of its projects are located onshorewhere operating and development costs are substantially lower than they areoffshore. This information is provided by RNS The company news service from the London Stock Exchange