Ascent Resources Regulatory News (AST)

18 February 2020

Ascent Resources plc

("Ascent" or the "Company")

Posting of Circular

Ascent Resources Plc (LON: AST) the onshore European independent oil and gas exploration and production company, announces that, further to the announcement on 14 February 2020, a circular will be posted to shareholders today and a copy will be made available on the Company's website, www.ascentresources.co.uk in due course. The Chairman's Letter has been extracted from the Circular and is shown below.

Enquiries:

1. Introduction

Ascent is in a phase of re-focusing its business to positive production growth including reviewing opportunities outside Slovenia to diversify its asset base.

Significant production growth at the Petišovci field in Slovenia can only be achieved when the partners have successfully obtained the required permits to re-stimulate the existing producing wells (Pg-10 and Pg-11A) as part of a larger development project to recover the field's significant proven and potential gas reserves. Additional near term production growth may also be possible by targeting other conventional oil and gas reservoirs within the large Petišovci concession area including undrilled fault blocks in the known producing structure. In 2019, the Company reprocessed the 2010 Petišovci 3D seismic survey using the latest technology, which has provided several attractive conventional appraisal and near-field exploration leads. Work is currently underway to progress these potential drilling opportunities with the Joint Venture Partners, but these opportunities will also need the requisite permits before they could be tested.

In order to progress matters in Slovenia, to meet costs and to source and assess new potential opportunities, further capital will be required. Accordingly, the Board has identified new management who will bring more opportunities to the Group and who have facilitated the raising of working capital for the Company by way of the Placing. The Board also recognises that, to allow the Placing to proceed and, more generally, the share capital of the Company requires restructuring, as explained further in paragraph 5 below.

The restructuring of the share capital of the Company and the granting to the Directors of the authority to allot additional share capital, which will allow new capital to be raised by way of the Placing, is fundamental to the future prospects of the Company.

If the Placing Resolutions are not passed in full, the Board doubts the ability of the Company to continue as a going concern.

2. The Petišovci project

Ascent holds a 75% interest in the Petišovci gas field in Slovenia, with its partner Geoenergo holding the remaining 25% through a concession signed in 2002 with a term of 19½ years, which is due for renewal in 2022. Ascent is liable for 100% of the financing obligations for the project. In 2011, two wells were drilled and flowed at commercial rates; however, development has been delayed due to the permitting issues described in further detail below.

The Company has been producing from the field since 2017, with the majority of production being exported to Croatia and sold to INA, a leading Croatian oil and gas business. In December 2019 the Company entered into a two-year extension of the gas sales agreement with INA, ensuring that once production can be increased, there is an existing route to market for that gas.

3. Permitting

The proper development of the field has been delayed by the permitting process in Slovenia. The IPPC Permit which is required for the installation of a processing plant at the field was finally awarded during 2019. The Well Permit which is required for the re-stimulation of wells Pg-10 and Pg-11A was blocked by the Slovenian Environment Minister and this decision has been appealed to the Administrative Court.

The Company is also progressing with a claim for damages for the significantly prolonged process and what the Board have been advised is a manifestly wrong decision.

4. Change of Directors and Management Reorganisation

Ascent will appoint James Parsons as Executive Chairman following satisfactory completion of regulatory due diligence. James has a wealth of corporate and transactional experience on AIM and a demonstrated ability to access capital to fund junior resource plays. He is Executive Chairman of Regency Mines plc and Non-Executive Chairman of Echo Energy plc and Coro Energy plc.

Ascent will also appoint Ewen Ainsworth and Leonardo Salvadori as independent Non-Executive Directors.

Ewen Ainsworth is an experienced AIM company director, currently the Non-Executive Chairman at Nostra Terra Oil and Gas Company plc. He is also a non-executive director at Regency Mines plc and the CEO of Discovery Energy Limited, an advisory, consultancy and Investment Company. He has worked in a variety of senior and board level roles in the international natural resource sector for over 30 years, most recently as Finance Director for San Leon Energy plc and previously Gulf Keystone Petroleum Limited.

Leonardo Salvadori has over 35 years of international experience and is currently the Managing Director of Coro Energy plc's Italian business. Prior to that he held Managing Director positions in Sound Energy and Dana Gas Egypt. With a strong focus on business development as well as operations, Leonardo previously led business development and exploration/technical teams in Centurion and Eni across MENA, Asia and Europe.

Louis Castro and Colin Hutchinson will set down from the board at the conclusion of the General Meeting.

5. Capital Reorganisation

The Company's Ordinary Shares are currently trading at below nominal value. The Company is not permitted by law to issue shares at an issue price below their nominal value.

Furthermore, a consequence of having a very large number of shares in issue, with a very low market share price, is that small share trades can result in large percentage movements in the market share price which results in considerable share price volatility. The Board also believes that the bid-offer spread on shares priced at low absolute levels can be disproportionate to the market share price, to the detriment of Shareholders.

The Directors propose, therefore that the Company effects the Capital Reorganisation on the basis that:

a. the Existing Ordinary Shares of 0.2 pence will each be subdivided into:

i. one Redenominated Ordinary Share (being an ordinary share in the capital of the Company with a nominal value of 0.005 pence); and

ii. one Deferred Share (being a deferred share in the capital of the Company with a nominal value of 0.195 pence), and

b. the Redenominated Ordinary Shares of 0.005 pence each (resulting from the subdivision referred to in paragraph (a) above) will be consolidated into new ordinary shares of 0.5 pence each (the "New Ordinary Shares") on the basis of one New Ordinary Share for every 100 Redenominated Ordinary Shares.

Where the Capital Reorganisation results in any Shareholder being entitled to a fraction of a New Ordinary Share, such fraction shall be aggregated and the Directors intend to sell (or appoint another person to sell) such aggregated fractions in the market and retain the net proceeds for the benefit of the Company.

The Deferred Shares will not be admitted to trading on AIM (or any other investment exchange). The Deferred Shares will have limited rights, and will be subject to the restrictions, as set out in the Company's New Articles, proposed to be adopted at the General Meeting, and as summarised below.

The Deferred Shares will not be transferable. The holders of the Deferred Shares shall not, by virtue or in respect of their holdings of Deferred Shares, have the right to receive notice of any general meeting of the Company or the right to attend, speak or vote at any such general meeting.

The Deferred Shares will not entitle their holders to receive any dividend or other distribution. The Deferred Shares will on a return of assets in a winding up entitle the holder only to the repayment of £1.00 for the entire class of Deferred Shares after repayment of the capital paid up on the New Ordinary Shares plus the payment of £10,000,000 per New Ordinary Share.

The Company will have irrevocable authority at any time to appoint any person to execute on behalf of the holders of the Deferred Shares a transfer thereof and/or an agreement to the transfer of the same to such person as the Company may determine or as the Company determines as custodian thereof, without making any payment to the holders thereof, and/or consent to cancel the same (in accordance with the provisions of the Act) without making any payment to or obtaining the sanction of the holders thereof. The Company may, at its option at any time, purchase all or any of the Deferred Shares then in issue, at a price not exceeding £1.00 for each aggregate holding of Deferred Shares so purchased. The Directors consider the Deferred Shares, so created, to be of no economic value.

The Articles have been amended, inter alia, to reflect the creation of the Deferred Shares and to set out the rights attaching to them and, accordingly, Resolution 7 seeks approval to adopt the New Articles of the Company reflecting, inter alia, these changes.

No share certificates will be in issued in respect of the Deferred Shares. Existing share certificates will remain valid for the Redenominated Ordinary Shares. New share certificates will be issued for the New Ordinary Shares.

The New Ordinary Shares will be freely transferable, and application will be made for the New Ordinary Shares to be admitted to trading on AIM. The record date for the Capital Reorganisation is 5.00 p.m. on 5 March 2020, unless otherwise agreed by the Board.

The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares.

One consequence of the Capital Reorganisation is that Shareholders holding fewer than 100 Existing Ordinary Shares will receive no New Ordinary Shares, they will, however, receive Deferred Shares. Any Shareholder holding fewer than 100 Existing Ordinary Shares may request the cash equivalent of such Existing Ordinary Shares by contacting Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY.

6. Placing

To fund the Company while it pursues these opportunities, the Board has conditionally raised £800,000 at an issue price of 5 pence per Placing Share, subject to the approval of Shareholders.

The Placing will be completed by way of subscription letters between the Company and the relevant placees, and will be conditional on the passing of the Placing Resolutions at the General Meeting. Shareholders will have their proportionate shareholdings in the Company diluted by approximately 35 per cent. as a result of the Placing, assuming that no further shares are issued after the date of this document.

7. Authority to allot shares and disapplication of pre-emption rights

The Directors are seeking a general authority, in addition to the authority in relation to the Placing, to allot new shares, free of pre-emption rights and without further recourse to shareholders, which is above the level recommended by the relevant corporate guidelines. The significantly higher level being sought is due to (i) the relatively low market capitalisation of the Company at the current time and (ii) the level of funding required by the Company in the medium term in order to execute on the stated strategy of securing additional assets outside of Slovenia.

This authority is essential to enable to new Board of Directors to capitalise in a timely fashion on attractive opportunities to execute on the stated strategy of diversifying its asset base.

8. Settlement and dealings

Application will be made to the London Stock Exchange for the New Ordinary Shares (including the Placing Shares) to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence at 8.00 a.m. on 11 March 2020.

9. General Meeting

Set out at the end of this document is a notice convening a General Meeting of the Company to be held at 2.30 p.m. on 5 March 2020 at the offices of Taylor Wessing LLP, 5 New Street Square, London, EC4A 3TW, at which the Resolutions will be proposed.

The Resolutions may be summarised as follows:

a. Resolutions 1 and 2 approve the Subdivision of the entire issued share capital of the Company into Redenominated Ordinary Shares and Deferred Shares, together with the Consolidation of the Redenominated Shares into New Ordinary Shares on the basis of 100 Redenominated Shares for every 1 New Ordinary Share;

b. Resolutions 3 and 5 seek authority to allot and issue the Placing Shares free of any pre-emption rights;

c. Resolutions 4 and 6 seek a significantly increased general authority to allot and issue shares free of pre-emption rights, representing approximately 100% of the share capital of the Company immediately following the Capital Reorganisation and the Placing; and

d. Resolution 7 approves the adoption of the New Articles.

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

Please check that you have received the following with this document:

·; 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 Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or, during normal business hours only, by hand, at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS13 8AE by no later than 2.30 p.m. on 3 March 2020 (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).

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 will not prevent you from attending and voting at the General Meeting, or any adjournment thereof.

11. Recommendation

The restructuring of the share capital of the Company and the granting to the Directors of the authority to allot additional share capital, which will allow new capital to be raised, is fundamental to the future prospects of the Company. If the Placing Resolutions are not passed in full, the Board doubts the ability of the Company to continue as a going concern.

The Directors intend to vote in favour of the Resolutions in respect of their aggregate shareholdings of 2,570,370 Ordinary Shares representing approximately 0.09 per cent. of the Company's Existing Issued Share Capital.