Ascent Resources Regulatory News (AST)

25 Oct 2007 15:45

Ascent Resources PLC25 October 2007 Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas 25th October 2007 Ascent Resources plc ("Ascent" or "the Company") Agreement to Sell Spanish Oil Assets and Farm-out of First Swiss Project Ascent Resources plc, the AIM-traded oil and gas exploration and productioncompany, has entered into an agreement to sell its oil assets in Spain and tofarm-out up to 40% of its 90% interest in the Seeland-Frienisberg Permit in theCanton of Berne in Switzerland, to AIM listed Leni Gas and Oil Plc ('LGO'). Under the proposed agreement, LGO will purchase Ascent's Spanish oil assets andthe entire issued share capital of Ascent's wholly owned subsidiary CompaniaPetrolifera de Sedano ('CPS'). These assets have a book value of £321,000 andhave an operating profit from production of £241,000. The consideration of €2.25million and 8 million ordinary LGO shares will be partially used to repayoutstanding intercompany loans in Spain. Ascent's Spanish oil assets include 88.75% of the Ayoluengo field in the La Loraconcession and CPS, which has a 50% interest in three exploration licences,Huemeces, Basconcillos-H and Valderedibles. These licences are held on a 50:50basis with Tethys Oil AB of Sweden. This divestment is in line with Ascent'sstrategy of focussing on its gas assets, which the Board believes providesgreater stability due to the strength of the mainland European gas market. Theacquisition of these assets by LGO constitutes a reverse takeover under the AIMRules and is therefore conditional (inter alia) upon LGO gaining approval fromits shareholders. Ascent is retaining a presence in Spain with its 50% interest in the Rocamundogas exploration application, where the Company's partners are Tethys Oil andShesa, the Basque oil company, who have a 30% interest and a 20% interestrespectively. This exploration permit is expected to be issued later this year. In Switzerland, Ascent has conditionally agreed to farm-out up to 40% of its 90%interest in the Seeland-Freinisberg Permit in north-western Switzerland to LGO.Schweizerisches Erdol AG ('SEAG') is the concession holder with a 10% interest.Under the terms of the farm-out, LGO will fund the costs of the drilling andtesting of the first well in the exploration permit. Expenditure on subsequentexploration and production activities in this permit will be funded on a workinginterest basis. If LGO takes up its full 40% interest, it will additionally havethe right of first refusal to participate in Ascent's other two Swiss projectson the same terms. The 363.5 square kilometre surface prospecting permit was awarded in July 2005,and the first exploration phase expires on December 31st 2007 with a three yearextension pending. The first phase work commitments which have been completed,includes a spectral acoustic seismic trial, geochemical field studies andintegration of the existing geological and geophysical data. In 1982, Elf drilled the Hermrigen-1 well within the area of the permit to atotal depth of 2,425m in Triassic salt. Gas shows were encountered in the lowercarbonate section of the Keuper and a test in the section of the well flowed gasat an initial rate of 1.5MMscfd decreasing to 0.62MMscfd after 15 hours. The Competent Persons Report commissioned by LGO, states that Gross ContingentResources associated with the Hermrigen-1 discovery well are between 10.7 Bcfand 21.2 Bcf and that six other prospects in the permit have ProspectiveResources totalling between 347.7 Bcf and 676.5 Bcf. The partner group willchoose the location of a well designed to prove commercial gas reserves in thispermit. Subject to regulatory approval, it is planned to drill this well usingthe new build, low environmental impact hydraulic rig of Perazzoli Drilling, adrilling contractor in which Ascent has acquired a 22.5% interest. Ascent Managing Director Jeremy Eng said, "The divestment of Ascent's Spanishoil assets follows both the Company's strategy of preferentially developing itsgas projects as well as its belief that these properties are non-core comparedto the potential of the other opportunities in Ascent's portfolio. Importantly,it is expected that during 2008, revenues from gas production in Hungary willmore than replace the oil sales revenues from the Spanish production. "The Swiss farm out allows us to progress this project and build our confidencein what we believe has the potential to be a major central European gas play.Both of Ascent's exploration permits in Berne have proven gas discoveries andthe third party report confirms substantial appraisal and exploration prospects.We look forward to working with LGO in an exploration programme to quantify theProspective Resources estimates, which in only the first of three permits,stands at between 348 Bcf and 676 Bcf of gas." The information contained in this announcement has been reviewed and approved byGavin Ward, Ascent's Exploration Manager (member of the AAPG) who has 19 yearsrelevant experience in the oil and gas industry. * * ENDS * * For further information visit www.ascentresources.co.uk or contact: Jeremy Eng Ascent Resources plc Tel: 020 7251 4905 Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477 Max Hartley Cenkos Securities plc Tel: 020 7397 8924 Notes Ascent Resources plc has a portfolio of 20 hydrocarbon exploration anddevelopment projects across six countries in Europe: Italy, Switzerland,Hungary, Spain, Slovenia and Netherlands. With the stable European gas market,Ascent's portfolio favours gas over oil. With the exception of the Netherlands,all of its projects are located onshore where operating and development costsare substantially lower than they are offshore. Glossary MMscfd Million standard cubic feet of gas per day, a measurement of gas rate Bcf Billions standard cubic feet of gas, a measurement of gas volume AAPG Association of American Petroleum Geologists This information is provided by RNS The company news service from the London Stock Exchange