Ascent Resources Plc (LON:AST) Chief Executive Officer Colin Hutchinson caught up with DirectorsTalk for an exclusive interview to discuss the decision made by the Administrative Court
Q1: Now Colin, following on from the announcement regarding the decision from the Administrative Court on Friday, could you give us some background on why you’ve had this outcome?
A1: Yes, it’s a very strange outcome and definitely not the one we were expecting. The Court has ruled on a technicality, a process issue, rather than anything to do with the permit itself, we haven’t had any feedback that the facility we’re proposing to install is unsuitable in any way, what they’ve said is that the process that we followed wasn’t the correct process and it’s a very strange decision. We submitted the application in June 2014 under the existing environment regulations, in July 2014 regulations changed which made them slightly more onerous and involved a little bit more work, what that law included was a clause that said if you’ve already submitted your application continue under the old regime, don’t follow the new which is exactly what we did. That’s what the Environment Agency have judged us on, the whole way through, at no point did anyone say we’d like you to resubmit under the new regulations but the Administrative Court has come back and said that our application was submitted in June 2014 and should have been done under regulations that weren’t in force until July 2014 which is quite bizarre.
Q2: Now it has come as a bit of a surprise, I take it you’ll be appealing the decision?
A2: Yes, our lawyers are as surprised as we are, even more so because they understand the whole implications of this, of the Court ruling that laws are incorrect, are refusing to implement the law, a crazy situation so the initial feedback from our lawyers is that we should have good grounds for an appeal. What’s going to happen is the decision will go back to the Environment Agency, I think they can decide whether they accept the decision of the Court or whether they stick with their original decision so we’ll obviously hope that they stick with what they originally did which was in line with the law that was enforced at the time. If they decide to go with what the Court’s said and reject the permit then we should have good grounds for an appeal to a higher court in Slovenia, there’s a Constitutional Court which might be appropriate because in this instance he Administrative Court has refused to implement the law and there are higher courts we can go to in the EU. Potentially there’s damages we could seek as well because this is obviously going to cause some damage to the company so there is an appeal and it is likely to delay getting an IPPC permit. Having said that, I think we’ve spoken about it before, that the IPPC route wasn’t necessarily or wasn’t definitely our preferred route, we have another route to market which is outsourcing the processing of the gas, sending it along pipelines that are already in existence to a facility in a neighbouring jurisdiction and having the gas processed there and then selling it so that route is still open, we’ll still having very positive discussions with the partners in relation to that and that doesn’t need an IPPC permit, it’s completely independent of that. It’s very annoying having it rejected because the IPPC route is our sort of long term solution for the field we want to build the facility in Slovenia, we want to be processing our gas there because the volumes that we see as the project move into full production will be big enough to justify that facility, but certainly our route to market initially, sort of our initial test production fears, it makes much more sense for us to have that done at a processing facility in a neighbouring jurisdiction, it’s quicker, it’s cheaper and it doesn’t rely on any more permits so in a way, this decision allows Ascent Resources to completely focus on that.
Q3: So does the decision impact Ascent Resources in any way?
A3: It means that the permitting application process will take longer but it isn’t the end of it, we’re implementing plans to get the application back under review and hopefully reverse the decision that the Court’s made. Ultimately our preferred route to market was this outsourcing the processing route and that hasn’t been impacted at all by the decision, if anything it’s a positive impact in that it means that we’ve no distractions, there was a slight concern that if we’d been awarded the permit before we’d got the outsource processing route operational we might have faced pressure to continue down the IPPC route and build out the plans which would have been much more costly and lots more time consuming. So in a way, we’ve got no argument now, we can’t have any debate amongst the joint venture, it will be the outsource processing, it will be the way forward and that will enable us to hopefully get gas out of the ground this year.
Q4: So are Ascent Resources still on track to hit gas this year?
A4: Yes we should be, things haven’t changed, we said that in the announcement at the beginning of the week, our preferred route to market has not been impacted at all by this desired decision of the Court, we’ll on track to produce gas this year by having the gas sent to other countries for processing.
