Ascent Resources Plc (LON:AST) Chief Executive Officer Colin Hutchinson caught up with DirectorsTalk to discuss the £500,000 fund raise, next steps for the company, appealing the Administrative Court’s ruling on the IPPC permit and confidence in the development of their gas project
Q1: Now if we can start with the fundraising, Ascent Resources have just raised £500,000 through Primarybid, do you think this will see you through to first gas production?
A1: The money raised today is very important to the company, we raised money back in the beginning of April, about 2 months ago, and that was cash to fund principally working capital to the end of June, what this further £500,000 does for us is it gives us the working capital to trade through to the end of Q3. It also allows us to begin to order some of the long lead items we need to get into production, there’s the ESD valve and a few other bits required in order to get it into production and they have a long lead time of 20 weeks so we needed to place PO’s for some of that equipment as soon as possible and because we can see that the legal agreements and the commercial agreement to export the gas and get into production is moving ahead as we’d expect. So if those agreements are signed at the end of June, I want to be in a position to start to get into production by the end of December so we needed to place orders on some of those items as soon as possible.
Q2: So you’re getting closer to first gas, you’ve agreed to one of the legal agreements and as you’ve just mentioned the other you’re expecting to done by the end of June, what’s the next step after these agreements?
A2: Yes, so we’ve got these two agreements, the first one is done, it’s just being submitted now for Board approval, the second one is close to being finalised and we should have that agreed and hopefully signed by the end of this month. The next step will then be on the ground, there’s some upgrade work required to a small processing plant beside the field to dehydrate the gas, there’s a recertification of an existing pipeline and then there’s some well work required on PG-10 and PG-11 to get them ready to produce. So all those things should hopefully be completed by the end of Q4 that’ll allow us to get into production this calendar year.
Q3: Now you’re looking to fight the Administrative Court’s ruling who denied you the IPPC permit, what are Ascent Resources’ legal options in relation to the permit?
A3: I’ve spent the last 2 or 3 weeks, mainly in Slovenia, talking to lawyers and consultants and government officials and our partners understanding the rationale behind the decision and what our options are going forward. No one I’ve spoken to can really understand why the Court has come up with the ruling that it has, it’s inexplicable to any lawyer or anyone I’ve spoken to finds it very strange and very disappointing, we have therefore from what I’m told reasonable good grounds to appeal to at least one, possibly two, higher Court’s in Slovenia to try and get the decision reversed. Also the decision has been hugely damaging, it doesn’t impact our date for first gas but it has been very damaging to the share price and to the company generally so we’ll have a case for compensation and that is something we’ll progress as well.
Q4: Ok, so good news there. Are you still confident in the development of the gas project as a whole?
A4: Yes, still very confident that Ascent Resources’ route to market through exporting the gas will bear fruit, hopefully we’ll be in production by the end of this year, everything’s moving forward as you’d expect it to, you’d always like these things to move more quickly but we’re dealing with large companies, large state-owned companies, and things do have to go through the bureaucratic process which can be frustrating. We’re getting towards the end of that now, we can see the agreements are in close to final shape and we’re hopeful of having signatures on those by the end of this month and then we’ve got a fairly clear project plan for what needs to be done on the ground in terms of ordering equipment, recertifying pipelines, re-completing wells to get us into production for the end of this year. So we can now see the first gas production, we have a clear plan to get there now which isn’t dependant on any permit or any government approval so I’m very confident about this. On the IPPC side, I’m confident that we have good grounds to take that further and hopefully get that decision reversed or get a further permit fast-tracked.
