Ascent Resources plc, the AIM-traded oil and gas exploration company with assets in five countries across Europe, announces its interim results for the six months to 30 June 2008.
HIGHLIGHTS
• Continued Portfolio development in Hungary, Slovenia and Italy
• Commencement of Hungarian gas production in July 2008
• Planning on-going for production from Slovenian assets
• Ten well potential for the period 2008-2009
OPERATIONS REVIEW
During the six months ended 30 June 2008, the period under review, Ascent has made significant progress across its portfolio and a summary of key events by country is set out below.
Hungary
Ascent now has three projects in Hungary: the Penészlek gas exploration and development project in the south-east; the Bajcsa gas field redevelopment in the west and the Szolnok Exploration project in central Hungary.
Penészlek Development Project - 45.2% interest
In August 2008 the Company announced the commencement of gas production at the PEN-104 well in the Penészlek area of the Nyírség permits in Hungary. The production rate of the well has stabilised at a rate of 117,000 cu.m per day (4.1 MMscfd; 688 boepd). The acquisition of 3-D seismic in the immediate area is planned later in the year and this will assist in evaluating other gas prospects which may be developed, including the partially depleted Penészlek field and the PEN-9 and PEN-12 wells.
Bajcsa Gas field Redevelopment Project - 38.7% interest
Ascent holds a 38.73% net interest in this project as part of a joint venture between MOL and ZalaGasCo kft. Ascent owns 90% of ZalaGasCo with partners Leni Gas and Oil plc and Geomega kft owning the remainder.
Considerable time during the period has been spent on the preparation and approval of the legal documentation required for the development and on the technical design, implementation and engineering of well interventions which are planned to recover remaining gas reserves. The gas field work-over programme is due to commence later in the year.
Szolnok Exploration Project - 12.5% interest
Drilling of the TIK-1 exploration wildcat well began in early April to intercept targets in the Pannonian formations. The TIK-1 well was drilled to a depth of 2,003m and penetrated 40m of reservoir quality gas saturated sands between 1,918m and 1,967m. Wireline logging and the analysis of gas samples confirmed the presence of a high percentage of CO2 in the lower Pannonian formations. Consequently the asset has been impaired with all costs associated with the well fully written off
The Kunszentmarton 3-D seismic acquisition programme began in April and was completed later in the second quarter. This programme covered approximately 150 sq km and delineated prospects identified from old 2-D lines.
The exploration wildcat well, Nko-Ny-1 was plugged and abandoned in May. The well reached a total depth of 1,370m and despite drilling a number of potential reservoir sands in the lower Pannonian, logging results showed these to be water bearing with traces of gas. Consequently the asset has been impaired with all costs associated with the well fully written off
The Endrod 3-D seismic acquisition is just starting and there are plans to drill up to four wells in the next nine months.
In July Ascent sold a 15% interest in this project to leave a 12.5% working interest.
SLOVENIA
Ascent operates in Slovenia through its wholly owned subsidiary Nemmoco Slovenia Corporation, which is the operator of the Petisovsci and Dolina field redevelopment projects. It has a 45% interest in the shallow oil and gas reservoirs and a 15.75% interest in the deep tight gas reservoirs.
Petisovsci Dolina Re-Development Project (Shallow) - 45% interest
The work being carried out by Ascent in 2008 involves a complete re-assessment of the geological, geophysical and engineering information from the fields. This work is resulting in development of a new field reservoir model and the Joint Venture now plans to acquire 3D seismic over the field area as well as considering proposals for re-entering a number of existing wells.
Petisovsci Dolina Re-Development Project (Deep) - 15.75% interest
The partnership has been evaluating the deep E1 sands which were tested and flowed gas in the D-14 well in the fourth quarter 2007. Further well intervention work is planned for the D-14 well and the results of the 3-D seismic will assist in planned future operations.
East Slovenia Exploration Permit - 80% interest
In July 2008, the company signed a Preliminary Agreement for an 80% participation in the exploration of the East Slovenia Exploration Permit to the north of the Petisovsci oil and gas field redevelopment project. The East Slovenian Project covers an area of 864 sq. km over three separate blocks within the Pomurje Regional Exploration Area. The current work programme envisages a regional exploration study followed by seismic and exploration or appraisal drilling in 2009.
ITALY
Ascent has interests in four projects in Italy:
Cento and Bastiglia Exploration Permits - 50% interest
These permits in the Po Valley were farmed-out in 2007 to Otto Energy Limited of Australia which has taken a 50% interest in return for paying for the cost of one firm well and one contingent well. The Gazzata-1 well is targeting the Gazzata gas structure and the well is scheduled to spud in the fourth quarter 2008.
Fiume Arrone Exploration Permit - 56% interest
Following the drilling of the Arrone-1 gas exploration well which found small quantities of gas in the secondary target, the well was subsequently abandoned. During the period a post mortem and geoscience study was undertaken of the findings which demonstrated that the reservoir would not be capable of commercial production. As a result the Company has fully impaired the asset with all costs associated with the project fully written off.
Frosinone Exploration Permit - 80% interest
After drilling the Anagni-1 well which had good oil shows both in core samples and during testing, the Company acquired some 30km of 2-D seismic to better understand the configuration of the Anagni structure and to investigate possible locations for an updip appraisal well. The results from the new seismic are encouraging and planning for the drilling of an Anagni appraisal is now under consideration.
Strangolagalli Concession - 50% interest
Ascent has a 50% interest in this concession as part of a joint venture with Pentex Italia srl. The area contains the Ripi oilfield which is operated by Pentex and Ascent has exploration rights below this field. The work that is being carried out in the Frosinone permit to the north-west will assist the exploration team in assessing the prospectivity of the adjoining Strangolagalli area. The possibility of a redevelopment of the Ripi field is also under consideration.
Perazzoli Drilling - 22.5% interest
Ascent acquired a 22.5% interest in Perazzoli Drilling in the fourth quarter 2007. The recently delivered, latest generation, low environmental impact, 200 Tonne capacity hydraulic rig, will be used to drill the Gazzata prospect in the Ascent operated Cento and Bastiglia permit.
The purchase of the interest in Perazzoli Drilling gives the Company priority access to certain drilling rigs. The participation in Perazzoli Drilling is important for Ascent as it not only gives a competitive advantage in oil and gas activities but the strong order book should also contribute to financial stability.
SWITZERLAND
Ascent holds four exploration permits in Switzerland
Seeland-Freinisberg Exploration Permit - 80% interest
This permit was awarded to SEAG on behalf of the Ascent Joint Venture in August 2005 and was extended to December 2011 in April this year. Seismic reprocessing and geological modelling has been completed on the Hermrigen structure and drilling of the Hermrigen-2 well to appraise the productive gas discovered by the Hermrigen-1 well is planned for mid 2009, subject to the issue of a construction permit. In February this year, the location of the Hermrigen-2 appraisal well was discussed with the local Town Council and a location was chosen close to the original well. Ascent is currently in discussions with a number of third parties for the farm-out of this opportunity.
Linden Exploration Permit - 90% interest
This permit was awarded to SEAG on behalf of the Ascent Joint Venture in August 2005 and was extended to December 2011 in April this year. It contains the Linden-1 well which tested gas at a rate of 3 mmscfd.
Gros de Vaud Exploration Permit - 90% interest
This permit was awarded to SEAG on behalf of the Joint Venture in May 2006 and was extended to June 2010 earlier this year. This exploration permit is north of the city of Lausanne and contains the 1962 Essertine-1 discovery which produced small amounts of oil on test.
Concordat Exploration Permit - 35% interest
In July 2008, Ascent acquired a 35% beneficial interest in 97% of the 7,495 sq. km Concordat Exploration Permit. This interest will be assigned to PEOS AG, Ascent's wholly owned Swiss subsidiary. The work programme planned for this permit for the remainder of 2008 involves the reprocessing of existing seismic data.
SPAIN
In the fourth quarter 2007, Ascent sold its Spanish assets to Leni Gas and Oil plc but retained an interest in the pending Rocamundo exploration application. During 2008, the Rocamundo application was superseded by the Bigüenzo exploration application lodged by Gas Natural, a large Spanish energy and exploration company. Following a strategic review of core operations Ascent has decided to exit the country.
NETHERLANDS
In November 2006 Ascent was awarded exploration licences for the M8, M10, M11 and P4 blocks offshore Netherlands (27% interest). The preliminary geoscience work programme to establish the hydrocarbon potential of this exploration and appraisal project has been completed and a divestment of these assets is under consideration.
FINANCIAL
The results for the period reflect continued development of the Company’s exploration assets, principally in Hungary, Italy and Slovenia. As set out in the Operations Review there has been a wide range of testing, geological and geophysical activity in the period. However, as part of that process over £2 million has been written off following an on-going review of the portfolio and the carrying value of permits and well costs in Hungary and Italy. Given the capital spend in the period and the timing of revenue receipts post period end the loss for the period of £2,768,809 was expected.
Revenue from gas production in Hungary came on stream after the period end.
