Ascent Resources (AST), a company focused on energy and natural resources in Hispanic America and Europe, announced that its subsidiary Ascent Slovenia Limited has reached agreements to settle a portion of its revenue recognition claim against Geoenergo and fully resolve its dispute with Petrol Geo, the JV service provider.
The settlement with Petrol Geo resolves their disputed and rejected invoices, which totalled €2,083,491 plus claimed interests and costs, for a discounted price of €1,436,000, representing approximately 30% off the face value.
The JV has also renegotiated the field operating service provider's fixed fee, resulting in a higher profitability of the remaining production, which is set to expire on 28 November 2023. The previous fixed fee of €44,000 per month has been replaced with a fee that is either the higher of €20,000 a month or a 35% share of hydrocarbons produced from the two producing wells, PG-10 and PG-11A.
Additionally, ASL has resolved part of its claims against Geoenergo for non-payment of agreed hydrocarbon revenues, resulting in further net revenues of €288,689 in cash, which comes in addition to the €857,000 already received relating to 2020 and 2021 production at the two producing wells.
ASL is still pursuing its arbitration claim against Geoenergo for different interpretations of the application of the baseline production profile and the number of wells ASL is entitled to receive a portion of revenues from while it is in a preferential cost recovery mode. ASL seeks compensation of at least €3 million for its share of hydrocarbons produced above the baseline production profile.
Meanwhile, the tribunal for Ascent's €500+ million damages claim against the Republic of Slovenia for Energy Charter Treaty violations has been constituted. The first procedural hearing is expected to take place in April 2023, with further updates to be announced as appropriate. It should be noted that the final amount received by Ascent may be significantly lower than the full claim, even if the company is successful in its claim.
Andrew Dennan, Chief Executive Officer, commented: "We are pleased to continue to make progress in achieving resolutions to our various disputes. Whilst there is still a way to go, resolving the matter with the service provider has resulted in a significant retrospective cost saving alongside a re-profiled and more sustainable ongoing project cost base for our Slovenian asset."
View from Vox
This news suggest an end in sight to the legal issues that have dogged Ascent in recent years, which will allow it to focus on developing and operating its assets.
The company’s last update showed that PG-10 and PG-11A produced a total of 117,687 scm of gas in October 2022 and had produced a total of 97,154 scm of gas for the first three weeks of November 2022. That could increase if a project with Geoenergo to remove or bypass a mechanical obstruction which was historically left in the well when it was drilled is successful – an announcement is expected in due course.
Meanwhile, Ascent has raised £0.4m to fully fund its portfolio of projects, which includes a new focus on ESG metals via its strategic investment in Beryl International, a South African natural resources investor whose Chief Investment Officer Fungai Chitungo has joined Ascent’s board as a non-executive director.
Ascent’s shares rose 5% on today’s news, which could mark a turning point for the company.