Ascent Resources (LON: AST), the Europe-focused oil and gas explorer and developer, said the outlook for 2011 and beyond is highly encouraging as it reported its final results for 2010.
“Having proved up our core portfolio we are now focused on extracting value from it and, in line with this, aggressive work programmes are underway,” said the firm’s chairman John Kenny.
Ascent’s strategy involves combining lower-risk field redevelopment projects in areas with existing infrastructure with higher-risk exploration projects. The firm has a diversified portfolio of assets and appraisal interests across five countries: Hungary, Slovenia, Switzerland, Italy and the Netherlands.
A primary objective in the near term for Ascent is to advance its Petišovci/Lovászi/Ujfalu tight gas project in Slovenia and Hungary. The firm now holds a 75 percent interest in the Petišovci asset, having acquired earlier this year a further 48.75 percent from EnQuest in return for a 22.5 percent equity stake in Ascent, and a 50 percent interest in both the Lovászi and Ujfalu assets.
During the year, Ascent had the entire project independently verified with P50 gas in place estimates of 412 billion cubic feet. “The challenge for us in 2011 is not so much finding the gas, which we know is there, but how to unlock this gas in a commercial manger given it is largely a tight gas asset,” said Kenny.
Ascent is currently in the first phase of developing the project, having drilled on well already with another well scheduled to be drilled later this summer. Over the next three to four years the firm expects to drill 10 to 15 more wells.
Ascent believes that it can generate net operating cash flow of €3 million from the first well in 2011, rising to €10 million in 2012 and €24 million for the period 2013 to 2015.
But the firm pointed out that the project would need more than €150 million to develop the entire field.
During the year, the firm produced revenue of £1.8 million (2009: £898,000) with a gross profit of £442,000 (2009: £219,000 loss). The overall loss before tax was reduced to £6 million (2009: £10.5 million).
The revenue came from Ascent’s Penészlek project in eastern Hungary where two wells are still producing more than 1.5 million cubic feet of gas per day, generating around €300,000 per month.
At 8.40am, Ascent’s shares were down 6.5 percent at 3 pence each.