Today's Oil and Gas Update - Ascent Resources, Touchstone Exploration and Frontera Resources


• Ascent Resources (LON:AST– 1.65p) – Common Sense Reigns: Today's news that the latest appeal in relation to the IPPC Permit has been dismissed is positive news for the Company, as it now allows serious progress to be made in the monetisation of Petišovci. While there is always a place for the rigorous examination of any development plans, not only in terms of physical impact on the environment, but this must be balanced against the beneficial impact that such development brings to the social and economic fabric of the wider community too. In this instance, as has been evidenced from the manner of the appeal’s dismissal, this line has been overstepped, and the courts have seen th rough the ruse of repeated appeals to block development, halting what is tantamount to an abuse of process. We believe that today’s news should rightly buoy the shares.

Touchstone Exploration (LON:TXP – 14p/C$0.23) – Moving Ahead Nicely: While there will be some that will be disappointed with today’s news, that the production growth is not accelerating, we believe that what is more important here is that management have disclosed their plans ahead of time and are being measured against those plans. To be blunt, this what a shareholder can ask of its management team, that it set goals and allows themse lves to be measured against them. If the management team aren’t setting ambitious enough targets, then those concerns should be voiced. Irrespective of that, the next 12 months should see an acceleration of the programme.

• Frontera Resources (LON:FRR– 0.72p) – Why, Why, Why?: Today's update reads positively, not just for the UD-2 well, but the entire operation in Georgia. The questions that investors should be asking is: Why? Why has it taken so long to get to this stage? Why does the one single well, over all the others, unlock the basin, and precipitating the need to design a 14km pipeline? Why has it been so expensive to get to this stage, after what is only a re-entry? Why, if the composition is being disclosed, aren't the remainder of the well results, such as flow rates, being disclosed? Why aren't management's expectations for the wider play following this well being disclosed as a 14km pipeline is being planned? Why isn't the basis for the design of that 14km pipeline, such as flow rates, additional infrastructure (separators and pump stations, etc. – if required) being disclosed? We believe that after all the shareholder money that has been squandered getting to this point, it’s the very least the management team could do. We do not believe one well, over all of the previous work, makes such a difference so quickly. Additionally, we would urge investors and get comfortable with the makeup of the management team, especially as we are repeatedly told how complex the geology is, and set that fact against the fact that the CEO has a medical degree and whose only experience of oil and gas prior to establishing the Company was physical product movement and export. In our opinion, if the geology is as demanding as we are told, the management team should be led by a suitably trained and experienced individual.

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