Ascent Resources – Initiation of Coverage
Transformation in progress as proven new management adopt a compelling Special Situations strategy for the resources sector
Ascent joined AIM in 2004 and has focused on developing the large Petišovci tight gas project in Slovenia. Production began in 2017, but prolonged issues with the government over permits have stopped the optimisation of this development which has consequently resulted in significantly lower than expected gas sales which have been small. With little progress being made the share price fell substantially, promoting some big changes which have seen the arrival of a new board with a brand-new strategy. Ascent is now positioned to invest in Special Sits in the energy/natural resources across the Caribbean, Hispanic Americas & Europe, focused on diversification/growth in a low oil price environment.
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Exclusive negotiations on a large onshore oil portfolio in Cuba
Cuba is one of the few remaining world-class yet largely unexploited hydrocarbon systems. This is a highly compelling opportunity as it includes six separate PSCs spread across four blocks which cover some 7,000km².
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Resolution of the Petišovci tight gas project – develop or litigate
Alternative strategies are under review following the appointment of a new government in Slovenia including initiating proceedings to recover significant damages from the Government of Slovenia.
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New team with track record of successful international oil transactions
James Parsons and Andrew Dennan, new Chairman and CEO, have proven access to capital (raised £500 million in last 6 or 7 years) and are seeking out opportunities where they can work their entrepreneurial magic.
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Possible Petišovci scenarios suggest upside of 593%
Analysis of the two project outcomes shows the potential. We initiate coverage of Ascent with a target price of 22.51p and Conviction Buy stance.
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RISK WARNING & DISCLAIMER
Ascent Resources is a research client of Align Research. Align Research holds an interest in the shares of AST. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/
For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to Dec | 2018A | 2019A | 2020E | 2021E |
|---|---|---|---|---|
| Revenue (£’000) | 1,942 | 298 | - | 5,000 |
| PTP (£’000) | (1,365) | (3,660) | (1,790) | (350) |
| EPS (p) | (6.01)¹ | (13.76)¹ | (3.15) | (0.25) |