Ascent Resources Plc (LON:AST) Chief Executive Officer Colin Hutchinson caught up with DirectorsTalk to discuss their interim results, things to do before first route to gas in 2017, the IPPC permit and his optimism for the rest of the year
Q1: Now Colin, 2016 has been a year of progress, can you talk us through the highlights?
A1: The main highlight of 2016 so far has been signing of the gas sales agreement with INA, we did that at the beginning of August and that has given Ascent Resources a route through to market. For a long time we had wells we’d produced, we’ve a lot of gas in the ground but we haven’t had a route through to market so that deal with INA gives us that route through to market now, we can start plans to deliver gas in the first part of 2017.
Q2: Operationally, you’re on track pursuing the alternative route to first gas without the IPPC permit, what else have you got to do before the beginning of next year?
A2: To get through to first gas we need to recomplete the 2 wells, Pg-10 and Pg-11, they were first drilled in 2011 and recompleted again in 2013, so they just really need to be made ready for production and plugs need to be removed. There’s an existing processing facility which we’ll use to strip out some of the water and condensate from the gas before we put it into the export pipeline, that’s currently owned and managed by our partners in Slovenia, Geoterm, so we’ll spend a bit of money refurbishing that to make sure it can cope with the additional volumes of gas that we expect to produce. Lastly, there some work on pipelines, we’ve already tested the export pipeline that runs from the land up by Trameta, the company we purchased in Slovenia, to the Croatian/Slovenian border and we’ve tested that at the highest operating pressure and that’s been successful. We’re waiting for recertification documents to come back from government officials and then we’ll connect that pipeline to the processing facility and that’ll be us ready to produce gas.
Q3: Can you shed a little bit more light on the status of the IPPC permit?
A3: Yes, obviously we got the decision back in May that our permitting, even though it had been approved twice by 2 different government bodies, first by the Environment Agency and then by the Ministry, that despite it being approved twice and despite the Court finding that there was no substantive issue with the permit, that they revoked it on a procedural technicality. We’ve been in discussions with various officials and government agencies about how we can rectify this because obviously it’s something our long term plan for the gas is to build our own processing plant in Slovenia so we can process the gas there and put it into the Slovenian National Grid. We feel that is by far the most economic solution for Slovenia as well as being the best solution for Ascent Resources and its partners in the country and hopefully, through dialogue and through addressing any concerns that people have, we can overcome the issues and get that permit awarded. I think the important thing for the company is that that permit is no longer crucial to our development of the field, we can produce the gas and sell it into Croatia for as long as we need.
Q4: Are you optimistic for the rest of the year?
A4: Yes, I’m very optimistic. I think 2016 has been a hugely significant for Ascent Resources, we’ve got the deal with INA and we’ve completed the Trameta transaction as well which enabled the alternative route to be viable. So I think that we’ve done the legal bits and the procedural bits and now we’re really on to the operational work programme where we can recomplete our wells, connect the pipeline and refurbish the processing plant to allow us to begin production by early 2017.
