Ascent Resources Plc (LON:AST) Chief Executive Officer Colin Hutchinson caught up with DirectorsTalk for an exclusive interview to discuss the successful fundraising of £3 million via PrimaryBid, whether they’re on track to bring gas to market in the near future and plans to settle the loan notes
Q1: Colin, you’ve announced the completion of a £3 million fundraise through PrimaryBid this morning, can you tell us a little bit more about the fundraise and what the proceeds are going to be used for?
A1: The fundraise we announced Friday afternoon after the market closed and we gave investors the weekend to come and invest to raise the £3 million, we were really pleased with the response we got from private investors and institutional investors, existing shareholders and new shareholders. That money is very important to Ascent Resources, we obviously raised £4.5 million back in October, we spent £900,000 repaying some debt at the time, the balance was the cash we needed to get into production, we spent a bit on PG-10 so far but I still have the majority of that money in the bank and could still get into production with that cash.
The additional funds are important because it really gives us more options, it allows us to move more quickly, instead of choosing the cheapest supplier, we can choose the best supplier, instead of waiting to do PG-11 once PG-10’s producing, I can move straight ahead to PG-11 straight away. That’s important for two reasons, I can supply the minimum contract with INA from PG-10 but it’s always better to have two wells, I can produce more gas, if I have more gas I can sell more gas, producing more gas also gives me data on what the reservoir does. So, the extra cash is hugely important, it wasn’t desperately needed, I wasn’t out searching for the money, the opportunity has arisen to take it and I think what it gives the company is hugely significant.
Q2: Now, it seems like things are progressing well, are you still on track to bring gas to the market in the near future?
A2: Yes, my goal is to deliver gas before the end of March and then working every day to try and secure that, it’s very important to keep the company moving from an exploration company to a production company and to start to bring some revenue in. That’s really what I’m working for now and hopefully the new funds will help us to do that more quickly and we’ll get producing by the end of March. That’s not the end of the story, once we get producing in March it’s all about securing the next phase for the company, we need to get the IPPC permit to allows us to build our own plant and start to put gas in to the Slovenian grid. So, this is the beginning of what’s hopefully a very exciting journey.
Q3: Ascent Resources still have a number of loan notes on the balance sheet, is the intention to pay these in the near future?
A3: Yes, I get quite a lot of questions about the loan notes, there’s obviously quite a lot of conversions of them recently and shareholders are justifiable concerned about the dilution that that brings. I’ve had it suggested to me that I go out and get a bank loan and repay these convertible debts, I’d ideally love to do that but unfortunately the banks aren’t too keen to lend to company’s when they’re pre-revenue and pre-profitability. Once the field is producing and generating cash and we’re positive, I think then that becomes a different proposition of going out and getting debt to potentially repay CLN’s and we’ve obviously got some extra cash at the minute as well which could supplement that. So, there’s no immediate plans to do that but it’s something I can see the benefit of doing that in the future if that was an option.
