Ascent Resources, the onshore Caribbean / Hispanic American and European oil and gas company, announces the execution of a binding Memorandum of Understanding ('MOU') directly with the Cuban national oil and gas company ('CUPET'), securing exclusive rights to three additional onshore licences.

Highlights

• Signature of binding MOU with CUPET granting exclusive rights to negotiate Production Sharing Contract ('PSC') terms on three additional onshore licences
• Issue of equity raising gross proceeds of £212,500 at nil discount to fund the initial technical work

Background

On 14 April 2020 the Company announced its first acquisition in its wider international strategy with the acquisition of an exclusive MOU on Block 9b, a producing onshore Cuban oil licence.  This licence, located on the North coast of Cuba, contains the onshore Majaguillar and San Anton fields and is currently producing 190bbls/day from three wells. 

The Company also announced that it viewed Cuba as one of the last remaining untapped hydrocarbon provinces of scale and that it was in negotiations with CUPET regarding a variety of other onshore blocks.

Memorandum of Understanding

The Company has now signed a binding MOU with CUPET granting exclusive rights for six months to negotiate multiple Production Sharing Contracts ('PSC') over the onshore Blocks 9a, 12 and 15.  This is in addition to the MOU on Block 9b recently secured via the recent purchase of Energetical Limited.

The combination of Blocks 9a, 9b, 12 and 15 positions the Company with exclusive negotiating rights to potentially one of the largest non state owned, onshore Cuban portfolios.  The portfolio provides a blend of existing production for low risk redevelopment with significant upside potential for both appraisal and exploration.  The portfolio is consistent with the Company's strategy of counter cyclical acquisitive growth with a focus on low cost production, manageable initial capital commitments and near term high inflection growth potential. 

Blocks 9a, 12 and 15 are all onshore licences that sit on the North coast of Cuba and therefore benefit from a proven hydrocarbon system with multiple historic wells with oil shows and on trend with adjacent blocks that are either producing or have successful discoveries.

It is anticipated that the PSC negotiations will take place over the coming 6 months.  As part of these negotiations, the Company will apply for operator status in Cuba, while building an integrated subsurface model, incorporating structural, Geochem and well data.  It is expected the PSCs will be granted with no up front cost / sign on bonuses and manageable capital commitments, focused initially on identifying a prospect inventory and redevelopment plan for Block 9b.

Details of the blocks:

Block 9a (1,000 km²)

Block 9a is an onshore block situated adjacent to acreage with a proven hydrocarbon system and on trend with the Varadero producing oil field. The Northern portion of the block is most prospective with limited but modern seismic data already available and approximately 30 historic wells which have penetrated primarily the shallow subsurface.  Many of these wells encountered oil shows.  Having conducted an initial review of the available data and in consultation with CUPET further prospectivity has been identified in the traditional Placetus carbonate reservoirs and in overlying fractured volcanic/ophiolite plays of the Zaza tectonic structural unit ('TSU'). 

Block 12 (2,750 km²)

Block 12 is a high potential onshore block with opportunities in multiple plays; Zaza (Ophiolite), Placetas, Camajuani and Remedios tectonic stratigraphic units. The block has been drilled 9 times, all of which were pre 1960s and all of which exhibited oil shows. Encouragingly, adjacent blocks have been drilled in more recent years with oil shows and discoveries having been made. The Company has identified the potential to generate a portfolio of exploration prospects after evaluation of the existing seismic and well data, including seismic reprocessing and structural modelling.

Block 15 (3,200 km²)

Block 15 is an onshore exploration block with good quality seismic across the central part and 3 historic wells. The Company has identified the northern half of the block as the most attractive section with initial analysis highlighting potential in multiple play types of the Remedios, Placetus and Camajuani tectonic structural units. Again this potential could be unlocked following reprocessing of the seismic data, integrating existing well data, and structurally modelling the subsurface.

Issue of Equity

In support of the Company's international growth strategy and the execution of the technical work streams associated in advancing the MOUs, the Company is pleased to announce it has raised gross proceeds of £212,500 through the issue of 7,727,272 shares in the Company ('Placing Shares') at 2.75 pence per new share, being a nil discount to the closing bid price of the Company's shares prior to this announcement. Each Placing Share will have one warrant attached to it exercisable at any time over the next 2 years by paying 5.5 pence per warrant share exercised, representing a 100% premium to the placing price. The Company has also issued 1 million warrants on the same terms and will pay £8,750 cash in connection with fees associated with the issue of equity. The Placing Shares are expected to be admitted to trading on AIM on or around 15 May 2020.

Andrew Dennan, the Company's Chief Executive, commented:
"This is good news that builds additional strategic momentum further to our recently announced MOU on Block 9b in Cuba, and we look forward to rapidly establishing and broadening our portfolio in-country, counter cyclically. 

We also expect to reveal shortly a revised strategy in Slovenia, where the new Board has been assessing alternatives to unlock near term value in this core asset."

KeyFacts Energy: Ascent Resources Cuba country profile