Ascent Resources : Interim Financial Statements Six months ended 30 June 2022

Interim Financial Statements

Six months ended 30 June 2022

Company Number 05239285

Ascent Resources plc

Interim Financial Statements for the six months ended 30 June 2022

Chairman and CEO's Statement

We are delighted to report a strong six month period ended 30 June 2022 (the "Period" or "H1 2022"), with the Company completing its 'no win-no fee' style funding agreement for its claims against the Republic of Slovenia which was rapidly followed by the formal launch of the associated arbitration process. Post the Period end, the Company confirmed a monetary damages claim in excess of €500 million and we believe this makes Ascent Resources plc a unique and compelling proposition for shareholders.

Whilst gas production at the Petisovci project in Slovenia is buoyed by the strong European gas market backdrop, the Company also continues to pursue an industrial growth strategy across both onshore gas and ESG Metals where it has, for some time now, been preparing for its maiden growth transaction.

Our vision remains, by the end of 2022, to have finalised this transformation of Ascent such that the Company has both sustainable cash flow generation from its operations and compelling upside exposure from a funded claim, all supported by an "on the money" ESG compatible strategy in an exciting, growth focused, part of the world.

We thank our shareholders for their support and look forward to achieving success together.

Slovenia Arbitration

The future success of the Company's 75% interest in the Petisovci tight gas project joint venture in Slovenia was hit with a significant blow in April 2022 when the Republic of Slovenia voted to approve amendments to the mining law which now includes a complete ban on hydraulic stimulation for the purpose of producing hydrocarbons. Consequently, the Company does now not expect to be able to re-stimulate the PG-10 and PG-11A wells and any future development plans can not include the use of mechanical stimulation. The Company responded quickly serving the Republic of Slovenia ('Slovenia' or 'the State') with a new notice of dispute of further breaches under the UK-Slovenia bilateral investment treaty ('BIT') and the Energy Charter Treaty ('ECT') on 5 May 2022. The Company then entered into a binding damages agreement, essentially a 'no win - no fee' style arrangement, to appoint Enyo Law LLP, as announced on 30 May 2022. Enyo Law LLP is a specialist arbitration and litigation legal firm who filed both of the Notice of Disputes on behalf of the Company and represented the Company in last year's pre-arbitration negotiations with the Republic of Slovenia. Post the Period end, the Company formally initiated arbitration proceedings against the Republic of Slovenia with a revised monetary damages claim in excess of €500 million on 15 August 2022. It should be cautioned that in the event the Company is successful in its claim any amount actually received by the Company may be significantly lower.

The claim is based on what the Board believe to be a populist campaign carried out by Slovenia against the Company and our investment, which has prevented the development of the Petišovci oil and gas field. In particular, Slovenia has prevented the restimulation of two wells (PG-10 and PG-11A) in 2017, which was necessary to maintain the levels of gas produced from the tight rock reservoir (as has been done multiple times over the last fifty years). This frustration of the ability to develop the field was initiated via a decision of the State's regulator, the Slovenian Environment Agency ("ARSO"), which determined that an Environmental Impact Assessment ("EIA") would be required to be approved in order to conduct the low-volume hydraulic stimulation, even though such an EIA was not required and never had been previously under Slovenian law, and ARSO's conclusion was contrary to the conclusion of Slovenia's own expert bodies. This decision significantly slowed down the development of the field by the Company. Pending such low-volume hydraulic stimulation, the amount of gas produced by the field was very significantly reduced, resulting in a significant loss of the Company's revenues. At the same time, the Minister of the Environment and Spatial Planning of Slovenia repeatedly made public statements portraying the Investors, as well as the Petišovci project, in a negative light, and the Company believes that leaks were made by ARSO to the press. This further demonstrates that ARSO was biased against the Investors and that the ARSO's decision was politically motivated. Slovenia's campaign against the Investors culminated in a complete ban on low-volume hydraulic stimulation, which came in effect on 5 May 2022. The Board believes that statements made during the parliamentary debate on the ban leave no doubt that the Investors were being specifically targeted by it.

Accordingly, the Company has submitted its dispute with the Republic of Slovenia to arbitration administered by the International Centre for Settlement of Investment Disputes ("ICSID"). The request for arbitration follows the Notices of Dispute filed by Ascent Resources Plc and Ascent Slovenia Ltd on 23 July 2020 and 5 May 2022 respectively in

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Ascent Resources plc

Interim Financial Statements for the six months ended 30 June 2022

which Slovenia was formally notified of the existence of a dispute under the ECT and the BIT. The Request for Arbitration ("Request") is submitted pursuant to Article 26 of the ECT and Article 8 of the 1996 Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Slovenia for the Promotion and Protection of Investments.

Ascent brings this claim in relation to Slovenia's measures that have destroyed the value of Ascent's investments in the Slovenian energy sector, and which have de facto deprived Ascent of its right to produce gas in Slovenia. Ascent's rights have been unlawfully expropriated by Slovenia, in breach of the country's obligations under international law and both the ECT and the BIT. The Company has therefore sustained losses for which it is seeking compensation. According to preliminary estimates, the losses sustained are in excess of €500 million. It should be cautioned that in the event the Company is successful in its claim any amount actually received by the Company may be significantly lower. The Company remains amenable to discussing settlement with the Republic of Slovenia following its review of the matter or otherwise pursuing this significant damages claim through to a binding result for the Company.

Slovenia Operational Update

The PG-10 and PG-11A wells continue to produce gas with 11,934 SCM/month being sold to local industrial buyers via the low-pressure pipeline. Through the Period, the Company remained in dispute with both its JV partner Geoenergo, in relation to agreeing the invoice amounts for hydrocarbons produced from the wells, and also in dispute with its JV operating service provider Petrol Geo (which is a related party of Geoenergo) in relation to their service agreement and a significant change in circumstances. Post the Period end, the Company agreed recognition of revenues for the period 2020 through to June 2022 which will be reflected in the next annual report. The Company has agreed total gross revenues of €1.68 million for the period of April 2020 through to June 2022. Furthermore, the Company is scheduled to have mediation with its JV partner in September 2022 in relation to different interpretations of the joint venture contract, which Ascent understands could result in the recognition of further hydrocarbon revenues.

ESG Metals Strategy

As announced in January 2022, the Company continues to evaluate a number of ESG Metal transactions across Latin and Hispanic America and it has now identified Peru as its primary target geography for this strategy, which focuses on ore processing and secondary mining recovery opportunities consistent with global Environmental, Social and Governance ("ESG") principles. The Company expects that these opportunities will typically involve the reclassification, through highly efficient recovery techniques, of surface stockpiled mining waste (previously viewed as a liability for mining companies) as a valuable asset for processing/reprocessing ahead of commercial sale to off-takers/otherthird-party buyers and/or participating in the enfranchising of local artisanal peasant gold mining communities with access to new tolling operations to process and commercialise their ore.

Peru is widely recognised as one of the largest and most diversified mineral producers with some of the most extensive reserves in the world with mining the most important sector in the Peruvian economy (some 10% of national GDP). Peru is currently the world's second largest Copper and Silver producer and Latin America's largest Gold, Zinc, Tin and Lead producer. Peru's Long-Term Credit Rating is rated as BBB by most agencies, which is amongst the strongest in the region. The country also benefits from a long history of mining, a robust mining legal framework and a significant pool of local expertise. The Company sees significant opportunity for attractive entry points in natural resources with a focus on onshore oil and gas developments and mining following the global pandemic which has triggered international capital flight and significant capital constraints for small-scale operators. The Company therefore initially expects to focus its attention on small-scale operations (up to 350 tpd), which the Company considers affordable, of an efficient operational scale and which have multiple local tax and permitting benefits.

Corporate

At the beginning of the year, in support of the Company focusing its ESG Metal strategy on Peru, the Company successfully raised new gross equity proceeds of £0.6 million to fund working capital requirements and wider business development activity at a price of 3.3 pence per new share, which represented a nil discount to the closing bid price on the prior day. The subscribers received one new equity warrant per new share subscribed for, with the warrant being exercisable at pence per warrant share at any time in the next two years.

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Ascent Resources plc

Interim Financial Statements for the six months ended 30 June 2022

During the Period, the Company agreed with the holders of the remaining 4 pence equity warrants that were issued on 6 August 2020 to an immediate warrant exercise whereby all 4 pence warrants were exercised, realising new equity proceeds of £242,500 for the Company, whilst the Company awarded one and half new warrants for each warrant exercised, with each new warrant being exercisable at 5p per new warrant at any time over the next three years.

In February 2022, Mr Ewen Ainsworth stepped down from his position as Non-Executive Director following his acceptance of a full-time executive position elsewhere.

Post the Period end, the Company has agreed invoices and began receiving payment for historic revenues from the PG- 10 and PG-11A wells for the period of April 2020 through to June 2022. Accordingly, the Company expects to recognise historic production revenues as well as associated production costs in its next annual accounts.

Outlook

The team continue to work diligently across our key corporate priorities which include championing redress from Slovenia pursuant to our $0.5+ billion ECT and BIT funded monetary damages claim and delivering a complimenting maiden new business transaction focused on development and near term production and revenue generation. We look forward to delivering success for our shareholders at Ascent Resources plc and engaging with them throughout our continuing journey.

James Parsons	Andrew Dennan
Executive Chairman	Chief Executive Officer
12 September 2022	12 September 2022

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Ascent Resources plc

Interim Financial Statements for the six months ended 30 June 2022

CEO's report

Financial performance

Revenue for H1 2022 was £nil, as per the prior period. The closing cash balance at 30 June 2022 was £174,000 (H1 2021: £766,000 and FY21: £97,000). Post Period end the Company agreed invoices and began receiving payment for historic revenues from the PG-10 and PG-11A wells for the period of April 2020 through to June 2022. Accordingly, the Company expects to recognise historic production revenues as well as associated production costs in its next annual accounts.

During the Period the Company raised £600,000 before costs in an equity placing in January 2022 and a further £242,500 from a warrant exercise in April 2022. There was a cash outflow from operations of £720,000 and an inflow of £797,000 from financing, resulting in net cash flow of £77,000.

Operational performance
	Jan	Feb	Mar	Apr	May	Jun
Production KPI's	2022	2022	2022	2022	2022	2022
Total gas (k scm)	123.1	98.29	144.57	108.05	108.11	89.98
Total gas (MMcf)	4.35	3.47	5.11	3.82	3.82	3.18
Average daily gas (k scm)	3.97	3.51	4.66	3.6	3.49	3.00
Average daily gas (Mcf)	140.23	123.96	164.69	127.20	123.16	105.92
Total condensate (liters)	1,728	3,764	2,445	5,468	4,250	4,230
CGR (liters per 1000 scm gas)	14.04	38.30	16.91	50.60	39.31	47.01
BOE - gas	749.31	598.28	880.00	657.72	658.07	547.71
BOE - condensate	10.85	23.64	15.35	34.34	26.69	26.56
Total BOE	760.16	621.92	895.35	692.62	684.76	574.27

Total production for the Period was 672.10 thousand cubic metres of gas and 21,885 litres of condensate.

Gas sales to INA remain suspended as wellhead pressure is below the export pipeline pressure, which is not expected to be remedied following the Slovenian ban which includes the prohibition of low volume hydraulic stimulation. The Company produced gas in the year to date which was sold locally to an industrial buyer through a low-pressure pipeline. Post Period end, the Company agreed invoices and began receiving payment for historic revenues from the PG-10 and PG-11A wells for the period of April 2020 through to June 2022. Accordingly, the Company expects to recognise historic production revenues as well as associated production costs in its next annual accounts.

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