4 May 2016

Ascent Resources plc

('Ascent' or 'the Company')

Final results for the year ended 31 December 2015

Ascent Resources plc, the AIM quoted European oil and gas exploration and production company is pleased to report its full year results for the year ended 31 December 2015.

Highlights:

· Significant progress made in the IPPC Permit application process

· Second route to market identified and in advanced stage discussions to implement

· Raised £1.2million via equity placings through PrimaryBid.com

· New loan facility secured

Post Period Highlights:

· £0.5m raised through PrimaryBid.com in April 2016

· Preliminary approach from Cadogan highlighting the potential value in the Ascent asset

· Colin Hutchinson appointed as permanent CEO

Clive Carver, Chairman of Ascent, commented:'2015 has been a year of solid progress for Ascent. The IPPC process has been a long one, however we are now at the final hurdle and expect a positive outcome from the Slovenian courts. In addition, we've developed an alternative route to market which should accelerate our journey to first gas which we expect in 2016.

'We would like to take this opportunity to thank our partners and shareholders for your support throughout 2015 and look forward to 2016 with optimism.'

Enquiries:

Chairman's Statement

Introduction

I am pleased to present the financial results for the year ended 31 December 2015.

The issue of the permitting delays at our Petišovci project was raised at the highest political level by the UK Government and we too raised it with the visiting Slovenian Prime Minister late in 2015.

Towards the end of the period under review and continuing in the first few months of 2016 we have experienced a positive change in the attitude of those on whom we rely to commence production.

In addition, we have also seen an increase in the interest displayed by industry participants in developing our Petišovci gas field once a clear route to first gas exists which is encouraging.

Routes to first gas

Shareholders may recall that we have three theoretical routes to first gas. The first and the most conventional route is to secure an environmental permit ('IPPC') to construct and operate a new gas treatment works. The gas would then be treated on site and piped into the national grid. The second involves sending the gas untreated across national boundaries, and the third is to supply untreated gas to a reconditioned methanol plant adjacent to our field.

IPPC permit

The preferred field development plan to date has been to install a Gas Gathering and Separation Station ('GGSS') to reduce the carbon dioxide content of the gas to meet national grid specifications, upgrade a metering station to at the entry point to the national grid and connect the wells via the GGSS to the metering station. The installation of the GGSS requires an IPPC permit, for which an application was lodged in June 2014; it was initially approved and put out to public consultation in December 2014 and following an extensive consultation process the Permit was awarded in July 2015.

Under the prevailing rules there is very little cost associated with objecting to the environment ministry's decision. It was therefore predictable that the original decision would be appealed, however we were pleasantly surprised that only two protest groups challenged the original decision.

Under the appeal the Environment Minister was required to re-assess the decision of her department, which she did and in November 2015 confirmed the initial ruling to grant the Permit.

Under the rules, objectors again have the option to refer the Minister's decision to the Slovenian Courts. Once again such a review is without material cost or inconvenience to the objector and inevitably one of the protesters saw fit to challenge the Minister's decision.

Thankfully the referral to the Court provides the last opportunity for a decision to be reviewed. We understand that the Court has already reviewed the files and we await their decision.

One of the unexpected benefits of the prolonged delays has been that the costs of construction of the proposed treatment works have fallen, with some suppliers being prepared to either lease the equipment or to receive payment from gas sold.

In anticipation of a favourable and final ruling we have issued tenders for the metering station.

Cross border gas

The Lendava location of our gas field is within a few miles of the Austrian, Hungarian and Croatian borders. There exists a network of pipes that would allow our gas to be transported across the border to an existing and underutilised treatment facility. This route to market does not require the IPPC permit to have been issued

We are at an advanced stage of negotiations to have joint venture gas treated outside Slovenia. While this may not be a long term solution, in particular when the second phase of the Petišovci field is developed, it would bring forward the date when we first receive income from the field. It also allows us to demonstrate to any banks that may provide project funding prolonged data on well performance and reservoir behaviour which we expect to reduce the risk and therefore the cost of any project finance facility.

A further advantage of this arrangement would be positive cash flow during the period when the treatment works envisaged under the IPPC permit is constructed.

Sale of gas to a reconditioned methanol plant

A characteristic of methanol is that it can be produced from gas with a sulphur content higher than is acceptable for the national grid.

Therefore, with a disused methanol plant adjacent to our gas field we have for some time entertained thoughts of being able to achieve first gas without the need for a new treatment works and therefore without the need in the short term for an IPPC permit.

Our hopes were raised in September 2015 when we learnt that the methanol plant in question had been acquired by a Californian based company for €5 million. However, despite repeated attempts to contact the new owners, we have yet to establish whether their intention is to refurbish the plant or alternatively use it for scrap.

We have therefore for the time being discounted thoughts of first gas being achieved via methanol production.

Management

From September 2015, Colin Hutchinson has in addition to being Finance Director fulfilled the duties of the CEO. I am pleased to report that following his performance the non-executive directors have resolved to appoint Colin as permanent CEO.

Funding

We are unable to generate income until we have a clear route to first gas. We have therefore been dependent upon issues of equity and debt to meet the costs of maintaining a presence in the UK and Slovenia.

In both locations we have reduced costs to a minimum, with as noted above our new CEO also fulfilling the role of Finance Director. In the UK we have held numerous discussions with industry participants interested in developing the Petišovci project once a clear route to first gas exists.

In Slovenia our team has worked to maintain the condition of the field and prepare the tender documentation for the issue of the IPPC permit.

We have been reliant on the continued support of our largest stakeholders Henderson Global Investors and EnQuest PLC in the period under review and subsequently.

From Henderson Global Investors we drew £500,000 in convertible loan notes in February 2015, a further £450,000 from the £7 million debt facility in 2015 and have drawn a further £350,000 of the facility since the end of the year. In July 2015, we issued £2 million of Convertible Loan Notes ('CLNs') in full settlement of a £3 million liability.

In addition, we have taken in a further £1.2million in new equity over the same period thereby broadening the shareholder base and preserving the value of the Ascent investment in the Petišovci project.

Subsequent to the period under review, on 7 April 2016 the Company raised £500,000 gross (£477,500 net to the Company) via the placing of 35,714,285 new ordinary shares of 0.2p each in the Company at a price of 1.4p per Placing Share with investors using the Primarybid.com platform. These funds will meet the working capital requirements of the Company until the end of Q2 2016 during which time the final outcome of the IPPC Permit and negotiations around an alternative route to first gas are expected

Outlook

We have two live options for a clear path to first gas. Our expectation is that both will crystallise during Q2 2016. An early agreement on the cross border route would still allow first gas in 2016.

The Placing in April 2016 has provided the Company with sufficient funds to meet its commitments during the period when these options are expected to crystallise and enables the Company to make progress towards the next stage of the project.

More importantly perhaps, we believe that the value of the project as a whole has been recognised by industry participants, whose interest we expect to firm up once a clear route to first gas exists.

Clive Carver

Chairman

3 May 2016

Operations Review

Slovenia

Ascent Slovenia Ltd 75% (operator), Geoenergo d.o.o. 25% (concession holder)

The Petišovci Tight Gas Project, in a 98 km2 area in north eastern Slovenia, targets the development of substantial tight gas reservoirs known to be in Miocene clastic sediments.

Ascent first acquired an interest in the Petišovci project in 2007 and in 2009 an extensive 3D seismic survey was conducted across the Petišovci concession area.

The structure has two sets of reservoirs, the shallower Upper Miocene and the deeper Middle Miocene. The Middle Miocene Badenian reservoirs, or Pg sands, are the focus of Ascent's development objectives; however, the shallow reservoirs, which were extensively developed during the 1960s, are not considered to be fully depleted.

The north east region of Slovenia has been an oil and gas producing area since the early 1940s and contains much of the infrastructure necessary for processing and exporting produced hydrocarbons.

Two new appraisal wells, Pg-10 and Pg-11, drilled in 2010/2011 to a total vertical depth of 3,497 m and 3,500 m respectively, confirmed gas in all six Middle Miocene Badenian reservoirs ('A' to 'F' Pg sands). Gas flowed for the first time from the shallowest 'A' sands and, in addition, gas and condensate were sampled from the Lower Badenian 'L' to 'Q' sands. Pg-10 proved productive from the 'F' sands and Pg‑11A (Pg-11 was side-tracked for technical reasons to Pg-11A) from the deeper 'L' to 'Q' sands. Both wells were successfully fracture stimulated resulting in flow rates of 8 MMscfd from the 'F' sands and 2 MMscfd from the 'L, M and N' sands, proving the commercial potential of both wells.

The data generated from the Pg-11 well, including three 18 m core samples and state-of-the-art wireline logging, supplemented the 2009 3D survey of the project area. The Company has reported independently verified P50 estimate of gas in place of 456 Bcf (13 Bm3; 76 MMboe).

Both wells will require a further recompletion prior to Phase One production which will help to better understand the long-term productivity performance of the reservoirs. The Phase One production results will inform decisions regarding the Phase Two, full field, Petišovci development.

Back-in Rights

Switzerland

The Hermrigen and Linden exploration permits in Switzerland cover undeveloped discoveries made by Elf Aquitaine in 1972 and 1982 with a combined estimated gas resource base of over 360 Bcf. As the original Hermrigen well was drilled before gas pipeline infrastructure was built in the area, the discovery has remained unappraised. Despite selling its interest in 2010 to eCORP, the current operator of the project, Ascent retains various back-in rights on any successful outcome of six conventional appraisal prospects, provided relevant apportioned costs are covered.

Netherlands

As part of the Sale and Purchase agreement with Tulip Oil for the Company's former Dutch licences, Ascent has the right to re-purchase a 10% interest in each of the Dutch licences once Tulip has made a final investment decision with respect to the commercial development of the Terschelling-Noord Field.

Clive Carver

Chairman

3 May 2016

Consolidated Income Statement & Statement of Comprehensive Income

For the year ended 31 December 2015

* Adjusted for share consolidation

* Foreign currency translation differences from foreign operationsmay be recycled through the income statement in the future if certain future conditions arise.

Company Statement of Financial Position

As at 31 December 2015

Consolidated Cash Flow Statement

For the year ended 31 December 2015

Company Cash Flow Statement

For the year ended 31 December 2015

Condensed Notes to the accounts

Accounting policies

Reporting entity

Ascent Resources plc ('the Company' or 'Ascent') is a company domiciled and incorporated in England. The address of the Company's registered office is 5 New Street Square, London EC4A 3TW. The consolidated financial results of the Company for the year ended 31 December 2015 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates and joint ventures. The Parent Company financial results present information about the Company as a separate entity and not about its Group. This announcement was authorised for issue in accordance with a resolution of the Board of Directors on 3 May 2016.

The Company is admitted to AIM, a market of the London Stock Exchange.

The financial information for the year ended 31 December 2015 set out in this announcement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2014 were approved by the Board of Directors on 11 May 2015 and delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting ('AGM').

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Statement of compliance

The Group's and Company's financial statements for the year ended 31 December 2015 were approved and authorised for issue by the Board of Directors on 3 May 2016 and the Statements of Financial Position were signed on behalf of the Board by Clive Carver.

While the financial information included in this announcement has been prepared in accordance with International Financial Reporting Standards ('IFRS'), this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to distribute the full financial statements that comply with IFRS in May 2016.

Audit Report

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2015 or 2014, but is derived from those accounts. The Auditor has reported on those accounts; its reports were unqualified, but did contain emphasis of matter paragraphs in 2014 & 2015 in respect of: going concern, on which further details are available below. The Auditor's Report did not contain statements under sections 498(2) or (3) of the Companies Act 2006.

Basis of preparation

The financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards adopted for use in the European Union. However, this announcement does not itself contain sufficient information to comply with IFRS. The Company will publish full financial statements that comply with IFRS in May 2016.

Measurement Convention

The financial statements have been prepared under the historical cost convention. The financial statements are presented in sterling and have been rounded to the nearest thousand (£'000s) except where otherwise indicated.

The principal condensed accounting policies set out below have been consistently applied to all periods presented. A number of amendments to existing standards and interpretations were applicable from 1 January 2015. The adoption of these amendments did not have a material impact on the Group's financial statements for the year ended 31 December 2015.

Going Concern

The financial statements of the Group are prepared on a going concern basis.

The Company has sufficient cash to fund its current trading obligations but further funding will be required for working capital for a period of the next 12 months and to finance work programmes in Slovenia. In addition, there are £11 million of CLNs which become due in November 2016. As a result, the Directors are considering a range of funding options, including a strategic investor.

However, there can be no guarantee over the outcome of these negotiations and as a consequence there is a material uncertainty of the Group's ability to raise additional finance, which may cast significant doubt on the Group's ability to continue as a going concern. Further, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors, however, remain confident of the Group's ability to operate as a going concern given the funding discussions that have and continue to take place and in light of the significant recent support from existing shareholders.

The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

Critical accounting estimates and assumptions and critical judgementsin applying the Group'saccounting policies

The preparation of the consolidatedfinancial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. The estimates and underlying assumptions are based on practical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based or as a result of new information. Such changes are recorded in the period in which the estimate is revised.

The application of the Group's accounting policies may require management to make judgements, apart from those involving estimates, which can have a significant effect on the amounts amortised in the financial statements. Management judgement is particularly required when assessing the substance of transactions that have a complicated structure or legal form.

The key areas where management judgement has needed to be applied are:

(a) Exploration and evaluation assets- exploration and evaluation costs are initially classified and held as intangible fixed assets rather than being expensed. The carrying value of intangible exploration and evaluation assets are then determined. Management considers these assets for indicators of impairment at least annually based on an estimation of the recoverability of the cost pool from future development and production of the related oil and gas reserves. This assessment requires estimates of gas reserves, production, gas prices, operating and capital costs associated with the field and discount rates;

(b) Decommissioning provision - the cost of decommissioning is estimated by reference to operators and internal specialist staff and requires estimates regarding the cost of decommissioning, inflation, discount rates and the timing of works;

(c) CLNs and extinguishment of EnQuest liability - the Group has entered into a series of significant modifications to the maturity and conversion rights on its CLNs and replaced the previous EnQuest financial liability with a convertible loan note. These transactions, some of which are with significant shareholders, required judgment in terms of the appropriate accounting treatment. In addition, judgment and estimation was required in determining the fair value of liability and equity components of the loan notes;

(d) Basis of consolidation - management consider the Company's ability to exert financial and operational control, as well as the level of voting rights and representation on the Board as a basis of consolidation;

(e) Share-based payments - management assesses the fair value of each option using an appropriate pricing model based on option and share prices, volatility and the life of the option;

(f) Commercial reserves - Commercial reserves are proven and probable oil and gas reserves calculated on an entitlement basis and are integral to the assessment of the carrying value of the exploration and evaluation assets. Estimates of commercial reserves include estimates of the amount of oil and gas in place, assumptions about reservoir performance over the life of the field and assumptions about commercial factors which, in turn, will be affected by the future oil and gas price.

Basis of consolidation

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

The results of undertakings acquired or disposed of are consolidated from or to the date when control passes to or from the Group. The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Income Statement from the date that control commences until the date that control ceases.

Where necessary, adjustments are made to the results of subsidiaries to bring the accounting policies they use into line with those used by the Group.

Business combinations

On acquisition, the assets, liabilities and contingent liabilities of subsidiaries are measured at their fair values at the date of acquisition. Any excess of cost of acquisition over net fair values of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the net fair values of the identifiable assets, liabilities and contingent liabilities acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition.

Joint arrangements

The Group is party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of the arrangement to the Group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.

The Group classifies its interests in joint arrangements as either joint ventures, where the Group has rights to only the net assets of the joint arrangement, or joint operations where the Group has both the rights to assets and obligations for the liabilities of the joint arrangement.

All of the Group's joint arrangements are classified as joint operations. The Group accountsfor its interests in joint operations by recognising its assets, liabilities, revenues and expenses in accordance with its contractually conferred rights and obligations.

Oil andGas Exploration Assets

All licence/project acquisitions, exploration and appraisal costs incurred or acquired on the acquisition of a subsidiary, are accumulated in respect of each identifiable project area. These costs, which are classified as intangible fixed assets are only carried forward to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Pre-licence/project costs are written off immediately. Other costs are also written off unless commercial reserves have been established or the determination process has not been completed. Thus accumulated cost in relation to an abandoned area are written off in full to the statement of comprehensive income in the year in which the decision to abandon the area is made.

When production commences the accumulated costs for the relevant area of interest are transferred from intangible fixed assets to Property, Plant and Equipment as 'Developed oil and gas assets'.

Impairmentof oil and gas exploration assets

Exploration/appraisal assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6 'Exploration for and Evaluation of Mineral Resources' and tested for impairment where such indicators exist.

In accordance with IFRS 6 the Group considers the following facts and circumstances in their assessment of whether the Group's oil and gas exploration assets may be impaired:

· whether the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed;

· whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned;

· whether exploration for and evaluation of oil and gas reserves in a specific area have not led to the discovery of commercially viable quantities of oil and gas and the Group has decided to discontinue such activities in the specific area; and

· whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale.

If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with the provisions of IAS 36. In such circumstances the aggregate carrying value of the oil and gas exploration and assets is compared against the expected recoverable amount of the cash generating unit. The recoverable amount is the higher of value in use and the fair value less costs to sell.

The Group has identified one cash generating unit, the Petišovci project in Slovenia. Any impairment arising is recognised in the Income Statement for the year.

Where there has been a charge for impairment in an earlier period that charge will be reversed in a later period where there has been a change in circumstances to the extent that the discounted future net cash flows are higher than the net book value at the time. In reversing impairment losses, the carrying amount of the asset will be increased to the lower of its original carrying values or the carrying value that would have been determined (net of depletion) had no impairment loss been recognised in prior periods.

Convertible loan notes

Upon issue of a new convertible loan, where the convertible option is at a fixed rate, the net proceeds received from the issue of CLNs are split between a liability element and an equity component at the date of issue. The fair value of the liability componentis estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the CLNs and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of theGroup, is included in equity and is not re-measured.

Subsequent to the initial recognition the liability component is measured at amortised cost using the effective interest method.

When there are amendments to the contractual loan note terms these terms are assessed to determine whether the amendment represents an inducement to the loan note holders to convert. If this is considered to be the case the estimate of fair value adjusted as appropriate and any loss arising is recorded in the income statement.

Where there are amendments to the contractual loan note terms that are considered to represent a significant modification to the loan note, without representing an inducement to convert, the Group treats the transaction as an extinguishment of the existing convertible loan note and replaces the instrument with a new convertible loan note. The fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The fair value of the conversion right is recorded as an increase in equity. The previous equity reserve is reclassified to accumulated loss. Any gain or loss arising on the extinguishment of the instrument is recorded in the income statement, unless the transaction is with a counterparty considered to be acting in their capacity as a shareholder whereby the gain or loss is recorded in equity.

Equity

Equity instruments issued by the Company are recorded at the proceeds received, net of any direct issue costs.

Operating loss is stated after charging:

Finance income and costs recognised in the year

Borrowings - Group & Company

There were several transactions during 2014 & 2015 in relation to CLNs:

(i) Issuance of convertible loan notes

The Group issued £5 million of 9 per cent 2013 CLNs during 2012 and 2013, convertible at any time at the discretion of the holder, into Ordinary Shares at 200 Ordinary Shares per £1 principal of loan note, an effective conversion price of between 0.1p and 0.5p per Ordinary share depending on whether the balance could be sold to independent third party investors. The CLNs were due to mature in January 2015.

The Group issued £5 million of 9 per cent 2013 CLNs during 2012 and 2013, convertible at any time at the discretion of the holder, into Ordinary Shares at 200 Ordinary Shares per £1 principal of loan note, an effective conversion price of between 1.0p and 0.5p per Ordinary share depending on whether the balance could be sold to independent third party investors. The CLNs were due to mature in January 2015.

On 5 February 2014 the Group agreed with Henderson to create a new £5 million class of 9 per cent CLNs with a maturity date of December 2014, convertible at any time at the discretion of the holder, into Ordinary Shares at 100 Ordinary Shares per £1 principal of loan note, an effective conversion price of 1 pence per Ordinary share. The first £2 million available under these 2014 CLNs was drawn immediately with the balance intended for sale to independent third party investors, with the intention that the pricing of all the 2014 CLNs would be reset to the lowest price paid by these new investors.

(ii) Variation of terms in 2014

On 8 September 2014, by when it had become clear that it would not be possible to secure investment from new third party subscribers for the £3 million balance outstanding under the 2014 CLNs, the Company agreed with Henderson to vary the terms of the 2014 CLNs whereby Henderson agreed to subscribe for a further £2 million in principal of 2014 CLNs convertible into Ordinary Shares at 500 Ordinary Shares per £1 principal of loan note, an effective conversion price of 0.2p. Additionally, Henderson was granted security in the form of a charge over the Company's assets. The variation to the loan note terms was considered to be an inducement to convert and resulted in a one-off charge to the income statement of £2,520,000 in 2014. The Company drew £1.5million between September and December 2014. At 31 December 2014 the carrying value of the loan notes stood at £9,624,000. On 5 February 2015 the Company drew the final £500,000 available under the loan notes.

(iii) First variation of terms in 2015

On 19 February 2015 the shareholders and note holders approved the variation of the terms on the 2013 and 2014 CLNs. In total £5 million had been drawn under the 2013 CLNs and £4 million had been drawn under the 2014 CLNs; including accrued interest some £10million was due for repayment, in part on 23 December 2014 and in part on 31 January 2015. In return for extending the maturity date of the CLNs to 19 November 2015 and terminating the accrual of further interest, the Board of Ascent agreed to adjust the conversion price in respect of both the 2013 and 2014 CLNs from 0.5p and 0.2p respectively to 0.1p (pre-share consolidation) for all loan notes. The 2013 and 2014 CLNs were extinguished and replaced with the amended convertible loan. On initial recognition the liability and equity element of the CLNs have been fair valued. As part of this transaction, a loss on extinguishment of £856,000 was recognised as a finance cost as the loan note holder was considered to be acting in its capacity as a debt holder. The loan was recognised at a discount rate of 15% and the interest charge accretes over the loan period.

(iv) EnQuest convertible loan note

On 9 July 2015 the Company agreed to restructure other payables due to EnQuest as deferred consideration on the acquisition of their 48.75% interest in the Petišovci project in 2010. In total £3,024,000 was due to be payable to EnQuest on 19 December 2015. As at July 2015, the liability stood at £2,779,000 and would have accreted this up to the full amount payable during the year had this restructuring not occurred. The entire debt payable was restructured into a £2,038,000 convertible loan note. The terms of these CLNs are identical to the £4 million of notes issued in 2014 to Henderson and benefit from security over the Company's shareholding in Ascent Slovenia Limited which owns an interest in the Petišovci concession. On initial recognition the liability and equity element of the CLNs have been fair valued. The loan was recognised at a discount rate of 15% and the interest charge accretes over the loan period. The extinguishment of the previous liability gave rise to a £741,000 gain recorded in finance income as EnQuest was considered to be acting in its capacity as a debt holder.

(v) Second variation of loan note terms in 2015

In November 2015, prior to the notes falling due for repayment, the holders of the CLNs agreed to extend the maturity to 19 November 2016 in exchange for the conversion price being rebased from 0.1 pence to 0.05 pence. The carrying value of the CLN liabilities at 19 November 2015 was £12,021,000. The CLNs were extinguished and replaced with amended convertible loans. On initial recognition the liability and equity element of the CLNs have been fair valued. The loans have been recognised at a discount rate of 15% (equating to £10,449,000) and the interest charge will accrete over the loan period with £192,000 having been charged for the period to 31 December 2015.

The fair value attributable to the equity portion has been recorded in equity (£1,572,000), representing the fair value of the conversion option and the difference between the previous and new liability which represented a capital contribution by shareholders as the loan note holders were considered to be acting in their capacity as shareholders. The loan amount is convertible at any time into ordinary shares of the Company.

Unlike the previous position in relation to the 2013 and 2014 CLN's the notes are no longer subject to a waiver of the provisions of Rule 9 of the City Code on Takeovers and Mergers. Accordingly, if Henderson or any other holder of the 2013 and 2014 CLN's exercise their right of conversion and the hold equal to or more than 30 per cent of the total voting rights of the Company, such holder will be required to make a mandatory bid for the remaining ordinary shares in the capital of the Company not held by them.

(vi) Capital reorganisation

On 30 November 2015 shareholders approved a placing, amendment to convertible loan note terms and a capital reorganisation. The capital reorganisation reduced the nominal share price from 0.1 pence to 0.01 pence and subsequently to consolidate ordinary shares by a factor of 20 thereby increasing the nominal share price to 0.2pence. The conversion price on the loan notes was similarly adjusted by a factor of 20 to 1 pence.

(vii) Conversions

On 26 March 2015 the Company processed a conversion request from holders of 123 CLNs which resulted in the issuance of 138,520 new Ordinary shares. On 30 April 2015 the Company processed a conversion request from holders of 420 CLNs which resulted in the issuance of 473,030 new Ordinary shares.

On 27 July 2015 the Company processed a conversion request from holders of 217 CLNs which resulted in the issuance of 244,392 new Ordinary shares.

On 29 September 2015 the Company processed a conversion request from holders of 2,439 CLNs which resulted in the issuance of 2,746,912 new Ordinary shares. On 10 December 2015 the Company processed a conversion request from holders of 900 CLNs which resulted in the issuance of 101,362 new Ordinary shares.

The Directors consider that the carrying amount of the bank and other loans approximates to their fair value. The weighted average coupon interest rate of the convertible loan is 0% as interest ceased to accrue on the convertible notes in January 2015 (2014: 9%).

(viii) £7 million short term funding facility

On 12 May 2015 the Company announced that it had agreed a £7million loan facility (the 'Loan') for general corporate purposes with Henderson. The Loan can be drawn at any time from signing to 30 June 2016 at the discretion of Henderson. The Loan accrues interest at the rate of 7.5% per annum on the amount drawn and this is added to the amount of the Loan. The Loan is subject to a drawdown fee of 1.75% per tranche which is deducted from the funds advanced. The Loan is also subject to a repayment fee of 1.25% on any amounts repaid by the Company. The balance outstanding is repayable on demand at any time.

As at 31 December 2015 the Company had drawn £450,000 from a £7 million facility provided by Henderson Global Investors on which £11,000 of interest had accrued at year end at 7.5% per annum; a further £250,000 was drawn from this facility during January 2016 and another £100,000 during March 2016.

Called up share capital

Shares issued during the year

· On 26 March 2015 the Company processed a conversion request from holders of 123 CLNs which resulted in the issuance of 138,520 new Ordinary shares.

· On 30 April 2015 the Company processed a conversion request from holders of 420 CLNs which resulted in the issuance of 473,030 new Ordinary shares.

· On 1 May 2015 the Company raised £550,000 (£525,250 net of costs) via the Placing of 275,000,000 Ordinary Shares with investors using the PrimaryBid.com platform.

· On 27 July 2015 the Company processed a conversion request from holders of 217 CLNs which resulted in the issuance of 244,392 new Ordinary shares.

· On 29 September 2015 the Company processed a conversion request from holders of 2,439 CLNs which resulted in the issuance of 2,746,912 new Ordinary shares.

· On 30 November 2015 the Company raised £703,000 (£671,843 net of costs) via the Placing of 70,350,000 Ordinary Shares with investors using the PrimaryBid.com platform.

· On 10 December 2015 the Company processed a conversion request from holders of 900 CLNs which resulted in the issuance of 101,362 new Ordinary shares.

Shares issued during the prior year

· On 18 December 2013 the Company announced that it had reached a settlement with GPS in respect of a number of matters related to ARI which had the potential to result in Warranty claims under the SPA. In return for a full waiver of any and all claims or potential claims Ascent agreed to issue GPS with 275 million shares. 268 million were issued immediately with the balance of 7 million issued in June 2014 following shareholder approval at General Meeting of the Company.

· On 26 March 2014 the Company received a notice of exercise to convert 1,848 CLNs of £1 each which were issued in May 2013 as part of an open offer to all shareholders. The Loan Notes, including rolled up interest at the rate of 9% per annum, are convertible into new ordinary shares of 0.1 pence each in the capital of the Company ('Ordinary Shares') at a price of 0.5 pence per Ordinary Share. Consequently, a total of 393,514 new Ordinary Shares were issued.

Reserve description and purpose

The following describes the nature and purpose of each reserve within owners' equity:

· Share capital: Amount subscribed for share capital at nominal value.

· Equity reserve: Amount of proceeds on issue of convertible debt relating to the equity component, i.e. option to convert the debt into share capital.

· Share premium: Amounts subscribed for share capital in excess of nominal value less costs of shares associated with share issues.

· Share-based payment reserve: Value of share options granted and calculated with reference to a binomial pricing model. When options lapse or are exercised, amounts are transferred from this account to retained earnings.

· Translation reserve: Exchange movements arising on the retranslation of net assets of operation into the presentation currency.

· Accumulated losses: Cumulative net gains and losses recognised in consolidated income.

Related party transactions

Group companies - transactions

Group companies - balances

Directors

Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the Group. In the opinion of the Board, the Group's key management are the Directors of Ascent Resources plc.

2015

Clive Carver is a director of Darwin Strategic Limited, which is the owner of PrimaryBid through which the Company raised £1.2million in equity during 2015.

2014

Clive Carver is a director of Darwin Strategic Limited, with whom the Company agreed a £500,000 short term facility during 2013. At the beginning of 2014 this had been drawn to £150,000 and a further £150,000 was drawn in February 2014. The balance including accrued interest of £326,807 was repaid in full in September 2014.

Aside from Darwin there were no related party transactions related to Directors other than their remuneration in 2015.

The Loan notes purchased by Len Reece in 2013 were being paid for through salary and are now receivables following his resignation; at the year-end £48,366 had been recovered from salary (2014: £34,429) and the balance of £15,078 (2014: £29,215) is included within other receivables .

Henderson Global Investors

Henderson Global Investors, who are a substantial shareholder in the Company, issued £10m of CLNs to Ascent in 2013 and 2014 and £450,000 of short term working capital funding in 2015.

Events subsequent to the reporting period

In January and March,the Company drew a further £350,000 in total under the Henderson Facility.

On 7 April 2016 the Company raised £500,000 gross (£477,500 net to the Company) via the placing of 35,714,285 new ordinary shares of 0.2p each in the Company at a price of 1.4p per Placing Share with investors using the Primarybid.com platform.

The Company received the several notices to convert CLNs of £1 each which were issued in May 2013 as part of an open offer to all shareholders and the terms of which were amended in February 2015. The Loan Notes, including rolled up interest, are convertible into new ordinary shares of 0.2 pence each in the Company at a rate of 100 new Ordinary Shares per £1 loan note.

· On 7 April 2016: 81,681 convertible notes were converted into 9,199,293 shares

· On 14 April 2016: 542,566 convertible notes were converted into 61,106,308 shares

· On 25 April 2016: 342,140 convertible notes were converted into 38,533,398 shares