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Ascent Resources ups interest in North Sea oil project to 54%

Europe focused oil and gas developer Ascent Resources (LON:AST) has boosted its interest in the M10/11 block in the southern North Sea off the Netherlands' coast to 54% after acquiring the 27% interest owned by McLaren Resources.

McLaren will receive a 3% net profit interest from Ascent Resources Netherlands on the 27% interest transferred and a one-off payment of C$125,000 if the drilling license is extended.

The M11-1 discovery well at the M10/11 project was drilled by Nederlandse Aardolie Maatschappij in 1985. Ascent said that the area benefited from good quality 3-D seismic coverage and in addition to the discovery in the Rotligendes sandstones, a number of other prospects and leads had been identified.

Ascent and the other project partners are considering the drilling of an appraisal well for the Terschelling Noord discovery, which lies partly within the M10/11 license area and partly in the area to the south.

Other partners in the project are EBN with 40% and GTO with 6%.

Ascent reaffirmed its focus on the Petisovci-Lovaszi project areas in Slovenia for 2010/11.

“While our attention is focused on the Petisovci-Lovaszi project areas for 2010/11, we continue to position our whole portfolio to maximise potential value for shareholders.  By taking an increased stake in the North Sea block, with no initial outlay, we are able to direct the decision on the drilling of appraisal wells so that we can act in the best interest for Ascent,” said managing girector of Ascent Resources Jeremy Eng.

Broker Astaire Securities commented in its Morning Report that the acquisition cost Ascent nothing, but at the same time increased its flexibility.

“Only a modest one-off payment of $125,000 CDN is due once the licence extension is granted with all other payment being a profit share. There is no downside to Ascent in this deal,” said Astaire.

The broker maintained its risked NAV (net asset value) at 21 pence per share.

The 300 bcf (billion cubic feet) Petisovci project is contiguous to the Ascent’s Lovaszi project in Hungary. Both projects will be key to the company’s 2010 work programme with four wells targeted based on the results of the processing of 3D seismic data, which exceeded expectations. The data extended the project area and mapped over 12 new drilling targets with a total estimated potential of over 75 bcf of recoverable gas.

Earlier this month, the company increased its stake in the Petisovci project after acquiring Kulczyk Oil Ventures Inc's 30% stake in the Dolina shallow oil field and 10.5% stake in the Globoki deep gas field. Ascent now has a 75% interest in the shallow oil and gas reservoirs and a 26.25% interest in the deeper tight gas reservoirs in the original project area.

Broker Fox-Davies Capital (FD Capital) has estimated the increase in net unrisked recoverable resources resulting from the deal at 2.4 mmbbls (million barrels) of oil and 15.75 bcf (billion cubic feet) of gas, equating this to an aggregate increase of some 1.4 mmboe (million barrels of oil equivalent) of net risked recoverable resources.