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Pantheon has announced an equity raise of US$30m at a share price of 25p, strengthening the company’s balance sheet as it goes through the extended flow testing programme for its Dubhe-1 well and progresses wider development planning for its onshore Alaska assets.
Pantheon Resources plc
Pantheon has released an update on its Dubhe-1 appraisal well onshore Alaska, reporting successful drilling of the well’s lateral section, and providing a management resource upgrade based on positive results to date.
Pantheon Resources has increased the scale of the Ahpun 2C recoverable liquids resource estimate to reflect positive logging results from Dubhe-1 well. The company also announced that it has successfully completed drilling a onemile horizontal lateral at the Dubhe-1 well, 30% longer than the upper end of the range initially provided. We conservatively increase our fair value estimate to 57.4p (+12%, from 51.3p), leaving scope for the bulk of the latent value related to today’s news to be unlocked by forthcoming catalysts
Pantheon has announced the positive initial result of its Dubhe-1 appraisal well. This found a thicker than expected reservoir section in the primary Ahpun West (SMD-B topset) formation, alongside oil pay in additional exploration targets. The horizontal flow test in the SMD-B topset is now upcoming.
Pantheon Resources announced the successful drilling of the Dubhe-1 pilot well with the thickness of the main SMD-B target exceeding the pre-drill best estimate by 26% (drilled gross pay: 565 feet; 172 meters) with the petrophysical parameters of the SMD-B encountered by the pilot well consistent with expectations premised on the SMD-B discovery well.
Pantheon has announced it has spudded the Dubhe-1 appraisal well in Alaska, which is expected to provide the data to help support development planning and financing going forward.
While focusing on the main near-term value catalyst, namely, the imminent drilling of the Dubhe-1 well, we take the opportunity to elaborate that under a success-case we believe that progressing Pantheon Resources’ assets to first oil stands to deliver $5 to $ 10 per barrel of value, based on our assessment of the most relevant M&A benchmark.
Pantheon has announced mobilisation of the rig for drilling of its Dubhe-1 appraisal well in Alaska, which is expected to provide the data to help support development planning and financing going forward.
Pantheon has announced a US$16.25m equity raise at 21.15p/share, providing the company with important funds and increased flexibility as it goes into drilling of its Dubhe-1 demonstration well in Alaska in H2 2025 and wider development planning.
We are increasing our fair value estimate for Pantheon Resources to 52.3p from 48.6p to reflect the extraordinarily strong support coming from the US Administration to rapidly progress an Alaskan natural gas pipeline and associated LNG export facility, which stands to be transformationally positive for Pantheon Resources.
Pantheon has announced the result of flow testing of the Lower Sag 3 reservoir level in its Megrez-1 well onshore Alaska – the third flow test from the well. The test was unsuccessful, and the well has now been suspended, with focus switching to the company’s development planning for Ahpun West and the upcoming Dubhe-1 demonstration well.
Pantheon Resources announced today that on test the Lower Sagavanirktok 3 formation produced water with essentially no commercial oil volumes – a result consistent with the prior two production test results from the Megrez-1 well.
Pantheon has announced the result of flow testing of the Lower Prince Creek reservoir level in its Megrez-1 well, onshore Alaska. The company ran an unstimulated test, with flowback largely consisting of water, similar to the recent flow test result of the underlying Topset 1 formation in the same well. Pantheon will now move to flow test the Lower Sag 3 horizon – the well’s most attractive from a porosity and permeability point of view, with a result in the coming weeks. Importantly, there is no direct read across from Megrez to Pantheon’s core Ahpun West, Ahpun Alkaid, and Kodiak assets, where early-stage development continues to be planned.
Alaskan Governor Mike Dunleavy posted on Friday (8 November 2024) an address of President Elect Trump on Facebook in which Trump endorsed an Alaska natural gas pipeline. In our view, Trump’s endorsement of that pipeline is unequivocally positive for Pantheon Resources because we believe Pantheon Resources has assets that are uniquely advantageous – having a very low CO2 content relative to Prudhoe Bay’s natural gas and being located immediately adjacent to the pipeline’s right of way – to provide the natural gas supply into that pipeline. Although not mentioned by name, President Elect Trump is clearly referring to the AGDC pipeline project. We believe that for the AGDC pipeline to be a success, it will require supply of natural gas from Pantheon Resources’ uniquely advantageous assets; by implication, in our view, the progression of the AGDC pipeline will involve a funding solution to develop the assets of Pantheon Resources.
Pantheon Resources anticipates commencing drilling operations at Megrez-1 in early November, with drilling operations expected to take approximately one month to reach total depth. We believe that Megrez-1 is by far the most exciting well ever drilled by Pantheon Resources due to our high confidence that the reservoir of the targeted Ahpun East Topsets (609 million barrels of prospective recoverable best estimate resources) will be of an exceptionally high quality – success would unlock correspondingly highly prolific and economic oil wells with extremely rapid payouts (4-5 months, based on our estimates). Independently of the result at Megrez-1, Pantheon Resources is progressing towards the commercialization of 1.56 billion barrels of discovered liquid recoverable resource (2C; independently certified; 3.28 bn boe inclusive of natural gas) – setting the scene for high-impact operational and financial newsflow into 2025 and beyond.
We are discontinuing coverage of Pantheon Resources. Our last recommendation was Sell, our last target price was 0p.
Pantheon Resources announced that it has elected to make the quarterly principal and interest payment on its convertible bonds through the issuance of 4,471,153 shares priced at $0.364 per share (circa 29p) with the payment amounting to $2.72m.
Pantheon Resources announced yesterday (11 June 2024) that Cawley Gillespie & Associates' Initial 2C Resource Estimate for the Ahpun Topsets amounts to 282 million barrels of recoverable liquids (gross), consisting of 54% oil and 46% natural gas liquids (“NGLs”). Inclusive of 803.5 bcf of natural gas, the total 2C resource estimate for the Ahpun Topsets as estimated by Cawley Gillespie & Associates amounts to 416 million barrels of oil equivalent. We believe that the estimate is of interest in its own right and also because it completes the quantification of the resource estimates for Pantheon Resources's core assets (Table 1). Therefore, we believe, yesterday's announcement sets the scene for Pantheon Resources to elaborate a comprehensive developments strategy. Likewise, with this final piece of the puzzle quantified, we are now positioned to assess and provide, in due course, a view on the comprehensive value of Pantheon Resources.
Pantheon Resources announced it has entered a Gas Sales Precedent Agreement with the Alaska state owned Alaska Gasline Development Corporation (“AGDC”), which is leading the development of the Alaska LNG Project. We are at once surprised by the announcement and the extent to which Pantheon Resources has become a key strategic partner for the State of Alaska. We view the development as a critical and positive achievement for Pantheon Resources.
Pantheon Resources announced that Lee Keeling & Associates (“LKA”) has ascribed the Alkaid Horizon, consisting of the smallest and deepest development candidate of the Ahpun field, 79 mmb of recoverable reserves and resources (5 million barrels of possible reserves and 74 million barrels of contingent resources).
Netherland Sewell & Associates (“NSA”) has increased its best estimate (2C) resource estimate for Pantheon's Kodiak field by 25% to 1,208 million barrels of recoverable liquids.
Pantheon Resources' interim results for the six months ended 31 December 2023 were broadly consistent with expectations. Most importantly, the company reported a post period end cash balance of $8.7m as at 15 March 2024. The company provided an update of notable forthcoming catalysts. Our view is that the macro backdrop for the oil & gas sector will play a preponderant role in the fortunes of the company; from that perspective, we believe that the backdrop for the oil & gas sector is significantly strengthening, which we anticipate will be pivotal and favourable for Pantheon Resources.
Pantheon Resources announced that pursuant to its leasing programme it has been awarded 66,240 acres on the North Slope covering i) substantially all of the anticipated remaining conventional reservoir potential in the Kodiak Field (43,200 acres) and ii) the eastern extent of the Ahpun Field (23,040 acres). Importantly, the newly acquired Kodiak acreage is updip (higher, shallower) relative to the main body of the field and therefore expected to benefit from better reservoir quality (less compression, higher permeability and higher porosity). In the case of the newly acquired Kodiak acreage, the company believes that the ultimate resource classification will be determined following reviews with Netherland, Sewell and Associates (“NSA”) and SLB. In the case of the new Ahpun acreage, the company stated that it believes the resources would be classified as “prospective” until drilling results (the confirmation of producible hydrocarbons) provide confidence to reclassify the resource as “contingent resources” and ultimately as “reserves”.
We reiterate our 0p target price (as we have not yet seen evidence that economic wells can be drilled on Pantheon’s acreage) and Sell rating.
Pantheon Resources announced that it has commenced re-entry operations at the Alkaid-2 well. The company stated that the intention of the re-entry is to gather data relevant to optimise frack engineering – not to maximise production. The re-entry will involve the isolation and fracking of the SMD horizon of the Aphun field (above the previously tested Zone of Interest; on the edge of the SMD reservoir).
We believe that the outlook for Pantheon Resources is significantly improving.
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Announced ITF 12 July: Substrate Artificial Intelligence, an artificial intelligence company based in Spain that creates, buys and scales companies around AI in diverse sectors such as fintech, agritech, energy, human resources, and health, intends to join the Access Segment of the AQSE Growth Market. Admission delayed. Announced ITF 6 July: Blackpoint Biotech plc, a medical cannabinoids company established to fulfil gaps in the medical cannabis market by creating products that provide fast onset of action and accurate dosing, intends to join the Access Segment of the AQSE Growth Market. Admission delayed. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Abingdon Health 11.75p £14.3m (ABDX.L) The lateral flow test contract manufacturer announces a partnership with Morrama Ltd (Morrama), a UK-based certified B-Corp design agency, to accelerate the development of plastic free lateral flow housings. Both Abingdon Health and Morrama will invest in a new company, Eco-Flo Innovations Ltd, to focus on developing sustainable product design solutions for the lateral flow market. Abingdon Health and Morrama intend to make their first plastic-free, compostable cassette (Eco-Flo) available to customers within the next 12 months. The brand-new plastic free cassette will be manufactured in the UK and will utilise renewable plant fibre moulding technology that reduces CO2 emissions by 80% compared to the equivalent single-use plastic. Active Energy Group 5.55p £9.0m (AEG.L) The producer of sustainably-sourced, energy-dense clean carbon products and technologies, announces that it has been voted by the members of the International Biomass Torrefaction and Carbonisation Council (IBTC) to join the IBTC. The IBTC is an organisation promoting the sustainable production of vital torrefied or carbonised technology products on a global scale. The IBTC and Active Energy believe steam explosion processes, torrefied or sustainably sourced carbonised biomass and waste feedstocks will efficiently replace fossil carbon. Agronomics 9.75p £96.8m (ANIC .L) The company focused on the field of cellular agriculture, announces that its portfolio company, SuperMeat The Essence of Meat Ltd (SuperMeat), has met Kosher standards for its chicken cell line. This is the first time that cultivated poultry has been recognised as meeting Kosher, under the stringent Mehadrin standards. Agronomics has invested a total of US$ 12.5m to date and has equity ownership of 7.8% in SuperMeat on a fully diluted basis which, subject to audit, represents 9.3% of the last published Net Asset Value of the Company (30.06.23) including post-balance sheet adjustments. Eleco 78p £64.9m (ELCO.L) The specialist software provider for the built environment, announces that its trading Building Lifecycle branded business Elecosoft has entered into a partnership with the AI planning co-pilot platform, Nodes & Links, to provide enhanced AI capabilities to the customers of its Asta Powerproject solution. The AI capability will provide greater reliability and programme forecasting and improve risk management. Over the next three years, as the partnership and technology advances, generative AI will support and enable project delivery teams to focus on high-value activities like strategy development, acceleration analysis, risk reduction and leadership. Construction company BAM Nuttall is the first Elecosoft customer to take advantage of the partnership. Jaywing 4.75p £4.4m (JWNG.L) The data science and marketing business announces its audited results for the year ended 31 March 2023 (FY23). Revenue was £22.1m (2022: £23.3m), 5.4% down on FY22. The decrease in FY23 revenue was a result of a 9.5% fall in UK revenues, partially offset by a rise of 8.8% in Australia revenues. Adjusted group EBITDA for FY23, was £2.4m (2022: £2.2m), an increase of 9.2%, reflecting margin improvements. The recent restructuring of the UK division and new business wins are expected to assist the UK division's ability to withstand ongoing challenges in the macroeconomic environment. Recent significant new business wins in Australia are expected to provide revenue and profitability growth. Lords Group Trading PLC 61.5p £101.8m (LORD.L) The distributor of building materials in the UK, announces its unaudited results for the six months ended 30 June 2023. H1 2023 group revenues were £222.6m (H1 2022: £214.2m), a 3.9% increase overall or decrease of 4.4% on a like-for-like basis. Adjusted EBITDA was £15.1m (H1 2022: £14.2m restated), a 6.1% increase. Acquisition pipeline remains active, offering potential for further market share gains, enhanced profitability and further diversified revenue streams: The Board remains confident of delivering the strategic targets of £500m revenue by 2024 and improving EBITDA margins to 7.5% in the medium term. Mpac Group 190p £38.9m (MPAC.L) The global packaging and automation solutions Group, announces its unaudited results for the six months to 30 June 2023. Order intake was £62.4m (2022: £32.8m) contributing to a closing order book of £77.5m (31 Dec 2022: £67.2m). Group revenue was £52.8m, up 4% (2022: £50.6m). Statutory profit before tax was £0.2m (2022: loss of £0.4m). Net cash was £2.2m (30 June 2022: £8.6m; 31 December 2022: net borrowings of £4.7m). Current trading is in line with the Board's expectations and full year market guidance remains unchanged. Margins are normalising as anticipated. Mpac is well positioned to deliver on the previously announced H2 weighting to the financial year. RA International 10p £17.4m (RAI.L) The specialist provider of complex and integrated remote site services to organisations globally, announces its unaudited results for the six months ended 30 June 2023. Revenue was US$30.4m (H2 2022: US$33.7m, H1 2022: US$29.2m). Underlying EBITDA was US$0.3m (H2 2022: US$0.6m, H1 2022: nil), in line with market expectations. Cash was US$12.2m on 30 June 2023, increased by US$4.7m from the prior period, resulting from US$6.1m of net cash inflows from operations, offset by US$1.4m of cash outflows from financing activities. As stated in May 2023, the Company expects the business to remain broadly breakeven at the underlying EBITDA level for this financial year. Pantheon Resources 20.17p £183.0m (PANR.L) The oil and gas company with 100% working interests, all on state (not federal) land, in certain projects located adjacent to transportation and pipeline infrastructure on the Alaska North Slope, announces that it has agreed to a private placement of 11,905,370 new ordinary shares of the Company at a price of £0.1878 per share for an aggregate subscription amount of US$2.793m, to IPGL Limited ("IPGL"), an existing supportive long term shareholder. The Company will also pay the full convertible bond repayment of $2.793m due on 13 September 2023, in cash. Accordingly the Private Placement will be cash-neutral and should result in materially similar dilution than would have been the case had the Company settled the bond repayment in shares. Polarean Imaging 11p £23.7m (POLX.L) The commercial-stage medical device company in advanced magnetic resonance imaging (MRI) of the lungs, announces its unaudited results for the six months ended 30 June 2023. Revenue was US$142,384, down 83% year-on-year (1H 2022: US$834,087). Net cash of US$9.9m as of 30 June 2023 is now expected to fund the Company until the end of Q2 2024 based on strategic decisions. Post period, the Company received 510(k) clearance from the FDA for its specialised MRI chest coil to now include Philips 3.0T MRI scanners for the visualisation of Xenon 129 nuclei. The Company also received a final determination from Medicare & Medicaid Services (CMS) that its new C-code is linked to a new technology APC 1551, which corresponds to a payment range of between US$1,201 to US$1,300. This reimbursement code should be helpful to the marketing of XENOVIEW for the evaluation of ventilation. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Hybridan Chefs research@hybridan.com
PANR MPAC D6BE
Pantheon Resources announced the closing of a $22m significantly oversubscribed placing and subscription priced at 17p. The use of proceeds will include: i) funding the flow testing of the Alkaid#2 well from the SMD horizon, ii) funding a competent person report to be prepared by Netherland Sewell and Associates covering the Theta West and Alkaid oil discoveries, iii) funding the preparation of dynamic models and field development models to be prepared by SLB (formerly Schlumberger) and iv) funding completion of the acquisition of 40,000 additional contiguous acres extending over Theta West.
We have reassessed the fair value of Pantheon Resources to reflect the evolving macro backdrop for the company. The main change is that the equity market is all but closed for capital raises across all sectors and geographies, creating some of the most challenging conditions in living memory for non-producing oil & gas companies. As a result, we are taking a more conservative approach to the valuation of Pantheon Resources by including 10%, rather than 20% of the success case values of Pantheon's core assets in our fair value estimate. We remain encouraged broadly by company specific developments, inclusive of the Alkaid #2 results. With the equity markets essentially closed for new placings across all sectors and all geographies there is more onus on a successful farmout, in our opinion. Notwithstanding our bullish expectations for crude oil prices, we are also lowering our long-term Brent oil price assumption to $85/b from $95/b to keep our valuation aligned with oil market dynamics. As a result, we are reducing our fair value estimate for Pantheon Resources to 92p (from 199p; Table 1).
Post update, Core/Risked NAV are tweaked from -4/295p to -3/293p. We maintain our Sell rating and 0p target price.
Understandably, the shares are c.-40% this morning. We think there is a very real prospect of the share price moving to zero in the next 12 months, so reduce our target price from 25p to 0p, and reiterate our Sell rating.
Pantheon Resources announced that Alkaid #2 has produced at an IP30 rate of 505 b/d of liquids consisting of 180 b/d of oil and 325 b/d of condensate and NGLs along with 2,300 mcf/d of gas (after shrinkage). Post clean-out, flow rates were initially marginally higher than pre-clean-out rates. The company believes that despite the sand blockage, the final 1,000ft of the well was connected and already contributing to the main wellbore through fluid communication between the fractures.
In light of Pantheon Resources' most recent operational developments we have provided some background to provide context to appreciate their progress. Where possible, we have sourced direct statements from industry leaders in Alaska in order to provide an unbiased view on certain aspects of Pantheon Resources' exploration and appraisal in that state (see page 2). We have also provided our own thoughts and commentary to provide context for interested parties to get their bearings. We retain our pre-drill fair value estimate of 199p, adjusted modestly to reflect the company's 30 June 2022 year-end balance sheet. Our valuation is premised on a long-term well-head liquids price of $80/b (unchanged; roughly equivalent to a $95/b Brent crude oil price assumption). Our valuation includes 20%, 5%, 20% and 25% of our estimate of the success-case values of, respectively, the Theta West Lower Basin Floor Fan, the Theta West Upper Basin Floor Fan, the Shelf Margin Deltaic-B and Alkaid (unchanged). The basis of our fair value estimate is provided in Table 1 (unchanged volumetric and success-case recoverable oil assumptions).
Earlier today we released a note discussing our view on the disappointing Alkaid-2 well result. In that note we reduced our target price from 50p to 25p (no further change in this note) and reiterated our Sell rating.
We reiterate our Sell recommendation, reducing our TP from 50p to 25p.
Pantheon Resources published the results of a static and dynamic reservoir modelling report undertaken by Schlumberger, one of the most rigorous and well known oil services companies globally. The company stated the report represents the first phase of Schlumberger's analysis and that the report and associated model represent the most comprehensive model completed on evaluating the discovered oil resource and the productive potential of the company's assets.
Pantheon Resources announced that it has acquired 40,000 acres of lease area through a State of Alaska lease sale and that remedial work at Alkaid #2 is ongoing and that the coiled tubing rig has now arrived on site.
The shutting in of the well to switch to permanent production facilities is standard, although the reduced productivity due to sand obstacles will need to be addressed. We believe that patience will simply be required over the coming weeks as the company uses the coiled tubing rig to clear out the well. Critically, these are operational/engineering issues – not geological issues – meaning that future wells can be adapted to reflect learnings. We believe the high oil recovery rate in relation to the 10% recovery factor is encouraging. We can appreciate that the reservoir is a relatively high quality reservoir, which creates its own issues in respect of multi-stage fracture completions.
Delay to Alkaid-2 testing Pantheon today announced that during the clean-up phase of Alkaid-2 well testing, frac sand production was higher than expected and the well is now shut-in. Alkaid-2 is awaiting the delivery of a coiled tubing unit to clean out the well, with results from the flow testing to be announced in the “next several weeks”. Pantheon commented that fluid flow during the clean-out phase has been in the “thousands of barrels per day”, however in our view this is not a strong indicator of reservoir performance, as it includes a large proportion of returning frac fluid (oil cut only 8-12%). We reiterate our Sell and 50p TP. Matt.Cooper@peelhunt.com, Werner.Riding@peelhunt.com
Pantheon Resources announced that it has completed 30 frack stimulations in a 5,000 foot lateral section of the Alkaid #2 well. The company stated it now intends to mobilise a work-over rig and install testing equipment to production test the well. The company stated that, if successful, a production test will occur later in October.
Pantheon Resources announced the receipt of a report by the experts at Baker Hughes AHS that indicated the Theta West 1 well penetrated a “world class petroleum system” with “abundant good quality reservoirs”.
Pantheon Resources announced that it has successfully drilled and cased the horizontal section of the Alkaid #2 well, with the lateral section extending 5,300 feet – just over a mile long (1.6km). The company stated that its logging while drilling tools and gas chromatography of the circulating drilling fluid both indicated that reservoir parameters were significantly better than had been assumed in the estimated pre-drill 76.5m barrel 2C recoverable resource estimate. The drilling rig will now be demobilised and replaced with a completion rig to undertake hydraulic fracture stimulations prior to placing the well on a long-term flow test.
Alkaid-2 horizontal section successfully drilled Pantheon today announced that it has successfully drilled a 5,300ft lateral section in the Alkaid-2 well. Reservoir quality in the lateral section was reported to be good, although no quantification of this was given. The key data to help de-risk the commerciality of Pantheon’s large discovered in place oil volumes is still to come, in the Alkaid-2 flow test initial rate and decline rate. Based on previous guidance of 150bbl/d per 1,000ft of completed reservoir length, this implies a flow rate of c.800bbl/d should be expected. We reiterate our 50p target price and Sell rating. Matt.Cooper@peelhunt.com, Werner.Riding@peelhunt.com
FY’22 was a record year for PIN in terms of NAV growth, cash generation and investment activity. The period saw valuation gains of 24.4%, nearly double the 10-year average. Combined with positive forex (7.2%) and a small buyback benefit, the 31% NAV growth was more than double the 10-year average, and this was achieved net of all fees. PIN saw its largest-ever single company exit, and uplifts on exit averaged 42%. This performance followed outperformance over the previous 34 years through multiple cycles. Despite this, PIN, and the rest of the PE sector, are trading at near-record discounts to NAV.
Pantheon Resources announced that the Alkaid #2 well reached a total depth of 8,950 feet (MD). Most importantly the company indicated that: The well penetrated 272 feet of oil bearing reservoir in the Shelf-Margin Deltaic-B structure – thicker than expected – and the reservoir quality was better than expected, according to the company.
Alkaid-2 vertical section successful; key risks remain Pantheon today announced that the Alkaid-2 vertical section has been successfully drilled, with oil penetrated in all three targeted formations. While this is helpful news for the company, the issue in Pantheon’s Alaskan acreage has not been finding oil, but rather producing it at a commercial rate. In our view the key risks to developing the discovered oil remain, as detailed in our initiation these are: i) operation failure drilling the Alkaid-2 horizontal section, ii) Alkaid-2 flow test initial rate / decline rate worse than expectations, iii) inability to farm out. We reiterate our 50p target price and Sell rating. Matt.Cooper@peelhunt.com, Werner.Riding@peelhunt.com
Pantheon Resources announced that it has commenced drilling operations for the Alkaid#2 well. WHI View: We are most excited about the Alkaid #2 well because its intention, amongst other things, is to i) test the depth of the Alkaid structure, which we believe is likely to increase the known scale of the resource, and ii) to production test a horizontal, multi-stage fractured well drilled into the formation – the first of its kind drilled by Pantheon in Alaska.
We are increasing our fair value estimate for Pantheon Resources to 208p, from under review (previously 184p). The change reflects what we believe was an unambiguously positive winter drilling campaign. This full note details the background analysis to the change in estimate of fair value, which includes a valuation table and an assessment of the forthcoming Alkaid#2 well.
Risk skewed to the downside In this podcast, we discuss our recent initiation on Pantheon, a c.£1bn market cap E&P with acreage onshore Alaska but zero production. Large oil volumes have been discovered, however doubts remain on the reservoir’s ability to flow at economic rates. Alkaid-1 (2019), Talitha-A (2021/22) and Theta West-1 (2022) all flowed at ≤108bbl/d after fracing (1,500bbl/d is envisioned for development). The lack of success farming-down is also cause for concern. The next catalyst is the Alkaid-2 long-term flow test, due in 2H22. We see risk skewed to the downside and so have initiated with a Sell rating and a 50p TP. Matt.Cooper@peelhunt.com, John.Gilbert@peelhunt.com Click below to listen to Matthew Cooper and John Gilbert discuss Pantheon Resources
Risk skewed to the downside Pantheon is a £1.0bn market cap E&P with acreage onshore Alaska but zero production. Large oil volumes have been discovered, however doubts remain on the reservoir’s ability to flow at economic rates. Alkaid-1 (2019), Talitha-A (2021/22) and Theta West-1 (2022) all flowed at ≤108bbl/d after fracing (1,500bbl/d is envisioned for development). The lack of success farming-down is also cause for concern. Despite this, the shares are +335% in the last 12 months. The next catalyst is the Alkaid-2 long-term flow test, due in 2H22. We see risk skewed to the downside so initiate with a Sell rating and a 50p TP. Matt.Cooper@peelhunt.com, Werner.Riding@peelhunt.com 28-page note
Pantheon Resources announced that it has contracted a rig (the Nabors 105AC) to the Alkaid #2 well, which the company indicated is scheduled to spud in July 2022. The company indicated that if the well is successful, Pantheon Resources will commence a long-term production test and truck and sell the produced oil to a nearby North Slope facility.
Pantheon Resources announced that based on management's analysis i) the resource estimate for the Lower Basin Floor Fan at Theta West has increased and ii) an oil in place resource estimate for the Slope Fan System at Talitha has been established.
Market Update: 24 March 2022
Pantheon Resources announced that the Theta West #1 well flowed oil to surface from the Lower Basin Floor Fan structure. Production rates averaged 57 b/d reaching peaks exceeding 100 b/d over a 2.5 day period. The company indicated that the rates met its pre-drill expectations in terms of i) oil presence ii) quality of oil iii) mobility of the oil. In relation to its pre-drill, success-case recoverable oil estimate of 1.2 billion barrels of oil, the company indicated that the result supports, and likely exceeds, expectations.
Pantheon Resources announced that it has suspended testing of the SMD from the Talitha #A. A mechanical or chemical blockage in the well appears to have materialised. Operational difficulties have stemmed from extreme blizzard conditions in Alaska. Importantly, wire line and mud logs indicated that the SMD should have been one of the most productive zones of the well, underlining the company's assessment that the well has had a mechanical issue or chemical blockage.
Pantheon Resources announced that the Slope Fan System produced from the Talitha #A well at a rate of 45 bopd over a three day test. The rate reflects production from two perforated and fracked zones each of a circa five foot interval and each relating to an independent production zone. As expected, the oil was of light, high quality. On the final day of testing the well flowed at a sustained rate of 32 bopd.
Pantheon Resources announced that it has completed drilling operations at the Theta West #1 well having reached a total depth in line with expectations (8,450 feet). The company indicated that it acquired good data via the logging while drilling tool and that it collected drill cuttings for Volatile Analysis (by AHS/Baker Hugues). The company indicated that extremely cold conditions (-55°C with wind chill) prevented open hole wireline logging and coring.
Pantheon Resources announced that the Lower Basin Floor Fan has been flow tested at the Talitha #A well at an average rate of 73 b/d over a three day test period. The oil is of a 35-39° API weight. The well was tested over three intervals (10 feet perforations) that were individually fractured and tested. The company indicated that the well's bottom hole pressure was near to reservoir pressure on the final day of testing.
Based on i) Pantheon Resources' $96m capital raise consisting of a $41m equity raise at 65p and $51m of convertible bonds with a conversion price of 78p and ii) the rising price of crude oil, we are increasing our fair value estimate for Pantheon Resources to 184p from 172p. For reference, we have increased our Brent oil price estimate to $87/b, up from $80/b, which we inflate at 1% per annum starting in 2023. Pantheon Resources' near-term drilling and testing operations, represent, in our opinion, the most exciting operations of their kind globally in 2022 – based on the elephantine scale of its resource base. Focusing only on the core resources that Pantheon Resources will be testing over the course of 2022, the company stands to significantly derisk 1.9 billion barrels of recoverable oil (2C estimates of Pantheon Resources). In our opinion, three major near-term catalysts make the outlook for Pantheon Resources akin to a wild ride on the back of an enormous elephant running up a steep hill – Buckle up!
Pantheon Resources announced that it has commenced drilling the Theta West #1 well, which has now drilled to a depth of 1,874 feet – target depth is circa 9,200 feet. The well is targeting i) the Upper Basin Floor Fan and ii) the Lower Basin floor fan, both of which are referred to as Theta West. Theta West has a combined best estimate success-case recoverable resource of 1.4 billion barrels of oil.
Pantheon Resources announced that it has raised $41m via an oversubscribed equity placing and retail offer priced at 65p/sh. The company also indicated that is issuing $55m of convertible bonds. The funding allows the company to fully execute its 2022 programme to assess 8 targets across three wells – four targets with the re-entry of Talitha #A and two targets each at Theta West and the company's 2H development well, which the company intends to bring on as a producer.
Based on the success of the Talitha #A well result, we are upgrading our fair value estimate for Pantheon Resources to 172p (from under review; and from a pre-drill fair value estimate of 89p). We believe that the Talitha #A result confirmed the presence of multiple oil-bearing conventional oil reservoirs that have success-case potentials of elephantine scale. Our valuation reflects only the potential of Pantheon Resources' prime assets for which resource estimates have been provided; namely, Theta West, the Shelf Margin Deltaic's B horizon (SMD-B) and Alkaid.
Pantheon provided a material corporate update yesterday morning prior to an investor presentation/technical webinar yesterday evening.
Pantheon provided a material corporate update today prior to an investor presentation/technical webinar scheduled for 4pm (BST) today.
Following analysis of the Talitha #A well result Pantheon Resources announced an oil in place estimate for the Shelf Margin Deltaic B sequence of 2.6 billion and a P50 Contingent Resource estimate of 404 million barrels of recoverable oil. We believe the update is materially positive and expect it to further strengthen the positive momentum in the company's share price. The company indicated that farmout discussions have commenced and specified that it will likely seek to raise capital in Q4 2021 in order to drill at least one well in the upcoming winter drilling season. All in all, we see the analysis of Pantheon Resources Talitha #A well indicating that that company is unlocking the potential of one of the most significant conventional oil discoveries of recent decades in North America. We believe that interest in the investment opportunity will increase as the implications of the Talitha #A result sink in and as visibility increases on operational plans for the forthcoming winter period.
Pantheon Resources announced that its best estimate of the oil in place in respect of the Theta West field, which it recently penetrated with the Talitha #A, well is 12.1 billion barrels of oil. The company announced that its best estimate of the success-case recoverable resource potential for the field amounts to 1.41 billion barrels of oil. The oil in place estimate is comprised of 11.0 billion barrels of oil from the Lower Theta West system and 1.10 billion barrels of oil from the Upper Theta West system. The recoverable oil estimate is comprised of 1.20 billion barrels of oil from the Lower Theta West system and 0.21 billion barrels of oil from the Upper Theta West system. The company indicated that it believes with two well penetrations drilled into the field (Pipeline State #1 and Talitha #A) combined with the robust AVO (Amplitude vs. Offset) expression of the structure (corroborated by well logs), the resources could be classified as contingent resources. We keep our fair value estimate under review for an upward revision (from our 88.9p pre-drill fair value estimate). Today's news can be expected to provide a positive price trajectory for the company in our opinion.
Pantheon has announced that it has concluded operations at the Talitha #A Well. Although, the parameters and estimates in respect of the horizons penetrated by the Talitha #A well can be expected to change materially as the well results are interpreted, for now we are comfortable with our 88.9p/sh pre-drill fair value estimate. We believe that positive volumetric analysis of the Talitha #A well in respect of the Basin Floor Fan and the Shelf Margin Deltaic will be determinant for near-term changes to our fair value estimate.
Pantheon Resources indicated that the Talitha #A well is flaring gas from the Kuparuk section as the well cleans up. Key operational data: That gas is being flared is highly encouraging. This is an early indicator that the well's completion operations have been effective. It is also absolutely necessary for these wells to have a high gas content because it is the expansion of gas that will provide energy that will push the oil up the wellbore to the surface. It also critical that the gas has sufficient energy to “clear up” the well, which involves clearing it of relatively heavy drilling and completion fluid. The previously announced over pressure of the Kuparuk formation created drilling challenges because it was unexpected. However, that overpressure will, in our opinion, favour well productivity.
Pantheon Resources has this morning announced interim results to 31 December 2020, at which time it had cash of $29.8M . Most importantly, the company has indicated that the Kuparuk formation being drilled by the Talitha #A well is over-pressured and that light oil has been recovered from the drilling mud.
Cornerstone FS to join AIM, an SME focused, cloud-based provider of international payment, currency risk management and electronic account services focused on removing the complexity of international payments for customers. Raising £2.2m. Mkt Cap £12.3m. Due 18 Mar. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5 million by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April 2021. Parsley Box, the direct to consumer provider of ready meals to the 60+ demographic, recently announced its AIM IPO plans. Parsley Box provides ready meals, which are not required to be stored in a fridge or freezer, have a shelf life of up to six months and are cooked in minutes. The company reported revenue of £24.4m for the financial year ended 31 December 2020 (unaudited). Deal details TBC and admission is expected to occur late March/ early April 2021. ActiveOps, a UK-based leader in Management Process Automation (MPA), providing a SaaS platform to large enterprises with complex and often global back-offices is planning to join AIM. Details TBA. Due late March. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. Deliveroo is considering applying for admission of the Company's Shares to the standard listing segment of the Official List of the FCA and to trading on the main market of the London Stock Exchange. Deliveroo works with over 115,000 best loved restaurants, takeaways and grocery stores globally and provide work to over 100,000 riders across 800 locations in 12 markets, serving 6m customers globally.
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Market Update - 23/03/2021
Pantheon Resources plc UK Oil & Gas Plc
Pantheon Resources announced that it intends to sidetrack the Talitha#A well to redrill 1,200 feet of new hole. The operations are expected to take 15 to 18 days.
Pantheon Resources has this morning announced that the better than expected well-logs from the Kuparuk formation warranted a change in plan for the testing of that formation, namely, from an open hole test to a more rigorous cased hole test (with a 4 ½ inch liner). However, due to equipment failures and technical issues, the formation started to become damaged in its current location and as such it was not possible to set the casing string (4 ½ inch liner). Accordingly, the company has made the decision to drill a new modestly angled sidetrack in the Kuparuk formation. It is estimated that the sidetrack will take 2-3 days to drill, some 650 feet through the Kuparuk formation, which should then allow a better testing operation. As a result of the cold weather in Alaska, the drilling season may be extended into early April.
The Talitha #A well has successfully reached target depth at 10,452 feet. The well has been logged and sidewall cores have been taken. The preliminary analysis is encouraging albeit the company cautions that production testing will be required to prove commerciality. The company indicated its plan is to production test the Shelf Margin Deltaic, Basin Floor Fan (two separate zones) and the Kuparuk zones. We retain our 89p fair value estimate.
Pantheon Resources announced final results for the year ended 30 June 2020. Period end cash amounted to $4.8M. The company raised $30M in November 2020 via an equity placing and announced that its cash balance at 21 January 2021 was $28.8M. The Talitha#A well continues to drill ahead.
Pantheon announced that it is acquiring the 10.8% of the Talitha Unit it does not already own, bringing its interest to 100% in the unit. The vendor, Otto Energy Alaska, will be provided with 14,272,592 shares in Pantheon Resources as consideration. The company continues to drill ahead with the Talitha#A well. The transaction is value accretive for Pantheon and we increase our fair value estimate to 89p from 83p. As a reminder, our fair value estimate includes 25% of our successcase valuations in respect of two of the four targets that the Talitha#A well is intended to evaluate, namely, the Talitha Brookian Shelf Margin Deltaic and the Talitha Kuparuk
Pantheon announced that it is acquiring the 10.8% of the Talitha Unit it does not already own, bringing its interest to 100% in the unit. The vendor, Otto Energy Alaska, will be provided with 14,272,592 shares in Pantheon Resources as consideration. The company continues to drill ahead with the Talitha#A well. The transaction is value accretive for Pantheon and we increase our fair value estimate to 89p from 83p. As a reminder, our fair value estimate includes 25% of our success-case valuations in respect of two of the four targets that the Talitha#A well is intended to evaluate, namely, the Talitha Brookian Shelf Margin Deltaic and the Talitha Kuparuk. Valuation: Please find an updated valuation table.
Pantheon announced that is has acquired the 10.8% of the Talitha Unit it did not already own, bringing its interest to 100% in the unit. The vendor, Otto Energy Alaska, will be provided with 14,272,592 shares in Pantheon Resources as consideration.
We put forward a fair value estimate to 82.8p for Pantheon Resources from “under review for an upward revision” as from 25 November 2020 and from 75p as per our initiation note dated 11 November 2020.
Pantheon announced that is has contracted a rig to drill the Talitha well and that drilling operations are expected to commence in January 2021. The well will target four independent reservoirs, in three separate trapping sequences, which the company estimates has the potential to contain in the region of a billion barrels of recoverable oil, although ongoing work is required to formally delineate the full potential of the targets.
We believe that Pantheon Resources is on the cusp of generating substantial shareholder value by progressing the appraisal and commercialisation of its world-class Alaskan oil & gas discoveries, all of which benefit from 3D seismic and well penetrations. Of its six identified targets in Alaska, Pantheon Resources has established resource estimates for three, which have a combined success-case recoverable resource potential of 720 million barrels of oil. Our current fair value estimate includes the equivalent of 147 million barrels of oil or 20.5% of the defined success-case potential resources. We see scope for future value creation from commercial and geological derisking. The board of Pantheon Resources has high-profile Alaskan pedigree, commercial acumen, substantive technical backgrounds and deep oil & gas experience, which we believe will favour successful value creation for shareholders. All-in, we see a positive multi-year trajectory of value creation for the company. We are initiating on Pantheon Resources and see fair value at 75p/sh.
Alkaid Production Unit licence approved
PANR P3K PTHRF
Talitha Kuparuk resource update
Talitha Shelf Margin Deltaic LKA resource report
Production Unit licence for Talitha progressed
Production Unit licence for Alkaid progressed
Admin cost cuts implemented
Caribbean Investment Holdings. Incorporated in Belize . CIHL primarily operates financial services businesses through its subsidiaries The Belize Bank Limited and Belize Bank International Limited, both located in Belize and international corporate services through Belize Corporate Services Limited. CIHL shares are also traded on the Bermuda Stock Exchange. Lord Ashcroft holds 75%. No capital raise. Due 28 April. £36m . 2019 net profit US$ 10.7m
PANR TON PRSM TAM KMK MERC ROAD EVPL LDRUF 9WN
Pantheon Resources (PANR LN): 483MMbbo at Shelf Margin Deltaic alone | Diversified Gas & Oil (DGOC LN): Five-year extension granted in Ohio | Gulf Keystone Petroleum (GKP LN): FY20 production guidance suspended | Ascent Resources* (AST LN): Strategy to diversify into Caribbean and Hispanic America
PANR DEC GKP AST
Talitha resource upgrade; company presentation
H1 FY 2020 results
Full year results to June 2019
Update on new Alaska licenses
Alkaid resource report
FY 2019 results delayed, shares suspended
New Alaska lease acquisitions
Pantheon has released an update on its Alaska farm out process. The shares have exhibited weakness during recent weeks, during a period in which we have had the positive news of a potential upgrade to Talitha target resources and the acquisition of Halliburton’s 25% in the Alkaid/Phecda discovery (helping simplify Pantheon’s farm out process), and in which the company has continued to engage with potential partners for its key Alaska farm out. Today’s update reports that this process remains busy, with interest from oil and gas and also nonindustry companies. We believe that this price move creates a buying opportunity, with potential for forward catalysts from a successful farm out and subsequent up to four well drilling programme.
Pantheon has announced a resource upgrade on its Alkaid discovery in Alaska. This was recently successfully flow tested at rates of 80-100bbl/d from a 6ft perforated interval (of a total of 240ft of net pay). Petrophysical analysis from the well test, combined with a full integration of 3D seismic data, has led the company to re-map both Alkaid and the next door Phecda prospect. Pantheon is now of the view that Phecda is part of the same structural accumulation as Alkaid, upgrading this. This analysis has led the company to an increase in combined gross OIP in Alkaid/Phecda from 595mmbbl to 900mmbbl, and the expected recovery factor to be increased from 10% to a range of 10-15%. This increases combined gross P50 resources in Alkaid/Phecda from 59mmbbl to a range of 90-135mmbbl – a substantial increase.
Pantheon Resources (PANR): Resource Upgrade | Cluff Natural Resources (CLNR): UK Results of placing and subscription
Pantheon Resources plc Deltic Energy Plc
Pantheon is an E&P company with assets onshore Alaska and East Texas. The company recently began a material work programme, with exploration and production drilling and separate flow testing over the coming months. This provides regular news flow while controlling risk, with room to run on success and elsewhere in the portfolio. We initiate with a Buy and 70p target.
Pantheon reported interim results a little weaker than we forecast but, crucially, cash and net cash at 31 December was £6.9m together with a US$0.7m drilling credit and close to our £8.2m forecast. With current net cash of £4.7m, and production likely to start mid-year, Pantheon believes it can fund a new three well programme from operating cash flow and existing resources - our forecasts support that. Test results on the VOBM#4 and VOBM#2H well are still pending, but should be due shortly. Despite the slow progress on testing, there is nothing to suggest that the resource story has been compromised, and decent test results would also help to calm nerves. We have pushed our modelled full drilling campaign out by a year with a knock on impact on forecasts, although we expect strong multiple support to build from next year. We remain buyers of Pantheon with a 170p/share Target Price and expect that a successful centre basin test would justify a very materially higher value.
Pantheon announced results for the long awaited VOBM#2 development well and VOS#1 frack job and both have turned out negative to our hopes. However, despite the disappointment, there is actually little in the results reported today to affect the fundamental investment thesis, although investor risk perceptions could clearly increase. Future wells continue to offer the potential to demonstrate at least P50 EUR’s, which is what we are modelling, and the centre basin test well in Tyler County, due later this year, continues to hold the potential to demonstrate a much larger resource base in Tyler County than has currently been disclosed. Consequently, we leave our target price unchanged at 170p and remain buyers of the stock.
Pantheon raised US$30m in March mainly to pursue its drilling programme targeting the Eagle Ford conventional sandstone play in Polk and Tyler Counties, East Texas. The VOBM#2H well was spudded in Polk County in May with results due shortly. Results on the VOS#1 frack job are now expected in August. In the event of success, we expect the shares to move sharply higher in anticipation of higher EURs and growing optimism that the potential gross resource base will prove significantly larger than the 258mmboe disclosed by Pantheon to date.
Pantheon recently raised US$30m to pursue its drilling programme targeting the Eagle Ford conventional sandstone play in Polk and Tyler Counties, East Texas, as well as for the acquisition of further acreage in the play. The raise saw strong demand and removes the near term funding requirement we previously highlighted. It also clears the way for the VOS#1 frack job, which management is optimistic should at least triple the initial test rate of 750boed. If it does so, we expect the shares to move sharply higher in anticipation of higher EURs and growing optimism that the potential gross resource base will prove significantly larger than the 258mmboe disclosed by Pantheon to date, in respect of this play.
Pantheon has raised US$30m to pursue its drilling programme targeting the Eagle Ford conventional sandstone play in Polk and Tyler Counties, East Texas, as well as for the acquisition of further acreage in the play. The raise saw strong demand and removes the near term funding requirement we previously highlighted. It also clears the way for the VOS#1 frack job, which management is optimistic should at least triple the initial test rate of 750boed. If it does so, we expect the shares to move sharply higher in anticipation of higher EURs and growing optimism that the potential gross resource base will prove significantly larger than the 258mmboe disclosed by Pantheon to date, in respect of this play. We amend our forecasts for the dilution but leave our Target Price unchanged at 170p per share. We are adding Pantheon to Panmure Gordon’s Conviction List and reiterate our Buy recommendation.
Pantheon has delivered a stellar performance since September but we believe there is more to come. The VOS#1 well result is further proof of Pantheon’s ability to find the conventional Eagle Ford sandstone reservoir in East Texas, based on a proprietary geological model. Well economics are exceptional with NPV of US$21m on our base case and the JV has identified 167 potential drilling locations. We expect Pantheon to require funding potentially toward the top end of a US$10-25m range, most likely via equity. We set a Target Price of 170p, which is our estimate of what an acquirer could be willing to offer today, and we initiate with a Buy recommendation.
Fifteen or so years ago the oil price was on its back (around $10 a barrel) and Tech Boom (v.1) was in full swing. I recall trying to sell a BP call warrant, at its intrinsic value. “No Thanks...” said a renowned guru investor - who was probably the equivalent of Neil Woodford before Neil Woodford was Neil Woodford - “...but what have you got Nokia 3 month ATM calls?” So I sold him some of those at 75% implied vol.
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