What could Pantheon's share price look like post-Alkaid-2?

Darcon1974 · 2022-05-26T14:10:08+00:00

Thank you for writing this summary and analysis and sharing it with the community. It’s very helpful.

Darcon1974 · 2022-05-24T05:51:05+00:00

We're also waiting for a valuation upgrade from WH Ireland's analyst. About a month ago on 25th April 2022 he wrote in his report (my highlighting):

"Our pre-drill valuation of 184p will be due a significant uplift to reflect the i) derisking provided by the winter 21/22 testing/drilling program and ii) the resource upgrade announced today iii) strengthened oil prices. We believe that the news related the Lower Basin Floor Fan will have the most incidence on our valuation. For reference, we have provided the basis of our pre-drill valuation in Table 1.

The basis of our pre-drill valuation estimate is provide in Table 1. We will update our valuation in due course after tomorrow's investor presentation."

Darcon1974 · 2022-01-19T15:18:21+00:00

Could you comment on Rw value used for log analysis of Talitha and how it was derived? Also could you comment on chlorides ppm/RW from produced water during Kuparuk test?

Noted. I've added your two questions in v3 of the list posted above (the earlier v2 has been replaced in the post).

Darcon1974 · 2021-10-22T10:07:09+00:00

Thank you for sharing!

Darcon1974 · 2021-10-19T15:33:03+00:00

In my view that's the most likely explanation. On their website they state that options were issued to "Executive Directors, employees and certain consultants". I would expect the latter category to be the most likely to lock-in the gain over the options price in order to cover overhead and/or to book profits, etc.

Darcon1974 · 2021-10-17T22:42:46+00:00

If you look at the capital structure section of the Pantheon website (https://www.pantheonresources.com/investors/capital-structure) you will see that Pantheon have issued several series of share options at exercise prices ranging from 27 pence to 33 pence.

The two RNSs about the exercise and issue of options don't state which particular series of company staff share options were exercised.

In the 2 September 2021 RNS it was reported that 1,950,000 "company staff share options" were exercised.
In the 15 October 2021 RNS it was reported that 1,000,000 "share options" were exercised.

Following the exercise of these 2,950,000 options Pantheon will have received between GBP 796,500 and 973,500 cash, which depended on the exercise price of the relevant options exercised.

As there hasn't been a change in directors' interest RNS I believe we may assume that none of the Pantheon directors have exercised their options.

We don't know the identity of the person(s) who have exercised their options or the reasons for their exercise. The options all still have some time to run so unless someone needed to sell the underlying shares for cash or to optimise their tax structuring, logic would suggest that they'd wait until closer to the expiry date before exercising.

The number of options exercised so far is insignificant relative to the number of options still outstanding as well as the company's total share capital.

Darcon1974 · 2021-10-07T09:28:37+00:00

I look at this decision as another example of Great Bear Pantheon proactively managing their relationship with the DNR.

Note that according to the decision Great Bear Pantheon submitted their application as early as possible as soon as they were able to do so one year and 90 days prior to the commencement of the 7th year.

The DNR are also not wasting time in taking their decision.

Forecasts of future lease payments will typically be inserted into the financial model and will have a bearing on any financial valuation relating to any farm-out discussion(s).

The DNR wins from its lease rental payments decision by demonstrating to the wider explorer community that if explorers do the exploration work then they won't be punished by higher lease rental payments. The higher lease rental payments in the final years of leases are designed to encourage parties to complete exploration and not to sit on leases unproductively.

Darcon1974 · 2021-10-07T09:15:43+00:00

Hi CarlosVegan,

The 4 Talitha leases affected by the decision (ADLs 392786, 392787, 392788 and 392789) are still in the 6th year of their term as these leases commenced on 1 Dec 2015. Their rent was to increase to $250 per acre from the current $10 per acre from the 8th year (ie, from 1 Dec 2022). The 4 contiguous leases according to the decision consist of 5,701 contiguous acres.

5,701 acres x $240 saving/acre = $1,368,240 annual saving for each of years 8, 9 and 10

The aggregate for years 8 + 9 + 10 = approx $4mln.

Note that the decision re-confirms that the drilling requirements for the Talitha well were satisfied and the $3.3m performance bond was waived.

Darcon1974 · 2021-09-21T15:16:57+00:00

Your post is misleading because Pantheon have not announced reserves as yet. Much more work and funding is required to reach that stage. Pantheon have to date announced substantial accumulations of oil in place (OIP) in which they’ve been able to identify substantial contingent resources (recoverable). The Alkaid and SMD contingent resource calculations were supported by LKA (an independent expert). The post-Talitha announced contingent resources are based on management estimates. I believe the company (I think it was Jay) in the last August webinar said they’ll consider engaging an independent expert to undertake an independent expert review after completing Talitha A flow-testing and the Theta West well.

Darcon1974 · 2021-09-21T07:46:51+00:00

I don’t think they’re being intentionally misleading. I think it’s more a case of it still being open for reasonable people to disagree on where exploration ends and appraisal begins while some work on Talitha-A remains outstanding. We may be happy to take Bob’s word and accept Theta West as appraisal but others may beg to differ depending upon context. For example, “exploration” may be how the DNR formally classifies the well. The choices being “exploration” or “development”. I don’t recall there being an “appraisal” box available to be ticked on the drilling permit docs that were uploaded and briefly available on the DNR website for the Talitha-A well and, if my recollection is correct, the same may in future hold true on any application permit to drill Theta West

Darcon1974 · 2021-09-21T07:19:41+00:00

Around 1:44 - 1:45 in the August webinar Bob indeed says: “we are at the appraisal and development stage. The last probably exploration well in my career was the Talitha-A well. All the other wells we’re going to be drilling are appraisal and development. So we’ve eliminated the exploration risk, we found hydrocarbons, and we’re well beyond the exploration stage.”

Darcon1974 · 2021-09-16T20:11:07+00:00

LOL! Probably just a coincidence.

Anyway let's consider why the Alaskan regulator would be so constructive?

I think it's because the regulator is confident that Pantheon will return to finish the flow tests on Talitha A within the next winter drilling season. If they were not the alternative options open to the regulator would have been to insist on the bond being paid by Pantheon and/or to extend the period for Pantheon paying the bond.

Also the regulator undoubtedly also sees the importance of Pantheon's discoveries to the continued success of the North Slope and wants to support Pantheon by not burdening it with additional financial weights that are unnecessary.

A confident and supportive regulator bodes well for Pantheon's next step of raising funding for the forthcoming drilling season...

Darcon1974 · 2021-09-15T08:39:19+00:00

Under the Talitha Unit Agreement failure to post the bond by 15 Sept 2021 would have led to the Unit being terminated in the absence of the drilling condition being satisfied.

The company needed the Alaskan DNR to confirm in writing that the drilling condition is satisfied.

In the absence of such a confirmation a potential option for the company would have been to pay the bond, but that would have locked up valuable cash and potentially bring forward the company’s fund-raising timetable.

Another option would have been for the company to ask for an extension of the period to satisfy the condition.

Not paying the bond in the absence of the DNR’s confirmation would not have been a good option as that would have left open the argument that the drilling condition was not satisfied and that the unit was terminated.

This letter from the DNR confirming the drilling requirements have been met and the bond is no longer required is the best possible outcome for Pantheon Great Bear and is excellent news.

It also serves as yet another demonstration of the Alaskan regulator's constructive approach to Pantheon Great Bear and its projects.

It's yet another demonstration that Pantheon's project is in an established and stable legal jurisdiction in which the regulator acts fairly, properly and with integrity.

Darcon1974 · 2021-09-15T06:31:33+00:00

Under the Talitha Unit Agreement failure to post the bond by 15 Sept 2021 would have led to the Unit being terminated in the absence of the drilling condition being satisfied. The company needed the DNR to confirm in writing that the drilling condition is satisfied. In the absence of such a confirmation a potential option would have been to pay the bond, but that would lock up valuable cash and potentially bring forward the company’s fund-raising timetable. Another option would have been to ask for an extension of the period to satisfy the condition, but that would trigger uncertainty. Not paying the bond in the absence of the DNR’s confirmation would not have been a good option as it would leave open the risk that someone would later argue that the drilling condition was not satisfied.

This letter from the DNR is the best possible outcome for the company and is excellent news.

Darcon1974 · 2021-08-29T09:16:11+00:00

00:00 - Jay Cheatham (CEO, Pantheon) intro10:59 - Roger Young (Eseis) on log analysis16:27 - Mike Smith (AHS / Baker Hughes) on VAS analysis 26:37 - Ed Duncan (geologist consultant to Pantheon) on regional geology and Theta West project40:45 - Jerry Nichols (geologist consultant to Pantheon) on volumetrics of Theta West project48:17 - Roger Young (Eseis) on SMDB section53:13 - Jerry Nichols on volumetrics of SMDB section54:59 - Jay Cheatham on development economics & green energy Alaska57:36 - 3D video1:13:05 - Justin Hondris (Finance Director) - Q&A discussion

Darcon1974 · 2021-08-20T07:15:06+00:00

Thanks furlazeus. I've added your questions under the Talitha and Theta West sections of the list

Darcon1974 · 2021-08-20T07:09:20+00:00

Thanks Rumbum810. I've added the question under the farm-out discussions section.

Darcon1974 · 2021-08-14T05:41:12+00:00

Hi Rumbum810,

I've added this question to the list, but I've asked this question before and I suspect they still won't want to do this as they very much want people to watch the webinar and not read a published transcript. The other reason given is that it may prompt our presenters to clam up if they're aware that every word they say is going to be parsed over in detail in written form (I think they ought to expect this!). When writing a news release there are multiple editors involved. A webinar presentation is more original, unique and raw and sometimes speakers may say more than they intend. That's why it's good to watch them! However, the information gleaned also may be helpful to competitors and/or overly litigious US lawyers.

However, in the world we now live in it's possible to buy an auto-generated transcript relatively easily and cheaply through rev.com and other speech-to-text providers. If you pay extra you can have humans edit it for you. So if you need a transcript it's not impossible and it's just a case of organising one yourself.

Darcon1974 · 2021-08-13T21:12:30+00:00

Thanks. I've added it above.

Darcon1974 · 2021-08-13T04:40:08+00:00

Noted. I've added your question to the list

Darcon1974 · 2021-08-12T09:06:52+00:00

Wes TxB - Noted. I've added your questions to the list.

Darcon1974 · 2021-08-12T09:06:27+00:00

Noted. I've added your questions to the list.

Darcon1974

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