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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Pantheon Resources Plc    PANR   GB00B125SX82

PANTHEON RESOURCES PLC

(PANR)
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Pantheon Resources : Proposed Placing and Subscription to raise a minimum of US$6.5 million #

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07/18/2019 | 12:30pm EDT

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA, OR TO BE TRANSMITTTED OR DISTRIBUTED TO, OR SENT BY, ANY NATIONAL OR RESIDENT OR CITIZEN OF ANY SUCH COUNTRIES OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION MAY CONTRAVENE LOCAL SECURITIES LAWS OR REGULATIONS. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (596/2014/EU) ("MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION, AS PERMITTED BY MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

18 July 2019

Pantheon Resources plc

("Pantheon" or the "Company")

Proposed Placing and Subscription to raise a minimum of US$6.5 million

Pantheon Resources plc (AIM:PANR), the AIM-quoted oil and gas exploration company with working interests in several conventional project areas in Tyler and Polk Counties, onshore East Texas, and onshore North Slope of Alaska, announces a proposed Capital Raising to raise a minimum of US$6.5 million (before expenses).

The Company intends to conduct a placing and subscription to raise a minimum of US$6.5 million via the Placing of new Ordinary Shares ("Placing Shares") and a subscription of new Ordinary Shares ("Subscription") each at a price of no less than 18 pence per New Ordinary Share ("Minimum Issue Price")

Jay Cheatham, CEO of Pantheon Resources, said:

"This capital raising comes at an exciting time for our Company after our merger with Great Bear Petroleum in January this year and post the confirmation of the Alkaid light oil (38-40 API deg) discovery in March. This discovery, which we estimate contains 900 million barrels of oil in place, could be transformational for Pantheon. The discovery is in the Brookian sequence, the same sequence where other major discoveries on the North Slope of Alaska have been made. It upgrades not only our exploration portfolio, but provides increased confidence about the potential of our other oil accumulation at Talitha where a similar oil resource has been identified and will be subject to testing in the near future."

"The capital raised, if successful, will allow Pantheon to continue the permitting work, engineering, geological and geophysical work necessary for the proposed drilling operations early next year, subject to successful farmout. It will also support the Data Room for farmout discussions, where Pantheon will be looking for a significant up-front payment as well as a carried work program on future operations. Over $200m has been spent in the project area where Pantheon now retains 75-100% working interest. Hence, a farm-down on a work

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program with some form of cash payment is the near term objective of the company. We have been approached by and have begun discussions with several interested companies, which is a positive indication of the interest in our North Alaska assets. We believe we have a world class resource in an ideal location for commercial development. If we can successfully conclude the farmout, we hope to be producing oil next year."

The Placing is to be conducted by way of an accelerated bookbuild process (the "Bookbuild") which will commence immediately following this Announcement in accordance with the terms and conditions set out in the Appendix to this Announcement.

Arden Partners plc ("Arden") is acting as Nominated Adviser and Sole Broker to Pantheon. Defined terms used in this announcement have the same meaning as set out at the end of this announcement.

The number of Placing Shares and Subscription Shares to be issued will be determined based on the exchange rate between the U.S. dollar and pound sterling on the date on which the Bookbuild is closed. Any reference to gross or net proceeds in this Announcement or any other amount in this Announcement stated in US$ assumes an exchange rate of 1:2478 being the exchange rate between the U.S. dollar and pound sterling on 18 July 2019.

An updated copy of the investor presentation used during meetings with potential investors will be posted to the Company's website at www.pantheonresources.com

Pantheon

020 7484 5361

Jay Cheatham, CEO

Justin Hondris, Director, Finance and Corporate Development

Arden Partners plc (Nominated Adviser and Broker)

0207 614 5950

Paul Shackleton / Dan Gee-Summons - Corporate Finance

Simon Johnson - Corporate Broker

Fraser Marshall - Equity Sales

Blytheweigh (PR)

0207 138 3204

Tim Blythe

Julia Tilley

Jane Lenton

Background to and Reasons for the Capital Raising

Background

Since the acquisition of the Alaskan Assets from Great Bear in January 2019, the Company completed its 2019 Alaska drilling programme, which culminated in the successful flow test of the Alkaid test well, confirming it as a discovery, resulting in the Company announcing on 25 March 2019 that:

  • The primary target, the Brookian zone of interest ("ZOI"), was confirmed as an oil discovery, following a successful flow test where results exceeded expectations.
  • A 6 foot interval (from a c.400 foot gross interval containing c.240 foot of net pay) was perfo- rated and flow tested at 80-100 BOPD light oil (40 degree API).
  • Such flow rates were considered an excellent result by the Company and indicate the potential for materially higher flow rates when wells are drilled in the typical manner for Brookian wells in Alaska - horizontally, stimulated, and with larger intervals perforated.

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  • The Alkaid well was drilled as a vertical test well with the primary objective to obtain sufficient data to make an assessment as to the potential commerciality of the targeted horizons.

On 6 June 2019, following a full analysis of the test results and with additional seismic interpretation and further petro physical analysis, the Company announced that the Alkaid and Phecda reservoirs had been remapped. The result of which was to conclude that both Alkaid and Phecda are part of the same structural accumulation and significantly, Phecda was upgraded from exploration to appraisal status with a resultant reduction in risk. The estimated oil in place ("OIP") of the combined Al- kaid/Phecda accumulation was increased by approximately 50% from 595 million barrels of oil ("Mmbo") to 900 Mmbo and the P50 Technically Recoverable Resource was increased from 59 Mmbo to 90-135 Mmbo, at a primary recovery factor of 10 to 15%. The Company noted that other Brookian reservoirs in Alaska had achieved recovery factors as high as 40% in the best cases, when secondary recovery techniques such as water flooding were used, and that potential therefore exists for Pan- theon's modelled 10 - 15% recovery factor to increase. The analysis also made a number of other important conclusions as follows:

  • The result proved the efficacy of Hi-tech geophysics as a tool for predicting certain reservoir parameters. The Company considered this of great importance given that Hi-tech geophysics had played a pivotal role in other Brookain discoveries on the North Slope of Alaska. This has given the Company increased confidence in the potential for its Talitha Appraisal and Talitha Exploration projects where Hi-tech geophysics has been applied.
  • The Company has estimated that individual P50 horizontal wells have the potential to contain an EUR (estimated ultimate recovery) of 1.5 - 2.5 million barrels of oil (Mmbo) per well, and could achieve a maximum flow rate of over 1,500 barrels of oil per day.
  • Estimated P50 Technically recoverable resource of 180 - 270 mmbo in Alkaid/Phecda and the Talitha projects.
  • Estimated NPV10 per barrel of oil in the ground of $7 - $12 per barrel of oil.

On 24 June 2019, the Company announced that it has entered into a services agreement with eSeis Inc, a pioneering proponent of 'Hi-Tech Geophysics' and 'Seismic Petrophysics' to lead Pantheon's efforts in these areas and to assist with data room management, introductions to potential partners and presenting the technical (geophysical) component in partner discussions. eSeis agreed to undertake the work for a discounted rate (which management estimate to be a saving of $1.5 - $2m to the Com- pany) in exchange for a 1% royalty on all production assets excluding Alkaid/Phecda.

The Company continues to make good progress on the preparation of the data room, which is on target to open this month for the purpose of facilitating farmout negotiations with interested parties with the objective of achieving a farmout in sufficient time to enable the Company to drill up to four wells in the winter/spring 2019/2020, with first production possible in 2020 subject to the timing and terms of the farmout.

In order to approach these negotiations from a position of greater strength, the Company is undertaking the Capital Raising to finance the Company's farmout process, as well as to provide additional funds to continue its geological and geophysical work, to renew certain leases, to finance the construction of a smaller gas processing plant in east Texas and for working capital purposes. Neither the Placing nor the proposed Subscriptions are being underwritten.

Use of proceeds

17464637v.2

The Gross proceeds receivable by the Company pursuant to the Capital Raising are expected to be a minimum of US$ 6.5 million. The Company intends to use the proceeds, together with its existing cash resources and potential future cash flow from production, to fund its forward capital programme:

US$m US$m

Placing

6.5

Estimated Production Revenues

0.6

Total Sources of Funds

7.1

US$m US$m

Lease Renewals

0.8

Gas Plant & East Texas

1.3

Geology & Geophysics

0.9

Alaskan Operations

1.1

G&A

2.4

Transaction Costs

0.5

Total Uses of Funds

7.1

Director participation

The existing Directors have indicated that they intend to participate in the Subscription for an aggregated amount of £54,000. The ultimate allocation to the Directors is at the absolute discretion of the Sole Bookrunner and the Company.

Staff long term share option plan

The board intends to award up to 13.7m share options to management and all staff under a long-term incentive scheme, representing 2.0 per cent of the fully diluted share capital of the Company. The options will be exercisable at a 50 per cent premium to the placing price.

It is intended that the options will be granted by the remuneration committee and approved by the Board in the coming weeks.

Conditions and other information relating to the Capital Raising

The Capital Raising is conditional, inter alia, upon:

  1. the Placing Agreement becoming unconditional in all respects (save for Admission occurring) and not having been terminated in accordance with its terms;
  2. Admission becoming effective by no later than 8.00 a.m. on 25 July 2019 (or such later time and/or date as the Company and Arden may agree (being not later than 8.30 a.m. on 15 Au- gust 2019).

Accordingly, if such conditions are not satisfied or, if applicable, waived, the Capital Raising will not proceed.

The Capital Raising is not underwritten by Arden Partners or any other person.

Settlement and dealings

The New Ordinary Shares will be in registered form and will be capable of being held in either certificated or uncertificated form (i.e. in CREST). Accordingly, following Admission, settlement of transactions in the Ordinary Shares may take place within the CREST system if a Shareholder so wishes. Shareholders who wish to receive and retain share certificates are able to do so.

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The ISIN number of the New Ordinary Shares is GB00B125SX82. The TIDM is PANR.

Risk Factors

Any investment in the Company is subject to a number of risks. Accordingly, prospective investors should carefully consider the risks set out below as well as the risks previously announced and other information contained in this Announcement and any other publicly available information about the Company before making a decision whether to invest in the Company. The risks described below are not the only risks that the Company faces. Additional risks and uncertainties that the Directors are not aware of or that the Directors currently believe are immaterial may also impair the Company's oper- ations. Any of these risks may have a material adverse effect on the Company's business, financial condition, results of operations and prospects. In that case, the price of the Ordinary Shares could decline and investors may lose all or part of their investment. Prospective investors should consider carefully whether an investment in the Company is suitable for them in light of the information in this document and their personal circumstances.

Before making an investment, prospective investors are strongly advised to consult an investment adviser authorised under FSMA who specialises in investments of this kind. A prospective investor should consider carefully whether an investment in the Company is suitable in the light of his or her personal circumstances, the financial resources available to him or her and his or her ability to bear any loss which might result from such investment.

The following factors do not purport to be a complete list or explanation of all the risks involved in investing in the Company. In particular, the Company's performance may be affected by changes in the market and/or economic conditions or in legal, regulatory or tax requirements.

Lease Obligations

Risk: There are outstanding drilling and testing commitments on two blocks of acreage as follows: (1) Drill an exploration well in the Theta prospect area, and (2) drill an additional well on the same block as Alkaid/Phecda. The original deadline for the Theta well was 30 May 2019, however because that deadline was not met the State of Alaska can declare a default, although in such circumstances, the directors believe that a cure period of 1 year would be granted. The deadline for the additional well at Alkaid/Phecda is currently 30 May 2020. In the event that the Alkaid/Phecda well is not drilled before the deadline the State of Alaska can declare a default, although in such circumstances, the directors believe that a cure period of 1 year would be granted. Whilst the directors believe that the granting of a cure period is a likely outcome where there is a default, there can be no certainty that it will be granted and if it is, the terms on which it is granted. It is also believed that other pro-active strategies are available for negotiation with the State of Alaska in this situation.

Working Capital

Risk: the Company's business plan and working capital requirement make certain assumptions as to the rate of production from the assets in East Texas and the price of Oil and Gas. If the assets do not produce at commercially economic rates or the price of Oil and Gas falls significantly the Company may be required to raise more money. The Company's business plan also envisages farming out working interests in its Alaskan projects. The Company is confident the quality of the project should attract a partner and is expected to result in payments towards future drilling and towards historic back costs, however the outcome of these negotiations cannot be guaranteed.

IMPORTANT NOTICE

This announcement is released by Pantheon Resources plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). It is disclosed in accordance with the Group's obligations under Article 17 of MAR.

17464637v.2

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Pantheon Resources plc published this content on 18 July 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 July 2019 16:29:04 UTC

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Financials (GBP)
Sales 2019 0,66 M
EBIT 2019 -
Net income 2019 -
Finance 2019 1,57 M
Yield 2019 -
P/E ratio 2019 -
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EV / Sales2019 132x
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John Bishop Cheatham Chief Executive Officer & Executive Director
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