Pantheon Resources Share Discussion Threads

[chris0805] 28/10/2021 10:46

* Thanks....

[chris0805] 28/10/2021 10:46

Thss asks WesTx Out of the box thinking is always wise! :-) GLA

[westx] 28/10/2021 10:27

Just a thought. An out of the box farm out pairing could possibly be larger shale companies enticed by the known thickness of oil column and source rock with turbidite sands. Reminiscent of Bakken play fracs with embedded sands which greatly improved those reserves. Don't know how state would feel about long lateral horizontals and big fracs but our acreage checks many of the boxes.

[sirmark] 28/10/2021 10:16

Currently away and on the talks of electric cars .... New downside never know before by myself "Vampire Miles" so I'm away for a week (very nice by the way) and the Tesla dropped off with the airport meet and greet with 124 miles ... plenty hmmmmm not so, Vampire Miles per day of 12 doesn't leave much for a week holiday and if you want a two week holiday you'll need nearly a full charge just so you have something barely to get you home... so whilst electric is good there needs to be soooooo much more infrastructure and petrol will be used for a lot longer than many are planning imo ... real world is a lot more different to the ideologies pitched.

[sirmark] 28/10/2021 10:07

ConocoPhillips has always been my theory partner and next year new owner ! £5 I'm out and I will wish ConocoPhillips good luck for the future with the PANR portfolio of targets. Not long now!

[gorgeousgeorge01] 28/10/2021 10:01

Well, an interesting debate. Conoco strikes me as being a more traditional oil business. An obvious suitor?

If Shell is actually broken up within the next few years, perhaps a major partner might emerge after all? I'm coming around to the idea. I've no interest in solar panels or car chargers whatsoever.

A traditional oil business, developing and exploiting fields in Alaska and elsewhere, literally oozing cash, would suit me down to the ground. Does anyone know of one? Perhaps Pantheon will become the keystone of such an initiative? Or 88e?

[sirmark] 28/10/2021 10:00

About to turn blue abs with new due in just a couple of weeks max imo we'll hopefully be breaking the pound fully fund for THREE drills one of which must surely be the most impactful well to be drilled in 2022

[spangle93] 28/10/2021 09:00

Scot - fair points throughout

I should have been clearer in my post yesterday that I don't doubt that farmout negotiations are being conducted, and that if negotiations on one should advance to fruition this year, it would have many advantages to shareholders, as advocated by yoghurt. For instance, as I mentioned yesterday, I genuinely believe the validation effect from having a co-venturer, even if it's a non-active investment company, would positively affect the share price.

Indeed, PANR is pretty fortunate that either approach would be beneficial, for different reasons. They can negotiate from a position of strength.

You draw attention to the phrase "Yes, farm out negotiations are under way and some of them are quite advanced, I must say." I can quite believe the plural, because the actual scope of the farmout under discussion surely varies with the appetite, financial resources, and operational skills (or lack of) of each potential co-venturer. (I'm not being derogatory - a farminee doesn't have to be an oil company)

Prior to the winter 2020-21 campaign the farm-out scope options could reasonably be broken down into 1. Alkaid, 2. Talitha, or 3. all. Following the revised mapping using Talitha results, this is no longer clear. The well logging and geobody analysis indicates the same formation (SMD-B) is found in Talitha, Pipeline, Alkaid and Merak, Theta West (time for a better name like "Goliath", perhaps?) is divided into Upper and Lower, and the lower extends through Talitha to Pipeline-1, and then there's the Kuparuk, which is more limited in areal extent, and is a different system to the reservoirs overlying the HRZ.

So it's not as clear cut as "an Alkaid structure", "a Talitha structure", "a Theta West structure", .... each of which could have a line drawn round it. The presentation showed instead a series of stacked geobodies, undefined areally by common structures, all part of a "supertrap". In hindsight, with the findings from Talitha, it's probably helpful that a farmout wasn't completed last winter!

I've no doubt that they have the competence to deliver a solution, and that drilling will take place this winter.


PS, North Slope Alaska is a pretty bleak place, even in July. I'm not sure the entire Return clan would appreciate the destination.

[total return] 27/10/2021 22:03

Thank you Mr Scot for focusing again on the fundamentals; I have been otherwise engaged during this half-term and am shocked to see the thread descend to a possible fisticuffs event. However I am the first to concede that we are all human and LT holders (and perhaps more recent investors with significant personal exposure)have understandably been getting a bit jumpy as we all await farm-out (most likely IMHO), or funding, news.

Can I suggest that we all lift our heads up from our screens and look to the future when REAL value has hopefully been delivered for shareholders, and at that point perhaps a few of us might even celebrate with a flight to Alaska and a drive along the Dalton Highway and maybe even a site visit? I would relish that. (I would hope to be accompanied by Mrs Return and the wee Returns who all have a really significant part of their financial wealth tied up in this stock.)

[scot126] 27/10/2021 21:41

Ha! It seems there are a fair few of us who wish to go it alone for one more winter season. That doesn't exactly surprise me. Many of us have been on a long journey and extracting *maximum* value for the long duration and stress of investing in PANR is a fully justifiable desire!

The above admitted, I was equally unsurprised to hear the following from Jay during the recent Proactive interview:

Q. "You have been open about your plans this winter for drilling and [the] need for funding. Are farm out negotiations under way?

A. "Yes, farm out negotiations are under way and some of them are quite advanced, I must say."

I think we should all be mindful that for the GB "side" of the business, the next 18-24 months is likely to see the culmination of a project which initially began in 2010. We all know they've been through the mill and I, for one, can understand their collective desire to ensure value realisation doesn't stretch on for another extended period.

So, too, for Jay and Phillip Gobe. Many of us who were around during the Texas days will recall Jay signalling *that* project may be his last hurrah, on the presumption of a success case of course. I 100% believe Jay's intention is to leave the O&G stage having delivered a win for his loyal backers.

Also, please have a read of the final answer he gave during the Proactive interview.

"Look we have a team, many of us are long in the tooth and have been at this for 40 or 50 years. This really is going to be the last endeavour many of us undertake and I believe it will be the best that I've seen in my career."

I submit that signing a farm out deal would possibly (probably?) offer the likes of Jay, Bob and Phillip the lower risk path towards creating meaningful value for themselves and their backers certainly within the next 12 months, and maybe even 18-24 months?

I was not appeasing yoghurt73 in my response to him earlier today. I *can* see his point about the attraction of a deep pocketed partner and perhaps one who had an acknowledged reputation and skillset within the sector. It doesn't have to be a major at this stage. Signing a deal with such a partner would, as yoghurt73 has laid out, almost inevitably lead to a warmer reception by the equity markets and a likely (?) easier/quicker path to advancing up the value add curve than going it alone.

It would be entirely reasonable to believe the answers Jay gave during the Proactive interview were quite deliberately crafted. Let's suppose there are multiple external parties still negotiating with PANR. Letting each of those potential partners know that "some of them [the negotiations] are quite advanced, I must say" serves as a nice wee dig in the ribs as the negotiations presumably enter the last lap of the race.

A couple of posters (sorry, I do not recall the names) have advanced the theory that if farm out negotiations weren't *genuinely* quite advanced then the BoD would have hit the Option B button before now. I tend to agree with that suggestion for a variety of reasons, not least of which is the inevitable attention COP26 will bring to the O&G sector.

Seems like I'm sitting on the fence? I guess it might look that way. I repeat again, I do *not* have the full facts in front of me and I am adamant the directors have earned my trust to negotiate on my behalf. Today's debate has been fascinating (no, not the boxing/kick-boxing/MMA nonsense) and, for the record, I still believe a farm out is the more likely of funding options to secure the anticipated and incredibly exciting winter drilling and testing programme. Good stuff.

PS Spangle93, yoghurt73 and responsible investor - all great posts with the authors each making cogent and fair points. In the final analysis, it sounds like each of us is going to continue being a shareholder and to read whatever deal the Board presents to us with keen interest. Good stuff once again and remember, we shareholders are in a far more comfortable position than this time last year!

[responsible investor] 27/10/2021 21:35

Each of Exxon, Total, Shell, BP and Chevron have reduced their reserves over each of the past three years and only Total and Chevron have shown any growth in production during this time. IMHO there is zero chance of any of these companies participating in a farm in. Perhaps the best and most logical company to participate is Hilcorp but they recently paid $5.6 billion for BP’s interests in Alaska - quite a mouthful for Hilcorp to digest even though they would presumably love to see more crude flowing through TAPS of which they own 49% (with Conoco owning 29%).

The question is what percentage does PANR BoD concede to potential partner(s) and of which assets to raise the finance for the winter drilling program - which requires about $50 million? This means giving up about 15 million brls (at just $3.00 per recoverable brl) of PANR’s total estimated recoverable of 1.9 billion brls i.e. a tiny proportion < 0.08% of the total or about 3% of Alkaid including SMD-B. And of course the partner(s) will share in the extra value created if the RF and the price per brl are, as is expected will be the case, higher than these values.

How much dilution are shareholders going to concede? There is a very big variation in the dilution involved when agreeing the %ages and over which assets.

Let’s hope not too much dilution but the BoD knows all this.

[yoghurt73] 27/10/2021 21:24

Does an argument also exists that an earlier FO and total slam dunk of TW might also play to our favour? Admittedly some might find a FO pre drill with hefty loss of either control, operatorship or sizeable loss of ownership stake hard to take at this point when we might be 1 drill away from a feeding frenzy but I wonder if...say this one drill confirms a huge discovery, unitisation of TW and categorised as such that by having a partner complete this well with us adds more value afterwards?
We have had many comments ref the $3.10 per bbl in the ground paid for less favourably located but better proved up resource on the ANS, but that was always based on a number at the lower end of recoverable because the maths was biased to the conservative side. In the audio and the transcribed exchanges of that deal it is clear (although the numbers are from memory and may not be exact in my post here) but that the 3.10 was based on a 400million recoverable when the real number intimated was 800 to 1.2B and beyond (20 mile step out). 400Mill was P90? So the 3.10 could be skewed greatly by Pmean and P10?
If a FO takes place pre drill and we go gangbusters at TW do we stand more chance of Pmean numbers agreed with our partner and true market belief (with share price reflection of a higher number but lower ownership percentage) of 'we have got what we say we've got'.

I'm not accounting here for market appreciation of VAS or short term flow test for TW that might mute the above & not require 'partner appreciation' for the wider market to accept this is a game changer on the ANS and then solo success with 100% ownership would be hugely more valuable...But that is a large part of my point, a short term flow test and VAS at TW is assumed to be all that is needed - If (and I don't doubt it isn't) VAS is so highly regarded and reliable why Talitha VAS isn't good enough bait for entry now and TW bait will be any different. The only long term production test in the calendar being Alkaid.

[rvsy2] 27/10/2021 20:08

Spangle93/Yoghurt73

Your comments and interchange have made enjoyable and interestig reading.

I also would prefer a self funded winter programme and doubt that an oil major would be what the board are seeking at this time. As pointed out by others an oil major would expect a much greater percentage of the equity and would probably insist on operational control, which would give them the right to dictate the speed with which the assets are developed ( oil majors may have other fish to fry). However after a successful 2021/22 winter programme an oil major would view Pantheon in a very different light.

[chris0805] 27/10/2021 19:02

Great post Spangle93.... many of us I'm sure will share the same sentiment...

[spangle93] 27/10/2021 17:32

Yoghurt, no probs. I also accept that the more people (they are all classed as "experts" aren't they ;-) reviewing the pre-drill plans and looking for problems the better.

Personally, like scot and several others have said, my preference would be that they would raise money and self fund the 2021-22 program, maintaining 100% interest and diluting up to ca.10%. I also think that from an optics perspective, if they announced in a webinar that "our number 1 plan is to raise equity and drill it ourselves" the price would deteroriate pretty quickly. So they have to say that they are actively pursuing a farm out as the preferred means of funding.

I can't think of any examples, though I'm sure someone will find one, where Exxon would accept a deal that leaves them with a minority non-operated shareholding, with a minnow as operator. So that would mean giving away a higher percentage than I think PANR management would consider. Maybe COP would run with as little as a 25% non-op stake, though again it's not the mentality of a major player. And my perception of Hilcorp is that they want the cash flow from producing assets, rather than the reserves.

So, at least IMHO, they aren't going to attract a major partner this winter, with spare staff to work with an operator, on terms that PANR has suggested they hope for. A major player would be more likely to pay the premium for others taking the risk, and just buy out PANR once assets are proven.

The advantage I'd see in any farm out would be that it provides the best validation yet that someone else is confident enough in the potential of the assets to be prepared to put significant money into it.

[winner66] 27/10/2021 17:20

Personally I see huge benefits from having a farm in partner , as long as it’s a company that currently produces oil. That expertise , cost sharing and the possibility of a long term full scale relationship is mouth watering . If we fund raise , then that would most likely be a cost covering exercise up to the end of activities for this coming winter.

[yoghurt73] 27/10/2021 17:06

Scot126. Agree ref financial partner not adding value in the same way as an industry partner but would assume farminee credentials are added to the financial value when the team are picking partner options.

Spangle - Not negative on TW drill - It is why I'm invested here & yes the guys themselves (that Scot rightly highlights in point 4) have a good number of successful drills under their belt - but they themselves point out that you learn something new on every drill - including appraisal drills - from memory it was a comment by one of them on the last webinar. My view is based on the fact that the market can discount a lot - in a scenario that requires more time (i.e. another winter because of Alaskan logisitcs and weather) being told there is a valid reason for delay would hold more weight when echoed by another industry peer/partner.

No impatience on my part, only attempting to bring the BB back to the near term potential and away from boxing, conkers or poohsticks.

[scot126] 27/10/2021 17:05

Hmmmm, no worries at my end. It read to me that yoghurt73 came up with an *imagined scenario* which supported his contention that having a resourceful big brother would serve to ameliorate the market's reaction should Theta West not go fully to plan for engineering/operational reasons. I honestly don't think it was anything more than that? yoghurt73's point is a fair one and I do see what he's getting at.

PS Thanks for that observation, michaelsadvfn. Useful. Couple of things to bear in mind maybe? If it is indeed Farallon continuing to sell (I don't know), please do recall they sold at 29p so they know no more than anyone else reading this thread. The other more strategic point I would make is that, personally, I would far rather Farallon at <17% of the register v's c.38% at the time of the PANR/GB merger. *If* the Alaskan asset is as valuable as management believes then, in order to attain the fullest possible value on sale for PIs, I don't wish any large strategic blocks of stock being secured by an opportunistic predator in the expectation they won't have to pay a full price for control. Good stuff.

[michaelsadvfn] 27/10/2021 17:02

Looking at those trades today, 925k ‘O’ sells in 25k & 50k blocks with one 150k sell fairy early on, would suggest F is still offloading about 25% of the daily volume.
It was pretty much bang on the 25% today.

Getting a bit monotonous.

[ngms27] 27/10/2021 16:50

It won't be, we all know that very well known service companies provide services for these wells so in my opinion yoghurt has over egged the cookie.

[metalbee] 27/10/2021 16:34

So we basically got a spinning doji candle today - indecision in the market! Look for macro movements to decide the immediate move.

[scot126] 27/10/2021 16:17

Hi yoghurt73 - fancy a fight? I'm thinking we should keep it seasonal and go with a conker fight? What say you?! No quarter asked nor given!

Your post #18499 makes many excellent points, as is always the case when you choose to make a contribution to the thread.

1) Your preference to sign a farm out agreement is noted.

2) In your scenario where the Theta West drill encounters operational difficulties, I do take your point. Having a big brother with dozens of engineers at hand could very well be useful in such a scenario, more so if the personnel had decades of experience on the North Slope.

3) What if the farm out partner is a "financial partner" as opposed to a sector operator? Would that invalidate or cause you to revise your preference for a farm out?

4) It's perhaps worth recalling that it's the same group of executives who successfully designed and drilled Alcor, Merak, Alkaid-1 and Talitha-A who will be responsible for designing the Theta West well. Personally, I will also be delighted if PANR has managed to secure the services of the same rig and crew which drilled Talitha-A last season. Being in the industry, yoghurt73, you'll be aware of the extensive use of specialist contractors (from the rig workers all the way to engineers) for an often surprising amount of time into the lifetime of an oilfield. Even then, not all the big operators move to a permanently employed model. I'm not seeking to downplay your point about the depth of the personnel pool, merely pointing out the ANS contractor base, due to its location if nothing else, contains a deep pool of regional contractors who have elected to specialise in the ANS. I have confidence our admittedly small but highly experienced management team can handle one drill at a time. I recognise that once the project accelerates so that there are multiple drills in multiple locations over the acreage, partnership with an operator will be a necessity. I guess my argument sees me believing the existing PANR team, augmented by experienced contractors with whom PANR has developed a highly professional working relationship, ought to be capable of delivering the anticipated 21/22 winter programme?

5) All that said and following your scenario to the letter, Theta West encounters difficulties which means that a flow test is delayed until winter season 22/23. Is that right? I would contend that, providing the logs and VAS continue to support management's geological model, the market would not be too savage in its reaction to your scenario. Yes, in extremis, the weather or localised flooding could ruin the whole Theta West drill in season 21/22. However, and here I'm relying on management securing funding (by whichever method) for all *three* main operations (Theta West drill and flow test, Talitha-A flow test and Alkaid-2 lateral production well), then any disappointment from Theta West, whilst understandable, would hopefully be contained as attention moved to the Spring drilling of Alkaid-2 beside the Dalton Highway => LTPT => cashflow generation => attaining reserve classification.

Notwithstanding the above, of course I accept the premise of your point. Having Conoco or Exxon or Hilcorp attach their name and personnel to the Theta West drill would certainly have the effect of ameliorating any blowback coming PANR's way in the event that Theta West encountered operational difficulties.

It's also worth remembering you and I are not in possession of the full range of facts. You may have noted I haven't entered the 'speculation discussion' as various posters guesstimate/fantasise (lol) the terms of a farm out agreement. That has been a very deliberate decision on my part. The last thing I wish to do is weaken the negotiating hand of the BoD in this crucial period and nor do I wish to pre-judge any deal the BoD makes on our behalf before examining closely the terms.

IMO there is no point waxing lyrical about hundreds of potential scenarios when none of us has the full facts at hand. I'd encourage all thread users to just let the BoD get on with it. Each Board member is a shareholder so they're utterly aligned with each one of us. All this factless speculation can only serve to weaken the BoD's hand so a Lenten undertaking (in November, mind you!) to be patient seems to me to be very much in order. GLA

[unlikely2] 27/10/2021 15:47

I am going to sit on the fence regarding farmout v placing. The points made by yoghurt and Swendab are valid - particularly if the partner is one of the larger operators already active on the North Slope. The opposing argument is the tremendous advantage holding 100.% will give in negotiations assuming a successful season. That we have three separate operations (and multiple zones within these) gives some insurance against a total disaster.

Hopefully not long before we find out.