Pantheon Resources Share Discussion Threads

[scot126] 06/11/2021 22:53

Dear All – just responding, in no particular order, to a few comments following my post #18820.

1) Thank you for the kind public comments and to those who sent me similar DM messages.

2) Hi unlikely2, post #18827: totally agree with you about the maths behind a reasonably small uplift in RF. I’m *extremely* keen to learn what effect the data collected over the next 8 months will mean to any management revision of RF guidance. Put it this way, I don’t think it’s going be revised downwards below the current c.14%. OIP – if you go back to the April webinar, I don’t *think* it was only Bob who piped up when comparing the potential scale of Theta West/Talitha with Prudhoe Bay and Kuparuk River? I’m happy to be corrected but I’m pretty sure other presenters voiced their own understanding of the possible scale of OIP too? Doubling current guidance of OIP would not bring it up to Prudhoe Bay’s figure but it would see Theta West/Talitha classed as larger than Kuparuk River. For context, Prudhoe Bay and Kuparuk River are the two largest onshore oilfields ever discovered in the US.

You ask an excellent question about indices and the mkt cap/ADV thresholds which apply. That is one of the “technical matters” I was alluding to at the end of post #18820. I don’t wish to set the rumour hares running unnecessarily so I’ll leave it at that for now, I think. I aim to have some more solid information over the next couple of weeks so please prompt me if I haven’t updated the thread on what I’ve learned by 19/11/21?

3) Hi Bobbiedazzler, post #18832: you’ve expressed your macro views previously. I follow what you’re describing and you may very well be correct, who knows? We *do* know our BoD has open communication channels with Art Berman so I’m sure they’ll keep themselves fully abreast of all the macro moving parts. I’ve mentioned this before but I think it bears repeating for the UK readers of this thread. We UK shareholders would, IMO, be wise not to underestimate the bipartisan determination by the political and national security class in the US to ensure they remain energy independent at all times in the future. There is a collective understanding that never again will the US be beholden to the Middle East for its energy requirements. This is one of, actually perhaps it’s the main reason, why I believe the eventual owner of PANR’s asset will be US-domiciled.

Overall, let’s hope these macro considerations, which do appear to be front’n’centre of your mind, are “great problems to have” because PANR has proved up an enormous new oilfield in Alaska. Until the results of the next 8 months work come in, I’m not overly convinced debating your macro fears every few days is the best use of this thread but that’s up to you.

4) Hi cezuan, post #18830: yep, we possibly did talk past each other as you suggest.

(i) I note you personal investment parameters and that you’re “not here to maximise the SP”. The trade you outlined in your point 1) has, IMHO, a more than decent chance of panning out for you if the winter programme is judged a success. Good luck.

(ii) “I am dependent on a rising share price that tracks my value expectation within my time frame.” Understood and noted. I thought it was a somewhat ballsy move in post #18763 to attempt to characterise the consensus view of your fellow shareholders being a relative newcomer to ADVFN (and PANR too?). As I wrote, I think your assessment of the consensus view is misjudged but I do appreciate you used the phrase “I think” when laying out your view. Your deliberate use of conditional vocabulary is very much appreciated at this end. I'm not joking.

(iii) I read with great interest your assumptions concerning the failure of the share price to appreciate to your anticipated level in the current market. There has never been, to my knowledge, any expectation that PANR would achieve reserves classification *prior* to a LTPT so I’m afraid I don’t attach any weight to that part of your explanation. Buyer interest? Yes, there I have some sympathy. The combination of Farallon/CHONS selling down from 38% in Jan ’19 to the present day's 16.99% holding, PANR’s history in Texas *and* the *almost* complete absence of the dissemination of the PANR investment case to the largest and most obvious addressable market, being US O&G institutional investors, may *all* have contributed to your “lack of buying” theory. Despite Farallon selling PANR stock as low as 29p in 2021, there is a palpable reticence by UK investors to go up against the perceived might of an 'all-knowing, all-seeing' US hedge fund. Culturally, US instos and PIs show no such subservience!

(iv) Your research describing the relative performance of the POO v’s O&G listed stocks is noted and agreed. I’m pretty phlegmatic about that to be frank. *If*, and I repeat if, the PANR investment case is proven, the disparity between the current attitude of the equity market towards it as a listed entity and the traditional valuation metrics used by equity markets to value proven oil assets is IMHO so profound, so massive that *any* narrowing of that disparity will result in a share price many, many multiples of today’s figure.

(v) I do understand and respect your description of the metaphorical stand off between supermajors transitioning to green energy, their requirement to maintain positive cashflows to fund said transition, the market’s clamour for dividends, the necessity for the supermajors to maintain (at a minimum) their reserves at a level which delivers said cashflow…̷0;all that and more v’s *your* requirement as an investor to make an acceptable return on the capital you have invested and placed at risk.
As I stated in post #18820, I think you have badly misinterpreted the consensus attitude of shareholders. In the scenario where the investment case continues to be supported by results on the ground over the next 8 months or so, and with the proviso the equity markets at least give a nodding glance of recognition to forward progress and fair value price discovery via the SP, then I strongly suspect the vast majority of shareholders will support further asset delineation for a further period of 12-24 months.

You’ve omitted to mention the farm out negotiations which are presumably going on as I type this post. It may be the case that a potential farm in partner is only interested in funding one winter season and then crystallising their investment? However, in my experience, that is not nearly as likely as one where the farm in partner *and* the PANR BoD would anticipate working together beyond the 21/22 Alaskan winter season. If, and I repeat if, PANR signs a farm out agreement in the coming days, your potential scenario of the asset being up for sale, perceived or in actuality, may become moot. Or rather it will rely on a large potential acquiror making the first move if 2022 is to be the 'asset sale year'.

I guess what I’m trying to say is that *if* the winter season’s operations are successful, it is my strong belief the equity markets will no longer be able to ignore the value inherent in the asset as proven by another set of empirical data. In that scenario, any scientific assessment which confirms PANR is indeed sitting on an oilfield which will be the third largest, second largest or largest onshore discovery in US history will inevitably see the PANR investment case investigated by international institutional investors who will be undeterred by PANR’s Texas history or its home listing on AIM.

If I were you, I’d consider loosening the relatively tight constraints of your investment parameters as described for your PANR position. However, if after a successful winter season, the equity markets continue to ignore PANR despite its strengthened investment case (in the 'success' scenario) then at that point, your tighter set of investment parameters may very well be worth returning to. All this is your call of course, it’s none of my business.

As an aside, it could well be the case that the BoD formally electing to move forward with a dual listing on NASDAQ would very quickly serve to satisfy your concerns about *your* assessment of the asset’s value v’s the market’s willingness to assign value to PANR.

Why don’t you and I diarise to revisit this issue in the weeks following the results from the flow test of Talitha #A and the drilling and testing of Theta West? Until then, I submit that this debate between you and I is largely moot and could serve as a distraction within a crucial period for the company where fundamentals will surely, and rightly, be the prime driving force behind the performance of PANR.

PS ADV = average daily volume. This is an important statistic, second only to mkt cap, when indices are assessing a stock's suitability for inclusion within an index.

[forwood] 06/11/2021 14:04

Nice up-channel Fordtin, which should reassure the buy and hold group.

However, there's a couple of points on the lower trend line could be hit if my last chart post (18794) bears out. These are shown below on the daily as support lines at 70 & 75. I note you didn't use stochastics - which has topped out. MACD, although checked, looks likely to resume its downward journey, rather than turn up, and that was the message of the hourly charts. But hey, it's probability rather than certainty.

[fordtin] 06/11/2021 13:22

When looking at charts many people will see what they want to see. Charts are in the eye of the beholder!


This is what I see at the moment;



free stock charts from uk.advfn.com



No advice intended except maybe that a trend is only a trend until it becomes untrendy!

[cezuan] 06/11/2021 10:00

@Scot I think we talked past each other and don’t disagree as much as it seemed. So, just as a follow up

1) I am not here to maximize my share price I entered PANR for what seems to be the „low hanging fruit“, from your pov, and used this year’s official guidance to plan a probable exit near a share price that resembles that valuation probably around >250p at some point in 2022.

2) Because I don’t exit when the company is actually sold (because that always takes longer) - which could guarantee a high, fitting price above or at my valuation - I am dependent on a rising share price that tracks my value expectation within my time frame. Since it has not risen as it could have, expecting the webinar’s or your increased valuation, I have to protect myself against it not reaching my estimate.
There are mostly 2 factors that I assume keep it down: reserve upgrading and buyer interest. While I could be wrong and the share price will tell in the spring, lack of buyer interest is a main risk. While I agree, most ppl are cautiously (!) bullish oil (futures), they aren’t the oil sector. Comparing how oil stocks track oil since 2018 shows that they have strongly underperformed. I do not want PANR to stay undervalued relative to my value expectation, because I want to sell based on the share price value and not the takeover deal.
I never expected PANR to sell in 2022, but I did expect that the share price will only then track my intended value if PANR brings clarity to whether it can actually sell it. And that usually only comes with it talking more about selling it and receiving immediate proposals. I’d fear that prioritizing drilling at the expense of that clarification would cap the share price below my threshold. That would be plausible, because PANR is overexposed to the potential demand risk from the next 2 decades, because its value lies concentrated in 1 huge field that in addition only few can buy and produce. Ofc, that’s good once oil assets start being bought („#underinvestment”). But the overall share prices don’t seem to foresee that. And indeed, so far, majors are selling more assets than buying, more are restricting capex and paying DIVs than investing in production.
I don’t want to carry that risk into the future by tolerating a low share price in ex. for outsized future gains, nor do I want the current risk to increase and keep a cap on the sp, because the buyside interest keeps being delayed. I think here we talked past each other, because I didn‘t intend my concern to regard the (physical) value of PANR’s reserves, but the risk to a share price that keeps me comfortable and invested within my TF.

To summarize, I think delaying selling (public negotiations) might delay the much needed verification of buying interest and keep me from the share price I want in 2022. All of what I write changes once any of these facts change. Until then I would like PANR to (flow test and) advance the buying negotiations it has said that it started.

[steved] 06/11/2021 09:35

Scot incredible analysis, just brilliant. What a week you've had. Thank you.

[bobbiedazzler] 06/11/2021 08:44

Scot - I buy all those points in an excellent post and the injunction to wait and see. Thank you. You are right that the board has clearly been conservative particularly on recovery factor. Sole caveat is we also need to wait and see macro environment. The coming oil price spike is going to be a massive opportunity for PANR, not least as the share price is so highly geared to it (see calcs of Canaccord if I remember). But that oil spike will also begin to destroy demand, accelerate bringing oil and gas into the existing carbon pricing regimes (possibly phasing in over time) that are already at a recent high of £75 per tonne of carbon and accelerate move to electricity via nuclear and renewables. There will be a sweet spot where the curves intersect which may be 2022 or 2023 but I doubt it's later.

[unlikely2] 06/11/2021 08:01

Morning Scot - and that standard of post is why I don't have you on filter or scroll past. Good stuff.
Recovery Factor - I have been thinking along the same lines here. Could be that the first lift to this will come after the spring flow tests. With the enormous volumes involved, even a small change to RF has major implications for the bottom line.
OIP. I have watched over the years fields grow in size as additional appraisal wells have been drilled. 2x plus may be a bit of a stretch, but BR tends to know what he is talking about, and does not usually overhype things.
NPV - The guidance already given for Alkaid and SMD taken together with the oil price would support an NPV which is multiples of that achieved by OSH. Note that Bank of America say $120 oil is on the cards by June next year. That may be a short lived spike, but coming around the time we are likely to get a fuller analysis of the spring activities, together with initial results from Alkaid LTPT, could have a real impact on share price

With regard to issues affecting SP, as the market cap grows, at what points do we cross the thresholds of various indices, requiring some tracker funds to purchase? Not an area I have much knowledge of.

[brian boru] 06/11/2021 07:40

£10 a share ain’t too shabby, Aye!

[michaelsadvfn] 06/11/2021 06:02

LOL!!! @pannikin

A truly excellent post Scot, chapeau.

[pannikin] 06/11/2021 00:18

a creep like you would have nothing better to be doing on a Friday evening - says the man posting at 23:30 on a Friday evening.

[mahanakiwi] 05/11/2021 22:26

Hi Scott, I am a new member to ADVFN and have thoroughly appreciated your insight into this exciting play. Looking forward to the upcoming season! Cheers.

[gorgeousgeorge01] 05/11/2021 21:43

I think that's quite possibly the longest post I've ever read on ADVFN!

"In point of fact, my analysis suggests that selling the asset in summer ’22 would see the BoD *potentially* underselling the asset by certainly a nine figure dollar amount and *possibly* a ten figure amount."

Indeed!

I go further: That is not only the longest post I've ever read on ADVFN, but it is, by some way, the very best that I've ever read!

[chris0805] 05/11/2021 17:26

I am aware of that, so why write we are testing in the main so less time should be needed compared to last year? Your earlier post makes no sense. Everything is subject to the necessary funding & permits & rig(s) & crew...

[winner66] 05/11/2021 16:30

Chris yes that’s right , subject to all the necessary.

[chris0805] 05/11/2021 16:11

Major drilling is planned at Theta West. Not just testing

[dhb368] 05/11/2021 15:49

I am betting on Nov 15/16

[winner66] 05/11/2021 15:44

All I’m fairly certain of is the news will be received at some point between now and the beginning of December. Don’t forget we are testing in the main as opposed to drilling over this winter season so the timeline needed is much shorter than last winter.

[sirmark] 05/11/2021 15:03

Will we get news next week ??? what everyone's thoughts.

[sirmark] 05/11/2021 14:51

82.9569 :)

[sirmark] 05/11/2021 14:50

Ok gents the 20k buy is me in a few mins :)