Pantheon Resources Share Discussion Threads

[pharmawotsit] 09/11/2021 11:32

 "Now finally, the management team. We all have deep experience, deep experience overall and deep experience in Alaska.

  We plan to prove up and sell this asset. For many on our team this is our last endeavour.

  And we plan to exit with a big win."

 Jay Cheatham, 26-Aug-2021

[dhb368] 09/11/2021 11:21

I cannot imagine JC not wanting to be at the helm when this is finally sold, or at least until the terms of a sale are agreed.

You don't get to be where he is, and has been, without being driven by the challenges ahead. He will have been thinking about that final negotiation for years. No chance he will give that to someone else IMHO.

[scot126] 09/11/2021 11:17

Hi michaelsadvfn - quick fact check. PANR gave up Leonis prior to this latest round of SoA lease auctions.

[michaelsadvfn] 09/11/2021 10:17

On the topic of when management plan to sell up I’m not convinced it will be as early as 2023 due to the amount of work still required to prove up a resource at the various prospects.

Selling up in 2023 gives them 2 more winter seasons with the first of those dedicated to Talitha & Theta West. In addition to the Kuparuk there’s also Leonis which sits on the extra acreage that was acquired in the lease auction and I guess they will want to know what value it may hold prior to selling up.

The more i think about it we may see some of the BOD retiring before any sale of the Company occurs.

[johnswan193] 09/11/2021 10:04

Good post BD, an articulate way of saying "make hay while the sun shines" and I agree completely. If this drill season is successful but the company is not sold I can see (for the reasons you mention) a scenario where investors are looking back at peak share price in 2022. My most likely course of action in 2022 on success is to exit/reduce my holding here if the company is not sold. The case to continue to try to remain independent and attempting to prove up every prospect in the acerage only holds up if you take the view that the long term POO (and attractiveness of investing in this sector) remains stable or improves over the next 2-3 years. If the share price was to reach £3 in 2022 that will represent 5x-10x gains for most investors. That's a lot to leave unrealised and exposed to the risk of adverse macro factors.

[hiddendepths] 09/11/2021 09:30

SMD - not so sure. I think there may well be more buying on a fund raise. It secures the winter drilling plans and it removes the potential overhang of new shares. What is more, any fund raise may well be accompanied by some distinctly bullish presentations to institutions and elsewhere.

Raises remove uncertainty in cases like this.

[smd_oz] 09/11/2021 09:16

gee can see some people getting burnt buying at these levels if raise happens

[dan de lion] 09/11/2021 08:56

wrong board!

[responsible investor] 09/11/2021 07:59

Boobiedazzler - good post.

I remain confident that the BoD understands the very good points made. Seems to me that the BoD should only allow dilution if the farminee, assuming there will be such in the forthcoming financing arrangement, is given participation only in fields which are substantially proven out. The company should not be selling assets which have not been fully explored and proven. The company can considerably complete the full exploratory and evaluation phase in 2022/23 and then sell out as appears to be the BoD's intention i.e. based upon indications from the BoD.

[chris0805] 09/11/2021 05:14

Thanks for a great post Bobbiedazzler... A very well described set of potential circumstances ahead. GLA C

[forwood] 09/11/2021 01:56

Well written too!

[the priest] 08/11/2021 23:26

Thanks for that Bobbiedazzler - a thoughtful and interesting post.

[bobbiedazzler] 08/11/2021 23:13

Thanks Scot for the response in post 18836. Not sure why you think I have macro “fears”: short term could not be more positive and is getting more so with news like the Pfizer therapeutic underpinning global economic recovery and hence the oil price. You seem – I may be wrong, and therefore please correct me if so – to be dismissive of the macro context around the micro considerations which are the main meat on the board. But just because there are more moving parts in macro does not mean that they do not matter or that they cannot be analysed. They are certainly relevant to Pantheon shareholders. For example, the company broker Canaccord initiation note (11 Nov 2020) estimated that a $5 rise in the oil price – the biggest macro input in any Pantheon valuation of existing and prospective resource – added 21 pence to the risked share price valuation. The model, indeed, appeared to be quite linear so broadly a 10 per cent change in the world oil price changed the share price by 25 per cent on both risked and unrisked valuations. (I make no judgment as to whether this is right, but it is pretty conventional). The Pantheon share price is highly geared to the world oil price.
Canaccord used WTI assumptions, not the Alaska price, which as you have repeatedly posted tracks the higher Brent price. But they all move pretty much in lockstep. The WTI forward price is up from the $45 assumed when Canaccord initiated coverage to around $68 (for the end of next year) now. That rise in itself would explain a rise in the Pantheon share price from the then 31 pence to just over 80 pence. This disregards all the positive micro drilling news and analysis since then, which effectively comes for free for today’s buyers. I suspect that was what Jay Cheatham was pointing to when he suggested (if I remember correctly) that the share price rise had merely allowed for the oil price, not the positive drilling analysis.
So just the rise in the oil price – the macro environment- has already made an appreciable difference to the company’s ability to fund the next winter campaign without deeper dilution of shareholders (whether through placing or farm-in). Like it or not, the board is going to have to make a call on the likely path of the oil price in considering between financing options. Maybe – I don’t know – some farminees want to go faster and with more drills? Maybe some want to go slower? How would you as a board member/concerned shareholder make a judgment between the options without a view about what is likely to happen to the oil price and the potential timing for onward sale of the whole asset? Surely it is in our interest as shareholders that our assets go on the block at the optimum moment where potential buyers are keenest? Human nature suggests that is going to be during the upswing in the oil price cycle.
That is why I think hard about the macro environment for my Pantheon shareholding. If I were not an oil price bull, this asset would look a lot less attractive. And I think the oil price bull’s case has steadily strengthened from the first vaccines onwards with a major step forwards last week on the news about Pfizer, and therefore the sharp rebound last week in covid-hit stocks like cruise ships, airlines and hotels. Please note that the first two of these consume oil like dervishes, providing more evidence for my bullish oil price views for next year. But what next? How would you advise the board to consider its options about a broad, speedy drilling campaign against a slower, more targeted one? Or to consider alternative speedy and broad or slow and targeted farm-in options? Or to do a placing that funds all the drills the BoD wants? (I concede that this assumes they have these options).
All the historic evidence is that oil supply globally is unresponsive – inelastic, in economist’s jargon – to oil price rises. In the last upswing, oil supply was more responsive than usual (and the peak price therefore lower) because of the upswing in US shale production. That is not happening this time. The shale oil producers highgraded during the downturn, using their best resources to get through the crisis. They also promised their shareholders that they would return more cash and invest less this time. Scott Sheffield, the CEO of Pioneer, is on the record saying that US producers will be more cautious this time: “There’s no growth investors investing in US majors or US shale. Now it’s dividend funds. So we can’t just whipsaw the people that buy our stocks”. He also pointed out that he personally made more money from his dividends in Pioneer than his pay. And don’t just judge by what they say, but what they do. The US rig count has risen much less than might previously have been expected from the rise in the oil price.
So the oil price will have to rise high enough to choke off demand to the likely level of supply. And it will. Maybe that is $100 a barrel, or maybe higher. There may even be a short-term spike that is at crazy levels - $200 - if the growth in oil demand exhausts even OPEC’s spare capacity (assuming OPEC+ steadily raises output, and perhaps there is no Iran nuclear deal and oil export resumption). After all, oil demand is already higher than pre-pandemic levels in China and elsewhere. But past experience of spikes suggests that the oil price comes down quickly as soon as demand starts to ebb. Early 2023? Mid 2023? Later? That is why a view on what is likely to happen is important for Pantheon. If we are still proving out the extent of the assets in the spring of 2023, we may – only may - have passed the peak in oil prices. We may even be seeing governments actually doing a lot more on decarbonisation and boosting alternatives to oil use. As you say, who knows? But just because the future is uncertain does not mean that we should not try to analyse it, understand the sensitivities and likely timing, and make the best of options.
Against that, you argue rightly that if we sell out sooner, we may be leaving a lot on the table. Kuparuk may not be fully analysed or proved up. But that might turn out to be a small loss if the overall price per barrel on the fields, where there will hopefully be good evidence, is coming down. This is as relevant to Pantheon and the price we as shareholders ultimately realise as the micro evidence on the fields (and some of the exciting numbers that posters get to). Some may argue, of course, that the key price is the assumption that a potential buyer makes about future oil prices, not what is happening in the market. But those assumptions tend to move in line, even if there is a difference.
The oil price is also relevant to the hold decision for shareholders, given the gearing. As a fundamental investor, my current intention is to hold until the board decide to sell. I have confidence in the BoD. But this view implies that the share price should gradually rise to that halcyon point at which the Board maximises value, whereas the macro environment may mean that the share price goes higher than the price that the board succeeds in selling at – particularly if there is a sharp spike in oil prices and some silly bubble-buying of oil stocks. This is quite possible if we have reached a good level of evidence on the bulk of the acreage. I think that the current share price is irrationally low, but my belief in that irrationality also forces me to recognise that a future price may equally be irrationally high.
Thanks for your point, Scott, about US energy independence. I had not myself thought that there were likely to be federal measures to stop US oil and gas output (other than the type of federal court decision that has delayed Willow on federal land or US Fed approvals for new pipelines). I think we are safe from that possibility, being on state land in a red fossil-fuel dependent state like Alaska. Nor do I think that the analysis of energy independence works quite the way you seem to suggest. After all, the US oil price is set in a global market (unlike the US gas price, where gas is still effectively trapped in the domestic US market by high conversion and transport costs for LNG, and even a lack of export terminals). Therefore whatever the goal or even the achievement of US energy independence, the US oil price is going to move broadly in line with world oil prices. If world oil prices ease off, assaulted by new extended carbon taxes (whether in the US or not), demand destruction, increased renewables, electric vehicles and so on, then US oil prices will ease off too regardless of what the US government wants and does. Joe Biden’s and Anthony Blinken’s undignified pleas last week to the Saudis to pump more oil to reduce prices in the US rather make my point. They know that the oil price worldwide is set by the last unit of demand – and the last unit of supply. The US is an oil price taker like everyone else. Indeed, a US carbon price might actually reduce US oil demand and even improve US energy independence once the boost to renewables is taken into account. Indeed, the best sure-fire way for countries to boost energy independence in the medium term is building out lots of renewables: wind, solar and (in the US) biomass are home energy by definition.
Of course, forecasts are almost always wrong (and even if right, they are usually right for the wrong reasons). But it makes sense to make them, and update them, and keep updating them, because the economic evidence is that the freshness of the data is more important than flaws in the models. As Goldmans used to warn, these are our present views only. Not surprisingly, macro analysis tends to be updated far more frequently than micro analysis. It also makes sense to have a macro view, because it helps avoid inconsistencies and highlights anomalies and provides sensitivity on timing. At the moment, the macro outlook is positive for Pantheon, and likely to remain so for at least a year. But I make no apologies for thinking about timing. The micro outlook matters. But so does the macro. Good luck all!

[responsible investor] 08/11/2021 18:42

Trading in PANR shares has got to be crazy. The buy/sell margin in so high and anyone buying into PANR should be thinking at least medium term - not a trading stock. If you cannot stomach the drifting share price after a big bounce, don't invest. There are much better trading stocks for you. But each to his/her own!

[fordtin] 08/11/2021 18:13

Evening forward,

Re; “you're right about stochastics in the periods you mention, but one doesn't take those in isolation. You need to look at MACD and RSI also.”

Precisely! The current MACD, RSI and stochastics could easily develop into the same pattern which can be seen during the periods mentioned in post 11835.


Re; ”We're getting to the point now where a 10% drop, for however long a period it may be (and I accept it could be short), is big money. So your argument, if I may characterise it crudely, is short-term technical trading v buy and hold. Nothing wrong with either approach."

To say “Is big money” seems very presumptuous. Could or would be big money are probably better ways to phrase it due to the possibility of the polar opposite scenario of a sudden and rapid share price rise.


I feel sure most interested parties who are honest with themselves will accept there is potential for short-term technical trading as you describe.
However, despite the possibility that the anticipated funding news could knock the share price back a bit, funding news could potentially cause the share price to gap up substantially on open.

If the second scenario transpires, the most lucrative short-term technical trade could just as easily be to buy now and sell above the gap!

As you say; “Nothing wrong with either approach”.

However, given there is no way of predicting which way it will go, I’ve decided my best chance of protecting my follicular fragility is to trust my interpretation of the information available and risk a small step backward rather than miss out on the possibility of a huge leap forward.

Best of luck to all
(except borrowers of Pantheon shares, potential borrowers of Pantheon shares, sellers of a promise to deliver Pantheon shares at a later date, potential sellers of a promise to deliver Pantheon shares at a later date & lenders of Pantheon shares!)

AIMO and any other caveat the reader feels would be appropriate.

[pannikin] 08/11/2021 08:10

Ah johnswan, the gift that keeps on giving.You do know that ngms calls every possible outcome, don't you? To count his successes and ignore his failures is, how do you say it, amateurish.

[forwood] 08/11/2021 03:03

Fordtin, you're right about stochastics in the periods you mention, but one doesn't take those in isolation. You need to look at MACD and RSI also.

We're getting to the point now where a 10% drop, for however long a period it may be (and I accept it could be short), is big money. So your argument, if I may characterise it crudely, is short-term technical trading v buy and hold. Nothing wrong with either approach.

[michaelsadvfn] 08/11/2021 01:31

#18842 - at 23.10 on a Sunday evening? What a creep.

I think you’ll find that most on here don’t need to read anything that enhances their comfort with their investment here, contrary to your nonsense.

[johnswan193] 07/11/2021 23:10

Most people like to read things that enhance their comfort with their investment here. But whether you like it or not, Jonny has made more correct calls over the years than Scot has.

Remember what Scot was telling you all about the groundbreaking 88E Alaskan Tax Credit deal and what this could mean for Farallon and holders of PANR shares. I challenged him and called it exactly right yet he went to great lengths to dispute otherwise and try to ridicule my suggestion on the basis of his superior knowledge and experience. Guess what happened when Scot was proved wrong? No acknowledgement whatsoever, no apology to those he wrongly misled……. thats Scot.

Remember Scot tried to co-ordinate an acquisition of stock from Farallon directly right before results were due from the Kuparuk? Complete and utter amateur.

Whether he is compensated or not for what he writes here he should be treated like a salesman and nothing more.

[madd_rip] 07/11/2021 17:39

I've also put a link to the Reddit hub for Pantheon on a few Twitter oil trading pages as well. All helps

[ngms27] 07/11/2021 15:04

Scot126, re your comment 4) around me leaving the Kuparuk for the next man.

A $1 billion or even potentially $2 billion left on the table WHEN no testing has taken place is not exactly important if your prior supposition of $22 billion for everything else holds true.

You've just taken a dig at me for personal reasons RATHER than being totally objective. That's exactly why many on here don't like you.

[cezuan] 07/11/2021 07:12

@Scot Thanks for the reply. I also expect and hope some version of (v) to play out. Good luck to us all^^