TIDMPANR

RNS Number : 2531U

Pantheon Resources PLC

28 March 2019

28 March 2019

Pantheon Resources plc

Interim Results for the Six Months Ended 31 December 2018

Pantheon Resources plc ("Pantheon" or "the Company"), the AIM-quoted oil and gas exploration company with working interests in several conventional project areas in Tyler and Polk Counties, onshore East Texas, as well as onshore North Slope of Alaska, announces its interim results for the six months ended 31 December 2018.

HIGHLIGHTS

Acquisition and post year end operational

Completed the acquisition of Great Bear Petroleum Ventures I LLC and Great Bear Petroleum Ventures II LLC (together, "Great Bear") in January 2019. The transaction added over 250,000 leased acres onshore North Slope of Alaska, covered by +1000 square miles of 3D seismic, which had a pre-drill estimated P50 Technically Recoverable Resource (Gross) of over 2 billion barrels oil.

Acquired a controlling 66.6% ownership of Vision Gas Limited and Vision Resources LLC (together, "Vision") including its working interest in the VOS#1 well and associated Tyler County acreage. This transaction has allowed Pantheon to assume management control of the Vision entities.

In January 2019 completed an equity fundraising raising US$20.9m before expenses, issuing 108,335,266 shares at an issue price of GBP0.1525.

Strengthened the existing Pantheon management team and Board. Appointment of Bob Rosenthal as Technical Director and plans to appoint Jeremy Brest and Carl Williams as Non Executive Directors. Other additions include Michael Duncan, VP Operations, Pat Galvin, Chief Commercial Officer Alaska, Josh McIntyre, CFO Alaska, and Dr. Ed Duncan, a founder and previous CEO of Great Bear, as Consulting Geologist.

Alkaid Well (Alaska): The primary target of the well, the Brookian ZOI, confirmed as an oil discovery following a successful flow test where results exceeded expectations. A 6 foot interval (from a c.240 foot interval of net pay) was perforated and flow tested at 80- 100 BOPD light oil (40 degree API). Such flow rates are considered to be an excellent result and indicate the potential for materially higher flow rates when wells are drilled in the typical manner for Brookian wells in Alaska - horizontally, fracture stimulated, and with larger intervals perforated. Preparations to test the two secondary targets, the West Sak and Ugnu have already commenced.

East Texas: Commenced a comprehensive technical review of East Texas assets. This has included a re-engagement with the Bureau of Economic Geology at the University of Texas at Austin. The Great Bear team will also undertake a comprehensive review of the drilling and completion history of our Polk and Tyler County wells and will apply high tech geophysics to our East Texas portfolio, a technique used to great success in Alaska.

Operational

Completed the gas pipeline from the VOS#1 well to the Enterprise Gas Pipeline system in Tyler County.

Installed compression at the inlet to the Kinder Morgan Gas Processing Facility in Polk County.

Combined production for Polk & Tyler Counties c.325 boepd.

Financial & Corporate

Revenues for the six months ended 31 December 2018 of $356,598 (2017: $514,303).

Loss for the period of $1.27m (2017: $2.57m).

Cash and Cash equivalents at year end $4.0m (2017: $7.6m).

Outlook

In Alaska, Pantheon has between 75% and 90% working interest positions in the Great Bear prospects (except Winx at 10%). Such dominant working interest positions provide the Group greater freedom in farm-out or other partnering opportunities to subsidize or fund future drilling. Together with Great Bear personnel, Pantheon has a comprehensive network of oil and gas contacts which will be accessed where relevant for farm out or other opportunities in both Texas and Alaska.

Alkaid Well - Following the successful flow test in the primary target, the Brookian ZOI, the next step is to flow test the secondary targets, the West Sak and Ugnu prior to shutting down operations later in April 2019.

Pantheon's strategy to delineate the perspectivity across its enlarged acreage position and seek a full value exit for shareholders remains unchanged.

Jay Cheatham, CEO, said:

"It's been an incredible period for Pantheon. The Great Bear merger, although complex, has been a huge success. The additions to our Board and Management team is showing results in both Alaska and East Texas. The success at Alkaid in the Brookian ZOI illustrates the quality of the technical work and of the Alaskan assets. Alkaid is already a huge success. The Brookian was the original target. The West Sak and Ugnu are bonus zones."

"I'm pleased with the work already underway in East Texas. Both from an operational and geologic/geophysical perspective, advances are evident."

"Finally I must add that the passing of our former Chairman , John Walmsley was a sad moment for me and for everyone who knew him. The consummate gentleman, I'll miss him."

-S-

Further information:

    Pantheon Resources plc           +44 20 7484 5361 

Jay Cheatham, CEO

Justin Hondris, Director, Finance and Corporate Development

   Arden Partners plc (Nominated Adviser and broker)     +44 20 7614 5900 

Paul Shackleton

Daniel Gee-Summons

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas exploration and production company with assets in East Texas and on the North Slope of Alaska, onshore USA.

The Group's stated objective is to create material value for its stakeholders through oil exploration, appraisal and development activities in high impact, highly prospective assets, in the USA; a highly established region for energy production with infrastructure, skilled personnel and low sovereign risk. All operations are onshore USA, with drilling costs an order of magnitude below that of offshore wells.

In East Texas, Pantheon holds a 50% to 75% working interest (and in present discussions to increase this to 100% working interest for non-cash consideration) in several conventional prospects in Tyler & Polk Counties, in an area of abundant regional infrastructure, and in proximity to the prized Double A Wells Field. P50 Technically Recoverable Resources are estimated at 157 million barrels of oil equivalent.

In Alaska, following its acquisition of the assets of Great Bear Petroleum in January 2019, Pantheon holds working interests ranging between 10% and 90% of prospects covered by over 1,000 square miles of 3D seismic with P50 Technically Recoverable Resources estimated at 2.1 billion barrels of oil 1.7 billion barrels of oil excluding the Alkaid prospect.

For further information on Pantheon Resources plc, see the website at: www.pantheonresources.com

The information contained within this RNS is considered to be inside information prior to its release. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

In accordance with the AIM Rules - Note for Mining and Oil & Gas Companies - June 2009, the information contained in this announcement has been reviewed and signed off by Jay Cheatham, a qualified Chemical & Petroleum Engineer, who has over 40 years' relevant experience within the sector.

Cautionary Statement: The estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially movable hydrocarbons.

Pantheon RESOURCES plc

INTERIM REPORT (UNAUDITED)

FOR THE SIX MONTHSED 31 dECEMBER 2018

STATEMENT FOR THE SIX MONTHSED 31 DECEMBER 2018

The half year ended 31 December 2018 and the period beyond has been one of immense change for our Company. Most significantly, we completed the acquisition of Great Bear Petroleum Ventures I LLC and Great Bear Petroleum Ventures II LLC (together, "Great Bear"). The transaction added to our portfolio over 250,000 leased acres onshore North Slope of Alaska which had a pre-drill estimated P50 Technically Recoverable Resource (Gross) of over 2.0 billion barrels oil. We also acquired a technical and operational team of the highest calibre which will greatly benefit our East Texas assets going forward.

At the same time, Pantheon also acquired a controlling 66.6% ownership of Vision Gas Limited and Vision Resources LLC (together, "Vision") including its working interest in the VOS#1 well and associated Tyler County acreage. This transaction has allowed Pantheon to assume management control of the Vision entities which is strategically and operationally of great importance to the future direction of the play, following the passing of Vision's principal Bobby Gray in June 2018.

Pantheon's strategy to delineate its now enlarged acreage position and to seek a full value exit for shareholders remains unchanged and is a strategy shared by Great Bear management. Pantheon now also has operating control of Vision and is working towards potentially increasing its working interest in the East Texas assets to 100%. In Alaska, Pantheon has between 75% and 90% working interest positions in the prospects (except Winx at 10%). Such dominant working interest positions provide the Group with greater freedom to pursue farm-out or other partnering opportunities to subsidize or fund future drilling. Together with Great Bear personnel, Pantheon has a comprehensive network of oil and gas contacts which will be accessed where relevant for farm out or other opportunities in both Texas and Alaska.

In March 2019, Pantheon announced the successful flow test of the Brookian zone of interest ("ZOI") in the Alkaid well. This result is significant both economically, but also commercially because it greatly enhances Pantheon's negotiating position for possible farm out discussions. Further, the positive result has a positive impact on the nearby Phecda prospect, where the seismic signatures are similar, and confirms the efficacy of our high tech geophysical analysis in modelling the sub surface geology in the region.

Pantheon Great Bear Merger

Pantheon completed an opportunistic 51%/49% merger of Great Bear in January 2019. This was accomplished by issuing 205 million consideration shares, 9.6m share options (exercise price GBP0.30) and a US$6.1m cash payment. At the same time the company raised c. US$20.9m before costs through the issuance of 108 million new ordinary shares at a price of GBP0.1525 per share. It was a very complex transaction, involving multiple jurisdictions and multiple interested parties, and took nearly 6 months to consummate in extremely difficult market conditions. It is a credit to our advisors and to our team that there were no leaks in what was such a significant and successful transaction.

The Great Bear transaction resulted in the acquisition of a majority interest in 250,000 acres of leasehold on the North Slope of Alaska in close proximity to the Trans Alaska Pipeline System (TAPS) and the Dalton Highway. Close proximity to infrastructure offers us tremendous economic and logistical benefits, and in a success case will greatly improve per barrel NPV's. Pantheon benefits from over US$200 million sunk cost already invested into the Alaskan assets to date, including over 1,000 square miles of 3D seismic. A prospect resource summary from the time of the transaction is provided below. It should be noted that Pantheon has since moved to a 100% working interest in the Alkaid well.

Great Bear P50 Technically Recoverable Resource Table

 
  P50 Technically Recoverable Resource 
  Estimated                                             Oil in      Reoverable    Possible 
   Timing                                                Place       Oil           Zones 
                                                         mmbl        mmbl                     GBP Interest 
              ----------------------  --------------  ----------  ------------  ---------- 
  2019          Alkaid Production       Test Zone 
    ZOI                                                 250         25            1           75% 
    West Sak                                            890         134           1           75% 
    Ugnu                                                   2,600    390           1           75% 
 
  2019          Winx Exploration(1)     Exploration       1,385     400           5           10%(1) 
  2020          Talitha Appraisal       Appraisal         2,643     508           4           90% 
  2020/21       Theta Exploration       Exploration     3790        600           2           90% 
  2021+         Megrez Exploration      Exploration     660         99            1           90% 
  2021+         Phecda Project          Exploration     345         34            1           75% 
  2021+         Tania & Alula           Exploration     TBD         TBD           3           90% 
  Total 
   barrels 
   (bn)                                                 12.5        2.1           18 
                                                      ----------  ------------  ---------- 
 
 

Note(1): The Winx-1 well was plugged and abandoned in March 2019. Accordingly the resource estimate for this Western Blocks acreage which contains Winx is subject to downward revision.

The merger also brought several outstanding additions to strengthen the existing Pantheon management team and Board. We have already appointed Bob Rosenthal as Technical Director and plan to appoint Jeremy Brest and Carl Williams as Non Executive Directors over the coming weeks. Other additions include Michael Duncan, VP Operations, Pat Galvin, Chief Commercial Officer Alaska, Josh McIntyre, CFO Alaska and Dr. Ed Duncan, a founder and previous CEO of Great Bear, has joined as consulting Geologist, further strengthening the team. The Company is currently working with the remuneration specialists at Deloitte to implement an employee share option scheme to align the interests of all staff and to attract and retain key personnel.

East Texas Update

Following the Great Bear merger, we have commenced a comprehensive technical review of our East Texas assets. Included in this has been a re-engagement with the Bureau of Economic Geology at the University of Texas at Austin, the same group who completed a comprehensive +3 year geological study on our play in conjunction with the technical team at Vision. The Great Bear team will also undertake a comprehensive review of the drilling and completion history of our Polk and Tyler County wells and will apply high tech geophysics to our East Texas portfolio, the same technique used to great success in Alaska. The review has commenced and is ongoing, although at present, the focus is on the current testing operations in Alaska.

In Polk County we have installed compression facilities at the inlet to the Kinder-Morgan gas processing facility. Although early days, the VOBM#1 and VOBM#3 wells combined are producing c.1125 thousand cubic feet per day ("mcfpd") wet gas and 30-35 bopd ("barrels of oil per day"). This is a marked improvement versus previous months of intermittent production and a welcome boost to cash flow.

In Tyler County the VOS#1 well has been a disappointment. Production is averaging c.650 mcfpd through the Enterprise pipeline. The historical operational and wellbore problems with VOS#1 have been well documented but we have not yet analysed the VOS#1 for possible remedial work. This will be undertaken after completion of our Alaskan operations.

Our belief in the potential of East Texas is undiminished, and has not become a lower priority versus Alaska, which has seasonal operational constraints. As previously reported, the P50 Technically Recoverable Resource (Gross) for the Tyler & Polk County acreage reduced from 301million barrels of oil equivalent ("mmboe") to 157mmboe last year, which was simply a function of a reduced acreage footprint and does not reflect a downgrade in acreage under lease. The Company is not aware that any of the dropped leases have been leased by third parties and might be available should the Group wish to renew them some time in the future.

We have great confidence that the East Texas Assets will strongly benefit from the input of Pantheon's new and highly regarded technical team who have already spent considerable time reviewing the geological work on the prospects. We can bring East Texas wells into production rapidly after well completions, which is a major benefit.

A proposed sidetrack of the VOBM#1 well is intended to be the next operational activity in East Texas. Timing of this well has been pushed back to allow the technical team to undertake, after completion of Alaskan operations, a detailed analysis to determine whether it makes sense to drill a new well rather than to sidetrack the existing wellbore, given the relatively modest cost differential of $4m - $4.5m for a new well versus $2.8m for a sidetrack. The VOBM#1 well flow tested at over 500 barrels of oil per day ("bopd") and 6,000 thousand cubic feet per day ("mcfd") before the well suffered collapsed casing and at those rates would be highly cash generative at current prices.

Since attaining operational control of Vision, Pantheon has parted ways with the previous operational team. The highly skilled technical team from Great Bear has assumed operating control of operations.

Alaska Update

Alkaid (100% Working Interest): Testing the Alkaid vertical test well is underway. As reported, the lower Brookian Zone of Interest was tested after a successful frac. The testing period was truncated due to extreme weather events on the North Slope and a need to test the upper West Sak and Ugnu zones prior to the impending Spring thaw. A 6 foot interval (out of c.240 feet of net pay) was perforated and flow tested at 80-100 bopd light (40 degree API) oil. This test was an excellent result and indicates the potential for materially higher flow rates when wells are drilled in the typical manner for Brookian wells in Alaska - horizontally, fracture stimulated and with larger intervals perforated. The Brookian ZOI (zone of interest) was the primary target of this well, hence the "ZOI" name, and even if the West Sak or Ugnu secondary targets prove unsuccessful in flow testing, which for the avoidance of doubt has not yet occurred, the Alkaid well is still considered to be a great success.

Pantheon's working interest in the Alkaid well increased from 75% to 100%, however Haliburton does have a back in right which would allow them to "back in" to a 25% working interest for an approximate 400% of the applicable sunk cost.

The Alkaid result also has positive implications for Pantheon's other Brookian prospects in the portfolio.

The process to begin testing the upper zones has now commenced and the Company will report back at the conclusion of testing operations. The Company will begin work on a development plan after completion of testing.

Winx 1 Exploration Well 10% Working Interest: The Winx 1exploration well drilled by 88 Energy tested the Torok and Nanashuk Topset formations on our Western Blocks. After reaching target depth a comprehensive logging suite was acquired through the potential targets. Petrophysical analysis of the data done by the operator and JV partners indicated that only low saturation hydrocarbons were present in the reservoirs and the partners decided to plug and abandon the well without further testing. A review of the all the data gathered during drilling and logging is underway to assess the potential of these 4 blocks.

STATEMENT FOR THE SIX MONTHSED 31 DECEMBER 2018

Future Activities

In East Texas, a full technical review of the assets in consultation with the Bureau of Economic Geology plus the application. of high tech geophysics will be completed following completion of Alaskan testing operations. The objective is to build upon the geological successes of Vision and improve future operational performance. We will then decide whether to sidetrack the VOBM#1 well or drill a new well nearby. In parallel, the Alaskan dataset will be worked up to prepare for possible farmout discussions on parts of the Alaskan acreage and prepare for drilling operations next season.

Financial & Corporate

The interim results show a loss for the period of $1.27m (2017: $2.57m) included certain transaction costs related to the Great bear acquisition. The 2017 period loss included an impairment charge of $1.83m.

At 31 December 2018, cash and cash equivalents amounted to $4.0m (2017: $7.6m). Trade and other receivables amounted to $2.0m (2017: $0.5m).

At a General Meeting held on the 14th of January 2019, shareholders ratified the acquisition of two wholly owned companies from Great Bear Petroleum Operating LLC, Great Bear Petroleum Ventures I LLC and Great Bear Petroleum Ventures II LLC (together the "Great Bear Companies"). The Company also completed an equity fundraising raising US$20.9m before expenses, issuing 108,335,266 shares at an issue price of GBP0.1525, in connection with the acquisition of the Great Bear Companies. On the same day the Company also acquired 66.6% (and management control) of Vision from Kaiser Francis and others for a total consideration of 3.5m ordinary fully paid shares.

As at 28 March, 2019 the company has on issue 557,001,521 shares (which includes 102,471,055 non-voting shares which are convertible into ordinary shares on a 1 for 1 basis, subject to certain conditions) and 19,607,843 share options with a GBP0.30 exercise price.

Other

Finally, is was with great sadness last week that the we announced the passing of John Walmsley, our Non-executive Director and former Chairman.

John served our company with distinction and honour for over 10 years. His wisdom, integrity, team spirit and sense of humour will be dearly missed by all.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIODED 31 DECEMBER 2018

 
                                                  6 months ended    6 months         Year ended 
                                                   31 December       ended 31         30 June 
                                                   2018              December         2018 
                                                                     2017 
                                         Notes    (unaudited)       (unaudited)      (audited) 
                                                  $                 $                $ 
  Continuing operations 
  Revenue                                         356,598           514,303          1,009,570 
  Production royalties                            (93,130)          (122,885)        (244,783) 
  Depletion of developed oil 
   & gas assets                                   (39,980)          (48,625)         (88,293) 
  Cost of sales                                   (397,744)         (84,797)         (562,986) 
  Gross (loss)/profit                             (174,256)         257,997          113,508 
 
  Administrative expenses                         (985,487)         (966,781)        (1,922,917) 
  Impairment of intangible assets        3        -                 (1,825,051)      (6,805,537) 
  Depreciation of production 
   & pipe line facilities                           (116,053)         (37,404)         (145,516) 
  Operating loss                                  (1,275,796)       (2,571,239)      (8,760,462) 
 
  Interest receivable                             1,140             2,731            6,858 
                                                ----------------  ---------------  --------------- 
 
 
  Loss before taxation                            (1,274,656)       (2,568,508)      (8,873,604) 
                                                ----------------  ---------------  --------------- 
 
  Taxation                                        -                 -                - 
                                                ----------------  ---------------  --------------- 
 
    Loss for the period                             (1,274,656)       (2,568,508)      (8,753,604) 
                                                ----------------  ---------------  --------------- 
 
 
    Other comprehensive income 
    for the period: 
 
  Exchange differences from 
   translating foreign operations                   (10,234)          (555,180)        277,183 
  Total comprehensive income 
   for the period                                   (1,284,890)       (3,123,687)      (8,476,421) 
                                                ----------------  ---------------  --------------- 
 
 
  Attributable to: 
  Equity holders of the company                   (1,284,890)       (3,123,687)      (8,476,421) 
 
  Loss per ordinary share 
   Loss per ordinary share - 
   basic and diluted from continuing 
   operations                              2 
                                                  (0.54)c           (1.10)c          (3.72)c 
                                                ----------------  ---------------  --------------- 
 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIODED 31 DECEMBER 2018

 
                             Share          Share          Retained            Currency       Equity           Total 
                             capital        premium        losses               reserve      reserve          Equity 
                             $              $              $                          $            $               $ 
  Group 
  At 30 June 2018            3,852,673      106,678,805      (48,137,398)      (41,554)      902,854      63,255,380 
 
  Net loss for the 
   period                              -              -       (1,274,656)             -            -     (1,274,656) 
  Other comprehensive 
   income: 
  Foreign currency 
   translation                         -              -                 -      (10,234)            -        (10,234) 
                           -------------  -------------  ----------------  ------------  -----------  -------------- 
  Total comprehensive 
   income for the 
   period                              -              -       (1,274,656)      (10,234)            -     (1,284,890) 
                           -------------  -------------  ----------------  ------------  -----------  -------------- 
 
  Balance at 31 December 
   2018                        3,852,673    106,678,805      (49,412,054)      (51,788)      902,854      61,970,490 
                           =============  =============  ================  ============  ===========  ============== 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIODED 31 DECEMBER 2017

 
                             Share          Share          Retained          Currency       Equity       Total 
                             capital        premium        losses            reserve        reserve      Equity 
                             $              $              $                           $            $                $ 
  Group 
  At 30 June 2017            3,557,582      94,914,770     (39,383,794)      (318,737)      902,854      59,672,675 
 
  Net loss for the 
   period                    -              -              (2,568,508)       -              -            (2,568,508) 
  Other comprehensive 
   income: 
  Foreign currency 
   translation                 -              -              -                 (555,180)      -            (555,180) 
                           -------------  -------------  ----------------  -------------  -----------  --------------- 
  Total comprehensive 
   income for the 
   period                      -              -              (2,568,508)       (555,180)      -            (3,123,687) 
                           -------------  -------------  ----------------  -------------  -----------  --------------- 
 
  Capital Raising 
  Issue of shares            293,461        11,917,829     -                 -              -            12,211,290 
  Issue of shares 
   in lieu of fees           1,630          68,459         -                 -              -            70,089 
  Issue costs                -              407,523        -                 -              -            407,523 
 
  Balance at 31 December 
   2017                        3,852,673    107,308,581      (41,952,301)      (873,916)      902,854    69,237,890 
                           =============  =============  ================  =============  ===========  =============== 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEARED 30 JUNE 2018

 
                          Share          Share            Retained          Currency      Equity       Total 
                          capital        premium          losses            reserve       reserve      Equity 
                          $              $                $                          $            $                $ 
  Group 
  At 30 June 2017         3,557,582      94,914,770       (39,383,794)      (318,737)     902,854      59,672,675 
 
  Net loss for the 
   period                 -              -                (8,753,604)       -             -            (8,753,604) 
  Other comprehensive 
   income: 
  Foreign currency 
   translation              -              -                -                 277,183       -            277,183 
                        -------------  ---------------  ----------------  ------------  -----------  --------------- 
  Total comprehensive 
   income for the 
   period                   -              -                (8,753,604)       277,183       -            (8,476,421) 
                        -------------  ---------------  ----------------  ------------  -----------  --------------- 
 
  Capital Raising 
  Issue of shares         292,941        12,303,543       -                 -             -            12,596,484 
  Issue of shares 
   in lieu of fees        2,150          90,271           -                 -             -            92,421 
  Issue costs             -              (629,779)        -                 -             -            (629,779) 
 
  Balance at 30 June 
   2018                     3,852,673      106,678,805      (48,137,398)      (41,554)      902,854      63,255,380 
                        =============  ===============  ================  ============  ===========  =============== 
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

 
                                   Notes    6 months ended    6 months ended    Year ended 
                                             31 December       31 December       30 June 
                                             2018              2017              2018 
                                             (unaudited)       (unaudited)       (audited) 
  ASSETS                                    $                 $                 $ 
  Non-Current Assets 
  Exploration and evaluation 
   assets                          3        37,306,625        54,019,102        43,498,422 
  Developed oil and gas assets     3        21,256,907        4,933,129         13,736,007 
  Property, plant & equipment      3        2,121,396         2,556,352         2,237,698 
                                          ----------------  ----------------  -------------- 
                                            60,684,928        61,508,584        59,472,127 
                                          ----------------  ----------------  -------------- 
  Current Assets 
  Trade and other receivables               1,920,505         515,445           700,939 
  Cash and cash equivalents                 3,980,942         7,567,362         3,399,290 
                                          ----------------  ----------------  -------------- 
                                            5,901,447         8,082,808         4,100,229 
                                          ----------------  ----------------  -------------- 
 
    Total assets                            66,586,375        69,591,391          63,572,356 
                                          ----------------  ----------------  -------------- 
 
  LIABILITIES 
  Current liabilities 
 
    Trade and other payables                4,615,885         353,501             316,976 
 
    Total liabilities                       4,615,885         353,501             316,976 
                                          ----------------  ----------------  -------------- 
 
  Net assets                                61,970,490        69,237,890        63,255,380 
                                          ================  ================  ============== 
 
 
  EQUITY 
  Capital and reserves 
  Share capital                             3,852,673         3,852,673         3,852,673 
  Share premium                             106,678,805       107,308,581       106,678,805 
  Retained losses                           (49,412,054)      (41,952,301)      (48,137,398) 
  Currency reserve                          (51,788)          (873,916)         (41,554) 
  Equity reserve                            902,854           902,854           902,854 
  Shareholders' equity                      61,970,490        69,237,890        63,255,380 
                                          ================  ================  ============== 
 
 
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIODED 31 DECEMBER 2018

 
                                              6 months       6 months       Year ended 
                                               ended 31       ended 31       30 June 
                                               December       December       2018 
                                               2018           2017 
                                              (unaudited)    (unaudited)    (audited) 
                                              $              $              $ 
 
    Net cash outflow from operating 
    activities                                (1,853,093)    (1,632,713)      (2,082,803) 
                                            -------------  -------------  ---------------- 
 
  Cash flows from investing activities 
 
    Interest received                         1,140          2,731            6,858 
  Funds used for drilling, exploration 
   and leases                                 (1,369,083)    (6,102,396)    (10,679,594) 
  Developed oil & gas assets                  -              (248)          (495,183) 
  Property, plant & equipment                 -              (1,771,119)    208,682 
 
    Net cash outflow from investing 
    activities                                (1,367,943)    (7,871,032)      (10,959,237) 
                                            -------------  -------------  ---------------- 
 
 
    Cash flows from financing activities 
  Proceeds from share issue ratified          3,802,688 
   post period end                                           -              - 
  Proceeds from issue of shares               -              13,096,425     12,596,484 
  Issue costs paid in cash                    -              (407,523)      (537,360) 
                                                           -------------  ---------------- 
 
    Net cash inflow from financing 
    activities                                  3,802,688    12,688,902     12,059,124 
                                            -------------  -------------  ---------------- 
 
  Net increase/(decrease) in cash 
   and 
   cash equivalents                           581,652        3,185,157        (982,916) 
 
    Cash and cash equivalents at the 
    beginning of the period                     3,399,290      4,382,206      4,382,206 
                                            -------------  -------------  ---------------- 
 
    Cash and cash equivalents at the 
    end of the period                           3,980,942      7,567,362      3,399,290 
                                            =============  =============  ================ 
 

RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

 
                                                                6 months ended    6 months ended    Year ended 
                                                                 31 December       31 December       30 June 
                                                                 2018              2017              2018 
                                                                (unaudited)       (unaudited)       (audited) 
                                                                $                 $                 $ 
  Loss for the period                                           (1,274,656)       (2,568,508)       (8,753,604) 
   Net interest received                                         (1,140)           (2,731)           (6,858) 
   Unrealised (gains)/losses on assets held for sale             -                 (132)             - 
  Impairment of intangible assets                               -                 1,825,051         6,805,537 
  Depreciation of office equipment                              215               895               1,436 
  Depletion of developed oil & gas assets                       39,980            48,625            88,293 
  Depreciation of production & pipeline facilities              116,053           37,404            145,516 
  Increase in trade and other receivables                       (1,219,566)       (186,994)         (372,620) 
  Increase/(decrease) in trade and other payables               496,223           (231,111)         (267,636) 
  Effect of translation differences (fixed assets)              34                (32)              (50) 
  Effect of translation differences                             (10,235)          (555,180)         277,183 
                                                              ----------------  ----------------  ------------- 
  Net cash outflow from operating activities                    (1,853,093)       (1,632,713)       (2,082,803) 
                                                              ================  ================  ============= 
 

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

   1.      Accounting policies 

A summary of the principal accounting policies, all of which have been applied consistently throughout the period, is set out below.

   1.1.   Basis of preparation 

This financial information has been prepared on a going concern basis using the historical cost convention and in accordance with the International Financial Reporting Standards ("IFRSs"), including IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the European Union ("EU") and in accordance with the provisions of the Companies Act 2006.

This interim report has been prepared on a basis consistent with the Group's expected accounting policies for the year ending 30 June 2019. These accounting policies are the same as those set out in the Group's Annual Report and Financial Statements for the year ended 30 June 2018, which are available from the registered office or the company's website (www.pantheonresources.com).

The Group financial information is presented in US Dollars and is unaudited. The interim financial information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The comparative figures for the year ended 30 June 2018 have been taken from the Group's statutory accounts for that financial year, which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, however did contain an emphasis of matter - going concern, to which the auditors drew attention without qualifying their report and did not contain any statement under section 498 (2) or 498 (3) of the Companies Act 2006.

   1.2.   Basis of consolidation 

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. Goodwill arising on acquisitions is capitalised and subject to impairment review, both annually and when there are indications that the carrying value may not be recoverable.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.

All the companies over which the Company has control apply, where appropriate, the same accounting policies as the Company.

   1.3.   Foreign currency translation 

(i) Functional and presentational currency

The financial statements are prepared in US Dollars ("$") which is the functional currency of the Company and is the Group's presentation currency.

(ii) Transactions and balances

Transactions in foreign currencies are translated into US Dollars at the average exchange rate for the period. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. The resulting exchange gain or loss is dealt with in the income statement.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

   1.3     Foreign currency translation continued 

The assets, liabilities and the results of the foreign subsidiary undertakings are translated into US dollars at the rates of exchange ruling at the year end. Exchange differences resulting from the retranslation of net investments in subsidiary undertakings are treated as movements on reserves.

   1.4.   Cash and cash equivalents 

The company considers all highly liquid investments, with a maturity of 90 days or less to be cash equivalents, carried at the lower of cost or market value.

   1.5.   Going concern 

The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

Oil and Gas exploration and development is a capital intensive business, requiring sufficient capital to prosecute a Company's strategy. Despite the high quality of Pantheon's assets, as a growth company it will require additional capital in the future. In January 2019 the Company concluded a successful fund raising of $20.9m (before expenses), through an equity offering. In March 2019 the Company announced the successful flow test and discovery of the Brookian Zone of Interest in the Alkaid well. Pantheon has a 100% working interest in this well which was estimated to contain a P50 Technically Recoverable Resource of 25 million barrels of oil. The Directors believe this, and the Groups other assets, have significant potential value and are confident it could farm down prospect(s) or seek other forms of financing (including but not limited to equity) if desired. Should Haliburton exercise their back in right to acquire 25% working interest in Alkaid, Pantheon would expect to receive a significant cash payment, equivalent to 400% of the prorated costs associated with present operations. The Directors believe for the reasons above that the Group's use of a going concern basis is appropriate. Accordingly, the Directors have prepared the financial statements on that basis.

The Directors have reviewed the Group's overall position and outlook and are of the opinion that the Group is sufficiently well funded to be able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements.

   1.6.   Deferred taxation 

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and expected to apply when the related deferred tax is realised or the deferred liability is settled.

Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the temporary differences can be utilized.

   1.7.   Exploration and evaluation costs and developed oil and gas properties 

The Group follows the 'successful efforts' method of accounting for exploration and evaluation costs. All costs associated with oil, gas and mineral exploration and investments are classified into and capitalised on a 'cash generating unit' ("CGU") basis, in accordance with IAS 36. Costs incurred include appropriate technical and administrative expenses but not general corporate overheads.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

   1.7      Exploration and evaluation costs and developed oil and gas properties continued 

If an exploration project is successful, the related expenditures will be transferred to Developed Oil and Gas Properties and amortised over the estimated life of the commercial reserves on a 'unit of production' basis.

The recoverability of all exploration and evaluation costs is dependent upon the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of the reserves and future profitable production or proceeds from the disposition thereof. The prospect acreage has been classified into discrete "prospects" or CGU's. When production commences the accumulated costs for the specific CGU is transferred from intangible fixed assets to tangible fixed assets i.e. 'Developed Oil & Gas Properties' or 'Production Facilities and Equipment', as appropriate. Amounts recorded for these assets represent historical costs and are not intended to reflect present or future values.

1.8. Impairment of exploration costs and developed oil and gas properties, and depreciation of assets

In accordance with IFRS 6 'Exploration for and Evaluation of Mineral Resources' (IFRS 6), exploration and evaluation assets are reviewed for indicators of impairment. Should indicators of impairment be identified an impairment test is performed.

In accordance with IAS 36, the Company is required to perform an "impairment test" on assets when an assessment of specific facts and circumstances indicate there may be an indication of impairment, specifically to ensure that the assets are carried at no more than their recoverable amount. Where an impairment test is required, any impairment loss is measured, presented and disclosed in accordance with IAS 36

In accordance with IAS 36 the Company has determined an accounting policy for allocating exploration and evaluation assets to specific 'cash-generating units' ("CGU").

Exploration and evaluation costs

In relation to the Tyler and Polk County projects, the carrying value as at 31 December 2018 represents back costs and direct costs paid in relation to the project, seismic, land and drilling costs relating to the prospects as well as prepaid costs towards future drilling.

Developed Oil and Gas Properties

Developed Oil and Gas Properties represent four wells (VOS#1, VOBM#1, VOBM#2H & VOBM#3) located in Polk and Tyler Counties. These costs were transferred from "Exploration and Evaluation costs" to "Developed Oil & Gas properties" when the wells were commissioned. The wells are depleted over the estimated life of the commercial reserves based on the "Unit of production basis" based upon a typeset P50 well estimated at 1.4Mmboe P50 prospective resource (recoverable).

Other property, plant and equipment

Other property, plant and equipment are stated at historical cost less depreciation. Depreciation is provided at rates calculated to write off the costs less estimated residual value of each asset over its estimated useful life as follows:

- Production facilities and equipment are depreciated by equal instalments over their expected useful lives, ranging from 3 to 30 years.

- Office equipment is depreciated by equal annual instalments over their expected useful lives, being three years.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

1.9. Revenue

Revenue, excluding production tax and similar taxes, represents net amounts invoiced for the Group's share of oil and gas revenues in the year.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

   2.      Loss per share 
 
                                                                                6 months 
                                                          6 months               ended 31      Year ended 
                                                           ended 31 December     December       30 June 
                                                           2018                  2017           2018 
                                                          (unaudited)           (unaudited)    (audited) 
  Loss per ordinary share from continuing operations: 
   Basic                                                  (0.54)c               (1.10)c        (3.72)c 
 
 

The calculation above for the basis loss per share has been calculated by dividing the relevant loss for the period by the weighted average number of ordinary shares in issue of 237,336,555 (December 2017: 233,606,706; June 2018: 237,336,555).

   3.      Non-current assets 
 
  Exploration and evaluation assets                   Exploration 
   Group                                               & evaluation 
                                                       assets 
                                                      $ 
  Cost: 
  At 30 June 2018                                     43,498,422 
   Additions                                           1,369,083 
  Transfer to developed oil and gas 
   assets                                             (7,560,880) 
  Transfer to PP&E                                    - 
                                                    --------------- 
  At 31 December 2018                                 37,306,625 
                                                    --------------- 
 
  Impairment: 
  At 30 June 2018                                     6,805,537 
  At 31 December 2018                                 - 
                                                    --------------- 
 
  Net book value: 
  At 31 December 2018                                 37,306,625 
                                                    =============== 
  At 30 June 2018                                     43,498,422 
                                                    =============== 
 

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

   3.      Non-current assets continued 
 
  Developed Oil and Gas Assets                        Developed 
   Group                                               Oil & Gas 
                                                       assets 
                                                      $ 
  Cost: 
  At 30 June 2018                                     13,736,007 
   Additions                                           - 
  Transferred from exploration & 
   evaluation assets                                  7,560,880 
   Depletion of developed oil & gas 
    assets                                             (39,980) 
                                                    ------------ 
  At 31 December 2018                                 21,256,907 
                                                    ------------ 
 
  Net book value: 
  At 31 December 2018                                 21,256,907 
                                                    ============ 
  At 30 June 2018                                     13,736,007 
                                                    ============ 
 
 
  Property Plant and Equipment             Property, 
   Group                                    Plant & 
                                            Equipment 
                                           $ 
  Cost: 
  At 30 June 2018                          2,237,698 
   Additions                                - 
  Depreciation office equipment            (215) 
  Transferred from exploration and 
   evaluation assets 
   Depreciation of production & pipe       - 
   line facilities                          (116,053) 
  Exchange difference                      (34) 
                                         ------------ 
  At 31 December 2018                      2,121,396 
                                         ------------ 
 
  Net book value: 
  At 31 December 2018                      2,121,396 
                                         ============ 
  At 30 June 2018                          2,237,698 
                                         ============ 
 

Exploration and Evaluation assets includes direct drilling, technical and accumulated leasehold costs in relation to the prospects. Once a well commences production, costs are reclassified to "Developed Oil & Gas properties" and subject to relevant depletion and amortisation charges as appropriate. In November, direct costs associated with the VOS#1 well were reclassified to Developed Oil and Gas properties.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

   4.      Approval by Directors 

The interim report for the six months ended 31 December 2018 was approved by the Directors on the 27th of March 2019.

   5.       Availability of Interim Report 

The interim report will be made available shortly on the Company's website (www.pantheonresources.com), with further copies available on request from the Company's registered office.

   6.       Subsequent events 

Completion of the acquisition of two wholly owned companies from Great Bear Petroleum Operating LLC ("Great Bear")

At the EGM held on the 14(th) of January 2019 the shareholders ratified the acquisition of two wholly owned companies from Great Bear Petroleum Operating LLC, Great Bear Petroleum Ventures I LLC and Great Bear Petroleum Ventures II LLC (together the "Great Bear Companies"). The main assets of the Great Bear Companies are leases with the rights to explore for hydrocarbons in Alaska. The Great Bear Companies have over 250,000 leased acres onshore North Slope of Alaska, which are well located to infrastructure, and whose acreage has an estimated P50 Technically Recoverable Resource (Gross) of 2.0 billion barrels oil. The estimated P50 Technically Recoverable Resource (Gross) included 400 million barrels oil attributable to the Winx Well. The acquisition of the assets of Great Bear Petroleum completed on 17 January 2018 in accordance with its terms.

Acquisition of controlling interest in Vision

Pantheon acquired 66.6 per cent ownership of Vision Gas Limited and Vision Resources LLC (together, "Vision") including its working interest in the VOS#1 well 33.3 per cent and associated Tyler County acreage. Vision Gas Limited owns certain physical assets and its intellectual property (comprising, inter alia, seismic, well logs, and production histories). The acquisition allows Pantheon to assume management control of the Vision entities. As consideration, Pantheon issued 3.5million new fully paid ordinary shares.

Completion of Capital Raising

At the EGM held on the 14(th) of January 2019 the shareholders ratified the Capital Raising of approximately US$20.9 million (before expenses). 108,335,266 new Ordinary Shares were issued at an issue price of 15.25 pence per share.

Appointment of Technical Director

Appointment of Mr Robert (Bob) Rosenthal as Technical Director of Pantheon on 11(th) of March 2019. Mr. Rosenthal, 66, has over 40 years' experience in the oil and gas industry globally as an Exploration Geologist and Geophysicist. He has held various senior exploration positions and spent a large part of his career at Exxon and at BP, where he gained key relevant regional experience in the geology of North Slope of Alaska and of Texas. Since 1999, Mr Rosenthal has run his own successful consulting business and has led the exploration efforts of a number of private and public companies.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIODED 31 DECEMBER 2018

   6.       Subsequent events continued 

Passing of John Walmsley

In March 2018 John Walmsley, Non-executive Director and former Chairman sadly passed away.

Winx well - Western Blocks acreage - 10% working interest, Alaskan North Slope

The Winx well hit target Depth of 6,800' on the 3rd March, with all pre-drill targets successfully intersected. A comprehensive wireline logging program was successfully completed, and a full petrophysical analysis and review was commenced. Provisional petrophysical analysis of the wireline logging program indicated low oil saturations in the primary Nanushuk Topset objectives; testing and fluid sampling indicated that reservoir quality and fluid mobility at this location was insufficient to warrant production testing.

Zones of interest in the Torok formation, secondary objectives, were identified on wireline logs, which similarly exhibited low oil saturations and did not flow hydrocarbons.

The estimated P50 Technically Recoverable Resource (Gross) attributable to the Winx Well was 400 million barrels of oil and this estimate will be subject to downward revision by the operator in due course..

Alkaid well, Alaska North Slope, PANR 100% working interest

The first of the 3 targeted horizons, the Brookian ZOI, confirmed as an oil discovery, following a successful flow test where results exceeded expectations. A 6 foot interval (from a c.240 foot interval of net pay) was perforated and flow tested at 80- 100 BOPD light oil (40 degree API). Such flow rates are considered to be an excellent result 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.

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 The plan is to now isolate the Brookian ZOI zone, and to flow test the shallower West Sak and Ugnu horizons prior to shutting down operations later in April.

GLOSSARY

bbl barrel of oil mcfd thousand cubic feet per day

bopd barrels of oil per day Mmboe million barrels of oil equivalent

boepd barrels of oil equivalent per day NPV net present value

mcf thousand cubic feet $ United States dollar

   bwpd                barrels water per day 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR MMGZFZNKGLZZ

(END) Dow Jones Newswires

March 28, 2019 03:02 ET (07:02 GMT)

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