TIDMPANR
RNS Number : 0582E
Pantheon Resources PLC
25 February 2020
25 February, 2020
Pantheon Resources plc
Final Results for the Year Ended 30 June 2019
Pantheon Resources plc ("Pantheon" or "the Company" or "the
Group"), the AIM-quoted oil and gas exploration company with 89.2%
- 100% working interests in several projects on the Alaskan North
Slope, and 58% - 100% working interests in projects in Polk &
Tyler Counties, East Texas is pleased to announce its results for
the year ended 30 June, 2019:
Operational Highlights
-- A transformational year for Pantheon, repositioning its asset
base following the acquisition of the Great Bear Petroleum Ventures
I LLC and Great Bear Petroleum Ventures II LLC (together the "Great
Bear Companies") which completed in January 2019, and establishing
itself as a significant stakeholder on the Alaskan North Slope,
with a strong portfolio offering multi-billion barrel of oil in
place potential:
o Over $200m invested on the assets prior to the acquisition by
Pantheon
o Approx. 1,000 square miles of mostly proprietary 3D
seismic
o Confirmed discoveries on both the Alkaid and Talitha
projects
-- A strategic refocusing of the Group, establishing Alaska as
the primary asset, ahead of East Texas
-- Significant milestones achieved at Alkaid during the year, including:
o Successful flow testing of the Alkaid #1 discovery well
o Alkaid and Phecda considered to be one continuous oil
accumulation "Greater Alkaid"
o More recently, Independent Expert Report ("IER") received,
confirming 76.5 Million barrels of oil ("MMBO") Contingent
Recoverable Resource
o IER modelled a 20 year development plan for Greater Alkaid at
$55 oil price, estimating an NPV10 of US$595m, EUR (estimated
ultimate recovery) of 2.25 MMBO per well and an NPV10 of US$8.50
per barrel of oil
-- eSeis (experts in geophysical and petrophysical analysis)
have chosen to work as a partner, aligning interests with the
Company and demonstrating industry validation
-- Farmout process well underway - increased interest over
recent weeks following Independent Expert Report on Greater Alkaid.
The Company is seeking an up-front payment and a carry, on future
drilling costs
-- Acquired key acreage in the core of the project area
containing another two discoveries which will be the focus of
continued evaluation. Initial estimate of Oil in Place exceeds 1
billion barrels
-- Acquired 66% of Vision Resources LLC, securing management
control for Pantheon's East Texas assets, after a long period of
disruption following the death of Vision's principal
Financial & Corporate Highlights
-- Revenues for the year ended 30 June 2019: $0.7m (2018: $1.0m)
-- Cost of sales $0.7m (2018: $0.9m)
-- Profit for the year $35.5m (2018: $8.7m loss)
-- Non-cash items: Gain on bargain purchase $100.8m (2018: Nil),
resulting from the acquisition of Great Bear in January 2019.
Offsetting this are non-cash impairments on the East Texas assets
$48.6m (2018: $6.8m) reflecting the Group's strategy to prioritise
its Alaskan assets over East Texas. Impairment of goodwill on the
acquisition of Vision $0.8m (2018: Nil)
-- G&A $3.4m (2018: $1.9m)
-- Vision costs $1.7m (2018: Nil). Expected to reduce going forward
-- Cash and Cash equivalents at 30 June 2019: $1.9m (2018: $3.4m)
-- Cash on hand: 21 February 2020: $6.6m
-- The Company issued 217,193,911 new fully paid ordinary shares
and 102,471,055 non-voting convertible shares during the year in
relation to the acquisition cost of Great Bear, the acquisition of
66% of Vision Resources LLC, an associated capital raising in
January 2019 (raising cash proceeds of c.$20.9m before expenses)
and payment of advisors
Outlook
-- Farm out process in Alaska is well underway. Pantheon's
intention is to secure a farmout partner in order to begindrilling
this year with first production shortly thereafter, as the oil
field is located immediately under the Trans Alaska Pipeline
-- Increased interest from potential new farm-in partners since the January release of IER
-- Pantheon is continuing to increase its understanding of its
projects, supported by the experts at eSeis.
-- New acreage, Theta West & Leonis, contains at least two
discoveries where resource numbers are currently being
evaluated
-- Talitha Project continues to emerge - resource upgrade
expected shortly, however the analysis is not yet complete and
therefore there can be no certainty of an increase
Jay Cheatham, CEO, said:
" As evidenced by the multitude of highlights above, this has
been an extraordinary year for Pantheon. Anchored by the
acquisition of Great Bear, Pantheon is positioned to potentially
become a major North Slope producer. This is a result of exemplary
work on the part of all the Pantheon employees and consultants.
With a handful of personnel we have the opportunity to unlock great
value for stakeholders. The Lee Keeling independent expert report
has solidified our belief in our many projects on the North Slope.
2020 promises to be our year. "
Annual report and Accounts
The Annual Report and Accounts for the financial year ended 30
June 2019 will be posted to shareholders tomorrow, together with a
Notice of Annual General Meeting. These documents will be available
today on the Company's website at: www.pantheonresources.com
The Annual General Meeting of the Company will be held at the
offices of Bryan Cave Leighton Paisner, at Adelaide House, London
Bridge, London EC4R 9HA on Friday, 20(th) March at 3.30pm.
-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 (Corporate
Finance)
Aimee Kerslake (Equity Sales)
Blytheweigh +44 20 7138 3204
Tim Blythe, Megan Ray
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.
On the North Slope of Alaska, Pantheon holds working interests
of 89.2% to 100% in projects covering c.200,000 gross acres &
covered by c.1,000 square miles of 3D seismic. In January 2020 the
Company received an Independent Expert Report certifying a
Contingent Resource of 76.5MMBO (million barrels of oil) on its
Greater Alkaid project.
In East Texas, Pantheon has working interests 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. Pantheon has the ability for this working
interest position to increase to 100% should the minority partner
not be in a position to meet its pro rata share of future drilling
and operating costs.
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.
Clearly, 2019 was a transformational year for Pantheon with the
Great Bear Petroleum ("GBP") acquisition that now underpins and
drives our corporate strategy. Great Bear's assets on the Alaska
North Slope ("ANS" or the "North Slope") delivers an opportunity
for our company to become a very significant oil and gas company in
terms of reserves and production. The ANS is experiencing an oil
exploration and development revival, boasting some of the world's
largest onshore oil discoveries in recent times. Pantheon has a
very material position in this prolific basin, which has taken a
decade and over $200 million to establish, and which contains
numerous discoveries of oil which we are continuing to evaluate. Of
most importance is the fact that our acreage and discoveries are
all located in close to proximity to the established infrastructure
which includes the Trans Alaska Pipeline and the Dalton Highway.
Having managed the largest oilfield in North America, less than 25
miles away at Prudhoe Bay, I can't stress highly enough the
importance of our ideal geographical location of our assets in
relation to the export infrastructure. This is a significant
advantage over other ANS plays, allowing much quicker times to
first production, materially lower capex requirements, and the
possibility for year-round drilling in certain locations, all of
which enhance the economics of our projects. This was a critical
factor in our decision to acquire Great Bear. We haven't forgotten
East Texas, but given the significant value differential between
Texas and Alaska, it is clear that the Company's primary focus must
now be Alaska.
As we look to Alaska, a key to unlocking the vast potential
resources on the Arctic Slope is fully exploiting our existing
high-quality 3D seismic data over our lease positions. Over $80
million has been spent to date on this seismic, which is
proprietary to Pantheon and is not available to anyone else. This
is a significant competitive advantage. As Pantheon looked to merge
and process the many surveys, our Technical Director Bob Rosenthal
and his team focused on the best technology and people to provide
the service. Pantheon selected eSeis as the service provider due to
their proprietary geophysics technology and world-class team. The
eSeis team has had a hand in multiple discoveries on the North
Slope, including the billion-barrel Alpine field. After reviewing
the data over our blocks, eSeis elected to work as a partner on the
project rather than purely on a fee basis and hence are completely
aligned with the interests of all shareholders. It is also an
assertive validation of the prospectivity of our acreage.
Also indicative of validation, we were pleased that the Lee
Keeling and Associates report confirmed our earlier estimates of
recoverable resources and excellent project economics at Greater
Alkaid, which in fact lies almost directly beneath the Dalton
Highway and pipeline. Jay Cheatham will give more specifics in his
CEO statement below on both our Alkaid-Phecda discovery (now
referred to as "Greater Alkaid") along with other exciting prospect
potential on our acreage.
At East Texas, it has been a complicated and frustrating year.
All of our historic wells had logged excellent reservoirs, similar
to the offset wells that have been producing significant volumes of
hydrocarbons for many years. Despite the apparent excellent log
responses, the operator's ability to effectively complete and
successfully flow hydrocarbons was unsuccessful. The death of the
principal of Vision, the operator, in 2018 significantly impacted
operations. This year we acquired of 66% of Vision Resources LLC,
which was crucial to obtain management control to help protect the
value of our assets. We have now been able to have Pantheon's
technical team commence a detailed field-wide study including
geological and geophysical data, historic drilling operations and
completion methods. These initiatives will put us in a stronger
position to continue to evaluate this project and determine a
future plan for this asset. Jay will expand on this in his CEO
Statement.
Finally, we strengthened our Board with the addition of Bob
Rosenthal, Technical Director and Chief Geologist, who was also a
founder of Great Bear, and Jeremy Brest, who was a director at
Great Bear and has a wealth of experience. Jeremy has a law degree
and is a specialist in structured financings. We have also retained
key members of the Great Bear team, which we have supplemented with
some extremely talented technical personnel. We also honour John
Walmsley who we lost during the year. He was a true gentleman who
we all miss greatly.
In closing, as we start a new decade your company is a very
different company to where we were last financial year. With hard
work and some good fortune we have emerged as a company with a
focus on Alaska, where we have established an exceptional position
in an area where the stakes and potential rewards are an order of
magnitude greater not only than East Texas, but than in most other
parts of the world.
Phillip Gobe
Chairman
24 February 2020
2019 has been an incredibly busy year for Pantheon.
Great Bear Acquisition
The acquisition of Great Bear Petroleum ("GBP") this year was a
transformational event for Pantheon. The Alaskan North Slope
("ANS") is experiencing an oil exploration and development revival.
The recent discoveries rate amongst the world's largest onshore oil
discoveries which has resulted in the ANS now being rated as a
"Super Basin" by the industry experts IHS Markit. The acquisition
of GBP has positioned Pantheon as a major leaseholder in this world
class province, where we now have large discovered oil resources
and outstanding exploratory potential. The Board of Pantheon, with
deep experience on large scale energy projects and important
relevant experience in Alaska, understands the exciting opportunity
of this portfolio as well as the challenges of operating in such a
location. As our Chairman has earlier discussed, all of the
Pantheon assets in Alaska are located in one core geographic
location, adjacent to the Dalton Highway and the Trans Alaska
Pipeline. This location enhances the commercial potential of any
discoveries with reduced logistical challenges, more rapid
development potential, resulting in much lower hurdles to economic
viability-critically important for a small company like ours
operating on the ANS, and an incredible competitive advantage when
compared to other projects.
Our team began negotiations with GBP in July 2018 and completed
the acquisition in January 2019. We were able to acquire the GBP
assets on the North Slope at an effective valuation significantly
less than the +$200 million invested in the project over the last
decade. I want to again congratulate the Pantheon and GBP teams for
completing this transaction and the subsequent capital raising in
what were extremely challenging circumstances in December of 2018.
Global equity markets were under extreme pressure due to US - China
trade issues, the UK Brexit crisis, and collapsed oil prices.
Despite all this, Pantheon emerged debt-free with what we view as a
world class portfolio in Alaska which offers incredible upside
potential. We enhanced the Board and management team with
additional technical and financial skills and delivered an
operational capability to progress its projects. Our two major
focus projects in Alaska are Alkaid and Talitha, which both contain
discovered resources and are both very large. Alkaid has been
successfully tested and, after receiving an Independent Expert
Report and certified Contingent Recoverable Resource as recently as
last month, is being readied for pilot production testing as soon
as we drill our next well. Talitha contains confirmed oil at
numerous levels but is yet to be production tested. Further
drilling at Talitha will delineate the resource and ascertain the
productive potential across the numerous stratigraphic levels,
however detailed geophysical work has been undertaken on Talitha
over recent months in collaboration with our partners at eSeis.
This work is ongoing, however is pointing to a very significant
upgrade in management's estimate of potential resource. We are also
very excited by our success at the recent lease sales where we
acquired another two possible oil accumulations at Theta West and
Leonis, adjoining our core acreage, which combined have
multi-billion-barrel potential. It is important to stress that
these projects were identified from GBP's proprietary 3D seismic,
unavailable to any third parties, which has provided a significant
competitive advantage in acreage selection.
As Operator and 89.2%-100% working interest owner of all its
projects, Pantheon is in an enviable position. We have continued to
expand our technical capabilities both in house, and by engaging
additional external expertise to work with our team and assist us
to evaluate and promote our current projects. We are extremely
happy with the performance of our entire team which have already
added significant value to our projects in Alaska our focus for
this year. The high working interest provides greater control over
the project area and ability to continue funding operations through
farm out activities.
Lee Keeling & Associates
The Company engaged the independent experts at Lee Keeling &
Associates ("LKA") to initially perform a reservoir study on the
Alkaid and Phecda (now referred to collectively as "Greater
Alkaid") oil discovery, and we will shortly engage them to commence
work on our Talitha project. LKA is a highly regarded USA based
engineering firm located in Tulsa Oklahoma that has decades of
experience with great expertise in the type of projects we have at
Alkaid and Talitha; horizontal multistage reservoir
development.
In the past few weeks LKA completed the initial phase of their
work at Greater Alkaid, and their analysis has supported our
internal assessment that Alkaid and Phecda were indeed one
continuous accumulation. The key takeaways were the certification
of a 76.5 million barrels of oil ("MMBO") Contingent Recoverable
Resource (a higher resource classification than our previous
resource estimate) with a $595million NPV10 from a phase 1 field
development which modelled a 44 well development of 70 MMBO over a
20 year period at a flat $55 oil price. LKA estimated an EUR
(estimated ultimate recovery) per well of 2.25MMBO, and a 10%
recovery factor. Additionally, they risked 20 of the 44 wells by
50%, yielding the 76.5 MMBO. When considering Greater Alkaid it is
important to remind ourselves that when the Alkaid#1 well was
originally drilled in 2015, drilling activities were terminated
prematurely under the direction of the regulators, due an
unseasonal weather event which resulted in extensive regional
flooding. The well was immediately suspended and the rig moved off
location. The well was within the targeted section of the
reservoir, which was oil bearing, precisely at the time when
operations were halted. As a result, there remains a potentially
significant section of untested pay deeper in the hole which was
unable to be accessed. Importantly, none of this potential has been
considered in the calculation of the Contingent Resource, which
provides potential for increases in the resource when the next well
is drilled. It is also worth noting that there is additional upside
potential if we can deliver increased recovery factors above the
modelled 10%, which is a reasonable possibility with further
engineering experience in these reservoirs. Elsewhere on the ANS,
Companies have used secondary recovery techniques such as water
flooding with great success, substantially increasing recovery
factors.
eSeis Consulting Agreement
Over $80m has been invested in our proprietary 3D seismic
acquisition which spans over 1,000 square miles. No other groups
have access to this. The most prospective play types across our
leases are mostly stratigraphic in nature, and these cannot be
matured to drill-ready prospects without 3D seismic. We engaged
eSeis to assist us in extracting the maximum amount of information
from our seismic data set. eSeis is a specialist geophysics
consultancy with a highly talented team and state-of-the-art
proprietary analytic tools used to determine fluid and possible
reservoir characteristics in target formations from seismic data.
These techniques have proven very successful in discovering oil
elsewhere on the ANS. The eSeis team have in depth expertise on the
ANS with a proven track record of discovering oil in that area and
are expert in this type of analysis. Pantheon signed a contract
with eSeis in June to provide their proprietary geophysical
analysis over our project area in exchange for a 1% overriding
royalty interest (ORRI) over our acreage excluding the discovered
Greater Alkaid oil accumulation. eSeis is also assisting Pantheon
in preparing the technical material and a data room for farmout
presentations. eSeis, who are experts in their field, have forgone
a significant consultancy fee in exchange for the ORRI, which is a
major endorsement of the technical merits and perceived commercial
value of our project. I have been extremely impressed with the
quality of the eSeis work, which has enabled us to identify
significant additional potential on our acreage. eSeis were also
integrally involved in the identification of the new Leonis and
Theta West projects acquired in December 2019. eSeis has been
extremely helpful in our farmout process, which is discussed in
more detail below.
Alkaid Oil Accumulation
As discussed already, GBP drilled the Alkaid well in 2015, but
had to suspend drilling operations after flooding of the Dalton
Highway led to road closure. This foreclosed the possibility of
production testing operations during the 2015 campaign, and the
well was suspended. Pantheon created a funding solution for the
successful 2019 testing of Alkaid, which delivered results which
exceeded our expectations, underpinning our asset base.
The Alkaid well encountered 400 feet of gross pay with 240 feet
of net oil pay and no oil/water contact, testing high quality,
light 35-40 deg API oil. This result upgraded the adjoining Phecda
prospect which is mapped with Alkaid as part of one large "Greater
Alkaid" structure, with estimated OIP of 900 million barrels. The
Alkaid well tested an average 100 bopd via a very small single frac
through casing. Only 6 ft of the 240 ft net pay interval was
perforated, demonstrating good productivity despite testing only a
tiny fraction of the oil zone. Horizontal development wells are
estimated to produce around 2,000 bopd, with recoveries of around
2.25 million barrels per well. These are excellent numbers
considering the size and location of the field. Primary recovery is
conservatively estimated at 10-15% but other fields on the ANS have
achieved significantly higher (25% +) recovery factors with
optimally located and designed wells. Secondary recovery techniques
could increase ultimate recoveries further, adding major additional
upside potential to this project. The company plans to use an early
production unit (EPU) as part of a pilot testing operation to
generate early cashflow while acquiring valuable production data to
underpin full-field development planning. The Greater Alkaid oil
accumulation sits virtually under the TAPS pipeline and along the
major Dalton Highway, making it uniquely suited for a year-round,
highly cost-effective phased development plan, offering early
production potential and significant long-term financial and
operational advantages to more remote oil field developments on the
ANS.
In the event of a successful farmout, one or two development
wells are planned for 2020 that will be completed as pilot test
producers which modelling suggests could produce in excess of 2,000
bopd peak rate if successful. Once a commercial well has been
drilled and tested, part of the contingent resource numbers will be
reclassified as reserves which should have major positive valuation
implications and significantly enhance funding options for future
development.
Talitha Project
The Talitha project is effectively an appraisal of a discovery
well named Pipeline State #1 which was drilled in the late 1980s.
That well encountered several oil-bearing intervals as well as
strong oil shows in other formations but was not considered
attractive at that time when the oil price was circa $25 and
horizontal drilling and fracking technologies were vastly inferior
to today's standards. The forward program at Talitha involves
evaluating discoveries of oil in several reservoir zones, and the
testing of an exploration zone analogous to the large Horseshoe
discovery. The proven oil-bearing reservoirs include Brookian slope
and basin floor fans and the deeper Kuparuk Formation with combined
potential of 2.6 billion barrels of OIP. The Kuparuk oil play is
located updip from 47 feet of net oil pay encountered in the
Pipeline State #1 well and has the potential to be much larger.
More recent work completed at Talitha with the eSeis team has
indicated that the fan systems identified as discrete pay zones
could in fact be part of one very large continuous section that
extends several thousand feet which, if correct, has the potential
to materially increase the estimated oil in place (OIP).
Farmout/Data Room
The farmout process is well underway with a number of
high-quality parties having entered the data room, or planning to
enter the data room. Since the publication of the LKA report last
month, we have had experienced increased interest from a number of
new parties interested in reviewing our portfolio for a possible
transaction. We are seeing interest from a broad spectrum of groups
spanning from National Oil Companies at one extreme, to smaller
more boutique players at the other extreme. We are happy to
consider farm-in offers across the entire portfolio, or smaller
farmin transactions over individual discrete projects such as
Greater Alkaid. We cannot know how long the farm-out process might
take, but with the LKA report on Greater Alkaid and the excellent
work from eSeis, we are optimistic that this period has been
shortened.
East Texas
In January 2019 Pantheon acquired a 66% stake in Vision
Resources LLC, gaining management control. This was an important
transaction to enable Pantheon to preserve the value of its East
Texas assets following the death in 2018 of Mr Bobby Gray, the
principal of Vision and operator of the East Texas assets. Under
the technical oversight of Bob Rosenthal and his team, we have
commenced a comprehensive geological review of the East Texas
portfolio, including a detailed analysis of the results of historic
drilling and testing operations. This analysis is ongoing, but it
is clear that East Texas is secondary to Alaska, which is a higher
priority due to its greater size and scale. Notwithstanding, our
knowledge of the project has increased to a level where we are
beginning to understand the poor operational results of the past,
allowing us to better plan for the future. As an example, we
recently employed an expert consultant who completed many of the
successful wells in the large analogous Double-A Wells
gas/condensate field adjoining our discovery area. We have learned
that some of the operational decisions made by the previous
operator have been less than ideal for successfully completing or
stimulating the Woodbine/Eagle Ford formation. The previously
utilized techniques have resulted in substantial well bore
formation damage, severely restricting production and resulting in
very poor performance.
Frac jobs will be required to alleviate the damage caused, and
workovers of the existing well bores are not guaranteed to deliver
the desired results. We have commenced a detailed geophysical
analysis of the structures across the project area, incorporating
wireline logs and production data, with the aim of planning a way
forward in this project area. We do expect to do more work on our
East Texas project in 2020, and it is worth remembering that we
have discovered hydrocarbons in all of our East Texas wells, hence
we still believe there is a substantial resource to be evaluated in
this area. Our analysis to date, while not yet complete, supports
the belief that the East Texas acreage offers tremendous geological
potential, yet has been clearly hampered by poor operational
performances, and more recently, poor natural gas prices.
Currently, the Polk County wells are shut in due to poor
performance and recent winter record low gas prices. In light of
the changed strategic direction of the group to focus on Alaska as
the priority, the Group has written down the value of the East
Texas assets in the Group's accounts, also reflecting that any
funding in place will be prioritized to Alaska over the medium term
given the potential value creation for bringing the Greater Alkaid
project into production.
At an operational level in Texas, Pantheon's Chief Operating
Officer, Michael Duncan, has taken operational control of East
Texas. All previous operational personnel associated with Vision
are no longer involved with the project. Michael has undertaken a
number of commercial initiatives to streamline operations.
All leasing in East Texas for the last 18 months has been in
Pantheon's name and as a result Pantheon owns 100% of the
leasehold, excluding a small working interest held by Vision and
its partners in some of the wells. These are considered to be
immaterial in value. Pantheon has paid all costs for the last 18
months, which was essential in order to preserve the value of the
assets. Further consolidation of these small interests is not a
priority for the Company given it now essentially controls all the
leasehold.
Strategic Overview
Whilst the East Texas project offers excellent geological
potential, it is clear that the Alaskan North Slope assets dwarf
them in both size and scale. The Great Bear team did a fantastic
job putting this portfolio together over many years, with over
$200m of investment to date, which we are fortunate to benefit
from. Following the successful flow test at Alkaid, and the receipt
of the Contingent Resource from LKA, the Group has commenced a
'high grading' of its entire portfolio, ranking the projects in
order of priority. Within the Alaskan portfolio itself, Greater
Alkaid is our immediate priority given its proximity to early
cashflows and the value creation that could create for
shareholders. Talitha continues to mature as an outstanding project
which could be much larger than we ever expected. We look forward
to sharing with shareholders an anticipated upgrade to our oil in
place estimates, when our evaluation is complete over the coming
weeks or months. Our assessments to date of the new Leonis and
Theta West projects look to be extremely promising, with a
risk/reward profile ahead of our existing Theta project, and which
we expect will be high graded over the coming year. Over the next
few months we anticipate releasing a completely refreshed project
inventory with associated resource estimates.
An important aspect to our company is that over the past year we
have progressed our portfolio to a level where Pantheon now has an
inventory of oil and gas discoveries; we are not just a speculative
junior oil and gas company. Some of our discoveries could be very
large, and with continued drilling and testing we have the
potential to transition these discoveries to reserves and,
hopefully, world class oil projects. Having an inventory of
projects each with the potential in a success case to be worth
multiples of our current valuation both diversifies risk and
positions ourselves with an incredible opportunity for growth.
In closing I want to commend all the Pantheon team for their
tireless work in executing on the acquisition of Great Bear. I also
welcome the highly talented Great Bear team to their new roles in
Pantheon. At all levels, operational, management and technical, I
have been super impressed with the high calibre Great Bear team who
I am very proud to now call colleagues.
It's been an amazing year!
Jay Cheatham
Chief Executive Officer
24 February 2020
Financial Review
The Group made a total profit for the financial year ended 30
June 2019 of $35.5m (2018: Loss $8.8m). The large increase in
profitability was dominated by the large gain on bargain purchase
of $100.8m resulting from the acquisition of the Great Bear
companies, and an impairment of $48.6m (2018: $6.8m) against
carrying values of Pantheon's East Texas assets, mainly reflecting
the strategic decision of the Group to prioritise Alaska over Eat
Texas as the primary asset base of the Group. The accounting
standards require that the assets and liabilities acquired in the
acquisitions of the Great Bear Companies and of Vision Resources
LLC during the year be recorded at their fair value at the
acquisition date and measured against the consideration paid. To
the extent that the fair value of the assets acquired exceeds the
purchase consideration paid, a 'bargain purchase' is brought to
account, and conversely where the fair value is less than the
consideration paid then that amount is accounted for as goodwill.
The total operating loss for the year, including all impairments
but excluding the gain on bargain purchase was $55.2m (2018: Loss
$8.8m).
Production
The Group's net total sales production for the financial year
ended 30 June 2019 amounted to 191,024 (2018: 203,565) mcf of
natural gas and 2,317 (2018: 7,326) bbl of oil. Average
realisations for the year for natural gas and oil were US$2.58
(2018: $2.40) per mcf and US$62.54 (2018: $61.11) per barrel
respectively.
Revenue
Revenues for the year ended 30 June 2019 were $724,589 (2018:
$1,009,570).
Cost of Sales
Cost of sales for the year ended 30 June 2019 was $737,208
(2018: $562,986). The year on year increase in costs reflects the
poor operational condition of the historic East Texas wells, and
the increased interventions and remedial operations required to
maintain production levels. "Production royalties" for the year
ended 30 June 2019 was $205,458 (2018: $244,783). "Depletion of
developed oil & gas assets" for the year ended 30 June 2019 was
$148,485 (2018: $88,293).
Impairments
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.
The Group has reviewed these assets for indications of
impairment. Where impairment indications have been found we have
performed impairment tests. Impairments losses have been measured,
presented and disclosed in accordance with IAS 36.
Reflecting the Group's strategic decision to focus on its North
Slope of Alaskan assets as its priority, an impairment charge of
$48.6m (2018: $6.8m) has been taken against the Company's East
Texas assets. The impairment charge consists of; $13.1m (2018:
$Nil) of developed oil and gas assets, $34.1m (2018: $6.8m) of
intangible exploration and evaluation assets and $1.4m (2018: $Nil)
of property plant and equipment. Whilst the geological potential of
the East Texas assets remains undiminished, the Group's immediate
and highest priority is to fund and exploit its Alaskan operations,
in particular, the drilling of a well at its 100% owned Greater
Alkaid project where the Group recently received an Independent
Expert Report certifying a Contingent Recoverable Resource of 76.5
million barrels of oil, and an NPV10 estimated at US$595 million
for the project. Given the Group has no current plans for the
drilling of new wells in East Texas until a comprehensive
geological and technical review of those assets has been completed,
and given sufficient budget is not presently available after
prioritizing Alaskan drilling operations, the Group has impaired
all leasehold to the most recent comparable lease acreage prices
paid regionally, being $650 per acre in Tyler County and $350 per
acre in Polk County. The Group is presently engaged in discussions
with a number of interested parties for the potential farm out of a
working interest in some or all of its Alaskan operations and is
seeking an upfront cash component together with funded
drilling.
Accounting policies
There have been no major changes to accounting policies during
the year. See note 1.13 for the new accounting standards that came
into effect.
Capital structure
The Company issued 217,193,911 new fully paid ordinary shares
during the year in relation to the acquisition cost of Great Bear,
the acquisition of 66% of Vision Resources LLC, an associated
capital raising in January 2019 (raising cash proceeds of c.$20.9m
before expenses) and payment of advisors. As at 30 June 2019 there
were 454,530,466 ordinary shares in issue (2018: 237,336,555).
Additionally, the Company issued 102,471,055 non-voting
convertible shares during the year as part of the acquisition cost
of Great Bear. As at 30 June 2019 there were 102,471,055 non-voting
convertible shares in issue (2018: Nil). The non-voting convertible
shares are convertible on a 1:1 basis into ordinary fully paid
shares.
As at 30 June 2019 total shares in issue, both ordinary and
non-voting was 557,001,521 (2018: 237,336,555).
The Company issued 9,607,843 warrants to acquire non-voting
convertible shares during the year as part of the acquisition of
Great Bear. The warrants have an exercise price of GBP0.30 per
share, expire on 30 September 2024 and are all fully vested. As at
30 June 2019 there were 9,607,843 warrants in issue (2018:
Nil).
The Company has 10,000,000 options outstanding to acquire
ordinary shares (2018: 10,000,000) at an exercise price of GBP0.30
per share and expire on 30 September 2024. As at 30 June 2019 all
share options were fully vested.
Going concern
The Directors are satisfied with the Group's ability to operate
as a going concern for the next 12 months, as documented further in
Note 1.4.
Taxation
The Group incurred a profit for the year and has incurred a
taxation expense of $10m (2018: Nil). Accordingly, the Directors
have recognized a deferred tax liability of the same amount.
Risk assessment
The Group's oil and gas activities are subject to a variety of
risks, both financial and operational, including but not limited to
those outlined below. These and other risks have the potential to
materially affect the financial performance of the Group. For
additional detail see section Key Operational Risks and
Uncertainties in the Strategic Report
Liquidity and Interest Rate Risk
Liquidity risk remains elevated for many companies in the
natural resources sector for a number of reasons including but not
limited to global macro-economic conditions, the volatility in
commodity prices, recent political and other influences, which have
impacted energy prices and created economic uncertainty.
Oil & Gas Price Risk
Future oil and gas sales revenues are subject to the volatility
of the underlying commodity prices throughout the year. Over the
past year the energy sector has been impacted by volatility in
commodity prices, which may continue to impact the Group going
forward. The Group did not engage in any commodity price hedging
activity during the year.
Currency Risk
Almost all capital expenditure and operational revenues for the
year were denominated in US dollars. The Group keeps the majority
of its cash resources denominated in US dollars to minimise
volatility and foreign currency risk. The Group did not engage in
any foreign currency hedging activity during the year.
Financial Instruments
At this stage of the Group's activities it has not been
considered appropriate or necessary to enter into any derivatives
strategies or hedging. Once the Group's production revenues
increase substantially, such strategies will be reviewed on a more
regular basis.
Justin Hondris
Director
24 February 2020
Principal activity
The Company is registered in England and Wales, having been
incorporated under the Companies Act with registered number
05385506 as a public company limited by shares. The principal
activity of the Group is the investment in oil and gas exploration
and development. The Group operates in the U.K. through its parent
undertaking and in the U.S.A. through subsidiary companies, details
of which are set out in the Note 9 to these accounts.
Review of the Business and Key Performance Indicators
2018/2019 KPI Measurement 2018/2019 Performance
--------------------------------------
Pursue farmout opportunities for Completion of farmout process Farmout discussions were initiated,
East Texas assets however were hampered by the
complications resulting from
the death of the principal of
Vision, the operator of the East
Texas assets. Pantheon commenced
discussions with Great Bear in June
2018 which culminated in the
acquisition of the Great
Bear portfolio of Alaskan assets, a
highly talented technical team in
January 2019, and ultimately
a change in focus whereby Alaska
became the main focus of the Group,
reflecting the vastly
superior size and scale of those
projects
-------------------------------------- -------------------------------------- --------------------------------------
Ensure business adequately funded Fund raise where appropriate Successful fund raisings announced
in Dec 2018 & July 2019
-------------------------------------- -------------------------------------- --------------------------------------
Move to control of East Texas Acquire control of Vision Resources Acquired 2/3rds controlling interest
operations to preserve the value of LLC in Vision Resources LLC in January
the assets following the 2019
death of the principal of the
operator, Vision
-------------------------------------- -------------------------------------- --------------------------------------
To successfully execute acquisition Completion of acquisition & Acquisition announced December 2018
of Great Bear Petroleum associated fund raising and finalised in January 2019
-------------------------------------- -------------------------------------- --------------------------------------
Operational activity in East Texas Drilling / testing wells A number of remedial operations have
occurred to maintain the modest
production from these
historic wells which are known to be
compromised and subsequently
impaired
-------------------------------------- -------------------------------------- --------------------------------------
Operational activity in Alaska Drilling / testing wells Alkaid Well successfully flow tested
resulting in a certified Contingent
Recoverable Resource
of 76.5MMBO by an independent expert
-------------------------------------- -------------------------------------- --------------------------------------
Pursue farmout of Alaskan assets Completion and opening of data room. Preparation of Data room which
Admission of potentially interested opened late Summer 2019
parties into data
room
-------------------------------------- -------------------------------------- --------------------------------------
Ensuring continued high-quality Establish and maintain relationships Sierra Hamilton relationship
technical consultant relationships with industry experts and review leveraged to deliver valuable high
performance quality technical advice in
East Texas. Post Great Bear
acquisition, technical consulting
team significantly strengthened
which is being applied to both
Alaska and East Texas. Experts such
as eSeis and others contracted.
Pantheon has recently added a
Geophysicist to its established
team. Pantheon has also re-engaged
with the Bureau of Economic Geology
at the University of Texas, at
Austin, the same group
who had undertaken a technical study
of the East Texas acreage with the
previous operator
-------------------------------------- -------------------------------------- --------------------------------------
Financial Position and Future Prospects
Please refer to the Chief Executive Officer's statement and
operation review for an overview of the Company position and
prospects.
Key operational risks and uncertainties
The Company may be unable to meet its lease obligations
In general, the Company's properties are held under oil and gas
leases. The terms of the Company's leases often provide for yearly
rental payments. Such yearly rentals may vary depending upon the
particular lease and whether the Company has commenced activities
in the property. If the Company defaults on its lease payments, its
leases may be automatically terminated. If the Company is unable to
make these payments and its leases are terminated, there could be a
material adverse effect on its business, financial condition and
results of operations.
The Company may be unable to renew and/or extend its leases once
they expire
The Company's lease agreements contain terms whereby the lease
may be terminated if the Company does not fulfil certain
obligations. These obligations include conducting exploration
and/or production activities. If the Company is unable to satisfy
these conditions on a timely basis, it may lose its rights in these
properties. In addition, given that it may not be able to renew
certain leases unless it begins exploration or production
activities within specific timeframes, the Company may be required
to invest significant funds at timetables not optimal to it in
order to meet the capital requirements required under the terms of
the leases. If the Company is unable to meet its obligations under
the terms of its leases, there could be a material adverse effect
on its business, financial condition and results of operations.
Our operations require the Company to obtain licensing, planning
permissions and other consents
The development of its current and future leases may be
dependent on the receipt of planning permission from the
appropriate local authorities as well as other necessary consents
such as environmental permits and regulatory consents. Obtaining
the necessary consents and approvals may be costly, and they may
not be granted or may be withdrawn or made subject to limitations
and conditions. Certain permits and consents may also become
contentious in the future, which may lead to these not being
granted or withdrawn. For instance, in 2015, Repsol only received
approval from the North Slope Borough (local government) for a
portion of its requested drill sites on the North Slope of Alaska.
The failure to gain such permissions, or gain such permissions on
terms or at a cost acceptable to the Company, may limit the Company
in its ability to develop and extract value from its leases and
could have a material adverse effect on its business, results of
operations, financial conditions and prospects.
Political conditions and government regulations could change and
have a material effect on the Company's results of operations
Although political conditions in the Northern Slope Borough, the
State of Alaska, the State of Texas and the United States federal
government are generally stable, changes may occur in their
political, fiscal and/or legal systems, which might adversely
affect the Company's operations. The Company's strategy has been
formulated in the light of the current regulatory environment and
probable future changes to the regulatory regime.
Although the Company believes that its activities are currently
carried out in accordance with all applicable rules and
regulations, no assurance can be given that new rules, laws and
regulations will not be enacted or that existing or future rules
and regulations will not be applied in a manner which could serve
to limit or curtail exploration or development of the Company's
business or have an otherwise negative impact on its activities.
Amendments to existing rules, laws and regulations governing the
Company's operations and activities, or increases in or more
stringent enforcement, implementation or interpretation thereof,
could have a material adverse impact on the Company's business,
results of operations and financial condition.
Future legal proceedings could adversely affect the Company's
business, results of operations or financial condition
The Company may face legal proceedings that may result in the
Company having to pay material damages and/or other remedies. While
the Company would assess the merits of each legal proceeding and
defend the Company accordingly, it may be required to incur
significant expenses or devote significant resources to defend
against such legal proceedings. In addition, legal proceedings are
also difficult to predict, which may force the Company to enter
into settlement arrangements even in the absence of any culpability
from its part.
Furthermore, the adverse publicity surrounding legal proceedings
may negatively affect the Company's relation with local
communities, government and non-government organizations, which
could also impact the Company's activities. As a result, legal
proceedings could have a material adverse effect on the Company's
business, financial condition, results of operations and
prospects.
Failure to manage relationships with local communities,
environmental groups and non-government organizations could
adversely affect the Company's future growth potential
The activities of oil and gas companies often face scrutiny from
the public and receive negative publicity. Although the Company's
operations are not located in or near large communities, the
Company's ability to further expand its operation may be hindered
by communities that may regard oil and gas activities as
detrimental to their environmental, economic or social
circumstances. Furthermore, oil and gas companies are also
increasingly facing scrutiny by environmental groups regarding the
effect operations may have on the animal life in the region.
Negative reaction to its operations could have a material adverse
impact on the cost, profitability, ability to finance or even the
viability of an operation. Such events could give rise to material
reputational damage.
These disputes are not always predictable and may cause
disruption to projects or operations. Failure to manage
relationships with local communities, environmental groups and
non-government organisations may adversely affect the Company's
reputation, as well as its ability to commence production projects
in certain locations, which could in turn affect its long-term
prospects and the Company's business, financial condition and
results of operations.
Any change to government regulation/administrative practices may
have a negative impact on the Company's ability to operate and its
profitability
The business of oil and gas exploration and development is
subject to substantial regulation under federal, state, local laws
relating to the exploration for, and the development, upgrading,
marketing, pricing, taxation, and transportation of oil and gas and
related products and other matters. Amendments to current laws and
regulations governing operations and activities of oil and gas
exploration and development operations could have a material
adverse impact on the Company's business. In addition, there can be
no assurance that tax laws, royalty regulations and government
incentive programs related to the Company's oil and gas properties
and the oil and gas industry generally, will not be changed in a
manner which may adversely affect the Company's prospects and cause
delays, inability to explore and develop or abandonment of these
interests.
Furthermore, permits, leases, licenses, and approvals are
required from a variety of regulatory authorities at various stages
of exploration and development. There can be no assurance that the
various government permits, leases, licenses and approvals sought
will be granted in respect of the Company's activities or, if
granted, will not be cancelled or will be renewed upon expiry.
There is no assurance that such permits, leases, licenses, and
approvals will not contain terms and provisions which may adversely
affect the Company's exploration and development activities. Any of
the forgoing were to occur, it could have a material adverse effect
on the Company's business, financial condition and results of
operations.
By order of the board.
Justin Hondris
Director
24 February 2020
The Directors present their report together with the audited
accounts of Pantheon Resources plc ("Pantheon" or the "Company")
and its subsidiary undertakings (together the "Group") for the year
ended 30 June 2019.
Results and dividends
The Group results for the period are set out above. The
Directors do not propose to recommend any distribution by way of a
dividend for the year ended 30 June 2019.
Information to shareholders - website
The Group maintains its own website (www.pantheonresources.com)
to facilitate provision of information to external stakeholders and
potential investors and to comply with Rule 26 of the AIM Rules for
Companies.
Group structure and changes in share capital
Details of the Group structure and the Company's share capital
during the period are set out in Notes 9 and 17 to these
accounts.
Directors
The Directors who served at any time during the year were:
Name Role Note
----------------------------
Phillip Gobe Non-Executive Chairman
John Cheatham Chief Executive Officer
Justin Hondris Director, Finance & Corporate
Development
John Walmsley Non-Executive Chairman cessation on 18 March 2019
Robert Rosenthal Technical Director appointed on 11 March 2019
----------------- ------------------------------- ----------------------------
Jeremy Brest was appointed as a non-executive director on 2(nd)
October, 2019.
Directors' interests
The beneficial and non-beneficial interests in the Company's
shares of the Directors and their families were as follows:
Name Number of Ordinary shares of GBP0.10
30 June 2019
--------------------------------------
Phillip Gobe 230,881
John Cheatham 2,639,142
Justin Hondris* 1,378,233
Robert Rosenthal 647,622
------------------ --------------------------------------
*Some of these ordinary shares are beneficially owned
by the spouse of J Hondris.
Share options
The Directors held the following share options for Ordinary
shares of GBP0.01, at the beginning and end of the year:
Director At 30 June Granted during At 30 June Exercise Latest date
2018 the year 2019 price of exercise
-------------
30 Sept
John Cheatham 4,385,000 - 4,385,000 GBP0.30 2024
30 Sept
Justin Hondris 3,865,000 - 3,865,000 GBP0.30 2024
----------------- ----------- --------------- ----------- --------- -------------
Total 8,250,000 8,250,000
----------------- ----------- --------------- ----------- --------- -------------
These are 100% vested as at 30 June 2019
--------------------------------------------------------------------------------------
Former Directors held the following share options for Ordinary
shares of GBP0.01, at the beginning and end of the year:
Director At 30 June Granted during At 30 June Exercise Latest date
2018 the year 2019 price of exercise
-------------
30 Sept
J Walmsley 1,000,000 - 1,000,000 GBP0.30 2024
Total 1,000,000 1,000,000
-------------
These are 100% vested as at 30 June 2019
----------------------------------------------------------------------------------
Report on Directors' remuneration and service contracts
The service contracts of all the Directors are subject to a
six-month termination period.
Directors' remuneration
Director Fees/basic Share-based Pension Health 2019 Total 2018 Total
salary payments Contributions Insurance (US$) (US$)
(US$) (US$) (US$) (US$)
------------
J Cheatham 496,820 - - - 496,820 496,540
J Hondris 363,439 - 19,128 4,832 387,399 361,983
J Walmsley 66,064 - - - 66,064 111,399
P Gobe 62,132 - - - 62,132 52,460
R Rosenthal 31,592 - - - 31,592 -
-------------- ----------------- ----------------- ----------------- ----------------- ------------ ------------
Total 1,020,047 - 19,128 4,832 1,044,007 1,022,382
-------------- ----------------- ----------------- ----------------- ----------------- ------------ ------------
Director incentive scheme
In 2012 the Company implemented a short-term executive director
incentive scheme ("the scheme") developed in conjunction with
executive remuneration specialists at Deloitte LLP. Any incentive
bonus resulting from the scheme will be shared by executive
Directors and will be calculated as 2.25% of the value of
"net-booked reserves" for a period (deducting any net-booked
reserves recognized in earlier periods for this purpose). For the
purposes of the scheme, net-booked reserves will include 100% of
proved reserves and 25% of probable reserves booked to the Group,
as determined by an independent third party, where relevant, in
accordance with the classification definitions as mandated by the
Society of Petroleum Engineers.
The remuneration committee will determine the extent to which
any annual bonus resulting from the scheme will be settled in cash
or share options with a discounted exercise price. The cash
component will be at least one third of the total and there is no
obligation to pay any of the annual bonus by way of share options.
In the event of a sale of the Company or other change of control,
the calculation will be undertaken by reference to the equity value
of the Company (less the value of net booked reserves recognized in
earlier periods). The remuneration committee believes that the
scheme, together with the granting of share options provides an
appropriate and reasonable structure to reward and motivate the
executive Directors for performance that is aligned to the
interests of shareholders and provides a balance of long term and
short-term performance measurement. Any potential benefit from the
scheme is linked to the booking of net-booked reserves which is
considered to be a key milestone reflecting potential "value add"
for the benefit of shareholders. The value of share options is
directly linked to the longer-term share price performance and is
therefore also considered to be a suitable metric as a basis for
executive remuneration.
Given the Group's strategy has shifted from non-operating
participation in East Texas to an operating company with vast
reserve potential in Alaska, the directors view that evaluating the
current plan consistent with the new strategy is appropriate and
should take into account other members of management participating,
in addition to executive directors. Any review would include
consultation with the remuneration experts at Deloitte LLP. No
awards have been paid from this scheme since inception.
Staff long term share option plan
As announced on 18 July 2019, the board intends to award up to
13.7m share options to management and all staff under a long-term
incentive scheme, representing c.2.0 per cent of the fully diluted
share capital of the Company. It was proposed that the options will
be exercisable at a price of GBP0.27, representing a 50 percent
premium to the most recent placing price. It is intended that the
options will be granted by the remuneration committee and approved
by the Board in the near term.
Subsequent events
Details of subsequent events can be found at Note 26.
Substantial shareholders
The Company has been notified, in accordance with Chapter 5 of
the FCA Disclosure and Transparency Rules, of the under noted
interests in its ordinary shares as at 20 February 2020:
Shareholder Ordinary Shares % of Share Capital
--------------------
Chons LLC 101,681,373 20.22%
Jim Nominees Limited 57,428,699 11.42%
Vidacos Nominees
Limited 29,187,420 5.81%
Vidacos Nominees
Limited 16,450,000 3.27%
Rock (Nominees) Limited 15,442,190 3.07%
-------------------------- ----------------- --------------------
Political and charitable contributions
There was a single charitable contribution made by the Company
to during the year ended 30 June 2019 (2018: GBPNil). The donation
(GBP250) was to Battersea Cats and Dogs Home and was made in honour
of Pantheon's late Chairman, Mr John Walmsley, who passed away
during the year.
Committees
Following the passing of Mr John Walmsley, it was decided to
reconstitute some of the Company's committees. This was actioned in
October 2019 following the appointment of two new directors: R
Rosenthal and J Brest.
Remuneration and Nomination Committee
The Board of Directors has established the Remuneration and
Nomination Committee of the Board. Phillip Gobe is the Chairman of
the committee and Jay Cheatham, Jeremy Brest and Justin Hondris are
the other members. John Walmsley ceased to be a member on 18 March
2019. Other Directors may attend meetings by invitation.
The Remuneration and Nomination Committee meets as required but
aims to meet at least annually. Its role is to determine the
remuneration arrangements and contracts of executive Directors and
senior employees, and the appointment or re-appointment of
Directors. It also has the responsibility for reviewing the
performance of the executive Directors and for overseeing
administration of the Company's share option scheme(s). No Director
is however involved in deciding his own remuneration.
Audit Committee
An Audit Committee of the Board has been established. The Audit
Committee consists of Phillip Gobe as Chairman and Jay Cheatham and
Jeremy Brest as members. This Committee provides a forum through
which the Group's finance functions and auditors report to the
non-executive Directors. Meetings may be attended, by invitation,
by the Company Secretary, other Directors and the Company's
auditors. John Walmsley ceased to be a member on 18 March 2019.
The Audit Committee meets at least twice a year. Its terms of
reference include review of the Annual and Interim Accounts,
consideration of the Company and Group's accounting policies, the
review of internal control, risk management and compliance
procedures, and consideration of all issues surrounding the annual
audit. The Audit Committee will also meet with the auditors and
review their reports relating to accounts and internal control
systems.
To follow best practice the external auditors have held
discussions with the Audit Committee on the subject of auditor
independence and have confirmed their independence in writing.
Conflicts Committee
A Conflicts Committee of the Board has been established. This
Committee consists of Phillip Gobe as Chairman, Jay Cheatham, Bob
Rosenthal and Jeremy Brest. John Walmsley ceased to be a member on
18 March 2019.
The role of the Conflicts Committee is to assist the Board in
monitoring actual and potential conflicts of interest under the
definitions of the Companies Act 2006. Under the Companies Act 2006
Directors are responsible for their individual disclosures of
actual or potential conflict. To follow best practice, the
Conflicts Committee holds discussions with the Company's UK
lawyers.
Anti-Corruption & Bribery Committee
An Anti-Corruption & Bribery Committee has been established.
This committee consists of Justin Hondris (as Chairman), Jay
Cheatham, Phillip Gobe and Jeremy Brest.
The purpose of the Anti-Corruption & Bribery Committee is to
ensure the Company's compliance with the Bribery Act 2010.
Corporate Governance
The Company adopted the Quoted Companies Alliance Corporate
Governance Code 2018 (the "QCA Code") on 28 September 2018. The
Board takes account of the requirements of the QCA Corporate
Governance Code. Corporate Governance adherence will be the
responsibility of the Chairman and will take steps to ensure
compliance by the Board and applicable employees with the terms of
the code. The Company has adopted a share dealing code for the
Board and employees of the Company. More information detailing the
Company's application of the principles of, and variances (if/where
relevant) from the Code can be found on our website
http://www.pantheonresources.com/investors/governance.
EU Market Abuse Regulations
The EU Market Abuse Regulation came into effect in the UK on 3
July 2016 and the company has implemented relevant policies and
procedures to ensure compliance with the requirements of the
regime.
Statement of Directors' responsibilities
The Directors are responsible for preparing the financial
statements in accordance with applicable laws and International
Financial Reporting Standards ("IFRS") as adopted by the European
Union. Company Law requires the Directors to prepare financial
statements for each financial period which give a true and fair
view of the state of affairs of the Group and of the Company and of
the profit or loss of the Group for that period. In preparing those
financial statements, the Directors are required to:
a) select suitable accounting policies and then apply them consistently;
b) make judgements and estimates that are reasonable and prudent;
c) prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business; and
d) state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements.
The Directors confirm that the financial statements comply with
the above requirements.
The Directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
financial position of the Group and Company and to enable them to
ensure that the financial
statements comply with the Companies Act 2006. The Directors are
also responsible for safeguarding the assets of the Group and hence
for taking steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Company's website.
Statement of disclosure to the auditors
So far as the Directors are aware:
a) there is no relevant audit information of which the Company's auditors are unaware; and
b) all the Directors have taken all the steps that they ought to
have taken to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that
information.
Auditors
In accordance with Section 489 of the Companies Act 2006, a
resolution proposing that UHY Hacker Young be reappointed as
auditors of the Company and that the Directors be authorised to
determine their remuneration will be put to the next Annual General
Meeting.
By order of the board
Justin Hondris
Director
24 February 2020
Phillip Gobe, Non Executive Chairman
Phillip Gobe has over 40 years' experience in the oil and gas
business both in the U.S.A. and internationally. Phillip has held
senior positions in Energy Partners Ltd (President & COO),
Nuevo Energy Co. (COO), Vastar Resources (COO) and several senior
positions with Atlantic Richfield Company, including a role as
Operations Manager of Prudhoe Bay in Alaska, the largest oilfield
in the USA. Throughout his career Phillip has successfully overseen
several corporate exits at substantial premiums to pre-deal
valuations. Phillip also has a background in drilling, human
resources and health & safety. He is currently a non-executive
director of the S&P 500 company, Pioneer Natural Resources and
Scientific Drilling International Inc, the fifth largest provider
of directional drilling and measurement equipment and operational
services. He is also Executive Chairman of ProPetro, a Texas-based
oil services group providing hydraulic fracturing and other
services. Phillip acts as Chairman of Pantheon's Remuneration and
Nominations Committee, Audit Committee, and Conflicts
Committee.
Jay Cheatham, Chief Executive Officer
Jay Cheatham has more than 40 years' experience in all aspects
of the petroleum business. He has extensive international
experience in both oil and natural gas, primarily for ARCO. At
ARCO, Jay held a series of senior appointments. These include
Senior Vice President and District Manager (ARCO eastern District)
with direct responsibility for Gulf Coast US operations and
exploration and President of ARCO International where he had
responsibility for all exploration and production outside the U.S.
Jay's most recent appointment was as President and CEO of
Rolls-Royce Power Ventures, where he had the key responsibility for
restructuring the Company.
Jay also has considerable financial skills in addition to his
corporate and operational expertise. He has acted as Chief
Financial Officer for ARCO's US oil and natural gas company (ARCO
Oil & Gas). Moreover he has understanding of the capital
markets through his past position as CEO to the Petrogen Fund, a
private equity fund.
Justin Hondris, Director, Finance and Corporate Development
Justin Hondris has over 14 years' experience in public company
management in the upstream oil and gas sector and has wide ranging
experience in corporate finance, private equity and capital markets
in the UK and abroad. Prior to Pantheon, Justin was involved in the
private equity sector where he gained valuable experience in both
investment and exit strategies for growth companies.
He is responsible for the financial, legal, administrative and
corporate development functions of the company.
Robert (Bob) Rosenthal, Technical Director
Bob Rosenthal 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, Bob has run his own successful consulting
business and has led the exportation efforts of a number of private
and public companies.
Jeremy Brest, Non-executive Director (appointed 2 October,
2019)
Jeremy has more than 20 years' experience in investment banking
and financial advisory. Jeremy is the founder of Framework Capital
Solutions, a boutique Singapore-based advisory firm specialized in
structuring and execution of private transactions. Prior to
founding Framework, Jeremy was the head of structuring for
Indonesia at Credit Suisse and a derivatives trader at Goldman
Sachs.
Opinion
We have audited the financial statements of Pantheon Resources
Plc for the year ended 30 June 2019 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated and
Parent Company Statement of Financial Position, the Consolidated
and Parent Company Statements of Cash Flows and the related notes,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Group and
Parent Company's affairs as at 30 June 2019 and of the Group's
profit for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Our assessment of risks of material misstatements
We identified the following risks of material misstatement that
we believe had the greatest impact on our overall audit strategy
and scope, the allocation of resources in the audit; and directing
the efforts of the engagement team. This is not a complete list of
all risks identified by our audit.
Key audit matter How our audit addressed the key audit
matter
Impairment of exploration and evaluation
assets We tested a sample of additions to
The Group has capitalised significant E&E assets to confirm they meet the
costs in respect of the Tyler and criteria for capitalisation in accordance
Polk County projects in Texas and with IFRS 6.
the Alkaid and Talitha projects We reviewed and challenged management's
in Alaska in accordance with International impairment assessment which was carried
Financial Reporting Standard 6 out in accordance with IFRS 6 in
'Exploration for and Evaluation order to determine whether there
of Mineral Resources' (IFRS 6), were any indicators of impairment.
therefore there is a risk of impairment. Indicators of impairment were identified
There are a significant number this year. Reflecting the Group's
of leases covering the areas over strategy to prioritise its Alaskan
which the Exploration and Evaluation assets over East Texas, and reflecting
("E&E") assets are located, therefore that available and expected funding
the renewal and good standing of from possible farmout transactions
the leases is vital in order to would be applied to Alaska over East
ensure no impairment of the exploration Texas, the Group has impaired the
assets is required. carrying value of its East Texas
The carrying value of the exploration assets to a dollar value per acre
assets held in Alaska that were equal to recent comparable market
acquired during the year have been value benchmarks. Additionally, a
considered below, under the 'Key number of leases (representing a
Audit matter' ; "Fair value of small acreage footprint) were allowed
assets acquired from Great Bear to lapse in East Texas during the
Petroleum". year. Impairments of $34m have been
recognised in the income statement.
In respect of the remaining assets,
we confirmed there is an ongoing
plan to develop each prospect. We
also obtained evidence that a sample
of key leases relating to the remaining
exploration assets remain valid and
are in good standing or are in the
process of renewal.
There were no further impairments
identified in respect of the remaining
exploration and evaluation assets.
-------------------------------------------------
Impairment of developed oil & gas
properties We assessed the developed oil and
If production has not met initial gas properties in East Texas for
estimates this may indicate that impairment and considered whether
the developed oil and gas properties the leased acreage was correctly
in Polk County are impaired. In pooled together in line with IAS
addition if any of the key licenses/leases 36.
were to expire or were not renewed Whilst the West AA prospect generated
this would lead to impairment of revenues from the VOBM#1, VOBM#2
these assets. and the VOBM#3 wells, recent production
Reviews should be undertaken by levels from this CGU have been disappointing.
the directors to confirm that there Following the year end these wells
are no indications, or requirement have now been shut in due to poor
for, impairments of their carrying performance and recent winter record
values. low gas prices, and the carrying
The results of these reviews by value of all Polk County wells have
the directors should be documented been fully impaired.
formally in the company's board At the year end there was no value
minutes. in use in respect of the Polk County
wells, therefore we consider that
impairment of this prospect of GBP13m
to be appropriate.
The VOS#1 well sits within the LP2
Offset Acreage. Net present value
calculations were reviewed and sensitivity
analyses performed, in order to assess
the carrying value of the developed
oil & gas property. The revenues
generated from this well since November
2018 along with the latest reserves
estimates, and management assessment
of the geological data of the acreage
and potential for further drilling,
were considered to provide sufficient
headroom to support its carrying
value not being impaired. We also
tested a sample of leases to ensure
the related lease remain in good
standing. Furthermore we understand
that management believe there is
scope to continue to develop or sidetrack
this well.
We consider the total impairments
of $13m to be appropriate and are
satisfied with the residual carrying
value of the development oil and
gas properties.
-------------------------------------------------
Impairment of loans due from subsidiary
companies We assessed the recoverability of
The Company has a significant loan the loans due from subsidiary companies
balance due from its subsidiary in conjunction with our review of
Pantheon Oil and Gas LP. This has the Group's exploration assets for
increased significantly following impairment and the discounted cash
the acquisitions in the year. flow model prepared to support the
carrying value of the developed oil
and gas properties.
No indications of impairment were
identified.
-------------------------------------------------
Fair value of assets acquired in
Vision Resources Vision Resources LLC is the general
On 14 January 2019 the group acquired partner and therefore controller
a controlling interest in Vision of Vision Gas Limited, however Vision
Resources LLC, the general partner Resources LLC only owns 0.1% of the
of Vision Gas Limited. The acquisition equity in Vision Gas Limited. With
allowed the group to direct and reference to this equity interest
manage the activities of the operator and the powers of Vision Resources
of the group's assets in which LLC as the General Partner, we concluded
the group has a working interest that Vision Gas Limited and its subsidiary
in East Texas. Vision Operating Company did not
In accordance with International meet the criteria within IFRS 10
Financial Reporting Standard 3 'Consolidated Financial Statements'
'Business Combinations' (IFRS 3) for control, therefore should not
all the assets and liabilities be consolidated.
of the acquired companies need The value of any oil and gas interests
to be measured at fair value. The acquired as part of the transaction
company has 12 months from the was considered to be minimal, however
date of acquisition to reassess the Group did acquire control over
the value of the assets acquired. Vison Resources LLC .
This is a non-routine calculation Following discussions and review
and the goodwill balance is also of supporting documentation from
likely to be material. management it was determined that
Upon acquisition of Vision Resources these assignments did not in fact
LLC, there was uncertainty surrounding have any intrinsic value to Pantheon
the composition of certain balance due to them already having 100% working
sheet items and the accuracy of interest in the oil and gas leases
the accounting records themselves and therefore this purely reflected
given the Company had never been transfer of the legal title in respect
audited. Therefore, there is a of the items listed in the Purchase
risk that the accounting records Sale Agreement. The main benefit
are incomplete or misstated and to Pantheon of making the acquisition
thus there is a material misstatement was to obtain 'control' of Vision
in the financial statements. Resources LLC, thereby allowing it
a greater ability to preserve and
protect the value of the East Texas
assets.
Whilst we have been able to corroborate
management's conclusions, there is
still inherently some uncertainty
in respect of the fair value of the
assigned assets, however we do not
consider this to be material.
-------------------------------------------------
Fair value of assets acquired from
Great Bear Petroleum Operating
Company LLC The group commissioned an independent
In January 2019 the group announced expert, Lee Keeling and Associates
the acquisition of Great Bear Petroleum Inc to consider the data available
Ventures I and II from Great Bear for the Alkaid-Phecda region in Alaska
Petroleum Operating Company LLC. following the flow testing of the
The key assets acquired related Alkaid 1 discovery well, to assess
to leases over acreage historically the potential value of the recoverable
explored by Great Bear Petroleum resources. This report was then provided
Operating Company LLC. to us along with a valuation model
In accordance with IFRS 3 all assets prepared by management.
and liabilities for acquired companies Whilst there is less data available
need to be measured at fair value. in respect of the Talitha Prospect,
The company has 12 months from we were provided with a recent report
the date of acquisition to reassess from eSeis Inc which disclosed the
the value of the assets acquired. estimated number of barrels of oil
Considering the acquisition balance in the Talitha region as well as
is so high the gain on the bargain other geological interpretations.
purchase is highly material. The reserve estimate was deemed to
The exploration assets of significant be a key estimate in the model. Third
value and the valuation of the party evidence as noted above along
resources held within this acreage with further information provided
is extremely judgemental, therefore by management was obtained in order
there is a risk that an inappropriate to gain comfort that the underlying
valuation at the date of acquisition resource to the estimates could be
and the year end could lead to supported. However, there were a
a material misstatement of the number of further key inputs into
value of these assets. the valuation model reducing the
value based on various risk factors.
These factors primarily comprised
the geological risk, commercial risk
and funding risk discount rates that
require significant judgement in
the allocation of risk weighting
to the valuation. Changing one of
these factors by as little as one
percentage point would have a material
impact on the value output by the
model.
Whilst the approach taken to preparing
the valuation model is considered
reasonable, due to the significant
number of judgements required and
inherent uncertainties in respect
of oil and gas reserves, it is not
possible to conclude with minimal
uncertainty that this figure is materially
correct.
There is therefore a material uncertainty
in respect of the fair value of the
leases acquired from Great Bear Operating
Company LLC at the date of acquisition
and at the year end.
-------------------------------------------------
Revenue recognition
During the prior year, Pantheon We reviewed revenue on a sample basis
commenced production in Polk County agreeing income to customer statements
within the West AA prospect. This to confirm its completeness and that
is only the second year of production it had been recorded in the correct
therefore there is a risk that period in the nominal ledger.
revenue may be incorrectly recognised. Our audit procedures did not identify
any material errors in respect of
completeness or cut-off.
-------------------------------------------------
Going concern
The Group's ability to maintain We reviewed the group's cash flow
sufficient working capital in order forecasts for the 12 month period
to continue to meet its liabilities following the estimated date of signing
as they fall due remains dependent the financial statements, critically
upon the existing cash reserves, assessing the estimates, workings,
the level of production from developed and assumptions used in its preparation,
wells and the ability to raise in order to conclude on their reasonableness
finance either through the issue as to support the going concern basis
of debt and/or equity or farming of preparation. We also reviewed
out part of their exploration assets. the appropriateness of the disclosures
in the financial statements around
the going concern basis of preparation.
The group had $1.9m of cash reserves
at the year-end and completed a placing
raising $10.7m before expenses on
17 July 2019. The cash reserves estimated
to be $6.5m as at 20 February 2020
are forecast to be sufficient to
maintain positive cash reserves throughout
the forecast period up to and including
February 2021.
The Group is presently in discussions
to farm out a working interest in
some or all of the Alaskan projects
in order to fund further exploration,
however the timing, quantum and completion
of the farm-out remains uncertain.
The company continued to generate
revenue during the year, however
following drilling issues such as
collapsed piping towards the end
of the prior year, the wells in Polk
County have now been shut in due
to poor performance and current low
gas prices. The group currently expects
to continue producing throughout
2020 from VOS#1 well in Tyler County.
The level of exploration is discretionary
due to the Pantheon Group having
control over the operatorship in
both its exploration interests in
East Texas and Alaska following the
acquisition of the Alaskan assets
from Great Bear Petroleum Operating
Company LLC and 66.6% of Vision Resources
LLC, during the year.
From review of the Groups' forecasts
the post year end acquisition of
additional leases in Alaska can be
satisfied from existing cash reserves,
but to undertake additional exploration
activity will require further funds
to be raised or the conclusion of
the farm out process. The directors
have concluded that any such expenditure
can be deferred until such time as
funding is available therefore there
is no material uncertainty in respect
of the application of the going concern
assumption.
We are satisfied that the disclosures
provided within the financial statements
are sufficient to provide the users
with a full understanding of basis
of preparation in this regard.
-------------------------------------------------
Our application of materiality
The scope and focus of our audit was influenced by our
assessment and application of materiality. We apply the concept of
materiality both in planning and performing our audit, and in
evaluating the effect of misstatements on our audit and on the
financial statements.
We define financial statement materiality as the magnitude by
which misstatements, including omissions, could reasonably be
expected to influence the economic decisions taken on the basis of
the financial statements by reasonable users.
We also determine a level of performance materiality which we
use to determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
Overall materiality We determined materiality for the financial
statements as a whole to be $1,670,000 (2018: 612,628).
How we determine it Based on the main key indicator, being 1% of
net assets of the Group.
Rationale for benchmarks applied We believe net asset values is
the most appropriate benchmark due to the size and stage of
development of the Company and Group.
Performance materiality On the basis of our risk assessment,
together with our assessment of the Company's control environment,
our judgement is that performance materiality for the financial
statements should be 75% of materiality, and this was rounded to
$1,252,500.
All misstatements over $83,500 identified during the audit were
reported to Audit Committee, as well as differences below that
threshold that, in our view, warrant reporting on qualitative
grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation
of the financial statements.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account an understanding of the
structure of the Company and the Group, their activities, the
accounting processes and controls, and the industry in which they
operate. Our planned audit testing was directed accordingly and was
focused on areas where we assessed there to be the highest risk of
material misstatement.
Our Group audit scope includes all of the group companies. At
the parent company level, we also tested the consolidation
procedures. The audit team met and communicated regularly
throughout the audit with the Finance Director in order to ensure
we had a good knowledge of the business of the Group. During the
audit we reassessed and re-evaluated audit risks and tailored our
approach accordingly.
The audit testing included substantive testing on significant
transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the
control environment, the effectiveness of controls and the
management of specific risk.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant findings, including any significant deficiencies in
internal control that we identify during the audit.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditors'
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this
regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at www.frc.org.uk/auditorsresponsibilities . This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with part 3 of Chapter 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of
UHY Hacker Young
Chartered Accountants
Statutory Auditor
Quadrant House
4 Thomas More Square
London E1W 1YW
24 February 2020
Notes 2019 2018
$ $
Continuing operations
Revenue 4 724,589 1,009,570
Production royalties (205,458) (244,783)
Depletion of developed oil & gas
assets (148,485) (88,293)
Cost of sales (737,208) (562,986)
-------------- -------------
Gross (loss)/profit (366,562) 113,508
Administration expenses (3,438,239) (1,922,917)
General & Administrative expenses
- Vision 3 (1,744,730) -
Impairment of exploration & evaluation
assets 14.1 (34,138,156) (6,805,537)
Impairment of developed oil & gas
assets 14.2 (13,092,684) -
Impairment of property plant and
equipment 14.3 (1,397,950) -
Impairment of Goodwill 14.4 (796,236) -
Depreciation of production & pipeline
facilities (275,665) (145,516)
Operating loss 5 (55,250,222) (8,760,462)
Gain on bargain purchase 3 100,757,286 -
Less: deferred tax thereon (28,783,396)
Interest receivable 7 25,781 6,858
-------------- -------------
Profit before taxation 16,749,449 (8,753,604)
-------------- -------------
Taxation 8 18,757,633 -
Profit / (loss) for the year 35,507,082 (8,753,604)
============== =============
Other comprehensive income for
the year
Exchange differences from translating
foreign operations (179,284) 277,183
Total comprehensive income / (loss)
for the year 35,327,798 (8,476,421)
Less: Net income / (loss) attributable
to noncontrolling interests - -
Net income / (loss) attributable
to Pantheon Company 35,327,798 (8,476,421)
Profit / (loss) per share
Profit / (loss) per ordinary share
- basic and diluted from continuing
operations 2 10.54c (3.72)c
-------------- -------------
The profit for the current and loss for the prior year and the
total comprehensive profit for the current and loss for the prior
year are wholly attributable to the equity holders of the parent
company, Pantheon Resources Plc.
Share Share Retained Currency Share Non Total
capital premium losses reserve based controlling equity
payment Interests
$ $ $ $ $ $ $
Group
At 1 July 2018 3,852,673 106,678,805 (48,137,398) (41,554) 902,854 - 63,255,380
Net profit
for the year - - 35,507,082 - - - 35,507,082
Other
comprehensive
income:
Foreign
currency
translation - - - (179,284) - - (179,284)
------------- --------------- ---------------- ------------- ------------- ------------- --------------
Total
comprehensive
income for
the year - - 35,507,082 (179,284) - - 35,327,798
------------- --------------- ---------------- ------------- ------------- ------------- --------------
Capital
Raising
Issue of
shares 1,394,037 19,865,021 - - - - 21,259,058
Issue of
shares
in lieu of
fees 23,753 (23,753) - - - - -
Issue costs - (890,304) - - - - (890,304)
Acquisitions
Issue of
shares 2,693,665 38,384,733 - - 1,261,044 - 42,339,442
Other
Shares issued
in lieu of
fees 1,947 30,218 - - - - 32,165
Business
Combination
Business
combination - - - - - (54,708) (54,708)
Balance at
30 June 2019 7,966,075 164,044,718 (12,630,316) (220,838) 2,163,898 (54,708) 161,268,831
============= =============== ================ ============= ============= ============= ==============
Share Share Retained Currency Share Total
capital premium losses reserve Based equity
payments
$ $ $ $ $ $
Company
At 1 July 2018 3,852,673 106,678,805 (19,837,455) (13,241,579) 902,854 78,355,298
Net loss for
the year - - (1,463,533) - - (1,463,533)
Other
comprehensive
income: Foreign
currency
translation - - - (3,625,534) - (3,625,534)
------------- --------------- ---------------- ---------------- ------------- ---------------
Total
comprehensive
income for
the year - - (1,463,533) (3,625,534) - (5,089,067)
------------- --------------- ---------------- ---------------- ------------- ---------------
Capital Raising
Issue of shares 1,394,037 19,865,021 - - - 21,259,058
Issue of shares
in lieu of
fees 23,753 (23,753) - - - -
Issue Costs - (890,304) - - - (890,304)
Acquisitions
Issue of shares 2,693,665 38,384,733 - - 1,261,044 42,339,442
Other
Shares issued
in lieu of
fees 1,947 30,218 - - - 32,165
Balance at
30 June 2019 7,966,075 164,044,720 (21,300,988) (16,867,113) 2,163,898 136,006,592
============= =============== ================ ================ ============= ===============
Share Share Retained Currency Share Total
capital premium losses reserve reserve Equity
$ $ $ $ $ $
Group
At 1 July 2017 3,557,582 94,914,770 (39,383,794) (318,737) 902,854 59,672,675
Net loss for the
year - - (8,753,604) - - (8,753,604)
Other comprehensive
income: Foreign
currency translation - - - 277,183 - 277,183
------------- --------------- ---------------- ------------ ----------- ---------------
Total comprehensive
income for the
year - - (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
============= =============== ================ ============ =========== ===============
Share Share Retained Currency Equity Total
capital premium losses reserve reserve Equity
$ $ $ $ $ $
Company
At 1 July 2017 3,557,582 94,914,770 (18,700,160) (14,366,568) 902,854 66,308,478
Net loss for the
year - - (1,137,295) - - (1,137,295)
Other comprehensive
income: Foreign
currency translation - - - 1,124,989 - 1,124,989
----------- --------------- -------------- -------------- --------- -------------
Total comprehensive
loss for the year - - (1,137,295) 1,124,989 - (12,306)
----------- --------------- -------------- -------------- --------- -------------
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 (19,837,455) (13,241,579) 902,854 78,355,298
=========== =============== ============== ============== ========= =============
Notes 2019 2018
$ $
ASSETS
Non-current assets
Exploration and evaluation assets 15 160,887,260 43,498,422
Developed oil & gas assets 16 6,961,445 13,736,007
Property, plant and equipment 16 2,494,464 2,237,698
170,343,169 59,472,127
-------------- --------------
Current assets
Trade and other receivables 10 1,843,649 700,939
Cash and cash equivalents 11 1,853,986 3,399,290
3,697,635 4,100,229
-------------- --------------
Total assets 174,040,804 63,572,356
-------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 12 1,410,347 316,976
Provisions 13 1,335,863 -
Deferred tax liability 8 10,025,763 -
-------------- --------------
12,771,973 316,976
-------------- --------------
Total liabilities 12,771,973 316,976
-------------- --------------
Net assets 161,268,831 63,255,380
============== ==============
EQUITY
Capital and reserves
Share capital 17 7,966,075 3,852,673
Share premium 164,044,718 106,678,805
Retained losses (12,630,316) (48,137,398)
Currency reserve (220,838) (41,554)
Share based payment reserve 23 2,163,898 902,854
Non controlling interests 3 (54,708) -
-------------- --------------
Shareholders' equity 161,268,831 63,255,380
============== ==============
The financial statements were approved by the Board of Directors
and authorised for issue on 24 February 2020 and signed on its
behalf by:
Justin Hondris
Director
Company Number 05385506
Notes 2019 2018
$ $
ASSETS
Non-current assets
Property, plant and equipment 16 635 1,099
Loans to subsidiaries 10 134,985,268 77,770,641
-------------- --------------
134,985,903 77,771,740
--------------
Current assets
Trade and other receivables 10 57,167 100,110
Cash and cash equivalents 11 1,312,164 687,768
--------------
1,369,331 787,878
-------------- --------------
Total assets 136,355,234 78,559,618
-------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 12 348,642 204,320
-------------- --------------
Total liabilities 348,642 204,320
-------------- --------------
Net assets 136,006,592 78,355,298
============== ==============
EQUITY
Capital and reserves
Share capital 17 7,966,075 3,852,673
Share premium 164,044,720 106,678,805
Retained losses (21,300,988) (19,837,455)
Currency reserve (16,867,113) (13,241,579)
Share based payment reserve 23 2,163,898 902,854
-------------- --------------
Shareholders' equity 136,006,592 78,355,298
============== ==============
In accordance with the provisions of Section 408 of the
Companies Act 2006, the Company has not presented an income
statement. A loss for the year ended 30 June 2019 of $1,463,533
(2018: loss of $1,137,295) has been included in the consolidated
income statement.
The financial statements were approved by the Board of Directors
and authorised for issue on 24 February 2020 and signed on its
behalf by:
Justin Hondris
Director
Company Number 05385506
Notes 2019 2018
$ $
Net outflow from operating activities 18 (5,513,085) (2,082,803)
-------------- --------------
Cash flows from investing activities
Interest received 25,781 6,858
Funds used for drilling, exploration
and leases (10,579,750) (10,679,594)
Developed oil & gas assets (523,934) (495,183)
Decommissioning Provision (Exploration
& Evaluation) 676,464 -
Decommissioning Provision (Developed
Oil & Gas Assets) 409,400 -
Property, plant & equipment (312,637) 208,682
Acquisition of a subsidiary (Great
Bear), net of cash acquired 3 (6,098,215) -
Acquisition of a subsidiary, (Vision
Resources LLC) net of cash acquired 3 1,920 -
Net cash outflow from investing activities (16,400,971) (10,959,237)
-------------- --------------
Cash flows from financing activities
Proceeds from share issues 17 21,259,057 12,596,484
Issue costs paid in cash (890,304) (537,360)
-------------- --------------
Net cash inflow from financing activities 20,368,753 12,059,124
-------------- --------------
Decrease in cash & cash equivalents (1,545,304) (982,916)
Cash and cash equivalents at the beginning
of the year 3,399,290 4,382,206
Cash and cash equivalents at the end
of the year 11 1,853,986 3,399,290
============== ==============
Notes 2019 2018
$ $
Net cash (outflow) / inflow from operating
activities 18 (4,894,845) 65,107
-------------- --------------
Cash flows from investing activities
Purchase of plant and equipment - (1,318)
Interest received 25,671 5,861
Loans to subsidiary companies (14,875,183) (13,701,062)
-------------- --------------
Net cash outflow from investing activities (14,849,512) (13,696,519)
-------------- --------------
Cash flows from financing activities
Proceeds from share issues 17 21,259,057 12,596,484
Issue costs paid in cash (890,304) (537,359)
-------------- --------------
Net cash inflow from financing activities 20,368,753 12,059,125
-------------- --------------
Increase / (decrease) in cash and
cash equivalents 624,396 (1,572,287)
Cash and cash equivalents at the beginning
of the year 687,768 2,260,055
Cash and cash equivalents at the end
of the year 11 1,312,164 687,768
============== ==============
1. Accounting policies
A summary of the principal accounting policies, all of which
have been applied consistently throughout the year, is set out
below.
1.1 Basis of preparation
The financial statements have 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.
The Group's financial statements for the year ended 30 June 2019
were authorised for issue by the board of Directors on 24 February
2020 and were signed on the Board's behalf by Mr J Hondris.
The Group and Company financial statements are presented in US
dollars.
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. 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 Interests in joint arrangements
IFRS 11 defines a joint arrangement as an arrangement over which
two or more parties have joint control. Joint control is the
contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities (being
those that significantly affect the returns of the arrangement)
require unanimous consent of the parties sharing control.
Joint operations
A joint operation is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the assets and obligations for the liabilities, relating to the
arrangement. In relation to its interests in joint operations, the
Group recognises its:
- Assets, including its share of any assets held jointly
- Liabilities, including its share of any liabilities incurred jointly
- Revenue from the sale of its share of the output arising from the joint operation
- Share of the revenue from the sale of the output by the joint operation
- Expenses, including its share of any expenses incurred jointly
1.4 Going concern
The Directors have reviewed the Group's overall position and
outlook and are of the opinion that the Group is able to operate as
a going concern for at least the next twelve months from the date
of approval of these financial statements.
Subsequent to year end, in July 2019, the Company raised
c.$10.7m through an equity fund raising at a price of GBP0.18 per
share. The Group is under no contractual obligation requiring it to
drill any wells or renew any specific leases. The Group does
however have an obligation to drill a delineation well at Alkaid
prior to May 2021; whilst this is not compulsory, failure to do so
would likely result in the Group forfeiting those particular
leases. The Group is presently in discussions with a number of
interested parties to potentially farm out a working interest in
some or all of the Alaskan projects is confident of meeting its
drilling obligation. Pantheon is seeking potential farminee(s) to
fund the cost of drilling one or more future wells as well as make
a material up-front payment as reimbursement for back costs
incurred to date. As a result, the Directors believe that the Group
is sufficiently funded and believe the use of the going concern
basis is appropriate. Accordingly, the Directors have prepared the
financial statements on a going concern basis.
1.5 Revenue
The Group is engaged in the business of extracting oil and gas.
Revenue from contracts with customers is recognised when control of
the goods is transferred to the customer at an amount that reflects
the consideration to which the Group expects to be entitled in
exchange for those goods.
Contract balances
A contract asset is the right to consideration in exchange for
goods transferred to the customer. If the Group performs by
transferring goods to a customer before the customer pays
consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional. The
Group does not have any contract assets as performance and a right
to consideration occurs within a short period of time and all
rights to consideration are unconditional.
Interest revenue is recognised on a proportional basis taking
into account the interest rates applicable to the financial
assets.
1.6 Foreign currency translation
(i) Functional and presentational currency
The financial statements are presented 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 year. 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.
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.
1.7 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.
1.8 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.
1.9 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. 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. All balance sheet carrying
values are reviewed for indicators of impairment at least twice
yearly. 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.
1.10 Impairment of exploration costs and developed oil and gas
properties, depreciation of assets, plug & abandonment and
goodwill
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 Group 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 Group has determined an accounting
policy for allocating exploration and evaluation assets to specific
'cash-generating units' ("CGU") for East Texas.
Exploration and evaluation costs
In relation to the East Texas projects, the carrying value as at
30 June 2019 represents back costs and direct costs paid in
relation to the project, seismic, land and drilling costs relating
to the prospects. Reflecting the strategic decision to prioritize
the Alaskan assets over the East Texas assets in the Group's
portfolio, due to their size, scale, and progress made, and
reflecting that the Group's current available funding and
anticipated cash inflows from a successful farmout would likely be
applied to the Alaskan assets, the Group has made an impairment to
the carrying values of the East Texas Exploration and Evaluation
Costs. The Group has valued its acreage footprint in Tyler and Polk
Counties, East Texas at the most relevant recent sale prices per
acre in those Counties, being $650 per acre and $350 per acre
respectively. To the extent that carrying values exceeded these
amounts, an impairment was taken.
The Alaskan exploration and evaluation leasehold assets have
been fair valued as at the date of acquisition of Great Bear. The
carrying value at 30 June 2019 represents the cost of acquisition
plus the fair value adjustment, in accordance with IFRS, that has
been recognised in the consolidated statement of comprehensive
income as a gain on bargain purchase.
Decommissioning Charges
Decommissioning costs will be incurred by the Group at the end
of the operating life of some of the Group's facilities and
properties. The Group assesses its decommissioning provision at
each reporting date. The ultimate decommissioning costs are
uncertain and cost estimates can vary in response to many factors,
including changes to relevant legal requirements, the emergence of
new restoration techniques or experience at other production sites.
The expected timing, extent and amount of expenditure may also
change - for example, in response to changes in reserves or changes
in laws and regulations or their interpretation. Therefore,
significant estimates and assumptions are made in determining the
provision for decommissioning. As a result, there could be
significant adjustments to the provisions established which would
affect future financial results. The provision at reporting date
represents management's best estimate of the present value of the
future decommissioning costs required.
For all wells the Group has adopted a Decommissioning Policy in
which all decommissioning costs are recognise immediately when a
well is either completed, abandoned, suspended or a decision taken
that the well will likely be plugged and abandoned in due course.
For completed or suspended wells, the decommissioning charge is
recorded against the capitalised amount and subsequently depleted
over the useful life of well using unit of production method.
Goodwill
Goodwill is tested for impairment annually (as at 30 June) and
when circumstances indicate that the carrying value may be
impaired. Impairment is determined for goodwill by assessing the
recoverable amount of the asset to which the goodwill relates.
Where the recoverable amount is less than its carrying amount, an
impairment loss is recognised. If an impairment is recognised it is
reflected in the statement of profit or loss and other
comprehensive income as part of other operating expenses.
Developed Oil and Gas Properties
Developed Oil and Gas Properties only represent the capitalised
costs associated with oil and gas properties, assessed on a CGU
(cash generating basis) which have been transferred from
"Exploration and Evaluation costs" to "Developed Oil & Gas
properties" when the well was commissioned. 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). The carrying
values of Developed Oil and Gas properties are tested for
indicators of impairment, and the higher of the asset's fair value
less costs to sell and value in use, is compared to the asset's
carrying value. Any excess of the asset's carrying value over its
recoverable amount is expensed to the income statement. During the
year, all historical East Texas wells were impaired to zero except
VOS#1 in Tyler County, reflecting their poor performance.
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. Pipeline and associated costs are depreciated over 30 years;
tankage, generators and generator systems over 20 years and
equipment associated with the Gas Plant over 3 years.
- Office equipment is depreciated by equal annual instalments
over their expected useful lives, being three years.
1.11 Financial instruments
IFRS 7 requires information to be disclosed about the impact of
financial instruments on the Group's risk profile, how the risks
arising from financial instruments might affect the entity's
performance, and how these risks are being managed.
The Group's policies include that no trading in derivative
financial instruments shall be undertaken. These disclosures have
been made in Note 22 to the accounts.
1.12 Critical accounting estimates and judgements
The preparation of financial statements in conformity with
International Financial Reporting Standards requires the use of
accounting estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during
the reporting period. Although these estimates are based on
management's best knowledge of current events and actions, actual
results ultimately may differ from those estimates. IFRSs also
require management to exercise its judgement in the process of
applying the Group's accounting policies.
The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the
financial statements are as follows:
Impairment of tangible and intangible assets
The first stage of the impairment process is the identification
of an indication of impairment. Such indications can include
production difficulties, significant reductions in estimates of
resources, a significant revision of Group Strategy or of the plan
for the development of a field, operation issues which may require
significant capital expenditure to remediate and others. This list
is not exhaustive and management judgement is required to decide if
an indicator of impairment exists. The Group regularly assesses the
tangible and non-tangible assets for indicators of impairment. When
an impairment indicator exists an impairment test is performed; the
recoverable amount of the asset, being the higher of the asset's
fair value less costs to sell and value in use, is compared to the
asset's carrying value. Any excess of the asset's carrying value
over its recoverable amount is expensed to the income
statement.
Value of exploration assets on acquisition
In accordance with IFRS 3 Business Combinations, exploration
assets acquired as part of a business acquisition, and hence
combination, are recorded at their fair value as opposed to the
fair value of the consideration paid. For more detail on the basis
for the fair value calculation of the Great Bear Petroleum
exploration assets see note 3.
Developed Oil & Gas Properties
Developed Oil & Gas Properties are amortised over the life
of the area according to the unit of production method. If the
amount of economically recoverable reserves varies, this will
impact on the amount of the asset which should be carried on the
balance sheet. The group categorises its leases (intangible assets)
and its Developed Oil and Gas Properties (tangible assets) into a
few discreet geological prospects ("cash generating units" or
"CGU's").
Share-based payments
The Group records charges for share-based payments.
For option-based share-based payments, to determine the value of
the options management estimate certain factors used in the option
pricing model, including volatility, vesting date, exercise date of
options and the number of options likely to vest. At each reporting
date during the vesting period management estimate the number of
shares that will vest after considering the vesting criteria. If
these estimates vary from actual occurrence, this will impact on
the value of the equity carried in the reserves.
1.13 New and amended International Financial Reporting Standards adopted by the Group
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 'Revenue from Contracts with Customers' and the related
'Clarifications to IFRS 15 Revenue from Contracts with Customers'
(hereinafter referred to as 'IFRS 15') replace IAS 18 'Revenue',
IAS 11 'Construction Contracts', and several revenue-related
Interpretations. Due to the nature of the groups revenues there has
been no impact from the application of this standard.
IFRS 9 'Financial Instruments'
IFRS 9 replaces IAS 39 'Financial Instruments: Recognition and
Measurement'. It makes major changes to the previous guidance on
the classification and measurement of financial assets and
introduces an 'expected credit loss' model for the impairment of
financial assets.
The adoption of standard has not required any restatement of
comparative information.
The adoption of IFRS 9 has only affected the descriptions of the
categories in which financial assets and liabilities are included.
All of the Group's financial assets and financial liabilities
continue to be held at amortised cost.
1.14 New standards and interpretations not applied
As of the date of these financial statements the IASB and IFRIC
have issued a number of new standards, amendments and
interpretations. These new Standards, Amendments and
Interpretations are effective for accounting periods beginning on
or after the dates shown below. Of these, only the following are
expected to be relevant to the Group:
Standard Impact on initial application Effective date
---------------------
IFRS 16 Leases 1 January 2019
IFRS 3* Business Combination 1 January 2020
IAS 1* Presentation of Financial Statements 1 January 2020
IAS 8* Accounting Policies, Changes in 1 January 2020
Accounting Estimates and Errors
-------------- -------------------------------------- ---------------------
* Amendments
-------------- -------------------------------------- ---------------------
The Group does not anticipate that the adoption of these
standards will have a material effect on its financial statements
in the period of initial adoption.
1.15 Share based payments
On occasion, the Company has made share-based payments to
certain Directors and advisers by way of issue of ordinary shares
and share options. The fair value of these payments is calculated
by the Company using the Black-Scholes option pricing model. The
expense is recognised on a straight-line basis over the period from
the date of award to the date of vesting, based on the Company's
best estimate of the number of shares that will eventually
vest.
During the year, no share-based payments were made.
2. Profit per share
The total profit per ordinary share for the group of 10.54 US
cents (2018: (3.72) US cents) is calculated by dividing the loss
for the year from continuing operations by the weighted average
number of ordinary shares in issue of 336,744,317 (2018:
235,471,630).
The diluted profit per share has been kept the same as the basic
profit per share because the 19,607,843 options in issue were out
of the money at 30 June 2019 and as a result have not been included
in the weighted average number of shares number.
The diluted weighted average number of shares in issue is
336,744,317 (2018: 235,471,630).
3. Business combinations - Great Bear & Vision
The Group made two acquisitions during the year ended June 2019,
as detailed below:
Great Bear Petroleum Ventures I LLC & Great Bear Petroleum
Ventures II LLC
In January, 2019, the Group acquired 100% of the share capital
of Great Bear Petroleum Ventures I LLC and Great Bear Petroleum
Ventures II LLC companies (together "Great Bear" or "the Great Bear
companies"). The principal assets of Great Bear are leases with the
rights to explore for hydrocarbons in the State of Alaska. At the
date of acquisition these leases were estimated to offer potential
for over 2 billion barrels of oil in place across the existing
project inventory plus the additional exploratory potential
identified in these leases. Additionally, Great Bear had around
1000 square miles of proprietary 3D seismic data which was
acquired, as well as intellectual property and technical data
relating to the properties under lease. Prior to Pantheon's
acquisition, Great Bear had invested over US$200m on evaluating the
hydrocarbon potential of this Alaskan acreage.
In addition to the acquisition of the Great Bear companies and
the projects identified in the Alaskan portfolio, Pantheon acquired
a highly talented technical and commercial team which the Directors
believe will be of great value to the Group in both Alaska and
Texas.
The provisional fair values of the identifiable assets and
liabilities of Great Bear are:
Provisional
fair value
-------------
US$ million
Exploration and evaluation assets (Note 13) 148.5
-------------
148.5
-------------
Total identifiable net assets at fair value 148.5
=============
Bargain purchase 100.8
-------------
Total consideration 47.8
=============
The cash outflow on acquisition is as follows:
Cash paid 6.1
Net cash acquired with the subsidiary -
-------------
Net consolidated cash outflow 6.1
=============
Total consideration for the Great Bear Companies totalled
US$47.8m as follows: Cash consideration of US$6.1m, 103.3m new
fully paid ordinary shares (US$20.3m) valued at 15.25 pence per
share, 102.5m new fully paid non-voting B-class shares (US$20.1)
valued at 15.25 pence per share, and 9.6m new warrants (US$1.3).
The warrants have an exercise price of GBP0.30 per warrant and
mirror the terms of the Company's existing share options except
they are only convertible into non-voting Class B shares.
Pursuant to IFRS3, the Directors have undertaken a fair value
assessment of the assets acquired in the Great Bear acquisition. No
liabilities were acquired in the acquisition. IFRS3 affords a
period of 12 months from the date of acquisition to finalise the
measurement of such assessments.
For accounting purposes, the Directors have adopted a
conservative methodology in making a fair value assessment of the
assets acquired. Whilst this approach is prudent from an accounting
perspective, in reality these are accounting judgements and the
real commercial value of those assets acquired may differ
significantly from these accounting judgements over the fullness of
time. In determining the appropriate fair value, consideration was
given to a number of risks associated with the various projects,
which have then been 'discounted' or 'risked' in three primary
categories:
1) Geological Risk - the chance of finding oil or successfully
appraising the existing discoveries.
2) Commercial Risk - involves the risk factors associated with
commercialising the discovered oil. Not all oil discoveries are
commercially viable. These risk factors relate to the technical
factors affecting the extraction of the oil and also the logistical
factors relating to the geographical location and fiscal regime of
the region.
3) Funding Risk - relates to the ability of Pantheon to attract
partners and raise sufficient capital to undertake the evaluation
and development of the oil. These factors include oil prices and
the state of equity and debt markets.
In making a fair value assessment of the various projects in the
portfolio, the Directors have adopted a rigorous high-grading
exercise, only applying a fair value to the projects reasonably
expected to be funded and drilled within the lease term. This is
because at the time of acquisition, certain leases had lease terms
remaining of less than 18 months and there is no certainty that the
Group will have activity on those leases or renew those leases upon
expiry. A key consideration in this process was the fact that the
Group is currently engaged in a process to secure a farm-in partner
for some or all of its Alaskan projects, which have been
prioritised with Greater Alkaid and Talitha being the immediate
targets. Given the uncertainty in predicting the financial capacity
and likely drilling programme desired by a future farm-in partner,
the Directors have undertaken the fair value assessment on the
basis that any funding would be applied to either the Greater
Alkaid or Talitha projects only at this early stage and no value
applied to the remaining exploration acreage. The Directors have
therefore applied a fair value of nil to the Winx project, a nil
valuation to the Megrez prospect on the basis that the Group has
dropped the leases on this non-core project, and likewise applied a
nil valuation to the Theta project on the basis that it is a higher
risk drilling project and therefore unlikely to be drilled in the
lease term. At this stage Pantheon believe it prudent to prioritise
Greater Alkaid and Talitha given these projects host oil
discoveries and hence lower risk potential for earlier cashflows
due the close proximity to existing infrastructure. The Group
adopted a conservative approach in making these accounting
judgements, and at Greater Alkaid has applied a 70% Commercial Risk
and a further 50% funding risk, reflecting the fact that the
farmout process is not yet completed and that the introduction of a
farm-in will involve the Company reducing its working interest. The
discovered oil at Greater Alkaid was then evaluated through a
conceptual development plan resulting in a Net Present Value (NPV)
per barrel of oil of $8, lower than the $8.50 per barrel of oil NPV
estimated by the independent experts at LKA, reflecting management
conservatism in accounting judgements. At Talitha, a 50% Geological
Risk was applied reflecting the fact that despite ARCO having
encountered oil at this location in 1988, the well was not
production tested at the time. This is a conservative, yet prudent
approach, given the Pipeline State-1 well was drilled and logged,
on our acreage. A 75% Commercial Risk was then applied due the
uncertainty of the reservoir parameters and hence production
performance of the oilfield, and a further 70% discount applied for
Funding risk which incorporates the numerous variables associated
with financing this oil accumulation. The modelled Funding Risk was
higher than at Alkaid, reflecting the projects' greater level of
uncertainty on the technical parameters and geographic location in
relation to its distance from the road and pipeline. An NPV per
barrel of oil of $5 - $6 was applied for the 2 key horizons,
reflecting certain geological factors and its location as described
above which would result in higher development costs.
After application of the aforementioned assumptions and risk
parameters, the fair value assessment of the bargain purchase of
Great Bear Petroleum Ventures I, LLC and Great Bear Petroleum
Ventures II, LLC (the "Ventures Entities") for US$100.8 arises
principally because of the following factors:
1. Great Bear Petroleum Operating, LLC ("GBPO") was a
financially distressed seller of Great Bear Ventures I and II,
having borrowed against encashable production tax credits issued by
the State of Alaska. The State did not appropriate funds for the
encashment of tax credits, resulting in GBPO going into payment
default under its borrowings.
2. Key leases of the Ventures Entities in Greater Alkaid were
set to expire if testing operations did not occur within the
Winter/Spring drilling season of 2018/2019. The time pressure for
the Ventures Entities to secure funding for these operations was
another factor in GBPO's bargaining position.
3. Pantheon's existing team had significant Alaskan expertise,
and was able to quickly and efficiently evaluate the attractiveness
of the prospective investment.
4. The existing owners of GBPO wanted to maintain exposure to
the Ventures Entities' assets, hence a primarily equity transaction
was undertaken, which resulted in Pantheon completing the
transaction, raising funding and preserving the Greater Alkaid
leases through the, ultimately successful, 2019 testing campaign.
Additionally, all Great Bear shareholders have maintained their
exposure to the Alaskan assets through Pantheon.
5. In light of the above, Pantheon was able to negotiate an
attractive acquisition price for the Ventures Entities.
From the date of acquisition in January 2019 to 30 June 2019,
Great Bear contributed US$549,092 loss to the Group profit.
Vision Resources LLC
During the year, the Group acquired a 66.6% interest in Vision
Resources LLC ("Vision"). As consideration, Pantheon issued 3.5m
(US$0.7m) new fully paid ordinary shares as full and final payment.
The acquisition, which was completed on 14 January 2019, was to
allow Pantheon to assume control of Vision Resources LLC, the
General Partner of the Vision Group of Companies, and to preserve
the value of the East Texas assets following the death of the
Principal of the Vision companies in 2018, and the significant
associated disruption and uncertainty caused by this event.
The provisional fair values of the identifiable assets and
liabilities of Vision are:
Provisional
fair value
-------------
US$
Cash and cash equivalents 1,920
Other current assets 1,596
-------------
3,516
-------------
Trade and other payables (167,641)
Net liabilities (164,125)
-------------
Total identifiable net assets at fair value (164,125)
Minority interest 54,708
Total identifiable net assets at fair value
attributable Pantheon Group (109,417)
Goodwill arising on acquisition (Note 14.4) 796,236
Total consideration 686,819
=============
The cash outflow on acquisition is as follows:
Cash paid -
Net cash acquired with the subsidiary 1,920
-------------
Net consolidated cash outflow 1,920
=============
The consideration for Vision was 3.5m new fully paid ordinary
shares (US$0.7m).
From the acquisition date, 14 January 2019, to 30 June 2019,
Vision Resources LLC contributed US$ Nil to the Group loss. This is
because Vision Resources LLC acts as a General Partner and does not
engage in day to day operations. During the period, Pantheon
incurred expenditures of $1.7m through Vision, relating to the East
Texas assets. Following the death of the principal of Vision in
2018, significant uncertainty and disruption occurred, and Vision's
capacity to continue to participate in the project was assessed as
being unlikely. It was important for Pantheon to preserve the value
of the assets. Pantheon has continued to increase its leasehold
position to what is now 100% ownership of all leases. It is
expected that the costs will drop significantly going forward, now
that Pantheon has implemented its own technical team to manage and
rationalise operations. The Group has ended relations with all
operational personnel associated with Vision's historical drilling
of the East Texas wells.
One third of Vision Resources LLC (33.3%) is not owned by the
Pantheon Group. This portion is termed a non-controlling interest
("NCI"). A NCI of ($54,708) is shown in the consolidated statement
of financial position which is made up of a NCI of ($54,708) on the
total fair value of net assets on the acquisition, and a current
year NCI of Nil as shown in the consolidated statement of
comprehensive income.
The goodwill on acquisition of US$796,236 arose principally
because Vision Resources LLC had an excess of liabilities over
assets of US$164,125 on 14 January 2019 on a fair value basis.
Pantheon paid US$0.7m in new shares to acquire the 66% interest in
Vision Resources LLC. The purpose of the acquisition was to allow
Pantheon to obtain management control of Vision Resources LLC, the
General partner of the Vision group of Companies, and to preserve
the value of the East Texas assets following the death of the
Principal of the Vision companies in 2018. None of the goodwill
recognised is expected to be deductible for income tax
purposes.
4. Segmental information
The Group's activities involve production of and exploration for
oil and gas. There are three reportable operating segments: USA
(Texas), USA (Alaska) and Head Office. Non-current assets, income
and operating liabilities are attributable to the USA, whilst most
of the corporate administration is conducted through Head
Office.
Each reportable segment adopts the same accounting policies.
In compliance with IFRS 8 'Operating Segments', the following
tables reconcile the operational loss and the assets and
liabilities of each reportable segment with the consolidated
figures presented in these Financial Statements, together with
comparative figures for the year ended 30 June 2018.
Oil and Gas production commenced in East Texas in late 2017.
The Group's net total sales production for the financial year
ended 30 June 2019 amounted to 191,024 (2018: 203,565) mcf of
natural gas and 2,317 (2018: 7,326) bbl. of oil. Average
realisations for the year for natural gas and oil were US$2.58
(2018: $2.40) per mcf and US$62.54 (2018: $61.11) per barrel of oil
respectively.
Revenues for the year ended 30 June 2019 were $724,589 (2018:
$1,009,570).
Year ended 30 June 2019
Geographical segment (Group) Head Office Texas Alaska Consolidated
$ $ $ $
Revenue - 724,589 - 724,589
Production royalties - (205,458) - (205,458)
Depletion of developed
oil & gas assets - (148,485) - (148,485)
Cost of sales - (737,208) - (737,208)
Administration expenses (1,489,204) (1,400,323) (549,092) (3,438,619)
General & Administrative
expenses - Vision - (1,744,730) - (1,744,730)
Impairment of intangible
assets - Goodwill - (796,236) - (796,236)
Impairment of intangible
assets - E&E (34,138,156) - (34,138,156)
Impairment developed oil
& gas assets - (13,092,684) - (13,092,684)
Impairment PP&E - (1,397,950) - (1,397,950)
Plug & abandonment costs - 380 - 380
Depreciation of production
& pipeline facilities - (275,665) - (275,665)
Interest receivable 25,671 110 - 25,781
Un-realised gains - - 100,757,286 100,757,286
Less: deferred tax thereon - - (28,783,396) (28,783,396)
Taxation - - 18,757,633 18,757,633
------------- --------------- -------------- --------------
Loss by reportable segment (1,463,533) (53,211,816) 90,182,431 35,507,083
============= =============== ============== ==============
Exploration & evaluation
assets - 7,303,800 153,583,460 160,887,260
Developed oil & gas assets - 6,961,445 - 6,961,445
Property, plant & equipment 635 2,493,829 - 2,494,464
Trade and other receivables 57,167 358,813 1,427,668 1,843,649
Cash and cash equivalents 1,312,164 541,445 377 1,853,986
Intercompany balances 134,985,268 (128,981,374) (6,003,894) -
------------- --------------- -------------- --------------
Total assets by reportable
segment 136,355,234 (111,322,042) 149,007,612 174,040,804
------------- --------------- -------------- --------------
Total liabilities by reportable
segment (348,642) (1,348,989) (11,074,342) (12,771,973)
============= =============== ============== ==============
Net assets by reportable
segment 136,006,592 (112,671,031) 137,933,270 161,268,831
============= =============== ============== ==============
Year ended 30 June 2018
Geographical segment (Group) Head Office USA (Texas) Consolidated
$ $ $
Revenue - 1,009,570 1,009,570
Production royalties - (244,783) (244,783)
Depletion of developed oil &
gas assets - (88,293) (88,293)
Cost of sales - (562,986) (562,986)
Administration expenses (1,143,157) (779,760) (1,922,917)
Impairment of intangible assets - (6,805,537) (6,805,537)
Depreciation of production &
pipeline facilities - (145,516) (145,516)
Interest receivable 5,862 996 6,858
------------- -------------- --------------
Loss by reportable segment (1,137,295) (7,616,309) (8,753,604)
============= ============== ==============
Exploration & evaluation assets - 43,498,422 43,498,422
Developed oil & gas assets - 13,736,007 13,736,007
Property, plant & equipment 1,099 2,236,599 2,237,698
Trade and other receivables 100,110 600,829 700,939
Cash and cash equivalents 687,768 2,711,522 3,399,290
Intercompany balances 77,770,641 (77,770,641) -
------------- -------------- --------------
Total assets by reportable segment 78,559,618 (14,987,262) 63,572,356
------------- -------------- --------------
Total liabilities by reportable
segment (204,320) (112,656) (316,976)
============= ============== ==============
Net assets by reportable segment 78,355,298 (15,099,918) 63,255,380
============= ============== ==============
5. Operating loss
2019 2018
$ $
Operating loss is stated after charging:
Depreciation - production facilities
& equipment 275,665 145,516
Depreciation - office equipment 431 1,436
Auditor's remuneration
- group and parent company audit
services 85,000 23,250
Auditor's remuneration for non-audit
services
- taxation services and compliance
services - 11,725
--------- ---------
6. Employment costs
The employee costs of the Group, including Directors'
remuneration, are as follows:
2019 2018
$ $
Wages and salaries 1,187,223 1,071,015
Social security costs 68,082 89,606
Statutory pension costs 22,693 21,611
----------- -----------
1,277,998 1,182,232
=========== ===========
The summary of the directors' remuneration is shown in the
directors' report.
2019 2018
Number of employees (including Executive number number
Directors) at the end of the year
Management and administration 5 5
-------- --------
7. Interest receivable
2019 2018
$ $
Bank interest received 25,781 6,858
======== =======
8. Taxation
2019 2018
$ $
Current tax
US federal corporate tax - -
US state and local tax - -
UK corporate tax - -
============== ===============
Factors affecting the tax charge for the period
Income (loss) on ordinary activities before
taxation 16,749,449 (8,756,152)
-------------- ---------------
Income (loss) on ordinary activities before
taxation multiplied by the standard US corporate
tax rate of 21% (2018: UK corporate tax rate
of 19%) 3,517,384 (1,663,669)
Effects of:
State of Alaska tax benefits associated with (51,615) -
temporary book-to-tax differences
US federal tax benefit associated with temporary (14,267,460) -
book-to-tax differences
US federal tax benefit associated with reassessed (7,955,942) -
future utilization of loss carryforward
Effects of:
Non-deductible expenses - 1,293,052
Capital allowances - -
Tax losses carried forward not recognized
as deferred tax asset - 370,617
-------------- ---------------
Total tax charge (18,757,633) -
============== ===============
Factors that may affect future tax charges
The Group's deferred tax assets and liabilities as at 30 June
2019 have been measured at 21% for items subject to US federal
income tax only, items subject to state of Alaska and US federal
income tax are reflected at an Alaska rate of 9.4% and a US federal
rate, net of state of Alaska tax deduction, of 28.426%. At June 30,
2019 the net deferred tax liability reflected on the balance sheet
is $10,025,763 (2018: nil). Movement in the statement of
comprehensive income accounting for the increase in net deferred
tax liability is comprised of a deferred tax benefit of $18,757,633
resulting from ordinary operations, and a deferred tax expense of
$28,783,396 resulting from the bargain purchase gain (in 2018 there
was no change in deferred tax asset or liability).
At the year-end date, the Group has unused losses carried
forward of $47.6m (2018: $34.5m) available for offset against
suitable future profits. Unused US tax losses incurred prior to
January 1, 2018 expire in general within 20 years of the year in
which they are sustained. Losses sustained after December 31, 2017
do not expire.
At June 30, 2018, the directors did not consider it appropriate
to recognise a deferred tax asset in respect of such losses, due to
the uncertain nature of future revenue streams. At June 30, 2019,
given the deferred tax liabilities recognized in conjunction with
the Great Bear Acquisition, the directors believe it is appropriate
to recognize the previously unrecognized deferred tax asset
associated with losses carried forward. This recognition resulted
in a deferred tax benefit of $7,955,942 reflected in the results
for year ended June 30, 2019.
9. Subsidiary entities
The Company currently has the following wholly owned
subsidiaries:
Name Country of Incorporation Percentage Activity
ownership
-----------------------
Hadrian Oil & Gas LLC United States 100% Holding Company
Agrippa LLC United States 100% Holding Company
Pantheon Oil & Gas LP United States 100% Oil & gas exploration
Great Bear Petroleum United States 100% Lease Holding Company
Ventures I, LLC
Great Bear Petroleum United States 100% Lease Holding Company
Ventures II, LLC
Great Bear Pantheon, United States 100% Operating Company
LLC
Pantheon East Texas, United States 100% Holding Company
LLC
Vision Resources, LLC United States 66.6% Operating Company
----------------------- -------------------------- -------------- -----------------------
Pantheon Oil & Gas LP is 99% owned by Agrippa LLC as its
limited partner and 1% by Hadrian Oil & Gas LLC as its general
partner.
10. Trade and other receivables
Group Group Company Company
2019 2018 2019 2018
$ $ $ $
Amounts falling due within
one year:
Prepayments & accrued income 332,000 672,468 13,214 74,301
Other receivables 1,511,649 28,471 43,953 25,809
Total 1,843,649 700,939 57,167 100,110
=========== ========= ========= =========
Group Group Company Company
2019 2018 2019 2018
$ $ $ $
Amounts falling due after one
year:
Loans to subsidiaries - - 134,985,268 77,770,641
======== ======== ============= ============
An annual impairment review of the amount due from subsidiary
undertakings (loans to subsidiaries) is performed by comparing the
expected recoverable amount of the subsidiary's underlying tangible
and intangible assets to the carrying value of the loan in the
Company's statement of financial position. This has been assessed
in line with IFRS 9 for credit losses however recoverability is
supported by the underlying assets.
The Company fully transitioned from IAS 39 and adopted IFRS 9
from 1 July 2018 onwards. The adoption of standard has not required
any restatement of comparative information. On the basis of ongoing
annual assessments, the lifetime expected credit losses are
recognised against loans and receivables when they are identified
and are recorded in the statement of comprehensive income.
11. Cash and cash equivalents
Group Group Company Company
2019 2018 2019 2018
$ $ $ $
Cash at bank and in hand 1,853,986 3,399,290 1,312,164 687,768
=========== =========== =========== =========
12. Trade and other payables
Group Group Company Company
2019 2018 2019 2018
$ $ $ $
Trade creditors 398,312 106,619 174,690 106,619
Accruals 1,012,035 210,357 173,952 97,701
----------- --------- --------- ---------
Total 1,410,347 316,976 348,642 204,320
=========== ========= ========= =========
13. Provisions
Plug and Abandonment Provision
The Group recognises a decommissioning liability where it has a
present legal or constructive obligation as a result of past
events, and it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate of the
amount of obligation can be made. The obligation generally arises
when the asset is installed, or the ground/environment is disturbed
at the field location. A breakdown of these costs is detailed at
Note 20.
Legal Costs
Legal costs have been provided for due to an ongoing dispute
with a third-party vendor.
Group Group Company Company
2019 2018 2019 2018
$ $ $ $
Plug and Abandonment 1,085,863 - - -
Legal costs 250,000
Total 1,335,863 - - -
=========== ======= ========= =========
14. Impairments
14.1 Impairment of non-current assets - exploration and evaluation assets
During the year ended 30 June 2019 impairment losses of US$34.1m
(2018: $6.8m) were recognised in respect of exploration and
evaluation assets in East Texas. The major element of this was a
charge of US$28.4m relating leased acreage across the various
CGU's, with in Polk & Tyler County, with the remaining charge
of US$5.7m relating to historic Austin Chalk back costs in the West
AA Prospect CGU.
Since the acquisition of Great Bear, the Alaskan acreage, due to
its materially larger size and scale, has become the primary focus
for the Group. The potential for the Texas acreage in Polk and
Tyler County remains undiminished, however, given the change in
geographical focus there is a reduced probability mid-term
operational activity in East Texas. As a result, an impairment loss
was recognised in the statement of profit or loss and other
comprehensive income as part of other operating expenses. To the
extent that carrying values exceeded these amounts, an impairment
was taken. The Tyler County and Polk County leases within each of
the CGU's were measured at the most recent and relevant per acre
lease sale transaction costs in Tyler County of $650 per acre (Core
Offset Prospect CGU & LP2 Offset CGU) and Polk County of $350
per acre (West West AA Prospect CGU and West AA Prospect CGU). The
Prospect E CGU has been impaired to a nil carrying value.
In assessing whether an impairment is required, the carrying
value of the asset is compared with its recoverable amount. The
recoverable amount is the higher of the assets fair value less
costs to sell and value in use. Where impairment indications have
been found we have performed impairment tests. The indicator for
impairment was the Group's change in strategic focus from East
Texas to Alaska, the prioritising of funding to Alaska, and the
resulting reduced scheduled activity in East Texas. Where
impairment indications have been found we have performed impairment
tests. Impairment losses have been measured, presented and
disclosed in accordance with IAS 36.
Given the nature of the Group's activities, information on the
fair value of an asset can be difficult to obtain unless
negotiations or similar transactions are taking place.
Consequently, the recoverable amount in use in assessing the
impairment charges to the E&E assets was the current price to
re-new the held leased in both Tyler and Polk County in East
Texas.
Impairment losses - exploration and
evaluation assets 2019 2018
$ $
West AA Prospect - CGU
West AA (prospect A leased acreage) 10,312,298 -
- Polk County
VOBM#5 Well - Polk County 3,445,153 -
Austin Chalk (back costs) - Polk County 5,751,637 -
Kara Farms (previously leased acreage) 139,757 -
- Polk County
West West AA Prospect - CGU
West West AA (prospect D leased acreage)
- Polk County 1,980,518 3,181,493
Prospect E - CGU
Prospect E (leased acreage) - Polk
County 57,204 1,798,993
Core Offset Prospect (aka Prospect
B&C) - CGU
Core Offset (prospect B&C leased acreage) 8,343,593 -
- Tyler County
LP2 Offset - CGU
LP2 offset (leased acreage) - Tyler 955,517 -
County
VOBM#4 Well - Tyler County 3,152,480 1,825,051
------------ -----------
Total 34,138,157 6,805,537
------------ -----------
14.2 Impairment of non-current assets - Oil & Gas producing properties
Impairment losses of US$13.1m (2018 Nil) were recognised in
respect of the producing oil and gas properties within the West AA
Prospect CGU in Polk County. All Polk County wells were written
down to zero. As has been well documented, these wells have
experienced significant operational issues historically and are
heavily compromised. The board considers them to be uneconomic and
accordingly a n impairment charge has been determined for the year
of $13.1m (2018: Nil). The carrying value of all three wells in the
CGU have been written down to Nil.
Impairment losses - oil & gas producing properties 2019 2018
$ $
West AA Prospect - CGU
VOBM#2H - Polk County 7,426,917 -
VOBM#1 - Polk County 2,533,041 -
VOBM#3 - Polk County 3,076,644 -
Acreage - Polk County 56,082 -
Total 13,092,684 -
------------ ------
14.3 Impairment of non-current assets - Property Plant & Equipment
Impairment losses of US$1.4m (2018: Nil) were recognised in
respect of property plant and equipment. This charge relates to the
impairment of the capitalised costs relating to Pantheon's share of
the gas processing plant and associated equipment and facilities in
Polk County which serviced the West AA Prospect - CGU. These assets
have been written down to their current recoverable amount less
costs to sell.
Impairment losses - Property Plant & Equipment 2019 2018
$ $
Polk County
Polk County Gas Plant 1,397,950 -
Total 1,397,950 -
----------- ------
14.4 Impairment of non-current assets - Goodwill
Impairment losses of US$0.8m (2018: Nil) were recognised in
respect of goodwill. This goodwill was recorded as a result of the
acquisition of 66% of Vision Resources LLC in January 2019. The
acquisition of Vision was undertaken primarily to give the Group
control of Vision Resources LLC in order to preserve the value of
the Group's East Texas operations following the unexpected death of
the principal of the Vision Group of Companies, and the uncertainty
over future operations that followed. The fair value of the
identifiable net assets acquired was less than the fair value of
the consideration, giving rise to an intangible asset of goodwill.
The acquisition was considered strategically important to Pantheon,
delivering the intangible asset of 'control' of Vision Resources
LLC, and greater opportunity to preserve the value of Pantheon's
assets.
The recoverable amount is calculated as the higher of fair value
less costs of disposal and value in use. Carrying includes the
carrying amount of only those assets that can be attributed
directly, or allocated on a reasonable and consistent basis, to the
unit. This also includes carrying amount of acquired goodwill
allocated to the unit. IAS 36 requires goodwill to be impaired
where the recoverable amount is less than the carrying amount. The
Group is unable to allocate the goodwill to the unit and as a
result an impairment loss was recognised in the statement of
comprehensive income as an impairment charge.
Impairment of Goodwill 2019 2018
$ $
Impairment goodwill - Vision 796,236 -
796,236 -
--------- ------
15. Exploration and evaluation assets
Group 2019 2018
$ $
Cost
At 1 July 50,303,959 55,545,596
Additions 10,579,750 10,679,595
Acquisitions 148,508,125 -
Transfer to developed oil &
gas assets (7,560,880) (13,329,117)
Transfer to production facilities
& equipment - (2,592,115)
At 30 June 201,830,954 50,303,959
------------- --------------
Impairment
As at 1 July 6,805,537 -
Charge for year 34,138,157 6,805,537
------------- --------------
At 30 June 40,943,694 6,805,537
------------- --------------
Net book value
------------- --------------
At 30 June 160,887,260 43,498,422
============= ==============
The Group additions for the year comprise the direct costs
associated with the preparation and drilling of oil and gas wells,
together with costs associated with leases and seismic acquisition
and processing. The acquisitions for the year comprise of the fair
value of the Alaskan Leases acquired as part of the Great Bear
acquisition in January 2019.
Details of the impairments for the year are disclosed in note
14.
16. Property, plant and equipment
Developed Production
Oil & Gas Facilities
Group Properties & Equipment Office Equipment Total
$ $ $ $
Cost
At 1 July 2017 - - 14,780 14,780
Additions 495,183 (210,000) 1,319 286,502
Transfer from exploration & evaluation
assets 13,329,117 2,592,115 - 15,921,232
------------- -------------- ------------------ ------------
At 30 June 2018 13,824,300 2,382,115 16,099 16,222,514
Additions 523,934 312,637 - 836,571
Transfer from exploration & evaluation
assets 7,560,880 - - 7,560,880
Transfer from developed oil &
gas assets (1,618,208) 1,618,208 - -
At 30 June 2019 20,290,906 4,312,960 16,099 24,619,965
------------- -------------- ------------------ ------------
Depreciation
At 1 July 2017 - - 13,614 13,614
Depreciation for the year - 145,516 1,436 146,952
Exchange difference - - (50) (50)
------------- -------------- ------------------ ------------
At 30 June 2018 - 145,516 15,000 160,516
Depreciation for the year - 275,665 431 276,096
Exchange difference - - 33 33
At 30 June 2019 - 421,181 15,464 436,645
------------- -------------- ------------------ ------------
Depletion
At 01 July 2017 - - - -
Depletion for the year 88,293 - - 88,293
------------- -------------- ------------------ ------------
At 30 June 2018 88,293 - - 88,293
Depletion for the year 148,485 - - 148,485
------------- -------------- ------------------ ------------
At 30 June 2019 236,778 - - 236,778
------------- -------------- ------------------ ------------
Impairments
At 30 June 2017 & 2018 - - - -
Impairment for the year 13,092,684 1,397,950 - 14,490,634
------------- -------------- ------------------ ------------
At 30 June 2019 13,092,684 1,397,950 - 14,490,634
------------- -------------- ------------------ ------------
Net book value
As at 30 June 2019 6,961,444 2,493,829 635 9,455,908
============= ============== ================== ============
As at 30 June 2018 13,736,007 2,236,599 1,099 15,973,705
============= ============== ================== ============
In accordance with IAS 36 'Impairment of Assets' (IAS 36), the
prospect acreage in East Texas has been classified into discrete
"prospects" or cash generating units ("CGU's").
All 'Developed oil & gas properties' relate to East Texas.
This category represents one well in Tyler County, namely VOS#1,
which is in the LP2 offset CGU.
The recoverable amount of the developed oil and gas properties
and loan to the subsidiary Pantheon Oil & Gas LP is based upon
value in use calculations. The use of this method requires the
estimation of future cash flows from the underlying assets,
discounted using a suitable pre-tax discount rate. For the purposes
of these calculations the Company's Tyler & Polk County Eagle
Ford sandstone project currently under lease was modelled on a P50
basis using a discount rate of 10%. The key assumptions upon which
the cash flow projections were based include recoverable resource,
number of wells drilled, leasehold position, cost of drilling and
the future prices of both oil and natural gas. For the purpose of
the calculations the following assumptions were used:
Average reserves per well 1.4Mmboe
Oil price ($/bbl) $59.02
Natural gas price ($/mcf) $2.17
Cost of drilling modelled vertical well $4.50m
These key assumptions have been determined by reference to a
number of sources including external market information, published
futures pricing for oil and natural gas and management's
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates.
Management has performed sensitivity analysis on the key
assumption of changing commodity prices.
The Group has performed value in use calculations of its
developed oil and gas properties. These involved NPV calculations
with a variety of sensitivity assumptions for both commodity prices
and well recoverabilities using the geological estimates provided
by a geological consultant. The Directors are satisfied that the
NPV of the Group's developed oil and gas properties supports the
carrying values after recording an impairment charge of $13.1m for
the developed oil and gas properties (2018: Nil)
17. Share Capital
2019 2018
$ $
Allotted, issued and fully
paid:
557,001,521 ordinary and non-voting
convertible shares of GBP0.01
each (2018: 237,336,555) 7,966,075 3,852,673
============= =============
Issued and
fully paid
Issued share capital: Number capital
As at 30 June 2019
454,530,466 ordinary shares
of GBP0.01 each (2018: 237,336,555) 454,530,466 6,647,498
102,471,055 non-voting convertible
shares of GBP0.01 each (2018:
Nil) 102,471,055 1,318,577
------------- -------------
Total 557,001,521 7,966,075
------------- -------------
The Company issued a total of 217,193,911 new fully paid
ordinary shares and 102,471,055 non-voting convertible shares
during the year.
In January 2019 the Company completed a placing of 108,335,226
new fully paid ordinary shares with a nominal value of GBP0.01,
raising gross proceeds of c.$16.5m before expenses of the share
issue. 1,845,900 ordinary shares were issued to advisors.
In January 2019 the Company acquired Great Bear Ventures I and
II. As part of the purchase consideration the Company issued
100,000,000 ordinary shares and 102,471,055 non-voting convertible
shares. An additional 3,362,745 ordinary shares were issued as part
of an antidilution clause that was triggered upon the issuing of
equity for the Vision Resources LLC acquisition.
In January 2019 the Company acquired 66.6% of Vision Resources
LLC. As consideration the Company issued 3,500,000 ordinary
shares.
In October 2018 the Company issued 150,000 new ordinary shares
in lieu of cash to a service provider.
The ordinary shares rank pari passu in all respects including
the right to receive dividends and other distributions declared,
made or paid.
As at 30 June 2019 there were 454,530,466 ordinary shares (2018:
237,336,555) and 102,471,055 non-voting convertible shares (2018:
Nil) in issue.
18. Net cash outflow from operating activities
Group Group
2019 2018
$ $
Profit / (loss) for the year 35,507,082 (8,753,604)
Net interest received (25,781) (6,858)
Unrealised gains (100,757,286) -
Less: deferred tax thereon 28,783,396 -
Impairment of intangible assets - 796,236 -
Goodwill
Impairment of intangible assets -
E&E 34,138,156 6,805,537
Impairment developed oil & gas assets 13,092,684 -
Impairment of PP&E 1,397,950 -
Plug & abandonment costs (380) -
Legal costs provision 250,000
Vision General & Administrative costs
(non-cash) 682,125
Depreciation of office equipment 431 1,436
Depletion of developed oil & gas assets 148,485 88,293
Depreciation of production & pipeline
facilities 275,665 145,516
Decrease in trade and other receivables (1,823,240) (372,620)
Increase/(decrease) in trade and other
payables 926,109 (267,636)
Shares issued in lieu of fees 32,166 -
Effect of translation differences
(fixed assets) 33 (50)
Effect of translation differences (179,284) 277,183
Taxation (18,757,633) -
--------------- -------------
Net cash outflow from operating activities (5,513,085) (2,082,803)
=============== =============
Company Company
2019 2018
$ $
Loss for the year (1,463,533) (1,137,295)
Net interest received (25,671) (5,862)
Depreciation 431 1,436
Decrease in trade and other receivables 42,942 22,965
Increase in trade and other payables 144,321 58,923
Shares issued in lieu of fees 32,166 -
Effect of translation differences
(fixed assets) 33 (50)
Effect of translation differences (3,625,534) 1,124,990
------------- -------------
Net cash inflow (outflow) from operating
activities (4,894,845) 65,107
============= =============
19. Control
No one party controls the Company.
20. Decommissioning expenditure
Plug & Abandonment
The Directors have considered the environmental issues and the
need for any necessary provision for the cost of rectifying any
environmental damage, as might be required under local legislation.
As at 30 June 2019 the Group has fully provided for the future plug
and abandonment charges in relation to all of its wells in both
East Texas and on the Alaskan North Slope.
2019 2018
$ $
Alaska
Greater Alkaid #1 test well 500,000 -
500,000 -
Texas - Polk County
VOBM#1 well 95,579 -
VOBM#2H well 111,861 -
VOBM#3 well 98,141 -
VOBM#4 well 81,162 -
VOBM#5 well 95,302 -
----------- ------
482,045 -
Texas - Tyler County
VOS#1 well 103,438 -
----------- ------
103,438 -
1,085,483
----------- ------
21. Exploration and evaluation commitments
A number of lease commitments exist in relation to the Group's
leases in Alaska, as follows:
Theta
Some of the leases located on the Theta project area have been
extended to 1 May 2021 and carry a well commitment. At this stage,
Pantheon has no current plans to drill a well at Theta as Greater
Alkaid and Talitha are considered to be higher priority targets
which are more attractive on a risk/reward basis. It is possible
that the DNR may take action to attempt to terminate the leases
prior to their expiration date if there is no activity, or Pantheon
may allow these leases to expire, or may elect to voluntarily drop
certain leases if it is unlikely they will be drilled. If Pantheon
desired it could bid for any relinquished leases at the next lease
sale, renewing them for a 10 year period if successful. The Leonis
and Theta West leases acquired in December 2019 appear superior to
Theta in terms of risk/reward and will likely be drilled before
Theta.
Greater Alkaid
The Greater Alkaid area leases are subject to a work commitment
to drill a delineation well by 1 May 2021. If the delineation well
is not drilled by mid-2020, Pantheon would expect to receive a
notice of default from the Department of Natural Resources ("DNR")
with a one-year opportunity to cure, in order to complete the well.
The Group is currently engaged in farm out discussions and is
confident of achieving this commitment, particularly given the
excellent flow tests at the Alkaid#1 discovery well and the LKA
report confirming a large contingent resource on the acreage.
22. Financial instruments
The Group's principal financial instruments comprise cash and
cash equivalents, trade and other receivables and trade and other
payables. Financial assets and liabilities are initially measured
at fair value plus transaction costs.
The main purpose of cash and cash equivalents financial
instruments is to finance the Group's operations. The Group's other
financial assets and liabilities such as receivables and trade
payables, arise directly from its operations. It is, and has been
throughout the entire period, the Group's policy that no trading in
financial instruments shall be undertaken.
The main risk arising from the Group's financial instruments is
market risk. Other minor risks are summarised below. The Board
reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and
market factors such as foreign exchange rates and interest rates
will affect the entity's income or the value of its holdings of
financial instruments.
The objective of market risk management is to manage and control
market risk exposures within acceptable parameters while optimising
the return.
The Company does not use derivative products to hedge foreign
exchange risk and has exposure to foreign exchange rates prevailing
at the dates when funds are transferred into different
currencies.
Cash flow interest rate risk
The Group's exposure to the risks of changes in market interest
rates relates primarily to the Group's cash and cash equivalents
with a floating interest rate. These financial assets with variable
rates expose the Group to cash flow interest rate risk. All other
financial assets and liabilities in the form of receivables and
payables are non-interest bearing. The Group does not engage in any
hedging or derivative transactions to manage interest rate
risk.
In regard to its interest rate risk, the Group continuously
analyses its exposure. Within this analysis consideration is given
to potential renewals of existing positions, alternative
investments and the mix of fixed and variable interest rates. The
Group has no policy as to maximum or minimum level of fixed or
floating instruments.
Interest rate risk is measured as the value of assets and
liabilities at fixed rate compared to those at variable rate.
Weighted average Fixed Non - interest
interest rate interest rate bearing
2019 2019 2019
Financial assets: % $ $
Cash on deposit 0.05 - -
Trade and other receivables - - -
Net fair value
The net fair value of financial assets and financial liabilities
approximates to their carrying amount as disclosed in the statement
of financial position and in the related notes.
Currency risk
The functional currency for the Group's operating activities and
exploration activities is the US dollar. The Group has not hedged
against currency depreciation but continues to keep the matter
under review.
Financial risk management
The Directors recognise that this is an area in which they may
need to develop specific policies should the Group become exposed
to wider financial risks as the business develops.
Liquidity risk
Liquidity risk is the risk that the entity will not be able to
meet its financial obligations as they fall due.
The objective of managing liquidity risk is to ensure as far as
possible, that it will always have sufficient liquidity to meet its
liabilities when they fall due, under both normal and stressed
conditions.
The entity has established a number of policies and processes
for managing liquidity risk. These include:
- Continuously monitoring actual and budgeted cash flows and
longer-term forecasting cash flows;
- Monitoring the maturity profiles of financial assets and
liabilities in order to match inflows and outflows; and
- Monitoring liquidity ratios (working capital).
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group's main counterparties are the operators of the
respective projects. Funds are normally only remitted on a
prepayment basis a short period before the expected commencement of
drilling. The Group has adopted a policy of only dealing with what
it believes to be creditworthy counterparties and would consider
obtaining sufficient collateral where appropriate, as a means of
mitigating the risk of financial loss from defaults. The Group's
exposure and the credit ratings of its counterparties are
continuously monitored, and the aggregate value of transactions
concluded is spread amongst approved counterparties. Ongoing credit
evaluation is performed on the financial condition of accounts
receivable.
Capital management
The Group's objective when managing capital is to ensure that
adequate funding and resources are obtained to enable it to develop
its projects, while in the meantime safeguarding the Group's
ability to continue as a going concern. This is aimed at enabling
it, once the projects come to fruition, to provide appropriate
returns for shareholders and benefits for other stakeholders.
Capital will continue to be sourced from equity and from borrowings
where appropriate.
23. Share-based payments
Movements in share options
and share warrants in issue
Exercise price Number of Warrants Expired during Number of
options issued Issued during year options and warrants
as of 30 June year issued
2018 as of 30 June
2019
GBP0.30 10,000,000 - - 10,000,000
GBP0.30 9,607,843 - 9,607,843
Total 10,000,000 9,607,843 - 19,607,843
================= ================ ================ =======================
The Group has previously issued share options to directors and
employees. These are equity settled share-based payments as defined
in IFRS 2 Share-based payments. A recognised valuation methodology
(using the Black & Scholes valuation model) was employed to
determine the fair value of options granted as set out in the
standard. The charge incurred relating to these options was
recognised within operating costs. All share options have been
fully expensed as at 30 June 2019. The weighted average exercise
price of share options outstanding and exercisable at the end of
the period was GBP0.30 (2018: GBP0.30).
As part of the consideration for the acquisition of Great Bear
Petroleum 9,607,843 (2018: Nil) warrants were issued. The terms of
these warrants mirror the terms of the current share options in
issue, however if exercised they convert to non-voting shares as
opposed to ordinary shares.
The Equity reserve account represents expired share options that
were originally expensed through the profit and loss account.
24. Related party transactions
There were no related party transactions during the year other
than the payment of remuneration to Directors and key management
personnel.
25. Contingent liability
Vision Operating Company LLC ("VOC") is in dispute with a
third-party service provider over the intended early termination of
a gas processing agreement in East Texas. VOC ceased making
payments to the service provider in July 2019. The service provider
has subsequently issued a demand to VOC and more recently to
Pantheon seeking payment of $4.2m, which represents an acceleration
of all future monthly payments that would have been owed from that
date up until the end date of the contract. It is unknown what
action the service provider may take.
Pantheon has ownership of less than 0.1% of VOC via a 66.6%
interest in Vision Resources LLC. Pantheon was not a signatory to
the gas processing agreement, is not named in the agreement, and
explicitly declined to provide any financial support in relation to
the agreement. Pantheon has taken legal advice on the matter and
believes it has no liability to the service provider. Accordingly,
Pantheon do not consider a provision should be included with the
final statements and will contest any claim made.
26. Subsequent events
Appointment of non-executive Director
Jeremy Brest, Non-executive Director was appointed on the 2(nd)
of October 2019. Jeremy has more than 20 years' experience in
investment banking and financial advisory. Jeremy is the founder of
Framework Capital Solutions, a boutique Singapore-based advisory
firm specialized in structuring and execution of private
transactions. Prior to founding Framework, Jeremy was the head of
structuring for Indonesia at Credit Suisse and a derivatives trader
at Goldman Sachs.
Acquisition of Halliburton's 25% working interest in
Alkaid/Phecda
In October 2019 Pantheon executed a contractual agreement with
Halliburton to acquire its 25% working interest in the six leases
jointly held with Pantheon on the North Slope of Alaska. Under the
agreement, which is subject to a customary approval process by the
State of Alaska Department of Natural Resources, Halliburton will
transfer to Pantheon their entire working interests in the leases
in exchange for Pantheon accepting full responsibility for all
future lease obligations. As a result of this transaction Pantheon
now holds 100% working interest in the 22,804 acres that make up
the Alkaid/Phecda project, and 92% working interest in two
additional adjacent leases comprising 11,367 gross acres. At the
year end, 30 June 2019, the Group held 75% working interest in
Alkaid / Phecda, which was increased to 100% in October 2019.
Capital Raising - July 2019
A Capital Raising of 47,788,563 new Ordinary Shares raised
approximately US$10.7 million (before expenses) at an issue price
of 18 pence per share.
Talitha Appraisal - Sept 2019
Material advancements have been made in the understanding of the
Talitha Appraisal (Brookian) and Talitha exploration (Kuparuk)
projects. In conjunction with the experts at eSeis, the Company has
undertaken a detailed review and analysis of these projects over
recent months. The result of this work has increased its
understanding of the geology which the Directors believe will lead
to an increase in estimates for oil in place and recoverable
resource at Talitha in due course.
Acquisition of additional Leases: North Slope Alaska - December
2019
Pantheon acquired 27,840 acres in the State of Alaska's North
Slope Areawide Lease sale in December 2019. The new leases are
strategically positioned in two areas, named Leonis and Theta West,
contiguous or adjacent to Pantheon's current acreage on its
northern and southwestern boundaries. The leases were identified
following a period of extensive analysis supported by the experts
at eSeis. When the leases are officially awarded by the State of
Alaska, estimated to be in 6 to 12 months, they will come with a
10-year initial term, an annual rental of $10 per acre for the
first seven years, and a royalty rate of either 12% (8 leases) or
16.67% (9 leases).
Estimated Oil in Place: Leonis & Theta West- January
2020
Management has completed an initial management estimate of the
newly acquired 'Theta West' and 'Leonis' projects acquired in
December 2019 and estimates that they have the potential to contain
in excess of 1 billion barrels of oil in place ("OIP").
Official Contingent Recoverable Resource Confirmation: Greater
Alkaid - January 2020
The Group received an Independent Expert Report and Resource
Statement from the International Petroleum Consultants Lee Keeling
& Associates, Inc. ("LKA"), on its 100% owned 'Greater Alkaid'
Project (formerly referred to as 'Alkaid/Phecda').
The report confirmed a Contingent Resource of 76.5 Million
Barrels of Recoverable Oil. Other highlights of the report
include:
-- $595 million NPV10 based on modelled 44 wells, and c.70 MMBO
(1) Phase 1 field development over a 20 year term at an oil price
of $55 held flat
-- NPV10 per barrel of oil estimated at $8.50
-- Field peak flow rate 30,000 Barrels of oil per day ("BOPD")
-- Individual well EUR (estimated ultimate recovery) of 2.25 MMBO per well for 24 wells
-- The LKA report supports the Company view that Alkaid and
Phecda is one continuous accumulation. Now called "Greater
Alkaid"
-- Located underneath and adjacent to the Dalton Highway & Trans-Alaska Pipeline (TAPS)
-- This estimate comprises Contingent Resource only - does not
include Prospective Resource
GLOSSARY
bbl barrel of oil mcfd thousand cubic feet per day
bopd barrels of oil per day Mmboe million barrels of oil equivalent
mmbo million barrels of oil NPV net present value
boepd barrels of oil equivalent NVP10 net present value at 10%pa
per day discount rate
mcf thousand cubic feet $ United States dollar
NCI non-controlling interesrt OIP Oil in place
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END
FR SELFSIESSEIE
(END) Dow Jones Newswires
February 25, 2020 06:01 ET (11:01 GMT)
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