LON:PANR | Pantheon Resources - Onwards And Upwards ....

9th Dec '15 by gus 1065

3 comments 8643 reads

A glimmer of sunshine in the troubled Oil and Gas sector, Pantheon Resources (LON:PANR) continues to rise strongly up a further 11% this morning.

There was a very positive interview on TipTV yesterday:-

(http://www.tiptv.co.uk/finance/ceo-interview-pantheon-resources-able-to-achieve-a-margin-in-a-20-per-barrel-oil-world/)

by Malcolm Graham-Wood with the CEO of the company, Jay Cheatham setting out the prospects for the company and in partcicular its confidence of being able to survive profitably in a sub-US$20 per barrel of oil world.

A fascinating insight for a non-oil specialist (such as me!) on what appears to be an exceptional prospect. I won't try and summarise the commentary - suffice to say the company's share price has risen from about 40p to £1.38 in the past month or so and appears to have further upside potential. Well worth a watch.

As ever, please DYOR etc., as this can be a high risk sector. I am long of the stock.

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leishylegs

12th Dec '15

Hi Gus,

I am also long of this stock and thought of top slicing and taking some profits earlier in the week but hung on to watch the latest Tip tv video between MGW and Jay Cheatham and decided to hold.

I took a bit of a hit trying to catch the falling knife that was Afren and so have stayed away from small oilies as a general rule, but Jay seems a very decent chap and in my view couldn't really have been more clear with his comments on how encouraging the latest well is but the key phrase for me related to how they wouldn't waste $1m to flow test the well if they didn't think it was worth it.

That is the key reason I didn't top slice - that plus the link basin chains yet to be drilled. If they have cracked the seismic code then they really are onto a winner, especially with such low extraction costs. I also liked his exit strategy which makes complete sense.

My gut feel is to hang on in here until the very end but I would also welcome others thoughts on the position here.

Good luck also in waiting for the flow test results. Everything is crossed here for a good pre christmas RNS.

Leishy

gus 1065

Hi Leishy,

Thanks for the feedback. I hope I wasn't tempting fate by raising the recent great run for the share price on the bulletin board last week. Clearly there was some pull back on Thursday and especially Friday as the oil sector in general was caned with falling POO, as it were! Natural for there to be some profit taking as well. I bought another small line of stock on Friday at just over 118p, taking my average entry price up a little but still in the money.

I also thought Jay presented the case for the company's prospects well in the interview. I'm particularly encouraged by his analysis of how the wells - if proven - should be economic at a POO of under $20 per barrel. Given their exit strategy is to drill, prove the extent of the resource and then sell to a major producer, these economics give me comfort that a profitable exit in late 2016/early 2017 is feasible.

For now, the key data point will be the drill results on the second well due in about two weeks time. If these are as good as the first well, I've seen commentary on a couple of bulletin boards which suggest that 175p could be the next stage post. Beyond that, if the full extent of their acreage comes through at a P50 (as opposed to an even higher PMean) level, this would be consistent with as much as 320p per share, possibly more if the wells are PMean and/or the price of oil recovers. I believe this target valuation is compatible with Jay's comment about the potential value of the field being US$1bn.

Clearly this is still speculative and we are in a high risk sector with a history of disappointments in the past so caveat emptor. Either way, we should have a much clearer view of things by the end of the month.

All the best,

Gus.

12th Jan '16

For anyone looking for some entertainment, this stock is providing quite the roller coaster ride. Even on a "no news" day last week the stock gyrated by more than 30% in a single trading session. Today's instalment following a slightly delayed update on the latest, second flow test has seen the share price move from 137p to 104p and back up to 130p again in about four hours. Malcy's blog provides a good commentary to the background to this.

http://www.malcysblog.com/2016/01/oil-price-ithaca...

This kind of volatility is not something I'm used to in the rest of my portfolio (recently they've just been going down and not back up again!) but a few observations and lessons learned:-

In thin volume/with actively speculated stocks the share price moves in very large steps on no apparent news flow;

My suspicion is that some of the MM's or other significant holders are gaming with supply and demand to accentuate these swings - fair enough, that seems to be par for the course in parts of AIM;

Automatic stop losses are potentially dangerous with such high volatility. Market commentary/bb's suggest that well out of the money stops are being triggered by very large but brief price dips before significant upswings then make it very costly to get back in again;

If one of your investments issues a material RNS do read and digest (all of it) before acting. In the context of today's announcement, what appears to have happened is that the RNS identified a timing/operational hiccup but went on to set out a very positive update on the prospects for this particular well. The hot money seems to have dumped the stock on the hiccup with MM's and LTH's (and quite likely speculators too) seeing through the delay and buying back in;

Given these swings, someone is making a lot of money and someone is losing it. If you don't know the patsy in a poker school after half an hour, you're probably it;

Do your own research; form a view on what you think a stock is worth; decide what the key value drivers are and adjust expectations as facts not sentiments change; act on, and take responsibility for, your own judgement.

Whether an investor, shorter or just a spectator there is rarely a dull moment.

Gus.

Pantheon Resources - Onwards and Upwards ....

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Gus 1065

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