REG - Pantheon Resources - Final Results for the Year Ended 30 June 2023
19/12/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231219:nRSS2362Xa&default-theme=true
RNS Number : 2362X Pantheon Resources PLC 19 December 2023
19 December 2023
Pantheon Resources plc
Final Results for the Year Ended 30 June 2023
Pantheon Resources plc (AIM: PANR) ("Pantheon" or the "Company"), the oil and
gas company with a 100% working interest in the Kodiak and Ahpun projects,
collectively spanning c. 193,000 contiguous acres in close proximity to
pipeline and transportation infrastructure on Alaska's North Slope, is pleased
to announce its results for the year ended 30 June 2023.
Operational Highlights for the year ended 30 June 2023 and beyond
· A period of great achievement for Pantheon, with testing at Alkaid-2
supporting the case for economic viability of full field developments of both
the Ahpun and Kodiak projects
· Receipt of an Independent Expert Report on the Kodiak project by
Netherland, Sewell & Associates, Inc. ("NSAI"), estimating a 2C Contingent
Resource of 962.5 million barrels of marketable liquids
· Completion of Phase 1 of SLB (formerly Schlumberger) reservoir
modelling project. SLB estimate Pantheon's acreage to contain 17.8 billion
barrels of oil in place((1))
· Strengthening of operational team - appointment of Tony Beilman, +40
years drilling, completions and production experience
· Refreshed the Board of Directors, with David Hobbs assuming the role
of Executive Chairman and the appointment of two new, independent
non-executive directors; (i) Allegra Hosford Scheirer who has deep geological
experience, including in Alaska, and (ii) Linda Havard (to be effective on 1
January 2024) who has several decades experience in financial/CFO roles,
including 15 years in the oil and gas industry
· Implemented revised corporate strategy with an objective to deliver
financial self-sufficiency and sustainable market recognition of a value of $5
- $10 per barrel of 1C/1P recoverable resources by 2028
· Establishment of Houston office
· Permanent production facilities have been established at the Alkaid
pad
· Commencement of work to achieve a hot-tap into the TAPS pipeline
· Acquisition of 40,000 strategic acres at the December 2022 annual
lease sales
· Successful bidder for an additional 66,240 acres of leases at the
December 2023 annual lease sales, strategically securing what Pantheon
believes to be highest quality areas of the Kodiak and Ahpun Fields at the
shallowest depths. Expected to result in a material upgrade to Independent
Resource Estimates
(1) Note that this estimate is not an official Independent Expert Report
and does not estimate a resource.
Financial & Corporate Highlights
· Loss from continuing operations for the year after tax: $1.5
million (2022: $13.9 million)
· Result impacted by (non-cash) accounting of the convertible bond,
including interest charges of $6.1 million (2022: $4.6 million) and a positive
revaluation of derivative component of the convertible bond of $11.3 million
(2022: $4.3 million)
· Completed a fundraising of $22 million in May 2023
· Reduction in convertible loan balance owed from $44.1 million at 1
July 2022 to $29.4 million as at the date of publication (i.e. after the
December 2023 quarterly repayment)
· Unaudited Cash and Cash equivalents at 13 December 2023: $7.8
million (after repayment of Dec 2023 convertible $2.8 million bond repayment
in cash and after payment of $0.44 million deposit for Dec 2023 lease
auctions)
· This cash balance does not Include an additional $4.1 million
proceeds from the November 2023 placement expected to be received late January
2024
· Discussions with service providers and other industry participants
for the possible provision of vendor financing or other non-equity based
financing
Jay Cheatham, CEO of Pantheon Resources, said: "The period from 1 July 2022
until now has been one of immense progress and achievement for Pantheon. In
fact, only last week we were the successful bidder for over 66,000 highly
strategic acres, contiguous to the west and east of our existing leases. The
data gathered and technical work done in 2023 underpins our confidence in the
commerciality of our projects. We remain laser focused on pursuing our goals
for FID on Ahpun by end 2025 and FID on Kodiak by end 2028 and to achieve
sustainable market recognition of $5 - $10 per barrel of 1P/1C recoverable
resources."
Annual report and Accounts
The Annual Report and Accounts for the financial year ended 30 June 2023 will
be posted to shareholders shortly, together with a Notice of Annual General
Meeting which is intended for 3pm GMT on 24 January, 2024. As in recent years,
the presentation component of the AGM will be held by webinar to enable
participation by USA and other non-London based shareholders and investors.
Copies will be available on the Company's website
at: www.pantheonresources.com (http://www.pantheonresources.com)
-ENDS-
Further information, please contact:
Pantheon Resources plc +44 20 7484 5361
David Hobbs, Executive Chairman
Jay Cheatham, CEO
Justin Hondris, Director, Finance and Corporate Development
Canaccord Genuity plc (Nominated Adviser and broker)
Henry Fitzgerald-O'Connor +44 20 7523 8000
James Asensio
Ana Ercegovic
BlytheRay
Tim Blythe +44 20 7138 3204
Megan Ray
Matthew Bowld
Notes to editors:
Pantheon Resources plc is an AIM listed Oil & Gas company focused on
developing the Ahpun and Kodiak fields located on state land on the Alaska
North Slope ("ANS"), onshore USA where, following issue of the new leases,
it will have a 100% working interest in c. 259,000 acres. Certified contingent
resources attributable to these projects exceeds 1 billion barrels of
marketable liquids, located adjacent to Alaska's Trans Alaska Pipeline
System ("TAPS").
Pantheon's stated objective is to demonstrate sustainable market recognition
of a value of $5-$10/bbl of recoverable resources by end 2028. This will
require targeting Final Investment Decision ("FID") on the Ahpun field by the
end of 2025, building production to 20,000 barrels per day of marketable
liquids into the TAPS main oil line, and applying the resultant cashflows to
support the FID on the Kodiak field by the end of 2028.
A major differentiator to other ANS projects is the close proximity to
existing roads and pipelines which offers a significant competitive advantage
to Pantheon, allowing for materially lower infrastructure costs and the
ability to support the development with a significantly lower pre-cashflow
funding requirement than is typical in Alaska.
The Company's project portfolio has been endorsed by world renowned
experts. Netherland, Sewell & Associates ("NSAI") estimate a 2C
contingent recoverable resource in the Kodiak project that total 962.5
million barrels of marketable liquids and 4,465 billion cubic feet of natural
gas. NSAI is currently working on estimates for the Ahpun Field.
Pantheon RESOURCES
plc
ANNUAL REPORT AND FINANCIAL
STATEMENTS
YEAR ENDED 30 June 2023
DIRECTORS, SECRETARY AND ADVISERS
Directors
David Hobbs (Executive Chairman)
John (Jay) Cheatham (Chief Executive Officer)
Justin Hondris (Executive Director, Finance and Corporate Development)
Robert (Bob) Rosenthal (Technical Director)
Jeremy Brest (Non-Executive Director)
Allegra Hosford Scheirer (Non-Executive Director) - appointed July 2023
Company Secretary Ben Harber
Registered Office Shakespeare Martineau
6th Floor
60 Gracechurch Street
London EC3V 0HR
Company Number 05385506
Auditors
PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
Solicitors
Bryan Cave Leighton Paisner LLP
Governors House
5 Laurence Pountney Hill
London EC4R 3AF
Registrars
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Principal Bankers Barclays Bank plc
Level 27, 1 Churchill Place
London E14 5HP
Nominated Adviser Canaccord Genuity Limited
& Broker
88 Wood Street,
London EC2V 7QR
Communications BlytheRay
Communications Ltd
& Public Relations 4-5 Castle Court,
London EC3V 9D
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
What better time than now to embark upon the development of major oil and gas
projects in Alaska, where the past year has seen the pendulum swing back
towards regulatory and political pragmatism. We have seen approval of the
Willow development in the National Petroleum Reserve, Alaska (NPRA), Final
Investment Decision (FID) on the Santos operated Pikka development and
progress towards an economically viable natural gas export project (gas
pipeline and LNG facility) from Alaska's North Slope ("ANS"), supported by US
Federal Government guarantees. More specifically for Pantheon (the "Company"
or the "Group"), the board believes that a successful demonstration of the
commerciality of its Ahpun field has now been achieved, and that has, in turn,
set the Company on a path to target first oil in early 2026. Netherland,
Sewell & Associates' independent validation of nearly 1 billion barrels of
contingent recoverable liquids from the Kodiak field and the sum of
development resources on Alaska's North Slope underpins the board's belief in
a renaissance for activity levels in the coming decade.
My colleague, Jay Cheatham, will address the operational outcomes of our
activities, including the subsequent successful re-entry of the Alkaid-2 well.
That last operation demonstrated the efficacy of our revised hydraulic frac
design in the shelf break horizons, in which the majority of Ahpun's
recoverable resources reside. He and the team deserve credit for the technical
achievements since our last annual report and we are now set fair to
capitalise on several years of highly encouraging exploration and appraisal
success.
Today, we believe the Company has two world class development assets both
advantageously located in close proximity to infrastructure. The first of
these, Ahpun, is located immediately underneath and adjacent to both the Trans
Alaska Pipeline System ("TAPS") and the Dalton highway, allowing for more
rapid development horizons compared to most other North Slope projects and
hence has become Pantheon's initial focus of development given the shorter
timeframe to first production revenues. The second project, Kodiak, located
immediately to the west of Ahpun, is believed to be among the largest onshore
discoveries of the 21st century to date and has an independently certified 2C
contingent resource of 962.5 million barrels of marketable liquids. Its Theta
West-1 well was described by WoodMac as "the fourth biggest discovery well
globally in 2022."
The past year has been transformational for Pantheon. Key points are:
· The Alkaid-2 long term production test was completed, supporting the
case for economic viability of full field developments of both our Ahpun and
Kodiak fields.
· We have refreshed the Board of Directors, bringing a new independent
non executive director (NED) with deep experience in oil and gas, Allegra
Hosford Scheirer, onboard. Allegra has a Ph.D. in marine geology and
geophysics and has extensive knowledge of Alaska. Only last week we announced
the appointment of another independent NED, Linda Havard, who is an
experienced CFO with decades of financial experience. Linda will formally join
the board in early January. I extend my heartfelt thanks to my predecessor,
Phillip Gobe, for his leadership of the Board and the wise counsel and support
he provided to colleagues. We would not be positioned as we are had it not
been for his contribution to the growth of the Company.
· We secured $22 million of funding in May 2023 to ensure continued
operation through to the end of 30 June 2024 and potentially beyond.
Subsequently, we placed shares to fund Convertible Bond payments into long
term, supportive hands that reduced the overhang of expected bond holder share
sales.
· The Company has embarked on a revised strategy with an objective to
deliver financial self-sufficiency and sustainable market recognition of a
value of $5-$10 per barrel of recoverable resources by 2028. Success does not
rely on a third-party buyout and, we believe, can be achieved while minimising
value dilution for existing investors.
· Progress with this strategy underpins our confidence that 2024 will
see Pantheon on a path to long term success.
However, the year has not lacked for challenges. The initial results from the
Alkaid-2 tests disappointed the market and it was not until we completed the
re-entry of the well to test what turned out to be a successful new frac
design in 2H 2023 that we were able to validate our confidence in the
commercial potential of the project. It is, therefore, instructive to consider
how we arrived at this situation and what we have learned to ensure that we
can deliver our strategic objective.
Having raised around $95 million in late 2021, the Company embarked on its
most ambitious work programme to date. This involved re-entry of the Talitha-A
well to test multiple horizons, drilling the Theta West-1 updip appraisal well
and then drilling and conducting a long term production test in the Alkaid-2
well. This series of investments exceeded expectations in terms of the data
provided and underpinned the Company's achievement of independent expert
recognition of nearly 1 billion barrels of recoverable resources. However,
costs were higher than anticipated and there were operational issues that cost
time and money - a feature of being a small player in a frontier environment.
The initial results of the Alkaid-2 well contributed to a weaker share price
and a lessening of investor confidence. Since that time we have made great
steps to restore credibility, including receipt of a report from SLB
(formerly Schlumberger) which estimated 17.8 billion barrels of oil in place
on our properties; an Independent Expert Report from Netherland Sewell &
Associates estimating a 2C Contingent Resource of nearly 1 billion barrels of
marketable liquids from our Kodiak project; and a successful re-entry of
Alkaid-2 where an efficiently executed new frac design supported our
confidence in the commerciality of the project.
The strategy refresh in the wake of these events involved strengthening the
team, focusing on achieving the earliest possible cash flows, and
concentrating only on those things that contribute to meeting our objectives
of financial self-sufficiency and sustainable value demonstration, while
ignoring distractions.
I am proud of the work that Jay and the team have done to strengthen the areas
in which it was needed, particularly as we work with vigour towards delivering
upon our objectives. Coupling the expanded capability with development of a
programme at a scale will help ensure that Pantheon is better positioned to
negotiate equipment and services on the North Slope. This supports our
confidence in bringing well costs down to levels that underpin economic
development of our projects at oil prices of $50/barrel ("bbl") and less.
These calculations are based on reservoir characteristics and well performance
revealed by the flow tests to date - in other words, they do not rely on any
of the demonstrated improvement in reservoir quality measured in appraisal
wells further west from the Dalton Highway and TAPS.
This robust economic development planning that supports the case for hundreds
or even thousands of wells, underpins our confidence to enter into long term
relationships with vendors and offtakers. There will be significant value
leverage in "learning by doing" and building the know-how to optimise the
development with an alliance of critical contractors for construction,
drilling and completion, fracking and production services. Benchmarking the
costs and allowing for expansion of their margins based on beating our cost
targets to create a win-win, are expected to allow long term contracts to be
secured without the normal service provider expenses of marketing and
tendering. Pantheon is seeking to leverage access to potentially $10+ billion
of potential service provider contracts over the life of the projects, to
defer the cost burden through production start-up. Coupling this with
potential financings arising from contracts with offtakers of both oil as well
as gas as well as reserves-based lending, once a sufficient number of wells
have been tied-in to production facilities, will minimise the requirement for
further equity financing or the need to farm down the Company's 100% working
interest in the two projects. Obviously in line with normal practice in oil
and gas operations, the working interest is burdened by a royalty to the State
of Alaska, which averages c.15% across the leaseholding. We are open to farm
down transactions, however, only if the terms are more attractive than the
alternatives in our base case operating plan, and visitors to our data room
are aware of this.
We have made tremendous progress since the beginning of this current financial
year and are approaching the remainder with conviction that we can deliver on
our stated strategic objective of delivering sustainable market recognition of
$5-$10 per barrel of 1C/1P recoverable resources by 2028 and without
significant value dilution to our existing investors.
David Hobbs
Executive Chairman
18 December, 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
Operationally, the 2023 financial year and for the period up until the time of
writing has been an important one for Pantheon. We undertook two significant
operations at Alkaid-2, received an Independent Expert Report on the newly
named Kodiak Field, received a very large estimate of oil in place by SLB
(previously Schlumberger) following their static and dynamic modelling work of
our assets, and strengthened our team with the appointment of Tony Beilman as
Senior VP Engineering.
Strategy
As outlined by David, a key component of our strategy is to be in production
from the Ahpun project by the middle of 2026. As noted below, the results from
Alkaid-2 both in the long-term production test in the horizontal well bore and
in the test of the shallower shelf break horizons in the vertical well bore
have provided confidence in our economic models. To reach first production
requires an estimated c. $120 million in capital divided as follows:
· $20 million for engineering and a hot tap into TAPS - this process
has commenced
· $20 million to upgrade the existing permanent production facility and
add a refrigeration unit to extract condensate and natural gas liquids
("NGLs")
· $60 million for three production wells and the conversion of Alkaid-2
for injection of gas and water
· $20 million for three years of general and administrative ("G&A")
expenses
As explained in the Chairman's statement, our financing strategy is to achieve
this funding, whilst minimising shareholder dilution. We have plans in place
and believe this is achievable.
Overview of operations
Alkaid-2 - initial operation
Alkaid-2 was spudded on 6 July 2022 and the pilot hole was completed on 29
July at a total measured depth of 8,950 feet ("ft") and total measured depth
of c. 14,300 ft when including a lateral length of 5,300 ft. Alkaid-2
confirmed more than 1,400 ft of gross continuous oil-bearing strata throughout
the section drilled below the regional top seal at 7,165 ft down to at least
the 8,584 ft total vertical depth. The Alaska Oil and Gas Conservation
Commission ("AOGCC") instructed us to stop drilling at 8,584 ft, despite not
having reached the bottom of the Alkaid Deep section, to ensure a sufficient
margin above the high pressure HRZ zone and a possible fault. Alkaid-2
confirmed the extension (all hydrocarbon bearing) of the Alkaid
deep formation (300 ft deeper than at Alkaid-1) and the extension of the
shallower shelf break horizons to the east of Alkaid-1 and across the Dalton
Highway to the North. This extension of shallower, more permeable horizons to
the northeast underneath the Dalton Highway offers major advantages for
future commercialisation of Ahpun.
The Alkaid-2 lateral was fracked with 29 stages and c. 8 million pounds of
sand. The well encountered sand blockages and following a clean out in the
final 1,000ft (c. 20%) of the wellbore, and after a 90 day production test,
the IP30 production rate was calculated at c. 505 barrels per day ("BPD") of
marketable liquid hydrocarbons consisting of c. 180 BPD oil c.38-39(o)
(degrees) API gravity, and c. 325 BPD of condensate and NGLs. This production
was accompanied by c. 2,300 thousand cubic feet per day ("mcfd") of") natural
gas, after shrinkage. The compositional mix of hydrocarbons encountered in
this test differed from pre-drill expectations. Significant analysis has been
undertaken since this result, including key data points obtained from a
revised frac design in the subsequent re-entry of the well as outlined below,
supporting the case for commercialization of the Ahpun field. The data
supports a type curve for modelled wells with an IP30 rate (average production
over the first 30 days) averaging 1,500 barrels of marketable liquids per day
and an EUR (economic ultimate recovery) estimated at 1 million barrels of
marketable liquids. A detailed analysis of this information was provided in
the Company's announcement dated 21 November 2023.
The quantum of liquid and gas production flowing without artificial lift from
Alkaid-2 demonstrates the good deliverability of the reservoir, which is a
significant de-risking event for the Ahpun field development. When separated
and included in the production stream, condensate and NGLs are estimated to
achieve approximately 80-90% of ANS crude oil price (ANS crude typically
trades at a premium to WTI oil) and the combination is expected to receive
approximately. 90% of the value of ANS at Valdez.
Subsequent Operation at Alkaid-2
Pantheon reentered the Alkaid-2 well in late summer 2023 to test the
previously untested, shallower shelf break horizons. The prior test of these
zones in winter 2021 at the Talitha-A well was first suspended due to a
blizzard and then the end of the drilling season. Because Alkaid-2 was in a
location positioned to target the Alkaid Zone of Interest ("ZOI") as the
primary target, it was in a poor location for the shallower horizons which
contain the majority of Ahpun's recoverable resources. It is located on the
northeast pinch out of the reservoir where it becomes more shaley and with
poorer quality sand. Notwithstanding, a 200 ft section (c. 100 ft net pay) was
encountered and this provided the opportunity to test the updated frac design
(a limited number of perforations, finer sand, higher rates and lower sand
concentrations) which delivered extremely promising results.
The Company's preliminary estimate of the efficiency of this revised frac is
50% of theoretical design performance and compares favourably with the
calculated frac efficiency of c. 20% experienced in the Alkaid-2 operations in
the deeper horizontal ZOI accumulation last year. This improvement was the
result of several key changes to the frac design as described above, which
allowed the frac to remain within the reservoir and confirmed the ability to
achieve at least the planned for 2x improvement in frac efficiency from that
achieved in the deeper Alkaid-2 test. This was a very important achievement
for the Company.
During the flow test, after recovery of approximately 60% of the frac
fluids, the oil rate (separator liquids) ranged from more than 100 barrels of
oil per day ("bopd") to 30 bopd, averaging 45 bopd over the five days during
which oil was recovered. Water cuts were 90% initially, but declined over
time as a larger share of the frac fluids was recovered. As highlighted before
the operation, the flow rates themselves were not expected to be material
because the objective was to limit drawdown in the initial flow back to limit
gas flashing in the reservoir and it was only a single stage frac in the
vertical wellbore. Encouragingly, the measured rate was higher than internal
pre operation estimates.
Multiple fluid samples were gathered indicating a measured gas-oil ratio
("GOR") of 3,000 - 4,000 standard cubic feet per barrel ("scf/bbl") and an
API gravity of 35-36(o). This compares to 12,000 - 13,000 scf/bbl measured in
the deeper Alkaid ZOI. This indicates success in limiting pressure drawdown
and avoiding flashing gas in the reservoir. This is of great importance
because all of the Company's development modelling is based upon the ZOI data
which is far more conservative. A pressure monitoring device was placed in the
well to allow pressure transient analysis, which will further help refine
estimates of the efficiency of the improved frac. That device was retrieved 10
December and we expect the data from it over the coming weeks.
Well Development Costs
The Alkaid-2 well drilling and completion cost was c. $34 million including
many one-time costs that would not be included in a production well. Once in
development we estimate per well drilling and completion costs can be reduced
to potentially $15 million or below, for a number of reasons, including; no
pilot hole drilling, only logging while drilling versus a full suite of
electric logs, sourcing sand locally to eliminate multiple handling and large
transport costs, avoiding the extraordinary charge for chemicals handling,
reduced mobilisation and demobilisation costs, etc.
The graphic below illustrates the Company's estimate of those savings:
Renaming of Pantheon Fields & Appointment of Senior VP Engineering
In order to simplify the potentially confusing nomenclature, Pantheon chose to
restructure its naming conventions to move away from individual geological
horizon designations for the fields to the areal field names Ahpun and Kodiak,
named after Alaskan bears, reflecting unified project implementation.
The Kodiak Field (previously referred to as Theta West) contains all
reservoirs between the Hue Shale and the HRZ shale. The recognised resources
currently include the Lower Basin Floor Fan and will potentially include the
Upper Basin Floor Fan once that has been more fully delineated. NSAI has
produced an Independent Expert Report ("IER") detailed below recognising best
estimate 2C Contingent Resources of 962 million barrels of marketable liquids
(oil, condensate and NGLs). Pantheon has previously estimated these to contain
more than 1.7 billion barrels of recoverable contingent resources and will
seek to confirm these larger volumes through further appraisal to the North
and West of the Theta West-1 well.
The Ahpun Field (named after a long term polar bear resident in the Anchorage
Zoo) contains all reservoirs below the regional top seal down to the Hue Shale
in the eastern portion of Pantheon's acreage, including the already granted
Alkaid and Talitha Units. These reservoirs currently include the shelf break
horizons, Alkaid Anomaly (ZOI) and the deeper extension of that anomaly
encountered in the Alkaid-2 Pilot Hole. Ahpun is estimated to contain more
than 481 million barrels of recoverable contingent resources in aggregate.
This figure consists of management estimates of 404 million barrels in the
shallower zones and 76.5 million barrels in the Alkaid Anomaly. No estimate
has yet been provided for the as yet unspecified additional resources proved
through deepening the Lowest Known Oil in the Alkaid-2 Pilot Hole. These
additional resources will be included in the NSAI report due in the first half
of 1H 2024. Furthermore, the Slope Fan horizons may be included in Ahpun
resource estimates in due course, once further delineated.
Pantheon has appointed Tony Beilman, a petroleum engineer with over 40 years'
experience in drilling, production, and completions, to the team. Tony's
appointment significantly strengthens Pantheon's operational capability with
his extensive expertise in completions in tight reservoirs involving
horizontal, multi-stage fracked completions in the Permian Basin, Marcellus
Shale and other unconventional reservoirs in North America. Tony was
instrumental in the successful redesign of the Alkaid-2 frac.
Receipt of Reports
Pantheon received three very significant reports during the period and after
from Netherland Sewell and Associates, ("NSAI"), SLB and AHS Baker Hughes.
NSAI Report
Pantheon received an Independent Expert Report (IER) prepared by NSAI on the
Lower Basin Floor Fan reservoir of the Company's Kodiak project in Q3 2023. A
summary of the resource estimate is outlined below.
Gross 100% Working Interest Contingent Resources
Resource Category Oil NGLs Residual Gas Total Marketable Liquids*
(million bbls) (million bbls) (BCF) (million bbls)
Low Estimate (1C) 145.4 292.4 2,151.7 437.8
Best Estimate (2C) 314.6 647.9 4,465.2 962.5
High Estimate (3C) 647.8 1,366.4 8,822.7 2,014.2
* Pantheon addition of oil & NGLs
This is a great achievement for the Company, documenting almost 1 billion
barrels of 2C marketable liquids in the Kodiak Field. NSAI is now working on
the Ahpun Field and we expect reports on the Ahpun field in the first half of
2024.
SLB Report
In a project spanning over 12 months, SLB, formerly known as Schlumberger, has
completed a comprehensive reservoir model of Pantheon's 100% owned projects.
This is not a formal 'Independent Experts Report' for the purposes of
providing a resource estimate; rather it is an output the extensive reservoir
modelling work that they have undertaken for the Company.
As announced on 8 December 2022, SLB estimated the reservoirs to contain
17.8bn barrels net oil in place. In the current phase of the project, SLB
are working on recovery factors and reservoir performance. Pantheon has
estimated a 10% recovery factor in its own modelling. The SLB Report outlined
conclusions from a detailed reservoir modelling analysis commissioned by
Pantheon and does not constitute a formal Independent Expert Report. The
primary objective of the SLB analysis is to provide a development plan based
on the dynamic model for analysis and forms a key component of the Company's
data room, allowing potential farm-in partners to manipulate the modelled data
to their needs.
The summary findings of reservoir modelling are:
Lease Area/Unit Net Oil in Place (Billion barrels of oil) *
Alkaid Unit 1.67
Theta West Lease 10.9
Talitha Unit including SE SMD 5.26
Total 17.8 billion barrels
*P50 estimate
SLB is now working with the dynamic model on a development scenario to yield
recovery factors for both individual wells and full field for Ahpun. Results
are expected in the first half of 2024 for the Ahpun Field.
Baker Hughes AHS Report on Kodiak
The key conclusions according to Baker Hughes AHS are outlined below.
Great Bear Pantheon's Theta West-1 (Kodiak) drilled a "world-class petroleum
system" comprised of:
1) A 1,360 ft thick continuous column of oil-bearing cuttings. The
actual length of the oil column is unquestionably greater than 1,360 ft, as
the base of the analysed cuttings' oil column is the total depth ("TD") of the
well, and the oil in the cuttings shows no sign of tapering off
2) High quality oil of 37-39(o) API gravity
3) Abundant good quality reservoirs
Successful Bidding at State of Alaska's North Slope Areawide Lease Sales in
November 2022 and December 2023
Pantheon was successful in the acquisition of approximately 40,000 acres in
the State of Alaska's North Slope Areawide Lease Sale in late 2022. The
new leases are strategically positioned in two areas contiguous or adjacent to
the Company's current acreage on its north western boundary, covering the
extension of the Kodiak field, and east, capturing the area adjacent to the
junction of the Alkaid Unit and the Talitha Unit, in both Ahpun and Kodiak
fields.
On December 13(th), Pantheon was the successful bidder on 66,240 acres in the
December 2023 lease sale, covering substantially all of the anticipated
remaining conventional reservoir potential in the Kodiak Field, where the
Company expects pay zone quality to improve as the reservoirs become shallower
to the north and west of the existing leases. In addition, the leases covering
the potential eastern extent of the Ahpun Field (including what is prognosed
to be higher quality, shallower reservoirs) covers the resources that are
assessed as economically developable using current technologies. The new
acreage contains material resource potential and classification of the
potentially recoverable resources will be determined in the coming months in
consultation with NSAI and SLB.
Pantheon's lease acquisition strategy is now complete. These latest awards
protect the development schedules for Ahpun and Kodiak by covering the full
fields to be included in our requests for development consents from the State
of Alaska. Our focus remains on the development of Ahpun with FID planned by
the end of 2025 and appraisal of the full potential of Kodiak to support its
FID in 2028.
Data Exchange with 88 Energy
Earlier this year, Pantheon entered into a well data exchange agreement with
88 Energy Limited ("88 Energy"), trading the data from Pantheon's Talitha-A
well for 88 Energy's Hickory #1 well. This additional well penetration of
discovered hydrocarbons, approximately 150 metres from Pantheon's southern
lease boundary, is an important "well control" point providing Pantheon with
valuable data, only 500 feet from our southern lease boundary at no cost and
allows us to incorporate this into subsurface modelling of the various
horizons. 88 Energy plans to test its Hickory #1 well during winter 2024.
Summary
The financial year ended 30 June 2023 was a very active time for the Company
and we have a very busy time ahead. Our three primary outside consulting
contractors; NSAI, SLB and AHS Baker Hughes, have contributed greatly to our
understanding of the giant reservoirs in which Pantheon has 100% working
interest. We successfully tested a 5,000 ft lateral in the Alkaid ZOI and
completed the test of the shallower shelf break zones at Ahpun with a revised
frac design confirming the ability to achieve at least 40% of theoretical
efficiency; a material improvement on the original frac at Alkaid. As part of
its strategy to gain sustainable market recognition of $5-$10 per barrel of
recoverable resource, Pantheon is targeting first production from Ahpun
through a hot tap into TAPS in 2026. We are committed to minimising dilution
through prudent use of non equity based funding, on our pathway to financial
self-sufficiency. NSAI confirmed Best Estimate (2C) Contingent Recoverable
Resource of nearly 1 billion barrels of marketable liquids in Kodiak. We added
to our management pool with Tony's hiring and strengthened our board of
directors and we have a number of parties in the data room at present,
assessing vendor financing and other opportunities. Although Pantheon is not
planning a winter 2024 well there are several upcoming newsworthy events:
· 88 Energy test of Hickory #1, 500ft from Pantheon's southern border -
winter 2024
· NSAI IER report on Contingent Resources at Ahpun - 1H 2024
· SLB development model with individual well and field development
plans
· Results from Geomark and the pressure analysis on the re-entry and
test of Alkaid-2
· Potential resource upgrades following the December 2023 lease
auctions
· Funding progress
Pantheon's stated objective is to demonstrate sustainable market recognition
of a value of $5-$10/bbl of recoverable resources by end of 2028. This will
require targeting Final Investment Decision ("FID") on the Ahpun field by the
end of 2025, bringing production to 20,000 barrels per day of marketable
liquids into the TAPS main oil line, and applying the resultant cashflows to
support the FID on the Kodiak field by the end of 2028. If we can achieve this
objective, then the upside potential is meaningful for all shareholders.
Jay Cheatham
Chief Executive Officer
18 December, 2023
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
Section 172 of the Companies Act 2006 requires Directors to take into
consideration the interests of stakeholders and other matters in their
decision making. The Directors continue to have regard to the interests of the
Company's employees and other stakeholders, the impact of its activities on
the community, the environment and the Company's reputation for good business
conduct when making decisions. In this context, acting in good faith and
fairly, the Directors consider what is most likely to promote the success of
the Company for its members in the long term. We explain in this annual report
how the Board engages with stakeholders.
· The Directors are fully aware of their responsibilities to
promote the success of the Company in accordance with section 172 of the
Companies Act 2006. Furthermore, the Directors have had refresher training
with their Nominated Advisor ("NOMAD") of Director responsibilities in the
application of AIM rules. This process encourages the Board to reflect on how
the Company engages with its stakeholders and to identify opportunities for
enhancement in the future and was considered at the Company's board meetings.
As required, the Company's external lawyers and the Company Secretary can
provide support to the Board to help ensure that sufficient consideration is
given to issues relating to the matters set out in s172(1)(a)-(f).
· As part of its ongoing business, the Board regularly considers
the Company's principal stakeholders and how it engages with them. This is
achieved through information provided by management via Regulatory News
Service announcements, Corporate Presentations, and Shareholder Meetings and
teleconferences and also by direct engagement with stakeholders themselves.
· The Company aims to work responsibly with key identified
stakeholders; shareholders, employees, consultants, suppliers, advisors,
government bodies and local communities where exploration and production
activities take place.
· Key Board decisions made in the year are set out below:
Key s172 Stakeholders Actions and Consequences affected
Significant events/decisions
Advancement of geological understanding of the Alaskan assets Shareholders, Employees, State of Alaska, and Business Relationships · Following the success of the Theta West-1 well in 2022, the
Company also hired third party expert consultants to undertake specialist
analysis. In particular, the experts at AHS Baker Hughes undertook detailed
'Volatiles Analysis', confirmed the presence of continuous stacked oil-bearing
reservoir zones over a 1,360-foot column and referred to Theta West in their
September 2022 report as being a "World Class Petroleum System."
· The Board continued to refine its in-depth geological review of
its Alaska North Slope assets.
· In December 2022, SLB completed phase 1 of an extremely
comprehensive project to prepare static and dynamic models of Pantheon's
various reservoirs. They estimated that the Lower Basin Floor Fan complex of
the Kodiak project alone had combined Net Oil in Place of 17.8 billion barrels
of oil.
· In 2022 the Company drilled and fracture stimulated the Alkaid-2
well and tested the primary target, the "ZOI". After encountering operational
issues including sand blockages, the ZOI ultimately produced a combination of
oil, condensate, NGLs and natural gas in quantities lower than pre drill
estimates. After extensive analysis with 3(rd) party expert groups, the well
was re-entered in Q3 2023 to test the shallower and independent SMD horizon. A
new frac design was applied to great success, achieving efficiency rates
estimated at c. 50% compared to the c. 20% efficiency estimated in the
deeper ZOI and announced to the market earlier in 2023. Additionally, the
well was brought on stream more slowly, minimising the flashing of gas near
and in the wellbore as had occurred in the deeper ZOI, and thus achieved a far
superior gas oil ratio. The knowledge gained has enabled the Group to make
great optimisation gains in both completion and testing practices, which is
common for the learning curve of new fields as successive wells are drilled
and tested.
· In Q3 2023, Netherland Sewell & Associates completed an
Independent Expert Report on the Kodiak project, certifying a C2 Contingent
Resource estimate of 962.5 million barrels of marketable liquids (oil,
condensate & NGLs).
· The consequences of these actions were to materially increase (i)
the resource potential of the projects, (ii) 3(rd) party validation of the
potential, which is beneficial for future project funding and development,
(iii) knowledge of the reservoir and of engineering design, and (iv)
confidence in development of both the Ahpun and Kodiak projects for the
potential benefit of all stakeholders through an advancement of the project,
potential for value and revenue creation to shareholders, employees and the
State of Alaska.
Growth in Resource Shareholders, employees, State of Alaska, Service Providers · Pantheon successfully acquired key new leases in the 2022 lease
sales which were formally awarded in mid 2023. The leases, which are all
contiguous to the existing acreages and are covered with 3D seismic, contain
material resource potential, increasing Pantheon's resource position.
· In Q3 2023, Netherland Sewell & Associates certified a C2
Contingent Resource of 962.5 million barrels of marketable liquids for the
Kodiak project. Such a certification benefits the Company, shareholders, the
State of Alaska as well as suppliers of products and services given the
validation supports further progress towards a potential future development.
· In December 2023 Pantheon was the successful bidder for over
66,000 leased contiguous to the Company's existing projects, which management
estimate to hav every significant resource potential.
Continued operation of staff share option plan Employees, long term consultants · The Company seeks to award an annual grant of share options to
every staff member and permanent consultant pursuant to the staff share option
scheme in order to attract and retain the highest quality staff, as well as to
align interests with shareholders. Following the share price fall following
the Alkaid-2 testing results, a decision was made that no share options be
awarded during the year.
· The consequence of this decision was to demonstrate an alignment
to shareholders by not rewarding staff with an allocation for the 2022 year,
following the significant share price decline in late 2022 and early 2023.
This decision was made despite the considerable other achievements made during
the year. Notwithstanding, the annual grant of share options to staff under
the scheme is a considered a suitable mechanism to retain, attract and
motivate staff to achieve successful outcomes and to provide a mechanism for
staff to benefit from future share price outperformance, aligning staff
interests with that of shareholders - and to help management retain and
attract the highest quality personnel.
· Since 2012, Pantheon had in place an executive management
incentive plan linked to the booking of reserves. No benefit has ever been
paid out to beneficiaries of this plan. Subsequent to year end, Pantheon
terminated this reserves-based plan.
Increased interaction with key stakeholders Shareholders, Employees, State of Alaska, Other Business Relationships · The Board conducted a number of webinar style shareholder
presentations outside of the traditional AGM, which all shareholders and
non-shareholders were invited to attend, in addition to a number of video
interviews. The Group also held a number of technical presentations with
industry and with the State of Alaska, working with them to ensure they are
fully appraised of the Group's intended plans.
· Following the results at Alkaid-2 which resulted in a significant
share price fall, the Company was active in communicating with shareholders to
better educate them on analysis and interpretation of results.
· The Group interacted with departments of the State of Alaska,
presenting its geological findings from drilling activities, as well as
working on planning, permitting and other necessary actions considered
necessary for the advancement of the project.
· The Group utilized the services of many local service providers
for services such as rig hire, road construction etc, providing material
service income for those companies.
· The Group increased the level of granularity in stock exchange
announcements and webinars, to allow stakeholders greater transparency of
capital requirements and targeted project timelines.
· The Directors announced its strategy to achieve sustainable
market recognition of $5 - $10 per barrel of resource.
· The consequence of these actions was to create a greater level of
understanding of the Group's projects and intended activities and to
strengthen relationships with stakeholders, as well as to clearly describe the
ambitions in terms of targeted value recognition for shareholders.
Implementation of development strategy Shareholders, Employees, State of Alaska, and Business Relationships · After year end, Pantheon outlined in great detail its strategy to
bring the Ahpun and Kodiak projects into development, targeting a final
investment decision (FID) on Alkaid by end 2025 and Kodiak by end 2028.
· Pantheon has commenced the process to apply for a hot-tap
directly into the Trans Alaska Pipeline System (TAPS) to facilitate the sale
of marketable liquids directly into the pipeline.
· Pantheon outlined in stock exchange announcements its estimation
of funding requirements to achieve key milestones.
· Pantheon has commenced discussions with industry service
providers as it seeks to secure non equity finance such as vendor finance, in
an effort to minimise shareholder dilution. A number of industry parties
have entered Pantheon's data room as part of this process.
· The consequence of these actions has been to give shareholders
and other stakeholders a clear visibility of Pantheon's intended project
development timeframes, milestones and capital requirements as the Company
seeks to move into development and production.
Increased Corporate Governance Shareholders, employees, Business Relationships · In the 2023 calendar year Pantheon appointed two new independent
non-executive directors, David Hobbs and Allegra Hosford Scheirer. Following
Mr Hobbs' accession to Executive Chairman, the Company announced the
appointment of Linda Havard as a non-executive director, to be effective 1
January 2024. Linda has decades of experience in financial and CFO roles and
will become the Chair of Audit Committee. Following this appointment Pantheon
will have a total of 7 directors.
· In preparation for a possible US stock market listing, Pantheon
is in the process of appointing a specialist outsourced advisory to assist in
bringing the Group up to Sarbanes-Oxley level compliance.
· The consequence of such actions is to improve the level of
governance and diversification which is to the benefit of all stakeholders.
Addition of incremental key leases in the December 2023 lease sale Shareholders, Employees, State of Alaska, and Business Relationships · Pantheon was the successful bidder for c.66,000 new leases in the
December 2023 lease sales. All acreages are immediately adjacent to existing
leases and add material resource potential for shareholders.
Finally, to you, our shareholders, thank you for your trust, belief and
support in what has been a year of great progress for our Company. Your
continued support is appreciated by your Board, our wider internal team and
our external advisory group.
This report was approved by the Board on 18(th) December, 2023 and signed on
its behalf.
Jay Cheatham
Chief Executive Officer
18(th) December, 2023
FINANCE DIRECTOR'S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Financial Review
The Group made a loss from Continuing Operations after Taxation for the
financial year ended 30 June 2023 of $1.5m (2022:$13.95m). This result was
impacted by the positive effect of the revaluation of the derivative component
of the convertible bond of $11.3m (2022: $4.3m) and interest expense relating
to the bond of $6.1m (2022:$4.6m). Additionally $3.1m of non cash share based
payment charges impacted the result for the year (2022:$8.2m).
In December 2021, the Company completed a financing through the issuance of a
$55m convertible bond and a $41m equity fundraising which was completed at a
price £0.65 per share. The convertible bond is for a 5 year term, repayable
in quarterly instalments in cash or shares (at the Company's election) and
carries an interest coupon of 4% per annum. At the date of this report, the
principal outstanding on the Convertible Bond is $29.4m. A summary of the key
bond terms is provided at note 16.
Impairments
In accordance with International Financial Reporting Standard 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. The
Directors have satisfied themselves that there are no indicators of impairment
in the current year.
Capital Structure
The Company completed an equity placing in May 2023 and issued 104,179,027 new
fully paid ordinary shares with a nominal value of £0.01, raising
approximately $22m before expenses at an issue price of 17 pence per share.
Additionally, during the year, several issues of ordinary shares were made as
follows:
- In September 2022, 2,800,813 ordinary shares were issued as
settlement of the September 2022, quarterly Convertible Bond repayment of
principal plus interest.
- In September 2022, 4,525,000 ordinary shares were issued as a result
of the exercise of share options.
- In December 2022, 3,276,374 ordinary shares were issued as
settlement of the December 2022, quarterly Convertible Bond repayment of
principal plus interest.
- In February 2023, 290,000 ordinary shares were issued upon the
vesting of RSUs.
- In March 2023, 9,257,328 ordinary shares were issued as settlement
of the March 2023, quarterly Convertible Bond repayment of principal plus
interest.
- In June 2023, 15,172,320 ordinary shares were issued as settlement
of the June 2023, quarterly Convertible Bond repayment of principal plus
interest.
A summary of movements in Capital Structure is provided at Note 19.
As at 30 June 2023 the total shares in issue was 907,206,399 (2022:
767,705,537).
During the year the Company did not grant share options to staff under the
Discretionary Share Option Plan (the "Scheme").
As at 30 June 2023 the Company had 4,803,921 warrants outstanding to acquire
non-voting convertible shares. The warrants have an exercise price of £0.30
per share and expire on 30 September 2024. They are all fully vested.
Non-voting shares are convertible into ordinary fully paid shares on a 1:1
basis.
As at 30 June 2023 the Company had 32,830,000 options outstanding to acquire
ordinary shares (2022: 50,160,000) at an average exercise price of 0.477 pence
per share. At year end all share options were fully vested.
Going concern
In June 2023 Pantheon communicated to shareholders via RNS and accompanying
webinar, its aggressive strategy to target sustainable market recognition of
a value of $5 - $10 per barrel of 1P/1C recoverable resource by the end
of 2028, FID (Final Investment Decision) on the Ahpun project by the end of
2025, and FID on the Kodiak project by the end of 2028. Executing such a
strategy requires significant additional capital, most of which the Company
seeks to access through non equity sources. This process is presently
underway. In November 2023 management provided a detailed stock exchange
announcement accompanied by a webinar, which provided a detailed overview of
the estimated $120 million capital required to achieve first production at
Ahpun. This sum includes the drilling of 3 new wells, a hot tap into the TAPS
pipeline, upgrading production facilities and 3 years of G&A. In
accessing additional capital, Pantheon's goal is to achieve this in the least
dilutive manner for shareholders, minimising the use of equity capital and by
prioritising three main alternate funding sources: (i) Vendor financing (ii)
Offtaker financing and (iii) Reserve based lending. Pantheon
is presently in discussions with multiple parties with respect to these
potential non-equity financing alternatives. The Group will need to secure
additional funding for general working capital, to cover future liabilities as
they fall due and to continue to progress its key projects as planned within
the 12 months following the approval of these financial statements. As
previously disclosed to shareholders, the Group seeks to secure such funding
by Q2 or Q3 2024, in the least dilutive manner for shareholders, ideally
through one of the non equity funding sourced discussed above. The auditors
have made reference to this material uncertainty within their audit report.
In Q3 2023, Netherland Sewell & Associates estimated a 2C Contingent
Resource for Pantheon's Kodiak project totalling 962.5 million barrels of
marketable liquids. The directors believe the enormous size of the
resource already appraised on Pantheon's acreage provides the potential for
1,000 - 2,000 wells. Whilst in absolute terms this would entails cumulative
investment estimated in the billions of dollars over the lifetime of the
project, Pantheon estimates c.$300 million on the Ahpun development (plus
potentially $50 million of Kodiak appraisal costs) to be the maximum
cumulative cash requirement. Once in full development, it is believed that
production revenues have the potential to self finance a great majority of the
development costs, as is typically the case in such developments.
The Group has no contractual obligation to drill any future wells and the only
obligation is to suspend the Talitha-A test well, the estimated cost of which
($0.7m) has already been provided for in the financial accounts. Given the
quality of the assets, the directors are confident in their ability to raise
capital as and when required. Accordingly, the financial statements have been
prepared on a going concern basis as documented further in Note 1.4.
Taxation
The Group incurred a loss for the year and has recorded a taxation charge of
$0.14m (2022: $2.0m credit). As the tax credit is all reflected in the
movement in deferred tax, the Directors have adjusted deferred tax liability
by the same amount as the tax charge.
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 on page 20.
Liquidity Risk
As the Company did not generate material revenue from hydrocarbon production
during the year (all production revenues were generated through a one-off long
term production test which has since concluded), the primary liquidity risk is
the ability to adequately source sufficient funding to meet the Company's
working capital and operational requirements. Funding availability, and hence
risk, within the capital markets remains uncertain as a result of continued
global economic conditions, including the impact of increased interest rates
and inflation.
Oil & Gas Price Risk
Future oil and gas sales revenues are subject to the volatility of the
underlying commodity prices. Over the past few years 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
Most capital expenditures for the year (and future years), as well as possible
future operational revenues from oil sales were or will be 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.
Credit Risk
The Group's credit risk is primarily attributable to its cash balances. The
credit risk on liquid funds is limited because the third parties are large
banks with a minimum investment grade credit rating. The Group's total credit
risk amounts to the total of other receivables and cash and cash equivalents.
The Group's does not have any joint venture partners.
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
18 December, 2023
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
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 Note 8 to these accounts.
Review of the Business and Key Performance Indicators
2022/2023 KPI Measurement 2022/2023 Performance
Ensure business adequately funded Fund raise where appropriate The Company completed a $22m fundraising (gross proceeds) in May 2023 and
serviced its convertible bond quarterly repayments (principal plus interest)
during the financial year through the issuance of equity.
Ensure appropriate levels of governance Continue to implement and improve governance standards Durig the year, Allegra Hosford Scheirer was appointed as independent NED, and
in December 2023 the board appointed Linda Havard as an additional independent
NED, to be effective 1st January 2024. Upon this appointment, Pantheon will
have 7 directors, 3 of which are non executive directors.
The Company has also announced its intention to prepare for a possible USA
stock market listing and as part of this has engaged with a 3(rd) party expert
group to assist in bringing Pantheon's governance up to Sarbanes-Oxley
standards.
Operational activity in Alaska Drilling / testing wells The Company undertook several operations during the year under review and
beyond:
Drilled and tested the Alkaid-2 zone of interest, encountering and flowing
hydrocarbons through a long term production test. Subsequent to year end, the
Akaid-2 well was re-entered and the independent and shallower SMD horizon was
flow tested and an improved fracture stimulation methodology was successfully
applied, demonstrating materially improved estimated frac efficiencies.
Third party expert validation of Alaskan assets Receipt of third party expert reports During the year, SLB (formerly Schlumberger) completed a large 'static model'
project and provided a report estimating Oil in Place of 17.8 billion barrels.
Subsequent to year end, Netherland Sewell & Associates published a report
estimating a C2 Contingent Resource of 962.5 million barrels of marketable
liquids (oil, condensate, NGLs). on the Kodiak project. NSAI will next prepare
a resource estimate on the Ahpun project, targeted for completion in 1H 2024.
Pursue farmout or project development Progress towards farmout or project development Pantheon's understanding of the geological potential (and therefore potential
value) of the assets has increased materially. The Company's revised strategy
announced after year end involves the Company developing the assets on its
own, with FID on the Ahpun project targeted for end 2025, and FID on the
Kodiak project targeted by end 2028. In the meantime, the Company has
commenced the process to work towards obtaining a hot-tap into the TAPS (Trans
Alaska Pipeline System) pipeline to enable it to sell its future production
directly into the pipeline. The Company isn't actively seeking a farmout
partner at this time as it believes greater value can be achieved, given the
disparity between market capitalisation and modelled project NPVs, by
advancing the project on its own, ideally supported by vendor and other
non-equity based sources of financing. As the project is advanced it is
believed that far greater value can be achieved in a farmout as the Company
seeks to become a 'price maker' rather than a 'price taker'.
Ensuring continued high-quality technical consultant relationships Establish and maintain relationships with industry experts and review Pantheon's technical team was further strengthened in the year under review.
performance Experts such as eSeis, AHS Baker Hughes and others remain contracted. Pantheon
also forged a strong relationship with SLB (formerly 'Schlumberger') for a
very significant dynamic and static reservoir modelling project. Work with all
these partners continues.
Continue to build and refine resource potential Estimated resource Pantheon successfully acquired c.40,000 new acres following the lease sales of
December 2022, and in December 2023 was the successful bidder on a further
c.66,000 acres, both with material resource potential. During the year the
Company received an Independent Expert Report estimating a 2C contingent
resource of 962.5 million barrels of marketable liquids. The Company expects a
further report(s) in 2024.
Ensure close working relationship with the State of Alaska and regulators Monitor interaction with regulators paying interest to approvals processes, The Group worked closely with the regulator, including detailed technical
timelines, and other procedural issues briefings discussing the analysis of well performance and interpretation of
data sets, communication of future plans, concepts for long term production
testing, flaring of gas, environmental matters, and future development
aspirations. The Group continues to work with key stakeholders for the
purposes of obtaining a hot-tap into the main pipeline.
Financial Position and Future Prospects
Please refer to the Director's Report for additional information on strategy
and the business model.
Key operational risks and uncertainties
The Group may be unable to meet its lease obligations
In general, the Group's properties are held under oil and gas leases. The
terms of the Group's leases often provide for yearly rental payments. Such
yearly rentals may vary depending upon the particular lease and whether the
Group has commenced activities in the property. If the Group defaults on its
lease payments, its leases may be automatically terminated. If the Group 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. Managing the lease position is of material importance for the
Group, and management devote considerable time to lease management, budgeting
and planning, consulting with the State of Alaska where required. The 27 new
leases (comprising c.40,000 acres) successfully bid for in the November 2022
lease auctions are contiguous to existing leases, have a 10-year initial term,
$10 per acre rentals and low royalties of between 12.5% - 16.7% to the State
of Alaska. In December 2023 Pantheon was the successful bidder for an
additional c.66,000 acres with the same lease terms as outlined above. It is
estimated that these leases will be formally awarded summer 2024 upon payment
of the balance of the application monies.
The Group may be unable to renew and/or extend its leases once they expire
The Group's lease agreements are subject to termination following their
initial term, unless extended by being included in a unit. Unitization
recognizes that the Group has established, to the State's satisfaction, that
the unit encompasses all or part of multiple potential hydrocarbon
accumulations. Exploration and/or production activities are usually a
prerequisite for unit formation. If the Group is unable to secure unitization
for some leases on a timely basis, it may lose its rights in these
properties when the initial term expires. In addition, given that it may not
be able to renew certain leases unless it begins exploration or production
activities within specific timeframes, the Group may be required to invest
significant funds at timetables not optimal in order to meet the
work requirements necessary to secure a unit. If the Group is unable
to extend its leases beyond their primary term, there could be a material
adverse effect on its business, financial condition and results of operations.
To mitigate this risk, the Group has successfully applied for and been
granted the Talitha and Alkaid Units that contain most of the Ahpun project
and some of the Kodiak projects. Most of Pantheon's Kodiak project is now
covered by leases of c.6 years or more of remaining initial term.
Our operations require the Group to obtain licensing, planning permissions and
other consents
The development of its current and future leases may be dependent upon 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, 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. The failure to
gain such permissions or gain such permissions on terms or at a cost
acceptable to the Group, may limit the Group 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. To manage
the risk, the Group employs experienced and qualified personnel, supplemented
by consulting firms where appropriate, who have successfully advised on or
obtained licenses and permits in the past, and who maintain working
relationships with regulatory agencies.
Political conditions and government regulations could change and have a
material effect on the Group's results or operations
Although political conditions in the Northern Slope Borough, the State of
Alaska 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 Group's operations. The Group's strategy has been
formulated in light of the current regulatory environment and expected future
changes to the regulatory regime. In 2021 the federal government adopted a
more cautionary position with respect to operations on federal land, notably
with respect to ConocoPhillips' Willow project, however through ongoing
consultation a suitable compromise was reached allowing the project to be
developed. Unlike the Willow project, Pantheon's projects are all located on
state land, not federal land, and so have not been impacted by such politics.
Although the Group 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 Group's
business or have an otherwise negative impact on its activities. Amendments to
existing rules, laws and regulations governing the Group's operations and
activities, or increases in or more stringent enforcement, implementation or
interpretation thereof, could have a material adverse impact on the Group's
business, results of operations and financial condition.
Future legal proceedings could adversely affect the Group's business, results
of operations or financial condition
The Group may face legal proceedings that may result in the Group having to
pay material damages and/or other remedies. While the Group would assess the
merits of each legal proceeding and defend the Group 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 Group 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 Group's relation with local communities, government, and
non-government organizations, which could also impact the Group's activities.
As a result, legal proceedings could have a material adverse effect on the
Group's business, financial condition, results of operations and prospects. To
manage this risk the Group consults legal counsel when it faces potential
legal proceedings. The board and management consult legal counsel when
conducting activities or entering into agreements that are viewed to have the
potential to give rise to material legal risks.
Failure to manage relationships with local communities, environmental groups
and non-government organizations could adversely affect the Group's future
growth potential
The activities of oil and gas companies often face scrutiny from the public
and receive negative publicity. Although the Group's operations are not
located in or near large communities, the Group'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-governmental organisations may adversely affect
the Group'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 Group's business, financial condition and results of operations. The
Group's current leased acreage is not in the immediate vicinity of any local
community. To manage this risk the Group ensures it conducts operations in a
legal and responsible manner and complies with rules and regulations.
Any change to government regulation/administrative practices may have a
negative impact on the Group's ability to operate and its future 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 of oil and gas resources, as well as the
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 Group's business. In
addition, there can be no assurance that tax laws, royalty regulations and
government incentive programs related to the Group's oil and gas properties
and the oil and gas industry generally, will not be changed in a manner which
may adversely affect the Group'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
Group'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
Group's exploration and development activities. If any of the forgoing were to
occur, it could have a material adverse effect on the Group's business,
financial condition and results of operations. To manage the risk, the Group
employs experienced personnel and contractors who have successfully obtained
licenses and permits in the past, and who maintain working relationships with
regulatory agencies and monitor changes that could impact the Group.
By order of the board.
Justin Hondris
Director
18 December, 2023
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
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 2023.
Results
The Group results for the period are set out on page 42. The Directors do not
propose to recommend any distribution by way of a dividend for the year ended
30 June 2023.
Future Developments
As explained in the CEO and Chairman's reports, the Group announced a revised
strategy in late summer 2023, where it outlined its goal of achieving FID by
end 2025 on the Ahpun project and by end 2028 on the Kodiak project. The Group
also announced that it was considering a listing or dual listing on a USA
stock exchange, possibly NYSE or NASDAQ, and/or was also considering the
merits of a listing on the main board of the London Stock Exchange as part of
its strategic planning. This work is ongoing. The Group also announced it
had commenced the process of working towards a hot-tap into the Trans Alaska
Pipeline System to allow the sale of future production directly into the
pipeline, and that it was currently maturing possible vendor financing
discussions as part of its objective to fund the operations and development in
the least dilutive manner to shareholders.
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 8 and 18 to these accounts.
Directors
The Directors who served at any time during the year were:
Name Role
Phillip Gobe Non-Executive Chairman - retired 8 June 2023
John Cheatham Chief Executive Officer
David Hobbs Non-Executive Director, then Executive Chairman
Justin Hondris Director, Finance & Corporate Development
Allegra Hosford Scheirer Non-Executive Director - appointed 3 July, 2023
Robert Rosenthal Technical Director
Jeremy Brest Non-Executive Director
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 £0.01
30 June 2023
Phillip Gobe (retired 8 June 2023) 849,350
John Cheatham 4,235,346
David Hobbs 1,717,229
Justin Hondris((1)) 1,844,753
Allegra Hosford Scheirer((2)) Nil
Robert Rosenthal((3)) 1,353,758
Jeremy Brest((4)) 1,379,703
(1) Some of these ordinary shares are beneficially owned by the spouse of J
Hondris.
(2) Appointed July 2023.
(3) In addition to Mr. Rosenthal's direct holding, he also holds an indirect
interest in approximately 553,000 shares of PANR through an approximate 2.8%
interest in Ursa Major Holdings LLC ("UMH"). UMH holds approximately 19.8
million ordinary shares.
(4) At the year end, Mr Brest does not have a direct interest in Pantheon and
has an indirect interest in the Company as described below:
Mr Brest's interest results from the direct and indirect holding of Pantheon
by Westman Management Limited ("Westman"), of which Mr Brest is the sole
director. Westman holds 1,379,703 ordinary shares of Pantheon and an indirect
interest in approximately 1 million shares of PANR through an approximate 5%
interest in Ursa Major Holdings LLC ("UMH"). UMH holds approximately 19.8
million ordinary shares.
Share options and restricted stock units
The Directors held the following share options for Ordinary shares of £0.01,
at the beginning and end of the year:
Director As at 30 June 2022((1)) Granted during the year((2)) Exercised during the year As at 30 June 2023
Phillip Gobe ((3)) - - - -
John Cheatham 11,360,000 - (1,300,000) 10,060,000
Justin Hondris 10,340,000 - (2,000,000) 8,340,000
Robert Rosenthal 6,975,000 - (900,000)- 6,075,000
Jeremy Brest 1,500,000 - - 1,500,000
1. Comprising a combination of previously vested share options granted in
2014, 2020, 2021 and 2022.
2. No share options were granted during the year.
3. Phillip Gobe (retired) was previously granted 290,000 Restricted Stock
Units ("RSUs) which vested to him in early February 2023 and converted into
ordinary shares on a 1:1 basis. Mr Gobe was never granted share options.
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 salary Pension Contributions Health Insurance 2023 2022 Total
(US$) (US$) (US$) Total
(US$) (US$)
D Hobbs 11,365 - - 11,365 -
J Cheatham 525,163 - 525,163 527,703
J Hondris 421,312 21,087 6,521 448,920 675,871
J Brest 39,931 - - 39,931 43,703
P Gobe 114,931 - - 114,931 123,703
R Rosenthal 372,389 - - 372,389 255,707
Total 1,485,092 21,087 6,521 1,512,700 1,626,687
Director incentive scheme
In November, 2023, the Company terminated the 2012 short-term executive
director incentive scheme (the "Reserve-based Scheme"), pursuant to which an
incentive bonus would accrue to participants in the scheme upon the booking of
reserves. Prior to the termination of the Reserve-based Scheme, the Group had
never since inception issued any awards under it.
Share Option Plan
The Company has in place a Share Option Plan (the "Scheme") for the long term
benefit of all staff and permanent consultants, designed to incentivise staff
for outperformance, and as a tool to attract and retain best quality
personnel. No share options have been awarded under the scheme since January
2022.
Any profits from the ultimate exercise and profitable sale of share options is
subject to full income tax (not capital gains tax) for the beneficiary.
Subsequent events
Details of subsequent events can be found at Note 32.
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 12 December 2023:
Shareholder Ordinary Shares % of Ordinary shares
Vidacos Nominees Limited 100,092,007 10.89
Lynchwood Nominees Limited 97,820,490 10.64
Vidacos Nominees Limited 57,155,967 6.22
Interactive Brokers Llc 49,544,996 5.39
Vidacos Nominees Limited 35,405,090 3.85
Interactive Brokers Llc 31,614,654 3.44
Hargreaves Lansdown (Nominees) Limited 31,549,508 3.43
Vidacos Nominees Limited 29,804,392 3.24
Interactive Investor Services Nominees Limited 28,803,074 3.13
Political and charitable contributions
There were no political or charitable contributions during the year.
CORPORATE GOVERNANCE STATEMENT
The Company has adopted the Quoted Companies Alliance Corporate Governance
Code 2018 (the "QCA Code"). This statement sets out how the Company complies
with the 10 principles of the QCA Code.
The Board recognises the principles of the QCA Corporate Governance Code,
which focus on the medium to long term value for shareholders, without
stifling the entrepreneurial spirit in which small to medium sized Companies
such as Pantheon have been created. As the Group grows, it is making a
concerted effort to further improve governance. The Company sets out below an
update on its compliance with the QCA Code.
The QCA Code outlines 10 core principles that should be applied. These are
listed below together with a short explanation of how the Company applies each
of the principles. The Company has adopted a share dealing code for the Board
and employees of the Company.
PANTHEON RESOURCES QCA CORPORATE GOVERNANCE COMPLIANCE
STRATEGY & BUSINESS MODEL
Pantheon's strategy is to focus on hydrocarbon exploration, appraisal and
production, onshore USA, in a region of low sovereign risk where its
specialist expertise lies. Pantheon has structured a lean organization that is
focused on maximising the potential returns to shareholders through carefully
targeted exploration, appraisal and development activities in established and
highly prospective areas underpinned by detailed geological analysis. Where
appropriate, the Group will also consider undertaking value accretive
acquisitions or divestitures of assets following careful analysis and, as
appropriate, shareholder engagement. The Group, as appropriate, uses a
combination of in-house expertise and external consultants to manage
operations.
Pantheon has historically sought to carefully manage corporate overhead costs,
whilst balancing the need to hire and retain the best personnel and advisors
to mitigate operational risks and maximise the potential returns to
shareholders in the event of success. Given the current scale of the Group,
which continues to grow, corporate and operating costs are monitored by
management to ensure appropriate levels of spending. In line with the Group's
stated strategy to advance to FID on its Ahpun and Kodiak projects, it is
anticipated that it will recruit additional personnel going forward.
During the year, the Board of Directors participated in a weekly conference
call, during which they discuss, amongst other items, the strategic direction
and operational status of the Group, and as a result any significant deviation
or change, should such occur, will be highlighted to the Board promptly. The
Board has also met in person, four times in 2023 for detailed board and
strategy sessions running for a minimum of two days.
UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS
Group progress on achieving its key targets are regularly communicated to
investors through stock exchange announcements which can be found under the
'Stock Exchange Announcements' section of the Company website. The Company
retains the services of a corporate communications firm who actively engages
with the press, investors, analysts, and to a limited extent, with social
media. The Group also retains a Corporate Broker and NOMAD, to ensure
compliance with stock exchange regulations as well as to ensure communications
to shareholders are suitable for them to understand the Group's operations and
activities. The Group will consider the use of commissioned research as a
medium for shareholder education.
The Company utilizes professional advisors such as a Broker, NOMAD, Corporate
Communications specialists and Company Secretarial services to provide advice
and recommendations on various shareholder considerations where relevant. The
Company hosts a weekly conference call with all directors and its
NOMAD/Broker. During these conference call any shareholder considerations
identified over the course of the week can be addressed and responded to
accordingly, as well as other operational, financial, strategic of other
relevant matters. The Company regards the Annual General Meeting as an
important opportunity to communicate directly with shareholders via detailed
presentations and an open question and answer session. The AGM includes a
detailed investor presentation and Q&A session, over recent years held by
a separate webinar to enable USA investor participation. Additionally, the
Company also holds regular webinars as and when relevant, open to all
shareholders, providing an investor presentation and an opportunity for
Q&A with management. The Company also undertakes investor roadshows as and
when appropriate, arranged through its broker. Over the past year, the Company
considers that it has communicated with a significant portion of its
shareholder base and has a clear understanding of shareholder expectations.
Contact details are provided on the Company's website and within public
documents, should shareholders wish to communicate with the Company.
TAKING INTO ACCOUNT WIDER STAKEHOLDER & SOCIAL RESPONSIBILITIES AND THEIR
IMPLICATIONS FOR LONG-TERM SUCCESS
The Directors recognise their responsibilities to stakeholders including the
State of Alaska, the Federal Government, North Slope Borough, staff, partners,
suppliers, vendors and residents within the areas it operates. Given the
current size of the Company, stakeholders are able to communicate directly
with executive management and staff members, allowing the Board to act
appropriately on such feedback. A description of how the Group considers key
stakeholders in its decision-making is provided on page 12.
The Company is conscious of its impact on the geological, archeological,
cultural and biological resources in its operating environment, and has
implemented measures to ensure that each person working on our projects,
including company personnel, contractors and subcontractors, are informed of
the environmental, social and cultural concerns that relate to that person's
job, so we can minimise any negative impacts.
Stakeholders can contact the Company via the website, its NOMAD, or can
contact the Company's retained corporate communications advisers when
required.
EMBEDDING EFFECTIVE RISK MANAGEMENT
During the year, the Board had weekly conference calls to discuss, amongst
other items, operations, key risks, and other relevant matters. The Company's
NOMAD also attends those weekly conference calls. Separately, the entire
management team has a fortnightly 'alignment call', designed to provide better
integration and understanding of activities across the team, both corporately
and operationally. Additionally, the Group also has a policy of structured
daily, weekly or fortnightly operational and management conference calls
during periods of operational activity to identify and discuss key business
challenges and risk areas. The Board believes that this regular program of
internal communications provides an effective opportunity for potential or
real-time risks to be identified, considered and, where necessary, addressed
in a timely manner. Refer page 12 for additional description of how the Group
considers stakeholder interests in decision making. The Group's oil and gas
activities are subject to a variety of risks, both financial and operational,
more information on risk can be found in the Finance Director's report and
Strategic Report.
Given the Company's current size, the Board considers that the Executive
Management team, with oversight from the Non-Executive Board of Directors and
relevant advisers, are sufficient to identify risks applicable to the Company
and its operations and to implement an appropriate system of controls.
Accepting that no systems of control can provide absolute assurance against
material misstatement or loss, the directors believe that the established
systems for internal control within the group are appropriate to the size and
cost structure of the business. Additionally, the Company has publicly stated
that it is considering a possible listing on a US stock exchange such as NYSE
or NASDAQ, and in preparation for such a listing has commenced a process of
increasing the level of controls and governance of the group, to
Sarbanes-Oxley standards. An internal audit function is not considered
necessary or practical at this time due to the size of the Company and the
close day-to-day control exercised by the executive directors.
The audit committee meets at least twice per year where these internal and
financial controls are reviewed as required and assets are also assessed for
impairment considerations.
MAINTAINING A BALANCED AND WELL-FUNCTIONING BOARD
The Directors acknowledge their responsibility for, and recognise the
importance of implementing and maintaining, high standards of corporate
governance. The Board is responsible for establishing and maintaining the
system of internal controls. The effectiveness of the Group's system of
internal control is considered annually by the Audit Committee of the Board.
The Board
The Board currently comprises two non-executive Directors, and four executive
Directors. On 12(th) December 2023 the Company announced the appointment of an
additional independent non-executive director, Linda Havard, to join the
board, effective 1 January 2024 The independent Company Secretary is a partner
in a law firm who is a specialist in providing company secretarial services to
listed companies. The Board is responsible to the shareholders for the proper
management of the Group. It meets regularly to discuss operations, consider
and monitor strategy, examine opportunities, identify and consider key risks,
consider (and where appropriate approve) capital expenditure projects and
other significant financing and strategic matters. The Board delegates
authority to the management for day-to-day business matters including:
drilling, geological and operational matters, purchasing procedures, financial
authority limits, contract approval procedures and the hiring of full time and
temporary staff and consultants. Matters reserved for the Board are
communicated in advance of formal meetings. In addition to formal board
meetings, the directors hold weekly conference calls, attended by the
Company's NOMAD, in order to keep the board fully informed with operational
matters and potential issues as well as regulatory obligations. The board also
considers this regular interaction with its NOMAD to be a prudent additional
layer of corporate governance. Biographical details of the directors can be
found on the 'About Pantheon' section of the Company's website. Board members
are expected to attend all formal board and committee meetings, as well as
weekly informal board meetings with the Company's NOMAD (or bi-wekly for non
executive directors). The board meets formally at least 4 times per year, with
meetings usually running for a full 2 days.
The QCA Code does not offer a definition of independence with respect to
directors, so in forming a view on the independence of directors the Company
has sought guidance by reference to the guidelines outlined in the FCA's UK
Corporate Governance Code. In any event, the Board exercises discretion in
making the determination of director independence which is kept under review
on an annual basis. The now retired non-executive Chairman, Phillip Gobe, was
considered to be independent. Allegra Hosford Scheirer and Linda Havard
(appointment effective 1 January 2024) are both also considered to be
independent. David Hobbs was also considered to be independent prior to
assuming the role of Executive Chairman.
The Board has a number of committees as explained below. Following the
appointment of the new independent non-executive director, Linda Havard on
1(st) January 2024, it is intended that some or all of the committees will be
restructured.
Audit Committee
The Audit Committee consists of Jeremy Brest as Chair with all other directors
as members. It is intended that Linda Havard will assume the role of Chair of
the Audit Committee following her formal appointment as an independent
non-executive director on 1(st) January 2024. 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's NOMAD, Company Secretary, other directors and the Company's
auditors.
The Audit Committee meets at least twice a year. For the financial year ended
30 June 2023 there were two audit committee meetings which were attended by
all members. Its terms of reference include the 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 publication of interim
and annual financial results and the annual audit. The Audit Committee will
also interact with the auditors and review their reports relating to accounts
and internal control systems. The Audit committee met formally twice during
the year, attended by all directors. The Company does not have a formal policy
of auditor firm rotation, however it the individual audit partner is required
to rotate every 5 years maximum.
Remuneration Committee
The Remuneration and Nomination Committee consist of Jeremy Brest as Chair,
and all other directors as members. The Committee meets as and when required.
Its role is to determine the remuneration arrangements and contracts of
executive Directors and senior employees, and the appointment or
re-appointment of Directors. No Director is involved in deciding their own
remuneration.
Nominations Committee
The Nominations Committee is chaired by David Hobbs, with all other directors
being members. The Committee meets as and when required. Its role is to
consider and oversee board composition, recruitment and succession planning.
Conflicts Committee
The Company has established a Conflicts Committee which consists of Allegra
Hosford Scheirer as Chair, with all other directors as members. 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 where appropriate, with
the Company's UK lawyers.
Anti-Corruption & Bribery Committee
The Company has established an Anti-Corruption & Bribery Committee
Committee which consists of Justin Hondris as Chair, with all other directors
as members. The purpose of the Anti-Corruption & Bribery Committee is to
ensure the Company's compliance with the Bribery Act 2010.
HAVING APPROPRIATE EXPERIENCE, SKILLS AND CAPABILITIES ON THE BOARD
The Board of directors has a mix of experience, skills, both technical and
commercial, and personal qualities that seek to deliver the strategy of the
Company. The Company will ensure that the directors have the necessary
up-to-date experience, skills and capabilities to deliver the Company strategy
and targets. If the Company identifies an area where additional skills are
required, the Company will contract an appropriately qualified third party to
advise as required. Each director is listed on the 'About Pantheon' section of
the Company's website and in the annual report, along with a clear description
of their role and experience. The board is currently in the process of
appointing of an additional independent non-executive director with extensive
financial experience.
EVALUATING BOARD PERFORMANCE
As the Company has grown, and with its stated intention of considering a
listing on a USA stock exchange, the Board is reviewing the board performance
and effectiveness and will add additional resources if/where appropriate. The
Company appointed an independent NED with geological experience during the
year (Allegra Hosford Scheirer) and has recently appointed an additional NED
with financial management experience (Linda Havard) whose appointment will
become effective 1 January 2024.. The Board has contracted the executive
remuneration specialists at Deloitte for matters concerning management
incentive schemes.
ETHICAL VALUES & BEHAVIOURS
The Company operates a corporate culture that is based on ethical values and
behaviors and treats operational stakeholders fairly and with respect. It will
maintain a culture appropriate to the standards required for a Company of its
size. The board communicates regularly with staff through meetings, team
conference calls and presentations, individual telephone calls and messages
and advocates respectful, pen dialogue with employees, consultants and other
stakeholders. Following the appointment of the proposed new independent
non-executive director, the board will comprise five male and two female
members.
ENVIRONMENTAL STATEMENT
Pantheon Resources will seek to conduct its activities in a way that keeps the
environmental and social impacts to a minimum. To that end, the Company plans
to eliminate its Scope 1 and Scope 2 greenhouse gas emissions by 2030.
Furthermore, it will consult with State and local communities on the North
slope of Alaska to minimize the development footprint while seeking to
maximise the economic benefits to the state of Alaska and North Slope Borough.
Pantheon intends for the initial development of Ahpun and Kodiak to be all
electric, with CCS (carbon capture & storage) applied to power generation
exhausts. We will ensure that all electricity purchases by the company are
from zero GHG (greenhouse gas) emission sources.
Furthermore, after 2030, the Company will work with its suppliers in an effort
to eliminate their Scope I and 2 emissions (i.e. Pantheon's scope 3
emissions).
To minimise the physical footprint of the Company's development activities we
will maximise the number of wells drilled from each pad and minimise the
number of pads and connecting roads.
MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES
Ultimate authority for all aspects of the Company's activities resides with
the Board, with the respective responsibilities of the Chairman, the Executive
Directors and the various committees arising as a result of delegation by the
Board. Given the constraints of balancing a small, cost-conscious Board with a
desire to maintain high standards of Corporate Governance, the Board has
active, structured and regular internal communication, including a standing
weekly conference call between the executive board (with a standing invitation
for non executives to attend) and its NOMAD where significant matters are
tabled and discussed. This is in addition to regular, formal board meetings,
at least 4 times per year. All the executive directors have designated roles
and areas of responsibility and engage with the Company's shareholders and
stakeholders in accordance with relevant regulatory guidelines. There are a
number of matters reserved for the Board's review and approval including,
Group strategy, approval of major capital expenditure projects, approval of
the annual and interim results, fundraising, dividend policy and Board
structure. It monitors the exposure to key business and operational risks and
reviews the strategic direction of the group and its operations. The Board
delegates day-to-day responsibility for managing the business to the Executive
Directors/senior management team. The Board considers its current governance
structures and processes as appropriate in the context of its current size,
headcount and complexity, and is seeking to improve them further as the Group
prepares itself for a possible USA stock market listing. The audit committee
meets at least twice per year where internal and financial controls are
reviewed as required and assets are also assessed for impairment
considerations. In December, 2023 the board announced the appointment of an
additional independent non-executive director, Linda Havard, who has decades
of financial oversight and CFO experience, to further strengthen the board.
COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
Page 12 of this Annual Report provides a section 172 statement which discusses
how the Group considers the interests of shareholders and other relevant
stakeholders in its decision making.
Additionally, under AIM Rule 26 the Company publishes historical annual
reports, notices of meetings and other publications, including regular
operational news flow, over a minimum of the five previous years which can be
found under the 'Financial Reports' and other sections of the Company website.
The Board is committed to maintaining good communication and having dialogue
with private and institutional shareholders, as well as analysts. In addition
to the Annual General Meeting, the Company endeavors to arrange shareholder
presentations (in person or via Webinar, Zoom or Microsoft Teams), allowing
shareholders to discuss issues and provide feedback as appropriate. The
Company also retains the services of a specialist corporate communications
advisor to assist in promoting awareness of the Company's activities to its
shareholders and wider audience.
The Board have not published an audit committee or remuneration committee
report, which the Board considers to be appropriate given the size and stage
of development of the Company.
Regarding a general meeting of the Company, upon the conclusion of that
meeting the results of the meeting are released through a regulatory news
service and a copy of the announcement is posted on the Company's website. In
a situation such as where there is a significant proportion of votes cast
against a resolution, then, where relevant, an explanation would be provided.
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. The Company administers
compliance in-house, consulting with NOMAD and legal counsel regularly.
Statement of Directors' responsibilities
The Directors are responsible for preparing the financial statements in
accordance with applicable laws and regulations. Under that law the Directors
have elected to prepare the Group and Parent Company financial statements in
accordance with UK-adopted international accounting standards which 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 UK adopted International 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. The Company is compliant with
AIM Rule 26 regarding the Company's website.
Statement of disclosure to the auditors
So far as the Directors are aware:
1. there is no relevant audit information of which the Company's auditors are
unaware; and
2. 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 PKF Littlejohn LLP 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
18 December, 2023
DIRECTORS' BIOGRAPHIES
FOR THE YEAR ENDED 30 JUNE 2023
David Hobbs, Executive Chairman
David Hobbs graduated as a Petroleum Engineer from Imperial College in 1984,
initially working at British Gas as a drilling engineer before moving into
commercial and business development roles at Monument Oil & Gas and Hardy
Oil and Gas, two UK listed international independent E&P companies. He
joined Cambridge Energy Research Associates (CERA), now part of S&P
Global, ending up as Chief Energy Strategist, advising Government officials,
senior executives and Boards of Directors across the energy sector. He also
spent six years as part of the leadership team establishing the King Abdullah
Petroleum Studies and Research Center (KAPSARC) in Riyadh, Saudi Arabia. David
is an adjunct professor at the University of Calgary, a senior Non-Resident
Fellow at the Atlantic Council's Global Energy Center and is Chairman of
Proton Green, a US based helium, food grade CO2 and carbon sequestration
company.
David is Chair of the Nominations Committee and a member of the Audit,
Remuneration, Conflicts, and Anti-Corruption & Bribery Committees.
Jay Cheatham, Chief Executive Officer
Jay Cheatham has more than 50 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 US 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 an
understanding of the capital markets through his past position as CEO to the
Petrogen Fund, a private equity fund.
Jay is a member of the Company's Remuneration and Nominations Committee, Audit
Committee, Conflicts Committee and Anti-Corruption and Bribery Committee.
Justin Hondris, Director, Finance and Corporate Development
Justin Hondris has over 15 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.
Justin is Chair of Pantheon's Anti-Corruption and Bribery Committee and is a
member of the Remuneration, Committee, Nominations Committee, Audit committee
and the Conflicts Committee.
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 exploration efforts of a number of private
and public companies.
Bob is a member of the Company's Remuneration and Nominations Committee, Audit
Committee, Conflicts Committee and Anti-Corruption and Bribery Committee.
Jeremy Brest, Non-executive Director
Jeremy has more than 25 years' experience in investment banking and financial
advisory. Jeremy is the founder of Framework Capital Solutions, a boutique
Singapore-based advisory firm specializing 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.
Jeremy is Chair of the Company's Audit Committee, and the Remuneration
Committee, and a member of the Conflicts Committee, Nominations Committee and
Anti-Corruption and Bribery Committee.
Allegra Hosford Scheirer, Non-Executive Director (appointed July 2023)
Allegra Hosford Scheirer is a recognized expert in petroleum system analysis.
Her degrees are from Brown University (B.S., geology-physics/math) and the
Massachusetts Institute of Technology (Ph.D., marine geology and geophysics).
Following a postdoctoral position at Woods Hole Oceanographic Institution, she
spent 6.5 years at the U.S. Geological Survey as a member of the Geophysical
Unit of Menlo Park and the Energy Resources Program, where she contributed to
petroleum resource assessments of sedimentary basins. For the past 15 years,
she has been a co-director of the Basin Processes and Subsurface Modelling
consortium at Stanford University, where she also teaches and advises graduate
students. She also maintains a consulting company for working with private
clients on exploration programs, short courses, and petroleum-focused field
trips. Allegra is passionate about sustainability initiatives, including
carbon capture and storage and geologic hydrogen.
Allegra is Chair of the Conflicts Committee and is a member of the
Anti-Corruption & Bribery Committee, the Audit Committee, Remuneration
Committee and Nominations Committee.
Opinion
We have audited the financial statements of Pantheon Resources Plc (the
'parent company') and its subsidiaries (the 'group') for the year ended 30
June 2023 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of Changes in Equity, the Consolidated
and Company Statements of Financial Position, the Consolidated and Company
Statements of Cash Flows and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and UK-adopted
international accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
· the financial statements give a true and fair view of the state of
the group's and of the parent company's affairs as at 30 June 2023 and of the
group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly prepared
in accordance with UK-adopted international accounting standards and as
applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements 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 group and parent 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.
Material uncertainty related to going concern
We draw attention to note 1.4 in the financial statements, which indicates
that additional capital will be required within the twelve months following
the date of approval of the financial statements in order to meet working
capital needs and to fully fund further exploration programmes as planned. As
stated in note 1.4, these events or conditions, along with the other matters
as set forth in note 1.4, indicate that a material uncertainty exists that may
cast significant doubt on the group and parent company's ability to continue
as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue to adopt
the going concern basis of accounting included:
· Challenging the forecasts prepared by management in order to assess
the group's and parent company's ability to meet financial obligations as they
fall due for a period of at least twelve months from the date of approval of
the financial statements. We have reviewed the committed cash flows against
contractual arrangements and historical information and compared general
budgeted overheads to current run rates;
· Identifying and evaluating subsequent events which impact upon going
concern and evaluating the likelihood of occurrence of forecasted future cash
inflows; and
· Stress testing the cash flow forecasts by increasing expenditure, as
well as critically reviewing committed versus non committed expenditure, in
order to evaluate reasonably possible downside scenarios and their impact on
the headroom.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we consider net assets to be the most
significant determinant of the group's and parent company's financial
performance used by shareholders as the group continues to bring its
exploration assets through to development and the parent company continues to
support the group's exploration activities. We therefore applied a materiality
threshold of 2% of net assets to both the group and the parent company.
Whilst materiality applied to the group financial statements was $5,000,000
(2022: $4,790,000), each significant component of the group was audited to a
lower level of materiality. The materiality of the parent company was
$4,750,000 (2022: $4,395,000) with the other significant components being
audited to materiality levels ranging between $1,105,000 and $2,424,000 (2022:
between $1,795,000 and $2,194,000). These materiality levels were used to
determine the financial statement areas that are included within the scope of
our audit work.
Performance materiality is the application of materiality for a particular
class of transactions, account balance or disclosure set at an amount to
reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality. Performance
materiality was set at 70% of the above materiality levels for both group and
parent company, equating to $3,500,000 (2022: $3,592,500) and $3,325,000
(2022: $3,396,800) respectively, based upon our assessment of the risk of
misstatement .
We agreed with management that we would report to the audit committee all
individual audit differences identified during the course of our audit in
excess of $250,000 (2022: $239,500) for the financial statements as a whole
and $237,500 (2022: $219,790) for the parent company. We also agreed to report
differences below these thresholds that, in our view, warranted reporting on
qualitative grounds.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on the areas at
greatest risk of material misstatement, aspects subject to significant
management judgement as well as areas of greatest complexity, risk and size.
As part of designing our audit, we determined materiality and assessed the
risk of material misstatement in the financial statements. In particular, we
looked at areas involving significant accounting estimates and judgement by
the directors and considered future events that are inherently uncertain. The
recoverability of intangible assets and investments in subsidiary undertakings
were assessed as areas which involved significant judgements by management. We
also addressed the risk of the valuation of the convertible bond, going
concern and management override of internal controls, including among other
matters consideration of whether there was evidence of bias that represented a
risk of material misstatement due to fraud.
The accounting records of the parent company and all subsidiary undertakings
are centrally located and audited by us based upon group, parent company and
component materiality or risk to the group. The key audit matters and how
these were addressed are outlined below.
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. In addition to the matter
described in the Material uncertainty related to going concern section of our
report, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Key audit matter How our scope addressed this matter
Valuation and impairment of exploration and evaluation assets in the group
financial statements (note 13)
The group's intangible asset represents capitalised exploration expenditure on Our work in this area included:
projects. The balance as at 30 June 2023 was $287m (2022: $238m).
· Obtaining a full schedule of leases relating to exploration assets
and reviewing available information to assess whether the leases remained in
good standing;
The group has capitalised costs in respect of the group's exploration
interests in accordance with International Financial Reporting Standard 6 · In respect of the Alaskan exploration assets, holding discussions
'Exploration for and Evaluation of Mineral Resources'('IFRS 6'). The directors with management regarding future plans to develop each prospect, including
are required to assess the exploration assets for indicators of impairment consideration of funding that may be required to do so;
and, where they are deemed to exist, to undertake a full impairment test to
assess the need for impairment charges. This may involve significant · Challenging management's assessment of impairment indicators in
judgements and assumptions such as the timing, amount and probability of relation to exploration and evaluation assets, taking into consideration the
future cash flow. impairment indicators outlined in IFRS 6. Challenging and corroborating key
assumptions made by management;
· Reviewing the minutes of Board meetings and Regulatory News Service
We therefore identified the risk over impairment of exploration and evaluation (RNS) announcements for indicators of impairment;
assets as a significant risk and, due to the magnitude of the balance and the
level of management judgement involved, we concluded this area to be a key · Obtaining and reviewing any reports prepared by independent experts
audit matter. on the portfolio of assets and reviewing key findings in conjunction with
management's assertions and IFRS 6 impairment indicators;
· Substantively testing a sample of exploration and evaluation
additions during the year and assessing their eligibility for capitalisation
under IFRS 6; and
· Ensuring presentation and disclosure in the financial statements are
sufficient and in accordance with requirements of IFRS 6.
Carrying value of loans to subsidiaries in the parent company financial
statements (note 9)
Under International Accounting Standard 36 'Impairment of Assets' ('IAS 36'), Our work in this area included:
companies are required to assess whether there is any indication that an asset
may be impaired at the end of each reporting period. · Reviewing the loan balances for any indicators of impairment,
including a review of the underlying net asset balances in the related
The parent company has loans to subsidiaries of $279m (2022: $211m). These entities and considering the work done in respect of the recoverability of
loans represent the most significant balance on the Company Statement of intangible assets within these entities;
Financial Position and there is a risk they may be impaired as a result of the
subsidiaries incurring losses. · Obtaining management's assessment of the recoverability of these
balances and corroborating, as well as challenging, the key assumptions made
Key judgements and assumptions regarding the impairment of the balances by management in arriving at their conclusions; and
include the timing, amount and probability of future cash flow from the
subsidiaries. · Evaluating the presentation and disclosure in the financial
statements.
We therefore identified the risk over the impairment of loans to subsidiaries
as a significant risk in the parent company's financial statements, and, due
to the magnitude of the balance and the level of management judgement
involved, we concluded this area to be a key audit matter.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group and parent company 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. 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 course of 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 this gives rise to a
material misstatement in the financial statements themselves. 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 group and the parent
company and their 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 parent company,
or returns adequate for our audit have not been received from branches not
visited by us; or
· the parent company 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 group and parent company
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 group and parent company financial statements, the directors
are responsible for assessing the group and the parent 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 group or the parent 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.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and parent company and the
sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management,
our expertise in the sector and through the application of cumulative audit
knowledge.
· We determined the principal laws and regulations relevant to the
group and parent company in this regard to be those arising from
o Companies Act 2006;
o IFRS accounting standards;
o AIM Rules for Companies;
o Quoted Companies Alliance Code; and
o Local laws and regulations in Alaska where the group operates.
· We designed our audit procedures to ensure the audit team considered
whether there were any indications of non-compliance by the group and parent
company with those laws and regulations. These procedures included, but were
not limited to:
o Making enquiries of management;
o Reviewing legal expense accounts;
o Reviewing board minutes and other correspondence during the year and
post-year end; and
o Reviewing of RNS announcements during the year and post-year end.
· We also identified the risks of material misstatement of the
financial statements due to fraud at both the group and parent company levels.
We considered, in addition to the non-rebuttable presumption of a risk of
fraud arising from management override of controls, whether key management
judgements could include management bias was identified in relation to the
valuation and impairment of exploration assets in the group financial
statements and the carrying value of loans to subsidiaries in the parent
company financial statements, and we addressed this as outlined in the Key
audit matters section of our report.
· We addressed the risk of fraud arising from management override of
controls by performing audit procedures which included, but were not limited
to: the testing of journals; reviewing accounting estimates for evidence of
bias; and evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
· Compliance with laws and regulations at the component level was
ensured through enquiry of management and review of ledgers and correspondence
for any instances of non-compliance.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
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
(http://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 Chapter 3 of Part 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.
Imogen Massey (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
18 December, 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Notes 2023 2022
$
$
Continuing operations
Revenue 28 803,689 -
Cost of sales (673,290) -
Gross profit 130,399 -
Administration expenses (3,870,673) (7,430,653)
Share Based payments expense 24 (3,146,170) (8,256,575)
Operating loss 4 (6,886,444) (15,687,228)
Convertible Bond - Interest Expense 16 (6,111,118) (4,640,537)
Convertible Bond - Revaluation of Derivative Liability 16 11,321,514 4,310,773
Other Income 29 30,000 -
Interest receivable 6 338,205 42,674
Loss before taxation (1,307,843) (15,974,318)
Taxation 7 (138,844) 2,022,334
Loss for the year (1,446,687) (13,951,984)
Other comprehensive income for the year
Exchange differences from translating foreign operations 30 (3,185,937) (741,484)
Total comprehensive loss for the year (4,632,624) (14,693,468)
Basic and diluted loss per share 2 (0.18)¢ (1.93)¢
The loss for the current and prior year and the total comprehensive loss for
the current and prior year are wholly attributable to the equity holders of
the parent company, Pantheon Resources Plc.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share Share Retained Currency Share Total
Capital premium losses reserve based payment reserve equity
$ $ $ $ $ $
Group
At 1 July 2022 10,720,459 264,879,196 (48,466,590) 493,078 11,776,246 239,402,388
Loss for the year - - (1,446,687) - - (1,446,687)
Other comprehensive income: Foreign currency translation - - - (3,185,937) - (3,185,937)
Total comprehensive income for the year - - (1,446,687) (3,185,937) - (4,632,624)
Transactions with owners
Capital Raising
Issue of shares 1,301,769 20,828,305 - - - 22,130,074
Issue costs - (469,920) - - - (469,920)
Issue costs paid in cash - (501,683) - - - (501,683)
Exercise of Share Options and RSUs
Issue of shares 58,445 1,880,003 - - - 1,938,448
Convertible Bond - Amortisation and Redemption
Issue of shares 384,005 11,032,995 - - - 11,417,000
Other - Reversal of over accrual relating to previous capital raise - 181,185 - - - 181,185
Total transactions with owners 1,744,219 32,950,885 - - - 34,695,104
- - 468,946 - (468,946) -
Transfer of previously expensed share based payment on exercise of options
Share based payments expense - - - - 2,963,741 2,963,741
Balance at 30 June 2023 12,464,677 297,830,078 (49,444,331) (2,692,860) 14,271,042 272,428,607
See note 27 for a description of each reserve account included above.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share Share Retained Currency Share Total
capital premium losses reserve based payment equity
$ $ $ $ $ $
Group
At 1 July 2021 9,739,203 208,683,936 (36,331,398) 1,234,562 5,336,462 188,662,765
Loss for the year - - (13,951,984) - - (13,951,984)
Other comprehensive income: Foreign currency translation - - - (741,484) - (741,484)
Total comprehensive income for the year - - (13,951,984) (741,484) - (14,693,468)
Transactions with owners
Capital Raising
Issue of shares 630,769 40,369,230 - - - 40,999,999
Issue of shares in settlement of fees 7,692 492,308 - - - 500,000
Issue costs - (1,494,693) - - - (1,494,693)
Exercise of Share Options
Issue of shares 196,238 5,543,559 - - - 5,739,797
Convertible Bond - Amortisation and Redemption
Issue of shares 146,557 11,284,856 - - - 11,431,413
Total transactions with owners 981,256 56,195,260 - - - 57,176,516
- - 1,816,791 - (1,816,791) -
Transfer of previously expensed share based payment on exercise of options
Share based payments expense - - - - 8,256,575 8,256,575
Balance at 30 June 2022 10,720,459 264,879,196 (48,466,591) 493,078 11,776,246 239,402,388
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share Share Retained Currency Share Total
Capital premium losses reserve based payment reserve equity
$ $ $ $ $ $
Company
At 1 July 2022 10,720,459 264,879,196 (38,237,347) (29,882,500) 11,776,246 219,256,054
Profit for the year - - 3,399,226 - - 3,399,226
Other comprehensive income: Foreign currency translation - - - 10,888,506 - 10,888,506
Total comprehensive income for the year - - 3,399,226 10,888,506 - 14,287,732
Transactions with owners
Capital Raising
Issue of shares 1,301,769 20,828,305 - - - 22,130,074
Issue costs - (469,920) - - - (469,920)
Issue costs paid in cash - (501,683) - - - (501,683)
Exercise of Share Options and RSUs
Issue of shares 58,445 1,880,003 - - - 1,938,448
Convertible Bond - Amortisation and Redemption
Issue of shares 384,005 11,032,995 - - - 11,417,000
Other - Reversal of over accrual relating to previous capital raise - 181,185 - - - 181,185
Total transactions with owners 1,744,219 32,950,885 - - - 34,695,104
- - 468,946 - (468,946) -
Transfer of previously expensed share based payment on exercise of options
Share based payments expense - - - - 2,963,741 2,963,741
Balance at 30 June 2023 12,464,677 297,830,078 (34,369,174) (18,993,994) 14,271,042 271,202,629
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share Share Retained Currency Share Total
capital premium losses reserve based payment Equity
$ $ $ $ $ $
Company
At 1 July 2021 9,739,203 208,683,936 (28,090,878) (2,922,760) 5,336,462 192,745,963
Loss for the year - - (11,963,260) - - (11,963,260)
Other comprehensive income: Foreign currency translation - - - (26,959,740) - (26,959,740)
Total comprehensive income for the year - - (11,963,260) (26,959,740) - (38,923,000)
Transactions with owners
Capital Raising
Issue of shares 630,769 40,369,230 - - - 40,999,999
Issue of shares in settlement of fees 7,692 492,308 - - - 500,000
Issue costs - (1,494,693) - - - (1,494,693)
Exercise of Share Options
Issue of shares 196,238 5,543,559 - - - 5,739,797
Convertible Bond - Amortisation and Redemption
Issue of shares 146,557 11,284,856 - - - 11,431,413
Total transactions with owners 981,256 56,195,260 - - - 57,176,516
- - 1,816,791 - (1,816,791) -
Transfer of previously expensed share based payment on exercise of options
Share based payments expense - - - - 8,256,575 8,256,575
Balance at 30 June 2022 10,720,459 264,879,196 (38,237,347) (29,882,500) 11,776,246 219,256,054
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes 2023 2022
$ $
ASSETS
Non-current assets
Exploration & evaluation assets 13 286,668,349 237,722,294
Property, plant and equipment 17 38,570 91,691
286,706,919 237,813,985
Current assets
Trade and other receivables 9 2,559,522 2,498,447
Cash and cash equivalents 10 20,661,012 57,784,121
23,220,534 60,282,568
309,927,453 298,096,553
Total assets
LIABILITIES
Current liabilities
Convertible Bond - Debt 16 9,755,688 10,001,704
Trade and other payables 11 2,840,610 6,377,986
Provisions 12 6,017,238 5,285,440
Lease Liabilities 14 36,435 60,297
Other Liabilities 15 - 1,964,441
18,649,971 23,689,868
Non-current liabilities
Lease Liabilities 14 - 30,004
Convertible Bond - Debt 16 16,619,062 20,474,664
Convertible Bond - Derivative 16 407,566 12,816,226
Deferred tax liability 7 1,822,247 1,683,403
18,848,875 35,004,297
37,498,847 58,694,166
Total liabilities
Net assets 272,428,607 239,402,388
EQUITY
Capital and reserves
Share capital 18 12,464,677 10,720,459
Share premium 297,830,078 264,879,196
Retained losses (49,444,331) (48,466,591)
Currency reserve (2,692,860) 493,078
Share based payment reserve 24 14,271,042 11,776,246
Shareholders' equity 272,428,607 239,402,388
The financial statements were approved by the Board of Directors and
authorised for issue on the 18 December, 2023 and signed on its behalf by
Justin Hondris
Director
Company Number 05385506
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes 2023 2022
ASSETS $ $
Non-current assets
Property, plant and equipment 17 38,570 91,691
Loans to subsidiaries 9 279,494,628 211,053,821
279,533,198 211,145,512
Current assets
Trade and other receivables 9 154,161 93,086
Cash and cash equivalents 10 19,518,284 54,610,306
19,672,445 54,703,392
299,205,643 265,848,904
Total assets
LIABILITIES
Current liabilities
Convertible Bond - Debt 16 9,755,688 10,001,704
Trade and other payables 11 617,425 710,474
Provisions 12 566,838 535,040
Lease Liability 14 36,435 60,297
Other Liabilities 15 - 1,964,441
10,976,386 13,271,956
Non-current liabilities
Lease Liabilities 14 - 30,004
Convertible Bond - Debt 16 16,619,062 20,474,664
Convertible Bond - Derivative 16 407,566 12,816,226
17,026,628 33,320,894
28,003,014 46,592,850
Total liabilities
Net assets 271,202,629 219,256,054
EQUITY
Capital and reserves
Share capital 18 12,464,677 10,720,459
Share premium 297,830,078 264,879,196
Retained losses (34,369,174) (38,237,347)
Currency reserve (18,993,994) (29,882,500)
Share based payment reserve 24 14,271,042 11,776,246
Shareholders' equity 271,202,629 219,256,054
In accordance with the provisions of Section 408 of the Companies Act 2006,
the Company has not presented an income statement. A profit for the year ended
30 June 2023 of $3,399,226 (2022: loss of $11,963,260) has been included in
the consolidated income statement.
The financial statements were approved by the Board of Directors and
authorised for issue on 18 December, 2023 and signed on its behalf by:
Justin Hondris
Director
Company Number 05385506
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Notes 2023 2022
$ $
Net outflow from operating activities 19 (11,395,855) (941,506)
Cash flows from investing activities
Interest received 338,205 42,674
Funds used for drilling, exploration and leases (48,246,055) (45,267,175)
Advance for Performance Bond - (2,400,000)
Property, plant and equipment (3,251) (3,368)
Net cash outflow from investing activities (47,911,101) (47,627,869)
Cash flows from financing activities
Proceeds from share issues 18 22,746,441 46,739,796
Issue costs paid in cash (501,683) (994,694)
Proceeds from Convertible Bond - 55,000,000
Repayment of borrowing and leasing liabilities (60,913) (55,083)
Net cash inflow from financing activities 22,183,845 100,690,020
(Decrease)/Increase in cash & cash equivalents (37,123,110) 52,120,645
Cash and cash equivalents at the beginning of the year 57,784,121 5,663,476
Cash and cash equivalents at the end of the year 10 20,661,012 57,784,121
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Notes 2023 2022
$ $
Net cash (outflow) / inflow from operating activities 19 (1,507,104) (1,831,791)
Cash flows from investing activities
Interest received 337,894 42,674
Loans to subsidiary companies (56,103,408) (49,249,801)
Property, plant and equipment (3,251) (3,368)
Net cash outflow from investing activities (55,768,764) (49,210,495)
Cash flows from financing activities
Proceeds from share issues 18 22,746,441 46,739,796
Issue costs paid in cash (501,683) (994,694)
Proceeds Convertible Bond - 55,000,000
Lease payments (60,913) (55,083)
Net cash inflow from financing activities 22,183,845 100,690,019
(Decrease) / Increase in cash and cash equivalents (35,092,023) 49,647,733
Cash and cash equivalents at the beginning of the year 54,610,306 4,962,573
Cash and cash equivalents at the end of the year 10 19,518,284 54,610,306
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
1. Accounting policies & General Information
Pantheon Resources Plc was listed on the London Stock Exchange's AIM in 2006.
Pantheon, through its subsidiaries, has a 100% working interest in oil
projects located onshore Alaska, USA. The Company is domiciled in the United
Kingdom and incorporated and registered in England and Wales, with
registration number 05385506.
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 UK Adopted International
Accounting Standards ("IASs") and in accordance with the provisions of the
Companies Act 2006.
The Group's financial statements for the year ended 30 June 2023 were
authorised for issue by the Board of Directors on 18 December, 2023 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 Joint Operations 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. The Group has a 100% working
interest in all of its projects and accordingly does not have interests in
joint operations at the balance date. At the present time the Group is not
actively seeking a farmout partner and is advancing towards development of
its projects on its own, aiming to achieve FID on the Ahpun project by end
2025 and FID on the Kodiak project by end 2028. This is not to say that the
Company is ruling out a potential farmout, however given the disparity between
the market capitalisation of Pantheon and management's assessment of project
NPV, it believes that materially better terms could be achieved once the
project is further advanced. If at some point the Group were to farm out, then
joint interest accounting would be applicable in future periods.
1.4 Going concern
In June 2023 Pantheon communicated to shareholders via RNS and accompanying
webinar, its aggressive strategy to target sustainable market recognition of
a value of $5 - $10 per barrel of 1P/1C recoverable resource by the end
of 2028, FID (Final Investment Decision) on the Ahpun project by the end of
2025, and FID on the Kodiak project by the end of 2028. Executing such a
strategy requires significant additional capital, most of which the Company
seeks to access through non equity sources. This process is presently
underway. In November 2023 management provided a detailed stock exchange
announcement accompanied by a webinar, which provided a detailed overview of
the estimated $120 million capital required to achieve first production at
Ahpun. This sum includes the drilling of 3 new wells, a hot tap into the TAPS
pipeline, upgrading production facilities and 3 years of G&A. In
accessing additional capital, Pantheon's goal is to achieve this in the least
dilutive manner for shareholders, minimising the use of equity capital and by
prioritising three main alternate funding sources: (i) Vendor financing (ii)
Offtaker financing and (iii) Reserve based lending. Pantheon
is presently in discussions with multiple parties with respect to those
potential non-equity financing alternatives. The Group will need to secure
additional funding for general working capital, to cover future liabilities as
they fall due and to continue to progress its key projects as planned within
the 12 months following the approval of these financial statements. As
previously disclosed to shareholders, the Group seeks to secure such funding
by Q2 or Q3 2024, in the least dilutive manner for shareholders, ideally
through one of the non equity funding sourced discussed above. The auditors
have made reference to this material uncertainty within their audit report.
In Q3 2023, Netherland Sewell & Associates estimated a 2C Contingent
Resource for Pantheon's Kodiak project totalling 962.5 million barrels of
marketable liquids. The directors believe the enormous size of the
resource already appraised on Pantheon's acreage provides the potential for
1,000 - 2,000 wells. Whilst in absolute terms this would entails cumulative
investment estimated in the billions of dollars over the lifetime of the
project, Pantheon estimates c. $300 million on the Ahpun development (plus
potentially $50 million of Kodiak appraisal costs) to be the maximum
cumulative cash requirement. Once in full development, it is believed that
production revenues have the potential to self-finance a great majority of the
development costs, as is typically the case in such developments.
The Group has no contractual obligation to drill any future wells and the only
obligation is to suspend the Talitha-A test well, the estimated cost of which
($0.7m) has already been provided for in the financial accounts. Given the
quality of the assets, the directors are confident in their ability to raise
capital as and when required. Accordingly, the financial statements have been
prepared on a going concern basis.
1.5 Revenue
During the year oil sales commenced as a result of testing at Alkaid-2. This
is considered to be non-recurring because it only occurred during the testing
phase and production and thus production revenues stopped once flow testing
operations ended. Once in production, revenue from contracts with customers
will be recognised in accordance with IFRS15 Revenue from Contacts with
Customers, at an amount that reflects the consideration to which the Group
expects to be entitled in exchange for those goods.
Contract balances
A contract asset is the right to consideration in exchange for goods
transferred to the customer. If the Group performs by transferring goods to a
customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional.
The Group does not have any contract assets as performance and a right to
consideration occurs within a short period of time and all rights to
consideration are unconditional.
Interest revenue is recognised on a proportional basis taking into account the
interest rates applicable to the financial assets.
1.6 Foreign currency translation
(i) Functional and presentational currency
The financial statements for the Group and the Company are presented in US
Dollars ("$") and this is the Group's Presentation currency. The Functional
currency of all entities within the Group, excluding the Parent Company, is
$USD. The Functional currency of the Parent Company is £GBP.
(ii) Transactions and balances
Transactions in foreign currencies are translated into US dollars at the spot
rate on the date of the transaction. 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 and liabilities of the Parent Company are translated into US
dollars at the rates of exchange ruling at the year end. The results of the
Parent Company are translated into US dollars at the average rates of exchange
during the year. Exchange differences resulting from the retranslation of
currencies 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. At the point of production, 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
"projects" or, upon production, 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") where applicable.
Exploration and evaluation costs
The Alaskan exploration and evaluation leasehold assets were subject to a fair
value assessment as at the date of acquisition. The carrying value at 30 June
2023 represents the cost of acquisition plus any fair value adjustment, where
appropriate, and subsequent capitalised costs, in accordance with UK adopted
IAS.
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 recognised 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 provided for and subsequently depleted over the
useful life of well using unit of production method.
Goodwill
Goodwill, when carried, 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, if applicable, by assessing the
recoverable amount of the asset or group of assets 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
unit) 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". The carrying values of Developed Oil and Gas
properties are tested for indicators of impairment, and the 'recoverable
amount', being 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.
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:
- Office equipment is depreciated by equal annual
instalments over their expected useful lives, being 3 years.
1.11 Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets, if/where applicable, are derecognised when the contractual
rights to the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
Classification and measurement of financial liabilities
The Group's financial liabilities include borrowings (convertible bond debt),
trade and other payables and embedded derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method except for derivatives and financial liabilities
designated which are carried subsequently at fair value with gains or losses
recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument's
fair value that are reported in profit or loss are included within finance
costs or fair value gains/(losses) on derivative financial instruments.
Embedded derivative financial instruments
A borrowing arrangement structured as a convertible bond repayable in cash or
stock over 20 quarterly instalments, in addition to the right of the lender to
voluntarily convert part or all of the outstanding principal prior to the
maturity date of the bond, has a derivative embedded in it. This is considered
to be a separable embedded derivative of a loan instrument.
At the date of issue, the fair value of the embedded derivative is estimated
by considering the derivative as a series of individual components with
modelling of the fixed and floating legs to determine a repayment schedule and
derive a net present value for the forward contract embedded derivative.
This amount is recognised separately as a financial liability or financial
asset and measured at fair value through the income statement. The residual
amount of the loan is then recorded as a liability on an amortised cost basis
using the effective interest method until extinguished upon conversion or at
the instrument's maturity date.
IFRS 9 Expected Credit Loss Model
IFRS 9 requires that credit losses on financial assets are measured and
recognised using the "expected credit loss" (ECL) approach. Other than cash,
the only other financial assets held are $2.4m in drilling deposits lodged
with the state of Alaska. These drilling deposits are to cover future
obligations to the state of Alaska for Great Bear Pantheon to perform
dismantle, removal and restoration activities at Alkaid #2. Funds held by
the state of Alaska are considered to have virtually no risk of credit loss.
1.12 Leases
All contracts entered into by the group are assessed to determine if they are
either a lease contract or contain a lease contract. Where a lease is
identified the Group recognises a right of use asset and a corresponding lease
liability with respect to all lease arrangements in which it is a lessee.
There are three key evaluations in determining a lease contract:
I. The contract contains an identified asset, which is
either explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the group.
II. The Group has the right to obtain substantially all of the
economic benefits from use of the identified assets throughout the period of
use, considering rights within the defined scope of the contract.
III. The Group has the right to direct the use of the identified
asset throughout the period of use.
Lease liabilities are initially measured at the discounted present value of
all future lease payments, excluding prepayments made up to and including the
commencement date of the lease. The discount rate used is either the rate
implicit in the lease, or if that is not readily determined, the incremental
borrowing rate.
The lease liability is presented as a separate line item in the balance sheet.
Subsequent measurement of the lease liability includes increases to the
carrying amount of the liability to reflect the interest on the lease
liability (using the effective interest method) and by reducing the carrying
amount for the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right-of-use asset) whenever:
A. There is a change in the lease term. In such cases the lease
liability is remeasured by discounting the revised lease payments using the
revised discount rate.
B. Change of lease payments (due to changes in the reference
index or rate) or any changes in expected payments under a guaranteed residual
value. In such instances the lease liability is remeasured using unchanged
discount rates; a revised discount rate is used where the lease payments are
changed due to a change in a floating interest rate.
C. Where a lease modification is not accounted for as a
separate lease. In such a case the lease liability is remeasured based on the
modified lease term, using the revised discount rate at the date of the
modification.
The initial carrying value of a right-of-use assets consists of:
• The corresponding lease liability
• All and any prepayments prior to the lease
commencement
• Less: Any lease incentive received by the lessee
• Less: Any initial direct costs incurred by the lessee
Right-of-use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. The depreciation starts at the
commencement date of the lease. The asset is subsequently measured at initial
carrying value less accumulated depreciation and impairment losses.
Where an impairment indicator has been identified, an impairment test is
conducted. In assessing whether an impairment is required, the carrying value
of the asset is compared with its recoverable value. The recoverable amount is
the higher of the assets fair value less the costs to sell and value in use.
1.13 Critical accounting estimates and judgements
The preparation of financial statements in conformity with UK adopted
International Accounting 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 significant geological
or geophysical information which may negatively impact the existing assessment
of a project's potential for recoverability, significant reductions in
estimates of resources, significant falls in commodity prices, a significant
revision of Group Strategy or of the plan for the development of a field,
operational issues which may require significant capital expenditure to
remediate, political or regulatory impacts 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.
Impairment of loans between Parent and Subsidiaries
The carrying amount of the loans made to the subsidiaries is tested for
impairment annually and this process is considered to be key judgement along
with determining whenever changes circumstances or events indicate that the
carrying amounts of those loans may not be recoverable. When assessing the
recovery of these loans, the Board of Directors consider the likelihood that
the subsidiaries will be able to settle the amounts owing , either out of
future anticipated cashflows or through divestment of assets.
Contingent liabilities
Pursuant to IAS 37, a contingent liability is either: (1) a possible
obligation arising from past events whose existence will be confirmed only by
the occurrence or non-occurrence of some uncertain future event not wholly
within the entity's control, or (2) a present obligation that arises from a
past event but is not recognized because either: (i) it is not probable that
an outflow of resources embodying economic benefits will be required to settle
the obligation, or (ii) the amount of the obligation cannot be measured with
sufficient reliability.
Kinder Morgan Treating L.P. ("Kinder Morgan") initiated a dispute over an East
Texas gas treating agreement between Kinder Morgan and Vision Operating
Company, LLC ("VOC"). VOC ceased making payments to the service provider in
July 2019. The service provider subsequently issued a demand to VOC and, in
February 2021, served Pantheon Resources plc with a petition, seeking to
recover not less than $3.35m in respect of this VOC contract. Pantheon held
ownership of less than 0.1% of VOC via a 66.6% interest in Vision Resources
LLC. Both Vision Resources LLC and VOC filed for Chapter 7 Bankruptcy in the
United States Bankruptcy Court for the Southern District of Texas Houston
Division in April 2020.
No Pantheon entity is a signatory to the gas treating agreement and none are
named in the agreement. Pantheon has taken legal advice on the matter and
believes it has no liability to the service provider. Accordingly, Pantheon
does not consider a provision should be included with the final statements and
will contest any claim made.
In, July 2021, the court dismissed Kinder Morgan's claims against Pantheon
Resources plc. Kinder Morgan has also asserted the same claims against two
subsidiaries, Pantheon Oil & Gas, LP and Pantheon East Texas, LLC.
Pantheon Oil & Gas, LP and Pantheon East Texas, LLC are contesting these
claims.
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.
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.
Calculation of fair value of the derivative and debt components of the
Unsecured Convertible Bond
Implicit within the convertible bond is an element of debt and a derivative
element, reflecting the optionality of receiving stock, potentially at a
profit, instead of cash in the case of quarterly repayments (amortisations) or
partial voluntary conversions of the bond at the bondholders election.
Pantheon contracted a third party expert valuation group in order to calculate
these amounts, using Monte Carlo analysis.
Segment Reporting
The operating segments, namely Head Office and Alaska, are reported in a way
that is consistent with the internal reporting and provided to the chief
operating decision maker as required by IFRS 8 "Operating Segments". The Board
of Directors, have been identified as the chief operating decision-maker. As
such, the Board of Directors are responsible for allocating resources and
assessing performance of the operating segments.
The accounting policies of the reporting segments are consistent with the
accounting policies of the Group as a whole. The segment profit and loss
represents the profit or loss earned by each segment. This is the measure of
profit that reported to the Board of Directors for the purpose of resource
allocation and the assessment of each segment's performance. When assessing
segment performance and considering the allocation of resources, the Board of
Directors review each segment's assets and total liabilities; For this
purpose, all assets and liabilities are allocated to reportable segments.
1.14 New and amended International Financial Reporting Standards
adopted by the Group
New standards and interpretations not applied
At the date of authorisation of these financial statements, the following
standards and interpretations relevant to the Group and which have not been
applied in these financial statements, were in issue but were not yet
effective.
Standard Impact on initial application Effective date
IAS 1 Amendments - classifications of current and non-current liabilities 01 January 2024
IAS 8 Amendments - accounting policies, changes to accounting estimates and errors 01 January 2023
IAS 12 Amendments - income taxes - deferred tax arising from a single transaction 01 January 2023
IAS 1 Amendments - presentation of financial statements and IFRS practice statement. 01 January 2023
Disclosure of accounting policies
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,
staff and consultants by way of issue of ordinary shares and share options. In
the case of 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 expected
number of shares that will eventually vest. There were no new issues of share
options made during the year.
2. Loss per share
The total loss per ordinary share from continuing operations for the group is
0.18 US cents (2022: 1.93 US cents - loss). The loss is calculated by dividing
the loss for the year by the weighted average number of ordinary shares in
issue of 791,082,592 (2022: 724,563,153 ).
The diluted profit per share has been kept the same as the basic profit per
share because, although some of the 50,438,921 options and warrants in issue
were in the money as at 30 June 2023, the Company reported a loss, hence
including the additional dilution would have resulted in a reduction of the
loss per share.
The diluted weighted average number of shares in issue is 841,521,513 (2022:
779,527,074 ).
3. Segmental information
The Group's activities involve the exploration for oil and gas. There are two
reportable operating segments: USA (Alaska) and Head Office. Non-current
assets, and operating liabilities are attributable to the USA (Alaska), whilst
much 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 2023.
Year ended 30 June 2023
Geographical segment (Group) Head Office Alaska Consolidated
$ $ $
Revenue - 803,689 803,689
Production royalties - (97,990) (97,990)
Cost of sales - (575,300) (575,300)
Administration expenses 997,106 (4,867,779) (3,870,673)
Share based payments (Options & RSUs) (3,146,170) - (3,146,170)
Convertible Bond - Interest Expense (6,111,118) - (6,111,118)
Convertible Bond - Revaluation of Derivative Liability 11,321,514 - 11,321,514
Interest receivable 337,894 311 338,205
Other Income - 30,000 30,000
Taxation - (138,844) (138,844)
Loss by reportable segment 3,399,226 (4,845,913) (1,446,687)
Exploration & evaluation assets - 286,668,349 286,668,349
Property, plant & equipment 38,570 - 38,570
Trade and other receivables 154,161 2,405,361 2,559,522
Cash and cash equivalents 19,518,284 1,142,727 20,661,011
Intercompany balances 279,494,628 (279,494,628) -
Total assets by reportable segment 299,205,643 10,721,809 309,927,452
Total liabilities by reportable segment (28,003,014) (9,495,832) (37,498,847)
Net assets by reportable segment 271,202,629 1,225,978 272,428,606
Year ended 30 June 2022
Geographical segment (Group) Head Office Alaska Consolidated
$ $ $
Administration expenses (3,419,596) (4,011,058) (7,430,654)
Share option expense (8,256,575) - (8,256,575)
Convertible Bond - Interest Expense (4,640,537) - (4,640,537)
Convertible Bond - Revaluation of Derivative Liability 4,310,773 - 4,310,773
Interest receivable 42,674 - 42,674
Taxation - 2,022,334 2,022,334
Loss by reportable segment (11,963,261) (1,988,724) (13,951,985)
Exploration & evaluation assets - 237,722,294 237,722,294
Property, plant & equipment 91,691 - 91,691
Trade and other receivables 93,086 2,405,361 2,498,447
Cash and cash equivalents 54,610,306 3,173,815 57,784,121
Intercompany balances (211,053,821) 211,053,821 -
Total assets by reportable segment 265,848,904 32,247,650 298,096,553
Total liabilities by reportable segment (46,592,850) (12,101,315) (58,694,166)
Net assets by reportable segment 219,256,054 20,146,334 239,402,388
4. Operating loss
2023 2022
$ $
Operating loss is stated after charging:
Depreciation - office equipment 1,869 303
Depreciation Right of use assets 55,700 54,472
Auditor's remuneration
- group and parent company audit services 133,000 112,500
Auditor's remuneration for non-audit services
- taxation services and compliance services - -
5. Employment costs
The employee costs of the Group, including Directors' remuneration, are as
follows:
2023 2022
$ $
Wages and salaries 2,680,169 2,739,035
Social security costs 170,861 255,446
Statutory pension costs 21,087 33,430
Share based payments 3,146,170 8,256,574
6,018,287 11,284,485
The summary of the directors' remuneration is shown in the directors' report
on page 26. The Directors are considered to be the key management.
2023 2022
Number of employees (including Executive Directors) at the end of the year number number
Management and administration 15 14
6. Interest receivable
2023 2022
$ $
Bank interest received 338,205 42,674
7. Taxation
2023 2021
$ $
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 (1,307,843) (15,974,318)
Income (loss) on ordinary activities before taxation multiplied by the (274,647) (3,354,607)
standard US corporate tax rate of 21% (2022: US corporate tax rate of 21%)
Effects of:
State of Alaska tax benefits associated with temporary book-to-tax differences (335,421) (267,455)
US federal tax benefit associated with temporary book-to-tax differences 748,912 1,599,728
US federal tax benefit associated with reassessed future utilization of loss -
carry forward
Total tax charge /(credit) 138,844 (2,022,334)
Factors that may affect future tax charges
The Group's deferred tax assets and liabilities as at 30 June 2023 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%.No deferred tax has been provided for the UK tax losses as there is no
expectation of the utilisation in the near future.
At the year-end date, the Group has unused losses carried forward of $123.6m
(2022: $125.5m) 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. The UK tax losses carried forward are approximately
$11.5m (2022: $16m). A deferred tax asset in respect of the unutilised carried
forward losses has not been recognised due to the uncertainty of the timing of
any future profits.
The deferred tax liability at 30 June 2023 is 1,822,247 (2022: 1,683,403). The
deferred tax liability is comprised of future tax benefits (deferred tax
asset) primarily associated with net operating losses generated in prior years
and the estimated loss generated in the current year, combined with future tax
expenses (deferred tax liability) associated with the book gain on bargain
purchase not yet recognized for income tax. Net operating losses will offset
future taxable income and reduce the tax liability that would otherwise be
incurred. The tax deferred gain on bargain purchase will result in future
taxable income greater than book net income.
8. Subsidiary entities
The Company currently has the following wholly owned subsidiaries:
Name Country of Incorporation Percentage ownership Activity Registered office address
Hadrian Oil & Gas LLC United States 100% Holding Company 5718 Westheimer, Suite 1600, Houston, Texas, 77057
Agrippa LLC United States 100% Holding Company 5718 Westheimer, Suite 1600, Houston, Texas, 77057
Pantheon Oil & Gas LP United States 100% Oil & Gas exploration 5718 Westheimer, Suite 1600, Houston, Texas, 77057
Great Bear Petroleum Ventures I, LLC United States 100% Lease Holding Company 3705 Arctic Blvd. # 2324 Anchorage, Alaska, 99503
Great Bear Petroleum Ventures II, LLC United States 100% Lease Holding Company 3705 Arctic Blvd. # 2324 Anchorage, Alaska, 99503
Great Bear Pantheon, LLC United States 100% Holding Company 3705 Arctic Blvd. # 2324 Anchorage, Alaska, 99503
Pantheon East Texas, LLC United States 100% Holding Company 5718 Westheimer, Suite 1600, Houston, Texas, 77057
Pantheon Operating Company, LLC United States 100% Operating Company P.O. Box 11082
Spring, Texas, 77391-1082
Borealis Petroleum LLC United States 100% Holding Company 3705 Arctic Blvd. # 2324 Anchorage, Alaska, 99503
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.
9. Trade and other receivables
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Amounts falling due within one year:
Prepayments & accrued income 55,199 46,000 52,500 43,301
Other receivables 2,504,323 2,452,447 101,661 49,785
Total 2,559,522 2,498,447 154,161 93,086
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Amounts falling due after one year:
Loans to subsidiaries - - 279,494,628 211,053,821
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.
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.
10. Cash and cash equivalents
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Cash at bank and in hand
20,661,012 57,784,121 19,518,284 54,610,306
11. Trade and other payables
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Trade creditors 251,617 79,417 250,539 78,339
Accruals 2,588,994 6,298,569 366,886 632,134
Total 2,840,611 6,377,986 617,425 710,473
12. 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 21.
Legal Costs
Legal costs have been provided for due to an ongoing dispute with a
third-party vendor as detailed in Note 26.
Provisions Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Plug and Abandonment 5,200,400 4,500,400 - -
Legal costs 250,000 250,000 - -
Other provision - Irrecoverable VAT 566,838 535,040 566,838 535,040
Total 6,017,238 5,285,440 566,838 535,040
Provisions Group Group
2023 2022
$ $
Opening balance 5,285,440 1,250.000
Increase in period 731,798 4,035,440
Amounts unused 6,017,238 5,285,440
Closing balance 6,017,238 5,285,440
Company Company
2023 2022
$ $
Opening balance 535,040 -
Increase in period 31,798 535,040
Amounts used - -
Amounts unused 566,838 535,040
Closing balance 566,838 535,040
13. Exploration and evaluation
assets
Group Group
2023 2022
$ $
Cost
At 1 July 237,852,406 189,084,831
Additions 48,246,055 45,267,175
Additions to Asset Retirement bligations 700,000 3,500,400
At 30 June 286,798,461 237,852,406
Impairment
As at 1 July 130,112 130,112
Charge for year - -
At 30 June 130,112 130,112
Net book value
At 30 June 286,668,349 237,722,294
The Group additions for the year comprise the direct costs associated with the
preparation of drilling of oil and gas wells, together with costs associated
with leases and seismic acquisition and processing.
An assessment for indicators for impairment was conducted on all of the
Group's exploration and evaluation assets. Indicators of impairment included
asset specific criteria such as, but not limited to, the emergence of negative
geological/geophysical analysis, unsuccessful drilling results, a
deterioration in the Group's lease position, and the presence of relevant
regional drilling data. The successful drilling campaign over recent years,
reinforced by the external validation from third party experts on the Group's
geological data, including, amongst other, receipt in August 2023 of a
certified C2 Contingent Resource estimate of 962.5 barrels of marketable
liquids, has caused the Group to conclude that no impairment was required.
In making assessments for indicators of impairment other criteria were
considered such as, but not limited to, changes to commodity prices, a
worsening of regulatory or environmental factors and macroeconomic conditions.
The Group considered such indicators for impairment and concluded that no
impairment was required.
14. Leases
Right of use assets
The Group used leasing arrangements relating to property, plant and equipment.
As the Group has the right of use of the asset for the duration of the lease
arrangement, a "right of use" asset is recognised within property, plant and
equipment.
When a lease begins, a liability and right of use asset are recognised based
on the present value of the lease payments.
Company & Group Company & Group
2023 2022
$ $
Interest expense on lease liabilities 5,746 4,964
Total cash outflow for leases (60,913) (55,083)
As at 1 July 88,627 30,308
Additions to right-of-use assets - 111,949
Depreciation charge - right of use assets (55,700) (54,472)
Foreign exchange movement on right of use assets 1,198 842
Carrying amount at the end of the year: 34,124 88,627
Right of use assets
Lease liabilities
Company & Group Company & Group
2023 2022
$ $
Current 36,435 60,297
Non-current - 30,004
36,435 90,301
15. Other Liabilities
The Company assists in the mechanics of the exercise of shares options for
staff and consultants, sale of resultant shares externally through a facility
operated through the Company's broker, remittances of relevant income tax and
other obligations. Employees are subject to full income tax on any profits
upon the exercise of share options and sale (if at a profit), which are
processed through the Company's payroll facility. The amount of $Nil (2022:
$1,964,441) represents the net amount payable for the exercise of options
that was being processed at the year end and payable.
16. Unsecured Convertible Bond
In December 2021, the Company issued $55 million worth of senior unsecured
convertible bonds to a fund advised by Heights Capital Ireland LLC, a global
equity and equity-linked focused investor. After settlement of the 13(th)
December 2023 convertible bond repayment, the remaining principal outstanding
is $29.4million.
The Convertible Bonds have a maturity of 5 years, a coupon of 4.0% per annum
and are repayable in 20 quarterly repayments ("amortisations") of principal
and interest over the 5 year term of the convertible bond, with the last
repayment due in December 2026. Such quarterly amortisations are repayable at
the Company's option, in either cash at face value, or in ordinary shares
("stock") at the lower of the conversion price (presently USD$0.9096 Wper
share) or a 10% discount to volume weighted average price ("VWAP") in the 10
or 3 day trading period prior to election date. Additionally, the bondholder
has the option to partially convert the convertible bond at their discretion.
A full summary of the terms of Convertible Bonds is detailed in the Company's
RNS dated 7 December, 2021.
The bond agreement contains embedded derivatives in conjunction with an
ordinary bond. As a result, and in accordance with the accounting standards,
the convertible bonds are shown in the Consolidated Statement of Financial
Position, in two separate components, namely Convertible Bond - Debt and
Convertible Bond - Derivative. At the time of recognition (Dec 2021) the $55m
bonds were split, $39,175,363 for the Debt Component and $15,824,637 for the
Derivative Component.
In order to value the derivative component, Pantheon engaged a third party
expert valuation specialist group to perform the valuations, who determined
that the valuation of the instrument required a Monte Carlo simulation of
share price outcomes over the 5 year life to determine the ultimate value of
the conversion option. This produced a calculated Effective Interest Rate
("EIR") of 20.41%. For the year end date of 30 June 2023, the third party
expert valuation group performed their Monte Carlo simulation and valuation
calculations to determine the new value for the equity component to be
$407,566. The resulting movement of $11,321,514 was posted to the consolidated
statement of comprehensive income to the account "Revaluation of derivative
liability". These amounts will be revalued every balance date with the
differences being accounted for in the consolidated statement of comprehensive
income.
As at 30 June 2023 six quarterly repayments (amortisations) have been made,
and in all cases ordinary shares were issued in full settlement.
At 30 June 2023 the Unsecured Convertible Bond is shown in the Consolidated
Statement of Financial Position in the following categories;
Convertible Bond - Debt Component (Current Liability) $9,755,688
Convertible Bond - Debt Component (Non-current Liability) $16,619,062
Convertible Bond - Derivative Component (Non-current Liability) $407,566
Total $26,782,316
17. Property Plant and Equipment
Office Equipment Right of Use Assets Total
Group and Company
$ $ $
Cost
At 30 June 2021 16,099 103,913 120,012
Additions 3,368 111,949 115,317
At 30 June 2022 19,467 215,862 235,329
Exchange Difference (1,068) (3,216) (4,284)
Additions 3,113 - 3,113
At 30 June 2023 21,512 212,646 234,158
Depreciation
At 30 June 2021 16,098 73,605 89,703
Depreciation for the year 303 54,472 54,775
Exchange difference 1 (840) (839)
At 30 June 2022 16,402 127,237 143,639
Depreciation for the year 1,869 55,700 57,569
Exchange difference (1,206) (4,414) (5,620)
At 30 June 2023 17,065 178,523 195,588
Net book value
As at 30 June 2023 4,447 34,123 38,570
As at 30 June 2022 3,065 88,625 91,690
18. Share Capital
2023 2022
$ $
Allotted, issued and fully paid: 12,464,677 10,720,459
907,206,399 (2022: 767,705,537) ordinary shares of £0.01 each
Issued share capital: Issued and fully paid capital
$
Number
As at 30 June 2023
907,206,399 ordinary shares of £0.01 each (2022: 767,705,537) 907,206,399 12,464,677
Total 907,206,399 12,464,677
A summary of movements in share capital is summarised in the table below.
Movement in ordinary shares Number Share Share Premium
Capital $
$
As at 1 July 2022 693,258,674 9,739,203 208,683,935
September 21 - Exercise of share options 1,950,000 26,959 700,927
October 21 - Exercise of share options 1,000,000 13,757 398,953
December 21 - Equity fundraising - issue of new shares 48,218,529 638,462 40,861,537
January 22 - Exercise of share options 2,575,000 34,983 945,247
February 22 - Partial Conversion of Unsecured Convertible Bonds 1,937,608 26,319 2,026,527
March 22 - Exercise of Warrants 4,803,922 65,540 1,900,657
March 22 - Settlement of 1st quarterly principal & interest repayment of 3,080,798 40,263 3,100,247
Convertible Bond
March 22 - Partial Conversion of Unsecured Convertible Bonds 3,681,457 45,970 3,539,717
May 22 - Exercise of share options 4,375,000 54,998 1,597,774
June 22 - Settlement of 2nd quarterly principal & interest repayment of 2,824,549 34,005 2,618,365
Convertible Bond
As at 30 June 2022 767,705,537 10,720,459 264,879,194
September 22 - Convertible Bond: Third Amortisation 2,800,813 33,894 2,857,106
December 22 - Convertible Bond: Fourth Amortisation 3,276,374 39,649 2,826,851
September 22 - Exercise of Share Options 4,525,000 54,759 1,701,259
February 23 - Conversion of 100% of RSUs 290,000 3,685 178,744
March 23 - Convertible Bond: Fifth Amortisation 9,257,328 117,645 2,724,354
May 23 - Placement - First Tranche 95,395,134 1,192,010 19,072,158
May 23 - Placement - Second Tranche 8,783,893 109,759 1,756,146
June 23 - Convertible Bond: Sixth Amortisation 15,172,320 192,816 2,624,684
As at 30 June 2023 907,206,399 297,830,078
12,464,677
19. Net cash outflow from operating activities
Group Group
2023 2022
$ $
Loss for the year (1,446,687) (13,951,984)
Net interest received (338,205) (42,674)
Share Based Payments non-cash expense 3,146,170 8,256,575
Depreciation of office equipment 1,869 303
Depreciation of right of use assets 55,700 54,472
Interest Expense 6,111,118 4,640,537
Convertible Bond - Revaluation of derivative liability (11,321,514) (4,310,773)
Other provisions - irrecoverable VAT 7,302 535,040
Decrease/ (increase) in trade and other receivables (61,076) 11,430
(Decrease)/Increase in trade and other payables (4,648,183) 7,235,337
Effect of translation differences (3,041,194) (1,347,435)
Taxation 138,844 (2,022,334)
Net cash outflow from operating activities (11,395,855) (941,506)
Company Company
2023 2022
$ $
Profit / (Loss) for the year 3,399,226 (11,963,260)
Net interest received (337,894) (42,674)
Share Based Payments non-cash expense 3,146,170 8,256,575
Depreciation 1,869 303
Depreciation of right of use assets 55,700 54,472
Interest Expense 6,111,118 4,640,537
Convertible Bond - Revaluation of derivative liability (11,321,514) (4,310,773)
Other provisions - irrecoverable VAT 7,302 535,040
Increase in trade and other receivables (56,878) (1,034)
(Decrease) / Increase in trade and other payables (1,324,123) 2,141,889
Effect of translation differences (1,118,080) (1,142,868)
Net cash outflow from operating activities (1,507,104) (1,831,793)
20. Control
No one party controls the Company.
21. 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 2023 the Group has
fully provided for the future plug and abandonment charges in relation to its
wells on the Alaskan North Slope. Where a well will be used as a future
disposal well then this is taken into account.
The Group provides for the estimated costs of future plug/abandonment and
environmental remediation and rehabilitation for all wells drilled if not
abandoned at that time, and for the estimated costs of future decommissioning,
remediation and rehabilitation costs for the gravel pad at Alkaid #2 at such
time as those wells/pad(s) come to the end of their respective useful life. By
way of example, in a case where a successful well produces hydrocarbons for a
period of 15 years, then the abandonment/rehabilitation provision would be
made at the time the well is completed and comes on stream, however, the
actual expenditure would occur when the works are performed in 15 years' time,
ie the provision is made today for work expected in 15 years' time.
Similarly, the end of the life of the gravel pad supporting Alkaid#2 and
future wells drilled from that location, would occur at such time as all
producing wells have depleted and the pad would serve no further purpose.
Group Group
2023 2022
Alaska $ $
Alkaid Well 666,000 666,000
Alkaid #2 Well 2,970,400 2,970,400
Talitha #A Well 1,564,000 864,000
As at 30 June 5,200,400 4,500,400
22. Exploration and evaluation commitments
There were no firm drilling commitments at 30 June 2023. The group has an
obligation to perform additional downhole isolation work to suspend the
Talitha #A well, for future re-entry. Work must be completed by June
2024. The estimated capital commitment to perform this work is $700,000.
23. 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.
Sensitivity Analysis - how does foreign exchange and interest rate changes
affect income
The Oil and Gas operational activities of the group are pre-production. The
revenue earned this financial year was a one-off, resulting from flow testing
for a limited period of time; this testing has now ceased and is
non-repetitive. Hence, there is very limited potential impact on income and no
impact on equity.
Sensitivity Analysis - how does foreign exchange and interest rate changes
affect holdings in financial instruments
Regarding the cash at bank, the interest receivable is a function of the
interest rate that the depositing bank assigns to the account. There is
limited potential impact on income and no impact on equity.
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. The Group managed its cash balance by applying certain non
committed cash deposits to higher yielding short term deposit accounts,
yielding c. 5% per annum on those deposits towards the end of the financial
year when interest rates had risen. 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 levels of
fixed or floating instruments.
The Convertible Bond has a fixed interest coupon rate payable of 4% per annum.
This rate is fixed throughout the life of the bond. However, due to the
presence of a derivative component within the convertible bond as described in
Note 16, from an accounting perspective an Effective Interest Rate of 22.15%
has been calculated to apply to the debt component of the convertible bond and
has been charged to the Income Statement.
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
2023
2023 2023
Financial
assets:
%
$ $
Cash on
deposit
1.5
1,142,728
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 North American operating activities
and exploration activities is the US dollar. The Group incurs general
administration and advisory expenses in the Parent Company in Pounds Sterling,
which is its functional currency. The Group does not use derivative products
to hedge foreign exchange risk and has exposure to foreign exchange rates
prevailing up to the dates when funds are transferred into different
currencies. The Group raises equity capital in Pounds Sterling and converts
the majority of this to US dollars to minimise currency risk. The Group
continues to keep the matter under review.
The convertible bond is denominated in US dollars with all repayments paid in
US dollars. Quarterly repayments are made, at the Company's election, either
in cash or shares. When paid in shares the Relevant Share Settlement Price of
shares for the purpose of the calculation is the lower of a 10% discount to
the 3 day or 10 day volume weighted average share price (VWAP) or a
predetermined reference price, currently US$0.9096. For the purpose of
calculating VWAP, the daily USD/GBP exchange rate is applied, introducing a
currency risk which may or may not result in a differing number of shares
being used to settle a repayment, dependent upon the exchange rate.
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
Prudent liquidity risk management includes maintaining sufficient cash
balances to ensure the Group can meet liabilities as they fall due.
In managing liquidity risk, the main objective of the Group is therefore to
ensure that it has the ability to pay all of its liabilities as they fall due.
The Unsecured Convertible Bond liabilities can, at the Company's election, be
met through the issuance of ordinary shares rather than cash. The Group
monitors its levels of working capital to ensure that it can meet its
liabilities as they fall due. The Group monitors its liquidity position
carefully and considers equity fundraising, debt or farmouts when additional
liquidity is required.
The table below shows the undiscounted cash flows on the Groups financial
liabilities as at 30 June 2023 and 2022, on the basis of their earliest
possible contractual maturity.
Total Payable on demand Within 1-3 months Within 3-6 months Within 6-12 months Greater than 1 year
$ $ $ $ $ $
As at 30 June 2023
Trade creditors 251,617 - 251,617 - - -
Accruals 2,588,994 - 2,588,994 - - -
Lease liabilities 36,435 - 15,365 15,740 5,330 -
Unsecured Convertible Bond 34,300,000 - 2,940,000 2,915,500 2,891,000 25,553,500
Provisions 6,017,238 566,838 - - - 5,450,400
43,194,284 566,838 5,795,975 2,931,240 2,896,330 31,003,900
As at 30 June 2022
Trade creditors 79,417 - 79,417 - - -
Accruals 6,298,569 - 6,298,569 - - -
Lease liabilities 90,301 - 13,354 13,680 28,405 34,862
Other liabilities 1,964,441 - 1,964,441 - - -
Unsecured Convertible Bond 48,289,500 - 2,891,000 2,866,500 5,659,500 36,872,500
Provisions 5,285,440 535,040 - - 1,780,000 2,970,400
62,007,668 535,040 11,246,781 2,880,180 7,467,905 39,877,762
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 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 across approved counterparties.
The maximum exposure to credit risk is $2,559,522 (2022: $2,498,447).
Capital management
The Group's capital management objectives are:
· To provide long-term returns to shareholders
· To ensure the Group's ability to continue as a going concern
The Group defines and monitors capital to ensure that the Company meets its
objectives above, focussing on long-term share price growth, long term growth
in production and resources, and a short-term requirement to ensure a going
concern.
The Board of Directors monitors the available capital as well as the Group's
commitments and adjusts the level of capital as is determined to be necessary
by issuing new shares. The Group is not subject to any externally imposed
capital requirements.
These policies have not changed in the year. The Directors believe that they
have been able to meet their objectives in managing the capital of the Group.
24. Share-based payments
Movements in share options in issue
Exercise price Number of Issued during year Expired / Exercised during year Number of
options as of options as of
30 June 2022 30 June 2023
£0.30((1)) 8,125,000 - (3,300,000) 4,825,000
£0.27((3)) 7,900,000 - (900,000) 7,000,000
£0.33((4)) 12,430,000 - - 12,430,000
£0.67((5)) 21,705,000 - (325,000) 21,380,000
Total 50,160,000 - (4,525,000) 45,635,000
Movements in share warrants in issue
Exercise price Number of Issued during year Expired / Exercised during year Number of
warrants as of warrants as of
30 June 2022 30 June 2023
£0.30((2)) 4,803,921 - - 4,803,921
Total 4,803,921 - - 4,803,921
Movements in restricted stock units
Number of Issued during year Expired / Exercised during year Number of
units issued units as of
as of 30 June 2022 30 June 2023
£0.675((6)) 290,000 - 290,000 -
Total 290,000 - 290,000 -
(1) Fully vested. Issued 2014. Expire September 2024. Exercise price
£0.30/share. Previously fully expensed.
(2) Fully vested. Issued 2019. Exercisable into non-voting shares, which are
convertible into ordinary fully paid shares on a 1:1 basis. Expire September
2024. Exercise price £0.30/share. Previously fully expensed.
(3) Fully vested and expire on the 6 July 2030. Issued 2020. Exercise price
£0.27/share. Previously fully expensed.
(4) Fully vested and expire on 27 January 2031. Issued 2021. Exercise price
£0.33/share. Previously fully expensed.
(5) Fully vested and expire 14 January 2027. Issued 2022. Exercise price
£0.671/share.
(6) All 290,000 RSUs converted 1:1 into ordinary shares during the year.
The Group has previously granted share options to directors, employees and
consultants under the Staff share option plan, although none have been granted
since January 2022. Such share options 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 with the associated charge being expensed to the
Income Statement on a pro rate basis based on vesting. The weighted average
exercise price of share options outstanding and exercisable at the end of the
period was £0.484 (2022: £0.463).
In 2019 the Group issued 9,607,843 warrants as part of the consideration for
the acquisition of Great Bear Petroleum. The terms of these warrants mirror
the terms of the share options referenced in footnote (1) above, however upon
exercise they convert on a 1:1 basis into non-voting shares as opposed to
ordinary shares. 4,803,921 of these remain unexercised at period end.
The Share Option and Restricted Stock Units expense charge to the Consolidated
Statement of Comprehensive Income for the year ending 30 June 2023 is
$3,146,170 (2022: $8,256,575) which represented the pro rata
Black-Scholes-derived charge (share options) and account charge (RSUs)
attributable to the year with respect to previously issued share options and
RSUs.
The equity reserve account represents current year expenses for unexpired
options and warrants and the historical balance on vested option and warrants.
25. Related party transactions
There were no related party transactions during the year other than the
payment of remuneration.
26. Contingent Liabilities
Pursuant to IAS 37, a contingent liability is either: (1) a possible
obligation arising from past events whose existence will be confirmed only by
the occurrence or non-occurrence of some uncertain future event not wholly
within the entity's control, or (2) a present obligation that arises from a
past event but is not recognized because either: (i) it is not probable that
an outflow of resources embodying economic benefits will be required to settle
the obligation, or (ii) the amount of the obligation cannot be measured with
sufficient reliability.
Kinder Morgan Treating L.P. ("Kinder Morgan") initiated a dispute over an East
Texas gas treating agreement between Kinder Morgan and Vision Operating
Company, LLC ("VOC"). VOC ceased making payments to the service provider in
July 2019. The service provider subsequently issued a demand to VOC and, in
February 2021, served Pantheon Resources plc with a petition, seeking to
recover not less than $3.35m in respect of this VOC contract. Pantheon held
ownership of less than 0.1% of VOC via a 66.6% interest in Vision Resources
LLC. Both Vision Resources LLC and VOC filed for Chapter 7 Bankruptcy in the
United States Bankruptcy Court for the Southern District of Texas Houston
Division in April 2020
No Pantheon entity is a signatory to the gas treating agreement and none are
named in the agreement. Pantheon has taken legal advice on the matter and
believes it has no liability to the service provider. Accordingly, Pantheon
does not consider a provision should be included with the final statements and
will contest any claim made.
In, July 2021, the court dismissed Kinder Morgan's claims against Pantheon
Resources plc. Kinder Morgan has also asserted the same claims against two
subsidiaries, Pantheon Oil & Gas, LP and Pantheon East Texas, LLC.
Pantheon Oil & Gas, LP and Pantheon East Texas, LLC are contesting these
claims.
27. Reserves
Share Capital
The share capital account represents the consideration received for the shares
issued at their nominal or par value.
Share Premium
The share premium reserve represents the excess of consideration received for
shares issued above their nominal value net of transaction costs.
Retained Earnings
Retained losses represent the cumulative profit and loss.
Currency Reserve
The currency reserve represents the foreign exchange gains and losses that
have arisen on the translation of £GBP into $USD.
Share-Based Payments Reserve
The share-based premium reserve represents the cumulative charge for options
and RSUs granted, still outstanding and not exercised.
28. Revenue
For year ended 30 June 2023, the Alaska CGU recognized gross revenue of
$803,689 from sales of oil produced during an extended production test. Sales
during a test period are recognized as revenue under IAS 16-20. Associated
cost of sales including, processing, transportation, royalty, and tax totaled
$673,290.
29. Other Income
The Employee Retention Credit (ERC) - sometimes called the Employee Retention
Tax Credit or ERTC - is a refundable tax credit for businesses and tax-exempt
organizations that had employees and were affected during the COVID-19
pandemic.
30. Translation differences
The financial statements for the Group and the Company are presented in US
Dollars ("$") and this is the Group's Presentation currency. The Functional
currency of all entities within the Group, excluding the Parent Company, is
$USD. The Functional currency of the Parent Company is £GBP.
The assets, liabilities of the Parent Company are translated into US dollars
at the rates of exchange ruling at the year end. The income and expenses of
the Parent Company are translated into US dollars at the average rates of
exchange during the year. Exchange differences resulting from the
retranslation of currencies are shown in the "Other Comprehensive Income for
the Year" section of the Statement of Comprehensive Income and are treated as
movements on reserves.
31. Reconciliation of liabilities arising from financing
activities and major non-cash transactions
Significant non-cash transactions, from financing activities in relation to
unsecured convertible bond, are as follows:
Unsecured Convertible Bond Group
2023
$
Opening Balance 1 July 2022 43,292,594
Non-cash flow Bond amortisation (11,417,000)
Non-cash flow Forex movement 122,864
Non-cash flow Interest 6,105,372
Non-cash flow Revaluation of Derivative Liability (11,321,514)
Closing Balance 30 June 2023 26,782,316
Significant non-cash transactions from financing activities in relation to
raising new capital are disclosed in note 18.
There were no significant non-cash transactions from investing and operating
activities in the current year.
32. Subsequent events
In July 2023, Allegra Hosford Scheirer was appointed as an independent
non-executive director. Allegra has a Ph.D in marine geology and geophysics
from MIT and for the past 15 years has been a co-director of the Basin
Processes and Subsurface Modelling Consortium at Stanford University.
In late August 2023, Pantheon received an Independent Expert Report from
Netherland Sewell & Associates ("NSAI") certifying a 2C Contingent
Resource of 962.5 million barrels of marketable liquids (oil, condensate,
NGLs) on its Kodiak project. NSAI have been contracted to provide an
Independent Expert Report on its Ahpun project, expected in Q2 2024.
In August 2023 Pantheon outlined its updated Corporate strategy, describing
its plans to move towards FID at Ahpun by end 2025 and Kodiak by end 2028. As
part of this the Company announced that it had commenced the process to
achieve a hot-tap into the trans Alaska Production System, and outlined an
estimation of capex required to meet various milestones. There are described
in greater detail in the CEO & Chairman's reports at the beginning of this
document.
In September 2023, Pantheon announced a private placement to a long term
shareholder, IPGL, approximately for 11.9 million shares at £0.1878 per share
to raise $2.793 million, being the exact amount due for the September 2023
quarterly Convertible Bond repayment, enabling the Company to make the
repayment to the bondholder in cash, rather than shares. The net result was
materially similar dilution to having made the bond repayment in shares,
however IPGL was considered to be a longer term shareholder and less likely to
dispose of the shares.
In late September 2023, Pantheon re-entered the Alkaid-2 wellbore to conduct a
fracture stimulation operation and flow test on the shallower and independent
Shelf Margin Deltaic (SMD) horizon in the Alkaid-2 wellbore. The operation had
3 primary objectives; (i) to obtain the best possible fluid samples for PVT
analysis, (ii) to determine initial reservoir pressure, and (iii) to test the
effectiveness of the revised frac design. In October 2023, Pantheon announced
that all three objectives were successfully achieved, with the frac efficiency
estimated at c.50%, a material improvement over the estimated 20% efficiency
in the deeper Alkaid test. The gas oil ratio was also significantly better
than that experienced in the deeper Alkaid test. These improvements are
considered to have very positive implications for future project economics.
In November 2023 Pantheon announced that it was seeking to appoint an
additional independent non-executive director, and was presently in the
screening process.
In December 2023, Pantheon announced a private placement of approximately 16.3
million shares at £0.208 per share to raise $4.15 million, to allow the
Company the ability to pay the December 23 Convertible Bond repayments of
$2.8m in cash rather than shares, which has now occurred. Receipt of the
$4.15m placing proceeds is expected in late January 2024. This action was
believed to remove the perceived overhang of shares while the Company
continues to mature potential vendor and offtaker financial funding options
and to seek to minimise dilution to shareholders.
In December 2023 Pantheon announced the appointment of a new independent
non-executive director, Linda Havard, to the board of Directors, effective 1
January 2024. Linda has decades of experience in financial/CFO roles, and an
MBA in Finance and a Ph.D. in Business. Linda will chair the Company's Audit
Committee.
In Dec 2023 Pantheon was the successful bidder on 66,240 acres in the State
of Alaska's 2023 North Slope Areawide Lease Sale. The leases capture
additional reservoir potential to the west of the Company's existing acreage
in the Kodiak field, and to the east of Ahpun. The new acreage contains
material resource potential and classification of the potentially recoverable
resources will be determined in the coming months in consultation with NSAI
and SLB. Full details are contained in the Company's RNS dated 14 December,
2023.
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 per day
NPV10 net present value at 10%pa discount rate
mcf thousand cubic feet
$ United
States dollar
NCI non-controlling interest
OIP Oil in place
FID Final Investment Decision
NGL Natural Gas Liquids
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FIFIVFFLALIVRecent news on Pantheon Resources
See all newsREG - Pantheon Resources - TR-1: Notification of major holdings
AnnouncementREG - Pantheon Resources - Webinar and update
AnnouncementREG - Pantheon Resources - Kodiak resource upgraded to 1.2 billion barrels
AnnouncementREG - Pantheon Resources - Director/PDMR Notification
AnnouncementREG - Pantheon Resources - Progress on Funding and Development Planning
Announcement