REG - Pantheon Resources - Final Results for the Year Ended 30 June 2024
09/12/2024 07:00
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RNS Number : 2380P Pantheon Resources PLC 09 December 2024
09 December 2024
Pantheon Resources PLC
Final Results for the Year Ended 30 June 2024
Pantheon Resources PLC (AIM:PANR, OTCQX: PTHRF) ("Pantheon" or the "Company"),
an oil and gas company developing the Kodiak and Ahpun oil fields in close
proximity to pipeline and transportation infrastructure on Alaska's North
Slope, today announced its results for the year ended 30 June 2024.
Fiscal 2024 and Subsequent Operational Highlights
· Receipt of three separate Independent Expert Reports, certifying
a combined total of c. 1.6 billion barrels of ANS Crude and 6.6 trillion cubic
feet ("Tcf") natural gas
· Refreshed corporate 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
· Signed a Gas Sales Precedent Agreement with Alaska Gasline
Development Corporation ("AGDC") for the proposed long term supply of natural
gas to Phase 1 (pipeline component) of the Alaska LNG project
· Alaska Industrial Development and Export Authority resolved to
provide letter of credit support to AGDC removing impediments to the start of
Front End Engineering Design on Phase 1 of the proposed Alaska LNG project.
· Strengthened Board with appointment of two well qualified
independent non-executive directors
· Commencement of work on Environmental Impact Statement submission
and engineering hot-tap into the Trans-Alaska Pipeline System ("TAPS") main
oil line
· Awarded an additional c. 66,000 acres of leases following the
December 2023 Alaska lease sale
· Spudded the Megrez-1 well on the Ahpun, Eastern Topset
Fiscal 2024 Financial & Corporate Highlights
· Total comprehensive loss for the year of $11.6 million, as
compared to $4.6 million in fiscal 2023, with non-cash items accounting for
the majority of the year-over-year change
· Reduced convertible loan balance to $17.2 million as of 9
December 2024 (further reducing to $14.7 million on 13 December), from $24.5
million at 1 July 2023.
· Cash and cash equivalents at 30 June 2024 totalled $7.9 million,
as compared to $20.7 million as of 30 June 2023. As of 9 December 2024,
unaudited cash and cash equivalents totalled $23.7 million, which are
currently funding the ongoing Megrez-1 well operations, with the majority of
the costs remaining to be spent.
David Hobbs, Executive Chairman of Pantheon Resources, said: "The past 18
months have seen extraordinary progress in three key areas. We received
independent validation of the Company's contingent resources base at 1.6
billion barrels of ANS crude. We funded and are executing the Megrez-1 well
programme, with its potential to add up to a further c. 40% to the overall
resource base. We secured a path to potential monetisation of the 6.6 trillion
cubic feet of natural gas in a way that may support the development capital
needs from Ahpun FID."
Annual Report and Accounts
The Annual Report and Accounts for the financial year ended 30 June 2024 will
be posted to shareholders shortly, together with a Notice of Annual General
Meeting ("AGM") which is scheduled for late January, 2025. As in recent years,
the presentation portion of the AGM will be held by webinar to enable
participation by all shareholders and investors. Details of the webinar will
be provided in due course. Copies of the presentation will be available before
the AGM on the Company's website at:
www.pantheonresources.com
(https://url.avanan.click/v2/___http:/www.pantheonresources.com___.YXAzOnBhbnRoZW9uOmE6bzpkYWNhMWJkYzdkYTI3ZDJkN2MzZTA5ZGU1YzIyMWQ5ZTo2OjgzNGM6YTg1ZTJiZWMxYjBiZjA4YWMxMDc3MjRkMjVhODdlZDI2NWZjMmZhMDg3MjAzNjU5NTQ3M2Y5ZTI3ZmE0MTEyOTpwOlQ6Tg)
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-ENDS-
UK Corporate and Investor Relations Contact
Pantheon Resources PLC
Justin Hondris
+44 20 7484 5361
contact@pantheonresources.com (mailto:contact@pantheonresources.com)
Nominated Adviser and Broker
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor, James Asensio, Charlie Hammond
+44 20 7523 8000
Public Relations Contact
BlytheRay
Tim Blythe, Megan Ray, Matthew Bowld
+44 20 7138 3204
U.S. Investor Relations Contact
MZ Group
Lucas Zimmerman, Ian Scargill
+1 949 259 4987
PTHRF@mzgroup.us (mailto:PTHRF@mzgroup.us)
About Pantheon Resources
Pantheon Resources PLC is an AIM listed Oil & Gas company focused on
developing its 100% owned Ahpun and Kodiak fields located on State of Alaska
land on the North Slope, onshore USA. Independently certified best estimate
contingent recoverable resources attributable to these projects currently
total c. 1.6 billion barrels of ANS crude and 6.6 Tcf (trillion cubic feet) of
associated natural gas. The Company owns 100% working interest in c. 259,000
acres.
Pantheon's stated objective is to demonstrate sustainable market recognition
of a value of $5-$10/bbl of recoverable resources by end 2028. This is based
on bringing the Ahpun field forward to FID and producing into the TAPS main
oil line (ANS crude) by the end of 2028. The Gas Sales Precedent Agreement
signed with AGDC (Alaska Gasline Development Corporation) provides the
potential for Pantheon's natural gas to be produced into the proposed 807 mile
pipeline from the North Slope to Southcentral Alaska during 2029. Once the
Company achieves financial self-sufficiency, it will apply the resultant
cashflows to support the FID on the Kodiak field planned, subject to
regulatory approvals, targeted by the end of 2028 or early 2029.
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 shorter development timeframes, materially lower
infrastructure costs and the ability to support the development with a
significantly lower pre-cashflow funding requirement than is typical in
Alaska. Furthermore, the low CO2 content of the associated gas allows export
into the planned natural gas pipeline from the North Slope to Southcentral
Alaska without significant pre-treatment.
The Company's project portfolio has been endorsed by world renowned experts.
Netherland, Sewell & Associates estimate a 2C contingent recoverable
resource in the Kodiak project that total 1,208 mmbbl (million barrels) of ANS
crude and 5,396 bcf (billion cubic feet) of natural gas. Cawley Gillespie
& Associates estimate 2C contingent recoverable resources for Ahpun's
western topset horizons at 282 mmbbl of ANS crude and 803 bcf of natural gas.
Lee Keeling & Associates estimated possible reserves and 2C contingent
recoverable resources totalling 79 mmbbl of ANS crude and 424 bcf natural gas.
For more information visit www.pantheonresources.com
(https://url.avanan.click/v2/___http:/www.pantheonresources.com___.YXAzOnBhbnRoZW9uOmE6bzpiYjcwYWIwMzY1YzcxNzczMDFkODA4MWRiMmY0MWQ1Yjo2OjhiZTM6ZGUyODVlNjI0ODQ5NWFjYTE4MWM4ZmNkODNhMzYwODQ0OGNhZjg1ZTFmZjY0YjY5MDE5MTQ0NDMwZDA5NTkwMjpwOkY6Tg)
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Pantheon RESOURCES plc
ANNUAL REPORT AND FINANCIAL
STATEMENTS
YEAR ENDED 30 June 2024
DIRECTORS, SECRETARY AND ADVISORS
Directors
David Hobbs (Executive Chair)
John (Jay) Cheatham (Chief Executive Officer)
Robert (Bob) Rosenthal (Technical Director)
Jeremy Brest (Non-Executive Director)
Allegra Hosford Scheirer (Non-Executive Director)
Linda Havard (Non-Executive Director)
Company Secretary Ben Harber
Registered Office Shakespeare Martineau
LLP
6th Floor
60 Gracechurch Street
London EC3V 0HR
Company Number 05385506
Auditors
PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
UK Legal Counsel Bryan Cave Leighton
Paisner LLP
Governors House
5 Laurence Pountney Hill
London EC4R 3AF
Simmons & Simmons LLP
CityPoint
1 Ropemaker Street
London EC2Y 9SS
USA Legal Counsel Orrick, Herrington &
Sutcliffe LLP
401 Union Street - Suite 3300
Seattle, WA 98101
United States
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
MZ Group
27422 Alison Creek Road, Suite 250
Aliso Viejo, California 92656
United States of America
CHAIR'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
2024 has been a year of solid progress by a Pantheon team committed to
delivering success for shareholders. In September of 2023 the Board adopted a
refreshed strategy aimed at achieving sustainable investor recognition of a
value of $5-$10 per barrel of proved resources and low case contingent
resources within 5 years - in other words by late 2028. The past year has
reinforced our belief that this is achievable and we remain committed to our
objective of achieving these goals in the least dilutive manner possible.
Refining our Strategy to Commercialise the Growth in the Resource Base
Much of the past year has been focused on consolidating the extraordinary
exploration success of the previous years and laying the foundations on which
the strategy's delivery can be built. It was no small achievement that, over a
three year period, the Company discovered and confirmed two substantial oil
fields, Kodiak and Ahpun to add to the initial smaller scale success of the
Alkaid-1 well from prior years.
Today Pantheon's certified contingent resources stand at 1.6 billion barrels
of total marketable liquids (or 'ANS crude') across both major projects, with
managements's pre-drill estimate of 0.6 billion additional barrels of
prospective undiscovered ANS crude from the recently spudded Megrez-1 well. We
hope to provide additional updates on the results shortly.
To maximise shareholder realisation of the value uplift from the recent
discoveries, it was necessary to redirect the Company strategy to be laser
focused upon development of the Ahpun and Kodiak projects. We needed to add
the capacity to plan and effectively control the capital programmes, including
identifying the engineering, regulatory and supply chain development aspects.
We have continued to build these capabilities and I believe our brief period
of foundation building has ended.
Development Planning and Timetable to First Production
A year ago, the anticipated development plan was based upon early production
from the Alkaid Zone using the improved completion design. The work conducted
by SLB (formerly Schlumberger) has established the ability to produce oil and
natural gas liquids ("NGL") at commercial rates in a single stream to be
exported through the Trans Alaska Pipeline System ("TAPS") and redelivered at
Valdez as Alaska North Slope blend. However, once serious development planning
work was underway, it became clear that it would be impossible to reinject
natural gas into the Alkaid Zone reservoir at sufficiently high volumes over
extended periods. Thus the optimum and earliest production candidate became
the Ahpun field's western topsets, which exhibit 100x better permeability than
the Alkaid Zone, sufficient to overcome the gas reinjection constraint.
The expanded estimated ultimate recovery ("EUR"), and the corresponding
surface footprint, of the expanded project would be unlikely to achieve
permitting approval under an environmental assessment ("EA"). Instead this
larger scale project would require the Company to prepare an environmental
impact statement ("EIS"), a more comprehensive and thus time consuming
process. Access to TAPS would be required because an early production scheme
based on trucking oil to Deadhorse might not generate positive net cashflows
and certainly would not provide a return on the capital invested. TAPS access
would require federal approval based on the EIS.
While the requirement for an EIS leads to a delay of some 18 months to a final
investment decision ("FID") on the overall Ahpun development compared to the
initial plan based on the Alkaid Zone alone, the new timetable allowed
drilling the potential extension of Ahpun to the east of the Sag River and, in
the success case, to incorporate it into the same development approval
process. This would add enormous value to Pantheon's portfolio, and management
estimates that it could potentially bringing the total recoverable oil and gas
resources across all projects to more than 3.5 billion barrels of oil
equivalent. First production is now expected in 2028, which leaves the
strategic goal of achieving sustainable value recognition by late 2028
unchanged.
The inclusion of gas into the resource base became feasible following
conclusion of a gas sales precedent agreement ("GSPA") with the Alaska Gasline
Development Corporation ("AGDC") in June of 2024. With the prospect of
monetising the methane resources, it also became feasible to consider the
helium potential revealed in gas samples in the Theta West-1 well. The
presence of helium appears to be unique to the Kodiak Field and would provide
a significant uplift to the asset value if confirmed by subsequent appraisal
drilling. We are actively evaluating plans to incorporate helium rights into
the leases and for this to be a potential distinct revenue stream in the
future.
Short- and Long-Term Funding Strategy
Since presenting the renewed strategy for developing the Ahpun and Kodiak
fields, a key focus for management has been securing the short term funding of
appraisal and pre-development expenditures prior to FID and accessing long
term funding of development expenditures post-FID.
In terms of long term funding, the Company began the year by pursuing a
two-pronged approach, exploring the potential for vendor financing and
off-taker financing. During negotiations, it became clear that the cost and
dilution of the vendor financing would exceed that of the off-taker financing
and management took the decision to narrow the focus on monetisation of the
natural gas and potential helium resources as a strategy for reducing the
future equity dilution of funding post-FID activity to reach cashflow
self-sufficiency.
Recent progress, including the support of the Alaskan gas pipeline project by
President-elect Trump and the Dunleavy Administration in Alaska, indicates
that attempting to leverage the gas resources to fund the core oil field
development is a clear path forward for us.
Governor Dunleavy's memorandum to Members and Members-Elect of the Alaska
State Legislature in November 2024 set out the value proposition very clearly:
Alaska LNG Project Phase 1 (the in-state pipeline) provides superior economics
when compared to the alternatives, the full Alaska LNG project will
dramatically lower long-term Alaska energy prices, and the Alaska LNG Project
Phase 1 could deliver $16 billion of additional benefits to the State compared
to alternatives. Pantheon is committed to working with the State of Alaska to
ensure these benefits are delivered because its advantaged resources (being
low CO2 and with upside helium potential) place it in a unique position to
help secure the development of long term strategic infrastructure.
Over the course of the fiscal year, the Company issued 37 million shares to
supportive shareholders through private placements that maintained liquidity
and created optionality on whether to pay the Convertible Bond ("CB") holder
in cash or shares. The Company was successful in completing a $29 million
(before costs) capital raise, post fiscal yearend, in late July 2024. This
provided sufficient funds to commit to drilling the Megrez-1 well and to
continue with engineering and other activities to maintain the schedule to
Ahpun FID and first production.
The flexibility afforded by equity issuance both during the fiscal year and
afterwards allowed Pantheon to negotiate with counterparties from a stronger
position than would otherwise have been the case. It was a significant
contributor to securing the benefits of the relationship with the State of
Alaska and AGDC. In the year ahead, we will seek to maintain the optionality
for incremental capital formation - inclusive of equity, debt or other
strategic avenues that may be available to us - to support any future
strategic needs. As always, we will keep a sharp eye on minimizing dilution
wherever practicable.
Shifting the Focus and Building the Foundation for an Initial Listing on a
U.S. Senior Exchange
Until last year, the focus was on exploration and appraisal, growing the
resource base and positioning the Company for a possible farm-out or disposal.
Under the refreshed strategy, the focus becomes engineering and operations. In
preparation for the planned listing on a senior U.S. exchange, the Company
leadership is now U.S. based. In September, we announced the appointment of
Philip Patman, Jr. as the Company's Chief Financial Officer following the
decision by Justin Hondris to step down from his role as Finance Director. We
are delighted to have been able to retain Justin's continuing contribution to
the Company's success in his new role as Sr. Vice President for Finance and
International Investment.
We recently announced the appointment of MZ Group - a U.S. investor relations
specialists who will help us better establish Pantheon in the U.S. capital
markets - as our Investor Relations Advisor, ahead of a potential listing on a
senior U.S. exchange such as the Nasdaq or the NYSE. Additionally, we are
working with two highly respected investment banking advisors that equip us to
reach pools of capital in both North America and Asia that align with our
improving risk and reward profile.
As we ready ourselves to comply with U.S. listing requirements, we have been
able to step up the pace of change, with much of the background preparatory
activity now complete. It should be noted that there are no current plans to
cancel Pantheon's listing on the AIM Market of the London Stock Exchange. For
as long as the UK market provides the greatest pool of liquidity and we have a
significant base of shareholders invested through the London market, there is
clear value in the listing.
In addition, the Board is being reshaped, towards an intended composition
consistent with U.S. financial market norms, while continuing to meet all UK
regulatory requirements. Succession planning for our most senior colleagues is
also underway to prepare for a development program that will extend for years
and even decades after the Ahpun field FID.
Building a Long-Term Incentive Plan to Best Align with Shareholder Interests
In October 2024, the Company announced the closing of its historical incentive
schemes and replacement with an Employee Stock Ownership Plan ("2024 ESOP")
designed to follow the principles, as far as practicable, of the Main Market
of the London Stock Exchange. No awards had been made under the original
scheme since January 2022 nor any awards ever under the reserves based plan
that was cancelled in 2023.
The 2024 ESOP has reduced the ceiling for aggregate awards to 10% of the
issued share capital over a 10 year period from 15% under the original plan.
The terms of the 2024 ESOP and its operation by the Remuneration Committee of
the Board will ensure challenging targets aligned with creation of shareholder
value and the initial grants under its terms demonstrate this determination.
Under the 2024 ESOP, 9.5 million Executive Share Options were awarded with an
exercise price nearly 4x the prevailing share price (at the date of the
award), with challenging performance targets and a five year vesting period.
This was a statement of intent to put shareholders first while providing
potential rewards that would attract and retain the talent needed for success.
Some 4.8 million executive share options expired out of the money in September
2024.
Final Thoughts
Overall, the past year has seen a far more robust Pantheon emerging from this
necessary period of consolidation. Many of the building blocks to achieve the
strategic goals are now in place and we are confident that, once the market
fully recognises the strength of the Ahpun and then Kodiak projects, the
intrinsic value of the resource base will be recognised in the share price.
A key theme for the year has been deepening Pantheon's relationship with the
State of Alaska through its key decision makers and to enhance the Company's
recognition within the energy ecosystem in Houston. This does not happen
overnight and involves laying the groundwork that may not always be publicly
visible, though investors should no doubt appreciate that the Board and
executive team at Pantheon are fully focused on the creation of sustainable
shareholder value over the long-term. It is through this long term focus that
the Company has built such a solid foundation this past year.
I would like to thank each and every one of our shareholders for their
support, which ultimately makes Pantheon's continued success possible.
On Behalf of the Pantheon Board of Directors,
David Hobbs
Executive Chair
December 7, 2024
CHIEF EXECUTIVE OFFICER'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
As we reflect on progress made over the last year, I look back on 2024 as a
year of foundation building. We have received independent validation of the
best estimate contingent resources at an incredible 1.6 billion barrels of ANS
crude. If we apply this resource to our targeted $5-$10 per bbl of resource,
the size of the potential prize we are targeting is clear for all to see.
As David outlined, Pantheon is moving forward to reach FID at Ahpun during 2H
2027. As we prepare to build out the operational team in Houston, Texas for
the next phase of our development journey at Ahpun, I have never been more
confident in the future of Pantheon and of its potential for shareholder value
creation.
Re-entry of Alkaid-2 Demonstrated Successful Improvement to Frac Design
The most significant event during the period was the re-entry of the Alkaid-2
well and flow test of the Shelf Margin Deltaic B ("SMD-B") Western Topsets
horizon. This was successful and demonstrated producible oil from the SMD
horizon in the Ahpun field, comprised of both the shallower SMD formation and
the previously tested deeper Alkaid zone of interest ("ZOI").
The Company had three clear objectives:
(i) To assess the efficacy of the revised frac design;
(ii) To gather representative fluid samples for
pressure-volume temperature analysis ("PVT"); and,
(iii) To better determine the initial reservoir pressure
All three objectives were successfully achieved.
The Company's preliminary estimate of the efficiency of the frac was 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
ZOI accumulation the previous year. This improvement was the result of
several key changes to the frac design, which allowed the frac to remain
within the reservoir and validates the ability to achieve at least the planned
for 2x improvement in frac efficiency in future.
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.
Working with AGDC to Accelerate Development of Alaska LNG
Pantheon is also working with the AGDC and the State of Alaska to accelerate
development of Alaska LNG Project ("Alaska LNG") through the GSPA to address
the projected supply shortfall of natural gas in South Central Alaska in the
next few years.
Phase 1 of Alaska LNG focuses on construction of the gas pipeline and does not
involve construction of an LNG plant, and as a result has a materially lower
capex requirement and construction timeframe, allowing gas transportation as
early as 2029. AGDC is aiming to undertake Front End Engineering and Design
ahead of their FID planned for the middle of 2025.
The GSPA contains the key commercial terms to be incorporated into the binding
take-or-pay Gas Sales Agreement ("GSA") to take effect after FID, including:
· Pantheon agrees to supply up to 500 million cubic feet per day
("mmcfd") of natural gas at a maximum base price of $1 per million BTU
("mmBtu") in 2024 dollars.
· The minimum daily contract volumes that are used to calculate the
level of the take or pay obligation.
· Plateau natural gas deliveries for 20 years, with the potential for
extension beyond that initial term.
· The State of Alaska has several options to reduce the natural gas
unit price significantly by working with Pantheon to reduce the cost of
project financing and/or enable other commercial opportunities, as specified
in the GSPA.
The initial term of the GSPA is until June 30 2025, or until the definitive
GSA is executed, whichever comes first. AGDC and Pantheon have begun working
on meeting all the relevant conditions for their respective parts of the
project to proceed within the planned schedule. For Pantheon, that includes
hiring several engineering firms to help design the needed surface facilities.
Formal Award of Leases
In August 2024, Pantheon paid the remaining portion of the fees for the 46 new
oil and gas leases acquired in the State of Alaska's 2023W Areawide oil and
gas lease sale held in December 2023. This formal award was necessary before
drilling the Eastern Topsets. The 46 new leases consist of an aggregate of
65,691 acres, 30 of which are located on the western boundary of the Kodiak
Field and 16 of which cover the Ahpun East topset play (site of the Megrez -1
well).
Independent Expert Reports Highlight the Significant Potential in Pantheon's
Portfolio
In order to help with negotiations for non-dilutive funding, Pantheon
commissioned Independent Expert Reports ("IERs") for the shallower Ahpun
Topsets and the deeper Alkaid Zone from Cawley Gillespie &Associates
("CGA") and Lee Keeling & Associates ("LKA") respectively, along with
Netherland, Sewell & Associates, Inc. ("NSAI") at Kodiak.
Netherland, Sewell & Associates - Kodiak Field
NSAI had previously completed a Kodiak Field IER, and carried out an updated
report to include the additional c.43,000 acres awarded in the updip portion
of the Kodiak field. In the updated IER, NSAI's best estimates
of Kodiak's contingent recoverable resources sum to 1.2 billion barrels of
ANS crude (the mixture of oil, condensate and natural gas liquids) and 5.4
trillion cubic feet of gas ("tcf"). The new resource is a 25% increase (963
to 1,208 million barrels ("mmbbls")) in recoverable ANS crude compared to
NSAI's previous 2023 report.
Our acreage acquisition strategy during the period focused on moving
structurally higher into better reservoir rocks where porosity and
permeability are substantially improved. The potential improvement in
reservoir quality in the newly acquired acreage underpins the c.40% increase
in the high estimate of recoverable resources to 2,840 mmbbls of ANS crude and
11.75 tcf of natural gas. The 5.4 tcf of recoverable gas (Best Case) is
important as it provides additional support for a proposed agreement
with AGDC to bring gas to southcentral Alaska markets.
Cawley Gillespie & Associates and Lee Keeling & Associates - Ahpun
Topsets and Alkaid Zone
Pantheon also commissioned two further reports, covering the Alkaid horizon as
assessed by Lee Keeling & Associates ("LKA") and additional topset
horizons evaluated by Cawley Gillespie & Associates (CGA). The combined
findings indicate strong contingent resources in oil, natural gas, and natural
gas liquids (NGLs), supported by favourable economic models. Notably, in LKA's
assessment of the Alkaid horizon, the base case includes 79 million barrels
("mmbbl") of ANS crude and 424 billion cubic feet ("bcf") of gas, with the
NPV10 estimated to be $0.2-0.5 billion.
CGA's analysis of the broader Ahpun field, focusing specifically on the
western topsets, presents similarly promising estimates. The best estimate
(2C) includes 282 mmbbl of ANS crude along with 804 bcf of gas. Given current
assumptions, the NPV10 for CGA's 2C contingent resources is approximately $1.7
billion, based on an $80 per barrel price for Alaska North Slope crude. Their
analysis also indicated that Ahpun's additional horizons have strong potential
to contribute additional value and further diversify the field's resource
base.
The positive economic models provided by both reports align with strategic
goals for advancing development, with a targeted FID aimed at enabling
production no later than 2028. When taken together, these assessments
reinforce the commercial viability of Ahpun and positioning it as a promising
asset within the Alaska North Slope, offering the potential for substantial
long-term value creation.
Building In-House Capabilities in the U.S. to Support Stateside Operations
With an eye toward both a U.S. listing, and extensive future operations, the
Company's leadership is now U.S. based. As announced in September, the
appointment of Philip Patman, Jr. as Chief Financial Officer, based in
Houston.
In addition, we promoted several key personnel within our organisation to lead
us into the future. Pat Galvin was promoted to General Counsel from his prior
role as Chief Commercial Officer and General Counsel of our Great Bear
subsidiary. Josh McIntyre was similarly promoted from Chief Financial Officer
of our GBP subsidiary to Group Financial Controller of Pantheon. These
promotions, as well as strategic new hires such as Jonathan Kurtz as VP of
Human Resources, recognise talent within and outside of the organisation as we
prepare for the next leg up in our growth trajectory.
I want to make it clear that the Company will not spend, and has not, spent,
any money on new hires or contractors until we have convinced ourselves that
it is necessary and cannot be done in-house with existing personnel.
In the coming year, we intend to complete the basis of design for the Ahpun
development, complete the studies to allow submission of documents needed for
the regulatory approvals and, subject to funding availability, plan for two
appraisal wells to firm up oil, NGL and natural gas resource estimates in
addition to narrowing the range of prospective helium resources contained in
Kodiak field associated gas.
Megrez-1 Well
The most significant activity of 2024 was the post-period spudding of the
Megrez well on November 8th, 2024. Before drilling, management estimated the
well to have a 69% geological chance of success of encountering a 2U
Prospective Resources of 609 million barrels of ANS crude and 3.3 Tcf of
natural gas - or over 1 billion BOE.
This has the potential to add significant incremental resources to our
portfolio, independent of the progress we've made thus far. We had expected to
spud slightly sooner but were delayed by high winds. We hope to provide
additional updates on the results shortly.
Building the Foundation for Success in 2025 and Beyond
The improvement in our prospects boils down to the hard work of my colleagues
throughout the organisation and I am sure you will join me in thanking them
for their efforts on your behalf. Taken together, we are proud of our
accomplishments in 2024 and the potential catalysts we are targeting in 2025.
Thank you to my fellow shareholders, partners, and staff for your support on
our journey. I look forward to another exceptional year at Pantheon.
On Behalf of the Pantheon Team,
Jay Cheatham
Chief Executive Officer
December 7, 2024
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
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, webinars, teleconferences,
analyst roadshows, shareholder meetings and also by direct engagement with
stakeholders themselves.
· The Company aims to work responsibly with key identified
stakeholders, including 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 · The Board continued to refine its in-depth geological review of
its Alaska North Slope assets.
· In 2024 Pantheon received three IERs on its projects, certifying
a C2 Contingent Resource estimate of 1.56 billion barrels of marketable
liquids (oil, condensate & NGLs) and 6.6 Tcf of natural gas. This
independent certification advanced the understanding of the assets and
advanced the Group's efforts towards development planning.
· In 2022 the Company drilled and fracture stimulated the Alkaid-2
well and tested the primary target of that well, 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 +/-50% compared to the +/- 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 for
application in future operations, which is common for the learning curve of
new fields as successive wells are drilled and tested.
· 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 2023 lease
sales which were formally awarded in summer 2024. 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,
particularly on the Kodiak and Ahpun - Eastern Topset project areas.
· Production of all resources results in economic benefit to
shareholders through production revenues, and to the state, through royalties.
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. That said, no share options were issued
to staff since 2022.
· The consequence of this decision was to demonstrate an alignment
to shareholders at a time when the stock price was not performing. 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 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. After the year end, in October 2024, Pantheon announced the
implementation of an updated staff share option scheme with an associated
grant of options to Executive Directors and Restricted Stock Units ("RSUs"),
which vest over time, to Executive Management and other staff. After a period
of no such grants, the consequence of this action was to provide incentives
aligned to share price growth.
Increased interaction with key stakeholders Shareholders, Employees, State of Alaska, Other Business Relationships · Directors and Executive Management conducted a number of webinar
style shareholder presentations outside of the traditional Annual General
Meeting ("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 broker non deal roadshows and technical presentations with industry
and with the State of Alaska, working with them to ensure they are fully
apprised of the Group's intended plans.
· The Group worked closely with AGDC, ultimately signing a Gas
Sales Precedent Agreement on 5 June 2024, to collectively pursue the
advancement of phase 1 of the proposed Alaska LNG.
· 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 utilised the services of many local service providers
for services such as development planning, engineering design, 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 transparency of capital
requirements and targeted project timelines.
· The Board reaffirmed 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 government and 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 · Pantheon reaffirmed in detail its strategy to bring the Ahpun and
Kodiak projects into development, targeting a final investment decision (FID)
on Ahpun by 2H 2027 and Kodiak by 2029.
· Pantheon has continued the process to apply for a hot-tap
directly into the TAPS, as well as completed engineering studies related to
the environmental permitting requirements to facilitate the sale of ANS crude
directly into TAPS.
· Pantheon outlined in stock exchange announcements its estimation
of funding requirements to achieve key milestones.
· Pantheon continued discussions with various potential
counterparties for the possible provision of non equity finance for the Group.
A number of industry parties have entered Pantheon's data room as part of this
process.
· Pantheon continued work towards sourcing capital to fund
Pantheon's future activities as well as to pursue a potential US IPO on either
NYSE or NASDAQ.
· 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, and to put in
place necessary preparations to access project and development capital, as the
Company seeks to move into development and production.
Increased Corporate Governance Shareholders, employees, Business Relationships · In the 2024 fiscal year Pantheon appointed two new independent
non-executive directors, Allegra Hosford Scheirer and Linda Havard. Linda has
decades of experience in financial and CFO roles and became the Chair of the
Audit Committee, the forerunner to the Finance, Audit and Risk Committee.
Following this appointment Pantheon had a total of 7 Directors. This
continued until the September 2024 resignation of Justin Hondris, after which,
the Board had 6 Directors.
· In preparation for a possible US stock market listing, Pantheon
has appointed a specialist outsourced advisory firm to assist in bringing the
Group up to a Sarbanes-Oxley level governance and compliance.
· Pantheon retained the law firm of Orrick, Herrington &
Sutcliffe LLP ("Orrick") to assist with advising the Group on corporate
preparations for an IPO on either NYSE or NASDAQ.
· 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 65,691 acres of new leases
in the December 2023 lease sales which were formally awarded after year end,
in August 2024. All leases were immediately adjacent to existing leases and
add material resource potential for shareholders.
· The consequence of this acquisition was to build Pantheon's
resource potential, which benefits the state in terms of future production
royalties and other economic benefits. Future development activities will,
among other things, result in hiring additional local staff, contracting local
service providers etc.
This report was approved by the Board on December 7, 2024 and signed on its
behalf.
Jay Cheatham
Chief Executive Officer
December 7, 2024
CHIEF FINANCIAL OFFICER'S REPORT
FOR THE YEAR ENDED 30 JUNE 2024
Financial Review
The Group made a loss from Continuing Operations after Taxation for the fiscal
year ended 30 June 2024 of $11.5m, versus a 2023 loss of $1.5m. This result
was materially impacted by the revaluation of the derivative component of the
convertible bond of a $0.3m loss in 2024, versus a profit of $11.3m in 2023.
Notably, after adjusting for the derivative revaluation of the convertible
bond (and leaving aside any resulting UK tax consequence), the adjusted loss
of $11.2m in 2024 is $1.6m lower than the adjusted loss of $12.8m in 2023.
In December 2021, the Company completed a refinancing through the issuance of
a $55m convertible bond. 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 $17.2m. A summary of the key
bond terms is provided at note 15.
Impairments
In accordance with International Financial Reporting Standard 36 'Impairment
of Assets' (IFRS 36), 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, and that
there are no indicators of impairment in the current year. Additional
details are provided in note 13 (Exploration and evaluation assets) to the
financial statements.
Capital Structure
The Company made several issuances of fully ordinary shares during the year as
outlined below. During the year the Company did not grant share options to
staff under the Discretionary Share Option Plan (the "Scheme"). A summary of
movements in share-based payments is provided at note 23 (Share-based
payments).
Some headline details of ordinary shares issued during the year were as
follows (with additional information provided in note 19 (Share Capital) to
the financial statements:
- In September, 2023, the Company completed an equity placing, issuing
11,905,370 new ordinary shares at an issue price of £0.1878 pence per share,
raising approximately $2.79m before expenses to IPGL Limited, an existing
supportive long term shareholder of Pantheon. The proceeds were applied
towards the payment of the September 2023 quarterly bond repayment in cash.
- In November 2023, the Company announced an equity placing on
deferred settlement terms (completed January 2024), issuing 16,286,343 new
ordinary shares at an issue price of £0.208 pence per share, raising
approximately $4.15m before expenses. The proceeds were applied towards the
payment of the December 2023 quarterly bond repayment in cash.
- In March, 2024, the Company completed an equity placing, issuing
8,820,315 new ordinary shares at an issue price of £0.244 pence per share,
raising approximately $2.74m before expenses to IPGL Limited, an existing
supportive long term shareholder of Pantheon. The proceeds were applied
towards the payment of the March 2024 quarterly bond repayment in cash.
- In June, 2024, the Company completed an equity placing, issuing
7,471,153 new ordinary shares at an issue price of $0.364 per share, raising
approximately $2.72m before expenses. The proceeds were applied towards the
payment of the June 2024 quarterly bond repayment in cash.
- Also in June, 2024, the Company completed an equity placing, issuing
9,230,080 new ordinary shares at an issue price of $0.364 per share, raising
approximately $3.36m before expenses. The proceeds were applied to general
corporate purposes.
As at 30 June 2024 the total shares in issue was 960,919,660 (2023:
907,206,399).
As at 30 June 2024 the Company had 4,802,922 warrants outstanding to acquire
non-voting convertible shares, convertible into ordinary fully paid shares on
a 1:1 basis. The warrants had an exercise price of £0.30 per share, however
all expired without being exercised on 30 September 2024.
As at 30 June 2024 the Company had 45,635,000 options outstanding to acquire
ordinary shares (2023:45,635,000) at an average exercise price of £0.477
(2023: £0.477) per share. At year end all share options were fully vested. In
September, 2024, subsequent to year end, 4,825,000 of these share options
expired.
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.
This target is unchanged. The FID on the Ahpun project is now expected to be
delayed to 2H 2027, with the FID on the Kodiak project by 2029. This impacts
the date of first production, now anticipated in 2028, and coupled with
increased project definition and workscope increases the funding requirement
to first production to approximately $150 million. Executing such a strategy
requires significant additional capital, most of which the Company seeks to
access through non equity sources. The Group will also need to secure
additional funding for general working capital, to cover future obligations as
and when they fall due to continue to progress its key projects, and to
continue its proposed US IPO preparations as planned within the next 12 months
following approval of these financial statements and the Group seeks to secure
such funding by Q2 or Q3 of fiscal year 2025 (for clarity, at latest, Q1 of
calendar year 2025), in the least dilutive manner for shareholders. This
process is presently underway, and Pantheon is procuring appropriate
assistance from its appointed investment banks and other advisors. The
auditors have made reference to this material uncertainty in their audit
report.
We believe that Pantheon's position has improved materially over the past 12
months as a result of the achievement of some major milestones, all of which
greatly increase the Group's confidence in securing its overall funding
requirement to reach first production. These milestones included receipt of
IERs on three of its projects, specifically (i) Kodiak, (ii) Ahpun - Alkaid,
and (iii) Ahpun - Western Topsets, which when combined certified, in
aggregate, a 2C Contingent Resource of 1.6 billion barrels of ANS Crude and
6.6 Tcf of natural gas. Critically however, these IERs estimated a project
NPV10 of $1.9 -$2.2 billion for the Ahpun - Alkaid and Ahpun - Western Topset
projects combined. An NPV estimate based on discounted net present value has
not yet been commissioned for the much larger Kodiak project, but it would
clearly be materially accretive to the intrinsic value of Pantheon's asset
base. The importance here is that Pantheon retains 100% working interest in
each of these projects, which have enormous potential value, and these large
valuations and certified resources give the Company great flexibility in
raising non-equity funding. This includes the ability to leverage any
success in the Megrez-1 well and the value attributable to gas resources
should Alaska LNG Phase 1 proceed. 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 such
alternate funding sources.
The Company believes that the enormous size of the resource already appraised
on Pantheon's acreage provides the potential for more than five hundred wells.
Whilst in absolute terms this would entail cumulative investment estimated in
the billions of dollars over the lifetime of the project, and whilst the
future costs and revenues are uncertain, Pantheon currently estimates that the
maximum negative cumulative outlay over the lifetime of the project could be
as high as $300 million. Once in full development, it is believed that
production revenues would have the potential to self-finance the remaining
development costs, as would typically be the case in such developments.
Furthermore, the Company could fund a substantial portion of the maximum
negative cumulative outlay could through debt secured by expected future
revenues from gas and other hydrocarbon sales.
The Group has no contractual obligation to drill any future wells and the only
obligation is to plug and abandon the Talitha-A test well, the estimated cost
of which ($1.6m) has already been provided for in the financial accounts.
Given the quality and advancement of the assets, the Company is optimistic in
its ability to raise capital as and when required. Accordingly, the financial
statements have been prepared on a going concern basis.
Taxation
The Group incurred a loss for the year and has recorded a taxation benefit of
$1.8m (2023: expense of $0.1m). As the tax credit is all reflected in the
movement in deferred tax, the Company has adjusted deferred tax liability by
the same amount as the tax benefit.
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 pages 20-22.
Liquidity Risk
As the Group did not generate material revenue from hydrocarbon production
during the year (all production revenues were generated through the sale of
oil during a short term testing operation), the primary liquidity risk is the
ability to adequately source sufficient funding to meet the Company's working
capital, capital expenditures, and operational requirements. Funding
availability, and hence risk, within the capital markets and for industry
transactions remains uncertain as a result of global economic conditions,
including the impact of increased interest rates, inflation, political and
environmental factors.
Oil & Gas Price Risk
Future oil and gas sales revenues are subject to the volatility of the
underlying commodity prices throughout the year. Over the past few years, the
energy sector has been impacted by volatility in commodity prices, which may
continue to impact the Group going forward. Being for all practical purposes
pre-production, 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.
Philip Patman, Jr.
Chief Financial Officer
December 7, 2024
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2024
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, appraisal and development. The Group operates in the U.K.
through its parent undertaking and in the US through subsidiary companies,
details of which are set out in note 8 to these accounts.
Review of the Business and Key Performance Indicators
2023/2024 KPI Measurement 2023/2024 Performance
Ensure business adequately funded Fund raise where appropriate The Company completed a $22m fundraising (gross proceeds) in May 2023 shortly
before the commencement of the financial year. During the financial year the
Company serviced its convertible bond quarterly repayments through the
issuance of equity, or via discreet equity placements to long term strategic
shareholders to allow the proceeds to be applied towards cash settlement of
the bond repayment. The Company completed an equity placement in late July
2024, shortly after year end, where it raised S$29 million before costs.
Establishment of US head office Sourcing, establishment and staffing of US office. During the year Pantheon established a head office in Houston, Texas, the
energy capital of the US. Since publication of last year's annual report,
the Chair has relocated to Houston where Pantheon has leased office space at
an attractive rate, and shortly after the end of the fiscal year, recruited
new Houston based personnel including a Chief Financial Officer and a VP of
Human Resources.
Ensure appropriate levels of governance Continue to implement and improve governance standards Following the appointment of Allegra Hosford Scheirer as an independent
Non-Executive Director ("NED") in the previous year, in January 2024 the Board
appointed Linda Havard as an additional independent NED. At the time of
publication of this report, Pantheon has 6 directors, 3 of which are non
executive directors.
The Company has also announced its intention to prepare for a possible US
stock market listing and as part of this has engaged with a 3(rd) party expert
group to assist in bringing Pantheon's governance and control systems up to US
Sarbanes-Oxley standards. This work is ongoing and is driving towards the
objective that governance and control processes will be enhanced significantly
across the Group, to the standard expected for a US-listed company.
Operational activity in Alaska Drilling / testing wells During the fiscal year, the Alkaid-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. After the fiscal year, specifically in
November, 2024, Pantheon spudded the Megrez-1 well on the Ahpun-Eastern Topset
project area. Drilling operations are ongoing as of the date of this report.
Third party expert validation of Alaskan assets Receipt of third party expert reports During the year, three IERs were completed on the Group's projects:
1. Netherland Sewell & Associates published a report estimating a 2C
Contingent Resource of 1.2 billion barrels of marketable liquids (oil,
condensate, NGLs) and 5.4 trillion cubic feet (Tcf) of natural gas on the
Kodiak project.
2. Cawley & Gillespie & Associates published a report estimating a 2C
Contingent Resource of 282 million barrels of marketable liquids and 0.8
trillion cubic feet (Tcf) of natural gas on the Ahpun - Western Topset
project.
3. Lee Keeling & Associates published a report estimating a 2C Contingent
Resource of 79 million barrels of marketable liquids and 0.4 trillion cubic
feet (Tcf) of natural gas on the Ahpun - Alkaid project.
Consider farmout or project development options Progress towards farmout or project development Pantheon's understanding of the geological potential (and therefore economic
potential value) of the assets has increased materially. This has been further
supported by the three IERs received on the Group's projects. The Group's
revised strategy prioritised the Company developing the assets on its own
rather than pursuing a farmout in the short term, with FID on the Ahpun
project targeted for 2H 2027, first production of oil in 2028, and FID on the
Kodiak project targeted by 2029. The Group believes that greater value can be
generated for shareholders by following this strategy. 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.
Additionally, in June 2024, the Group executed a GSPA with the AGDC with the
ambition of using Pantheon's natural gas to supply the proposed natural gas
pipeline, defined as Phase 1 of Alaska LNG. Under the proposed terms Pantheon
would supply its natural gas at beneficial terms in exchange for funding
support or significant loan guarantees, estimated to be sufficient to
materially lower the Group's capital expenditures requirement to first
production.
Ensuring continued high-quality technical consultant relationships Establish and maintain relationships with industry experts and review Pantheon's technical team enjoyed another year of continuity. Experts such as
performance eSeis, AHS Baker Hughes and SLB remain contracted and work with all these
partners continues. Pantheon also contracted with three independent expert
groups during the year for the provision of IERs to provide resource estimates
on the Group's projects.
Continue to build and refine resource potential Estimated resource Pantheon successfully acquired 65,691 new acres following the lease sales of
December 2023 which were formally awarded in August 2024. The new acreas
contain material resource potential on the Ahpun Eastern Topset Project and to
the updip north western extension of the existing Kodiak acreage in shallower
depositional setting where reservoir properties are forecast to be high
quality. During the year the Company received three IERs estimating a combined
2C contingent resource of c.1.6 billion barrels of ANS crude and 6.6 Tcf of
natural gas.
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 and with respect to
provision of Pantheon's natural gas into the proposed Alaska LNG.
The State of Alaska receives a royalty on all future oil and gas production on
Pantheon's projects.
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. Leases
generally have a 10-year initial term, $10 per acre rentals and low royalties
of between 12.5% - 16.7% to the State of Alaska.
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 production or being included in a unit.
Unitization recognises that the Group has established, to the State's
satisfaction, that the unit encompasses all or part of one or more 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 terms, 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 much of the Ahpun project
and some of the Kodiak projects. Most of Pantheon's Kodiak project is now
covered by leases of c.5 years or more of remaining initial term.
The Group may be unable to access sufficient capital to adequately progress
its projects
Continued appraisal and development of the Group's projects requires access to
additional capital. Whilst the Group is confident that the quality of its
assets should enable it to access additional capital, there can never be
guarantees that such capital will be available as and when required. To
mitigate this risk the Group continues to consider capital from various
sources including equity, non-equity sources, mezzanine debt, as well as
industry transactions such as farm outs. The receipt of three independent
expert reports which estimate a combined total of c.1.6 billion barrels of ANS
crude together with c.6.6 Tcf of natural gas give the Group great confidence
that it will be able to attract finance in the future. Additionally,
initiatives such as the Gas Sales Precedent Agreement executed with Alaska
Gasline Development Corporation provide potential for additional non equity
funding.
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 probable 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's Willow project; however, even in that case,
through ongoing consultation, a suitable compromise was reached allowing the
project to be developed. Helpfully, unlike the Willow project, Pantheon's
projects are all located on state land, not federal land, and therefore have
not been negatively 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 proceedings.
The Company has had two of its subsidiaries involved in litigation in Texas,
with the case styled Pantheon Oil & Gas LP and Pantheon East Texas LLC v.
Kinder Morgan Treating, LP, Cause No. 2021-41735, in the 113th Judicial
District Court of Harris County, Texas.
The case proceeded to trial in late October and the jury rendered a verdict in
favor of Pantheon Oil & Gas on all counts. Following the verdict,
Pantheon Oil & Gas and Pantheon East Texas filed a motion for entry of
final judgment in their favor, along with a request for a discretionary award
of attorney fees. Kinder Morgan Treating has filed a motion for judgment in
its favor notwithstanding the verdict and a pleading challenging Pantheon Oil
& Gas and Pantheon East Texas's claim to recover attorney fees. Those
post-trial motions are set for hearing in mid-January 2025.
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 that it conducts operations in a legal and
responsible manner and complies with applicable 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 upgrading, marketing, pricing,
taxation, and transportation of oil and gas and related products and other
matters. Amendments to current laws and regulations governing operations and
activities of oil and gas exploration and development operations could have a
material adverse impact on the 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 also can be 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.
Linda Havard
Director
December 7, 2024
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2024
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 2024.
Results
The Group results for the period are set out herein beginning on page 42. The
Directors do not propose to recommend any distribution by way of a dividend
for the years ended 30 June 2024, and did not for the fiscal year 2023.
Future Developments
The Group announced a refreshed strategy in late summer 2023, where it
outlined its goal of achieving FID by end 2025, subsequently amended to 2H of
2027 on the Ahpun project and by 2029 on the Kodiak project. The Group also
announced that it was considering a listing or dual listing on a US 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 thinking. This work is ongoing. The Group also announced it had
commenced the process of working towards a hot-tap into the TAPS, to allow the
sale of future production directly into the pipeline. Additionally, Pantheon
has executed a GSPA with AGDC for the intended future supply of Pantheon's
natural gas into the proposed 800 mile natural gas pipeline (Phase 1 of the
Alaska LNG project) from the Alaska North Slope to Nikiski in Alaska's
south. Southcentral Alaska is facing an impending energy crisis and is
actively evaluating its options to best resolve this near term issue. In
September 2024, Wood Mackenzie published a draft report on Alaska LNG, which
concluded that gas supply via the proposed pipeline (when compared to other
alternatives such as importing LNG) provides higher economic impact, jobs and
lower delivered costs by stimulating demand, despite requiring higher capital
expenditures. The commercial arrangements agreed to between Pantheon and AGDC
involve Pantheon supplying its natural gas into the pipeline at beneficial
rates in exchange for providing commercial support to reduce the cost of
project financing and/or enable other commercial opportunities, as specified
in the GSPA. In November 2024, Wood Mackenzie published their final report on
Alaska LNG which concluded that the Alaska LNG project would, in their
opinion, deliver material economic benefits to the State of Alaska. These
conclusions were echoed by Governor Dunleavy. In addition, President-elect,
Donald Trump, made very supportive statements in support of the proposed gas
pipeline (Phase 1, Alaska LNG).
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 17 to these accounts.
Directors
The Directors who served at any time during the year were:
Name Role
David Hobbs Executive Chair
John Cheatham Chief Executive Officer
Justin Hondris Director, Finance & Corporate Development - resigned 27 September, 2024
Robert Rosenthal Technical Director
Jeremy Brest Non-Executive Director
Allegra Hosford Scheirer Non-Executive Director - appointed 3 July, 2023
Linda Havard Non-Executive Director - appointed 1 January 2024
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 Number of Ordinary shares of £0.01
30-Jun-23 30-Jun-24
David Hobbs 1,717,229 3,697,684
John Cheatham 4,235,346 4,235,346
Justin Hondris((1)) 1,844,753 1,844,753
Robert Rosenthal 1,353,758 1,867,821
Jeremy Brest 1,379,703 2,322,608
Allegra Hosford Scheirer Nil Nil
Linda Havard Nil Nil
(1) Some of these ordinary shares are beneficially owned by the spouse of J
Hondris.
Share options and restricted stock units
The Directors held the following share options of Ordinary shares of £0.01,
at the beginning and end of the year:
Director As at 30 June 2023((1)) Granted during the year((2)) Exercised during the year As at 30 June 2024
David Hobbs - - - -
John Cheatham 10,060,000 - - 10,060,000
Justin Hondris 8,340,000 - - 8,340,000
Robert Rosenthal 6,075,000 - - 6,075,000
Jeremy Brest 1,500,000 - - 1,500,000
Allegra Hosford Scheirer - - - -
Linda Havard - - - -
1. Comprising a combination of previously vested share options granted in
2014, 2020, 2021 and 2022.
2. No share options were granted or exercised during the year.
3. Subsequent to year end, in September, 2024 a total of 4.825 million
2014 series share options expired without exercise.
4. Subsequent to year end, in October 2024, the Group issued a total of 8
million share options to Directors. These share options vest over 5 years, are
subject to additional performance based vesting conditions and have an
exercise price of $0.835, representing a 290% premium to the share price the
day prior to grant.
Report on Directors' remuneration and service contracts
The service contracts of all the Directors are subject to a three-month
termination period.
Directors' remuneration
Director Fees/basic salary Pension Contributions Health Insurance 2024 Total 2023 Total
($) ($) ($) ($) ($)
D Hobbs ((1)) 252,654 - 15,598 269,544 11,365
J Cheatham 427,769 - - 433,370 525,163
J Hondris ((2)) 439,925 21,905 7,275 469,105 448,920
R Rosenthal 395,205 - - 395,205 372,389
J Brest 41,481 - - 41,481 39,931
A Hosford Scheirer 41,481 41,481 -
L Havard ((3)) 20,741 20,741 -
Total 1,619,256 21,905 29,766 1,670,927 1,397,768
(1) D Hobbs contract covers 3 days per week
(2) J Hondris resigned as a director subsequent to year end, on 27
September, 2024
(3) Appointed 1 January, 2024
Share Option Plan
The Company has in place a Share Option Plan for the long term benefit of all
staff and permanent onsultants, 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.
In October 2024 it was announced that this scheme had been replaced by a new
scheme, the Employee Share Ownership Scheme ("ESOP") which comprises a "share
award scheme" and a "Long Term Incentive Plan" of share options for directors
and certain officers. Grants of both share options and stock awards
("Restricted Stock Units" or RSUs) were granted to directors, executive
management and other staff on 23 October, 2024.
Subsequent events
Details of subsequent events can be found at Note 30.
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 2 December 2024.
Shareholder Ordinary shares % of Ordinary shares
LYNCHWOOD NOMINEES LIMITED 136,773,097 12.00
VIDACOS NOMINEES LIMITED 120,414,356 10.57
VIDACOS NOMINEES LIMITED 90,303,966 7.93
INTERACTIVE BROKERS LLC 83,887,924 7.36
HARGREAVES LANSDOWN (NOMINEES) LIMITED 42,011,171 3.69
PERSHING NOMINEES LIMITED 35,421,628 3.11
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"), and observes that there is an updated QCA Code of
2023 that will apply for FY 2025. With respect to the FY 2024, the Company
published a statement on 1 August 2024 setting out how it complies with the 10
principles of the QCA Code. That statement is available at:
https://www.pantheonresources.com/images/governance/Corporate_Governance_Statement_-_Aug_2024.pdf
(https://www.pantheonresources.com/images/governance/Corporate_Governance_Statement_-_Aug_2024.pdf)
.
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. In addition to the QCA Code, the Company
has adopted a share dealing code for the Board and employees of the Company.
As previously announced, the Company is making preparations for a possible US
stock market listing. As part of these preparations, the Group has hired a
specialist consulting firm to assist it in building its controls and processes
to meet US Sarbanes-Oxley standards. This is a very comprehensive, process
which is presently underway, and its enhancements to corporate governance will
be in addition to maintaining the Company's current compliance with the QCA
Code.
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 historically 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. As the Group builds towards development of its projects
and a possible US stock market listing, the organization will naturally grow
both in headcount and in operational capacity. 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 seeks to manage corporate overhead expenditures, whilst balancing the
need to hire and retain the best personnel, advisors and infrastructure in
order to 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 by necessity increasing, and are monitored
by management to ensure appropriate levels of spending.
The Executive members of the Board of Directors, along with other Executive
Management, participate in a weekly video conference call, during which they
discuss, inter alia, the strategic direction, regulatory obligations and
operational status of the Group, and as a result any significant deviation or
change, should such occur, will be highlighted to the remainder of the Board
promptly. Once per month, Non-Executive Directors join the weekly executive
call. The Board has also met in person, four times during the 2024 financial
year 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 two corporate communications firms which actively
engage with the press, investors, analysts, and with social media. The second
of these firms was retained in October 2024 in order to increase the profile
to the US investment community and to the US press. The Group also retains a
Corporate Broker and Nominated Adviser ("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 also utilises outside legal, corporate communications, and company
secretarial specialist firms to provide advice and recommendations on various
shareholder considerations where relevant. The Company hosts a weekly
conference call with all Executive Directors, Executive Management, and its
NOMAD/Broker. During these conference calls any shareholder considerations
identified over the course of the week can be addressed and responded to
accordingly, as well as other operational, financial, strategic advice of
other relevant matters. The Company regards the AGM as an important
opportunity to communicate directly with shareholders via detailed
presentations and in an open question and answer session. The AGM includes a
detailed investor presentation and Q&A session; in recent years, this has
been held by a separate webinar to enable global 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, 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 in its Section 172 Statement, on page 11.
The Company is conscious of its impact on the geological, archeological,
cultural and bisological 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 that 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
The Company hosts a weekly conference call with all Executive Directors,
Executive Management, and its NOMAD/Broker. 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. In addition, you may refer to pages 12-13 for an
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, as are described in the Chief
Financial Officer'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, to be 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 due to the size of the Company and the close day-to-day
control exercised by the Executive Directors.
The Finance, Audit and Risk Committee meets at least two times per year
(typically four times per year) where these internal and financial controls
are discussed as required, where, inter alia, budgets/forecasts and other key
financial matters are discussed.
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 Finance, Audit and Risk
Committee of the Board.
The Board
As at the date of this report, the Board comprises three non-executive
Directors and three executive Directors. 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 budgets (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, inter alia, drilling, geological and operational matters,
purchasing procedures, contract approval procedures (within limits),
accounting and administration, 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 executive directors
hold weekly conference calls, attended by the Company's NOMAD, in order to
keep the executive 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, at weblink
https://pantheonresources.com/index.php/about-us/board
(https://url.uk.m.mimecastprotect.com/s/G0oMCZzGyhnQ6323CzfEIBUu__?domain=pantheonresources.com)
. Board members are expected to attend all formal board and applicable
committee meetings, as well as weekly informal board meetings with the
Company's NOMAD (monthly for non executive directors). The board meets
formally at least 4 times per year, with meetings usually running for a
minimum of 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. All three non-executive directors are considered by the
Board to be independent. In addition, subsequent to the end of the fiscal
year 2024, each committee was restructured such that all have a majority
membership of NEDs and, with the exception of the Nominations Committee, are
chaired by an NED.
The Board has a number of committees as explained below.
Finance, Audit, and Risk Committee
During the fiscal year, The Finance, Audit and Risk Committee consisted of
Linda Havard as Chair with all other directors as members. As noted earlier,
subsequent to the end of the fiscal year 2024, this committee was restructured
such that all have a majority membership of NEDs. The current members are
Linda Havard, Jeremy Brest, and Jay Cheatham, with Ms. Havard remaining as
Chair. This Committee provides a forum through which the Group's finance
functions and auditors, report to the Board. Meetings may be attended, by
invitation, by the Company's NOMAD, Company Secretary, other
directors/executives and the Company's auditors.
The Finance, Audit and Risk Committee meets at least twice per year, but
typically four times per year. For the financial year ended 30 June 2024 there
were four Finance, Audit and Risk 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 Finance, Audit and Risk
Committee will also interact with the auditors and review their reports
relating to accounts and internal control systems. The Finance, Audit and
Risk Committee does not have a formal policy on auditor rotation, however the
individual audit partner is required to rotate after a maximum of 5 years.
Remuneration Committee
During the fiscal year, the Remuneration Committee consists of Jeremy Brest as
Chair, with all other Directors as members. As noted earlier, subsequent to
the end of the fiscal year 2024, this committee was restructured such that it
has a majority membership of NEDs. The current members are Jeremy Brest,
Linda Havard, Allegra Hosford Scheirer, and David Hobbs, with Mr. Brest
remaining as Chair. The Committee met four times during the year. Its role
is to determine the remuneration arrangements and contracts of all Directors
and senior employees, and the appointment or re-appointment of Directors.
Specifically, Executive Directors recommend remuneration for Executive
Management and other senior employees, and the Remuneration Committee approves
of these arrangements. In addition, the Executive Director members of the
Remuneration Committee set the remuneration for NEDs, and the NED members of
the Remuneration Committee set the remuneration of the Executive Directors.
No Director, however, is involved in deciding matters of his or her own
remuneration.
Nominations Committee
During the fiscal, the Nominations Committee is chaired by David Hobbs, with
all other Directors being members. As noted earlier, subsequent to the end
of the fiscal year 2024, this committee was restructured such that it has a
majority membership of NEDs; however, this Committee continues to have an
Executive Director as its Chair. The current members are David Hobbs, Linda
Havard, Jeremy Brest, Allegra Hosford Scheirer, and Jay Cheatham, with Mr.
Hobbs remaining as Chair. The Committee meets as and when required. Its role
is to consider and oversee board composition, recruitment and succession
planning.
Conflicts Committee
During the fiscal year, the Company has established a Conflicts Committee
which consists of Allegra Hosford Scheirer as Chair, with all other Directors
as members. As noted earlier, subsequent to the end of the fiscal year 2024,
this committee was restructured such that it has a majority membership of
NEDs. The current members are Allegra Hosford Scheirer, Jeremy Brest, and
David Hobbs, with Ms. Hosford Scheirer remaining as Chair. 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
During the fiscal year, the Company has established an Anti-Corruption &
Bribery Committee Committee for which Justin Hondris was Chair, with all other
Directors as members, during the fiscal year. As noted earlier, subsequent
to the end of the fiscal year 2024, this committee was restructured such that
it has a majority membership of NEDs.
Following Mr Hondris' resignation as a Director, Allegra Hosford Scheirer
assumed the Chair role of the Anti-Corruption and Bribery Committee. The
current members are Allegra Hosford Scheirer, Linda Havard, and David Hobbs,
with Ms. Hosford Scheirer remaining as Chair. 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 Company's website and in
the annual report, along with a clear description of the Director's role and
experience.
EVALUATING BOARD PERFORMANCE
As the Company has grown, and with its stated intention of pursuing a listing
on a US stock exchange, the Board is reviewing the board performance and
effectiveness and is adding additional resource if/where appropriate. Pantheon
will continue to liaise with its advisors as to the most appropriate
composition and effectiveness of the board and executive management team.
ETHICAL VALUES & BEHAVIOURS
The Company operates a corporate culture that is based on ethical values and
behaviors and treats staff, consultants, operational and financial
stakeholders fairly and with respect. It will maintain a quality system
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 dialogue with employees, consultants and other stakeholders. At the
time of writing, the board comprised four 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 has a
target to eliminate its Scope 1 and Scope 2 greenhouse gas emissions by the
later of five years after FID or the calendar year 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 field facilities of Ahpun and Kodiak to be all
electric, with CCS (carbon capture & storage) applied to power generation
exhausts, beginning from the later of five years after FID or calendar year
2030. To the extent possible, we will ensure that all electricity purchases
by the company are from zero GHG (greenhouse gas) emission sources.
Furthermore, after the later of five years after FID or calendar year 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) and/or acquire suitable
offsets as and when appropriate.
To minimise the physical footprint of the Company's development activities we
will maximise the number of wells drilled from each pad in order to 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 Chair, the Executive
Directors, the various Board Committees, and Executive Management arising as a
result of delegation by the Board. Given the constraints of balancing a small,
cost-conscious Company with a desire to maintain high standards of Corporate
Governance, the Board has adopted a number of initiatives to achieve Corporate
Govenance standards. The Board engages in active, structured and regular
internal communication, including a standing weekly conference call
(including non-executive directors once per month) between the executive
board and its NOMAD (Nominated Advsior to the London Stock Exchange) where
significant matters are tabled and discussed. A NOMAD has a responsibility to
London Stock Exchange for advising and guiding a company on its
responsibilities in relation to its admission to AIM as well as its continuing
obligations of being a listed company. This is in addition to regular, formal
Board meetings, at least 4 times per year. All the Executive Directors and
Executive Management have designated, delegated roles and areas of
responsibility and engage with the Company's shareholders and stakeholders in
accordance with relevant regulatory and corporate governance 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 and Executive 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 US stock market listing.
The Finance, Audit, and Risk Committee meets at least twice per year, but
typically a minimum of four times per year, where internal and financial
controls are reviewed as required and assets are also assessed for impairment
considerations.
COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
Page 11 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 broker
arranged non-deal roadshows, shareholder presentations and webinars, all of
which allow shareholders to discuss issues and provide feedback as
appropriate. The Company also retains the services of two specialist corporate
communications advisors to assist in promoting awareness of the Company's
activities to its shareholders and wider audience. The second of these was
retained with the objective of improving the Group's profile in the US.
The Board have not published a Finance, Audit and Risk Committee or
Remuneration Committee report, which the Board considers to be appropriate
given the size and stage of development of the Company.
Upon the conclusion of the AGM of the Company, 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:
a) there is no relevant audit information of which the Company's
auditors are unaware; and
b) all the Directors have taken all the steps that they ought to
have taken to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
By order of the board
Linda Havard
Director
December 7, 2024
DIRECTORS' BIOGRAPHIES
FOR THE YEAR ENDED 30 JUNE 2024
Biographical details of the Directors of the Company can be found on the
'About Pantheon' section of the Company's website, at weblink
https://pantheonresources.com/index.php/about-us/board
(https://url.uk.m.mimecastprotect.com/s/G0oMCZzGyhnQ6323CzfEIBUu__?domain=pantheonresources.com)
. Additional details now follow:
David Hobbs, Executive Chair
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 Chair 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 Remuneration
Committee, Finance, Audit, and Risk Committee, Conflicts Committee, and
Anti-Corruption & Bribery Committee.
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 member of the Nominations Committee, Remuneration Committee, Finance,
Audit, and Risk Committee, Conflicts Committee, and Anti-Corruption and
Bribery 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 Nominations Committee, Remuneration
Committee, Finance, Audit and Risk 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 Remuneration Committee, and a member of the Finance,
Audit and Risk Committee, the Conflicts Committee, Nominations Committee, and
the 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 the Anti-Corruption &
Bribery Committee, and is a member of the Finance, Audit and Risk Committee,
Remuneration Committee and Nominations Committee.
Linda Havard, Non-Executive Director (appointed January 2024)
Linda Havard has more than 35 years' experience as a financial and operating
executive in public oil and gas and entertainment companies as well as
professional services firms. She most recently served as Chief Financial
Officer of Gensler, the world's largest architecture and design firm.
Previously, she served for six years as Chief Financial Officer at the global
law firm of Orrick, Herrington & Sutcliffe, 13 years as Executive Vice
President and Chief Financial Officer of Playboy Enterprises and 15 years at
ARCO (now BP Amoco), where she headed Corporate Planning and Investor
Relations, among other senior positions.
Linda holds an MBA in Finance from the University of California at Los Angeles
and a PhD (honoris causa) in Business from the Chicago School of Professional
Psychology. She is a member of the Atlanta Federal Reserve Board CFO Panel,
the International Women's Forum, and the Governing Body of the CFO Executive
Summit.
Linda is Chair of the Finance, Audit and Risk Committee and a member of the
Remuneration, Nominations, Conflicts and Anti-Corruption & Bribery
Committees.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2024
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 2024 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated and Parent Company Statements of Changes in Equity, the
Consolidated and Parent Company Statement of Financial Position, the
Consolidated and Parent Company Statements of Cash Flows and 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 2024 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 further funding will be required within the 12 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 director's
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 and parent company's ability to continue to adopt the
going concern basis of accounting included:
· Challenging the inputs and assumptions used in the forecasts
prepared by management 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.
· Corroborating the committed cash flows against contractual
arrangements and historic information and compared general budgeted overheads
to current run rates.
· Identifying and evaluating subsequent events which affect going
concern and evaluating the likelihood of occurrence of forecast and impact on
the future cash inflows.
· Stress-testing the forecasted cash flows by increasing
expenditures, as well as critically reviewing committed versus non committed
expenditure, in order to evaluate the likelihood of potential downside
scenarios that may have an impact on headroom.
· Comparing actual results for the year to previous budgets to
assess the accuracy of management's forecasting.
· Reviewing post year end information such as minutes of board
meetings and Regulatory News Service (RNS) announcements.
· Reviewing post year end cash position as at the end of October
2024 and compared this against the forecasted position.
· Discussing with management as to the strategies that they are
pursuing to secure further funding if and when required. Considering
management's past history in relation to the ability to raise funds.
· Assessing the adequacy of the disclosures in respect of going
concern including the uncertainty over the ability to raise additional funds.
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 (2023: 2% of net assets) to both the group and
the parent company.
Whilst materiality applied to the group financial statements was $5,545,000
(2023: $5,000,000), each significant component of the group was audited to a
lower level of materiality. The parent company materiality was $5,267,000
(2023: $4,750,000) with the other significant components being audited to
materialities ranging between $1,099,000 - $2,637,000 (2023: $1,105,000 -
$2,424,000). These materiality levels were used to determine the financial
statement areas that are included within the scope of our audit work and the
extent of sample sizes during the audit.
Performance materiality is the application of materiality at the individual
account or balance level 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%
(2023: 70%) of the above materiality levels for both group and parent company,
equating to $3,881,000 (2023: $3,500,000) and $3,686,000 (2023: $3,325,000),
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 $277,000 (2023: $250,000) for the financial statements as a whole
and $263,000 (2023: $237,500) 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 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 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, 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
(note 13)
As disclosed in note 13 to the Group Financial statements, the Group's Our work in this area included:
intangible asset represents capitalised exploration expenditure on projects.
The balance as at 30 June 2024 was $293,635,128 (2023: $286,668,349). Note · Obtaining a full schedule of leases relating to exploration assets
1.13 discloses critical accounting estimates and judgements in this area. and reviewing available information to assess whether the leases remained in
good standing;
· Discussing with management future plans to develop each prospect,
The Group has capitalised costs in respect of the Group's exploration including consideration of funding that may be required to do so;
interests in accordance with IFRS 6 Exploration for and Evaluation of Mineral
Resources (IFRS 6). The Directors are required to assess the exploration · Challenging management's assessment of impairment in relation to
assets for indicators of impairment and, where they are deemed to exist, to exploration and evaluation assets, taking into consideration the impairment
undertake a full impairment review to assess the need for impairment charges. indicators outlined in IFRS 6. Challenging and corroborating key inputs and
This may involve making significant judgements and assumptions relating to the assumptions made by management;
timing, amount and probability of future cash flow.
· Reviewing the minutes of Board meetings and RNS announcements for
indicators of impairment;
We therefore identified the risk over impairment of exploration and evaluation · Obtaining and reviewing reports prepared by independent experts on
assets as a significant risk and, due to the magnitude of the balance and the the portfolio of assets and reviewing key findings against management's
level of management judgement involved, we concluded this risk to be a key assertions and IFRS 6 impairment indicators;
audit matter.
· Substantively testing a sample of exploration and evaluation
additions during the year by corroborating to the original source
documentation 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.
Based on our audit procedures performed, the carrying value of exploration
assets is not materially misstated.
Carrying value of loans due from subsidiary companies in the parent company
(note 9)
Under IAS 36 'Impairment of Assets', companies are required to assess whether Our work in this area included:
there is any indication that an asset may be impaired at each reporting
date. · Reviewing the loan balances for any indicators of impairment in
accordance with IAS 36, including a review of the underlying net asset
The parent company has loans due from subsidiary companies of $292,828,674 balances in the related entities and considering the work done in respect of
(2023: $279,494,628) which form part of the company's net investment in these the recoverability of intangible assets within these entities;
subsidiaries. These balances represent the most significant account on the
company statement of financial position and there is a risk they may be · Obtaining and reviewing management's assessment of the recoverability
impaired as a result of the subsidiary companies incurring losses. Note 1.13 of these balances and corroborating, as well as challenging the key inputs and
discloses critical accounting estimates and judgements in this area. assumptions made by management in arriving at their conclusions; and,
Key judgements and assumptions regarding the impairment of the balances · Assessing the appropriateness of presentation and adequacy of
include the timing, extent and probability of future cash flow from the disclosures in the financial statements.
subsidiary companies.
We therefore identified the risk over the impairment of loans due from
subsidiary companies as a significant risk in the parent company financial Based on our audit procedures performed, the carrying value of loans from
statements, and, due to the magnitude of the balance and the level of subsidiary companies in the parent company is not materially misstated.
management judgement involved, we concluded this risk 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 UK Companies Act 2006;
o Quoted Companies Alliance (QCA) Corporate Governance Code
o UK-adopted international accounting standards;
o AIM Rules; and,
o Local industry 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 minutes of board meetings and other correspondence
during the year and post-year end; and,
o Reviewing 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 level.
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
carrying value of exploration assets and the carrying value of loans due from
subsidiary companies in the parent company and we addressed this as outlined
in the Key Audit Matters section.
· 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 subsidiary 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
(https://url.avanan.click/v2/___http:/www.frc.org.uk/auditorsresponsibilities___.YXAzOmdyZWF0YmVhcjphOm86N2ZkODE5Njc2Yjc3YmE3MjVlMTM3MGVkYTQ2NzY5ZjI6NjpkMTM5OjU1M2IxNTcyMWFlNjQyNDE1NmFlYTIwZjljYmZjMjQ4NTQ2ZGIxNzY3NTdhYjM0OGNlYTM4N2M2MGI1Mjc2Mzg6cDpUOk4)
. 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)
Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
7 December 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
Notes 2024 2023
$ $
Continuing operations
Revenue 27 13,393 803,689
Cost of sales (7,153) (673,290)
Gross profit 6,240 130,399
Administration 3 (8,773,748) (3,870,673)
expenses
Share Based payments expense 23 - (3,146,170)
Operating loss 4 (8,767,508) (6,886,444)
Interest Expense - Convertible Bond and other 15 (4,893,640) (6,111,118)
Convertible Bond - Revaluation of Derivative Liability 15 (337,055) 11,321,514
Other Income 28 - 30,000
Interest receivable 6 630,371 338,205
Loss before taxation (13,367,832) (1,307,843)
Taxation 7 1,822,247 (138,844)
Loss for the year (11,545,585) (1,446,687)
Other comprehensive income for the year
Exchange differences from translating foreign operations 29 (52,924) (3,185,937)
Total comprehensive loss for the year (11,598,509) (4,632,624)
Basic and diluted loss per share 2 (1.25)¢ (0.18)¢
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 2024
Share Share Retained Currency Share Total
Capital premium losses reserve based payment reserve equity
$ $ $ $ $ $
Group At 1 July 2023 12,464,677 297,830,078 (49,444,331) (2,692,860) 14,271,042 272,428,606
Loss for the year - - (11,545,585) - - (11,545,585)
Other comprehensive income: Foreign currency translation - - - (52,924) - (52,924)
Total comprehensive income for the year - - (11,545,585) (52,924) - (11,598,509)
Transactions with owners
Capital Raising
Issue of shares (note 17) 466,487 9,837,080 - - - 10,303,567
Issue Costs - - - - - -
Issue costs paid in cash - - - - - -
Convertible Bond - Amortisation
Issue of shares 208,228 5,561,332 - - - 5,769,560
Total transactions with owners 674,715 15,398,412 - - - 16,073,127
Balance at 30 June 2024 13,139,392 313,228,490 (60,989,916) (2,745,784) 14,271,042 276,903,224
See note 26 for a description of each reserve account included above.
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
Share Share Retained Currency Share Total
Capital premium losses reserve based payment reserve equity
$ $ $ $ $ $
Company
At 1 July 2023 12,464,677 297,830,078 (34,369,174) (18,993,994) 14,271,042 271,202,629
Loss for the year - - (7,199,103) - - (7,199,103)
Other comprehensive income: Foreign currency translation - - - (1,130,441) - (1,130,441)
Total comprehensive income for the year - - (7,199,103) (1,130,441) - (8,329,544)
Transactions with owners
Capital Raising
Issue of shares (note 17) 466,487 9,837,080 - - - 10,303,567
Issue costs - - - - - -
Issue costs paid in cash - - - - - -
Convertible Bond - Amortisation
Issue of shares 208,228 5,561,332 - - - 5,769,560
Total transactions with owners 674,715 15,398,412 - - - 16,073,127
Balance at 30 June 2024 13,139,392 313,228,490 (41,568,277) (20,304,435) 14,271,042 278,766,212
See note 26 for a description of each reserve account included above.
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 (note 17) 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 RSU's
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 12,464,678 297,830,081 (34,369,175) (18,993,994) 14,271,041 271,202,629
See note 26 for a description of each reserve account included above.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Notes 2024 2023
$ $
ASSETS
Non-current assets
Exploration & evaluation assets 13 293,635,128 286,668,349
Property, plant and equipment 16 129,200 38,570
293,764,328 286,706,919
Current assets
Trade, other receivables and deposits 9 2,944,543 2,559,522
Cash and cash equivalents 10 7,913,862 20,661,012
10,858,405 23,220,534
304,622,733 309,927,453
Total assets
LIABILITIES
Current liabilities
Convertible Bond - Debt 15 7,090,177 9,755,688
Trade and other payables 11 703,496 2,840,610
Provisions 12 5,921,030 6,017,238
Lease Liabilities 14 63,395 36,435
13,778,098 18,649,971
Non-current liabilities
Lease Liabilities 14 69,028 -
Convertible Bond - Debt 15 13,127,532 16,619,062
Convertible Bond - Derivative 15 744,851 407,566
Deferred tax liability 7 - 1,822,247
13,941,411 18,848,875
27,719,509 37,498,847
Total liabilities
Net assets 276,903,224 272,428,607
EQUITY
Capital and reserves
Share capital 17 13,139,392 12,464,677
Share premium 313,228,490 297,830,078
Retained losses (60,989,916) (49,444,331)
Currency reserve (2,745,784) (2,692,860)
Share based payment reserve 23 14,271,042 14,271,042
Shareholders' equity 276,903,224 272,428,607
The financial statements were approved by the Board of Directors and
authorised for issue on the December 7, 2024 and signed on its behalf by
Linda
Havard
Philip Patman, Jr.
Director
Chief Financial Officer
December 7,
2024
December 7, 2024
Company Number 05385506
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Notes 2024 2023
ASSETS $ $
Non-current assets
Property, plant and equipment 16 25,698 38,570
Loans to subsidiaries 9 292,828,674 279,494,628
292,854,372 279,533,198
Current assets
Trade and other receivables 9 106,334 154,161
Cash and cash equivalents 10 7,543,991 19,518,284
7,650,325 19,672,445
300,504,697 299,205,643
Total assets
LIABILITIES
Current liabilities
Convertible Bond - Debt 15 7,090,177 9,755,688
Trade and other payables 11 278,864 617,425
Provisions 12 470,630 566,838
Lease Liability 14 26,431 36,435
7,866,102 10,976,386
Non-current liabilities
Convertible Bond - Debt 15 13,127,532 16,619,062
Convertible Bond - Derivative 15 744,851 407,566
13,872,383 17,026,628
21,738,485 28,003,014
Total liabilities
Net assets 278,766,212 271,202,629
EQUITY
Capital and reserves
Share capital 17 13,139,392 12,464,677
Share premium 313,228,490 297,830,078
Retained losses (41,568,277) (34,369,174)
Currency reserve (20,304,435) (18,993,994)
Share based payment reserve 23 14,271,042 14,271,042
Shareholders' equity 278,766,212 271,202,629
In accordance with the provisions of Section 408 of the Companies Act 2006,
the Company has not presented an income statement. A loss for the year ended
30 June 2024 of $7,199,103 (2023: profit of $3,399,226) has been included in
the consolidated income statement.
The financial statements were approved by the Board of Directors and
authorised for issue on the December 7, 2024 and signed on its behalf by
Linda
Havard
Philip Patman, Jr.
Director
Chief Financial Officer
December 7,
2024
December 7, 2024
Company Number 05385506
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
Notes 2024 2023
$ $
Net outflow from operating activities 18 (11,365,415) (11,395,855)
Cash flows from investing activities
Interest received 630,371 338,205
Interest paid (757) -
Funds used for drilling, exploration and leases 13 (6,966,779) (48,246,055)
Property, plant and equipment - (3,251)
Net cash outflow from investing activities (6,337,165) (47,911,101)
Cash flows from financing activities
Proceeds from share issues 17 10,303,566 22,746,441
Issue costs paid in cash - (501,683)
Repayment of borrowing - unsecured convertible bond 29 (5,273,798) -
Repayment of borrowing and leasing liabilities 14 (74,338) (60,913)
Net cash inflow from financing activities 4,955,430 22,183,845
(Decrease) in cash & cash equivalents (12,747,150) (37,123,111)
Cash and cash equivalents at the beginning of the year 20,661,012 57,784,121
Cash and cash equivalents at the end of the year 10 7,913,862 20,661,012
Major non-cash transactions
During the year the Company / Group elected to make two quarterly principal
and interest payments in relation to the unsecured convertible bond. The
details are below;
1. In March 2024 8,820,315 new ordinary shares were issued at a price
of US$0.29 per share to settle the quarterly bond repayment of US$2.7m.
2. In June 2024 7,471,153 new ordinary shares were issued at a price
of US$0.36 per share to settle the quarterly bond repayment of US$2.7m.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
Notes 2024 2023
$ $
Net outflow from operating activities 18 (2,800,734) (1,507,104)
Cash flows from investing activities
Net interest received 556,626 337,894
Loans to subsidiary companies 9 (14,704,205) (56,103,408)
Property, plant and equipment - (3,251)
Net cash outflow from investing activities (14,147,579) (55,768,765)
Cash flows from financing activities
Proceeds from share issues 17 10,303,566 22,746,441
Issue costs paid in cash - (501,683)
Repayment of borrowing - unsecured convertible bond (5,273,798) -
Repayment of borrowing and leasing liabilities (55,748) (60,913)
Net cash inflow from financing activities 4,974,020 22,183,845
(Decrease) / Increase in cash and cash equivalents (11,974,293) (35,092,022)
Cash and cash equivalents at the beginning of the year 19,518,284 54,610,306
Cash and cash equivalents at the end of the year 10 7,543,991 19,518,284
Major non-cash transactions
During the year the Company / Group elected to make two quarterly principal
and interest payments in relation to the unsecured convertible bond. The
details are below;
1. In March 2024 8,820,315 new ordinary shares were issued at a price
of US$0.29 per share to settle the quarterly bond repayment of US$2.7m.
2. In June 2024 7,471,153 new ordinary shares were issued at a price
of US$0.36 per share to settle the quarterly bond repayment of US$2.7m.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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 ("IAS") and in accordance with the provisions of the
Companies Act 2006.
The Group's financial statements for the year ended 30 June 2024 were
authorised for issue by the Board of Directors on December 7, 2024 and were
signed on the Board's behalf by Linda Havard, Director, and Philip Patman,
Jr., Chief Financial Officer.
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 sheet date. At the present time the Group is
advancing towards development of its projects on its own, aiming to achieve
FID on the Ahpun project by 2H of 2027 and FID on the Kodiak project by
2029. This is not to say that the Company is ruling out a potential farmout
notwithstanding the disparity between the market capitalisation of Pantheon
and management's assessment of the intrinsic value of the Company's assets.
However, we believe that materially better terms could be achieved once the
development of the Company's assets 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.
This target is unchanged. The FID on the Ahpun project is now expected to be
delayed to 2H 2027, with the FID on the Kodiak project by 2029. This impacts
the date of first production, now anticipated in 2028, and coupled with
increased project definition and workscope increases the funding requirement
to first production to approximately $150 million. Executing such a strategy
requires significant additional capital, most of which the Company seeks to
access through non equity sources. The Group will also need to secure
additional funding for general working capital, to cover future obligations as
and when they fall due, to continue to progress its key projects, and to
continue its proposed US IPO preparations as planned within the next 12 months
following approval of these financial statements and the Group seeks to secure
such funding by Q2 or Q3 of fiscal year 2025 (for clarity, at latest, Q1 of
calendar year 2025), in the least dilutive manner for shareholders. This
process is presently underway, and Pantheon is procuring appropriate
assistance from its appointed investment banks and other advisors. The
auditors have made reference to this material uncertainty in their audit
report.
We believe that Pantheon's position has improved materially over the past 12
months as a result of the achievement of some major milestones, all of which
greatly increase the Group's confidence in securing its overall funding
requirement to reach first production. These milestones included receipt of
IERs on three of its projects, specifically (i) Kodiak, (ii) Ahpun - Alkaid,
and (iii) Ahpun - Western Topsets, which when combined certified, in
aggregate, a 2C Contingent Resource of 1.6 billion barrels of ANS Crude and
6.6 Tcf of natural gas. Critically however, these IERs estimated a project
NPV10 of $1.9 -$2.2 billion for the Ahpun - Alkaid and Ahpun - Western Topset
projects combined. An NPV estimate based on discounted net present value has
not yet been commissioned for the much larger Kodiak project, but it would
clearly be materially accretive to the intrinsic value of Pantheon's asset
base. The importance here is that Pantheon retains 100% working interest in
each of these projects, which have enormous potential value, and these large
valuations and certified resources give the Company great flexibility in
raising non-equity funding. This includes the ability to leverage any
success in the Megrez-1 well and the value attributable to gas resources
should Alaska LNG Phase 1 proceed. 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 such
alternate funding sources.
The Company believes that the enormous size of the resource already appraised
on Pantheon's acreage provides the potential for more than five hundred wells.
Whilst in absolute terms this would entail cumulative investment estimated in
the billions of dollars over the lifetime of the project, and whilst the
future costs and revenues are uncertain, Pantheon currently estimates that the
maximum negative cumulative outlay over the lifetime of the project could be
as high as $300 million. Once in full development, it is believed that
production revenues would have the potential to self-finance the remaining
development costs, as would typically be the case in such developments.
Furthermore, the Company could fund a substantial portion of the maximum
negative cumulative outlay could through debt secured by expected future
revenues from gas and other hydrocarbon sales.
The Group has no contractual obligation to drill any future wells and the only
obligation is to plug and abandon the Talitha-A test well, the estimated cost
of which ($1.6m) has already been provided for in the financial accounts.
Given the quality and advancement of the assets, the Company is optimistic in
its ability to raise capital as and when required. Accordingly, the financial
statements have been prepared on a going concern basis.
1.5 Revenue
During the previous year oil sales commenced as a result of testing at
Alkaid-2. There were one off FY 2024 oil sales resulting from the re-entry and
flow test of the Alkaid-2 well. This is considered to be non-recurring because
it only occurred during the testing phase and production and thus production
revenues stopped once flow testing operations ended. Once in production,
revenue from contracts with customers will be recognised in accordance with
IFRS15 Revenue from Contacts with Customers, at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods.
Contract balances
A contract asset is the right to consideration in exchange for goods
transferred to the customer. If the Group performs by transferring goods to a
customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional.
The Group does not have any contract assets as performance and a right to
consideration occurs within a short period of time and all rights to
consideration are unconditional.
Interest revenue is recognised on a proportional basis taking into account the
interest rates applicable to the financial assets.
1.6 Foreign currency translation
(i) Functional and presentational currency
The financial statements for the Group and the Company are presented in US
Dollars ($) 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. Monetary assets and liabilities denominated in foreign currencies are
translated at the rate of exchange ruling at the balance sheet date. The
resulting exchange gain or loss is dealt with in the income statement.
The assets, liabilities of the Parent Company are translated into US dollars
at the rates of exchange ruling at the year end. Exchange differences
resulting from the retranslation of currencies are treated as movements on
reserves.
The results of the Parent Company are translated into US dollars at the
average rates of exchange during the year.
(iii) Inter-group Loans
Inter-group Loans are made from the Parent Company to the Subsidiaries. These
loans are denominated in £GBP as the Parent Company's functional currency is
£GBP. At the end of the period the Parent Company presents these loans in
$USD, as the presentation currency is $USD for the Group. Any resulting
foreign exchange gain or loss incurred by the subsidiaries is recorded at
their individual entity level and these loans are then eliminated at the
consolidated level. This treatment has been adopted as these loans, in
substance, more closely resemble a net investment in that foreign operation.
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, CGUs. 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.
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.
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 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
2024 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. To date no depletion
expense has been recorded on the assets currently held by the Group.
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 (unsecured 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 an unsecured convertible bond repayable
in 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 the instrument. This
is considered to be a separable embedded derivative of the 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 $2.46m in drilling deposits lodged
with the state of Alaska. These drilling deposits are held as security to
cover future obligations to the state of Alaska for Great Bear Pantheon to
perform dismantle, removal and restoration activities. Funds held by the
state of Alaska are considered to have virtually no risk of credit loss. These
funds cannot be accessed or utilised by the Group until such time as the state
of Alaska releases the funds back to the Group.
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 exploration & evaluation assets
The first stage of the impairment process is the identification of an
indicator 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 (regional to the Alaska North
Slope, or more localized to the leases held by Pantheon or by specific data
relating to the Group's projects), significant reductions in estimates of
resources (via third-party derived analysis or internally developed analysis),
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,
environmental, 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; next, 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 considers the likelihood that
the subsidiaries will be able to settle the amounts owing, either out of
future anticipated cashflows or through divestment of assets. These loans to
foreign subsidiaries, for which settlement is neither specifically planned,
nor likely to occur in the near term foreseeable future is, in substance, a
part of the Company's investment in foreign operation and impairment is
assessed from this perspective.
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.
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 estimates 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 estimates 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.
Segment Reporting
The operating segments, namely UK (PLC administration) and US (Alaskan
operations/office plus Houston Headquarters), 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, has been identified as the chief operating decision-maker. As such,
the Board of Directors is 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 is 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 reviews 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
IFRS 16 Lease liability in a sale and leaseback (amendment to IFRS 16) 1 January 2024
IAS 1 Amendments to IAS 1: Classification of Liabilities as Current or Non-current 1 January 2024
and Classification of Non-current Liabilities with covenants
IFRS 7 Statement of Cash Flows (Supplier Finance Arrangements) Financial Instruments 1 January 2024
(Supplier Finance Arrangements)
IAS 21 The Effects of Changes in Foreign Exchange Rate (Lack of Exchangeability) 1 January 2024
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.
1.16 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. Foreign exchange gains or losses incurred by the
subsidiaries on the intra-group loans are recorded at their individual entity
level and these loans and associated foreign exchange gains or losses are
subsequently eliminated upon consolidation.
2. Loss per share
The total loss per ordinary share from continuing operations for the group is
1.25 US cents (2023: 0.18 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 925,860,425 (2023: 791,082,592).
The diluted profit per share has been kept the same as the basic profit per
share because as 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 976,299,346 (2023:
841,521,513). Change in shares is reflected in note 17.
3. Segmental information
The Group's activities involve the exploration for oil and gas. There are two
reportable operating segments: "US", which includes the Alaskan Operation plus
administration based in Alaska and Texas and "UK"; Office for Pantheon
Resources PLC.
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 2024.
Year ended 30 June 2024
Geographical segment (Group) UK US Consolidated
$ $ $
Revenue - 13,393 13,393
Cost of sales - (7,153) (7,153)
Administration expenses (2,526,955) (6,246,793) (8,773,748)
Convertible Bond and other - Interest Expense (4,889,255) (4,385) (4,893,640)
Convertible Bond - Revaluation of Derivative Liability (337,055) - (337,055)
Interest receivable 554,162 76,209 630,371
Taxation - 1,822,247 1,822,247
Loss by reportable segment (7,199,103) (4,346,482) (11,545,585)
Exploration & evaluation assets - 293,635,128 293,635,128
Property, plant & equipment 25,698 103,502 129,200
Trade and other receivables 98,759 2,845,783 2,944,542
Cash and cash equivalents 7,543,991 369,871 7,913,862
Intercompany balances 292,828,674 (292,828,674) -
Total assets by reportable segment 300,947,122 4,125,610 304,622,732
Total liabilities by reportable segment (21,738,485) (5,981,023) (27,719,508)
Net assets by reportable segment 278,758,637 (1,855,413) 276,903,224
Year ended 30 June 2023
Geographical segment (Group) UK US 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 & RSU's) (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
4. Operating loss
2024 2023
$ $
Operating loss is stated after charging:
Depreciation - office equipment 4,399 1,869
Depreciation Right of use assets 68,704 55,700
Auditor's remuneration
- group and parent company audit services 172,392 133,000
5. Employment costs
The employee costs of the Group, including Directors' remuneration, are as
follows:
2024 2023
$ $
Wages and salaries 3,224,433 2,680,169
Social security costs 214,898 170,861
Statutory pension costs 21,905 21,087
Share based payments - 3,146,170
3,461,236 6,018,287
The summary of the directors' remuneration is shown in the Directors' report
beginning on Page 23. The Directors are considered to be the key management
during the fiscal year.
2024 2023
Number of employees (including Executive Directors) at the end of the year number number
Management and administration 12 15
6. Interest receivable
2024 2023
$ $
Bank interest 630,371 338,205
7. Taxation
2024 2023
$ $
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 (13,367,832) (1,307,843)
Income (loss) on ordinary activities before taxation multiplied by the (2,807,245) (274,647)
standard US corporate tax rate of 21% (2023: US corporate tax rate of 21%)
Effects of:
State of Alaska tax benefits associated with temporary book-to-tax differences (448,411) (335,421)
US federal tax benefit associated with temporary book-to-tax differences 105,313 748,912
US federal tax benefit associated with reassessed future utilization of loss
carry forward
1,328,095 -
Total tax (credit)/charge (1,822,248) 138,844
Factors that may affect future tax charges
The Group's deferred tax assets and liabilities as at 30 June 2024 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 $136.9m
(2023: $123.6m) 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
$16m (2023: $11.5m). 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 2024 is $Nil (2023: $1,822,247). 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% Operating 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% Lease 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, other receivables, and deposits
Group Group Company Company
2024 2023 2024 2023
$ $ $ $
Amounts falling due within one year:
Prepayments & accrued income 467,026 55,199 98,759 52,500
Other receivables and deposits 2,477,516 2,504,323 7,575 101,661
Total 2,944,542 2,559,522 106,334 154,161
Group Group Company Company
2024 2023 2024 2023
$ $ $ $
Amounts falling due after one year:
Loans to subsidiaries - - 292,828,674 279,494,628
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
2024 2023 2024 2023
$ $ $ $
Cash at bank and in hand
7,913,862 20,661,012 7,543,991 19,518,284
11. Trade and other payables
Group Group Company Company
2024 2023 2024 2023
$ $ $ $
Trade creditors 50,470 251,617 49,403 250,539
Accruals 653,026 2,588,994 229,461 366,886
Total 703,496 2,840,611 278,864 617,425
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 20.
Legal Costs
Legal costs have been provided for due to an ongoing dispute with a
third-party vendor as detailed in Note 25.
Provisions Group Group Company Company
2024 2023 2024 2023
$ $ $ $
Plug and Abandonment 5,200,400 5,200,400 - -
Legal costs 250,000 250,000 - -
Other provision - Irrecoverable VAT 470,630 566,838 470,630 566,838
Total 5,921,030 6,017,238 470,630 566,838
Provisions - Group 2024 Plug and
Abandonment Other Total
$ $ $
Opening balance 5,200,400 816,838 6,017,238
(Decrease) / Increase in period - (96,208) (96,208)
Amounts unused 5,200,400 720,630 5,921,030
Closing balance 5,200,400 720,630 5,921,030
Provisions - Group 2023 Plug and
Abandonment Other Total
$ $ $
Opening balance 4,500,400 785,040 5,285,440
(Decrease) / Increase in period 700,000 31,798 731,798
Amounts unused 5,200,400 816,838 6,017,238
Closing balance 5,200,400 816,838 6,017,238
13. Exploration and evaluation assets
Group 2024 2023
$ $
Cost
At 1 July 286,798,461 237,852,406
Additions 6,966,779 48,246,055
Additions to Asset Retirement Obligations - 700,000
At 30 June 293,765,240 286,798,461
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 293,635,128 286,668,349
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 the 2024 fiscal year of
the three favorable IERs from NSAI (relating to Kodiak), CGA (relating to
Ahpun - Western Topset), and LKA (relating to Ahpun - Alkaid), 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.
Group Group
2024 2023
$ $
Interest expense on lease liabilities 6,566 5,746
Total cash outflow for leases (74,338) (60,913)
As at 1 July 34,124 88,627
Additions to right-of-use assets 164,250 -
Depreciation charge - right of use assets (68,704) (55,700)
Foreign exchange movement on right of use assets (470) 1,198
Carrying amount at the end of the year: 129,200 34,124
Right of use assets
Lease liabilities
Group Group
2024 2023
$ $
Current 63,395 36,435
Non-current 69,028 -
132,423 36,435
Company Company
2024 2023
$ $
Interest expense on lease liabilities 2,181 5,746
Total cash outflow for leases (55,748) (60,913)
As at 1 July 34,124 88,627
Additions to right-of-use assets 44,054 -
Depreciation charge - right of use assets (52,010) (55,700)
Foreign exchange movement on right of use assets (470) 1,198
Carrying amount at the end of the year: 25,698 34,124
Right of use assets
Lease liabilities
Company Company
2024 2023
$ $
Current 26,432 36,435
Non-current - -
26,432 36,435
15. 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. At the end of the financial year,
30 June 2024, the notional outstanding balance is $24.5 million.
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$0.8348 per
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 its discretion. A
full summary of the terms of Convertible Bonds is detailed in the Company's
RNS dated 7 December, 2021. Note that post year end, in July 2024, Pantheon
repaid the final two convertible bond repayments in advance (in respect of the
September 2026 and December 2026 repayments). Accordingly, the final repayment
on the convertible bond is now June
2026.
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 2024, the third party
expert valuation group performed their Monte-Carlo simulation and valuation
calculations to determine the new value for the derivative component to be
$744,851. The resulting movement of $337,055 was posted to the consolidated
statement of comprehensive income to the account "Revaluation of derivative
liability". These amounts will be revalued every balance sheet date with the
differences being accounted for in the consolidated statement of comprehensive
income.
At 30 June 2024 the Unsecured Convertible Bond is shown in the Consolidated
Statement of Financial Position in the following categories;
Convertible Bond - Debt Component (Current Liability) 7,090,177
Convertible Bond - Debt Component (Non-current Liability) 13,127,532
Convertible Bond - Derivative Component (Non-current Liability) 744,851
Total $20,962,560
16. Property Plant and Equipment
Group Office Equipment Right of Use Assets Total
$ $ $
Cost
At 1 July 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
Exchange Difference - (1,042) (1,042)
Additions - 164,250 164,250
At 30 June 2024 21,512 375,854 397,366
Depreciation
At 1 July 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
Depreciation for the year 4,399 68,704 73,103
Exchange difference 48 (573) (525)
At 30 June 2024 21,512 246,654 268,166
Net book value
As at 30 June 2024 - 129,200 129,200
As at 30 June 2023 4,447 34,123 38,570
Company Office Equipment Right of Use Assets Total
$ $ $
Cost
At 1 July 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
Exchange Difference - (1,042) (1,042)
Additions - 44,054 44,054
At 30 June 2024 21,512 255,658 277,170
Depreciation
At 1 July 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
Depreciation for the year 4,399 52,010 56,409
Exchange difference 48 (573) (525)
At 30 June 2024 21,512 229,960 251,472
Net book value
As at 30 June 2024 - 25,698 25,698
As at 30 June 2023 4,447 34,123 38,570
17. Share Capital
2024 2023
$ $
Allotted, issued and fully paid: 13,139,392 12,464,667
960,919,660 (2023: 907,206,399) ordinary shares of £0.01 each
Issued share capital: Issued and fully paid capital
$
Number
As at 30 June 2024 960,919,660 13,139,392
960,919,660 ordinary shares of £0.01 each (2023: 907,206,399)
Total 960,919,660 13,139,392
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 767,705,537 10,720,459 264,879,194
September 22 - Convertible Bond: Third Amortisation 2,800,813 33,893 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 RSU 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
Capital Raise Fees - - (790,418)
As at 30 June 2023 907,206,399 297,830,078
12,464,677
September 23 - Private Placement 11,905,370 145,405 2,585,302
November 23 - Private Placement 16,286,343 203,278 4,024,904
March 24 - Convertible Bond Amortisation 8,820,315 112,874 2,949,386
June 24 - Convertible Bond Amortisation 7,471,153 95,354 2,611,946
June 24 - Private Placement 9,230,080 117,804 3,226,874
As at 30 June 2024 960,919,660 13,139,392 313,228,490
18. Net cash outflow from operating activities
Group Group
2024 2023
$ $
Loss for the year (11,545,585) (1,446,687)
Net interest received (629,614) (338,205)
Share Based Payments (non-cash expense) - 3,146,170
Depreciation of office equipment 4,399 1,869
Depreciation of right of use assets 68,704 55,700
Interest Expense 4,892,883 6,111,118
Convertible Bond - Revaluation of derivative liability 337,055 (11,321,514)
(Decrease) / Increase in Provisions - irrecoverable VAT (96,209) 7,302
Increase in trade and other receivables (385,020) (61,076)
Decrease in trade and other payables (2,137,115) (4,648,183)
Effect of translation differences (52,666) (3,041,194)
Taxation (Benefit) / Charge (1,822,247) 138,844
Net cash outflow from operating activities (11,365,415) (11,395,855)
Company Company
2024 2023
$ $
(Loss) / Profit for the year (7,199,103) 3,399,226
Net interest received (556,626) (337,894)
Share Based Payments non-cash expense - 3,146,170
Depreciation 4,399 1,869
Depreciation of right of use assets 52,010 55,700
Interest Expense 4,888,498 6,111,118
Convertible Bond - Revaluation of derivative liability 337,055 (11,321,514)
(Decrease) / Inrease in Other provisions - irrecoverable VAT (92,889) 7,302
Decrease / (Increase) in trade and other receivables 46,799 (56,878)
(Decrease) in trade and other payables (333,593) (1,324,123)
Effect of translation differences 52,716 (1,188,080)
Net cash outflow from operating activities (2,800,734) (1,507,104)
19. Control
No one party controls the Company.
20. Decommissioning expenditure
Plug & Abandonment
The Directors have considered the environmental issues and the need for any
necessary provision for the cost of rectifying any environmental damage, as
might be required under local legislation. As at 30 June 2024 the Group has
fully provided for the future plug and abandonment charges in relation to its
wells on the Alaskan North Slope. In situations in which a well will likely be
used as a future disposal well, that fact 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 is expected to produce
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 not be expected to 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. Based on this approach, the Group estimates its future
plug/abandonment and environmental remediation liabilities as follows:
Group Group
2024 2023
Alaska $ $
Alkaid Well 666,000 666,000
Alkaid-2 Well 2,970,400 2,970,400
Talitha-A Well 1,564,000 1,564,000
As at 30 June 5,200,400 5,200,400
21. Exploration and evaluation commitments
There were no firm drilling commitments at 30 June 2024. There is an
obligation is to plug and abandon the Talitha-A test well.
22. Financial instruments
The Group's principal financial instruments comprise cash and cash
equivalents, trade and other receivables and trade and other payables.
Financial assets and liabilities are initially measured at fair value plus
transaction costs.
The main purpose of cash and cash equivalents financial instruments is to
finance the Group's operations. The Group's other financial assets and
liabilities, such as receivables and trade payables, arise directly from its
operations. It is, and has been throughout the entire period, the Group's
policy that no proprietary trading in financial instruments for speculative
purposes shall be undertaken. The Group uses treasury bills, notes and other
fixed deposits as a mechanism for earning interest income on deposits.
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 +/- 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 15, from an accounting perspective, an Effective Interest Rate of 20.41%
has been calculated to apply to the debt component of the convertible bond.
This has in turn 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, as reflected in the below table:
Financial assets Weighted average interest rate Fixed interest rate Variable interest rate 2024* Non-interest bearing 2024*
2024 2024*
% (US$) (US$) (US$)
Cash on deposit 5.09% 7,593,588 320,274
Trade & other receivables 5.25% 2,000,000 944,543
*Balances as at 30 June 2024
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 $0.8497. 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 Group's financial
liabilities as at 30 June 2024 and 2023, 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 2024
Trade creditors 50,470 - 50,470 - -
Accruals 653,026 - 653,026 - -
Lease liabilities 146,376 - 22,704 22,797 26,749 74,126
Unsecured Convertible Bond 24,500,000 - 2,450,000 2,450,000 4,900,000 14,700,000
Provisions 5,921,030 - 470,630 250,000 - 5,200,400
31,270,902 - 3,646,830 2,722,797 4,926,749 19,974,526
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
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 $2,944,542 (2023: $2,559,522). These
items are also reflected in note 9.
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.
23. 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 2023 30 June 2024
£0.30((1)) 4,825,000 - - 4,825,000
£0.27((3)) 7,000,000 - - 7,000,000
£0.33((4)) 12,430,000 - - 12,430,000
£0.67((5)) 21,380,000 - - 21,380,000
Total 45,635,000 - - 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 2023 30 June 2024
£0.30((2)) 4,803,921 - - 4,803,921
Total 4,803,921 - - 4,803,921
(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. 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 the years end.
(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.
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 £0.46 (2023: £0.46).
The Share Option and Restricted Stock Units expense charge to the Consolidated
Statement of Comprehensive Income for the year ending 30 June 2024 is $Nil
(2023: $3,146,170).
The equity reserve account represents current year expenses for unexpired
options and warrants and the historical balance on vested option and warrants.
24. Related party transactions
During the year that a subsidiary of the Company entered into a subleasing
agreement for office space in Houston with Proton Green LLC, David Hobbs, the
Company's Executive Chairman, also served and continues to serve as Executive
Chairman of Proton Green LLC. The terms and conditions of the subleasing
arrangement were in accordance with commercial norms in the Houston, Texas
office space market. The current projected annual subleasing expenses to the
Company total less than $0.1m.
25. 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 in
April 2020.
No Pantheon entity was a signatory to the gas treating agreement and none are
named in the agreement. Pantheon took legal advice on the matter and
believed it had no liability to the service provider. Accordingly, Pantheon
made no provision in previous Annual Statements.
In July 2021, the court dismissed Kinder Morgan's claims against Pantheon
Resources plc. Kinder Morgan then asserted claims against two subsidiaries,
Pantheon Oil & Gas, LP and Pantheon East Texas, LLC, seeking to recover
the same claimed damages under the VOC contract. The court in that lawsuit
dismissed the claims against Pantheon East Texas LLC as it was not formed
until 18 months after the gas treating agreement was signed.
Pantheon Oil & Gas, LP contested the claims asserted against it. The
case proceeded to trial in late October and the jury rendered a verdict in
favor of Pantheon Oil & Gas on all counts. Following the verdict,
Pantheon Oil & Gas and Pantheon East Texas filed a motion for entry of
final judgment in their favor, along with a request for a discretionary award
of attorney fees. Kinder Morgan has filed a motion for judgment in its favor
notwithstanding the verdict and a pleading challenging Pantheon Oil & Gas
and Pantheon East Texas's claim to recover attorney fees. Those post-trial
motions are set for hearing in mid-January 2025.
26. 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 the
options and RSUs granted, still outstanding, and not exercised.
27. Revenue
For year ended 30 June 2024, the US CGU recognized gross revenue of $13,393
(2023:$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 $7,153 (2023:$673,290).
28. 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.
29. 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
2024
$
Opening Balance 1 July 2023 26,782,316
Non-cash flow Bond amortisation (5,769,560)
Bond amortisation - settled in cash (5,273,798)
Non-cash flow Forex movement 230
Non-cash flow Interest 4,886,317
Non-cash flow Revaluation of Derivative Liability 337,055
Closing Balance 30 June 2024 20,962,560
Significant non-cash transactions from financing activities in relation to
raising new capital are disclosed in note 17. There were no significant
non-cash transactions from investing and operating activities in the current
year.
30. Subsequent events
In July 2024, Pantheon completed an equity fundraising, raising $29 million
before costs through the issuance of 132,454,566 New Ordinary Shares at a
price of 17 pence per Ordinary Share. As part of this fundraising, Directors
collectively subscribed for a combined 1,390,287 ordinary shares. Concurrent
with the equity fundraising, the Company made an early repayment of $4.9
million against the Convertible Bond through the issuance of 22,380,254 New
Ordinary Shares at a price of 17 pence per Ordinary Share. Pantheon had
originally borrowed $55 million through the Convertible Bond and at the time
of publication of this report the balance owing had reduced to $17.2 million.
In August 2024, Pantheon was awarded the 46 new oil and gas leases comprising
65,691 acres which were successfully bid for in the State of Alaska's 2023
Areawide oil and gas lease sale held in December 2023. The leases were
subsequently paid for and issued to Pantheon, bringing its lease interests to
258,295 contiguous acres on the Alaska North Slope. Pantheon has a 100%
working interest in all of its leases.
In September 2024, in line with the Group's stated objective for the
consolidation of core management in the Company's Houston headquarters and
preparation for a potential US listing, It was announced the CFO role will
move to Houston and, as a result, UK based Justin Hondris has stepped down
from his role as Director, Finance and Corporate Development and has
transitioned to a new role as Senior Vice President for Finance
and International Investment. Philip Patman Jr. was appointed Chief Financial
Officer of the Group, based in Houston, Texas, United States.
In October 2024, Pantheon announced the appointment of MZ Group ("MZ"), a
corporate & financial communications advisor to upgrade its USA presence.
MZ Group will lead a strategic investor relations and financial
communications programme with a particular focus on North America.
In October 2024, Pantheon announced details of its replacement ESOP for all
employees and a Long Term Incentive Plant ("LTIP") for Executive Directors and
certain officers of the Company. Under the ESOP the Company issued in
aggregate 9,087,584 RSUs across all staff members (excluding NEDs). The RSUs
were priced at $0.2206, being the £0.17 price for the July 2024
equity placement, using current exchange rates, and represented a small
premium to the closing share price on the day prior to issue. Under the Share
Award Scheme, the initial RSUs, granted to all staff, vest over three years
beginning in 2025. Under the LTIP a total of 9 million deeply out of the
money share options were granted, vest over a 5 year period and are subject to
achievement of challenging performance targets. The exercise price of the
initial option grant, the first grant for more than two and a half years,
was $0.835 (c. £0.64), representing a 290% premium to the prevailing share
price.
In October 2024 all of the NEDs of the Company, together with the Chair,
subscribed for a combined 261,696 ordinary shares in the Company at £0.212
per share, being the closing share price on the prior day.
In November 2024, the Megrez-1 well was spudded. Before drilling, management
estimated the well to have a 69% geological chance of success of encountering
a 2U Prospective Resources of 609 million barrels of ANS crude and 3.3 Tcf of
natural gas - or over 1 billion BOE. This has the potential to add
significant incremental resources to the Company's portfolio. We hope to
provide additional updates on the results shortly.
In November 2024, Pantheon completed a private placement of 9,108,756 shares
at an issue price of $0.2878 (£0.2266) per ordinary share, raising $2.622
million. These proceeds will be applied to the full payment of the December
2024 quarterly convertible bond repayment due on 13 December 2024.
The Company has had two of its subsidiaries involved in litigation in Texas,
with the case styled Pantheon Oil & Gas LP and Pantheon East Texas LLC v.
Kinder Morgan Treating, LP, Cause No. 2021-41735, in the 113th Judicial
District Court of Harris County, Texas.
The case proceeded to trial in late October and the jury rendered a verdict in
favor of Pantheon Oil & Gas on all counts. Following the verdict,
Pantheon Oil & Gas and Pantheon East Texas filed a motion for entry of
final judgment in their favor, along with a request for a discretionary award
of attorney fees. Kinder Morgan Treating has filed a motion for judgment in
its favor notwithstanding the verdict and a pleading challenging Pantheon Oil
& Gas and Pantheon East Texas's claim to recover attorney fees. Those
post-trial motions are set for hearing in mid-January 2025
GLOSSARY
FOR THE YEAR ENDED 30 JUNE 2024
GLOSSARY
AGDC Alaska Gasline Development Corporation
AGM Annual General Meeting
Alaska LNG Alaska LNG Project
ANS crude The mixture of oil, condensate and NGL transported through the Trans-Alaska
Pipeline System
bbls Barrels
bcf Billion cubic feet
CGA Cawley Gillespie & Associates
CGU Cash generating unit
EA Environmental assessment
ECL Expected credit loss
EIS Environmental impact statement
ESOP Employee stock ownership plan
EUR Estimate ultimate recovery
FID Final investment decision
G&A General & Administrative
GOR Gas-oil ratio
GSA Gas Sales Agreement
GSPA Gas Supply Precedent Agreement
IER Independent Expert Report
LKA Lee Keeling & Associates
LNG Liquefied natural gas
mcf Thousand cubic feet
mmBtu Million British Thermal Units
mmcf Million cubic feet
NED Non-Executive Director
NGL Natural gas liquids
NSAI Netherland, Sewell & Associates, Inc.
PVT Pressure-volume temperature analysis
RSU Restricted stock unit
scf Standard cubic feet
SLB Former Schlumberger
SMD-B Shelf Margin Deltaic B
TAPS Trans-Alaska Pipeline System
tcf Trillion cubic feet
ZOI Zone of interest
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