TIDMPANR
RNS Number : 2362X
Pantheon Resources PLC
19 December 2023
19 December 2023
Pantheon Resources plc
Final Results for the Year Ended 30 June 2023
Pantheon Resources plc (AIM: PANR) ("Pantheon" or the
"Company"), the oil and gas company with a 100% working interest in
the Kodiak and Ahpun projects, collectively spanning c. 193,000
contiguous acres in close proximity to pipeline and transportation
infrastructure on Alaska's North Slope, is pleased to announce its
results for the year ended 30 June 2023.
Operational Highlights for the year ended 30 June 2023 and
beyond
-- A period of great achievement for Pantheon, with testing at
Alkaid-2 supporting the case for economic viability of full field
developments of both the Ahpun and Kodiak projects
-- Receipt of an Independent Expert Report on the Kodiak project
by Netherland, Sewell & Associates, Inc. ("NSAI"), estimating a
2C Contingent Resource of 962.5 million barrels of marketable
liquids
-- Completion of Phase 1 of SLB (formerly Schlumberger)
reservoir modelling project. SLB estimate Pantheon's acreage to
contain 17.8 billion barrels of oil in place (1)
-- Strengthening of operational team - appointment of Tony
Beilman, +40 years drilling, completions and production
experience
-- Refreshed the Board of Directors, with David Hobbs assuming
the role of Executive Chairman and the appointment of two new,
independent non-executive directors; (i) Allegra Hosford Scheirer
who has deep geological experience, including in Alaska, and (ii)
Linda Havard (to be effective on 1 January 2024) who has several
decades experience in financial/CFO roles, including 15 years in
the oil and gas industry
-- Implemented revised corporate strategy with an objective to
deliver financial self-sufficiency and sustainable market
recognition of a value of $5 - $10 per barrel of [1C/1P]
recoverable resources by 2028
-- Establishment of Houston office
-- Permanent production facilities have been established at the Alkaid pad
-- Commencement of work to achieve a hot-tap into the TAPS pipeline
-- Acquisition of 40,000 strategic acres at the December 2022 annual lease sales
-- Successful bidder for an additional 66,240 acres of leases at
the December 2023 annual lease sales, strategically securing what
Pantheon believes to be highest quality areas of the Kodiak and
Ahpun Fields at the shallowest depths. Expected to result in a
material upgrade to Independent Resource Estimates
(1) Note that this estimate is not an official Independent
Expert Report and does not estimate a resource.
Financial & Corporate Highlights
-- Loss from continuing operations for the year after tax: $1.5 million (2022: $13.9 million)
-- Result impacted by (non-cash) accounting of the convertible
bond, including interest charges of $6.1 million (2022: $4.6
million) and a positive revaluation of derivative component of the
convertible bond of $11.3 million (2022: $4.3 million)
-- Completed a fundraising of $22 million in May 2023
-- Reduction in convertible loan balance owed from $44.1 million
at 1 July 2022 to $29.4 million as at the date of publication (i.e.
after the December 2023 quarterly repayment)
-- Unaudited Cash and Cash equivalents at 13 December 2023: $7.8
million (after repayment of Dec 2023 convertible $2.8 million bond
repayment in cash and after payment of $0.44 million deposit for
Dec 2023 lease auctions)
-- This cash balance does not Include an additional $4.1 million
proceeds from the November 2023 placement expected to be received
late January 2024
-- Discussions with service providers and other industry
participants for the possible provision of vendor financing or
other non-equity based financing
Jay Cheatham, CEO of Pantheon Resources, said: "The period from
1 July 2022 until now has been one of immense progress and
achievement for Pantheon. In fact, only last week we were the
successful bidder for over 66,000 highly strategic acres,
contiguous to the west and east of our existing leases. The data
gathered and technical work done in 2023 underpins our confidence
in the commerciality of our projects. We remain laser focused on
pursuing our goals for FID on Ahpun by end 2025 and FID on Kodiak
by end 2028 and to achieve sustainable market recognition of $5 -
$10 per barrel of 1P/1C recoverable resources."
Annual report and Accounts
The Annual Report and Accounts for the financial year ended 30
June 2023 will be posted to shareholders shortly, together with a
Notice of Annual General Meeting which is intended for 3pm GMT on
24 January, 2024. As in recent years, the presentation component of
the AGM will be held by webinar to enable participation by USA and
other non-London based shareholders and investors. Copies will be
available on the Company's website at:
www.pantheonresources.com
-S-
Further information, please contact:
Pantheon Resources plc +44 20 7484 5361
David Hobbs , Executive Chairman
Jay Cheatham, CEO
Justin Hondris, Director, Finance and Corporate
Development
Canaccord Genuity plc (Nominated Adviser and
broker)
Henry Fitzgerald-O'Connor
James Asensio
Ana Ercegovic +44 20 7523 8000
BlytheRay
Tim Blythe
Megan Ray
Matthew Bowld +44 20 7138 3204
Notes to editors:
Pantheon Resources plc is an AIM listed Oil & Gas company
focused on developing the Ahpun and Kodiak fields located on state
land on the Alaska North Slope ("ANS"), onshore USA where,
following issue of the new leases, it will have a 100% working
interest in c. 259,000 acres. Certified contingent resources
attributable to these projects exceeds 1 billion barrels of
marketable liquids, located adjacent to Alaska's Trans Alaska
Pipeline System ("TAPS").
Pantheon's stated objective is to demonstrate sustainable market
recognition of a value of $5-$10/bbl of recoverable resources by
end 2028. This will require targeting Final Investment Decision
("FID") on the Ahpun field by the end of 2025, building production
to 20,000 barrels per day of marketable liquids into the TAPS main
oil line, and applying the resultant cashflows to support the FID
on the Kodiak field by the end of 2028.
A major differentiator to other ANS projects is the close
proximity to existing roads and pipelines which offers a
significant competitive advantage to Pantheon, allowing for
materially lower infrastructure costs and the ability to support
the development with a significantly lower pre-cashflow funding
requirement than is typical in Alaska.
The Company's project portfolio has been endorsed by world
renowned experts. Netherland, Sewell & Associates ("NSAI")
estimate a 2C contingent recoverable resource in the Kodiak project
that total 962.5 million barrels of marketable liquids and 4,465
billion cubic feet of natural gas. NSAI is currently working on
estimates for the Ahpun Field.
Pantheon RESOURCES plc
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEARED 30 June 2023
DIRECTORS, SECRETARY AND ADVISERS
Directors David Hobbs (Executive Chairman)
John (Jay) Cheatham (Chief Executive Officer)
Justin Hondris (Executive Director, Finance and Corporate
Development)
Robert (Bob) Rosenthal (Technical Director)
Jeremy Brest (Non-Executive Director)
Allegra Hosford Scheirer (Non-Executive Director) - appointed
July 2023
Company Secretary Ben Harber
Registered Office Shakespeare Martineau
6th Floor
60 Gracechurch Street
London EC3V 0HR
Company Number 05385506
Auditors PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
Solicitors Bryan Cave Leighton Paisner LLP
Governors House
5 Laurence Pountney Hill
London EC4R 3AF
Registrars Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Principal Bankers Barclays Bank plc
Level 27, 1 Churchill Place
London E14 5HP
Nominated Adviser Canaccord Genuity Limited
& Broker 88 Wood Street,
London EC2V 7QR
Communications BlytheRay Communications Ltd
& Public Relations 4-5 Castle Court,
London EC3V 9D
CHAIRMAN'S STATEMENT
FOR THE YEARED 30 JUNE 2023
What better time than now to embark upon the development of
major oil and gas projects in Alaska, where the past year has seen
the pendulum swing back towards regulatory and political
pragmatism. We have seen approval of the Willow development in the
National Petroleum Reserve, Alaska (NPRA), Final Investment
Decision (FID) on the Santos operated Pikka development and
progress towards an economically viable natural gas export project
(gas pipeline and LNG facility) from Alaska's North Slope ("ANS"),
supported by US Federal Government guarantees. More specifically
for Pantheon (the "Company" or the "Group"), the board believes
that a successful demonstration of the commerciality of its Ahpun
field has now been achieved, and that has, in turn, set the Company
on a path to target first oil in early 2026. Netherland, Sewell
& Associates' independent validation of nearly 1 billion
barrels of contingent recoverable liquids from the Kodiak field and
the sum of development resources on Alaska's North Slope underpins
the board's belief in a renaissance for activity levels in the
coming decade.
My colleague, Jay Cheatham, will address the operational
outcomes of our activities, including the subsequent successful
re-entry of the Alkaid-2 well. That last operation demonstrated the
efficacy of our revised hydraulic frac design in the shelf break
horizons, in which the majority of Ahpun's recoverable resources
reside. He and the team deserve credit for the technical
achievements since our last annual report and we are now set fair
to capitalise on several years of highly encouraging exploration
and appraisal success.
Today, we believe the Company has two world class development
assets both advantageously located in close proximity to
infrastructure. The first of these, Ahpun, is located immediately
underneath and adjacent to both the Trans Alaska Pipeline System
("TAPS") and the Dalton highway, allowing for more rapid
development horizons compared to most other North Slope projects
and hence has become Pantheon's initial focus of development given
the shorter timeframe to first production revenues. The second
project, Kodiak, located immediately to the west of Ahpun, is
believed to be among the largest onshore discoveries of the 21st
century to date and has an independently certified 2C contingent
resource of 962.5 million barrels of marketable liquids. Its Theta
West-1 well was described by WoodMac as " the fourth biggest
discovery well globally in 2022 ."
The past year has been transformational for Pantheon. Key points
are:
-- The Alkaid-2 long term production test was completed,
supporting the case for economic viability of full field
developments of both our Ahpun and Kodiak fields.
-- We have refreshed the Board of Directors, bringing a new
independent non executive director (NED) with deep experience in
oil and gas, Allegra Hosford Scheirer, onboard. Allegra has a Ph.D.
in marine geology and geophysics and has extensive knowledge of
Alaska. Only last week we announced the appointment of another
independent NED, Linda Havard, who is an experienced CFO with
decades of financial experience. Linda will formally join the board
in early January. I extend my heartfelt thanks to my predecessor,
Phillip Gobe, for his leadership of the Board and the wise counsel
and support he provided to colleagues. We would not be positioned
as we are had it not been for his contribution to the growth of the
Company.
-- We secured $22 million of funding in May 2023 to ensure
continued operation through to the end of 30 June 2024 and
potentially beyond. Subsequently, we placed shares to fund
Convertible Bond payments into long term, supportive hands that
reduced the overhang of expected bond holder share sales.
-- The Company has embarked on a revised strategy with an
objective to deliver financial self-sufficiency and sustainable
market recognition of a value of $5-$10 per barrel of recoverable
resources by 2028. Success does not rely on a third-party buyout
and, we believe, can be achieved while minimising value dilution
for existing investors.
-- Progress with this strategy underpins our confidence that
2024 will see Pantheon on a path to long term success.
However, the year has not lacked for challenges. The initial
results from the Alkaid-2 tests disappointed the market and it was
not until we completed the re-entry of the well to test what turned
out to be a successful new frac design in 2H 2023 that we were able
to validate our confidence in the commercial potential of the
project. It is, therefore, instructive to consider how we arrived
at this situation and what we have learned to ensure that we can
deliver our strategic objective.
Having raised around $95 million in late 2021, the Company
embarked on its most ambitious work programme to date. This
involved re-entry of the Talitha-A well to test multiple horizons,
drilling the Theta West-1 updip appraisal well and then drilling
and conducting a long term production test in the Alkaid-2 well.
This series of investments exceeded expectations in terms of the
data provided and underpinned the Company's achievement of
independent expert recognition of nearly 1 billion barrels of
recoverable resources. However, costs were higher than anticipated
and there were operational issues that cost time and money - a
feature of being a small player in a frontier environment. The
initial results of the Alkaid-2 well contributed to a weaker share
price and a lessening of investor confidence. Since that time we
have made great steps to restore credibility, including receipt of
a report from SLB (formerly Schlumberger) which estimated 17.8
billion barrels of oil in place on our properties; an Independent
Expert Report from Netherland Sewell & Associates estimating a
2C Contingent Resource of nearly 1 billion barrels of marketable
liquids from our Kodiak project; and a successful re-entry of
Alkaid-2 where an efficiently executed new frac design supported
our confidence in the commerciality of the project.
The strategy refresh in the wake of these events involved
strengthening the team, focusing on achieving the earliest possible
cash flows, and concentrating only on those things that contribute
to meeting our objectives of financial self-sufficiency and
sustainable value demonstration, while ignoring distractions.
I am proud of the work that Jay and the team have done to
strengthen the areas in which it was needed, particularly as we
work with vigour towards delivering upon our objectives. Coupling
the expanded capability with development of a programme at a scale
will help ensure that Pantheon is better positioned to negotiate
equipment and services on the North Slope. This supports our
confidence in bringing well costs down to levels that underpin
economic development of our projects at oil prices of $50/barrel
("bbl") and less. These calculations are based on reservoir
characteristics and well performance revealed by the flow tests to
date - in other words, they do not rely on any of the demonstrated
improvement in reservoir quality measured in appraisal wells
further west from the Dalton Highway and TAPS.
This robust economic development planning that supports the case
for hundreds or even thousands of wells, underpins our confidence
to enter into long term relationships with vendors and offtakers.
There will be significant value leverage in "learning by doing" and
building the know-how to optimise the development with an alliance
of critical contractors for construction, drilling and completion,
fracking and production services. Benchmarking the costs and
allowing for expansion of their margins based on beating our cost
targets to create a win-win, are expected to allow long term
contracts to be secured without the normal service provider
expenses of marketing and tendering. Pantheon is seeking to
leverage access to potentially $10+ billion of potential service
provider contracts over the life of the projects, to defer the cost
burden through production start-up. Coupling this with potential
financings arising from contracts with offtakers of both oil as
well as gas as well as reserves-based lending, once a sufficient
number of wells have been tied-in to production facilities, will
minimise the requirement for further equity financing or the need
to farm down the Company's 100% working interest in the two
projects. Obviously in line with normal practice in oil and gas
operations, the working interest is burdened by a royalty to the
State of Alaska, which averages c.15% across the leaseholding. We
are open to farm down transactions, however, only if the terms are
more attractive than the alternatives in our base case operating
plan, and visitors to our data room are aware of this.
We have made tremendous progress since the beginning of this
current financial year and are approaching the remainder with
conviction that we can deliver on our stated strategic objective of
delivering sustainable market recognition of $5-$10 per barrel of
1C/1P recoverable resources by 2028 and without significant value
dilution to our existing investors.
David Hobbs
Executive Chairman
18 December, 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
FOR THE YEARED 30 JUNE 2023
Operationally, the 2023 financial year and for the period up
until the time of writing has been an important one for Pantheon .
We undertook two significant operations at Alkaid-2, received an
Independent Expert Report on the newly named Kodiak Field, received
a very large estimate of oil in place by SLB (previously
Schlumberger) following their static and dynamic modelling work of
our assets, and strengthened our team with the appointment of Tony
Beilman as Senior VP Engineering.
Strategy
As outlined by David, a key component of our strategy is to be
in production from the Ahpun project by the middle of 2026. As
noted below, the results from Alkaid-2 both in the long - term
production test in the horizontal well bore and in the test of the
shallower shelf break horizons in the vertical well bore ha ve
provided confidence in our economic models. To reach first
production requires an estimated c. $120 million in capital divided
as follows:
-- $20 million for engineering and a hot tap into TAPS - this process has commenced
-- $20 million to upgrade the existing permanent production
facility and add a refrigeration unit to extract condensate and
natural gas liquids ("NGLs")
-- $60 million for three production wells and the conversion of
Alkaid-2 for injection of gas and water
-- $20 million for three years of general and administrative ("G&A") expenses
As explained in the Chairman's statement, our financing strategy
is to achieve this funding, whilst minimising shareholder dilution.
We have plans in place and believe this is achievable.
Overview of operations
Alkaid-2 - initial operation
Alkaid-2 was spudded on 6 July 2022 and the pilot hole was
completed on 29 July at a total measured depth of 8,950 feet ("ft")
and total measured depth of c. 14,300 ft when including a lateral
length of 5,300 ft . Alkaid-2 confirmed more than 1,400 ft of gross
continuous oil-bearing strata throughout the section drilled below
the regional top seal at 7,165 ft down to at least the 8,584 ft
total vertical depth. The Alaska Oil and Gas Conservation
Commission ("AOGCC") instructed us to stop drilling at 8,584 ft,
despite not having reached the bottom of the Alkaid Deep section,
to ensure a sufficient margin above the high pressure HRZ zone and
a possible fault. Alkaid-2 confirmed the extension (all hydrocarbon
bearing) of the Alkaid deep formation (300 ft deeper than at
Alkaid-1) and the extension of the shallower shelf break horizons
to the east of Alkaid-1 and across the Dalton Highway to the North.
This extension of shallower, more permeable horizons to the
northeast underneath the Dalton Highway offers major advantages for
future commercialisation of Ahpun.
The Alkaid-2 lateral was fracked with 29 stages and c. 8 million
pounds of sand. The well encountered sand blockages and following a
clean out in the final 1,000ft (c. 20%) of the wellbore, and after
a 90 day production test, the IP30 production rate was calculated
at c. 505 barrels per day ("BPD") of marketable liquid hydrocarbons
consisting of c. 180 BPD oil c.38-39 (o) ( degrees) API gravity,
and c. 325 BPD of condensate and NGLs . This production was
accompanied by c. 2,300 thousand cubic feet per day ("mcfd") of ")
natural gas, after shrinkage. The compositional mix of hydrocarbons
encountered in this test differed from pre-drill expectations.
Significant analysis has been undertaken since this result,
including key data points obtained from a revised frac design in
the subsequent re-entry of the well as outlined below, supporting
the case for commercialization of the Ahpun field. The data
supports a type curve for modelled wells with an IP30 rate (average
production over the first 30 days) averaging 1,500 barrels of
marketable liquids per day and an EUR (economic ultimate recovery)
estimated at 1 million barrels of marketable liquids. A detailed
analysis of this information was provided in the Company's
announcement dated 21 November 2023.
The quantum of liquid and gas production flowing without
artificial lift from Alkaid-2 demonstrates the good deliverability
of the reservoir, which is a significant de-risking event for the
Ahpun field development. When separated and included in the
production stream, condensate and NGLs are estimated to achieve
approximately 80-90% of ANS crude oil price (ANS crude typically
trades at a premium to WTI oil) and the combination is expected to
receive approximately . 90% of the value of ANS at Valdez.
Subsequent Operation at Alkaid-2
Pantheon reentered the Alkaid-2 well in late summer 2023 to test
the previously untested , shallower shelf break horizons. The prior
test of these zones in winter 2021 at the Talitha-A well was first
suspended due to a blizzard and then the end of the drilling
season. Because Alkaid-2 was in a location positioned to target the
Alkaid Zone of Interest ("ZOI") as the primary target, it was in a
poor location for the shallower horizons which contain the majority
of Ahpun's recoverable resources. It is located on the northeast
pinch out of the reservoir where it becomes more shaley and with
poorer quality sand. Notwithstanding, a 200 ft section (c. 100 ft
net pay) was encountered and this provided the opportunity to test
the updated frac design (a limited number of perforations, finer
sand, higher rates and lower sand concentrations) which delivered
extremely promising results.
The Company's preliminary estimate of the efficiency of this
revised frac is 50% of theoretical design performance and compares
favourably with the calculated frac efficiency of c. 20%
experienced in the Alkaid-2 operations in the deeper horizontal ZOI
accumulation last year. This improvement was the result of several
key changes to the frac design as described above, which allowed
the frac to remain within the reservoir and confirmed the ability
to achieve at least the planned for 2x improvement in frac
efficiency from that achieved in the deeper Alkaid-2 test. This was
a very important achievement for the Company.
During the flow test, after recovery of approximately 60% of the
frac fluids, the oil rate (separator liquids) ranged from more than
100 barrels of oil per day (" bopd") to 30 bopd , averaging 45 bopd
over the five days during which oil was recovered. Water cuts were
90% initially, but declined over time as a larger share of the frac
fluids was recovered. As highlighted before the operation, the flow
rates themselves were not expected to be material because the
objective was to limit drawdown in the initial flow back to limit
gas flashing in the reservoir and it was only a single stage frac
in the vertical wellbore. Encouragingly, the measured rate was
higher than internal pre operation estimates.
Multiple fluid samples were gathered indicating a measured
gas-oil ratio ("GOR") of 3,000 - 4,000 standard cubic feet per
barrel ("scf/bbl") and an API gravity of 35-36(o) . This compares
to 12,000 - 13,000 scf/bbl measured in the deeper Alkaid ZOI. This
indicates success in limiting pressure drawdown and avoiding
flashing gas in the reservoir. This is of great importance because
all of the Company's development modelling is based upon the ZOI
data which is far more conservative. A pressure monitoring device
was placed in the well to allow pressure transient analysis, which
will further help refine estimates of the efficiency of the
improved frac. That device was retrieved 10 December and we expect
the data from it over the coming weeks.
Well Development Costs
The Alkaid-2 well drilling and completion cost was c . $34
million including many one-time costs that would not be included in
a production well. Once in development we estimate per well
drilling and completion costs can be reduced to potentially $15
million or below, for a number of reasons, including; no pilot hole
drilling, only logging while drilling versus a full suite of
electric logs, sourcing sand locally to eliminate multiple handling
and large transport costs, avoiding the extraordinary charge for
chemicals handling, reduced mobilisation and demobilisation costs,
etc.
The graphic below illustrates the Company's estimate of those
savings:
Renaming of Pantheon Fields & Appointment of Senior VP
Engineering
In order to simplify the potentially confusing nomenclature,
Pantheon chose to restructure its naming conventions to move away
from individual geological horizon designations for the fields to
the areal field names Ahpun and Kodiak, named after Alaskan bears,
reflecting unified project implementation.
The Kodiak Field (previously referred to as Theta West) contains
all reservoirs between the Hue Shale and the HRZ shale. The
recognised resources currently include the Lower Basin Floor Fan
and will potentially include the Upper Basin Floor Fan once that
has been more fully delineated. NSAI has produced an Independent
Expert Report (" IER") detailed below recognising best estimate 2C
Contingent Resources of 962 million barrels of marketable liquids
(oil, condensate and NGLs). Pantheon has previously estimated these
to contain more than 1.7 billion barrels of recoverable contingent
resources and will seek to confirm these larger volumes through
further appraisal to the North and West of the Theta West-1
well.
The Ahpun Field (named after a long term polar bear resident in
the Anchorage Zoo) contains all reservoirs below the regional top
seal down to the Hue Shale in the eastern portion of Pantheon's
acreage, including the already granted Alkaid and Talitha Units.
These reservoirs currently include the shelf break horizons, Alkaid
Anomaly (ZOI) and the deeper extension of that anomaly encountered
in the Alkaid-2 Pilot Hole. Ahpun is estimated to contain more than
481 million barrels of recoverable contingent resources in
aggregate. This figure consists of management estimates of 404
million barrels in the shallower zones and 76.5 million barrels in
the Alkaid Anomaly. No estimate has yet been provided for the as
yet unspecified additional resources proved through deepening the
Lowest Known Oil in the Alkaid - 2 Pilot Hole. These additional
resources will be included in the NSAI report due in the first half
of 1H 2024. Furthermore, the Slope Fan horizons may be included in
Ahpun resource estimates in due course, once further
delineated.
Pantheon has appointed Tony Beilman, a petroleum engineer with
over 40 years' experience in drilling, production, and completions,
to the team. Tony's appointment significantly strengthens
Pantheon's operational capability with his extensive expertise in
completions in tight reservoirs involving horizontal, multi-stage
fracked completions in the Permian Basin, Marcellus Shale and other
unconventional reservoirs in North America. Tony was instrumental
in the successful redesign of the Alkaid-2 frac.
Receipt of Reports
Pantheon received three very significant reports during the
period and after from Netherland Sewell and Associates, ("NSAI"),
SLB and AHS Baker Hughes.
NSAI Report
Pantheon received an Independent Expert Report (IER) prepared by
NSAI on the Lower Basin Floor Fan reservoir of the Company's Kodiak
project in Q3 2023 . A summary of the resource estimate is outlined
below.
Gross 100% Working Interest Contingent Resources
Resource Category Oil NGLs Residual Total Marketable
(million (million Gas Liquids*
bbls) bbls) (BCF) (million bbls)
Low Estimate
(1C) 145.4 292.4 2,151.7 437.8
----------- ----------- ---------- ------------------
Best Estimate
(2C) 314.6 647.9 4,465.2 962.5
----------- ----------- ---------- ------------------
High Estimate
(3C) 647.8 1,366.4 8,822.7 2,014.2
----------- ----------- ---------- ------------------
* Pantheon addition of oil & NGLs
This is a great achievement for the Company, documenting almost
1 billion barrels of 2C marketable liquids in the Kodiak Field.
NSAI is now working on the Ahpun Field and we expect reports on the
Ahpun field in the first half of 2024.
SLB Report
In a project spanning over 12 months, SLB, formerly known as
Schlumberger, has completed a comprehensive reservoir model of
Pantheon's 100% owned projects . This is not a formal 'Independent
Experts Report' for the purposes of providing a resource estimate;
rather it is an output the extensive reservoir modelling work that
they have undertaken for the Company.
As announced on 8 December 2022, SLB estimated the reservoirs to
contain 17.8bn barrels net oil in place. In the current phase of
the project, SLB are working on recovery factors and reservoir
performance. Pantheon has estimated a 10% recovery factor in its
own modelling. The SLB Report outlined conclusions from a detailed
reservoir modelling analysis commissioned by Pantheon and does not
constitute a formal Independent Expert Report. The primary
objective of the SLB analysis is to provide a development plan
based on the dynamic model for analysis and forms a key component
of the Company's data room, allowing potential farm-in partners to
manipulate the modelled data to their needs.
The summary findings of reservoir modelling are:
Lease Area/Unit Net Oil in Place (Billion
barrels of oil) *
Alkaid Unit 1.67
---------------------------
Theta West Lease 10.9
---------------------------
Talitha Unit including
SE SMD 5.26
---------------------------
Total 17.8 billion barrels
---------------------------
*P50 estimate
SLB is now working with the dynamic model on a development
scenario to yield recovery factors for both individual wells and
full field for Ahpun. Results are expected in the first half of
2024 for the Ahpun Field.
Baker Hughes AHS Report on Kodiak
The key conclusions according to Baker Hughes AHS are outlined
below.
Great Bear Pantheon's Theta West - 1 (Kodiak) drilled a
"world-class petroleum system" comprised of:
1) A 1,360 ft thick continuous column of oil-bearing cuttings.
The actual length of the oil column is unquestionably greater than
1,360 ft, as the base of the analysed cuttings' oil column is the
total depth ("TD") of the well, and the oil in the cuttings shows
no sign of tapering off
2) High quality oil of 37-39 (o) API gravity
3) Abundant good quality reservoirs
Successful Bidding at State of Alaska's North Slope Areawide
Lease Sales in November 2022 and December 2023
Pantheon was successful in the acquisition of approximately
40,000 acres in the State of Alaska's North Slope Areawide Lease
Sale in late 2022. The new leases are strategically positioned in
two areas contiguous or adjacent to the Company's current acreage
on its north western boundary, covering the extension of the Kodiak
field, and east, capturing the area adjacent to the junction of the
Alkaid Unit and the Talitha Unit, in both Ahpun and Kodiak
fields.
On December 13(th) , Pantheon was the successful bidder on
66,240 acres in the December 2023 lease sale, covering
substantially all of the anticipated remaining conventional
reservoir potential in the Kodiak Field, where the Company expects
pay zone quality to improve as the reservoirs become shallower to
the north and west of the existing leases. In addition, the leases
covering the potential eastern extent of the Ahpun Field (including
what is prognosed to be higher quality, shallower reservoirs)
covers the resources that are assessed as economically developable
using current technologies. The new acreage contains material
resource potential and classification of the potentially
recoverable resources will be determined in the coming months in
consultation with NSAI and SLB.
Pantheon's lease acquisition strategy is now complete. These
latest awards protect the development schedules for Ahpun and
Kodiak by covering the full fields to be included in our requests
for development consents from the State of Alaska. Our focus
remains on the development of Ahpun with FID planned by the end of
2025 and appraisal of the full potential of Kodiak to support its
FID in 2028.
Data Exchange with 88 Energy
Earlier this year, Pantheon entered into a well data exchange
agreement with 88 Energy Limited ("88 Energy"), trading the data
from Pantheon's Talitha-A well for 88 Energy's Hickory #1 well.
This additional well penetration of discovered hydrocarbons,
approximately 150 metres from Pantheon's southern lease boundary,
is an important "well control" point providing Pantheon with
valuable data, only 500 feet from our southern lease boundary at no
cost and allows us to incorporate this into subsurface modelling of
the various horizons. 88 Energy plans to test its Hickory #1 well
during winter 2024.
Summary
The financial year ended 30 June 2023 was a very active time for
the Company and we have a very busy time ahead. Our three primary
outside consulting contractors; NSAI, SLB and AHS Baker Hughes,
have contributed greatly to our understanding of the gian t
reservoirs in which Pantheon has 100% working interest. We
successfully tested a 5,000 ft lateral in the Alkaid ZOI and
completed the test of the shallower shelf break zones at Ahpun with
a revised frac design confirming the ability to achieve at least
40% of theoretical efficiency; a material improvement on the
original frac at Alkaid. As part of its strategy to gain
sustainable market recognition of $5-$10 per barrel of recoverable
resource, Pantheon is targeting first production from Ahpun through
a hot tap into TAPS in 2026. We are committed to minimising
dilution through prudent use of non equity based funding, on our
pathway to financial self-sufficiency. NSAI confirmed Best Estimate
(2C) Contingent Recoverable Resource of nearly 1 billion barrels of
marketable liquids in Kodiak. We added to our management pool with
Tony's hiring and strengthened our board of directors and we have a
number of parties in the data room at present, assessing vendor
financing and other opportunities. Although Pantheon is not
planning a winter 2024 well there are several upcoming newsworthy
events:
-- 88 Energy test of Hickory #1 , 500ft from Pantheon's southern border - winter 2024
-- NSAI IER report on Contingent Resources at Ahpun - 1H 2024
-- SLB development model with individual well and field development plans
-- Results from Geomark and the pressure analysis on the re-entry and test of Alkaid-2
-- Potential resource upgrades following the December 2023 lease auctions
-- Funding progress
Pantheon's stated objective is to demonstrate sustainable market
recognition of a value of $5-$10/bbl of recoverable resources by
end of 2028. This will require targeting Final Investment Decision
("FID") on the Ahpun field by the end of 2025, bringing production
to 20,000 barrels per day of marketable liquids into the TAPS main
oil line, and applying the resultant cashflows to support the FID
on the Kodiak field by the end of 2028. If we can achieve this
objective, then the upside potential is meaningful for all
shareholders.
Jay Cheatham
Chief Executive Officer
18 December, 2023
SECTION 172 STATEMENT
FOR THE YEARED 30 JUNE 2023
Section 172 of the Companies Act 2006 requires Directors to take
into consideration the interests of stakeholders and other matters
in their decision making. The Directors continue to have regard to
the interests of the Company's employees and other stakeholders,
the impact of its activities on the community, the environment and
the Company's reputation for good business conduct when making
decisions. In this context, acting in good faith and fairly, the
Directors consider what is most likely to promote the success of
the Company for its members in the long term. We explain in this
annual report how the Board engages with stakeholders.
-- The Directors are fully aware of their responsibilities to
promote the success of the Company in accordance with section 172
of the Companies Act 2006. Furthermore, the Directors have had
refresher training with their Nominated Advisor ("NOMAD") of
Director responsibilities in the application of AIM rules. This
process encourages the Board to reflect on how the Company engages
with its stakeholders and to identify opportunities for enhancement
in the future and was considered at the Company's board meetings.
As required, the Company's external lawyers and the Company
Secretary can provide support to the Board to help ensure that
sufficient consideration is given to issues relating to the matters
set out in s172(1)(a)-(f).
-- As part of its ongoing business, the Board regularly
considers the Company's principal stakeholders and how it engages
with them. This is achieved through information provided by
management via Regulatory News Service announcements, Corporate
Presentations, and Shareholder Meetings and teleconferences and
also by direct engagement with stakeholders themselves.
-- The Company aims to work responsibly with key identified
stakeholders; shareholders, employees, consultants, suppliers,
advisors, government bodies and local communities where exploration
and production activities take place.
-- Key Board decisions made in the year are set out below:
Key s172 Stakeholders Actions and Consequences affected
Significant
events/decisions
Advancement Shareholders,
of geological Employees, State * Following the success of the Theta West-1 well in
understanding of Alaska, and 2022, the Company also hired third party expert
of the Alaskan Business Relationships consultants to undertake specialist analysis. In
assets particular, the experts at AHS Baker Hughes undertook
detailed 'Volatiles Analysis', confirmed the presence
of continuous stacked oil-bearing reservoir zones
over a 1,360-foot column and referred to Theta West
in their September 2022 report as being a " World
Class Petroleum System."
* The Board continued to refine its in-depth geological
review of its Alaska North Slope assets.
* In December 2022, SLB completed phase 1 of an
extremely comprehensive project to prepare static and
dynamic models of Pantheon's various reservoirs. They
estimated that the Lower Basin Floor Fan complex of
the Kodiak project alone had combined Net Oil in
Place of 17.8 billion barrels of oil.
* In 2022 the Company drilled and fracture stimulated
the Alkaid-2 well and tested the primary target, the
"ZOI". After encountering operational issues
including sand blockages, the ZOI ultimately produced
a combination of oil, condensate, NGLs and natural
gas in quantities lower than pre drill estimates.
After extensive analysis with 3(rd) party expert
groups, the well was re-entered in Q3 2023 to test
the shallower and independent SMD horizon. A new frac
design was applied to great success, achieving
efficiency rates estimated at c. 50% compared to the
c. 20% efficiency estimated in the deeper ZOI and
announced to the market earlier in 2023. Additionally,
the well was brought on stream more slowly,
minimising the flashing of gas near and in the
wellbore as had occurred in the deeper ZOI, and thus
achieved a far superior gas oil ratio. The knowledge
gained has enabled the Group to make great
optimisation gains in both completion and testing
practices, which is common for the learning curve of
new fields as successive wells are drilled and
tested.
* In Q3 2023, Netherland Sewell & Associates completed
an Independent Expert Report on the Kodiak project,
certifying a C2 Contingent Resource estimate of 962.5
million barrels of marketable liquids (oil,
condensate & NGLs).
* The consequences of these actions were to materially
increase (i) the resource potential of the projects,
(ii) 3(rd) party validation of the potential, which
is beneficial for future project funding and
development, (iii) knowledge of the reservoir and of
engineering design, and (iv) confidence in
development of both the Ahpun and Kodiak projects for
the potential benefit of all stakeholders through an
advancement of the project, potential for value and
revenue creation to shareholders, employees and the
State of Alaska.
------------------------- -------------------------------------------------------------
Growth in Resource Shareholders,
employees, State * Pantheon successfully acquired key new leases in the
of Alaska, Service 2022 lease sales which were formally awarded in mid
Providers 2023. The leases, which are all contiguous to the
existing acreages and are covered with 3D seismic,
contain material resource potential, increasing
Pantheon's resource position.
* In Q3 2023, Netherland Sewell & Associates certified
a C2 Contingent Resource of 962.5 million barrels of
marketable liquids for the Kodiak project. Such a
certification benefits the Company, shareholders, the
State of Alaska as well as suppliers of products and
services given the validation supports further
progress towards a potential future development.
* In December 2023 Pantheon was the successful bidder
for over 66,000 leased contiguous to the Company's
existing projects, which management estimate to hav
every significant resource potential.
------------------------- -------------------------------------------------------------
Continued operation Employees, long
of staff share term consultants * The Company seeks to award an annual grant of share
option plan options to every staff member and permanent
consultant pursuant to the staff share option scheme
in order to attract and retain the highest quality
staff, as well as to align interests with
shareholders. Following the share price fall
following the Alkaid-2 testing results, a decision
was made that no share options be awarded during the
year.
* The consequence of this decision was to demonstrate
an alignment to shareholders by not rewarding staff
with an allocation for the 2022 year, following the
significant share price decline in late 2022 and
early 2023. This decision was made despite the
considerable other achievements made during the year.
Notwithstanding, the annual grant of share options to
staff under the scheme is a considered a suitable
mechanism to retain, attract and motivate staff to
achieve successful outcomes and to provide a
mechanism for staff to benefit from future share
price outperformance, aligning staff interests with
that of shareholders - and to help management retain
and attract the highest quality personnel.
* Since 2012, Pantheon had in place an executive
management incentive plan linked to the booking of
reserves. No benefit has ever been paid out to
beneficiaries of this plan. Subsequent to year end,
Pantheon terminated this reserves-based plan.
------------------------- -------------------------------------------------------------
Increased interaction Shareholders,
with key stakeholders Employees, State * The Board conducted a number of webinar style
of Alaska, Other shareholder presentations outside of the traditional
Business Relationships AGM, which all shareholders and non-shareholders were
invited to attend, in addition to a number of video
interviews. The Group also held a number of technical
presentations with industry and with the State of
Alaska, working with them to ensure they are fully
appraised of the Group's intended plans.
* Following the results at Alkaid-2 which resulted in a
significant share price fall, the Company was active
in communicating with shareholders to better educate
them on analysis and interpretation of results.
* The Group interacted with departments of the State of
Alaska, presenting its geological findings from
drilling activities, as well as working on planning,
permitting and other necessary actions considered
necessary for the advancement of the project.
* The Group utilized the services of many local service
providers for services such as rig hire, road
construction etc, providing material service income
for those companies.
* The Group increased the level of granularity in stock
exchange announcements and webinars, to allow
stakeholders greater transparency of capital
requirements and targeted project timelines.
* The Directors announced its strategy to achieve
sustainable market recognition of $5 - $10 per barrel
of resource.
* The consequence of these actions was to create a
greater level of understanding of the Group's
projects and intended activities and to strengthen
relationships with stakeholders, as well as to
clearly describe the ambitions in terms of targeted
value recognition for shareholders.
------------------------- -------------------------------------------------------------
Implementation Shareholders,
of development Employees, State * After year end, Pantheon outlined in great detail its
strategy of Alaska, and strategy to bring the Ahpun and Kodiak projects into
Business Relationships development, targeting a final investment decision
(FID) on Alkaid by end 2025 and Kodiak by end 2028.
* Pantheon has commenced the process to apply for a
hot-tap directly into the Trans Alaska Pipeline
System (TAPS) to facilitate the sale of marketable
liquids directly into the pipeline.
* Pantheon outlined in stock exchange announcements its
estimation of funding requirements to achieve key
milestones.
* Pantheon has commenced discussions with industry
service providers as it seeks to secure non equity
finance such as vendor finance, in an effort to
minimise shareholder dilution. A number of industry
parties have entered Pantheon's data room as part of
this process.
* The consequence of these actions has been to give
shareholders and other stakeholders a clear
visibility of Pantheon's intended project development
timeframes, milestones and capital requirements as
the Company seeks to move into development and
production.
------------------------- -------------------------------------------------------------
Increased Corporate Shareholders,
Governance employees, Business * In the 2023 calendar year Pantheon appointed two new
Relationships independent non-executive directors, David Hobbs and
Allegra Hosford Scheirer. Following Mr Hobbs'
accession to Executive Chairman, the Company
announced the appointment of Linda Havard as a
non-executive director, to be effective 1 January
2024. Linda has decades of experience in financial
and CFO roles and will become the Chair of Audit
Committee. Following this appointment Pantheon will
have a total of 7 directors.
* In preparation for a possible US stock market listing,
Pantheon is in the process of appointing a specialist
outsourced advisory to assist in bringing the Group
up to Sarbanes-Oxley level compliance.
* The consequence of such actions is to improve the
level of governance and diversification which is to
the benefit of all stakeholders.
------------------------- -------------------------------------------------------------
Addition of Shareholders,
incremental Employees, State * Pantheon was the successful bidder for c.66,000 new
key leases of Alaska, and leases in the December 2023 lease sales. All acreages
in the December Business Relationships are immediately adjacent to existing leases and add
2023 lease material resource potential for shareholders.
sale
------------------------- -------------------------------------------------------------
Finally, to you, our shareholders, thank you for your trust,
belief and support in what has been a year of great progress for
our Company. Your continued support is appreciated by your Board,
our wider internal team and our external advisory group.
This report was approved by the Board on 18(th) December, 2023
and signed on its behalf.
Jay Cheatham
Chief Executive Officer
18(th) December, 2023
FINANCE DIRECTOR'S REPORT
FOR THE YEARED 30 JUNE 2023
Financial Review
The Group made a loss from Continuing Operations after Taxation
for the financial year ended 30 June 2023 of $1.5m (2022:$13.95m).
This result was impacted by the positive effect of the revaluation
of the derivative component of the convertible bond of $11.3m
(2022: $4.3m) and interest expense relating to the bond of $6.1m
(2022:$4.6m). Additionally $3.1m of non cash share based payment
charges impacted the result for the year (2022:$8.2m).
In December 2021, the Company completed a financing through the
issuance of a $55m convertible bond and a $41m equity fundraising
which was completed at a price GBP0.65 per share. The convertible
bond is for a 5 year term, repayable in quarterly instalments in
cash or shares (at the Company's election) and carries an interest
coupon of 4% per annum. At the date of this report, the principal
outstanding on the Convertible Bond is $29.4m. A summary of the key
bond terms is provided at note 16.
Impairments
In accordance with International Financial Reporting Standard 6
'Exploration for and Evaluation of Mineral Resources' (IFRS 6),
exploration and evaluation assets are reviewed for indicators of
impairment. Should indicators of impairment be identified an
impairment test is performed.
The Group has reviewed these assets for indications of
impairment. The Directors have satisfied themselves that there are
no indicators of impairment in the current year.
Capital Structure
The Company completed an equity placing in May 2023 and issued
104,179,027 new fully paid ordinary shares with a nominal value of
GBP0.01, raising approximately $22m before expenses at an issue
price of 17 pence per share.
Additionally, during the year, several issues of ordinary shares
were made as follows:
- In September 2022, 2,800,813 ordinary shares were issued as
settlement of the September 2022, quarterly Convertible Bond
repayment of principal plus interest.
- In September 2022, 4,525,000 ordinary shares were issued as a
result of the exercise of share options.
- In December 2022, 3,276,374 ordinary shares were issued as
settlement of the December 2022, quarterly Convertible Bond
repayment of principal plus interest.
- In February 2023, 290,000 ordinary shares were issued upon the vesting of RSUs.
- In March 2023, 9,257,328 ordinary shares were issued as
settlement of the March 2023, quarterly Convertible Bond repayment
of principal plus interest.
- In June 2023, 15,172,320 ordinary shares were issued as
settlement of the June 2023, quarterly Convertible Bond repayment
of principal plus interest.
A summary of movements in Capital Structure is provided at Note
19.
As at 30 June 2023 the total shares in issue was 907,206,399
(2022: 767,705,537).
During the year the Company did not grant share options to staff
under the Discretionary Share Option Plan (the "Scheme").
As at 30 June 2023 the Company had 4,803,921 warrants
outstanding to acquire non-voting convertible shares. The warrants
have an exercise price of GBP0.30 per share and expire on 30
September 2024. They are all fully vested. Non-voting shares are
convertible into ordinary fully paid shares on a 1:1 basis.
As at 30 June 2023 the Company had 32,830,000 options
outstanding to acquire ordinary shares (2022: 50,160,000) at an
average exercise price of 0.477 pence per share. At year end all
share options were fully vested.
Going concern
In June 2023 Pantheon communicated to shareholders via RNS and
accompanying webinar, its aggressive strategy to target sustainable
market recognition of a value of $5 - $10 per barrel of 1P/1C
recoverable resource by the end of 2028, FID (Final Investment
Decision) on the Ahpun project by the end of 2025, and FID on the
Kodiak project by the end of 2028. Executing such a strategy
requires significant additional capital, most of which the Company
seeks to access through non equity sources. This process is
presently underway. In November 2023 management provided a detailed
stock exchange announcement accompanied by a webinar, which
provided a detailed overview of the estimated $120 million capital
required to achieve first production at Ahpun. This sum includes
the drilling of 3 new wells, a hot tap into the TAPS pipeline,
upgrading production facilities and 3 years of G&A. In
accessing additional capital, Pantheon's goal is to achieve this in
the least dilutive manner for shareholders, minimising the use of
equity capital and by prioritising three main alternate funding
sources: (i) Vendor financing (ii) Offtaker financing and (iii)
Reserve based lending. Pantheon is presently in discussions with
multiple parties with respect to these potential non-equity
financing alternatives. The Group will need to secure additional
funding for general working capital, to cover future liabilities as
they fall due and to continue to progress its key projects as
planned within the 12 months following the approval of these
financial statements. As previously disclosed to shareholders, the
Group seeks to secure such funding by Q2 or Q3 2024, in the least
dilutive manner for shareholders, ideally through one of the non
equity funding sourced discussed above. The auditors have made
reference to this material uncertainty within their audit
report.
In Q3 2023, Netherland Sewell & Associates estimated a 2C
Contingent Resource for Pantheon's Kodiak project totalling 962.5
million barrels of marketable liquids. The directors believe the
enormous size of the resource already appraised on Pantheon's
acreage provides the potential for 1,000 - 2,000 wells. Whilst in
absolute terms this would entails cumulative investment estimated
in the billions of dollars over the lifetime of the project,
Pantheon estimates c.$300 million on the Ahpun development (plus
potentially $50 million of Kodiak appraisal costs) to be the
maximum cumulative cash requirement. Once in full development, it
is believed that production revenues have the potential to self
finance a great majority of the development costs, as is typically
the case in such developments.
The Group has no contractual obligation to drill any future
wells and the only obligation is to suspend the Talitha-A test
well, the estimated cost of which ($0.7m) has already been provided
for in the financial accounts. Given the quality of the assets, the
directors are confident in their ability to raise capital as and
when required. Accordingly, the financial statements have been
prepared on a going concern basis as documented further in Note
1.4.
Taxation
The Group incurred a loss for the year and has recorded a
taxation charge of $0.14m (2022: $2.0m credit). As the tax credit
is all reflected in the movement in deferred tax, the Directors
have adjusted deferred tax liability by the same amount as the tax
charge.
Risk assessment
The Group's oil and gas activities are subject to a variety of
risks - both financial and operational - including, but not
limited, to those outlined below. These and other risks have the
potential to materially affect the financial performance of the
Group. For additional detail see section Key Operational Risks and
Uncertainties in the Strategic Report on page 20.
Liquidity Risk
As the Company did not generate material revenue from
hydrocarbon production during the year (all production revenues
were generated through a one-off long term production test which
has since concluded), the primary liquidity risk is the ability to
adequately source sufficient funding to meet the Company's working
capital and operational requirements. Funding availability, and
hence risk, within the capital markets remains uncertain as a
result of continued global economic conditions, including the
impact of increased interest rates and inflation.
Oil & Gas Price Risk
Future oil and gas sales revenues are subject to the volatility
of the underlying commodity prices. Over the past few years the
energy sector has been impacted by volatility in commodity prices,
which may continue to impact the Group going forward. The Group did
not engage in any commodity price hedging activity during the
year.
Currency Risk
Most capital expenditures for the year (and future years), as
well as possible future operational revenues from oil sales were or
will be denominated in US dollars. The Group keeps the majority of
its cash resources denominated in US dollars to minimise volatility
and foreign currency risk. The Group did not engage in any foreign
currency hedging activity during the year.
Credit Risk
The Group's credit risk is primarily attributable to its cash
balances. The credit risk on liquid funds is limited because the
third parties are large banks with a minimum investment grade
credit rating. The Group's total credit risk amounts to the total
of other receivables and cash and cash equivalents. The Group's
does not have any joint venture partners.
Financial Instruments
At this stage of the Group's activities it has not been
considered appropriate or necessary to enter into any derivatives
strategies or hedging. Once the Group's production revenues
increase substantially, such strategies will be reviewed on a more
regular basis.
Justin Hondris
Director
18 December, 2023
STRATEGIC REPORT
FOR THE YEARED 30 JUNE 2023
Principal activity
The Company is registered in England and Wales, having been
incorporated under the Companies Act with registered number
05385506 as a public company limited by shares. The principal
activity of the Group is the investment in oil and gas exploration
and development. The Group operates in the U.K. through its parent
undertaking and in the U.S.A. through subsidiary companies, details
of which are set out in Note 8 to these accounts.
Review of the Business and Key Performance Indicators
2022/2023 KPI Measurement 2022/2023 Performance
--------------------------------------
Ensure business adequately funded Fund raise where appropriate The Company completed a $22m
fundraising (gross proceeds) in May
2023 and serviced its convertible
bond quarterly repayments (principal
plus interest) during the financial
year through the
issuance of equity.
-------------------------------------- -------------------------------------- --------------------------------------
Ensure appropriate levels of Continue to implement and improve Durig the year, Allegra Hosford
governance governance standards Scheirer was appointed as
independent NED, and in December
2023 the board appointed Linda
Havard as an additional independent
NED, to be effective 1st
January 2024. Upon this appointment,
Pantheon will have 7 directors, 3 of
which are non executive
directors.
The Company has also announced its
intention to prepare for a possible
USA stock market listing
and as part of this has engaged with
a 3(rd) party expert group to assist
in bringing Pantheon's
governance up to Sarbanes-Oxley
standards.
-------------------------------------- -------------------------------------- --------------------------------------
Operational activity in Alaska Drilling / testing wells The Company undertook
several operations during
the year under review and
beyond:
Drilled and tested the
Alkaid-2 zone of interest,
encountering and flowing
hydrocarbons through
a long term production
test. Subsequent to year
end, the Akaid-2 well was
re-entered and the
independent and shallower
SMD horizon was flow
tested and an improved
fracture stimulation
methodology was
successfully applied,
demonstrating materially
improved estimated frac
efficiencies.
-------------------------------------- -------------------------------------- --------------------------------------
Third party expert validation of Receipt of third party expert During the year, SLB (formerly
Alaskan assets reports Schlumberger) completed a large
'static model' project and
provided a report estimating Oil in
Place of 17.8 billion barrels.
Subsequent to year end,
Netherland Sewell & Associates
published a report estimating a C2
Contingent Resource of 962.5
million barrels of marketable
liquids (oil, condensate, NGLs). on
the Kodiak project. NSAI
will next prepare a resource
estimate on the Ahpun project,
targeted for completion in 1H
2024.
-------------------------------------- -------------------------------------- --------------------------------------
Pursue farmout or project Progress towards farmout or project Pantheon's understanding of the
development development geological potential (and therefore
potential value) of the
assets has increased materially. The
Company's revised strategy announced
after year end involves
the Company developing the assets on
its own, with FID on the Ahpun
project targeted for end
2025, and FID on the Kodiak project
targeted by end 2028. In the
meantime, the Company has
commenced the process to work
towards obtaining a hot-tap into the
TAPS (Trans Alaska Pipeline
System) pipeline to enable it to
sell its future production directly
into the pipeline. The
Company isn't actively seeking a
farmout partner at this time as it
believes greater value
can be achieved, given the disparity
between market capitalisation and
modelled project NPVs,
by advancing the project on its own,
ideally supported by vendor and
other non-equity based
sources of financing. As the project
is advanced it is believed that far
greater value can
be achieved in a farmout as the
Company seeks to become a 'price
maker' rather than a 'price
taker'.
-------------------------------------- -------------------------------------- --------------------------------------
Ensuring continued high-quality Establish and maintain relationships Pantheon's technical team was
technical consultant relationships with industry experts and review further strengthened in the year
performance under review. Experts such
as eSeis, AHS Baker Hughes and
others remain contracted. Pantheon
also forged a strong relationship
with SLB (formerly 'Schlumberger')
for a very significant dynamic and
static reservoir modelling
project. Work with all these
partners continues.
-------------------------------------- -------------------------------------- --------------------------------------
Continue to build and refine Estimated resource Pantheon successfully acquired
resource potential c.40,000 new acres following the
lease sales of December 2022,
and in December 2023 was the
successful bidder on a further
c.66,000 acres, both with material
resource potential. During the year
the Company received an Independent
Expert Report estimating
a 2C contingent resource of 962.5
million barrels of marketable
liquids. The Company expects
a further report(s) in 2024.
-------------------------------------- -------------------------------------- --------------------------------------
Ensure close working relationship Monitor interaction with regulators The Group worked closely with the
with the State of Alaska and paying interest to approvals regulator, including detailed
regulators processes, timelines, and technical briefings discussing
other procedural issues the analysis of well performance and
interpretation of data sets,
communication of future
plans, concepts for long term
production testing, flaring of gas,
environmental matters, and
future development aspirations. The
Group continues to work with key
stakeholders for the
purposes of obtaining a hot-tap into
the main pipeline.
-------------------------------------- -------------------------------------- --------------------------------------
Financial Position and Future Prospects
Please refer to the Director's Report for additional information
on strategy and the business model.
Key operational risks and uncertainties
The Group may be unable to meet its lease obligations
In general, the Group's properties are held under oil and gas
leases. The terms of the Group's leases often provide for yearly
rental payments. Such yearly rentals may vary depending upon the
particular lease and whether the Group has commenced activities in
the property. If the Group defaults on its lease payments, its
leases may be automatically terminated. If the Group is unable to
make these payments and its leases are terminated, there could be a
material adverse effect on its business, financial condition, and
results of operations. Managing the lease position is of material
importance for the Group, and management devote considerable time
to lease management, budgeting and planning, consulting with the
State of Alaska where required. The 27 new leases (comprising
c.40,000 acres) successfully bid for in the November 2022 lease
auctions are contiguous to existing leases, have a 10-year initial
term, $10 per acre rentals and low royalties of between 12.5% -
16.7% to the State of Alaska. In December 2023 Pantheon was the
successful bidder for an additional c.66,000 acres with the same
lease terms as outlined above. It is estimated that these leases
will be formally awarded summer 2024 upon payment of the balance of
the application monies.
The Group may be unable to renew and/or extend its leases once
they expire
The Group's lease agreements are subject to termination
following their initial term, unless extended by being included in
a unit. Unitization recognizes that the Group has established, to
the State's satisfaction, that the unit encompasses all or part of
multiple potential hydrocarbon accumulations. Exploration and/or
production activities are usually a prerequisite for unit
formation. If the Group is unable to secure unitization for some
leases on a timely basis, it may lose its rights in these
properties when the initial term expires. In addition, given that
it may not be able to renew certain leases unless it begins
exploration or production activities within specific timeframes,
the Group may be required to invest significant funds at timetables
not optimal in order to meet the work requirements necessary to
secure a unit. If the Group is unable to extend its leases beyond
their primary term, there could be a material adverse effect on its
business, financial condition and results of operations. To
mitigate this risk, the Group has successfully applied for and been
granted the Talitha and Alkaid Units that contain most of the Ahpun
project and some of the Kodiak projects. Most of Pantheon's Kodiak
project is now covered by leases of c.6 years or more of remaining
initial term.
Our operations require the Group to obtain licensing, planning
permissions and other consents
The development of its current and future leases may be
dependent upon the receipt of planning permission from the
appropriate local authorities, as well as other necessary consents,
such as environmental permits and regulatory consents. Obtaining
the necessary consents and approvals may be costly, and they may
not be granted, may be withdrawn, or made subject to limitations
and conditions. Certain permits and consents may also become
contentious in the future, which may lead to these not being
granted or withdrawn. The failure to gain such permissions or gain
such permissions on terms or at a cost acceptable to the Group, may
limit the Group in its ability to develop and extract value from
its leases and could have a material adverse effect on its
business, results of operations, financial conditions and
prospects. To manage the risk, the Group employs experienced and
qualified personnel, supplemented by consulting firms where
appropriate, who have successfully advised on or obtained licenses
and permits in the past, and who maintain working relationships
with regulatory agencies.
Political conditions and government regulations could change and
have a material effect on the Group's results or operations
Although political conditions in the Northern Slope Borough, the
State of Alaska and the United States federal government are
generally stable, changes may occur in their political, fiscal
and/or legal systems, which might adversely affect the Group's
operations. The Group's strategy has been formulated in light of
the current regulatory environment and expected future changes to
the regulatory regime. In 2021 the federal government adopted a
more cautionary position with respect to operations on federal
land, notably with respect to ConocoPhillips' Willow project,
however through ongoing consultation a suitable compromise was
reached allowing the project to be developed. Unlike the Willow
project, Pantheon's projects are all located on state land, not
federal land, and so have not been impacted by such politics.
Although the Group believes that its activities are currently
carried out in accordance with all applicable rules and
regulations, no assurance can be given that new rules, laws and
regulations will not be enacted, or that existing or future rules
and regulations will not be applied in a manner which could serve
to limit or curtail exploration or development of the Group's
business or have an otherwise negative impact on its activities.
Amendments to existing rules, laws and regulations governing the
Group's operations and activities, or increases in or more
stringent enforcement, implementation or interpretation thereof,
could have a material adverse impact on the Group's business,
results of operations and financial condition.
Future legal proceedings could adversely affect the Group's
business, results of operations or financial condition
The Group may face legal proceedings that may result in the
Group having to pay material damages and/or other remedies. While
the Group would assess the merits of each legal proceeding and
defend the Group accordingly, it may be required to incur
significant expenses or devote significant resources to defend
against such legal proceedings. In addition, legal proceedings are
also difficult to predict, which may force the Group to enter into
settlement arrangements even in the absence of any culpability from
its part.
Furthermore, the adverse publicity surrounding legal proceedings
may negatively affect the Group's relation with local communities,
government, and non-government organizations, which could also
impact the Group's activities. As a result, legal proceedings could
have a material adverse effect on the Group's business, financial
condition, results of operations and prospects. To manage this risk
the Group consults legal counsel when it faces potential legal
proceedings. The board and management consult legal counsel when
conducting activities or entering into agreements that are viewed
to have the potential to give rise to material legal risks.
Failure to manage relationships with local communities,
environmental groups and non-government organizations could
adversely affect the Group's future growth potential
The activities of oil and gas companies often face scrutiny from
the public and receive negative publicity. Although the Group's
operations are not located in or near large communities, the
Group's ability to further expand its operation may be hindered by
communities that may regard oil and gas activities as detrimental
to their environmental, economic or social circumstances.
Furthermore, oil and gas companies are also increasingly facing
scrutiny by environmental groups regarding the effect operations
may have on the animal life in the region. Negative reaction to its
operations could have a material adverse impact on the cost,
profitability, ability to finance, or even the viability of an
operation. Such events could give rise to material reputational
damage.
These disputes are not always predictable and may cause
disruption to projects or operations. Failure to manage
relationships with local communities, environmental groups and
non-governmental organisations may adversely affect the Group's
reputation, as well as its ability to commence production projects
in certain locations, which could in turn affect its long-term
prospects and the Group's business, financial condition and results
of operations. The Group's current leased acreage is not in the
immediate vicinity of any local community. To manage this risk the
Group ensures it conducts operations in a legal and responsible
manner and complies with rules and regulations.
Any change to government regulation/administrative practices may
have a negative impact on the Group's ability to operate and its
future profitability
The business of oil and gas exploration and development is
subject to substantial regulation under federal, state, local laws
relating to the exploration for and the development of oil and gas
resources, as well as the marketing, pricing, taxation, and
transportation of oil and gas and related products and other
matters. Amendments to current laws and regulations governing
operations and activities of oil and gas exploration and
development operations could have a material adverse impact on the
Group's business. In addition, there can be no assurance that tax
laws, royalty regulations and government incentive programs related
to the Group's oil and gas properties and the oil and gas industry
generally, will not be changed in a manner which may adversely
affect the Group's prospects and cause delays, inability to explore
and develop or abandonment of these interests.
Furthermore, permits, leases, licenses and approvals are
required from a variety of regulatory authorities at various stages
of exploration and development. There can be no assurance that the
various government permits, leases, licenses and approvals sought
will be granted in respect of the Group's activities or, if
granted, will not be cancelled, or will be renewed upon expiry.
There is no assurance that such permits, leases, licenses and
approvals will not contain terms and provisions which may adversely
affect the Group's exploration and development activities. If any
of the forgoing were to occur, it could have a material adverse
effect on the Group's business, financial condition and results of
operations. To manage the risk, the Group employs experienced
personnel and contractors who have successfully obtained licenses
and permits in the past, and who maintain working relationships
with regulatory agencies and monitor changes that could impact the
Group.
By order of the board.
Justin Hondris
Director
18 December, 2023
DIRECTORS' REPORT
FOR THE YEARED 30 JUNE 2023
The Directors present their report together with the audited
accounts of Pantheon Resources plc ("Pantheon" or the "Company")
and its subsidiary undertakings (together the "Group") for the year
ended 30 June 2023.
Results
The Group results for the period are set out on page 42. The
Directors do not propose to recommend any distribution by way of a
dividend for the year ended 30 June 2023.
Future Developments
As explained in the CEO and Chairman's reports, the Group
announced a revised strategy in late summer 2023, where it outlined
its goal of achieving FID by end 2025 on the Ahpun project and by
end 2028 on the Kodiak project. The Group also announced that it
was considering a listing or dual listing on a USA stock exchange,
possibly NYSE or NASDAQ, and/or was also considering the merits of
a listing on the main board of the London Stock Exchange as part of
its strategic planning. This work is ongoing. The Group also
announced it had commenced the process of working towards a hot-tap
into the Trans Alaska Pipeline System to allow the sale of future
production directly into the pipeline, and that it was currently
maturing possible vendor financing discussions as part of its
objective to fund the operations and development in the least
dilutive manner to shareholders.
Information to shareholders - website
The Group maintains its own website (www.pantheonresources.com)
to facilitate provision of information to external stakeholders and
potential investors and to comply with Rule 26 of the AIM Rules for
Companies.
Group structure and changes in share capital
Details of the Group structure and the Company's share capital
during the period are set out in Notes 8 and 18 to these
accounts.
Directors
The Directors who served at any time during the year were:
Name Role
---------------------------------------------
Phillip Gobe Non-Executive Chairman - retired 8 June
2023
John Cheatham Chief Executive Officer
David Hobbs Non-Executive Director, then Executive
Chairman
Justin Hondris Director, Finance & Corporate Development
Allegra Hosford Scheirer Non-Executive Director - appointed 3 July,
2023
Robert Rosenthal Technical Director
Jeremy Brest Non-Executive Director
--------------------------- ---------------------------------------------
Directors' interests
The beneficial and non-beneficial interests in the Company's
shares of the Directors and their families were as follows:
Name Number of Ordinary shares of GBP0.01
30 June 2023
--------------------------------------
Phillip Gobe (retired
8 June 2023) 849,350
John Cheatham 4,235,346
David Hobbs 1,717,229
Justin Hondris(1) 1,844,753
Allegra Hosford Scheirer(2) Nil
Robert Rosenthal(3) 1,353,758
Jeremy Brest(4) 1,379,703
------------------------------- --------------------------------------
(1) Some of these ordinary shares are beneficially owned by the
spouse of J Hondris.
(2) Appointed July 2023.
(3) In addition to Mr. Rosenthal's direct holding, he also holds
an indirect interest in approximately 553,000 shares of PANR
through an approximate 2.8% interest in Ursa Major Holdings LLC
("UMH"). UMH holds approximately 19.8 million ordinary shares.
(4) At the year end, Mr Brest does not have a direct interest in
Pantheon and has an indirect interest in the Company as described
below:
Mr Brest's interest results from the direct and indirect holding
of Pantheon by Westman Management Limited ("Westman"), of which Mr
Brest is the sole director. Westman holds 1,379,703 ordinary shares
of Pantheon and an indirect interest in approximately 1 million
shares of PANR through an approximate 5% interest in Ursa Major
Holdings LLC ("UMH"). UMH holds approximately 19.8 million ordinary
shares.
Share options and restricted stock units
The Directors held the following share options for Ordinary
shares of GBP0.01, at the beginning and end of the year:
Director As at 30 Granted Exercised As at 30
June 2022(1) during during June 2023
the year(2) the year
Phillip Gobe - - - -
(3)
--------------- -------------- ------------- ------------
John Cheatham 11,360,000 - (1,300,000) 10,060,000
--------------- -------------- ------------- ------------
Justin Hondris 10,340,000 - (2,000,000) 8,340,000
--------------- -------------- ------------- ------------
Robert Rosenthal 6,975,000 - (900,000)- 6,075,000
--------------- -------------- ------------- ------------
Jeremy Brest 1,500,000 - - 1,500,000
--------------- -------------- ------------- ------------
1. Comprising a combination of previously vested share options
granted in 2014, 2020, 2021 and 2022.
2. No share options were granted during the year.
3. Phillip Gobe (retired) was previously granted 290,000
Restricted Stock Units ("RSUs) which vested to him in early
February 2023 and converted into ordinary shares on a 1:1 basis. Mr
Gobe was never granted share options.
Report on Directors' remuneration and service contracts
The service contracts of all the Directors are subject to a
six-month termination period.
Directors' remuneration
Director Fees/basic salary Pension Contributions Health Insurance 2023 2022 Total
(US$) (US$) (US$) Total
(US$) (US$)
------------
D Hobbs 11,365 - - 11,365 -
J Cheatham 525,163 - 525,163 527,703
J Hondris 421,312 21,087 6,521 448,920 675,871
J Brest 39,931 - - 39,931 43,703
P Gobe 114,931 - - 114,931 123,703
R Rosenthal 372,389 - - 372,389 255,707
-------------- ------------------- ----------------------- ------------------ ----------- ------------
Total 1,485,092 21,087 6,521 1,512,700 1,626,687
-------------- ------------------- ----------------------- ------------------ ----------- ------------
Director incentive scheme
In November, 2023, the Company terminated the 2012 short-term
executive director incentive scheme (the "Reserve-based Scheme"),
pursuant to which an incentive bonus would accrue to participants
in the scheme upon the booking of reserves. Prior to the
termination of the Reserve-based Scheme, the Group had never since
inception issued any awards under it.
Share Option Plan
The Company has in place a Share Option Plan (the "Scheme") for
the long term benefit of all staff and permanent consultants,
designed to incentivise staff for outperformance, and as a tool to
attract and retain best quality personnel. No share options have
been awarded under the scheme since January 2022.
Any profits from the ultimate exercise and profitable sale of
share options is subject to full income tax (not capital gains tax)
for the beneficiary.
Subsequent events
Details of subsequent events can be found at Note 32.
Substantial shareholders
The Company has been notified, in accordance with Chapter 5 of
the FCA Disclosure and Transparency Rules, of the under noted
interests in its ordinary shares as at 12 December 2023:
% of Ordinary
Shareholder Ordinary Shares shares
Vidacos Nominees Limited 100,092,007 10.89
Lynchwood Nominees Limited 97,820,490 10.64
Vidacos Nominees Limited 57,155,967 6.22
Interactive Brokers Llc 49,544,996 5.39
Vidacos Nominees Limited 35,405,090 3.85
Interactive Brokers Llc 31,614,654 3.44
Hargreaves Lansdown (Nominees) Limited 31,549,508 3.43
Vidacos Nominees Limited 29,804,392 3.24
Interactive Investor Services Nominees
Limited 28,803,074 3.13
Political and charitable contributions
There were no political or charitable contributions during the
year.
CORPORATE GOVERNANCE STATEMENT
The Company has adopted the Quoted Companies Alliance Corporate
Governance Code 2018 (the "QCA Code"). This statement sets out how
the Company complies with the 10 principles of the QCA Code.
The Board recognises the principles of the QCA Corporate
Governance Code, which focus on the medium to long term value for
shareholders, without stifling the entrepreneurial spirit in which
small to medium sized Companies such as Pantheon have been created.
As the Group grows, it is making a concerted effort to further
improve governance. The Company sets out below an update on its
compliance with the QCA Code.
The QCA Code outlines 10 core principles that should be applied.
These are listed below together with a short explanation of how the
Company applies each of the principles. The Company has adopted a
share dealing code for the Board and employees of the Company.
PANTHEON RESOURCES QCA CORPORATE GOVERNANCE COMPLIANCE
STRATEGY & BUSINESS MODEL
Pantheon's strategy is to focus on hydrocarbon exploration,
appraisal and production, onshore USA, in a region of low sovereign
risk where its specialist expertise lies. Pantheon has structured a
lean organization that is focused on maximising the potential
returns to shareholders through carefully targeted exploration,
appraisal and development activities in established and highly
prospective areas underpinned by detailed geological analysis.
Where appropriate, the Group will also consider undertaking value
accretive acquisitions or divestitures of assets following careful
analysis and, as appropriate, shareholder engagement. The Group, as
appropriate, uses a combination of in-house expertise and external
consultants to manage operations.
Pantheon has historically sought to carefully manage corporate
overhead costs, whilst balancing the need to hire and retain the
best personnel and advisors to mitigate operational risks and
maximise the potential returns to shareholders in the event of
success. Given the current scale of the Group, which continues to
grow, corporate and operating costs are monitored by management to
ensure appropriate levels of spending. In line with the Group's
stated strategy to advance to FID on its Ahpun and Kodiak projects,
it is anticipated that it will recruit additional personnel going
forward.
During the year, the Board of Directors participated in a weekly
conference call, during which they discuss, amongst other items,
the strategic direction and operational status of the Group, and as
a result any significant deviation or change, should such occur,
will be highlighted to the Board promptly. The Board has also met
in person, four times in 2023 for detailed board and strategy
sessions running for a minimum of two days.
UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS
Group progress on achieving its key targets are regularly
communicated to investors through stock exchange announcements
which can be found under the 'Stock Exchange Announcements' section
of the Company website. The Company retains the services of a
corporate communications firm who actively engages with the press,
investors, analysts, and to a limited extent, with social media.
The Group also retains a Corporate Broker and NOMAD, to ensure
compliance with stock exchange regulations as well as to ensure
communications to shareholders are suitable for them to understand
the Group's operations and activities. The Group will consider the
use of commissioned research as a medium for shareholder
education.
The Company utilizes professional advisors such as a Broker,
NOMAD, Corporate Communications specialists and Company Secretarial
services to provide advice and recommendations on various
shareholder considerations where relevant. The Company hosts a
weekly conference call with all directors and its NOMAD/Broker.
During these conference call any shareholder considerations
identified over the course of the week can be addressed and
responded to accordingly, as well as other operational, financial,
strategic of other relevant matters. The Company regards the Annual
General Meeting as an important opportunity to communicate directly
with shareholders via detailed presentations and an open question
and answer session. The AGM includes a detailed investor
presentation and Q&A session, over recent years held by a
separate webinar to enable USA investor participation.
Additionally, the Company also holds regular webinars as and when
relevant, open to all shareholders, providing an investor
presentation and an opportunity for Q&A with management. The
Company also undertakes investor roadshows as and when appropriate,
arranged through its broker. Over the past year, the Company
considers that it has communicated with a significant portion of
its shareholder base and has a clear understanding of shareholder
expectations. Contact details are provided on the Company's website
and within public documents, should shareholders wish to
communicate with the Company.
TAKING INTO ACCOUNT WIDER STAKEHOLDER & SOCIAL
RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS
The Directors recognise their responsibilities to stakeholders
including the State of Alaska, the Federal Government, North Slope
Borough, staff, partners, suppliers, vendors and residents within
the areas it operates. Given the current size of the Company,
stakeholders are able to communicate directly with executive
management and staff members, allowing the Board to act
appropriately on such feedback. A description of how the Group
considers key stakeholders in its decision-making is provided on
page 12.
The Company is conscious of its impact on the geological,
archeological, cultural and biological resources in its operating
environment, and has implemented measures to ensure that each
person working on our projects, including company personnel,
contractors and subcontractors, are informed of the environmental,
social and cultural concerns that relate to that person's job, so
we can minimise any negative impacts.
Stakeholders can contact the Company via the website, its NOMAD,
or can contact the Company's retained corporate communications
advisers when required.
EMBEDDING EFFECTIVE RISK MANAGEMENT
During the year, the Board had weekly conference calls to
discuss, amongst other items, operations, key risks, and other
relevant matters. The Company's NOMAD also attends those weekly
conference calls. Separately, the entire management team has a
fortnightly 'alignment call', designed to provide better
integration and understanding of activities across the team, both
corporately and operationally. Additionally, the Group also has a
policy of structured daily, weekly or fortnightly operational and
management conference calls during periods of operational activity
to identify and discuss key business challenges and risk areas. The
Board believes that this regular program of internal communications
provides an effective opportunity for potential or real-time risks
to be identified, considered and, where necessary, addressed in a
timely manner. Refer page 12 for additional description of how the
Group considers stakeholder interests in decision making. The
Group's oil and gas activities are subject to a variety of risks,
both financial and operational, more information on risk can be
found in the Finance Director's report and Strategic Report.
Given the Company's current size, the Board considers that the
Executive Management team, with oversight from the Non-Executive
Board of Directors and relevant advisers, are sufficient to
identify risks applicable to the Company and its operations and to
implement an appropriate system of controls. Accepting that no
systems of control can provide absolute assurance against material
misstatement or loss, the directors believe that the established
systems for internal control within the group are appropriate to
the size and cost structure of the business. Additionally, the
Company has publicly stated that it is considering a possible
listing on a US stock exchange such as NYSE or NASDAQ, and in
preparation for such a listing has commenced a process of
increasing the level of controls and governance of the group, to
Sarbanes-Oxley standards. An internal audit function is not
considered necessary or practical at this time due to the size of
the Company and the close day-to-day control exercised by the
executive directors.
The audit committee meets at least twice per year where these
internal and financial controls are reviewed as required and assets
are also assessed for impairment considerations.
MAINTAINING A BALANCED AND WELL-FUNCTIONING BOARD
The Directors acknowledge their responsibility for, and
recognise the importance of implementing and maintaining, high
standards of corporate governance. The Board is responsible for
establishing and maintaining the system of internal controls. The
effectiveness of the Group's system of internal control is
considered annually by the Audit Committee of the Board.
The Board
The Board currently comprises two non-executive Directors, and
four executive Directors. On 12(th) December 2023 the Company
announced the appointment of an additional independent
non-executive director, Linda Havard, to join the board, effective
1 January 2024 The independent Company Secretary is a partner in a
law firm who is a specialist in providing company secretarial
services to listed companies. The Board is responsible to the
shareholders for the proper management of the Group. It meets
regularly to discuss operations, consider and monitor strategy,
examine opportunities, identify and consider key risks, consider
(and where appropriate approve) capital expenditure projects and
other significant financing and strategic matters. The Board
delegates authority to the management for day-to-day business
matters including: drilling, geological and operational matters,
purchasing procedures, financial authority limits, contract
approval procedures and the hiring of full time and temporary staff
and consultants. Matters reserved for the Board are communicated in
advance of formal meetings. In addition to formal board meetings,
the directors hold weekly conference calls, attended by the
Company's NOMAD, in order to keep the board fully informed with
operational matters and potential issues as well as regulatory
obligations. The board also considers this regular interaction with
its NOMAD to be a prudent additional layer of corporate governance.
Biographical details of the directors can be found on the 'About
Pantheon' section of the Company's website. Board members are
expected to attend all formal board and committee meetings, as well
as weekly informal board meetings with the Company's NOMAD (or
bi-wekly for non
executive directors). The board meets formally at least 4 times
per year, with meetings usually running for a full 2 days.
The QCA Code does not offer a definition of independence with
respect to directors, so in forming a view on the independence of
directors the Company has sought guidance by reference to the
guidelines outlined in the FCA's UK Corporate Governance Code. In
any event, the Board exercises discretion in making the
determination of director independence which is kept under review
on an annual basis. The now retired non-executive Chairman, Phillip
Gobe, was considered to be independent. Allegra Hosford Scheirer
and Linda Havard (appointment effective 1 January 2024) are both
also considered to be independent. David Hobbs was also considered
to be independent prior to assuming the role of Executive
Chairman.
The Board has a number of committees as explained below.
Following the appointment of the new independent non-executive
director, Linda Havard on 1(st) January 2024, it is intended that
some or all of the committees will be restructured.
Audit Committee
The Audit Committee consists of Jeremy Brest as Chair with all
other directors as members. It is intended that Linda Havard will
assume the role of Chair of the Audit Committee following her
formal appointment as an independent non-executive director on
1(st) January 2024. This Committee provides a forum through which
the Group's finance functions and auditors, report to the
non-executive Directors. Meetings may be attended, by invitation,
by the Company's NOMAD, Company Secretary, other directors and the
Company's auditors.
The Audit Committee meets at least twice a year. For the
financial year ended 30 June 2023 there were two audit committee
meetings which were attended by all members. Its terms of reference
include the review of the Annual and Interim Accounts,
consideration of the Company and Group's accounting policies, the
review of internal control, risk management and compliance
procedures, and consideration of all issues surrounding publication
of interim and annual financial results and the annual audit. The
Audit Committee will also interact with the auditors and review
their reports relating to accounts and internal control systems.
The Audit committee met formally twice during the year, attended by
all directors. The Company does not have a formal policy of auditor
firm rotation, however it the individual audit partner is required
to rotate every 5 years maximum.
Remuneration Committee
The Remuneration and Nomination Committee consist of Jeremy
Brest as Chair, and all other directors as members. The Committee
meets as and when required. Its role is to determine the
remuneration arrangements and contracts of executive Directors and
senior employees, and the appointment or re-appointment of
Directors. No Director is involved in deciding their own
remuneration.
Nominations Committee
The Nominations Committee is chaired by David Hobbs, with all
other directors being members. The Committee meets as and when
required. Its role is to consider and oversee board composition,
recruitment and succession planning.
Conflicts Committee
The Company has established a Conflicts Committee which consists
of Allegra Hosford Scheirer as Chair, with all other directors as
members. The role of the Conflicts Committee is to assist the Board
in monitoring actual and potential conflicts of interest under the
definitions of the Companies Act 2006. Under the Companies Act 2006
Directors are responsible for their individual disclosures of
actual or potential conflict. To follow best practice, the
Conflicts Committee holds discussions where appropriate, with the
Company's UK lawyers.
Anti-Corruption & Bribery Committee
The Company has established an Anti-Corruption & Bribery
Committee Committee which consists of Justin Hondris as Chair, with
all other directors as members. The purpose of the Anti-Corruption
& Bribery Committee is to ensure the Company's compliance with
the Bribery Act 2010.
HAVING APPROPRIATE EXPERIENCE, SKILLS AND CAPABILITIES ON THE
BOARD
The Board of directors has a mix of experience, skills, both
technical and commercial, and personal qualities that seek to
deliver the strategy of the Company. The Company will ensure that
the directors have the necessary up-to-date experience, skills and
capabilities to deliver the Company strategy and targets. If the
Company identifies an area where additional skills are required,
the Company will contract an appropriately qualified third party to
advise as required. Each director is listed on the 'About Pantheon'
section of the Company's website and in the annual report, along
with a clear description of their role and experience. The board is
currently in the process of appointing of an additional independent
non-executive director with extensive financial experience.
EVALUATING BOARD PERFORMANCE
As the Company has grown, and with its stated intention of
considering a listing on a USA stock exchange, the Board is
reviewing the board performance and effectiveness and will add
additional resources if/where appropriate. The Company appointed an
independent NED with geological experience during the year (Allegra
Hosford Scheirer) and has recently appointed an additional NED with
financial management experience (Linda Havard) whose appointment
will become effective 1 January 2024.. The Board has contracted the
executive remuneration specialists at Deloitte for matters
concerning management incentive schemes.
ETHICAL VALUES & BEHAVIOURS
The Company operates a corporate culture that is based on
ethical values and behaviors and treats operational stakeholders
fairly and with respect. It will maintain a culture appropriate to
the standards required for a Company of its size. The board
communicates regularly with staff through meetings, team conference
calls and presentations, individual telephone calls and messages
and advocates respectful, pen dialogue with employees, consultants
and other stakeholders. Following the appointment of the proposed
new independent non-executive director, the board will comprise
five male and two female members.
ENVIRONMENTAL STATEMENT
Pantheon Resources will seek to conduct its activities in a way
that keeps the environmental and social impacts to a minimum. To
that end, the Company plans to eliminate its Scope 1 and Scope 2
greenhouse gas emissions by 2030. Furthermore, it will consult with
State and local communities on the North slope of Alaska to
minimize the development footprint while seeking to maximise the
economic benefits to the state of Alaska and North Slope
Borough.
Pantheon intends for the initial development of Ahpun and Kodiak
to be all electric, with CCS (carbon capture & storage) applied
to power generation exhausts. We will ensure that all electricity
purchases by the company are from zero GHG (greenhouse gas)
emission sources.
Furthermore, after 2030, the Company will work with its
suppliers in an effort to eliminate their Scope I and 2 emissions
(i.e. Pantheon's scope 3 emissions).
To minimise the physical footprint of the Company's development
activities we will maximise the number of wells drilled from each
pad and minimise the number of pads and connecting roads.
MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES
Ultimate authority for all aspects of the Company's activities
resides with the Board, with the respective responsibilities of the
Chairman, the Executive Directors and the various committees
arising as a result of delegation by the Board. Given the
constraints of balancing a small, cost-conscious Board with a
desire to maintain high standards of Corporate Governance, the
Board has active, structured and regular internal communication,
including a standing weekly conference call between the executive
board (with a standing invitation for non executives to attend) and
its NOMAD where significant matters are tabled and discussed. This
is in addition to regular, formal board meetings, at least 4 times
per year. All the executive directors have designated roles and
areas of responsibility and engage with the Company's shareholders
and stakeholders in accordance with relevant regulatory guidelines.
There are a number of matters reserved for the Board's review and
approval including, Group strategy, approval of major capital
expenditure projects, approval of the annual and interim results,
fundraising, dividend policy and Board structure. It monitors the
exposure to key business and operational risks and reviews the
strategic direction of the group and its operations. The Board
delegates day-to-day responsibility for managing the business to
the Executive Directors/senior management team. The Board considers
its current governance structures and processes as appropriate in
the context of its current size, headcount and complexity, and is
seeking to improve them further as the Group prepares itself for a
possible USA stock market listing. The audit committee meets at
least twice per year where internal and financial controls are
reviewed as required and assets are also assessed for impairment
considerations. In December, 2023 the board announced the
appointment of an additional independent non-executive director,
Linda Havard, who has decades of financial oversight and CFO
experience, to further strengthen the board.
COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS
Page 12 of this Annual Report provides a section 172 statement
which discusses how the Group considers the interests of
shareholders and other relevant stakeholders in its decision
making.
Additionally, under AIM Rule 26 the Company publishes historical
annual reports, notices of meetings and other publications,
including regular operational news flow, over a minimum of the five
previous years which can be found under the 'Financial Reports' and
other sections of the Company website.
The Board is committed to maintaining good communication and
having dialogue with private and institutional shareholders, as
well as analysts. In addition to the Annual General Meeting, the
Company endeavors to arrange shareholder presentations (in person
or via Webinar, Zoom or Microsoft Teams), allowing shareholders to
discuss issues and provide feedback as appropriate. The Company
also retains the services of a specialist corporate communications
advisor to assist in promoting awareness of the Company's
activities to its shareholders and wider audience.
The Board have not published an audit committee or remuneration
committee report, which the Board considers to be appropriate given
the size and stage of development of the Company.
Regarding a general meeting of the Company, upon the conclusion
of that meeting the results of the meeting are released through a
regulatory news service and a copy of the announcement is posted on
the Company's website. In a situation such as where there is a
significant proportion of votes cast against a resolution, then,
where relevant, an explanation would be provided.
EU Market Abuse Regulations
The EU Market Abuse Regulation came into effect in the UK on 3
July 2016 and the Company has implemented relevant policies and
procedures to ensure compliance with the requirements of the
regime. The Company administers compliance in-house, consulting
with NOMAD and legal counsel regularly.
Statement of Directors' responsibilities
The Directors are responsible for preparing the financial
statements in accordance with applicable laws and regulations.
Under that law the Directors have elected to prepare the Group and
Parent Company financial statements in accordance with UK-adopted
international accounting standards which requires the Directors to
prepare financial statements for each financial period which give a
true and fair view of the state of affairs of the Group and of the
Company and of the profit or loss of the Group for that period. In
preparing those financial statements, the Directors are required
to:
a) select suitable accounting policies and then apply them consistently;
b) make judgements and estimates that are reasonable and prudent;
c) prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business; and
d) state whether applicable UK adopted International Accounting
Standards have been followed, subject to any material departures
disclosed and explained in the financial statements.
The Directors confirm that the financial statements comply with
the above requirements.
The Directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
financial position of the Group and Company and to enable them to
ensure that the financial statements comply with the Companies Act
2006. The Directors are also responsible for safeguarding the
assets of the Group and hence for taking steps for the prevention
and detection of fraud and other irregularities. The Directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the Company's website. The
Company is compliant with AIM Rule 26 regarding the Company's
website.
Statement of disclosure to the auditors
So far as the Directors are aware:
1. there is no relevant audit information of which the Company's
auditors are unaware; and
2. all the Directors have taken all the steps that they ought to
have taken to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that
information.
Auditors
In accordance with Section 489 of the Companies Act 2006, a
resolution proposing that PKF Littlejohn LLP be reappointed as
auditors of the Company and that the Directors be authorised to
determine their remuneration will be put to the next Annual General
Meeting.
By order of the board
Justin Hondris
Director
18 December, 2023
DIRECTORS' BIOGRAPHIES
FOR THE YEARED 30 JUNE 2023
David Hobbs, Executive Chairman
David Hobbs graduated as a Petroleum Engineer from Imperial
College in 1984, initially working at British Gas as a drilling
engineer before moving into commercial and business development
roles at Monument Oil & Gas and Hardy Oil and Gas, two UK
listed international independent E&P companies. He joined
Cambridge Energy Research Associates (CERA), now part of S&P
Global, ending up as Chief Energy Strategist, advising Government
officials, senior executives and Boards of Directors across the
energy sector. He also spent six years as part of the leadership
team establishing the King Abdullah Petroleum Studies and Research
Center (KAPSARC) in Riyadh, Saudi Arabia. David is an adjunct
professor at the University of Calgary, a senior Non-Resident
Fellow at the Atlantic Council's Global Energy Center and is
Chairman of Proton Green, a US based helium, food grade CO2 and
carbon sequestration company.
David is Chair of the Nominations Committee and a member of the
Audit, Remuneration, Conflicts, and Anti-Corruption & Bribery
Committees.
Jay Cheatham, Chief Executive Officer
Jay Cheatham has more than 50 years' experience in all aspects
of the petroleum business. He has extensive international
experience in both oil and natural gas, primarily for ARCO. At
ARCO, Jay held a series of senior appointments. These include
Senior Vice President and District Manager (ARCO eastern District)
with direct responsibility for Gulf Coast US operations and
exploration and President of ARCO International where he had
responsibility for all exploration and production outside the US
Jay's most recent appointment was as President and CEO of
Rolls-Royce Power Ventures, where he had the key responsibility for
restructuring the Company.
Jay also has considerable financial skills in addition to his
corporate and operational expertise. He has acted as Chief
Financial Officer for ARCO's US oil and natural gas company (ARCO
Oil & Gas). Moreover, he has an understanding of the capital
markets through his past position as CEO to the Petrogen Fund, a
private equity fund.
Jay is a member of the Company's Remuneration and Nominations
Committee, Audit Committee, Conflicts Committee and Anti-Corruption
and Bribery Committee.
Justin Hondris, Director, Finance and Corporate Development
Justin Hondris has over 15 years' experience in public company
management in the upstream oil and gas sector and has wide ranging
experience in corporate finance, private equity and capital markets
in the UK and abroad. Prior to Pantheon, Justin was involved in the
private equity sector where he gained valuable experience in both
investment and exit strategies for growth companies.
He is responsible for the financial, legal, administrative and
corporate development functions of the Company.
Justin is Chair of Pantheon's Anti-Corruption and Bribery
Committee and is a member of the Remuneration, Committee,
Nominations Committee, Audit committee and the Conflicts
Committee.
Robert (Bob) Rosenthal, Technical Director
Bob Rosenthal has over 40 years' experience in the oil and gas
industry globally as an Exploration Geologist and Geophysicist. He
has held various senior exploration positions and spent a large
part of his career at Exxon and at BP, where he gained key relevant
regional experience in the geology of North Slope of Alaska and of
Texas. Since 1999, Bob has run his own successful consulting
business and has led the exploration efforts of a number of private
and public companies.
Bob is a member of the Company's Remuneration and Nominations
Committee, Audit Committee, Conflicts Committee and Anti-Corruption
and Bribery Committee.
Jeremy Brest, Non-executive Director
Jeremy has more than 25 years' experience in investment banking
and financial advisory. Jeremy is the founder of Framework Capital
Solutions, a boutique Singapore-based advisory firm specializing in
structuring and execution of private transactions. Prior to
founding Framework, Jeremy was the head of structuring for
Indonesia at Credit Suisse and a derivatives trader at Goldman
Sachs.
Jeremy is Chair of the Company's Audit Committee, and the
Remuneration Committee, and a member of the Conflicts Committee,
Nominations Committee and Anti-Corruption and Bribery
Committee.
Allegra Hosford Scheirer, Non-Executive Director (appointed July
2023)
Allegra Hosford Scheirer is a recognized expert in petroleum
system analysis. Her degrees are from Brown University (B.S.,
geology-physics/math) and the Massachusetts Institute of Technology
(Ph.D., marine geology and geophysics). Following a postdoctoral
position at Woods Hole Oceanographic Institution, she spent 6.5
years at the U.S. Geological Survey as a member of the Geophysical
Unit of Menlo Park and the Energy Resources Program, where she
contributed to petroleum resource assessments of sedimentary
basins. For the past 15 years, she has been a co-director of the
Basin Processes and Subsurface Modelling consortium at Stanford
University, where she also teaches and advises graduate students.
She also maintains a consulting company for working with private
clients on exploration programs, short courses, and
petroleum-focused field trips. Allegra is passionate about
sustainability initiatives, including carbon capture and storage
and geologic hydrogen.
Allegra is Chair of the Conflicts Committee and is a member of
the Anti-Corruption & Bribery Committee, the Audit Committee,
Remuneration Committee and Nominations Committee.
Opinion
We have audited the financial statements of Pantheon Resources
Plc (the 'parent company') and its subsidiaries (the 'group') for
the year ended 30 June 2023 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Company
Statements of Changes in Equity, the Consolidated and Company
Statements of Financial Position, the Consolidated and Company
Statements of Cash Flows and notes to the financial statements,
including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable
law and UK-adopted international accounting standards and as
regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 30
June 2023 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards and as applied in accordance with the provisions of the
Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1.4 in the financial statements, which
indicates that additional capital will be required within the
twelve months following the date of approval of the financial
statements in order to meet working capital needs and to fully fund
further exploration programmes as planned. As stated in note 1.4,
these events or conditions, along with the other matters as set
forth in note 1.4, indicate that a material uncertainty exists that
may cast significant doubt on the group and parent company's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group's and parent
company's ability to continue to adopt the going concern basis of
accounting included:
-- Challenging the forecasts prepared by management in order to
assess the group's and parent company's ability to meet financial
obligations as they fall due for a period of at least twelve months
from the date of approval of the financial statements. We have
reviewed the committed cash flows against contractual arrangements
and historical information and compared general budgeted overheads
to current run rates;
-- Identifying and evaluating subsequent events which impact
upon going concern and evaluating the likelihood of occurrence of
forecasted future cash inflows; and
-- Stress testing the cash flow forecasts by increasing
expenditure, as well as critically reviewing committed versus non
committed expenditure, in order to evaluate reasonably possible
downside scenarios and their impact on the headroom.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and on the financial
statements as a whole.
Based on our professional judgement, we consider net assets to
be the most significant determinant of the group's and parent
company's financial performance used by shareholders as the group
continues to bring its exploration assets through to development
and the parent company continues to support the group's exploration
activities. We therefore applied a materiality threshold of 2% of
net assets to both the group and the parent company.
Whilst materiality applied to the group financial statements was
$5,000,000 (2022: $4,790,000), each significant component of the
group was audited to a lower level of materiality. The materiality
of the parent company was $4,750,000 (2022: $4,395,000) with the
other significant components being audited to materiality levels
ranging between $1,105,000 and $2,424,000 (2022: between $1,795,000
and $2,194,000). These materiality levels were used to determine
the financial statement areas that are included within the scope of
our audit work.
Performance materiality is the application of materiality for a
particular class of transactions, account balance or disclosure set
at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality. Performance materiality was set
at 70% of the above materiality levels for both group and parent
company, equating to $3,500,000 (2022: $3,592,500) and $3,325,000
(2022: $3,396,800) respectively, based upon our assessment of the
risk of misstatement .
We agreed with management that we would report to the audit
committee all individual audit differences identified during the
course of our audit in excess of $250,000 (2022: $239,500) for the
financial statements as a whole and $237,500 (2022: $219,790) for
the parent company. We also agreed to report differences below
these thresholds that, in our view, warranted reporting on
qualitative grounds.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on
the areas at greatest risk of material misstatement, aspects
subject to significant management judgement as well as areas of
greatest complexity, risk and size.
As part of designing our audit, we determined materiality and
assessed the risk of material misstatement in the financial
statements. In particular, we looked at areas involving significant
accounting estimates and judgement by the directors and considered
future events that are inherently uncertain. The recoverability of
intangible assets and investments in subsidiary undertakings were
assessed as areas which involved significant judgements by
management. We also addressed the risk of the valuation of the
convertible bond, going concern and management override of internal
controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material
misstatement due to fraud.
The accounting records of the parent company and all subsidiary
undertakings are centrally located and audited by us based upon
group, parent company and component materiality or risk to the
group. The key audit matters and how these were addressed are
outlined below.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the matter described in the Material uncertainty related to going
concern section of our report, we have determined the matters
described below to be the key audit matters to be communicated in
our report.
Key audit matter How our scope addressed this matter
===================================================== ===============================================================
Valuation and impairment of exploration and
evaluation assets in the group financial statements
(note 13)
===============================================================
The group's intangible asset represents capitalised Our work in this area included:
exploration expenditure on projects. The * Obtaining a full schedule of leases relating to
balance as at 30 June 2023 was $287m (2022: $238m). exploration assets and reviewing available
information to assess whether the leases remained in
The group has capitalised costs in respect of the good standing;
group's exploration interests in accordance
with International Financial Reporting Standard 6
'Exploration for and Evaluation of Mineral * In respect of the Alaskan exploration assets, holding
Resources'('IFRS 6'). The directors are required to discussions with management regarding future plans to
assess the exploration assets for indicators develop each prospect, including consideration of
of impairment and, where they are deemed to exist, funding that may be required to do so;
to undertake a full impairment test to
assess the need for impairment charges. This may
involve significant judgements and assumptions * Challenging management's assessment of impairment
such as the timing, amount and probability of indicators in relation to exploration and evaluation
future cash flow. assets, taking into consideration the impairment
indicators outlined in IFRS 6. Challenging and
We therefore identified the risk over impairment of corroborating key assumptions made by management;
exploration and evaluation assets as a
significant risk and, due to the magnitude of the
balance and the level of management judgement * Reviewing the minutes of Board meetings and
involved, we concluded this area to be a key audit Regulatory News Service (RNS) announcements for
matter. indicators of impairment;
* Obtaining and reviewing any reports prepared by
independent experts on the portfolio of assets and
reviewing key findings in conjunction with
management's assertions and IFRS 6 impairment
indicators;
* Substantively testing a sample of exploration and
evaluation additions during the year and assessing
their eligibility for capitalisation under IFRS 6;
and
* Ensuring presentation and disclosure in the financial
statements are sufficient and in accordance with
requirements of IFRS 6.
===============================================================
Carrying value of loans to subsidiaries in the
parent company financial statements (note
9)
===============================================================
Under International Accounting Standard 36 Our work in this area included:
'Impairment of Assets' ('IAS 36'), companies are * Reviewing the loan balances for any indicators of
required to assess whether there is any indication impairment, including a review of the underlying ne
that an asset may be impaired at the end t
of each reporting period. asset balances in the related entities and
The parent company has loans to subsidiaries of considering the work done in respect of the
$279m (2022: $211m) . These loans represent recoverability of intangible assets within these
the most significant balance on the Company entities;
Statement of Financial Position and there is a
risk they may be impaired as a result of the
subsidiaries incurring losses. * Obtaining management's assessment of the
Key judgements and assumptions regarding the recoverability of these balances and corroborating,
impairment of the balances include the timing, as well as challenging, the key assumptions made by
amount and probability of future cash flow from the management in arriving at their conclusions; and
subsidiaries.
We therefore identified the risk over the
impairment of loans to subsidiaries as a * Evaluating the presentation and disclosure in the
significant financial statements.
risk in the parent company's financial statements,
and, due to the magnitude of the balance
and the level of management judgement involved, we
concluded this area to be a key audit matter.
===============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group and parent company financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the group and parent company financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements,
the directors are responsible for assessing the group and the
parent company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and parent company
and the sector in which they operate to identify laws and
regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding
in this regard through discussions with management, our expertise
in the sector and through the application of cumulative audit
knowledge.
-- We determined the principal laws and regulations relevant to
the group and parent company in this regard to be those arising
from
o Companies Act 2006;
o IFRS accounting standards;
o AIM Rules for Companies;
o Quoted Companies Alliance Code; and
o Local laws and regulations in Alaska where the group
operates.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group and parent company with those laws and regulations. These
procedures included, but were not limited to:
o Making enquiries of management;
o Reviewing legal expense accounts;
o Reviewing board minutes and other correspondence during the
year and post-year end; and
o Reviewing of RNS announcements during the year and post-year
end.
-- We also identified the risks of material misstatement of the
financial statements due to fraud at both the group and parent
company levels. We considered, in addition to the non-rebuttable
presumption of a risk of fraud arising from management override of
controls, whether key management judgements could include
management bias was identified in relation to the valuation and
impairment of exploration assets in the group financial statements
and the carrying value of loans to subsidiaries in the parent
company financial statements, and we addressed this as outlined in
the Key audit matters section of our report.
-- We addressed the risk of fraud arising from management
override of controls by performing audit procedures which included,
but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the
business rationale of any significant transactions that are unusual
or outside the normal course of business.
-- Compliance with laws and regulations at the component level
was ensured through enquiry of management and review of ledgers and
correspondence for any instances of non-compliance.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Imogen Massey (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
18 December, 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2023
Notes 2023 2022
$ $
Continuing operations
Revenue 28 803,689 -
Cost of sales (673,290) -
------------- --------------
Gross profit 130,399 -
Administration expenses (3,870,673) (7,430,653)
Share Based payments expense 24 (3,146,170) (8,256,575)
Operating loss 4 (6,886,444) (15,687,228)
Convertible Bond - Interest Expense 16 (6,111,118) (4,640,537)
Convertible Bond - Revaluation
of Derivative Liability 16 11,321,514 4,310,773
Other Income 29 30,000 -
Interest receivable 6 338,205 42,674
------------- --------------
Loss before taxation (1,307,843) (15,974,318)
------------- --------------
Taxation 7 (138,844) 2,022,334
------------- --------------
Loss for the year (1,446,687) (13,951,984)
============= ==============
Other comprehensive income for
the year
Exchange differences from translating
foreign operations 30 (3,185,937) (741,484)
Total comprehensive loss for the
year (4,632,624) (14,693,468)
Basic and diluted loss per share 2 (0.18)c (1.93)c
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 YEARED 30 JUNE 2023
Share Share Retained Currency Share Total
Capital premium losses reserve based equity
payment
reserve
$ $ $ $ $ $
Group
At 1 July 2022 10,720,459 264,879,196 (48,466,590) 493,078 11,776,246 239,402,388
Loss for the year - - (1,446,687) - - (1,446,687)
Other comprehensive
income: Foreign currency
translation - - - (3,185,937) - (3,185,937)
------------ ------------- -------------- ------------- ------------ -------------
Total comprehensive
income for the year - - (1,446,687) (3,185,937) - (4,632,624)
------------ ------------- -------------- ------------- ------------ -------------
Transactions with
owners
Capital Raising
Issue of shares 1,301,769 20,828,305 - - - 22,130,074
Issue costs - (469,920) - - - (469,920)
Issue costs paid in
cash - (501,683) - - - (501,683)
Exercise of Share
Options and RSUs
Issue of shares 58,445 1,880,003 - - - 1,938,448
Convertible Bond -
Amortisation and Redemption
Issue of shares 384,005 11,032,995 - - - 11,417,000
Other - Reversal of
over accrual relating
to previous capital
raise - 181,185 - - - 181,185
------------ ------------- -------------- ------------- ------------ -------------
Total transactions
with owners 1,744,219 32,950,885 - - - 34,695,104
------------ ------------- -------------- ------------- ------------ -------------
Transfer of previously
expensed share based
payment on exercise
of options - - 468,946 - (468,946) -
Share based payments
expense - - - - 2,963,741 2,963,741
Balance at 30 June
2023 12,464,677 297,830,078 (49,444,331) (2,692,860) 14,271,042 272,428,607
============ ============= ============== ============= ============ =============
See note 27 for a description of each reserve account included
above.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
Share Share Retained Currency Share Total
capital premium losses reserve based equity
payment
$ $ $ $ $ $
Group
At 1 July 2021 9,739,203 208,683,936 (36,331,398) 1,234,562 5,336,462 188,662,765
Loss for the year - - (13,951,984) - - (13,951,984)
Other comprehensive
income: Foreign currency
translation - - - (741,484) - (741,484)
------------ ------------- -------------- ----------- ------------- --------------
Total comprehensive
income for the year - - (13,951,984) (741,484) - (14,693,468)
------------ ------------- -------------- ----------- ------------- --------------
Transactions with
owners
Capital Raising
Issue of shares 630,769 40,369,230 - - - 40,999,999
Issue of shares in
settlement of fees 7,692 492,308 - - - 500,000
Issue costs - (1,494,693) - - - (1,494,693)
Exercise of Share
Options
Issue of shares 196,238 5,543,559 - - - 5,739,797
Convertible Bond -
Amortisation and Redemption
Issue of shares 146,557 11,284,856 - - - 11,431,413
------------ ------------- -------------- ----------- ------------- --------------
Total transactions
with owners 981,256 56,195,260 - - - 57,176,516
------------ ------------- -------------- ----------- ------------- --------------
Transfer of previously
expensed share based
payment on exercise
of options - - 1,816,791 - (1,816,791) -
Share based payments
expense - - - - 8,256,575 8,256,575
Balance at 30 June
2022 10,720,459 264,879,196 (48,466,591) 493,078 11,776,246 239,402,388
============ ============= ============== =========== ============= ==============
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
Share Share Retained Currency Share Total
Capital premium losses reserve based equity
payment
reserve
$ $ $ $ $ $
Company
At 1 July 2022 10,720,459 264,879,196 (38,237,347) (29,882,500) 11,776,246 219,256,054
Profit for the year - - 3,399,226 - - 3,399,226
Other comprehensive
income: Foreign currency
translation - - - 10,888,506 - 10,888,506
------------ ------------- -------------- -------------- ------------ -------------
Total comprehensive
income for the year - - 3,399,226 10,888,506 - 14,287,732
------------ ------------- -------------- -------------- ------------ -------------
Transactions with
owners
Capital Raising
Issue of shares 1,301,769 20,828,305 - - - 22,130,074
Issue costs - (469,920) - - - (469,920)
Issue costs paid in
cash - (501,683) - - - (501,683)
Exercise of Share
Options and RSUs
Issue of shares 58,445 1,880,003 - - - 1,938,448
Convertible Bond -
Amortisation and
Redemption
Issue of shares 384,005 11,032,995 - - - 11,417,000
Other - Reversal of
over accrual relating
to previous capital
raise - 181,185 - - - 181,185
------------ ------------- -------------- -------------- ------------ -------------
Total transactions
with owners 1,744,219 32,950,885 - - - 34,695,104
------------ ------------- -------------- -------------- ------------ -------------
Transfer of previously
expensed share based
payment on exercise
of options - - 468,946 - (468,946) -
Share based payments
expense - - - - 2,963,741 2,963,741
Balance at 30 June
2023 12,464,677 297,830,078 (34,369,174) (18,993,994) 14,271,042 271,202,629
============ ============= ============== ============== ============ =============
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
Share Share Retained Currency Share Total
capital premium losses reserve based Equity
payment
$ $ $ $ $ $
Company
At 1 July 2021 9,739,203 208,683,936 (28,090,878) (2,922,760) 5,336,462 192,745,963
Loss for the year - - (11,963,260) - - (11,963,260)
Other comprehensive
income: Foreign
currency
translation - - - (26,959,740) - (26,959,740)
------------ ------------- -------------- -------------- ------------- --------------
Total comprehensive
income for the year - - (11,963,260) (26,959,740) - (38,923,000)
------------ ------------- -------------- -------------- ------------- --------------
Transactions with
owners
Capital Raising
Issue of shares 630,769 40,369,230 - - - 40,999,999
Issue of shares in
settlement of fees 7,692 492,308 - - - 500,000
Issue costs - (1,494,693) - - - (1,494,693)
Exercise of Share
Options
Issue of shares 196,238 5,543,559 - - - 5,739,797
Convertible Bond -
Amortisation and
Redemption
Issue of shares 146,557 11,284,856 - - - 11,431,413
------------ ------------- -------------- -------------- ------------- --------------
Total transactions
with owners 981,256 56,195,260 - - - 57,176,516
------------ ------------- -------------- -------------- ------------- --------------
Transfer of previously
expensed share based
payment on exercise
of options - - 1,816,791 - (1,816,791) -
Share based payments
expense - - - - 8,256,575 8,256,575
Balance at 30 June
2022 10,720,459 264,879,196 (38,237,347) (29,882,500) 11,776,246 219,256,054
============ ============= ============== ============== ============= ==============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes 2023 2022
$ $
ASSETS
Non-current assets
Exploration & evaluation assets 13 286,668,349 237,722,294
Property, plant and equipment 17 38,570 91,691
286,706,919 237,813,985
-------------- --------------
Current assets
Trade and other receivables 9 2,559,522 2,498,447
Cash and cash equivalents 10 20,661,012 57,784,121
23,220,534 60,282,568
-------------- --------------
Total assets 309,927,453 298,096,553
-------------- --------------
LIABILITIES
Current liabilities
Convertible Bond - Debt 16 9,755,688 10,001,704
Trade and other payables 11 2,840,610 6,377,986
Provisions 12 6,017,238 5,285,440
Lease Liabilities 14 36,435 60,297
Other Liabilities 15 - 1,964,441
18,649,971 23,689,868
-------------- --------------
Non-current liabilities
Lease Liabilities 14 - 30,004
Convertible Bond - Debt 16 16,619,062 20,474,664
Convertible Bond - Derivative 16 407,566 12,816,226
Deferred tax liability 7 1,822,247 1,683,403
18,848,875 35,004,297
-------------- --------------
Total liabilities 37,498,847 58,694,166
-------------- --------------
Net assets 272,428,607 239,402,388
============== ==============
EQUITY
Capital and reserves
Share capital 18 12,464,677 10,720,459
Share premium 297,830,078 264,879,196
Retained losses (49,444,331) (48,466,591)
Currency reserve (2,692,860) 493,078
Share based payment reserve 24 14,271,042 11,776,246
Shareholders' equity 272,428,607 239,402,388
============== ==============
The financial statements were approved by the Board of Directors
and authorised for issue on the 18 December, 2023 and signed on its
behalf by
Justin Hondris
Director
Company Number 05385506
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes 2023 2022
ASSETS $ $
Non-current assets
Property, plant and equipment 17 38,570 91,691
Loans to subsidiaries 9 279,494,628 211,053,821
-------------- --------------
279,533,198 211,145,512
-------------- --------------
Current assets
Trade and other receivables 9 154,161 93,086
Cash and cash equivalents 10 19,518,284 54,610,306
-------------- --------------
19,672,445 54,703,392
-------------- --------------
Total assets 299,205,643 265,848,904
-------------- --------------
LIABILITIES
Current liabilities
Convertible Bond - Debt 16 9,755,688 10,001,704
Trade and other payables 11 617,425 710,474
Provisions 12 566,838 535,040
Lease Liability 14 36,435 60,297
Other Liabilities 15 - 1,964,441
-------------- --------------
10,976,386 13,271,956
-------------- --------------
Non-current liabilities
Lease Liabilities 14 - 30,004
Convertible Bond - Debt 16 16,619,062 20,474,664
Convertible Bond - Derivative 16 407,566 12,816,226
17,026,628 33,320,894
-------------- --------------
Total liabilities 28,003,014 46,592,850
-------------- --------------
Net assets 271,202,629 219,256,054
============== ==============
EQUITY
Capital and reserves
Share capital 18 12,464,677 10,720,459
Share premium 297,830,078 264,879,196
Retained losses (34,369,174) (38,237,347)
Currency reserve (18,993,994) (29,882,500)
Share based payment reserve 24 14,271,042 11,776,246
--------------
Shareholders' equity 271,202,629 219,256,054
============== ==============
In accordance with the provisions of Section 408 of the
Companies Act 2006, the Company has not presented an income
statement. A profit for the year ended 30 June 2023 of $3,399,226
(2022: loss of $11,963,260) has been included in the consolidated
income statement.
The financial statements were approved by the Board of Directors
and authorised for issue on 18 December, 2023 and signed on its
behalf by:
Justin Hondris
Director
Company Number 05385506
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2023
Notes 2023 2022
$ $
Net outflow from operating activities 19 (11,395,855) (941,506)
-------------- --------------
Cash flows from investing activities
Interest received 338,205 42,674
Funds used for drilling, exploration
and leases (48,246,055) (45,267,175)
Advance for Performance Bond - (2,400,000)
Property, plant and equipment (3,251) (3,368)
Net cash outflow from investing activities (47,911,101) (47,627,869)
-------------- --------------
Cash flows from financing activities
Proceeds from share issues 18 22,746,441 46,739,796
Issue costs paid in cash (501,683) (994,694)
Proceeds from Convertible Bond - 55,000,000
Repayment of borrowing and leasing
liabilities (60,913) (55,083)
Net cash inflow from financing activities 22,183,845 100,690,020
-------------- --------------
(Decrease)/Increase in cash & cash
equivalents (37,123,110) 52,120,645
Cash and cash equivalents at the beginning
of the year 57,784,121 5,663,476
Cash and cash equivalents at the
end of the year 10 20,661,012 57,784,121
============== ==============
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2023
Notes 2023 2022
$ $
Net cash (outflow) / inflow from
operating activities 19 (1,507,104) (1,831,791)
-------------- --------------
Cash flows from investing activities
Interest received 337,894 42,674
Loans to subsidiary companies (56,103,408) (49,249,801)
Property, plant and equipment (3,251) (3,368)
-------------- --------------
Net cash outflow from investing activities (55,768,764) (49,210,495)
-------------- --------------
Cash flows from financing activities
Proceeds from share issues 18 22,746,441 46,739,796
Issue costs paid in cash (501,683) (994,694)
Proceeds Convertible Bond - 55,000,000
Lease payments (60,913) (55,083)
--------------
Net cash inflow from financing activities 22,183,845 100,690,019
--------------
(Decrease) / Increase in cash and
cash equivalents (35,092,023) 49,647,733
Cash and cash equivalents at the beginning
of the year 54,610,306 4,962,573
Cash and cash equivalents at the
end of the year 10 19,518,284 54,610,306
============== ==============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2023
1. Accounting policies & General Information
Pantheon Resources Plc was listed on the London Stock Exchange's
AIM in 2006. Pantheon, through its subsidiaries, has a 100% working
interest in oil projects located onshore Alaska, USA. The Company
is domiciled in the United Kingdom and incorporated and registered
in England and Wales, with registration number 05385506.
A summary of the principal accounting policies, all of which
have been applied consistently throughout the year, is set out
below.
1.1 Basis of preparation
The financial statements have been prepared on a going concern
basis using the historical cost convention and in accordance with
the UK Adopted International Accounting Standards ("IASs") and in
accordance with the provisions of the Companies Act 2006.
The Group's financial statements for the year ended 30 June 2023
were authorised for issue by the Board of Directors on 18 December,
2023 and were signed on the Board's behalf by Mr J Hondris.
The Group and Company financial statements are presented in US
dollars.
1.2 Basis of consolidation
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases. The purchase method of accounting is
used to account for the acquisition of subsidiaries by the Group.
The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued, and liabilities incurred
or assumed at the date of exchange. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired is
recorded as goodwill. Goodwill arising on acquisitions is
capitalised and subject to impairment review, both annually and
when there are indications that the carrying value may not be
recoverable.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated.
All the companies over which the Company has control apply,
where appropriate, the same accounting policies as the Company.
1.3 Interests in joint arrangements
IFRS 11 Joint Operations defines a joint arrangement as an
arrangement over which two or more parties have joint control.
Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant
activities (being those that significantly affect the returns of
the arrangement) require unanimous consent of the parties sharing
control.
Joint operations
A joint operation is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the assets and obligations for the liabilities, relating to the
arrangement. The Group has a 100% working interest in all of its
projects and accordingly does not have interests in joint
operations at the balance date. At the present time the Group is
not actively seeking a farmout partner and is advancing towards
development of its projects on its own, aiming to achieve FID on
the Ahpun project by end 2025 and FID on the Kodiak project by end
2028. This is not to say that the Company is ruling out a potential
farmout, however given the disparity between the market
capitalisation of Pantheon and management's assessment of project
NPV, it believes that materially better terms could be achieved
once the project is further advanced. If at some point the Group
were to farm out, then joint interest accounting would be
applicable in future periods.
1.4 Going concern
In June 2023 Pantheon communicated to shareholders via RNS and
accompanying webinar, its aggressive strategy to target sustainable
market recognition of a value of $5 - $10 per barrel of 1P/1C
recoverable resource by the end of 2028, FID (Final Investment
Decision) on the Ahpun project by the end of 2025, and FID on the
Kodiak project by the end of 2028. Executing such a strategy
requires significant additional capital, most of which the Company
seeks to access through non equity sources. This process is
presently underway. In November 2023 management provided a detailed
stock exchange announcement accompanied by a webinar, which
provided a detailed overview of the estimated $120 million capital
required to achieve first production at Ahpun. This sum includes
the drilling of 3 new wells, a hot tap into the TAPS pipeline,
upgrading production facilities and 3 years of G&A. In
accessing additional capital, Pantheon's goal is to achieve this in
the least dilutive manner for shareholders, minimising the use of
equity capital and by prioritising three main alternate funding
sources: (i) Vendor financing (ii) Offtaker financing and (iii)
Reserve based lending. Pantheon is presently in discussions with
multiple parties with respect to those potential non-equity
financing alternatives. The Group will need to secure additional
funding for general working capital, to cover future liabilities as
they fall due and to continue to progress its key projects as
planned within the 12 months following the approval of these
financial statements. As previously disclosed to shareholders, the
Group seeks to secure such funding by Q2 or Q3 2024, in the least
dilutive manner for shareholders, ideally through one of the non
equity funding sourced discussed above. The auditors have made
reference to this material uncertainty within their audit
report.
In Q3 2023, Netherland Sewell & Associates estimated a 2C
Contingent Resource for Pantheon's Kodiak project totalling 962.5
million barrels of marketable liquids. The directors believe the
enormous size of the resource already appraised on Pantheon's
acreage provides the potential for 1,000 - 2,000 wells. Whilst in
absolute terms this would entails cumulative investment estimated
in the billions of dollars over the lifetime of the project,
Pantheon estimates c. $300 million on the Ahpun development (plus
potentially $50 million of Kodiak appraisal costs) to be the
maximum cumulative cash requirement. Once in full development, it
is believed that production revenues have the potential to
self-finance a great majority of the development costs, as is
typically the case in such developments.
The Group has no contractual obligation to drill any future
wells and the only obligation is to suspend the Talitha-A test
well, the estimated cost of which ($0.7m) has already been provided
for in the financial accounts . Given the quality of the assets,
the directors are confident in their ability to raise capital as
and when required. Accordingly, the financial statements have been
prepared on a going concern basis.
1.5 Revenue
During the year oil sales commenced as a result of testing at
Alkaid-2. This is considered to be non-recurring because it only
occurred during the testing phase and production and thus
production revenues stopped once flow testing operations ended.
Once in production, revenue from contracts with customers will be
recognised in accordance with IFRS15 Revenue from Contacts with
Customers, at an amount that reflects the consideration to which
the Group expects to be entitled in exchange for those goods.
Contract balances
A contract asset is the right to consideration in exchange for
goods transferred to the customer. If the Group performs by
transferring goods to a customer before the customer pays
consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional. The
Group does not have any contract assets as performance and a right
to consideration occurs within a short period of time and all
rights to consideration are unconditional.
Interest revenue is recognised on a proportional basis taking
into account the interest rates applicable to the financial
assets.
1.6 Foreign currency translation
(i) Functional and presentational currency
The financial statements for the Group and the Company are
presented in US Dollars ("$") and this is the Group's Presentation
currency. The Functional currency of all entities within the Group,
excluding the Parent Company, is $USD. The Functional currency of
the Parent Company is GBPGBP.
(ii) Transactions and balances
Transactions in foreign currencies are translated into US
dollars at the spot rate on the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
translated at the rate of exchange ruling at the balance sheet
date. The resulting exchange gain or loss is dealt with in the
income statement.
The assets and liabilities of the Parent Company are translated
into US dollars at the rates of exchange ruling at the year end.
The results of the Parent Company are translated into US dollars at
the average rates of exchange during the year. Exchange differences
resulting from the retranslation of currencies are treated as
movements on reserves.
1.7 Cash and cash equivalents
The Company considers all highly liquid investments with a
maturity of 90 days or less to be cash equivalents, carried at the
lower of cost or market value.
1.8 Deferred taxation
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Deferred tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the balance sheet date and
expected to apply when the related deferred tax is realised, or the
deferred liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that the future taxable profit will be available against
which the temporary differences can be utilized.
1.9 Exploration and evaluation costs and developed oil and gas properties
The Group follows the 'successful efforts' method of accounting
for exploration and evaluation costs. At the point of production,
all costs associated with oil, gas and mineral exploration and
investments are classified into and capitalised on a 'cash
generating unit' ("CGU") basis, in accordance with IAS 36. Costs
incurred include appropriate technical and administrative expenses
but not general corporate overheads. If an exploration project is
successful, the related expenditures will be transferred to
Developed Oil and Gas Properties and amortised over the estimated
life of the commercial reserves on a 'unit of production'
basis.
The recoverability of all exploration and evaluation costs is
dependent upon the discovery of economically recoverable reserves,
the ability of the Group to obtain necessary financing to complete
the development of the reserves and future profitable production or
proceeds from the disposition thereof. All balance sheet carrying
values are reviewed for indicators of impairment at least twice
yearly. The prospect acreage has been classified into discrete
"projects" or, upon production, CGU's. When production commences
the accumulated costs for the specific CGU is transferred from
intangible fixed assets to tangible fixed assets i.e., 'Developed
Oil & Gas Properties' or 'Production Facilities and Equipment',
as appropriate. Amounts recorded for these assets represent
historical costs and are not intended to reflect present or future
values.
1.10 Impairment of exploration costs and developed oil and gas
properties, depreciation of assets, plug & abandonment and
goodwill
In accordance with IFRS 6 'Exploration for and Evaluation of
Mineral Resources' (IFRS 6), exploration and evaluation assets are
reviewed for indicators of impairment. Should indicators of
impairment be identified an impairment test is performed.
In accordance with IAS 36, the Group is required to perform an
"impairment test" on assets when an assessment of specific facts
and circumstances indicate there may be an indication of
impairment, specifically to ensure that the assets are carried at
no more than their recoverable amount. Where an impairment test is
required, any impairment loss is measured, presented and disclosed
in accordance with IAS 36.
In accordance with IAS 36 the Group has determined an accounting
policy for allocating exploration and evaluation assets to specific
'cash-generating units' ("CGU") where applicable.
Exploration and evaluation costs
The Alaskan exploration and evaluation leasehold assets were
subject to a fair value assessment as at the date of acquisition.
The carrying value at 30 June 2023 represents the cost of
acquisition plus any fair value adjustment, where appropriate, and
subsequent capitalised costs, in accordance with UK adopted
IAS.
Decommissioning Charges
Decommissioning costs will be incurred by the Group at the end
of the operating life of some of the Group's facilities and
properties. The Group assesses its decommissioning provision at
each reporting date. The ultimate decommissioning costs are
uncertain and cost estimates can vary in response to many factors,
including changes to relevant legal requirements, the emergence of
new restoration techniques or experience at other production sites.
The expected timing, extent and amount of expenditure may also
change - for example, in response to changes in reserves or changes
in laws and regulations or their interpretation. Therefore,
significant estimates and assumptions are made in determining the
provision for decommissioning. As a result, there could be
significant adjustments to the provisions established which would
affect future financial results. The provision at reporting date
represents management's best estimate of the present value of the
future decommissioning costs required.
For all wells the Group has adopted a Decommissioning Policy in
which all decommissioning costs are recognised when a well is
either completed, abandoned, suspended or a decision taken that the
well will likely be plugged and abandoned in due course. For
completed or suspended wells, the decommissioning charge is
provided for and subsequently depleted over the useful life of well
using unit of production method.
Goodwill
Goodwill, when carried, is tested for impairment annually (as at
30 June) and when circumstances indicate that the carrying value
may be impaired. Impairment is determined for goodwill, if
applicable, by assessing the recoverable amount of the asset or
group of assets to which the goodwill relates. Where the
recoverable amount is less than its carrying amount, an impairment
loss is recognised. If an impairment is recognised it is reflected
in the statement of profit or loss and other comprehensive income
as part of other operating expenses.
Developed Oil and Gas Properties
Developed Oil and Gas Properties only represent the capitalised
costs associated with oil and gas properties, assessed on a CGU
(cash generating unit) basis which have been transferred from
"Exploration and Evaluation costs" to "Developed Oil & Gas
properties" when the well was commissioned. Wells are depleted over
the estimated life of the commercial reserves based on the "unit of
production basis". The carrying values of Developed Oil and Gas
properties are tested for indicators of impairment, and the
'recoverable amount', being the asset's fair value less costs to
sell and value in use, is compared to the asset's carrying value.
Any excess of the asset's carrying value over its recoverable
amount is expensed to the income statement.
Other property, plant and equipment
Other property, plant and equipment are stated at historical
cost less depreciation. Depreciation is provided at rates
calculated to write off the costs less estimated residual value of
each asset over its estimated useful life, as follows:
- Office equipment is depreciated by equal annual instalments
over their expected useful lives, being 3 years.
1.11 Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument.
Financial assets, if/where applicable, are derecognised when the
contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks
and rewards are transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Classification and measurement of financial liabilities
The Group's financial liabilities include borrowings
(convertible bond debt), trade and other payables and embedded
derivative financial instruments.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated which are carried subsequently at
fair value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or fair value gains/(losses) on
derivative financial instruments.
Embedded derivative financial instruments
A borrowing arrangement structured as a convertible bond
repayable in cash or stock over 20 quarterly instalments, in
addition to the right of the lender to voluntarily convert part or
all of the outstanding principal prior to the maturity date of the
bond, has a derivative embedded in it. This is considered to be a
separable embedded derivative of a loan instrument.
At the date of issue, the fair value of the embedded derivative
is estimated by considering the derivative as a series of
individual components with modelling of the fixed and floating legs
to determine a repayment schedule and derive a net present value
for the forward contract embedded derivative.
This amount is recognised separately as a financial liability or
financial asset and measured at fair value through the income
statement. The residual amount of the loan is then recorded as a
liability on an amortised cost basis using the effective interest
method until extinguished upon conversion or at the instrument's
maturity date.
IFRS 9 Expected Credit Loss Model
IFRS 9 requires that credit losses on financial assets are
measured and recognised using the "expected credit loss" (ECL)
approach. Other than cash, the only other financial assets held are
$2.4m in drilling deposits lodged with the state of Alaska. These
drilling deposits are to cover future obligations to the state of
Alaska for Great Bear Pantheon to perform dismantle, removal and
restoration activities at Alkaid #2. Funds held by the state of
Alaska are considered to have virtually no risk of credit loss.
1.12 Leases
All contracts entered into by the group are assessed to
determine if they are either a lease contract or contain a lease
contract. Where a lease is identified the Group recognises a right
of use asset and a corresponding lease liability with respect to
all lease arrangements in which it is a lessee.
There are three key evaluations in determining a lease
contract:
I. The contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
group.
II. The Group has the right to obtain substantially all of the
economic benefits from use of the identified assets throughout the
period of use, considering rights within the defined scope of the
contract.
III. The Group has the right to direct the use of the identified
asset throughout the period of use.
Lease liabilities are initially measured at the discounted
present value of all future lease payments, excluding prepayments
made up to and including the commencement date of the lease. The
discount rate used is either the rate implicit in the lease, or if
that is not readily determined, the incremental borrowing rate.
The lease liability is presented as a separate line item in the
balance sheet.
Subsequent measurement of the lease liability includes increases
to the carrying amount of the liability to reflect the interest on
the lease liability (using the effective interest method) and by
reducing the carrying amount for the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
A. There is a change in the lease term. In such cases the lease
liability is remeasured by discounting the revised lease payments
using the revised discount rate.
B. Change of lease payments (due to changes in the reference
index or rate) or any changes in expected payments under a
guaranteed residual value. In such instances the lease liability is
remeasured using unchanged discount rates; a revised discount rate
is used where the lease payments are changed due to a change in a
floating interest rate.
C. Where a lease modification is not accounted for as a separate
lease. In such a case the lease liability is remeasured based on
the modified lease term, using the revised discount rate at the
date of the modification.
The initial carrying value of a right-of-use assets consists
of:
-- The corresponding lease liability
-- All and any prepayments prior to the lease commencement
-- Less: Any lease incentive received by the lessee
-- Less: Any initial direct costs incurred by the lessee
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. The
depreciation starts at the commencement date of the lease. The
asset is subsequently measured at initial carrying value less
accumulated depreciation and impairment losses.
Where an impairment indicator has been identified, an impairment
test is conducted. In assessing whether an impairment is required,
the carrying value of the asset is compared with its recoverable
value. The recoverable amount is the higher of the assets fair
value less the costs to sell and value in use.
1.13 Critical accounting estimates and judgements
The preparation of financial statements in conformity with UK
adopted International Accounting Standards requires the use of
accounting estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during
the reporting period. Although these estimates are based on
management's best knowledge of current events and actions, actual
results ultimately may differ from those estimates. IFRSs also
require management to exercise its judgement in the process of
applying the Group's accounting policies.
The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the
financial statements are as follows:
Impairment of tangible and intangible assets
The first stage of the impairment process is the identification
of an indication of impairment. Such indications can include
significant geological or geophysical information which may
negatively impact the existing assessment of a project's potential
for recoverability, significant reductions in estimates of
resources , significant falls in commodity prices, a significant
revision of Group Strategy or of the plan for the development of a
field, operational issues which may require significant capital
expenditure to remediate, political or regulatory impacts and
others. This list is not exhaustive and management judgement is
required to decide if an indicator of impairment exists. The Group
regularly assesses the tangible and non-tangible assets for
indicators of impairment. When an impairment indicator exists an
impairment test is performed; the recoverable amount of the asset,
being the higher of the asset's fair value less costs to sell and
value in use, is compared to the asset's carrying value. Any excess
of the asset's carrying value over its recoverable amount is
expensed to the income statement.
Impairment of loans between Parent and Subsidiaries
The carrying amount of the loans made to the subsidiaries is
tested for impairment annually and this process is considered to be
key judgement along with determining whenever changes circumstances
or events indicate that the carrying amounts of those loans may not
be recoverable. When assessing the recovery of these loans, the
Board of Directors consider the likelihood that the subsidiaries
will be able to settle the amounts owing , either out of future
anticipated cashflows or through divestment of assets.
Contingent liabilities
Pursuant to IAS 37, a contingent liability is either: (1) a
possible obligation arising from past events whose existence will
be confirmed only by the occurrence or non-occurrence of some
uncertain future event not wholly within the entity's control, or
(2) a present obligation that arises from a past event but is not
recognized because either: (i) it is not probable that an outflow
of resources embodying economic benefits will be required to settle
the obligation, or (ii) the amount of the obligation cannot be
measured with sufficient reliability.
Kinder Morgan Treating L.P. ("Kinder Morgan") initiated a
dispute over an East Texas gas treating agreement between Kinder
Morgan and Vision Operating Company, LLC ("VOC"). VOC ceased making
payments to the service provider in July 2019. The service provider
subsequently issued a demand to VOC and, in February 2021, served
Pantheon Resources plc with a petition, seeking to recover not less
than $3.35m in respect of this VOC contract. Pantheon held
ownership of less than 0.1% of VOC via a 66.6% interest in Vision
Resources LLC. Both Vision Resources LLC and VOC filed for Chapter
7 Bankruptcy in the United States Bankruptcy Court for the Southern
District of Texas Houston Division in April 2020.
No Pantheon entity is a signatory to the gas treating agreement
and none are named in the agreement. Pantheon has taken legal
advice on the matter and believes it has no liability to the
service provider. Accordingly, Pantheon does not consider a
provision should be included with the final statements and will
contest any claim made.
In, July 2021, the court dismissed Kinder Morgan's claims
against Pantheon Resources plc. Kinder Morgan has also asserted the
same claims against two subsidiaries, Pantheon Oil & Gas, LP
and Pantheon East Texas, LLC. Pantheon Oil & Gas, LP and
Pantheon East Texas, LLC are contesting these claims.
Value of exploration assets on acquisition
In accordance with IFRS 3 Business Combinations, exploration
assets acquired as part of a business acquisition, and hence
combination, are recorded at their fair value as opposed to the
fair value of the consideration paid.
Share-based payments
The Group records charges for share-based payments.
For option-based share-based payments, to determine the value of
the options management estimate certain factors used in the option
pricing model, including volatility, vesting date, exercise date of
options and the number of options likely to vest. At each reporting
date during the vesting period management estimate the number of
shares that will vest after considering the vesting criteria. If
these estimates vary from actual occurrence, this will impact on
the value of the equity carried in the reserves.
Calculation of fair value of the derivative and debt components
of the Unsecured Convertible Bond
Implicit within the convertible bond is an element of debt and a
derivative element, reflecting the optionality of receiving stock,
potentially at a profit, instead of cash in the case of quarterly
repayments (amortisations) or partial voluntary conversions of the
bond at the bondholders election. Pantheon contracted a third party
expert valuation group in order to calculate these amounts, using
Monte Carlo analysis.
Segment Reporting
The operating segments, namely Head Office and Alaska, are
reported in a way that is consistent with the internal reporting
and provided to the chief operating decision maker as required by
IFRS 8 "Operating Segments". The Board of Directors, have been
identified as the chief operating decision-maker. As such, the
Board of Directors are responsible for allocating resources and
assessing performance of the operating segments.
The accounting policies of the reporting segments are consistent
with the accounting policies of the Group as a whole. The segment
profit and loss represents the profit or loss earned by each
segment. This is the measure of profit that reported to the Board
of Directors for the purpose of resource allocation and the
assessment of each segment's performance. When assessing segment
performance and considering the allocation of resources, the Board
of Directors review each segment's assets and total liabilities;
For this purpose, all assets and liabilities are allocated to
reportable segments.
1.14 New and amended International Financial Reporting Standards adopted by the Group
New standards and interpretations not applied
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Group and
which have not been applied in these financial statements, were in
issue but were not yet effective.
Standard Impact on initial application Effective date
---------- ----------------------------------- -----------------
IAS 1 Amendments - classifications 01 January 2024
of current and non-current
liabilities
IAS 8 Amendments - accounting policies, 01 January 2023
changes to accounting estimates
and errors
IAS 12 Amendments - income taxes 01 January 2023
- deferred tax arising from
a single transaction
IAS 1 Amendments - presentation 01 January 2023
of financial statements and
IFRS practice statement.
Disclosure of accounting
policies
The Group does not anticipate that the adoption of these
standards will have a material effect on its financial statements
in the period of initial adoption.
1.15 Share based payments
On occasion, the Company has made share-based payments to
certain Directors, staff and consultants by way of issue of
ordinary shares and share options. In the case of share options,
the fair value of these payments is calculated by the Company using
the Black-Scholes option pricing model. The expense is recognised
on a straight-line basis over the period from the date of award to
the date of vesting, based on the Company's best estimate of the
expected number of shares that will eventually vest. There were no
new issues of share options made during the year.
2. Loss per share
The total loss per ordinary share from continuing operations for
the group is 0.18 US cents (2022: 1.93 US cents - loss). The loss
is calculated by dividing the loss for the year by the weighted
average number of ordinary shares in issue of 791,082,592 (2022:
724,563,153 ).
The diluted profit per share has been kept the same as the basic
profit per share because, although some of the 50,438,921 options
and warrants in issue were in the money as at 30 June 2023, the
Company reported a loss, hence including the additional dilution
would have resulted in a reduction of the loss per share.
The diluted weighted average number of shares in issue is
841,521,513 (2022: 779,527,074 ).
3. Segmental information
The Group's activities involve the exploration for oil and gas.
There are two reportable operating segments: USA (Alaska) and Head
Office. Non-current assets, and operating liabilities are
attributable to the USA (Alaska), whilst much of the corporate
administration is conducted through Head Office.
Each reportable segment adopts the same accounting policies.
In compliance with IFRS 8 'Operating Segments', the following
tables reconcile the operational loss and the assets and
liabilities of each reportable segment with the consolidated
figures presented in these Financial Statements, together with
comparative figures for the year ended 30 June 2023.
Year ended 30 June 2023
Geographical segment (Group) Head Office Alaska Consolidated
$ $ $
Revenue - 803,689 803,689
Production royalties - (97,990) (97,990)
Cost of sales - (575,300) (575,300)
Administration expenses 997,106 (4,867,779) (3,870,673)
Share based payments (Options
& RSUs) (3,146,170) - (3,146,170)
Convertible Bond - Interest
Expense (6,111,118) - (6,111,118)
Convertible Bond - Revaluation
of Derivative Liability 11,321,514 - 11,321,514
Interest receivable 337,894 311 338,205
Other Income - 30,000 30,000
Taxation - (138,844) (138,844)
-------------- --------------- --------------
Loss by reportable segment 3,399,226 (4,845,913) (1,446,687)
============== =============== ==============
Exploration & evaluation assets - 286,668,349 286,668,349
Property, plant & equipment 38,570 - 38,570
Trade and other receivables 154,161 2,405,361 2,559,522
Cash and cash equivalents 19,518,284 1,142,727 20,661,011
Intercompany balances 279,494,628 (279,494,628) -
-------------- --------------- --------------
Total assets by reportable
segment 299,205,643 10,721,809 309,927,452
-------------- --------------- --------------
Total liabilities by reportable
segment (28,003,014) (9,495,832) (37,498,847)
============== =============== ==============
Net assets by reportable
segment 271,202,629 1,225,978 272,428,606
============== =============== ==============
Year ended 30 June 2022
Geographical segment (Group) Head Office Alaska Consolidated
$ $ $
Administration expenses (3,419,596) (4,011,058) (7,430,654)
Share option expense (8,256,575) - (8,256,575)
Convertible Bond - Interest
Expense (4,640,537) - (4,640,537)
Convertible Bond - Revaluation
of Derivative Liability 4,310,773 - 4,310,773
Interest receivable 42,674 - 42,674
Taxation - 2,022,334 2,022,334
--------------- -------------- --------------
Loss by reportable segment (11,963,261) (1,988,724) (13,951,985)
=============== ============== ==============
Exploration & evaluation
assets - 237,722,294 237,722,294
Property, plant & equipment 91,691 - 91,691
Trade and other receivables 93,086 2,405,361 2,498,447
Cash and cash equivalents 54,610,306 3,173,815 57,784,121
Intercompany balances (211,053,821) 211,053,821 -
--------------- -------------- --------------
Total assets by reportable
segment 265,848,904 32,247,650 298,096,553
--------------- -------------- --------------
Total liabilities by reportable
segment (46,592,850) (12,101,315) (58,694,166)
=============== ============== ==============
Net assets by reportable
segment 219,256,054 20,146,334 239,402,388
=============== ============== ==============
4. Operating loss
2023 2022
$ $
Operating loss is stated after charging:
Depreciation - office equipment 1,869 303
Depreciation Right of use assets 55,700 54,472
Auditor's remuneration
- group and parent company audit
services 133,000 112,500
Auditor's remuneration for non-audit
services
- taxation services and compliance - -
services
5. Employment costs
The employee costs of the Group, including Directors'
remuneration, are as follows:
2023 2022
$ $
Wages and salaries 2,680,169 2,739,035
Social security costs 170,861 255,446
Statutory pension costs 21,087 33,430
Share based payments 3,146,170 8,256,574
----------- ------------
6,018,287 11,284,485
=========== ============
The summary of the directors' remuneration is shown in the
directors' report on page 26. The Directors are considered to be
the key management.
2023 2022
Number of employees (including Executive number number
Directors) at the end of the year
Management and administration 15 14
-------- --------
6. Interest receivable
2023 2022
$ $
Bank interest received 338,205 42,674
========= ========
7. Taxation
2023 2021
$ $
Current tax
US federal corporate tax - -
US state and local tax - -
UK corporate tax - -
============= ==============
Factors affecting the tax charge for the
period -
Income (loss) on ordinary activities before
taxation (1,307,843) (15,974,318)
Income (loss) on ordinary activities before
taxation multiplied by the standard US corporate
tax rate of 21% (2022: US corporate tax rate
of 21%) (274,647) (3,354,607)
Effects of:
State of Alaska tax benefits associated with
temporary book-to-tax differences (335,421) (267,455)
US federal tax benefit associated with temporary
book-to-tax differences 748,912 1,599,728
US federal tax benefit associated with reassessed
future utilization of loss carry forward -
Total tax charge /(credit) 138,844 (2,022,334)
------------- --------------
Factors that may affect future tax charges
The Group's deferred tax assets and liabilities as at 30 June
2023 have been measured at 21% for items subject to US federal
income tax only, items subject to state of Alaska and US federal
income tax are reflected at an Alaska rate of 9.4% and a US federal
rate, net of state of Alaska tax deduction, of 28.426%.No deferred
tax has been provided for the UK tax losses as there is no
expectation of the utilisation in the near future.
At the year-end date, the Group has unused losses carried
forward of $123.6m (2022: $125.5m) available for offset against
suitable future profits. Unused US tax losses incurred prior to
January 1, 2018 expire in general within 20 years of the year in
which they are sustained. Losses sustained after December 31, 2017
do not expire. The UK tax losses carried forward are approximately
$11.5m (2022: $16m). A deferred tax asset in respect of the
unutilised carried forward losses has not been recognised due to
the uncertainty of the timing of any future profits.
The deferred tax liability at 30 June 2023 is 1,822,247 (2022:
1,683,403). The deferred tax liability is comprised of future tax
benefits (deferred tax asset) primarily associated with net
operating losses generated in prior years and the estimated loss
generated in the current year, combined with future tax expenses
(deferred tax liability) associated with the book gain on bargain
purchase not yet recognized for income tax. Net operating losses
will offset future taxable income and reduce the tax liability that
would otherwise be incurred. The tax deferred gain on bargain
purchase will result in future taxable income greater than book net
income.
8. Subsidiary entities
The Company currently has the following wholly owned
subsidiaries:
Name Percentage Activity Registered office
Country ownership address
of
Incorporation
------------------------------
Hadrian Oil & Gas LLC United 100% Holding Company 5718 Westheimer,
States Suite 1600, Houston,
Texas, 77057
Agrippa LLC United 100% Holding Company 5718 Westheimer,
States Suite 1600, Houston,
Texas, 77057
Pantheon Oil & Gas LP United 100% Oil & Gas exploration 5718 Westheimer,
States Suite 1600, Houston,
Texas, 77057
Great Bear Petroleum United 100% Lease Holding 3705 Arctic Blvd.
Ventures I, LLC States Company # 2324 Anchorage,
Alaska, 99503
Great Bear Petroleum United 100% Lease Holding 3705 Arctic Blvd.
Ventures II, LLC States Company # 2324 Anchorage,
Alaska, 99503
Great Bear Pantheon, United 100% Holding Company 3705 Arctic Blvd.
LLC States # 2324 Anchorage,
Alaska, 99503
Pantheon East Texas, United 100% Holding Company 5718 Westheimer,
LLC States Suite 1600, Houston,
Texas, 77057
Pantheon Operating Company, United 100% Operating Company P.O. Box 11082
LLC States Spring, Texas, 77391-1082
Borealis Petroleum LLC United 100% Holding Company 3705 Arctic Blvd.
States # 2324 Anchorage,
Alaska, 99503
----------------------------- ---------------- ------------ ----------------------- ----------------------------
Pantheon Oil & Gas LP is 99% owned by Agrippa LLC as its
limited partner and 1% by Hadrian Oil & Gas LLC as its general
partner.
9. Trade and other receivables
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Amounts falling due within
one year:
Prepayments & accrued income 55,199 46,000 52,500 43,301
Other receivables 2,504,323 2,452,447 101,661 49,785
Total 2,559,522 2,498,447 154,161 93,086
=========== =========== ========= =========
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Amounts falling due after
one year:
Loans to subsidiaries - - 279,494,628 211,053,821
======= ======= ============= =============
An annual impairment review of the amount due from subsidiary
undertakings (loans to subsidiaries) is performed by comparing the
expected recoverable amount of the subsidiary's underlying tangible
and intangible assets to the carrying value of the loan in the
Company's statement of financial position. This has been assessed
in line with IFRS 9 for credit losses however recoverability is
supported by the underlying assets.
On the basis of ongoing annual assessments, the lifetime
expected credit losses are recognised against loans and receivables
when they are identified and are recorded in the statement of
comprehensive income.
10. Cash and cash equivalents
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Cash at bank and in hand 20,661,012 57,784,121 19,518,284 54,610,306
============ ============ ============ ============
11. Trade and other payables
Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Trade creditors 251,617 79,417 250,539 78,339
Accruals 2,588,994 6,298,569 366,886 632,134
----------- ----------- --------- ---------
Total 2,840,611 6,377,986 617,425 710,473
=========== =========== ========= =========
12. Provisions
Plug and Abandonment Provision
The Group recognises a decommissioning liability where it has a
present legal or constructive obligation as a result of past
events, and it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate of the
amount of obligation can be made. The obligation generally arises
when the asset is installed, or the ground/environment is disturbed
at the field location. A breakdown of these costs is detailed at
Note 21.
Legal Costs
Legal costs have been provided for due to an ongoing dispute
with a third-party vendor as detailed in Note 26.
Provisions Group Group Company Company
2023 2022 2023 2022
$ $ $ $
Plug and Abandonment 5,200,400 4,500,400 - -
Legal costs 250,000 250,000 - -
Other provision - Irrecoverable
VAT 566,838 535,040 566,838 535,040
Total 6,017,238 5,285,440 566,838 535,040
=========== =========== =========== =========
Provisions Group Group
2023 2022
$ $
Opening balance 5,285,440 1,250.000
Increase in period 731,798 4,035,440
Amounts unused 6,017,238 5,285,440
Closing balance 6,017,238 5,285,440
=========== ===========
Company Company
2023 2022
$ $
Opening balance 535,040 -
Increase in period 31,798 535,040
Amounts used - -
Amounts unused 566,838 535,040
Closing balance 566,838 535,040
========= =========
13. Exploration and evaluation assets Group Group
2023 2022
$ $
Cost
At 1 July 237,852,406 189,084,831
Additions 48,246,055 45,267,175
Additions to Asset Retirement
bligations 700,000 3,500,400
At 30 June 286,798,461 237,852,406
--------------- --------------
Impairment
As at 1 July 130,112 130,112
Charge for year - -
--------------- --------------
At 30 June 130,112 130,112
--------------- --------------
Net book value
--------------- --------------
At 30 June 286,668,349 237,722,294
=============== ==============
The Group additions for the year comprise the direct costs
associated with the preparation of drilling of oil and gas wells,
together with costs associated with leases and seismic acquisition
and processing.
An assessment for indicators for impairment was conducted on all
of the Group's exploration and evaluation assets. Indicators of
impairment included asset specific criteria such as, but not
limited to, the emergence of negative geological/geophysical
analysis, unsuccessful drilling results, a deterioration in the
Group's lease position, and the presence of relevant regional
drilling data. The successful drilling campaign over recent years,
reinforced by the external validation from third party experts on
the Group's geological data, including, amongst other, receipt in
August 2023 of a certified C2 Contingent Resource estimate of 962.5
barrels of marketable liquids, has caused the Group to conclude
that no impairment was required. In making assessments for
indicators of impairment other criteria were considered such as,
but not limited to, changes to commodity prices, a worsening of
regulatory or environmental factors and macroeconomic conditions.
The Group considered such indicators for impairment and concluded
that no impairment was required.
14. Leases
Right of use assets
The Group used leasing arrangements relating to property, plant
and equipment. As the Group has the right of use of the asset for
the duration of the lease arrangement, a "right of use" asset is
recognised within property, plant and equipment.
When a lease begins, a liability and right of use asset are
recognised based on the present value of the lease payments.
Company Company
& Group & Group
2023 2022
$ $
Interest expense on lease liabilities 5,746 4,964
Total cash outflow for leases (60,913) (55,083)
As at 1 July 88,627 30,308
Additions to right-of-use assets - 111,949
Depreciation charge - right of use assets (55,700) (54,472)
Foreign exchange movement on right of use assets 1,198 842
---------- ----------
Carrying amount at the end of the year:
Right of use assets 34,124 88,627
---------- ----------
L ease liabilities
Company Company
& Group & Group
2023 2022
$ $
Current 36,435 60,297
Non-current - 30,004
---------- ----------
36,435 90,301
---------- ----------
15. Other Liabilities
The Company assists in the mechanics of the exercise of shares
options for staff and consultants, sale of resultant shares
externally through a facility operated through the Company's
broker, remittances of relevant income tax and other obligations.
Employees are subject to full income tax on any profits upon the
exercise of share options and sale (if at a profit), which are
processed through the Company's payroll facility. The amount of
$Nil (2022: $1,964,441) represents the net amount payable for the
exercise of options that was being processed at the year end and
payable.
16. Unsecured Convertible Bond
In December 2021, the Company issued $55 million worth of senior
unsecured convertible bonds to a fund advised by Heights Capital
Ireland LLC, a global equity and equity-linked focused investor.
After settlement of the 13(th) December 2023 convertible bond
repayment, the remaining principal outstanding is $29.4million.
The Convertible Bonds have a maturity of 5 years, a coupon of
4.0% per annum and are repayable in 20 quarterly repayments
("amortisations") of principal and interest over the 5 year term of
the convertible bond, with the last repayment due in December 2026.
Such quarterly amortisations are repayable at the Company's option,
in either cash at face value, or in ordinary shares ("stock") at
the lower of the conversion price (presently USD$0.9096 Wper share)
or a 10% discount to volume weighted average price ("VWAP") in the
10 or 3 day trading period prior to election date. Additionally,
the bondholder has the option to partially convert the convertible
bond at their discretion. A full summary of the terms of
Convertible Bonds is detailed in the Company's RNS dated 7
December, 2021.
The bond agreement contains embedded derivatives in conjunction
with an ordinary bond. As a result, and in accordance with the
accounting standards, the convertible bonds are shown in the
Consolidated Statement of Financial Position, in two separate
components, namely Convertible Bond - Debt and Convertible Bond -
Derivative. At the time of recognition (Dec 2021) the $55m bonds
were split, $39,175,363 for the Debt Component and $15,824,637 for
the Derivative Component.
In order to value the derivative component, Pantheon engaged a
third party expert valuation specialist group to perform the
valuations, who determined that the valuation of the instrument
required a Monte Carlo simulation of share price outcomes over the
5 year life to determine the ultimate value of the conversion
option. This produced a calculated Effective Interest Rate ("EIR")
of 20.41%. For the year end date of 30 June 2023, the third party
expert valuation group performed their Monte Carlo simulation and
valuation calculations to determine the new value for the equity
component to be $407,566. The resulting movement of $11,321,514 was
posted to the consolidated statement of comprehensive income to the
account "Revaluation of derivative liability". These amounts will
be revalued every balance date with the differences being accounted
for in the consolidated statement of comprehensive income.
As at 30 June 2023 six quarterly repayments (amortisations) have
been made, and in all cases ordinary shares were issued in full
settlement.
At 30 June 2023 the Unsecured Convertible Bond is shown in the
Consolidated Statement of Financial Position in the following
categories;
Convertible Bond - Debt Component (Current
Liability) $9,755,688
Convertible Bond - Debt Component (Non-current
Liability) $16,619,062
Convertible Bond - Derivative Component
(Non-current Liability) $407,566
-------------
Total $26,782,316
17. Property Plant and Equipment
Right
Office of Use
Group and Company Equipment Assets Total
$ $ $
Cost
At 30 June 2021 16,099 103,913 120,012
Additions 3,368 111,949 115,317
At 30 June 2022 19,467 215,862 235,329
Exchange Difference (1,068) (3,216) (4,284)
Additions 3,113 - 3,113
At 30 June 2023 21,512 212,646 234,158
Depreciation
At 30 June 2021 16,098 73,605 89,703
Depreciation for the
year 303 54,472 54,775
Exchange difference 1 (840) (839)
------------ --------- ---------
At 30 June 2022 16,402 127,237 143,639
Depreciation for the
year 1,869 55,700 57,569
Exchange difference (1,206) (4,414) (5,620)
------------ --------- ---------
At 30 June 2023 17,065 178,523 195,588
------------ --------- ---------
Net book value
As at 30 June 2023 4,447 34,123 38,570
============ ========= =========
As at 30 June 2022 3,065 88,625 91,690
============ ========= =========
18. Share Capital
2023 2022
$ $
Allotted, issued and fully paid:
907,206,399 (2022: 767,705,537) ordinary
shares of GBP0.01 each 12,464,677 10,720,459
============= =============
Issued and
fully paid
capital
Issued share capital: Number $
As at 30 June 2023
907,206,399 ordinary shares of GBP0.01
each (2022: 767,705,537) 907,206,399 12,464,677
Total 907,206,399 12,464,677
------------- -------------
A summary of movements in share capital is summarised in the
table below.
Movement in ordinary shares Number Share Share Premium
Capital $
$
As at 1 July 2022 693,258,674 9,739,203 208,683,935
September 21 - Exercise of share
options 1,950,000 26,959 700,927
October 21 - Exercise of share
options 1,000,000 13,757 398,953
December 21 - Equity fundraising
- issue of new shares 48,218,529 638,462 40,861,537
January 22 - Exercise of share
options 2,575,000 34,983 945,247
February 22 - Partial Conversion
of Unsecured Convertible Bonds 1,937,608 26,319 2,026,527
March 22 - Exercise of Warrants 4,803,922 65,540 1,900,657
March 22 - Settlement of 1st
quarterly
principal & interest repayment
of
Convertible Bond 3,080,798 40,263 3,100,247
March 22 - Partial Conversion of
Unsecured Convertible Bonds 3,681,457 45,970 3,539,717
May 22 - Exercise of share
options 4,375,000 54,998 1,597,774
June 22 - Settlement of 2nd
quarterly
principal & interest repayment
of
Convertible Bond 2,824,549 34,005 2,618,365
-------------------------- ------------------------- --------------------------
As at 30 June 2022 767,705,537 10,720,459 264,879,194
-------------------------- ------------------------- --------------------------
September 22 - Convertible Bond:
Third Amortisation 2,800,813 33,894 2,857,106
December 22 - Convertible Bond:
Fourth
Amortisation 3,276,374 39,649 2,826,851
September 22 - Exercise of Share
Options 4,525,000 54,759 1,701,259
February 23 - Conversion of 100%
of RSUs 290,000 3,685 178,744
March 23 - Convertible Bond:
Fifth
Amortisation 9,257,328 117,645 2,724,354
May 23 - Placement - First
Tranche 95,395,134 1,192,010 19,072,158
May 23 - Placement - Second
Tranche 8,783,893 109,759 1,756,146
June 23 - Convertible Bond: Sixth
Amortisation 15,172,320 192,816 2,624,684
As at 30 June 2023 907,206,399 12,464,677 297,830,078
-------------------------- ------------------------- --------------------------
19. Net cash outflow from operating activities
Group Group
2023 2022
$ $
Loss for the year (1,446,687) (13,951,984)
Net interest received (338,205) (42,674)
Share Based Payments non-cash expense 3,146,170 8,256,575
Depreciation of office equipment 1,869 303
Depreciation of right of use assets 55,700 54,472
Interest Expense 6,111,118 4,640,537
Convertible Bond - Revaluation of
derivative liability (11,321,514) (4,310,773)
Other provisions - irrecoverable
VAT 7,302 535,040
Decrease/ (increase) in trade and
other receivables (61,076) 11,430
(Decrease)/Increase in trade and
other payables (4,648,183) 7,235,337
Effect of translation differences (3,041,194) (1,347,435)
Taxation 138,844 (2,022,334)
-------------- --------------
Net cash outflow from operating activities (11,395,855) (941,506)
============== ==============
Company Company
2023 2022
$ $
Profit / (Loss) for the year 3,399,226 (11,963,260)
Net interest received (337,894) (42,674)
Share Based Payments non-cash expense 3,146,170 8,256,575
Depreciation 1,869 303
Depreciation of right of use assets 55,700 54,472
Interest Expense 6,111,118 4,640,537
Convertible Bond - Revaluation of
derivative liability (11,321,514) (4,310,773)
Other provisions - irrecoverable
VAT 7,302 535,040
Increase in trade and other receivables (56,878) (1,034)
(Decrease) / Increase in trade and
other payables (1,324,123) 2,141,889
Effect of translation differences (1,118,080) (1,142,868)
-------------- --------------
Net cash outflow from operating activities (1,507,104) (1,831,793)
============== ==============
20. Control
No one party controls the Company.
21. Decommissioning expenditure
Plug & Abandonment
The Directors have considered the environmental issues and the
need for any necessary provision for the cost of rectifying any
environmental damage, as might be required under local legislation.
As at 30 June 2023 the Group has fully provided for the future plug
and abandonment charges in relation to its wells on the Alaskan
North Slope. Where a well will be used as a future disposal well
then this is taken into account.
The Group provides for the estimated costs of future
plug/abandonment and environmental remediation and rehabilitation
for all wells drilled if not abandoned at that time, and for the
estimated costs of future decommissioning, remediation and
rehabilitation costs for the gravel pad at Alkaid #2 at such time
as those wells/pad(s) come to the end of their respective useful
life. By way of example, in a case where a successful well produces
hydrocarbons for a period of 15 years, then the
abandonment/rehabilitation provision would be made at the time the
well is completed and comes on stream, however, the actual
expenditure would occur when the works are performed in 15 years'
time, ie the provision is made today for work expected in 15 years'
time. Similarly, the end of the life of the gravel pad supporting
Alkaid#2 and future wells drilled from that location, would occur
at such time as all producing wells have depleted and the pad would
serve no further purpose.
Group Group
2023 2022
Alaska $ $
Alkaid Well 666,000 666,000
Alkaid #2 Well 2,970,400 2,970,400
Talitha #A Well 1,564,000 864,000
As at 30 June 5,200,400 4,500,400
----------- -----------
22. Exploration and evaluation commitments
There were no firm drilling commitments at 30 June 2023. The
group has an obligation to perform additional downhole isolation
work to suspend the Talitha #A well, for future re-entry. Work must
be completed by June
2024. The estimated capital commitment to perform this work is $700,000.
23. Financial instruments
The Group's principal financial instruments comprise cash and
cash equivalents, trade and other receivables and trade and other
payables. Financial assets and liabilities are initially measured
at fair value plus transaction costs.
The main purpose of cash and cash equivalents financial
instruments is to finance the Group's operations. The Group's other
financial assets and liabilities, such as receivables and trade
payables, arise directly from its operations. It is, and has been
throughout the entire period, the Group's policy that no trading in
financial instruments shall be undertaken.
The main risk arising from the Group's financial instruments is
market risk. Other minor risks are summarised below. The Board
reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and
market factors such as foreign exchange rates and interest rates
will affect the entity's income or the value of its holdings of
financial instruments.
The objective of market risk management is to manage and control
market risk exposures within acceptable parameters while optimising
the return.
Sensitivity Analysis - how does foreign exchange and interest
rate changes affect income
The Oil and Gas operational activities of the group are
pre-production. The revenue earned this financial year was a
one-off, resulting from flow testing for a limited period of time;
this testing has now ceased and is non-repetitive. Hence, there is
very limited potential impact on income and no impact on
equity.
Sensitivity Analysis - how does foreign exchange and interest
rate changes affect holdings in financial instruments
Regarding the cash at bank, the interest receivable is a
function of the interest rate that the depositing bank assigns to
the account. There is limited potential impact on income and no
impact on equity.
Interest rate risk
The Group's exposure to the risks of changes in market interest
rates relates primarily to the Group's cash and cash equivalents
with a floating interest rate. These financial assets with variable
rates expose the Group to cash flow interest rate risk. The Group
managed its cash balance by applying certain non committed cash
deposits to higher yielding short term deposit accounts, yielding
c. 5% per annum on those deposits towards the end of the financial
year when interest rates had risen. All other financial assets and
liabilities in the form of receivables and payables are
non-interest bearing. The Group does not engage in any hedging or
derivative transactions to manage interest rate risk.
In regard to its interest rate risk, the Group continuously
analyses its exposure. Within this analysis consideration is given
to potential renewals of existing positions, alternative
investments and the mix of fixed and variable interest rates. The
Group has no policy as to maximum or minimum levels of fixed or
floating instruments.
The Convertible Bond has a fixed interest coupon rate payable of
4% per annum. This rate is fixed throughout the life of the bond.
However, due to the presence of a derivative component within the
convertible bond as described in Note 16, from an accounting
perspective an Effective Interest Rate of 22.15% has been
calculated to apply to the debt component of the convertible bond
and has been charged to the Income Statement.
Interest rate risk is measured as the value of assets and
liabilities at fixed rate compared to those at variable rate.
Weighted average Fixed Non-interest
interest rate interest rate bearing
2023 2023 2023
Financial assets: % $ $
Cash on deposit 1.5 1,142,728
Trade and other receivables - - -
Net fair value
The net fair value of financial assets and financial liabilities
approximates to their carrying amount as disclosed in the statement
of financial position and in the related notes.
Currency risk
The functional currency for the Group's North American operating
activities and exploration activities is the US dollar. The Group
incurs general administration and advisory expenses in the Parent
Company in Pounds Sterling, which is its functional currency. The
Group does not use derivative products to hedge foreign exchange
risk and has exposure to foreign exchange rates prevailing up to
the dates when funds are transferred into different currencies. The
Group raises equity capital in Pounds Sterling and converts the
majority of this to US dollars to minimise currency risk. The Group
continues to keep the matter under review.
The convertible bond is denominated in US dollars with all
repayments paid in US dollars. Quarterly repayments are made, at
the Company's election, either in cash or shares. When paid in
shares the Relevant Share Settlement Price of shares for the
purpose of the calculation is the lower of a 10% discount to the 3
day or 10 day volume weighted average share price (VWAP) or a
predetermined reference price, currently US$0.9096. For the purpose
of calculating VWAP, the daily USD/GBP exchange rate is applied,
introducing a currency risk which may or may not result in a
differing number of shares being used to settle a repayment,
dependent upon the exchange rate.
Financial risk management
The Directors recognise that this is an area in which they may
need to develop specific policies should the Group become exposed
to wider financial risks as the business develops.
Liquidity risk
Prudent liquidity risk management includes maintaining
sufficient cash balances to ensure the Group can meet liabilities
as they fall due.
In managing liquidity risk, the main objective of the Group is
therefore to ensure that it has the ability to pay all of its
liabilities as they fall due. The Unsecured Convertible Bond
liabilities can, at the Company's election, be met through the
issuance of ordinary shares rather than cash. The Group monitors
its levels of working capital to ensure that it can meet its
liabilities as they fall due. The Group monitors its liquidity
position carefully and considers equity fundraising, debt or
farmouts when additional liquidity is required.
The table below shows the undiscounted cash flows on the Groups
financial liabilities as at 30 June 2023 and 2022, on the basis of
their earliest possible contractual maturity.
Greater
Payable Within Within Within than 1
Total on demand 1-3 months 3-6 months 6-12 months year
$ $ $ $ $ $
As at 30
June
2023
Trade
creditors 251,617 - 251,617 - - -
Accruals 2,588,994 - 2,588,994 - - -
Lease
liabilities 36,435 - 15,365 15,740 5,330 -
Unsecured
Convertible
Bond 34,300,000 - 2,940,000 2,915,500 2,891,000 25,553,500
Provisions 6,017,238 566,838 - - - 5,450,400
------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- --------------------------------
43,194,284 566,838 5,795,975 2,931,240 2,896,330 31,003,900
========================= ============================ ============================ ============================ ============================ ================================
As at 30
June
2022
Trade
creditors 79,417 - 79,417 - - -
Accruals 6,298,569 - 6,298,569 - - -
Lease
liabilities 90,301 - 13,354 13,680 28,405 34,862
Other
liabilities 1,964,441 - 1,964,441 - - -
Unsecured
Convertible
Bond 48,289,500 - 2,891,000 2,866,500 5,659,500 36,872,500
Provisions 5,285,440 535,040 - - 1,780,000 2,970,400
62,007,668 535,040 11,246,781 2,880,180 7,467,905 39,877,762
========================= ============================ ============================ ============================ ============================ ================================
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group.
The Group has adopted a policy of only dealing with what it
believes to be creditworthy counterparties and would consider
obtaining sufficient collateral where appropriate, as a means of
mitigating the risk of financial loss from defaults. The Group's
exposure and the credit ratings of its counterparties are
continuously monitored, and the aggregate value of transactions
concluded is spread across approved counterparties.
The maximum exposure to credit risk is $2,559,522 (2022:
$2,498,447).
Capital management
The Group's capital management objectives are:
-- To provide long-term returns to shareholders
-- To ensure the Group's ability to continue as a going concern
The Group defines and monitors capital to ensure that the
Company meets its objectives above, focussing on long-term share
price growth, long term growth in production and resources, and a
short-term requirement to ensure a going concern.
The Board of Directors monitors the available capital as well as
the Group's commitments and adjusts the level of capital as is
determined to be necessary by issuing new shares. The Group is not
subject to any externally imposed capital requirements.
These policies have not changed in the year. The Directors
believe that they have been able to meet their objectives in
managing the capital of the Group.
24. Share-based payments
Movements in share options
in issue
Exercise Number of Issued during Expired / Number of
price options as of year Exercised options as
30 June 2022 during year of
30 June 2023
GBP0.30 (1) 8,125,000 - (3,300,000) 4,825,000
GBP0.27 (3) 7,900,000 - (900,000) 7,000,000
GBP0.33 (4) 12,430,000 - - 12,430,000
GBP0.67 (5) 21,705,000 - (325,000) 21,380,000
Total 50,160,000 - (4,525,000) 45,635,000
================ =============== ============== ===============
Movements in share warrants
in issue
Exercise Number of Issued during Expired / Number of
price warrants as year Exercised warrants as
of during year of
30 June 2022 30 June 2023
GBP0.30 (2) 4,803,921 - - 4,803,921
Total 4,803,921 - - 4,803,921
=============== =============== ============== ===============
Movements in restricted
stock units
Number of Issued during Expired / Number of
units issued year Exercised units as of
as of 30 June during year 30 June 2023
2022
GBP0.675
(6) 290,000 - 290,000 -
Total 290,000 - 290,000 -
================ =============== ============== ===============
(1) Fully vested. Issued 2014. Expire September 2024. Exercise
price GBP0.30/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 GBP0.30/share.
Previously fully expensed.
(3) Fully vested and expire on the 6 July 2030. Issued 2020.
Exercise price GBP0.27/share. Previously fully expensed.
(4) Fully vested and expire on 27 January 2031. Issued 2021.
Exercise price GBP0.33/share. Previously fully expensed.
(5) Fully vested and expire 14 January 2027. Issued 2022.
Exercise price GBP0.671/share.
(6) All 290,000 RSUs converted 1:1 into ordinary shares during
the year.
The Group has previously granted share options to directors,
employees and consultants under the Staff share option plan,
although none have been granted since January 2022. Such share
options are equity settled share-based payments as defined in IFRS
2 Share-based payments. A recognised valuation methodology (using
the Black-Scholes valuation model) was employed to determine the
fair value of options granted with the associated charge being
expensed to the Income Statement on a pro rate basis based on
vesting. The weighted average exercise price of share options
outstanding and exercisable at the end of the period was GBP0.484
(2022: GBP0.463).
In 2019 the Group issued 9,607,843 warrants as part of the
consideration for the acquisition of Great Bear Petroleum. The
terms of these warrants mirror the terms of the share options
referenced in footnote (1) above, however upon exercise they
convert on a 1:1 basis into non-voting shares as opposed to
ordinary shares. 4,803,921 of these remain unexercised at period
end.
The Share Option and Restricted Stock Units expense charge to
the Consolidated Statement of Comprehensive Income for the year
ending 30 June 2023 is $3,146,170 (2022: $8,256,575 ) which
represented the pro rata Black-Scholes-derived charge (share
options) and account charge (RSUs) attributable to the year with
respect to previously issued share options and RSUs.
The equity reserve account represents current year expenses for
unexpired options and warrants and the historical balance on vested
option and warrants.
25. Related party transactions
There were no related party transactions during the year other
than the payment of remuneration.
26. Contingent Liabilities
Pursuant to IAS 37, a contingent liability is either: (1) a
possible obligation arising from past events whose existence will
be confirmed only by the occurrence or non-occurrence of some
uncertain future event not wholly within the entity's control, or
(2) a present obligation that arises from a past event but is not
recognized because either: (i) it is not probable that an outflow
of resources embodying economic benefits will be required to settle
the obligation, or (ii) the amount of the obligation cannot be
measured with sufficient reliability.
Kinder Morgan Treating L.P. ("Kinder Morgan") initiated a
dispute over an East Texas gas treating agreement between Kinder
Morgan and Vision Operating Company, LLC ("VOC"). VOC ceased making
payments to the service provider in July 2019. The service provider
subsequently issued a demand to VOC and, in February 2021, served
Pantheon Resources plc with a petition, seeking to recover not less
than $3.35m in respect of this VOC contract. Pantheon held
ownership of less than 0.1% of VOC via a 66.6% interest in Vision
Resources LLC. Both Vision Resources LLC and VOC filed for Chapter
7 Bankruptcy in the United States Bankruptcy Court for the Southern
District of Texas Houston Division in April 2020
No Pantheon entity is a signatory to the gas treating agreement
and none are named in the agreement. Pantheon has taken legal
advice on the matter and believes it has no liability to the
service provider. Accordingly, Pantheon does not consider a
provision should be included with the final statements and will
contest any claim made.
In, July 2021, the court dismissed Kinder Morgan's claims
against Pantheon Resources plc. Kinder Morgan has also asserted the
same claims against two subsidiaries, Pantheon Oil & Gas, LP
and Pantheon East Texas, LLC. Pantheon Oil & Gas, LP and
Pantheon East Texas, LLC are contesting these claims.
27. Reserves
Share Capital
The share capital account represents the consideration received
for the shares issued at their nominal or par value.
Share Premium
The share premium reserve represents the excess of consideration
received for shares issued above their nominal value net of
transaction costs.
Retained Earnings
Retained losses represent the cumulative profit and loss.
Currency Reserve
The currency reserve represents the foreign exchange gains and
losses that have arisen on the translation of GBPGBP into $USD.
Share-Based Payments Reserve
The share-based premium reserve represents the cumulative charge
for options and RSUs granted, still outstanding and not
exercised.
28. Revenue
For year ended 30 June 2023, the Alaska CGU recognized gross
revenue of $803,689 from sales of oil produced during an extended
production test. Sales during a test period are recognized as
revenue under IAS 16-20. Associated cost of sales including,
processing, transportation, royalty, and tax totaled $673,290.
29. Other Income
The Employee Retention Credit (ERC) - sometimes called the
Employee Retention Tax Credit or ERTC - is a refundable tax credit
for businesses and tax-exempt organizations that had employees and
were affected during the COVID-19 pandemic.
30. Translation differences
The financial statements for the Group and the Company are
presented in US Dollars ("$") and this is the Group's Presentation
currency. The Functional currency of all entities within the Group,
excluding the Parent Company, is $USD. The Functional currency of
the Parent Company is GBPGBP.
The assets, liabilities of the Parent Company are translated
into US dollars at the rates of exchange ruling at the year end.
The income and expenses of the Parent Company are translated into
US dollars at the average rates of exchange during the year.
Exchange differences resulting from the retranslation of currencies
are shown in the "Other Comprehensive Income for the Year" section
of the Statement of Comprehensive Income and are treated as
movements on reserves.
31. Reconciliation of liabilities arising from financing
activities and major non-cash transactions
Significant non-cash transactions, from financing activities in
relation to unsecured convertible bond, are as follows:
Unsecured Convertible Bond Group
2023
$
Opening Balance 1 July 2022 43,292,594
Non-cash flow Bond amortisation (11,417,000)
Non-cash flow Forex movement 122,864
Non-cash flow Interest 6,105,372
Non-cash flow Revaluation of Derivative
Liability (11,321,514)
Closing Balance 30 June 2023 26,782,316
--------------
Significant non-cash transactions from financing activities in
relation to raising new capital are disclosed in note 18.
There were no significant non-cash transactions from investing
and operating activities in the current year.
32. Subsequent events
In July 2023, Allegra Hosford Scheirer was appointed as an
independent non-executive director. Allegra has a Ph.D in marine
geology and geophysics from MIT and for the past 15 years has been
a co-director of the Basin Processes and Subsurface Modelling
Consortium at Stanford University.
In late August 2023, Pantheon received an Independent Expert
Report from Netherland Sewell & Associates ("NSAI") certifying
a 2C Contingent Resource of 962.5 million barrels of marketable
liquids (oil, condensate, NGLs) on its Kodiak project. NSAI have
been contracted to provide an Independent Expert Report on its
Ahpun project, expected in Q2 2024.
In August 2023 Pantheon outlined its updated Corporate strategy,
describing its plans to move towards FID at Ahpun by end 2025 and
Kodiak by end 2028. As part of this the Company announced that it
had commenced the process to achieve a hot-tap into the trans
Alaska Production System, and outlined an estimation of capex
required to meet various milestones. There are described in greater
detail in the CEO & Chairman's reports at the beginning of this
document.
In September 2023, Pantheon announced a private placement to a
long term shareholder, IPGL, approximately for 11.9 million shares
at GBP0.1878 per share to raise $2.793 million, being the exact
amount due for the September 2023 quarterly Convertible Bond
repayment, enabling the Company to make the repayment to the
bondholder in cash, rather than shares. The net result was
materially similar dilution to having made the bond repayment in
shares, however IPGL was considered to be a longer term shareholder
and less likely to dispose of the shares.
In late September 2023, Pantheon re-entered the Alkaid-2
wellbore to conduct a fracture stimulation operation and flow test
on the shallower and independent Shelf Margin Deltaic (SMD) horizon
in the Alkaid-2 wellbore. The operation had 3 primary objectives;
(i) to obtain the best possible fluid samples for PVT analysis,
(ii) to determine initial reservoir pressure, and (iii) to test the
effectiveness of the revised frac design. In October 2023, Pantheon
announced that all three objectives were successfully achieved,
with the frac efficiency estimated at c.50%, a material improvement
over the estimated 20% efficiency in the deeper Alkaid test. The
gas oil ratio was also significantly better than that experienced
in the deeper Alkaid test. These improvements are considered to
have very positive implications for future project economics.
In November 2023 Pantheon announced that it was seeking to
appoint an additional independent non-executive director, and was
presently in the screening process.
In December 2023, Pantheon announced a private placement of
approximately 16.3 million shares at GBP0.208 per share to raise
$4.15 million, to allow the Company the ability to pay the December
23 Convertible Bond repayments of $2.8m in cash rather than shares,
which has now occurred. Receipt of the $4.15m placing proceeds is
expected in late January 2024. This action was believed to remove
the perceived overhang of shares while the Company continues to
mature potential vendor and offtaker financial funding options and
to seek to minimise dilution to shareholders.
In December 2023 Pantheon announced the appointment of a new
independent non-executive director, Linda Havard, to the board of
Directors, effective 1 January 2024. Linda has decades of
experience in financial/CFO roles, and an MBA in Finance and a
Ph.D. in Business. Linda will chair the Company's Audit
Committee.
In Dec 2023 Pantheon was the successful bidder on 66,240 acres
in the State of Alaska's 2023 North Slope Areawide Lease Sale. The
leases capture additional reservoir potential to the west of the
Company's existing acreage in the Kodiak field, and to the east of
Ahpun. The new acreage contains material resource potential and
classification of the potentially recoverable resources will be
determined in the coming months in consultation with NSAI and SLB.
Full details are contained in the Company's RNS dated 14 December,
2023.
GLOSSARY
bbl barrel of oil mcfd thousand cubic feet per day
bopd barrels of oil per day Mmboe million barrels of oil
equivalent
mmbo million barrels of oil NPV net present value
boepd barrels of oil equivalent per day NPV10 net present value
at 10%pa discount rate
mcf thousand cubic feet $ United States dollar
NCI non-controlling interest OIP Oil in place
FID Final Investment Decision
NGL Natural Gas Liquids
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END
FR FIFIVFFLALIV
(END) Dow Jones Newswires
December 19, 2023 02:00 ET (07:00 GMT)
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