Canaccord15 Dec 2021 07:54
Canaccord Genuity view Pantheon has raised $96m (upscaled from $70m) to provide the funding necessary for an extended, varied, and very high impact operational programme in 2022. We expect operations to begin very soon, and to include the drilling and testing of two/three new wells and the testing of a previously drilled well, at its 100% held licences onshore Alaska. We see a number of key attractions to the programme including: Large Scale: Targeting c.2 bnbbls net resources. Excellent location: Onshore Alaska, close to oil services, road access (Dalton Highway), and crude oil export via Trans Alaska Pipeline. Catalysts: Numerous, starting early Q1, lower risk exploration to appraisal. Drilling and testing two new wells (Theta West-1, Alkaid-2H), testing four zones in Talitha#A well, with a longer-term Alkaid test to include oil sales. A fourth well, at Alkaid, is likely to be added following the upscaled raise. In our view, this comprehensive and very exciting programme could result in a significant uplift in market valuation and a considerably raised industry profile, which in turn could lead to a potential farm-out or sale.
Valuation, rating, and target price A more comprehensive discussion of value is overleaf. For now though, we make adjustments to our target price, based on total estimated targeted 2022 resources of 2.1 bnbbls, a highly risked $1/bbl unit valuation, and anticipated post raise full dilution. As a result, we increase our target price to 200p (from 170p) and given the risk profile we maintain our SPECULATIVE BUY rating. We note the scope for the much higher market and industry valuations (discussed overleaf), and we would foresee our risked valuation shifting in that direction as successful drilling/testing milestones are met in the 2022 operational programme.
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