Member Info for neil9327

My take on the situation is that the directors have probably identified one of several production assets for sale that they would quite like to buy, and know that an impending recession is likely to allow them to be purchased cheaper than normal. Our recent high share price was the perfect opportunity to raise cash from the markets to give us the cash to do this. He wouldn't be able to be specific at the moment about the asset he is most keen on buying because it is an essential requirement for negotiation to be able to walk away and to feign dis-interest.

Actually with the share price currently below the placing price, even if he chooses not to spend the cash, he could instead use some of the cash to buy back shares, generating a small risk free profit on the round-turn.

In the same way, going forward, once he has finished raising cash in placings, it is in all shareholders' interest for the share price to be as low as possible, below the intrinsic worth of the company, because that way the company can use profits to buy back stock at a discount, increasing the per-share value of the shares of existing holders who haven't sold.

https://www.lse.co.uk/rns/SOUC/drill-test-results-and-equity-financing-3cess01wsjkkn4v.html
"at an issue price of C$0.87 (approximately 54.5 pence)"

Before the placing the company market cap was around £60M, and the company was generating circa 3000 boepd equivalent. I'm going to assume profits on this are around £10/barrel (a ballpark figure). So profits of £10 * 3000 boepd * 365 days/year = £11M/year - which puts the company on a P/E of around 5.5
A few months ago Southern Energy (and i3 Energy) said that they had been acquiring production assets with payback periods of less than a year. So today's placement cash raised could perhaps be seen as funding a stand-alone entity with a P/E of 1. Merge the two together, and you'll get a combined P/E somewhere in the middle - i.e. lower than the current 5.5
Therefore I think it is value-accretive for existing shareholders.
You have to take into account the circa 20% discount placing price, but it still seems value accretive despite this.

What are the alternatives? One alternative is to grow the company organically, using profits generated from production to save capital for onwards investment. This would work but would be slow. Rising oil prices will cause a rise in the price of production assets, so the company might end up having to pay more, so reducing forward profits.
Debt is another option - but this adds risk of insolvency if for any one of many reasons there is a problem with production for a while.

The company's stated aim is to get production up to 25,000 boepd. This placing will allow this goal to be reached sooner than would otherwise be the case. Therefore although the placing will reduce the total percentage gain that existing shareholders will enjoy as a result, the 25,000 goal and (hopefully) the share price rise to a level consistent with this will be achieved sooner. Then all us shareholders have to do is sell, and use the remaining time to invest somewhere else where we can make up the difference.

Existing shareholders may grumble about the drop in the share price today, but in my opinion the underlying value of their investment has not gone down at all.

Finally the directors have a large holding of shares, and I think it is unlikely they would deliberately hobble the value of these.

I bought an additional £20K's worth of shares this morning, on top of my existing holdings.

Nonsense, you shouldn't feel any responsibility at all, as your posts here have been very informative and genuine. You've put a lot more effort in than the rest of us. Please carry on..

Good idea Viable; nothing good ever comes from getting emotional about investing.
Did they give any more detail on said "planning"?

Same here, I have a lot of SOUC, that I also acquired a few months ago. i3 also.
Agree with you on IOG - interest by other investors seems a bit too keen.
Have you looked at PANR?

Just a FYI: The Guild is a closed bulletin board in "the other place", which you can access by clicking on the following link:
https://uk.advfn.com/common/guilds
logging on, and scrolling down to the Pantheon Resources link.
Your advfn account needs to be in credit to the tune of one plusonecoin, but these are basically free to get by visiting one of the links under:
https://uk.advfn.com/common/plusonecoin
or messaging user Swendab on the regular forum who will credit one to your account.

I should say though that I prefer the chat on here (lse.co.uk) - a much better designed website all over.

All the small oil companies are down by a lot today (i3 energy, Petrol Matad, Eco Atlantic). Nothing to worry about because it has no relevance to the eventual sale price or ultimate production profits.

When he was negative about PANR, I noticed the share price went down. Now that he is positive about us once again - the share price still goes down. The guy is toxic lol.

That's correct it is Jay's stated aim to prove up and sell. I'm just thinking that if he wanted to carry on, perhaps in a part time role post "retirement", he could do so instead. He and all shareholders should benefit from a higher market cap as a result, both from the higher margins from production vs farm-out, and also the rise in oil prices that (in my opinion) will continue to rise post any farmout deal/sale. Why share the profits of production with others, when we can keep them for ourselves.

The income from Alkaid 2 would allow the company to borrow (with care) to invest in new wells as required, so it's not certain that the company needs to raise cash or get a farm-out deal. Indeed I think it could be better for shareholders for us to go it alone and grow production organically, with some speed, all the way up to the hundreds of thousands of barrels a day over, say, five years.

Re: "Alkaid 2 needs to go extremely well".
I don't think it does need to go extremely well, it just needs to go averagely well. This is because the year-round drilling for Alkaid means the company has time to correct any mistakes. All companies encounter problems like we have seen with the cement etc. But they only showed up because the short winter drilling season of the off-Dalton-highway drills of Talitha and Theta West meant that the company ran out of time, preventing the completion of the objectives this time around.
With Alkaid we've got all the time we need - which will allow us to take our time, no hurry, and get it right.

Direct link:
https://www.youtube.com/watch?v=jkjKLh7aGRM

He's been a busy bee hasn't he!
I'm very confident about the company's prospects, with the Peel Hunt report presenting an open opportunity for new investors to get in and sample this great growth company. It is to his credit that he doesn't criticize the report but instead invites investors to make up their own minds based on the evidence.

Just to add, we should also see the positive in it. Rather as Ryanair says there is no such thing as bad publicity, the Peel Hunt report will encourage a new set of investors to take a look at what we have to offer. Many of them, over the next few weeks and months, will come to the conclusion that we are the definition of a good contrary investment. This could create an upward trend in the share price as their buy-requests are fulfilled.

Titanic?
(joke)

From:
https://corporate.exxonmobil.com/Sustainability/Energy-and-Carbon-Summary/Strategy/Potential-impact-on-proved-reserves-and-resources
says: "At the end of 2020, ExxonMobil's proved reserves totaled about 15 billion oil-equivalent barrels"
In comparison to this, we know that Pantheon's proved reserves are likely to be upwards of 2.3 billion barrels, once full appraisal tests are complete. This makes us 2.3/15 = 15% of the size of them on this comparison.

Next, from:
https://corporate.exxonmobil.com/News/Newsroom/News-releases/2022/0201_ExxonMobil-earns-23-billion-in-2021_initiates-10-billion-share-repurchase-program
"Oil-equivalent production in the fourth quarter was 3.8 million barrels per day"
Now, if we are 15% of their size, this for us would be 3.8 million * 15% = 570 thousand barrels per day.

Each of our wells will output around 1 thousand barrels per day. Later this summer we will drill one (Alkaid 2).
We know that profits from these wells recoup the cost of drilling (circa $12 million) in around 12 months or less.
Therefore next year we'll be able to drill 2 (or more, as the company has already explained).
The year after that 4
8
16
32
64
128
256
512 - = the above output figure.
i.e. it will take 9 years to reach full output.

What is the market cap of ExxonMobil now? Answer $355 billion = £287 billion.
How much of that can be attributable to their upstream operations (rather than their refining or retail) I don't know, but let's pluck the figure of 30% out of the air for this. = £86 billion.
15% of this is £12 billion.

So this suggests that our market cap will be £12 billion in 9 years time, through organic growth, without a need for a farm-in partner, or an offer from an oil major.

We know that our 2.3 billion barrels reserves is very likely to rise a lot as we gain experience with drilling the fields. Let's say it will double. So market cap goes up to £25 billion. And by CAREFUL use of debt I suspect we can accelerate the deployment of the wells so as to reach our target in 5 years, say, rather than 9.

So with today's £1 billion market cap, my amateur-investor prediction is that the share price will rise by 25 times in the next 5 years. Or will if we are not bought out before then.

To put this into perspective, bitcoin has risen by 25 times in the past 5 years, from around $1000 in early 2017, to $25,000 now. My conclusion: Pantheon is the new Bitcoin!

https://www.youtube.com/watch?v=vLJbrJU7F3E

What is Pro about? He's a trader. He propagates lies and out-of-context truths in order to discourage the marginal investor into selling or refraining from buying. This often causes the share price to decline, allowing him to buy in cheaper and generate greater profits.
Is it a useful deployment of his funds? I would argue not, because as soon as the share price returns to "normal" he'll sell, hoping to do the same again. But all the time he's out of the market the share price is at risk of rising substantially due to fundamental factors, resulting in him making less money overall than if he adopted a buy and hold strategy.
Still, he creates liquidity, which is useful to those who wish to get in or out.

Indeed.

https://citywire.com/funds-insider/news/expert-view-lloyds-experian-ashmore-ab-dynamics-and-plus500/a2386147
says:

Peel Hunt upgrades Plus500

Peel Hunt has upgraded Plus500 (PLUS), the contracts-for-difference trading platform, as it is making strategic progress and broadening its reach.

Analyst Stuart Duncan upgraded his recommendation from ‘add’ to ‘buy’ and increased the target price from £16.55 to £18.60 on the stock, which was trading up 3.4% at £15.63 at the time of writing on Wednesday.

‘Despite what we believe to be conservative assumptions, we still increase our forecasts for 2022 by 13% following strong first-quarter results,’ he said.

‘We forecast an investment proposition underpinned by strong earnings momentum, continuing volatile markets, and some interesting strategic developments.’

He noted the development of Plus500 Invest and the group becoming a full clearing firm that opens up business-to-business opportunities ‘with small brokers lacking clearing house access’.

‘There looks to be little of either aspect reflected in the current valuation,’ he said.

‘Plus500 is evolving towards becoming a more broadly based financial services firms, which generates significant levels of cash’.

I was just having a play around with our huge numbers, through a (very) rose-tinted lens:

We have 23 billion barrels of oil in place.
There are 159 litres in a barrel.
If all this oil is extracted (ok it won't be), and if all of it is turned into petrol (ok it can't be), then at an average of, say, £1.68/litre at the forecourt, it will sell for:
23 billion * 159 * £1.68 = £6,143 billion

i.e. 6 TRILLION pounds!

Divide this by the UK population of around 67 million, means that every man, woman, and child in this coutry will be spending £6,143 / 0.067 = £91,000 on Pantheon's assets over the years.

But there's more. How far would a single car travel, fuelled by Pantheon petrol?
Given that there are 35 gallons in a barrel. And taking a typical 38 miles per gallon,
this is 23 billion * 35 * 38 = 30,590 billion miles.

Now those who are interested in astronomy will know that the distance of one light year is equivalent to 5.88 trillion miles
https://en.wikipedia.org/wiki/Light-year

Therefore the distance the car can travel is 30,590 billion miles / 5.88 trillion miles = 5.2 light years.

And we know that Alpha Centuri, the nearest star to the Sun, is only 4.37 light years away. So the car will make the journey!
https://en.wikipedia.org/wiki/Alpha_Centauri

Therefore my conclusion? Pantheon Resources is positively cosmic!

They didn't say.
This summer's Alkaid 2 horizontal well will generate around 1000 boepd. At $100 oil this would imply gross revenues of $0.7MM per week. Then the following summer they said 4 wells will be drilled at Alkaid (and appraisal wells at Talitha/Theta West). They didn't give any cashflow analysis as to how this could all be scaled up, and how quickly.