Member Info for Newanda

Quite possible Chickster. Although I believe they were pursuing different source rocks to/as well as HRZ.

This article highlights what they were up to early on, and also the staggering ambitions of the company. Obviously it all went a bit Pete Tong.

http://www.petroleumnews.com/pntruncate/827149061.shtml

Jof - interestingly GB started out with the intentions of unconventional development, but given the economics switched to focus on conventional.

Good article here https://www.hartenergy.com/exclusives/alaska-north-slope-next-frontier-unconventionals-31264

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/091018-feature-alaska-producers-finding-profitable-ways-to-unlock-viscous-oil-in-north-slope

Sorry - specifically from West Sak and Ugnu

CP are getting 7000 barrels per day. Requires diffrent extraction techniques given viscosity, but CP invested $400m north of us to do so.

Lower price, but balanced against vast amounts (on CO acteage anyway).

Approx 20 miles north of our acreage, and 5 miles west of TAPs

Monstersaurus 0838 - Very much so. The relevance of this starts to bring into focus the central and eastern fairways of our acreage where we haven't yet conducted any 3D seismics I believe. The majority of our conventional focus has been on the western fairway, with 2D seismic delineating some prospects on Central and eastern.

This result brings increasing credibility to GBs data and analysis and therefore derisks the remaining prospects they have, and most importantly for us, is Talitha some 1 mile north of our acreage targeting a 508m barrels. It also adds credibility to modern 3D seismic methods and has a positive read across to our own 3D seismic.

A good result for the North Slope.

http://www.pantheonresources.com/investors/presentations/597-agm-presentation-2019/file

Will be interesting indeed. I suspect the usual ramping crews on AIM will get on this and drive it up.

Market seems to have missed the significance of this.

For me, Zoi priced in or otherwise, the importance of this is far stretching, and builds confidence in the other data and analysis over the acreage we have, and de-risks future prospects significantly.

I hope this will wake up the market and get people looking at the prospectivity of our GB acreage and bring the market.

Apologies for naive question - first time one of my investments has flowed oil

Is it as simple as if 6ft gives 100 bopd, over 240ft assuming there is a reasonably consistent geology, we can expect 40x that over the full interval? so 4000 bopd?

6 foot interval from the 240 flowed at 80-100 bopd

I believe that you need relevant corporate experience in the relevant industry, coupled with technical understanding of the fundamentals of the business you are operating in to make the best decisions based on the data that is available. So I do believe he is a valuable asset to the company. And whilst I hear a lot of disagreement with the way this company is run, I for one am happy with the decision making taking place. I'm not happy with the results from Winx, and I'm not qualified to know whether or not we drilled in the optimal location based on the data, but I trust the decision to drill there. Nobody knew the geology would have been what it turned out to be.

I disagree that we pluck reserve figures out of thin air, and I believe that qualified people using sound methodologies and algorithms are generating the estimates.

I personally believe that the strategy to acquire a significant acreage in a geography that has many economical positives for exploration, whilst oil prices were on the floor, and to then prove it up over the past 3-4 years is sound. Whilst all the majors were focusing further North, we picked up acreage at bargain basement prices and have added value to that acreage through the seismic activity we have conducted. The next few weeks will hopefully bring this to it's first step in fruition and value creation for us.

And yes, I am happy to give away 70-75% interest in that acreage in return for a partner who can take on costs to prove up the resources, inject the 88e with capital removing the necessity to rely on shareholders, and help us get to production faster than we could on our own. If you do the numbers, a 25% or 30% WI in the resources we have is a significant value, and if successful will catapult this company forwards significantly. What's the alternative? Continuous capital raises and dilution? Exploration is a capital intensive business, always has been always will be. And until you have production revenues you have either debt or capital markets to fund it.

If you haven't run the numbers on what a 25-30% WI on 2.2bn barrels looks like, I would urge you to do so. It is beyond compelling.

I am hurting from the current share price, but I believe in the leadership of the company, I believe in the current strategy, and I continue to hold and buy more on the dips as I personally believe in the fundamentals of what we have, and I believe in the operational execution and decision making of the company - i.e. the things in our control.

Agree, and also don't underestimate the usefulness of not only his network with the majors, but also his experience from being part of the Cove Energy story. Having someone on the Board who has been part of taking a small explorer to a sale to a major is worth £30k per year (or whatever the exact figure is).

Whilst we wait for the news we all want - I've been doing some research into Pantheon's Great Bear prospects, and I think probably quite relevant for us, as is our FO developments for Pantheon.

Alkaid 1 is flow testing a discovery of 550m barrels approximately 20 miles north of our Central Fairway acreage across West Sak, Ugnu and Zoi horizons (results due in 3-4 weeks). West Sak and Ugnu are huge reservoirs and producing for ConoccoPhillips in the North after a $400m investment. Interestingly these contain much heavier oils and require different extraction techniques that CP have been pioneering. But interesting if Ugnu and West Sak continue under our acreage.

Talitha is more relevant for us as it's approximately 1 mile North of the Central Fairway acreage WI we acquired from Great Bear, and will be appraising a discovery of approximately 508m barrels in the mid-schrader bluff. Given proximity quite possible that this will continue under our acreage and therefore particularly interesting - although not being drilled until 2020. That said there is some interesting data in the below on slides 17 and 18.

http://www.pantheonresources.com/investors/presentations/597-agm-presentation-2019/file

First time I've seen a number against the number of wells we might have in Kansas...

"Kansas Gas Resource: 3,457-acres with the first well producing nitrogen with an initial flow rate of 2,581 Mcfpd. Potential for an additional 24 wells."

From RNS last week. Had a look on Kansas Oil and Gas Commission website to see if any permits lodged, but doesn't seem to be working.

100% agree with that Sandcrab, and most do not consider the difficulty in getting the project financing sorted. Look at BCN for example.

In fact, whilst not an NPV specific example, the KDNC rise yesterday is a great example of misunderstanding the value of the $4bn off take agreement with Glencore and MMS. KDNC went up approximately £20m based on a 10% share of MMS which was valued at Mcap of £8m prior to the news (and still is as in trading halt on TSX where KDNC holds an interest). Claims of "$40m per annum to KDNC" were being made and KDNC finished 245% up. Even if you look at the rise of MMS on the US OTC exchange, it was up 410% which if the TSX does the same should value MMS at approx £50m - or KDNC share at £5m vs the £20m rise yesterday.

Anyway - I digress, but the similarity with the article is that many did not think to investigate and overlooked the fact that whilst a $4bn revenue off take is great, there is currently no mine, and there is no financing for the mine ($335m) and therefore there is a long way to go before that revenue comes in - and as such is not guaranteed.

So I suspect once MMS opens on the TSX and folk realise there is not even mine financing in hand, and the $4bn is a revenue number that needs to account for Capex, opex, debt and tax then the value to KDNC via MMS MCap appreciation is much much less.

Anyway - off my high horse on that front, but as I stated in my analysis below - the full NPV case is sat behind the barrier of getting chunky upfront financing - I estimated at $120m for a 4 well field and pipeline to TAPS which little old us are unlikely to get. So therefore, much more likely to sell the oil in ground, or farm out in return for a free carry on a WI of 20-30%. In the latter case the NPV valuation serves purely to show the return over time against a 10% WACC.

The killer question is at what stage in Alkaid's development will the full value (the amount of which is clearly deal dependent) of the resource be assigned to our share price. One would expect a tick-up if we prove the oil flows, and is in recoverable quantities similar or greater than estimates. But I suspect full value wouldn't be assigned until either a deal is struck with a rich partner to sell the oil or to farm out to. Very roughly I suspect the path to value realisation will be:
1) successful appraisal and confirmation of resource
2) confirmation of interest of another company in resource (eyes on 88e FO as an analogue for that)
3) completion and detail of deal
4) successful build out of infrastructure
5) first oil and revenues

I have no idea what % of value would be assigned on this path, but will look at some other companies to see what happened.

IMHO

I would say Talitha it should. And I suspect on a successful Alkaid then people's ears will prick up and then some of that value would be ascribed.

Phecda relative to Talitha and Alkaid is still exploration vs discovery and only (!) 34m barrels recoverable and 75% WI

Theta however - still exploration, but at 600m barrels, 90% WI and in the Nanushuk looks interesting and possibly likely to attract some SP valuation/interest

I've also put Talitha through my model. Not drilling until 2020, but with 90% WI at 508m recoverable barrels, it's a chunky resource.

Talitha
@$3 per barrel sold in ground = £1,042m or £2.29 per share
NPV10 @$68 per barrel = £4,144m or £9.12 per share
20% free carry NPV10 @$68 per barrel = £2,012m or £4.43 per share

APOLOGIES SPOTTED ERROR IN WEST SAK CALC FOR FULL CASE - PLEASE USE THIS VERSION

OK Take 2 starting with assumption that it is sold in ground and all zones flow with reserves as per current estimates. I've halved (assumptive) the price per barrel in ground for Sak and Ugnu as heavier oils.

Zoi
@$3 per barrel sold in ground = £42.8m or £0.09 per share

West Zak
@$1.5 per barrel as heavy oil = £115.4m or £0.25 per share

Ugnu
@$1.5 per barrel as heavy oil = £333.5m or £0.73 per share

Total = £491.6m or £1.08 per share

Now looking at the full value case, which clearly requires heavy up front investment (but is covered in the cost to extract for purposes of modelling) and with the following tweaks to assumptions:

1) West Sak and Ugnu command $50 per barrel (based on other heavy oil prices) not the $68 ANS premium
2) Case is extrapolated over 15 years not 10
3) Cost to extract is $40 per barrel, which is actually more of an unconventional cost, so is conservative

Zoi
NPV10 @$68 per barrel = £170m or £0.37 per share

West Zak UPDATED
NPV10 @$50 per barrel = £324m or £0.72 per share

Ugnu
NPV10 @$50 per barrel = £945m or £2.08 per share

Total UPDATED = £1,445m or £3.18 per share

Even in a more conservative success case, still staggering upside. However, as stated, we don't have the Capex to develop the field, so the question is how good a deal can we do? If we get a 20% WI with free carry (Free carry I define as zero Capex and Opex costs to PANR, and therefore our free carried share of oil = 110m barrels at zero cost)

On an NPV10 basis over 15 years I get:

Zoi 20% free carry
NPV10 @$68 per barrel = £63m or £0.14 per share

West Zak 20% free carry
NPV10 @$50 per barrel = £249m or £0.55 per share

Ugnu 20% free carry
NPV10 @$50 per barrel = £720m or £1.58 per share

Total = £1,031m or £2.27 per share

At 30% free carry WI this goes up to:
Total = £1,547m or £3.40 per share

Similarly at 10% free carry WI this goes down to:
Total = £515m or £1.13 per share

OK Take 2 starting with assumption that it is sold in ground and all zones flow with reserves as per current estimates. I've halved (assumptive) the price per barrel in ground for Sak and Ugnu as heavier oils.

Zoi
@$3 per barrel sold in ground = £42.8m or £0.09 per share

West Zak
@$1.5 per barrel as heavy oil = £115.4m or £0.25 per share

Ugnu
@$1.5 per barrel as heavy oil = £333.5m or £0.73 per share

Total = £491.6m or £1.08 per share

Now looking at the full value case, which clearly requires heavy up front investment (but is covered in the cost to extract for purposes of modelling) and with the following tweaks to assumptions:

1) West Sak and Ugnu command $50 per barrel (based on other heavy oil prices) not the $68 ANS premium
2) Case is extrapolated over 15 years not 10
3) Cost to extract is $40 per barrel, which is actually more of an unconventional cost, so is conservative

Zoi
NPV10 @$68 per barrel = £170m or £0.37 per share

West Zak
NPV10 @$50 per barrel = £656m or £1.44 per share

Ugnu
NPV10 @$50 per barrel = £945m or £2.08 per share

Total = £1,772m or £3.90 per share

Even in a more conservative success case, still staggering upside. However, as stated, we don't have the Capex to develop the field, so the question is how good a deal can we do? If we get a 20% WI with free carry (Free carry I define as zero Capex and Opex costs to PANR, and therefore our free carried share of oil = 110m barrels at zero cost)

On an NPV10 basis over 15 years I get:

Zoi 20% free carry
NPV10 @$68 per barrel = £63m or £0.14 per share

West Zak 20% free carry
NPV10 @$50 per barrel = £249m or £0.55 per share

Ugnu 20% free carry
NPV10 @$50 per barrel = £720m or £1.58 per share

Total = £1,031m or £2.27 per share

At 30% free carry WI this goes up to:
Total = £1,547m or £3.40 per share

Similarly at 10% free carry WI this goes down to:
Total = £515m or £1.13 per share

I'm going to adjust the price for West Sak and Ugnu per barrel down to $50 which is akin to some of the other heavy oil prices in the US. Will post shortly.

The interesting thing about these reservoirs is a) they are vast b) ConnocoPhillips invested $400m in West Sak and have pioneered a load of techniques to recover the oil. I would guess they would be interested in what we flow, if indeed we do. Our acreage is further south then the known limits of the fields - so very interesting...