Canaccord update19 Jan 2021 14:09
Canaccord update on todays news :
"Acquires full ownership of Talitha
Canaccord Genuity view:
Pantheon is acquiring the remaining 10.8% working interest (WI) in the Talitha Unit on the North Slope of Alaska from Otto Energy in exchange for c.14.3m Pantheon shares. Following completion of the transaction and the recent success in the Alaska State lease sale, Pantheon will own a 100% WI across all its 161,000 licensed acres on the North Slope.
We see the mopping up of the 10.8% interest in the Talitha Unit as an accretive acquisition for Pantheon, which also simplifies its holdings and gives the company absolute control over the future of its position in Alaska. ***That should streamline any future farm-out or sale activities that the company may undertake.***
Transaction details:
Otto Energy owns 10.8% WI in the c.44,000 acre Talitha Unit through its 100% held entity Borealis Alaska. Pantheon will issue to Otto 14.273m shares in exchange for that interest. Otto will retain a 0.5% overriding royalty interest in any future production from the Talitha unit. The completion of the transaction requires approval of the Alaska Dept. of Natural Resources (DNR). That is anticipated "to take a number of weeks". The shares issued to Otto will be ***locked up until 30 June 2021.***
Drilling refresher:
The Talitha #A well spudded on 13th January. The operational plan is to drill to total depth (TD) of c.10,000 feet through four objectives. The primary is the Shelf Margin Deltaic (SMD) which is also the shallowest expected reservoir zone. Three secondary targets are anticipated: Slope Fan System, Basin Floor Sand, and Kuparuk. Pantheon plans to ***test each zone after completing the drilling operations***. The full operational programme must be completed before the spring thaw begins
which is usually around end March.
Valuation and rating:
We see the all-share acquisition of Otto's 10.8% WI in the Talitha Unit as accretive to Pantheon and beneficial to it in terms of simplified and total ownership of all its North Slope licences. On the basis that DNR approval is given for the transaction, we ***raise our NPV10 risked valuation to 89p (from 83p)*** and maintain our Speculative BUY rating.
That valuation includes ***only*** a risked assessment of Pantheon's 2C resources in the Alkaid project and the independently determined c.300 mmbbls resource in the SMD within Talitha. Our unrisked valuation for that subset of the company's resources increases to 205p (from 172p).
The company estimates the full potential resources in Talitha across all four target zones as over 1 bbbls."
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