Pantheon Res Regulatory News (PANR)

30 December 2022

 Pantheon Resources plc

Final Results for the Year Ended 30 June 2022

Pantheon Resources plc ("Pantheon" or the "Company" or the "Group"), the AIM-quoted oil company with 100% working interest in approximately 153,000 acres located adjacent to transportation and pipeline infrastructure on State Land on the Alaska North Slope, is pleased to announce its results for the year ended 30 June 2022.

Operational Highlights for the year ended 30 June 2022 and up to the present date

· A period of great achievement for Pantheon, with drilling and testing successes at both the Theta West and Talitha wells during the year. These wells have led to a material upgrade to our resources further establishing Pantheon as a significant stakeholder on the Alaskan North Slope 

· Drilling proved +10 mile extension/continuity of the Lower Basin Floor Fan oil accumulation from Talitha to Theta West, confirming both (i) the presence, and (ii) the movability of high quality light oil across multiple formations

· Drilling results upgraded Company resource estimates to 23 billion barrels of oil in place ("OIP") and 2.3 billion barrels of recoverable resource, increasing confidence and reducing risk across our portfolio.

· Receipt of AHS Baker Hughes technical report on Theta West labelling it as "A world class petroleum system"

· Successfully drilled Alkaid #2, confirming (i) the extension (all hydrocarbon bearing) of the Alkaid deep formation 300ft deeper than at Alkaid #1, and (ii) the extension of the Shelf Margin Deltaic ("SMD") to the east of Alkaid #1

· The extension of SMD to the east, underneath the Dalton Highway offers major advantages for commercialisation of oil as well as operational benefits such as (i) appraisal of the SMD from the Alkaid pad, allowing a long term production test not otherwise available, and (ii) after testing, the well can be converted to a water and gas disposal well which will be of great value to future operations in reducing operating costs

· Alkaid #2 is currently being flow tested, producing c.500 barrels of light liquid hydrocarbons (comprising c.200 barrels of oil per day along with 300-350 BPD of Natural Gas Liquids ("NGL's") and condensate, plus over 2.5 mmcfpd gas) despite an estimated 1000 ft of sand blockage remaining in the liner, restricting flow testing operations and flow rates

· The Company believes Alkaid has intersected a massive hydrocarbon system and is presently flow testing oil, condensate, LPG and gas naturally without artificial lift

· Permanent production facilities have been established at Alkaid and Pantheon is now selling oil generating a small but important cashflow and beginning its transition from pure explorer to producer

· A rig has been identified to remove the tubing and clear out the blockage; a relatively straightforward procedure expected to improve productivity and materially accelerate the well cleanup process

· Pantheon was a successful bidder for an additional 40,000 acres of contiguous leases at the annual lease sales which the Company believes is highly prospective for additional oil resources

· Completion of Phase 1 of major Schlumberger reservoir modelling project. Phase 1 has estimated Pantheon's acreage to contain 17.8 billion barrels of oil in place(1). Phase 2 will focus on reservoir quality and recovery factors for commercialisation purposes

· Data room to formally reopen to attract potential farm in partners into Pantheon's project area where it controls 100% of its acreage. Pantheon could offer an interest in a singular project or across the portfolio. The Schlumberger work has greatly enhanced the quality of the information within the data room

· Companies are showing interest in our project. Whilst encouraging there can be no guarantee a transaction will conclude on terms acceptable to Pantheon

Financial & Corporate Highlights

· Completed a fundraising of $96 million, comprising $41million in equity and $55 million in unsecured convertible bonds.

· Convertible loan balance reduced to $39.2 million at present time

· Loss for the year after tax: $13.9m (2021: $6.7m)

· Non-cash items: Non-cash accounting charge of $8.2m (2021: $3.2m) relating to share based payments

· G&A: $7.4m (2020: $5.0m) reflecting the growth in size and activity of the Group

· Cash and cash equivalents at 28 December 2022: $16.6m

Jay Cheatham, CEO, said: "It has been a period of tremendous achievement for Pantheon. We've advanced our asset position considerably, made material upgrades to our estimates of potential resource, had great drilling success and received endorsement from groups we consider to be some of the best in the business - who have had access to our data in forming their opinions. We've also been able to maintain a 100% working interest across all our projects giving us great flexibility in how we fund and grow our assets as we enter 2023. The successful Alkaid appraisal, drilling and testing operation has set the basis for our first commercial production operation where we are currently selling oil, as well as major resource upside potential to be tested in 2023."

Annual report and Accounts

The Annual Report and Accounts for the financial year ended 30th June 2022 will be posted to shareholders shortly, together with a Notice of Annual General Meeting. Copies will be available on the Company's website at: www.pantheonresources.com

Footnote:

(1) The Schlumberger Report was a detailed reservoir modelling analysis and did not constitute an Independent Expert Report

(2) The information contained in this RNS is considered to be Inside Information for the purposes of Market Abuse Regulations

-ENDS-

Further information, please contact:

Pantheon RESOURCES plc

ANNUAL REPORT AND FINANCIAL STATEMENTS

YEAR ENDED 30 June 2022

Directors John (Jay) Cheatham (Chief Executive Officer)

Justin Hondris (Executive Director, Finance and Corporate Development)

Phillip Gobe (Non-Executive Chairman)

Robert (Bob) Rosenthal (Technical Director)

Jeremy Brest (Non-Executive Director)

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 9DL

CHAIRMAN'S STATEMENT

The past year has seen the critical role of hydrocarbons magnified in a number of ways. In the United States, the price of oil and natural gas increased rapidly, however, Europe has seen a more dramatic increase in natural gas prices following the Russian invasion of Ukraine and subsequent decrease of exports to Europe. Energy security has now become a dominant theme in Europe and the rest of the developing world at a time when inflationary pressures are having profound economic impacts. These events have again highlighted the importance of oil and gas in our societies which will exist for many decades as we transition in a more measured way to renewable energy. Against this backdrop, Pantheon has achieved several milestones on its path from an explorer to producer on the North Slope of Alaska.

Prior to the winter 2021/2022 drilling and testing programme, Pantheon raised $96 million, split $41 million in equity at 65 pence per share and $55 million via a convertible bond. At the time of writing, the balance owing on this convertible bond is $39.2 million. The fundraising enabled Pantheon to execute on its extensive winter and summer drilling programmes and highlighted the confidence in Pantheon's projects from both existing and new shareholders.

During the winter programme, we successfully drilled the Theta West #1 well, a 10.5 mile step out from the Talitha #A discovery well and tested the Lower Basin Floor Fan ("LBFF") complex. The results from Theta West #1 came in on prognosis at approximately 1500 feet ("ft") up dip and with a thickness in the oil column of 960 ft in the LBFF, leading to a significant resource upgrade for the Company. This was an extremely important result for our Company. Theta West could be the largest oil discovery made on the North Slope of Alaska for many decades. At Talitha #A we tested four zones; the LBFF, Slope Fan System ("SFS") Shelf Margin Deltaic ("SMD") and Kuparuk which were all oil bearing. The discovery of moveable, high quality light oil across multiple zones in these wells confirmed the large potential that exists within our acreage position.

Post year-end, we drilled the Alkaid #2 well from a gravel pad we built along the Dalton Highway which had three objectives. The primary objective was kick off our first horizontal well and production test the oil zone discovered previously at Alkaid #1; the second objective was to drill deeper and confirm that the deeper Alkaid anomaly was oil bearing; and the final objective was to appraise the extension of the SMD. We achieved all three of our objectives which is an outstanding result for our Company. Despite Alkaid being the smallest of Pantheon's various projects, it has now grown in importance in both size and commerciality given it is immediately adjacent to the highway and pipeline and ideally located for near term, commercial production. One of the major advantages of Pantheon's projects compared to other projects on the North Slope is its immediate proximity to the TAPS pipeline and Dalton Highway, allowing the possibility for far more rapid commercialisation and development, and massive cost savings.

For Alkaid #2, the State of Alaska granted Pantheon an initial three month test flaring permit with the ability to apply for two additional three month extensions. This allows the Company to gather the data necessary to understand the characteristics of production from that reservoir. Additionally, we will truck and sell the oil produced, generating Pantheon's first Alaskan revenues and supplementing further exploration costs.

Other post period achievements include Pantheon's admission to trade on the top tier of the OTC market in the US, the OTCQX, helping to further increase both accessibility and visibility for the Company to US investors at this key stage in our Company's journey. Additionally, in November 2022 we successfully picked up key strategic leases covering 40,000 acres in the State of Alaska's North Slope Areawide Lease Sale. We anticipate these leases will result in an upgrade to our oil in place and resource estimates in due course.

Overall, it has been an extremely positive year for Pantheon, having delivered a number of key objectives and having benefited from the endorsement from leading industry names, with one referring to Theta West as a "Word Class Petroleum System". The global focus on energy independence has strengthened our position as we enter the next financial year with Alkaid #2 currently in long term production testing and the commencement of oil sales.

The size and scale of Pantheon's oil in place and potential resource are substantial, and we believe significant in scale for any oil company. We are extremely fortunate to still have a 100% working interest in all of our projects, allowing us plenty of flexibility to, on the right terms, consider farming out an interest in one or more of our projects to fund future drilling. Our objective is to continue to prove these projects out to demonstrate to industry that we have the data to support our assessments. If we achieve this in the recent years' context of industry global underinvestment in finding new significant oil resources, then we believe an industry hungry for new supply will have great interest in Pantheon.

Phillip Gobe

Chairman

29 December 2022

PANTHEON RESOURCES PLC

CHIEF EXECUTIVE OFFICER'S STATEMENT AND OPERATIONAL REVIEW

This year to 30 June 2022 and the period beyond has been one of great progress for Pantheon. Drilling on the North Slope of Alaska presents challenges not faced in most parts of the Lower 48, such as fewer readily available service providers, limited transportation routes, fewer available spare parts and equipment. On top of this, the booming oil market saw very high demand for services and equipment, causing material price inflation across the industry, impacting time schedules. Our team has done a tremendous job overcoming operational hurdles and illustrating how we can move our assets from exploration towards production.

Our operations achieved great success this year. We have a small, but exceptional team of highly talented professionals and I am also proud to report that we achieved a 100% staff retention rate during the year, despite heavy competition for high quality industry professionals in this strong oil market. I am equally proud to report that in the male dominated oil industry, approximately 15% of our headcount are women.

Financing

In December 2021, Pantheon successfully completed a $96 million fundraise comprised of an equity raise of $41 million, priced at 65 pence per share, and a $55 million Convertible Bond, over 28% of which has already been repaid at the time of this report through the issuance of shares. This fundraise allowed Pantheon to complete its winter and spring/summer drilling and testing programmes and materially advance the projects both in terms of increasing resource potential, reducing project risk and moving us closer to becoming a production company.

Upgrade of Shelf Margin Deltaic

During the period we were pleased to complete our internal analysis and resource upgrade of the SMD-B sequence after drilling the Talitha #A well in the winter of 2021 and testing in winter 2022. Using data obtained from well logs, cores, and the Advanced Hydrocarbon System, Baker Hughes ("AHS Baker Hughes") Volatiles Analysis Service ("VAS"), Pantheon significantly upgraded its resource assessments, estimating that this zone has the potential to contain 2.6 billion barrels of Oil in Place ("OIP") and a P50 Contingent Resource (recoverable) of 404 million barrels oil ("mmbo"). The SMD-B is one of numerous oil bearing zones across our acreage position that we will continue to appraise and test.

Winter 2022 programme

With our funding secure, Pantheon was in a strong position entering the winter 2021/2022 programme, which consisted of drilling and testing the very large Basin Floor Fan complex at Theta West #1 and re-entering and testing the Talitha #A discovery well. Both of these vertical test wells were designed to collect data prior to being plugged and abandoned as is standard practice for test wells. Both wells were very successful, delivering material increases in the company's resource base. 

In January 2022, operations commenced at Talitha #A to prepare for testing, where the well had drilled to its prognosed Total Depth discovering oil in its four target horizons, LBFF, SFS, SMD and Kuparuk. The rig was then moved circa 10 miles to drill the Theta West #1 well. The two primary horizons, LBFF and UBFF (Upper Basin Floor Fan), at Theta West #1 exceeded our predrill estimates. The target horizons encountered 1,160 ft of oil bearing reservoir in a large fan complex in a vast oil resource and, we believe, confirmed Pantheon's geologic model. All zones tested during the winter 2022 programme produced high quality oil of 34-38.5 API with few impurities.

We must remember, these are vertical test wells designed with the primary to gather data and determine the potential of the reservoir and the horizon, before being plugged and abandoned. They are not designed to maximise production - this occurs in future production wells designed as long horizontals with 8,000 feet or more of the wellbore exposed to the reservoir and thus designed to achieve much higher flow rates.

Following the winter programme, Pantheon upgraded its Company estimates of oil in place across its portfolio (in which Pantheon has a 100% working interest) to 23 billion barrels of oil and 2.3 billion barrels of recoverable resource based on a modelled 10% recovery factor.

Summer/Fall 2022 Programme

The summer programme began with the construction of a gravel pad and two access roads about 20 miles south of Prudhoe Bay, along and immediately adjacent to the Dalton Highway and the Trans Alaska Pipeline System (TAPS). In July 2022, subsequent to our financial year end, after building the pad and access roads, the Nabors 105AC rig spudded the Alkaid #2 well to drill a pilot hole to (i) confirm the SMD, (ii) confirm the Alkaid anomaly ("Alkaid Anomaly") at this location and (iii) to probe the deeper Alkaid anomaly ("Alkaid Deep") previously undrilled at Alkaid #1 and drill a circa 5,000ft horizontal through the Alkaid Anomaly. The pilot hole was successful in achieving these goals, encountering over 1400 ft of oil bearing strata through these three zones. This extended our interpretation of the SMD from Talitha #A, northeast to Alkaid #2 and across the Dalton Highway. The SMD has 272 ft of oil bearing reservoir at the Alkaid #2 location. We also confirmed the Alkaid Anomaly extends over 300 ft deeper than the maximum depth drilled at Alkaid #1 circa four miles away. This lower zone has 155 ft of oil bearing reservoir. These results provided the Company with increased confidence in its subsurface modelling efficacy. These results are expected to have a significant impact on the resource potential in and around the Alkaid location where we expect an upgrade to our previous resources completed by an Independent Expert.

The Alkaid #2 well was put-on long-term production testing, initially using skid-mounted rental separation and flow back equipment and is now producing into our permanent production facility. Flow testing commenced in late November and, as of today's date, the clean-up phase of the well is ongoing. As previously announced, the flow rate is restricted by the accumulation of sand in the horizontal portion of the well bore which is not uncommon, but a nuisance, in long horizontal wells treated with multistage fracture stimulations. The remaining sand blockage which we estimate is affecting +/- 1,000 ft of the 5,300 ft horizontal section of the wellbore, has had two main impacts: (i) it reduces the flow into the production tubing limiting the contributions from the blocked areas; and (ii) the clean up phase takes longer because we must be very careful to not exacerbate the blockage by drawing in more sand. Despite this, even with the remaining partial blockage, the well is flowing without lift. Oil production began quickly in the flowback at low concentrations. At the time of writing, and despite being in the early stages of flowback, and despite the estimated 1,000 ft of sand blockage, the well is producing over 500 barrels per day of liquid hydrocarbons, comprising c.200 barrels of oil per day along with 300-350 BPD of Natural Gas Liquids ("NGL's") and condensate and over 2.5 mmcfpd gas.

Alkaid #2 is showing encouraging signs, clearly evidencing that we have encountered a very significant hydrocarbon system. However, a definitive assessment (of this or any well) cannot be made until flow testing is completed. We believe we need to observe the flow rates when the well clean-up phase is +/- 60% completed in order to make an accurate determination of this well, yet we estimate the well is less than c.40% cleaned up. When the sand blockage occurred, the lack of availability of a winterised workover rig to perform the relatively straightforward procedure to remove the production tubing meant that we used a less effective and more time consuming procedure using a Coiled Tubing Unit ("CTU") to try to clear the blockage. Whilst the CTU cleared much of the blockage, as explained above, the remaining blockage has limited how we test the well and thus slowed the clean-up process. With the correct equipment, removing the sand and cleaning the well is a simple operation, and I am pleased to advise that we have finally located a rig and intend to remove the tubing to fully clear the blockage in January. This is an excellent outcome as it will allow us to assess the full well potential and the clean-up phase should occur much faster, unhindered by the limitations of the blockage.

A more detailed discussion on Alkaid #2 can be found in a separate, Alkaid #2 specific RNS announced on 30 December, 2022.

Schlumberger Report

In a project spanning over 6 months, Schlumberger has completed a comprehensive reservoir model of Pantheon's 100% owned projects, estimating the reservoirs contain 17.8bn bbls net oil in place. Schlumberger's oil in place estimates for Theta West were constrained to the projects 3D footprint with more conservative reservoir parameters than Pantheon's at the lease boundaries. In the next project phase, Schlumberger will work on recovery factors, and reservoir performance. Pantheon has estimated a 10% recovery factor in its own modelling. The Schlumberger Report outlined conclusions from a detailed reservoir modelling analysis commissioned by Pantheon and does not constitute a formal Independent Expert Report. We expect to commission a separate Independent Expert Report in due course which will use the Schlumberger work. The primary objective of the Schlumberger analysis is to provide a static and dynamic models for analysis and form a key component of the Company's data room, allowing potential farm-in partners to manipulate the modelled data to their needs.

2023 programme

The Company will await results from Alkaid #2 before making decisions on a 2023 program. Pantheon is constantly evaluating a host of exciting opportunities as we generate more information from several areas including our own operations at Alkaid, technical information from the recent and ongoing Schlumberger analysis across our total acreage, and assessing the results and impact, if any, of other operators drilling in the immediate area. It is prudent that we await the outcome of the Alkaid #2 production test before making final decisions on our next wells given the information gained will be of great importance to our planning, to minimise risk and to maximise chance of success. The confirmation of oil in the SMD (and its extension eastwards) and the deeper oil discovered at Alkaid #2, in addition to the great success at Theta West #1 and Talitha B, have added a new dimension of upside potential to our portfolio. The location of this new upside is of particular importance given we have the advantage of being able to undertake some of these activities outside of the normal winter drilling season, hence we have time to make more informed decisions on future operations and have the opportunity to be active at any time of the year.

Our current goals, subject to funding, are to drill another well addressing the substantial upside of the new oil formations in the Alkaid anomaly and the SMD, with the potential of completing a successful well as an additional producer, and to drill a high impact Theta West target, updip from our 2022 discovery. Recently we have formulated plans to target the SMD through directional drilling from the existing Alkaid pad. This offers several significant advantages over the proposed Talitha #B location to assess the same target, including (i) the ability to drill year round, eliminating the requirement to complete works by close of the winter season, (ii) drilling from the Alkaid #2 pad allows the possibility to undertake long term production testing on the SMD which would not be possible from a location drilled from an ice pad where testing is limited by the length of the winter season, and (iii) rather than plugging and abandoning the well as is typical after a winter test well, we can complete it for production in a success case or, subject to relevant approvals, possibly convert it to a gas and water disposal well. This offers tremendous advantages, allowing wells on the pad, such as Alkaid #2 (and future wells), to produce year round without the constraints of gas flaring as well reducing disposal costs. The ability to leverage our recently commissioned production facility to produce and sell oil while testing the significant upside that exists within the immediate Alkaid area presents a compelling opportunity.

The SMD formation can be tested in a superior location to Talitha #A, Alkaid #1 and #2, most likely south of the Pipeline State #1 well drilled by ARCO in the late 1980's. In recent weeks, a subsidiary of 88 Energy has confirmed plans to drill their Hickory well, targeting a southern extension of the SMD, south of our southern most lease line, in a downdip location, which will provide valuable information in appraising the southern extent of the SMD. Like Alkaid, the SMD is advantageously located near to road and pipeline infrastructure. We estimate the combination of Alkaid deep, Phecda and the extension of the SMD offers potential for 500 MMBO recoverable resource Pantheon can access virtually under the highway and TAPS pipeline. In a success case, this is of major commercial value with phased near term production opportunities.

We have also identified an excellent drilling location to appraise the enormous Theta West accumulation which is our large basin floor fan oil discovery and the largest project in our portfolio. The location is significantly updip from the two wells that have penetrated this fan complex and hence we expect further reservoir improvements. Pantheon recently secured additional acreage incorporating the discovery area and hopes to make an impactful Theta West updip appraisal well a key feature in any farmout discussions.

Opening of data room

At the same time Pantheon intends to reopen our data room to pursue potential farm out opportunities to fund, and hopefully, accelerate appraisal and development of our projects. Following the comprehensive reservoir modelling project completed by Schlumberger, together with the enormous volume of data gained from the Talitha #A, Theta West #1 and Alkaid #2 wells, our data room has never been as comprehensive. We are extremely fortunate to have maintained a 100% working interest in all of our projects, allowing us great flexibility, at the right terms, to structure a deal on one or more of our projects by having a third party fund drilling in exchange for a working interest. Despite not being formally open, interest has already been expressed in the project(s), although there can be no guarantee that a transaction will be completed on terms acceptable to Pantheon.

Summary

I am extremely happy with the significant progress that Pantheon made since the commencement of the financial year as we transition from exploration to production. The drilling success confirmed our belief that we have an enormous petroleum system on our 100% 153,000 leasehold acres. Drilling data and analysis led management to estimate 23 billion barrels of oil in place and 2.3 billion barrels of recoverable oil on Pantheon acreage. I am also very proud to have endorsements from recognised third party experts with AHS Baker Hughes labelling our largest project, Theta West, as a 'World Class Petroleum System" and in recent weeks Schlumberger, the world's largest oil services provider, estimated our projects contain 17.8 billion barrels of oil in place. We are confident in the commercial potential of our world class portfolio and will engage in further testing to demonstrate this. With the unique location of the assets in terms of accessibility to the Dalton Highway and Trans Alaska Pipeline, the management team are excited as we move into 2023. As ever, we are grateful to our shareholders for their ongoing support and look forward to updating the market as we enter the next phase in our journey.

Jay Cheatham

Chief Executive Officer

29 December 2022

SECTION 172 STATEMENT

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 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:

Finally, to you, our shareholders, thank you for your trust, belief and support in what has been a year of great achievement 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 29 December 2022 and signed on its behalf.

Jay CheathamChief Executive Officer

29 December 2022

FINANCE DIRECTOR'S REPORT

Financial Review

The Group made a loss from Continuing Operations after Taxation for the financial year ended 30 June 2022 of $13.95m (2021: loss $6.7m). The major component of this loss was an $8.3m non-cash expense relating to the theoretical Black & Scholes calculated cost of share based payments.

During the year the Company completed a refinancing through the issuance of a $55m convertible bond and a $41m equity fundraising which was completed at a price £0.65 per share. The convertible bond is for a 5 year term, repayable in quarterly instalments in cash or shares and carries an interest coupon of 4% per annum. A summary of the key bond terms is provided at note 17.

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 December 2021 and issued 47,637,583 new fully paid ordinary shares with a nominal value of £0.01, raising approximately $41m before expenses at an issue price of 65 pence per share. An addition amount of 580,946 new ordinary shares were issued in settlement of placing fees.

A summary of movements in Capital Structure is provided at Note 19.

As at 30 June 2022 the total shares in issue was 767,705,537 (2021: 659,368,196).

During the year the Company made share options grants to staff under the Discretionary Share Option Plan (the "Scheme"). The Company approved an annual grant of share options with respect of the past financial year of up to 21.7m share options; these options have an exercise price of 67.1 pence and expire 10 years after issue.

As at 30 June 2022 the Company had 4,803,921 warrants outstanding to acquire non-voting convertible shares (2021: 9,607,843). The warrants have an exercise price of £0.30 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 2022 the Company had 50,160,000 options outstanding to acquire ordinary shares (2021: 38,355,000) at an average exercise price of 46.3 pence per share At year end 28,455,000 share options were fully vested and 21,705,000 were un-vested.

Going concern

The Directors have reviewed the Group's overall position and are of the opinion that the Group is able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements. The Directors have prepared 12 month cash flow forecasts which take account of the current cost and operational structure of the Group, as well as the current commitments and budgeted capital expenditure commitments.

The Group has no contractual obligation to drill any future wells and has sufficient cash on hand to operate as a going concern for at least the next twelve months from the date of approval of these financial statements. Pantheon's only obligation is the future plug and abandonment (P&A) of the Talitha #A test well, the cost of which has already been provided for in the financial accounts. The Company has however applied to the regulator for a 12 month extension and awaits a response. Ideally the Company will P&A the well when it drills another well in the area to benefit from using the ice or snow road for that new well and thus minimising additional cost. Additionally, the Company can, at its election, make convertible loan repayments in shares rather than cash.

As previously announced, the Company had a successful operational campaign since 1 July 2021, encountering oil in all three wells drilled and/or tested/testing by the Group including Theta West #1, Talitha #A and Alkaid #2. The data and analysis from drilling and testing activities resulted in material increases to Company estimates for both Oil in Place and recoverable resource. The Company intends to complete either a farmout and/or other funding arrangement in the first half of 2023 to have sufficient resources for the anticipated 2023 drilling and testing campaign and for ongoing working capital.

The Directors have assessed in the cash flow forecasts the impacts of increased overhead and operating costs, differing oil and gas prices and increased capital expenditure costs. These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of at least 12 months from the date of approval of these financial statements. 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 credit of $2.0m (2021: $1.6m). 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 14.

Liquidity Risk

As the Company did not generate material revenue from hydrocarbon production during the year, the primary liquidity risk is the ability to adequately source sufficient funding to meet the Company's working capital requirements. Funding availability, and hence risk, within the capital markets remains volatile as a result of continued global economic uncertainty.

Oil & Gas Price Risk

Future oil and gas sales revenues are subject to the volatility of the underlying commodity prices throughout the year. Over the past year 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. Credit assessments are routinely reviewed on all of the Group's joint venture partners and other counterparties.

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

29 December 2022

STRATEGIC REPORT

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 9 to these accounts.

Review of the Business and Key Performance Indicators

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. In 2020 Pantheon was awarded Units on the Alkaid and Talitha projects and has been an active participant in the annual lease sales over recent years, significantly strengthening Pantheon's lease portfolio. The 40,000 leases successfully bid for in the November 2022 have a 10-year life, $10 per acre rentals and low royalties of between 12.5% - 16.7% to the State of Alaska.

The Group may be unable to renew and/or extend its leases once they expire

The Group's lease agreements contain terms whereby the lease may be terminated if the Group does not fulfil certain obligations. These obligations include conducting exploration and/or production activities. If the Group is unable to satisfy these conditions on a timely basis, it may lose its rights in these properties. 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 capital requirements as per the terms of the leases. If the Group is unable to meet its obligations under the terms of its leases, 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 unitization for the leases that comprise its Talitha and Alkaid projects. Unitization recognizes that the Group has established, to the State's satisfaction, that all or part of multiple potential hydrocarbon accumulations are included in the unit areas to allow the leases to potentially be held beyond the initial lease term. Most of Pantheon's lease position is now covered by these units or leases of between c.7 years or more of remaining life. Management has materially reduced the risk of lease expiry.

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 who have successfully 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 of 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 the light of the current regulatory environment and probable future changes to the regulatory regime. In 2021 the federal government has adopted a more cautionary position with respect to operations on federal land, notably with respect to ConocoPhillips' Willow project. Pantheon's projects are all located on state, not federal land, and so has 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 proceedings.

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 upgrading, 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.

COVID, Supply chain and inflationary risk

The impact of the Covid-19 pandemic on global supply chains is a well-documented phenomenon which has affected many industries globally, including the oil and gas sector. This has been exacerbated by the Russia/Ukraine conflict and the high oil and gas prices which resulted in high demand for equipment, service providers and materials. Additionally, services and materials costs have experienced very high inflation. As a result, the lead times, availability and costs for the equipment and consumables required for drilling in Alaska have increased over the last 12 months. To manage this risk it is important that key equipment and materials are ordered on a timely basis so as to minimise the potential for supply chain disruption to drilling operations, and that well operations are carefully planned, to try to minimise cost inflation where possible.

By order of the board.

Justin Hondris

Director

29 December 2022

DIRECTORS' REPORT

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 2022.

Results

The Group results for the period are set out on page 34. The Directors do not propose to recommend any distribution by way of a dividend for the year ended 30 June 2022.

Future Developments

As explained in the CEO and Chairman's reports, the Group is, subsequent to year end, undertaking long term production testing at the Alkaid #2 well as the first step towards fulfilling its objective of becoming a producer. Oil produced from long term production testing will be sold.

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 9 and 19 to these accounts.

Directors

The Directors who served at any time during the year were:

Directors' interests

The beneficial and non-beneficial interests in the Company's shares of the Directors and their families were as follows:

(1) Some of these ordinary shares are beneficially owned by the spouse of J Hondris.

(2) In addition to Mr. Rosenthal's direct holding, he also holds an indirect interest through an approximate 2.8% interest in Ursa Major Holdings LLC ("UMH"). UMH holds approximately 17.5 million ordinary shares and approximately 4.8 million warrants exercisable into non-voting shares (convertible into ordinary shares on a 1:1 basis) in the Company with an exercise price of £0.30 per share.

(3) 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 673,821 ordinary shares of Pantheon and holds approximately 5.2% interest in Ursa Major Holdings LLC ("UMH"). UMH holds approximately 17.5 million ordinary shares and approximately 4.8 million warrants exercisable into non-voting shares (convertible into ordinary shares on a 1:1 basis) in the Company with an exercise price of £0.30 per share.

Share options and restricted stock units

The Directors held the following share options for Ordinary shares of £0.01, at the beginning and end of the year:

1. Comprising a combination of previously vested share options granted in 2014, 2020 and 2021.

2. Granted 2022. Exercise price £0.671, Expire January 2027. 50% vested at 30 June 2022. 50% to vest in January 2023.

3. Phillip Gobe has been granted 290,000 Restricted Stock Units ("RSU's"). The RSU's vest in January 2023 and will convert on a 1 for 1 basis into ordinary shares. Phillip Gobe has zero 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

(1) J Hondris realised a gain of $265,770 on the exercise and sale of share options, which was fully taxable as income and not Capital Gains Tax.

Director incentive scheme

In 2012 the Company implemented a short-term executive director incentive scheme (the "scheme") developed in conjunction with executive remuneration specialists at Deloitte LLP. Any incentive bonus resulting from the scheme will be shared by executive Directors and will be calculated as 2.25% of the value of "net-booked reserves" for a period (deducting any net-booked reserves recognized in earlier periods for this purpose). For the purposes of the scheme, net-booked reserves will include 100% of proved reserves and 25% of probable reserves booked to the Group, as determined by an independent third party, where relevant, in accordance with the classification definitions as mandated by the Society of Petroleum Engineers.

The remuneration committee will determine the extent to which any annual bonus resulting from the scheme will be settled in cash or share options with a discounted exercise price. The cash component will be at least one third of the total and there is no obligation to pay any of the annual bonus by way of share options. In the event of a sale of the Company or other change of control, the calculation will be undertaken by reference to the equity value of the Company (less the value of net booked reserves recognized in earlier periods). The remuneration committee believed that the scheme, together with the granting of share options, provides an appropriate and reasonable structure to reward and motivate the executive Directors for performance that is aligned to the interests of shareholders and provides a balance of long-term and short-term performance measurement. Any potential benefit from the scheme is linked to the booking of net-booked reserves, which is considered to be a key milestone reflecting potential "value add" for the benefit of shareholders. The value of share options is directly linked to the longer-term share price performance and is therefore, also considered to be a suitable metric as a basis for executive remuneration.

Given the fact that the Group's executive team has grown and asset base has grown, the directors regard that evaluating the current plan consistently with the new circumstances is appropriate, and should consider other members of management participating, in addition to executive directors. The scheme is currently under review and is anticipated to be updated. Any review/restructuring would include consultation with the remuneration experts at Deloitte LLP and/or USA based independent remuneration consultants. No awards have been paid from this scheme since inception in 2012.

Share Option Plan

The Company has in place a Share Option Plan (the "Plan") 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. The Plan comprises two components: (i) a previously granted initial award of up to 13.7m share options which were granted at a premium of 93% above the prevailing share price at the time of grant and (ii) annual grants of share options to be issued subsequent to financial year end, at the prevailing share price, in respect of the respective financial year reported upon.

In respect of this annual component, on 14 January 2022 Pantheon announced its intention to award 21.7m share options representing c.2.8% of its ordinary share capital to directors and all staff under the Company's Share Option Plan at an exercise price of 67.1 pence. 50% of these options have vested with the remaining 50% due to vest on the 24 January 2023.

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 28

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 20 December 2022:

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. The Company sets out below its annual 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 organisation that is focused on maximising the potential returns to shareholders through carefully targeted exploration, appraisal and where relevant, 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 seeks to keep corporate overhead costs to a minimum, whilst balancing the need to hire and retain the best personnel and advisors to 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.

The Board of Directors participate 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.

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 'News and Media' 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 utilises 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. Since the onset of COVID, the AGM has been held virtually, with a detailed investor presentation and Q&A session held by a separate webinar. Additionally, the Company has also commenced holding webinars, as and when relevant, open to all shareholders, typically 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, 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 10.

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

The Board has weekly conference calls to discuss, amongst other items, operations, key risks, and other relevant matters. The Company's NOMAD also attend the weekly conference calls. 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 10 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. An internal audit function is not considered necessary or practical 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 reviewed annually by the Audit Committee of the Board.

The Board

The Board currently comprises two non-executive Directors, one of whom is the independent Chairman, and three executive Directors. The independent Company Secretary is a partner in a law firm who is a specialist in providing company secretarial services to listed companies. Although this composition is considered by the Board to be an appropriate balance given the Group's current size to date, the Board is considering the appointment of an additional independent non-executive director. 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 matters and report to shareholders. 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.

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 non-executive Chairman, Phillip Gobe, is currently considered to be independent.

The Board has a number of committees as explained below.

Audit Committee

The Audit Committee consists of Phillip Gobe as Chairman, Jay Cheatham and Jeremy Brest. 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. 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.

Remuneration & Nominations Committee

The Remuneration and Nomination Committee consist of Phillip Gobe as Chairman, Jeremy Brest, Jay Cheatham and Justin Hondris. 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. It also has the responsibility for reviewing the performance of the executive Directors and for oversight of the Company's incentive schemes. No Director is involved in deciding their own remuneration. 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.

Conflicts Committee

The Company has established a Conflicts Committee which consists of Phillip Gobe as Chairman, Jeremy Brest, Justin Hondris and Jay Cheatham. 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. This committee consists of Justin Hondris as Chairman, Jeremy Brest, Jay Cheatham and Phillip Gobe. 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 Company recognises that it currently has a limited diversity, including a lack of gender balance, particularly at board level, and this will be considered in future recruitment decisions if the board decides that additional directors are required. The board is currently considering the appointment of an additional independent non executive director.

EVALUATING BOARD PERFORMANCE

Given the Company's current size, the Board has not considered it necessary to undertake a formal assessment of the Board performance and effectiveness, however, any deficiencies in Board performance and effectiveness would be identified on an ad hoc basis. The board contracts the executive remuneration specialist 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 quality system 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.

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 entire board and its NOMAD where significant matters are tabled and discussed. 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. 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.

COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS

Page 10 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 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:

a) there is no relevant audit information of which the Company's auditors are unaware; and

b) 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

29 December 2022

DIRECTORS' BIOGRAPHIES

Phillip Gobe, Non Executive Chairman

Phillip Gobe has over 40 years' experience in the oil and gas business both in the USA and internationally. He is also Chairman (and former CEO) of ProPetro, a Texas-based oil field services provider in the pressure pumping space, which includes hydraulic fracturing services and cementing, as well as completion services including wireline. Phillip has held senior positions in Energy Partners Ltd (President & COO), Nuevo Energy Co. (COO), Vastar Resources (COO) and several senior positions with Atlantic Richfield Company, including a role as Operations Manager of Prudhoe Bay in Alaska, the largest oilfield in the USA. Throughout his career Phillip has successfully overseen several corporate exits at substantial premiums to pre-deal valuations. Phillip also has a background in drilling, human resources and health and safety. He is currently a non-executive director of the S&P 500 company, Pioneer Natural Resources and was previously a director of Scientific Drilling International Inc, the USA's fifth largest provider of directional drilling and measurement equipment and operational services. Phillip acts as Chairman of Pantheon's Remuneration and Nominations Committee, Audit Committee and Conflicts Committee. Phillip is also a member of the Companies Anti-Corruption and Bribery Committee.

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 acts as Chairman of Pantheon's Anti-Corruption and Bribery Committee and is a member of the Remuneration and Nominations 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.

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 a member of the Company's Audit Committee, Remuneration and Nominations Committee, Conflicts Committee and Anti-Corruption and Bribery Committee.

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF PANTHEON RESOURCES PLC

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 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent 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 2022 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.

Conclusions relating to going concern

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 reviewing the group's budgets and cash flow forecasts for the period ending 31 December 2023 and challenging the assumptions used in their preparation. Our work included comparing these forecasts to actual results, carrying out a sensitivity analysis on the key inputs to the forecast and considering whether any significant events have taken place since the year end that have an impact upon going concern.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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 groups exploration activities. We applied a threshold of 2% of the net assets to both the Group and company.

Whilst materiality applied to the group financial statements was $4,790,000, each significant component of the group was audited to a lower level of materiality. The parent company materiality was $4,395,000 with the other significant components being audited to a materiality of $2,194,000. These materiality levels were used to determine the financial statement areas that are included within the scope of our audit work and the extent of sample sizes during the audit.

Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds headline materiality. Performance materiality was set at 75% of the above materiality levels for both group and parent company, equating to $3,592,500 and $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 $239,500 for the financial statements as a whole and $219,700 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 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. Other assessed risks included the accounting and disclosure of decommissioning provision, accounting for share based payments, contingent liabilities, related parties and opening balances.

The accounting records of the parent company and all subsidiary undertakings are centrally located and audited by us based upon group, parent 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.

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 listing rules;

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  Enquiries of management

o  Review of Legal expenses

o  Review of minutes and legal correspondence

o  Review of RNS announcements.

· We also identified the risks of material misstatement of the financial statements due to fraud at both the group and parent company level. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, the potential for management bias was identified in relation to the carrying value of exploration assets and we addressed this as outlined in the Key audit matters section.

· As in all of our audits, 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 subsidiary 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.

Daniel Hutson (Senior Statutory Auditor) 15 Westferry Circus

For and on behalf of PKF Littlejohn LLP Canary Wharf

Statutory Auditor London E14 4HD

29 December 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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 AND COMPANY STATEMENTS OF CHANGES IN EQUITY

COMPANY STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors and authorised for issue on the 29 December 2022 and signed on its behalf by

Justin Hondris

Director

Company Number 05385506

COMPANY STATEMENT OF FINANCIAL POSITION

In accordance with the provisions of Section 408 of the Companies Act 2006, the Company has not presented an income statement. A loss for the year ended 30 June 2022 of $11,963,260 (2021: loss of $5,503,380) has been included in the consolidated income statement.

The financial statements were approved by the Board of Directors and authorised for issue on 29 December 2022 and signed on its behalf by:

Justin Hondris

Director

Company Number 05385506

CONSOLIDATED STATEMENT OF CASH FLOWS

COMPANY STATEMENT OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

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 ("IAS's") and in accordance with the provisions of the Companies Act 2006.

The Group's financial statements for the year ended 30 June 2022 were authorised for issue by the Board of Directors on 29 December 2022 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 balance date. The Company intends to open its data room to consider a farm out of an interest in its project(s) and this occurs then joint interest accounting will be applicable in future periods.

1.4 Going concern

The Directors have reviewed the Group's overall position and are of the opinion that the Group is able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements. The Directors have prepared 12 month cash flow forecasts which take account of the current cost and operational structure of the Group, as well as the current commitments and budgeted capital expenditure commitments.

The Group has no contractual obligation to drill any future wells and has sufficient cash on hand to operate as a going concern for at least the next twelve months from the date of approval of these financial statements. Pantheon's only committed obligation is the future plug and abandonment of the Talitha #A test well, the cost of which has already been provided for in the financial accounts. The Company has applied to the regulator for a 12 month extension to allow it sufficient time to analyse the data from the Alkaid #2 well and awaits a response. Ideally the Company will plug and abandon Talitha #A when it drills another well in the area, such as Talitha #B, to benefit from using the ice or snow road for that new well and not incurring additional cost. Additionally, it is prudent to analyse the data from Alkaid #2 before making final drilling decisions on Talitha #B.

As previously announced, the Company had a successful operational campaign since the beginning of the financial year, encountering oil in all three wells drilled and/or tested by the Group including Theta West #1, Talitha #A and Alkaid #2. The data and analysis from drilling and testing activities resulted in material increases to Company estimates for Oil and Place and recoverable resource. Additionally, in December 2022, Schlumberger estimated 17.8 billion barrels of oil in place in Pantheon's projects. The Company intends to complete either a farmout and/or funding in the first half of 2023 in order to fund an active 2023 drilling and testing campaign and for ongoing working capital. The Company has sufficient cash on hand to fund certain operations in the forthcoming 12 months, but would likely require additional capital through a farmout or other funding, in order to drill new wells requiring ice roads on a 100% basis. The data room, including the Schlumberger dynamic model, is currently being finalised to be open in the new year for potential farminees.

The Directors have assessed in the cash flow forecasts the impacts of increased overhead and operating costs, differing oil and gas prices and increased capital expenditure costs. These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of at least 12 months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

1.5 Revenue

The Group is engaged in the business of extracting oil and gas but was pre revenue at year end, however post year end has commenced oil sales during testing at Alkaid #2. 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 are presented in US Dollars ("$"), which is the functional currency of the Company and is the Group's presentation currency.

(ii) Transactions and balances

Transactions in foreign currencies are translated into US dollars at the average exchange rate for the year. 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, liabilities and the results of the foreign subsidiary undertakings are translated into US dollars at the rates of exchange ruling at the year end. Exchange differences resulting from the retranslation of net investments in subsidiary undertakings 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 2022 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 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 embedded in it a derivative. 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 using Monte Carlo analysis, 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.

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.

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 indictor 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.

Contingent liabilities

Pursuant to IAS37, 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.

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.

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.

During the year the Company made share options grants to staff under the Discretionary Share Option Plan (the "Scheme"). The Company approved an annual grant of share options with respect of the past financial year of up to 21.7m share options; these options have an exercise price of 67.1 pence and expire 5 years after issue.

1.16 Discontinued operation

A discontinued operation is a component of the company's business (i.e., the operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company). It also represents a separate major line of business or geographical area of operations,or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.

2. Loss per share

The total loss per ordinary share from continuing operations for the group is 1.93 US cents (2021: 1.17 US cents - loss). The loss is calculated by dividing the loss for the year from continuing operations by the weighted average number of ordinary shares in issue of 724,563,153 (2021: 568,432,240).

The diluted profit per share has been kept the same as the basic profit per share because, although the 54,963,921 options and warrants in issue were in the money as at 30 June 2022, 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 779,527,074 (2021: 616,395,083).

3. Discontinued Operations & Disposal of interest in East Texas

During a previous year the Group exited its East Texas portfolio entirely, reflecting the previously announced strategic decision of the Group to prioritise its Alaska North Slope asset portfolio, given the significantly larger size, scale and resource potential. Accordingly, the Group had previously fully impaired the carrying value of the East Texas properties. In February 2021, Pantheon formally exited East Texas with the transfer of 100% of the Group's interests in both Polk and Tyler Counties to Neches Transport, a local operator. The consideration for the sale was in the form of an agreement were the acquirer legally assumed the plug and abandonment liabilities of the East Texas Acreage.

As a result of exiting East Texas, and in accordance with UK adopted IAS, the expenses for the East Texas Operation were reclassified to "Discontinued Operations" during the prior year.

4. Segmental information

The Group's activities involve the exploration for oil and gas. There are two reportable operating segments: USA (Alaska) and Head Office. The previous year included a segment for USA (Texas); this was discontinued in December 2020. Non-current assets, and operating liabilities are attributable to the USA, 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 2022.

Year ended 30 June 2022

 Year ended 30 June 2021

5. Operating loss

6. Employment costs

The employee costs of the Group, including Directors' remuneration, are as follows:

The summary of the directors' remuneration is shown in the directors' report on Page 19.

7. Interest receivable

8. Taxation

Factors that may affect future tax charges

The Group's deferred tax assets and liabilities as at 30 June 2022 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 $125.5m (2021: $114.8m) 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 $16m (2021: $13m). 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 2022 is 1,683,403 (2021: 3,705,737).

9. Subsidiary entities

The Company currently has the following wholly owned subsidiaries:

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.

10. Trade and other receivables