In the period since the last Annual General Meeting Pantheon Resources has evolved significantly and positively. The past 12 months have put the company on an improved footing, despite a non-commercial well in the deeper sections of Plum Deep on Padre Island.
A nine well drilling program since the IPO has yielded six discoveries. Three of these were made since the last AGM, including the two most significant; Wilson and Dunn Deep #2. These two were brought on-stream within the last six months. This has led to Pantheon's net production on a working interest basis rising sharply from around 80 thousand cubic feet a day (mcfd) at end June to over one million cubic feet a day (mmcfd) at year end. Production for the October to December 2007 period averaged 1,091 mmcfd.
Pantheon faces an active and exciting drilling program over the next six to twelve months. The company is currently drilling a high-impact oil and gas prospect in South Louisiana on the Nottoway Prospect. Pantheon also has a further two high impact prospects at Bullseye and Point Clair, both located in South Louisiana. In 2008 these three wells will test a P-50 reserve potential of around 5 million barrels of oil equivalent (mmboe) on a WI basis. In view of these and other opportunities, Pantheon has decided against participating in the drilling of the Manzano prospect. Review of the overall commercial terms and the known increase in risk profile compared with these other opportunities are the key factors behind this decision.
Financially, since the financial year-end Pantheon has raised 900,000 eur by way of a placing of 1.5 million shares. The proceeds from this placing, together with revenues from the company's production, should provide Pantheon with the funds to carry the company through its drilling commitments.
Pantheon has not escaped from the trends besetting the oil and gas industry over this past year. For Pantheon, for example, both the drilling and analysis of the Plum Deep prospect proved costly. A significant part of the doubling of costs resulted from the need to core the deeper section to determine commerciality. The well may have pay in the shallower section. Unfortunately, the testing of this section has been continually deferred by the operator due to drilling commitments on other wells.
Pantheon is obviously disappointed by the slow progress of the drilling of the Fay Weil Ross #1 well on the Nottoway prospect. Petro-Hunt LLC, the operator has a program to sidetrack and drill to total depth. Pantheon remains optimistic and committed to this project and the follow up well on a different lower risk prospect, Point Clair.
The Board is excited about Pantheon's prospects for growth based on its current drilling programme, prospect inventory, and management.
"Good exploration prospects and reservoirs along with good management and judgement lead to wealth creation. There's no business with the leverage and excitement of this one," said Jay Cheatham, Pantheon's CEO.
"I know as shareholders you all want Pantheon to drill the wells as predicted. This just isn't possible in an industry where so many things can go wrong," he said. "The tight rig market also adds a complexity to well timing. For instance once we had drilled Plum Deep which took longer than planned, all the wells scheduled for that particular rig were delayed by that same time."
"Pantheon has several high impact prospects in the portfolio," Cheatham continued. "However, I didn't join to run a company with a £10mln or even £20mln market capitalisation. The Board and I are already developing a plan to grow significantly the company."
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