30th Mar 2016 10:02
LONDON (Alliance News) - Pantheon Resources PLC Wednesday said it is expecting to receive its first meaningful chunk of revenue imminently as it heads into its fully funded drilling programme in the US in search of more gas.
The oil and gas company involved in projects within Texas in the US said its pretax loss in the six months to the end of 2015 amounted to GBP439,613 compared to the GBP612,005 loss reported a year earlier.
That was mainly the result of share-based payments dropping to GBP53,812 in the first half of the current financial year from the GBP215,250 paid the year before, alongside a small reduction in administrative costs.
Revenue remained negligible in the period, but that is not expected to last for much longer.
Pantheon holds a 50% working interest in several projects spread across the Tyler and Polk Counties of East Texas, and was involved in the successful drilling of two discovery wells during the period.
The VOBM-1 well in Polk County encountered 62.0 feet of net pay and delivered a production rate of around 1,500 barrels of oil equivalent per day under flowtest conditions whilst the VOS-1 well in Tyler County perforated 107.0 to 270.0 feet of net sandstone containing hydrocarbons, producing a flow rate of around 750 barrels of oil equivalent per day.
Pantheon said first revenue from commercial production derived from VOBM-1 is expected in the second quarter, and said it is currently finalising agreements for the processing and sale of natural gas from that well and future wells in the area.
Pantheon will also begin fracture stimulating the VOS-1 well once it has secured the required equipment in the hope it can complete that in tandem with the upcoming drilling programme, which is also expected to begin in the second quarter.
Pantheon believes the flow rates from VOS-1 can tripled by applying a standard fracture stimulation on the well, implying the company is aiming to achieve a flow rate in the region of 2,250 barrels of oil equivalent per day.
The planned drill programme will be comprised of three wells, with the first two being drilled on Polk County followed by a third on Tyler. The first well will be drilled in April and will be a horizontal step-out from VOBM-1. Pantheon said drilling a horizontal well should allow the company to recover between two to three times more oil than if it drilled a vertical well.
The second well will then be a step-out from the first well and the last well will be a step-out appraisal well in LP2 Offset Discovery in Tyler County.
"Now fully funded to actively develop and exploit our acreage position, the company intends to take advantage of the current low cost environment and commence the next stage of our promising drilling programme into 2016. We will also look for opportunistic additions to our acreage position if/where appropriate," said Chief Executive Jay Cheatham.
At the end of 2015, Pantheon's cash balance had dwindled to only GBP124,916 from the GBP6.9 million reported at the end of 2014 and from the GBP5.3 million at the end of June 2015.
However, since the start of this year, Pantheon has raised USD30.0 million after issuing almost 18.4 million new shares in the company earlier this month at a 13% discounted price of 115.0 pence each. That was considerably more than the USD25.0 million the company was aiming to raise.
Of that USD30.0 million, Pantheon will spend USD8.5 million on drilling the three wells planned under the upcoming drilling programme whilst another USD1.0 million will be spent on re-fracking VOS-1 in an attempt to increase flow rates.
Additional exploration and development drilling across its portfolio will cost a further USD8.0 million, and another USD4.0 million will be spent to purchase more land in the US to consolidate its portfolio with its joint venture partners. Another USD1.0 million of the proceeds will be swallowed up by joint venture payments, taking the total expenditure of all that work up to USD22.5 million.
Pantheon previously said remaining proceeds would be used for working capital and "deal expenses".
Pantheon shares were trading down 4.1% to 129.93 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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