Pantheon Resources Plc

AIM-listed Pantheon Resources Plc (LON: PANR) is a UK based energy Company, which is involved in the exploration of oil and gas projects. It has onshore projects in the East Texas and North Slope of Alaska. In North Slope of Alaska, the working interest of PANR is 89.2% to 100% along with working interest in Tyler & Polk Counties in East Texas.

Financial Highlights (H1 FY2020)

On 20 March 2020, the Company provided interim results (unaudited) for the six months ended 31 December 2019. Reported revenue stood at around US$78 thousand in H1 FY20, which was down from US$357 thousand in H1 FY19. The gross loss stood at US$0.3 million, and the operating loss was reported at US$2.8 million. The loss for the first half of 2020 increased to US$2.2 million from loss of US$1.3 million due to the acquisition of Great Bear. As on 18 March 2020, the Group had cash of US$6.1 million. In the first half of 2020, Pantheon surged the stake from 75% to 100% in Greater Alkaid oil discovery. In January 2020, over 1 billion barrels of oil in place (OIP) was estimated at Theta West and Leonis. It acquired 25% working interest from Halliburton.

The Group completed the analysis of shallowest of the three zones at the Talitha project. The Shelf Margin Deltaic horizon is projected to have 1.8 billion barrels of OIP. A total of 2.6 billion barrels of OIP was previously estimated for all three horizons. The development of the project is estimated to yield NPV of US$5.75 per barrel and a total NPV10 of US$2 billion with a 55% internal rate of return.

Share Price Performance

 
1-Year Chart as of 13 August 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Pantheon Resources Plc’s shares were closed at GBX 23.00 on 13 August 2020, up by 5.26% against the last day closing price. Stock 52 week High and Low were GBX 24.45 and GBX 6.52, respectively.

From the technical standpoint, 14-day RSI is currently moving towards the overbought zone, which means there is a potential for a short-term correction in the stock price.

Key Risks

The performance of the Group is dependent on the production, which may be delayed due to the Covid-19 outbreak. The volatile demand and supply conditions can adversely impact the commodity prices, and thus, the Group’s profitability. Moreover, the delay in the delivery of material and equipment can lead to a higher cost of production.

Conclusion

The Group is watchful of the fall in oil prices and operational constraints on business due to the COVID-19 mayhem; however, it believes that the oil prices would recover. PANR is seeking farm-in partner for the exploration of the Alaskan projects. It expects upfront cash contribution and funding of drilling costs from the farm in partners. The Group does not have any debt on the balance sheet. The profitability margins have remained in the negative zone for the period. The Group operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors.

The Group’s P/E, P/CF and EV/EBITDA multiples are in negative zone as compared to the industry multiple. Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited.

Based on the above rationale, we have given a “Watch” stance on Pantheon Resources at the closing market price of GBX 23.00 (as on 13 August 2020), while we look for any upcoming catalysts in the near term.

Petro Matad Ltd – Operating with Low Cost Opportunities

Petro Matad Ltd (LON: MATD) is an Oil & Gas producer, which primarily focused on exploration and production of oil & gas in the geographic region of Mongolia.

Recent News

On 26 June 2020, the Group announced the issue of 3.2 million new ordinary shares at a price of US$0.01 each under the MATD's Long-Term Equity Incentive Plan (LTIP).

Financial Highlights (FY2019)

On 15 June 2020, the Group provided a financial statement for the year ended 31 December 2019, with a cash position of US$4.3 million as on 31 December 2019. For the twelve months ended 31 December 2019, the Group's net loss after tax stood at US$16.8 million (31 December 2018: loss US$18.4 million). The impact of the COVID-19 pandemic on Petro Matad's activities in the same period has been limited as the Group's focus has been on working with the Mongolian authorities to secure approvals and permits. The Government ministries have been open and functioning as normal throughout.

Share Price Performance
 
1-Year Chart as of 13 August 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Petro Matad Plc’s shares were closed at GBX 2.65 on 13 August 2020, down by 1.85% against the last day closing price. Stock 52 week High and Low were GBX 10.00 and GBX 1.80, respectively.

From the technical standpoint, the shares were trading below the short-term support level of 50-day simple moving average prices, which reflects a downward trend in the stock.

Key Risks
During the first half of 2020, the COVID-19 pandemic has brought considerable change to the risk landscape. The Group operates in multiple geographies, and profits can be impacted negatively due to foreign exchange rate fluctuations. Led by abundant supply and low oil & gas prices, the US oil & gas market continues to operate in a difficult environment.

Conclusion
In 2020, the Group’s main activity is focused on incorporating all the data gathered in the 2019 drilling campaign. It also witnessed an opportunity to move from pure exploration into exploration and production activities. Since the Group is in the development phase, it does not generate any revenues, and all the operations are financed through the cash reserves and grants. The profitability margins have remained in the negative zone for the period. MATD’s P/E, P/CF and EV/EBITDA multiples are in negative zone as compared to the industry multiple.

Based on the above rationale, we have given a “Watch” stance on Petro Matad at the closing market price of GBX 2.65 (as on 13 August 2020), while we look for any upcoming catalysts in the near term such as benefit from the pure exploration.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.