TIDMPANR
RNS Number : 8280X
Pantheon Resources PLC
21 August 2009
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| Press release | Date: 21 August 2009 |
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Placing of Shares
Pantheon Resources plc ("Pantheon" or "the Company"), the AIM-quoted oil and gas
exploration company active in Louisiana and Texas, announces that it has today
conditionally placed with investors 4,554,600 new ordinary shares of 1 pence
each in the Company ("the Placing Shares") at an issue price of 12 pence per
share to raise GBP0.507million after expenses ("the Placing"). Application has
been made for the Placing Shares to be admitted to trading on the AIM market of
the London Stock Exchange plc ("Admission"). The Placing is conditional, inter
alia, upon Admission which is expected to be on 24 August 2009.
The net proceeds of the Placing will be used to fund the estimated costs for the
proposed remedial operations on the Vision Rice University #1 ("VRU#1") well on
the Tyler County project, and for general working capital. As previously
announced, these remedial actions follow extensive drilling and testing
delays at the VRU#1 well. Specific details of the proposed remedial work at the
well were announced on 13 August 2009.
As previously announced, the drilling and testing delays at both the Bullseye
and Tyler County projects have also resulted in additional costs becoming
payable by the Company. These additional costs have been met through Pantheon's
existing cash resources and the proposed bridging finance facilities of up to
GBP1.45m announced on 29 April 2009 and 25 June 2009, of which a total of
GBP1.13m has been drawn down to date. Following the completion of the Placing
there is no intention for the Company to draw down the remaining balance of the
bridging finance facilities.
The delays at the VRU#1 well relate primarily to mechanical difficulties
encountered whilst drilling and do not reflect the potential prospectivity of
the project. Specific difficulties encountered include much higher than expected
reservoir pressures and the unexpected presence of an "unconsolidated rubble
zone". Despite the mechanical challenges caused by these unexpected features,
both features are considered to be beneficial for the project overall. In Austin
Chalk wells, higher pressure is generally regarded as a positive as it usually
indicates higher potential reserves and productivity. Unconsolidated rubble
zones typically exhibit higher porosity and permeability, and should lead to
enhanced recovery and flow rate per well if confirmed.
Previously Pantheon has advised that the Company is in discussions for the
provision of a possible debt-based facility to fund the development of both its
Bullseye and Tyler County projects. The Board continues to believe that a
debt-based facility for the remainder of both programmes is preferable to
issuing additional equity, in order to minimise dilution to existing
shareholders. A decision is expected to be made on this possible facility
subsequent to the completion of this well. Should the VRU#1 well be completed
successfully and brought into production then the Company is optimistic about
securing a debt-based facility. Should however the remedial operations be
unsuccessful or a debt-based facility not be agreed, the Company may be required
to explore other alternatives for future funding of its assets.
Following completion of the Placing, the Company will have 44,391,730 ordinary
shares of 1 pence each ("Ordinary Shares") in issue. The Placing Shares will
rank pari passu in all respects with the Company's existing Ordinary Shares.
These Placing Shares will represent approximately 10.26% percent of the enlarged
issued share capital of the Company on Admission.
Jay Cheatham CEO of Pantheon Resources, stated,
"I am very pleased with the response to the private placing and the confidence
shown in the Company's future. This placing was constrained in order to minimise
dilution to existing shareholders, and should allow the Company to complete the
proposed remedial actions for the well."
"I remain very excited by the potential for this well and for the entire
project. I believe it is extremely important to recognise that the difficulties
experienced in this well are for engineering and mechanical reasons, and not
because of the absence of hydrocarbons. Put simply, the well was not originally
engineered for the features encountered. Ironically, these very features are
potentially materially beneficial for the remainder of the project. We are
delighted to have a 25% stake in this joint venture, and our challenge is to
maintain that interest with a minimum dilution to existing shareholders".
For further information on Pantheon Resources plc, see the website at
www.pantheonresources.com
Further information:
Pantheon Resources plc
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| Justin Hondris, Director, Finance and Corporate | +44 20 7484 5359 |
| Development | |
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Oriel Securities Limited (Nominated Adviser)
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| Michael Shaw / Daniel Conti | +44 20 7710 |
| | 7600 |
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Background on Vision Rice University #1 ("VRU#1") Well
The first well on this Tyler County project commenced on 12 November 2008 with
the spudding of the Vision Rice University #1 ("VRU#1") well. In February 2009
the completion assembly was run. Reservoir pressure was materially higher both
than that seen in the Anadarko/Ergon wells located to the north. The operator
had already engineered the well in the expectation that the reservoir pressure
would be higher than those encountered in the Anadarko/Ergon wells. However the
pressure encountered exceeded even its pre-drill estimates. This higher pressure
caused the operator to complete the well with a shorter lateral (horizontal)
section than originally planned. However fractures were cut with commensurate
natural gas shows.
After setting a slotted liner in the horizontal segment of the wellbore, service
company personnel failed to set a production packer, on two separate occasions.
On the third attempt, a packer and production tubing were successfully
installed. During subsequent clean-up operations the well bore became blocked.
This caused further delays.
The operator utilised a coiled tubing unit in an attempt to remove the
blockages. During these procedures, small pieces of formation flowed through the
slotted liner into the well bore resulting in a new obstruction. This occurred
each time the well was cleaned out. Such experiences are consistent with the
presence of an unconsolidated rubble formation. Eventually the blockages
prevented the extraction of the coiled tubing from the hole.
The presence of a potential unconsolidated rubble zone was imperceptible on the
seismic available to the joint venture prior to drilling. Such zones are known
to exist elsewhere in the Austin Chalk. The existence of an unconsolidated
rubble zone would be extremely encouraging for the project. Such zones typically
exhibit higher permeability and porosity. These usually lead to both enhanced
recovery and flow rate per well. If confirmed, these factors would have a
significant and beneficial impact on the project's economics. Additionally,
during the very limited testing operations performed, the well produced natural
gas, condensate and black oil.
The information gathered from the current well should facilitate the drilling of
any future wells on the project. In particular, it should result in subsequent
wells being drilled at a lower cost than originally expected, despite the
mechanical problems contributing towards additional time and cost overruns in
this well. Lower potential future drilling costs would also enhance the
project's economics.
Remedial operations planned by the operator will utilise a high pressure
snubbing unit in an attempt to remove the stuck coiled tubing. The plan is to
then cement the upper zone to prevent further migration of pebbles and fine
sediments into the well bore, before undertaking clean-out and completion
operations. This operation is estimated to take two to three weeks on a trouble
free basis to complete once the snubbing unit is on location.
This information is provided by RNS
The company news service from the London Stock Exchange
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