I am going for Pantheon Resources (PANR) currently at £1.29p
This small oil exploration company currently has a market cap of only £19m. It also has an extremely low free float of shares. Currently it is holding approx £7m cash and is already a gas producer from its other project Wharton, it is expanding this project further with other wells being drilled in 2007. This project provides ongoing cashflow and is not insignificant in itself.
Its main play is an area called Padre Island of the Gulf Coast of Mexico. It will be drilling 5 more wells in 2007 (all fully funded) and shareholders are currently awaiting the result of its 1st well, Plum Deep, which will be fully declared in early January.
Success at any one of the 3 major wells (the next being Manzano, spudding January) will easily double the SP from the current level. The remaining 2 are shallower but success would still provide a decent fillip to the SP.
The company has a well respected management team.
The shares were run up to £1.72 only a few days back but have fallen away on an initial negative RNS from Plum Deep. However the remaining 800' of declared payzone has yet to be tested.
A good bet in my book for a double bagger in 2007.
POTENTIAL VALUATION
Padre Island high impact wells:
KCS Energy are active in the Padre Island area (as detailed in Post 1). Based on 2005 reserves of 452 bcf (recoverable) and MC prior to take-out of US$1.15bn, had a value of $2.54/mcf, although they are a mature producer.
Assuming maximum P50 value for the three largest prospects (there is major upside in P10 values) and 25% WI, this results in the following asset values to PANR if the fields were in mature production:
- Plum Deep: 73bcf net. US$186M, or £6.20/share.
- Manzano: 84 bcf net. US$214M, or £7.20/share.
- Murdock South: 58 bcf net. US$148M, or £5.00/share.
Need to take into account the high drilling success rate of the operator, the number of propsects, and a top class producing area for oil / gas in general. However, need to also take into account capex to achieve the stage of a mature producer.
