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Is the Pantheon Resources sell off overdone? #PANR

Pantheon Resources (LSE:PANR) announced problems with its VOBM#5 well this morning in an operational update. The share price is currently at 25.5p, a drop of nearly 50% on yesterday’s close. Although bad news, this isn’t necessarily game over and may present a buying opportunity.

Jay Cheatham, CEO, said:

“At the VOBM#5 discovery well, the representation of the Eagle Ford Sandstone in the log responses were some of the cleanest I have seen to date and, such logs would be expected to result in upper tier wells. It is perplexing that we have produced water in such quantity while on test and that production rates differ so much from the pre-shut in VOBM#1. We have one of the most experienced teams in the region addressing the issue and are using the time while we wait for heating elements to calibrate the seismic to the well logs to determine if we have encountered a deeper water bearing zone which was unseen on the logs and which is impeding hydrocarbon production. Once we have completed our analysis and have more production test data we will be in a far better position to assess the productivity of this well.”

Jay is in London this week to meet investors, the company explicitly states in today’s RNS that ‘it is not undertaking any fundraising activities’.

Pantheon recently released its interim results showing Net Current Assets of around £7.8m.  Even after today’s drop, the Market Cap is still £58m at 25p, which attributes a great deal of Enterprise Value reliant on operational success.

Will the news shatter investor sentiment?

Pantheon has been a popular stock with investors and if the news damages retail confidence, this could drift further. However, with a Potential 159mmboe recoverable prospective resource rewarding success, this could be offering an interesting opportunity for the less risk-averse.

Author: Stuart Langelaan

Disclosure: The Author owns shares in the company mentioned above

 

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