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Pantheon Resources: Independent energy upstart is not having it all its way

Publication Date: 05 Nov 2018 - By Manika Premsingh By Manika Premsingh
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Equity Fundamental Equity UK Energy

Founded in 2005, the independent oil and gas exploration company – Pantheon Resources (LON:PANR) – has not had much of a year so far at the stock markets. Share price for the company, which operates in Texas and is headquartered in London, was at 16.7p at the last close, down over 76% from the maximum level witnessed in the past 52 weeks and just 8% higher than the lowest level.

The weakness in Pantheon Resources’ share prices came in quite suddenly too, shortly after its last financial update, on account of a drilling stall at its new well. From a price of 47.7p on April 9, 2018, there was a sharp fall (of 54%) to 22p the next day, and it has not recovered since.

The financial results for the AIM-listed company for the 6 months ending December 31, 2017 were not entirely bad, though. On the positive side, the company started earning revenues after a zero revenue year in 2016. It made revenues of $514,303 during the period, and posted a gross profit of around half the number. However, it made an operating loss and consequently a net loss.

Clearly, investors did not think the results were all bad but the temporary stop to oil drilling dented Pantheon Resources' outlook.

There could, however, still be room for some positivity in the future. First, the revenue outlook is good, with fuel prices strong and demand expected to strengthen with the start of the winter heating season. Further, the company has just announced that its natural gas pipelines have now commenced operations.

Pantheon Resources is also undergoing leadership changes, which cannot be judged in terms of either good or bad, but will likely influence the future. The current chairman, John Walmsley, is scheduled to retire next month and will be replaced by Phillip Gobe, who comes with 40 years of experience in the oil and gas industry and is currently a non-executive director at the company.

So far, though, Pantheon Resources’ share prices are untouched by both announcements. This is probably because it is too early to fathom how or how far they translate into on the ground results. Some clarity will emerge when the financials for the six months up to June 30, 2018 become available.

However, with a long gestation period before the company starts reaping rewards for investors, it might be worth its while to wait for some more time before investing. Short of a surprisingly good result for the last period, its share prices are unlikely to register a noticeable spike anytime soon. 

Disclosure:

I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

Manika Premsingh

 

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