Company Number 05385506
Incorporated in England & Wales
PANTHEON RESOURCES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2021
PANTHEON RESOURCES PLC
CONTENTS
Directors secretary, and advisers
Chairman’s statement
Chief Executive Officer’s statement and operational review
Section 172 statement
Finance Director’s report
Strategic report
Directors’ report
Directors’ biographies
Independent auditor’s report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Company Statements of Changes in Equity
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
Glossary
Page
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5
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27
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46
71
PANTHEON RESOURCES PLC
DIRECTORS, SECRETARY AND ADVISERS
Directors
John (Jay) Cheatham (Chief Executive Officer)
Justin Hondris (Executive Director, Finance and Corporate Development)
Phillip Gobe (Non-Executive Chairman)
Robert (Bob) Rosenthal (Technical Director)
Jeremy Brest (Non-Executive Director)
Company Secretary
Ben Harber
Registered Office
Shakespeare Martineau
6th Floor
60 Gracechurch Street
London EC3V 0HR
Company Number
05385506
Auditors
Solicitors
Registrars
Principal Bankers
Nominated Adviser
& Broker
Communications
& Public Relations
UHY Hacker Young
Quadrant House
4 Thomas More Square
London E1W 1YW
Bryan Cave Leighton Paisner LLP
Governors House
5 Laurence Pountney Hill
London EC4R 3AF
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Barclays Bank plc
Level 27, 1 Churchill Place
London E14 5HP
Canaccord Genuity Limited
88 Wood Street,
London EC2V 7QR
Blytheweigh Communications Ltd
4-5 Castle Court,
London EC3V 9DL
PANTHEON RESOURCES PLC
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
The past year has been a particularly interesting and exciting period for our company after a difficult 2020. Over
the past year, the global petroleum industry has recovered as the world is re-opening from the COVID-19
pandemic, with rising global oil demand in an environment of constrained production. Over that period, we
managed to drill and confirm a major oil discovery at our Talitha location which has been a transformational
event for the Company. These events have led to a material rise in the value of Pantheon and put us in a strong
position to pursue a funded appraisal and production testing program over the next 12 months.
The macro environment for the oil industry is very positive and Pantheon is well placed to take advantage of this
favourable situation, having discovered major deposits of oil adjacent to underutilised export infrastructure in a
major oil province. Non - Organization of the Petroleum Exporting Countries (“OPEC”) production is declining
whilst demand is anticipated to recover in the near term. The global push for capital to be redirected to primarily
renewable energy projects will lead to further declines in non-OPEC oil supply and has some well-regarded
industry commentators predicting an oil crisis. OPEC’s market share of world production has already increased
over the past few years, and this is expected to continue. History has demonstrated that increasing OPEC market
share leads to increasing oil prices, hence the near to medium term outlook for oil prices is very positive.
We still have much work to do on our Alaskan projects to confirm the total resource and productive capability of
our recent discoveries, which in turn will provide us with a more definitive assessment of the commercial
potential. Our ability to do this work has been significantly enhanced by the strong prevailing macro-oil
environment. The level of interest in our projects from both prospective financiers and joint venture partners has
been strong, allowing us to pursue multiple strategies to secure funding for the 2021/22 drilling season. Whilst
there can be no guarantees of success, the Company remains confident that it will be funded to commence
operations in January 2022. At a high level, the Company aims to shift possible “resources” to proven “reserves”
and even commence pilot production from discoveries such as Alkaid, conveniently located along the Dalton
highway almost immediately under the Trans Alaska Pipeline System (TAPS). The geographical location of
Pantheon’s discoveries provides enormous advantages over other operators on the North Slope, enabling us to
expedite development and production.
It is becoming increasingly difficult for the oil industry globally to secure exploration acreage with big resource
potential, especially in the developed world. Pantheon’s acreage has become increasingly valuable because of its
onshore location, in a low sovereign risk jurisdiction, and the globally-significant scale of the discovered
resource. Pantheon’s Alaskan acreage has received investment of around $300m over more than a decade,
delineating its current portfolio containing a host of major discoveries and excellent further exploratory potential.
The next 12 months will be an exciting period as we, subject to successfully completing the necessary funding,
seek to undertake one or more of the following operations; (i) to test Talitha, (ii) to drill a major appraisal well at
Theta West and/or (iii) to drill a production and appraisal well at Alkaid, bringing closer commercial production.
Drilling a well on the Alkaid oil accumulation from the Dalton Hwy location, if successful, should result in
Pantheon’s first Alaskan oil production, and will provide valuable data for future developments on the large
accumulation, easily accessible from the Dalton Hwy and with ready evacuation via TAPS.
Our team, despite being small, is extremely high quality and has done a wonderful job concurrently progressing
all our projects on both technical and financial levels. Funding oil and gas projects is challenging in this
environment and Pantheon has been working hard on these endeavours for many months, running a parallel
strategy of farmout discussions as well as considering other financing options. The Company remains confident
that it will achieve its funding objectives although, as always we caution that there can be no guarantees. If
however we are successful, then we believe that it could be a very exciting winter season for the company.
Phillip Gobe
Chairman
07 December 2021
4
PANTHEON RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S STATEMENT AND OPERATIONAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2021
Over the past year, Pantheon has continued to progress its Alaskan project and is delighted with the results to
date. The successful drilling of the giant Talitha structure was clearly the year’s highlight and delivered a
transformational event for the company. The Talitha discovery, combined with the rise in the oil price has
increased the market value of Pantheon to over $600m and has increased Pantheon’s global profile as a successful
oil company. In recent weeks, Pantheon has entered the MSCI UK Small Cap Index as well as the FTSE AIM
100 index.
Talitha spudded in January 2021 and was suspended in April 2021, having confirmed oil in five zones. It was one
of the most impactful onshore wells drilled anywhere in the world and it lived up to and even exceeded,
expectations. Talitha was designed to intersect four targeted horizons; (i) the Shelf Margin Deltaic (SMD), the
primary target, and the three secondary targets: (ii) the Slope Fan System; (iii) the Basin Floor Fan; and
(iv) Kuparuk formations. Management expectations were that the well had the potential to contain in the region of
one billion barrels of gross prospective oil resource across those multiple stacked objectives. Talitha was a major
success in that it encountered oil in all the predrill targets mentioned above, plus an additional zone in the Basin
Floor Fan. We were only able to undertake testing operations within the deepest zone, known as the Kuparuk
formation, due to the end of the winter season. The Kuparuk was confirmed as oil bearing—a great result—as this
structure is very large. Unfortunately, due to unexpected reservoir characteristics, we were unable to obtain a
stabilised oil flow from the Kuparuk. The Kuparuk formation at this location was over pressured, which was both
unexpected and unlike any known Kuparuk well regionally, which caused challenges in testing. Unlike the
Kuparuk, the four shallower zones are normally pressured with all zones encountering light oil and hence, offer
excellent potential based upon analysis to date. These zones are all secured behind pipe which provides a
straightforward low risk testing operation. The results of the Talitha well has generated multiple oil development
opportunities, including major upgrades for the Theta West fan complex and the Shelf Margin Deltaic, the focus
of near-term activity.
Talitha continued to highlight the prospectivity of Pantheon’s acreage and confirmed its vast potential. The
Talitha well encountered 3,700 feet of live oil through the cuttings which were analysed by industry experts at
Baker Hughes and Advanced Hydrocarbon Stratigraphy (AHS) using Volatile Analysis Service. This provided a
comprehensive, sophisticated and independent evaluation of hydrocarbon presence in the well bore, using mass
spectrometry analysis of well cuttings. This analysis confirmed high quality oil (35-42 deg API) in good reservoir
quality rock which has important implications for commercial development. Of particular interest, and an area of
great excitement for our technical team, is Talitha’s penetration and encountering of oil in the distal limits of a
giant basin floor fan complex called Theta West which management now believe could be the largest new
geological play on the North Slope. The Theta West fan complex is approximately 460 sq km and we internally
estimate it contains 12 billion barrels of oil in place, with around 1.4 billion barrels of recoverable oil. Subject to
financing, we plan to drill this giant play this coming winter season in an “updip” location over 10 miles from
Talitha, where we expect to encounter a thicker reservoir section located closer to the sediment source. We expect
enhanced reservoir quality at this shallower drilling depth. This is effectively an appraisal well and will be the
most exciting and impactful well that I have been involved with in my long career.
Talitha also provided valuable data on Pantheon’s other big geological play, known as the Shelf Margin Deltaic
(SMD), which is also potentially very large. This zone has multiple well penetrations across the Pantheon
acreage. Pantheon has mapped a resource of 2.6 billion barrels of oil in place with 404 million barrels being
recoverable. A significant portion of the SMD oil resource is located close to the Dalton Highway and Trans
Alaska Pipeline and hence, can be easily developed from the highway location providing an enormous
commercial advantage. The oil zone discovered in the SMD is stratigraphically shallower than the oil discovered
within the deeper Brookian section at Alkaid and hence, both zones may be jointly developed from the highway
location. Pantheon has estimated that the combined oil resource within the Brookian section at Alkaid and SMD
at Alkaid is 481 million barrels of recoverable oil, of which an estimated 204 million barrels of recoverable oil is
believed to be developable from the highway. The favourable geographical location, close proximity to
infrastructure and large resource potential offers the opportunity for more rapid development horizons, lower
capex and tremendous value creation for Pantheon shareholders in a success case.
5
PANTHEON RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S STATEMENT AND OPERATIONAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2021
The advantageous location of the estimated 204 million barrels of recoverable SMD/Alkaid oil developable from
the highway should allow for year-round development and production access from the highway, unique to new
projects on the North Slope. Pantheon is well advanced on development planning after formal approval from the
Alaskan Department of Natural Resources of two Units at Alkaid and Talitha. The award of these Units is an
endorsement by the State of the commercial potential of the discoveries and provide longer tenure over the leases.
As prudent for any oil and gas company with limited capital we have paid great attention to optimising and high-
grading our acreage position on the North Slope using our proprietary seismic data and experience in that area.
We now own most of the leases that cover the better portion of the current oil discoveries. Part of that strategy
included the acquisition of 10.8% working interest (WI) in the Talitha Unit from Otto Energy Alaska LLC for a
consideration of 14,272,592 fully paid shares in Pantheon, bringing Pantheon’s WI in Talitha to 100%. Having a
100% working interest across all of our major projects gives us sole operational control of our activities and puts
us in a stronger position to pursue a farm down (or sell down) a WI in certain projects if desired, thus enabling us
to continue funding our operations without necessarily diluting equity at the corporate level. Optimising acreage
also meant that we relinquished certain leases such as the Leonis area which is outside the core acreage block
where we will focus in the nearer term.
In November 2020 Pantheon completed an oversubscribed fundraising which raised $30.2m before costs at a
price of £0.31/share. This funding allowed the Company to drill the successful Talitha #A discovery well and
complete its acreage acquisition strategy. At the time of writing the Company is in the process of securing its
financing for the 2021/22 drilling programme. Whilst there can be no guarantees, the Company is confident of a
successful outcome that should see the Company embark on the most exciting drilling campaign in its history.
Summary
I am very proud of all our achievements as our small team has consistently delivered in all aspects of our
operation. Our confidence in the fact that we have a world class opportunity across our portfolio is very high and
numerous industry experts have now confirmed this. As I mentioned last year, nothing is certain in oil and gas,
but in my 50+ year career in the sector I can assure shareholders that the quality of the work and analysis is as
good as anything I have seen. We have the team in place to deliver the next phase over the forthcoming 12
months. The scale of this opportunity is growing, and the risks associated are declining as we continue to drill and
test more wells and acquire important data. Our plan over the coming months is threefold; drill the giant basin
floor fan complex at Theta West, production test the multiple oil discoveries in the Talitha well bore, and drill a
production/long term test well at Alkaid, which will also appraise the SMD in that location. As you have seen
from our RNS’s the valuation implications of success from these activities are very large i.e., multi billions
dollars. Our job now is to secure funding to enable what has the potential to be a very significant drilling
campaign in 2021/22.
Jay Cheatham
Chief Executive Officer
07 December 2021
6
PANTHEON RESOURCES PLC
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders
and other matters in their decision making. The Directors continue to have regard to the interests of the
Company’s employees and other stakeholders, the impact of its activities on the community, the environment and
the Company’s reputation for good business conduct when making decisions. In this context, acting in good faith
and fairly, the Directors consider what is most likely to promote the success of the Company for its members in
the long term. We explain in this annual report how the Board engages with stakeholders.
• The Directors are fully aware of their responsibilities to promote the success of the Company in accordance
with section 172 of the Companies Act 2006. Furthermore, the Directors have had refresher training with
their NOMAD of Director responsibilities in the application of AIM rules. This process encourages the Board
to reflect on how the Company engages with its stakeholders and to identify opportunities for enhancement in
the future and was considered at the Company’s board meetings. As required, the Company’s external
lawyers and the Company Secretary can provide support to the Board to help ensure that sufficient
consideration is given to issues relating to the matters set out in s172(1)(a)-(f).
• As part of its ongoing business, the Board regularly considers the Company’s principal stakeholders and how
it engages with them. This is achieved through information provided by management via Regulatory News
Service announcements, Corporate Presentations, and Shareholder Meetings and teleconferences and also by
direct engagement with stakeholders themselves.
• The Company aims to work responsibly with key identified stakeholders; shareholders, employees,
consultants, suppliers, advisors, government bodies and local communities where exploration and production
activities take place.
• Key Board decisions made in the year are set out below:
Significant
events/decisions
Key s172
Stakeholders
Actions and Consequences affected
Advancement of
geological
understanding of the
Alaskan assets
Shareholders,
Employees and
Business
Relationships
• The Group drilled the Talitha #A well successfully during the
year and collected a comprehensive data set of geological,
geochemical and geophysical information including well
logs, sidewall cores and cuttings analysis. The Company also
hired third party expert consultants to undertake specialist
analysis. In particular, the experts at Advanced Hydrocarbon
Stratigraphy undertook detailed ‘Volatiles Analysis’ on over
400 cuttings taken, which confirmed the presence of
continuous stacked oil-bearing reservoir zones over a 3,700-
foot column.
• The Board continued to refine its in-depth geological review
of its Alaska North Slope assets.
• The consequences of these actions were to materially increase
the resource potential of the projects. The Company
subsequently estimated greater than 12 billion barrels of oil in
place and 1.41 billion barrels of oil recoverable resource
potential at its 100% owned Theta West project. The drilling
and analysis of Talitha #A has greatly enhanced the Group’s
geological understanding of its assets.
7
PANTHEON RESOURCES PLC
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
High Grading of
Alaskan lease
acreage
Shareholders,
State of Alaska,
Business
Relationships
Disposal of East
Texas assets
Shareholders
Implementation of
staff share option
plan
Employees, long
term consultants
Drilling of the
Talitha #A well
Shareholders,
Employees, State
of Alaska
Increased interaction
with key
stakeholders
Shareholders,
Employees, State
of Alaska, Other
Business
Relationships
• The Group successfully acquired new lease acreages covering
the Theta West project, and subsequent to the year end
relinquished to the State of Alaska leases covering the Leonis
project which were now considered non-core.
• The Group successfully acquired the remaining 10.8% of the
Talitha project, bringing its working interest in that project -
like all its other projects - to 100%.
• The consequence of these actions were to further refine the
high grading strategy of the Group’s portfolio to key areas of
focus, while at the same time voluntarily relinquishing non-
core acreages to the State to allow them to potentially offer
them for lease to the wider public, which would benefit the
state.
•
In accordance with previous guidance, the Group formally
exited its East Texas portfolio during the year to focus on its
primary focus, that being the Alaskan assets.
• Consequently, the Group was able to fully focus its efforts
and capital allocation on the more impactful Alaskan
portfolio. The carrying value of the East Texas oil and gas
leases had previously been fully impaired.
Implementation of staff share option plan
•
• The consequence of this decision was to deliver a share
option plan to allow staff to benefit from share price
outperformance - aligning staff interests with that of
shareholders - and to help management retain and attract the
highest quality personnel.
• The Group successfully drilled the Talitha #A well, gaining
valuable data and significantly enhanced the potential for a
future commercial development.
• The consequence of this decision was to benefit of all
stakeholders through a significant advancement in
understanding of, potential of, and confidence in a future
commercial development of the Group’s projects.
• The Board conducted a number of webinar style shareholder
presentations outside of the traditional AGM, which all
shareholders and non-shareholders were invited to attend, in
addition to a number of video interviews. The Group also
held a number of technical presentations with the State of
Alaska, working with them to ensure they are fully appraised
of the Group’s intended plans.
• The consequence of these actions was to create a greater level
of understanding of the Group’s projects and intended
activities and to strengthen relationships with stakeholders.
Finally, to you, our shareholders, thank you for your trust, belief and support in what has been a year of great
achievement for our Company. Your continued support is appreciated by your Board, our wider internal team and
our external advisory group.
8
PANTHEON RESOURCES PLC
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
This report was approved by the Board on 07 December 2021 and signed on its behalf.
Jay Cheatham
Chief Executive Officer
9
PANTHEON RESOURCES PLC
FINANCE DIRECTOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Financial Review
The Group made a loss for the financial year ended 30 June 2021 of $6.7m (2020: loss $17.0m). Included within
the $6.7m loss is a $3.2m non-cash expense for staff share options.
In late 2020, the Group made a decision to formally exit its East Texas portfolio entirely, reflecting the previously
announced strategic decision of the Group to prioritise its Alaska North Slope asset portfolio, given its
significantly larger size, scale and resource potential. The decision to fully impair the carrying value of the East
Texas properties at 30 June 2020 was driven by the severe falls in oil and gas prices resulting from the economic
impacts of the pandemic, which had devastating effects on the US oil and gas sector. Whilst there has been some
recovery in prices since 30 June 2020, they were not considered enough to justify continued investment into East
Texas as it was concluded that capital could be better applied towards Alaska. In February 2021, Pantheon
formally exited East Texas with the transfer of 100% of our interests in both Polk and Tyler Counties to Neches
Transport, a local operator. As a result of exiting East Texas, and in accordance with UK adopted IFRS (IFRS),
the expenses for the East Texas Operation have been reclassified to “Discontinued Operations”. This
reclassification has been performed on both the current period and the comparative periods shown. The
consideration for the sale was in the form of an agreement whereby the acquirer legally assumed the plug and
abandonment liabilities of the East Texas Acreage.
Impairments
In accordance with International Financial Reporting Standard 6 ‘Exploration for and Evaluation of Mineral
Resources’ (IFRS 6), exploration and evaluation assets are reviewed for indicators of impairment. Should
indicators of impairment be identified an impairment test is performed.
The Group has reviewed these assets for indications of impairment. The Directors have satisfied themselves that
there are no indicators of impairment in the current year. In the prior year, indicators of impairment were
identified and impairment reviews led to impairment charges that were measured, presented and disclosed in
accordance with International Accounting Standard (“IAS”) 36 Impairment of Assets.
Capital structure
The Company completed an equity placing during the year and issued 73,756,314 new fully paid ordinary shares
during the year with a nominal value of £0.01, raising approximately $30.2m before expenses at an issue price of
31 pence per share. This represented a 72% premium to the previous fundraising price in 2019.
During the year, Pantheon formally acquired 100% ownership of Borealis Alaska LLC. Borealis Alaska LLC
owned a 10.8% working interest in each of the 16 leases in the 44,463-acre Talitha Unit. Pantheon paid a
consideration of 14,272,592 ordinary shares for the 10.8% working interest.
At the beginning of the year there were 102,471,055 non-voting shares in issue. These non-voting shares were
convertible into ordinary fully paid shares on a 1:1 basis and were identical to ordinary fully paid shares in all
respects, except for the lack of voting rights. During the year 68,580,577 non-voting shares were converted into
fully paid shares. The remaining 33,890,478 non-voting shares were converted into ordinary fully paid shares
subsequent to year end.
As at 30 June 2021 the total shares in issue—both ordinary and non-voting—was 693,258,674 (2020:
605,229,768). As at 30 June 2021 the Company had 9,607,843 warrants outstanding to acquire non-voting
convertible shares (2020: 9,607,843). The warrants have an exercise price of £0.30 per share and expire on 30
September 2024. They are all fully vested. Non-voting shares are convertible into ordinary fully paid shares on a
1:1 basis.
As at 30 June 2021 the Company had 10,000,000 options outstanding to acquire ordinary shares (2020:
10,000,000) at an exercise price of £0.30 per share and expire on 30 September 2024. At year end all share
options were fully vested.
During the year the Company made share options grants to staff under the updated Discretionary Share Option
Plan (the “Scheme”). The structure of the Scheme comprised two components: (i) an up-front grant for share
options with an exercise price 93% above the prevailing share price at the time of issue. The Company approved
the grant of up to 13.7m share options with respect to this component (exercise price of 27 pence and 10 year
term); and (ii) an annual grant of share options with respect of the past financial year. The Company approved the
10
PANTHEON RESOURCES PLC
FINANCE DIRECTOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2021
grant of up to 14.7m share options with respect to this component; these options have an exercise price of 33
pence and expire 10 years after issue. These were the only grants of share options made by the Company since
2014.
Going concern
As previously announced, the Company must complete either a farmout and/or funding in Q4 2021 to have
sufficient resources for the anticipated winter 2021/2022 drilling and testing campaign and for ongoing working
capital.
The Group is advanced in its efforts to secure a funding solution, however at the time of writing, this remains
incomplete and is naturally subject to completion risk. The process is well advanced and the Company is
confident of a positive outcome, however, there can be no guarantees of a successful outcome.
The Directors have reviewed the Group’s overall position, and given the advanced stage of the fund raising
discussions are of the opinion that the Group is able to operate as a going concern for at least the next twelve
months from the date of approval of these financial statements.
Given the Director’s confidence in their ability to complete a funding solution in the near term and the
discretionary nature of some of the future exploration commitments, the Directors believe that the Group will be
sufficiently funded and believe the use of the going concern basis is appropriate. Accordingly, the Directors have
prepared the financial statements on a going concern basis. However, it should be noted that completion risk
relating to the funding solution causes a material uncertainty that may cause significant doubt about going
concern should sufficient fundraising not be obtained.
The Directors are satisfied with the Group’s ability to operate as a going concern for the next 12 months, as
documented further in Note 1.4.
Taxation
The Group incurred a loss for the year and has recorded a taxation credit of $1.6m (2020: $4.7m). As the tax
charge is all reflected in the movement in deferred tax, the Directors have adjusted deferred tax liability by the
same amount as the tax charge.
Risk assessment
The Group’s oil and gas activities are subject to a variety of risks - both financial and operational - including, but
not limited, to those outlined below. These and other risks have the potential to materially affect the financial
performance of the Group. For additional detail see section Key Operational Risks and Uncertainties in the
Strategic Report on page 13.
Liquidity Risk
As Company is not currently generating revenue from hydrocarbon production, the primary liquidity risk is the
ability to adequately source sufficient funding to meet the Company’s working capital requirements. Funding
availability, and hence risk, within the capital markets has improved over with recent years as evidenced by the
near high global stock market indices.
Oil & Gas Price Risk
Future oil and gas sales revenues are subject to the volatility of the underlying commodity prices throughout the
year. Over the past year the energy sector has been impacted by volatility in commodity prices, which may
continue to impact the Group going forward. The Group did not engage in any commodity price hedging activity
during the year.
Currency Risk
Almost all capital expenditure and the operational revenues for the prior year were denominated in US dollars.
The Group keeps the majority of its cash resources denominated in US dollars to minimise volatility and foreign
currency risk. The Group did not engage in any foreign currency hedging activity during the year.
11
PANTHEON RESOURCES PLC
FINANCE DIRECTOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Financial Instruments
At this stage of the Group’s activities it has not been considered appropriate or necessary to enter into any
derivatives strategies or hedging. Once the Group’s production revenues increase substantially, such strategies
will be reviewed on a more regular basis.
Justin Hondris
Director
07 December 2021
12
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Principal activity
The Company is registered in England and Wales, having been incorporated under the Companies Act with
registered number 05385506 as a public company limited by shares. The principal activity of the Group is the
investment in oil and gas exploration and development. The Group operates in the U.K. through its parent
undertaking and in the U.S.A. through subsidiary companies, details of which are set out in Note 9 to these
accounts.
Review of the Business and Key Performance Indicators
2019/2020 KPI
Divestiture of East
Texas assets to focus on
Alaska as the primary
asset
Measurement
2020/2021 Performance
Completion of divestiture Pantheon had previously fully impaired the carrying value of the East
Texas oil and gas leases assets and had previously stated its intention
to not commit further funds to the East Texas project in order to focus
on the superior opportunity in Alaska. During the year the Group
formally exited all operations in East Texas.
Ensure business
adequately funded
Fund raise where
appropriate
Operational activity in
Alaska
Drilling / testing wells
Pursue farmout of
Alaskan assets
Resumption of farmout
process
The Company is in advanced stages of securing the required funding
to ensure the Group is adequately funded for both working capital and
operational requirements. At the time of signing the accounts, the
Company was in discussions for a potential Farmout of working
interests in the Group’s assets and was additionally in late stage
discussions for alternate methods of financing. Whilst the Company
remains confident of a successful outcome to one or more of these
endeavours, until contractually signed such discussions remain subject
to completion risk.
The Alkaid Well successfully flow tested in 2019, resulting in a
Contingent Recoverable Resource of 76.5MMBO by an independent
expert. Additionally, Pantheon successfully drilled the Talitha #A well
in Q1/Q2 2021 and intends to revisit the well to undertake testing
operations on the various prospective zones.
Pantheon’s understanding of the geological potential (and therefore
potential value) of the assets has increased materially, particularly
following the drilling and analysis of Talitha #A. The Company
continues to be in advanced discussions with a potential farm in
partner, where that party would be expected to commit to certain
expenditures to earn a working interest in the project. At the time of
writing
is
encouraged by discussions, but cannot offer certainty of completion of
a transaction.
these discussions remain underway. The Company
Ensuring continued
high-quality technical
consultant relationships
Establish and maintain
relationships with industry
experts and review
performance
Pantheon’s technical team has been further strengthened in the year
under review. Experts such as eSeis and others remain contracted.
Pantheon also forged a strong relationship with AHS during Talitha
#A operations and intends to utilize their services again in the future.
Financial Position and Future Prospects
Please refer to the Director’s Report for additional information on strategy and the business model.
Key operational risks and uncertainties
The Group may be unable to meet its lease obligations
In general, the Group's properties are held under oil and gas leases. The terms of the Group's leases often provide
for yearly rental payments. Such yearly rentals may vary depending upon the particular lease and whether the
Group has commenced activities in the property. If the Group defaults on its lease payments, its leases may be
automatically terminated. If the Group is unable to make these payments and its leases are terminated, there could
be a material adverse effect on its business, financial condition and results of operations. Managing the lease
13
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2021
position is of material importance for the Group, and management devote considerable time to lease management,
budgeting and planning, consulting with the State of Alaska where required. In 2020 Pantheon was awarded Units
on the Alkaid and Talitha projects and has been an active participant in the annual lease sales over the past 2
years, significantly strengthening Pantheon’s lease portfolio. The 66,000 leases acquired in the January 2021 have
a 10-year life, $10 per acre rentals and low royalties of between 12.5% – 16.7%.
The Group may be unable to renew and/or extend its leases once they expire
The Group's lease agreements contain terms whereby the lease may be terminated if the Group does not fulfil
certain obligations. These obligations include conducting exploration and/or production activities. If the Group is
unable to satisfy these conditions on a timely basis, it may lose its rights in these properties. In addition, given
that it may not be able to renew certain leases unless it begins exploration or production activities within specific
timeframes, the Group may be required to invest significant funds at timetables not optimal in order to meet the
capital requirements as per the terms of the leases. If the Group is unable to meet its obligations under the terms
of its leases, there could be a material adverse effect on its business, financial condition and results of operations.
To mitigate this risk the Group has successfully applied for and been granted unitization for the leases that
comprise its Talitha and Alkaid projects. Unitization recognizes that the Group has established—to the State’s
satisfaction—that all or part of multiple potential hydrocarbon accumulations are included in the unit areas to
allow the leases to potentially be held beyond the initial lease term. Most of Pantheon’s lease position is now
covered by these units or leases of between 8.5 years or more of remaining life. Management has materially
reduced the risk of lease expiry.
Our operations require the Group to obtain licensing, planning permissions and other consents
The development of its current and future leases may be dependent upon the receipt of planning permission from
the appropriate local authorities, as well as other necessary consents, such as environmental permits and
regulatory consents. Obtaining the necessary consents and approvals may be costly, and they may not be granted,
may be withdrawn or made subject to limitations and conditions. Certain permits and consents may also become
contentious in the future, which may lead to these not being granted or withdrawn. The failure to gain such
permissions or gain such permissions on terms or at a cost acceptable to the Group, may limit the Group in its
ability to develop and extract value from its leases and could have a material adverse effect on its business, results
of operations, financial conditions and prospects. To manage the risk, the Group employs experienced and
qualified personnel who have successfully obtained licenses and permits in the past, and who maintain working
relationships with regulatory agencies.
Political conditions and government regulations could change and have a material effect on the Group's results
of operations
Although political conditions in the Northern Slope Borough, the State of Alaska and the United States federal
government are generally stable, changes may occur in their political, fiscal and/or legal systems, which might
adversely affect the Group's operations. The Group's strategy has been formulated in the light of the current
regulatory environment and probable future changes to the regulatory regime. Over recent times the federal
government has adopted a more cautionary position with respect to operations on federal land, notably with
respect to ConocoPhillips’ Willow project. Pantheon’s projects are all located on state, not federal land, and so
has not been impacted by such politics.
Although the Group believes that its activities are currently carried out in accordance with all applicable rules and
regulations, no assurance can be given that new rules, laws and regulations will not be enacted, or that existing or
future rules and regulations will not be applied in a manner which could serve to limit or curtail exploration or
development of the Group's business or have an otherwise negative impact on its activities. Amendments to
existing rules, laws and regulations governing the Group's operations and activities, or increases in or more
stringent enforcement, implementation or interpretation thereof, could have a material adverse impact on the
Group's business, results of operations and financial condition.
Future legal proceedings could adversely affect the Group's business, results of operations or financial condition
The Group may face legal proceedings that may result in the Group having to pay material damages and/or other
remedies. While the Group would assess the merits of each legal proceeding and defend the Group accordingly, it
may be required to incur significant expenses or devote significant resources to defend against such legal
14
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2021
proceedings. In addition, legal proceedings are also difficult to predict, which may force the Group to enter into
settlement arrangements even in the absence of any culpability from its part.
Furthermore, the adverse publicity surrounding legal proceedings may negatively affect the Group's relation with
local communities, government and non-government organizations, which could also impact the Group's
activities. As a result, legal proceedings could have a material adverse effect on the Group's business, financial
condition, results of operations and prospects. To manage this risk the Group consults legal counsel when it faces
potential legal proceedings. The board and management consult legal counsel when conducting activities or
entering into agreements that are viewed to have the potential to give rise to material legal proceedings.
Failure to manage relationships with local communities, environmental groups and non-government
organizations could adversely affect the Group's future growth potential
The activities of oil and gas companies often face scrutiny from the public and receive negative publicity.
Although the Group's operations are not located in or near large communities, the Group's ability to further
expand its operation may be hindered by communities that may regard oil and gas activities as detrimental to their
environmental, economic or social circumstances. Furthermore, oil and gas companies are also increasingly
facing scrutiny by environmental groups regarding the effect operations may have on the animal life in the region.
Negative reaction to its operations could have a material adverse impact on the cost, profitability, ability to
finance or even the viability of an operation. Such events could give rise to material reputational damage.
These disputes are not always predictable and may cause disruption to projects or operations. Failure to manage
relationships with local communities, environmental groups and non-governmental organisations may adversely
affect the Group's reputation, as well as its ability to commence production projects in certain locations, which
could in turn affect its long-term prospects and the Group's business, financial condition and results of operations.
The Group’s current leased acreage is not in the immediate vicinity of any local community. To manage this risk
the Group ensures it conducts operations in a legal and responsible manner and complies with rules and
regulations.
Any change to government regulation/administrative practices may have a negative impact on the Group's ability
to operate and its future profitability
The business of oil and gas exploration and development is subject to substantial regulation under federal, state,
local laws relating to the exploration for and the development of upgrading, marketing, pricing, taxation, and
transportation of oil and gas and related products and other matters. Amendments to current laws and regulations
governing operations and activities of oil and gas exploration and development operations could have a material
adverse impact on the Group's business. In addition, there can be no assurance that tax laws, royalty regulations
and government incentive programs related to the Group's oil and gas properties and the oil and gas industry
generally, will not be changed in a manner which may adversely affect the Group's prospects and cause delays,
inability to explore and develop or abandonment of these interests.
Furthermore, permits, leases, licenses and approvals are required from a variety of regulatory authorities at
various stages of exploration and development. There can be no assurance that the various government permits,
leases, licenses and approvals sought will be granted in respect of the Group's activities or, if granted, will not be
cancelled, or will be renewed upon expiry. There is no assurance that such permits, leases, licenses and approvals
will not contain terms and provisions which may adversely affect the Group's exploration and development
activities. If any of the forgoing were to occur, it could have a material adverse effect on the Group's business,
financial condition and results of operations. To manage the risk, the Group employs experienced personnel and
contractors who have successfully obtained licenses and permits in the past, and who maintain working
relationships with regulatory agencies and monitor changes that could impact the Group.
COVID and Supply chain Risk
The impact of the Covid-19 pandemic on global supply chains is a well-documented phenomenon which has
affected many industries globally, including the oil and gas sector. As a result, the lead times for the equipment
and consumables required for the winter drilling season in Alaska have lengthened over the last 12 months. To
manage this risk it is important that key equipment and materials are ordered on a timely basis so as to minimise
the potential for supply chain disruption to drilling operations.
15
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2021
By order of the board.
Justin Hondris
Director
07 December 2021
16
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
The Directors present their report together with the audited accounts of Pantheon Resources plc (“Pantheon” or
the “Company”) and its subsidiary undertakings (together the “Group”) for the year ended 30 June 2021.
Results and dividends
The Group results for the period are set out on page 38. The Directors do not propose to recommend any
distribution by way of a dividend for the year ended 30 June 2021.
Information to shareholders – website
The Group maintains its own website (www.pantheonresources.com) to facilitate provision of information to
external stakeholders and potential investors and to comply with Rule 26 of the AIM Rules for Companies.
Group structure and changes in share capital
Details of the Group structure and the Company’s share capital during the period are set out in Notes 9 and 18 to
these accounts.
Directors
The Directors who served at any time during the year were:
Name
Phillip Gobe
John Cheatham
Justin Hondris
Robert Rosenthal
Jeremy Brest
Directors’ interests
Role
Non-Executive Chairman
Chief Executive Officer
Director, Finance & Corporate Development
Technical Director
Non-Executive Director
The beneficial and non-beneficial interests in the Company’s shares of the Directors and their families were as
follows:
Name
Phillip Gobe
John Cheatham
Justin Hondris(1)
Robert Rosenthal(2)
Jeremy Brest(3)
Number of Ordinary shares of £0.01
30 June 2021
323,972
3,229,464
1,453,238
647,622
See note 3 below
(1) Some of these ordinary shares are beneficially owned by the spouse of J Hondris.
(2) In addition to Mr. Rosenthal’s direct holding, he also holds an indirect interest through an approximate 2.8%
interest in Ursa Major Holdings LLC ("UMH"). UMH has an indirect interest in Pantheon through Great Bear
Petroleum Operating LLC ("GBPO"). UMH holds an approximately 50% interest in GBPO. GBPO has a
beneficial interest in approximately 35 million ordinary shares which are currently held by CHONS LLC2 on
behalf of GBPO. GBPO also owns approximately 4.8 million warrants exercisable into convertible non-voting
shares in the Company with strike price of £0.30 per share.
Mr Rosenthal's interest in the shares held by GBPO is variable based on the distribution mechanisms established
by the limited liability company agreements of UMH and Great Bear Petroleum Holdings LLC ("GBPH", a
17
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
parent company of GBPO). This interest changes with fluctuations of exchange rates, the Company's share price
and other factors.
(3) At the year end, Mr Brest does not have a direct interest in Pantheon and has an indirect interest in the
Company as described below:
Mr Brest's interest results from the direct and indirect holding of Pantheon by Westman Management Limited
("Westman"), of which Mr Brest is the sole director. Westman holds 327,869 ordinary shares of Pantheon and
holds approximately 5.2% interest in Ursa Major Holdings LLC ("UMH"). UMH has an indirect interest in
Pantheon through Great Bear Petroleum Operating LLC ("GBPO"). UMH holds an approximately 50% interest in
GBPO. GBPO has a beneficial interest in approximately 35 million ordinary shares which are currently held by
CHONS LLC on behalf of GBPO. GBPO also owns approximately 4.8 million warrants exercisable into
convertible non-voting shares in the Company with strike price of £0.30 per share.
Mr Brest's interest in the shares held by GBPO is variable based on the distribution mechanisms established by
the limited liability company agreements of UMH and Great Bear Petroleum Holdings LLC ("GBPH", a parent
company of GBPO). This interest changes with fluctuations of exchange rates, the Company's share price, and
other factors.
Share options
The Directors held the following share options for Ordinary shares of £0.01, at the beginning and end of the year:
Director
As at 30
June 2020(1)
Granted
during the
year(2)
Granted
during the
year(3)
As at 30
June 2021
Phillip Gobe
-
-
-
-
John Cheatham
4,385,000
1,500,000
2,125,000
8,010,000
Justin Hondris
3,865,000
1,500,000
2,125,000
7,490,000
Robert Rosenthal
Jeremy Brest
-
-
1,500,000
2,125,000
3,625,000
-
750,000
750,000
1. Issued September 2014. Exercise price £0.30, Expire September 2024. Fully vested.
2. Issued July 2020. Exercise price £0.27, Expire July 2030. Fully vested.
3. Issued January 2021. Exercise price £0.33, Expire January 2031. Not yet vested.
Former Directors held the following share options for Ordinary shares of £0.01, at the beginning and end of the
year:
Director
At 30 June 2020
J Walmsley
Total
These are 100% vested as at 30 June 2021
1,000,000
1,000,000
Granted
during the
year
At 30 June 2021
-
-
1,000,000
1,000,000
Exercise
price
Latest date of
exercise
£0.30
30 Sept 2024
Report on Directors’ remuneration and service contracts
The service contracts of all the Directors are subject to a six-month termination period.
18
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ remuneration
Director
Fees/basic
salary
(US$)
Gains on
Exercised
Share-based
payments
(US$)
Pension
Contributions
(US$)
Health
Insurance
(US$)
2021 Total
2020 Total
(US$)
(US$)
J Cheatham
J Hondris
J Brest
P Gobe
R Rosenthal
Total
415,574
330,488
40,991
95,781
177,791
1,060,624
Director incentive scheme
-
-
-
-
-
-
-
17,662
-
-
-
17,662
-
5,207
-
-
-
5,207
415,574
353,358
40,991
95,781
177,791
1,083,493
432,940
359,907
29,851
93,646
149,863
1,066,207
In 2012 the Company implemented a short-term executive director incentive scheme (the “scheme”) developed in
conjunction with executive remuneration specialists at Deloitte LLP. Any incentive bonus resulting from the
scheme will be shared by executive Directors and will be calculated as 2.25% of the value of “net-booked
reserves” for a period (deducting any net-booked reserves recognized in earlier periods for this purpose). For the
purposes of the scheme, net-booked reserves will include 100% of proved reserves and 25% of probable reserves
booked to the Group, as determined by an independent third party, where relevant, in accordance with the
classification definitions as mandated by the Society of Petroleum Engineers.
The remuneration committee will determine the extent to which any annual bonus resulting from the scheme will
be settled in cash or share options with a discounted exercise price. The cash component will be at least one third
of the total and there is no obligation to pay any of the annual bonus by way of share options. In the event of a
sale of the Company or other change of control, the calculation will be undertaken by reference to the equity
value of the Company (less the value of net booked reserves recognized in earlier periods). The remuneration
committee believed that the scheme, together with the granting of share options, provides an appropriate and
reasonable structure to reward and motivate the executive Directors for performance that is aligned to the
interests of shareholders and provides a balance of long-term and short-term performance measurement. Any
potential benefit from the scheme is linked to the booking of net-booked reserves, which is considered to be a key
milestone reflecting potential “value add” for the benefit of shareholders. The value of share options is directly
linked to the longer-term share price performance and is therefore, also considered to be a suitable metric as a
basis for executive remuneration.
Given the fact that the Group’s executive team has grown and the Group’s strategy has shifted to focus solely
upon Alaska, the directors regard that evaluating the current plan consistently with the new strategy is appropriate
and should consider other members of management participating, in addition to executive directors. Any review
would include consultation with the remuneration experts at Deloitte LLP. No awards have been paid from this
scheme since inception in 2012.
Share Option Plan
In July 2019, the Board announced its intention to implement a Share Option Plan (the “Plan”) for the benefit of
all staff and permanent consultants. The Plan comprised two components: (i) an initial award of up to 13.7m
share options to management and all staff at an exercise price of £0.27p, a premium of 93% above the prevailing
share price at the time of issue and (ii) annual grants of share options to be issued subsequent to financial year
end, at the prevailing share price, in respect of the respective financial year reported upon. In respect of this
annual component, on 19 November 2020 Pantheon announced its intention to award share options award
representing c.2.25% of its ordinary share capital (voting and non-voting) to directors and all staff under the
Company's Share Option Plan at the Fundraising Price of £0.31. These share options were subsequently granted
in January 2021 at a higher exercise price of £0.33.
Subsequent events
Details of subsequent events can be found at Note 27
19
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Substantial shareholders
The Company has been notified, in accordance with Chapter 5 of the FCA Disclosure and Transparency Rules, of
the under noted interests in its ordinary shares as at 06th December 2021:
Shareholder
GOLDMAN SACHS SECURITIES (NOMINEES)
LIMITED
VIDACOS NOMINEES LIMITED
INTERACTIVE BROKERS LLC
LYNCHWOOD NOMINEES LIMITED
THE BANK OF NEW YORK (NOMINEES) LIMITED
Ordinary Shares % of Ordinary Shares
107,104,410
79,715,534
60,395,813
46,689,257
37,701,609
15.38
11.45
8.67
6.71
5.42
Political and charitable contributions
There were no political or charitable contributions during the year.
20
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
CORPORATE GOVERNANCE STATEMENT
The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code”).
This statement sets out how the Company complies with the 10 principles of the QCA Code.
The Board recognises the principles of the QCA Corporate Governance Code, which focus on the medium to long
term value for shareholders, without stifling the entrepreneurial spirit in which small to medium sized Companies
such as Pantheon have been created. The Company sets out below its annual update on its compliance with the
QCA Code.
The QCA Code outlines 10 core principles that should be applied. These are listed below together with a short
explanation of how the Company applies each of the principles. The Company has adopted a share dealing code
for the Board and employees of the Company.
PANTHEON RESOURCES QCA CORPORATE GOVERNANCE COMPLIANCE
STRATEGY & BUSINESS MODEL
Pantheon's strategy is to focus on hydrocarbon exploration and production, onshore USA, in a region of low
sovereign risk where its specialist expertise lies. Pantheon has structured a lean organisation that is focused on
maximising the potential returns to shareholders through carefully targeted exploration, appraisal and where
relevant, development activities in established and highly prospective areas underpinned by detailed geological
analysis. Where appropriate the Group will also undertake value accretive acquisitions or divestitures of assets
following careful analysis and, as appropriate, shareholder engagement. The Group, as appropriate, uses a
combination of in-house expertise and external consultants to manage operations.
Pantheon seeks to keep corporate overhead costs to a minimum, whilst balancing the need to hire and retain the
best personnel and advisors, to maximise the potential returns to shareholders in the event of success. Given the
current scale of the Group, corporate and operating costs are monitored by management to ensure appropriate
levels of spending.
The Board of Directors participate in a weekly conference call, during which they discuss—amongst other
items—the strategic direction and operational status of the Group, and as a result any significant deviation or
change, should such occur, will be highlighted to the Board promptly.
UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS
Group progress on achieving its key targets are regularly communicated to investors through stock exchange
announcements which can be found under the ‘News and Media’ section of the Company website. The Company
retains the services of a corporate communications firm who actively engages with the press, investors, analysts,
as well as a Corporate Broker, to ensure shareholders understand the Group’s operations and activities. The
Group will consider the use of commissioned research as a medium for shareholder education.3
The Company also utilises professional advisors such as a Broker, NOMAD, Corporate Communications
specialists and Company Secretarial services to provide advice and recommendations on various shareholder
considerations where relevant. The Company hosts a weekly conference call with all directors, our
NOMAD/Broker, and when appropriate our corporate communications advisors. During the call any shareholder
considerations identified over the course of the week can be tabled and responded to accordingly.
21
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
The Company regards the Annual General Meeting as an important opportunity to communicate directly with
shareholders via detailed presentations and an open question and answer session. During COVID times the AGM
has been held virtually, with a detailed investor presentation and Q&A session held by a separate webinar.
Additionally, the Company has also commenced holding webinars—as and when relevant—open to all
shareholders, typically providing an investor presentation and an opportunity for Q&A with management. The
Company also undertakes investor roadshows as and when appropriate, arranged through its broker. Over the past
year, the Company considers that it has communicated with a significant portion of its shareholder base and has a
clear understanding of shareholder expectations. Contact details are provided on the Company’s website and
within public documents, should shareholders wish to communicate with the Company.
TAKING INTO ACCOUNT WIDER STAKEHOLDER & SOCIAL RESPONSIBILITIES AND THEIR
IMPLICATIONS FOR LONG-TERM SUCCESS
The Directors recognise their responsibilities to stakeholders including the State of Alaska, North Slope Borough,
staff, partners, suppliers, vendors and residents within the areas it operates. Given the current size of the
Company, stakeholders are easily able to communicate directly with executive management and staff members,
allowing the Board to act appropriately on such feedback. A description of how the Group considers key
stakeholders in its decision-making is provided on page 7.
The Company is conscious of its impact on the geological, archeological and biological resources in its operating
environment, and has implemented measures to ensure that each person working on our projects, including
company personnel, contractors and subcontractors - are informed of the environmental, social and cultural
concerns that relate to that person’s job, so we can minimise any negative impacts.
Stakeholders can contact the Company via the website, its NOMAD, or can contact the Company’s retained
corporate communications advisers when required.
EMBEDDING EFFECTIVE RISK MANAGEMENT
The Board has weekly conference calls to discuss—amongst other items—operations, key risks, and other
relevant matters. The Company’s NOMAD and, when relevant, the Company’s corporate communications
advisers, also attend the weekly conference calls. Additionally, the Group also has a policy of structured weekly
or fortnightly operational and management conference calls during periods of operational activity to identify and
discuss key business challenges and risk areas. The Board believes that this regular program of internal
communications provides an effective opportunity for potential or real-time risks to be identified, considered
and—where necessary—addressed in a timely manner. Refer page 7 for additional description of how the Group
considers Stakeholder interests in decision making. The Group’s oil and gas activities are subject to a variety of
risks, both financial and operational, more information on risk can be found on pages 11 to 15 of the Company’s
2021 Annual Report.
Given the Company’s current size, the Board considers that the Executive Management team—with oversight
from the Non-Executive Board of Directors and relevant advisers—are sufficient to identify risks applicable to
the Company and its operations and to implement an appropriate system of controls. Accepting that no systems of
control can provide absolute assurance against material misstatement or loss, the directors believe that the
established systems for internal control within the group are appropriate to the size and cost structure of the
business. An internal audit function is not considered necessary or practical due to the size of the Company and
the close day-to-day control exercised by the executive directors.
The audit committee meets at least twice per year where these internal and financial controls are reviewed as
required and assets are also assessed for impairment considerations.
22
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
MAINTAINING A BALANCED AND WELL-FUNCTIONING BOARD
The Directors acknowledge their responsibility for, and recognise the importance of implementing and
maintaining, high standards of corporate governance. The Board is responsible for establishing and maintaining
the system of internal controls. The effectiveness of the Group's system of internal control is reviewed annually
by the Audit Committee of the Board.
The Board
The Board currently comprises two non-executive Directors, one of whom is the Chairman, and three executive
Directors. The independent Company Secretary is a partner in a law firm and who is a specialist in providing
company secretarial services to listed companies. This composition is considered to be an appropriate balance
given the Group’s current size; however, the Board may look to appoint an additional independent director in due
course if considered appropriate. The Board is responsible to the shareholders for the proper management of the
Group. It meets regularly to set and monitor strategy, examine opportunities, identify and consider key risks,
consider (and where appropriate approve) capital expenditure projects and other significant financing matters and
report to shareholders. The Board delegates authority to the management for day-to-day business matters
including: drilling, geological and operational matters, purchasing procedures, financial authority limits, contract
approval procedures and the hiring of full time and temporary staff and consultants. Matters reserved for the
Board are communicated in advance of formal meetings. In addition to formal board meetings, the directors hold
weekly conference calls, which the Company’s NOMAD is invited to attend, in order to keep the board fully
informed with operational matters and potential issues. The board also considers this regular interaction with its
NOMAD to be a prudent additional layer of corporate governance. Biographical details of the directors can be
found on the ‘About Pantheon’ section of the Company’s website.
The QCA Code does not offer a definition of independence with respect to directors, so in forming a view on the
independence of directors the Company has sought guidance by reference to the guidelines outlined in the FCA’s
UK Corporate Governance Code. In any event, the Board exercises discretion in making the determination of
director independence which is kept under review on an annual basis. The non-executive Chairman, Phillip Gobe,
is currently considered to be independent.
The Board has a number of committees as explained below.
Audit Committee
The Audit Committee consists of Phillip Gobe as Chairman, Jay Cheatham and Jeremy Brest. This Committee
provides a forum through which the Group's finance functions and auditors, report to the non-executive Directors.
Meetings may be attended, by invitation, by the Company’s NOMAD Company Secretary, other directors and the
Company’s auditors.
The Audit Committee meets at least twice a year. Its terms of reference include the review of the Annual and
Interim Accounts, consideration of the Company and Group’s accounting policies, the review of internal control,
risk management and compliance procedures, and consideration of all issues surrounding publication of interim
and annual financial results and the annual audit. The Audit Committee will also interact with the auditors and
review their reports relating to accounts and internal control systems.
Remuneration Committee
The Remuneration and Nomination Committee consist of Phillip Gobe as Chairman, Jeremy Brest, Jay Cheatham
and Justin Hondris. The Committee meets as and when required. Its role is to determine the remuneration
arrangements and contracts of executive Directors and senior employees, and the appointment or re-appointment
of Directors. It also has the responsibility for reviewing the performance of the executive Directors and for
oversight of the Company's incentive schemes. No Director is involved in deciding their own remuneration.
23
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Conflicts Committee
The Company has established a Conflicts Committee which consists of Phillip Gobe as Chairman, Jeremy Brest,
Justin Hondris and Jay Cheatham. The role of the Conflicts Committee is to assist the Board in monitoring actual
and potential conflicts of interest under the definitions of the Companies Act 2006. Under the Companies Act
2006 Directors are responsible for their individual disclosures of actual or potential conflict. To follow best
practice, the Conflicts Committee holds discussions where appropriate, with the Company’s UK lawyers.
Anti-Corruption & Bribery Committee
The Company has established an Anti-Corruption & Bribery Committee. This committee consists of Justin
Hondris as Chairman, Jeremy Brest, Jay Cheatham and Phillip Gobe. The purpose of the Anti-Corruption &
Bribery Committee is to ensure the Company’s compliance with the Bribery Act 2010.
HAVING APPROPRIATE EXPERIENCE, SKILLS AND CAPABILITIES ON THE BOARD
The Board of directors has a mix of experience, skills—both technical and commercial—and personal qualities
that seek to deliver the strategy of the Company. The Company will ensure that the directors have the necessary
up-to-date experience, skills and capabilities to deliver the Company strategy and targets. If the Company
identifies an area where additional skills are required, the Company will often contract an appropriately qualified
third party to advise as required. Each director is listed on the ‘About Pantheon’ section of the Company’s
website and in the annual report, along with a clear description of their role and experience. The Company
recognises that it currently has a limited diversity, including a lack of gender balance, and this will be considered
in future recruitment decisions if the board decides that additional directors are required.
EVALUATING BOARD PERFORMANCE
Given the Company’s current size, the Board has not considered it necessary to undertake a formal assessment of
the Board performance and effectiveness, however, any deficiencies in Board performance and effectiveness
would be identified on an ad hoc basis. The board contracts the executive remuneration specialist at Deloitte for
matters concerning management incentive schemes.
ETHICAL VALUES & BEHAVIOURS
The Company operates a corporate culture that is based on ethical values and behaviors and treats operational
stakeholders fairly and with respect. It will maintain a quality system appropriate to the standards required for a
Company of its size. The board communicates regularly with staff through meetings, team conference calls and
presentations, individual telephone calls and messages and advocates respectful, pen dialogue with employees,
consultants and other stakeholders.
MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES
Ultimate authority for all aspects of the Company’s activities resides with the Board, with the respective
responsibilities of the Chairman, the Executive Directors and the various committees arising as a result of
delegation by the Board. Given the constraints of balancing a small, cost-conscious Board with a desire to
maintain high standards of Corporate Governance, the Board has active, structured and regular internal
communication, including a standing weekly conference call between the entire board and its NOMAD where
significant matters are tabled and discussed. All the executive directors have designated roles and areas of
responsibility and engage with the Company’s shareholders and stakeholders in accordance with relevant
regulatory guidelines. There are a number of matters reserved for the Board’s review and approval including,
Group strategy, approval of major capital expenditure projects, approval of the annual and interim results,
fundraising, dividend policy and Board structure. It monitors the exposure to key business and operational risks
and reviews the strategic direction of the group and its operations. The Board delegates day-to-day responsibility
for managing the business to the Executive Directors/senior management team. The Board considers its current
24
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
governance structures and processes as appropriate in the context of its current size, headcount and complexity.
The audit committee meets at least twice per year where internal and financial controls are reviewed as required
and assets are also assessed for impairment considerations.
COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
Page 7 of this Annual Report provides a section 172 statement which discusses how the Group considers the
interests of shareholders and other relevant stakeholders in its decision making.
Additionally, under AIM Rule 26 the Company publishes historical annual reports, notices of meetings and other
publications—including regular operational news flow—over a minimum of the five previous years which can be
found under the ‘Financial Reports’ and other sections of the Company website.
The Board is committed to maintaining good communication and having dialogue with private and institutional
shareholders, as well as analysts. In addition to the Annual General Meeting, the Company endeavors to arrange
shareholder presentations (in person or via Webinar, Zoom or Microsoft Teams), allowing shareholders to discuss
issues and provide feedback as appropriate. The Company also retains the services of a specialist corporate
communications advisor to assist in promoting awareness of the Company’s activities to its shareholders and
wider audience.
The Board have not published an audit committee or remuneration committee report, which the Board considers
to be appropriate given the size and stage of development of the Company.
Regarding a general meeting of the Company, upon the conclusion of that meeting the results of the meeting are
released through a regulatory news service and a copy of the announcement is posted on the Company’s website.
In a situation such as where there is a significant proportion of votes cast against a resolution, then, where
relevant, an explanation would be provided.
EU Market Abuse Regulations
The EU Market Abuse Regulation came into effect in the UK on 3 July 2016 and the Company has implemented
relevant policies and procedures to ensure compliance with the requirements of the regime. The Company
administers compliance in-house, consulting with NOMAD and legal counsel regularly.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the financial statements in accordance with applicable laws and UK
adopted IFRS (“IFRS”). Company Law requires the Directors to prepare financial statements for each financial
period which give a true and fair view of the state of affairs of the Group and of the Company and of the profit or
loss of the Group for that period. In preparing those financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
a)
b) make judgements and estimates that are reasonable and prudent;
c)
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business; and
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements.
d)
The Directors confirm that the financial statements comply with the above requirements.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy
at any time the financial position of the Group and Company and to enable them to ensure that the financial
statements comply with the Companies Act 2006. The Directors are also responsible for safeguarding the assets
of the Group and hence for taking steps for the prevention and detection of fraud and other irregularities. The
Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website.
25
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Statement of disclosure to the auditors
So far as the Directors are aware:
a)
b)
there is no relevant audit information of which the Company’s auditors are unaware; and
all the Directors have taken all the steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditors are aware of that information.
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution proposing that UHY Hacker Young be
reappointed as auditors of the Company and that the Directors be authorised to determine their remuneration will
be put to the next Annual General Meeting.
By order of the board
Justin Hondris
Director
07 December 2021
26
PANTHEON RESOURCES PLC
DIRECTORS’ BIOGRAPHIES
FOR THE YEAR ENDED 30 JUNE 2021
Phillip Gobe, Non Executive Chairman
Phillip Gobe has over 40 years’ experience in the oil and gas business both in the USA. and internationally. He is
also Executive Chairman of ProPetro, a Texas-based oil services group providing hydraulic fracturing and other
services. Phillip has held senior positions in Energy Partners Ltd (President & COO), Nuevo Energy Co. (COO),
Vastar Resources (COO) and several senior positions with Atlantic Richfield Company, including a role as
Operations Manager of Prudhoe Bay in Alaska, the largest oilfield in the USA. Throughout his career Phillip has
successfully overseen several corporate exits at substantial premiums to pre-deal valuations. Phillip also has a
background in drilling, human resources and health and safety. He is currently a non-executive director of the
S&P 500 company, Pioneer Natural Resources and was previously a director of Scientific Drilling International
Inc, the USA’s fifth largest provider of directional drilling and measurement equipment and operational services.
Phillip acts as Chairman of Pantheon’s Remuneration and Nominations Committee, Audit Committee and
Conflicts Committee. Phillip is also a member of the Companies Anti-Corruption and Bribery Committee.
Jay Cheatham, Chief Executive Officer
Jay Cheatham has more than 50 years' experience in all aspects of the petroleum business. He has extensive
international experience in both oil and natural gas, primarily for ARCO. At ARCO, Jay held a series of senior
appointments. These include Senior Vice President and District Manager (ARCO eastern District) with direct
responsibility for Gulf Coast US operations and exploration and President of ARCO International where he had
responsibility for all exploration and production outside the US Jay's most recent appointment was as President
and CEO of Rolls-Royce Power Ventures, where he had the key responsibility for restructuring the Company.
Jay also has considerable financial skills in addition to his corporate and operational expertise. He has acted as
Chief Financial Officer for ARCO's US oil and natural gas company (ARCO Oil & Gas). Moreover, he has an
understanding of the capital markets through his past position as CEO to the Petrogen Fund, a private equity fund.
Jay is a member of the Company’s Remuneration and Nominations Committee, Audit Committee, Conflicts
Committee and Anti-Corruption and Bribery Committee.
Justin Hondris, Director, Finance and Corporate Development
Justin Hondris has over 15 years’ experience in public company management in the upstream oil and gas sector
and has wide ranging experience in corporate finance, private equity and capital markets in the UK and abroad.
Prior to Pantheon, Justin was involved in the private equity sector where he gained valuable experience in both
investment and exit strategies for growth companies.
He is responsible for the financial, legal, administrative and corporate development functions of the company.
Justin acts as Chairman of Pantheon’s Anti-Corruption and Bribery Committee and is a member of the
Remuneration and Nominations Committee and the Conflicts Committee.
Robert (Bob) Rosenthal, Technical Director
Bob Rosenthal has over 40 years' experience in the oil and gas industry globally as an Exploration Geologist and
Geophysicist. He has held various senior exploration positions and spent a large part of his career at Exxon and at
BP, where he gained key relevant regional experience in the geology of North Slope of Alaska and of Texas.
Since 1999, Bob has run his own successful consulting business and has led the exportation efforts of a number of
private and public companies.
Jeremy Brest, Non-executive Director
Jeremy has more than 25 years’ experience in investment banking and financial advisory. Jeremy is the founder
of Framework Capital Solutions, a boutique Singapore-based advisory firm specializing in structuring and
execution of private transactions. Prior to founding Framework, Jeremy was the head of structuring for Indonesia
at Credit Suisse and a derivatives trader at Goldman Sachs.
Jeremy is a member of the Company’s Audit Committee, Remuneration and Nominations Committee, Conflicts
Committee and Anti-Corruption and Bribery Committee.
27
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
Opinion
We have audited the financial statements of Pantheon Resources plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 30 June 2021 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Statement of Changes in Equity, the Consolidated Statement of Financial
Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Company
Statement of Cash Flows and the related notes to the financial statements, including significant accounting
policies.
The financial reporting framework that has been applied in the preparation of the Group and Parent Company
financial statements is applicable law and UK adopted International Financial Reporting Standards (IFRSs).
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 30 June 2021 and of the Group’s loss and cash flows for the year then ended;
the Group and Parent Company financial statements have been properly prepared in accordance with UK
adopted IFRSs;
the Group financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and Parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to note 1.4 in the Group financial statements, which indicates that the Group is reliant on a
successful fundraising event (for example an equity fundraising or a farmout) in order to meet its significant
forecast expenditures. The Group is actively engaged in discussions with a view to raising sufficient capital to
enable operational activities as well as to maintain a cash surplus through 2022.
As stated in note 1.4, these events or conditions, along with the other matters as set forth in note 1.4, indicate that
a material uncertainty exists that may cast significant doubt on the Group's and the Parent Company's ability to
continue as a going concern.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s
assessment of the entity’s ability to continue to adopt the going concern basis of accounting included an
assessment of the risk and audit procedures to address this risk:
Capital Fundraising
The Group is reliant on either a farmout or a completed fundraise of appropriate size (the “Financing”), which the
Group is seeking to complete in December 2021 in order to have sufficient resources for the anticipated winter
2021/2022 drilling and testing campaign and for ongoing working capital for the remainder of 2022. The Group is
28
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
actively engaged in obtaining the necessary funding and is also in negotiations for a potential farmout amongst
other options to ensure Pantheon is sufficiently funded. Management are optimistic that the Group will complete
its financing objectives.
We are aware that management is in discussions to achieve the Financing, and we note that management are
confident of a successful outcome.
This is vital to the Group’s success over the following 12 months as the Group will not be able to meet its
planned expenditure and exploration activities without it.
The Group recently arranged an additional $1.5m facility to cover any immediate ongoing expenditures (such as
the pre-purchase of drilling materials) until the financing is complete.
Given the above factors, we consider going concern to be a significant audit risk area.
The directors' conclusion of the risks and circumstances described in note 1.4 of the Group financial statements
represent a material uncertainty over the ability of the Group and Company to continue as a going concern for a
period of at least a year from the date of approval of the financial statements. However, clear and full disclosure
of the facts and the directors' rationale for the use of the going concern basis of preparation, including that there is
a related material uncertainty, is a key financial statement disclosure and so was the focus of our audit in this
area. Auditing standards require that to be reported as a key audit matter.
How our audit addressed the risk:
Our audit procedures included:
•
•
•
•
Assessing the transparency and the completeness and accuracy of the matters covered in the going
concern disclosure by evaluating management's cash flow projections for the next 12 months and the
underlying assumptions.
We obtained cash flow forecasts, reviewed the methodology behind these, ensured arithmetically correct
and challenged the assumptions.
We obtained post year end information on available cash reserves and compared these to the forecast to
assess the accuracy of the forecasts.
We discussed plans for the Group going forward with management, ensuring these had been incorporated
into the budgeting and would not have an impact on the going concern status of the Group.
Key observations:
In addition to the capital fundraising matters addressed above, key observations made related to:
Technical Programme Costs
We understand that the Group has no mandatory drilling commitments on its Alaskan lease units in 2022 and any
drilling is at management’s discretion. Subject to completion of the Financing, the Group intends to undertake
operations on one or more of its Talitha, Alkaid and Theta West projects.
Anticipated costs for such operations can be separated between each project as follows:
-
-
-
Talitha ($10.7m) – To test the four zones above the Kuparuk.
Alkaid ($23.2m) – Drill a development well, and if successful, to commence production.
Theta West ($16.7m) – Drilling, and if appropriate, testing costs for the Theta West well.
29
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
The anticipated drilling and exploration costs of the Alaskan wells is discretionary, and the Group have 100%
control of their exploration leases. Accordingly they could choose to undertake less exploration work should they
have a lack of sufficient funding.
It is important to note that this is contingent on the Group having sufficient cash or raising additional funds
through further equity financing.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our approach to the audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account an understanding of the structure of the Company and the
Group, their activities, the accounting processes and controls, and the industry in which they operate. Our planned
audit testing was directed accordingly and was focused on areas where we assessed there to be the highest risk of
material misstatement.
Our Group audit scope includes all of the group companies. At the Parent Company level, we also tested the
consolidation procedures. The audit team communicated regularly throughout the audit with the finance team in
order to ensure we had a good knowledge of the business of the Group. During the audit we reassessed and re-
evaluated audit risks and tailored our approach accordingly.
The audit testing included substantive testing on significant transactions, balances and disclosures, the extent of
which was based on various factors such as our overall assessment of the control environment, the effectiveness
of controls and the management of specific risk.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant findings, including any significant deficiencies in internal control that we
identify during the audit.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks
identified during our audit. Going concern is a significant key audit matter and is described above. In arriving at
our audit opinion above, the other key audit matters were as follows:
30
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
Key audit matters
of
Valuation
exploration and evaluation assets in
the Group
impairment
and
to
need
assess
The Group has capitalised costs in
respect of the Group’s exploration
interests in accordance with IFRS 6
‘Exploration for and Evaluation of
Mineral Resources’ (IFRS 6). The
Directors
the
exploration assets for indicators of
impairment and where they exist to
undertake a full review to assess the
need for impairment charges. This
involves significant judgements and
assumptions such as the timing and
extent and probability of future cash
flow.
of
We therefore identified the risk over
and
impairment
evaluation assets as a significant risk,
which was one of the most significant
risks of material misstatement.
exploration
How our audit addressed the key audit matters
Our audit work included, but was not restricted to:
• Discussing the Alaskan exploration assets with
their review for
management and evaluating
indicators of impairment in conjunction with the
independent reports available for each exploration
project and reviewing available information to
assess whether the leases remain in good standing.
•
In respect of the Alaskan exploration assets that
have not been impaired, we confirmed there is an
ongoing plan to develop each prospect and assessed
the future plans of the projects in respect of
funding, the right to explore and development to
indicators of
there were any
assess whether
impairment in line with IFRS 6.
• We discussed the key leases with the directors and
considered their assessment in conjunction with the
independent reports on the portfolio of leases
available and reviewed other available information
to assess whether the leases remain in good
standing or are in the process of renewal.
• Where certain leases have not been renewed either
during the year or in the subsequent period we
confirmed with management that these leases were
non-core and did not have a material impact on the
exploration areas they are targeting.
The Group’s accounting policy on the valuation and
impairment of exploration and evaluation assets in the
Group is shown in Principal Accounting Policies for the
consolidated
related
and
disclosures are included in notes 1.9 and 1.10.
statements
financial
Key observations
As a result of the audit procedures we performed and,
after considering management’s disclosures of the
judgements applied by them, we have concluded that no
indicators of impairment were identified in respect of
the carrying values of exploration and evaluation assets
at the year end.
Impairment of investments and loans Our audit work included, but was not restricted to:
31
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
due from subsidiary companies in the
Parent Company
International
Under
Accounting
Standard 36 ‘Impairment of Assets’,
companies are
to assess
whether there is any indication that an
asset may be
impaired at each
reporting date.
required
the
judgements and assumptions
Key
of
regarding
investments include the timing, extent
and probability of future cash flow
from its subsidiary companies.
impairment
The Parent Company has loans due
from subsidiary companies of $188.3m
investments
(2020: $139.7m). The
represent the primary balance on the
Company balance sheet and there is a
risk it could be impaired and that
be
loans may
intragroup
recoverable as a result of the subsidiary
companies incurring losses.
not
We therefore identified the risk over
the impairment of loans due from
subsidiary companies as a significant
risk in the Parent Company financial
statements, which was one of the most
significant
material
misstatement.
risks
of
• Reviewing the investments balances for indicators
of impairment;
• Assessing the appropriateness of the methodology
applied by management in their assessment of the
recoverable amount of
loans by
comparing it to the Group’s accounting policy;
intragroup
• Assessing management‘s
the
recoverable amounts of intragroup loans including
review the impairment provisions and net asset
values of components that have intercompany debt;
evaluation of
• Checking
that
intragroup
loans have been
reconciled and confirming that there are no material
differences.
Key observations
As a result of the audit procedures we performed and,
after considering management’s disclosures of the
judgements applied by them, we have concluded that
the majority of the investment balances correlate with
the exploration assets held by that subsidiary and our
to our
impairment review was
the
assessment of
corresponding exploration licences.
linked
impairment on
indicators of
therefore
As at the year end the carrying value of the Alaskan
assets held by the subsidiaries to which the funds had
been lent were in excess of the intercompany loans so
no indications of impairment were identified.
Fair value of the assets and liabilities
on acquisition of Borealis Alaska
LLC
During the current year the Group
acquired Borealis Alaska LLC – an
entity which held the remaining 10.8%
working interest in the Alaskan Talitha
unit. This
is a one-off material
transaction which raises the risk in
Our audit work included, but was not restricted to:
• Review of the signed Members Interest Purchase
agreement to assess management’s identification of
the assets and liabilities acquired as well as to
corroborate their fair value at the date of acquisition
and to agree shares issued and to be issued as part
of the purchased consideration;
• Assessing the appropriateness of the recognition
policies applied by management in their assessment
32
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
itself that the accounting and valuation
of the acquisition has not been treated
correctly.
consideration paid
for
represented
the
The
acquisition was
by
14,272,592 ordinary shares at a price
of 37.5p per share, which when
total
equated
translated,
consideration of $7,383,711.
to
the
iterates
requirement
IFRS 3 Business Combinations (IFRS
3)
that
acquisitions must be accounted for
using the ‘acquisition method’, which
generally requires assets acquired and
liabilities assumed to be measured at
their fair values at the acquisition date.
assets
The determination of the value of
intangible
acquired
of
$7,383,711
significant
involve
judgements and could, if performed
inaccurately,
to a material
misstatement.
lead
We therefore identified accounting and
valuation of the acquisition of Borealis
Alaska LLC as a key audit matter in
the Group financial statements, which
the most significant
was one of
assessed
material
misstatement.
risks
of
of the fair value of Borealis Alaska LLC against the
requirements of IFRS 3;
• Evaluating management’s methodology including
key assumptions used against the requirements of
IFRS 3;
• Consideration of whether any additional intangible
assets should be recognised on the acquisition;
• Performing a review of the consolidation entries,
adjustments and accounting estimates to ensure the
entity had been recognised and consolidated within
the group appropriately.
• Evaluate the related disclosures included in the
financial statements for compliance with IFRS 3.
Key observations
As a result of the audit procedures we performed and,
after considering management’s assessments, we have
concluded that the acquisition of Borealis Alaska LLC
is materially accurate and has been accounted for in line
with the recognition criteria of IFRS 3.
33
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We apply the
concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on
our audit and on the financial statements.
We define financial statement materiality as the magnitude by which misstatements, including omissions, could
reasonably be expected to influence the economic decisions taken on the basis of the financial statements by
reasonable users.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use
a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Materiality Measure Group
Overall materiality
Parent
How we determine it
Rationale for
benchmarks applied
Performance
materiality
Specific materiality
Reporting threshold
We determined materiality for the financial statements as a whole to be:
$1,887,000 (2020: $1,545,000)
Based on a benchmark of:
1% of net assets (the key indicator)
of the group.
$1,321,000 (2020: $1,169,000)
1% of net assets (the key indicator)
of the Parent Company exceeded
the Group materiality amount
therefore this was capped at 70%
of Group materiality.
$991,000 (2020: $812,000)
We believe the net assets are the most appropriate benchmark due to the
size and stage of development of the Company and Group and due to the
Group not yet generating any revenue.
On the basis of our risk assessment, together with our assessment of the
Group’s control environment, our judgement is that performance
materiality for the financial statements should be 75% of materiality, and
was set at:
$1,415,250 (2020: $1,159,000)
Area materiality for the disclosure of the cash element of directors’
remuneration has been set at £2,000 and performance materiality of
£1,000.
We agreed with the Audit Committee that we would report to them all
misstatements over 5% of Group and company materiality identified
during the audit as set out below, as well as differences below that
threshold that, in our view, warrant reporting on qualitative grounds. We
also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial
statements.
$95,000 (2020: $77,000)
$66,000 (2020: $54,000)
34
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
Other information
The other information comprises the information included in the annual report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
35
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
using the going concern basis of accounting unless the directors either intend to liquidate the group or Parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding of the Group and the industry in which it operates, we identified that the principal
risks of non-compliance with laws and regulations related to the acts by the Group which were contrary to
applicable laws and regulations including fraud and we considered the extent to which non-compliance might
have a material effect on the financial statements. We also considered those laws and regulations that have a
direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal risks were related to potential impairment of
exploration and other assets.
Audit procedures performed included: review of the financial statement disclosures to underlying supporting
documentation, review of correspondence with legal advisors, enquiries of management, testing of journals and
evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement
due to fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance
with laws and regulations is from the events and transactions reflected in the financial statements, the less likely
we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
36
PANTHEON RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2021
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with part 3 of Chapter 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent
Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Daniel Hutson
(Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
Chartered Accountants and Statutory Auditor
UHY Hacker Young
4 Thomas More Square
London E1W 1YW
07 December 2021
37
PANTHEON RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Continuing operations
Administration expenses
Impairment of exploration & evaluation assets
Share option expense
Operating loss
Interest receivable
Loss before taxation
Taxation
Loss for the year from Continuing Operations
after Taxation
Loss for the year from discontinued operations
Loss for the year
Other comprehensive income for the year
Exchange differences from translating foreign
operations
Total comprehensive loss for the year
Loss per share from continuing operations:
Basic and diluted loss per share
Loss per share from discontinued operations:
Basic and diluted loss per share
Notes
14.1
24
5
7
8
3
2
2
2021
$
2020
(restated)
$
(5,034,361)
-
(3,211,038)
(8,245,400)
(3,667,635)
(130,112)
-
(3,797,747)
4,234
23,759
(8,241,165)
(3,773,988)
1,573,094
965,681
(6,668,071)
(2,808,307)
(54,415)
(14,170,288)
(6,722,487)
(16,978,595)
1,503,199
(47,800)
(5,219,288)
(17,026,395)
(1.17)¢
(0.56)¢
(0.01)¢
(2.83)¢
The loss for the current and prior year and the total comprehensive loss for the current and prior year are wholly
attributable to the equity holders of the parent company, Pantheon Resources Plc.
38
PANTHEON RESOURCES PLC
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Share
capital
$
Share
premium
Retained
losses
Currency
reserve
$
$
$
Share
based
payment
$
Non
controlling
Interests
$
Total
equity
$
Group
At 1 July 2020
8,568,721
173,687,092
(29,608,911)
(268,637)
2,163,898
Loss for the year
Other comprehensive
income: Foreign
currency translation
Total comprehensive
income for the year
Capital Raising
-
-
-
-
-
-
(6,722,487)
-
1,503,199
(6,722,487)
1,503,199
Issue of shares
1,170,482
36,394,313
-
-
(1,397,469)
-
-
-
-
-
-
-
-
-
-
-
-
3,172,564
9,39,203
208,683,936
(36,331,398)
1,234,562
5,336,462
Issue costs
Share option expense
Balance at 30 June
2021
-
-
-
-
-
-
-
-
154,542,163
(6,722,487)
1,503,199
(5,219,288)
37,564,795
(1,397,469)
3,172,564
188,662,765
Share
capital
Share
premium
Retained
Losses
Currency
reserve
$
$
$
$
Share
based
payment
$
Non
controlling
Interests
$
Total
equity
$
Group
At 1 July 2019
7,966,075
164,044,720
(12,630,316)
(220,838)
2,163,898
(54,708)
161,268,831
Loss for the year
Other comprehensive
income: Foreign
currency translation
Total comprehensive
income for the year
Capital Raising
-
-
-
-
-
(16,978,595)
-
-
(47,799)
-
(16,978,595)
(47,799)
Issue of shares
602,646
10,244,977
-
-
-
(31,239)
(571,366)
-
-
-
-
-
-
-
-
-
Issue of shares in lieu of
fees
Issue costs
Disposals
Balance at 30 June
2020
-
-
-
-
-
-
-
-
-
(16,978,595)
(47,799)
-
(17,026,394)
-
-
-
54,708
10,847,623
(31,239)
(571,366)
54,708
8,568,721
173,687,092
(29,608,911)
(268,637)
2,163,898
-
154,542,163
39
PANTHEON RESOURCES PLC
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Share
capital
$
Share
premium
Retained
losses
Currency
reserve
$
$
$
Share
based
payment
$
Total
equity
$
8,568,721
173,687,092
(22,587,498)
(20,659,590)
2,163,898
141,172,623
-
-
-
-
-
-
(5,503,380)
-
-
17,736,830
(5,503,380)
17,736,830
-
-
-
(5,503,380)
17,736,830
12,233,450
Company
At 1 July 2020
Loss for the year
Other comprehensive
income: Foreign currency
translation
Total comprehensive
income for the year
Capital Raising
Issue of shares
1,170,482
36,394,313
-
-
-
37,564,795
Issue costs
Share option expense
Balance at 30 June 2021
-
-
9,739,203
(1,397,469)
-
208,683,936
-
-
(28,090,878)
-
-
(2,922,760)
-
3,172,564
5,336,462
(1,397,469)
3,172,564
192,745,963
40
PANTHEON RESOURCES PLC
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Share
capital
$
Share
premium
Retained
losses
Currency
reserve
$
$
$
Share
based
payment
$
Total
equity
$
7,966,075
164,044,720
(21,300,988)
(16,867,113)
2,163,898
136,006,592
-
-
-
-
-
-
(1,286,510)
-
-
(3,792,477)
(1,286,510)
(3,792,477)
-
-
-
-
-
-
(1,286,510)
(3,792,477)
(5,078,987)
10,847,623
(31,239)
(571,366)
141,172,623
Company
At 1 July 2019
Loss for the year
Other comprehensive
income: Foreign currency
translation
Total comprehensive
income for the year
Capital Raising
Issue of shares in lieu of
fees
Issue costs
Balance at 30 June 2020
Issue of shares
602,646
10,244,977
-
(31,239)
-
-
-
-
-
8,568,721
(571,366)
173,687,092
-
(22,587,498)
-
(20,659,590)
2,163,898
41
PANTHEON RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Notes
2021
$
2020
$
ASSETS
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Lease Liabilities
Deferred tax liability
Non-current liabilities
Lease Liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves
Share capital
Share premium
Retained losses
Currency reserve
Share based payment reserve
Shareholders’ equity
15
17
10
11
12
13
16
8
16
18
24
188,954,719
30,308
188,985,027
109,876
5,663,477
5,773,353
156,097,609
658,898
156,756,507
74,167
4,802,965
4,877,132
194,758,380
161,633,639
1,107,090
1,250,000
32,788
3,705,737
6,095,615
-
-
6,095,615
188,662,765
9,739,203
208,683,936
(36,331,398)
1,234,562
5,336,462
188,662,765
388,092
1,335,863
46,311
5,293,296
7,063,562
27,914
27,914
7,091,476
154,542,163
8,568,721
173,687,092
(29,608,911)
(268,637)
2,163,898
154,542,163
The financial statements were approved by the Board of Directors and authorised for issue on the 07 December
2021 and signed on its behalf by
Justin Hondris
Director
Company Number 05385506
42
PANTHEON RESOURCES PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
ASSETS
Non-current assets
Property, plant and equipment
Loans to subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease Liability
Non-current liabilities
Lease Liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves
Share capital
Share premium
Retained losses
Currency reserve
Share based payment reserve
Shareholders’ equity
Notes
2021
$
2020
$
17
10
10
11
12
16
16
18
24
30,308
188,286,555
188,316,863
73,035
139,661,971
139,735,006
104,515
4,962,573
5,067,088
68,807
1,745,834
1,814,641
193,383,951
141,549,647
605,201
32,788
637,988
-
302,799
46,311
349,110
27,914
27,914
637,988
377,024
192,745,963
141,172,623
9,739,203
208,683,936
(28,090,878)
(2,922,760)
5,336,462
8,568,721
173,687,092
(22,587,498)
(20,659,590)
2,163,898
192,745,963
141,172,623
In accordance with the provisions of Section 408 of the Companies Act 2006, the Company has not presented an
income statement. A loss for the year ended 30 June 2021 of $5,503,380 (2020: loss of $1,286,510) has been
included in the consolidated income statement.
The financial statements were approved by the Board of Directors and authorised for issue on 07 December 2021
and signed on its behalf by:
Justin Hondris
Director
Company Number 05385506
43
PANTHEON RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Notes
2021
$
2020
$
Net outflow from operating activities
19
(3,098,495)
(5,707,802)
Cash flows from investing activities
Interest received
Funds used for drilling, exploration and leases
Disposal
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from share issues
Issue costs paid in cash
Repayment of borrowing and leasing liabilities
Net cash inflow from financing activities
3
18
4,295
(24,973,399)
-
(24,969,105)
25,881
(1,591,591)
(1,134)
(1,566,844)
30,181,084
(1,197,275)
(55,698)
28,928,111
10,816,383
(571,364)
(21,394)
10,223,625
Increase in cash & cash equivalents
860,511
2,948,979
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
4,802,965
5,663,476
1,853,986
4,802,965
44
PANTHEON RESOURCES PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Notes
2021
$
2020
$
Net cash inflow / (outflow) from operating activities
19
15,525,277
(5,137,011)
Cash flows from investing activities
Interest received
Loans to subsidiary companies
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from share issues
Issue costs paid in cash
Lease payments
Net cash inflow from financing activities
4,224
(41,240,873)
(41,236,649)
23,759
(4,676,703)
(4,652,944)
18
30,181,084
(1,197,275)
(55,698)
28,928,111
10,816,383
(571,364)
(21,394)
10,223,625
Increase in cash and cash equivalents
3,216,739
433,670
Cash and cash equivalents at the beginning of the year
1,745,834
1,312,164
Cash and cash equivalents at the end of the year
11
4,962,573
1,745,834
45
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1.
Accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the year,
is set out below.
1.1
Basis of preparation
The financial statements have been prepared on a going concern basis using the historical cost convention and in
accordance with the UK Adopted International Financial Reporting Standards (“IFRSs”), including IFRS 6,
‘Exploration for and Evaluation of Mineral Resources’, in accordance with the provisions of the Companies Act
2006.
The Group’s financial statements for the year ended 30 June 2021 were authorised for issue by the Board of
Directors on 07 December 2021 and were signed on the Board’s behalf by Mr J Hondris.
The Group and Company financial statements are presented in US dollars.
1.2
Basis of consolidation
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases. The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
Goodwill arising on acquisitions is capitalised and subject to impairment review, both annually and when there
are indications that the carrying value may not be recoverable.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
All the companies over which the Company has control apply, where appropriate, the same accounting policies as
the Company.
1.3
Interests in joint arrangements
IFRS 11 Joint Operations defines a joint arrangement as an arrangement over which two or more parties have
joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities (being those that significantly affect the returns of the arrangement)
require unanimous consent of the parties sharing control.
Joint operations
A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the assets and obligations for the liabilities, relating to the arrangement. In relation to its interests in
joint operations, the Group recognises its:
-
-
-
-
-
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities incurred jointly
Revenue from the sale of its share of the output arising from the joint operation
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly
1.4
Going concern
As previously announced, the Company must complete either a farmout and/or funding in Q4 2021 to have
sufficient resources for the anticipated winter 2021/2022 drilling and testing campaign and for ongoing working
capital.
The Group is in advanced efforts to secure a funding solution, however at the time of writing, this remains
incomplete and is naturally subject to completion risk. The process is well advanced and the Company is
confident of a positive outcome, however, there can be no guarantees of a successful outcome.
46
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The Directors have reviewed the Group’s overall position and given the advanced stage of the fund-raising
discussions are of the opinion that the Group is able to operate as a going concern for at least the next twelve
months from the date of approval of these financial statements.
Given the Directors’ confidence in their ability to complete a funding solution in the near term and the
discretionary nature of some of the future exploration commitments, the Directors believe that the Group will be
sufficiently funded and believe the use of the going concern basis is appropriate. Accordingly, the Directors have
prepared the accounts on a going concern basis. However, it should be noted that completion risk relating to the
funding solution causes a material uncertainty that may cause significant doubt about going concern should
sufficient fundraising not be obtained.
1.5
Revenue
The Group is engaged in the business of extracting oil and gas. Revenue from contracts with customers is
recognised in accordance with IFRS15 Revenue from Contacts with Customers, at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those goods.
Contract balances
A contract asset is the right to consideration in exchange for goods transferred to the customer. If the Group
performs by transferring goods to a customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional. The Group does not have any contract
assets as performance and a right to consideration occurs within a short period of time and all rights to
consideration are unconditional.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
1.6
Foreign currency translation
(i)
Functional and presentational currency
The financial statements are presented in US Dollars (“$”), which is the functional currency of the
Company and is the Group’s presentation currency.
(ii)
Transactions and balances
Transactions in foreign currencies are translated into US dollars at the average exchange rate for the year.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the balance sheet date. The resulting exchange gain or loss is dealt with in the income statement.
The assets, liabilities and the results of the foreign subsidiary undertakings are translated into US dollars at the rates
of exchange ruling at the year end. Exchange differences resulting from the retranslation of net investments in
subsidiary undertakings are treated as movements on reserves.
1.7
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of 90 days or less to be cash equivalents,
carried at the lower of cost or market value.
1.8
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and expected to
apply when the related deferred tax is realised, or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available
against which the temporary differences can be utilized.
47
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1.9
Exploration and evaluation costs and developed oil and gas properties
The Group follows the ‘successful efforts’ method of accounting for exploration and evaluation costs. At the
point of production, all costs associated with oil, gas and mineral exploration and investments are classified into
and capitalised on a ‘cash generating unit’ (“CGU”) basis, in accordance with IAS 36. Costs incurred include
appropriate technical and administrative expenses but not general corporate overheads. If an exploration project is
successful, the related expenditures will be transferred to Developed Oil and Gas Properties and amortised over
the estimated life of the commercial reserves on a ‘unit of production’ basis.
The recoverability of all exploration and evaluation costs is dependent upon the discovery of economically
recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of the
reserves and future profitable production or proceeds from the disposition thereof. All balance sheet carrying
values are reviewed for indicators of impairment at least twice yearly. The prospect acreage has been classified
into discrete “projects” or, upon production, CGU’s. When production commences the accumulated costs for the
specific CGU is transferred from intangible fixed assets to tangible fixed assets i.e., ‘Developed Oil & Gas
Properties’ or ‘Production Facilities and Equipment’, as appropriate. Amounts recorded for these assets represent
historical costs and are not intended to reflect present or future values.
1.10
Impairment of exploration costs and developed oil and gas properties, depreciation of
assets, plug & abandonment and goodwill
In accordance with IFRS 6 ‘Exploration for and Evaluation of Mineral Resources’ (IFRS 6), exploration and
evaluation assets are reviewed for indicators of impairment. Should indicators of impairment be identified an
impairment test is performed.
In accordance with IAS 36, the Group is required to perform an “impairment test” on assets when an assessment
of specific facts and circumstances indicate there may be an indication of impairment, specifically to ensure that
the assets are carried at no more than their recoverable amount. Where an impairment test is required, any
impairment loss is measured, presented and disclosed in accordance with IAS 36.
In accordance with IAS 36 the Group has determined an accounting policy for allocating exploration and
evaluation assets to specific ‘cash-generating units’ (“CGU”) where applicable.
Exploration and evaluation costs
The Alaskan exploration and evaluation leasehold assets were subject to a fair value assessment as at the date of
acquisition. The carrying value at 30 June 2021 represents the cost of acquisition plus any fair value adjustment,
where appropriate, and subsequent capitalised costs, in accordance with IFRS.
Decommissioning Charges
Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s
facilities and properties. The Group assesses its decommissioning provision at each reporting date. The ultimate
decommissioning costs are uncertain and cost estimates can vary in response to many factors, including changes
to relevant legal requirements, the emergence of new restoration techniques or experience at other production
sites. The expected timing, extent and amount of expenditure may also change - for example, in response to
changes in reserves or changes in laws and regulations or their interpretation. Therefore, significant estimates and
assumptions are made in determining the provision for decommissioning. As a result, there could be significant
adjustments to the provisions established which would affect future financial results. The provision at reporting
date represents management’s best estimate of the present value of the future decommissioning costs required.
For all wells the Group has adopted a Decommissioning Policy in which all decommissioning costs are
recognised when a well is either completed, abandoned, suspended or a decision taken that the well will likely be
plugged and abandoned in due course. For completed or suspended wells, the decommissioning charge is
provided for and subsequently depleted over the useful life of well using unit of production method.
Goodwill
Goodwill, when carried, is tested for impairment annually (as at 30 June) and when circumstances indicate that
the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount
of the asset or group of assets to which the goodwill relates. Where the recoverable amount is less than its
48
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
carrying amount, an impairment loss is recognised. If an impairment is recognised it is reflected in the statement
of profit or loss and other comprehensive income as part of other operating expenses.
Developed Oil and Gas Properties
Developed Oil and Gas Properties only represent the capitalised costs associated with oil and gas properties,
assessed on a CGU (cash generating unit) basis which have been transferred from “Exploration and Evaluation
costs” to “Developed Oil & Gas properties” when the well was commissioned. Wells are depleted over the
estimated life of the commercial reserves based on the “unit of production basis”. The carrying values of
Developed Oil and Gas properties are tested for indicators of impairment, and the ‘recoverable amount’, being the
asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the
asset’s carrying value over its recoverable amount is expensed to the income statement.
Other property, plant and equipment
Other property, plant and equipment are stated at historical cost less depreciation. Depreciation is provided at
rates calculated to write off the costs less estimated residual value of each asset over its estimated useful life, as
follows:
-
-
Production facilities and equipment are depreciated by equal instalments over their expected useful lives,
ranging from 3 to 30 years.
Office equipment is depreciated by equal annual instalments over their expected useful lives, being 3
years.
1.11
Financial instruments
IFRS 7 requires information to be disclosed about the impact of financial instruments on the Group's risk profile,
how the risks arising from financial instruments might affect the entity's performance, and how these risks are
being managed.
The Group's policies include that no trading in derivative financial instruments shall be undertaken. These
disclosures have been made in Note 23 to the accounts.
1.12 Leases
The details of accounting policies under both IAS 17 and IFRS 16 are presented separately below.
Policy applicable from 1 July 2019
All contracts entered into by the group are assessed to determine if they are either a lease contract or contain a
lease contract. Where a lease is identified the Group recognises a right of use asset and a corresponding lease
liability with respect to all lease arrangements in which it is a lessee.
There are three key evaluations in determining a lease contract:
The contract contains an identified asset, which is either explicitly identified in the contract or implicitly
I.
specified by being identified at the time the asset is made available to the group.
The Group has the right to obtain substantially all of the economic benefits from use of the identified
II.
assets throughout the period of use, considering rights within the defined scope of the contract.
III.
The Group has the right to direct the use of the identified asset throughout the period of use.
Lease liabilities are initially measured at the discounted present value of all future lease payments, excluding
prepayments made up to and including the commencement date of the lease. The discount rate used is either the
rate implicit in the lease, or if that is not readily determined, the incremental borrowing rate.
The lease liability is presented as a separate line item in the balance sheet.
Subsequent measurement of the lease liability includes increases to the carrying amount of the liability to reflect
the interest on the lease liability (using the effective interest method) and by reducing the carrying amount for the
lease payments made.
49
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
There is a change in the lease term. In such cases the lease liability is remeasured by discounting the
A.
revised lease payments using the revised discount rate.
B.
Change of lease payments (due to changes in the reference index or rate) or any changes in expected
payments under a guaranteed residual value. In such instances the lease liability is remeasured using unchanged
discount rates; a revised discount rate is used where the lease payments are changed due to a change in a floating
interest rate.
Where a lease modification is not accounted for as a separate lease. In such a case the lease liability is
C.
remeasured based on the modified lease term, using the revised discount rate at the date of the modification.
The initial carrying value of a right-of-use assets consists of:
•
•
•
•
The corresponding lease liability
All and any prepayments prior to the lease commencement
Less: Any lease incentive received by the lessee
Less: Any initial direct costs incurred by the lessee
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.
The depreciation starts at the commencement date of the lease. The asset is subsequently measured at initial
carrying value less accumulated depreciation and impairment losses.
Where an impairment indictor has been identified, an impairment test is conducted. In assessing whether an
impairment is required, the carrying value of the asset is compared with its recoverable value. The recoverable
amount is the higher of the assets fair value less the costs to sell and value in use.
50
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1.13 Critical accounting estimates and judgements
The preparation of financial statements in conformity with International Financial Reporting Standards requires
the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses during the reporting period.
Although these estimates are based on management’s best knowledge of current events and actions, actual results
ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the
process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are as follows:
Impairment of tangible and intangible assets
The first stage of the impairment process is the identification of an indication of impairment. Such indications can
include production difficulties, significant geological or geophysical information which may negatively impact the
existing assessment of a project’s potential for recoverability, significant reductions in estimates of resources,
significant falls in commodity prices, a significant revision of Group Strategy or of the plan for the development of
a field, operational issues which may require significant capital expenditure to remediate, political or regulatory
impacts and others. This list is not exhaustive and management judgement is required to decide if an indicator of
impairment exists. The Group regularly assesses the tangible and non-tangible assets for indicators of impairment.
When an impairment indicator exists an impairment test is performed; the recoverable amount of the asset, being the
higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any
excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.
Contingent liabilities
Pursuant to IAS37, a contingent liability is either: (1) a possible obligation arising from past events whose
existence will be confirmed only by the occurrence or non-occurrence of some uncertain future event not wholly
within the entity’s control, or (2) a present obligation that arises from a past event but is not recognized because
either: (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, or (ii) the amount of the obligation cannot be measured with sufficient reliability.
Kinder Morgan Treating L.P. (“Kinder Morgan”) initiated a dispute over an East Texas gas treating agreement
between Kinder Morgan and Vision Operating Company, LLC (“VOC”). VOC ceased making payments to the
service provider in July 2019. The service provider subsequently issued a demand to VOC and, in February 2021,
served Pantheon Resources plc with a petition, seeking to recover not less than $3.35m in respect of this VOC
contract. Pantheon held ownership of less than 0.1% of VOC via a 66.6% interest in Vision Resources LLC. Both
Vision Resources LLC and VOC filed for Chapter 7 Bankruptcy in the United States Bankruptcy Court for the
Southern District of Texas Houston Division on 28 April 2020
No Pantheon entity is a signatory to the gas treating agreement and none are named in the agreement. Pantheon
has taken legal advice on the matter and believes it has no liability to the service provider. Accordingly, Pantheon
does not consider a provision should be included with the final statements and will contest any claim made.
In, July 2021, the court dismissed Kinder Morgan’s claims against Pantheon Resources plc. Kinder Morgan has
also asserted the same claims against two subsidiaries, Pantheon Oil & Gas, LP and Pantheon East Texas, LLC.
Pantheon Oil & Gas, LP and Pantheon East Texas, LLC are contesting these claims.
Value of exploration assets on acquisition
In accordance with IFRS 3 Business Combinations, exploration assets acquired as part of a business acquisition,
and hence combination, are recorded at their fair value as opposed to the fair value of the consideration paid.
51
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Share-based payments
The Group records charges for share-based payments.
For option-based share-based payments, to determine the value of the options management estimate certain
factors used in the option pricing model, including volatility, vesting date, exercise date of options and the
number of options likely to vest. At each reporting date during the vesting period management estimate the
number of shares that will vest after considering the vesting criteria. If these estimates vary from actual
occurrence, this will impact on the value of the equity carried in the reserves.
1.14 New and amended International Financial Reporting Standards adopted by the Group
New standards and interpretations not applied
As of the date of these financial statements the IASB and IFRIC have issued a number of new standards,
amendments and interpretations. These new Standards, Amendments and Interpretations are effective for
accounting periods beginning on or after the dates shown below. Of these, only the following are expected to be
relevant to the Group:
Contingent
Impact on initial application
Property, Plant & Equipment
Provisions,
Contingent Assets
Statements:
of
Presentation
Classification of Liabilities as Current or Non-
Current
Liabilities
Financial
and
Effective date
1 January 2022
1 January 2022
1 January 2022
Standard
IAS 16*
IAS 37*
IAS 1*
*
Amendments
The Group does not anticipate that the adoption of these standards will have a material effect on its financial
statements in the period of initial adoption.
1.15
Share based payments
On occasion, the Company has made share-based payments to certain Directors and advisers by way of issue of
ordinary shares and share options. In the case of share options, the fair value of these payments is calculated by
the Company using the Black-Scholes option pricing model. The expense is recognised on a straight-line basis
over the period from the date of award to the date of vesting, based on the Company’s best estimate of the
expected number of shares that will eventually vest.
During the year the Company implemented its updated share option plan (“scheme”) which comprised a one off,
up-front issue of 13.7 million share options at a 93% premium to the prevailing share price, all of which have
now vested, as well as an annual grant of 14.655 million share options, none of which have vested, with respect to
the previous financial year. To the extent that share options have vested or are expected to vest, the calculated
expense has been amortised on a straight-line basis over the vesting period. These were the only share options
issued by the Company since 2014.
52
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1.16 Discontinued operation
A discontinued operation is a component of the company’s business (i.e., the operations and cash flows can be
clearly distinguished, operationally and for financial reporting purposes, from the rest of the company). It also
represents a separate major line of business or geographical area of operations, or is part of a single coordinated
plan to dispose of a separate major line of business or geographical area of operations.
2.
Loss per share
The total loss per ordinary share from continuing operations for the group is 1.17 US cents (2020: 0.56 US cents -
loss). The loss is calculated by dividing the loss for the year from continuing operations by the weighted average
number of ordinary shares in issue of 568,432,240 (2020: 500,386,832).
The total loss per ordinary share for the group from discontinued operations is 0.01 US cents (2020: 2.83). This is
calculated by dividing the loss for the year from discontinued operations by the weighted average number of
ordinary shares in issue of 568,432,240 (2020: 500,386,832).
The diluted profit per share has been kept the same as the basic profit per share because, although the 33,307,843
vested options and warrants in issue were in the money as at 30 June 2021, the Company reported a loss, hence
including the additional dilution would have resulted in a reduction of the loss per share.
The diluted weighted average number of shares in issue is 616,395,083 (2020: 500,386,832).
3.
Discontinued Operations, Acquisitions and Disposals
Acquisition of Borealis Alaska LLC (10.8% interest in Talitha Unit)
In March 2021, Pantheon formally acquired 100% ownership of Borealis Alaska LLC. Borealis Alaska LLC’s
sole asset was a 10.8% working interest in each of the 16 leases comprising the 44,463 acre Talitha Unit.
Pantheon paid a consideration of 14,272,592 ordinary shares for the 10.8% working interest. Upon completion of
the acquisition, Pantheon owned a 100% working interest and an 86.0% net revenue interest in the Talitha Unit.
Discontinued Operations & Disposal of interest in East Texas
During the year the Group exited its East Texas portfolio entirely, reflecting the previously announced strategic
decision of the Group to prioritise its Alaska North Slope asset portfolio, given the significantly larger size, scale
and resource potential. Accordingly, the Group took the decision to fully impair the carrying value of the East
Texas properties in the previous financial year's accounts, to 30 June 2020. Weak oil prices, an aging lease
position and a general lack of investment by oil and gas companies into new projects supported this decision. In
February 2021, Pantheon formally exited East Texas with the transfer of 100% of the Group’s interests in both
Polk and Tyler Counties to Neches Transport, a local operator. The consideration for the sale was in the form of
an agreement were the acquirer legally assumed the plug and abandonment liabilities of the East Texas Acreage.
As a result of exiting East Texas, and in accordance with UK adopted IFRS, the expenses for the East Texas
Operation have been reclassified to “Discontinued Operations”. The Consolidated Statement of Comprehensive
Income, including the comparatives, has been restated to show the discontinued operation separately from
continuing operations.
53
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Results of Discontinued Operations
Revenue
Production royalties
Depletion of developed oil and gas assets
Cost of sales
Gross (loss) / profit
Administrative expenses
General & Administrative expenses - Vision
Impairment of exploration & evaluation assets
Impairment of developed oil and gas assets
Impairment of property plant and equipment
Bad debt expense
Gain on disposal of subsidiary undertaking
Results from operating activities
Interest receivable
Income tax
Loss from discontinued operations, net of tax
Discontinued Operations statement of cashflows
Net outflow from operating activities
Cash flows from investing activities
Funds used for drilling, exploration & leases
Interest received
Disposal
Net cash inflow/(outflow) from investing
activities
Cash flows from financing activities
Inter-company loans
Net cash (outflow)/inflow from financing
activities
Year ended
30 June
2021
$
-
-
-
-
-
(68,941)
-
-
-
-
-
-
(68,941)
61
14,465
(54,415)
Year ended
30 June
2020
$
85,312
(24,580)
(27,800)
(6,273)
26,659
(421,313)
(814,762)
(7,678,800)
(6,933,644)
(1,907,966)
(318,786)
109,417
(17,965,854)
2,121
3,766,786
(14,170,288)
Year ended
30 June
2021
$
Year ended
30 June
2020
$
(263,274)
(2,049,767)
-
61
-
61
(375,000)
2,121
(1,134)
(374,013)
(1,635,323)
4,908,826
(1,635,323)
4,908,826
(Decrease) / increase in cash & cash equivalents
(1,898,536)
2,485,046
Cash and cash equivalents at the beginning of the
period
Cash and cash equivalents at the date of
discontinuation
3,026,491
541,445
1,127,955
3,026,491
54
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Vision Resources
A controlling (66.6%) interest in Vision Resources LLC was acquired by the Group, and consolidated as part of
the Group accounts, during the financial year ending 30 June 2019. The acquisition was to allow Pantheon to
assume control of Vision Resources LLC, the General Partner of the Vision Group of Companies, and to preserve
the value of the East Texas assets following the death of the Principal of the Vision Companies in 2018.
On 28 April 2020 Vision Resources LLC filed Chapter 7 Bankruptcy in the United States Bankruptcy Court for
the Southern District of Texas Houston Division. At this time control of the company was transferred to a court
appointed bankruptcy trustee. At 30 June 2019 the group recognized an impairment of its $0.7 million investment
in Vision Resources LLC and a $0.3m bad debt relating to Oil & Gas receipts not received. For the years ended
30 June 2020 and 2019 Vision Resources LLC contributed $Nil to the group income/loss. The de-consolidation
of Vision Resources LLC has resulted in:
•
$0.1m gain on the disposal of a subsidiary undertaking, which has been recognised in the Consolidated
Statement of Comprehensive Income for the year ending 30 June 2020.
• The elimination of a non-controlling interest in the Consolidated Statement of Financial Position for the year
ending 30 June 2020.
4.
Segmental information
The Group’s activities involve the exploration for oil and gas. There are three reportable operating segments:
USA (Alaska) and Head Office and USA (Texas) which was discontinued in December 2020. Non-current assets,
and operating liabilities are attributable to the USA, whilst most of the corporate administration is conducted
through Head Office.
Each reportable segment adopts the same accounting policies.
In compliance with IFRS 8 ‘Operating Segments’, the following tables reconcile the operational loss and the
assets and liabilities of each reportable segment with the consolidated figures presented in these Financial
Statements, together with comparative figures for the year ended 30 June 2020.
Oil and Gas production in East Texas commenced in late 2017 and ceased in early 2020. Pantheon formally divested
its East Texas (segment) operations in December 2020. The Intercompany balance reflected in the Texas segment
represents the loan payable to Pantheon PLC. The top-level Texas legal entity, Pantheon Oil and Gas LP, remains as
the holding company for the Alaskan group of companies.
The Group’s net total sales production for the financial year ended 30 June 2021 amounted to Nil (2020: 57,420)
mcf of natural gas and Nil (2020: 158) bbl. of oil. Average realisations for the year for natural gas and oil were US
$Nil (2020: $1.81) per mcf and US $Nil (2020: $59.93) per barrel of oil respectively.
Revenues for the year ended 30 June 2021 were US $Nil (2020: $85,312 ).
55
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Year ended 30 June 2021
Geographical segment (Group)
Administration expenses
Share option expense
Interest receivable
Taxation
Loss by reportable segment
Exploration & evaluation assets
Property, plant & equipment
Trade and other receivables
Cash and cash equivalents
Intercompany balances
Total assets by reportable segment
Total liabilities by reportable segment
Net assets by reportable segment
Year ended 30 June 2020
Geographical segment (Group)
Revenue
Production royalties
Depletion of developed oil & gas assets
Cost of sales
Administration expenses
General & Administrative expenses –
Vision
Impairment of intangible assets – E&E
Impairment developed oil & gas assets
Impairment PP&E
Bad debt expense
Interest receivable
Gain on disposal of subsidiary
undertaking
Taxation
Loss by reportable segment
Head Office
$
(2,296,566)
(3,211,038)
4,224
-
(5,503,380)
-
30,308
104,515
4,962,573
188,286,555
193,383,951
(637,988)
192,745,963
Head Office
$
-
-
-
-
(1,310,268)
-
-
-
-
23,759
Texas
$
(263,274)
-
61
-
(263,213)
Alaska Consolidated
$
(5,103,303)
(3,211,038)
4,295
-
(6,722,487)
$
(2,543,463)
-
10
-
(955,894)
-
-
5,361
665,620
(152,048,912)
(151,377,931)
(255,619)
(151,633,550)
188,954,719
-
-
35,285
(36,237,643)
152,752,360
(5,202,009)
147,550,352
188,954,719
30,308
109,876
5,663,477
-
194,758,380
(6,095,615)
188,662,765
Texas
$
85,312
(24,580)
(27,800)
(6,273)
(976,970)
(814,762)
(7,678,800)
(6,933,644)
(1,907,966)
(318,786)
2,121
Alaska Consolidated
$
85,312
(24,580)
(27,800)
(6,273)
(4,088,948)
$
-
-
-
-
(1,801,710)
-
(130,112)
-
-
-
-
(814,762)
(7,808,912)
(6,933,644)
(1,907,966)
(318,786)
25,880
-
-
(1,286,509)
109,417
-
(18,492,731)
-
4,732,467
2,800,645
109,417
4,732,467
(16,978,595)
Exploration & evaluation assets
Property, plant & equipment
Trade and other receivables
Cash and cash equivalents
Intercompany balances
Total assets by reportable segment
Total liabilities by reportable segment
Net assets by reportable segment
-
73,035
68,807
1,745,834
139,661,971
141,549,647
(377,024)
141,172,623
-
585,863
5,360
3,026,492
(130,145,522)
(126,527,805)
(836,570)
(127,364,375)
156,097,608
-
-
30,639
(9,516,449)
146,611,798
(5,877,883)
140,733,915
156,097,608
658,898
74,167
4,802,965
-
161,633,639
(7,091,476)
154,542,163
56
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
5.
Operating loss
Operating loss is stated after charging:
Depreciation – production facilities & equipment
Depreciation – office equipment
Depreciation Right of use assets
Auditor’s remuneration
- group and parent company audit services
Auditor’s remuneration for non-audit services
- taxation services and compliance services
6.
Employment costs
2021
$
-
225
50,395
65,500
-
2020
$
-
420
19,558
74,000
10,500
The employee costs of the Group, including Directors’ remuneration, are as follows:
Wages and salaries
Social security costs
Statutory pension costs
2021
$
1,133,661
68,365
17,662
1,219,688
2020
$
1,237,242
70,541
16,172
1,323,955
The summary of the directors’ remuneration is shown in the directors’ report on Page 19.
Number of employees (including Executive Directors) at the end of
the year
Management and administration
7.
Interest receivable
Bank interest received
2021
2020
number
number
8
9
2021
$
2020
(restated)
$
4,234
23,759
57
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
8.
Taxation
Current tax
US federal corporate tax
US state and local tax
UK corporate tax
2021
$
-
-
-
2020
$
-
-
-
Factors affecting the tax charge for the period
Income (loss) on ordinary activities before taxation
Income (loss) on ordinary activities before taxation multiplied by the
standard US corporate tax rate of 21% (2019: US corporate tax rate of
21%)
-
(8,241,741)
-
(21,711,062)
(1,730,644)
(4,559,323)
Effects of:
State of Alaska tax benefits associated with temporary book-to-tax
differences
US federal tax benefit associated with temporary book-to-tax
differences
US federal tax benefit associated with reassessed future utilization of
loss carryforward
Total tax charge
Factors that may affect future tax charges
(96,856)
(173,144)
254,406
-
-
-
(1,573,094)
(4,732,467)
The Group’s deferred tax assets and liabilities as at 30 June 2021 have been measured at 21% for items subject to
US federal income tax only, items subject to state of Alaska and US federal income tax are reflected at an Alaska
rate of 9.4% and a US federal rate, net of state of Alaska tax deduction, of 28.426%.
At the year-end date, the Group has unused losses carried forward of $114.8m (2020: $59.8m) available for offset
against suitable future profits. Unused US tax losses incurred prior to January 1, 2018 expire in general within 20
years of the year in which they are sustained. Losses sustained after December 31, 2017 do not expire.
The deferred tax liability at 30 June 2021 is 3,705,737 (2020: 5,293,296).
The income tax credit for the year for the discontinued operations in East Texas is $14,465, as disclosed in note 3
to the accounts.
9.
Subsidiary entities
The Company currently has the following wholly owned subsidiaries:
Name
Hadrian Oil & Gas LLC
Agrippa LLC
Pantheon Oil & Gas LP
Great Bear Petroleum
Ventures I, LLC
Great Bear Petroleum
Ventures II, LLC
Great Bear Pantheon, LLC
Pantheon East Texas, LLC
Pantheon Operating Company,
LLC
Borealis Petroleum LLC
Country of
Incorporation
United States
United States
United States
United States
Percentage
ownership
100%
100%
100%
100%
Activity
Holding Company
Holding Company
Oil & Gas exploration
Lease Holding Company
United States
100%
Lease Holding Company
United States
United States
United States
100%
100%
100%
Holding Company
Holding Company
Operating Company
United States
100%
Holding Company
58
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Pantheon Oil & Gas LP is 99% owned by Agrippa LLC as its limited partner and 1% by Hadrian Oil & Gas LLC
as its general partner.
10.
Trade and other receivables
Amounts falling due within one year:
Prepayments & accrued income
Other receivables
Total
Amounts falling due after one year:
Group
2021
$
66,388
43,488
109,876
Group
2021
$
Group
2020
$
Company
2021
$
Company
2020
$
29,906
44,261
74,167
Group
2020
$
63,688
40,827
104,515
27,207
41,600
68,807
Company
2021
$
Company
2020
$
Loans to subsidiaries
-
-
188,286,555
139,661,971
An annual impairment review of the amount due from subsidiary undertakings (loans to subsidiaries) is
performed by comparing the expected recoverable amount of the subsidiary’s underlying tangible and intangible
assets to the carrying value of the loan in the Company’s statement of financial position. This has been assessed
in line with IFRS 9 for credit losses however recoverability is supported by the underlying assets.
The Company fully transitioned from IAS 39 and adopted IFRS 9 from 1 July 2018 onwards. On the basis of
ongoing annual assessments, the lifetime expected credit losses are recognised against loans and receivables when
they are identified and are recorded in the statement of comprehensive income.
11.
Cash and cash equivalents
Group
2021
$
Group Company
2021
$
2020
$
Company
2020
$
Cash at bank and in hand
5,663,477
4,802,965
4,962,573
1,745,834
12.
Trade and other payables
Group
2021
$
90,942
1,016,148
1,107,090
Group Company
2021
$
2020
$
Company
2020
$
172,630
215,462
388,092
89,865
515,336
605,201
87,452
215,347
302,799
Trade creditors
Accruals
Total
13.
Provisions
Plug and Abandonment Provision
The Group recognises a decommissioning liability where it has a present legal or constructive obligation as a
result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a
reliable estimate of the amount of obligation can be made. The obligation generally arises when the asset is
installed, or the ground/environment is disturbed at the field location. A breakdown of these costs is detailed at
Note 21.
59
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Legal Costs
Legal costs have been provided for due to an ongoing dispute with a third-party vendor.
Group
2021
$
Group Company
2021
$
2020
$
Company
2020
$
1,000,000
250,000
1,250,000
1,085,863
250,000
1,335,863
-
-
-
-
Plug and Abandonment
Legal costs
Total
14.
Impairments
14.1
Impairment of non-current assets - exploration and evaluation assets
In accordance with International Financial Reporting Standard 6 ‘Exploration for and Evaluation of Mineral
Resources’ (IFRS 6), exploration and evaluation assets are reviewed for indicators of impairment. Should
indicators of impairment be identified an impairment test is performed.
The Group has reviewed these assets for indications of impairment. The Directors have satisfied themselves that
there are no indicators of impairment in the current year. In the prior year, indicators of impairment were
identified and impairment reviews led to impairment charges that were measured, presented and disclosed in
accordance with International Accounting Standard (“IAS”) 36 Impairment of Assets.
During the year ended 30 June 2021 there were no impairment charges (2020: $7.8m) in respect of exploration
and evaluation assets.
In 2020 Pantheon announced its intention to exit its East Texas assets to concentrate solely on the Alaska North
Slope assets and impaired the total carrying value of the East Texas properties to nil. The impairment charges for
2020 comprised of $7.7m in East Texas and $0.1m in Alaska.
Where impairment indications are found the Company performs impairment tests. Any resulting impairment
losses must be measured, presented and disclosed in accordance with IAS 36. In assessing whether an impairment
is required, the carrying value of the asset is compared with its recoverable amount. The recoverable amount is
defined to be the higher of the asset’s fair value less costs to sell, and value in use.
Impairment losses – exploration and evaluation assets
West AA Prospect – CGU (Texas)
West AA (prospect A leased acreage) - Polk County
West West AA Prospect – CGU (Texas)
West West AA (prospect D leased acreage) - Polk County
Core Offset Prospect (aka Prospect B&C) – CGU (Texas)
Core Offset (prospect B&C leased acreage) - Tyler County
LP2 Offset – CGU (Texas)
LP2 offset (leased acreage) - Tyler County
Alaska
Acreage
Total
60
2021
$
2020
$
-
-
-
-
-
-
1,870,200
908,250
4,845,750
54,600
130,112
7,808,912
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
14.2
Impairment of non-current assets – developed oil and gas assets
Impairment losses of US$ Nil (2020 $6.9m) were recognised in respect of the producing oil and gas properties
within East Texas. The Group made a strategic decision to exit East Texas and concentrate solely on its Alaskan
Assets. In 2020, the company has fully impaired the carrying value of the Oil and Gas producing properties in
East Texas.
Impairment losses – developed oil and gas assets
VOS#1 Well (East Texas)
Total
2021
$
2020
$
-
-
6,933,644
6,933,644
14.3
Impairment of non-current assets – Property Plant & Equipment
Impairment losses of US$ Nil (2020: $1.9m) were recognised in respect of Property Plant and Equipment. The
impairment losses in 2020 were due to the strategic decision to exit East Texas. The impairments related mainly
to Pantheon’s share of the gas processing plant and the pipeline associated with the VOS#1 well.
Impairment losses – Property Plant & Equipment
Polk County (East Texas)
Polk County Gas Plant
Pipeline
Total
15.
Exploration and evaluation assets
Group
Cost
At 1 July
Additions
Acquisitions
Asset Retirement Obligations
At 30 June
Impairment
As at 1 July
Charge for year
At 30 June
Net book value
At 30 June
2021
$
2020
$
-
-
-
22,680
1,885,286
1,907,966
2021
$
2020
$
204,850,215
24,973,399
7,383,711
500,000
201,830,954
3,019,261
-
-
237,707,325
204,850,215
48,752,606
-
48,752,606
40,943,694
7,808,912
48,752,606
188,954,719
156,097,609
The Group additions for the year comprise the direct costs associated with the preparation of drilling of oil and
gas wells, together with costs associated with leases and seismic acquisition and processing.
61
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
16.
Disclosure required by IRFS 16 - Leases
Right of use assets
The Group used leasing arrangements relating to property, plant and equipment. As the Group has the right of use
of the asset for the duration of the lease arrangement, a “right of use” asset is recognised within property, plant
and equipment.
When a lease begins, a liability and right of use asset are recognised based on the present value of the lease
payments.
Interest expense on lease liabilities
Total cash outflow for leases
As at 1 July
Additions to right-of-use assets
Depreciation charge - right of use assets
Foreign exchange movement on right of use assets
Carrying amount at the end of the year:
Right of use assets
Lease liabilities
Current
Non-current
Group
2021
$
6,207
(55,698)
72,829
1,222
(50,395)
6,652
Group
2020
$
3,260
(21,394)
-
91,995
(19,558)
392
30,308
72,829
Group
2021
$
32,788
-
Group
2020
$
46,311
27,914
32,788
74,225
62
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
17.
Property, plant and equipment and Developed Oil & Gas Properties
Group
Cost
At 30 June 2019
Transition to IFRS 16
At 30 June 2020
Additions
Exchange Difference
At 30 June 2021
Depreciation
At 30 June 2019
Depreciation for the year
Exchange difference
As at 30 June 2020
Depreciation for the year
Exchange difference
At 30 June 2021
Depletion
At 30 June 2019
Depletion for the year
At 30 June 2020
Depletion for the year
At 30 June 2021
Disposals
At 30 June 2019
Disposals for the year
At 30 June 2020
Disposals for the year
At 30 June 2021
Impairments
At 30 June 2019
Impairment for the year
At 30 June 2020
Impairment for the year
At 30 June 2021
Net book value
As at 30 June 2021
As at 30 June 2020
Developed
Oil & Gas
Properties
$
Production
Facilities
&
Equipment
$
Office
Equipment
$
Right of
Use
Assets
$
Total
$
20,290,906
-
20,290,906
-
-
20,290,906
4,312,960
-
4,312,960
-
-
4,312,960
-
-
-
-
-
-
-
421,181
-
-
421,181
-
-
421,181
236,778
27,800
264,578
-
264,578
-
-
-
-
-
-
-
-
-
-
-
-
-
585,863
585,863
13,092,684
6,933,644
20,026,328
-
20,026,328
1,397,950
1,907,966
3,305,916
-
3,305,916
-
-
-
16,099
-
16,099
-
-
16,099
15,464
420
9
15,893
225
(20)
16,098
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,995
91,995
1,222
10,696
103,913
24,619,965
91,995
24,711,960
1,222
10,696
24,723,878
-
19,558
(392)
19,166
50,395
4,044
73,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
436,645
19,978
(383)
456,240
50,620
4,024
510,884
236,778
27,800
264,578
-
264,578
-
-
-
585,863
585,863
14,490,634
8,841,610
23,332,244
-
23,332,244
30,308
30,308
585,863
206
72,829
658,898
63
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Company
The Property, Plant and Equipment for the Company comprises of Right-of-Use assets $30,308 (2020: $73,035)
as shown above.
18.
Share Capital
Allotted, issued and fully paid:
659,368,196 (2020:502,758,713) ordinary shares of
£0.01 each
33,890,478 (2020: 102,471,055) non-voting convertible
shares of £0.01 each
Issued share capital:
As at 30 June 2021
659,368,196 ordinary shares of £0.01 each (2020:
502,758,713)
33,890,478 non-voting convertible shares of £0.01 each
(2020: 102,471,055)
Total
2021
$
2020
$
9,263,095
7,250,204
476,108
1,318,517
Issued and
fully paid
capital
Number
659,368,196
9,263,095
33,890,478
693,258,674
476,108
9,739,203
The Company issued a total of 156,609,483 new fully paid ordinary shares during the year. These were issued for
three separate events:
1. An equity fund raise in November 2020. 73,756,314 ordinary shares were issued at a £0.30 per share premium.
The issue costs were $1,397,469.
2. The company acquired Borealis Alaska LLC for the consideration of 14,272,592 ordinary shares.
3. During the year 68,580,577 non-voting shares were converted into ordinary shares on a 1:1 basis.
The ordinary shares rank pari passu in all respects including the right to receive dividends and other distributions
declared, made or paid.
As at 30 June 2021 there were 659,368,196 ordinary shares (2020: 502,758,713) and 33,890,478 non-voting
convertible shares (2020: 102,471,055) in issue.
64
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
19.
Net cash outflow from operating activities
Loss for the year
Net interest received
Share option expense
Gain on disposal of subsidiary undertaking
Impairment of intangible assets – E&E
Impairment developed oil & gas assets
Impairment of PP&E
Bad debt expense
Depreciation of office equipment
Depreciation of right of use assets
Charge on Lease - right of use assets
Depletion of developed oil & gas assets
(Increase)/decrease in trade and other receivables
Increase/ (Decrease) in trade and other payables
Effect of translation differences (fixed assets)
Effect of translation differences (right of use assets)
Effect of translation differences (Share option expense)
Effect of translation differences
Taxation
Net cash outflow from operating activities
Loss for the year
Net interest received
Share option expense
Depreciation
Depreciation of right of use assets
Charge on Lease - right of use assets
Increase in trade and other receivables
Increase/ (decrease) in trade and other payables
Shares issued in lieu of fees
Effect of translation differences (fixed assets)
Effect of translation differences (right of use assets)
Effect of translation differences (Share option expense)
Effect of translation differences
Net cash inflow / (outflow) from operating activities
20.
Control
No one party controls the Company.
21.
Decommissioning expenditure
Plug & Abandonment
Group
2021
$
(6,722,487)
(4,295)
3,211,038
-
-
-
-
-
225
50,395
6,207
-
(35,709)
518,805
(21)
179
(38,474)
1,503,199
(1,587,559)
(3,098,495)
Company
2021
$
(5,503,380)
(4,224)
3,211,038
225
50,395
6,207
(3,570)
102,211
-
(20)
179
(38,474)
17,736,830
15,525,277
Group
2020
$
(16,978,595)
(25,881)
-
(109,417)
7,808,912
6,933,644
1,907,966
318,786
420
19,559
3,260
27,800
21,002
(854,972)
10
(29)
-
(47,800)
(4,732,467)
(5,707,802)
Company
2020
$
(1,286,509)
(23,759)
-
420
19,559
3,260
(11,639)
(45,844)
-
9
(29)
-
(3,792,479)
(5,137,011)
The Directors have considered the environmental issues and the need for any necessary provision for the cost of
rectifying any environmental damage, as might be required under local legislation. As at 30 June 2021 the Group
has fully provided for the future plug and abandonment charges in relation to its wells on the Alaskan North Slope.
65
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Alaska
Greater Alkaid #1 test well
Talitha #A well
Texas - Polk County
VOBM#1 well
VOBM#2H well
VOBM#3 well
VOBM#4 well
VOBM#5 well
Texas – Tyler County
VOS#1 well
Group
2021
$
500,000
500,000
1,000,000
-
-
-
-
-
-
-
-
As at 30 June
1,000,000
22.
Exploration and evaluation commitments
There were no firm drilling commitments at 30 June 2021.
Group
2020
$
500,000
-
1,000,000
95,579
111,861
98,141
81,162
95,302
482,045
103,438
103,438
1,085,483
23.
Financial instruments
The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables and
trade and other payables. Financial assets and liabilities are initially measured at fair value plus transaction costs.
The main purpose of cash and cash equivalents financial instruments is to finance the Group’s operations. The
Group’s other financial assets and liabilities, such as receivables and trade payables, arise directly from its
operations. It is, and has been throughout the entire period, the Group’s policy that no trading in financial
instruments shall be undertaken.
The main risk arising from the Group’s financial instruments is market risk. Other minor risks are summarised
below. The Board reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and market factors such as foreign exchange rates and
interest rates will affect the entity’s income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters while optimising the return.
Interest rate risk
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s cash and
cash equivalents with a floating interest rate. These financial assets with variable rates expose the Group to cash
flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-
interest bearing. The Group does not engage in any hedging or derivative transactions to manage interest rate risk.
In regard to its interest rate risk, the Group continuously analyses its exposure. Within this analysis consideration
is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable
interest rates. The Group has no policy as to maximum or minimum levels of fixed or floating instruments.
66
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Interest rate risk is measured as the value of assets and liabilities at fixed rate compared to those at variable rate.
Weighted average
interest rate
2021
%
0.05
-
Fixed
interest rate
2021
$
Non-interest
bearing
2021
$
-
-
-
-
Financial assets:
Cash on deposit
Trade and other receivables
Net fair value
The net fair value of financial assets and financial liabilities approximates to their carrying amount as disclosed in
the statement of financial position and in the related notes.
Currency risk
The functional currency for the Group’s operating activities and exploration activities is the US dollar. The Group
incurs modest headquarters and advisory expenses in Pounds Sterling. The Group does not use derivative
products to hedge foreign exchange risk and has exposure to foreign exchange rates prevailing up to the dates
when funds are transferred into different currencies. The Group raises equity capital in Pounds Sterling and
converts the majority of this to US dollars shortly after receipt of funds to minimise currency risk. The Group
continues to keep the matter under review.
Financial risk management
The Directors recognise that this is an area in which they may need to develop specific policies should the Group
become exposed to wider financial risks as the business develops.
Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash balances to ensure the Group can meet
liabilities as they fall due.
In managing liquidity risk, the main objective of the Group is therefore to ensure that it has the ability to pay all
of its liabilities as they fall due. The Group monitors its levels of working capital to ensure that it can meet its
liabilities as they fall due. The Group monitors its liquidity position carefully and considers equity fundraising,
debt or farmouts when additional liquidity is required.
The table below shows the undiscounted cash flows on the Groups financial liabilities as at 30 June 2021 and
2020, on the basis of their earliest possible contractual maturity.
67
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Total
$
90,942
1,016,148
32,788
1,250,000
2,389,878
172,630
215,462
79,666
1,085,863
1,553,621
As at 30 June 2021
Trade creditors
Accruals
Lease liabilities
Provisions
As at 30 June 2020
Trade creditors
Accruals
Lease liabilities
Provision for plug and
abandonment
Credit risk management
Payable
on
demand
$
Within 1-3
months
$
Within 3-6
months
$
Within 6-12
months
$
Greater
than 1
year
$
-
-
-
1,250,000
1,250,000
-
-
4,684
-
4,684
-
-
25,158
-
-
29,350
-
25,158
1,085,863
1,115,213
-
-
-
-
-
-
-
-
-
90,942
1,016,148
14,052
-
1,121,142
172,630
215,462
12,579
-
400,671
-
-
14,052
-
14,052
-
-
12,579
-
12,579
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group.
The Group has adopted a policy of only dealing with what it believes to be creditworthy counterparties and would
consider obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored, and the
aggregate value of transactions concluded is spread across approved counterparties.
The maximum exposure to credit risk is $5,773,353 (2020: $4,877,132).
Capital management
The Group’s capital management objectives are:
• To provide long-term returns to shareholders
• To ensure the Group’s ability to continue as a going concern
The Group defines and monitors capital to ensure that the Company meets its objectives above, focussing on
long-term share price growth and a short-term requirement to ensure a going concern.
The Board of Directors monitors the available capital as well as the Group’s commitments and adjusts the level of
capital as is determined to be necessary by issuing new shares. The Group is not subject to any externally
imposed capital requirements.
These policies have not changed in the year. The Directors believe that they have been able to meet their
0bjectives in managing the capital of the Group.
68
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
24.
Share-based payments
Movements in share options and
share warrants(1) in issue
Exercise price
Number of
options and
warrants issued
as of 30 June 2020
Issued during
year
Expired/Exercised
during year
Number of
options and warrants
issued
as of 30 June 2021
£0.30
£0.30
£0.27
£0.33
Total
10,000,000(1)
9,607,843(2)
-
-
-
-
13,700,000(3)
14,655,000(4)
19,607,843
28,355,000
-
-
-
-
-
10,000,000
9,607,843
13,700,000
14,655,000
47,962,843
(1) Fully vested. Expire September 2024.
(2) Fully vested. The 9,607,843 warrants are exercisable into non-voting shares, which are convertible into
ordinary fully paid shares on a 1:1 basis.
(3) Fully vested and expire on the 6th July 2030. The Share Option expense charge to the Consolidated Statement
of Comprehensive Income for the year ending 30 June 2021 is $1,624,378; this was calculated using Black
Shoals model utilising the inputs listed below:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Number of options issued 13.7m
Exercise price 27 pence
Expiry – 10 years after issue
Vesting Terms - 50% vest 90 days from grant date; 50% vest upon the next well spudded in
Alaska (from date of issue)
Risk free rate 10%
60 day volatility 102
(vii)
Liquidity discount 30%
(4) Unvested. 50% to vest 28 January 2022 and 50% to vest upon Pantheon’s spudding of the next well in
Alaska. Expire 27 January 2031. The Share Option expense charge to the Consolidated Statement of
Comprehensive Income for the year ending 30 June 2021 is $1,586,660; this was calculated using Black
Shoals model utilising the inputs listed below:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Number of options issued 14.6m
Exercise price 33 pence
Expiry – 10 years after issue
Vesting Terms - 50% to vest 28 January 2022 and 50% to vest upon Pantheon’s spudding of the
next well in Alaska. Expire 27 January 2031 (from date of issue)
Risk free rate 10%
60 day volatility 77.2
(vii)
Liquidity discount 30%
The Group has issued share options to directors and employees. These are equity settled share-based payments as
defined in IFRS 2 Share-based payments. A recognised valuation methodology (using the Black & Scholes
valuation model) was employed to determine the fair value of options granted as set out in the standard. The
69
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
charge incurred relating to these options was recognised as an expense. The weighted average exercise price of
share options outstanding and exercisable at the end of the period was £0.30 (2020: £0.30).
In January 2019, the Group previously issued 9,607,843 warrants as part of the consideration for the acquisition
of Great Bear Petroleum. The terms of these warrants mirror the terms of the share options in issue (1); however,
if exercised they convert to non-voting shares as opposed to ordinary shares.
The Share Option expense charge to the Consolidated Statement of Comprehensive Income for the year ending
30 June 2021 is $3,211,038 (2020: Nil).
The equity reserve account represents current year expenses for unexpired options and warrants and the historical
balance on vested option and warrants.
25.
Related party transactions
There were no related party transactions during the year other than the payment of remuneration and the granting
of share options to Directors and key management personnel.
26.
Contingent Liabilities
Vision Operating Company LLC (“VOC”) has previously been in dispute with a third-party service provider,
Kinder Morgan Treating L.P. (“Kinder Morgan”) over the early termination of a gas processing agreement in East
Texas. On 28 April 2020 Vision Resources LLC and VOC filed Chapter 7 Bankruptcy in the United States
Bankruptcy Court for the Southern District of Texas Houston Division and control of the company was
transferred to a court appointed bankruptcy trustee.
Kinder Morgan issued a demand to VOC and in January 2021 served Pantheon Resources plc with a petition,
seeking a payment of no less than $3.35m in respect of the early termination of a Gas Treating Agreement entered
into between Kinder Morgan and Vision Operating Company LLC ("VOC"). Pantheon held ownership of less
than 0.1% of VOC via a 66.6% interest in Vision Resources LLC.
Pantheon was not a signatory to the gas processing agreement, is not named in the agreement and explicitly
declined to provide any financial support in relation to the agreement. Pantheon has taken legal advice on the
matter and believes it has no liability to the service provider. Accordingly, Pantheon do not consider a provision
should be included with the final statements and will contest any claim made.
27.
Subsequent events
Short Term Financing Facility – November 2021
As announced previously, the Company must complete either a farmout or funding in Q4 2021 to have sufficient
resources for the anticipated winter 2021/2022 drilling and testing campaign and for ongoing working capital.
The Company is actively engaged in negotiations for a potential farmout, as well as other options to ensure
Pantheon is funded for these operations. The Company is optimistic about completing its financing objectives this
quarter, in line with previous guidance. Naturally, there can be no guarantees of a successful outcome.
In order to minimise the potential for disruption or delay to the anticipated operations, the Company entered into
a short-term financial facility on the 17th of November, for up to a maximum of US$1.5 million. The facility will
enable the Company to make certain prepayments to suppliers and contractors for future equipment, goods and
services relating to the intended winter programme on its Alaska North Slope project(s) early enough to minimise
the risk of supply chain disruption. The Facility is unsecured, carries an interest rate of 10% per annum on
amounts drawn down, and can be repaid in full at any time at the Company's election.
Exercise of share options
In September and October 2021, 2,950,000 share options were exercised and the Company issued and allotted
2,950,000 new ordinary shares of £0.01 each. As of 7 December 2021, total ordinary fully paid shares in issue
totalled 696,208,674. The new ordinary shares rank pari passu with the existing ordinary shares in the company.
70
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Conversion of shares
In July 2021, Pantheon announced that it has received a notice of conversion, on a one-for-one basis, for all
33,890,478 of the 33,890,478 ordinary shares not carrying voting rights ("Non-Voting Shares") into ordinary
fully paid shares carrying voting rights in the Company.
The Non-Voting Shares were originally issued as part of the purchase consideration for the Great Bear
Companies in January 2019, as previously announced. The Non-Voting Shares were convertible into ordinary
fully paid shares, on a one-for-one basis.
Resource Upgrade - Shelf Margin Deltaic
In July 2021, Pantheon reported that it had completed its internal analysis of the SMD-B sequence encountered in
the Talitha #A well. The SMD is the shallowest of five discrete oil-bearing intervals encountered in that well. The
SMD interval itself is comprised of three individual components: the SMD-A, the SMD-B and the SMD-C.
Pantheon completed its analysis of the SMD-B zone and estimated that this zone has the potential to contain 2.6
billion barrels oil in place ("OIP") and a P50 Resource (recoverable) of 404 million barrels oil ("mmbo"). The
Company believes this resource meets the classification of Contingent Resource.
Farmout Discussions
In July 2021, Pantheon announced that discussions had commenced with a number of groups for the purpose of
seeking the farmout of a working interest percentage in one or more of the Company's Alaskan projects.
Pantheon's objective is to complete a farmout or funding in Q4 2021, prior to the onset of the drilling season. The
Company's objective for winter 2021 and spring/summer 2022 is for an active work program to test all zones
above the Kuparuk in the Talitha #A well, and to drill at least one other well at either Alkaid or Theta West. An
Alkaid development well has the benefit of being able to be hooked up to production to generate revenues shortly
after completion, and a Theta West well has the attraction of testing a globally significant play which offers
tremendous potential for value creation. Pantheon confirms that farmout discussions remain underway and are at
an advanced stage with one potential partner. Whilst it is possible that a farmout may be consummated, there can
be no guarantee.
GLOSSARY
bbl
bopd
mmbo
boepd
mcf
NCI
barrel of oil
barrels of oil per day
million barrels of oil
barrels of oil equivalent per day
thousand cubic feet
non-controlling interest
mcfd
Mmboe
NPV
NPV10
$
OIP
thousand cubic feet per day
million barrels of oil equivalent
net present value
net present value at 10%pa discount rate
United States dollar
Oil in place
71