Preliminary Results
Pantheon Resources PLC
20 December 2007
Preliminary Results for the Period Ended 30 June 2007
Pantheon Resources plc ('Pantheon' or 'the Company'), the UK based independent
oil and gas exploration company focused on the U.S. Gulf of Mexico region, today
announces its preliminary results for the period ended 30 June 2007. The
Company has published its annual report and accounts for the year ended 30 June
2007 and hard copies are being posted to shareholders. In addition, the annual
report and accounts can be obtained free of charge for a period of one month
following the date of this announcement from the offices of the Company's
nominated adviser, Oriel Securities Limited, being 125 Wood Street, London EC2V
7AN.
HIGHLIGHTS
• First commercial discovery and production within six months of initial
public offering ('IPO');
• Cash flow being generated from existing discoveries;
• Asset base expanded and diversified;
• Asset portfolio retains potential for major growth in reserves and
production;
• Active drilling programme has commenced with spudding of well on Nottoway
prospect;
• Board strengthened with appointment of new independent non-executive
director;
• Search for CEO advanced;
• Successful placing of 1.5 million shares in November 2007 providing
additional funding to help finance the drilling programme, as well as for
the provision of general working capital;
• Pre-tax loss including writedowns previously announced of £5,095,034
(2006: pre tax loss £339,314).
Chairman's Report
Pantheon ended its financial year awaiting its first significant production and
cash flow, on the brink of an active drilling programme and having refreshed and
diversified its asset portfolio. This was achieved within 18 months of its
initial public offering ('IPO') in April 2006. The scale of the transformation
may be measured as, at the beginning of the period, drilling had not even
commenced on any of the Group's exploration prospects.
The second half of the financial year was dominated by the drilling of the
Wilson well, just as the first half had been focussed on the testing of the Plum
Deep prospect. Success was attained at Wilson with a declaration of
commerciality on 18 June 2007. At the end of the financial year work was
underway to tie this well into the sales pipeline. Since the end of the
financial year, Wilson has been brought on-stream and is now in an extended
production test phase.
The disappointment and uncertainty created by the deeper zones at Plum Deep only
served to intensify Pantheon's efforts to secure other potential high impact
ventures. Since May 2007, two high impact ventures, Bullseye and South
Louisiana, have been added to the portfolio, both located in Louisiana. The
South Louisiana venture has had a number of benefits to Pantheon. Apart from
adding another high impact project to Pantheon's portfolio, it also provided
lower risk targets with the Point Clair prospect. Moreover, since the
acquisition of South Louisiana, additional exploration prospects have been
identified on the venture.
Pantheon continues to analyse further opportunities in conjunction with
established operators. The aim is to enhance shareholder value and returns. This
is in line with its stated strategy. Since the financial year end, Pantheon has
farmed-into the Dunn Deep #2 well on Padre Island, which has subsequently proved
a natural gas discovery. The period from farm-in to first production amounted to
just over six weeks. This highlights the ability to obtain rapid cash flow and
good returns in an energy-thirsty, low sovereign risk market with excellent
infra-structure.
The changed asset base has led to a consideration of the resources that Pantheon
needs to deploy in the future. Pantheon has maintained a strategy of keeping
corporate overheads low since its IPO. However the company is now at a stage of
development where additional senior management is required. The board has
already been strengthened by the appointment of John Walmsley as a non-executive
director in August 2007. His extensive experience in the oil and gas industry
has proven invaluable in his short tenure.
With six producing wells from a total of nine wells drilled since the Company's
formation and heading into a period of further drilling, the Company believes it
an ideal time to appoint a Chief Executive Officer. The search is now advanced.
The Company is delighted with the response which has identified several high
calibre candidates to date, and detailed discussions are underway in relation to
this matter. Once this key appointment is confirmed, then it should be followed
by further positions.
High oil and natural gas prices may have led to a resurgence of the global oil
and gas industry over the past years but they have also heralded a less welcome
trend. Costs have risen, wells have been delayed due to a tight rig market and
the general workforce has suffered from inexperience following years of
under-investment and cut-backs. Pantheon has not been immune to these trends.
Both the Wilson and Plum Deep wells recorded cost over-runs from initial
budgets. While testing programmes account for some of the additional cost
burden, these factors have contributed.
Since the year-end, Pantheon has raised £900,000 by way of a placing of
1,500,000 ordinary fully paid up shares at a price of 60p per share with
institutional investors. This was oversubscribed. The proceeds have provided
Pantheon with additional funding to help finance the drilling programmes in
South Louisiana and Texas, as well as for the provision of general working
capital.
Pantheon is now facing a period of rising production and cash flow. Drilling has
commenced on the Nottoway prospect with the spudding of the Fay Weill et al well
on 12 October. This well should be followed by others, Bullseye and Point Clair,
over the coming months as the exploration programme gathers pace. In its
relatively short time as a public company, Pantheon has made significant
progress. This should provide a foundation on which to build a focused
exploration and production company.
Post-balance sheet events
Appointment of Director
On 1 August 2007, Pantheon announced the appointment of Mr John Walmsley as a
director of the company. Mr Walmsley's extensive experience in the oil and gas
industry has proven invaluable since his appointment.
Capital Raising
Since the year-end, Pantheon has raised £900,000 by way of a placing of
1,500,000 ordinary fully paid up shares at a price of 60p per share with
institutional investors. This was oversubscribed. The proceeds have provided
Pantheon with additional funding to help finance the drilling programmes in
South Louisiana and Texas, as well as for the provision of general working
capital.
Dunn Deep #2
In early August 2007, Pantheon farmed-into an appraisal/development well of the
Mid-Frio La Playa #1 natural gas find ('Dunn Deep #1'). Although located on
Padre Island, Dunn Deep #2 is separate from the Padre Island Joint Venture.
Pantheon had a 10% paying interest to earn approximately a 7.5% working interest
('WI'). This equated to a one-third for one-quarter farm-in. This represented
very favourable terms relative to normal industry agreements for a farm-in to a
development well. It should be noted that Pantheon does not have an interest in
Dunn Deep #1. The operator is BNP, a private Texas-based company.
The Dunn Deep #2 well commenced drilling on 15 August, 2007. The main objective
in Dunn Deep #2 was the Marg Tex 35 formation. This is the same zone as that
tested successfully at the Wilson discovery. Planned total measured depth of
10,542 feet was achieved and electric logs were run. Net pay of 20 feet was
encountered within a 50 feet gross interval in the main objective. No flow
testing was undertaken. On 7 September 2007, it was announced that Dunn Deep#2
would be completed as a natural gas producer.
Dunn Deep #2 came on-stream on 17 September 2007, less than two weeks from
confirmation of a commercial discovery. An early hook-up to the sales grid was
achievable as the well had been drilled from an existing site.
Initial gross production from the field was 3 million standard cubic feet of gas
per day and 60 barrels a day of condensate. This has risen to a stabilised rate
of 4.8 mmcfd of natural gas.
Wilson
Subsequent to the financial year-end, Pantheon has seen the start-up of the
Wilson #1 well on 10 September 2007 in which it has a 31.77% working interest.
Initial gross output from Wilson was 2.5 mmcfd of natural gas.
Production
Subsequent to the financial year-end, Pantheon has seen the commencement of
production from two of its wells located on Padre Island. These have augmented
existing output from the four producing wells on Project Wharton. Average
production to Pantheon for the July to September period was 359 mcfd on a
working interest basis compared with the 74.1 mcfd averaged for the previous
three month period. Table 2 provides a quarterly breakdown of production.
Table 1 :Pantheon Quarterly Natural Gas Production on Working Interest Basis
(mcfd)
Q1 Q2 Q3 Q4
(Jul-Sep) (Oct-Dec) (Jan-Mar) (Apr-Jun)
2006 0.7 32.3 81.7 74.1
2007 359.2
South Louisiana
The first well on Pantheon's South Louisiana venture, Fay Weil Ross et al #1,
commenced drilling on 12 October 2007. This well is scheduled to be a 15,498
feet test of the Nottoway Prospect, a salt feature unknown until a new 3D
seismic survey was shot in late 2005. This well is located to the south of Baton
Rouge near the small community of White Castle, Louisiana.
On 17 December it was announced that the well had reached a measured depth
('MD') of 12,025 feet at which point 7 5/8 inch casing is being set. The
target horizons have yet to be reached. Hydrocarbon shows were encountered in
the mud logs in shallower zones. These shallower zones have been logged. The
results of these electric logs suggest the presence of a thin hydrocarbon pay
zone.
Two factors should be highlighted. First, these shows were encountered in a
reservoir that was not considered either a primary or secondary objective prior
to drilling. Secondly, the occurrence of hydrocarbons at this shallower depth
should not be interpreted as an indication of the presence of hydrocarbons in
either the primary or secondary zone.
The Nottoway Prospect is located between two existing oil and gas fields, White
Castle Dome and Laurel Ridge. Deeper exploration was undertaken on both fields
in 2006. New discoveries were made in both White Castle Dome and Laurel Ridge
Field in the deeper Oligocene section in 2006. Similar zones are objectives in
the Nottoway Prospect.
Padre Island
Pantheon notes that BNP and Golden Gate Petroleum are in current discussions
concerning the terms and conditions for the drilling of the Manzano well.
Following the outcome of these discussions Pantheon will gain greater visibility
on the timing of this well.
DIRECTORS' REPORT FOR THE PERIOD ENDED 30 JUNE 2007
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 2007.
Principal activity
The Company is registered in England and Wales, having been incorporated on 8
March 2005 under the Companies Act with registered number 5385506 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 its parent undertaking and in the USA
through subsidiary companies, details of which are set out in the note 8 to
these accounts.
Results and dividends
The Group results for the period are set out on page 18. The Directors do not
propose to recommend any distribution by way of a dividend for the year ended 30
June 2007.
Use of financial instruments
Pantheon's financial risk management objectives are to minimise debt, to fund
exploration activity through equity financing and to ensure sufficient working
capital for the Group's overhead and capital expenditure commitments. This is
achieved by prudent financial management and careful management of the Group's
cash balances, both short and long term. The Group does not use derivative
financial instruments. The financial risk management objectives and policies of
the Group set out in Note 18 of the Financial Statements include the Group's
exposure to price, liquidity and credit risk.
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
meet the new AIM guidance.
Group structure and changes in share capital
Details of movements in share capital during the period are set out in Note 14
to these accounts.
Report on Directors' remuneration and service contracts
The service contracts of all the Directors are subject to a six month
termination period.
Pensions
The Group does not operate a pension scheme for Directors or employees.
Directors' remuneration
Remuneration of Directors was as follows:
Fees/basic Employers Benefits 2007
salary NI in kind Total
£ £ £ £
S Graham 44,269 5,731 - 50,000
R Rosenthal 44,269 5,731 - 50,000
J Hondris 37,002 4,665 - 41,667
A Waller 25,000 - - 25,000
150,540 16,127 - 166,667
Supplier payment policy
The Company's policy is that payments to suppliers are made in accordance with
those terms and conditions agreed between the Company and its suppliers,
providing that all trading terms and conditions have been complied with.
Political and charitable contributions
There were no political or charitable contributions made by the Company during
the year ended 30 June 2007.
Remuneration and Audit committees
The company does not at present operate a Remuneration committee. It is expected
that such a committee will be established in the forthcoming year as the company
grows.
The audit committee meets twice per year to discuss half yearly and annual
results. For the annual results, the independent auditors, UHY Hacker Young LLP,
are invited to discuss the results and their assessment of internal controls.
The Chairman of the Audit committee is John Walmsley, and the other
participating member is Justin Hondris.
DIRECTORS' REPORT FOR THE PERIOD ENDED 30 JUNE 2007
Statement of directors' responsibilities
The Directors are responsible for preparing the financial statements in
accordance with applicable laws and International Financial Reporting Standards.
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;
• make judgements and estimates that are reasonable and prudent;
• prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business;
• state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial statements.
The Directors confirm that the financial statements comply with the above
requirements.
The Directors are responsible for keeping proper 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 1985. 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.
Statement of disclosure to the auditors
So far as the Directors are aware:
• there is no relevant audit information of which the Company's auditors are unaware; and
• all the Directors have taken 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
On 30 April 2007 the Company's auditors, UHY Hacker Young, transferred their
business into a limited liability partnership, UHY Hacker Young LLP ('the LLP'),
and the office of auditor has passed to the LLP. In accordance with Section 385
of the Companies Act 1985, a resolution proposing that UHY Hacker Young LLP 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.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PANTHEON RESOURCES PLC FOR THE
PERIOD ENDED 30 JUNE 2007
We have audited the Group and Parent Company financial statements (the '
financial statements') of Pantheon Resources plc for the year ended 30 June 2007
which comprise the Group income statement, the Group and Parent Company
statements of changes in equity, the Group and Parent Company balance sheets,
the Group and Parent Company cash flow statements and the related notes. These
financial statements have been prepared in accordance with the basis and the
accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with Section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the 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 Company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The Directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and International
Financial Reporting Standards ('IFRS') as adopted by the European Union are set
out in the Statement of Responsibilities of Those Charged with Governance.
Our responsibility is to audit the financial statements in accordance with the
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you whether, in our opinion, the information given in
the Directors' report is consistent with the financial statements. In addition,
we report to you if, in our opinion, the Company has not kept proper accounting
records, if we have not received all the information and explanations we require
for our audit, or if information specified by law regarding directors'
remuneration and other transactions with the Company is not disclosed.
We read other information contained in the Annual Report, and consider whether
it is consistent with the audited financial statements. This other information
comprises the Chairman's Statement, Review of Operations and Directors' Report.
We consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the Directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the Company's and the Group's circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• the Group financial statements give a true and fair view, in accordance
with IFRSs as adopted by the European Union, of the state of the Group's affairs
as at 30 June 2007 and of the Group's loss for the year then ended;
• the Parent Company financial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union as applied in accordance
with the provisions of the Companies Act 1985, of the state of the Parent
Company's affairs as at 30 June 2007;
• the financial statements have been properly prepared in accordance with
the Companies Act 1985; and
• the information given in the Directors' report is consistent with the
financial statements.
UHY Hacker Young
19 December 2007
Chartered Accountants
Registered Auditors
St. Alphage House
2 Fore Street
London EC2Y 5DH
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007
Notes 2007 2006
£ £
Turnover 3 23,693 -
Cost of sales (877) -
Gross profit 22,816 -
Administrative expenses before share based
payments and impairment losses
(427,679) (238,536)
Share based payments 19 (487,540) (161,513)
Impairment of intangible assets 12 (4,438,420) -
Total administration expenses 4 (5,353,639) (400,049)
Operating loss 4 (5,330,823) (400,049)
Finance revenue 6 235,789 60,535
Loss before taxation (5,095,034) (339,514)
Taxation 7 - -
Loss for the year (5,095,034) (339,514)
Loss per ordinary share - basic and diluted 2 (32.76)p (8.33)p
The comparative amounts represent the results for the period from the date of
incorporation on 8 March 2005 to 30 June 2006.
All of the above amounts are in respect of continuing operations.
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN NET EQUITY FOR THE YEAR ENDED
30 JUNE 2007
Share Share Retained Currency Equity
capital premium earnings reserve reserve Total
£ £ £ £ £ £
Group
At 1 July 2006 155,524 9,698,748 (339,514) - 161,513 9,676,271
Net loss for the year - - (5,095,034) - - (5,095,034)
Foreign currency - - - (234,275) - (234,275)
Share based payment - - - - 487,540 487,540
Balance at 30 June 2007 155,524 9,698,748 (5,434,548) (234,275) 649,053 4,834,502
Company
At 1 July 2006 155,524 9,698,748 (301,025) - 161,513 9,714,760
Net loss for the year - - (4,969,235) - - (4,969,235)
Share based payment - - - - 487,540 487,540
Balance at 30 June 2007 155,524 9,698,748 (5,270,260) - 649,053 5,233,065
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007
Notes 2007 2006
£ £
Fixed assets
Intangible fixed assets 12 3,792,161 1,818,024
Tangible fixed assets 13 249,566 -
4,041,727 1,818,024
Current assets
Trade and other receivables 9 69,049 109,907
Cash and cash equivalents 10 1,447,432 8,409,699
1,516,481 8,519,606
Creditors: amounts falling due within one year 11 723,706 661,359
Net current assets 792,775 7,858,247
Total assets less liabilities 4,834,502 9,676,271
Capital and reserves
Called up share capital 14 155,524 155,524
Share premium account 9,698,748 9,698,748
Retained losses (5,434,548) (339,514)
Currency reserve (234,275) -
Equity reserve 649,053 161,513
Shareholders' funds 4,834,502 9,676,271
The financial statements were approved by the Board on 19 December 2007
COMPANY BALANCE SHEET AS AT 30 JUNE 2007
Notes 2007 2006
£ £
ASSETS
Fixed assets
Tangible fixed assets 12 2,077 -
Debtors: amounts falling due after one year 9 3,801,339 1,240,113
Current assets
Trade and other receivables 9 60,098 109,907
Cash and cash equivalents 10 1,434,390 8,409,699
1,494,488 8,519,606
Creditors: amounts falling due within one year 11 64,839 44,959
Net current assets 1,429,649 8,474,647
Total assets 5,233,065 9,714,760
Capital and reserves
Called up share capital 14 155,524 155,524
Share premium account 9,698,748 9,698,748
Retained losses (5,270,260) (301,025)
Equity reserve 649,053 161,513
Shareholders' funds 5,233,065 9,714,760
The financial statements were approved by the Board on 19 December 2007
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2007
Notes 2007 2006
£ £
Net cash (outflow)/ inflow from operating activities 15 (424,943) 312,916
Cash flows from investing activities
Interest received 235,789 60,535
Acquisition of tangible fixed assets (2,769) -
Net funds used for capital expenditure (6,536,068) (1,818,024)
Net cash inflow from investing activities (6,303,048) (1,757,489)
Cash flows from financing activities
Proceeds from issue of shares - 10,420,061
Issue costs - (565,789)
Net cash inflow from financing activities - 9,854,272
Net (decrease)/increase in cash and cash equivalents (6,727,991) 8,409,699
Effect of foreign currency translation reserve (234,276)
400,756
-
Cash and cash equivalents at the beginning of the year 8,409,699 -
Cash and cash equivalents at the end of the period 10 1,447,432 8,409,699
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2007
Notes 2007 2006
£ £
Net cash (outflow)/ inflow from operating activities 15 (424,454) (155,087)
Cash flows from investing activities
Interest received 235,789 60,535
Acquisition of tangible fixed assets (2,769) -
Loans to group companies (6,783,875) (1,350,021)
Net cash inflow from investing activities (6,550,854) (1,289,486)
Cash flows from financing activities
Proceeds from issue of shares - 10,420,061
Issue costs - (565,789)
Net cash inflow from financing activities - 9,854,272
Net (decrease)/increase in cash and cash equivalents (6,975,309) 8,409,699
Cash and cash equivalents at the beginning of the year 8,409,699 -
Cash and cash equivalents at the end of the period 10 1,434,390 8,409,699
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
1. Accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the period, is set out below.
1.1. Basis of preparation
The financial statements have been prepared using the historical cost
convention. In addition, the financial statements have been prepared in
accordance with the International Financial Reporting Standards ('IFRS')
including IFRS 6, Exploration for and Evaluation of Mineral Resources, as
adopted by the European Union ('EU') and in accordance with the provisions of
the Companies Act 1985.
The group's financial statements for the year ended 30 June 2007 were authorised
for issue by the board of Directors on 19 December 2007 and the balance sheets
were signed on the Board's behalf by Mr J Hondris.
The group financial statements are presented in UK pounds sterling.
In accordance with the provisions of the Section 230 of the Companies Act 1985,
the Company has not presented a profit and loss account. A loss for the year
ended 30 June 2007 of £4,969,235 (2006: loss for period of £301,025) has been
included in the income statement.
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, plus costs directly attributable to the
acquisition. 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. Revenue
Oil and Gas revenue represents amounts invoiced (exclusive of sales related
taxes) for the Group's share of oil and gas sales in the year.
Interest revenue is recognised on a proportional basis taking into account the
interest rates applicable to the financial assets.
1.4. Foreign currency translation
(i) Functional and presentational currency
Items included in the Group's financial statements are measured using United
States Dollars ('US$'), which is the currency of the primary economic
environment in which the Group operates ('the functional currency'). The
financial statements are presented in Pounds Sterling ('£'), which is the
functional currency of the Company and is the Group's presentation currency.
The individual financial statements of each Group company are presented in the
functional currency of the primary economic environment in which it operates.
(ii) Transactions and balances
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of the transaction. 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 Sterling 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.
1.5. 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.
1.6. 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.
1.7. Exploration and development costs
All costs associated with oil, gas and mineral exploration and investments are
capitalised on a project by project basis, pending determination of the
feasibility of the project. 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. Where a licence is relinquished or
project abandoned, the related costs are written off. Where the Group maintains
an interest in a project, but the value of the project is considered to be
impaired, a provision against the relevant capitalised costs will be raised.
The recoverability of all exploration and development 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.
Amounts recorded for these assets represent costs and are not intended to
reflect present or future values.
1.8. Impairment of exploration and development costs and depreciation of
fixed assets
The carrying value of unevaluated areas is assessed on at least an annual basis
or when there has been an indication that impairment in value may have occurred.
The impairment of unevaluated prospects is assessed based on the Directors'
intention with regard to future exploration and development of individual
significant areas and the ability to obtain funds to finance such exploration
and development.
Developed Oil and Gas Properties are amortised over the estimated life of the
commercial reserves on a unit of production basis.
The cost of other fixed assets is written off by equal annual instalments over
their expected useful lives, as follows:
Office equipment - two years.
1.9. Financial instruments
International Accounting Standard 32 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 18 to the accounts.
1.10. Share based payments
In the prior year the Company made share-based payments to certain directors and
advisers by way of issue 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 shares
that will eventually vest.
1.11. 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. IFRS 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 intangible assets
Determining whether an intangible asset is impaired requires an estimation of
whether there are any indications that its carrying value is not recoverable.
At each reporting date, the company reviews the carrying value of its tangible
and intangible assets to determine whether there is any indication that those
assets have been impaired. If such an indication exists, 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.
Expenditure and Development
Expenditure and development costs are amortised over the life of the area
according to the rate of depletion of the economically recoverable reserves. If
the amount of economically proven reserves varies, this will impact on the
amount of the asset which should be carried on the balance sheet.
Share based payments
The Group records charges for share based payments.
For option based share based payments management estimate certain factors used
in the option pricing model, including volatility, exercise date of options and
number of options likely to be exercised. If these estimates vary from actual
occurrence, this will impact on the value of the equity carried in the reserves.
1.12. New standards and interpretations not applied
During the year, the IASB and IFRIC have issued a number of new standards,
amendments and interpretations with an effective date after the date of these
financial statements. Of these, only the following are expected to be relevant
to the Group:
IFRS 7 Financial instruments: Disclosures 1 January 2007
IFRS 8 Operating segments 1 January 2009
IAS1 Presentation of Financial Statements:
Capital Disclosures 1 January 2007
IFRIC 10 Interim Financial Information and Impairment 1 November 2006
The directors do not anticipate that the adoption of these standards and
interpretations will have a material impact on the Group's financial statements
in the period of initial application.
2. Loss per share
The basic loss per share of 32.76p (2006: 8.33p) for the Group is calculated by
dividing the loss for the year by the weighted average number of ordinary shares
in issue of 15,552,329 (2006: 4,074,045).
Share options issued on 4 April 2006 are anti-dilutive. Full details of the
share options issued are set out in note 19.
3. Segmental information
The primary segmental reporting is determined to be geographical segment
according to the location of the assets. The Directors do not believe that there
is a secondary segment that could be reported.
All turnover relates to income from the Group's oil and gas assets and is
derived from the United States.
The loss for the year is analysed by geographical area as follows:
Geographical segment (Group) United Kingdom United States Total
£ £ £
Turnover: - 23,693 23,693
Cost of sales - (877) (877)
Interest receivable 235,789 - 235,789
Impairment of investment - (4,438,420) (4,438,420)
Share-based payments (487,540) - (487,540)
Administration expenses (406,198) (21,481) (427,679)
Loss before taxation (657,949) (4,437,085) (5,095,034)
The net operating assets are analysed by geographical area as follows:
Geographical segment (Group) United Kingdom United States Total
£ £ £
Developed oil & gas properties - 247,489 247,489
Exploration and development costs - 3,792,161 3,792,161
Fixed assets 2,077 - 2,077
Trade and other receivables 60,098 8,951 69,049
Cash and cash equivalents 1,447,432 - 1,447,432
Trade and other payables (64,837) (658,869) (723,706)
Net assets 1,444,770 3,389,732 4,834,502
4. Operating loss
2007 2006
£ £
This is stated after charging:
Auditors' remuneration
- In capacity as auditor (group and company) 12,000 8,000
- Other services pursuant to legislation 4,962 -
Foreign exchange loss - 38,489
5. Directors' emoluments
2007 2006
£ £
Wages and salaries 150,540 121,875
Social security costs 16,127 9,642
166,667 131,517
There are no employees other than the Directors.
6. Finance revenue
2007 2006
£ £
Bank interest 235,789 60,535
7. Taxation
2007 2006
£ £
Factors affecting the tax charge for the period
Loss on ordinary activities before taxation (5,095,034) (339,514)
Loss on ordinary activities before taxation
multiplied by standard rate of corporation
tax of 30.00% (1,528,510) (101,854)
Effects of:
Non deductible expenses 153,762 12,445
Timing differences not recognised 48,454
Tax losses carried forward 1,374,748 40,955
Current tax charge - -
Factors that may affect future tax charges
At the balance sheet date, the Group has unused United Kingdom tax losses
available for offset against suitable future profits in the United Kingdom. A
deferred tax asset has not been recognised in respect of such losses due to
uncertainty of future profit streams.
8. Subsidiary entities
The Company currently has the following wholly owned subsidiaries all of which
were incorporated on 3 February 2006:
Country of Percentage
Name Incorporation ownership Activity
Hadrian Oil & Gas LLC United States 100% Holding company
Agrippa LLC United States 100% Holding company
Pantheon Oil & Gas LP United States 100% Oil & gas exploration company
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.
9. Trade and other receivables
Group Group Company Company
2007 2006 2007 2006
£ £ £ £
Amounts falling due within one year:
Trade receivables 8,951 - - -
Prepayments and accrued income 54,286 73,457 54,286 73,457
Other receivables 5,812 36,450 5,812 36,450
69,049 109,907 60,098 109,907
Amounts falling due after more than one year :
Amount due from subsidiary undertakings - - 3,801,339 1,240,113
10. Cash and cash equivalents
Group Group Company Company
2007 2006 2007 2006
£ £ £ £
Cash at bank and in hand 1,447,432 8,033,232 1,434,390 8,033,232
Cash equivalents - 376,467 - 376,467
1,447,432 8,409,699 1,434,390 8,409,699
11. Trade and other payables
Group Group Company Company
2007 2006 2007 2006
£ £ £ £
Trade creditors 1,005 1,005
Other payables - 36,959 - 36,959
Accruals 722,701 624,400 63,834 8,000
723,706 661,359 64,839 44,959
12. Intangible assets
Exploration and
development
costs
£
Group
Cost
At 30 June 2006 1,818,024
Additions 6,536,068
Reclassified to Tangible assets (268,823)
At 30 June 2007 8,085,269
Impairment
At 30 June 2006 -
Impairment during the period 4,438,420
Foreign exchange movement (145,312)
At 30 June 2007 4,293,108
Net book value
3,792,161
At 30 June 2007
At 30 June 2006 1,818,024
The Company had no intangible assets at either 30 June 2007 or 30 June 2006.
13. Tangible assets
Developed Oil & Gas
Properties
Office
£ Equipment Total
Group £ £
Cost
At 30 June 2006 - - -
Reclassified from Intangible assets 268,823 - 268,823
Additions - 2,769 2,769
At 30 June 2007 268,823 2,769 271,592
Depreciation
At 30 June 2006 - - -
Depreciation for the year 21,334 692 22,026
At 30 June 2007 21,334 692 22,026
Net book value
At 30 June 2007 247,489 2,077 249,566
At 30 June 2006 - - -
Office
Equipment
£
Company
Cost
At 30 June 2006 -
Additions 2,769
At 30 June 2007 2,769
Depreciation
At 30 June 2006 -
Depreciation for the year 692
At 30 June 2007 692
Net book value
At 30 June 2007 2,077
At 30 June 2006 -
2007 2006
£ £
14. Called up share capital
Authorised:
1,000,000,000 ordinary shares of £0.01 each 10,000,000 10,000,000
Allotted, issued and fully paid:
15,552,329 ordinary shares of £0.01 each 155,524 155,524
There were no changes to the issues share capital during the year.
15. Net cash (outflow)/ inflow from operating activities
Group Group
2007 2006
£ £
Operating loss (5,330,823) (400,049)
Impairment 4,438,420 -
Depreciation 22,027 -
Cost of issuing share options 487,540 161,513
Decrease/(increase) in trade and other receivables 40,858 (109,907)
Increase in trade and other payables 62,347 661,359
Net cash (outflow)/ inflow from operating activities (424,943) 312,916
Company Company
2007 2006
£ £
Operating loss (5,205,023) (361,560)
Impairment 4,289,948 -
Depreciation 692 -
Cost of issuing share options 487,540 161,513
Decrease/(increase) in trade and other receivables 49,809 -
Increase in trade and other payables 19,880 44,960
Net cash (outflow)/ inflow from operating activities (424,454) (155,087)
16. Control
No one party is identified as controlling the Company
17. Decommissioning expenditure
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. In their view, no provision is
necessary for any future costs of decommissioning or any environmental damage.
18. Financial instruments
At 30 June 2007, the Group had cash on one month term deposits of £nil (2006:
£7,000,000). The Company's exposure to interest rate risk, which is the risk
that a financial instrument's value will fluctuate as a result of changes in
market interest rates and the effective weighted average interest rates on
classes of financial assets and financial liabilities, was as follows:
Weighted Average Fixed Non - Interest
Interest Rate interest rate Bearing
2007 2007 2007
Financial assets: % £ £
Cash on Deposit 4.1 1,434,390 -
Net Fair Value
The net fair value of financial assets and financial liabilities approximates to
their carrying amount as disclosed in the balance sheet and in the related
notes.
Currency Risk
The functional currency for the Group's operating activities is the Pound
Sterling and for exploration activities the United States of America dollar.
The Group has not hedged against currency depreciation but 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.
19. Share based payments
Included within administration expenses is a charge for issuing share options.
Group Group Company Company
2007 2006 2007 2006
£ £ £ £
Cost of issuing share options 487,540 161,513 487,540 161,513
Number of
Exercise price Value Options granted and
Pounds Pence held at 30 June 2007
1.00 42.474 483,284
1.25 35.116 250,000
1.50 31.116 650,000
2.00 23.806 650,000
The share options, detailed above, were granted on 4 April 2006 and will be
exercisable between the first and fifth anniversary of Admission to AIM and are
non-transferable.
No options were exercised, forfeited or expired during the period.
The option values were calculated with reference to the Black-Scholes option
pricing model taking into account the following input assumptions:
Share price £1.00
Exercise Price As stated above
Expected volatility 50%
Vesting period 1 year
Expected dividends Nil
Risk free interest rate 5.42%
The volatility percentage is an estimation of the expected volatility in the
share price for a junior exploration Company which is listed on AIM having
regard to comparative companies, quantum of cash raised, targeted
(institutional) investment group and risk profile.
20. Post balance sheet events
Appointment of Director
On 1 August 2007, Pantheon announced the appointment of Mr John Walmsley as a
director of the company. Mr Walmsley's extensive experience in the oil and gas
industry has proven invaluable since his appointment.
Capital Raising
On 21 November, 2007 Pantheon raised £900,000 by way of a placing of 1,500,000
ordinary fully paid up shares at a price of 60p per share with institutional
investors.
Issue of Options to new Director
On 2 November, 2007 Pantheon granted options to subscribe for 300,000 shares to
its newly appointed director, Mr John Walmsley. The price payable for these
shares is 100p for the first 100,000 shares, 150p for the second 100,000 shares
and 200p for the remaining 100,000 shares.
New Projects
On 17 July, 2007 Pantheon announced its farm-in to the Bullseye prospect in
Louisiana, and on 7 August 2007 Pantheon farmed into a development well at Padre
Island which was subsequently announced as a discovery. On 16 October, 2007
Pantheon announced the spudding of the Fay Weil Ross et al#1 well designed to
test the Nottoway prospect. This well is still currently being drilled.
Contacts:
Pantheon Resources Plc
Sue Graham, Chairman +44 20 7379 0118
Oriel Securities Limited
Scott Richardson Brown +44 20 7710 7600
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