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Adding to the Assets - (PNR)
26/1/2017 (119264)

Adding to the Assets

After the drama and dismay of discovering that it was just too tough to drill a horizontal well through the Eagle Ford sandstone in Polk County, Texas, Pantheon Resources (PANR) is back on track and looking better than ever.

Going back to drilling a vertical well (VOBM#2H) as a sidetrack from the frustrated horizontal, Pantheon has hit the main reservoir target and found hydrocarbons in a potentially significant reservoir. The well will be completed as a producer ahead of testing operations using a lighter and cheaper rig, but it looks more like the VOBM#1 well drilled in 2015 than the VOBM#3 well. That confirms the company's understanding of the geology, and might suggest that the initial flow rate could be a valuable 1,000 to 1,500 barrels a day.

It also raises hopes that vertical wells into the Polk Eagle Ford sandstone could be relatively easy and inexpensive.

It looks as if the company will bring in a third party to install a dedicated facility to process the Polk gas, and we might hear more of that next month. A third party deal might imply that both sides are relatively confident that there could be a decent flow of gas available for processing, sale and early cash flow. Check my report of November 23 for more.

Meanwhile the VOBM#4 well in Tyler county is being completed. The mood appears confident, and flow tests will follow, with further news possible in the next few weeks. This will bring confirmation of whether the unexpected discovery of the Wilcox formation as the well went down is a commercial producer. There appears to be a strong chance of this, and it is worth looking at another Wilcox discovery by Unit Petroleum some five miles to the south.

Go to http://www.unitpetroleum.com/UnitPetroleum-Operations.html?tpm=1_4 The map there shows how important the Wilcox can be, with 157 operated wells (7 horizontal) and drilling resuming there this month, plus a 'world class' gas reservoir.

Since drilling started, Pantheon has made three unexpected discoveries - one at the first well, the Wilcox, and the Navarro carbonate formation near the bottom of VOBM#4. All three could end up being fairly significant finds, in addition to the five major prospects Pantheon has always believed were there to be found and exploited.

The shares added 4.5p to 82p today, half their peak price. Despite the horizontal drilling setback, there has been nothing to suggest the resources are not as valuable as ever they appeared to be - and the three new discoveries come in on top. Of course, now that the team is aware of the extra finds, it will be easier to track them and perhaps add to them in future. Pantheon looks as good a gamble as ever.

I have a holding in Pantheon.

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26/1/2017 Pantheon back on track.


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