Good afternoon, and welcome to the Pantheon Resources plc investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions can be submitted any time by the Q&A tab situated on the right-hand corner of your screen. Just click Q&A, scroll to the bottom, type your question, and press send. Due to the number of attendees on today's presentation, the company will not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and will publish a response if we're appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to David Hobbs, Executive Chairman. Good afternoon, sir.
Thanks very much indeed, Paul. We've run into our first technical problem, which is the ability to move the slides, which I've now solved, so apologies for that. This is our disclaimer. We're gonna be answering a lot of questions and answers during the course of this, so please take note of the disclaimer. Delighted to have everyone here. This webinar is really set up in order to be able to address a lot of the questions that came in around the previous webinar we did, where we laid out the company's strategy. This map is familiar to everybody.
What we're gonna be focusing on today is our strategy for extracting maximum value from two giant field development assets, Ahpun and Alkaid. Ahpun being the approximately 500 MMbbl along the Dalton Highway and just off to the west of it, and Alkaid being some 1.7 Gbbl recoverable further to the west and in the deeper basin floor fan. We explained in some detail in the previous webinar, so I'm not going to spend time today, but the objective of our webinar today is to reiterate what our strategy is, summarize it, clarify any points that weren't immediately clear, and address your questions.
What we are aiming to do is to deliver sustainable market recognition of $5-$10 per barrel by the end of 2028. In order to achieve that, we anticipate getting to final investment decision on Ahpun during 2025 and Kodiak during 2028. We will be generating positive net cash flow that will fund the development, create the cash self-sufficiency for the company so that it is able to become a price maker, not a price taker. Our financing anticipates no more than $350 million required to get to that point of cash self-sufficiency, and our anticipation is that the equity component of that will be significantly less than $100 million.
To get to that, we anticipate having to drill 30 production wells from the two pads, Alkaid and Phecda, the names of the pads. Some of you will remember that there was a pad for the Alkaid-2 well, and there was a so-called Alkaid-3 pad. That is what the Phecda pad is. We've allowed for one in every four wells. For each three production wells, we'll require one well as an injector well for disposing of water and gas, and for maintaining reservoir pressure. We anticipate needing 20,000 bpd of processing capacity for marketable liquids to be injected into the Trans-Alaska Pipeline main oil line.
To that end, we've begun the process of applying for a hot tap into the TAPS line, and that will be a couple of miles to the north of our Alkaid unit license. There are some essential plumbing things that have to happen before and to enable all of this to happen. One is the establishment of the Houston headquarters we talked about, which will become the geographical, the corporate, the sort of financial and operational engineering center of gravity of the company. We are in discussions with advisors on a U.S. or dual listing strategy, and that will be all geared towards ensuring maximum access to capital on the optimum possible terms. We've begun the process of permitting for Alkaid field development and for the TAPS tie-in.
To talk a little more specifically about the order of things, I'm gonna hand it to Jay.
Thank you, David. Well, this is the illustrative timeline. As you can see, as David mentioned, there are lots of moving parts, lots of things that we will be doing at the same time. The keys are, of course, the final investment decisions on Ahpun and Alkaid and the original drilling of the wells to get us up to that 20,000 bbl of oil per day. A lot of activity between now and 2028. Of course, the regulatory issues that we'll be going through, permitting, and then of course just drilling the wells and executing properly on this strategy that we've laid out. That's our illustrative timeline out to the end of 2028. We'll be talking more about some of the details on that in our next webinar about Alkaid and Ahpun.
Back over to you, Paul.
That's fantastic. Thank you very much indeed. Well, let's move on to some questions. Jay, David, as you can see, we've had a number of questions submitted today already, and we had a number of pre-submitted questions. Perhaps if I can start with the first one, if I may. It reads as follows: The gulf in value between what management have presented as positive exploration progress versus the market reactions are at the extremes when compared with our peers. Please factor in as many ways as you can communicate why the market's wrong into your June webinar and make the theme throughout.
Obviously that was a question that was carried over from the June webinar a few weeks ago.
We announced our strategy in that on the 28th in an RNS, and the strategy was designed to achieve sustainable market recognition of a value of $5-$10 a barrel, as I've explained. Management analysis is clear that subject to funding, the milestones are achievable, and we're gonna seek to achieve them at the least possible value dilution for today's shareholders. We'll talk later about the number of different channels that the company is evaluating in order to optimize access to capital, and those can include reserve-based lending, equity, corporate debt, farm outs, et cetera. I've used the term EUR here, and it's worth just taking two seconds to explain how we're defining it because there are two main sources of reserve definition.
The Society of Petroleum Engineers under their Petroleum Resource Management System and the SEC, the Securities and Exchange Commission. The main difference is the point at which you can move from recognizing a resource to recognizing a reserve. The SPE only requires that you expect the resource to be commercially developable. In other words, has it crossed the economic threshold, and it can then be recognized as reserves, whereas the SEC requires the company has committed the capital and to the development through its final investment decision. Pantheon has throughout used that more conservative definition. That's the reason we will continue to be talking about resources during this presentation and over the coming years, until we've achieved FID on each field.
The term EUR may be reserves. It may be resources depending on where we're at in that process. Jay, maybe you can...
Yeah. Yeah, David, thanks. Well, the current share price appears to reflect market participants' view as to both the commercial value of our assets and the likelihood that we can successfully bring them to market at acceptable levels of dilution. Our company's strategy aims to increase the market's perception of the value of the assets with our upcoming resource statements, but we also understand we need to demonstrate access to capital to get the recognition of that ability to bring the assets to market. In the absence of financing mentioned above or a renegotiation of the convertible bond, there is a supply of equity from the quarterly principal and interest payments. We recognize that. We do intend to bring new investors onto the register, expand the institutional ownership base.
We're gonna do that by promoting the company, providing the independent expert validation to our geological assessment, and removing barriers to institutions in holding our stock. That may be driven by ESG concerns, the fact that we're pre-revenue, or the current location of our listing or some other. Reducing this gulf in the valuation requires a number of steps that rebuild the confidence in the company's ability to effectively finance its strategy. We began that process with the June 28th RNS and webinar, where we laid out the strategy that aims to reach, as David said, financial self-sufficiency as our primary goal. We will be judged by our ability to demonstrate progress toward that goal over the coming months and years. It's an ongoing process. It's a series of small actions that builds momentum over time. Thanks.
That's great. Thank you very much indeed, Jay. Next question we've got here: What are the plans for the next six months, 12 months, 3 years?
Plans for the next six months, why don't I cover sort of corporate and communication and then hand over to Jay to talk about some of the operational plans. The first I mentioned is establishing our Houston headquarters and consolidating corporate engineering and financial center of gravity into that office. I'm moving to Houston subject to the speed at which U.S. Consular Services can operate post-COVID. The majority of the Pantheon team will spend a significant proportion of their time together in that office. We're targeting fourth quarter to be up and running fully there. Secondly, we're building the team and the operational capability in-house.
We're enhancing internal and external operational processes and procedures and bringing some of the right consultants into the broader team to make sure that we are over-matching the problems facing us. Third, we'll be expecting to receive and act upon the advice from U.S. advisors on the U.S. listing and other considerations vis-à-vis timetable costs and tax implications. We're targeting the fourth quarter of this year to get onto that. On communications, we're planning an increased focus on smaller, more detailed webinars where necessary, obviously preceded by RNSs where there's new information. That's geared to helping shareholders understand their investment and to remove some of the misinformation and misunderstanding about the company that's out there.
Next week, Jay mentioned we'll be scheduling a webinar that we promised to drill down on the Ahpun well completion and frack performance and the implication for future wells. That will be Wednesday next week, where it's just a question of getting the invitation sent out. Later this month, we'll issue an RNS and do a webinar on the Netherland, Sewell & Associates report on Kodiak. That will include an assessment of field development economics as well. We're hoping to get it done before the end of this month. It'll happen as soon after the report has been RNS as we can manage. Jay, do you want to talk about that?
Thanks, David. We're gonna perforate and frack the Shelf Margin Deltaic horizon in the Alkaid-2 vertical wellbore. We're gonna do that to gather fluid and frack design data for the Ahpun field. The target date for the start of that operation is September, this fall. Pantheon's recently appointed Senior Vice President of Engineering, Tony Beilman, as you guys, everybody met him. He is an expert in fracking and completing horizontal wells, having spent the last decade focusing on the U.S.'s unconventional reservoirs, the Marcellus, the Permian, the Barnett, the Utica, et cetera. Tony has completed an extensive review on Alkaid-2, and he's concluded that material improvements can be made with the next evolution of frack design.
We'll apply some of these learnings to the vertical SMD test, and it's expected to provide really valuable data for the frack design of all of our future wells. We're gonna analyze the drilling performance and solutions to allow the collection of whole core for our next Kodiak appraisal well and a full logging suite prior to committing for the next well location, and this will follow the completion of planning for the Alkaid-2 SMD frack. For the next 24-36 months, that includes completing the regulatory process for the hot tap into the Trans-Alaska Pipeline System, the Ahpun development. We're targeting that for the second half of 2025. A proposed dual listing or relisting of Pantheon onto a U.S. exchange. Of course, that's subject to legal, regulatory, tax hurdles, et cetera, overcoming those. We target that in 2024.
Securing funding for the Ahpun development from a combination of sources. That's vendors, debt, non-traditional sources, equity markets, pre-sale of crude to ensure the minimum possible value dilution to equity shareholders so they retain the maximum value in the company. Next target, Q4 of 2025. Longer term, to launch the Kodiak development approval process with the objective of achieving a final investment decision on that in 2028. Paul.
That's great. Thank you very much indeed, Jay. I guess something you've touched on in an earlier question, future funding. Pantheon's recent fundraise, in which it raised gross proceeds of approximately $22 million, provides sufficient working capital for corporate overheads, the resource reports and the SMD test at Alkaid-2. What's the expectation for funding for the coming winter programs?
Our primary focus is on bringing Ahpun into production and generating positive cash flows as quickly as possible. Those operations will be conducted after proper planning and review to overcome any past operational issues we encountered. Investors will remember that we've had one or two glitches and we're working hard to avoid that in future. On future Kodiak appraisal wells, our initial focus is to gather the necessary information to optimize development runs to prove up additional volumes. Because we believe from our analysis that we've comfortably exceeded the economic threshold. The question isn't whether we're gonna push forward with the development. It's about whether or what the optimum development concept looks like in terms of the location and number of pads, centralization versus distributed processing, et cetera.
We intend to collect whole core in at least one of the upcoming Kodiak appraisal wells, and we're not gonna rush to meet a winter 2023/2024 deadline at the expense of having a well plan that maximizes our chance of getting all of that information. We will be updating on a detailed operational plan later this year after we've completed the short-term program and after we've completed all of the planning.
Great. Thank you very much indeed, David. Next question, just looking at that U.S. listing, U.S. investors. When can we expect Pantheon to have secured a U.S. investment advisor status? What will be the terms of reference? Will there be any incentives based upon securing defined objectives?
We're already in discussion with several U.S.-based investment banks, intending to engage a preferred partner shortly. Terms of reference will be to assist the company in securing a U.S. listing or dual listing accessing U.S.-based individual and high net worth and other international investors and to secure the capital overall to execute the strategy that we've laid out. We're not gonna share confidential information relating to the precise terms of engagement or anything, but I can tell you it will be in line with normal arrangements consisting of some retainer and a success fee measured on quantifiable measures of success.
The only other thing I'd add is until we've got confirmation that there is a viable strategy for the listing, we're not gonna be presenting a detailed timetable for implementing any change in our listing.
That's fantastic. Thank you, David. Just really extending that, the next question, U.S. and other institutional investors, again, something that you guys have touched on already. Has a beauty program been set in place for the presentation of the Pantheon investment opportunity to the U.S. investment community, including potential farming partners, hopefully for Kodiak and SMD? What else is Pantheon doing to get institutional eyes on its projects and appeal to the wider audience through mainstream news?
Well, we're gonna raise the profile of the company and our assets both privately and publicly through participation in non-deal roadshows. We're gonna speak at industry conferences. We're gonna meet potential partners face-to-face. Much of this activity will occur prior to the opening of the Houston office, as David has mentioned, such as the non-deal roadshow after receipt of the Netherland Sewell report. Our objective is, and we're already hitting the ground running now and in September. Well, this increase in visibility is not dependent on moving the company's listing to the United States. We're gonna undertake that under any circumstances.
Thank you very much indeed. Next question we've got here. Your webinar outlined a strategy which targeted achieving recognition of value between $5 and $10 per barrel of resource by 2028. 2028 seems quite a long time away.
Yes, that question came up and to an extent we answered it previously, but let me address it again. Just because our objective is to have achieved $5-$10 per barrel by 2028 doesn't mean that it can't, that it can only be achieved or the value of that strategy will only be realized five years from now. Right now, the market's attributing $0.10 per barrel, and that reflects the skepticism that Jay mentioned earlier about the ability of the company to overcome the corporate, technical, operational and other risks in executing the strategy.
This is a bit more detail than really needed, but for example, you could download the Excel model from the Alaska Department of Natural Resources, and if anyone wants to email contact@pantheonresources.com, I'll happily send them the link to that. If you populate the model with the first stage of the Ahpun development, then what you see is, the value per barrel comes out at between $5-$10 per barrel. Now that is for a part of our resource and future resources, next stage of Ahpun, for example, slightly lower royalties, slightly higher values per barrel. Kodiak, probably where the reservoir is thicker and higher quality, even better.
As we reach the FID for these assets, we see $5-$10 per barrel being an attainable forward expectation. If there were no risks to achieving that value objective, the stock would probably reflect the discounted value of that goal, less whatever we have to invest in the meantime to get there. The market is clearly factoring in the key risks, and particularly an assessment of the dilution risk as we fund the strategy. The value of proceeding on the strategy is not at the end of five years, it is the steps we take on the way that should make that future more inevitable. Jay, do you want to maybe-
Yeah. Yeah, David. As we move forward, and we demonstrate our ability to overcome each of these hurdles, as outlined by David, to a successful development and production, we'd expect investors to build their confidence in the achievement of the ultimate objective, and the market would then rewrite its valuation of the company. If the aggregate dilution ended up, let's say, even as high as 50% at either the asset or the corporate level, up to the point of cash flow self-sufficiency and Kodiak FID, current Pantheon investors would still own the equivalent of 1Gbbl or slightly over 1 Gbbl of recoverable oil.
Half of the aggregate for Ahpun and half of Kodiak, which would then start its development program with a value of as David said, $5-$10 a barrel, that would represent a 50x-100 x leverage on today's market valuation. The value gearing to Pantheon's strategy is substantial in both the short and long term as investors see us meeting those strategic milestones along the way.
Fantastic. Thank you very much indeed, Jay. The next question we've got here: When will another independent non-executive director be appointed?
As you're aware, we appointed Allegra Hosford Scheirer at the end of June. We're considering other candidates in due course that can add to the governance and not only meet best practice requirements, but benefit the company and its shareholders.
Thank you very much indeed, David. Just touching on that appointment that you've mentioned there, you appointed an independent NED this week. Comments?
Oh, sorry.
Should have combined those two together.
No, no, that's fine. I just preempted it. Look, we released Allegra's background as a PhD from MIT, worked for the USGS, knows Alaska. You know, she's a pretty competent person. She's had an opportunity to do her due diligence coming on board, and in joining the board, she's endorsing the quality of what it is we're trying to achieve. She brings the number to six. We'll definitely, as I said, consider additional appointments if we believe they'll enhance the governance of the company.
Fantastic. Thank you. Next question we've got is around remuneration costs. It reads as follows: The remuneration of the CEO and CFO for the year to 31 December 2023 is $528,000 and $676,000 respectively. They also received 3.35 million 10-year options with a strike price of 67p. These figures seem excessive. What's being done to reduce these figures to a more acceptable level, particularly bearing in mind the degree to which ordinary shareholders have suffered since September 2022 when these directors exercised options and sold shares at GBP 1.23 per share? The figures for the third executive director were reasonable. I'll hand that back to you. Thank you.
Look, we absolutely take on board investors concerns about remuneration, and the Remuneration Committee will indeed, at our next meeting, be addressing executive compensation and will report compensation in line with the requirements to do so. It's absolutely true the Pantheon share price has fallen substantially over the past nine months. It's been a period of great progress, though, towards development and realizing the company's strategy, even if not great progress in terms of the share price. Pantheon today is a company that owns 100% working interest in a project over 193,000 acres with an oil in place over 20 Gbbl . We think 2 Gbbl of recoverable resource. That's certainly a better place than we were one and two years ago.
Our job is to ensure that the share price properly reflects that. I'm not gonna say more on that. Jay, maybe you want to.
Along that line, David, you know, in 2023, Wood Mackenzie in Alaska Upstream Review of 2022 referred to Theta West-1 Well as the fourth largest discovery globally in 2022, and the largest onshore discovery in 2022. They did note that more appraisal and production tests would be required before we'd consider it commercial. Additionally, the independent experts at IHS Markit described Kodiak, Theta or Theta West as a world-class petroleum system. Also in 2022, IHS Markit referred to Talitha-A as a top 10 discovery well for 2021. Lots of accomplishments in the field.
That's great. Thank you very much indeed, Jay. Next question is, does Jay intend to stay on as CEO until Pantheon is taken over?
Jay, I'll let you.
I plan to stay with Pantheon. I'm committed to deliver the board's strategy, period.
Perfect. Thank you very much, Jay. Next one we've got here: What would happen to director options if a director was to step down? Do they have a shelf life, or would the former director still get the full benefit of the forthcoming SMD test results if the SMD tests lead to game-changing farm out?
Well, just as a technical matter, share options that are vested continue to benefit the recipient of those vested options under the terms of their grant. Unvested share options would normally be canceled when someone leaves the company before they vest. I'm not sure there's more to say on that.
That's great. Thank you very much indeed, David. Next question we've got here is, would the directors be ready to enter into voluntary undertakings to restrict their share sales until certain conditions agreed by a new Remuneration Committee are met?
Obviously, options that have already been granted are subject to the company's dealing policy. I'm not gonna prejudge the actions of the board, because share sales are a matter for individual directors based on their personal circumstances and subject to the dealing policy. Obviously any new options or any new sales would need to conform to the director share dealing procedure. If the board determines or the Remuneration Committee of the board determines that other restrictions would benefit the company, we'll consider implementing them. I'm not looking for anyone to voluntarily restrict their ability to exercise their property rights.
Incidentally, you know, this topic hasn't come up very often in the last 17 years because, as far as I'm aware, there have only ever been two instances of director share sales. Sorry, Paul, I interrupted you.
No problem at all, David. You carry on. Right, next question we've got here, again, sort of touches again on that. Why does Pantheon still retain the 2012 director incentive scheme, which would award the directors with 2.25% of the value of the net booked reserves, irrespective of the share dilution and share price performance? The 2012 scheme was designed for a different resource base and prior to Pantheon's merger with Great Bear and appears excessive in creating an outsized free carry, not directly tied to share price performance. Please can you explain why this does not create a misalignment with shareholder interests.
There's a lot to unpack in that, but what I'm gonna tell you is that the remuneration structure, both in terms of key performance targets and quantum of potential rewards, will be reviewed periodically and to ensure its suitability. I'm absolutely sure that with the new members of the various board committees, this is a topic that will come up for discussion.
Thank you, David. Next one we've got here. Please can you provide examples of other AIM listed companies that have been successful for their shareholders scheme, such as the 2012 director incentive scheme?
Well, I'll interpret that, I think, as it was intended. Look, there are a lot of companies who have incentive schemes that are linked to delivery of key performance targets rather than just share options because there is a fear that share options on their own can sometimes run into the money for reasons outside the performance of the executives. Most companies have a combination of share options and performance-related targets. At the time the scheme was initiated, it was believed that the booking of reserves would generate significant value, and it was not an easy performance target to achieve, and it was appropriate to the shape of the business as it was then.
As I just said, in line with where the company's at, the remuneration structure is gonna be reviewed to ensure its suitability going forward, and it will be reviewed on an ongoing basis, because the company will be evolving on an ongoing basis.
Thanks, David. I think we've got a couple more just questions around that. How do long-dated ten-year share options align with directors statements about seeking a near-term prove up and exit strategy? We've got one final question around that as well, which I'll pick up with you afterwards.
Okay. I'll take that one. I believe this question was posed prior to our refocused strategy that we've outlined recently, and it does not fully rely on a near-term exit. Plus, this is a long-term business. You put your money in upfront, and you get your payout over a long period of time. We always intended to ensure that the Pantheon had the capacity to exploit the asset itself, or as we called it, a go-it-alone strategy. The speed of that was always limited by the availability of capital. As restated in the RNS and the webinar, Pantheon's strategy does not rely upon a near-term prove up and exit strategy now. It doesn't mean that a sale on appropriate terms would not be entertained.
It would have to be more attractive than our alternative of achieving FID on Ahpun and Kodiak fields by 2025 and 2028, respectively.
Thanks, Jay. I think you have covered this off, David, but I'll say it anyway. Will you allow the shareholders a vote on any new directors incentive scheme?
Look, any incentive scheme would be put to the vote of shareholders as if it was required to be so under the, you know, corporate governance codes, securities laws, regulations, listing rules. Anything that the company is subject to, we would abide by.
That's fantastic. Thank you. The next one here, why are you not taking legal action against certain anonymous avatars on Twitter and other social media platforms for their repeated disparaging statements and allegations regarding Pantheon's business case and assets?
Well, we've spoken to our advisors and our legal team, and where it's clear that a legal action has occurred and where we believe it could be economically a beneficial outcome is likely, we would explore those options. We're aware that there have been significant unfounded and untruthful statements made about the company. We have not publicly responded to such comments to date. However, we know that in the absence of providing clear evidence, refuting those claims and allowing an information vacuum to develop would be a further risk from such allegations, and we aim to close that gap.
I think our strategy going forward is to provide as much transparency as possible as quickly and as frequently as is reasonable, to avoid the risk of people being able to fill the vacuum with that kind of thing. I think that let me just reiterate and support what Liam Denning said. There's no point in performative response. If we are going to pursue legal action, it's going to be because there's a clear almost guaranteed outcome that is to the benefit of the company from doing so.
Great. Thank you. Thank you both. Is it only the shorting campaign that's resulted in the fall in Pantheon's share price?
Well, I'm not gonna comment specifically on share prices 'cause it's outside our control, and I don't think anyone knows for sure what drives share price on any given day. The challenges faced by the company include some that are company specific and some that are macro. The failure to achieve expectations that were set or allowed to be set on the Alkaid-2 well, and its failure to deliver an unambiguous success, and ensure sufficient balance sheet strength, in the wake of what we shared in the last webinar of significant cost overruns and in terms of the overall program when we completed testing, a time overrun at Alkaid. That allowed short sellers to be able to bet on a supply of shares to mitigate the risk of being short.
At a macro level, we've seen oil prices fall substantially since the middle of June 2022. There have been inflationary pressures, interest rates have gone up. Those have also had a material impact. I think the board takes responsibility for the performance of the company. It recognizes the best strategy for dealing with the current situation is to mitigate those vulnerabilities, and that mitigation of vulnerability and ensuring we become self-sufficient as quickly as possible is what informs our strategy for the future.
Thank you very much, David. Assuming that part of the reason for Pantheon's share price fall was caused by an absence of operational activity, will Pantheon's strategy include operational activity in the short to medium term to support a rerate and a rising share price?
Well, we do recognize that the news flow, including operational results, can drive short-term share price movement. Our focus now is on taking the steps necessary to achieve Ahpun and Kodiak FIDs in the shortest timeframe and at the lowest cost and minimum possible dilution. We'll refine the timeline shared in the June RNS and webinar to provide firm dates and milestones on our path to achieving the goal that we've mentioned and David mentioned at the start of $5-$10 per barrel of recoverable resources by the end of 2028.
That's great. Thank you very much, Jay. Given the short thesis focuses on Pantheon's plays being gas condy, what evidence is there to support oil reservoirs?
Well, these reservoirs contain oil and liquid phase. It's true the gas oil ratio is a level that would be defined as an oil field. For prudence, our development modeling makes no assumption the future wells will show any change to the compositional mix that we saw at Alkaid-2. The liquids we encounter includes condensate produced from the well, and the liquids that could have been stripped from the gas phase with refrigeration, will be combined into the marketable liquids that will be exported by the TAPS main oil line. Analysis of the well test indicates that marketable liquids recovered at Ahpun production stream meet the specification for pipeline liquids. As we described in the January 2023 webinar, the TAPS Quality Bank would be expected to yield about 90% of the volume lifting entitlement versus the volume exported at TAPS.
Whatever we put in at the front end, we'd get about 90% of that volume at the back end, or as we described it, about a 10% reduction in the overall value from TAPS or ANS.
Thank you, Jay. What have we got here? We've been told that prospective partners will look at the evidence of the resource rather than Pantheon's market cap. We are assured that SLB and Netherland, Sewell are working to produce that evidence. With such a fall in market cap, what incentive is there for a prospective partner to invest millions of dollars rather than simply proceed with a takeover at price that undervalues the company's true value and prospects? Indeed, have there been any such approaches? Obviously, I appreciate what you can say from a regulatory point of view, but hand that back to you.
Well, Paul, we will not comment on potential transactions until we're at a point where we have a degree of certainty that permits that or something that requires disclosure.
Yeah. Thank you very much, Jay. Next one we've got here, I think you can perhaps fill in some of the gaps for this one. Who negotiated and is responsible for the terms negotiated? How do the terms and results so far compare with terms of convertibles negotiated by other companies on AIM and elsewhere?
The decision to issue the convertible was a board decision. The board takes responsibility and is accountable for it. Our advice at the time was that the terms were not inconsistent with similar instruments. The repayment schedule is for a little less than $2.7 million every quarter. We're working hard to deliver shareholders a clear and coherent strategy that removes much of the misinformation about the assets. We expect the Netherland Sewell report shortly, which will provide an independent assessment on Kodiak, and then in due course, with the testing of the Shelf Margin Deltaic and the subsequent Netherland Sewell report, we believe that we'll be able to begin to allay some of those concerns.
The share price may well begin to reflect a lower level of concern, and so the cost of the convertible bond would be less onerous. It's you know, A, I mentioned earlier, it's worth thinking what we got in return for using the convertible bond, and B, recognize that it's clearly going to be central to management thinking going forward in terms of capitalizing the company to bring ourselves out from under the overhang of that convertible bond. You know, we wouldn't want to be in the situation we're in today. That's the reason we're seeking to not be in the situation we're in today and to remove that overhang.
Thank you very much, David. Again, sort of following that, why did Pantheon not come up with other ideas to avoid the extra dilution caused by the fall in Pantheon share price?
Yeah, very good question. Well, we had initially planned to raise funding after the completion at Alkaid-2. We had expected that to occur in October, early November. When operations were delayed as a result of the sand blockage, the lack of the availability of a rig to clean it out, couple that with the impact of mandatory closed periods on release of the company's interim financial results, it really wasn't until Q2 of 2023 that we were able to undertake a fundraising. We all know market conditions at that time were pretty challenging, especially for pre-production oil and gas companies. It was in part affected by the material fall in oil price David mentioned earlier, the rise in interest rates, other macro things. At that time, it was unrealistic to expect a farm out of Alkaid in that short time period.
For the reasons mentioned previously, we deemed that an equity fundraising was less dilutive than a farm out at Kodiak. We're focused on our initiatives and future strategies to mitigate dilution. We've always worked hard to do that, provide to all the shareholders.
Thank you, very much, Jay. Why did Pantheon not pay the most recent installment using the extra cash it raised at GBP 0.17 , but instead chose to go for even more dilution by issuing shares at approximately 14.53 pence to the bond holder?
Well, look, as I said, we recognize the overhang from the bond, and removing that overhang is a priority. Until our financing strategy is finalized, our preference is for liquidity to ensure that any transaction that we undertake is from as strong a position as possible.
David, you haven't mentioned this and touched on it earlier on, but if Pantheon were to receive a cash payment as part of any farm out, would it be able to accelerate repayment of the convertible loan or set aside the cash in escrow to settle quarterly payments with cash rather than shares?
Yeah. Look, we're looking at all options to relieve the overhang, and whether cash came from a farm out or from any other source, we will apply it in whatever delivers the highest value, and helps to minimize value dilution prior to achieving cash flow self-sufficiency.
Thank you. Why does the eSeis not mention Pantheon's projects on its website? Is it because Pantheon's assets are currently discoveries and not yet established producers?
We just don't discuss the eSeis website with them. That's just not part of our remit.
Thank you, Jay. With the current low stock price, investors are concerned about dilution and issuing shares. Again, a thing that's come up with a few questions we've had through. What is the company's approach to attract new investors? Is there any source of revenues besides raising capital?
Well, look, we share investors' concern about potential value dilution, and our strategy is designed to minimize overall dilution on the way to self-sufficiency. But until we have got positive cash flow production, we're gonna have to continue to raise capital from a variety of sources, and I ran through those earlier, of which equity is only one. The simple answer to that question is, there's nothing we can do other than raise capital until we have revenue, which is why our primary focus is on developing positive net cash flow to fund the operation going forward, to minimize dilution, ensure shareholders have as large a share of the value, by the time we reach the $5-$10 per barrel target in 2028.
David, thank you. Are you planning to revise the casing design of the horizontal wells to increase the size of the production casing?
Well, first.
Change of pace.
I'm sorry, David, were you about to say something?
No, I said that's a real change of pace.
Oh, yeah, it is. We'll go a little back to a little bit of engineering. The casing size didn't impact any of the operations or the production at Alkaid-2. I'll just say generally, during early exploration and appraisal, our focus has been on ensuring reliable operations that deliver the required data. Once we're in development production, the focus would return to optimizing value of production. Our strengthened team, including Tony, Michael, and our many service partners, will turn to this in planning for the future production wells, and that will include the optimum casing and tubing program to ensure we can drill long enough laterals and to capture the highest return on investment for each well in the future. Good question.
Thanks, Jay. How many months of runway does our company have based on the current cash balances and work plan? Which milestones does management aim to achieve based on the GBP 22 million raised during the last funding?
Well, in simple terms, we've got around 12 months of runway, depending on the precise investment decisions and expenditures that we incur. That should cover testing of the Shelf Margin Deltaic in the Alkaid-2 well, delivery of the Netherland Sewell reports on Kodiak and Ahpun, establishing the Houston office, executing our preferred option for stock exchange listing, and sorry, I've forgotten one. Finishing the SLB dynamic model, which is an essential input to development planning. Just to be clear on that one, the dynamic model isn't a report per se. It is a tool that allows us to do the engineering to optimize the development economics.
Thank you very much indeed. What have we got here? The $350 million needs to be raised before Pantheon gets to free cash flow positive. Some of this can be reserve-based lending, but how much do we need to raise, including reserve-based lending? What are the contingency plans if capital markets for small cap oil and gas exploration companies are not conducive? While the current strategy may have pivoted away from being over-reliant on farm-outs, is it now over-reliant on the vagaries of a volatile stock market?
I think Bart Simpson put it best, when he said, "You're damned if you do, and you're damned if you don't." Look, our strategy anticipates that any particular funding channel could become unconducive. It's designed to avoid over-reliance on any individual source. We've not dismissed the farm-out any more than any other approach to funding. What we are determined to do is to try to create competition between options to allow us to reposition ourselves as a price maker, not a price taker. You know, it's a little bit like Winston Churchill talking about energy security. Security comes from variety. That is our strategy to make sure that we have security against any individual channel of finance becoming unconducive.
Thanks, David. Oil companies are reluctant to farm in on terms that management finds attractive. What needs to happen that can realistically change the lack of enthusiastic competitive interest in Pantheon assets? What are the talent and skills gaps we need to augment to the current management bench to give us the capacity to get there?
Well, we've talked extensively about the first part of that. We've also taken steps to broaden and deepen our team, both with our service partner engagements, NSAI, AHS, Baker Hughes, SLB, et cetera, and with the internal hires, beginning with Tony Beilman. We've refreshed our board of directors. Allegra has an incredible CV. There are some additional needs that we'll fill in the coming months. We'll share that progress with you as we migrate the operations and financial and technical center to Houston.
Thanks, Jay. Next one for you actually references you, David. Executive Chairman David Hobbs led by example and set the right tone when he declared on the June 30 Proactive Investors interview, "I'm a big shareholder. I've bought and paid for every share." With a share price at the current depressed levels, many shareholders are concerned about Pantheon's generosity issuing dilutive share options to directors and management at these levels. How can Pantheon build and nurture the kind of owner's mentality that our executive chairman's demonstrated, David Hobbs, your thoughts on building a culture that attracts missionaries rather than mercenaries?
Someone obviously must have heard a presentation I gave when I was in Saudi Arabia rather about the culture we were trying to build at KAPSARC. Look, firstly, all shares owned by management have been bought and paid for. There are shares owned by members of the team that they subscribed for in the most recent fundraising, for example. The company has issued share options in the past as part of an overall remuneration scheme. Pantheon hasn't issued any share options to management in 2023. I don't think there's any question in my mind that we have a team of missionaries, not mercenaries. Every member of the team believes in the assets.
We are all committed to delivering on the strategy that we've laid out and doing whatever it takes to achieve that objective. It's obviously flattering that someone singled me out, but in truth, I don't think I'm any different than the rest of the team. We're all absolutely committed to making this work, and they have every share that they own as a share they have bought and paid for.
Thanks, David. I think we have covered this one off, but just if there's anything further to add. Are steps being taken to remove the company's debt and the relentless issuance of shares and interest? Something that I think we did pick up on a few other questions come from.
Yeah. We've answered that, but we're just not gonna provide a running commentary on any of our specific plans. As we've said, we're acutely aware of the consequences of the convertible bond. But without that, we wouldn't have been able to drill and test, as David said, Theta West, reenter and test Talitha or drill and flow test Alkaid-2. That really allowed us to gather the data that underpins our commercial development plans at Ahpun. Avoiding, as we said, unnecessary dilution is paramount for us.
Thank you very much, Jay. David, one just again references you. David, I've recently articulated concerns regarding margin erosion if we were to produce and sell oil from Alkaid-2 prior to TAPS pipeline connection. However, if there is a case to do so in small scale to demonstrate to the market we're capable of producing and selling oil in commercial quantities, even if it was done at break-even basis, by doing so well in advance of the two years required to be TAPS ready, if it resulted in a materially higher share price, might it not create more attractive funding options for you?
Well, thank you. That question shows an appreciation of the multidimensional trade-offs between different paths to reaching the objective. We are clearly gonna look at the balance between spending money and the value return, including reduced dilution of those investments. We've not ruled out the potential for future wells completed to demonstrate production capacity and composition. Those plans are part of an overall program that delivers cash self-sufficiency at the lowest reasonable level of dilution. Absolutely, you know, the question touches on the kind of deliberation that we're having as we look to optimize that path forward.
That's great. Thanks, David. Could you update us on plans and timelines to flow test SMD?
Yes. Paul, we're currently evaluating the bids for the mobilization of the necessary equipment, and that's primarily the rig and the horsepower necessary for the frack to conduct the flow test, and we expect that to start in September. However, we've discussed this at board meetings if the prices to mobilize the equipment and services are unreasonable. This is gonna be, again, a single well operation. If they're unreasonable, we won't shy away from deferring the activity until we have a better plan that makes best use of shareholders' funds to achieve our strategic goals. We don't believe that'll be necessary, but we need to have those contingency plan. That's the same holds true for further appraisal on Kodiak.
Our priority is to always conduct cost-effective, reliable operations, consistent with meeting the timelines of a verified deal on Ahpun and Kodiak by end of 2025 and end of 2028.
Thanks, Jay. Another one just touching on management shares. What's stopping management from purchasing shares here and now? The current pricing environment is perfect opportunity for management to make substantial purchases in the open market. The trade has an incredible upside over the next five years, and sizable open market purchases aid confidence in management. A win-win. The need for a blackout period can be circumvented and only has a limited duration as valid reason for lack of insider purchases.
It comes across as, or the way you read it, therefore, almost a rhetorical question. Look, we're not gonna comment on the investment capacity or decisions of individual members of the management team. Buying shares is not a requirement of employment, nor should it be, and I'm certainly not gonna pre-judge what other financial commitments members of the team may have. We will deal in shares under the share dealing rules in place for the board and announce any transactions if they happen. We're not going to pre-judge or commentate on that here.
Thanks, David. Just moving back. With the share price around current levels, what's management plan with regards to $35 million of convertible debt that's still due?
Look, we've sort of addressed that. We're not gonna provide a running commentary on it. I can absolutely assure you it's $34.3 million. The fact that I'm about to tell you it's $34.3 million tells you it's an important focus. There's nobody on the board who's not aware of it, and it's central to our financing strategy, to address the overhang.
Again, I think we've recovered this. Are there any plans to deal with the toxic convertible note funders and the death spiral?
Yeah. Asked and answered.
Yeah, fine. Is management still open to a farm out?
Oh, yes, absolutely, we're open for a farm out. If it offers a, you know, as we've stated, a path for less value dilution than the alternatives on the journey to our cash self-sufficiency. It's important to have a strategy that anticipates the need, as David has said in the earlier, for competitive tension between potential bidders within a specific channel and between channels, for the capital we need.
Thank you, Jay. These two are perhaps almost combine them. I may read both of them out actually. What was the justification of the previous Alkaid-2 well design? Why wasn't a 10,000-foot lateral used initially? The question after that is, were there any mistakes made during the first design that could have been avoided with the information that was known at the time? Kind of two for one there, guys, but around the same point.
Yeah. We're gonna address those issues at the Ahpun and Alkaid-2 webinar. We plan that for next week. Those questions won't need to get resubmitted.
Thank you.
We'll address them. We'll pick them up and sweep up into the ones for that.
Thank you both. For the frack optimization, as mentioned during the last shareholder presentation, that very high costs had to be paid due to being held hostage to a single vendor. How did it come to that? We were in that situation. How do we know it will not happen in the future? For the sand transport, how did it come that we didn't use a local vendor? Why do we go to a vendor in Canada? Could you please disclose the names of the two vendors? Sort of a bunch of questions in one there.
Yeah. Once again, next week at the Alkaid-2 webinar, we'll answer those.
Thank you.
Although just to be clear, I don't think even next week we're gonna be disclosing confidential information.
Yeah. No, we won't name names.
Yeah.
Just, I guess, closing off on that point, when will we start seeing revenues from the new well design?
Well, right now, we don't envision production prior to our Ahpun development approval from the State of Alaska and the completion of the hot tap into the Trans-Alaska Pipeline System. As David answered up above, we'll always look at options.
Just so we read out the questions here, but we have covered this off, so I don't think we'll have to address any plans for listings on other exchanges. I know we spoke earlier about the U.S.
Yeah, we've covered that already.
How do you plan to deal with many mistruths and ensure another coordinated short attack doesn't happen? Again, I think we've covered that one off as well.
Yeah, I think we have. I just say, you know, to be clear, it's not our plan to engage in dialogue on social media or bulletin boards or wherever most of that kind of narrative happens. We're gonna use whatever the most appropriate channels are to share details of our progress towards a sustainable market recognition of $5-$10 per barrel of expected recovery. You know, that's. Sorry, I know I sound a bit like a broken record.
Thanks, David. Again, I may combine these two 'cause they're quite similar. What's the company's cash position? How can you assure us that you won't need to raise any more cash? We've touched on that going through. What needs to happen to convert our asset into cash flow generating? When do you expect the timeline for that?
Well, I'll take that. We've stated many times that we need to raise about $350 million capital through multiple channels. As David mentioned, reserve-based lending, volumetric payments, industry transactions, new equity, and we're gonna, you know, our goal is obviously, as we've stated, minimize dilution. We've laid out our timeline. It foresees production, which will come hard on the heels of the Ahpun FID, and cash flow generation would begin as soon as we have liftable quantities of ANS at Valdez. It takes a few days for it to transport down the pipeline from Pump Station #1 or wherever our hot tap is down to Valdez.
Until that point, our focus is on investing in only those activities that are gonna add value through the data that it provides and to the extent it moves us forward toward that goal of positive net cash flow.
Thanks, Jay. Again, David, I think you've covered this off. How many months of runway does our company have based on our current cash balance and work plan? Which milestones does management aim to achieve based on the $22 million raised in the last?
I think that may have been a reentry of a question.
Yeah.
that appeared previously.
Agreed. If the CPI comes out with material lower numbers to SOB than yours, then how are you going to explain this to the market as the shortage could play on material low numbers?
Well, look, bluntly, an independent expert's report is exactly that. It's independent. We're gonna share all news, whether it's good or bad, the same way, and allow investors to make up their own minds as to how to value the information released. We will RNS the NSAI report and share the full document, and we'll conduct a webinar afterwards to discuss the content and how it fits into the company's plans to bring these huge assets to cash flow and achieve the stated valuation realization that we're aiming at.
Again, just following that, if all goes so well, when do you envisage first production?
Well, as we've stated, shortly after the FID for our Ahpun, we have planned to achieve that before the end of 2025.
Thanks, Jay. Perhaps a bit of reiteration here from an investor, but just really probably trying to clarify a couple of things. Are there plans for equal shareholder representation on the Remuneration Committee? And if not, why not? Are there plans to revisit, review existing options, as they currently do not seem, to the writer, in brackets, to be particularly achievement-based? Again, if not, why not? I frame these questions from a philosophy of generously rewarding measurable success.
Right. Well, I'm not sure I understand the first bit 'cause I don't think shareholders typically have representation on board committees. If I've misunderstood the question, I'd invite whoever that's from to send it to contact@pantheonresources.com, so we can make sure we are addressing that question. Look, there are no plans to reprice existing options, which currently are well out of the money. The point about having performance targets as well as options, I think we've addressed earlier. The Remuneration Committee is gonna examine the most appropriate mix to ensure that the incentives match the achievement, and to create the maximum alignment with shareholders.
David, I'm just conscious we have gone through the hour. If you're happy to carry on, we're happy to.
Yeah, why don't we let's finish the questions that were submitted before, and then that we can run through what's been put online during this, and we maybe will knock off a few of those and then come back to others.
That sounds great. Thank you very much indeed. Okay, next one we've got here, I think it's relating to a previous webinar. Quite like a deeper explanation of slides seven to 11. I think slide 7 may have been missed or covered later in the webinar. Just having a look at that.
We plan to address those in the upcoming Ahpun and Alkaid-2 webinar. That'll be a primary focus.
That's great. Another one I think just a bit more about what we're doing here, but could you elaborate on how this platform will allow you to move forward? I'm a fan of the Q&A. Will this forum allow you to answer questions pre- and post-webinar in an orderly fashion? Which we're obviously doing so. Let's say yes to that one. I'll answer that one for you.
Yeah.
With regards to the webinar, would you also be inclined at the end to do a summary, which I'm sure we'll cover off?
Well, just quickly. I mean, this webinar was to an extent the TLDR version of the previous webinar, in order to create a vehicle for clarifying and answering the questions that were submitted after, in some cases after that webinar. Yes is the answer. We're committed to using this platform or whatever platforms we use to allow going forward. This would be the norm to have the opportunity for pre-asked questions and live Q&A and to try and make sure we answer every question that's asked.
Thanks very much, David. Will this webinar focus on the RNS, I'm guessing recent date being focused on Kodiak. Could you reiterate the importance of Ahpun's plan and how this will roll into Kodiak's development?
Yeah. Similar to the above answer. This was focused on corporate questions and a summary of our corporate strategy. We'll address Kodiak and Ahpun in subsequent sessions in much more detail.
Thanks, Jay. One investor pre-submitted this question saying wouldn't be able to attend, so thanks for sending that through. Will it be promptly put up on your website? Also, will the Q&A section reflect this on your own website? Moving forward, will you provide a webinar and list the Q&As of each webinar so we can see them on your site?
I know, Paul, you're gonna send the link so that the link to this should be available as quickly as possible. In terms of how Q&A is handled, we'll work out what is the optimum way to make sure that everything is as easily accessible through whatever platforms to investors.
Just to reiterate on that, investors can pre-submit questions ahead of meetings via the IMC platform, and also post-event, you'll be able to review the responses to questions that we've had today. Moving on to the next. Are the directors planning on selling any more of their personal shares? Again, I think you've touched on that, but if there's any-
Let me just reiterate. No director has expressed an intention to sell any personal shares.
Thank you very much. I'm sure many people are looking for news on Pantheon. When can we realistically expect the SLB report, and also will it be looking at Kodiak as well as Ahpun? Please elaborate.
We're gonna address the questions on Kodiak more generally during a planned webinar following the RNS for the Netherland Sewell report. Ahpun and Kodiak are both subject to the technical work currently being conducted by SLB for development planning purposes. That's the dynamic model David mentioned earlier. We don't anticipate a specific report from SLB on that, as it's a model. It's not really a report. And it's used for development planning by the company, by consultants, contractors, et cetera, and in discussions with the State of Alaska about the developments.
Many thanks, Jay. Could you provide a detailed, conservative breakdown, describing the development permitting and other steps required to get the TAPS main oil line connected and completed in 24 months, ideally with a chart? Is there some scope for any of these steps being done concurrently or accelerated? Could you commit to providing progress update on getting the TAPS connection completed along with your periodic operational updates? Who will be the persons directly responsible for getting the TAPS main oil line connection done on time?
Well, we're really fortunate to have Pat Galvin on our team, and he leads our legal, regulatory, and commercial activities in Alaska. If you recall, he presented the TAPS Quality Bank illustration in our March webinar. He's really an expert in the process of achieving permit approvals. He was Commissioner of Revenue and the Petroleum Land Manager for the state of Alaska in a past life. He's familiar with all of the requirements to move a field forward to production, and he'll apply that expertise for Pantheon. We will, of course, share significant updates from our process when we have plenty of information through RNSs as appropriate, obviously.
Thanks, Jay. Next question we've got here. I believe that to date, Pantheon has had only to apply for permits at the Alaskan state level. Do you see any potential risks or potential for bottlenecks when Pantheon applies for federal permits or access to TAPS?
Well, just to be clear, we've received federal permits in the past from the U.S. Army Corps of Engineers, and that was associated with wetlands fill. All the regulatory processes do involve risk, whether it's state or federal. That said, access to TAPS, it's regulated. It's a common carrier pipeline. We believe we'll meet all the regulatory requirements necessary to gain the access on a non-discriminatory basis, as required under the relevant rules.
Thank you very much, Jay. Can you give us an update on the key personnel of the business? Have there been any reshuffles or people moved from previous positions?
Well, other than my becoming Executive Chairman and Tony Beilman joining as Senior Vice President of Engineering, we haven't changed or reshuffled in any way. Obviously we'll continue to evaluate the needs of the business, strengthen the team where needed, most importantly, ensuring people can play to their strengths and acquiring the expertise before it's required to undertake the specific tasks. Jay and I have very complementary roles that allow us to back each other up. We've also broadened the executive capacity both strategically and operationally.
That's fantastic. Thanks, David. Has Pantheon been in discussions with any providers of reserve-based lending? Can you share your understanding of what are currently the minimum conditions to be satisfied by Pantheon in order to successfully negotiate such a facility? What would be the size of the facility, for it to be commercial interest to the banks?
Well, sorry, similar answer to a number of questions looking to go too specific. We're not gonna provide a continuous commentary on the specifics of the financing plan. We will, obviously, when appropriate, inform shareholders of significant progress. Just to be clear, we're not assuming that we'll be able to borrow against anything other than proved producing reserves as we bring wells onto production. As I explained in the Proactive interview a couple of weeks ago, the likely borrowing base of each well is larger than the cost of drilling a well, so development drilling is liquidity enhancing.
We expect to be able to negotiate a suitably large facility that we can draw down against as we bring wells onto production to ensure that we minimize the need to raise equity for the majority of the development CapEx post-production startup. That implies a facility that will definitely be large enough to be attractive to the provider.
Thanks, David. Will you be able to access any preferential financial support from the Alaskan State Development Funds for financing the $20 million infrastructure cost of TAPS pipeline tie-in and/or $20 million cost of facilities upgrades to strip out all the liquids for putting all of them into the TAPS pipeline?
Yeah. Well, look, again, we're not gonna provide or unable to provide a continuous commentary on discussions with third parties, not least because they're confidential with those third parties. We're gonna ensure that all sources of potential financing are examined with the intention of minimizing the dilution to existing investors between now and the point at which the company becomes self-sufficient.
Just really following with the next question, could you offer to forward sell some of your potential future production into the U.S. Strategic Oil Reserve at a price favorable to the U.S. government and sufficient to get the project off the ground?
Look, it's a creative idea, and we'll certainly consider all options for funding in the least dilutive way possible. I'd hope for a price that was attractive to us, and that made the U.S. government, you know, squeak a little bit, but, you know, that's just the negotiation.
Again, next question we've got. Have you seen JAPEX management plan for 2022 to 2030 and their plans for international investment? They've recently cut a JV deal with Longboat Energy's Norwegian subsidiary. Do you think they'd make a good potential partner for Pantheon?
Well, Paul, we're familiar with a number of transactions taking place around the industry. We'll consider all options to finance our development in the least dilutive manner, as we've said, for us and our investors to gain financial self-sufficiency. We'll explore all the options.
That's great. Thank you, Jay. There's a perception as evidenced by the recent Bloomberg article of the 10 July 2023 by Liam Denning that ensures only the biggest oil companies can afford to take the risk and the time to develop Arctic fields. How are you gonna overcome that hurdle and perception to your new strategy?
Jay, do you wanna-
As we've said repeatedly, our assets are unique in their location. They're close to the Dalton Highway and the Trans-Alaska Pipeline System that greatly reduces the cost of getting to first production from billions from the developments to our west to hundreds of millions, and as David said, the equity portion of that to a fraction of that. We think we're in a unique position with an incredible asset.
Look, we intend to overcome the hurdle in perception if that's the case through the actions we take. Jay's right. We're uniquely positioned.
Don't let's forget, it can cut both ways because the perception that this is majors territory has allowed us to tie up an enormous resource base that we have today of some 2 Gbbl recoverable without potential competitors who may have been scared away by that perception. It cuts both ways. What matters is our ability to execute a plan that we've laid out that shows that Liam Denning probably could do with spending some time with Pantheon.
Fantastic. Thanks, David. We'll drop him a line. In the interest of national security, would the Pantheon management team consider the possibility of lobbying the U.S. Department of the Treasury for timely CFIUS approval for an interested foreign party to farm in at the right price?
That's yours, Jay.
Repeat the question, please.
I'll tell you what. No, look, I mean, the CFIUS approval for foreign investment in the U.S., it's not our plan to speculate about whether or not we would be successful lobbyists. What we did, you know, if someone proposed a transaction that was good for shareholders, we would do what we could to give it a realistic chance of achieving approval. My guess is, a farm in from a North Korean stands no chance of CFIUS approval. A farm in from a British company probably similarly stands a better chance.
I'm sorry, David. I was laughing about your comment about Liam Denning, so
Oh, yeah.
I totally missed the question.
Yeah. Not to worry. Go ahead, Paul.
Fantastic. Thank you very much, David. Just the last few really we've got here. What's the contingency plan in case the application for hot tap's rejected?
There are other options to tie into the pipeline. It could result in additional cost. We could inject oil into the system, for instance, at Pump Station #1, might tap into crude, or Pump Station #2, a little bit south of our leases. As we've stated, there really is no reason to believe that the regulatory process won't result in a successful application of our hot tap.
We've got what was the water cut for the Alkaid-2 well, please?
Yeah. We're gonna post an Excel file for the production from Alkaid-2 after the Alkaid-2 webinar next week.
Paul, shall we just quickly skip through some of the questions online? Some of them we won't be able to get into.
Sure.
Today, we'll follow up. The first one I think is a repeat of the question about will we sue people making libelous statements against the company, and I'd refer back to our answer on there. The one about do we know who our shareholders are, yeah, the answer is for the most part, absolutely. We'll address it. It's a thoughtful question, and I'd like to address it more thoughtfully than in the closing minutes of this. Has the team engaged in a credible manner with main voices in the oil and investment banking world? The answer is we're in the process of doing so. We haven't encountered any problem with them taking our call when we reach out.
Whatever conversations I've had with Mohammed bin Salman, I'm not about to share on a webinar. The reservoir parameters acquired when drilling the Alkaid-2 well, I think we can in the SMD, I think we'll cover next week. Benefit of year-round access. Why has there been such a delay from completion of the flow testing to testing of the SMD? The answer is, in simple terms, it's much cheaper not to be operating in the tail end of the winter, and also to give time to mobilize the right pumping horsepower and the right units to have a trouble-free operation. Is it still considered an economic advantage to develop both the Alkaid Deep along with the SMD from gravel pads? Absolutely, yes.
That's why it's so central to our strategy. Would the management take their children's future and buy shares today? My view is, investing in shares would enhance my children's future. I'm not sure I accept the premise of the question. When will Alkaid-2 test the upper reservoir? We mentioned later in September. Not for the board, not acknowledging shareholders has been a long journey since Pantheon was listed in 2006. No, I'm acutely aware of how long a journey it's been. I've been an investor since a little after the original IPO of Pantheon. That's the reason that our strategy is being recast to give the best chance of delivering the highest value as quickly as possible.
I'm very happy to engage more deeply on that question. Sukhmanji , by all means, you can email to contact@pantheonresources.com. The question about compensating board members based on quantitative KPIs, absolutely. As answered during the earlier questions. That's thank you for the statement. Why the board of directors doesn't buy shares to give reassurance to shareholders and also the market? I think we answered earlier that we're not going to prejudge, or at least I'm certainly not gonna prejudge the ability and financial position of any director, nor should buying shares be a requirement of employment. Details on the TAPS tie-in cost of the application.
If the lead time was previously known, then why was the application not started years ago? Well, that simple answer to that is that until we had got an unambiguous test from the Alkaid-2 well that underpins the economic attractiveness, any application would have been speculative because the regulator wants to know that you're actually going to have oil to put in there before they instruct the common carrier to create it. The process has to happen in an order, and we're now moving forward as quickly as reasonably can be from the end of the LK2 lateral test. Market abuse. Can't write off social media. No, we're absolutely not going to write off social media. What we said is we're not gonna engage in debate on social media.
As a great friend of mine once said, you know, "No one ever won an argument against a drunk person, and no one has ever won an argument on Twitter either." We will certainly engage in terms of using social media to transmit the company's message, but we won't get into arguments with individual people that merely raises their profile. The answer is we are doing everything we can to minimize the lead time on the connection to the Alaskan pipeline. What keeps me awake at night? Well, I'm just approaching that age where the capacity of my bladder is what keeps me awake at night most often. Where are we? Energy security.
Yes, is there a way to direct register shares so that shares are held in our own name, not in nominee account? I don't know the answer to that, Jay. I don't think you know the answer to that either. Please, PRB, can you send that question to contact@pantheonresources.com, and we will find out what the right answer to that is and share it with you.
Yeah. All of our shareholding is documented in the annual report so if
Oh, yeah. This is about investors holding shares directly in their own names rather than-
Oh, investors.
The accounts with Computershare. I know I had a problem with my own nominee and Computershare being unable to work with them. I feel it intensely. I don't know the answer because I got three different organizations all telling me that it was one of the other two that were responsible for the inability of the systems to talk to each other. But do please send that question, and we will get as clear an answer as we can. If the problem can't be solved, we'll tell you it can't be solved. If it can, we'll point you in the right direction. Jay, are there any closing words you want to say before we wrap up?
Yeah, David, I do. I wanna thank all of you who've watched this live. We really appreciate you taking the time. You know, we are really all committed to this company. We all believe in these assets. There's no question that we have what is truly world-class. We're gonna work our strategy and deliver the value to our shareholders. I wanna thank Paul for indulging with us and asking the questions. David, you were superb. Thanks a lot.
Well, thank you, everyone.
Back to you, Paul.
Fantastic. Thanks so much for covering off so many questions and going way beyond the hour as well. I think it was well appreciated by your investors. David, Jay, thanks indeed for updating investors today. Could I please ask investors not to close the session? You should now automatically be redirected to provide your feedback so all the team can better understand your views and expectations. This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team at Pantheon Resources plc, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon to you all.