Pantheon Resources draws strong industry interest as Kodiak resource potential grows

the valuation gap uh was too big for our shareholders at that time. Of course, this was before the new seismic. So, if anything, that valuation uh gap has gotten bigger. So I think it was the right decision by the board at the time. So as I said, there's 10 companies involved, they're great companies, big and small. Uh we're quite happy that we'll get a deal out of who we're talking to now.

Welcome back inside our proactive news room and joining me now is Max Easley. He is the CEO of Pantheon Resources. and Max, good to see you again.

Good to see you, Steve. It's been a while.

It has been. Good to have you back. And also your chief development officer, Eric Kremenacker is with us as well. And Eric, it's great to see you as well.

Yeah, thanks for having me back.

Yeah, good stuff. We got lots to talk about gentlemen. First off, um Max I I I know that you just put out a release and sort of an update on a number of different things and one of which was a some participants in in your data room and and companies that are sort of interested in in what you're doing and maybe working with. So, let's talk about that first. Tell me a little bit about this data room and the participants.

Yeah, Steve, it's been a very busy summer. Uh given how attractive Alaska has become, record lease sales, uh Santos started up a major development called Pica. There's a lot of interest in Alaska. As we released the other day, we have 10 companies active now. Uh this could grow more. There's a lot of interest in us. Uh we have majors, we have mid caps, we have independents. And among those, some are incumbents on the North slope. They already hold acreage or operations. and some want to enter Alaska because of the resource base. Some people like the resource, some people like the infrastructure possibilities, but they all like it. In general, most people are after the large scale resources. Resources are getting scarce in the low 48. and going international sometimes gets a bit scary depending on where where you go.

So Alaska is very popular. What's important here, this is not an auction. If we were trying to farm down 10,000 acres and say the Permian. everyone knows what 10,000 acres in the Permian is worth. So you just hold an auction. This is a unique large asset and everyone looks at it a little bit different. Uh so we'll see how it plays out. We're very optimistic but uh really good companies that are looking at it.

Yeah, so Eric, I just on on this topic though, um why not drill Kodiac as a standalone?

Yeah, that's it's a great question. I mean, we we could drill this ourselves and we're confident we have the right team. um in fact, uh, you know, the right technical planning in place, but the right partner could really support a clear runway for a final investments decision for major development and material production startup. And most of the interested parties have really wanted to kind of see the new seismic to de-risk the asset a bit more. and probably more importantly, they want to optimize next steps for the asset. So we're really focusing on that as a number one priority right now.

Yeah. Uh Max, I know that uh in the in the release you talked about having a uh an offer in hand that you rejected and I'm just just wondering a little bit about that. As you mentioned, is it just because you've got so much interest right now that you want to see what everyone would potentially maybe moving towards in the future?

Yeah, Steve, I would say uh not accept rather than reject. Uh they could come back, you know, we'll see. Uh this was fairly early in the process. Uh it's a great company. But the valuation gap uh was too big for our shareholders at that time. Of course, this was before the new seismic. So if anything, that valuation gap has gotten bigger. So I think it was the right decision by the board at the time. So as I said, there's 10 companies involved. They're great companies, big and small. Uh we're quite happy that we'll get a deal out of who we're talking to now.

Okay, let's talk about the uh the seismic reprocessing results because you mentioned them there and and they were very good and uh Eric is sort of in your baileywick. So tell me uh a little bit about uh about what you saw there and really what you liked.

Yeah, no, absolutely. I think the results of the new seismic following our reprocessing work, I mean, are they're tremendous. We selected one of the most reputable seismic firms in the world to work with and we worked really closely with one team, uh, to deliver the project. We've always believed the reservoir in the northwest of Kodiac has better properties relative to where we have drilled and tested down dip. Um, and the new seismic is completely consistency, consistent with that. Uh, we have a clear 3D image of the reservoir, which enables us to better target appraisal and development, and it enables better planning and more productivity, uh, predictability in our drilling and completion operations. Um, we see additional prospects as well in the Capark formation below and some anomalies in the shallow intervals above. These could be pretty compelling targets. So, overall, it's been uh the seismic's been fantastic and actually our various interested parties. It's been made available to them in the data room and it's creating a lot of excitement. So, so pretty uh pretty high hopes on that.

Does it, does it change at all like timelines or operational strategy and how you want to move forward or is that, is that was all pretty well set even with the reprocessing you had?

I mean, I think in terms of timelines, we're still able to go after the Kodiac, um, you know, as soon as we can. The one thing it does do is is bring out potential opportunities we might want to look at, particularly these prospects I mentioned, um above and below and but also what's good about that it de-risks our operations as well. So, so you know, anything that de-risks makes things uh much more predictable and usually does on average bring things more more quickly forward.

Okay. Uh, Max, can you talk a little bit more about the gas pipeline situation and and really, uh, bring it back to Pantheon and how it really affects you?

Yeah, I would say that um, Alaskans have wanted two things for a long time, Steve. One is a gas pipeline and the other is competition on the North slope. Pantheon represents both. So as a new operator with a lot of resources, but also a very attractive gas shipper when when that gas line occurs. I would say up front, uh the state of Alaska through the Alaska Gasline Development Corporation and Glenn Farn have done a phenomenal job on this. Uh the markets are there, the planning is robust, permits in place, gas agreements in place, labor agreements in place, contractors chosen. This is ready for FID very, very soon. Uh the last step in this uh was a a legislative outcome required in the state of Alaska. The state of Alaska levies property tax on an appraised basis. Now for a large project like this, that's very difficult to finance because you'd be paying large tax bills before you had revenue. So the governor of the state of Alaska introduced a bill to change that from an appraised valuation tax into a volume tax, which aligns the revenue with taxation. Uh, it passed the House of Representatives uh very strongly, 34 to 5. And it got stuck in the Senate over the summer. Uh a secondary issue was attached to the bill uh associated with more general taxation, which wasn't directly related to the pipeline, and that got things stuck. Um, but where we sit today is we're in in an election cycle now and most people see this. It's an 80 to 90% positive uh issue for the citizens of the state. This is a quick win for the new governor. So a new governor comes in and a legislature comes in, I fully expect this to pass and get on the the path to execution. As it's very advantageous for us. Uh we are the shipper of choice because our our gas has no acid gas. It's it's pipeline quality and it's likely the cheapest gas. uh because there's no reservoir benefit to us to reinjecting gas. So, you know, this little bit of delay actually works in our favor. Uh it aligns perfectly with our development schedule. uh and we're very happy with the outcome. And as and as an Alaskan, I can see this being a very positive step very soon.

Okay. And just really quickly, it sounds with the data room and and what you just talked about, it seems the company's in a in a really enviable position right now. Is that fair to say, Max?

Yeah, we're very happy with where we are right now, Steve.

Okay, good stuff. Gentlemen, thank you so much. Really good to talk to you both. Max, it's always good to see you.

I'll see you again soon.

Yeah, see you there too. And Eric, always great to see you as well. Thanks for the input.

Fantastic. Thanks a lot, Steve. Speak soon.

All right. There's Eric Kremenker, he's the chief development officer, Max Easley, the CEO of Pantheon Resources.