Why the Pantheon Resources (LON:PANR) share price may soon double to 280p

This a company that could be sitting on vast oil reserves. With production potentially imminent, I think the Pantheon Resources share price could soon fly.

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Pantheon Resources (LSE:PANR) is an oil exploration firm operating in the US state of Alaska. Listed on the FTSE AIM index, it is pursuing a number of exciting projects. A glance at its financial information yields little for analytical purposes, owing to its status as an exploration business. But it has had several successful drilling projects. I bought at a much lower Pantheon Resources share price, but should I add more shares soon? It currently trades at 141.9p. Let’s take a closer look.

Recent activities

The company has been working for an extended period to advance its drilling operations at its Talitha and Theta West wells.

Yesterday, the leadership team hosted a webinar to update investors on winter drilling activity in the area. It contained a number of interesting revelations. Although the winter operations were disrupted on a few occasions because of weather-related shutdowns, successful drilling activities have resulted in meaningful increases to previous resource estimates, roughly twofold growth.

Resource estimates and the PANR share price

The ‘resources estimates of proven reservoirs’ figure tells us that there are around 23.5bn barrels of oil in place.

Even with a 10% recoverability rate, which is probably conservative, the firm will likely extract around 2.3bn barrels of oil. In fact, this number could be two or three times higher.

As a current shareholder, this fills me with confidence and excitement, because it will provide revenue for the business to grow.

It is also possible that oil production could begin in October, meaning that physical sales could commence quickly.

This positive activity led broker Canaccord to increase its target price for the company from 250p to 280p. At current levels, this would mean the PANR share price doubling. Given the large amount of oil potential going into production, I think this share price movement could materialise. 

It is always worth noting, however, that actual oil reserves may differ from estimates and recoverability may not be in line with expectations when the time comes to produce. This is in the nature of any exploration endeavour.

Recent financial results

Elsewhere, the firm reported a loss of $4.4m for the six months ended 31 December 2021. This was larger than for the same period in 2020, when losses were $3m. 

Widening losses aren’t particularly surprising for an exploration company, especially given the fact that the areas of exploration look prosperous.

The company also has a strong cash position. At the end of the period, it had a balance of $92.7m. This was an increase from $29.8m the previous year.

Overall, the recent increases in estimates are very exciting and, if recovered efficiently, could provide vast oil resources to sell into the market. I think the Pantheon Resources share price could soar on the back of these developments and I will be buying more shares soon.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Andrew Woods owns shares in Pantheon Resources. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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