In what has been another interesting week in the stock market, many investors have been digesting quarterly reports and press releases. With that in mind, here’s my stock of the week. Let’s take a closer at why I’ve chosen this particular firm.
This week’s statement
The Pantheon Resources (LSE:PANR) share price has been volatile over the past year. In that time, it’s up 158%. At the time of writing, it’s trading at 134p.
The Alaska-based oil exploration firm has licenses to search for oil on over 153,000 acres of land on Alaska’s North Slope.
The big news this week was an operational update from drilling at the Alkaid #2 well. The business stated that it had completed drilling to a depth of 14,300 ft.
This was a major step forward, because it will now progress to the next stage of operations. This entails swapping rigs to prepare for completion and the possibility of commencing oil production.
However, the company did add that inflation and supply chain problems may cause issues in the future. Much of what Pantheon Resources does relies on effective supplies of equipment. As a current shareholder, I hope the firm manages this potential issue carefully for the smooth progression of its operations.
23.5bn barrels of oil?
This week’s statement was preceded by another drilling update for Alkaid #2, on 29 July. This announcement stated that the business had found multiple oil-bearing reservoirs during the drilling operation. In addition, the quality of these reservoirs was much better than anticipated.
The market responded very favourably to this news, and the shares climbed nearly 25% in one day.
More broadly, the firm estimates it has oil-in-place of 23.5bn barrels. Of this, a conservative estimate is that it could recover 10%. With oil prices at historically high levels, if Pantheon Resources can recover this amount of oil it could bode extremely well for future balance sheets.
The leadership within the company added that these developments at Alkaid could mark the transition from a business focused on exploration to one set on production. As an investor, this is something that excites me greatly.
Aside from exploration developments, the company also has a strong balance sheet. It has a manageable debt pile of $39.74m and total cash of $92.67m. What this means is that there is the potential for the business to expand its exploration capabilities even further, given its solid financial state.
Overall, the recent share price performance of this company has been explosive. Looking deeper, however, it’s clear to see that the oil exploration is going smoothly. There is also the real possibility that it begins production sometime this year. With that in mind, I’ll be adding to my current holding soon to gain greater exposure to what I believe is a quality business.
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Andrew Woods has positions 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.