IIn June 2006, Pantheon expanded its operations by farming-into a natural gas exploration venture in Wharton County, south Texas, located broadly between Houston and Corpus Christi. This venture is operated by the Everest Resource Company ("Everest") which has a long and successful history in the Texas Gulf Coast Area. This project provides Pantheon with low risk/reward plays to balance the higher risk/reward plays at the PI Project Area.

Project Wharton location map

The Project Wharton farm-in comprised three prospects initially, since expanded to six. The prospects have been identified using high-quality 3D seismic. Each of these is of an order of magnitude lower in terms of estimated size and of lower risk. Reserves estimates per well range from 0.5 to 4.0 billion cubic feet ("bcf"). This farm-in was considered complementary in terms of risk to the high impact PI Project Area. The exploration risk is regarded as low, with probability of success ranging from 50-80%.

Each well has multiple objectives. As not all objectives have been included in the evaluation, this provides additional upside potential.

This initial drilling campaign has delivered effectively a 75% success rate. The Company is now producing from four natural gas fields, Baptist, Caddo, Mohawk and Zebu.

Zebu (Pantheon 9.375%)

Zebu #1 was discovered in August 2006 and commenced production on September 29, 2006. Zebu discovered natural gas in two Frio sands. It is producing from the deeper zone at around 4,280 feet ("ft"). The primary objective, which encountered natural gas at around 3,750 ft, remains to be completed for production. The Joint Venture intends to produce from the secondary zone until depleted and then complete the primary zone higher up the well bore. The success has led the Joint Venture to plan on drilling another Zebu well in 2007.

Mohawk (Pantheon 18.75%)

Mohawk #1 was brought into production at 110 mcfd through a 4/64 inch choke. It is expected that production will increase as the choke size is increased and other mechanical improvements are implemented. Mohawk #1 encountered natural gas in both its primary and secondary Frio objectives.

The success at Mohawk has led the Joint Venture to plan to drill another Mohawk well in 2007. The Mohawk #2 will test a slightly smaller amplitude anomaly (30 acres) at 4,075 ft that is very similar to, but fault separated from the Mohawk #1 anomaly. As this is not subject to the farm-in terms, it would have a higher value to Pantheon, if successful.

Caddo (Pantheon 18.75%)  

Caddo #1 encountered gas in a shallow Frio formation at around 4,470 ft and was completed for production testing in November. The well was successfully tested at rates ranging from 120 mcfd to 385 mcfd on 4/64 and 7/64 inch choke sizes respectively. The well produced at a stabilised rate of around 250 mcfd on a 6/64 inch choke. This well was brought onstream on February 8, 2007.

The Caddo #1 discovery is a particularly important. It is located in an area of mutual interest that covers a large area where six other prospects exist. These target comparable Yegua and Frio anomalies, but Miocene objectives are also present in all of them.

Baptist (Pantheon 11.25%)

The Baptist #1 exploration well has encountered natural gas in both its primary and secondary objectives. The Baptist #1 well was drilled to test a large Frio seismic amplitude anomaly revealed by the Shell East Graceland 3D (vintage 1996). It was brought onstream on June 19, 2007.

Two prospects were uncommercial.

Dakota (Pantheon 18.75%)

Dakota #1 well was plugged and abandoned as non-commercial in late September 2006. Both natural gas and formation water were recovered from three zones.

Seven additional prospects are located on the Dakota area of mutual interest ("AMI") which covers around 1,950 acres. These still remain attractive targets for future drilling. As these are not subject to the farm-in terms, they would have a higher value to Pantheon.

Kant (Pantheon 18.75%)

This well was plugged and abandoned as non-commercial in early January 2007, having spudded on late December 2006. Hydrocarbons were present in the primary objective. However the well was deemed non-commercial due to low natural gas saturation and thin reservoir sands.