DIRECTORS' REPORT

FOR THE YEAR ENDED 30 JUNE 2023

The Directors present their report together with the audited accounts of Pantheon Resources plc ("Pantheon" or the "Company") and its subsidiary undertakings (together the "Group") for the year ended 30 June 2023.

Results

The Group results for the period are set out on page 42. The Directors do not propose to recommend any distribution by way of a dividend for the year ended 30 June 2023.

Future Developments

As explained in the CEO and Chairman's reports, the Group announced a revised strategy in late summer 2023, where it outlined its goal of achieving FID by end 2025 on the Ahpun project and by end 2028 on the Kodiak project. The Group also announced that it was considering a listing or dual listing on a USA stock exchange, possibly NYSE or NASDAQ, and/or was also considering the merits of a listing on the main board of the London Stock Exchange as part of its strategic planning. This work is ongoing.  The Group also announced it had commenced the process of working towards a hot-tap into the Trans Alaska Pipeline System to allow the sale of future production directly into the pipeline, and that it was currently maturing possible vendor financing discussions as part of its objective to fund the operations and development in the least dilutive manner to shareholders.

Information to shareholders - website         

The Group maintains its own website (www.pantheonresources.com) to facilitate provision of information to external stakeholders and potential investors and to comply with Rule 26 of the AIM Rules for Companies.

Group structure and changes in share capital

Details of the Group structure and the Company's share capital during the period are set out in Notes 8 and 18 to these accounts.

Directors

The Directors who served at any time during the year were:

Directors' interests

The beneficial and non-beneficial interests in the Company's shares of the Directors and their families were as follows:

(1) Some of these ordinary shares are beneficially owned by the spouse of J Hondris.

(2) Appointed July 2023.

(3) In addition to Mr. Rosenthal's direct holding, he also holds an indirect interest in approximately 553,000 shares of PANR through an approximate 2.8% interest in Ursa Major Holdings LLC ("UMH"). UMH holds approximately 19.8 million ordinary shares.

(4) At the year end, Mr Brest does not have a direct interest in Pantheon and has an indirect interest in the Company as described below:

Mr Brest's interest results from the direct and indirect holding of Pantheon by Westman Management Limited ("Westman"), of which Mr Brest is the sole director. Westman holds 1,379,703 ordinary shares of Pantheon and an indirect interest in approximately 1 million shares of PANR through an approximate 5% interest in Ursa Major Holdings LLC ("UMH"). UMH holds approximately 19.8 million ordinary shares.

Share options and restricted stock units

The Directors held the following share options for Ordinary shares of £0.01, at the beginning and end of the year:

1.   Comprising a combination of previously vested share options granted in 2014, 2020, 2021 and 2022.

2.   No share options were granted during the year.

3.   Phillip Gobe (retired) was previously granted 290,000 Restricted Stock Units ("RSUs) which vested to him in early February 2023 and converted into ordinary shares on a 1:1 basis. Mr Gobe was never granted share options.

Report on Directors' remuneration and service contracts

The service contracts of all the Directors are subject to a six-month termination period.

Directors' remuneration

Director incentive scheme

In November, 2023, the Company terminated the 2012 short-term executive director incentive scheme (the "Reserve-based Scheme"), pursuant to which an incentive bonus would accrue to participants in the scheme upon the booking of reserves. Prior to the termination of the Reserve-based Scheme, the Group had never since inception issued any awards under it.

Share Option Plan

The Company has in place a Share Option Plan (the "Scheme") for the long term benefit of all staff and permanent consultants, designed to incentivise staff for outperformance, and as a tool to attract and retain best quality personnel. No share options have been awarded under the scheme since January 2022.

Any profits from the ultimate exercise and profitable sale of share options is subject to full income tax (not capital gains tax) for the beneficiary.

Subsequent events

Details of subsequent events can be found at Note 32.

Substantial shareholders

The Company has been notified, in accordance with Chapter 5 of the FCA Disclosure and Transparency Rules, of the under noted interests in its ordinary shares as at 12 December 2023:

Political and charitable contributions

There were no political or charitable contributions during the year.

CORPORATE GOVERNANCE STATEMENT

The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (the "QCA Code"). This statement sets out how the Company complies with the 10 principles of the QCA Code.

The Board recognises the principles of the QCA Corporate Governance Code, which focus on the medium to long term value for shareholders, without stifling the entrepreneurial spirit in which small to medium sized Companies such as Pantheon have been created. As the Group grows, it is making a concerted effort to further improve governance. The Company sets out below an update on its compliance with the QCA Code.

The QCA Code outlines 10 core principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles. The Company has adopted a share dealing code for the Board and employees of the Company.

PANTHEON RESOURCES QCA CORPORATE GOVERNANCE COMPLIANCE

STRATEGY & BUSINESS MODEL

Pantheon's strategy is to focus on hydrocarbon exploration, appraisal and production, onshore USA, in a region of low sovereign risk where its specialist expertise lies. Pantheon has structured a lean organization that is focused on maximising the potential returns to shareholders through carefully targeted exploration, appraisal and development activities in established and highly prospective areas underpinned by detailed geological analysis. Where appropriate, the Group will also consider undertaking value accretive acquisitions or divestitures of assets following careful analysis and, as appropriate, shareholder engagement. The Group, as appropriate, uses a combination of in-house expertise and external consultants to manage operations.

Pantheon has historically sought to carefully manage corporate overhead costs, whilst balancing the need to hire and retain the best personnel and advisors to mitigate operational risks and maximise the potential returns to shareholders in the event of success. Given the current scale of the Group, which continues to grow, corporate and operating costs are monitored by management to ensure appropriate levels of spending. In line with the Group's stated strategy to advance to FID on its Ahpun and Kodiak projects, it is anticipated that it will recruit additional personnel going forward.

During the year, the Board of Directors participated in a weekly conference call, during which they discuss, amongst other items, the strategic direction and operational status of the Group, and as a result any significant deviation or change, should such occur, will be highlighted to the Board promptly. The Board has also met in person, four times in 2023 for detailed board and strategy sessions running for a minimum of two days.

UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS

Group progress on achieving its key targets are regularly communicated to investors through stock exchange announcements which can be found under the 'Stock Exchange Announcements' section of the Company website. The Company retains the services of a corporate communications firm who actively engages with the press, investors, analysts, and to a limited extent, with social media. The Group also retains a Corporate Broker and NOMAD, to ensure compliance with stock exchange regulations as well as to ensure communications to shareholders are suitable for them to understand the Group's operations and activities. The Group will consider the use of commissioned research as a medium for shareholder education.

The Company utilizes professional advisors such as a Broker, NOMAD, Corporate Communications specialists and Company Secretarial services to provide advice and recommendations on various shareholder considerations where relevant. The Company hosts a weekly conference call with all directors and its NOMAD/Broker. During these conference call any shareholder considerations identified over the course of the week can be addressed and responded to accordingly, as well as other operational, financial, strategic of other relevant matters. The Company regards the Annual General Meeting as an important opportunity to communicate directly with shareholders via detailed presentations and an open question and answer session. The AGM includes a detailed investor presentation and Q&A session, over recent years held by a separate webinar to enable USA investor participation. Additionally, the Company also holds regular webinars as and when relevant, open to all shareholders, providing an investor presentation and an opportunity for Q&A with management. The Company also undertakes investor roadshows as and when appropriate, arranged through its broker. Over the past year, the Company considers that it has communicated with a significant portion of its shareholder base and has a clear understanding of shareholder expectations. Contact details are provided on the Company's website and within public documents, should shareholders wish to communicate with the Company.

TAKING INTO ACCOUNT WIDER STAKEHOLDER & SOCIAL RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS

The Directors recognise their responsibilities to stakeholders including the State of Alaska, the Federal Government, North Slope Borough, staff, partners, suppliers, vendors and residents within the areas it operates. Given the current size of the Company, stakeholders are able to communicate directly with executive management and staff members, allowing the Board to act appropriately on such feedback. A description of how the Group considers key stakeholders in its decision-making is provided on page 12.

The Company is conscious of its impact on the geological, archeological, cultural and biological resources in its operating environment, and has implemented measures to ensure that each person working on our projects, including company personnel, contractors and subcontractors, are informed of the environmental, social and cultural concerns that relate to that person's job, so we can minimise any negative impacts.

Stakeholders can contact the Company via the website, its NOMAD, or can contact the Company's retained corporate communications advisers when required.

EMBEDDING EFFECTIVE RISK MANAGEMENT

During the year, the Board had weekly conference calls to discuss, amongst other items, operations, key risks, and other relevant matters. The Company's NOMAD also attends those weekly conference calls. Separately, the entire management team has a fortnightly 'alignment call', designed to provide better integration and understanding of activities across the team, both corporately and operationally. Additionally, the Group also has a policy of structured daily, weekly or fortnightly operational and management conference calls during periods of operational activity to identify and discuss key business challenges and risk areas. The Board believes that this regular program of internal communications provides an effective opportunity for potential or real-time risks to be identified, considered and, where necessary, addressed in a timely manner. Refer page 12 for additional description of how the Group considers stakeholder interests in decision making. The Group's oil and gas activities are subject to a variety of risks, both financial and operational, more information on risk can be found in the Finance Director's report and Strategic Report.

Given the Company's current size, the Board considers that the Executive Management team, with oversight from the Non-Executive Board of Directors and relevant advisers, are sufficient to identify risks applicable to the Company and its operations and to implement an appropriate system of controls. Accepting that no systems of control can provide absolute assurance against material misstatement or loss, the directors believe that the established systems for internal control within the group are appropriate to the size and cost structure of the business. Additionally, the Company has publicly stated that it is considering a possible listing on a US stock exchange such as NYSE or NASDAQ, and in preparation for such a listing has commenced a process of increasing the level of controls and governance of the group, to Sarbanes-Oxley standards.  An internal audit function is not considered necessary or practical at this time due to the size of the Company and the close day-to-day control exercised by the executive directors.

The audit committee meets at least twice per year where these internal and financial controls are reviewed as required and assets are also assessed for impairment considerations.

MAINTAINING A BALANCED AND WELL-FUNCTIONING BOARD

The Directors acknowledge their responsibility for, and recognise the importance of implementing and maintaining, high standards of corporate governance. The Board is responsible for establishing and maintaining the system of internal controls. The effectiveness of the Group's system of internal control is considered annually by the Audit Committee of the Board.

The Board

The Board currently comprises two non-executive Directors, and four executive Directors. On 12^th December 2023 the Company announced the appointment of an additional independent non-executive director, Linda Havard, to join the board, effective 1 January 2024 The independent Company Secretary is a partner in a law firm who is a specialist in providing company secretarial services to listed companies. The Board is responsible to the shareholders for the proper management of the Group. It meets regularly to discuss operations, consider and monitor strategy, examine opportunities, identify and consider key risks, consider (and where appropriate approve) capital expenditure projects and other significant financing and strategic matters. The Board delegates authority to the management for day-to-day business matters including: drilling, geological and operational matters, purchasing procedures, financial authority limits, contract approval procedures and the hiring of full time and temporary staff and consultants. Matters reserved for the Board are communicated in advance of formal meetings. In addition to formal board meetings, the directors hold weekly conference calls, attended by the Company's NOMAD, in order to keep the board fully informed with operational matters and potential issues as well as regulatory obligations. The board also considers this regular interaction with its NOMAD to be a prudent additional layer of corporate governance. Biographical details of the directors can be found on the 'About Pantheon' section of the Company's website. Board members are expected to attend all formal board and committee meetings, as well as weekly informal board meetings with the Company's NOMAD (or bi-wekly for non executive directors). The board meets formally at least 4 times per year, with meetings usually running for a full 2 days.

The QCA Code does not offer a definition of independence with respect to directors, so in forming a view on the independence of directors the Company has sought guidance by reference to the guidelines outlined in the FCA's UK Corporate Governance Code. In any event, the Board exercises discretion in making the determination of director independence which is kept under review on an annual basis. The now retired non-executive Chairman, Phillip Gobe, was considered to be independent. Allegra Hosford Scheirer and Linda Havard (appointment effective 1 January 2024) are both also considered to be independent. David Hobbs was also considered to be independent prior to assuming the role of Executive Chairman.

The Board has a number of committees as explained below. Following the appointment of the new independent non-executive director, Linda Havard on 1^st January 2024, it is intended that some or all of the committees will be restructured.

Audit Committee

The Audit Committee consists of Jeremy Brest as Chair with all other directors as members. It is intended that Linda Havard will assume the role of Chair of the Audit Committee following her formal appointment as an independent non-executive director on 1^st January 2024. This Committee provides a forum through which the Group's finance functions and auditors, report to the non-executive Directors. Meetings may be attended, by invitation, by the Company's NOMAD, Company Secretary, other directors and the Company's auditors.

The Audit Committee meets at least twice a year. For the financial year ended 30 June 2023 there were two audit committee meetings which were attended by all members. Its terms of reference include the review of the Annual and Interim Accounts, consideration of the Company and Group's accounting policies, the review of internal control, risk management and compliance procedures, and consideration of all issues surrounding publication of interim and annual financial results and the annual audit. The Audit Committee will also interact with the auditors and review their reports relating to accounts and internal control systems.  The Audit committee met formally twice during the year, attended by all directors. The Company does not have a formal policy of auditor firm rotation, however it the individual audit partner is required to rotate every 5 years maximum.

Remuneration Committee

The Remuneration and Nomination Committee consist of Jeremy Brest as Chair, and all other directors as members. The Committee meets as and when required. Its role is to determine the remuneration arrangements and contracts of executive Directors and senior employees, and the appointment or re-appointment of Directors. No Director is involved in deciding their own remuneration.

Nominations Committee

The Nominations Committee is chaired by David Hobbs, with all other directors being members. The Committee meets as and when required. Its role is to consider and oversee board composition, recruitment and succession planning.

Conflicts Committee

The Company has established a Conflicts Committee which consists of Allegra Hosford Scheirer as Chair, with all other directors as members. The role of the Conflicts Committee is to assist the Board in monitoring actual and potential conflicts of interest under the definitions of the Companies Act 2006. Under the Companies Act 2006 Directors are responsible for their individual disclosures of actual or potential conflict. To follow best practice, the Conflicts Committee holds discussions where appropriate, with the Company's UK lawyers.

Anti-Corruption & Bribery Committee

The Company has established an Anti-Corruption & Bribery Committee Committee which consists of Justin Hondris as Chair, with all other directors as members. The purpose of the Anti-Corruption & Bribery Committee is to ensure the Company's compliance with the Bribery Act 2010.

HAVING APPROPRIATE EXPERIENCE, SKILLS AND CAPABILITIES ON THE BOARD

The Board of directors has a mix of experience, skills, both technical and commercial, and personal qualities that seek to deliver the strategy of the Company. The Company will ensure that the directors have the necessary up-to-date experience, skills and capabilities to deliver the Company strategy and targets. If the Company identifies an area where additional skills are required, the Company will contract an appropriately qualified third party to advise as required. Each director is listed on the 'About Pantheon' section of the Company's website and in the annual report, along with a clear description of their role and experience. The board is currently in the process of appointing of an additional independent non-executive director with extensive financial experience.

EVALUATING BOARD PERFORMANCE

As the Company has grown, and with its stated intention of considering a listing on a USA stock exchange, the Board is reviewing the board performance and effectiveness and will add additional resources if/where appropriate. The Company appointed an independent NED with geological experience during the year (Allegra Hosford Scheirer) and has recently appointed an additional NED with financial management experience (Linda Havard) whose appointment will become effective 1 January 2024..  The Board has contracted the executive remuneration specialists at Deloitte for matters concerning management incentive schemes.

ETHICAL VALUES & BEHAVIOURS

The Company operates a corporate culture that is based on ethical values and behaviors and treats operational stakeholders fairly and with respect. It will maintain a culture appropriate to the standards required for a Company of its size. The board communicates regularly with staff through meetings, team conference calls and presentations, individual telephone calls and messages and advocates respectful, pen dialogue with employees, consultants and other stakeholders. Following the appointment of the proposed new independent non-executive director, the board will comprise five male and two female members.

ENVIRONMENTAL STATEMENT

Pantheon Resources will seek to conduct its activities in a way that keeps the environmental and social impacts to a minimum. To that end, the Company plans to eliminate its Scope 1 and Scope 2 greenhouse gas emissions by 2030. Furthermore, it will consult with State and local communities on the North slope of Alaska to minimize the development footprint while seeking to maximise the economic benefits to the state of Alaska and North Slope Borough.

Pantheon intends for the initial development of Ahpun and Kodiak to be all electric, with CCS (carbon capture & storage) applied to power generation exhausts. We will ensure that all electricity purchases by the company are from zero GHG (greenhouse gas) emission sources.

Furthermore, after 2030, the Company will work with its suppliers in an effort to eliminate their Scope I and 2 emissions (i.e. Pantheon's scope 3 emissions).

To minimise the physical footprint of the Company's development activities we will maximise the number of wells drilled from each pad and minimise the number of pads and connecting roads.

MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES

Ultimate authority for all aspects of the Company's activities resides with the Board, with the respective responsibilities of the Chairman, the Executive Directors and the various committees arising as a result of delegation by the Board. Given the constraints of balancing a small, cost-conscious Board with a desire to maintain high standards of Corporate Governance, the Board has active, structured and regular internal communication, including a standing weekly conference call between the executive board (with a standing invitation for non executives to attend) and its NOMAD where significant matters are tabled and discussed. This is in addition to regular, formal board meetings, at least 4 times per year. All the executive directors have designated roles and areas of responsibility and engage with the Company's shareholders and stakeholders in accordance with relevant regulatory guidelines. There are a number of matters reserved for the Board's review and approval including, Group strategy, approval of major capital expenditure projects, approval of the annual and interim results, fundraising, dividend policy and Board structure. It monitors the exposure to key business and operational risks and reviews the strategic direction of the group and its operations. The Board delegates day-to-day responsibility for managing the business to the Executive Directors/senior management team. The Board considers its current governance structures and processes as appropriate in the context of its current size, headcount and complexity, and is seeking to improve them further as the Group prepares itself for a possible USA stock market listing. The audit committee meets at least twice per year where internal and financial controls are reviewed as required and assets are also assessed for impairment considerations. In December, 2023 the board announced the appointment of an additional independent non-executive director, Linda Havard, who has decades of financial oversight and CFO experience, to further strengthen the board.

COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS

Page 12 of this Annual Report provides a section 172 statement which discusses how the Group considers the interests of shareholders and other relevant stakeholders in its decision making.

Additionally, under AIM Rule 26 the Company publishes historical annual reports, notices of meetings and other publications, including regular operational news flow, over a minimum of the five previous years which can be found under the 'Financial Reports' and other sections of the Company website.

The Board is committed to maintaining good communication and having dialogue with private and institutional shareholders, as well as analysts. In addition to the Annual General Meeting, the Company endeavors to arrange shareholder presentations (in person or via Webinar, Zoom or Microsoft Teams), allowing shareholders to discuss issues and provide feedback as appropriate. The Company also retains the services of a specialist corporate communications advisor to assist in promoting awareness of the Company's activities to its shareholders and wider audience.

The Board have not published an audit committee or remuneration committee report, which the Board considers to be appropriate given the size and stage of development of the Company.

Regarding a general meeting of the Company, upon the conclusion of that meeting the results of the meeting are released through a regulatory news service and a copy of the announcement is posted on the Company's website. In a situation such as where there is a significant proportion of votes cast against a resolution, then, where relevant, an explanation would be provided.

EU Market Abuse Regulations

The EU Market Abuse Regulation came into effect in the UK on 3 July 2016 and the Company has implemented relevant policies and procedures to ensure compliance with the requirements of the regime. The Company administers compliance in-house, consulting with NOMAD and legal counsel regularly.

Statement of Directors' responsibilities

The Directors are responsible for preparing the financial statements in accordance with applicable laws and regulations. Under that law the Directors have elected to prepare the Group and Parent Company financial statements in accordance with UK-adopted international accounting standards which requires the Directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Group and of the Company and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to:

a)      select suitable accounting policies and then apply them consistently;

b)      make judgements and estimates that are reasonable and prudent;

c)      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business; and

d)      state whether applicable UK adopted International Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors confirm that the financial statements comply with the above requirements.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the financial position of the Group and Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. The Directors are also responsible for safeguarding the assets of the Group and hence for taking steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The Company is compliant with AIM Rule 26 regarding the Company's website.

Statement of disclosure to the auditors

So far as the Directors are aware:

1. there is no relevant audit information of which the Company's auditors are unaware; and

2. all the Directors have taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Auditors

In accordance with Section 489 of the Companies Act 2006, a resolution proposing that PKF Littlejohn LLP be reappointed as auditors of the Company and that the Directors be authorised to determine their remuneration will be put to the next Annual General Meeting.

By order of the board

Justin Hondris

Director

18 December, 2023