Shares in Pantheon Resources have jumped more than 25 per cent after it revealed a "transformational" contract with the largest US energy infrastructure company to install and operate a new gas processing facility.
The oil and gas explorer's shares, listed on London's Alternative Investment Market (Aim), were trading 25.63 per cent higher at 62.5p in afternoon trading.
The deal with Kinder Morgan will see the production of a 15m cubic feet per day capacity gas processing facility in Polk County, Texas. The installation is set to begin in early August with first production scheduled for mid-September.
At full capacity, the facility is expected to generate over $1.5m per month of free cash flow net to Pantheon at today's pricing.
Based on well data, Pantheon believes it should be able to achieve operating and transportation costs in the lower quartile of North American producers, possibly as low as $5 per barrel of oil equivalent (boe).
Jay Cheatham, the boss of Pantheon, said:
The contract signing for the Polk County gas processing facility is a transformational event for the company, with near term production augmenting our value proposition from that of an explorer into a full cycle exploration and production company.
Analysts at Panmure said: "Pantheon’s share price has suffered badly as a result of the delays in advancing the current work programme."
Shares in the firm were up to a high of around 180p last year.
"Critically, the announcement on the gas production facility should alleviate concerns over the company’s cash position."