London-based independent explorer Pantheon Resources plc has reached a deal with Kinder Morgan Inc. to install and operate a 15 MMcf/d natural gas processing facility in East Texas, within the Austin Chalk area.

Pantheon, which owns working interest in several conventional drilling projects in Tyler and Polk counties, said the new facility in Polk County would serve targeted first production from its VOBM No. 1 and VOBM No. 3 wells by mid-September.

“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,” CEO Jay Cheatham said. “We remain highly confident in the nature of the reservoirs on our acreage and once production begins, we expect to generate sufficient cash flow to help the the company fund future operations.”

Pantheon also has brought in a rig, completion crew and related equipment with plans to begin fracturing (fracking) the VOBM No. 2H well in Polk County (58% working interest) in early August.

“The frack is designed with the intention of remediating the skin damage believed to have occurred as a consequence of the low penetration rates encountered when drilling the very hard Eagle Ford sandstone in a horizontal or deviated orientation,” management said.

Pantheon is working to line up “a suitable drill rig for the sidetrack” of its VOBM No. 4 well in Tyler County, in which it owns a 50% working interest.

“Third-party reservoir engineering consultants have concluded that based upon analysis of well logs, technical data and hydrocarbons encountered during drilling, the Wilcox in this location has outstanding potential and the objective is to complete the sidetrack as soon as a rig is contracted,” management said. “A successful flow test could have very positive implications for the surrounding acreage.”

Activity in the Permian Basin, several hundred miles away from East Texas, “has resulted in significant lead times for equipment and crews in Tyler and Polk county,” the company said.

Pantheon, whose shares are quoted on AIM, a sub-market of the London Stock Exchange, said the new gas facility running at full capacity at today’s prices would generate more than $1.5 million per month of free cash flow net.