TIDMPANR
RNS Number : 9292R
Pantheon Resources PLC
06 March 2023
6th March, 2023
Pantheon Resources plc
Operational and corporate update
Pantheon Resources plc ("Pantheon" or "the Company"), the
AIM-quoted oil and gas company with a 100% working interest in all
of its oil projects spanning c. 153,000 acres adjacent and near to
transportation and pipeline infrastructure on the Alaska North
Slope ("ANS") provides the following update:
Alkaid #2 update
The Alkaid #2 well returned to production on 21 February,
following the cleanout of the sand blockage in the final 1,000ft
(c.20%) of the wellbore. The IP30 production rate is calculated at
c.505 barrels per day ("BPD") of liquid hydrocarbons consisting of
c.180 BOPD oil, c.325 BPD of condensate and natural gas liquids
("NGLs"), along with c.2,300 mcfpd natural gas, after shrinkage.
The quantum of liquid and gas production flowing without artificial
lift from Alkaid #2 demonstrates the good deliverability of the
reservoir, which is a significant de-risking event for Alkaid
development. When separated and sold, condensate and NGLs are
estimated to achieve 80% - 90%, or potentially higher, of ANS crude
oil price (ANS crude typically trades at a premium to WTI oil).
Post cleanout, flow rates were initially marginally higher than
pre-cleanout suggesting that despite the sand blockage the final
1,000ft was connected and already contributing to the main wellbore
through the fractures communicating with each other. Alkaid #2 also
penetrated the shallower shelf margin deltaic ("SMD") reservoir,
which management estimate to contain over 400 million barrels of
oil ("mmbo") recoverable resource. The addition of these resources
to any potential Alkaid development will significantly boost
economic returns. The data collected indicates the SMD has
significantly better reservoir qualities than the Alkaid
anomaly.
As has been previously disclosed, it is believed that the Alkaid
#2 well fracked into a gas cap resulting in a much higher gas oil
ratio ("GOR") than that encountered at the nearby Alkaid #1 well
which is in the same reservoir. It is believed that this is Alkaid
#2 specific, and accordingly, future wells, should be drilled
deeper to avoid the gas cap and thus should produce a much improved
GOR. Alkaid #2 has now produced for over 50 days and production has
resumed in line with the pre cleanout decline profile.
The Alkaid #2 test has been a long and complex well and has
generated significant data in de-risking the play. The Company
believes this result is Alkaid #2 specific and not a reflection on
the Alkaid reservoir which produced flow test results of 108 BOPD
and a much lower GOR from a single 6 ft fracked and tested section
in the Alkaid #1 well. Both Alkaid #1 and #2 have confirmed the
presence of a material hydrocarbon system with very good reservoir
deliverability, which the Company firmly believe supports the case
for a commercial development. As previously explained, future
development wells will be drilled deeper to avoid the gas cap which
should result in a far richer GOR.
Alkaid #2 - context
Alkaid represents less than 4% of Pantheon's resource base, is
independent of Pantheon's other discoveries, and is Pantheon's
first production test well in a new geological play type. As is
typical for first time operations in new fields, there is a
learning curve with any first well that will be optimised over
subsequent wells to yield the best results.
In Pantheon's stress test economic modelling as discussed in our
24 January webinar, we modelled a development well drilling cost of
$19.5 million which modelled a 50% increase over the then estimate
of $13 million. The Company has continued to analyse and review
this figure and currently estimates development drilling costs to
be in the region of +/- $13.5 million per well. Using the $13.5
million well cost, assuming a 10,000 ft lateral and no improvement
in productivity, Alkaid development economics yield a +20% IRR at
an $80 ANS crude price. If Pantheon achieves efficiency and
optimisation improvements as discussed by Phillip Gobe in the
Company's recent webinar and as explained above, these returns will
improve significantly. These stand alone economics are based on
developing the 76.5 mmbo resources at Alkaid and do not include the
SMD.
Commissioning an Independent Expert Report
Pantheon is pleased to announce that it has commissioned
Netherland Sewell & Associates, a worldwide leader in petroleum
property analysis and one of the most respected names in
independent reserves reporting, to undertake an independent expert
report (Competent Persons Report) over the Company's Theta West and
Alkaid projects. Additionally, SLB is updating the dynamic
reservoir models across Pantheon's portfolio. These reports will
run in parallel to the farmout process as well as providing
investors and financiers an independent assessment of the
resources.
Jay Cheatham, CEO, said : "We are pleased that production
testing at Alkaid #2 has recommenced and proven the productive
capability of the reservoir. Given the high GOR seen, we will
locate and design future wells with longer laterals to minimise gas
and improve liquid hydrocarbon production. The first well in any
new play type is a learning exercise.
"It is worth remembering that Alkaid is the smallest project in
the Pantheon portfolio making up less than 4% of Pantheon's
estimated discovered resources. Its location on the Dalton highway,
along with the test at Alkaid #1, made it an ideal candidate for
testing and production. Pantheon will now increase its focus on the
larger oil projects in Pantheon's portfolio as it begins a farmout
process to undertake future activities. The large Theta West oil
accumulation with resources of over 17 billion barrels of oil in
place is Pantheon's major asset. A large portion of the Theta West
oil accumulation is in a shallower reservoir than anything else in
our portfolio and analogous to giant oil fields in other parts of
the world."
Bob Rosenthal, Technical Director, said: "Having stabilised the
well, the long-term production test will now give us valuable data
to plan future wells with better oil production capabilities. We
IP'd at over 500 barrel of oil and condensate and almost 500
barrels of gas to oil equivalent, equalling 1,000 BOE/d which
actually indicates excellent reservoir deliverability. We are in
contact with a substantial amount of hydrocarbons, and our data
clearly demonstrates the productive capability of the reservoir
which in my view was the biggest risk in this project! I was asked
repeatedly over the last year about the commerciality of our
projects. As stated above using our current production data we
still believe this will ultimately be commercial. Our team, which
includes among the best oil service providers in the world, have
already commenced detailed reservoir studies to optimise flow rates
in commercial development. As Jay says, we simply need to position
future wells in better locations after having discovered and now
successfully tested the reservoir. Our job now is to optimize
drilling and completions to maximise the potential commerciality of
Alkaid as well as continue to assess the potential of our other
major discoveries which include our large discovery at Theta
West."
-S-
Further information, please contact:
Pantheon Resources plc +44 20 7484 5361
Jay Cheatham, CEO
Justin Hondris, Director, Finance and Corporate
Development
Canaccord Genuity plc (Nominated Adviser and
broker)
Henry Fitzgerald-O'Connor
James Asensio
Gordon Hamilton +44 20 7523 8000
BlytheRay
Tim Blythe, Megan Ray, Matthew Bowld +44 20 7138 3204
Glossary
bbls Barrels of oil
BOPD Barrels of oil per day
BOE/D Barrels of oil equivalent per day
BPD Barrels per day
ft Feet
mmbo Million Barrels of Oil
mcfpd Thousand cubic feet per day
IP Initial Production
IP30 Average oil production rate over 30 days
WTI West Texas Intermediate crude oil
In accordance with the AIM Rules - Note for Mining and Oil &
Gas Companies - June 2009, the information contained in this
announcement has been reviewed and signed off by Robert Rosenthal,
a qualified Petroleum Geologist, who has over 40 years' relevant
experience within the sector.
The information contained within this Announcement is deemed by
Pantheon Resources PLC to constitute inside information as
stipulated under the Market Abuse Regulation (EU) No. 596/2014 as
it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR").
Notes to Editors
Pantheon Resources plc is an AIM listed Oil & Gas company
focused on several large projects located on the North Slope of
Alaska ("ANS"), onshore USA where it has a 100% working interest in
153,000 highly prospective acres with potential for multi billion
barrels of oil recoverable. A major differentiator to other ANS
projects is its close proximity to transport and pipeline
infrastructure which offers a significant competitive advantage to
Pantheon, allowing for materially lower capital costs and much
quicker development times. The Group's stated objective is to
create material value for its stakeholders through oil exploration,
appraisal and development activities in high impact, highly
prospective conventional assets, in the USA; a highly established
region for energy production with infrastructure, skilled personnel
and low sovereign risk. All operations are onshore USA, with
drilling costs materially below that of offshore wells.
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