TIDMPANR
RNS Number : 3507B
Pantheon Resources PLC
06 June 2019
6 June, 2019
Pantheon Resources plc
Resource upgrade - Alkaid prospect
Pantheon Resources plc ("Pantheon" or "the Company"), the
AIM-quoted oil and gas exploration company with working interests
in several conventional project areas in Tyler and Polk Counties,
onshore East Texas, and onshore North Slope of Alaska, is pleased
to provide details of the Webcast scheduled for 1130am BST today
and to provide the following update in relation to the testing of
the Alkaid well located on the Alaska North Slope:
Webcast
A CEO Q&A Webcast will be available at 1130 British Summer
Time today and will be accessible at the following link:
https://webcasting.brrmedia.co.uk/broadcast/5cf6ad4a221579216107c9a7
Alkaid project: P50 Technically Recoverable Resource upgrade
As previously announced, the Alkaid well was confirmed as an oil
discovery in the primary target, the Brookian ("zone of interest"
or "ZOI") at c.8,100ft depth, flowing 80-100 bopd of high quality,
light oil from a 6 foot perforated interval (within a 240 foot
interval of net pay) during testing. This result is considered of
great importance because the Brookian ZOI is the same formation
that is at the heart of the major Alaskan discoveries over recent
times. Pantheon has a large family of other Brookian prospects on
its acreage. Notably, the result has confirmed the efficacy of
Pantheon's 'High Tech Geophysics' analysis in modelling the
Brookian, important because the application of High Tech Geophysics
has been central to those recent major Brookian discoveries in
Alaska.
Alkaid was drilled as a vertical test well with the objective of
verifying the presence of the oil reservoir and gathering data and
was not drilled to maximise production from this wellbore. The well
is on the edge of the reservoir and seismic clearly shows improved
reservoir characteristics moving towards the heart of the
reservoir. Future development wells will be drilled horizontally
and fracked as is typical for the region, which should result in
vastly improved flow rates than that of the test well.
Since testing the well, analysis by the Company has been
ongoing. Petrophysical analysis has now been completed and the
Company is pleased to provide the following conclusions from this
analysis:
Please note that the estimates below are Company estimates and
do not imply "resources" under Petroleum Resources Management
System.
1. The major geological parameters assessed in Alkaid all exceeded pre-drill analyses.
2. The Alkaid and Phecda projects have been remapped, which
included a merging of additional 3D seismic shot subsequent to
drilling. Remapping has concluded that both Alkaid and Phecda are
now part of the same structural accumulation. Accordingly, Phecda
has been upgraded from exploration to appraisal status with a
resultant reduction in risk.
3. Oil in place ("OIP") - the Alkaid and Phecda combined OIP has
been upgraded by the Company by approximately 50%, increasing from
595 million barrels of oil ("mmbo") to 900 mmbo.
4. Recovery factor ("RF") - the RF for Alkaid and Phecda has
increased from 10% pre-drill to a range of 10-15%. It is noted that
secondary recovery techniques such as water flooding have been
successfully applied to other Brookian accumulations in Alaska
bringing recovery factors as high as 40%. For conservatism, it is
too early for Pantheon to model such secondary recoveries into its
base case given such techniques have not been applied at Alkaid.
However, if such techniques were successfully applied during
development then potential exists for a significant improvement to
the 10-15% modelled recovery factor.
5. P50 Technically Recoverable Resource - combined from Alkaid
and Phecda has been increased by the Company from 59 mmbo to 90-135
mmbo.
6. Future development wells will be drilled horizontally and
fracked. The Board believe that, in a success case, a modelled P50
well is estimated to have an EUR (Estimated Ultimate Recovery) in
the range of 1.5 - 2.5mmbo and an estimated potential maximum flow
rate per well exceeding 1,500 barrels of oil per day.
7. Development of the Alkaid/Phecda project benefits
tremendously, both financially and operationally, from its location
immediately adjacent to and underneath the Dalton Highway and the
Trans-Alaska Pipeline System ("TAPS"). The Company's preliminary
modelling suggests potential for up to c.50 development wells
across the project in a phased development plan, with first
production targeted for 2021 utilizing mobile Early Production
Units ("EPU's"). Because of its favorable location, it is believed
Alkaid/Phecda should have year round operations and not be subject
to the typical seasonal activity restrictions.
8. The data room for Alkaid/Phecda is nearly complete and work
is underway to commence formal farmout discussions. Over US$80m has
been invested in seismic with over $200m total sunk cost into the
Alaskan project. Management believe this important discovery offers
both scale and near-term development potential to any potential
farminee. Pantheon is seeking potential farminees to contribute a
material up-front cash contribution towards sunk cost for entry
into the project, together with an element of 'carry' whereby that
farminee would fund part of Pantheon's development costs.
9. The Alkaid/Phecda development opportunity is compelling and
the Company has already been proactively approached by parties
making enquiry about possible opportunities.
10. The Alkaid results have also increased confidence in the
Brookian section at Talitha. The efficacy of the High Tech
Geophysics in its rendering of the Brookian sequence at Alkaid
gives the Company confidence in correlating the High Tech
Geophysics in the Brookian section at Talitha. Whilst Pantheon is
yet to drill a well at Talitha, the presence of the Pipeline State
#1 well on the Talitha acreage is of great importance. That well
was drilled in 1988, at a time when drilling capabilities were not
advanced as today and when the oil price was c.$10 barrel. The well
encountered hydrocarbons, but was targeting a thick, clean sand and
instead encountered an interbedded, laminate type sand and thus was
plugged and abandoned. With today's advanced horizontal drilling
and fracking techniques, this type of geology can be, and is,
effectively and efficiently drilled and produced.
11. Owing to the favourable location and the quality of data
received, the Company believes the Alkaid/Phecda project could
generate NPV's per barrel of oil superior to other Alaskan
discoveries made over recent years. The Company's preliminary
modelled NPV10 per barrel of oil in the ground range is estimated
at $7 - $12. Alaska North Slope oil trades at a premium to WTI
(West Texas Intermediate) and in the current environment we would
estimate a net back of c.$55 per barrel of oil, after all
transportation and pipeline charges.
East Texas Update
The main focus of the Company in 2019 has been on Alaska,
principally because of the requirement to achieve our objectives
during the 2018/19 winter drilling season. Exploration efforts in
Alaska are typically confined to the winter months when the ice
protects the natural tundra. East Texas remains a core asset of the
Company with potential for the Eagle Ford sandstone, Austin Chalk,
Wilcox and Navarro formations, all of which have encountered
hydrocarbons on our acreage. East Texas has abundant nearby
infrastructure and successful wells can be brought on stream and
generate cashflow rapidly.
The Great Bear acquisition delivered Pantheon a world class
technical and operational team with a deep history in US oil and
gas. The new team has commenced a full and comprehensive review of
East Texas. We have reengaged with the Bureau of Economic Geology
at the University of Texas, in Austin (the "BEG"), who participated
in Vision's 3+ year geological study a number of years ago. This
review will include our prospects, regional analogs and operational
experiences to date. No shortcuts are being taken and a decision on
the next East Texas drilling operation will be made only when that
study is completed, to minimize the chances of failure and to
ensure the team has a full understanding of the geology.
Under Vision's operatorship, 6 wells were drilled, all of which
encountered potentially significant hydrocarbons. Each however,
suffered a variety of different operational issues which hampered
the success of those wells and masked the underlying potential of
those locations. Since obtaining control of Vision earlier this
year we have parted ways Vision's operational team, and future
operations will be led by our new highly experienced operational
team whose performance under challenging conditions at Alkaid was
exceptional. As previously announced, because of the varied well
bore issues, current wells will continue to have variable
production rates with regular interventions to address blockages
and other issues and will never be great producers. We are hopeful
to improve production through a number of small workovers.
Recent leasing in East Texas has been 100% by Pantheon. The
acquisition of 2/3 of the shareholding of the Vision entities in
January this year gave us management and operational control.
Having paid 100% of all Vision costs for the past year, unless
Vision can repay those costs and pay their pro rata share of future
drilling and operating costs, Pantheon will default to an effective
100% working interest in the East Texas prospects.
Jay Cheatham, CEO, said: "It gives me great pleasure to report
this extremely positive news to shareholders. Alkaid has been a
great success for our Company leading to both a resource upgrade
and increased confidence for our other Brookian prospects. It
delivers a wonderful near-term development opportunity of scale, in
one of the most exciting areas for oil and gas in the USA where
there are limited opportunities for investment or participation. We
will complete our data room shortly and welcome discussions with
potential farm in partners who we expect to provide both funding
and resource. Our target is to bring the project into production as
early as 2021. It also allows us to increase the profile of our
company at both an industry and an investor relations level,
starting with a marketing roadshow to US institutional investors,
which is a logical step given their greater knowledge of
Alaska."
"In East Texas things have progressed and our team has already
commenced a detailed technical review of the geology and
operations. We have acquired operational control of the project and
parted ways with Vision's previous operational team and moved to a
position where we have an effective 100% working interest going
forward."
"At a corporate level our integration with the team at Great
Bear is going very well. We have assembled a first class team both
corporately and technically, and we will continue to carefully and
strategically manage our assets for the benefit of all
shareholders.
-ENDS-
Further information:
Pantheon Resources plc +44 20 7484 5361
Jay Cheatham, CEO
Justin Hondris, Director, Finance and Corporate
Development
Arden Partners plc (Nominated Adviser and broker) +44 20 7614 5900
Paul Shackleton
Daniel Gee-Summons
Notes to Editors
Pantheon Resources plc is an AIM listed Oil & Gas
exploration and production company with assets in East Texas and on
the North Slope of Alaska, onshore USA.
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 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 an order of
magnitude below that of offshore wells.
In East Texas, Pantheon held a 50% to 75% working interest
("WI") in several conventional prospects in Tyler & Polk
Counties, in an area of abundant regional infrastructure, and in
proximity to the prized Double A Wells Field. Pantheon has the
ability for this working interest position to increase to 100%
should the minority partner not be in a position to meet its pro
rata share of future drilling and operating costs.
In Alaska, following its acquisition of the assets of Great Bear
Petroleum in January 2019, Pantheon holds working interests ranging
between 10% and 90% of prospects covered by circa 1,000 square
miles of 3D seismic with P50 Technically Recoverable Resources
estimated at over1.2 billion barrels of oil excluding the Winx
Prospect and the West Sak and Ugnu formations.
For further information on Pantheon Resources plc, see the
website at: www.pantheonresources.com
The information contained within this RNS is considered to be
inside information prior to its release. Neither the contents of
the Company's website nor the contents of any website accessible
from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
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 Jay Cheatham, a
qualified Chemical & Petroleum Engineer, who has over 40 years'
relevant experience within the sector.
Cautionary Statement: The estimated quantities of petroleum that
may be potentially recovered by the application of a future
development project relate to undiscovered accumulations. These
estimates have both an associated risk of discovery and a risk of
development. Further exploration, appraisal and evaluation are
required to determine the existence of a significant quantity of
potentially movable hydrocarbons. The announcement contains
management estimates of possible valuations based on certain
assumptions based upon information available at the time of writing
and relating to a future period and, accordingly, they are not
guaranteed and are subject to change. Estimates and assumptions
underlying any such valuations are inherently uncertain, are based
on events that have not taken place and are subject to economic,
competitive and other uncertainties and contingencies beyond the
Company's control. It is emphasised that the valuations, which are
unaudited projections, do not constitute any form of forecast,
whether of cash, profit or otherwise.
GLOSSARY
BOPD Barrels of Oil per day
API The American Petroleum Institute gravity, or API gravity, is
a measure of how heavy or light a petroleum liquid is compared to
water: if its API gravity is greater than 10, it is lighter and
floats on water; if less than 10, it is heavier and sinks.
NPV Net Present Value
ZOI Zone of interest (primary target)
Gross pay That portion (the overall interval) of a reservoir
that contains economically recoverable reservoir.
Net Pay That smaller section of Gross Pay that meets further
criteria for pay such as permeability & hydrocarbon
saturation.
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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