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."

-ENDS-

Further information, please contact:

Glossary

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.