27 September 2023

Pantheon Resources plc

 Commencement of Operations - Re-entry of Alkaid-2

Pantheon Resources plc (AIM: PANR) ("Pantheon" or the "Company" or the "Group"), the oil and gas company with a 100% working interest in the Kodiak and Ahpun projects, collectively spanning 193,000 contiguous acres in close proximity to pipeline and transportation infrastructure on Alaska's North Slope, is pleased to advise that operations for the re-entry at Alkaid-2 have now commenced.

Objectives

The Alkaid-2 re-entry has three primary objectives:

(i) to gather the best possible reservoir fluid samples for pressure-volume temperature ("PVT") analysis;

(ii) to determine initial reservoir pressure; and

(iii) test the improvements in the frac design discussed in recent Company webinars

The objective of the operations at Alkaid-2 is not to target maximum flow rates. Pantheon will deliberately restrict the flow rates to minimise gas production into the well bore and allow optimum data collection. 

Re-entry to assess SMD

The Alkaid-2 well was positioned to target the Zone of Interest ("ZOI") in the optimum location and is on the edge of the mapped SMD reservoir. Notwithstanding the thinner SMD interval at this location when compared to the core of the Ahpun Field, the well encountered encouraging hydrocarbon indications en route to the deeper ZOI.

The programme of operations to achieve the three primary objectives includes:

1.    Make well safe in preparation for operations

2.    Run a plug to isolate the Alkaid ZOI below the SMD horizon

3.    Perforate a limited section to ensure injection pressures are high enough to propagate the frac lobes horizontally as desired

4.    Pump 11,000 bbls of water and 400,000 lbs of 100 mesh sand

5.    Flow back slowly to prevent or limit gas flashing in the reservoir (i.e. exsolving from solution in an uncontrolled manner) in order to gather the most representative fluid samples possible

6.    Monitor pressures throughout to assess frac efficiency and original reservoir pressure.

Jay Cheatham, CEO, said: "We are pleased that operations for the re-entry at Alkaid-2 have now begun. As stated, we are not targeting maximum flow rates, instead, this programme is designed to allow for as much data gathering as possible. Whilst the location of the Alkaid-2 well is not ideal for the shallower SMD horizon, the Company was pleasantly surprised to have logged oil pay when drilling through the SMD en route to the primary target, the ZOI. This has provided a low cost option to assess both the productivity of the shallower horizon and test our improved frac design."

Background

The Alkaid-2 well was drilled in 2022 and was positioned to prioritise testing of the primary target (or 'zone of interest', "ZOI"), being the oil zone successfully flow tested in the Alkaid-1 well in 2019. Testing of the ZOI was compromised in Alkaid-2 as a result of wellbore blockages, necessitating a number of cleanout and other remedial operations. Ultimately, the ZOI produced an IP30 production rate of c.505 barrels per day ("BPD") of marketable liquid hydrocarbons consisting of oil, condensate and NGLs, as well as natural gas.

As previously announced, extensive analysis has been undertaken on the Alkaid-2 ZOI results with the data supporting a commercial development based upon 10,000ft lateral development wells, a doubling of the frac efficiency to 40% and assuming no improvement in reservoir quality. The data indicates that well productivity has the potential to improve materially based upon better frac design. Tony Beilman, Pantheon's recently appointed Senior VP of Engineering, and an expert in fracking in North America, believes that with iterative optimisation, Pantheon has the potential to meet typical performance benchmarks, a 4x improvement upon that achieved in the ZOI. One of the primary objectives of the upcoming Shelf Margain Deltaic test is to assess the efficacy of an updated frac design.

-ENDS-

 Further information, please contact:

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas company focused on developing the Ahpun and Kodiak fields located on state land on the Alaska North Slope ("ANS"), onshore USA where it has a 100% working interest in 193,000 acres. Management estimates these fields to produce Expected Ultimate Recovery of contingent resources amounting to some 2 billion barrels of marketable liquids to be delivered through the Trans Alaska Pipeline System ("TAPS").

Pantheon's stated objective is to demonstrate sustainable market recognition of a value of $5-$10/bbl of recoverable resources by end 2028. This will require targeting Final Investment Decision ("FID") on the Ahpun field by the end of 2025, building production to 20,000 barrels per day of marketable liquids into the TAPS main oil line, and applying the resultant cashflows to support the FID on the Kodiak field by the end of 2028.

A major differentiator to other ANS projects is the close proximity to existing roads and pipelines which offers a significant competitive advantage to Pantheon, allowing for materially lower infrastructure costs and the ability to support the development with a significantly lower pre-cashflow funding requirement than is typical in Alaska.

The Company's project portfolio has been endorsed by world renowned experts. Netherland, Sewell & Associates ("NSAI") estimate a 2C contingent recoverable resource in the Kodiak project that total 962.5 million barrels of marketable liquids and 4,465 billion cubic feet of natural gas. NSAI is currently working on estimates for the Ahpun Field.