Formal Approval of the Talitha Unit

13 November, 2020

Pantheon Resources plc

Formal Approval of the Talitha Unit

Pantheon Resources plc ("Pantheon" of "the Company") the AIM-quoted oil and gas exploration company with working interests of 89.2% - 100% in certain projects located adjacent to transportation and pipeline infrastructure on the Alaska North Slope is pleased to announce the Company's application to form the Talitha  Area Unit has been formally approved by the State of Alaska, Department of Natural Resources ("DNR"). The Talitha Area Unit encompasses 44,463 acres of State Leases in the central Alaska North Slope area, located adjacent to both the Trans Alaska Pipeline System ("TAPS") and the Dalton Highway. The unit lies directly adjacent to the southern border of the recently-approved Alkaid Unit, 20 miles south of the Prudhoe Bay Unit, and 25 miles southeast of Kuparuk River Unit and has an effective date of November 10^th 2020.

Background

The award of the Talitha Production Unit over which Pantheon has an 89.2% working interest, represents an important milestone for the Company and for its ambitions to drill the Talitha #A appraisal well in Q1 2021. As has been previously announced, drilling of the Talitha #A well remains subject to funding and the Company confirms that its farmout discussions remain ongoing and today's unit award is considered an important step forward in this process. The Talitha Project is keyed off the Pipeline State #1 vertical discovery well, located on the Talitha Project itself, which was drilled in 1988 and which reached a total depth at 10,460 ft measured depth and encountered oil in several intervals. The intended Talitha #A well will drill through all these intervals in a structurally higher location (shallower depth) with the primary reservoir target being the Shelf Margin Deltaic sequence which is expected to be encountered at a reservoir depth of around 7000 feet. The secondary targets are a Slope Fan System and the Basin Floor Fans in the Brookian section, as well as the deeper Kuparuk formation. Pantheon believes the combined potential of these zones could be in the region of a billion barrels of recoverable oil, however ongoing work is required to formally delineate the ultimate potential  of the secondary targets.

An Independent Expert Report ("IER") was received on the primary target Shelf Margin Deltaic ("SMD") sequence in late September this year. Importantly this IER was confined to the 'updip' component of the SMD only, and did not consider the downdip' component over which additional potential exists. Highlights of the IER are summarised below:

Highlights:

⇨  304 Million Barrels of Oil ("MMBO") Prospective Resource (Recoverable)

⇨  $2.7 billion⁽¹⁾ NPV10, using a long term Brent oil forward curve ranging from $45.84 to $54.89

⇨  $8.92 NPV10 per barrel of oil⁽²⁾ and an Internal Rate of Return of 79.9%

⇨   Field peak maximum production rate⁽²⁾ of 90,000 Barrels of oil per day ("BOPD") facility limited

⇨   Average individual producing well EUR (estimated ultimate recovery) of 3.32 MMBO per well⁽²⁾ 

⇨   The LKA report confirmed that Talitha is an Appraisal project updip from discovered oil

⇨   Located near the Dalton Highway & Trans-Alaska Pipeline (TAPS) allowing a phased development and minimising upfront capex

Notes: (1) NPV's are calculated on a pre-tax basis after deduction of a modelled 13.5% royalty rate. (2) Production volumes & EUR's are quoted on gross production numbers (i.e. pre 13.5% royalty). (2) The IER was prepared on a 100% project basis of which Pantheon has a 89.2% working interest. (3) The IER modelled development plan for the Talitha project was truncated after 302 MMBO were produced.

The Independent Expert Report estimate only covers 20,600 acres of the reservoir section updip from the oil pay at the Pipeline State #1 discovery well, and not the total resource across the entire structure or project area. Pantheon's internal estimate for the SMD across the entire mapped closure as previously announced is significantly larger. Pantheon recently announced (13^th October 2020) a resource estimate for the Kuparuk section which is the deepest of the targeted horizons at Talitha,  and estimates the potential for this horizon (on a 100% basis) to contain 1.4 billion barrels of oil in place ("OIP") and a Prospective Resource (Recoverable) of 341 million barrels of oil ("MMBO") as a most likely case. The Company has modelled as an illustrative development plan exploiting 247 MMBO of the estimated 341 MMBO resource, and using the forward price curve as at 13 October 2020, yielding a potential NPV10 of over US$1.48 billion, with NPV10 per barrel of $6.00 and an Internal Rate of Return of 55%. Analysis of the remaining secondary objectives, the Slope Fan System and the Basin Floor Fan horizon are currently under evaluation.

The award of the Talitha Unit (Pantheon 89.2%) requires certain commitments that include: (i) The reprocessing approximately 50 square mile of 3D seismic to determine the  optimum location of the Talitha #A well; (ii) Posting a performance bond in the amount of $3.3 million no later than September 15, 2021; A requirement to drill either one well in the Unit by the second anniversary of the Unit effective date, or two wells in the Unit by the fifth anniversary of the effective date. Upon completion of either well commitment, the performance bond will be returned (if a well is drilled prior to September 15, 2021, the bond is not required). Failure to meet either commitment will result in termination of the Unit after the fifth anniversary and forfeiture of the performance bond.

Jay Cheatham, CEO, commented: "The formal award of the Unit Agreement over our Talitha project represents an important milestone for our company and brings us a step closer to our aspirations of drilling one of the most impactful and exciting well in my career. Many years of analysis and a long and collaborative process with the Department of Natural Resources which involved a great deal of technical, geological, engineering and environmental information is now concluded. We now have tenure over 44,463 acres at Talitha, and combined with the recently awarded 22,804 acres in the new Alkaid Unit puts us in a strong position to pursue the appraisal and development of our discovered resources.  Pantheon is now one of the larger Unit owners on the Alaskan North Slope."

"The Independent Expert report confirming our project as oil bearing combined with the State of Alaska awarding our Talitha Unit is a significant endorsement of the project potential. Our modeling shows Talitha is economic at very low oil prices because of the size, reservoir qualities and proximity to the Dalton Highway and Trans Alaska Pipeline infrastructure. The value of the potential resources at Talitha is very large and represents a huge prize we hope to test  in early 2021. The award of the two units provides long term tenure over key leases and significantly enhances our ability to attract partners into all of our projects."

-Ends-

Further information:

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas exploration and production focused on several large projects located on the North Slope of Alaska ("ANS"), onshore USA. A major differentiator to other ANS projects is its close proximity to transport and pipeline infrastructure. 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.

On the North Slope of Alaska, Pantheon holds working interests of 89.2% - 100% in projects  covered by c.1,000 square miles of proprietary 3D seismic. The Company has received Independent Expert Reports certifying a Contingent Resource of 76.5MMBO (million barrels of oil) recoverable on its Greater Alkaid project and 302MMBO Prospective Resource at its Talitha project.

Information contained within this RNS is considered to be inside information prior to its announcement. 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.