REG - Pantheon Resources - Expert Report Confirms Estimate for Kodiak Field

Pantheon ResourcesAnnouncement

29/08/2023 07:00

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RNS Number : 5502K  Pantheon Resources PLC  29 August 2023

 

29 August 2023

 

Pantheon Resources plc

 Independent Expert Report confirms Best Estimate Contingent Resource
estimates totalling 962 million barrels for Kodiak Field

 

Pantheon Resources plc (AIM: PANR) ("Pantheon" or the "Company" or the
"Group"), the oil and gas company operating on Alaska's North Slope, is
pleased to advise that it has received an Independent Expert Report ("IER")
which provides an estimate of contingent resources recoverable from its 100%
Working Interest Kodiak project, formerly known as Theta West ("Kodiak"). A
full copy of the report will be published on the Company's website.

Kodiak Field Contingent Resource Estimates

 

Pantheon is pleased to announce receipt of an IER prepared by Netherland,
Sewell & Associates ("NSAI") on the Lower Basin Floor Fan reservoir of the
Company's Kodiak project (the "Kodiak NSAI IER"). A summary of the resource
estimate is outlined below.

 

Gross 100% Working Interest Contingent Resources

 

 Resource Category   Oil              NGLs             Residual Gas    Total Marketable Liquids*

                     (million bbls)   (million bbls)   (BCF)           (million bbls)
 Low Estimate (1C)   145.4            292.4            2,151.7         437.8
 Best Estimate (2C)  314.6            647.9            4,465.2         962.5
 High Estimate (3C)  647.8            1,366.4          8,822.7         2,014.2

 

* Pantheon addition of Oil & NGLs

 

Pantheon has also commissioned NSAI to complete a similar IER on the Alkaid
horizon at the Ahpun project, with expected completion in Q4 2023.

 

Pantheon Management Commentary on the Kodiak NSAI IER

 

The 2C estimates (best estimates) of oil and natural gas liquids ("NGLs")
total 962.5 million barrels of marketable liquids. As previously advised by
management, the NGLs on Pantheon's projects are of material value as they can
be blended with the oil and the combined stream of oil, condensate and NGLs
has been estimated by management to yield approximately 90% of the value of
the Alaska North Slope ("ANS") price per barrel.

 

The management believe the Kodiak NSAI IER supports the Company's development
plans for the Kodiak project, which will involve development of leases
totaling some 126,000 acres (including the recently awarded additional
acreage), delineated by the Company's proprietary 3D seismic and confirmed by
three wells (Pipeline State 1, Talitha-A and Theta West-1). The field is
defined as the hydrocarbon bearing horizons contained within the large basin
floor fan between the Hue Shale top seal and the underlying HRZ shale, from
their downdip pinchout east of Talitha-A running to over 15 miles northwest
into the new "chimney acreage" acquired in the 2022 area wide lease sale. The
Company believes that this is one of the largest basin floor fan systems
discovered onshore in the past few decades. This will be discussed in the
Company's forthcoming webinar and accompanying press release.

Figure 1: Kodiak Project Horizon (illustrative type log)

 Source: Pantheon Management

 

Figure 2: Location of Kodiak and Ahpun Projects

Source: Pantheon Management

 

Company Plans for Further Appraisal of Kodiak

 

The absence of wireline electric logs or sidewall cores taken at Theta West-1,
due to hole stability issues and the limited time available at the end of the
drilling season, has meant that the highest resolution data that captures the
thinly interbedded reservoir in the Kodiak field is limited to the Talitha-A
well.  The Company plans to drill the next Kodiak well significantly updip
from the Talitha-A and the Theta West-1 wells, where management believe the
lower depth of burial ("Dmax") should lead to improved reservoir
characteristics compared to both Talitha-A and Theta West-1. The Company has
completed a detailed geological model taking into account data from wells in
the immediate area which include the producing Tarn and Meltwater fields.

 

Pantheon plans to drill the next Kodiak appraisal well in the recently
acquired leases, some five miles northwest of Theta West-1. Based on the
Company's petrophysical analysis noted above, a Theta West-2 well in that
location would be expected by management to encounter a reservoir section with
37% of the pay interval exhibiting porosities at or above 12% and
permeabilities of greater than 0.1 milliDarcies - the typical cut-off for
recognising reservoirs as conventional, which typically yield higher flow
rates and hydrocarbon recovery rates. The reservoirs in the structural updip
portion on the Theta West structure are expected by management to exhibit the
highest quality on Pantheon's acreage, in its largest trapping mechanism.

 

The Company plans to cut full cores and acquire a full suite of wireline logs
and representative fluid samples/flow tests in future appraisal wells to
address the contingencies in NSAI's evaluation. Demonstrating the character of
the reservoir at the most granular possible level creates potential for future
increases to recoverable resource estimates.

 

 

Rig Contracted for Shelf Margin Deltaic ("SMD") test at Alkaid-2

 

Pantheon is pleased to confirm that the All-American Oil Rig 111 has been
formally contracted for the re-entry of the Alkaid-2 well to test the SMD
horizon. Pantheon has also awarded all major service provider contracts
necessary for the operation. Finalisation of necessary permits for the
operation is ongoing, with mobilisation of the rig targeted for September.

 

Webinar

 

A presentation covering the NSAI Kodiak IER together with a comprehensive
discussion on the Company's analysis and Kodiak development concepts will be
shared in a webinar in the coming month.  Further information will be
provided once details have been finalised.

 

 

David Hobbs, Pantheon's Executive Chairman, said: "I am delighted with this
result. Netherland, Sewell & Associates is one of the most highly regarded
firms in the industry, whose opinions carry great weight. They conducted an
intensive review of the data that validates Pantheon's assessment of the scale
of the resource. We remain on track to meet our strategic goal of delivering
sustainable market recognition of $5 - $10 per barrel of recoverable
resources."

 

Jay Cheatham, Pantheon's Chief Executive Officer, said: "This really is a big
deal. A credible third-party estimate of nearly one billion barrels of
recoverable liquids for a company the size of Pantheon is an incredible
achievement, validating our geological model. This is the first IER conducted
on our largest asset and will have enormous value in financing discussions and
in attracting potential partners. As I have repeatedly said, big oilfields
continue to get bigger, and with additional wells and data points we expect
this contingent resource to grow and for some or all to be classified as
reserves once we achieve a Final Investment Decision."

 

Bob Rosenthal, Pantheon's Technical Director, said: "I am extremely proud of
this achievement and the validation that we have discovered something special!
For perspective, it is very rare to see certified resources of this size,
particularly onshore and near to infrastructure. This first report supports
the work conducted by a broad technical group that has included our partners
at SLB, eSeis, AHS Baker Hughes among others. NSAI's evaluation of Kodiak is a
transformational milestone on the path to commercialisation. I remind
shareholders that this report on Kodiak only covers the Lower Basin Floor Fan,
based on three wells and our proprietary 3-D seismic data set. There is clear
potential for further growth in these numbers as continuing appraisal provides
more granular data."

 

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 David Hobbs, a qualified Petroleum Engineer and a member of
the Society of Petroleum Engineers, who has nearly 40 years' relevant
experience within the sector.

The estimates in the Kodiak NSAI IER have been prepared in accordance with
definitions and guidelines set forth in the 2018 Petroleum Resource Management
System (PRMS) approved by the Society of Petroleum Engineers (SPE).

 

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").

-ENDS-

 Further information, please contact:

 

 Pantheon Resources plc                                       +44 20 7484 5361
 David Hobbs, Executive Chairman

 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

 

ANS Price: The price of Alaska North Slope crude loaded at Valdez and
delivered to a US West Coast Refinery.

 

Bbls: barrels

 

Contingent Resource: Those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations by application of
development projects, but which are not currently considered to be
commercially recoverable owing to one or more contingencies.

 

For Contingent Resources, the general cumulative terms low/best/high estimates
are used to estimate the resulting 1C/2C/3C quantities, respectively. The
terms C1, C2, and C3 are defined for incremental quantities of Contingent
Resources:

A.    C1: Denotes low estimate of Contingent Resources. C1 is equal to 1C.

B.    C2: Denotes Contingent Resources of same technical confidence as
Probable, but not commercially matured to Reserves.

C.    C3: Denotes Contingent Resources of same technical confidence as
Possible, but not commercially matured to Reserves.

 

When the range of uncertainty is represented by a probability distribution, a
low, best, and high estimate shall be provided such that:

A.    There should be at least a 90% probability (P90) that the quantities
actually recovered will equal or exceed the low estimate.

B.    There should be at least a 50% probability (P50) that the quantities
actually recovered will equal or exceed the best estimate.

C.    There should be at least a 10% probability (P10) that the quantities
actually recovered will equal or exceed the high estimate.

 

The Kodiak NSAI IER highlights the following contingencies:

1.    Acquisition of additional technical data that demonstrate producing
rates and volumes sufficient to sustain economic viability across the acreage.

2.    Approval of a field development plan and regulatory permits.

3.    Demonstration of viable gas and water utilization or disposal
methods.

4.    Demonstration of ability to market oil and natural gas liquids
(NGLs).

5.    Commitment to fund and complete the development project.

 

If these contingencies are successfully addressed, some portion of the
contingent resources estimated in the report may be reclassified as reserves.

 

NGLs: Natural gas liquids (NGL) are components of natural gas that are
separated from the gas state in the form of liquids.

 

Overriding Royalty Interest (ORRI): A royalty granted to a third party other
than the royalty payable to the State of Alaska.

 

Working Interest: The legal ownership of the leases awarded by the State of
Alaska. Pantheon's Net Revenue Interest (NRI) in the leases is less than 100%
by virtue of royalties payable to the State and any ORRI. In the case of the
Kodiak project, the State royalties vary between 12.5% and 16.67%. Management
estimates that the average NRI is approximately 85%.

 

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 preparation of an Independent Expert Report for the Ahpun
Field.

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