REG - Pantheon Resources - Independent Expert Report by LKA on Alkaid Horizon

Pantheon ResourcesAnnouncement

01/05/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240501:nRSA7035Ma&default-theme=true

RNS Number : 7035M  Pantheon Resources PLC  01 May 2024

1 May 2024

 

Pantheon Resources plc

LKA confirms 79 mmbbl of recoverable reserves and resources in Ahpun's Alkaid
Horizon after Alkaid-2 long term test

Pantheon Resources plc (AIM: PANR) ("Pantheon" or "the Company"), the oil and
gas company with a 100% working interest in the Kodiak and Ahpun projects,
covered by 193,000 acres of leases with an additional c. 66,000 acres to be
awarded following successful bids in the December 2023 lease sales, all in
close proximity to pipeline and transportation infrastructure on Alaska's
North Slope, is pleased to share the results of an updated Independent Expert
Report ("IER") by Lee Keeling & Associates, Inc. ("LKA"). This update
covers the Alkaid horizon within its Ahpun Field over which it has a 100%
working interest.

This report updates the January 2020 IER on the Alkaid horizon (formerly
referred to as the 'ZOI' and/or 'Alkaid Deep') within the Ahpun field. The
original report was issued after the successful re-entry and test of the
Alkaid-1 well during the winter of 2019. This update benefits from the
additional data gathered from the 5,200 feet horizontal completion and 90-day
flow test of the Alkaid-2 well drilled in 2022. The Alkaid horizon is the
smallest and deepest development candidate in Pantheon's portfolio, with
poorer reservoir quality than the Ahpun topsets and Kodiak reservoirs,
however, the advantage of its immediate proximity to pipeline and road
infrastructure creates optionality for early economic development.

Highlights

·    LKA estimates base case Possible Reserves of 5 million barrels
("mmbbl") and 27 billion cubic feet ("bcf") of recoverable natural gas at the
Alkaid horizon, in addition to Contingent Resources totalling 74 mmbbl of
marketable liquids and 396 bcf of recoverable natural gas.

·    LKA estimates high case Contingent Resources totalling 123 mmbbl and
634 bcf.

·    LKA's attribution of reserves in the immediate vicinity of the
Alkaid-2 well and its economic modelling of the overall Alkaid horizon
estimating real rates of return in excess of 20%, support Pantheon's previous
assessment that the Alkaid-2 long term production test demonstrated the
commerciality of the Alkaid horizon in Ahpun.

David Hobbs, Pantheon's Executive Chairman, commented: "This is an important
result for our strategy to move the Ahpun and Kodiak Fields through
development to production over the coming years. The confirmation that the
Alkaid horizon, the most marginal of the resources appraised on our Alaska
North Slope acreage, is modelled by the Independent Experts to deliver real
rates of return exceeding 20%, is fantastic news for our development planning.
It's important to remember that both the Ahpun topsets and the newly awarded
Ahpun Eastern Extension both offer far superior reservoir properties and are
similarly located in close proximity to the pipeline and road infrastructure.
There are material synergies to be exploited in development, potentially
further enhancing expected returns.

"Once again, Jay, Bob and the team are putting in the hard yards to line up
all the pieces necessary to deliver our strategic goal of achieving
sustainable market recognition of $5-$10 per recoverable barrel by 2028. We
are expecting the Cawley Gillespie report on the Ahpun Topsets in the coming
weeks and expect to continue building on this momentum going forward."

Field Naming

In 2023 Pantheon incorporated all reservoirs above the Hue Shale into a single
field-Ahpun. The Ahpun field currently includes two horizons, (i) the 'Alkaid
horizon' (the subject of this report) and (ii) the shallower topsets, formerly
termed the 'SMD'. If successfully tested, subject to funding, in the planned
Megrez-1 well, the eastern topsets (secured in the December 2023 lease sale)
would also be included. The upper and lower slope fans tested in Talitha-A
have not been assessed as commercial by the Company and are not currently
incorporated into the Ahpun field.

IER Conclusions

This IER is specific to the Alkaid horizon and estimates base case Possible
Reserves of 5 mmbbl and 27 billion cubic feet ("bcf") of recoverable natural
gas in addition to Contingent Resources (C2) totalling 74 mmbbl of marketable
liquids and 396 bcf of recoverable natural gas. Importantly, the volumes
classified as Possible Reserves indicates that a proportion of the resources
are already deemed economically viable. Furthermore, LKA's economic modelling
of the overall Alkaid horizon estimated real rates of return in excess of 20%
which Pantheon believes exceeds the economic threshold to be considered
commercial. This result supports the Company's previous assessment that the
Alkaid-2 long term production test demonstrated the commerciality of the
Alkaid horizon in Ahpun. Moreover, the topset horizons, having far superior
reservoir properties with estimated permeabilities two orders of magnitude
(i.e. 100x) higher, suggest significantly improved economics compared to the
Alkaid horizon as described in Pantheon's press release dated 10
(https://polaris.brighterir.com/public/pantheon_resources/news/rns/story/xpok8jw)
(th
(https://polaris.brighterir.com/public/pantheon_resources/news/rns/story/xpok8jw)
) April 2024
(https://polaris.brighterir.com/public/pantheon_resources/news/rns/story/xpok8jw)
.

A summary table extracted from the report is copied below and is based on
$80/bbl ANS (Alaska North Slope) crude delivered to the West Coast:

 

 Base Case             Estimated Remaining                   Estimated Remaining Net Reserves / Resources      Future Net Cash Flow

                       Gross Reserves / Resources
 Classification        Oil         Wellhead Gas  NGL         Oil                      NGL                      Total        Present Worth Disc.@ 10%

                       (MBBLS)     (MMCF)        (MBBLS)     (MBBLS)                  (MBBLS)                  (M$)         (M$)
 Possible Reserves     2,800       27,389        2,328       2,282                    1,897                    95,556       14,528
 Contingent Resources  40,501      396,183       33,676      33,008                   27,446                   1,452,544    185,820
 Total Resources       43,300      423,572       36,004      35,290                   29,343                   1,548,100    200,347

 

Note: Totals may not agree with schedules due to computer roundoff.

 High-Side Case        Estimated Remaining               Estimated Remaining Net Resources     Future Net Cash Flow

                       Gross Resources
 Classification        Oil       Wellhead Gas  NGL       Oil                NGL                Total        Present Worth Disc.@ 10%

                       (MBBLS)   (MMCF)        (MBBLS)   (MBBLS)            (MBBLS)            (M$)         (M$)
 Contingent Resources  69,621    633,724       53,867    56,741             43,901             3,425,705    526,545
 Total Resources       69,621    633,724       53,867    56,741             43,901             3,425,705    526,545

 

Note: Totals may not agree with schedules due to computer roundoff.

 

The base case NPV at a 10% real discount was estimated by LKA to be c. $200
million ($526 million for the high-side case), pre-Federal Income Tax but
after all State taxes. LKA's high side case (recognising increased EURs of
c.1.5 mmbbl per well, versus c.1 mmbbl per well for the base case) estimates
total Contingent Resource of 123.3 mmbbl of marketable liquids and 634 bcf of
gas. This appears to reflect the potential for greater recovery from the
entire section through greater frac growth vertically and laterally, including
what was previously described as Alkaid Deep.

The full report received from LKA has been posted to www.pantheonresources.com
(http://www.pantheonresources.com) .

 

Further information:

 

Pantheon Resources plc

Jay Cheatham,
CEO
+44 20 7484 5361

David Hobbs, Executive
Chairman

Justin Hondris, Director, Finance and Corporate Development

 

Canaccord Genuity Limited (Nominated Adviser and broker)

Henry Fitzgerald-O'Connor, Ana
Ercegovic
+44 20 7523 8000

 

BlytheRay

Tim Blythe, Megan Ray, Matthew
Bowld
+44 20 7138 3204

 

 

 

The estimates in the LKA 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).

 

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 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
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 c.
193,000 acres. In December 2023, Pantheon was the successful bidder for an
additional 66,240 acres with very significant resource potential, contiguous
to the Ahpun and Kodiak projects. Following the issue of the new leases,
which are expected to be formally awarded in summer 2024 upon payment of the
balance of the application monies, the Company will have a 100% working
interest in c. 259,000 acres. Certified contingent resources attributable to
these projects are currently around 1.3 billion barrels of marketable liquids,
located adjacent to Alaska's Trans Alaska Pipeline System ("TAPS") with
additional IERs expected within the next month.

Pantheon's stated objective is to demonstrate sustainable market recognition
of a value of $5-$10/bbl of recoverable resources by end 2028. The Company is
targeting Final Investment Decision ("FID") on the Ahpun field by the end of
2025, subject to regulatory approvals, building production to at least 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 1,208
million barrels of marketable liquids and 5,396 billion cubic feet of natural
gas. ("LKA") has confirmed a combination of reserves and contingent resources
totalling 79 million barrels of marketable liquids and 424 billion cubic feet
of natural gas. Cawley Gillespie & Associates ("CGA") are working on
estimates for the Ahpun western topsets.

 

Glossary

bbl: barrels

 

bcf: Billion cubic feet

Proved Reserves: Those quantities of petroleum that, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be
commercially recoverable from a given date forward from known reservoirs and
under defined economic conditions, operating methods, and government
regulations.

Probable Reserves: Those additional Reserves that analysis of geoscience and
engineering data indicates are less likely to be recovered than Proved
Reserves but more certain to be recovered than Possible Reserves.

Possible Reserves: Those additional reserves that analysis of geoscience and
engineering data indicates are less likely to be recoverable than Probable
Reserves.

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.

 

Gross Reserves/Resources: The Group's working interest reserves/resources
before the deduction of royalties.

 

Net Reserves/Resources: The Group's net working interest reserves/resources
after the deduction of royalties

 

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

 

Other definitions are included in LKA's report posted to Pantheon's website

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDWPUMCCUPCGRU