REG - Pantheon Resources - Kodiak resource upgraded to 1.2 billion barrels

Pantheon ResourcesAnnouncement

09/04/2024 07:00

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RNS Number : 7621J  Pantheon Resources PLC  09 April 2024

9(th) April 2024

Pantheon Resources plc

Kodiak field resource upgraded 25% to 1.2 billion barrels of recoverable
liquids by NSAI

 

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 the updated Independent Expert
Report ("IER") by Netherland Sewell & Associates, Inc. ("NSAI"). This
update includes approximately 43,000 acres of the leases on which the Company
was the successful bidder in December 2023(1), located on its 100% owned
Kodiak Field on the North Slope of Alaska.

 

Highlights

 

·    NSAI's best estimates of Kodiak's contingent recoverable resources
sum to 1.2 billion barrels of marketable liquids (oil, condensate and natural
gas liquids) and 5.4 trillion cubic feet of gas ("tcf").

·    The new resource represents a 25% increase (963 to 1,208 million
barrels ("mmbbls")) in recoverable marketable liquids compared to NSAI's
previous 2023 report.

·    The updated numbers include c. 43,000 of the c. 66,000 acres of the
expanded acreage footprint post the successful lease bids in December 2023(1),
and a higher average recovery rate due to the better reservoir properties in
the shallower, updip portion of the field secured by the new leases.

·    Kodiak is a large basin floor fan accumulation with three well
penetrations. Recent drilling activity and acreage acquisition strategy has
focused on moving structurally higher into better reservoir rocks where
porosity and permeability are substantially improved.

·    The potential improvement in reservoir quality in the newly acquired
acreage underpins the c. 40% increase in the high estimate of recoverable
resources to 2,840 mmbbls of marketable liquids and 11.75 tcf of natural gas.

·    The 5.4 tcf of recoverable gas (Best Case) is important as additional
support for a proposed agreement with Alaska Gasline Development Corp ("AGDC")
to bring gas to southcentral Alaska markets.

 

NSAI Contingent Resource estimate

 

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)   168.5            299.9            2,151.7         468.3
 Best Estimate (2C)  425.8            782.1            5,396.3         1,207.9
 High Estimate (3C)  1,029.7          1,811.6          11,748.6        2,814.3

 

 

The Kodiak oil and gas field currently represents Pantheon's largest project
development candidate, currently defined by three well penetrations into the
Basin Floor Fan structure, which extends more than 10 miles from the deepest
part of the fan to the 2021 updip Theta West-1 appraisal well. The additional
recent successful lease bids secure the remainder of the accumulation to the
northwest and adds a significant volume of recoverable oil and gas to the
Kodiak field. Pantheon has been able to delineate the full extent of the field
through its proprietary 3D seismic where seismic attributes have clearly
indicated the presence of light oil across the entirety of the field.

 

NSAI estimated an increased average recovery factor of 8% across the field for
liquids due to expectations of substantially improved porosity and
permeability in the northwest, updip portion of the field. Recovery factors
for gas are in the range of 30-40%, based on primary recovery only. Pantheon
believes these recovery factors may increase further once supported by
drilling data in the northwest portion of the acreage.

 

The updip extensions of the Kodiak field are more analogous to producing
fields, including Tarn and Meltwater. Future appraisal drilling will focus on
the shallower, better quality reservoir sections to demonstrate the validity
of increased recovery factors and production performance.

 

The NSAI updated report on Kodiak is one of several IERs being prepared for
Pantheon as it progresses funding options for its projects. To expedite a more
rapid completion of these reports, Pantheon commissioned IERs for (the
shallower) Ahpun Topsets and (the deeper) Alkaid Zone from Cawley Gillespie
& Associates ("CGA") and Lee Keeling & Associates ("LKA")
respectively. These reports are expected over the next month and are integral
to financing discussions.

 

(1) The Company has paid an initial 20% deposit to the State of Alaska with
the remainder payable on official award of the new leases which is anticipated
this quarter

 

The NSAI report can be found at www.pantheonresources.com
(http://www.pantheonresources.com/)

 

Pantheon will be hosting an Investor Meet Company webinar at 5.00pm BST on
Wednesday April 10(th). Those wishing to participate can register through the
following link:

 

https://www.investormeetcompany.com/pantheon-resources-plc/register-investor
(https://www.investormeetcompany.com/pantheon-resources-plc/register-investor)

 

David Hobbs, Executive Chairman of Pantheon Resources, commented:

 

"The underpinning of our strategy with the validation provided by NSAI is an
important step on the path to our 2028 goal of demonstrating values in the
range $5-$10 per barrel of recoverable resource. Recent progress towards
securing funding, include leveraging our natural gas resources - potentially
turning them from a liability to an asset - allows us to move forward with
increased confidence. I would like to take the opportunity to congratulate Jay
and his team on putting the building blocks in place to deliver our ultimate
success."

 

Bob Rosenthal, Technical Director of Pantheon commented:

 

"This NSAI report reveals the true scale of the Kodiak Field now that we have
secured leases over its full extent. The potential upside is vast - NSAI
recognise a high estimate in excess of 2.8 billion barrels of recoverable
marketable liquids and nearly 12 trillion cubic feet of recoverable natural
gas. As we drill wells and obtain additional data, our goal is to
progressively move the 'best case estimate' towards NSAI's 'high case
estimate' over time.

 

"Discovering a billion-barrel oil accumulation is what companies dream about
and the Independent Expert Report by NSAI validates our Company's significant
achievements over the past decade. We can now turn our attention to
development, along with our growing Ahpun resource, to turn these volumes to
cashflow and value for shareholders."

 

 

 NSAI Contingencies                                                              Plan to Address the Contingencies
 1.   Acquisition of additional technical data that demonstrate producing        ·    Creating a development model for Pantheon's entire project area that
 rates and volumes sufficient to sustain economic viability across the acreage   encompasses both Kodiak and Ahpun

                                                                                 ·    At Kodiak, the Company believes it will require 2 or 3 more appraisal
                                                                                 wells with whole cores, full suites of electric logs, and longer production
                                                                                 test data than was acquired at both the Talitha-A or Theta West-1 wells
 2.   Approval of a field development plan and regulatory permits                ·    A field development plan will be supported by dynamic modelling
                                                                                 carried out by SLB and the Pantheon team

                                                                                 ·    The Company has embarked on the relevant regulatory processes for
                                                                                 Ahpun and will, in due course begin the process for Kodiak with a goal to
                                                                                 achieve FID for Kodiak by the end of 2028
 3.   Demonstration of viable gas and water utilization or disposal methods      ·    Pantheon will reinject any excess gas that isn't consumed as fuel in
                                                                                 field operations or marketed to consumers in southcentral Alaska

                                                                                 ·    Water produced will be reinjected into the original formation or
                                                                                 other strata
 4.   Demonstration of the ability to market oil and natural gas liquids         ·    The Company sold 10,000 barrels of oil from Alkaid-2 production in
 (NGL) and                                                                       2023

                                                                                 ·    Legacy fields on North Slope co-mingle their condensates and NGLs
                                                                                 into TAPS
 5.   Commitment to fund and complete the development project                    ·    Pantheon will only proceed with development FID when it has secured
                                                                                 funding

 

 

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").

 

Further information, please contact:

 

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

 Jay Cheatham, Chief Executive Officer
 Justin Hondris, Director, Finance and Corporate Development

 Canaccord Genuity plc (Nominated Adviser and broker)         +44 20 7523 8000
 Henry Fitzgerald-O'Connor

 James Asensio

 Ana Ercegovic

 BlytheRay                                                    +44 20 7138 3204
 Tim Blythe

 Megan Ray

 Matthew Bowld

 

 

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. This is based
on 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. Cawley
Gillespie & Associates and Lee Keeling & Associates are working on
estimates for the Ahpun Field Topset and Alkaid horizons.

Glossary

 

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 project maturity subclass for these contingent resources is development
unclarified.

 

Development Unclarified is a discovered accumulation where project activities
are under evaluation and where justification as a commercial development is
unknown based on available information.

 

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%.

 

 

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