REG - Pantheon Resources - Reservoir modelling report from Schlumberger

Pantheon ResourcesAnnouncement

08/12/2022 07:00

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RNS Number : 9939I  Pantheon Resources PLC  08 December 2022

08 December 2022

 

Pantheon Resources plc

Receipt of reservoir modelling report from Schlumberger

 

Pantheon Resources plc ("Pantheon" or "the Company"), the AIM listed oil and
gas company with a 100% working interest in all of its oil projects spanning
c. 153,000 acres adjacent and near to transportation and pipeline
infrastructure on the Alaska North Slope ("ANS"), is pleased to announce the
receipt of a report from Schlumberger Limited ("Schlumberger"). A copy of the
executive summary to the report is provided at the end of this announcement
and a copy will be uploaded to the Company's website at
https://www.pantheonresources.com/ (https://www.pantheonresources.com/)

Completion of Phase 1 of Schlumberger reservoir modelling project

 

A static and dynamic reservoir model of Pantheon's subsurface geological
projects has now been completed by the world's largest oil service company,
Schlumberger, over Pantheon's three project areas which encompass the four
distinct oil reservoirs within the current Pantheon acreage footprint; (i)
Alkaid, (ii) the Slope Fan System, (iii) the Shelf Margin Deltaic (SMD) and
(iv) the Basin Floor Fan system. Pantheon engaged Schlumberger to undertake
this project more than six months ago in order to develop a highly detailed
body of work to assist in reservoir modelling, development modelling and as an
important tool in Pantheon's data room to allow potential future farm in
partners to gain a greater understanding of the potential, characteristics and
scale of Pantheon's projects. This reservoir model represents completion of
the first phase of the project. Schlumberger's report represents the most
comprehensive model completed on evaluating the discovered oil resource and
the productive potential.

The Schlumberger model is extremely detailed, comprising c. 13 million
individual three dimensional cells within the c. 153,000 acres of Pantheon's
current leasehold. This model is extremely comprehensive, having been
developed over the past six months and involved in excess of 1,000 man-hours
with a team of reservoir, geological and geophysical specialists at
Schlumberger and is an important step toward modelling reservoir development
scenarios and attracting future project partners and supporting project
financing, which is part of Pantheon's corporate development strategy. That
next phase of the project will similarly require significant man hours over a
number of months.

 

The summary findings of reservoir modelling:

                                Net Oil in Place

                                (Billion barrels of oil)
 Lease Area/Unit                P50
 Alkaid Unit                    1.67
 Theta West Lease               10.9
 Talitha Unit including SE SMD  5.26
 Total                          17.8 billion Bbls

Schlumberger's modelling of oil in place ("OIP")  is prepared on a project
area basis (i) Alkaid Unit, (ii) Theta West leases, and (iii) Talitha unit,
whereas Pantheon's estimates are based upon the project formations themselves:
(i) Alkaid, (ii) Shelf Margin Deltaic, (iii) Slope Fan System, and (iv) Basin
Floor Fans, and are therefore not perfectly comparable, but nevertheless
provide an excellent overview and importantly, are comparable on a sum total
basis.

Overall, the Schlumberger modelling estimates the reservoirs contain 17.8
billion barrels net OIP versus Company estimates of 23 billion barrels of OIP.
The Schlumberger model OIP numbers are approximately 70+% of Pantheon's
estimates for the Theta West (Lower Basin Floor Fan) which accounts for the
primary variance between the overall Pantheon and Schlumberger estimates.
Schlumberger's OIP estimates for Theta West were constrained to the project's
3D footprint with more conservative reservoir parameters than Pantheon's at
the lease boundaries. With additional drilling data points, potential exists
for Schlumberger's modeling estimates to increase in the future. Pantheon
believe that the reservoir improves in quality to the north of Theta West #1
both within and outside our current leasehold, which is the primary reason
Pantheon bid on new acreage in that area in the November 2022 Alaska lease
sale. The recently acquired acreage and its resource potential is not
considered in the Schlumberger report nor the Pantheon current estimates. The
next Schlumberger project phase, commencing shortly, will address these
differences along with developing a dynamic development model to predict
overall recoveries.

Schlumberger has not provided an estimate on recovery factors, which was
outside the scope of this first phase of the project. Schlumberger's work is
ongoing, and the recovery factors will be covered in the next phase of their
work.

In addition to their modelling of oil in place, Schlumberger also modeled
individual well recoveries for three separate reservoirs (shown below) over an
illustrative one-mile lateral length (c. 5,300 feet).  Whilst a nominal
one-mile lateral has been used as the basis for modelling, longer lateral
lengths are expected to yield higher production volumes. As previously
announced, Pantheon's development plan is based on what it believes is the
optimum lateral length of 8,000 to 10,000 feet:

Single Horizontal Well Oil EUR Production Forecast (1-mile lateral length)

Schlumberger Base Case Forecast:

•     Alkaid: IP 30 days = 775 bopd; Oil Cum @ 30 years=1.1 MMBO

•     Theta West BFF: IP 30 days = 1060 bopd; Oil Cum @ 30 years=1.5
MMBO

•     Talitha SMD: IP 30 days = 791 bopd; Oil Cum @ 30 years=1.2 MMBO

 

The Schlumberger estimate of 775 IP 30 days is broadly in line with Pantheon's
predictions of IP of 150 BOPD per 1000 feet of lateral. The Schlumberger
estimate is actually a 30-day IP rate versus Pantheon's of an initial IP rate
after clean up.

For illustrative purposes only, applying Pantheon's estimated 10% recovery
factor to Schlumberger's estimated 17.8 billion barrels of oil in place would
imply the Pantheon leasehold has the potential to contains 1.78 billion
barrels of recoverable oil. The dynamic model is applicable toward predicting
ultimate well and reservoir recoveries for differing development scenarios
which is critical for ascertaining the commercial potential of the resource.

 

Alkaid #2 update

Pantheon is currently in a production testing operation at Alkaid #2. As
previously reported, Pantheon utilized a coiled tubing unit (CTU) to remediate
a sand blockage inside the horizontal production liner. Ideally, a workover
rig would have been used to remove the production tubing in a relatively
straightforward operation to clear the blockage without the constraints of
working inside the tubing, however the lack of availability of a suitable
workover rig caused the Company to use a CTU which is a more delicate and
potentially less effective method. Fortunately, the CTU was effective in
clearing most, but not all, of the blockage and flow testing has resumed. The
well is still early in the cleanup phase with encouraging initial results. As
always however, the Company cautions that despite early positive data, a
definitive assessment of commerciality cannot be made until flow testing
operations have concluded. The Company will report back to shareholders in due
course.

 

 

Jay Cheatham, CEO, said, "The Schlumberger report and the derived model is a
great result and an important tool that oil companies can use when evaluating
our project in our data room. Just a few years ago a 13 million cell model
would have been beyond comprehension and is only now possible with modern
computing power combined with the data that we have assembled over the past
decade. It also highlights the tremendous benefits that modern technology
brings to the industry and that we will benefit from going forward - including
advancements in seismic interpretation, drilling and completion methodologies,
improvements in drilling and recoveries.

"The results further bolster our own confidence. Applying management's
estimate of recovery factor of 10 percent to OIP calculates over 1 billion
barrels of recoverable oil onshore USA adjoining major underutilized export
infrastructure in a stable tax and royalty environment. The Schlumberger
numbers speak volumes about the overall quality of the resource and provide
valuable industry validation.

"Alkaid #2 is a case of so far, so good. In this booming oil market, we have
encountered significant supply chain issues for equipment and materials
causing a knock on effect on our timetable, but it is still all to play for at
Alkaid and we remain cautiously optimistic. As previously stated, it makes
sense to observe the results of Alkaid #2 before making final decisions on our
forward activity plan and to engage in potential farmout discussions."

Bob Rosenthal, Technical Director, said "I have been beyond impressed with the
quality of work and the attention to detail shown by the Schlumberger team.
The amount of time and effort to develop this model is extraordinary. It will
significantly enhance the intended future farmout process as this model
provides potential farm-in companies industry validation, confidence in the
data and the project potential. Companies can use this giant model to
manipulate parameters/assumptions for their own analysis. I can't wait to
start working with them on the next phase of the project which will, amongst
other modeling, predict overall reservoir recoveries. I believe our current
estimate of 10% has the potential to be conservative based on what we are
seeing at the moment and again remembering we are using unconventional
technology on conventional reservoirs."

 

The Schlumberger Report

Schlumberger has constructed 3D geological and geophysical static and sector
specific dynamic reservoir models capturing three main reservoir plays; being
Shelf Margin Deltaic (SMD), Slope Fan (SF) and Basin Floor Fan (BFF) to aid
appraisal and development execution in the Alkaid, Talitha and Theta West
areas, calculated volumetric and production forecasts.

The Oil in Place numbers modelled in this report do not constitute an
Independent Resource Estimate.

 

Glossary

 Bbls                                           Barrels of oil

 bopd                                           Barrels of oil per day
 IP                                             Initial Production
 IP30                                           Average oil production rate over the first 30 days
 MMBO                                           Millions of barrels of oil
 OIP or Oil in Place                            Is a specialist term in petroleum geology  that refers to the total  oil
                                                (https://en.wikipedia.org/wiki/Petroleum)   content of an  oil reservoir
 Oil Cum @ 30 years                             Cumulative oil production over 30 years (per well)
 P50                                            P50 is defined as 50% of estimates exceed the P50 estimate (and by
                                                definition, 50% of estimates are less than the P50 estimate).
 Recovery Factor                                The recoverable amount of hydrocarbon initially in place, normally expressed
                                                as a percentage

 

 

-Ends-

 

 

Further information:

 

 Pantheon Resources plc                                       +44 20 7484 5361
 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

 

 

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 Jay Cheatham, a qualified Chemical & Petroleum
Engineer, who has over 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
several large projects located on the North Slope of Alaska ("ANS"),
onshore USA where it has a 100% working interest in 153,000 highly
prospective acres with potential for multi billion barrels of oil recoverable.
A major differentiator to other ANS projects is its close proximity to
transport and pipeline infrastructure which offers a significant competitive
advantage to Pantheon, allowing for materially lower capital costs and much
quicker development times. 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.

 

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)
incorporated into, or forms part of, this announcement. The information
contained within this announcement is considered to be inside information
prior to its release.

 

 

 

 

 

The Schlumberger Report

 

 

 

 

 

 

 

 

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