REG - Pantheon Resources - Successful Acquisition of Leases

Pantheon ResourcesAnnouncement

14/12/2023 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231214:nRSN8122Wa&default-theme=true

RNS Number : 8122W  Pantheon Resources PLC  14 December 2023

 

 

 

 

 

14 December 2023

Pantheon Resources plc

Successful Acquisition of Leases over Updip Kodiak and Ahpun's Eastern
Potential

 

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,
collectively spanning c. 193,000 contiguous acres in close proximity to
pipeline and transportation infrastructure on Alaska's North Slope, is pleased
to finally share the complete results of its multiyear leasing programme.

 

Pantheon has been awarded 66,240 acres on the North Slope covering:

·    substantially all of the anticipated remaining conventional reservoir
potential in the Kodiak Field - pay zone quality is expected to improve as the
reservoir become shallower to the north and west of the existing leases. The
ultimate resource classification of the 43,200 new acres will be determined
following reviews with Netherland, Sewell & Associates, Inc. ("NSAI") and
SLB.

·    the potential eastern extent of the Ahpun Field (including what is
prognosed to be higher quality, shallower reservoirs) covered by the 23,040
acres that could be accessed from the West side of the Sag River using current
technologies. The Company believes these volumes would initially meet the
definition of Prospective Resources and only be recognisable as Contingent
Resources (and eventually Reserves) once well penetrations have confirmed
producible hydrocarbons in the identified Shelf Margin horizons.

 

Pantheon's winning bids averaged $31.83 per acre including fees. When the
leases are officially awarded by the State of Alaska, estimated to be in 4 to
6 months' time, they will come with a 10-year initial term, an annual rental
of $10 per acre, and royalty rates of 16.67% (20 leases, 28,800 acres) and
12.5% (26 leases, 37,440 acres). The Company has paid an initial deposit to
the State of Alaska equivalent to 20% of the bid costs with the remainder
payable on official award along with the first year rentals.

 

Pantheon's Technical Director, Bob Rosenthal, said: "This is an important
result, securing what we expect to be the highest quality areas of the Kodiak
and Ahpun Fields at the shallowest depths, and protecting the development
schedules for Ahpun and Kodiak by covering the full fields to be included in
our requests for development consents from the State of Alaska. Our focus
remains on the development of Ahpun with FID planned by the end of 2025 and
appraisal of the full potential of Kodiak to support its FID in 2028."

 

Finance Director, Justin Hondris, added: "In the past, we have had to strike a
balance between prioritising investments in our existing lease estate and
capturing the full extent of our two world class development assets. The soon
to be publicly released proprietary 3D seismic data risked opening the area up
to competitors before the next lease sale and Pantheon therefore chose to act
this year."

 

New Lease Volumetric Estimates

The Company owns 100% Working Interest ("W.I.") in all leases, which are
subject to State Royalties of approximately 15% across the portfolio resulting
in a Net Revenue Interest ("NRI") after deducting royalties of approximately
85%. The Company prepared preliminary estimates of the gross and net Liquid
Hydrocarbons in Place ("OIP") and recoverable volumes described, for the time
being, as Technically Recoverable Resources ("TRR") (see glossary of terms)
for the new acreage to support the lease bids and these are shown in the table
below:

 

 OIP                    Gross OIP                                   Net OIP(1)
 Quantities in mmbbls   Low Estimate  Best Estimate  High Estimate  Low Estimate  Best Estimate  High Estimate  COS(3)
 Western Kodiak Leases  -             7,866          11,508         -             6,474          9,471          >90%
 Eastern Ahpun Leases   2,025         2,243          2,470          1,668         1,847          2,034          70%
 Totals                 -             10,109         13,978                       8,321          11,505

 TRR(2)                 Gross Recoverable                           Net Recoverable(1)
 Quantities in mmbbls   Low Estimate  Best Estimate  High Estimate  Low Estimate  Best Estimate  High Estimate  COS(3)
 Western Kodiak Leases  -             629            1,726          -             517            1,420          >90%
 Eastern Ahpun Leases   280           367            478            242           317            413            70%
 Totals(4)              -             996            2,204                        834            1,833

 

(1) Estimated based on 16.67% State royalty for Western Kodiak Leases and
12.5% State royalty for the Eastern Ahpun Leases. All subject to 1 %
Overriding Royalty Interest ("ORRI") in favour of eSeis.

(2) Company estimates of TRR are based on 8% recovery factor ("RF") in tight
formations and up to 20% in formations exceeding the conventional threshold.
No resources are attributed to natural gas because there is currently no
market on the North Slope and any gas not used for fuel is modelled to be
reinjected into the reservoir.

NGL and Condensates stripped from the production stream are not explicitly
recognised within these figures pending GeoMark reservoir fluid composition
analysis. Until GeoMark's analysis is received, the basis of estimation is
consistent with the SLB reservoir modelling report released on 8(th) December,
2022.

(3) COS is the Geological Chance of Success - the probability that
hydrocarbons will be encountered and capable of flowing to surface. The target
formations in the western leases covering the extension of the Kodiak field
are the same horizons encountered in the Pipeline State, Talitha-A and Theta
West-1 wells, resulting in a high COS. The eastern Ahpun leases exhibit the
seismic characteristics indicating hydrocarbon pay but cannot be confirmed
until penetrated by a well.

(4) The Kodiak volumes have been estimated deterministically and the Ahpun
volumes have been estimated probabilistically. The totals do not represent the
statistical addition of these estimates.

 

The above quantities are solely attributable to the new leases.

 

Pantheon is working with NSAI and SLB to re-evaluate the entire portfolio in
light of the acreage additions and the fluid composition analysis by GeoMark.
The Company is targeting NSAI to provide an updated Independent Expert Report
("IER") on Kodiak in Q1 2024 and an IER on Ahpun in Q2 2024.

 

Kodiak Area Leases

Last year, Pantheon successfully bid for the acreage to the North of the Theta
West-1 well that is expected to contain substantial recoverable oil (included
in August 2023's NSAI IER). However, the Company's financial situation
prevented it from acquiring all of the acreage that it expected to contain the
best quality resources. In recent Stock Exchange Announcements and webinars,
the Company has shared analysis supporting the improvement in reservoir
quality and the increasing proportion of conventional hydrocarbon pay expected
to be confirmed in future appraisal wells. However, for obvious commercial
reasons, it was not appropriate for management to publish estimates of the
full potential of the Kodiak field outside of the areas under lease. This is
no longer a concern.

 

Ahpun Area Leases

Pantheon has long recognised the resource potential of the northerly
progradations of the shelf margin deltaic horizons extending beyond the
current lease holding to the east (beyond the Dalton Highway and Sag River).
In fact, the Company once held this acreage but the logistical challenges of
operating on the east side of a major river system away from the export and
transport infrastructure resulted in a decision to relinquish the acreage for
financial reasons until there was a development plan.

The Company's new leases capture as much of this easterly potential in the
Ahpun field as Pantheon estimates can be commercially produced at industrial
scale given current technology. Pantheon management's confidence (Geological
Chance of Success, 70%) that there are recoverable volumes is based on three
factors resulting from the recent appraisal programme:

1.    Proven ability to identify hydrocarbon bearing zones from seismic,
successfully demonstrated in its recent drilling campaigns including
Talitha-A, Theta West-1 and Alkaid-2. The additional progradations of the
shelf margin horizons have a very clear hydrocarbon signature on seismic.

2.    Each additional cycle of the shelf margin system has a reduced Dmax
and the best quality expression of these reservoirs is seen in the horizons
deposited from the Southwest to the Northeast (as illustrated by the SMD-B
reservoir exhibiting permeabilities at least two orders of magnitude higher
than the Alkaid ZOI). Indeed, the next cycles may exhibit better quality
conventional reservoir parameters.

3.    The Company's assessment of commercially producible light oil in the
shelf margin horizon at Alkaid-2.

 

The successful acquisition of 66,240 acres via this lease sale is expected to
deliver a substantial resource upgrade for Pantheon. The new acreage to the
west secures the entirety of the best predicted reservoir in Kodiak in a
structurally higher location where the Company expects continued improvement
in reservoir parameters, even to a point where they meet the threshold to be
recognised as conventional. To the east, the acreage secures the accessible
extent (and projected best quality potential reservoirs) of Ahpun that avoids
placing infrastructure across the Sag River, with all its attendant costs.
With the 2014 3D Seismic publicly available before the next anticipated lease
sale, the Company has removed the risk that a competitor would find this
acreage attractive - particularly if the exploration programme east of the Sag
River yields successful results this winter.

 

Investor Presentation

Pantheon will provide an update on the new lease acquisition and the updip,
conventional resources in the Kodiak Field and eastern extent of the Ahpun
Field via Investor Meet Company on Thursday 14(th) December 2023,
at 5:00pm GMT.

 

The presentation is open to all existing and potential shareholders.
Registration details can be accessed
at: https://www.investormeetcompany.com/pantheon-resources-plc/register-investor
(https://www.investormeetcompany.com/pantheon-resources-plc/register-investor)
 

Questions can be submitted pre-event via your Investor Meet Company dashboard
up until 9am the day before the meeting or at any time during the live
presentation.

 

For regulatory and compliance reasons, Pantheon will not engage on social
media and any questions that investors or others may have outside of a
scheduled webinar should be addressed to contact@pantheonresources.com
(mailto:contact@pantheonresources.com)  where your questions will be
responded to in a timely manner.

 

 

-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                                    +44 20 7523 8000

 James Asensio

 Ana Ercegovic

 BlytheRay
 Tim Blythe                                                   +44 20 7138 3204

 Megan Ray

 Matthew Bowld

 

 

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

 

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").

 

The volumetric assessments were prepared by management in accordance with the
definitions and guidelines set out in the 2018 Petroleum Resources Management
System approved by the Society of Petroleum Engineers.

 

 

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, following issue of the new leases, it
will have a 100% working interest in c. 259,000 acres. Certified contingent
resources attributable to these projects exceeds 1 billion barrels of
marketable liquids, located adjacent to Alaska's 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 estimates for the Ahpun Field.

 

Glossary

 

ANS - Alaska North Slope

 

Contingent Resources

Those quantities of petroleum which are estimated, on a given date, to be
potentially recoverable from known accumulations, but which are not currently
considered to be commercially recoverable.

 

IER - Independent Expert Report

 

FID - Final Investment Decision

 

OIP - Liquid Hydrocarbons in Place

In the reservoir, the liquids in place consist of a mix of hydrocarbons that
may be produced and separated at surface into crude oil, condensate and
natural gas liquids,

 

ORRI - Overriding Royalty Interest

An undivided interest in a mineral lease giving the holder the right to a
proportional share (receive revenue) of the sale of oil and gas produced. The
ORRI is carved out of the working interest or lease.

 

NSAI - Netherland, Sewell & Associates, Inc.

 

NRI - Net Revenue Interest

The portion of production remaining after deducting related burdens (such as
royalties payable to the State of Alaska and overriding royalties) from any
working interest held.

 

Prospective Resources

Those quantities of petroleum which are estimated, on a given date, to be
potentially recoverable from undiscovered accumulations.

 

RF - Recovery Factor

The proportion of hydrocarbon initially in place that is recoverable, normally
expressed as a percentage.

 

TAPS - Trans Alaska Pipeline System

 

TRR - Technically Recoverable Resources

Those quantities of petroleum producible using currently available technology
and industry practices, regardless of commercial considerations.

 

W.I. - Working Interest

The percentage of ownership in a lease that gives the working interest owner
the right to explore, drill, and produce oil and gas. The investor is
responsible for all costs incurred to explore, develop, and conduct production
operations.

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  ACQTIBRTMTMBMTJ