REG - Pantheon Resources - Webinar and Strategy Update

Pantheon ResourcesAnnouncement

28/06/2023 17:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230628:nRSb2851Ea&default-theme=true

RNS Number : 2851E  Pantheon Resources PLC  28 June 2023

28 June 2023

 

Pantheon Resources Plc

 Webinar and Strategy Update

 

Pantheon Resources plc ("Pantheon" or the "Company" or the "Group"), the
AIM-quoted oil company with 100% working interest in approximately 193,000
acres located adjacent to transportation and pipeline infrastructure on State
Land on the Alaska North Slope, is pleased to provide a strategy update
alongside its webinar being held at 5.30pm British summer time (BST) today.

 

About the Webinar

As previously announced a webinar will be held at 5.30pm BST today and is open
to all shareholders and interested parties. Those wishing to participate can
register for the Webinar via the link at the bottom of this page. A copy of
the PowerPoint presentation to be delivered during the Webinar will be
uploaded to Pantheon's website at www.pantheonresources.com
(http://www.pantheonresources.com/) shortly beforehand. A recording of the
Webinar will also be uploaded to the Company's website once available.

 

Refocus of Strategy

Pantheon is pleased to share its forward strategy which targets sustainable
market recognition of a value of $5 - $10 per barrel of recoverable resource
by end 2028. Previously the Company's strategy envisaged proving up sufficient
volumes to attract a buyer or partner, willing to pay fair value for the
assets and to provide much of the development capital. However, the Directors
believe the market has changed over the past few years and therefore
Pantheon's strategy must continue to evolve with it. The Directors believe the
Company must consider a range of financing alternatives, including debt,
equity, and joint ventures, to be able to demonstrate that it has the
financial strength to bring its resources into production and to not be
reliant exclusively upon a buyout to maximize the full value of its assets.

 

Delivering the Company's goal requires achieving Final Investment Decisions
("FID") on the aggregate recoverable contingent resource, as estimated by
management, of >2 billion barrels of marketable liquids to be exported to
the Trans Alaska Pipeline System (TAPS) from the Kodiak and Ahpun fields
combined (defined below).

 

Field Definitions

As Pantheon begins the task of bringing the fields into production, it is
necessary to define the field areas for fiscal and regulatory purposes. In
order to simplify that process and reduce the number of separate approvals,
the Company has reclassified its various projects into two defined two fields;
Kodiak and Ahpun. The reclassification of the accumulations into these two
fields does not alter any previously announced resource estimates.

 

The Kodiak Feld (previously known as Theta West) contains all reservoirs
between the Hue Shale and the HRZ shale. It currently comprises the Lower
Basin Floor Fan but may include the Upper Basin Floor Fan once that has been
more fully delineated. Pantheon has previously estimated these to contain more
than 1.7 billion barrels of recoverable contingent resourceand they will be
the subject of the first Independent Expert Report (IER) to be delivered by
Netherland, Sewell & Associates (NSAI) during July.

 

The Ahpun Field contains all reservoirs below the regional top seal down to
the Hue shale in the eastern portion of Pantheon's acreage, including the
already granted Alkaid and Talitha Units. These reservoirs currently include
the Shelf Margin Deltaic ("SMD") zones, Alkaid Anomaly and the deeper
extension of that anomaly encountered in the Alkaid 2 Pilot Hole, estimated to
contain more than 500 million barrels of recoverable contingent resources in
aggregate. This figure consists of management estimates of 404 million barrels
in the SMD, 99 million barrels in the Alkaid Anomaly (Lee Keeling &
Associates' (LKA) IER; 76.5 million barrels) and the as yet unspecified
additional resources proved through deepening the Lowest Known Oil in the
Alkaid 2 Pilot Hole. These additional resources will be included in the NSAI
report due later this year. Furthermore, the Slope Fan System reservoirs may
be included in Ahpun in due course, once further delineated.

 

 

Geologic Section from Regional Top Seal through to Kuparuk and New Naming
Convention

 

Development Phases, Investment Requirements and Financing

The plan for meeting the Company's strategic goals involves generating
sufficient net operating cashflow from Ahpun Stage 1 (being the resources
accessible from the Alkaid and (proposed) Phecda pads alongside the Dalton
Highway) to fund future development and production growth. The Company is
targeting Final Investment Decision ("FID") for Ahpun Stage 1 by September
2025, and to build production to 20,000 barrels of marketable liquids per day.
This will require a hot tap into the TAPS main oil line and regulatory
approvals to begin production and export.

 

Pantheon estimates this daily production rate will require approximately $300
million of total investment, in phases, committed to bring Ahpun Stage 1 to
the point at which it generates sufficient positive net cash flow to fund its
continuing development and the developments of Ahpun Stage 2 and, following
its FID, Kodiak.  Importantly, the Company intends to cover a significant
component of this $300 million from reserves backed lending facilities, where
available.

 

Furthermore, the Company expects that in order to achieve FID for the Kodiak
field it will require a further three appraisal wells at an estimated cost of
$50 million in total, to be drilled in a timeframe consistent with completing
regulatory approvals and development planning by 2028. An update on the
schedule of activities will be provided in due course.

 

Pantheon's financing strategy is integrated with its operational strategy. The
Company's goal remains to minimise the value dilution between now and
attaining its objective to ensure that current shareholders retain as much of
the value of the resource base as possible. This means that Pantheon will
likely not pursue a farm in that results in greater shareholder dilution than
would be achieved through a combination of equity, debt, vendor financing,
etc. (but including, potentially, farm-in if it provides more attractive terms
than the alternatives). This makes it unlikely that the Company will raise the
whole amount through any single financing channel and that it will break it
down into appropriate tranches with the end objective as the Company's guiding
principle.

 

Near Term Activities

·    New Headquarters in Houston: To deliver this strategy, Pantheon will
establish a head office in Houston, Texas that will become the centre of
gravity for the Company's corporate, technical and financial activities. David
Hobbs, Executive Chairman will relocate there later this summer and the staff
will gather there on a regular basis to ensure efficient collaboration both
internally and with Pantheon's technical partners from NSAI, SLB, eSeis, AHS
Baker Hughes and others.

 

·    Start of Regulatory Approval Process: Pantheon is beginning the
regulatory process for development of the Ahpun Field and a hot tap into the
TAPS main oil line.  The Company estimates over 200 million barrels EUR
("Expected Ultimate Recovery") is accessible from the existing Alkaid pad and
others to be installed adjacent to the Dalton Highway.

 

·    Appointing Advisors for US Listing: Pantheon is also in the process
of hiring US financial advisers to explore the optimal means to achieve a US
listing or dual listing on NASDAQ. They will be tasked to explore the best
method to avoid unnecessary cost and taxation burdens on either the Company or
its shareholders.

 

·    Alkaid-2 re-entry and SMD Frac: Pantheon will test the SMD horizon
encountered in the Alkaid-2 well to gather good quality reservoir fluid data
and to assess the effectiveness of the next iteration of our frac design. This
is expected to begin in September to ensure all appropriate equipment and
services are in place.

 

·    Netherland, Sewell & Associates IERs: Pantheon anticipates
delivery of the NSAI report on Kodiak to be delivered in July and the initial
IER on Ahpun, expected to be delivered in September. The initial focus will be
the Alkaid zone (previously assessed by LKA at 76.5 million barrels of
contingent recoverable resources). The other horizons in Ahpun will be
incorporated in line with the regulatory process and financing requirements.

 

 

Alkaid- 2 - Further technical, engineering and economic analysis

Pantheon, supported by third party experts, has completed additional analysis
of the Alkaid-2 result and the analysis indicates that material improvements
to well performance can be reasonably expected through a combination of (i)
positioning the wellbore slightly deeper in the reservoir, (ii) implementation
of an improved frac design, and (iii) extending the lateral section of the
wellbore to ~10,000 ft. The modelled estimated economics based on scaling the
Alkaid-2 result to a 10,000 ft lateral and employing a 3(rd) generation frac
are presented below:

 

 Proposed Ahpun Development vs Alkaid - 2 Actual

 Proposed Ahpun Development Well*                                                Alkaid - 2 Actual employing a second generation frac

 ·    EUR per well of 1.2 million barrels                                        ·    EUR per well of 300,000 barrels

 ·    IP30 of 1,500 barrels per day of marketable liquids, (1(st) year rate      ·    IP30 of 505 barrels per day of marketable liquids (1(st) year rate
 average 1,000)                                                                  average 270)

 ·    Well cost $13 million to drill and complete                                ·    Well cost $34 million to drill and complete

 

The Company's analysis shows the expected performance improvement results from
the combination of 2x from doubling the length of the lateral and at least 2x
from improving the frac efficiency. Tony Beilman, the Company's newly
appointed Senior Vice President of Engineering, will explain these
improvements in today's webinar and a future webinar that will expand on these
well performance and cost improvements in detail. Multiple well operations,
local sourcing of frac sand along with longer lead times for procurement and
planning are expected to greatly reduce costs.

 

Incremental well economics (excluding sunk costs of pads and other facilities)
based on the $13 million figure result in a per well NPV10, before Federal
Income Taxes with an oil price of $70/bbl at the wellhead, of $29 million and
Internal Rate of Return ("IRR")> 300% with a payout of less than 1 year.

 

Field Level Economic Assessments*

Incorporating wells based on this cost and production profile into a Stage 1
Ahpun model, plus an appropriate number of gas and water injection wells,
results in a NPV10 >$6/bbl of EUR and >50% IRR. Furthermore, even
allowing for initial wells to cost more than $20 million while the frac design
is fully optimized, the model results in a total financing drawdown of less
than $300 million as previously noted.

 

 Net Present Value (NPV10) millions  $1,295
 Internal Rate of Return (IRR)       50%
 Payback (Years)                     5
 Total oil recovered (mmbbls)        200

The Ahpun Stage 2 model, with production beginning in 2028 shows similarly
robust economics and the Company envisages this phase will be funded by
applying the net operating cash flows from Phase 1.

 

FID on Kodiak is planned before the end of 2028 and three further wells will
be needed to define the Kodiak field development plan. These delineation
wells, expected to cost $50 million in total as previously noted, will be
scheduled into the overall capital spending programme consistent with
achieving FID five years from now. As with Ahpun, recognition of Kodiak
reserves under SEC guidelines is expected to occur at this point. The
development will require multiple pads placed some 5-20 miles from the Dalton
Highway. Cash flow from Ahpun Stages 1 and 2 will be applied to fund the
Kodiak development.

 

New Acreage and Improved Kodiak Reservoir Quality Updip

The data suggests the additional acreage covering the northern updip portion
of the Kodiak field is expected to have the best reservoir parameters; 14%-17%
porosity and commensurate improvements in permeability based on Company
analysis of the estimated Maximum Depth of Burial ("Dmax"), supported by SLB
and eSeis. These figures greatly exceed the properties at both Talitha A and
Theta West 1 with permeabilities expected up to 50x those seen in Talitha A,
where the basin floor fans were first tested.

 

Once NSAI has delivered its report for the Kodiak Field, Pantheon will develop
an economic model for the development based on its analysis.

 

David Hobbs, Pantheon's Executive Chairman said: "We are excited to have the
opportunity to share our updated Company strategy at this afternoon's webinar.
We intend to keep this webinar to less than 45 minutes with the express
intention of following it shortly with more detailed webinars to expand on the
topics addressed. We are under no illusions as to the scale of the tasks ahead
but determined to minimise value dilution to shareholders in line with our
objective of delivering $5-$10/bbl of recoverable resources by the end of
2028."

 

Webinar details

The presentation is open to all shareholders and interested parties. Those
wishing to participate can register for the webinar via the link below:

 

https://www.bigmarker.com/share-talk/Pantheon-Resources-Shareholder-Presentation-June-2023
(https://www.bigmarker.com/share-talk/Pantheon-Resources-Shareholder-Presentation-June-2023)

 

Attendees should use the latest version of Chrome, Safari or Firefox for the
best experience. Alternatively, investors can download the IOS application for
Big Marker, or dial in via telephone. Dial in details are outlined below:

 

Attendee Dial-in: UK (0)1793 250421

Attendee Dial-in Number: USA +1 (312) 248-9348

Attendee Dial-in ID Number: 294177

Attendee Dial-in Passcode: 9269

 

* Indicative Field and Individual Well Economics are derived by management on
a conceptual development model for illustrative purposes only. The Directors
assess the fields as being commercial and this is the reason the Company is
seeking development approvals and to achieve FID. However, projections of
value depend on factors including but not limited to expected oil prices,
equipment and service costs, well outcomes, funding risk, fiscal terms and
scheduling of investments.

 

Glossary of Terms

Dmax - Maximum depth of burial of a formation during geological time that
influences reservoir quality

EUR - Expected Ultimate Recovery

FID - Final Investment Decision

IER - Independent Expert Report

IRR - Internal Rate of Return, annual percentage rate

LKA - Lee Keeling & Associates

LKO - Lowest Known Oil

Marketable Liquids - The mix of hydrocarbons exported from Pantheon owned
facilities meeting the specifications for injection into the TAPS main oil
line.

NSAI - Netherland, Sewell & Associates, Inc

NPV - Net Present Value, discounted at an annual percentage 'discount' rate

SEC - US Securities and Exchange Commission

TAPS - Trans Alaska Pipeline System

 

 

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.

Cautionary Statement: Certain statements and estimates contained in this
announcement carry an associated risk of accuracy as such statements and
estimates are based upon projections made from information available at the
time of making such statements. Actual results could differ materially from
expectations or estimates set out in such statements. Among other factors,
this could be as a result of changes in economic, market, engineering, fiscal
and political factors, the success of future drilling and geological success,
the risk of future drilling changes in the regulatory environment and other
government actions, funding risk and assumptions, fluctuations in the price of
oil and exchange rates, and business and operational risk management.

 

 

 

 

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  MSCEVLFLXQLEBBX