Source - LSE Regulatory
RNS Number : 5472H
Pantheon Resources PLC
28 July 2023





The following amendments have been made to the "Operational Update" announcement released on 28/07/23 at 07:00 under RNS No 4873H.


Change of "$6-$8 /bbl ANS" to "$6-$8 /bbl" and "18 mmbbl ANS" to "18 mmbbl"


All other details remain unchanged.


The full amended text is shown below.



28 July 2023


Pantheon Resources plc

Replacement Operational Update


Pantheon Resources plc ("Pantheon" or the "Company" or the "Group"), the AIM-quoted oil company developing its 100% working interest in the Ahpun and Kodiak Fields with expected Ultimate Recovery ("EUR") of approximately 2 billion barrels of contingent resources of marketable liquids adjacent to transportation and pipeline infrastructure on State Land on the Alaska North Slope, is pleased to provide an operational update and refined management estimates of preliminary development costs for the Ahpun field.




·   Pantheon expects to receive an Independent Expert Report from Netherland, Sewell & Associates on recoverable resources from the Kodiak field in August 2023.

·   Planned date of September 2023 for mobilisation of workover rig for conducting the frac of the Shelf Margin Deltaic Zone.

·   Management modelling of the economics for 20 well development pads estimate robust returns with valuations of $6-$8 /bbl and rates of return of 33%-53% at ANS prices1 of $70-$80 /bbl ANS respectively.

·    Analysis of the fluid composition from the Alkaid-2 test indicates that the reservoir pressure is below the bubble point and therefore there is free gas in the reservoir, but no free gas cap.


Independent Recoverable Resource Estimates


Netherland, Sewell & Associates ("NSAI") is presently completing its Independent Expert Report ("IER") on the Kodiak field and is expected to provide its independent assessment of the recoverable resources from Kodiak during August 2023. Following completion of the Kodiak IER, NSAI will prepare an IER on the Alkaid Zone within the Ahpun field which the Company estimates will be finalised in autumn 2023.


Alkaid-2 Shelf Margin Deltaic Test


The primary contractors have now confirmed availability of sufficient pumping horsepower at acceptable service rates, and a suitable workover rig has been identified, which, subject to execution of contracts, would have a planned date for mobilisation in September 2023. However, the precise start-up of operations will be refined nearer the time.


The Alkaid-2 re-entry is designed to gather the best possible reservoir fluid samples for pressure-volume temperature ("PVT") analysis and to test the improvements in the frac design discussed in recent Company webinars.


Pantheon Executive Chairman, David Hobbs, said: "Netherland Sewell and Associates have advised that they require a little more time to incorporate all of the additional acreage and the newly developed understanding of the reservoir fluid composition. We support their desire to provide the most robust report possible and are happy to allow further time. We are pleased to be on track to begin the Alkaid-2 re-entry during September/October as originally planned."


Well Pad Level Costs and Economics - Management Estimates 2


In recent webinars, management has outlined the factors supporting its modelling, including estimates for individual wells costs of $13 million (in 2023 real terms) for drilling and completion of a multi-stage fracked, 10,000 feet ("ft") lateral production well in a development scenario.


Preliminary estimates of the costs to build each well pad, capable of supporting a minimum of 20 wells (15 producers and 5 injectors), are less than $5 million each. Costs for upgrading the existing production facilities installed on the Alkaid well pad in 2022 (including chiller units for liquids recovery from the gas produced in association with the oil) are estimated at $20 million. Growth in capacity is estimated to cost less than $1 million per 1,000 barrels per day ("bpd") based on the Company's experience with the initial unit. Cost for the hot tap into the Trans Alaska Pipeline System ("TAPS") main oil pipeline is estimated to be $20 million. Pantheon will design the connection with sufficient capacity to handle the entire production of Ahpun and Kodiak, anticipated to reach more than 200,000 bpd of marketable liquids at peak. Operating cost estimates amount to some $7 million per year per pad at peak production.


Modelled results for the first 20 well pad (including the one off cost of the TAPS tie in) with an EUR of 18 mmbbl and peak production of 8,000 bpd of marketable liquids illustrate the following results:


NPV10 ($70/bbl constant real ANS Price):                      $103 million with 33% IRR

NPV10 ($80/bbl constant real ANS Price):                      $150 million with 52% IRR


These well pad level economics anticipate a cash sink for the first pad of some $70 million. However, allowing for potential cost over-runs on the initial wells, corporate overheads and the optimum development being based on simultaneous operations on the first two pads, management estimates are for up to $350 million of funding required to achieve financial selfsufficiency, as previously outlined. This figure also incorporates three appraisal wells on the Kodiak field prior to its FID, expected in 2028. The estimates demonstrate considerable flexibility in optimising the funding requirements based on the cost of financing and the Company's determination to minimise value dilution for existing shareholders between now and achieving financial self-sufficiency.


Jay Cheatham, Pantheon CEO, added: "Sharing our cost estimates allows investors to understand the robust economics that our Ahpun development can deliver. When staged development proceeds, adding new pads and production capacity funded from the cashflows of the early pads, the modelled returns demonstrate why we are confident in our ability to achieve our targeted objective of delivering sustainable market recognition of $5-$10 per barrel of recoverable marketable liquids by 2028."


Alkaid-2 Well Test Results - Reservoir Fluid Composition


The Company is pleased to share the results of its recently completed analysis of the fluid composition from the Alkaid-2 production test. This suggests that the reservoir pressure is below the bubble point and there is therefore free gas in the reservoir and is likely not a result of a   free gas cap. Rather, the gas is distributed throughout the pore space. This analysis has now been incorporated into the SLB Static and Dynamic Models. Further details can be found in the Appendix below.


Pantheon Technical Director, Bob Rosenthal, said: "It has required some six months of painstaking technical analysis and consideration of all valid technical theories to develop an understanding and to identify analogues for the fluid composition that was delivered by the Alkaid-2 flow test. We are grateful to Geomark, SLB, Baker Hughes AHS, eSeis, NSAI and others for the collaborative effort that has moved us forward along our path to successful development of the Ahpun and Kodiak Fields."



 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, James Asensio, Gordon Hamilton


+44 20 7523 8000



Tim Blythe, Megan Ray, Matthew Bowld

+44 20 7138 3204



Notes to Editors


Pantheon Resources plc is an AIM listed Oil & Gas company focused on developing the Ahpun and Kodiak fields located on the North Slope of Alaska ("ANS"), onshore USA where it has a 100% working interest in 193,000 acres. These fields support expected ultimate recovery of contingent resources amounting to some 2 billion barrels of marketable liquids to be delivered through the Trans Alaska Pipeline System ("TAPS"). Pantheon's stated objective is to deliver a 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 through a hot tap, 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 transport and pipeline infrastructure which offers a significant competitive advantage to Pantheon, allowing for materially lower capital costs and the ability to support the development with a significantly lower pre-cashflow funding requirement than is typical outside the US lower 48 states.




1ANS Price is the price of Alaska North Slope crude loaded at Valdez and delivered to a US West Coast Refinery.



Following extensive analysis and comparison with analogous reservoirs elsewhere in the world, management believes that it is possible to discount a free gas cap in the Ahpun field as a valid explanation for the well performance. Instead, the most likely explanation for the persistently higher than anticipated production of gas is that the pressure in the reservoir is, at least at its most up dip locations, below the bubble point - the pressure at which gas breaks out of solution. This has likely occurred because the reservoir fluids reached an equilibrium (at bubble point) at the maximum depth of burial and, through subsequent uplift over geological time, the reservoir pressure is no longer above the bubble point.


The quality of the reservoir rocks has not permitted the gas to accumulate in the crest of the structures and it therefore exists in discontinuous gas bubbles surrounded by oil and water locked in the matrix of the reservoir. As wells are produced, the pressure drop will cause the gas bubbles to expand, providing the unexpectedly high levels of reservoir energy that caused the wells to flow without any indication of requiring gas lift.


This interpretation of the well results supports the Company's conservative assumption that production wells will deliver the same compositional mix in terms of oil, condensate, NGLs and natural gas as observed in this flow test. This has been applied across the portfolio, including in the work conducted by SLB in constructing the static and dynamic models that Pantheon will use in its development planning work.


* 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.


The information contained within this announcement may be considered inside information prior to its release.

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.




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