TIDMPANR
RNS Number : 5958Q
Pantheon Resources PLC
19 October 2023
19 October 2023
Pantheon Resources plc
Validation of revised frac design and successful fluid
sampling
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, with certified contingent resources
of over 1 billion barrels of marketable liquids spanning 193,000
contiguous acres in close proximity to pipeline and transportation
infrastructure on Alaska's North Slope, provides the following
update:
Alkaid-2 Re-entry Update
The re-entry of the Alkaid-2 well and flow test of the Shelf
Margin Deltaic B ("SMD-B") horizon is now complete at the end of
the programme to frac, clean up and flow the well. The Company is
pleased to report that testing operations have been successful at
demonstrating producible oil from the SMD horizon in the Aphun
field, which is comprised of both the shallower SMD formation and
the previously tested deeper Alkaid ZOI.
As previously announced, g oing into the SMD data gathering
programme, the Company had three clear objectives :
(i) To assess the efficacy of the revised frac design;
(ii) To gather representative fluid samples for pressure-volume
temperature analysis ("PVT"), and;
(iii) To better determine the initial reservoir pressure
All three objectives have been successfully achieved:
(i) Post well analysis indicates that the frac treatment
resulted in vertical propagation across the entirety of the the 200
ft gross (100 ft net) reservoir column and extended laterally some
300-400 ft.
The Company's preliminary estimate of the efficiency of the frac
was 50% of theoretical design performance and compares favourably
with the calculated frac efficiency of c.20% experienced in the
Alkaid-2 operations in the deeper ZOI accumulation last year. This
improvement was the result of several key changes to the frac
design, as described below, which allowed the frac to remain within
the reservoir and validates the ability to achieve at least the
planned for 2x improvement in frac efficiency in future.
(ii) Multiple fluid samples were gathered indicating a measured
gas oil ratio ("GOR") of 3 ,000 - 4 ,000 standard cubic feet per
barrel ("scf/bbl") and an API gravity of 35-36(o) . This compares
to 12,000 - 13,000 scf/bbl measured in the deeper Alkaid ZOI. This
indicates success in limiting pressure drawdown and avoiding
flashing gas in the reservoir.
The Company will have GeoMark conduct recombination analysis on
the recovered fluids from this SMD test, which will provide a
comparison to the calculated GOR range for the Alkaid ZOI of 2,000
- 3,000 scf/bbl.
Analysis of the gas samples is ongoing to determine accurate
natural gas liquids ("NGL") yields . The initial estimate of the
calorific value of the produced gas was 1,200 British Thermal Units
("Btu") per standard cubic foot ("scf") compared to approximately
1,000 Btu/scf for pure methane. This indicates there should be
further marketable liquids beyond just the separator liquid volumes
reported.
(iii) Initial reservoir pressure was determined to be in the
range 3,800 - 4,000 psi and the well has been suspended with a
pressure monitoring device to further refine and confirm this
estimate. We anticipate retrieving the pressure gauge in the next
six weeks or thereabouts.
During the flow test, after recovery of approximately 60% of the
frac fluids, the oil rate (separator liquids) ranged from more than
100 barrels of oil per day (" bopd") to 30 bopd (averaging 45 bopd
over the 5 days during which oil was recovered). W ater cuts were
90% initially, but declin ed over time as a larger share of the
frac fluids was recovered. As highlighted before the operation, the
flow rates themselves were not expected to be material because the
objective was to limit drawdown in the initial flow back. However,
the actual flow rates were substantially better than prognosed,
given the conservative approach to production in order to limit gas
flashing in the reservoir and ensure the best quality PVT samples,
which bodes well for future SMD development in the Ahpun Field.
Improvement in the frac design included limiting the number of
perforations to achieve treatment rates of 1.5 - 2.0 barrels per
minute per perforation, use of 100 mesh sand, inclusion of
micro-emulsion breaking chemicals and lower overall sand
concentrations.
Pantheon calculates the frac efficiency as the ratio of the area
of the reservoir exposed to the wellbore vs the theoretical
exposure if the treatment had achieved 100% of its designed
outcome. This frac has surpassed the doubling of efficiency from
c.20% achieved in the Alkaid ZOI to c.50%, I.e. more than the basis
upon which the development planning is being modelled. A more
precise efficiency estimate will be possible when the pressure
gauge is pulled from the well. Future wells will provide the
opportunity for further optimization with a view to meeting
benchmarks of 80% frac efficiency achieved in other basins.
The location of the Alkaid-2 well was chosen to prioritize the
deeper ZOI as the primary target, and is positioned on the very
northern edge of the SMD-B accumulation, where it begins to shale
out. Thus it was always expected to encounter poorer reservoir
quality than in the core of the SMD horizons in the Ahpun field to
the southwest. Expectations for flow rates, water saturations and
water cuts had led to plans for nitrogen lift (necessary to reduce
bottom hole pressure and ensure that fluids were recovered to
surface). Encouragingly, nitrogen injection was not required until
the last six days of the eleven day test, resulting in the
operation coming in at or below budgeted timelines and costs.
Ahpun Field Development Update
Following this validation of the ability to improve the frac
efficiency by more than 2x compared to the Alkaid-2 long term test,
the Company's strategy to move to regulatory approvals for the
Ahpun Field development and to proceed with a hot tap into the TAPS
main oil line has been reinforced. Confirming producible oil in the
SMD, the larger oil accumulation within the Ahpun Field (which
includes the Alkaid ZOI) is significant for the longer - term
commercial implications of developing production infrastructure
near the Dalton Highway.
The plan targets FID (final investment decision) by the end of
2025 with first production to follow in early 2026. Estimated costs
to first production are conservatively estimated at $120 million,
based on:
-- $20 million for the hot tap
-- $20 million for facilities upgrade (including preparing Alkaid-2 for injection service)
-- $ 6 0 million for the first three production wells
-- $20 million for three years of corporate G&A
This cost to reach first production contrasts with other
developments in the region, requiring at least an order of
magnitude greater expenditure. Additional development costs after
first production are expected to be funded through debt or
equivalent sources. The Company will provide further updates on its
financing activities, designed to minimize equity or other value
dilution for existing investors, as arrangements progress.
Jay Cheatham, CEO, said : "This re-entry operation has provided
validation of our development plans for Ahpun and, in due course,
Kodiak, by proving the efficiency achieved with our next iteration
of the optimum frac design. We have achieved the three core
objectives we set for this operation and are now focused on the
next steps in our plan to bring these 100% owned resources into
production, benefitting from the advantages of our location right
next to the Dalton Highway and the TAPS line."
David Hobbs, Executive Chairman, said: "Congratulations to Jay
and the operational team on a trouble - free operation that
supports the economic case for developing our entire portfolio of
resources. Gathering the last few data elements for our development
planning allows us to move forward at full speed towards bringing
Ahpun on stream in 2026 with Kodiak to follow. We estimate that we
have surpassed the 40% frac efficiency upon which our development
plan was predicated and will aim to achieve substantial further
improvements during the early stages of development. "
-S-
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 Limited (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 David Hobbs, a
qualified Petroleum Engineer, who has nearly 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 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 193,000 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 of terms
BBL - Barrel
BOPD - Barrels of oil per day
BTU - British Thermal Units
GOR - Gas oil ratio
Marketable Liquids - The mix of hydrocarbons exported from
Pantheon owned facilities meeting the specifications for injection
into the TAPS main oil line.
NGL - Natural gas liquids
PVT - Pressure-volume temperature analysis
SCF - Standard Cubic Feet
SMD - Shelf Margain Deltaic
TAPS - Trans Alaska Pipeline System
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