TIDMPANR
RNS Number : 0860L
Pantheon Resources PLC
14 July 2017
14 July, 2017
Pantheon Resources plc
Gas processing facility agreement contracted and drilling
update
Pantheon Resources plc ("Pantheon" or "the Company"), the
AIM-quoted oil and gas exploration company with a working interest
of 50%-58% in several conventional projects in Tyler and Polk
Counties, onshore East Texas, is pleased to announce the following
information:
Gas processing facility agreement contract signed
-- Contracts have been formally executed, on improved terms,
with Kinder Morgan, the USA's largest energy infrastructure
company, to install and operate a 15mmcf/d capacity gas processing
facility in Polk County.
-- Instillation of the facility is expected to commence in early
August 2017 with targeted first production by mid-September 2017
from VOBM#1 well and VOBM#3. If successful, VOBM#2H will also be
hooked up for production following testing. Based upon modelled
well data, Pantheon believes it should be able to achieve operating
and transportation costs in the lower quartile of North American
producers, possibly as low as $5 per boe.
-- The pad, tap in point, permits, and pipeline procurement have
already been completed, and rights of way have been agreed and paid
for.
-- The VOBM#1 well alone, at tested flow rates on a 12/64ths
choke could generate an initial c.$635,000 free cashflow per month
to Pantheon, at today's pricing(1) and after taking into account
the accelerated payback arrangement(2) concluded last year, after
royalties and production taxes. This would generate sufficient
cashflow to fund the projected cost of a Polk County vertical well
within 4 months. Larger choke apertures would be expected to
produce disproportionately greater flow rates.
-- At full capacity and on the same terms, the 15mmcf/d gas
processing facility running at maximum throughput at today's
pricing(1) is modelled to generate over $1,500,000 per calendar
month of free cash flow net to Pantheon.
Update on VOBM#2H well, Polk County, onshore East Texas
(Pantheon 58% WI)
The Company is also pleased to announce that a rig, frac crew
and related equipment to undertake the planned frac of the VOBM#2H
well has been booked and operations are estimated to commence in
early August 2017, subject to there being no third party delays.
The frac is designed with the intention of remediating the skin
damage believed to have occurred as a consequence of the low
penetration rates encountered when drilling the very hard Eagle
Ford sandstone in a horizontal or deviated orientation.
The burgeoning activity levels in the Permian Basin play in West
Texas, some 800 miles away, has resulted in a significant lead
times for equipment and crews in Tyler and Polk County.
Update on VOBM#4 well, Tyler County, onshore East Texas
(Pantheon 50% WI)
Arrangements for the procurement of a suitable drill rig for the
sidetrack of the VOBM#4 well are presently underway. Quality
control issues resulted in the cancellation of negotiations on a
previously agreed rig.
Third party reservoir engineering consultants have concluded
that based upon analysis of well logs, technical data and
hydrocarbons encountered during drilling, the Wilcox in this
location has outstanding potential and the objective is to complete
the sidetrack as soon as a rig is contracted. A successful flow
test could have very positive implications for the surrounding
acreage.
Jay Cheatham, CEO of Pantheon Resources said:
"The contract signing for the Polk County gas processing
facility is a transformational event for the Company, with near
term production augmenting our value proposition from that of an
explorer into a full cycle exploration and production company.
"We remain highly confident in the nature of the reservoirs on
our acreage and once production begins, we expect to generate
sufficient cashflow to help the Company fund future operations. I
reiterate to shareholders that the issues we have faced over the
past 9 months were operational matters related to specific wellbore
conditions and do not in any way affect the geological potential of
the Eagle Ford sandstone on our acreage. The discovery of the
regionally productive Wilcox on our acreage has the potential, if
successful, to be significant for Pantheon and I look forward to
updating you as to the progress of the VOBM#4 well."
Further information:
+44 20 7484
Pantheon Resources plc 5361
Jay Cheatham, CEO
Justin Hondris, Director, Finance and Corporate
Development
Stifel Nicolaus Europe Limited (Nominated +44 20 7710
Adviser and broker) 7600
Callum Stewart
Ashton Clanfield
Nicholas Rhodes
+44 20 3727
FTI Consulting 1000
Ed Westropp
James Styles
For further information on Pantheon Resources plc, see the
website at: www.pantheonresources.com
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.
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
GLOSSARY
mmcf/d million cubic feet per day
mcf/d thousand cubic feet per day
mcf thousand cubic feet
boe barrel of oil equivalent
WI Working interest
Footnote
(1) Assumptions: $44.50 per barrel oil (WTI), $3.00mcf gas,
calculated after royalties and production taxes.
(2) Under the accelerated payback arrangement Pantheon will
receive the first 70% of production revenues from Polk County wells
until costs are recouped, at which point it will revert back to a
58% revenue share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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