Alkaid Well Update

RNS Number : 8045U

Pantheon Resources PLC

02 April 2019

 

2 April, 2019

 

Pantheon Resources plc

 

Alkaid Well Update

Pantheon Resources plc ("Pantheon" or "the Company"), the AIM-quoted oil and gas exploration company with working interests in several conventional project areas in Tyler and Polk Counties, onshore East Texas, as well as onshore North Slope of Alaska, provides the following update in relation to the testing of the Alkaid well located on the Alaska North Slope:

Highlights: Alkaid Well, Alaska North Slope, Pantheon 100% working interest

·     Following the successful flow test of the primary target, the Brookian Formation (Brookian "zone of interest" or "ZOI") at c.8,100 ft depth in the Alkaid well, which confirmed the well as an oil discovery, flow testing operations moved up the hole to the shallower West Sak and Ugnu secondary targets.

·     Testing of the West Sak secondary target has now occurred, with the well encountering low salinity (brackish) water. The Ugnu and West Sak secondary targets were independent of the Brookian ZOI, however the presence of brackish water in the West Sak has significantly downgraded the probability of success in the the Ugnu Formation, given these zones are close to each other and have very similar log responses.

·     As a result of the confirmation of the oil discovery in the Brookian ZOI, Pantheon has decided to suspend and seek approval to 'freeze protect' the Alkaid well bore, preserving it as a future development well and this process is expected to take up to two weeks.

·     As previously announced on 25 March, the Alkaid well is considered a material success for the Company, flowing 80 - 100 bopd of light (40 degree API oil) from a 6 foot perforated interval as previously reported. Future development wells will be horizontal, stimulated and perforated over much larger intervals which will deliver significantly larger production rates.

·     The Brookian ZOI Is estimated to have 400 feet of gross pay and 240 feet of net pay.  Flow testing and data received exceeded expectations and have material positive implications for reserve and production potential for the Alkaid project, as well as for increasing probabilities of success of other Brookian targets on the acreage, most notably Phecda, the adjoining prospect.

·     Application has been made to the State of Alaska to suspend and 'freeze protect' the wellbore for use as a future development well and producer.

Flow testing operations at Alkaid have now been concluded with the well confirmed as a new field oil discovery in the primary Brookian ZOI. The shallower West Sak secondary target horizon at c,5,450 ft encountered low salinity water, suggesting the horizon to be non-commercial and the decision was made not to test the other secondary target Ugnu horizon. Although the Ugnu target zone is independent from West Sak, the nature of the West Sak results and its similar log response to Ugnu, the result has significantly altered the risk profile and chance of success of the Ugnu zone.

Given the excellent results which exceeded expectations from the primary target, the Brookian ZOI, it has been decided to suspend the well as a future producer. Alkaid's close and favourable proximity to the Dalton Highway and the Trans Alaska Pipeline (TAPS) should result in a significantly shorter permitting and development schedule compared to typical North Slope of Alaska developments.

Pantheon has applied to the State of Alaska to suspend and 'freeze protect' the Alkaid well bore, preserving it as a future development well and producer. If approved, this work will take an additional two weeks taking operations through to the end of the operating (weather) season which has been experiencing warmer than usual temperatures recently. Future operations may involve re-entering the well and drilling a horizontal section through the oil zone.  The Alkaid well successfully tested high quality 40 degree API oil from the Brookian ZOI which has an estimated 240 feet of net oil pay (400 feet gross oil pay), and the discovery confirms the high tech geophysics work done on the Great Bear acreage and improves the prospectivity of Pantheon's other Brookian prospects where 3D seismic has already been acquired and prospects delineated. In particular, the Alkaid result is believed to have materially positive implications for the adjoining Phecda prospect which is now upgraded and considered a step out appraisal from the Alkaid location. These two projects will now likely be part of a single development plan, favourably located adjacent to the Dalton highway and TAPS pipeline. The better than expected results in the zone of interest will also impact the pre drill P50 Technically Recoverable Resource estimates which will be assessed in the near future.

Jay Cheatham, CEO, said:

"Despite today's news on the secondary targets, Alkaid has been a great success for Pantheon, exceeding our expectations in the primary target, and upgrading the adjoining Phecda prospect which appears analogous on seismic. The Alaska team of geologists, engineers, drillers, service providers and all others are to be commended for delivering an excellent incident free result for Pantheon. Our decision to apply to the State to suspend and freeze protect Alkaid now was impacted significantly by the "brackish water" produced in the West Sak and also by the recent exceptionally warm weather on the North Slope. It is imperative to preserve the Alkaid discovery well for future production. The Alkaid success provides ongoing confidence on future drilling operations where the high tech geophysics applied to Alkaid can be replicated across the entire portfolio and deliver material success as has been the case with other operators chasing this similar play in adjoining leases.

The Company will immediately set about reworking and analysing all key data from our Alaskan programme which will include reviewing the pre-drill conceptual development plans on Alkaid as well formulating plans for future farm out discussions. Work will also commence in the short term reviewing geological models for East Texas operations with a view to re-drilling VOBM#1 as a side-track or as a new well once analysis has been completed. The Company will update shareholders as to timing expectations once analysis has been completed."

-ENDS-

 Further information:

Pantheon Resources plc	[phone]
Jay Cheatham, CEO
Justin Hondris, Director, Finance and Corporate Development
Arden Partners plc (Nominated Adviser and broker)	[phone]
Paul Shackleton Daniel Gee-Summons

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas exploration and production company with assets in East Texas and on the North Slope of Alaska, onshore USA.

The Group's stated objective is to create material value for its stakeholders through oil exploration, appraisal and development activities in high impact, highly prospective assets, in the USA; a highly established region for energy production with infrastructure, skilled personnel and low sovereign risk. All operations are onshore USA, with drilling costs an order of magnitude below that of offshore wells.

In East Texas, Pantheon holds a 50% to 75% working interest (and in present discussions to increase this to 100% working interest for non-cash consideration) in several conventional prospects in Tyler & Polk Counties, in an area of abundant regional infrastructure, and in proximity to the prized Double A Wells Field. P50 Technically Recoverable Resources are estimated at 157 million barrels of oil equivalent.

In Alaska, following its acquisition of the assets of Great Bear Petroleum in January 2019, Pantheon holds working interests ranging between 10% and 90% of prospects covered by over 1,000 square miles of 3D seismic with P50 Technically Recoverable Resources estimated at 1.7 billion barrels of oil. An additional 0.4 billion barrels of P50 Technically Recoverable Resources was estimated to apply the Winx-1 Western Acreage acreage blocks, however this number is subject to downward revision following the disappointing Winx result in March 2019 and following the Alkaid testing result announced today. This work will be conducted over the coming months and an updated resource assessment provided once work is completed.

For further information on Pantheon Resources plc, see the website at: www.pantheonresources.com

The information contained within this RNS is considered to be inside information prior to its release. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

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.

Cautionary Statement: The estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially movable hydrocarbons.

GLOSSARY

BOPD             Barrels of Oil per day

API                   The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water: if its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks.

NPV                 Net Present Value

ZOI                  Zone of interest (primary target)        

 

END

 

 

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