Expert Report Confirms Estimate for Kodiak Field

Pantheon Resources PLC

29 August 2023

 

29 August 2023

Pantheon Resources plc

 Independent Expert Report confirms Best Estimate Contingent Resource estimates totalling 962 million barrels for Kodiak Field

Pantheon Resources plc (AIM: PANR) ("Pantheon" or the "Company" or the "Group"), the oil and gas company operating on Alaska's North Slope, is pleased to advise that it has received an Independent Expert Report ("IER") which provides an estimate of contingent resources recoverable from its 100% Working Interest Kodiak project, formerly known as Theta West ("Kodiak"). A full copy of the report will be published on the Company's website.

Kodiak Field Contingent Resource Estimates

Pantheon is pleased to announce receipt of an IER prepared by Netherland, Sewell & Associates ("NSAI") on the Lower Basin Floor Fan reservoir of the Company's Kodiak project (the "Kodiak NSAI IER"). A summary of the resource estimate is outlined below.

Gross 100% Working Interest Contingent Resources

Resource Category	Oil (million bbls)	NGLs (million bbls)	Residual Gas (BCF)		Total Marketable Liquids* (million bbls)
Low Estimate (1C)	145.4	292.4	2,151.7		437.8
Best Estimate (2C)	314.6	647.9	4,465.2		962.5
High Estimate (3C)	647.8	1,366.4	8,822.7		2,014.2

* Pantheon addition of Oil & NGLs

Pantheon has also commissioned NSAI to complete a similar IER on the Alkaid horizon at the Ahpun project, with expected completion in Q4 2023.

Pantheon Management Commentary on the Kodiak NSAI IER

The 2C estimates (best estimates) of oil and natural gas liquids ("NGLs") total 962.5 million barrels of marketable liquids. As previously advised by management, the NGLs on Pantheon's projects are of material value as they can be blended with the oil and the combined stream of oil, condensate and NGLs has been estimated by management to yield approximately 90% of the value of the Alaska North Slope ("ANS") price per barrel.

The management believe the Kodiak NSAI IER supports the Company's development plans for the Kodiak project, which will involve development of leases totaling some 126,000 acres (including the recently awarded additional acreage), delineated by the Company's proprietary 3D seismic and confirmed by three wells (Pipeline State 1, Talitha-A and Theta West-1). The field is defined as the hydrocarbon bearing horizons contained within the large basin floor fan between the Hue Shale top seal and the underlying HRZ shale, from their downdip pinchout east of Talitha-A running to over 15 miles northwest into the new "chimney acreage" acquired in the 2022 area wide lease sale. The Company believes that this is one of the largest basin floor fan systems discovered onshore in the past few decades. This will be discussed in the Company's forthcoming webinar and accompanying press release.

Figure 1: Kodiak Project Horizon (illustrative type log) 

 Source: Pantheon Management

Figure 2: Location of Kodiak and Ahpun Projects

Source: Pantheon Management

Company Plans for Further Appraisal of Kodiak

The absence of wireline electric logs or sidewall cores taken at Theta West-1, due to hole stability issues and the limited time available at the end of the drilling season, has meant that the highest resolution data that captures the thinly interbedded reservoir in the Kodiak field is limited to the Talitha-A well.  The Company plans to drill the next Kodiak well significantly updip from the Talitha-A and the Theta West-1 wells, where management believe the lower depth of burial ("Dmax") should lead to improved reservoir characteristics compared to both Talitha-A and Theta West-1. The Company has completed a detailed geological model taking into account data from wells in the immediate area which include the producing Tarn and Meltwater fields.

Pantheon plans to drill the next Kodiak appraisal well in the recently acquired leases, some five miles northwest of Theta West-1. Based on the Company's petrophysical analysis noted above, a Theta West-2 well in that location would be expected by management to encounter a reservoir section with 37% of the pay interval exhibiting porosities at or above 12% and permeabilities of greater than 0.1 milliDarcies - the typical cut-off for recognising reservoirs as conventional, which typically yield higher flow rates and hydrocarbon recovery rates. The reservoirs in the structural updip portion on the Theta West structure are expected by management to exhibit the highest quality on Pantheon's acreage, in its largest trapping mechanism.

The Company plans to cut full cores and acquire a full suite of wireline logs and representative fluid samples/flow tests in future appraisal wells to address the contingencies in NSAI's evaluation. Demonstrating the character of the reservoir at the most granular possible level creates potential for future increases to recoverable resource estimates.

Rig Contracted for Shelf Margin Deltaic ("SMD") test at Alkaid-2

Pantheon is pleased to confirm that the All-American Oil Rig 111 has been formally contracted for the re-entry of the Alkaid-2 well to test the SMD horizon. Pantheon has also awarded all major service provider contracts necessary for the operation. Finalisation of necessary permits for the operation is ongoing, with mobilisation of the rig targeted for September.

Webinar

A presentation covering the NSAI Kodiak IER together with a comprehensive discussion on the Company's analysis and Kodiak development concepts will be shared in a webinar in the coming month.  Further information will be provided once details have been finalised.

David Hobbs, Pantheon's Executive Chairman, said: "I am delighted with this result. Netherland, Sewell & Associates is one of the most highly regarded firms in the industry, whose opinions carry great weight. They conducted an intensive review of the data that validates Pantheon's assessment of the scale of the resource. We remain on track to meet our strategic goal of delivering sustainable market recognition of $5 - $10 per barrel of recoverable resources."

Jay Cheatham, Pantheon's Chief Executive Officer, said: "This really is a big deal. A credible third-party estimate of nearly one billion barrels of recoverable liquids for a company the size of Pantheon is an incredible achievement, validating our geological model. This is the first IER conducted on our largest asset and will have enormous value in financing discussions and in attracting potential partners. As I have repeatedly said, big oilfields continue to get bigger, and with additional wells and data points we expect this contingent resource to grow and for some or all to be classified as reserves once we achieve a Final Investment Decision."

Bob Rosenthal, Pantheon's Technical Director, said: "I am extremely proud of this achievement and the validation that we have discovered something special! For perspective, it is very rare to see certified resources of this size, particularly onshore and near to infrastructure. This first report supports the work conducted by a broad technical group that has included our partners at SLB, eSeis, AHS Baker Hughes among others. NSAI's evaluation of Kodiak is a transformational milestone on the path to commercialisation. I remind shareholders that this report on Kodiak only covers the Lower Basin Floor Fan, based on three wells and our proprietary 3-D seismic data set. There is clear potential for further growth in these numbers as continuing appraisal provides more granular data."

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 and a member of the Society of Petroleum Engineers, who has nearly 40 years' relevant experience within the sector.

The estimates in the Kodiak NSAI IER have been prepared in accordance with definitions and guidelines set forth in the 2018 Petroleum Resource Management System (PRMS) approved by the Society of Petroleum Engineers (SPE).

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").

-ENDS-

 Further information, please contact:

Pantheon Resources plc	[phone]
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	[phone]
BlytheRay
Tim Blythe, Megan Ray, Matthew Bowld	[phone]

Glossary

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

Bbls: barrels

Contingent Resource: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies.

For Contingent Resources, the general cumulative terms low/best/high estimates are used to estimate the resulting 1C/2C/3C quantities, respectively. The terms C1, C2, and C3 are defined for incremental quantities of Contingent Resources:

A.    C1: Denotes low estimate of Contingent Resources. C1 is equal to 1C.

B.    C2: Denotes Contingent Resources of same technical confidence as Probable, but not commercially matured to Reserves.

C.    C3: Denotes Contingent Resources of same technical confidence as Possible, but not commercially matured to Reserves.

When the range of uncertainty is represented by a probability distribution, a low, best, and high estimate shall be provided such that:

A.    There should be at least a 90% probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

B.    There should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

C.    There should be at least a 10% probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

The Kodiak NSAI IER highlights the following contingencies:

1.    Acquisition of additional technical data that demonstrate producing rates and volumes sufficient to sustain economic viability across the acreage.

2.    Approval of a field development plan and regulatory permits.

3.    Demonstration of viable gas and water utilization or disposal methods.

4.    Demonstration of ability to market oil and natural gas liquids (NGLs).

5.    Commitment to fund and complete the development project.

If these contingencies are successfully addressed, some portion of the contingent resources estimated in the report may be reclassified as reserves.

NGLs: Natural gas liquids (NGL) are components of natural gas that are separated from the gas state in the form of liquids.

Overriding Royalty Interest (ORRI): A royalty granted to a third party other than the royalty payable to the State of Alaska.

Working Interest: The legal ownership of the leases awarded by the State of Alaska. Pantheon's Net Revenue Interest (NRI) in the leases is less than 100% by virtue of royalties payable to the State and any ORRI. In the case of the Kodiak project, the State royalties vary between 12.5% and 16.67%. Management estimates that the average NRI is approximately 85%.

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. Management estimates these fields to produce 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 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 preparation of an Independent Expert Report for the Ahpun Field.

 

END