Independent Expert Report by LKA on Alkaid Horizon

Pantheon Resources PLC

01 May 2024

 

1 May 2024 

Pantheon Resources plc

LKA confirms 79 mmbbl of recoverable reserves and resources in Ahpun's Alkaid Horizon after Alkaid-2 long term test

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, covered by 193,000 acres of leases with an additional c. 66,000 acres to be awarded following successful bids in the December 2023 lease sales, all in close proximity to pipeline and transportation infrastructure on Alaska's North Slope, is pleased to share the results of an updated Independent Expert Report ("IER") by Lee Keeling & Associates, Inc. ("LKA"). This update covers the Alkaid horizon within its Ahpun Field over which it has a 100% working interest.

This report updates the January 2020 IER on the Alkaid horizon (formerly referred to as the 'ZOI' and/or 'Alkaid Deep') within the Ahpun field. The original report was issued after the successful re-entry and test of the Alkaid-1 well during the winter of 2019. This update benefits from the additional data gathered from the 5,200 feet horizontal completion and 90-day flow test of the Alkaid-2 well drilled in 2022. The Alkaid horizon is the smallest and deepest development candidate in Pantheon's portfolio, with poorer reservoir quality than the Ahpun topsets and Kodiak reservoirs, however, the advantage of its immediate proximity to pipeline and road infrastructure creates optionality for early economic development.

Highlights

·    LKA estimates base case Possible Reserves of 5 million barrels ("mmbbl") and 27 billion cubic feet ("bcf") of recoverable natural gas at the Alkaid horizon, in addition to Contingent Resources totalling 74 mmbbl of marketable liquids and 396 bcf of recoverable natural gas.

·    LKA estimates high case Contingent Resources totalling 123 mmbbl and 634 bcf.

·    LKA's attribution of reserves in the immediate vicinity of the Alkaid-2 well and its economic modelling of the overall Alkaid horizon estimating real rates of return in excess of 20%, support Pantheon's previous assessment that the Alkaid-2 long term production test demonstrated the commerciality of the Alkaid horizon in Ahpun.

David Hobbs, Pantheon's Executive Chairman, commented: "This is an important result for our strategy to move the Ahpun and Kodiak Fields through development to production over the coming years. The confirmation that the Alkaid horizon, the most marginal of the resources appraised on our Alaska North Slope acreage, is modelled by the Independent Experts to deliver real rates of return exceeding 20%, is fantastic news for our development planning. It's important to remember that both the Ahpun topsets and the newly awarded Ahpun Eastern Extension both offer far superior reservoir properties and are similarly located in close proximity to the pipeline and road infrastructure. There are material synergies to be exploited in development, potentially further enhancing expected returns.

"Once again, Jay, Bob and the team are putting in the hard yards to line up all the pieces necessary to deliver our strategic goal of achieving sustainable market recognition of $5-$10 per recoverable barrel by 2028. We are expecting the Cawley Gillespie report on the Ahpun Topsets in the coming weeks and expect to continue building on this momentum going forward."

Field Naming

In 2023 Pantheon incorporated all reservoirs above the Hue Shale into a single field-Ahpun. The Ahpun field currently includes two horizons, (i) the 'Alkaid horizon' (the subject of this report) and (ii) the shallower topsets, formerly termed the 'SMD'. If successfully tested, subject to funding, in the planned Megrez-1 well, the eastern topsets (secured in the December 2023 lease sale) would also be included. The upper and lower slope fans tested in Talitha-A have not been assessed as commercial by the Company and are not currently incorporated into the Ahpun field.

IER Conclusions

This IER is specific to the Alkaid horizon and estimates base case Possible Reserves of 5 mmbbl and 27 billion cubic feet ("bcf") of recoverable natural gas in addition to Contingent Resources (C2) totalling 74 mmbbl of marketable liquids and 396 bcf of recoverable natural gas. Importantly, the volumes classified as Possible Reserves indicates that a proportion of the resources are already deemed economically viable. Furthermore, LKA's economic modelling of the overall Alkaid horizon estimated real rates of return in excess of 20% which Pantheon believes exceeds the economic threshold to be considered commercial. This result supports the Company's previous assessment that the Alkaid-2 long term production test demonstrated the commerciality of the Alkaid horizon in Ahpun. Moreover, the topset horizons, having far superior reservoir properties with estimated permeabilities two orders of magnitude (i.e. 100x) higher, suggest significantly improved economics compared to the Alkaid horizon as described in Pantheon's press release dated 10^th April 2024.

A summary table extracted from the report is copied below and is based on $80/bbl ANS (Alaska North Slope) crude delivered to the West Coast:

Base Case	Estimated Remaining Gross Reserves / Resources			Estimated Remaining Net Reserves / Resources		Future Net Cash Flow
Classification	Oil (MBBLS)	Wellhead Gas (MMCF)	NGL (MBBLS)	Oil (MBBLS)	NGL (MBBLS)	Total (M$)	Present Worth Disc.@ 10% (M$)
Possible Reserves	2,800	27,389	2,328	2,282	1,897	95,556	14,528
Contingent Resources	40,501	396,183	33,676	33,008	27,446	1,452,544	185,820
Total Resources	43,300	423,572	36,004	35,290	29,343	1,548,100	200,347

Note: Totals may not agree with schedules due to computer roundoff.

High-Side Case	Estimated Remaining Gross Resources			Estimated Remaining Net Resources		Future Net Cash Flow
Classification	Oil (MBBLS)	Wellhead Gas (MMCF)	NGL (MBBLS)	Oil (MBBLS)	NGL (MBBLS)	Total (M$)	Present Worth Disc.@ 10% (M$)
Contingent Resources	69,621	633,724	53,867	56,741	43,901	3,425,705	526,545
Total Resources	69,621	633,724	53,867	56,741	43,901	3,425,705	526,545

Note: Totals may not agree with schedules due to computer roundoff.

The base case NPV at a 10% real discount was estimated by LKA to be c. $200 million ($526 million for the high-side case), pre-Federal Income Tax but after all State taxes. LKA's high side case (recognising increased EURs of c.1.5 mmbbl per well, versus c.1 mmbbl per well for the base case) estimates total Contingent Resource of 123.3 mmbbl of marketable liquids and 634 bcf of gas. This appears to reflect the potential for greater recovery from the entire section through greater frac growth vertically and laterally, including what was previously described as Alkaid Deep.

The full report received from LKA has been posted to www.pantheonresources.com.

Further information:

Pantheon Resources plc

Jay Cheatham, CEO                                                                                         [phone]

David Hobbs, Executive Chairman                                                                           

Justin Hondris, Director, Finance and Corporate Development

Canaccord Genuity Limited (Nominated Adviser and broker)

Henry Fitzgerald-O'Connor, Ana Ercegovic                                            [phone]

BlytheRay

Tim Blythe, Megan Ray, Matthew Bowld                                                               [phone]

The estimates in the LKA 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).

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 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 c. 193,000 acres. In December 2023, Pantheon was the successful bidder for an additional 66,240 acres with very significant resource potential, contiguous to the Ahpun and Kodiak projects. Following the issue of the new leases, which are expected to be formally awarded in summer 2024 upon payment of the balance of the application monies, the Company will have a 100% working interest in c. 259,000 acres. Certified contingent resources attributable to these projects are currently around 1.3 billion barrels of marketable liquids, located adjacent to Alaska's Trans Alaska Pipeline System ("TAPS") with additional IERs expected within the next month.

Pantheon's stated objective is to demonstrate sustainable market recognition of a value of $5-$10/bbl of recoverable resources by end 2028. The Company is targeting Final Investment Decision ("FID") on the Ahpun field by the end of 2025, subject to regulatory approvals, building production to at least 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 1,208 million barrels of marketable liquids and 5,396 billion cubic feet of natural gas. ("LKA") has confirmed a combination of reserves and contingent resources totalling 79 million barrels of marketable liquids and 424 billion cubic feet of natural gas. Cawley Gillespie & Associates ("CGA") are working on estimates for the Ahpun western topsets. 

Glossary

bbl: barrels

bcf: Billion cubic feet

Proved Reserves: Those quantities of petroleum that, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable from a given date forward from known reservoirs and under defined economic conditions, operating methods, and government regulations.

Probable Reserves: Those additional Reserves that analysis of geoscience and engineering data indicates are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves.

Possible Reserves: Those additional reserves that analysis of geoscience and engineering data indicates are less likely to be recoverable than Probable Reserves.

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.

Gross Reserves/Resources: The Group's working interest reserves/resources before the deduction of royalties.

Net Reserves/Resources: The Group's net working interest reserves/resources after the deduction of royalties

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

Other definitions are included in LKA's report posted to Pantheon's website

 

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