Operational update

RNS Number : 2623L

Pantheon Resources PLC

30 December 2022

 

  30 December, 2022

Pantheon Resources Plc

Operational update

Pantheon Resources plc ("Pantheon" or the "Company" or the "Group"), the AIM-quoted oil company with 100% working interest in approximately 153,000 acres located adjacent to transportation and pipeline infrastructure on State Land on the Alaska North Slope, is pleased to provide the following operational update on the Alkaid #2 well.

Operational update - Alkaid #2

As previously announced, the lateral section of the Alkaid #2 wellbore is partially blocked with approximately 1,000 feet of frac sand which (i) has restricted tested flow rates due to the lack of contribution from the blocked section, and (ii) has necessitated a more conservative testing protocol in order to not exacerbate the blockage, which has resulted in a slower 'cleanup phase'.

Encouragingly, despite the blockage, the well is flowing naturally into Pantheon's recently commissioned permanent production facilities located on the Dalton Highway at a rate of over 500 barrels per day ("bpd") of hydrocarbon liquids which includes oil, condensate and natural gas liquids ("NGL's"), as well as significant natural gas, from an estimated 4,000 ft of lateral. Importantly, it is estimated that the well is still less than 40% of the way through cleanup phase, so potential exists for these rates to further improve. Crude oil is processed on location and oil sales are underway. To date over 7,000 barrels of 38-41 degree API oil has been trucked and sold into the Trans Alaska Pipeline System. This oil is lighter than existing North Slope oil production and hence a welcome addition to the production stream.

A proportion of the gas production is used to generate power across all the facilities that are now electrically powered and operational, reducing flaring and providing cost savings to operations at this location.

Production

At this early clean up stage, Alkaid #2 is delivering hydrocarbon liquid rates near expectations over the 4,000 ft unblocked section, with gas rates well above original prognosis.  Sustained daily production over more than the last 30 days has averaged over 500 barrels per day of hydrocarbon liquids, of which circa 200 bpd of crude oil and over 300 bpd being condensate and NGLs, all of which can be sold either by blending into the pipeline or trucking to an Alaskan refinery. Gas rates are above 2.5 mmcfd which is higher than originally anticipated, however this is not believed to be from a gas cap but coming out of solution near the well bore. This is not considered a long term problem as excess gas could be reinjected into the reservoir for pressure maintenance. This combined hydrocarbon deliverability to date confirms the forecasted reservoir properties and highlights the potential deliverability of the Alkaid reservoir. The Company is confident there is upside above these rates as it is apparent that only a portion of the completed wellbore is contributing to the production stream; and it is estimated that the well has produced to date less than 40% of the volume of frac fluid used in the stimulations.

Sand

As previously announced, the flow rate is restricted by the accumulation of sand in the horizontal portion of the well bore also slows down well cleanup. This is not uncommon in long horizontal wells that have been treated with multi stage fracture stimulations.  With the correct equipment, removing the sand and cleaning the well is a simple operation which is currently planned for January. The sand blockage in the well bore was identified early in the production test, however no winterized workover rig was available which prohibited the removal of the tubing and a proper clean out at that time. Instead, a coiled tubing unit ("CTU") was used to conduct a through-tubing cleanout, but was unable to reach the full well depth and hence was partially successful with more than 1,000 ft remaining blocked and untouched by the CTU clean out. A rig is available in January to clean out the entire well bore and is expected to open the entirety of the lateral allowing the full potential of the well to be revealed and at the same time accelerating the clean up phase.

In advance of the clean out the Company plans to shut in and perform reservoir diagnostics, a normal oilfield practice, to gather additional data.

Jay Cheatham, CEO, said: "The Alkaid #2 well is delivering a total hydrocarbon liquid mixture exceeding 500 bpd from what we believe is from only c.4,000 feet of lateral. The liquid mixture includes high quality oil with associated condensates and NGL that are saleable through TAPS. The total hydrocarbon production rates confirm we have tapped into a significant hydrocarbon system. To have this level of production at this stage in the "clean up" phase of production testing remains positive. The current reservoir performance is compromised by the sand blockage and we will not have a true indication of reservoir performance until the entire well bore is clean. We are deliberately using a conservative approach in flow testing of not 'pulling on the reservoir' too hard, allowing the natural healing of the fractures to minimise future sand flow. Overall, we're very encouraged with the preliminary results of the production test and the fact that we have permanent facilities for treating and selling our oil as well as utilizing our gas to power our operations on location. Despite this encouragement however, we remind shareholders as we always do, that a definitive assessment of the well cannot be made until flow testing operations have concluded and we are still too early in the process.

"We expect flow rates after the clean out to improve. The location of Alkaid, immediately adjacent to the Dalton Highway, again highlights the significant advantage we have to other operators on the North Slope in expediting our oil developments. These initial positive testing results have increased our confidence in pursuing an Alkaid #3 well, subject to funding, which would be a high impact appraisal well to test the Shelf Margin Deltaic, the reservoir target immediately above the discovered oil at Alkaid #1 and #2. A success at Alkaid #3 would be a commercially impactful well with material resource implications and would also leverage off the established production facilities for important near term cashflow and it could be drilled outside of the traditional winter drilling season."

Glossary

Bpd	Barrells per day
Bopd	Barrells of oil per day
Mmcfd Ft	Millions of cubic feet per day Feet

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 Robert Rosenthal, a qualified Petroleum Geologist, who has over 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").

Cautionary Statement: Certain statements and estimates contained in this announcement carry an associated risk of accuracy as such statements and estimates are based upon information available at the time of making such statements. Actual results could differ materially from expectations set out in such statements. Among other factors, this could be as a result of changes in economic, market, geological and political factors, the success of future drilling and geological success, the risk of future drilling changes in the regulatory environment and other government actions, fluctuations in the price of oil and exchange rates, and business and operational risk management.

-Ends-

Further information: Pantheon Resources plc
Jay Cheatham, CEO	[phone]
Justin Hondris, Director, Finance and Corporate Development
Canaccord Genuity L imited (Nominated Adviser and broker)
Henry Fitzgerald-O'Connor,   James Asensio, Gordon Hamilton	[phone]
BlytheRay
Tim Blythe, Megan Ray, Matthew Bowld	[phone]

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas company focused on several large projects located on the North Slope of Alaska ("ANS"), onshore USA where it has a 100% working interest in 153,000 highly prospective acres with potential for multi billion barrels of oil recoverable. A major differentiator to other ANS projects is its close proximity to transport and pipeline infrastructure which offers a significant competitive advantage to Pantheon, allowing for materially lower capital costs and much quicker development times. 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 conventional 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 materially below that of offshore wells.

 

END

 

 

UPDGGBDDRXXDGDG