TIDMPANR
RNS Number : 8122W
Pantheon Resources PLC
14 December 2023
14 December 2023
Pantheon Resources plc
Successful Acquisition of Leases over Updip Kodiak and Ahpun's
Eastern Potential
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, collectively spanning c. 193,000
contiguous acres in close proximity to pipeline and transportation
infrastructure on Alaska's North Slope, is pleased to finally share
the complete results of its multiyear leasing programme.
Pantheon has been awarded 66,240 acres on the North Slope
covering:
-- substantially all of the anticipated remaining conventional
reservoir potential in the Kodiak Field - pay zone quality is
expected to improve as the reservoir become shallower to the north
and west of the existing leases. The ultimate resource
classification of the 43,200 new acres will be determined following
reviews with Netherland, Sewell & Associates, Inc. ("NSAI") and
SLB.
-- the potential eastern extent of the Ahpun Field (including
what is prognosed to be higher quality, shallower reservoirs)
covered by the 23,040 acres that could be accessed from the West
side of the Sag River using current technologies. The Company
believes these volumes would initially meet the definition of
Prospective Resources and only be recognisable as Contingent
Resources (and eventually Reserves) once well penetrations have
confirmed producible hydrocarbons in the identified Shelf Margin
horizons.
Pantheon's winning bids averaged $31.83 per acre including fees.
When the leases are officially awarded by the State of Alaska,
estimated to be in 4 to 6 months' time, they will come with a
10-year initial term, an annual rental of $10 per acre, and royalty
rates of 16.67% (20 leases, 28,800 acres) and 12.5% (26 leases,
37,440 acres). The Company has paid an initial deposit to the State
of Alaska equivalent to 20% of the bid costs with the remainder
payable on official award along with the first year rentals.
Pantheon's Technical Director, Bob Rosenthal, said: "This is an
important result, securing what we expect to be the highest quality
areas of the Kodiak and Ahpun Fields at the shallowest depths, and
protecting the development schedules for Ahpun and Kodiak by
covering the full fields to be included in our requests for
development consents from the State of Alaska. Our focus remains on
the development of Ahpun with FID planned by the end of 2025 and
appraisal of the full potential of Kodiak to support its FID in
2028."
Finance Director, Justin Hondris, added: "In the past, we have
had to strike a balance between prioritising investments in our
existing lease estate and capturing the full extent of our two
world class development assets. The soon to be publicly released
proprietary 3D seismic data risked opening the area up to
competitors before the next lease sale and Pantheon therefore chose
to act this year."
New Lease Volumetric Estimates
The Company owns 100% Working Interest ("W.I.") in all leases,
which are subject to State Royalties of approximately 15% across
the portfolio resulting in a Net Revenue Interest ("NRI") after
deducting royalties of approximately 85%. The Company prepared
preliminary estimates of the gross and net Liquid Hydrocarbons in
Place ("OIP") and recoverable volumes described, for the time
being, as Technically Recoverable Resources ("TRR") (see glossary
of terms) for the new acreage to support the lease bids and these
are shown in the table below:
OIP Gross OIP Net OIP(1)
------------------------------------- -------------------------------------
Quantities in Low Estimate Best High Low Estimate Best High COS(3)
mmbbls Estimate Estimate Estimate Estimate
------------- ---------- ---------- ------------- ---------- ---------- -------
Western Kodiak
Leases - 7,866 11,508 - 6,474 9,471 >90%
------------- ---------- ---------- ------------- ---------- ---------- -------
Eastern Ahpun
Leases 2,025 2,243 2,470 1,668 1,847 2,034 70%
------------- ---------- ---------- ------------- ---------- ---------- -------
Totals - 10,109 13,978 8,321 11,505
------------- ---------- ---------- ------------- ---------- ---------- -------
TRR(2) Gross Recoverable Net Recoverable(1)
------------------------------------- ------------------------------------- -------
Quantities in Low Estimate Best High Low Estimate Best High COS(3)
mmbbls Estimate Estimate Estimate Estimate
------------- ---------- ---------- ------------- ---------- ---------- -------
Western Kodiak
Leases - 629 1,726 - 517 1,420 >90%
------------- ---------- ---------- ------------- ---------- ---------- -------
Eastern Ahpun
Leases 280 367 478 242 317 413 70%
------------- ---------- ---------- ------------- ---------- ---------- -------
Totals(4) - 996 2,204 834 1,833
------------- ---------- ---------- ------------- ---------- ---------- -------
(1) Estimated based on 16.67% State royalty for Western Kodiak
Leases and 12.5% State royalty for the Eastern Ahpun Leases. All
subject to 1 % Overriding Royalty Interest ("ORRI") in favour of
eSeis.
(2) Company estimates of TRR are based on 8% recovery factor
("RF") in tight formations and up to 20% in formations exceeding
the conventional threshold. No resources are attributed to natural
gas because there is currently no market on the North Slope and any
gas not used for fuel is modelled to be reinjected into the
reservoir.
NGL and Condensates stripped from the production stream are not
explicitly recognised within these figures pending GeoMark
reservoir fluid composition analysis. Until GeoMark's analysis is
received, the basis of estimation is consistent with the SLB
reservoir modelling report released on 8(th) December, 2022.
(3) COS is the Geological Chance of Success - the probability
that hydrocarbons will be encountered and capable of flowing to
surface. The target formations in the western leases covering the
extension of the Kodiak field are the same horizons encountered in
the Pipeline State, Talitha-A and Theta West-1 wells, resulting in
a high COS. The eastern Ahpun leases exhibit the seismic
characteristics indicating hydrocarbon pay but cannot be confirmed
until penetrated by a well.
(4) The Kodiak volumes have been estimated deterministically and
the Ahpun volumes have been estimated probabilistically. The totals
do not represent the statistical addition of these estimates.
The above quantities are solely attributable to the new
leases.
Pantheon is working with NSAI and SLB to re-evaluate the entire
portfolio in light of the acreage additions and the fluid
composition analysis by GeoMark. The Company is targeting NSAI to
provide an updated Independent Expert Report ("IER") on Kodiak in
Q1 2024 and an IER on Ahpun in Q2 2024.
Kodiak Area Leases
Last year, Pantheon successfully bid for the acreage to the
North of the Theta West-1 well that is expected to contain
substantial recoverable oil (included in August 2023's NSAI IER).
However, the Company's financial situation prevented it from
acquiring all of the acreage that it expected to contain the best
quality resources. In recent Stock Exchange Announcements and
webinars, the Company has shared analysis supporting the
improvement in reservoir quality and the increasing proportion of
conventional hydrocarbon pay expected to be confirmed in future
appraisal wells. However, for obvious commercial reasons, it was
not appropriate for management to publish estimates of the full
potential of the Kodiak field outside of the areas under lease.
This is no longer a concern.
Ahpun Area Leases
Pantheon has long recognised the resource potential of the
northerly progradations of the shelf margin deltaic horizons
extending beyond the current lease holding to the east (beyond the
Dalton Highway and Sag River). In fact, the Company once held this
acreage but the logistical challenges of operating on the east side
of a major river system away from the export and transport
infrastructure resulted in a decision to relinquish the acreage for
financial reasons until there was a development plan.
The Company's new leases capture as much of this easterly
potential in the Ahpun field as Pantheon estimates can be
commercially produced at industrial scale given current technology.
Pantheon management's confidence (Geological Chance of Success,
70%) that there are recoverable volumes is based on three factors
resulting from the recent appraisal programme:
1. Proven ability to identify hydrocarbon bearing zones from
seismic, successfully demonstrated in its recent drilling campaigns
including Talitha-A, Theta West-1 and Alkaid-2. The additional
progradations of the shelf margin horizons have a very clear
hydrocarbon signature on seismic.
2. Each additional cycle of the shelf margin system has a
reduced Dmax and the best quality expression of these reservoirs is
seen in the horizons deposited from the Southwest to the Northeast
(as illustrated by the SMD-B reservoir exhibiting permeabilities at
least two orders of magnitude higher than the Alkaid ZOI). Indeed,
the next cycles may exhibit better quality conventional reservoir
parameters.
3. The Company's assessment of commercially producible light oil
in the shelf margin horizon at Alkaid-2.
The successful acquisition of 66,240 acres via this lease sale
is expected to deliver a substantial resource upgrade for Pantheon.
The new acreage to the west secures the entirety of the best
predicted reservoir in Kodiak in a structurally higher location
where the Company expects continued improvement in reservoir
parameters, even to a point where they meet the threshold to be
recognised as conventional. To the east, the acreage secures the
accessible extent (and projected best quality potential reservoirs)
of Ahpun that avoids placing infrastructure across the Sag River,
with all its attendant costs. With the 2014 3D Seismic publicly
available before the next anticipated lease sale, the Company has
removed the risk that a competitor would find this acreage
attractive - particularly if the exploration programme east of the
Sag River yields successful results this winter.
Investor Presentation
Pantheon will provide an update on the new lease acquisition and
the updip, conventional resources in the Kodiak Field and eastern
extent of the Ahpun Field via Investor Meet Company on Thursday
14(th) December 2023, at 5:00pm GMT.
The presentation is open to all existing and potential
shareholders. Registration details can be accessed at:
https://www.investormeetcompany.com/pantheon-resources-plc/register-investor
Questions can be submitted pre-event via your Investor Meet
Company dashboard up until 9am the day before the meeting or at any
time during the live presentation.
For regulatory and compliance reasons, Pantheon will not engage
on social media and any questions that investors or others may have
outside of a scheduled webinar should be addressed to
contact@pantheonresources.com where your questions will be
responded to in a timely manner.
-ENDS-
Further information, please contact:
Pantheon Resources plc +44 20 7484 5361
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
Ana Ercegovic +44 20 7523 8000
BlytheRay
Tim Blythe
Megan Ray
Matthew Bowld +44 20 7138 3204
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, who has nearly 40 years' relevant
experience within the sector and is a member of the Society of
Petroleum Engineers.
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").
The volumetric assessments were prepared by management in
accordance with the definitions and guidelines set out in the 2018
Petroleum Resources Management System approved by the Society of
Petroleum Engineers.
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,
following issue of the new leases, it will have a 100% working
interest in c. 259,000 acres. Certified contingent resources
attributable to these projects exceeds 1 billion barrels of
marketable liquids, located adjacent to Alaska's 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
estimates for the Ahpun Field.
Glossary
ANS - Alaska North Slope
Contingent Resources
Those quantities of petroleum which are estimated, on a given
date, to be potentially recoverable from known accumulations, but
which are not currently considered to be commercially
recoverable.
IER - Independent Expert Report
FID - Final Investment Decision
OIP - Liquid Hydrocarbons in Place
In the reservoir, the liquids in place consist of a mix of
hydrocarbons that may be produced and separated at surface into
crude oil, condensate and natural gas liquids,
ORRI - Overriding Royalty Interest
An undivided interest in a mineral lease giving the holder the
right to a proportional share (receive revenue) of the sale of oil
and gas produced. The ORRI is carved out of the working interest or
lease.
NSAI - Netherland, Sewell & Associates, Inc.
NRI - Net Revenue Interest
The portion of production remaining after deducting related
burdens (such as royalties payable to the State of Alaska and
overriding royalties) from any working interest held.
Prospective Resources
Those quantities of petroleum which are estimated, on a given
date, to be potentially recoverable from undiscovered
accumulations.
RF - Recovery Factor
The proportion of hydrocarbon initially in place that is
recoverable, normally expressed as a percentage.
TAPS - Trans Alaska Pipeline System
TRR - Technically Recoverable Resources
Those quantities of petroleum producible using currently
available technology and industry practices, regardless of
commercial considerations.
W.I. - Working Interest
The percentage of ownership in a lease that gives the working
interest owner the right to explore, drill, and produce oil and
gas. The investor is responsible for all costs incurred to explore,
develop, and conduct production operations.
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