REG - Pantheon Resources - CGA Initial Resource Estimate for Ahpun Topsets

Pantheon ResourcesAnnouncement

11/06/2024 07:00

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RNS Number : 8753R  Pantheon Resources PLC  11 June 2024

11 June 2024

 

Pantheon Resources plc

Cawley Gillespie & Associates Initial Resource Estimate for Ahpun Field
Topsets at 280 Million Barrels Recoverable ANS Crude

 

Pantheon Resources plc (AIM: PANR) ("Pantheon" or "the Company"), owner of
100% working interest in the Kodiak and Ahpun oil fields, is pleased to
announce the results of the recent Independent Expert Report ("IER") by Cawley
Gillespie & Associates, Inc. ("CGA"). This completes the independent
estimates for the Company's aggregate resources from the Kodiak field, Ahpun
western topsets and Alkaid horizon resulting in totals exceeding 1.5 billion
barrels ("Bbbl") of ANS Crude and 6.5 trillion cubic feet ("Tcf") of
associated gas.

 

Highlights

CGA has completed its initial IER for the western topset horizons in the Ahpun
oil and gas field (formerly named the SMD), located in the North Slope Alaska,
and estimate the 2C contingent recoverable resources to be:

 

                               Gross Quantities  Net Quantities

                               (100% WI)         (Net of Royalties)
 Oil -mmbbl                    152.48            128.47
 NGL - mmbbl                   129.58            109.25
 Total of Oil and NGL - mmbbl  282.06            227.72
 Gas - bcf                     803.85            0(1)

 

 1  At the time of CGA's engagement there was no recognised commercial market
for the natural gas production, accordingly CGA attributed zero revenues to
natural gas production in this analysis and therefore zero net resource is
recognised until such time as the gas sales agreement is executed.

 

As was the case with Lee Keeling & Associates ("LKA") which recently
updated its IER on the Alkaid horizon of the Ahpun field, CGA has evaluated
the economics of the best estimate or 2C case. Based on an ANS Crude price of
$80 per barrel delivered to the US West Coast, CGA estimates the net present
value of the total contingent resources in the western topsets in the Ahpun
field (using a real discount rate of 10%) at $1.74 billion.

 

This report extends the independent assessments of all the Company's
contingent resources discovered, appraised and for which development approvals
are being prepared. As previously announced, the Company is targeting Final
Investment Decision ("FID") at the earliest possible date subject to
regulatory consents, but in any case, to allow first production no later than
2028.

 

Pantheon commissioned CGA to prepare the independent report on the Ahpun field
as it progresses funding options for its projects. This IER incorporates data
obtained from the successful completion and test of the shallower topset
horizon in the vertical section of the Alkaid-2 well in Q4 2023. For that
test, Pantheon utilised a revised frac design with success, including using
finer mesh sand and at a lower concentration in a slick water stimulation.
This resulted in a materially improved frac efficiency compared to the
completion in the horizontal section of Alkaid-2 and will be the starting
point for all future frac designs. Pantheon was also able to obtain down hole
pressure data and fluid samples consisting of oil, gas and condensates/NGLs.
This allowed analysis of reservoir pressure and permeability leading to a
better understanding of the western topsets reservoir parameters and potential
development economics. These estimates can only be upgraded from the
contingent resource to the reserves classification following FID.

 

This initial IER is based on Pantheon's base case development plan for Ahpun,
but does not yet incorporate the benefits of planned infill drilling (or
"wine-racking") in the southern portion of the topsets, where they are
thickest. Analysis of the interference between "parent" and "child" wells in
such a scenario is more complex and time consuming and will only be required
later in the process of achieving FID. Preliminary management estimates
indicate that "wine-racking" the wells in this area would add an additional c.
80 million barrels ("mmbbl") of high value recoverable resources. When
combined with CGA's estimate, this would bring the total expected ultimate
recovery from the Ahpun western topsets to c. 360 mmbbl as compared with the
previously released management estimates (based on in-place quantities and a
generalised recovery factor assumption) of 404 mmbbl.

 

Jay Cheatham, Pantheon Chief Executive, commented: "Cawley Gillespie &
Associates have validated Pantheon's assessment that the Ahpun topsets on the
west side of the Dalton Highway can be economically developed, even after
excluding the potential market offtake for natural gas. The best estimate of
282 mmbbl of contingent recoverable resources of ANS crude and 803 billion
cubic feet ("bcf") of natural gas underscore our ability to support the
in-State phase of the Alaska LNG project, initially with Ahpun volumes and, in
due course, Kodiak field resources."

 

David Hobbs, Pantheon Executive Chairman, commented: "We now have independent
validation of all the contingent resources we are working to develop,
including support for the commerciality of the Ahpun development, which will
be first onstream given its immediate proximity to the established pipeline
and road infrastructure. Validation of Pantheon's natural gas resources, in
particular, is of great value as these resources enabled us to develop a
strategic relationship with the State of Alaska resulting in the Gas Sales
Precedent Agreement that we expect has the potential to lead to a long term
take or pay agreement that could be used to support the funding of our
post-FID capital costs.

 

"We will update the independent assessment of the Kodiak field to evaluate the
economics of that development after we drill and test the planned appraisal
wells up dip in the new acreage secured at the last two lease sales, subject
to funding."

 

The Company plans to conduct a webinar at the end of June 2024 to discuss the
results of the independent resource estimates, the recently concluded Gas
Sales Precedent Agreement and its funding strategy for funding the development
of Ahpun.

 

 

Further information, please contact:

 

 Pantheon Resources plc                                                  +44 20 7484 5361

 David Hobbs, Executive Chairman

 Jay Cheatham, Chief Executive Officer

 Justin Hondris, Director, Finance and Corporate Development

 Canaccord Genuity plc (Nominated Adviser and broker)                    +44 20 7523 8000

 Henry Fitzgerald-O'Connor

 James Asensio

 Ana Ercegovic

 BlytheRay                                                               +44 20 7138 3204
 Tim Blythe, Megan Ray, Matthew Bowld

 

The estimates in the CGA 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 full report
will be available at:

https://pantheonresources.com/index.php/investors/shareholder-documents
(https://pantheonresources.com/index.php/investors/shareholder-documents) .

 

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 its 100% owned Ahpun and Kodiak fields located on State of Alaska
land on the North Slope, onshore USA. Independently certified best estimate
contingent recoverable resources attributable to these projects currently
total more than 1.5 billion barrels of ANS crude and 6.5 Tcf of associated
natural gas.

 

The Company owns 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 to the west, reflected in NSAI's Kodiak IER and
prospective resources to the east, contiguous with the Ahpun project.
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.

 

Pantheon's stated objective is to demonstrate sustainable market recognition
of a value of $5-$10/bbl of recoverable resources by end of 2028. This is
based on bringing the Ahpun field forward to FID and producing into the TAPS
main oil line (ANS crude) by the end of 2028. The Gas Sales Precedent
Agreement signed with AGDC foresees natural gas produced into the planned
807-mile pipeline from the North Slope to Southcentral Alaska during 2029.
When the company achieves financial self-sufficiency, it will apply the
resultant cashflows to support the FID on the Kodiak field planned, subject to
regulatory approvals, 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. Furthermore, the low CO2
content of the associated gas allows export into the planned natural gas
pipeline from the North Slope to Southcentral Alaska without significant
pre-treatment.

 

The Company's project portfolio has been endorsed by world renowned experts.
Netherland, Sewell & Associates estimate a 2C contingent recoverable
resource in the Kodiak project that total 1,208 mmbbl of ANS crude and 5,396
bcf of natural gas. Cawley Gillespie & Associates estimate 2C contingent
recoverable resources for Ahpun's western topset horizons at 282 mmbbl of ANS
crude and 803 bcf of natural gas. Lee Keeling & Associates estimated
possible reserves and 2C contingent recoverable resources totalling 79 mmbbl
of ANS crude and 424 bcf.

 

Glossary

 

Bbls: Barrels

 

Bbbl: Billion barrels

 

Bcf: Billion cubic feet

 

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.

 

 

Mmbbl: Million barrels

 

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.

 

Tcf: Trillion cubic feet

 

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%.

 

 

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