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(Sharecast News) - Oil and gas company Pantheon Resources announced the formal acceptance and payment for the award of 39,540 acres by the Alaskan Department of Natural Resources (DNR) on Thursday.
The AIM-traded firm said it was the successful bidder in last year's state lease sale, adding that the granting of the leases from the DNR was expected shortly, pending standard formalities.
Of the total acreage awarded, 25,460 acres constitute the northern extension, known as 'the Chimney', and the updip portion of Pantheon's Theta West Basin Floor Fan.
The remaining 14,080 acres fill in the areas around Pantheon's Alkaid and Talitha Units along the Dalton Highway and Trans Alaska Pipeline.
It said the new additions would extend the existing discoveries made by Pantheon using its proprietary 3D seismic technology.
While a comprehensive evaluation of the new acreage was currently underway, Pantheon said it expected an upgrade to its resource base as a result of the expansion.
In December last year, Schlumberger (SLB) completed the first phase of its static and dynamic reservoir model, estimating 10.9 billion barrels of oil in place within Pantheon's existing leases in the Basin Floor Fan (BFF) complex.
However, the newly-acquired acreage was not part of the original SLB estimates.
The BFF resources in the additional acreage were structurally higher, or 'updip', from the Theta West 1 discovery well.
That structural elevation in shallower reservoir depths was expected to improve reservoir properties by reducing compaction due to a shallower Maximum Depth of Burial (Dmax).
Consequently, the enhanced reservoir qualities were projected to lead to increased recovery and better reservoir productivity.
Pantheon said it intended to test the BFF reservoir in the new leases at a depth of around 6,200 feet - 750 feet higher than the discovery depth in the Theta West 1 well.
The shallower drilling targets were expected to reduce drilling costs, while the forecast higher productivity should enhance the economics of potential development in the area.
Pantheon noted that Theta West 1 exceeded its pre-drill expectations for the northern extent of the accumulation, prompting the decision to secure additional leases in what was believed to hold the highest-quality resources within this significant discovery.
To incorporate the additional resources, SLB would update its models, and Netherland Sewell would include those resources in its assessment of contingent resources on the Theta West and Alkaid projects.
Pantheon said that independent assessment, expected to be completed over the summer for Theta West and the autumn for Alkaid, would represent the first comprehensive evaluation of the recoverable resources identified through its appraisal programmes in the past two and a half years.
"Pantheon will soon have around 193,000 acres under lease with a material resource base in the billions of barrels," said chief executive officer Jay Cheatham.
"In the past we have limited our public profile to reduce competition for offset acreage while we acquired the current acreage position.
"Pantheon and its predecessor Great Bear have made significant investments over the past decade securing this vast acreage position, assisted through the advantage of having sole use of 1,000 square miles of high quality 3D seismic."
Having now secured the desired acreage, Cheatham said Pantheon now intended to increase the profile of its project geology "without fear of competition", and to assist in attracting potential farm-in partners.
"This process commenced last week where AHS/Baker Hughes presented a case study using the Theta West volatiles analysis to the Society of Petroleum Engineers (SPE) Western Regional Meeting in Anchorage.
"We will also begin participating in other relevant industry meetings to raise the profile of the assets."
At 1437 BST, shares in Pantheon Resources were down 2.86% at 15.29p.
Reporting by Josh White for Sharecast.com.
