(Sharecast News) - Alaskan North Slope-focussed oil and gas company Pantheon Resources said on Monday that it has formally executed contracts for the Nabors 105AC drill rig to drill the Alkaid 2 well, scheduled to spud in July.
The AIM-traded firm said if successful, it would start a long term production test, and truck and sell the produced oil to a nearby North Slope facility.
It said the well has three objectives, with the first being to appraise the shallower Shelf Margin Deltaic horizon, which management believes contains a contingent resource of 2.6 billion barrels oil in place and 404 million barrels recoverable resource.
The second resource would be the start of a long-term production test of the primary objective Alkaid horizon, which the independent expert engineering firm Lee Keeling estimated to contain 76.5 million barrels of oil contingent resources recoverable.
Pantheon said the final objective would be to evaluate the extent of the oil column within the Alkaid horizon immediately below the total depth at Alkaid 1.
Alkaid 1 was terminated within the oil zone due to flooding of the Dalton Highway at the time.
Based on seismic and other analytical analysis, the company said it believes the Alkaid horizon's oil zone is "substantially thicker" than reported to date, offering the potential for additional resource growth.
The firm also explained that the Alkaid 2 well is a step-out from the Alkaid 1 discovery well, which was drilled as a vertical test well and flow tested 108 barrels of oil per day through a six-foot perforated interval.
Alkaid 2 would be drilled horizontally to maximise flow rates, and was expected to "substantially exceed" those seen at Alkaid 1.
"Following our successful winter season, we are moving ahead by securing the rig and necessary permits for the construction of the pad at Alkaid #2 planned for this summer," said chief executive officer Jay Cheatham.
"We are on track to spud in July, allowing Pantheon to commence a long-term production test and, importantly, begin generating revenue for the company, as well as conducting potentially impactful appraisals of the Shelf Margin Deltaic and the deeper portion of the Alkaid horizon."
At 1156 BST, shares in Pantheon Resources were up 3.92% at 135.1p.
Reporting by Josh White at Sharecast.com.
Pantheon Res (PANR)