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Good point Brombard,

An oversight on my part. We didn't really talk much about it last night. I suspect the next catalyst there will be either us getting the seismic done, or awaiting the seismic that OSH are doing. One hypothesis would be that they find something on the 3D on the Western Blocks (I believe it's going over our acreage) and they approach us to buy the lot. Or buy-in.

Sorry that should say:
On conventional failure:
1) Additional wells to test Charlie to the North and Victor to the East 20/21 @30% WI costs, but PMO may well decide not worth the expenditure given results of Charlie-1
2) 3D Seismic over Eastern Fairway 20/21
3) Push on Yukon 20/21

So there's two macro outcomes from this well that we need to treat independently:
1) we can hit conventional from 1 or more of the 7 targets and get it to flow at 100 barrels per day. Note: two zones max can be tested
2) the data we collect from the HRZ confirms that the unconventional is still game on and that the kerogens are less mature in other parts of our acreage.

So if 1 is negative, 2 can still come in.

Specifically on the conventional, Dave talked about the fact that there is Charlie to the North and Victor to the East, they may well be explored on either the failure or success case, although I suspect on success they will be put on the back burner. On failure they may come into focus, and then there is a question over whether PMO would want to get involved on 3D Seismics on the rest of the acreage.

He did mention Yukon very much still in play, and my take is that it's being viewed right now as bottom of the priority list, almost as contingency plan, but may well become a focus if Charlie-1 fails.

So my prognosis, on conventional success:
1) lateral well from Charlie-1 to test flow 20/21
2) If lateral successful possibly a couple of more wells 21/22 to prove up
3) Additional wells to test Charlie to the North and Victor to the East 21/22 (maybe accelerated to 20/21) @30% WI costs
4) Look for full or partial sale 2022 to PMO or another
5) 3D Seismic over Eastern Fairway 20/21
6) Re: Yukon - not sure I would drive forwards with all the above going on until we've got significant cash in the bank or a 3rd party approaches us with appetite to get moving

On conventional failure:
1) Additional wells to test Charlie to the North and Victor to the East 21/22 (maybe accelerated to 20/21) @30% WI costs, but PMO may well decide not worth the expenditure given results of Charlie-1
2) 3D Seismic over Eastern Fairway 20/21
3) Push on Yukon 20/21

A bit speculative

Oh and one more thing - triggered by the word Malguk in your post Brom.

They said when they started the FO they were approached by one of the guys on the Malguk drill. I think who was with one of the companies looking to farm in. Apparently he stated something along the lines of "we want in as I know what I saw when we drilled Malguk". It was something like that anyway.....

Thanks Brombard - will take a look.

One more thing that I took from the session: Dave mentioned that we were "really close" to farming out the HRZ before. He wasn't specific on timelines, it was when DB was still around. But the thing that struck me was that he repeated several time "really really close" and my subjective take was a little regret. None of us will know who, or how close, but I took some positivity from that and got the impression they were at contracting stage.

Makes sense GaryM, although Dave was questioned on the Icewine drill and reasons for it not flowing.

Icewine not flowing- this was possibly the lowlight for me. Dave was questioned on the failure again, and having this time last year stated it was due to what Gary stated below re: gas in the lower zone, this time the root-cause was stated as the over mature kerogens - i.e. the bitumen at Icewine.

A couple of other reflections.

Thicker sands then at Prudhoe - Dave talked about how the sands on our acreage are thicker than at Prudhoe - in particular that Torok is 700ft - which on reflection is huge and something I'd overlooked. He also said that as you move to the East the Clinoforms get steeper which is good for thickness of sands. Versus at Prudhoe where the beach is where the clinofroms are less steep and sands less thick. Good to remember that we still have no 3D seismic over the Central and Eastern Fairway yet - and if you look back at the resource upgrade from 2D to 3D on the western acreage then there could be much more to come (my speculation not anything Dave said).

PMO spotted something we didn't - someone mentioned this earlier, and I may have misunderstood - but when questioned what they saw Dave went to slide 11 in the pack and pointed and Victor A&B on the map. Looking back at previous packs I can see this resource has upgraded to 328 gross mean from 217.

On success, the strategy per tonight's conversation would be to prove up the reserves. Flowing 100 barrels per day from this well would be a great outcome, and the intention would be to then come back drill a lateral and see if we can flow several 1000 per day. That plus a couple of other wells to test to the North and possibly to the East would help us prove up the resource, but with our share of drilling costs relative to our WI of 30% - so much less per well than previously. My take was that the strategy is to prove up the reserves similarly to how Armstrong and Repsol did, and Dave mentioned this a few times as well as the OS $3 per barrel when oil was at $45.

So 2 years of proving it up, and then possibly a sale @$3 per barrel. The drill on success will be value accretive, but the real value will come over the next couple of years. Will require a little patience yet...

Also talked a lot about the value of understanding the HRZ better with this well. I also got the sense that the HRZ data from this well will be critical to the strategy for HRZ forwards. If the data gives us positive data then great - and this will help us push it forwards. If the data does not support the HRZ hypothesis then it will cast real doubt on the HRZ commercial probability.

Final point is the next Seismic will be shot hopefully winter 20/21 with the Eastern fairway the favoured target.

To be clear what Dave and Steve said was: 100% there is oil in the Torok formation. Whether or not it will flow at commercial rates is not known at this point in time. They also highlighted the risk of the depth the Torok is at, and how that may mean the sands have compressed over time. But I didn't take anything negative from this, I thought it was upbeat, honest and straight.

I suspect it’s the Winx block which they are covering. It’s slap bang in the middle of their acreage per the below

http://dog.dnr.alaska.gov/Documents/Maps/10-21-2019__NorthSlopeNotificationLesseeMap.pdf

https://www.petroleumnews.com/pnads/407244340.shtml

http://dog.dnr.alaska.gov/Documents/Maps/ActivityMaps/NorthSlope/2019-10-07_Activity_Map_North_Slope__Web.pdf

http://dog.dnr.alaska.gov/Documents/Maps/10-21-2019__NorthSlopeNotificationLesseeMap.pdf

https://www.nextoilrush.com/88e-drill-one-biggest-oil-wells-world-2020/

I still go back to some of the results from IW1, these taken with Pantheon data to me suggest the Central/Eastern Block could have some interesting potential, be great to run the 3D seismic over the area. Talitha is 5 miles north of our acreage I think. Interesting that Pantheon are looking the Kupurak given what we discovered.

"In addition to the unconventional HRZ play, a number of conventional reservoir targets were
tested by the drilling of the Icewine#1 well with the following key highlights:
o Excellent reservoir was encountered over the Kuparuk sands interval from 11,262’ –
11,320’ with elevated gas readings over a 58 foot gross interval – a detailed
petrophysical log interpretation is underway
o Preliminary log interpretation of the Kuparuk sand interval indicates porosities of up to
15% and good permeability
o The reservoir quality in this Kuparuk sand interval is substantially higher than
anticipated, which is extremely positive for deeper conventional prospectivity on the
Project Icewine acreage
? As reported previously, the shallow Brookian sequence intersected had excellent reservoir
quality and hydrocarbon shows through out the section"

AND

"Early Conventional Insights – Icewine Conventional Potential High-Graded
The HRZ remains the primary target at Icewine and results to date are encouraging for the play in
the project area, although full evaluation will not be complete for several months. Additionally,
preliminary petrophysical analysis of the logs acquired in the intermediate section from 3,500’ –
8,500’ are encouraging for Brookian conventional potential at Icewine#1 and across the
leasehold.
For example, one of several conventional zones of interest in the Brookian sequence at
Icewine#1 extends from approximately 4,000’ to 4,400’ and comprises a series of three stacked
fine grained sandstone to siltstone sequences within the Schrader Bluff Formation. The
sequences range from 61’ to 110’ in gross thickness with net:gross ranging from 78% – 100%.
The average porosities of the clastic sequences are within the range of 18% - 19% with peaks of
up to 28% porosity. Preliminary petrophysical analysis supports oil saturations in these sandstone
units above 60% and up to 75%. Hydrocarbon shows whilst drilling this interval encountered mud
log gas shows comprising predominantly C1 and minor oil shows, likely due to the fact that this
interval is not within closure.
The commercial implications of these hydrocarbon bearing Brookian sandstones will be fully
investigated following the completion of the well. The indications of significant volumes of oil in
the system and excellent reservoir are highly encouraging on a regional basis. The challenge is
now to find the oil within closure on the Project Icewine leasehold, which requires 3D seismic."

Agreed Catsize,

Worth noting as well that Pantheon have a deal with eSeis who are doing seismic analysis in exchange for a royalty on production. They may well be helping us understand the Winx seismic as well given it was originally on Great Bear acreage Pantheon now have all that data via their GB acqusition.

The other thing interesting in this is the value of the proximity of the Dalton highway, which is cited as being worth $100s m of cost saving versus being out on the tundra. Interesting when we look to the eastern part of our acreage.

Team,

Latest from Pantheon - of particular note to us is Talitha given proximity to our acreage to the north.

http://www.pantheonresources.com/investors/presentations/637-investor-presentation-alaska-september-2019/file

GG I believe we should. What I’ve not been able to find is the balance of outstanding tax credits for GB at time of acquisition. But I believe we should have inherited onto our balance sheet. They’re only eligible for certain exploratory costs, bit given the $200m+ spent I’m guessing we’re due some....

Thanks BOBHOPE,

So the calculations are based on trying to put a value on the net holding to 88e (so gross minus BEX WI) and taken from the second page of the news http://clients3.weblink.com.au/pdf/88E/02137409.pdf. So if one wanted to calculate the equivalent for BEX then would beed to take their net barrels and multiply through by the per barrel values. I only focused on 88e.

Yup totally agree re drill costs, but the valuation essentially puts a cost on the oil in the ground based on what PMO have paid. So at a 1.5 cents per barrel valuation for Area A vs. current price of Alaskan crude USD 61.8 that is taken into account in the valuation. The low value per barrel takes into account the risk profile of it flowing at commercial rates and the future cost of extraction to some extent.

Hope that makes sense.

Afternoon,

I've been playing with the numbers a little, and have read the Next Oil Rush article with interest. I think one oversight in that article is that it makes the assumption that the value of the acreage is homogenous - i.e. that Area A is 40% of the acreage, and therefore B and C are the remaining 60% and the value of those is linear with Area A. I'm not so sure that assumption holds given the non-linear distribution of prospects. A = 2,400mmbo, B = 373mmbo and C=124mmbo.

An alternative valuation method would be to base it on the estimates and the numbers in the deal.

Area A = USD23m for 60% of 2,400mmbo = USD0.0159 per barrel therefore 88e's 720mmbo = USD11.49m = GBP 9.31m
Area B = USD15m for 50% of 373mmbo = USD0.08 per barrel therefore 88e's 193mmbo = USD15.44m = GBP 12.5m
Area C = USD15m for 50% of 124mmbo = USD0.24 per barrel therefore 88e's 96mmbo = USD23.04 = GBP 18.66m

So total IW conventional valuation Premier has put on our acreage net to 88e is GBP 40.47m

At current MCap of GBP 57m that puts a GBP 16.5m valuation on Unconventional, Yukon and Winx.

So let's zero out Winx for the mo, and try and place a value on Yukon and Unconventional. Assuming the per barrel valuation of Area A as it's the lowest and to be conservative, then:

Yukon has 89.6mmbo at USD0.0159 per barrel = USD 1.42m or GBP 1.15m
Unconventional low end has 800mmbo and at USD0.0159 per barrel = USD 12.72m or GBP 10.3m
Unconventional high end has 2000mmbo and at USD0.0159 per barrel = USD 31.8m or GBP 25.75m

So we could apply a value of between GBP 11.45m and GBP 26.9m to Yukon and Unconventional.

Bringing a total valuation for Yukon, IW Conventional and Unconventional of between GBP 51.92m and GBP 67.37m at this moment in time.

Clearly lots of assumptions, and worth remembering that the reason Area A has more prospectivity is because that's the area we shot the 3D seismic (it went from 1,194mmbo on 2D to 2,400 on 3D). We do not know fully what sits beneath B and C yet as we only have 2D there, and if the Western Flanks are anything to go on then some serious upside (which will make that USD 15m for 50% look cheaper).

Keen to hear views.

Thanks

http://www.pantheonresources.com/investors/presentations/628-fund-raising-presentation-july-2019/file