RE: Level 2 Very strong9 Apr 2024 08:29
WHI View: For a super-giant oil and gas field under appraisal, Kodiak benefits from exceptionally high quality controlling data, namely, three well penetrations (the most recent of which was a very significant step out well that came in on prognosis) and, critically, 3D seismic coverage that eSeis has calibrated to control the stratigraphic extent of the productive reservoir. The point is that there is a high degree of confidence in the NSA estimates and future appraisal results will have direct read-across to a massive scale resource. Scale matters in our opinion. Specifically, scale attracts funding. Scale also presents Kodiak as a means of providing meaningful growth in the context where US shale oil production in the Lower 48 states is stalling. We believe that given the high quality of the Kodiak resource and the very real potential to optimise developmental wells to fully exploit the relatively high natural permeability and porosity of the field, the company will be focusing on the upside case in terms of what is really at stake – a view that we believe is corroborated by our observation that the main US shale plays considerably overdelivered relative to initial expectations. That focuses attention on the 40% uplift to the upside case (3C) recoverable resource estimate of 2,840 million barrels of liquids and 11.75 tcf of natural gas, provided by NSA. The update is positive and provides unequivocal validation of the resource potential of Pantheon’s 100% held Kodiak field from a globally recognised expert, namely, Netherland Sewell & Associates. We remind investors that we have long-believed that the macro context will be determinant for the fortunes of Pantheon and we see that context changing significantly and positively for Pantheon. We highlight rising oil prices and an increasing appreciation of the potential for oil scarcity into the mid-term and long-term, due mainly to the tiring out of US shale oil production in the Lower 48