Pantheon Res Regulatory News (PANR)

19 April, 2021

Pantheon Resources plc

Operational update, Talitha #A well

Pantheon Resources plc ("Pantheon" or the "Company"), the AIM-quoted oil and gas exploration Company with a 100% working interest in projects spanning c.160,000 acres covered by 3D seismic and advantageously located adjacent to transportation and pipeline infrastructure on the Alaska North Slope, provides the following update following the conclusion of operations at the Talitha #A well:

Talitha #A well - conclusion of operations and overview  

Operations at the Talitha #A well have concluded with the well suspended for future testing operations. The well encountered five stacked, independent oil-bearing reservoir zones over a 3700 ft interval which management believes has validated its earlier assertion of over 1 billion barrels recoverable oil potential from this multi-billion barrel oil in place play at Talitha. Testing of the deepest of these zones, the Kuparuk formation, which flowed high-quality light oil intermittently at rates up to 100 BOPD, a disappointing rate, encountered a number of operational issues. The Kuparuk horizon at this location was overpressured which was both unexpected and unlike any known Kuparuk well regionally, which caused challenges in testing. The four normally pressured shallower zones, all of which encountered light oil and offer excellent potential based upon analysis to date, will be tested in a future program.

The Company collected an enormous amount of drilling, logging and testing data which will be evaluated. Additionally, Pantheon has engaged the experts at Baker Hughes and Advanced Hydrocarbon Stratigraphy ("AHS") to provide Volatile Analysis Service ("VAS"), a comprehensive, sophisticated and independent evaluation of hydrocarbon presence in the well bore, using mass spectrometry analysis of well cuttings. Pantheon also used conventional data collection techniques including 'Logging While Drilling', mud logging, side wall cores and an entire suite of wireline logs. Baker Hughes AHS identified five independent highly prospective zones with high oil saturations and low or moderate water saturations. These correlate directly to Pantheon's five target zones.

Comprehensive analysis of the VAS and wireline data from these zones over the forthcoming months will enable the Company to fully optimize its testing program for next season, as well as enabling lengthier flow tests.

Update on testing of the Kuparuk horizon

The Kuparuk proved more geologically complex than expected. The well encountered ± 60 ft of well-developed sand with high resistivity readings, indicating the presence of hydrocarbons, independently confirmed by VAS. Talitha #A demonstrated the key elements of a proven hydrocarbon system in the Kuparuk formation with the presence of movable high-quality (± 42° API) oil, however during testing the well-produced oil intermittently along with solution gas, with formation water fresher than anticipated. These flow rates were not consistent with our expectation based on Talitha logs compared to nearby Kuparuk field production.

A comprehensive analysis of the Kuparuk, supported by third party experts, has already commenced to gain a greater understanding of the atypical reservoir characteristics encountered. Based upon analysis to date, the Kuparuk very much remains a viable target on the Company's acreage. Early analysis suggests that the Kuparuk horizon at this location might respond better to different drilling fluids and techniques, however ultimate recoveries may be lower than originally estimated. This work is just starting, and a formal conclusion will be reported when completed.

Well Strategy

The Talitha #A well location was selected as the optimal location for the shallower Shelf Margin Deltaic horizon, the primary target of the well. The Kuparuk at this location is some 800 ft downdip from its ideal 'updip' position and was a secondary target.

Our technical team prioritised testing the Kuparuk formation and ultimately recommended deferring plans to test the shallower horizon during this drilling season because the well logs of the Kuparuk indicated much better developed reservoir than at Pipeline State #1, comparable to those in highly productive nearby Kuparuk fields. Based upon the well logs (and regional comparatives), the associated disappointing flow rates, were a surprise.

Update on shallower horizons

Pantheon is extremely encouraged by the analysis of the shallower zones in the Talitha #A well. The reservoir qualities are in line with expectations, the oil appears to be lighter than expected and an additional significant zone has been discovered, increasing the total resource potential significantly. These zones are all independent of the Kuparuk and will be tested next winter.

Talitha #A reached a total depth of 10,456 ft and confirmed five potentially productive zones, all of which were oil bearing as follows (from shallowest to deepest):

(i) Shelf Margin Deltaic ("SMD")

(ii) Slope Fan System

(iii) Upper Basin Floor Fan

(iv) Lower Basin Floor Fan

(v) Kuparuk

An enormous volume of high-quality data has been collected from drilling Talitha #A which has both de-risked these zones for future drilling, and increased confidence of their viability. The Basin Floor Fan ("BFF") zone was thicker than expected and encountered more reservoir than expected. The Upper BFF is an additional zone with good reservoir properties. The Slope Fan System was encountered as anticipated and will benefit from additional work prior to next season's testing. The SMD was not as well developed as anticipated at Talitha #A, however based on our new data Pantheon now interprets that the SMD extends across the Alkaid project, and better developed as it extends south east across the Dalton Highway. This significantly increases the resource near the highway.

The VAS process entailed taking samples every 10-20 ft of well depth, hermetically sealing approximately half of those samples to avoid any evaporation of hydrocarbons, with the other half of the samples tested after exposure to air. These samples are then subjected to mass spectrometry analysis in the Baker Hughes AHS VAS lab. Significantly, the VAS analysis confirmed the presence of continuous stacked oil-bearing reservoir zones over a 3,700 ft interval starting at the regional top seal above the Shelf Margin Deltaic reservoir zone down to target depth at 10,456 ft. Every single sample taken over this interval extracted oil.

Future activity

Pantheon's immediate focus is to complete the analysis of the Talitha #A well, including a comprehensive study to better understand the implications for the Kuparuk across Pantheon's acreage. At the same time Pantheon intends to recommence its farmout strategy to attract a suitable industry partner to best exploit this large play.

Pantheon's potential for the shallower zones has increased and been de-risked with the discovery of oil based on logging, sidewall core data and analysis from Baker Hughes AHS in each of these formations. Accordingly, the Company has started work on updating its resource estimates across these shallower zones.

The discovery of oil in the Basin Floor Fan will become an area of intense focus as this is part of the significant Theta West prospect, Pantheon's largest target, now considerably de-risked by the Talitha #A result. Theta West will test the exceptionally large Basin Floor Fan in a better structural location and hence should attract strong partner interest in drilling this significant prospect.

Bob Rosenthal, Technical Director, said:

"Like all exploration wells on the Alaska North Slope, the primary objective of this well was to gain valuable data for assessment both technically and economically. At a geological level we have amassed an enormous volume of high-quality data, independently supported by the leading industry experts. The bottom line is that Talitha #A has confirmed five separate zones, all hydrocarbon bearing, and which collectively have significantly increased our estimate of oil in place on our 100% controlled acreage."

"A great frustration is that we simply ran out of time to test all the zones. This cloud has a silver lining - when we plan to come back this coming winter, we will have the twin luxuries of a testing program incorporating the results of a thorough analysis of the dataset, and a much longer testing window. This can be accomplished with a small rig and at a much reduced cost. The Kuparuk itself is not yet fully understood, but we believe still offers tremendous potential if drilled differently given its inherent geologic properties. This experience is normal in the industry in any first well drilled in a new area. I would like to thank our exceptional technical team for their extraordinary efforts on this well over the past few months."

Jay Cheatham, CEO, said:

"Today's news is a tale of two stories. We are of course disappointed not to deliver the high tested flow rates we were hoping for from the Kuparuk. We will continue our analysis of this complex zone as we believe it still offers great potential for our Company. The shallower (Brookian) zones continue to grow and evolve as we receive new data. Baker Hughes AHS have independently confirmed our belief. We anticipate providing an upgrade to management's resource estimates once analysis is completed."

"While the testing of the Kuparuk has not gone to plan, we set an incredibly high bar to attempt to drill and test four independent zones in one North Slope winter drilling season. If we had the VAS data before drilling, we would likely have drilled and tested the Kuparuk formation differently. The Baker Hughes AHS analysis has concluded there are strong indicators of five oil pay zones across some 3700 ft. This technology is proven and successfully used in other parts of Alaska and North America. The Basin Floor Fan discovery at this downdip location sets up a significant and low risk opportunity and is sure to attract international partner attention. We have learned that our acreage contains a vast hydrocarbon play, located along and close to the Dalton Highway and the Trans Alaska Pipeline. We have de-risked this play significantly which will lead to upgrades in due course."

-Ends-

Cautionary Statement: The estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially movable hydrocarbons.

Further information:

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 Jay Cheatham, a qualified Chemical & Petroleum Engineer, who has over 40 years' relevant experience within the sector.

The information contained within this RNS is considered to be inside information prior to its release. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. 

Glossary

API The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water: if its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks.

Ft feet

BOPD Barrels Oil Per Day

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas exploration and production focused on several large projects located on the North Slope of Alaska ("ANS"), onshore USA. A major differentiator to other ANS projects is its close proximity to transport and pipeline infrastructure. The Group's stated objective is to create material value for its stakeholders through oil exploration, appraisal and development activities in high impact, highly prospective conventional assets in the USA; a highly established region for energy production with infrastructure, skilled personnel and low sovereign risk. All operations are onshore USA, with drilling costs materially below that of offshore wells.

On the North Slope of Alaska, Pantheon holds working interests of 100% in projects spanning c.160,000 acres and covered by c.1,000 square miles of proprietary 3D seismic. The Company has received Independent Expert Reports certifying a Contingent Resource of 76.5MMBO (million barrels of oil) recoverable on its Greater Alkaid project and 302MMBO Prospective Resource at its Talitha project.

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