Pantheon Res Regulatory News (PANR)

28 June 2023

Pantheon Resources Plc

 Webinar and Strategy Update

Pantheon Resources plc ("Pantheon" or the "Company" or the "Group"), the AIM-quoted oil company with 100% working interest in approximately 193,000 acres located adjacent to transportation and pipeline infrastructure on State Land on the Alaska North Slope, is pleased to provide a strategy update alongside its webinar being held at 5.30pm British summer time (BST) today.

About the Webinar

As previously announced a webinar will be held at 5.30pm BST today and is open to all shareholders and interested parties. Those wishing to participate can register for the Webinar via the link at the bottom of this page. A copy of the PowerPoint presentation to be delivered during the Webinar will be uploaded to Pantheon's website at www.pantheonresources.com shortly beforehand. A recording of the Webinar will also be uploaded to the Company's website once available.

Refocus of Strategy

Pantheon is pleased to share its forward strategy which targets sustainable market recognition of a value of $5 - $10 per barrel of recoverable resource by end 2028. Previously the Company's strategy envisaged proving up sufficient volumes to attract a buyer or partner, willing to pay fair value for the assets and to provide much of the development capital. However, the Directors believe the market has changed over the past few years and therefore Pantheon's strategy must continue to evolve with it. The Directors believe the Company must consider a range of financing alternatives, including debt, equity, and joint ventures, to be able to demonstrate that it has the financial strength to bring its resources into production and to not be reliant exclusively upon a buyout to maximize the full value of its assets.

Delivering the Company's goal requires achieving Final Investment Decisions ("FID") on the aggregate recoverable contingent resource, as estimated by management, of >2 billion barrels of marketable liquids to be exported to the Trans Alaska Pipeline System (TAPS) from the Kodiak and Ahpun fields combined​ (defined below).

Field Definitions

As Pantheon begins the task of bringing the fields into production, it is necessary to define the field areas for fiscal and regulatory purposes. In order to simplify that process and reduce the number of separate approvals, the Company has reclassified its various projects into two defined two fields; Kodiak and Ahpun. The reclassification of the accumulations into these two fields does not alter any previously announced resource estimates.

The Kodiak Feld (previously known as Theta West) contains all reservoirs between the Hue Shale and the HRZ shale. It currently comprises the Lower Basin Floor Fan but may include the Upper Basin Floor Fan once that has been more fully delineated. Pantheon has previously estimated these to contain more than 1.7 billion barrels of recoverable contingent resourceand they will be the subject of the first Independent Expert Report (IER) to be delivered by Netherland, Sewell & Associates (NSAI) during July.

The Ahpun Field contains all reservoirs below the regional top seal down to the Hue shale in the eastern portion of Pantheon's acreage, including the already granted Alkaid and Talitha Units. These reservoirs currently include the Shelf Margin Deltaic ("SMD") zones, Alkaid Anomaly and the deeper extension of that anomaly encountered in the Alkaid 2 Pilot Hole, estimated to contain more than 500 million barrels of recoverable contingent resources in aggregate. This figure consists of management estimates of 404 million barrels in the SMD, 99 million barrels in the Alkaid Anomaly (Lee Keeling & Associates' (LKA) IER; 76.5 million barrels) and the as yet unspecified additional resources proved through deepening the Lowest Known Oil in the Alkaid 2 Pilot Hole. These additional resources will be included in the NSAI report due later this year. Furthermore, the Slope Fan System reservoirs may be included in Ahpun in due course, once further delineated.

Geologic Section from Regional Top Seal through to Kuparuk and New Naming Convention

Development Phases, Investment Requirements and Financing

The plan for meeting the Company's strategic goals involves generating sufficient net operating cashflow from Ahpun Stage 1 (being the resources accessible from the Alkaid and (proposed) Phecda pads alongside the Dalton Highway) to fund future development and production growth. The Company is targeting Final Investment Decision ("FID") for Ahpun Stage 1 by September 2025, and to build production to 20,000 barrels of marketable liquids per day. This will require a hot tap into the TAPS main oil line and regulatory approvals to begin production and export.

Pantheon estimates this daily production rate will require approximately $300 million of total investment, in phases, committed to bring Ahpun Stage 1 to the point at which it generates sufficient positive net cash flow to fund its continuing development and the developments of Ahpun Stage 2 and, following its FID, Kodiak. Importantly, the Company intends to cover a significant component of this $300 million from reserves backed lending facilities, where available.

Furthermore, the Company expects that in order to achieve FID for the Kodiak field it will require a further three appraisal wells at an estimated cost of $50 million in total, to be drilled in a timeframe consistent with completing regulatory approvals and development planning by 2028. An update on the schedule of activities will be provided in due course.

Pantheon's financing strategy is integrated with its operational strategy. The Company's goal remains to minimise the value dilution between now and attaining its objective to ensure that current shareholders retain as much of the value of the resource base as possible. This means that Pantheon will likely not pursue a farm in that results in greater shareholder dilution than would be achieved through a combination of equity, debt, vendor financing, etc. (but including, potentially, farm-in if it provides more attractive terms than the alternatives). This makes it unlikely that the Company will raise the whole amount through any single financing channel and that it will break it down into appropriate tranches with the end objective as the Company's guiding principle.

Near Term Activities

· New Headquarters in Houston: To deliver this strategy, Pantheon will establish a head office in Houston, Texas that will become the centre of gravity for the Company's corporate, technical and financial activities. David Hobbs, Executive Chairman will relocate there later this summer and the staff will gather there on a regular basis to ensure efficient collaboration both internally and with Pantheon's technical partners from NSAI, SLB, eSeis, AHS Baker Hughes and others.

· Start of Regulatory Approval Process: Pantheon is beginning the regulatory process for development of the Ahpun Field and a hot tap into the TAPS main oil line. The Company estimates over 200 million barrels EUR ("Expected Ultimate Recovery") is accessible from the existing Alkaid pad and others to be installed adjacent to the Dalton Highway.

· Appointing Advisors for US Listing: Pantheon is also in the process of hiring US financial advisers to explore the optimal means to achieve a US listing or dual listing on NASDAQ. They will be tasked to explore the best method to avoid unnecessary cost and taxation burdens on either the Company or its shareholders.

· Alkaid-2 re-entry and SMD Frac: Pantheon will test the SMD horizon encountered in the Alkaid-2 well to gather good quality reservoir fluid data and to assess the effectiveness of the next iteration of our frac design. This is expected to begin in September to ensure all appropriate equipment and services are in place.

· Netherland, Sewell & Associates IERs: Pantheon anticipates delivery of the NSAI report on Kodiak to be delivered in July and the initial IER on Ahpun, expected to be delivered in September. The initial focus will be the Alkaid zone (previously assessed by LKA at 76.5 million barrels of contingent recoverable resources). The other horizons in Ahpun will be incorporated in line with the regulatory process and financing requirements.

Alkaid- 2 - Further technical, engineering and economic analysis

Pantheon, supported by third party experts, has completed additional analysis of the Alkaid-2 result and the analysis indicates that material improvements to well performance can be reasonably expected through a combination of (i) positioning the wellbore slightly deeper in the reservoir, (ii) implementation of an improved frac design, and (iii) extending the lateral section of the wellbore to ~10,000 ft. The modelled estimated economics based on scaling the Alkaid-2 result to a 10,000 ft lateral and employing a 3rd generation frac are presented below:

The Company's analysis shows the expected performance improvement results from the combination of 2x from doubling the length of the lateral and at least 2x from improving the frac efficiency. Tony Beilman, the Company's newly appointed Senior Vice President of Engineering, will explain these improvements in today's webinar and a future webinar that will expand on these well performance and cost improvements in detail. Multiple well operations, local sourcing of frac sand along with longer lead times for procurement and planning are expected to greatly reduce costs.

Incremental well economics (excluding sunk costs of pads and other facilities) based on the $13 million figure result in a per well NPV10, before Federal Income Taxes with an oil price of $70/bbl at the wellhead, of $29 million and Internal Rate of Return ("IRR")> 300% with a payout of less than 1 year.

Field Level Economic Assessments*

Incorporating wells based on this cost and production profile into a Stage 1 Ahpun model, plus an appropriate number of gas and water injection wells, results in a NPV10 >$6/bbl of EUR and >50% IRR. Furthermore, even allowing for initial wells to cost more than $20 million while the frac design is fully optimized, the model results in a total financing drawdown of less than $300 million as previously noted.

The Ahpun Stage 2 model, with production beginning in 2028 shows similarly robust economics and the Company envisages this phase will be funded by applying the net operating cash flows from Phase 1.

FID on Kodiak is planned before the end of 2028 and three further wells will be needed to define the Kodiak field development plan. These delineation wells, expected to cost $50 million in total as previously noted, will be scheduled into the overall capital spending programme consistent with achieving FID five years from now. As with Ahpun, recognition of Kodiak reserves under SEC guidelines is expected to occur at this point. The development will require multiple pads placed some 5-20 miles from the Dalton Highway. Cash flow from Ahpun Stages 1 and 2 will be applied to fund the Kodiak development.

New Acreage and Improved Kodiak Reservoir Quality Updip

The data suggests the additional acreage covering the northern updip portion of the Kodiak field is expected to have the best reservoir parameters; 14%-17% porosity and commensurate improvements in permeability based on Company analysis of the estimated Maximum Depth of Burial ("Dmax"), supported by SLB and eSeis. These figures greatly exceed the properties at both Talitha A and Theta West 1 with permeabilities expected up to 50x those seen in Talitha A, where the basin floor fans were first tested.

Once NSAI has delivered its report for the Kodiak Field, Pantheon will develop an economic model for the development based on its analysis.

David Hobbs, Pantheon's Executive Chairman said: "We are excited to have the opportunity to share our updated Company strategy at this afternoon's webinar. We intend to keep this webinar to less than 45 minutes with the express intention of following it shortly with more detailed webinars to expand on the topics addressed. We are under no illusions as to the scale of the tasks ahead but determined to minimise value dilution to shareholders in line with our objective of delivering $5-$10/bbl of recoverable resources by the end of 2028."

Webinar details

The presentation is open to all shareholders and interested parties. Those wishing to participate can register for the webinar via the link below:

https://www.bigmarker.com/share-talk/Pantheon-Resources-Shareholder-Presentation-June-2023

Attendees should use the latest version of Chrome, Safari or Firefox for the best experience. Alternatively, investors can download the IOS application for Big Marker, or dial in via telephone. Dial in details are outlined below:

Attendee Dial-in: UK (0)1793 250421

Attendee Dial-in Number: USA +1 (312) 248-9348Attendee Dial-in ID Number: 294177Attendee Dial-in Passcode: 9269

* Indicative Field and Individual Well Economics are derived by management on a conceptual development model for illustrative purposes only. The Directors assess the fields as being commercial and this is the reason the Company is seeking development approvals and to achieve FID. However, projections of value depend on factors including but not limited to expected oil prices, equipment and service costs, well outcomes, funding risk, fiscal terms and scheduling of investments.

Glossary of Terms

Dmax - Maximum depth of burial of a formation during geological time that influences reservoir quality

EUR - Expected Ultimate Recovery

FID - Final Investment Decision

IER - Independent Expert Report

IRR - Internal Rate of Return, annual percentage rate

LKA - Lee Keeling & Associates

LKO - Lowest Known Oil

Marketable Liquids - The mix of hydrocarbons exported from Pantheon owned facilities meeting the specifications for injection into the TAPS main oil line.

NSAI - Netherland, Sewell & Associates, Inc

NPV - Net Present Value, discounted at an annual percentage 'discount' rate

SEC - US Securities and Exchange Commission

TAPS - Trans Alaska Pipeline System

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 David Hobbs, a qualified Petroleum Engineer.

Cautionary Statement: Certain statements and estimates contained in this announcement carry an associated risk of accuracy as such statements and estimates are based upon projections made from information available at the time of making such statements. Actual results could differ materially from expectations or estimates set out in such statements. Among other factors, this could be as a result of changes in economic, market, engineering, fiscal and political factors, the success of future drilling and geological success, the risk of future drilling changes in the regulatory environment and other government actions, funding risk and assumptions, fluctuations in the price of oil and exchange rates, and business and operational risk management.