delays but they sound fairly upbeat .......

delays but they sound fairly upbeat ....

https://www.londonstockexchange.com/news-article/PANR/operational-update-talitha-a-well/14890474

RNS Number : 4064R
Pantheon Resources PLC
08 March 2021

08 March, 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%⁽¹⁾ working interest in projects covering 160,000 acres, all covered by 3D seismic and conveniently located adjacent to transportation and pipeline infrastructure on the Alaska North Slope, provides the following update:

Talitha #A well

As previously announced, the Talitha #A well reached target depth at 10,452 ft and encountered oil in multiple formations. Recent third party analysis of the electric logs and other data has upgraded the number of significant oil bearing zones from four to five, with the addition of a highly prospective zone within the Slope Fan System. Preliminary analysis for all of these zones which include the Kuparuk Formation, Lower Basin Floor Fan, Upper Basin Floor Fan, Slope Fan and the Shelf Margin Deltaic ("SMD") are very encouraging. The Company would intend on testing each of these zones either within this current drilling season, time permitting, or suspend the well and return to test any untested zones next season. Four of the oil zones are secured behind pipe and can be tested at any time during a drilling season. Current operations are focussed on the deepest zone which is the Kuparuk Formation.

As previously announced, geological data in the Kuparuk Formation, which was a secondary target in this well, has been better than expectated and hence warranted a change of plans to test this zone more thoroughly. The Kuparuk Formation is an important target on the Alaska North Slope because of its large scale and enormous regional productive capability. It is particularly important to Pantheon, which has secured a major acreage position covering what it believes to be the most prospective part of the play. The Company estimates that the Kuparuk extends up to 50,000 acres on its acreage, and based on the new preliminary data, it has the potential, if successful, to contain 350-500 million barrels prospective resource (recoverable) of light oil. The potential size and economic value of this large resource close to the export infrastructure has made this a priority for a comprehensive testing operation.

On 13 October, 2020 Pantheon announced that the internal estimate of prospective resource potential at Talitha was 1.4 billion barrels of oil in place and 341 million barrels of recoverable oil in the Kuparuk Formation alone and based on conceptual development plans this oil had an NPV10 of $6 per barrel based upon the oil pricing at that time. Simply adjusting the same model⁽²⁾ for today's oil price of $69.36 (held flat) and making no other changes, that NPV10 increases to over $10 per barrel.

As previously announced, because of equipment failures and technical issues, the formation within the Kuparuk started to become damaged in its current location and it was not possible to effectively set the 4 ½ inch liner. The damage occurred to the geologic formations above the Kuparuk, a sequence of thick shales and clays, which swelled while the hole was open during the delay. Accordingly, the Company decided to drill a new modestly angled sidetrack into the Kuparuk, however, it has not been possible to undertake this operation because of the poor condition of that section of the hole.

The Company has therefore decided to retrace some 500 feet above the original casing shoe where the wellbore integrity is good, and to kick off a completely new sidetrack hole. This new shallower section of hole will be drilled from the existing casing string avoiding the open hole section of the well where all the problems have occured. The new sidetracked well should penetrate the Kuparuk formation some 100 feet from the original problem section of hole in a virgin reservoir section which will allow a better testing operation. The Company estimates that drilling and testing operations through this initiative will take 15-18 days and involve redrilling some 1,200 feet of new hole.   

The Company believes the delays and costs associated with this new testing operation is worth the investment. Pantheon has evaluated over 1,000 square miles of 3D seismic in the Talitha area and the Company believes this is the best Kuparuk reservoir encountered in any wells over this vast area. The Company believes success in this zone should prove a viable regional play that can be quantified now that a good oil bearing reservoir section has been discovered. This has important ramifications for future exploration on the Alaska North Slope in areas that previously were not considered prospective for Kuparuk oil. The four potential oil  zones in the shallower section are all  important but the testing sequence dictates that testing occurs sequentially from the deepest Kuparuk section to the shallowest Shelf Margin Deltaic section. It is now unlikely that time will permit the testing of all zones. However, the Company will aim to make full use of the drilling season to test as many zones as time permits. Where zone(s) remain untested, the Company will suspend Talitha #A and propose to test those remaining zone(s) next season using a smaller workover rig instead of the current larger drilling rig.

Footnotes:
(1)  The transfer of the 10.8% WI in the Talitha project acquired from Otto Energy remains conditional upon approval by the Alaska Department of Natural Resources
(2)  As announced on 13 October, 2020, the Company estimated the Kuparuk to contain 1.4 billion barrels of oil in place and a Prospectove Resource (Recoverable) of 341 million barrels as a most likely case. It modelled an illustrative development plan for the Kuparuk with 62 producing wells, exploiting 247 MMBO of this resource
(3)  Resource estimate in accordance with PRMS guidelines


Jay Cheatham, CEO, said:

"Although the testing of the Kuparuk has encountered technical problems and therefore delays, we have confirmed oil discoveries in multiple formations that appear better than expected. The team is very excited about what has been discovered. We now have five separate formations to test which all have multi hundred million barrel potential. We have decided to focus on the Kuparuk Formation because of the reservoir quality encountered and potential size of the resource, which is massive by any standards. The results to date and the potential economic value as discussed earlier i.e., 350-500 million barrels of recoverable oil at an estimated NPV10 of over $10/bbl (at today's oil price) represents a huge potentially multi billion dollar prize that we can test over coming weeks.  

"As always, we caution that testing is critical to establish the commercial viability of the oil that appears present in the Talitha structure; it is essential that we undertake this process thoroughly, particularly in the Kuparuk Formation. As we stated in our last release, the time delays don't impact the potential of the well, rather, our ability to test all zones as effectively as we would like before the end of the drilling season. Having any untested zones behind pipe knowing we can return at a later date without damage to the oil bearing formations is comforting."