US: LKA confirms 79 mmbbl of recoverable reserves and resources in Ahpun's Alkaid Horizon after Alkaid-2 long term test

Pantheon Resources, the oil and gas company with a 100% working interest in the Kodiak and Ahpun projects, covered by 193,000 acres of leases with an additional c. 66,000 acres to be awarded following successful bids in the December 2023 lease sales, all in close proximity to pipeline and transportation infrastructure on Alaska's North Slope, has announced the results of an updated Independent Expert Report ('IER') by Lee Keeling & Associates, Inc. ('LKA'). This update covers the Alkaid horizon within its Ahpun Field over which it has a 100% working interest.

This report updates the January 2020 IER on the Alkaid horizon (formerly referred to as the 'ZOI' and/or 'Alkaid Deep') within the Ahpun field. The original report was issued after the successful re-entry and test of the Alkaid-1 well during the winter of 2019. This update benefits from the additional data gathered from the 5,200 feet horizontal completion and 90-day flow test of the Alkaid-2 well drilled in 2022. The Alkaid horizon is the smallest and deepest development candidate in Pantheon's portfolio, with poorer reservoir quality than the Ahpun topsets and Kodiak reservoirs, however, the advantage of its immediate proximity to pipeline and road infrastructure creates optionality for early economic development.

Highlights

• LKA estimates base case Possible Reserves of 5 million barrels ("mmbbl") and 27 billion cubic feet ("bcf") of recoverable natural gas at the Alkaid horizon, in addition to Contingent Resources totalling 74 mmbbl of marketable liquids and 396 bcf of recoverable natural gas.
• LKA estimates high case Contingent Resources totalling 123 mmbbl and 634 bcf.
• LKA's attribution of reserves in the immediate vicinity of the Alkaid-2 well and its economic modelling of the overall Alkaid horizon estimating real rates of return in excess of 20%, support Pantheon's previous assessment that the Alkaid-2 long term production test demonstrated the commerciality of the Alkaid horizon in Ahpun.

David Hobbs, Pantheon's Executive Chairman, commented: 'This is an important result for our strategy to move the Ahpun and Kodiak Fields through development to production over the coming years. The confirmation that the Alkaid horizon, the most marginal of the resources appraised on our Alaska North Slope acreage, is modelled by the Independent Experts to deliver real rates of return exceeding 20%, is fantastic news for our development planning. It's important to remember that both the Ahpun topsets and the newly awarded Ahpun Eastern Extension both offer far superior reservoir properties and are similarly located in close proximity to the pipeline and road infrastructure. There are material synergies to be exploited in development, potentially further enhancing expected returns.

'Once again, Jay, Bob and the team are putting in the hard yards to line up all the pieces necessary to deliver our strategic goal of achieving sustainable market recognition of $5-$10 per recoverable barrel by 2028. We are expecting the Cawley Gillespie report on the Ahpun Topsets in the coming weeks and expect to continue building on this momentum going forward.'

Field Naming

In 2023 Pantheon incorporated all reservoirs above the Hue Shale into a single field-Ahpun. The Ahpun field currently includes two horizons, (i) the 'Alkaid horizon' (the subject of this report) and (ii) the shallower topsets, formerly termed the 'SMD'. If successfully tested, subject to funding, in the planned Megrez-1 well, the eastern topsets (secured in the December 2023 lease sale) would also be included. The upper and lower slope fans tested in Talitha-A have not been assessed as commercial by the Company and are not currently incorporated into the Ahpun field.

IER Conclusions

This IER is specific to the Alkaid horizon and estimates base case Possible Reserves of 5 mmbbl and 27 billion cubic feet ('bcf') of recoverable natural gas in addition to Contingent Resources (C2) totalling 74 mmbbl of marketable liquids and 396 bcf of recoverable natural gas. Importantly, the volumes classified as Possible Reserves indicates that a proportion of the resources are already deemed economically viable. Furthermore, LKA's economic modelling of the overall Alkaid horizon estimated real rates of return in excess of 20% which Pantheon believes exceeds the economic threshold to be considered commercial. This result supports the Company's previous assessment that the Alkaid-2 long term production test demonstrated the commerciality of the Alkaid horizon in Ahpun. Moreover, the topset horizons, having far superior reservoir properties with estimated permeabilities two orders of magnitude (i.e. 100x) higher, suggest significantly improved economics compared to the Alkaid horizon as described in Pantheon's press release dated 10th April 2024.

A summary table extracted from the report is copied below and is based on $80/bbl ANS (Alaska North Slope) crude delivered to the West Coast:

Note: Totals may not agree with schedules due to computer roundoff.

Note: Totals may not agree with schedules due to computer roundoff.

The base case NPV at a 10% real discount was estimated by LKA to be c. $200 million ($526 million for the high-side case), pre-Federal Income Tax but after all State taxes. LKA's high side case (recognising increased EURs of c.1.5 mmbbl per well, versus c.1 mmbbl per well for the base case) estimates total Contingent Resource of 123.3 mmbbl of marketable liquids and 634 bcf of gas. This appears to reflect the potential for greater recovery from the entire section through greater frac growth vertically and laterally, including what was previously described as Alkaid Deep.

The full report received from LKA has been posted to www.pantheonresources.com.

Original announcement link

Source: Pantheon Resources