With a huge competitive advantage is it time for Pantheon Resources to join the “Billion Barrels of Oil” Club
The company said it was an ‘extraordinary result’ adding that they ‘never expected’ to discover oil at this stage. Shares in the business rose nearly 20%, to around todays level of 40p, valuing Pantheon at £188.5million. Can the company now go back to last years level of 70/80p?
Pantheon Resources (PANR.L) is an independent oil and gas exploration and production company listed in the UK with a portfolio of high impact projects onshore USA, focusing on the Alaskan North Slope, with an estimated Technically Recoverable Resource exceeding 1.2 billion barrels of oil.
In January, when shares were around 10p Pantheon received an Independent Experts Report on its 100% owned Greater Alkaid project, estimating a P50 Contingent Recoverable Resource of 76.5 million barrels of oil with an NPV10 of US$595 million (based upon the then current oil price of $55 per barrel). In March 2020 Pantheon advised that analysis had been completed over the shallowest of three independent horizons at its Talitha project, estimating 1.8 billion barrels OIP and 483 million barrels of oil P50 Technically Recoverable Resource. The Pantheon share price continued its meteoric rise up even further a few weeks ago after it announced an untapped well of 302m barrels of oil for the SMD Horizon at Talitha. The AIM-listed oil and gas exploration company, said the find is worth £2.1billion in future sales. The company said it was an ‘extraordinary result’ adding that they ‘never expected’ to discover oil at this stage. Shares in the business rose nearly 20%, to around todays level of 40p, valuing Pantheon at £188.5million. Shares are up nearly 500% so far this year, can the company now go back to last years level of 70/80p?
The recent update on the Kuparuk follows the recent attribution of 302mmbbl of gross recoverable prospective resources, in the shallowest area, for the Shelf Margin Deltaic reservoir on Talitha in a report from industry consultants Lee Keeling. This considers only reservoir interpreted to be updip of the existing Pipeline State #1 well, and Pantheon is progressing its work on a resource estimate for reservoir down dip. Further news is due here, and potentially an increase in expected Talitha Shelf Margin Deltaic resources, in the coming weeks/months. Clearly there is more oil here than what they have announced. These are world class targets and is highly unusual to find these type of resources on-shore.
Pantheon is also progressing its work on the third identified reservoir level at Talitha, the Slope Fan System and again a further update is due from management on this resource.
This work goes to the planned new appraisal drilling on Talitha, which would target all three identified reservoir levels. Pantheon could drill here as early as next year, and the timing of this will depend on the company’s ongoing farmout process.
The farm out process remains key for Pantheon. The company continues to engage with a variety of potential partners here. All of the work that Pantheon is doing on subsurface interpretation and resource estimates helps provide a richer vein of data for potential partners to examine, and will help with getting a deal over the line. The potential upcoming awards of Production Unit licences for both Greater Alkaid and Talitha will also help get a deal done. Four wells are being targeted, including two wells targeting production on Greater Alkaid and two wells targeting appraisal on Talitha. The farm out should secure a material work programme, allowing Pantheon to collect significant new drilling data on Greater Alkaid and Talitha, and also establish production to provide further information and, cash flows to help fund further forward CAPEX.
Pantheon has assets onshore Alaska and East Texas spanning the E&P risk spectrum from production to exploration. The Alaska portfolio does look as if it could provide substantial upside potential, with Greater Alkaid now about to move towards development, the Talitha discovery is to be further appraised alongside ongoing resource assessment work, and additional prospects for potential exploration drilling. The ongoing Alaska farm out process is targeting drilling of Greater Alkaid and Talitha, both of which enjoy the significant cost advantage of being close to the TAPS pipeline and Dalton Highway, and this could lead to first production in Alaska as early as 2021. In East Texas, the asset is being reviewed given Pantheon’s assumption of operatorship in 2019.
Jay Cheatham, CEO,commented: “If we can complete a farmout in time to drill this winter, Talitha has the potential, if successful, to be the most impactful well of my 50 year career. Having run Arco’s international business and also its upstream Gulf of Mexico area business, you dream about these opportunities. It has taken over a decade of work to delineate and advance this opportunity to “drill ready” status. This appraisal well will test three separate and independent targets which collectively offer the potential for greater than a billion-barrels of recoverable oil. Each of these targets compare in size to large deepwater offshore projects around the world. In our case they are onshore USA. The Talitha location is adjacent to the major highway and Trans Alaska Pipeline network serving the North Slope, positioning us beautifully in the event of success for a development, even in a low oil price world. Despite our obvious excitement about Talitha, an appraisal well updip from discovered oil, nothing is without risk in this business and commercial success is never guaranteed before drilling”
Keep your eyes open for Farmout news and then its all eyes now on the Talitha well for early next year, with three independent zones and friendly drilling conditions could this be only one of a handfull of a billion barrels oil well?
Below, Jay Cheatham and Bob Rosenthal expand a little more to Blytheweigh about recent news flow….
The author was paid for this article but does not hold shares in the above named company