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Pantheon Resources expects commercial production in Q1

Published: 08:33 22 Jan 2016 GMT

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“The outlook for the company remains extremely positive," says CEO Jay Cheatham.

Pantheon Resources (LON:PANR) is expecting to start commercial production from the VOBM-1 well, in east Texas, by the end of the first quarter.

The AIM quoted company told investors that its joint venture is currently in negotiations with nearby natural gas plants, and sealing such arrangements represent the final step in bringing the well online.

VOBM-1 is a new discovery in the Eagle Ford sandstone formation and the well is set to produce both natural gas and liquids.

Separately, Pantheon also informed investors that there has been a blockage in its other new well, VOS-1. It comes after the completion of a pressure build up test which, according to Pantheon, provided valuable diagnostic information.

The company highlighted that blockages have occurred in a number of similar wells and were successfully remedied.

As well as the pressure build up test the company also now plans to carry out a second flow test, assessing a wider range of choke sizes and tubing pressures.

It will also carry out an inexpensive diagnostic spinner survey which is expected to help determine the best course of action for the well.

Jay Cheatham, Pantheon chief executive, says the issue has not changed the company’s view of the scale or commerciality of the VOS-1 discovery, and he highlighted that it was producing commercial quantities of oil and gas prior to being shut-in.

"Performing a flow test and spinner survey is a prudent measure to make absolutely sure that we can complete analysis and testing of the VOS#1 well in the most methodical and cost-effective manner,” he said.

“To date we have found commercial volumes of oil and gas in the Eagle Ford sandstone with both of our first two wells.

“Both wells have exceeded our pre-drill estimates on net pay and confirmed our ability to identify commercial well locations successfully.”

Cheatham also pointed out that as both wells are estimated to have capital and operating costs of less than $5 barrel of oil equivalent, they should remain profitable even if low oil prices persist.

“The outlook for the company remains extremely positive."

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