Pantheon Resources PLC (AIM:PANR, OTC:PTHRF) has provided further data from its production testing in Alaska where the Alkaid-2 well appears to be performing well whilst still undergoing constraints of its ‘clean up’ phase.
The explorer, in a statement, noted that the lateral section of the Alkaid well remained partially blocked with around 1,000 feet of frac sand still in the well which has restricted test rates from that section and has demanded a more conservative testing protocol.
Alkaid-2 is, however, flowing naturally into the recently commissioned production facilities and it is estimated that the well is only 40% through its ongoing ‘clean up’, so the company sees potential for production rates to improve further.
Pantheon highlighted, meanwhile, that hydrocarbon liquids production rates of around 500 barrels per day are “near expectations” (given the 4,000 feet of unblocked lateral well section) and the gas rates are “well above” expectations.
“The total hydrocarbon production rates confirm we have tapped into a significant hydrocarbon system. To have this level of production at this stage in the 'clean up' phase of production testing remains positive,” Pantheon chief executive Jay Cheatham said in a statement.
“The current reservoir performance is compromised by the sand blockage and we will not have a true indication of reservoir performance until the entire well bore is clean.
“We are deliberately using a conservative approach in flow testing of not 'pulling on the reservoir' too hard, allowing the natural healing of the fractures to minimise future sand flow.
“Overall, we're very encouraged with the preliminary results of the production test and the fact that we have permanent facilities for treating and selling our oil as well as utilizing our gas to power our operations on location.
“Despite this encouragement, however, we remind shareholders as we always do, that a definitive assessment of the well cannot be made until flow testing operations have concluded and we are still too early in the process.”
Cheatham added: “We expect flow rates after the clean-out to improve. The location of Alkaid, immediately adjacent to the Dalton Highway, again highlights the significant advantage we have to other operators on the North Slope in expediting our oil developments.
“These initial positive testing results have increased our confidence in pursuing an Alkaid #3 well, subject to funding, which would be a high impact appraisal well to test the Shelf Margin Deltaic, the reservoir target immediately above the discovered oil at Alkaid #1 and #2.
“A success at Alkaid #3 would be a commercially impactful well with material resource implications and would also leverage off the established production facilities for important near term cashflow and it could be drilled outside of the traditional winter drilling season."
Pantheon, in a separate statement, released its interim results for the twelve months ended 30 June 2022 – a year described by Jay Cheatham as “a period of tremendous achievement”.
In terms of financials, the company noted that it ended June with some US$16.6mln of cash and equivalents – having raised US$96mln in the year, comprising US$41mln of equity and US$55mln of unsecured convertible bonds.
The exploration company reported a US$13.9mln loss after tax for the year.
Recapping the financial year, Cheatham commented: “We've advanced our asset position considerably, made material upgrades to our estimates of potential resource, had great drilling success and received endorsement from groups we consider to be some of the best in the business - who have had access to our data in forming their opinions.
“We've also been able to maintain a 100% working interest across all our projects giving us great flexibility in how we fund and grow our assets as we enter 2023.”