Pantheon Resources PLC (AIM:PANR, OTC:PTHRF) chief executive Jay Cheatham today said he doesn’t believe the Alkaid#2 result has been fully understood by the market, whilst providing a recap of key information from the well.
The explorer, in a statement ahead of a webinar presentation this afternoon, noted that production testing at the Alaska well is continuing and it sees more scope for improved performance.
Pantheon shares were trading higher in London, up 4.8p or 9.8% to 53.72p.
“The production test is still ongoing and far from complete as less than 40% of the estimated frac fluid has been recovered and hence there is still scope for further production improvement,” Cheatham said.
“Despite this, we can demonstrate that even at current rates/hydrocarbon mix our modelling points to this as a commercial oil development.”
Pantheon on 30 December reported hydrocarbon liquids production rates of around 500 barrels per day, described as “near expectations”, though the well was partially blocked and gas rates were said to be better than expected, despite the well being compromised.
Today the company noted that a rig to clean out the well blockage will tomorrow be mobilized to Alkaid-2. Once underway, operations for this clean out are expected to take around 10 days.
Technical director Bob Rosenthal, meanwhile, commented: “We have a fantastic team presenting to shareholders later today.
“We have a lot to cover and a huge Q&A session as we attempt to clarify some of the misconceptions permeating in the investment community, so we will take our time to be as comprehensive and transparent as possible.
“There is much misinformation in the market about this well and what it means, and I am confident that shareholders will be comforted by what they hear.
“It is clear we have confirmed a huge hydrocarbon system at Alkaid; our job now is to optimize drilling and completions to maximise the potential commerciality of Alkaid as well as continue to assess the potential of our other major discoveries which include our large basin floor fan discovery at Theta West.
“Our operations at Alkaid are important in establishing a production and development base on the North Slope of Alaska which will aid the operations across all our portfolio."
Modelling
The company, meanwhile, highlighted numbers generated through a model in order to demonstrate the potential commerciality of a conceptual development scenario for the Alkaid anomaly – informed by the well’s actual flow rate data (ignoring potential upcoming improvements) – which estimated some US$40,000 per day of gross production revenue.
The model was undertaken for illustrative purposes only, Pantheon noted, whilst saying that the Alkaid project can be commercial at current production levels.
Gas cap
In reference to gas, the company noted that a detailed analysis has been undertaken to better understand the higher than expected gas production alongside SLB (formerly known as Schlumberger) and other consultants and Pantheon said it has been collectively concluded that the frack has possibly intercepted a gas cap at the extreme updip portion of the Alkaid anomaly.
This possible gas cap is not significant, estimated to represent approximately 2% of the gross rock volume of the Alkaid resource yet would explain the gas production volumes, it added, and could be avoided in future wells.