Pantheon Resources Plc (LON:PANR) shares dropped 26% in Tuesday’s early deals after the latest update from the Alkaid well on Alaska’s North Slope.
The wholly-owned well previously confirmed a discovery in the Brookian formation and Pantheon successfully completed a flow-test, before moving on to additionally test the secondary targets in the West Sak and Ugnu zones.
Testing of West Sak has, however, flowed ‘brackish’ (low salinity) water and it is believed to be a non-commercial horizon. This result also significantly downgraded the estimated chance-of-success in the Ugnu and consequently, the company decided not to test the zone.
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Pantheon softened the blow somewhat by confirming that it would now designate the well as a future producer from the Brookian zone, and, it will be suspended – by ‘freeze protecting’ the wellbore - pending future development.
"Despite today's news on the secondary targets, Alkaid has been a great success for Pantheon, exceeding our expectations in the primary target, and upgrading the adjoining Phecda prospect which appears analogous on seismic,” said Jay Cheatham, Pantheon chief executive.
“Our decision to apply to the State to suspend and freeze-protect Alkaid now was impacted significantly by the ‘brackish water’ produced in the West Sak and also by the recent exceptionally warm weather on the North Slope.
“It is imperative to preserve the Alkaid discovery well for future production.”
He added: “The Alkaid success provides ongoing confidence on future drilling operations where the high tech geophysics applied to Alkaid can be replicated across the entire portfolio and deliver material success as has been the case with other operators chasing this similar play in adjoining leases.”
Pantheon shares dropped 7.45p or 26.3% to change hands at 20.88p.