Pantheon Resources PLC (AIM:PANR, OTC:PTHRF) told investors that the Alkaid-2 well in Alaska has shown promising indications of reservoir performance whilst it remains in the early phase of clean-up, prior to production testing.
Oil was produced from the well along with a strong flow back of frac fluid – measured in thousands of barrels of fluids per day - including frac sand which was described by Pantheon as higher than expected but not uncommon.
So far, the company has recovered around 10% of the frac fluid that was injected into the well and, in the recovered fluid, it has seen an oil cut between 8% and 12%.
“Often, the first real indications of oil occur much later,” said chief executive Jay Cheatham in a statement. “Whilst the production of frac sand is inconvenient, as is the waiting time for obtaining a coiled tubing unit, it is not an uncommon occurrence in multistage fracture stimulation completions in conventional reservoirs and will be dealt with once the unit arrives.”
Cheatham added: "It is encouraging that the reservoir response to the stimulation procedure has been very good, as we have experienced strong initial fluid flows measured in the thousands of barrels per day.
“These are conventional reservoirs that have superior reservoir qualities compared to shales, and given it is our first well completion applying stimulation techniques in these reservoirs it requires a little patience as we better understand our reservoir characteristics on the North Slope.”
The well is now being shut-in as planned, as part of a procedure to transition from temporary flow-back facilities to larger permanent facilities, and a coiled tubing unit will be used to clean out the wellbore. Other preparations for production testing will also be undertaken, including pressure build-up methods.
Pantheon noted that typically, ‘better indications’ of actual performance can be ascertained after recovering over 40% of the frac fluid. It expects to reach this point “over the coming weeks”.
Michael Duncan, Pantheon’s vice president for operations and engineering, meanwhile, described early results to date as “greatly encouraging” and highlighted the operational progress.
"Prior to entering initial production, it is common practice to clean out a wellbore,” he said. “We are using a planned outage for tie-in of our permanent facilities to perform a well pressure build up as well as the wellbore cleanout.
“It has been a good operating season thus far, and we eagerly anticipate having a fully operational system soon. The production of frac sand is a nuisance which has cost us some time during the early stages of flowback, however, is not believed to change the potential of the well."