Pantheon Resources upbeat on recent work at Alkaid 2

Alaska North Slope-focussed oil and gas company Pantheon said in an update on Tuesday that production testing at Alkaid 2 had started, with the well in the clean-up phase, and showing positive early indications of oil production from the reservoir.

The AIM-traded firm said that during the clean-up, in addition to the fluid production, the strong flow back had yielded frac sand production higher than expected, which was not uncommon in similar completion procedures.

It said Alkaid 2 was being shut-in as part of the planned procedure to transition from temporary flow-back facilities to larger permanent facilities, adding that a coiled tubing unit would be used to clean out the wellbore.

Additionally, Pantheon said it would undertake a pressure build-up operation by placing a pressure ‘bomb’ in the production packer, and allowing formation pressure to increase for several days.

That would allow for analysis of multiple reservoir parameters, describing it as a standard reservoir engineering analytical tool.

The operations to date had recovered approximately 10% of the frac fluid used, with oil cuts averaging from 8% to 12%.

Typically, a better indication of ultimate production performance could be ascertained after recovering over 40% of the frac fluid, which the company expected to achieve over the coming weeks.

Alkaid 2 had produced initial fluid flow with rates in the thousands of barrels per day, including a strong sand production response, which the company would address to ensure sand was not restricting the wellbore.

Pantheon said it was awaiting delivery of a coiled tubing unit to clean out the well bore prior to recommencement of flow test operations.

“We have seen promising indications of reservoir performance, with oil cuts showing early in the flow back process,” said chief executive officerJay Cheatham.

“Often, the first real indications of oil occur much later.

“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 said the company hoped to complete its clean-up programme at Alkaid 2 over the coming weeks, and would announce the results of flow testing once complete.

“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.

“Remember, 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.

“Whilst the early data is very encouraging, I reiterate my previous statements that we cannot make a definitive assessment of the ultimate commerciality of the well until flow testing operations have concluded. However, we remain optimistic.”

At 1244 BST, shares in Pantheon Resources were up 1.64% at 93.1p.

Reporting by Josh White at Sharecast.com.