Pantheon returns Alkaid 2 well to production testing

Alaska North Slope-focussed oil company Pantheon Resources said in an update on Monday that the Alkaid 2 well has returned to production after the cleanout of the sand blockage in the final 1,000 feet of the wellbore.

The AIM-traded firm said the IP30 production rate was around 505 barrels per day of liquid hydrocarbons consisting of oil, condensate, natural gas liquids, and natural gas.

It said the reservoir's good deliverability was a “significant” de-risking event for the development of Alkaid.

After separating and selling the condensate and natural gas liquids, the company estimated that it could achieve 80% to 90% of the Alaska North Slope (ANS) crude oil price.

The shelf margin deltic (SMD) reservoir, estimated to contain more than 400 million barrels of recoverable oil resource, had significantly better reservoir qualities than the Alkaid anomaly, and its addition to any potential Alkaid development would boost economic returns, Pantheon added.

The company said it believed that the Alkaid 2 well fracked into a gas cap, resulting in a much higher gas-oil ratio than that encountered at the nearby Alkaid 1 well, which is in the same reservoir.

Pantheon said it planned to drill future wells deeper to avoid the gas cap and achieve a much richer gas-oil ratio.

The Alkaid 2 test generated significant data in de-risking the play, with the company believing that the result was specific to the well, and not a reflection on the Alkaid reservoir.

Pantheon added that it had commissioned Netherland Sewell & Associates, a petroleum property analysis specialist, to undertake an independent expert report over the company's Theta West and Alkaid projects.

The firm said it believed the reports would provide investors and financiers with an independent assessment of the resources, adding that it would run in parallel to the farmout process.

“We are pleased that production testing at Alkaid 2 has recommenced and proven the productive capability of the reservoir,” said chief executive officer Jay Cheatham.

“Given the high gas-oil ratio seen, we will locate and design future wells with longer laterals to minimise gas and improve liquid hydrocarbon production.

“The first well in any new play type is a learning exercise.”

Cheatham said it was “worth remembering” that Alkaid is the smallest project in the company’s portfolio, making up less than 4% of its estimated discovered resources.

“Its location on the Dalton highway, along with the test at Alkaid 1, made it an ideal candidate for testing and production.

“Pantheon will now increase its focus on the larger oil projects in Pantheon's portfolio as it begins a farmout process to undertake future activities.”

The large Theta West oil accumulation, with resources of over 17 billion barrels of oil in place, was described by Jay Cheatham as Pantheon's “major” asset.

“A large portion of the Theta West oil accumulation is in a shallower reservoir than anything else in our portfolio and analogous to giant oil fields in other parts of the world.”

At 1506 GMT, shares in Pantheon Resources were down 39.77% at 31.92p.

Reporting by Josh White for Sharecast.com.