CEO Q&A Webinar, June 2019
Pantheon Resources is an independent oil and gas exploration and production company incorporated in the UK with a portfolio of high impact projects onshore USA, in both East Texas and the Alaskan North Slope (‘ANS’) with a combined P50 Technically Recoverable Resource estimated to exceed 1.3 billion barrels of oil equivalent, excluding the Winx and Alkaid prospects in Alaska which are subject to revision following recent drilling and testing activities.
In East Texas, Pantheon holds a 55.1% - 75% working interest in four prospects in Tyler and Polk Counties, East Texas, which host the Eagle Ford sandstone, Austin Chalk, Navarro and Wilcox formations. Pantheon is working towards increasing these to 100%.
On the Alaska North Slope, Pantheon holds a 75% - 90% working interest in all of its projects with the exception of the Western Blocks area (WInx) in which it holds a 10% working interest.
Pantheon’s strategy is to maximise shareholder value through strategic drilling (and farm-outs where appropriate) to prove up the assets and to achieve an exit at the highest value. Given its dominant working interest positions in both East Texas and Alaska, Pantheon has the capacity to tactically use farm outs as a method of funding or subsidising future operations, and to partner with strategic partners.
Pantheon has a very experienced board, all of whom are shareholders, with a proven track record of success in the industry and in both Alaska and Texas, and a history of building companies for sale.
CEO Jay Cheatham, a 40-year veteran of the oil industry, describes the company's acreage position in East Texas as one of the "most exciting projects I have been involved in during my industry career". He said that the tested flow rates achieved by the first well were "truly a transformational event for Pantheon", one that opens the way for rapid commercial development and potentially further discoveries on the company's extensive acreage position. Pantheon has established gas processing facilities and pipeline infrastructure to enable future discoveries to be hooked up to sales rapidly.
The primary target is the Woodbine/Eagle Ford sandstone, a formation that is one of the most productive per acre onshore conventional discoveries in recent Texan history, the nearby Double A Wells field. Before drilling Pantheon and its partner Vision Gas Resources LLC spent three years completing a confidential study of the previously, poorly understood formation in association with the independent Bureau of Economic Geology at the University of Texas at Austin. An attractive feature of these wells is the potential for rapid payback and significant early cashflow generation, allowing in a success case, early wells to provide the cashflow to fund the drilling of subsequent wells.
The first well drilled, VOBM#1 in Polk County, confirmed the presence of both oil and gas in the Woodbine/Eagle Ford sandstone and generated flow rates that appear analogous to those of the Double A Wells field, which has been producing since the mid-1980s. Unfortunately the steel casing collapsed in this wellbore subsequent to testing, and it is intended this well be plugged back and sidetracked, or a new well drilled immediately adjacent to the location given its outstanding initial performance. The second well, VOS#1 in neighbouring Tyler County, has indicated the presence of another potentially significant reservoir in the Eagle Ford/Woodbine sandstone.
Subsequent drilling in both Polk and Tyler Counties have further enhanced our understanding of the Woodbine/Eagleford sandstone, confirming the presence of sufficient hydrocarbons. The Company intends to exploit a development of up to 157 million barrels of oil equivalent on the acreage, of which Pantheon has a 55% - 75% working interest. Surrounding acreage offers significant additional resource potential. The VOBM#4 well in Tyler County encountered hydrocarbons in 2 additional zones; the Wilcox and the Navarro, both of which could be potentially material for the company, if successfully tested.
It is estimated that over 100 individual wells could be drilled on the acreage to exploit both the Eagle Ford sandstone and Austin Chalk formations, although this number could be lower for a number of reasons including if individual wells drain larger areas. It is also possible that multiple wells could be drilled using the same location.
Pantheon’s partner in its East Texas operations is the Texas independent, Vision group of companies (“Vision”). The principal and driving force of Vision, Bobby Gray, sadly passed away in 2018 which resulted in a prolonged period of operational disruption and uncertainty. In January 2019 Pantheon acquired a 66% controlling stake in Vision paving the way for a resumption of operations.
Unlike recent onshore shale oil discoveries in the United States, the Eagle Ford sandstone formation can be developed without the necessity for horizontal drilling or "fracking" (unconventional reservoir stimulus), both of which techniques add materially to development costs, although fracking may be considered if/where considered beneficial. As a result, modelled P50 discovery wells are modelled to be economic at prices below $30 per barrel. The project economics also benefit from being located very close to infrastructure and transportation links in East Texas, with operating costs potentially as low as $5per barrel of oil equivalent.
* In respect of one of these 3 prospects, "Prospect D” (“West West AA”), the grantor of the underlying leases retains an option to participate on a ground floor basis in wells drilled on the underlying land or lands pooled with that land for up to a 25% working interest (proportionately reduced to the mineral interest of the grantor in the relevant well or unit). If exercised in full it could reduce Pantheons working interest in this individual prospect to 37.5%. In July 2016, Pantheon acquired an additional 8% working interest in "Prospect D" as well as in "Prospect A". The aforementioned participation option also applies to these newly acquired interests.
Alaska North Slope
In January 2019 Pantheon acquired the assets of Great Bear Petroleum ("GBP"), a focused Alaskan North Slope (“ANS”) oil and gas company. The ANS hosts the largest conventional oil and gas accumulations in North America. GBP has been operating on the ANS for almost a decade and has invested over US$200m in evaluating the exploratory potential in its core area. The ANS is experiencing an exploration revival and now boasts among the largest recent conventional onshore oil discoveries made anywhere in the world. These discoveries all tested high production rates of good quality light oil from conventional reservoirs. Drilling by GBP and adjoining operators has highlighted the prospectivity of GBP’s acreage as offering billions of barrels of oil potential in stacked conventional targets across multiple geological plays.
GBP is a large exploration leaseholder where it controls over 250,000 acres, most of it contiguous, south of the giant Prudhoe Bay and Kuparuk oil fields which are the largest oil fields in North America. This acreage is covered by 3D seismic and contains several existing discoveries and a host of world class exploration prospects. With the exception of the Winx prospect where it has a 10% working interest, Pantheon’s working interest in all other acreage in Alaska is between 75% and 90%.
Apart from being a proven prolific oil province, GBP’s acreage position is operationally advantaged by the Trans-Alaska Pipeline System (“TAPS”) and the Dalton Highway which both pass through GBP’s leasehold enhancing near term commercialization opportunities. Such close proximity to infrastructure provides Pantheon with a significant competitive advantage versus other Operators, with lower development and production costs and more rapid commercialization opportunities, believed to result in higher per barrel NPV’s.
In March 2019 Pantheon announced its Alkaid well to be a discovery in the Brookian zone of interest, following successful flow testing which exceeded expectations. This was an excellent result for Pantheon, with positive implications for Pantheon’s other Brookian prospects, in particular upgrading the adjacent and analogous Phecda prospect.
You can keep in touch with the Company's progress by signing up to our news feed or visiting the press release section of this site. Photographs of the Polk Country drilling operations can be found in the Image Library.