Providing coverage of Alaska and northern Canada's oil and gas industry
May 2019

Vol. 24, No.21 Week of May 26, 2019

The Explorers 2019: Pantheon discovers oil at Alkaid

London firm merges with Great Bear, says Alkaid success in Brookian bodes well for nearby Phecda prospect, looking for partners

Kay Cashman

Petroleum News

On April 2, 2019, Pantheon Resources Plc said flow testing in the Alkaid No. 1 well has confirmed a new Brookian light oil discovery just west of the Dalton Highway and south of the Prudhoe Bay unit on Alaska’s North Slope. The company is applying to the state for permission to suspend and freeze-protect the well for future use in a field development.

Moreover, Pantheon now views the nearby Phecda prospect as an appraisal well for the Alkaid discovery, rather than a standalone exploration well.

London-based Pantheon Resources, said Jan. 21, 2019, that it closed on its acquisition of two wholly owned subsidiaries of Great Bear Petroleum Operating LLC - Great Bear Petroleum Ventures I and Great Bear Petroleum Ventures II. The 250,000-plus acres of state of Alaska leases, 1,000 square miles of 3-D seismic and two discovery wells that are part of the deal will be operated by the company’s newly formed Alaska subsidiary, Pantheon Alaska Petroleum Operating LLC.

Pantheon Resources also has a subsidiary in Texas, where it has operations in Tyler and Polk counties.

Pantheon Resources launched a share issue to raise $16 million, plus expenses, largely to help fund the acquisition and related exploration activities in Alaska.

Exploration, appraisal ahead

In a presentation at a Jan. 14, 2019, annual general meeting in which the 51/49% Pantheon/Great Bear merger was approved, Pantheon unveiled additional exploration plans for 2020-21 and beyond, saying its strategy in Alaska was “to prove up acreage … and sell at a significant premium to a larger company.”

Pantheon said 2019-20 drilling will include the Talitha well, which is a re-drill of the 1986 ARCO Alaska discovery well, Pipeline State No. 1. Pantheon holds a 90% working interest in that lease.

The new well will appraise oil sands seen in the adjoining plugged and abandoned ARCO well and “test a topset exploration play analogous to recent major discoveries in the area,” Pantheon said.

Extraction techniques “now far surpass what was available in the 1980s,” the company noted, saying some 900 million barrels of oil in place had been discovered in three zones plus there was a 1.7 billion exploratory upside.

In 2020-21 and beyond Pantheon would like to drill exploration wells in leases where it now has between 75 and 90% working interest, including a well called Theta, which will test Kuparuk and Brookian (Nanushuk) zones.

Also listed for this time period are the Megrez, Tania and Alula wells.

The Alkaid No. 1 and these other prospects are either on 10 contiguous leases west of the Dalton Highway or five nearby leases straddling the highway.

The Phecda prospect was also mentioned for this time period in the general meeting presentation, but that drilling appears to have been moved up with the Alkaid No. 1 test results.

Alkaid No. 1 drilled in 2015

Great Bear drilled the Alkaid well in 2015 as a vertical test well but was unable to conduct flow testing in the well because the drilling program was cut short by flooding on the Dalton Highway. The Alkaid well was suspended in to avoid equipment being stranded at location. All zones had been logged and sidewall cores had been taken at the deepest zones, confirming indications of oil in three major zones, from some 4,000 feet to 8,100 feet.

Great Bear had previously carried out an extensive program of 3-D seismic surveying on its acreage and had identified several oil prospects, including the Alkaid. The subsequent suspension of payments of state exploration tax credits under the administration of former Gov. Bill Walker - an action that hit small independents such as Great Bear particularly hard - resulted in a pause in the company’s exploration program.

Meanwhile the Alkaid well was suspended until such time as testing could be done.

Alkaid, Phecda single development

The 2019 re-entry of Alkaid No. 1 resulted in a better-than-expected well test, with a flow of 80 to 100 barrels of 40 degree API oil per day from a vertical perforated interval through the reservoir. Horizontal wells will be used in field development, enabling much higher flow rates, Pantheon said.

The main zone of interest in the Brookian was estimated to have 240 feet of net pay within 400 feet of reservoir rock.

“Such flow rates are considered to be an excellent result and indicate the potential for materially higher flow rates when wells are drilled in the typical manner for Brookian wells in Alaska - horizontally, stimulated and with larger intervals perforated,” Pantheon said in a March 24, 2019, statement.

Testing of two secondary targets in Alkaid No. 1 at shallower depths proved less successful, with brackish water being found in the West Sak and also inferred to be present in the Ugnu.

“These two projects (Alkaid and Phecda) will now likely be part of a single development plan, favorably located adjacent to the Dalton Highway and TAPS pipeline,” Pantheon said. “The better than expected results in the zone of interest will also impact the pre-drill P50 technically recoverable resource estimates which will be assessed in the near future.”

Looking for partners

Based in Texas, Pantheon Resources Chief Executive Officer Jay Cheatham said April 2, 2019, “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. … The company will immediately set about reworking and analyzing all key data from our Alaskan program which will include reviewing the pre-drill conceptual development plans on Alkaid as well as formulating plans for future farm out discussions.”

Pantheon holds a 100% interest in the production testing operations at Alkaid No. 1. Joint venture partner Halliburton will kick in with a 25% share in the event of a plug and abandon operation, with Halliburton also having the right to buy pack into a 25% working interest in the prospect.

Winx well a disappointment

Four of the Great Bear leases acquired in the merger by Pantheon lie in a block to the west of the central North Slope, south of the Colville River unit and the village of Nuiqsut, and line up with the trend of recent major oil discoveries by ConocoPhillips and Armstrong/Repsol to the north. The area is underlain by the prolific Nanushuk sandstones.

In addition to the successful testing of the Alkaid well, the 2018-19 winter exploration season also included the drilling of the Winx 1 exploration well on the western block in which Great Bear cut a deal with three independents - 88 Energy, Otto Energy and Red Emperor Resources - to cover the cost of the drilling, retaining a 10% interest.

Because Great Bear was the operator of record on the leases, the permits were issued in its name, but the Winx program was actually operated by 88 Energy subsidiary Captivate Energy Alaska.

The Winx 1 was drilled into ADL 391720, the primary target was the Nanushuk with the Torok as a secondary objective.

88 Energy said provisional results of the wireline program indicated “low oil saturations in the Nanushuk Topsets not conducive to successfully flowing the formation. … Reservoir properties appear to be compromised by dispersed clay in the matrix at Winx-1,” the company said, noting that clay is often present in successful Nanushuk wells “but in discrete laminations with decent quality, high resistivity, oil saturated sandstones in between.”

The clay binds much of the fluid in place so it cannot flow, 88 Energy said, and also occupies pore space within the formation. “This means that, whilst oil is present in the reservoir, there is less of it and it is not mobile.”

The Torok channel sequence had better reservoir performance than the Nanushuk in Winx 1, but wireline logging showed oil saturation in the Torok zone of interest was also low and not conducive to flow.

Data acquired in Winx 1 will be further evaluated and integrated with the Nanuq 3-D seismic to evaluate remaining prospectivity on the western lease block.

The well will be plugged and abandoned.

Galvin stays

Technically, Cheatham is manager of the company’s Alaska subsidiary per Alaska Department of Commerce records.

At the January 2019 annual general meeting, in which a resolution to move forward with the Great Bear deal was approved, Phillip Gobe, a Pantheon executive director, was advanced to chairman.

Gobe has more than 40 years’ experience in the U.S. and international oil and gas industry, including several senior positions with ARCO, such as operations manager of ARCO Alaska Prudhoe Bay. Currently Gobe is a non-executive director of former Alaska operator Pioneer Natural Resources and Scientific Drilling International, a provider of directional drilling and measurement equipment and operational services.

Anchorage-based Patrick Galvin, former commissioner of the Alaska Department of Revenue and Great Bear’s chief commercial officer and general counsel, has assumed a similar title and duties for Pantheon Alaska Petroleum Operating, effectively running the company.

Founded in 2005, Pantheon is listed on the AIM Stock Exchange, a sub-market of the London Stock Exchange that allows smaller, less-viable companies to float shares with a more flexible regulatory system than that of the main market.

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