??19 October 2023

Pantheon Resources plc

Validation of revised frac design and successful fluid sampling

Pantheon Resources plc (AIM: PANR) ("Pantheon" or the "Company"), the oil and gas company with a 100% working interest in the Kodiak and Ahpun projects, with certified contingent resources of over 1 billion barrels of marketable liquids spanning 193,000 contiguous acres in close proximity to pipeline and transportation infrastructure on Alaska's North Slope, provides the following update:

Alkaid-2 Re-entry Update

The re-entry of the Alkaid-2 well and flow test of the Shelf Margin Deltaic B ("SMD-B") horizon is now complete at the end of the programme to frac, clean up and flow the well. The Company is pleased to report that testing operations have been successful at demonstrating producible oil from the SMD horizon in the Aphun field, which is comprised of both the shallower SMD formation and the previously tested deeper Alkaid ZOI.

As previously announced, going into the SMD data gathering programme, the Company had three clear objectives:

(i)    To assess the efficacy of the revised frac design;

(ii)   To gather representative fluid samples for pressure-volume temperature analysis ("PVT"), and;

(iii)  To better determine the initial reservoir pressure

All three objectives have been successfully achieved:

(i)   Post well analysis indicates that the frac treatment resulted in vertical propagation across the entirety of the the 200 ft gross (100 ft net) reservoir column and extended laterally some 300-400 ft.

The Company's preliminary estimate of the efficiency of the frac was 50% of theoretical design performance and compares favourably with the calculated frac efficiency of c.20% experienced in the Alkaid-2 operations in the deeper ZOI accumulation last year. This improvement was the result of several key changes to the frac design, as described below, which allowed the frac to remain within the reservoir and validates the ability to achieve at least the planned for 2x improvement in frac efficiency in future.

(ii)  Multiple fluid samples were gathered indicating a measured gas oil ratio ("GOR") of 3,000 - 4,000 standard cubic feet per barrel ("scf/bbl") and an API gravity of 35-36^o. This compares to 12,000 - 13,000 scf/bbl measured in the deeper Alkaid ZOI. This indicates success in limiting pressure drawdown and avoiding flashing gas in the reservoir.

The Company will have GeoMark conduct recombination analysis on the recovered fluids from this SMD test, which will provide a comparison to the calculated GOR range for the Alkaid ZOI of 2,000 - 3,000 scf/bbl.

Analysis of the gas samples is ongoing to determine accurate natural gas liquids ("NGL") yields. The initial estimate of the calorific value of the produced gas was 1,200 British Thermal Units ("Btu") per standard cubic foot ("scf") compared to approximately 1,000 Btu/scf for pure methane. This indicates there should be further marketable liquids beyond just the separator liquid volumes reported.

(iii) Initial reservoir pressure was determined to be in the range 3,800 - 4,000 psi and the well has been suspended with a pressure monitoring device to further refine and confirm this estimate. We anticipate retrieving the pressure gauge in the next six weeks or thereabouts.

During the flow test, after recovery of approximately 60% of the frac fluids, the oil rate (separator liquids) ranged from more than 100 barrels of oil per day ("bopd") to 30 bopd (averaging 45 bopd over the 5 days during which oil was recovered). Water cuts were 90% initially, but declined over time as a larger share of the frac fluids was recovered. As highlighted before the operation, the flow rates themselves were not expected to be material because the objective was to limit drawdown in the initial flow back. However, the actual flow rates were substantially better than prognosed, given the conservative approach to production in order to limit gas flashing in the reservoir and ensure the best quality PVT samples, which bodes well for future SMD development in the Ahpun Field.

Improvement in the frac design included limiting the number of perforations to achieve treatment rates of 1.5 - 2.0 barrels per minute per perforation, use of 100 mesh sand, inclusion of micro-emulsion breaking chemicals and lower overall sand concentrations.

Pantheon calculates the frac efficiency as the ratio of the area of the reservoir exposed to the wellbore vs the theoretical exposure if the treatment had achieved 100% of its designed outcome. This frac has surpassed the doubling of efficiency from c.20% achieved in the Alkaid ZOI to c.50%, I.e. more than the basis upon which the development planning is being modelled. A more precise efficiency estimate will be possible when the pressure gauge is pulled from the well. Future wells will provide the opportunity for further optimization with a view to meeting benchmarks of 80% frac efficiency achieved in other basins.

The location of the Alkaid-2 well was chosen to prioritize the deeper ZOI as the primary target, and is positioned on the very northern edge of the SMD-B accumulation, where it begins to shale out. Thus it was always expected to encounter poorer reservoir quality than in the core of the SMD horizons in the Ahpun field to the southwest. Expectations for flow rates, water saturations and water cuts had led to plans for nitrogen lift (necessary to reduce bottom hole pressure and ensure that fluids were recovered to surface). Encouragingly, nitrogen injection was not required until the last six days of the eleven day test, resulting in the operation coming in at or below budgeted timelines and costs.

Ahpun Field Development Update

Following this validation of the ability to improve the frac efficiency by more than 2x compared to the Alkaid-2 long term test, the Company's strategy to move to regulatory approvals for the Ahpun Field development and to proceed with a hot tap into the TAPS main oil line has been reinforced. Confirming producible oil in the SMD, the larger oil accumulation within the Ahpun Field (which includes the Alkaid ZOI) is significant for the longer-term commercial implications of developing production infrastructure near the Dalton Highway.

The plan targets FID (final investment decision) by the end of 2025 with first production to follow in early 2026. Estimated costs to first production are conservatively estimated at $120 million, based on:

·    $20 million for the hot tap

·    $20 million for facilities upgrade (including preparing Alkaid-2 for injection service)

·    $60 million for the first three production wells

·    $20 million for three years of corporate G&A

This cost to reach first production contrasts with other developments in the region, requiring at least an order of magnitude greater expenditure. Additional development costs after first production are expected to be funded through debt or equivalent sources. The Company will provide further updates on its financing activities, designed to minimize equity or other value dilution for existing investors, as arrangements progress.

Jay Cheatham, CEO, said: "This re-entry operation has provided validation of our development plans for Ahpun and, in due course, Kodiak, by proving the efficiency achieved with our next iteration of the optimum frac design. We have achieved the three core objectives we set for this operation and are now focused on the next steps in our plan to bring these 100% owned resources into production, benefitting from the advantages of our location right next to the Dalton Highway and the TAPS line."

David Hobbs, Executive Chairman, said: "Congratulations to Jay and the operational team on a trouble-free operation that supports the economic case for developing our entire portfolio of resources. Gathering the last few data elements for our development planning allows us to move forward at full speed towards bringing Ahpun on stream in 2026 with Kodiak to follow. We estimate that we have surpassed the 40% frac efficiency upon which our development plan was predicated and will aim to achieve substantial further improvements during the early stages of development."

-ENDS-

 Further information, please contact:

In accordance with the AIM Rules - Note for Mining and Oil & Gas Companies - June 2009, the information contained in this announcement has been reviewed and signed off by David Hobbs, a qualified Petroleum Engineer, who has nearly 40 years' relevant experience within the sector.

The information contained within this Announcement is deemed by Pantheon Resources PLC to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

Notes to Editors

Pantheon Resources plc is an AIM listed Oil & Gas company focused on developing the Ahpun and Kodiak fields located on state land on the Alaska North Slope ("ANS"), onshore USA where it has a 100% working interest in 193,000 acres. Certified contingent resources attributable to these projects exceeds 1 billion barrels of marketable liquids, located adjacent to Alaska's Trans Alaska Pipeline System ("TAPS").

Pantheon's stated objective is to demonstrate sustainable market recognition of a value of $5-$10/bbl of recoverable resources by end 2028. This will require targeting Final Investment Decision ("FID") on the Ahpun field by the end of 2025, building production to 20,000 barrels per day of marketable liquids into the TAPS main oil line, and applying the resultant cashflows to support the FID on the Kodiak field by the end of 2028.

A major differentiator to other ANS projects is the close proximity to existing roads and pipelines which offers a significant competitive advantage to Pantheon, allowing for materially lower infrastructure costs and the ability to support the development with a significantly lower pre-cashflow funding requirement than is typical in Alaska.

The Company's project portfolio has been endorsed by world renowned experts. Netherland, Sewell & Associates ("NSAI") estimate a 2C contingent recoverable resource in the Kodiak project that total 962.5 million barrels of marketable liquids and 4,465 billion cubic feet of natural gas. NSAI is currently working on estimates for the Ahpun Field.

 Glossary of terms

BBL - Barrel

BOPD - Barrels of oil per day

BTU - British Thermal Units

GOR - Gas oil ratio

Marketable Liquids - The mix of hydrocarbons exported from Pantheon owned facilities meeting the specifications for injection into the TAPS main oil line.

NGL - Natural gas liquids

PVT - Pressure-volume temperature analysis

SCF - Standard Cubic Feet

SMD - Shelf Margain Deltaic

TAPS - Trans Alaska Pipeline System