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Pantheon Resources CEO determined company can survive at $30 oil

Energy Voice

The chief executive of Pantheon Resources said he had “never been more certain about the future of his company”.

The company leader made the affirmation after the firm revealed it could target capital costs of $5boe.

In its latest operational update, Pantheon confirmed it would use a fracture stimulation remediation technique to unlock the potential of its onshore VOS#1 well, located in Tyler County, East Texas, and its VOBM#1 well, located in Polk County, East Texas.

Company leader Jay Cheatham said: “Our focus is now on drilling out the multiple well targets which have been de-risked by VOS#1 and VOBM#1. We have drilled two discovery wells in two separate counties, in two separate mini basins, on two different seismic packages. Following from Polk County, the next well in Tyler County will be a horizontal well, a large step out from our first, and located in the third of the five prospective areas in the company’s portfolio. With combined operating and capital costs forecast at below $5 per boe and the prospect of near term cash flow from our first two successes, I have never been more certain about the future of this company.”

During a testing period, the VOS#1 well well flowed at a sustained rate of over 750 barrels of oil equivalent per day on a 12/64th choke. Analysis has confirmed that these rates should be materially improved by applying a standard fracture stimulation procedure as the optimal remediation technique, according to the company.

On a modelled P50 basis, the VOBM#1 well has an estimated payback of approximately seven months, after deduction of royalties and production taxes, at oil and gas prices of US$30 bbl oil/US$2.00 mcf natural gas, according to the firm.

Cheatham added: “The more we analyse the results of the VOS#1 well, the more confident we are that both it and the VOBM#1 well before it will prove to exceed our original P50 estimates. We have taken extra time to analyse the restricted flow rates in the VOS#1 well. It is impossible to know the exact extent of any blockage or reservoir damage caused by the use of heavy drilling mud, however there are permeability variations across the 270 foot column of sandstone. Because of the exceptional extent of the reservoir encountered, we, along with the service companies, have concluded that flow rates and recovery can be substantially improved by adopting a straightforward fracture stimulation remediation technique that has worked effectively with analogous neighbouring wells. The extent of the column and the flow rates achieved from a narrow choke during subsequent testing have confirmed our belief that this should be an exceptionally productive well and one which exceeds our initial expectations.

“The knowledge and experience acquired with these first two commercial discoveries reinforces our desire to press ahead with further drilling, taking advantage of the reduced costs provided by a low price environment. The decision to use horizontal drilling techniques to drill future wells on our acreage is another important step forward in the company’s transition from exploration to development status. The operator has always considered that horizontal completions would be the most efficient method for drilling these wells, but adopted a more cautious approach for its first two wells to minimise risk. The horizontal well models suggest that ultimate recoveries could be between 200% and 300% greater than that of a vertical well.”

The first well of Pantheon’s 2016 drilling campaign will be in Polk County.

A company spokesperson said: “It is a step out from the VOBM#1 discovery well and unlike the first two wells will be drilled horizontally. Significantly, the operator now considers this to be a development well. In Tyler County, the next well will be a large step out from VOS#1 into the Core Offset prospect in the heart of the Eagle Ford mini-basin complex.”

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