The Talitha project is considered to be an appraisal of a conventional oilfield discovered by two wells, Pipeline State #1 drilled by Arco Alaska in 1988 and Talitha #A drilled by Pantheon in 2021. Pipeline State #1 was designed to drill to 13,000 feet depth but stopped short of this, just below the Kuparuk formation. The well encountered several oil-bearing intervals as well as strong oil shows throughout an extensive section and did observe oil to surface from several Brookian zones whilst drilling. Promisingly, several cores taken from the well confirmed the presence of oil. No reservoir flow tests were performed as at the time as the objective of the well had been to find a lookalike for the prodigious Kuparuk River field and the Kuparuk formation at this location exhibited different characteristics. This occurred in 1988 when oil prices had plunged to around WTI $15-$20/bbl and the TAPS pipeline was running at full capacity, hence there was little incentive to continue the evaluation of the discovery at that time. Moreover, at that time 3D seismic imaging was in its infancy, drilling and completion technologies as well as oil extraction techniques were not nearly as advanced as they are today. Had today’s techniques been available in the 1980’s, the Pipeline State well may well have initiated the new field development Pantheon envisions today. High resolution 3D seismic acquired in 2013 indicated the potential for an exceptionally large oil accumulation across multiple zones which structurally conform to the oil encountered at Pipeline State which lead to the recent drilling of the Talitha #A well.
Talitha A Pay Intervals
There are several distinct stratigraphic oil zones and possibly more that have now been identified at Talitha which have been defined using advanced seismic petrophysics, a technology which integrates petrophysics, geophysics and geology. Advances such as horizontal drilling and reservoir stimulation now enable economic development of these type of reservoirs, which were previously considered uneconomic. This integrated approach has proven to be successful on the Alaska North Slope (ANS) and resulted in an exploration revival of the ANS which now boasts some of the largest onshore conventional oil discoveries in the world.
The recently drilled Talitha #A well by Pantheon is located approximately eight miles west of the Dalton Highway and Trans Alaska Pipeline System ("TAPS") and four miles from the Pipeline State #1 well and confirmed the presence of movable light oil in the objective horizons. Talitha #A has been announced by Pantheon as a new discovery of oil with over a billion barrels of recoverable oil potential across the multiple stacked (primary and secondary) objectives. These zones are comprised of shallow Brookian reservoirs (primary targets) and the deeper Kuparuk reservoir (secondary target).
Most of the recent larger oil discoveries by other operators on the ANS have been drilled some distance from existing infrastructure which will require extremely high preproduction expenditure and exceedingly long lead times to any production. These recent discoveries by other operators remain several years away from producing any oil and cashflow. Talitha’s proximity to the Dalton Hwy & Trans Alaska Pipeline will be immediately appraised and progressed to development via phased modular production facilities reducing the need for substantial upfront capital expenditure hence allowing production to ramp up as early cashflow is reinvested to grow production.
Theta West Basin Floor Fan Complex
Updip to and Thicker than Talitha A
Closer to Sediment Source - Enhanced Reservoir Quality and Shallower Drilling Depth
The Talitha #A well reached a total depth of c 10,456 ft and drilled through the Shelf Margin Deltaic sequence along with several other targets including (a) the Slope Fan System, (b) the Basin Floor Fan, both within the Brookian section, as well as (c) the deeper and Kuparuk formation. Data collected during drilling indicates five potentially productive zones in the (from deepest to shallowest) (i) Kuparuk, (ii) Lower Basin Floor, (iii) Upper Basin Floor Fan sequences, (iv) Slope Fan and (v) Shelf Margin Deltaic horizons. The Company was only able to test the deepest of these zones, the Kuparuk Formation as it experienced operational issues that led to a delayed testing operation and eventual suspension of the testing at the onset of the warmer Spring weather. It is intended that testing operations will be completed in the next season.
The four normally pressured shallower Brookian zones are secured behind casing. All zones encountered light oil and offer excellent potential based upon analysis to date and will be tested in a future program along with continued testing in the Kuparuk. The shallowest four zones are all geologically independent of the Kuparuk, have all confirmed the presence of potentially significant quantities of light oil, and will be flow tested when the Company re-enters the well next winter. Pantheon’s confidence in these zones has increased as the data obtained during drilling of Talitha #A is of exceptionally high quality. This data have been analyzed by Pantheon’s geologic, geophysical and engineering teams, supplemented by the independent analysis done by AHS (Baker Hughes). Volatiles Analysis Service (VAS) by AHS has evaluated cuttings collected at the rig floor utilizing proprietary techniques confirming a continuous 3700 ft of oil bearing cuttings at Talitha #A. The VAS process entailed taking samples every 10-20 ft of well depth, hermetically sealing approximately half of those samples to avoid any evaporation of hydrocarbons, with the other half of the samples tested after exposure to air. These samples are then subjected to mass spectrometry analysis in the Baker Hughes AHS VAS lab. Significantly, the VAS analysis confirmed the presence of continuous stacked light oil-bearing(35+ API) reservoir zones over a 3,700 ft interval starting at the regional top seal above the Shelf Margin Deltaic reservoir zone down to target depth at 10,456 ft. Every single sample (>400) taken over this interval extracted light oil. The discovery of oil in these formations enhances the prospectivity of other adjoining potential oil-bearing structures that will form part of a future drilling program. We have proven that we can “see” light oil in reservoir with our 3D seismic.
The discovery of light oil in the Basin Floor Fan (BFF) will become an area of intense focus as this is part of the now proven, giant Theta West play. The Theta West play is Pantheon’s largest target and the Company believes has the potential to be the largest hydrocarbon pore volume play currently being exploited in North Alaska outside of Prudhoe Bay. This type of geological play and its volumetric size is comparable to deepwater offshore Gulf of Mexico, West Africa and recent discoveries offshore Guyana.
Pantheon leveraged its proprietary 3D seismic and proprietary analytical methodologies over the past few years to strategically secure a dominant position in the Theta West play fairway prior to the drilling of Talitha #A. Post drilling of Talitha #A, the Company estimates the BFF (Theta West) (on a 100% basis) to contain 12.1 billion barrels of OIP and a P50 Contingent Resource (Recoverable) of 1.41 billion barrels of oil on Pantheon’s acreage a most likely case under primary recovery. The Theta West Basin Floor Fan was also penetrated in the Pipeline State well, substantially downdip from Talitha #A, and was also oil bearing. Theta West represents a major opportunity to pursue the continued appraisal and development of what is a truly world class project in a fantastic location.
The Talitha #A well penetrated the BFF in a structurally down dip location, approximately 1500 ft structurally down dip and over 8 miles from the crest of the trap to the north west. The Talitha #A test location of the Theta West project area contains two separate reservoirs, the Upper Basin Floor Fan (“UBFF”), and the Lower Basin Floor Fan (“LBFF”). The LBFF is 600 ft thick with approximately 50% net sand to gross interval ratio. The Theta West reservoir target interval, based on seismic, doubles in thickness at its (updip) crest, substantially shallower (7500 ft) than at Talitha #A (9000 ft). Accordingly, Pantheon expects a thicker reservoir section with increased porosity and permeability at the updip Theta West location. Drilling the shallower crestal location leads to reduced drilling costs. The Theta West project covers approximately 100,000 acres controlled by Pantheon.
The BFF and the Slope Fan system is part of the Brookian deepwater fan systems which lie below the SMD and above the Kuparuk in depth and all proven oil-bearing from the discovery well at Talitha #A and Pipeline State #1. The original interpretation was that this was a series of discrete fan systems, however, more recent analysis has indicated that the fan systems previously identified as discrete pay zones could in fact be part of one large continuous section that extends several thousand feet. Collectively, much of the targeted Brookian section at Talitha has the potential to lie within a “super trap”.
Pantheon is extremely encouraged by the analysis of the shallower zones in the Talitha #A well. The reservoir qualities are in line with expectations, the oil appears to be lighter than expected and an additional significant zone has been discovered in Talitha #A, significantly increasing the total resource potential.
An enormous volume of high-quality data has been collected from drilling Talitha #A which has both de-risked these zones for future drilling, and increased confidence of their commercial viability. The Basin Floor Fan ("BFF") zone encountered more reservoir than expected. The Upper BFF is an additional zone with that was penetrated in Talitha #A. The Slope Fan System was encountered as anticipated and will benefit from additional work prior to next season's testing. The SMD was not as well developed as anticipated at Talitha #A, however based on our new data Pantheon now interprets that the SMD extends across the Alkaid project where the zone is proven oil bearing, and better developed as it extends south east across the Dalton Highway. This significantly increases the resource potential near the highway and pipeline.
The shallowest formation is the 'Shelf Margin Deltaic' ("SMD") horizon. Pantheon’s Production Unit at Talitha covers 44,373 acres. The SMD was the primary interval of focus defining utilized to define the Talitha Unit. The SMD could be classed as analogous in stratigraphic setting to the large Pikka/Horseshoe discovery to the west which is also described as a SMD play. The SMD play now extends into the Alkaid Unit to the northeast lying directly above the tested Alkaid discovery. New mapping also extends the play due east and underneath the Dalton Highway and Trans Alaskan Pipeline.
The third and deepest oil formation is the Kuparuk Formation. The Kuparuk formation is a prolific regional producer just north of Pantheon’s leases where there is a giant oilfield named the Kuparuk Field holding an estimated oil in place of 14 billion barrels of oil. Oil was discovered in the Kuparuk formation at the Pipeline State #1 well in 1988 but much deeper than the established Kuparuk oil fields to the north. The Pipeline State well encountered 47 feet of net oil pay in the Kuparuk but was never tested. The Talitha #A well was drilled “up dip” from Pipeline State and encountered thicker and better reservoir rocks. The well encountered ± 60 ft of well-developed sand with high resistivity readings and very strong gas chromatograph indications of oil. The presence of oil in reservoir was independently confirmed by VAS. Talitha #A demonstrated the key elements of a proven hydrocarbon system in the Kuparuk formation with the presence of movable high-quality (± 42° API) oil, however during testing the well-produced oil intermittently along with solution gas and formation water with lower salinity than anticipated. High quality light oil flowed intermittently at rates up to 100 BOPD as test encountered several operational issues and is believed to exhibit ‘oil wettability’ characteristics which will be addressed in future wells through different drilling products and techniques. The Kuparuk horizon at this location was over pressured which was both unexpected and unlike any known Kuparuk well regionally causing challenges in testing. The Kuparuk at Talitha #A is some 800 ft downdip from its ideal 'updip' position and was a recognized, predrill, as a secondary target but important stratigraphic play test. The Talitha #A well location was selected as the optimal location for the shallower Shelf Margin Deltaic horizon, the primary target of the well.
Our technical team prioritised testing the Kuparuk formation and ultimately recommended deferring plans to test the shallower horizon during the drilling season because the well logs of the Kuparuk indicated excellent reservoir, comparable to reservoirs in highly productive nearby Kuparuk fields. Based upon the well logs (and regional analogs), the test results were a surprise and more work will be needed to understand the Kuparuk reservoir at this location. Comprehensive analysis of the VAS and wireline data from these zones over the forthcoming months will enable the Company to fully optimize its testing program for next season, as well as enabling lengthier flow tests.
Before drilling Talitha #A Pantheon completed an internal analysis of the Kuparuk Formation in late 2020 where it estimated the Kuparuk Formation (on a 100% basis) has the potential to contain 1.4 billion barrels of oil in place (OIP) and a Prospective Recoverable Resource of 341 million barrels of oil (MMBO) as a most likely case. The Company has modelled an illustrative development plan for this zone with 62 producing wells, exploiting 247 MMBO of this resource, and using the WTI current forward price curve, yielding a potential NPV10 of over US$1.48 billion, with NPV per barrel of $6.00 and an Internal Rate of Return of 55%. This was a standalone development concept which would be significantly enhanced if this development is combined with the discovered resources the shallower section at Talitha and Alkaid.