LONDON (ShareCast) - (Sharecast News) - Pantheon Resources reported further results from its flow testing programme at the Megrez-1 well on Alaska's North Slope on Monday, with early tests from two intervals yielding water-dominated flows despite confirming high in-place oil saturations.
The AIM-traded company said it recovered reservoir fluids, including oil and gas, from the Lower Prince Creek formation using an unstimulated method, but the flow quickly became dominated by low-salinity water.

A similar outcome was seen in the previously-tested TS1 interval, where further analysis confirmed oil saturations above 50%, though no mobile oil reached the surface.

Pantheon concluded that both intervals likely formed part of an oil-wet system where hydrocarbons may only become mobile after extended flow periods, requiring future testing from permanent production facilities.

Hydraulic stimulation of the Lower Prince Creek had been deferred pending further evaluation.

The next phase of testing would target the Lower Sagavanirktok 3 horizon, which features higher porosity and permeability and was now considered the most promising candidate for commercial oil flow in the Megrez-1 wellbore.

Pantheon emphasised that results from Megrez-1 did not affect the Ahpun and Kodiak fields, which had independently certified 2C contingent resources of approximately 1.6 billion barrels of liquids and 6.6 trillion cubic feet of gas.

Pantheon said it remained on schedule to begin drilling the Dubhe-1 demonstration well in the Ahpun field in the summer, with field development and regulatory work continuing as planned.

"The initial flow test in the Lower Prince Creek formation has shown improved but similar reservoir characteristics as TS1," said chief executive officer Max Easley.

"Core analysis across both intervals has reinforced our view that this is a substantial, oil-charged system with unique characteristics that we're continuing to define through careful, stepwise appraisal.

"The data indicate material oil saturations and reservoir properties that would, under normal circumstances, support commercial production rates, but our challenge is one of engineering, to determine if/how we can engineer them to flow commercially."

Easley said both zones could become attractive candidates for future development once permanent facilities enable longer-term, cost-effective flowback and processing.

"In the near term, we're eager to test the Sagavanirktok interval, a much higher porosity and permeability reservoir."

At 1041 BST, shares in Pantheon Resources were down 32.43% at 28.65p.

Reporting by Josh White for Sharecast.com.

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