David Hobbs, executive chairperson of Pantheon Resources was recently a guest on Benzinga's All-Access. Pantheon is an independent oil and gas company developing the Kodiak and Ahpun fields, a portfolio of high-impact oil projects on the Alaska North Slope (ANS) that span a 100% working interest across 258,000 acres. The company recently announced an exclusive agreement with the Alaska Gasline Development Corporation, as well as drilling results from a key well.
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00:00It's my pleasure to welcome in the Executive Chairman of Pantheon Resources, David Hobbs.
00:08Wonderful to be with you today, David.
00:10Dan, delighted to be with you.
00:12Well, let's get right into it. Give us an overview of Pantheon, if you would, please.
00:17Pantheon is a UK-listed company with enormous lease positions in Alaska,
00:25on which we've found a whole load of oil, basically independently certified 1.6 billion
00:32barrels of recoverable oil and just over 6 trillion cubic feet of natural gas,
00:37just been drilling and are between drilling and testing a new well, which could add substantially
00:45to that position. The pre-drill estimate was for another 600 million barrels of oil.
00:49And in fact, what we found is a rather larger hydrocarbon column than we originally expected.
00:55So lots of work going on to work out exactly what that means.
00:58But if I'm looking happy, you shouldn't be surprised.
01:02I love it. Let's talk about what kind of opportunity lies in the Kodiak and AFON fields.
01:07Why are these projects unique for the rest of the Alaska North Slope?
01:11Well, I'm going to have to correct you on the second one. It's Apun, named after a polar bear
01:17that once lived in the zoo in Anchorage and apparently well-beloved. But the Kodiak field,
01:24that's the larger of the two fields, 1.2 billion barrels. Apun, around about another 400,
01:31just under. And if the recent well is as successful as we hope, then that will take
01:38that number up around a billion barrels based on the pre-drill estimate. But what's really unique
01:43and special for Alaska is two things. The first is that the location of these assets is right
01:50under the Trans-Alaska Pipeline and the Dalton Highway. That's the main whole road,
01:5430 miles south of Dead Horse, which is where the airport, where the oil services center is
02:00on the North Slope. So the costs of getting into first production are enormously,
02:06an order of magnitude lower than most other developments on the North Slope.
02:10The way to think about it is it's like the Permian Basin on steroids, but really cold.
02:14And the second thing, and in a sense, the more exciting thing and been recently in the news,
02:20is that the gas that we've got has very low carbon dioxide content. Now that may not mean
02:26anything immediately, but if I tell you that too much carbon dioxide in the gas means that it needs
02:31to be removed before it can go into a pipeline because it's very corrosive. Whereas our gas,
02:36unlike most of the gas on the North Slope has such low levels that it can go straight into
02:41the pipeline without that preprocessing. That allows us to offer it to the state of Alaska
02:46or to the consumers in Alaska at an incredibly low price. And we've committed to provide in-state
02:52demand at $1 into the pipeline. And in fact, under some circumstances for free into the pipeline.
02:59Now that's good for Alaska because two things, one is that gas supplies to South Central Alaska
03:07are dwindling. And so there's going to be a need for more gas. And the second is because the cost
03:12of building a pipeline from the North Slope all the way down to South Central Alaska would be
03:16prohibitive unless it were for the ability to supply very cheap gas into that pipeline. And
03:22we were delighted last year to sign a contract with the Alaska Gas Line Development Corporation
03:27to provide cheap gas that would precipitate the development of this pipeline. And in the
03:33last week or so, Glen Farn, who are an infrastructure developer founded by former
03:40Macquarie bankers, extremely well versed in infrastructure development. They've committed
03:47to bring the project forward working with the state of Alaska. And so we're delighted to be
03:53working alongside Glen Farn and AGDC to realizing a project that frankly has been on the books for
03:58the last several decades. But finally, it looks like it's moving forward and it's got the support
04:03of Governor Don Levy, but also President Elect Trump supported it publicly in one of his first
04:10speeches after his election. Sounds like you said great news for the residents of Alaska,
04:14which is very important as well. You know, David, I wanted to ask you how the project's
04:17making the company competitive in attracting additional capital, especially compared to the
04:22big four U.S. basins. Well, the big four, in the Permian Basin, you've got the Delaware and
04:28the Midland Basin, you've got the Eagleford, you've got the Williston. These are really where
04:32the majority of new oil production growth has been happening in the lower 48. And that's where
04:39the majority of upstream capital has been invested in the United States. Because of the anatomy of
04:47our assets, the fact that we can drill one well at a time, much like in those big four basins,
04:52because of our proximity to infrastructure. And yet, for approximately a 50% higher well cost,
04:59we're getting more than twice as much oil per well. So the economics look really attractive.
05:03Our breakevens are likely to be below $30 a barrel compared to today's oil prices. That's a lot of
05:11headroom. And that's also probably a lower breakeven cost than those big four basins.
05:17And just on a unit value, we think it's extremely competitive. And so we are working with advisors
05:24and with a number of stakeholders to access capital for the development of these assets,
05:29bring them forward to production in 2028, potentially even 2027, if we can get through
05:34the regulatory processes in an efficient way, and bring this up to production. And we've got a
05:40target looking for around 300,000 barrels a day of production in due course. But that can start
05:47as soon as we tie into the Trans-Alaska Pipeline. Those are great numbers. And what is your sales
05:52precedent with the state of Alaska for LNG? So for providing gas into the Alaska LNG project,
06:00so there are three phases to that project. There's the pipeline, which is going to be phase one.
06:06There's then the LNG export, which to get that volume of gas may require a carbon capture plant
06:12up on the North Slope, so the Arctic Carbon Capture Plant. So those three elements of the project
06:17together are about $44, $45 billion. The pipeline is probably $11, $12 billion. And we're moving
06:25with Glenn Fahn moving to front-end engineering to refine that cost estimate and to really make
06:32sure that the pipeline is financeable moving forward. So that's what we're trying to support.
06:40And what we agreed was that up to half a billion cubic feet a day of our gas would be provided over
06:4520 years at $1 in order to make sure that the delivered price of gas down to South Central
06:53Alaska was competitive. And that's what unlocked the project. Now, the other thing that's really
06:57good news, but still fairly uncertain, in the Kodiak field, when we were drilling the appraisal
07:04well, we found levels of helium between a half percent and 2%. That doesn't sound like very much.
07:10But when you consider that it'll come down to the South Coast, that if it goes into an LNG plant
07:17and you've liquefied everything else, at those low temperatures, below 200 degrees,
07:23minus 200 degrees centigrade, that that leaves just basically helium, that's an incredibly
07:30cost-effective way of developing that helium. And at 1% helium, that would be equivalent to maybe
07:3650 or 60 billion cubic feet of helium. Now, put that in context, helium sells for between $500
07:42and $1,000 per 1,000 cubic feet. So that's a ton of extra potential on the upside.
07:49Can't take it to the bank yet, but as we appraise and develop those fields,
07:53that would be a really nice little Easter egg to find.
07:56Yeah, helium is not cheap like it maybe was years ago. It's a lot different these days, David.
08:00I know you recently received the results of a well survey. What did they show and how is the
08:04Megrez One Well unique? Well, the difference with Megrez One Well from what we have drilled to date
08:12is that the quality of the reservoir is much better. So in the Kodiak and Apun West fields,
08:18the rock is tight. It's conventional, but it's tight. It requires completion techniques that
08:26you'd find in the major basins in the lower 48. The Megrez Well was looking into the eastern portion
08:32of the Apun field where it's much shallower and the rocks seem to have 10 to 100, even 1,000 times
08:40better permeability. That's the ability of oil to flow through the rock. And so what that means is
08:46it's really analogous to the developments that are going on at Willow and Pika, which are the two
08:51big ongoing developments being led by ConocoPhillips and Santos, which will be on production during the
08:56next three or four years. And so there's a real renaissance in Alaska. The pipeline right now
09:03is only a one-third full, plenty of room for all of us to expand and increase production into the
09:10pipeline. But what's unique about this well, as I say, in our portfolio is it's the best quality
09:17reservoir we've encountered so far. We went into it expecting probably 300 feet to 500 feet of oil
09:26column. What we found was reservoirs over about a 1,200 foot column. So more than twice as much
09:33vertical column of oil. And so as I said earlier, we've got CoreLab working out the
09:41quality from the cores that we cut as we design a testing program. And during late February and
09:46March, we're hoping to come forward with testing results that will demonstrate that we really have
09:53lucked out in terms of finding something that really adds to the portfolio.
09:57Now, it's very exciting stuff. And David, we know that artificial intelligence is everywhere,
10:01by the way. Has AI affected the way you survey or do business in any other way? And do you see
10:07more opportunities to use AI in oil and gas? Well, there's no question at all. The oil and
10:12gas industry has been a major adopter of new technology, probably just behind gaming and
10:20defense in terms of being on the cutting edge. And the ability to image several thousand feet
10:27below surface using seismic surveys and to create three-dimensional models, both static and dynamic
10:34models, that's state of the art. What we're finding is that the use of AI to enhance the
10:42interpretation, speed up the interpretation, allow the technical folks to look at more different
10:48scenarios more quickly. So yes, it's absolutely influencing on the discovery side of the business
10:57and in terms of the appraisal and understanding what we've got. The really exciting thing is that
11:02AI is also a voracious user of power. What does Alaska have? It's got cheap energy, almost unlimited
11:10cold land and fresh water. So the governor has been pushing hard to develop data centers,
11:18which will be also part of the anchor demand for gas from the North Slope. And the huge gas
11:24resources on the North Slope, coupled with carbon capture potentially down in the historical Cook
11:31Inlet, the depleted gas fields, means that you could see very low carbon, very cost effective
11:36data center development. And AI is just a huge driver of that. So AI is affecting us both on
11:44the supply side and on the demand side. In the future, definitely hear when it comes to that.
11:49Well, listen, David, it was an absolute pleasure talking to you today. Thank you so much for your
11:52time. Dan, it's been a real pleasure. Thanks very much indeed.