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 12 January 2016

Pantheon Resources plc

VOS#1 wellTesting Update

 Pantheon Resources plc (“the Company”), the AIM-quoted oil and gas exploration and production company with a 50% working interest in several projects in Tyler and Polk Counties, East Texas, announces the following operational update.

 Update on flow testing operations at VOS#1 well, Tyler County, onshore East Texas

 The VOS#1 well encountered 107 feet of net pay at a depth of c.15,150 feet, in the Eagle Ford sandstone, the primary target of the well. This is more than 70% greater than the net pay encountered in the recently completed VOBM#1 well in Polk County. The well initially flowed high rates of natural gas and 39 degree gravity oil at a flowing tubing pressure (“FTP”) of 8,400 pounds per square inch. The net pay and initial flow rates are consistent with a well exceeding a PMean ultimate recovery of c.3 million barrels of oil equivalent.

 During subsequent testing operations, all three producing parameters (gas production, oil production and FTP) decreased suddenly, indicating the presence of a blockage. Subsequent changes to the choke size at the surface over several days had no impact on either the FTP or production rates, confirming the likely presence of a blockage within the production interval at the perforations. The JV has subsequently decided to perform a bottom hole pressure build up test, which is estimated to take 72 hours and which has recently commenced. This will allow a definitive analysis of the type of blockage and allow for appropriate remedial action, which could take up to an additional seven days.

 Jay Cheatham, CEO, said

“From the V0S#1 well, the net pay encountered and initial flow rates are very encouraging. Although we are disappointed that we cannot report production numbers at this time, I am confident we will be able to remedy the downhole issue, which is most likely heavy mud blocking perforations. Similar blockages are known to have occurred in the analogous, nearby Double A Wells field and were subsequently successfully remedied. Even at the reduced flow rates after the blockage, the well is still flowing commercial quantities of hydrocarbons. Without the blockage, our data suggests that this has the potential to be an exceptional well.”

 For further information on Pantheon Resources plc, see the website at: www.pantheonresources.com

 

–ENDS–

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Oil has continued its rollercoaster ride into the new year, with Brent crude falling below $35 a barrel for the first time in 11 years.

Brent crude sank by 4.2% to $34.88 a barrel, surpassing its late December fall, and taking the price to its lowest level since 1 July 2004.

The price of US crude dropped 3.3% to $34.77 a barrel.

The sharp falls followed a short-lived rally on Monday after Saudi Arabia broke diplomatic ties with Iran.

Analysts said fears over the worsening relations between Saudi Arabia and Iran, which had initially raised concerns about possible supply disruptions and boosted the oil price, had now been overtaken by pessimism over oil cartel Opec ever agreeing on a production ceiling.

How low?

Historically, Opec has cut production to support prices. But led by Saudi Arabia, by far the group’s most powerful member, the group has resolutely refused to trim supply this time.

Rising tensions over Saudi Arabia’s execution of Shia cleric Sheikh Nimr al-Nimr mean that any agreement is now deemed less likely than ever.

“With relations between Opec kingpins Saudi Arabia and Iran at a historic low point, it solidifies an already unlikely scenario that Opec might cut output,” said Barclays analyst Alia Moubayed.

Since mid-2014, oil prices have slumped 70% mainly because of oversupply. This in turn is largely due to US shale oil flooding the market.

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe.

Iranian oil exports are also expected to rise later this year once Western sanctions against Tehran for its nuclear programme are lifted, increasing the oversupply of oil.

Opec is hoping that refusing to cut production will help to drive US shale producers out of business, believing that they will fall victim to lower prices long before its own members, and has forecast that prices will recover to $70 a barrel by 2020.

Goldman Sachs has warned that oil prices could go as low a $20 a barrel, but most analysts are expecting the price to stabilise in the second half of the year as supply from non-Opec nations slows and demand remains relatively robust.

Source: BBC News Online