Pantheon Resources Plc (PTHRF)

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From the January 3, 2023, Questions and Answers

https://www.pantheonresources.com/q-a

Implications of Condensate and NGLs in Production test

Q: Does your condensate and NGL production have any value? In your operating update on 30 December (“the Operating Update”) you stated Alkaid #2 was producing 300-350 barrels per day (“BPD”) of condensate and Natural Gas Liquids (“NGLs”) in addition to 200 BPD of oil. Can you expand?

A: Yes. As clearly stated in the Operating Update, the liquid mixture includes high quality oil with associated condensates and NGL that are saleable through TAPS (Trans Alaska Pipeline System).

Pantheon’s preliminary views indicated that the current blend of oil, condensate and NGLs produced at Alkaid #2 could be sold in the region of 80% - 90%, or potentially higher, of Alaska North Slope crude oil price (“ANS Crude”). ANS Crude commonly trades at a premium to WTI oil. Our initial estimates exclude some of the higher value NGL components that we are not able to extract yet but should be extracted and sold in a development scenario.

Pantheon’s preliminary views of price expectation are based on our current production, our knowledge of the TAPS pricing methodology and the preliminary analysis of the makeup of the Alkaid NGLs and high quality of the Alkaid light oil. The Alkaid NGL stream includes all fractions/components from propane up through gasoline equivalents. Like the other North Slope fields, the NGL mixture at Alkaid is a different mixture versus NGLs in other areas such as the Gulf Coast.

TAPS throughput is a mix of all the various field outputs in terms of quality and component mix. The field owners have developed a pricing methodology to fairly compensate those contributing higher quality products. Our Alkaid crude oil is high grade and light at 38-41 API and will receive a premium when sold through TAPS. Condensates typically trade at a premium to ANS Crude. For the NGLs, lower value components, such as propane and butane, will be valued at a discount that could be half of the ANS Crude oil price, while other NGLs, such as Naptha or distillates, will get a premium over ANS Crude oil.

The data on the Alkaid NGLs is of course at a preliminary stage and as set out in the Operating Update additional data analysis is being conducted including on Alkaid NGLs. The component mix will also likely change as the well cleans up (the well is presently c.40% through the clean-up phase).

GLTA

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