Pan Orient Reports First Quarter 2015 Financial and Operating Results

Pan Orient Energy Corp. (TSXV:POE) announced the financial and operating results for its first quarter 21015, which included guidance for the remainder of the year.

Highlights:

• Completed the sale on February 2, 2015 of a 50% equity interest in Thailand subsidiary for estimated net proceeds to Pan Orient, after closing adjustments and costs, of $52.0 million, including a working capital adjustment of $3.1 million.
• Bitumen production continues at the Sawn Lake, Alberta steam assisted gravity drainage (“SAGD”) demonstration project of Andora Energy Corporation (“Andora”). After a three week delay due to repair of the electrical submersible pump, the steam chamber is approaching the top of the Bluesky formation sandstone reservoir and bitumen production has averaged 353 BOPD (177 BOPD net to Pan Orient) for the period of May 1 to May 20 with a steam to oil ratio (“SOR”) of 4.7.
• On May 15, 2015 the Government of Indonesia approved the transfer of a 51% participating interest and operatorship of the East Jabung Production Sharing Contract (“PSC”) to a subsidiary of Talisman Energy Inc. Pan Orient retains a 49% participating interest at the East Jabung PSC. The first well is planned to be drilled in approximately early to mid-2016 and the farminee will fund the first USD$5 million of Pan Orient’s share of the exploration program and fund associated general and administrative expenses.
• Working capital and non-current deposits of $85.0 million at March 31, 2015 and an additional $9.4 million as initial consideration of the East Jabung farmout is expected in mid-June of 2015. Pan Orient has no long-term debt.
• On February 2, 2015 the Company sold a 50% equity interest in its subsidiary Pan Orient Energy (Siam) Ltd. and retained a 50% equity interest. From February 2, 2015 forward the retained 50% equity interest is reclassified as a non-controlled Joint Venture and Pan Orient’s 50% equity interest in the working capital, assets, capital expenditures, liabilities and operations of Pan Orient Energy (Siam) Ltd. are recorded as Investment in Thailand Joint Venture.
• For the first quarter of 2015, the Company recorded total corporate funds flow from operations of $0.4 million ($0.01 per share) and funds flow from sale of the Thailand interest of $48.9 million ($0.86 per share).
• Net income attributable to common shareholders was $33.9 million ($0.60 per share).
• At March 31, 2015 Pan Orient had $85.0 million of working capital and non-current deposits. Working capital and non-current deposits of $85.0 million were comprised of $70.7 million cash, $4.3 million of non-current deposits, $12.7 million of Canadian taxes receivable, other receivables & prepaid expenses of $2.0 million and less payables of $4.7 million. There is $1.8 million of equipment inventory at the Batu Gajah PSC in Indonesia to be utilized in future drilling operations. In addition, Pan Orient’s Investment in Thailand Joint Venture includes $0.9 million of Thailand working capital and non-current deposits and $2.3 million of equipment inventory to be utilized for future Thailand Joint Venture operations.

Outlook:

• Indonesia
  • On May 15, 2015 the company received Government of Indonesia for approval for the transfer of a 51% participating interest and operatorship in the East Jabung PSC to a subsidiary of Talisman Energy Inc. The first well is currently planned to be drilled in the East Jabung PSC in approximately early to mid-2016.
  • The Company plans to drill an exploration well at the Batu Gajah PSC in the second half of 2015 which would offset an existing oil discovery made by another operator in the adjacent Lemang PSC. Forestry approval for three surface locations was received in May 2015, and road and wellpad construction is expected to commence in June 2015.
• Canada – Sawn Lake (Operated by Andora, in which Pan Orient has a 71.8% ownership)
  • The Company expects the steam chamber to reach the top of the Bluesky formation sandstone reservoir in May or June 2015 and maximum production is anticipated to occur in approximately September 2015, corresponding to the end of the first year of production.
  • The well is still in its ramp-up phase and Andora is now aiming for consistent bitumen production of 449 barrels of bitumen per day, with an associated SOR of 3.1, which corresponds to the High case estimate used by Sproule Unconventional Limited in the December 31, 2014 contingent resource evaluation for the 16- 30-91-12W5M well pair which was drilled in a 15 to 20 meter thick reservoir with no bottom or top water.
• Thailand
  • Pan Orient is continuing to test the multiple sandstone intervals in the L53-DC1ST1 and L53-DEXT1ST2 appraisal wells.
  • No exploration drilling has been confirmed by the Concession L53 joint venture partners for 2015 at this time. Activities for the next half of 2015 will focus on workovers of existing wells to maximize production and further investigation all options towards reducing operating costs.

Jeff Chisholm, president and CEO of Pan Orient, commented:

These financial results and the announcement of the Government of Indonesia’s approval of the East Jabung PSC farmout clearly demonstrate the progress achieved over the past year in the corporate initiative to reduce our future capital exposure and strengthen our balance sheet.

Click here to read the full Pan Orient Energy Corp. (TSXV:POE) press release.