CALGARY, ALBERTA--(Marketwire - July 13, 2011) -
Thailand Concession L44 (Pan Orient 60% working interest and operator)
WBEXT-1F Exploration Well
Pan Orient Energy Corp. (TSX VENTURE:POE) ("POE") is pleased to announce the discovery of two new sandstone reservoir pools at WBEXT-1F in a fault compartment due east of the existing WBEXT field for which no proved or probable reserves were assigned in the December 31, 2010 evaluation. The "E" sand tested at approximately 0.6 million cubic feet per day of natural gas (gross) and the shallower D sand at 100 BOPD (gross) with no water. As observed in every example to date, the Company expects oil down dip of the gas encountered in the "E" sand. Upon the completion of testing in the new reserve area "E" and "D" sands, the well was plugged back and put on production from the "D" sand (misidentified as the "E" sand in the May 26, 2011 press release) at a stabilised rate of approximately 83 BOPD (50 BOPD net to Pan Orient). A follow up appraisal program targeting the "E" and "D" sands in the new fault compartment is currently being defined.
WBEXT-2B Appraisal Well
The WBEXT-2BST1 well, a step out appraisal of the 2010 WBEXT WBV2 volcanic reservoir oil discovery is currently on production at a restricted rate of approximately 1,100 BOPD (660 BOPD net to Pan Orient) with a water cut of approximately 28% as the well cleans up after approximately 1,800 barrels of fluid losses incurred while drilling the highly fractured volcanic reservoir interval. There remains potential upside to this encouraging step out appraisal well with up to four additional locations on the Concession L44 side of the structure, excluding the portion of the structure which extends to the north into Concession L33.
We anticipate the next well targeting the WBEXT WBV2 reservoir to commence drilling in approximately five days, upon the completion of the POE-6A well which is currently drilling.
POE-6A Appraisal Well
The POE-6A is the first appraisal of the 2006 POE-6 oil discovery well and flowed at approximately 46 BOPD (28 BOPD net to Pan Orient). The well has showed a very low decline rate and water cut despite being drilled in close proximity to the field oil water contact. POE-6A encountered the top of the "G" sand target approximately 70 meters high to the POE-6 discovery well with approximately 20 meters of net sand with good oil shows and elevated mud gas readings, and is interpreted to be oil bearing on wireline logs. The overlying "F" sand, approximately 13 meters thick, is also interpreted be hydrocarbon bearing in this well. Logging over the "F" and "G" sands, and casing of the well to intermediate depth, has been completed. The plan is to now continue drilling deeper to evaluate the relatively unknown older sedimentary section in this region of the concession. Upon the completion of the drilling of this well, the rig will be moving on to a planned WBEXT WBV2 appraisal well.
Thailand Concession SW1 (Pan Orient 60% working interest and operator)
NS-2A Appraisal Well
The NS-2A appraisal well drilled within the Na Sanun Production License area encountered the main Na Sanun volcanic reservoir at a depth approximately four meters higher than the original NS-1 discovery well, and is highly fractured based on the approximately 400 barrels per hour of drilling fluid losses observed while drilling through the zone. Testing is anticipated to be commence within the two days.
Na Sanun West-1 Exploration well
The Na Sanun West-1 ("NSW-1") exploration well is targeting a separate structural closure at the same volcanic target level as the Na Sanun Field located approximately 3.3 kilometers to the east. Drilling is anticipated to commence within the next two days and take approximately eight to days to reach total depth.
Thailand Concession L53 (Pan Orient 100% working interest and operator)
L53-A2ST1 Development well
The L53-A2ST1 development well is currently on production at a stabilized rate of 235 BOPD with no water from the "K40-A" sand. Drilling has now been completed in Concession L53 and the drilling rig has been moved to Concession L44. We anticipate renewed drilling in Concession L53 with two exploration wells, L53-G and L53-E, once the L53-G exploration location receives environmental approval and is constructed, likely in late October 2011 after the monsoon season.
L53-DST2 Appraisal Well
The L53-DST2 appraisal well was the twin of the L53-D well drilled over 1 year ago that encountered a thin eight meter oil pay section over water. Initial test results were encouraging in the current well at over 250 BOPD, but quickly reached a 90% water cut, a known pre-drill risk. Production is currently 40 BOPD. There are currently no reserves attributed to the L53-D accumulation.
Thailand production net to Pan Orient is currently 2,644 BOPD with 2,019 BOPD from Concessions L44, L33 and SW1, and an additional 625 BOPD from Concession L53. Pan Orient's Thailand production is up 264 BOPD from the May 26, 2011 update (2,380 BOPD) and up 684 BOPD from the April 26, 2011 update (1,960 BOPD). Oil production for the second quarter of 2011 averaged 2,052 BOPD.
Near term production additions are anticipated from the POE-6A development well that has indicated sandstone pay in the F/G sands and the NS-2A Na Sanun appraisal well which is about to commence testing. Two drilling rigs are now fully operational on concession L44.
Of particular note, over the past few months, the historic 11% differential for the realized price of our Thailand crude oil compared to the WTI reference price has been narrowing and most recently our realized price is approximately 2% lower than the WTI reference price. This is expected to continue as long as the WTI and Brent spreads continue at their historically high differential.
Production guidance will be reviewed and updated with the 2011 Q2 report to be released in the second half of August.
INDONESIA OPERATIONS UPDATE
Batu Gajah PSC (Pan Orient Operator and 97% Working Interest)
South East Tiung-1 Exploration Well (SE Tiung-1)
The SE Tiung-1 well has been suspended at a depth of approximately 4,200 feet true vertical depth for approximately the past three weeks while undergoing repairs to the engine drive shaft of the rig draw works. It is anticipated the replacement drive shaft that has now cleared Indonesian customs will be installed by July 17, at which time drilling will recommence.
Upon the recommencement of drilling, the first of three sandstone targets is expected at 4,700 feet true vertical depth, shortly after which casing will be run prior to drilling into two deeper sandstone reservoir targets down to a depth of approximately 5,800 feet true vertical depth. Upon the completion of drilling, the rig will immediately mobilise to the Betano-1 location and commence drilling there.
Budget approval and technical back up is currently in process towards the drilling of three additional wells planned for Batu Gaja PSC (Tuba Obi Utara-2, Kemala-1 and Shinta-1) in the latter part of this year.
Citarum PSC (Pan Orient Operator and 77% Working Interest)
Land purchase has been finalised for two of the three drilling locations with the third to be completed shortly. Contracts for a drilling rig and location construction have been awarded, site construction is commencing today and final acceptance of the locations expected on September 15, 2011. Drilling of the first well is anticipated to commence near the end of September.
Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand, Indonesia and in Western Canada.
This news release contains forward-looking information. Forward-looking information is generally identifiable by the terminology used, such as "expect", "believe", "estimate", "should", "anticipate" and "potential" or other similar wording. Forward-looking information in this news release includes, but is not limited to, references to: well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, and information on future production and project start-ups. By their very nature, the forward-looking statements contained in this news release require Pan Orient and its management to make assumptions that may not materialize or that may not be accurate. The forward-looking information contained in this news release is subject to known and unknown risks and uncertainties and other factors, which could cause actual results, expectations, achievements or performance to differ materially, including without limitation: imprecision of reserve estimates and estimates of recoverable quantities of oil, changes in project schedules, operating and reservoir performance, the effects of weather and climate change, the results of exploration and development drilling and related activities, demand for oil and gas, commercial negotiations, other technical and economic factors or revisions and other factors, many of which are beyond the control of Pan Orient. Although Pan Orient believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.