CALGARY, ALBERTA--(Marketwire - Nov. 24, 2011) -
Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE) is pleased to provide highlights of its 2011 third quarter consolidated financial and operating results. Please note that all amounts are in Canadian dollars unless otherwise stated and BOPD refers to barrels of oil per day net to Pan Orient.
The Corporation will file today its unaudited condensed consolidated financial statements as at and for the three and nine months ended September 30, 2011 and related management's discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained online at www.sedar.com or the Corporation's website, www.panorient.ca.
2011 THIRD QUARTER HIGHLIGHTS
Thailand Operations Update
Recent flooding in Thailand related to the historically high annual monsoon rains has had, and is expected to have, no impact on Thailand production and drilling operations.
Thailand production was 2,000 BOPD in the third quarter of 2011 and is currently approximately 1,960 BOPD with six new wells and one sidetrack well planned to be completed prior to year-end 2011 on Concession L44 and Concession L53 in addition to one new ICD technology recompletion on an existing well in L44 within the Bo Rang "B" volcanic reservoir. The vast majority of the production declines since the last update are attributed to a single well (NSE-F6) which declined from 600 BOPD net to 35 BOPD net in the intervening period.
Each of the remaining four development wells and 1 sidetrack well are estimated to be capable of initial production rates in excess of 300 BOPD per well net to Pan Orient. Year end production will be heavily influenced by: 1) the initial production rates observed in these yet to be drilled wells, 2) the decline rates these wells exhibit prior to year end, and 3) the results of the two well exploration program on concession L53.
The initial results of an ICD controlled in flow technology pilot on the BR-1RDST1 have been very encouraging with production at approximately 215 barrels of oil per day gross (129 BOPD net to Pan Orient) which is up 165 barrels of oil per day gross from the 50 barrels of oil per day gross production rate prior to the ICD recompletion. Current plans are to run one additional ICD recompletion prior to year end on an existing horizontal well within the Bo Rang "B" field and evaluate the results prior to making a decision on the redevelopment using ICD controlled in flow technology of the NSE Central, NSE South, NSE-E1, Bo Rang "A" and Bo Rang "B" fields.
Environmental approval is anticipated for up to 15 wells in the WBEXT "E" and "D" sandstone reservoir area at the end of December 2011, with an aggressive sandstone development program to follow in January 2012 (assuming environmental approval is granted at the upcoming December 30, 2011 meeting with the Government of Thailand environmental regulator). At least three sandstone exploration targets in close proximity to the WBEXT reservoir area are also planned to be drilled in 2012 and these locations are covered by the environmental approval referred to above.
The L53-D2 (L53-D East) and L53-G exploration wells at Concession L53 are planned to commence drilling multiple stacked sandstone reservoir targets in mid-December 2011. A 200 square kilometer 3D survey in Concession L53 is being considered for the second quarter of 2012 targeting an area which has minimal data coverage between Pan Orient's oil producing wells and a recent oil discovery made by a competitor to the North, adjacent to the concession boundary.
Thailand Drilling Update
Concessions L44, L33 & SW1 (Pan Orient 60% working interest and Operator)
L33-2A Exploration Well
The L33-2A exploration well targeted the unproven WBV2 volcanic zone below the proven oil producing WBV1 volcanic reservoir. Excellent fracturing was indicated by the drilling mud losses observed while drilling; however, only water was recovered on test.
BR-2ST3 Development Well
The BR-2ST3 deviated development well tested at an initial rate of approximately 306 BOPD net to Pan Orient and no water from the Bo Rang "A1" volcanic reservoir. The current production rate is approximately 70 BOPD net to Pan Orient with a stable water cut of approximately 30%.
BR-4ST1 Development Well
The BR-4ST1 development was targeting the Bo Rang "A1" reservoir at a location approximately 850 meters east of BR-2ST3 development well. Just prior to drilling the main target section the directional assembly ("MWD") was removed as is common practice in order to reduce the risk of sticking the MWD in the hole when massive drilling fluid losses are experienced in the target reservoir. A subsequent deviation survey indicated that the well deviated coming out of the casing shoe, just missing the top of the intended target. The well has been suspended with plans to re-enter the hole and drill into the intended target prior to year end.
NSE-F7 Horizontal Development Well
The NSE-F7 well encountered extensive fracturing within the target volcanic formation with over 2,000 barrels of fluid losses observed while drilling. The well is currently on production at a stabilized rate of 442 barrels of oil per day gross (264 BOPD net to Pan Orient) with a stabilized water cut of 40%. This well is a likely candidate for future ICD recompletion.
NSE-F5 Horizontal Development Well
The NSE-F5 horizontal well is currently setting casing just above target approximately 1.4 kilometers east of the NSE-F7 well.
Andora Energy Corporation Update
Andora Energy Corporation, a private oil company in which Pan Orient has 53% ownership, has an oil sands project in the Sawn Lake area of Northern Alberta and initiated a process earlier this year to identity and consider strategic alternatives. No binding proposals to purchase the Company or farm-in to the asset have been received to date and the process continues.
In the first quarter of 2011 Andora acquired an additional 10% working interest in the Sawn Lake Central and North Blocks with the issuance of 4,433,031 non-voting special warrants of Andora (with each special warrant entitling the holder thereof to receive one common share of Andora upon the happening of a liquidity event involving Andora). If a liquidity event is not completed by November 25, 2011 the acquired interests will be re-conveyed back to the vendor and the warrants will be cancelled.
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.
Financial and Operating Summary |
Three Months Ended September 30, |
Nine Months Ended September 30, |
Change | ||||||||||||
(thousands of Canadian dollars except where indicated) | 2011 | 2010 | 2011 | 2010 | |||||||||||
FINANCIAL | |||||||||||||||
Oil revenue, before royalties and transportation expense | 18,083 | 27,050 | 55,053 | 74,524 | -26 | % | |||||||||
Funds flow from operations (Note 1) | 13,165 | 15,412 | 38,809 | 41,209 | -6 | % | |||||||||
Per share - basic | $ | 0.23 | $ | 0.32 | $ | 0.71 | $ | 0.85 | -17 | % | |||||
Per share - diluted | $ | 0.23 | $ | 0.31 | $ | 0.71 | $ | 0.82 | -14 | % | |||||
Funds flow from operations by region (Note 1) | |||||||||||||||
Canada | 20 | (33 | ) | (384 | ) | 814 | -147 | % | |||||||
Thailand | 13,123 | 15,370 | 39,477 | 40,490 | -3 | % | |||||||||
Indonesia | 22 | 75 | (284 | ) | (95 | ) | 199 | % | |||||||
Total | 13,165 | 15,412 | 38,809 | 41,209 | -6 | % | |||||||||
Net income attributable to common shareholders | 3,882 | 5,405 | 12,418 | 13,691 | -9 | % | |||||||||
Per share - basic | $ | 0.07 | $ | 0.11 | $ | 0.23 | $ | 0.28 | -19 | % | |||||
Per share - diluted | $ | 0.07 | $ | 0.11 | $ | 0.23 | $ | 0.27 | -6 | % | |||||
Working capital | 52,756 | 23,897 | 52,756 | 23,897 | 121 | % | |||||||||
Working capital & non-current deposits | 58,016 | 27,746 | 58,016 | 27,746 | 109 | % | |||||||||
Long-term debt | - | - | - | - | - | ||||||||||
Capital expenditures (Note 2) | 15,364 | 11,012 | 57,831 | 47,690 | 21 | % | |||||||||
Acquisitions - Indonesia (Note 3) | - | - | 1,761 | - | |||||||||||
Acquisitions - Sawn Lake, Canada (Note 3) | - | - | 3,192 | - | |||||||||||
Shares outstanding (thousands) | 56,685 | 48,619 | 56,685 | 48,619 | 17 | % | |||||||||
Funds Flow from Operations per Barrel (Note 1) | |||||||||||||||
Canada operations | $ | 0.11 | $ | (0.08 | ) | $ | (0.67 | ) | $ | 0.78 | -186 | % | |||
Thailand operations | 71.33 | 39.67 | 68.91 | 38.76 | 78 | % | |||||||||
Indonesia operations | 0.12 | 0.19 | (0.50 | ) | (0.09 | ) | 451 | % | |||||||
$ | 71.56 | $ | 39.78 | $ | 67.74 | $ | 39.45 | 72 | % | ||||||
Capital Expenditures (Note 2) | |||||||||||||||
Canada | 22 | 185 | 236 | 595 | -60 | % | |||||||||
Thailand | 10,310 | 8,694 | 38,069 | 31,695 | 20 | % | |||||||||
Indonesia | 5,032 | 2,133 | 19,526 | 15,400 | 27 | % | |||||||||
Total | 15,364 | 11,012 | 57,831 | 47,690 | 21 | % | |||||||||
Working Capital and Non-current Deposits | |||||||||||||||
Working capital & non-current deposits - beginning of period | 60,469 | 24,029 | 31,396 | 32,738 | -4 | % | |||||||||
Funds flow from operations (Note 1) | 13,165 | 15,412 | 38,809 | 41,209 | -6 | % | |||||||||
Capital expenditures (Note 2) | (15,364 | ) | (11,012 | ) | (57,831 | ) | (47,690 | ) | 21 | % | |||||
Acquisitions - Indonesia (Note 4) | - | - | (1,417 | ) | - | ||||||||||
Non-cash settlement of Andora receivable | - | - | - | (600 | ) | ||||||||||
Foreign exchange impact on working capital | (254 | ) | (772 | ) | (557 | ) | (1,247 | ) | -55 | % | |||||
Net proceeds on share transactions | - | 89 | 47,616 | 3,336 | 1327 | % | |||||||||
Working capital & non-current deposits - end of period | 58,016 | 27,746 | 58,016 | 27,746 | 109 | % | |||||||||
Canada Operations | |||||||||||||||
Interest income | 109 | 15 | 269 | 29 | 828 | % | |||||||||
General and administrative (expense) recovery (Note 5) | (157 | ) | (67 | ) | (462 | ) | 670 | -169 | % | ||||||
Realized foreign exchange gain (loss) | 68 | 19 | (191 | ) | 172 | -211 | % | ||||||||
Foreign new ventures expenditures | - | - | - | (57 | ) | ||||||||||
Funds flow from operations (Note 1) | 20 | (33 | ) | (384 | ) | 814 | -147 | % | |||||||
Funds flow from operations per barrel | |||||||||||||||
Interest income | $ | 0.59 | $ | 0.04 | $ | 0.47 | $ | 0.03 | 1466 | % | |||||
General and administrative expense (Note 5) | (0.85 | ) | (0.17 | ) | (0.81 | ) | 0.64 | -226 | % | ||||||
Realized foreign exchange gain (loss) | 0.37 | 0.05 | (0.33 | ) | 0.16 | -308 | % | ||||||||
Foreign new ventures expenditures | - | - | - | (0.05 | ) | ||||||||||
$ | 0.11 | $ | (0.08 | ) | $ | (0.67 | ) | $ | 0.78 | -186 | % |
Indonesia Operations | |||||||||
General and administrative recovery (expense) (Note 5) | 22 | 75 | (284 | ) | (95 | ) | 199 | % | |
Wells drilled | |||||||||
Gross | - | - | 2 | - | |||||
Net | - | - | 2.0 | - |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
(thousands of Canadian dollars except where indicated) | 2011 | 2010 | 2011 | 2010 | Change | ||||||||||
THAILAND OPERATIONS | |||||||||||||||
Oil sales (bbls) | 183,973 | 387,444 | 572,867 | 1,044,601 | -45 | % | |||||||||
Average daily oil sales (bbls/d) by Concession | |||||||||||||||
L44 | 1,181 | 3,842 | 1,322 | 3,577 | -63 | % | |||||||||
SW1 | 200 | 146 | 142 | 174 | -18 | % | |||||||||
L33 | 117 | - | 160 | - | |||||||||||
L53 | 502 | 223 | 474 | 75 | 528 | % | |||||||||
Total | 2,000 | 4,211 | 2,098 | 3,826 | -45 | % | |||||||||
Average oil sales price, before transportation (CDN$/bbl) | $ | 98.29 | $ | 69.82 | $ | 96.10 | $ | 71.34 | 35 | % | |||||
Reference Price (volume weighted) and differential | |||||||||||||||
Exchange Rate $US/$Cdn | 0.99 | 1.04 | 0.99 | 1.04 | -5 | % | |||||||||
Crude oil (WTI $US/bbl) | $ | 90.31 | $ | 76.82 | $ | 95.65 | $ | 77.78 | 23 | % | |||||
Sales price / WTI reference price | 110 | % | 88 | % | 102 | % | 88 | % | 14 | % | |||||
Crude oil (Brent $US/bbl) | $ | 113.49 | $ | 77.07 | $ | 111.95 | $ | 77.35 | 45 | % | |||||
Sale price / Brent reference price | 87 | % | 87 | % | 87 | % | 88 | % | -1 | % | |||||
Funds flow from operations (Note 1) | |||||||||||||||
Crude oil sales | 18,083 | 27,050 | 55,053 | 74,524 | -26 | % | |||||||||
Government royalty | (894 | ) | (1,725 | ) | (2,777 | ) | (4,698 | ) | -41 | % | |||||
Other royalty | (51 | ) | (26 | ) | (136 | ) | (47 | ) | 190 | % | |||||
Transportation expense | (398 | ) | (970 | ) | (1,274 | ) | (2,636 | ) | -52 | % | |||||
Operating expense | (2,314 | ) | (2,502 | ) | (6,848 | ) | (6,649 | ) | 3 | % | |||||
14,426 | 21,827 | 44,018 | 60,494 | -27 | % | ||||||||||
General and administrative expense (Note 5) | (1,011 | ) | (937 | ) | (2,636 | ) | (3,370 | ) | -22 | % | |||||
Interest income | 6 | 5 | 64 | 57 | 12 | % | |||||||||
Special Remuneratory Benefit tax (SRB) | - | (1,957 | ) | - | (4,863 | ) | -100 | % | |||||||
Current income tax | (298 | ) | (3,568 | ) | (1,969 | ) | (11,828 | ) | -83 | % | |||||
Funds flow from operations | 13,123 | 15,370 | 39,477 | 40,490 | -3 | % | |||||||||
Funds flow from operations / barrel (CDN$/bbl) (Note 1) | |||||||||||||||
Crude oil sales | $ | 98.29 | $ | 69.82 | $ | 96.10 | $ | 71.34 | 35 | % | |||||
Government royalty | (4.92 | ) | (4.45 | ) | (4.94 | ) | (4.50 | ) | 10 | % | |||||
Other royalty | (0.22 | ) | (0.07 | ) | (0.15 | ) | (0.04 | ) | 271 | % | |||||
Transportation expense | (2.16 | ) | (2.50 | ) | (2.22 | ) | (2.52 | ) | -12 | % | |||||
Operating expense | (12.58 | ) | (6.46 | ) | (11.95 | ) | (6.36 | ) | 88 | % | |||||
78.41 | 56.34 | 76.84 | 57.92 | 33 | % | ||||||||||
General and administrative expense (Note 5) | (5.49 | ) | (2.42 | ) | (4.60 | ) | (3.23 | ) | 42 | % | |||||
Interest Income | 0.03 | 0.01 | 0.11 | 0.05 | 123 | % | |||||||||
Special Remuneratory Benefit (SRB) | - | (5.05 | ) | - | (4.66 | ) | -100 | % | |||||||
Current income tax | (1.62 | ) | (9.21 | ) | (3.44 | ) | (11.32 | ) | -70 | % | |||||
Thailand - Funds flow from operations | $ | 71.33 | $ | 39.67 | $ | 68.91 | $ | 38.76 | 78 | % | |||||
Government royalty as percentage of crude oil sales | 5.0 | % | 6.4 | % | 5.0 | % | 6.3 | % | -1.3 | % | |||||
SRB as percentage of crude oil sales | 0.0 | % | 7.2 | % | 0.0 | % | 6.5 | % | -6.5 | % | |||||
Income tax as percentage of crude oil sales | 1.6 | % | 13.2 | % | 3.6 | % | 15.9 | % | -12.3 | % | |||||
As percentage of crude oil sales | |||||||||||||||
Expenses - transportation, operating, G&A and other | 20.9 | % | 16.4 | % | 19.8 | % | 17.0 | % | 2.8 | % | |||||
Government royalty, SRB and income tax | 6.6 | % | 26.8 | % | 8.6 | % | 28.7 | % | -20.1 | % | |||||
Funds flow from operations, before interest income and realized foreign exchange gain | 72.5 | % | 56.8 | % | 71.6 | % | 54.3 | % | 17.3 | % | |||||
Wells drilled | |||||||||||||||
Gross | 5 | 7 | 20 | 19 | 5 | % | |||||||||
Net | 3.0 | 4.2 | 14.0 | 11.4 | 23 | % |
(1) Funds flow from operations ("funds flow" before changes in non-cash working capital and reclamation costs) is used by management to analyze operating performance and leverage. Funds flow as presented does not have any standardized meaning prescribed by IFRS and therefore it may not be comparable with the calculation of similar measures of other entities. Funds flow is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.
(2) Cost of capital expenditures, excluding any asset retirement obligation and excluding the impact of changes in foreign exchange rates.
(3) Cost of acquisitions, including deemed value of equity issued in the transaction.
(4) Cost of acquisitions, excluding deemed value of equity issued in the transaction.
(5) General & administrative expenses, excluding non-cash accretion on decommissioning provision.
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