CALGARY, ALBERTA--(Marketwire - April 25, 2012) - Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE.V - News) reports 2011 year-end and fourth 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 is today filing its audited consolidated financial statements as at and for the year ended December 31, 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 OPERATING RESULTS
-- Pan Orient had total corporate funds flow from operations of $45.9
million ($0.83 per share) in 2011 compared to $59.0 million ($1.22 per
share) in 2010. The $13.1 million decrease in funds flow from operations
from the prior year is primarily due to an $11.0 million reduction in
funds flow from Thailand operations resulting from lower oil production
volumes partially offset by higher oil prices, and a $1.4 million
decrease in funds flow from Canada.
Funds flow from operations for the fourth quarter of 2011 was $7.1
million ($0.12 per share) compared to $13.2 million ($0.23 per share)
for the third quarter of 2011 and $17.8 million ($0.37 per share) for
the fourth quarter of 2010. The reduction in funds flow from operations
in the fourth quarter of 2011 compared to the third quarter of 2011 is
largely due to current Thailand income taxes of $4.1 million and
increased operating expenses and general & administrative expenses in
Thailand. The reduction from the fourth quarter of 2010 is primarily due
to a reduction in oil production levels since the fourth quarter of 2010
included flush production at the Wichian Buri Extension field.-- Net income attributable to common shareholders was $24.0 million ($0.43
per share) for 2011 compared to $23.5 million ($0.49 per share) for
2010. Net income attributable to common shareholders was $11.6 million
($0.21 per share) for the fourth quarter of 2011 compared to net income
attributable to common shareholders of $3.9 million ($0.07 per share),
for the third quarter of 2011 and $9.8 million ($0.20 per share) for the
fourth quarter of 2010. The increase in net income attributable to
common shareholders during the fourth quarter of 2011 reflects a $10.2
million reduction in future tax expense partially offset by higher
depletion.-- Total 2011 capital programs were $70.9 million, with $48.3 million in
Thailand primarily for the drilling of 28 gross wells, $22.2 million in
Indonesia for exploration activities relating to the four Production
Sharing Contracts ("PSC's") including the commencement of drilling at
the Batu Gajah and Citarum PSC's, and $0.4 million in Canada. Capital
expenditures in Thailand were funded 98% by Thailand funds flow from
operations, and the remaining capital programs were funded from working
capital.
Capital expenditures were $13.1 million in the fourth quarter of 2011
with $10.2 million in Thailand for a drilling program of eight wells and
$2.7 million in Indonesia with site preparation and road access for the
Citarum PSC drilling program that commenced on December 31, 2011 plus
costs related to Pan Orient being awarded the new East Jabung PSC.-- At December 31, 2011 Pan Orient had $51.6 million of working capital and
non-current deposits, and no long-term debt. In addition, at December
31, 2011 Pan Orient had $11.7 million of equipment inventory to be
utilized for future Thailand and Indonesia operations which is included
in exploration and evaluation assets in the consolidated statement of
financial position. As at December 31, 2011 estimated commitments in
Indonesia to November 2014 were $45.1 million for the Batu Gajah,
Citarum, South CPP and East Jabung PSC's. Estimated commitments in
Thailand at December 31, 2011 were $0.5 million to January 2013;
principally for the drilling of one additional well in Concession L53.-- Thailand
-- Average 2011 oil sales volume in Thailand was 2,030 BOPD with 1,826
BOPD for the fourth quarter of 2011. Average oil sales in the first
quarter of 2012 were 2,541 BOPD and 63% was being produced from
sandstone reservoirs.
-- Thailand operations in 2011 generated $47.2 million in funds flow
from operations after tax, or $63.69 per barrel in 2011 compared to
$58.2 million or $41.05 per barrel in 2010. The Thailand operations
in 2011 experienced a 35% increase in the realized crude oil price
and a 48% decrease in oil sales volumes. For 2011, transportation
expenses of $2.27 per barrel, operating expenses and other royalty
of $13.42 per barrel, general and administrative expenses $5.61 per
barrel and amounts to the Thailand government of $13.09 per barrel
resulted in after tax funds flow from operations per barrel of
$63.69. Operating expenses increased 2% during the year to $9.7
million or $13.16 per barrel in 2011 from $9.5 million or $6.73 per
barrel in 2010. General and administrative expenses in Thailand
decreased 4% in 2011 to $4.2 million or $5.61 per barrel in 2011
from $4.3 million or $3.06 per barrel in 2010. For 2011, Thailand
crude oil revenue was allocated 22% to expenses for other royalties,
transportation, operating, and general & administrative, 13% to the
government of Thailand in the form of royalties and income tax, and
65% to Pan Orient.
For the fourth quarter of 2011, Thailand generated $7.7 million in
funds flow from operations, or $45.87 per barrel, compared to $13.1
million for the third quarter of 2011. Lower funds flow from
operations in the fourth quarter of 2011 reflects the $4.1 million
($24.29 per barrel) recorded for current Thailand income taxes
(including year-end adjustments) and increased year-end personnel
expenses in Thailand impacting operating expenses and general &
administrative expenses. A 9% decrease in oil sales volumes was
largely offset by a 6% increase in the realized price for crude oil.
For the quarter, transportation expenses of $2.43 per barrel,
operating expenses and other royalty of $17.62 per barrel, general
and administrative expenses of $9.02 per barrel and amounts to the
Thailand government of $29.49 per barrel resulted in after tax funds
flow from operations per barrel of $45.87. The Brent reference price
for crude oil per barrel remained essentially unchanged during the
quarter at CDN$112.30 compared to the third quarter of 2011, as the
4% decrease in the Brent reference price in United States dollars
was offset by a decrease in the Canadian dollar. Operating expenses
increased to $2.9 million or $17.26 per barrel in the fourth quarter
from $2.3 million, or $12.58 per barrel, in the third quarter of
2011 as a result of the additional year-end personnel expenses. For
the fourth quarter of 2011, Thailand crude oil revenue was allocated
28% to expenses for transportation, operating, and general &
administrative, 28% to the government of Thailand in the form of
royalties and income tax, and 44% to Pan Orient.
-- Capital expenditures in 2011 were $48.3 million in Thailand for
ongoing drilling operations in all four concessions. A total of 28
gross wells (19.2 net) were drilled in Thailand during 2011 with 19
wells at Concession L44 (with four wells at the Wichian Buri
Extension field, four wells at the NSE-F1 field, three wells at Bo
Rang, three exploration wells on new geological structures, and five
wells at other oil fields), two wells at Concession L33, one
appraisal well at the SW1 Concession and six wells at Concession
L53. Drilling during 2011 was directed 32% to development wells and
68% to exploration and appraisal wells.
The nine development wells (three at Concession L53 in sandstone
reservoirs, two at the Bo Rang field, two at the NSE-F1 field and
one each in the sandstone reservoirs at the POE-6 and WBEXT fields)
resulted in eight producing oil wells which produced 142,597 barrels
of oil net to Pan Orient in 2011 and represented 620 BOPD in the
fourth quarter of 2011.
The 19 exploration and appraisal wells in 2011 had limited success
although the L53-D2 exploration well drilled at the end of December
2011 resulted in a potentially significant sandstone reservoir
discovery that is currently being tested. The drilling program
resulted in five producing oil wells in the fourth quarter of 2011,
an additional two wells (L53-D2 and L44V-D1ST2) which started
production in 2012, produced 45,462 barrels of oil net to Pan Orient
in 2011 and represented 196 BOPD in the fourth quarter of 2011.
-- Capital expenditures in the fourth quarter 2011 were $10.2 million
with the drilling of eight gross (5.2 net) wells. Six wells were
drilled in Concession L44, with three at the Bo Rang field and three
at the NSE-F1 field resulting in four producing oil wells. One
exploration well was drilled unsuccessfully at Concession L33 and
the L53-D2 exploration well in Concession L53 resulted in the
potentially significant sandstone reservoir discovery.
-- The independent reserves evaluation conducted by Gaffney, Cline &
Associates (Consultants) Pte. Ltd. of Singapore ("Gaffney Cline")
for the Thailand assets at December 31, 2011 assigned proved plus
probable reserves of 19.0 million barrels at December 31, 2011, a
40% decrease from 31.9 million barrels at December 31, 2010. The
12.6 million barrel downward revision related to previously assigned
reserves at volcanic oil fields in Concessions L44 and L33. Note
that for the determination of crude oil reserves at December 31,
2011, no reserves were assigned to the new oilfield discovery with
the L53-D2 well in Concession L53, which started drilling in
December 2011 and started producing oil in January 2012 under a 90
day test period but has not yet been granted a production license.
The net present value of proved and probable reserves after tax
(using forecast prices and discounted at 10%) was Cdn$349 million,
representing $6.15 per Pan Orient share based on the 56.7 million
shares outstanding.-- Indonesia
-- At the Batu Gajah PSC on-shore Sumatra (Pan Orient operator and 97%
ownership), Pan Orient commenced the exploration drilling program in
late March 2011.
-- Capital expenditures of $15.5 million at the Batu Gajah PSC in
2011 were $11.9 million for well-site preparation, road access
and the drilling of two wells, $2.0 million for equipment
inventory and $1.6 million for capitalized exploration overhead
and other costs. Capital expenditures in the fourth quarter of
2011 were $0.8 million.
-- The Tuba Obi Utara-1 (NTO-1) exploration well drilled at the end
of the first quarter and into the second quarter encountered
10.5 feet of gas pay within good-quality sand near the top of
the Lower Talang Akar Formation ("LTAF"). The follow-up NTO-1ST
side track well encountered the same LTAF gas sand formation
identified at the NTO-1 well, but of lower reservoir quality.
Initial drilling results at North Tuba Obi are encouraging with
proven gas in the LTAF and oil shows in the Upper Talang Akar
sand. The first Appraisal of the North Tuba Obi gas discovery,
NTO-2 is planned to be drilled in 2012 to target natural gas in
the LTAF and oil in the overlying Upper Talang Akar and Air
Benakat sandstone zones.
-- The SE Tiung-1 exploration well drilled in June and into July
encountered oil shows and good quality sands within the primary
Lower Talang Akar target horizon but wire line logging indicated
the zone to be water bearing. The secondary objective of the
Gumai and Upper Talang Akar formation sands were also present,
but interpreted as being water bearing.
-- The 2012 capital program includes the drilling of two wells at
the Batu Gajah PSC with the Shinta-1 exploration well and the
NTO-2 appraisal well. Discussions continue towards a
comprehensive road and land access agreement with the Indonesian
forestry company which holds the surface rights associated with
two prospects planned to be drilled in Batu Gajah in 2012.
-- At the Citarum PSC on-shore Java (Pan Orient operator and 77%
ownership), Pan Orient commenced the three well exploration drilling
program at the end of December.
-- Capital expenditures of $4.5 million at the Citarum PSC in 2011
were $2.9 million for well-site preparation, road access for the
Cataka-1, Jatayu-1 and Geulis-1 exploration wells and the start
of drilling of the Cataka-1 well, $0.2 million for equipment
inventory and $1.4 million for capitalized exploration overhead
and other costs. Capital expenditures in the fourth quarter of
2011 were $1.8 million.
-- The Cataka-1 exploration well started drilling on December 31,
2011. The well encountered severe drilling difficulties and the
decision was made in February 2012 to junk and abandon the well
at a depth of approximately 400 meters TVD, 1,500 meters above
the primary reservoir objective. The primary reservoir objective
of the well, at approximately 1,900 meters depth, had not been
penetrated. Upon the completion of the Jatayu-1 well which is
currently drilling, drilling will commence on the re-drill of
the Cataka prospect (with Cataka-1A well) incorporating a
redesigned well plan incorporating the information gathered from
the original well
-- After drilling of the Cataka 1A exploration well, the rig will
mobilize to the Geulis exploration prospect.
-- At the South CPP PSC on-shore Sumatra (Pan Orient operator and 97%
ownership), Pan Orient had capital expenditures of $0.6 million in
2011 relating to seismic interpretation, environmental study, and
overhead.
-- The East Jabung PSC was formally granted on a 100% basis to Pan
Orient on November 21, 2011. The 6,228 square kilometer East Jabung
PSC is located on and offshore south Sumatra Indonesia, and directly
east and adjacent to the company's 97% working interest and operated
Batu Gajah PSC. Costs in 2011 of $1.5 million are for the signature
bonus to the Government of Indonesia.
-- In the first quarter of 2011, Pan Orient completed transactions
which increased our interest in the Batu Gajah PSC to 97%, interest
in the Citarum PSC to 77% and interest in the South CPP PSC to 97%
through the repurchase of carried interests. The cost to repurchase
the carried interests in the three PSC's was $1.8 million, including
the issuance of 50,677 shares in Pan Orient at a deemed value of
$0.3 million.
-- Canada - Andora Energy Corporation
-- 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. Andora received Commercial Scheme Approval for a
Steam Assisted Gravity Drainage (SAGD) recovery process under the
Oil Sands Conservation Act from the Energy Resources Conservation
Board (ERCB) and approval from the Government of Alberta under the
Environmental Protection and Enhancement Act (EPEA) in 2009. The
pilot project location is on Andora 100% owned acreage within the
South Block of its Sawn Lake Property in the Peace River Oil Sands
Region.
-- The oil sands project at Sawn Lake Alberta as at December 31, 2011
was evaluated by Sproule Associates Ltd. ("Sproule"). The contingent
resource volumes estimated in the Sproule report are considered
contingent until such time as commercial recovery has been
demonstrated, regulatory approvals have been obtained and the
company has committed to proceed with commercial development.
Contingent Resources are further classified as "High", "Best" and
"Low" in accordance with the level of certainty.
Sawn Lake "Best Case" contingent resources of 114.4 million barrels
attributed to the 53.4% ownership interest of Pan Orient in Andora
have been assigned largely in the South and Central Blocks of Sawn
Lake. Andora is the operator of these lands and holds a 100% working
interest in the 16 sections of the South Block and holds a 50%
working interest plus an additional 3% gross overriding royalty
("GORR") on non-owned 40% working interest in the 12 sections of the
Central Block. Net present value of the "Best Case" (discounted at
10% after income tax using forecast prices) attributed to Sawn Lake
contingent resources is $327 million to the 53.4% ownership interest
of Pan Orient in Andora.
-- There is no change from the estimate of contingent resource volumes
as at December 31, 2010 prepared by Sproule. The December 31, 2011
contingent resource report by Sproule represents a mechanical update
incorporating new forecasted prices for natural gas and crude oil,
and revised estimates of operating expenses and capital
expenditures. The most significant changes are a reduction in
natural gas prices and an increase in crude oil prices.
-- Andora Energy Corporation initiated a process in the first quarter
of 2011 to identity and consider strategic alternatives. No binding
proposal has been received to date and Andora is considering various
alternatives for moving ahead with the pilot program.
OUTLOOK FOR 2012
2012 Budget and Work Program
Production guidance for corporate planning purposes in 2012 has been set at an average of 2,500 BOPD net to Pan Orient for the year. Results from Concession L53 (100% Pan Orient owned) will likely have the largest potential positive impact on Thailand production in 2012 and the work program is subject to the timing of the granting of a production license and the environmental approval the drilling of up to 12 wells.
The capital budget for 2012 is estimated at $77.5 million with $40 million for Indonesia that includes six exploration wells (Cataka-1 & 1A, Jatayu-1 & Geulis-1 in the Citarum PSC, two wells in Batu Gajah PSC and one well in East Jabung PSC), a 2D seismic program in South CPP, and a 3D seismic program in Batu Gajah, and $37 million in Thailand including 33 wells (with approximately 20% exploration wells) and a 3D seismic program in Concession L53. The exact well breakdown between concessions in Thailand will be heavily influenced by Concession L53 exploration drilling results and timing of regulatory approvals
Canadian operations are allocated an additional $0.5 million. Cash flow, under current oil price and production assumptions, is anticipated to fund approximately $55 million of the 2012 budget with the remaining $22.4 million funded through working capital and deposits which totaled $51.6 million at December 31, 2011.
-- Thailand
-- Robust economics as evidenced by after tax netbacks in 2011 of
$63.69 per barrel, and a strong organization.
-- Focus on drilling of sandstone reservoirs in Concessions L53, L44
and SW1 which have more predictable production and longer reserve
life. Currently, the Company is waiting on regulatory approval for
16 sandstone wells in Concession L44 which is expected sometime
between late May and August 2012, and for the approval of additional
sandstone drilling locations at Concession L53.
-- Continued application of the ICD technology with planned horizontal
infill pilots within the NSE South and Central fields of Concession
L44, targeting 90-120 BOPD per well (net).
-- Focus on the development, appraisal and exploration of conventional
sandstone reservoirs within Concession L53. This will include an
additional appraisal well that is planned to commence drilling
within the next 5 days into an unproven fault compartment of the
L53-D East oil discovery and up to 12 development and appraisal
wells that are currently under application for an environmental
permit. A production license application for the L53-D East
discovery will be submitted by the end of April with approval
anticipated by the end of July.
-- As part of the production license application for L53-D East, a
third party contingent resource estimate for the one proven fault
compartment will be completed prior to the end of April. Initial
test data suggests that the multiple sandstone reservoirs
encountered in the two wells drilled to date are in close proximity
to oil/water contacts as suggested by the varying water cuts
observed at the end of each test. The negative aspect of this
suggests the approximately 1.5 square kilometer fault compartment is
not filled out to the limit of structural closure; the positive
aspect is that recovery factors are expected to be high, in the
order of 20%-30% due to the active water drive. Pre-drill estimates
of between 4 to 12 million barrels of recoverable oil for the entire
structural closure encompassing 3 separate fault compartments are
now expected to be in the maximum range of 4 million barrels
recoverable for one of the three fault compartments with the
hydrocarbon potential of the additional two undrilled fault
compartments yet to be defined by drilling.
-- Indonesia
-- Batu Gajah - Two wells are planned on Batu Gajah in 2012 with the
NTO-2 appraisal well targeting the updip potential of the NTO-1 gas
discovery made in 2011 and the Shinta-1 exploration well, at a
prospect located north of NTO-2. Both wells are being drilled on the
basis of 3D seismic data. The exact timing of drilling is dependent
on the success ongoing negotiations with the forestry company that
holds the surface access rights over both of these locations, and
for which have been ongoing for some time now.
-- Citarum -The Jatayu-1 well is currently setting casing at a depth of
approximately 1,424 meters TVD. The well will be drilled to the
primary Parigi limestone reservoir objective estimated at
approximately 2,300 meters TVD. Once drilling is completed at
Jatyau-1, the rig will move to Cataka-1A, followed by Geulis-1.
-- South CPP - 2D seismic is planned in 2012 with the drilling of 1
exploration well scheduled for 2013.
-- East Jabung - A 2D seismic program is planned for 2012 with the
drilling of up to two exploration wells planned to commence drilling
in late 2012 or early 2013. Initially drilling was scheduled for
mid-2012 but original survey monuments for the seismic program
conducted over 20 years ago could not be located. Because the data
was acquired prior to the introduction of the GPS survey system, the
exact positioning of the earlier acquired 2D data is subject to a
large degree of uncertainty.
-- Pan Orient is well funded for the 2012 capital program, and possesses an
acreage and prospect inventory that has been more than four years in the
making to reach the point of drilling that we are at now. The portfolio
of prospects is diverse across a number of reservoir types, basins and
countries and in many cases, of a potential size whereby any one success
has the potential to transform the production and reserves base of the
Company.
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.
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Financial and Operating Summary Three Months
Ended Year Ended
December 31, December 31,
(thousands of Canadian dollars
except where indicated) 2011 2010 2011 2010 Change
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FINANCIAL
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Oil revenue, before royalties
and transportation expense 17,523 28,495 72,576 103,019 -30%
Funds flow from operations (Note
1) 7,061 17,803 45,870 59,014 -22%
Per share - basic $ 0.12 $ 0.37 $ 0.83 $ 1.22 -32%
Funds flow from operations by
region (Note 1)
Canada (301) (97) (686) 718
Thailand 7,708 17,709 47,184 58,198 -19%
Indonesia (346) 191 (628) 98
--------------------------------------------
Total 7,061 17,803 45,870 59,014 -22%
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Net income attributable to
common shareholders 11,573 9,833 23,991 23,524 2%
Per share - basic $ 0.21 $ 0.20 $ 0.43 $ 0.49 11%
Per share - diluted $ 0.21 $ 0.20 $ 0.43 $ 0.48 10%
Working capital 48,651 26,768 48,651 26,768 82%
Working capital & non-current
deposits 51,632 31,396 51,632 31,396 64%
Long-term debt - - - -
Capital expenditures (Note 2) 13,065 13,638 70,896 61,328 16%
Disposition - Canada (308) - (308) -
Acquisitions - Indonesia (Note
3) - - 1,761 -
Acquisitions - Sawn Lake, Canada
(Note 3) (3,192) - - -
Shares outstanding (thousands) 56,685 48,741 56,685 48,741 16%
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Funds Flow from Operations per
Barrel (Note 1)
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Canada operations $ (1.79) $ (0.26) $ (0.93) $ 0.51
Thailand operations 45.87 47.46 63.69 41.05 55%
Indonesia operations (2.06) 0.51 (0.85) 0.07
--------------------------------------------
$ 42.02 $ 47.71 $ 61.90 $ 41.63 49%
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Capital Expenditures (Note 2)
----------------------------------------------------------------------------
Canada 142 268 378 863 -56%
Thailand 10,230 11,746 48,299 43,441 11%
Indonesia 2,693 1,624 22,219 17,024 31%
--------------------------------------------
Total 13,065 13,638 70,896 61,328 16%
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Working Capital and Non-current
Deposits
----------------------------------------------------------------------------
Working capital & non-current
deposits - beginning 58,016 27,746 31,396 32,738 -4%
Funds flow from operations
(Note 1) 7,061 17,803 45,870 59,014 -22%
Capital expenditures (Note 2) (13,065) (13,638) (70,896) (61,328) 16%
Acquisitions - Indonesia (Note
4) - - (1,417) -
Non-cash settlement of Andora
receivable - - - (600)
Foreign exchange impact on
working capital (380) (847) (937) (2,097) -55%
Net proceeds on share
transactions - 332 47,616 3,669 1198%
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Working capital & non-current
deposits - end of period 51,632 31,396 51,632 31,396 64%
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Canada Operations
----------------------------------------------------------------------------
Interest income 93 21 362 50 623%
General and administrative
(expense) recovery (Note 5) (347) 38 (810) 708
Realized foreign exchange loss (47) (212) (238) (40) 509%
Foreign new ventures
expenditures - 57 - -
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Funds flow from operations (Note
1) (301) (97) (686) 718
--------------------------------------------
--------------------------------------------
Funds flow from operations per
barrel
Interest income $ 0.55 $ 0.06 $ 0.49 $ 0.04 1120%
General and administrative
expense (Note 5) (2.07) 0.10 (1.09) 0.50
Realized foreign exchange loss (0.28) (0.57) (0.32) (0.03) 969%
Foreign new ventures
expenditures - 0.15 - -
--------------------------------------------
$ (1.79) $ (0.26) $ (0.93) $ 0.51
----------------------------------------------------------------------------
Indonesia Operations
----------------------------------------------------------------------------
General and administrative
(expense) recovery (Note 5) (163) 191 (445) 98
Foreign new ventures
expenditures (183) - (183) -
Wells drilled Gross 1.00 - 3 -
Net 0.80 - 2.8 -
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Three Months
Ended Year Ended
December 31, December 31,
(thousands of Canadian dollars
except where indicated) 2011 2010 2011 2010 Change
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THAILAND OPERATIONS
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Oil sales (bbls) 1,417,75
168,022 373,147 740,889 0 -48%
Average daily oil sales (bbls/d)
by Concession
L44 1,162 3,572 1,282 3,575 -64%
SW1 200 124 156 161 -3%
L33 69 272 137 69 99%
L53 396 88 454 79 475%
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Total 1,826 4,056 2,030 3,884 -48%
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Average oil sales price, before
transportation (CDN$/bbl) $ 104.29 $ 76.36 $ 97.96 $ 72.66 35%
Reference Price (volume
weighted) and differential
Exchange Rate $US/$Cdn 1.03 1.01 1.00 1.04 -4%
Crude oil (WTI $US/bbl) $ 94.08 $ 84.70 $ 95.26 $ 79.36 20%
Crude oil (WTI $Cdn/bbl) $ 96.66 $ 85.83 $ 94.96 $ 82.17 16%
Sales price / WTI $Cdn
reference price 108% 89% 103% 88% 15%
Crude oil (Brent $US/bbl) $ 109.29 $ 86.01 $ 111.35 $ 79.63 40%
Crude oil (Brent $Cdn/bbl) $ 112.30 $ 87.16 $ 110.99 $ 82.45 35%
Sale price / Brent $Cdn
reference price 93% 88% 88% 88% 0%
Funds flow from operations (Note
1)
Crude oil sales 17,523 28,495 72,576 103,019 -30%
Government royalty (874) (1,826) (3,651) (6,498) -44%
Other royalty (60) (37) (196) (110) 78%
Transportation expense (409) (1,017) (1,683) (3,653) -54%
Operating expense (2,900) (2,886) (9,748) (9,535) 2%
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13,280 22,729 57,298 83,224 -31%
General and administrative
expense (Note 5) (1,516) (974) (4,153) (4,345) -4%
Interest income 25 11 89 68 31%
Special Remuneratory Benefit
tax (SRB) - (1,549) - (6,413) -100%
Current income tax (4,081) (2,508) (6,050) (14,336) -58%
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Funds flow from operations 7,708 17,709 47,184 58,198 -19%
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Funds flow from operations /
barrel (CDN$/bbl) (Note 1)
Crude oil sales $ 104.29 $ 76.36 $ 97.96 $ 72.66 35%
Government royalty (5.20) (4.89) (4.93) (4.58) 8%
Other royalty (0.36) (0.10) (0.26) (0.08) 231%
Transportation expense (2.43) (2.73) (2.27) (2.58) -12%
Operating expense (17.26) (7.73) (13.16) (6.73) 96%
--------------------------------------------
79.04 60.91 77.34 58.70 32%
General and administrative
expense (Note 5) (9.02) (2.61) (5.61) (3.06) 83%
Interest Income 0.15 0.03 0.12 0.05 141%
Special Remuneratory Benefit
(SRB) - (4.15) - (4.52) -100%
Current income tax (24.29) (6.72) (8.17) (10.11) -19%
--------------------------------------------
Thailand - Funds flow from
operations $ 45.87 $ 47.46 $ 63.69 $ 41.05 55%
--------------------------------------------
--------------------------------------------
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% 5.4% 0.0% 6.2% -6.2%
Income tax as percentage of
crude oil sales 23.3% 8.8% 8.3% 13.9% -5.6%
As percentage of crude oil sales
Expenses - transportation,
operating, G&A and other 28% 17% 22% 17% 5%
Government royalty, SRB and
income tax 28% 21% 13% 27% -14%
Funds flow from operations,
before interest income and
realized foreign exchange
gain 44% 62% 65% 56% 9%
Wells drilled
Gross 8 6 28 25 12%
Net 5.2 4.0 19.2 15.4 25%
----------------------------------------------------------------------------
---------------------------------------------
Year Ended
December 31,
(thousands of Canadian dollars
except where indicated) 2011 2010 Change
----------------------------------------------------------------------------
RESERVES AND CONTINGENT
RESOURCES
----------------------------------------------------------------------------
Onshore Thailand (reserves
assigned to Concessions
L44/43, L33/43 and SW1 where
Pan Orient is the operator
with a 60% interest, and
Concession L53/48 where Pan
Orient is the operator with a
100% interest) (Note 6)
Proved oil reserves
(thousands of barrels) 5,993 7,363 -19%
Proved plus probable oil
reserves (thousands of
barrels) 18,998 31,935 -41%
Net present value of proved +
probable reserves, after tax
discounted at 10% 349,000 509,000 -31%
Per Pan Orient share -
basic (Note 7) $ 6.15 $ 10.44 -41%
Net present value of proved +
probable reserves, after tax
discounted at 15% 283,000 413,000 -31%
Per Pan Orient share -
basic (Note 7) $ 4.99 $ 8.47 -41%
Canada (share of the oil sands
leases of Andora at Sawn Lake,
Alberta)
Contingent Oil Resources -
Best Estimate "2C"
(thousands of barrels) (Note
8) 114,400 103,900 10%
Net Present value, before tax
discounted at 10% 327,000 222,000 47%
Per Pan Orient share -
basic (Note 7) $ 5.77 $ 4.55 27%
Net present value, before tax
discounted at 15% 103,000 45,000 129%
Per Pan Orient share -
basic (Note 7) $ 1.82 $ 0.92 98%
----------------------------------------------------------------------------
INTERNATIONAL
INTERESTS
----------------------------------------------------------------------------
All amounts December 31, 2011
reflect Pan Financial 2011 Avg. P+P
Orient's Net Square Commitments Production Reserves
interest Status Kilometers (CDN thousands) (BOPD) (Mstb)
----------------------------------------------------------------------------
Onshore
Thailand
Concessions
--------------
SW1A (60%
working
interest &
operator) Developed 9 - - 156 526
L44/43 (60%
working
interest &
operator) Partially to July
(Note 9) developed 556 $ 18 2012 1,282 15,718
L33/43 (60%
working
interest &
operator) Partially to July
(Note 10) developed 557 $ 49 2012 137 1,959
L53/48 (100%
working to
interest & Partially January
operator) developed 1,959 $ 407 2013 454 795
------------------- ---------------------
3,081 $ 474 2,030 18,998
------------------- ---------------------
------------------- ---------------------
Onshore
Indonesia
PSC's
--------------
Citarum PSC,
West Java
(77% working
interest & to
operator) October
(Note 11) Undeveloped 684 $14,198 2012
Batu Gajah
PSC, South
Sumatra (97%
working
interest & to
operator) January
(Note 11) Undeveloped 2,505 $14,514 2013
CPP South
PSC, Central
Sumatra (97%
working
interest & to
operator) November
(Note 11) Undeveloped 2,603 $ 5,212 2013
Onshore &
Offshore
Indonesia
PSC
--------------
East Jabung
PSC, South
Sumatra
(100%
working
interest & to
operator) November
(Note 11) Undeveloped 4,339 $11,208 2014
-------------------
10,131 $45,132
-------------------
-------------------
Consolidated
Total 13,212 $45,606
-------------------
-------------------
----------------------------------------------------------------------------
(1) Funds flow from operations ("funds flow" before changes in non-cash
working capital and reclamation costs) is used by management to analyze
operating performance and leverage. Funds flow as presented does not
have any standardized meaning prescribed by IFRS and therefore it may
not be comparable with the calculation of similar measures of other
entities. Funds flow is not intended to represent operating cash flow
or operating profits for the period nor should it be viewed as an
alternative to cash flow from operating activities, net earnings or
other measures of financial performance calculated in accordance with
IFRS.
(2) Cost of capital expenditures, excluding any asset retirement obligation
and excluding the impact of changes in foreign exchange rates.
(3) Cost of acquisitions, including deemed value of equity issued in the
transaction.
(4) Cost of acquisitions, excluding deemed value of equity issued in the
transaction.
(5) General & administrative expenses, excluding non-cash accretion on
decommissioning provision.
(6) Thailand reserves as at December 31, 2011 and December 31, 2010 as
evaluated by Gaffney Cline & Associates (Consultants) Pte. Ltd. of
Singapore assessed at forecast crude oil reference prices and costs.
The reference price for crude oil per barrel (US$ Brent per barrel) for
the December 31, 2011 evaluation is $105.61 for 2012, $101.36 for 2013,
$97.23 for 2014, $97.41 for 2015, $101.42 for 2016, $103.37 for 2017
and prices increase at 2.0% per year thereafter. The engineered values
disclosed may not represent fair market value.
(7) Per share values calculated based on 56,685,307 Pan Orient Shares
outstanding at December 31, 2011 and 48,740,866 Pan Orient Shares
outstanding at December 31, 2010.
(8) Pan Orient's 53.4% share as at December 31, 2011 and December 31, 2010
of the reserves of Andora Energy Corporation, a private company as
evaluated by Sproule Associates Ltd. assessed at forecast crude oil
reference prices and costs. The reference price for crude oil per
barrel (Western Canada Select WCS 20.5 API adjusted for quality and
transportation in Canadian dollars) is $82.34 for 2012, $79.69 for
2013, $77.25 for 2014, $81.80 for 2015, $83.44 for 2016 and prices
increasing at 2% thereafter. Future capital expenditures estimated at
$1,055 million. The engineered values disclosed may not represent fair
market value.
(9) Concession L44/43 in Thailand consists of 47 net square kilometers of
lands held through production licenses (with a 20 year primary term
plus an additional 10 year renewal period that can be applied for) and
509 net square kilometers of exploration lands. The exploration lands
expire in July 2012 and the Company has applied to reserve 294 net
square kilometers of exploration lands for an additional 5 year period.
(10) Concession L33/43 in Thailand consists of 7 net square kilometers of
lands held through production licenses (with a 20 year primary term
plus an additional 10 year renewal period that can be applied for) and
550 net square kilometers of exploration lands. The exploration lands
expire in July 2012 and the Company has applied to reserve 295 net
square kilometers of exploration lands for an additional 5 year period.
(11) Share of commitments in Indonesia reflect amounts to be paid by Pan
Orient, including carried interest partners (3% for Citarum, Batu Gajah
and South CPP). Commitments for a Production Sharing Contract ("PSC")
in Indonesia include the completion of a work program as well as the
Company's estimated amount of the expenditure. Financial commitments as
provided above represent the work program required under the initial 3-
year firm commitment exploration period of the PSC. The work program
commitment is based on the original contract and timing is subject to
government approval. With respect to Citarum, Batu Gajah and South CPP
PSC's, extension of this initial exploration period has been agreed to
with the Government of Indonesia (GOI) to the dates indicated above. If
Pan Orient exercises its options to continue beyond the initial
exploration period, additional commitments will be determined on a
year-by-year basis through submission of a work program and approval
from the GOI. Although extension of the exploration period is a
departure from the original contract, it is considered standard
practice in Indonesia.
(12) Tables may not add due to rounding.
To view the maps and Drilling chart associated with this release, please visit the following link: http://media3.marketwire.com/docs/425poe_maps.pdf
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.
Contacts
Jeff Chisholm
Pan Orient Energy Corp.
President and CEO
(403) 294-1770
Bill Ostlund
Pan Orient Energy Corp.
Vice President Finance and CFO
(403) 294-1770