CALGARY, ALBERTA--(Marketwire - May 28, 2012) - Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE.V - News) is pleased to provide highlights of its 2012 first 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 unaudited consolidated financial statements as at and for the three months ended March 31, 2012 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.
2012 FIRST QUARTER OPERATING RESULTS
-- Funds flow from operations for the first quarter of 2012 was $18.7
million compared with $7.1 million for the fourth quarter of 2011 and
$12.4 million for the first quarter of 2011. Funds flow from operations
per share was $0.33 for the first quarter of 2012.
-- Net income attributable to common shareholders was $8.1 million, or
$0.14 per share, for the first quarter of 2012 compared with net income
attributable to common shareholders of $11.6 million, or $0.21 per
share, for the fourth quarter of 2011 and $3.9 million, or $0.08 per
share, for the first quarter of 2011. Net income attributable to common
shareholders for the fourth quarter of 2011 included a $10.3 million
reduction in future tax expense.
-- Total capital expenditures for the first quarter of 2012 were $21.5
million, with $13.6 million in Thailand, $7.8 million in Indonesia and
$0.1 million in Canada.
-- At March 31, 2012 Pan Orient had $48.5 million of working capital and
non-current deposits, and no long-term debt. In addition, Pan Orient had
$11.6 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 March
31, 2012 estimated commitments in Indonesia to November 2014 were $54.0
million for the Batu Gajah, Citarum, South CPP and East Jabung PSC's
("Production Sharing Contracts"). Estimated commitments in Thailand at
March 31, 2012 were $0.1 million to January 2013.
-- Thailand
-- Average oil sales in Thailand for the first quarter of 2012 of 2,541
BOPD with 1,358 BOPD from Concession L53, 979 BOPD from Concession
L44, 44 BOPD from Concession L33, and 160 BOPD from Concession SW1.
Oil sales at Concession L53 increased to 1,358 BOPD in the first
quarter of 2011 from 396 BOPD in the fourth quarter of 2011 with the
addition of 885 BOPD from the L53-D2 and L53-DST3 exploration wells
at the L53D-East field producing from new sandstone reservoirs under
90 day test periods. Production from sandstone reservoirs
represented 63% of oil sales in the first quarter of 2012.
Average oil sales in April 2012 were 1,757 BOPD, with 755 BOPD from
Concession L53, 820 BOPD from Concession L44, 47 BOPD from
Concession L33, and 135 BOPD from Concession SW1. Concession L53
production was impacted by the shut-in of L53-D2 on April 17th at
the end of its 90 production period.
The L53-DST3 well was shut-in on May 1st with 27 days remaining on
the 90 day allowable production testing period. Additional potential
oil zones in the L53-DST3 well will be perforated after completion
of the L53-D2ST2 well which is currently drilling. In mid-May
approximately 280 BOPD of production was temporarily shut in at
Concession L44 while the company awaits the approval for long term
use on surface lands held by the Agricultural Land Reform Office
(ALRO) of the Government of Thailand. Production is anticipated to
be brought back on by mid-August 2012.
-- Funds flow from Thailand operations was $19.0 million for the first
quarter of 2012, or $81.98 per barrel. The results for the first
quarter of 2012 reflect increased production in Concession L53,
which has a high after tax netback from lower transportation
expenses per barrel due to a closer proximity to the refinery and
the utilization of income tax loss carry forward balances to
eliminate current income tax. The increase in funds flow from
Thailand operations to $19.0 million from $7.7 million in the fourth
quarter of 2011 is a result of the 39% increase in oil sales
volumes, a 6% increase in the realized price for crude oil, a
reduction in operating and administrative expenses and a reduction
in current income tax. Funds flow from Thailand operations funded
the $13.6 million of capital expenditures during the quarter and
generated an additional $5.4 million for other capital programs in
Indonesia or Canada.
For the first quarter of 2012, transportation expenses were $1.92
per barrel, operating expenses and other royalty were $9.41 per
barrel, general and administrative expenses of $3.98 per barrel and
amounts to the Thailand government of $13.71 per barrel resulted in
after tax funds flow from operations per barrel of $81.98. The Brent
reference price for crude oil per barrel increased 8% during the
quarter to CDN$121.09 and the realized price was 92% of this
reference price based on strength of oil product prices in
Singapore. For the first quarter of 2012, Thailand crude oil revenue
of $110.97 per barrel was allocated 14% to expenses for
transportation, operating, and general & administrative, 12% to the
government of Thailand in the form of royalties and Income Tax, and
74% to Pan Orient.-- A Thailand drilling program in the first quarter 2012 of six wells (4.4
net wells) with two exploration wells in Concession L53, an exploration
well and an appraisal well in Concession L44, and an exploration well
and an appraisal well in Concession SW1. In addition, drilling and
testing work continued on the L53-D2 exploration well in Concession L53
which spudded December 15, 2011, and the L44V-D2ST2 appraisal well in
the Bo Rang field in Concession L44 which spudded December 22, 2011.
-- The two exploration wells drilled in Concession L53 resulted in the
L53-DST3 well producing oil from new sandstone intervals in the
recently discovered L53-D East field, and the L53-G exploration well
which tested oil at sub-commercial rates.
-- The two wells drilled during the quarter at Concession L44 (Pan
Orient operator and 60% ownership) were the L44R-2ST2 exploration
well which tested oil at sub-commercial rates and the L44-G3
appraisal well which tested oil at sub-commercial rates but is
planned to be re-drilled horizontally later in 2012.
-- The two wells drilled during the quarter at Concession SW1 (Pan
Orient operator and 60% ownership) were the POE-3A appraisal well
which was unsuccessful and the NS-4A exploration well which
encountered four meters of net oil pay in a shallow sandstone
reservoir which is currently on production at approximately 54 BOPD
with no water. Two immediate follow up wells are planned for this
new sandstone discovery.
-- The L53-D East sandstone oilfield in Concession L53 (Pan Orient 100%
working interest and operator) was discovered with the L53-D2
exploration well which had been spudded in December 2011 and brought
into production in January 2012 during a 90 day production testing
period in which several zones were tested. The follow-up L53-DST3
exploration well was drilled and started production testing of different
reservoir intervals in February 2012. During the first quarter of 2012,
the L53-D East field produced 80,573 barrels of oil. The L53-D2ST1 well,
sidetracked off of the original L53-D2 wellbore that had reached the end
of its 90 day production test, was targeting the untested deep sands
within fault block "C" which proved water bearing. The L53-D2ST2 well, a
second sidetrack off the same wellbore, is currently drilling ahead
towards a number of shallow and deep sandstone objectives in the
untested fault compartment "B".
The reserve report of Pan Orient at December 31, 2011 assigned no
reserves to the L53-D East oilfield since there was no production
license in place. As part of the production license application for L53-
D East, a third party contingent resource estimate for one of four fault
compartments (compartment "A") was completed at the end of April and
submitted with the application in early May for a production license for
the L53-D East sandstone field. This report estimated contingent
resources for compartment "A" of: 1C 0.264 million barrels, 2C 0.944
million barrels and 3C 4.242 million barrels. Three zones that are
interpreted as oil bearing, but were not tested as they were deemed
certain oil, were not included in the assessment. Approval of the
production license is anticipated by approximately the end of July. The
follow-up work program is subject to the timing of the granting of a
production license and the environmental approval for the drilling of up
to 12 wells.
-- A 3D seismic survey has been completed in Concession L53 to the
northeast of the existing 3D seismic coverage with possible exploration
wells drilled on the basis of this 3D seismic by year-end 2012.
-- Indonesia
-- Capital expenditures in Indonesia of $7.8 million with $7.5 million
at the Citarum PSC (Pan Orient operator and 77% ownership), $0.1
million at the Batu Gajah PSC (Pan Orient operator and 97%
ownership) and $0.2 million at the East Jabung PSC (Pan Orient
operator and 100% ownership).
-- At the Citarum PSC on-shore Java, Pan Orient commenced the
exploration drilling program at the end of December 2011. Capital
expenditures of $7.5 million in the first quarter of 2012 included
$4.3 million for the Cataka-1 well, $1.9 million for the Jatayu-1
well, $0.8 million for site preparation for the Geulis-1 well and
$0.5 million for capitalized exploration overhead and other costs.
-- The Cataka-1 exploration well commenced 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 and Geulis-1
wells 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.
-- The Jatayu-1 exploration well commenced drilling on February 15,
2012 towards a primary reservoir objective target depth of 7,382
feet. At 6,156 a drilling break occurred where the penetration
rate increased from 16 feet per hour to 54 feet per hour over a
50 foot interval while drilling through sands, suggesting porous
sands. Associated with this drilling break was an influx of gas
(18% mudgas, above 0.8% background) into the wellbore that
required an increase in mud weight and two to three hours to
circulate the gas out of the mud system. Shortly thereafter the
pipe became stuck. The well is currently being plugged back to
the 9 5/8" casing shoe at 1,444 meters and will be drilled
vertically from this location to avoid the issues associated
with the initial directional / deviated hole in a complex fold
belt environment. It is believed this will largely mitigate the
difficulties experienced to date. The drilling break with
associated gas influx observed in a secondary sandstone
objective above the main reservoir target was very encouraging.
The gas composition appears to be of biogenic origin (mainly
methane), the similar to the approximately 780 Bcf Subang gas
field to the north in an adjacent concession
-- Upon the completion of drilling at the Jatayu-1 well, the rig
will, mobilize to the Geulis prospect and then to the Cataka
prospect.
-- Subsequent Event
On May 23, 2012 Pan Orient announced that it has entered into an
agreement for the sale of its operated 60% interest in Thailand
Concessions L44/43, L33/43 and SW1 for a cash price of USD $170 million
plus approximately USD $8 million for working capital and other
adjustments. It is expected that net proceeds after costs and income tax
will be approximately USD $162 million. The transaction is anticipated
to close on approximately June 15, 2012 and will have a December 31,
2011 effective date. Pan Orient's other interests in Thailand,
consisting of its operated 100% interest in Concession L53/48, are being
retained.
OUTLOOK
-- Pan Orient will be focusing on a large acreage portfolio in western
onshore Indonesia throughout the remainder of 2012. The current three
well drilling program in the Citarum PSC has been challenging and
encouraging; attributes not entirely unexpected in a frontier
exploration foldbelt. Approximately late in the third quarter of 2012,
exploration will focus on the Batu Gajah PSC onshore Sumatra with the
drilling of 2 firm exploration wells and 2 contingent exploration wells.
One of the firm wells will be an appraisal of the NTO-1 gas discovery
that will be drilled to confirm the overall size of the gas accumulation
in the Lower Talang Akar sandstones and test the possibility of an oil
or gas accumulation in the overlying Upper Talang Akar sandstones. The
Shinta-1 exploration well will be targeting potential stacked sandstone
pay at a location in close proximity to, and surrounded by, some large
fields operated by another operator. Both of these well locations have
been selected on the basis of 3D seismic data. In the second half of
2012 we also be acquiring 2D seismic data in the East Jabung and South
CPP PSC's, setting the stage for a three well exploration program on
these PSC's in 2013. Meaningful exploration success of any of the above
wells will alter the work program as outlined with a significant
increase in the planned activity.
-- In Thailand, the company will aggressively develop the L53 D East
sandstone oil discovery and also likely be in a position to start the
first exploration drilling in the northern portion of the concession
late in the year on the basis of 3D seismic acquisition that was just
recently completed. Pan Orient considers the Thailand operation core to
its business and a generator of free cash flow used to fund exploration
activities in Indonesia and additional new ventures opportunities that
we know to be available in Thailand.
-- Lastly, we anticipate activities related to the Sawn Lake heavy oil
asset to come into focus over the remainder of 2012 with a clear course
of action on the asset to be communicated to shareholders shortly after
the closing of the sale of the Thailand assets.
Please refer to the Pan Orient's website (www.panorient.ca) where an updated corporate presentation can be viewed.
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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Three Months Ended
Financial and Operating Summary March 31,
(thousands of Canadian dollars except
where indicated) 2012 2011 Change
----------------------------------------------------------------------------
FINANCIAL
----------------------------------------------------------------------------
Oil revenue, before royalties and
transportation expense 25,654 18,449 39%
Funds flow from operations (Note 1) 18,668 12,362 51%
Per share - basic & diluted $ 0.33 $ 0.24 37%
Funds flow from operations by region
(Note 1)
Canada (220) (424) -48%
Thailand 18,954 12,859 47%
Indonesia (66) (73) -10%
-----------------------------------
Total 18,668 12,362 51%
-----------------------------------
Net income attributable to common
shareholders 8,124 3,928 107%
Per share - basic and diluted $ 0.14 $ 0.08 79%
Working capital 45,379 64,512 -30%
Working capital & non-current deposits 48,501 69,164 -30%
Long-term debt - -
Capital expenditures (Note 2) 21,471 19,972 8%
Acquisitions - Indonesia (Note 3) - 1,780 0%
Acquisitions - Sawn Lake, Canada (Note 3
& 6) - 3,192 0%
Shares outstanding (thousands) 56,685 56,544 0%
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Funds Flow from Operations per Barrel
(Note 1)
----------------------------------------------------------------------------
Canada operations $ (0.95) $ (2.10) -55%
Thailand operations 81.98 63.61 29%
Indonesia operations (0.29) (0.36) -21%
-----------------------------------
$ 80.75 $ 61.15 32%
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Capital Expenditures (Note 2)
----------------------------------------------------------------------------
Canada 43 68 -37%
Thailand 13,613 14,414 -6%
Indonesia 7,815 5,490 42%
-----------------------------------
Total 21,471 19,972 8%
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Working Capital and Non-current Deposits
----------------------------------------------------------------------------
Working capital & non-current deposits -
beginning 51,632 31,396 64%
Funds flow from operations (Note 1) 18,668 12,362 51%
Capital expenditures (Note 2) (21,471) (19,972) 8%
Acquisitions - Indonesia (Note 4) - (1,436) -100%
Foreign exchange impact on working
capital (328) (314) 4%
Net proceeds on share transactions - 47,130 -100%
-----------------------------------
Working capital & non-current deposits -
end of period 48,501 69,166 -30%
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Canada Operations
----------------------------------------------------------------------------
Interest income 69 21 230%
General and administrative (expense)
recovery (Note 5) (256) (263) -3%
Realized foreign exchange (loss) gain (33) (182) -82%
-----------------------------------
Funds flow from operations (Note 1) (220) (424) -48%
-----------------------------------
-----------------------------------
Funds flow from operations per barrel
Interest income $ 0.30 $ 0.10 199%
General and administrative expense
(Note 5) (1.11) (1.30) -15%
Realized foreign exchange (loss) gain (0.14) (0.90) -84%
-----------------------------------
$ (0.95) $ (2.10) -55%
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Indonesia Operations
----------------------------------------------------------------------------
General and administrative (expense)
recovery (Note 5) (66) (73) -10%
Wells drilled
Gross 1 1 0%
Net 0.8 1.0 -20%
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-----------------------------------
Three Months Ended
March 31,
(thousands of Canadian dollars except
where indicated) 2012 2011 Change
----------------------------------------------------------------------------
THAILAND OPERATIONS
----------------------------------------------------------------------------
Oil sales (bbls) 231,188 202,167 14%
Average daily oil sales (bbls/d) by
Concession
L44 979 1,501 -35%
SW1 160 122 31%
L33 44 210 -79%
L53 1,358 414 228%
-----------------------------------
Total 2,541 2,246 13%
-----------------------------------
Average oil sales price, before
transportation (CDN$/bbl) $ 110.97 $ 91.26 22%
Reference Price (volume weighted) and
differential
Exchange Rate $US/$Cdn 0.96 1.00 4%
Crude oil (Brent $US/bbl) $ 118.90 $ 105.60 13%
Crude oil (Brent $Cdn/bbl) $ 121.09 $ 105.60 15%
Sale price / Brent $Cdn reference price 92% 86% 5%
Funds flow from operations (Note 1)
Crude oil sales 25,654 18,449 39%
Government royalty (1,273) (956) 33%
Other royalty (49) (45) 9%
Transportation expense (444) (469) -5%
Operating expense (2,126) (2,137) -1%
-----------------------------------
21,762 14,842 47%
General and administrative expense
(Note 5) (921) (992) -7%
Interest income 9 17 -48%
Special Remuneratory Benefit tax (SRB) - (23) -100%
Current income tax (1,896) (985) 92%
-----------------------------------
Funds flow from operations 18,954 12,859 47%
-----------------------------------
-----------------------------------
Funds flow from operations / barrel
(CDN$/bbl) (Note 1)
Crude oil sales $ 110.97 $ 91.26 22%
Government royalty (5.51) (4.73) 16%
Other royalty (0.21) (0.22) -4%
Transportation expense (1.92) (2.32) -17%
Operating expense (9.20) (10.57) -13%
-----------------------------------
94.13 73.41 28%
General and administrative expense
(Note 5) (3.98) (4.90) -19%
Interest Income 0.04 0.08 -53%
Special Remuneratory Benefit (SRB) - (0.11) -100%
Current income tax (8.20) (4.87) 68%
-----------------------------------
Thailand - Funds flow from operations $ 81.98 $ 63.61 29%
-----------------------------------
-----------------------------------
Government royalty as percentage of crude
oil sales 5.0% 5.2% -0.2%
SRB as percentage of crude oil sales 0.0% 0.1% -0.1%
Income tax as percentage of crude oil
sales 7.4% 5.3% 2.1%
As percentage of crude oil sales
Expenses - transportation, operating,
G&A and other 14% 20% -6%
Government royalty, SRB and income tax 12% 10% 2%
Funds flow from operations, before
interest income and realized foreign
exchange gain 74% 70% 4%
Wells drilled -
Gross 6 6 0%
Net 4.4 4.4 0%
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(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 decommissioning provision
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) The acquisition transaction was reversed in the fourth quarter of 2011.
To view the maps and drilling chart associated with this release, please visit the following link: http://media3.marketwire.com/docs/poe0528_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
www.panorient.ca