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PAN ORIENT ENERGY CORP. - 2022 First Quarter Financial & Operating Results

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CALGARY, AB, May 12, 2022 /CNW/ - Pan Orient Energy Corp. ("Pan Orient" or the "Company") (TSXV: POE) reports 2022 first quarter consolidated financial and operating results. Please note that all amounts are in Canadian dollars unless otherwise stated, BOPD refers to barrels of oil per day and BOPD for Thailand operations represents volumes net to Pan Orient's 50.01% equity interest in the Thailand Joint Venture.

logo (CNW Group/Pan Orient Energy Corp.)
logo (CNW Group/Pan Orient Energy Corp.)

The Company is today filing its unaudited consolidated financial statements as at and for the three months ended March 31, 2022 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 Company's website, www.panorient.ca.

Commenting today on Pan Orient's 2022 first quarter results, President and CEO Jeff Chisholm stated: "Pan Orient is currently engaged in the advanced stages of a due diligence process related to the sale of the Company's Thailand interests. We anticipate being in a position to make an announcement regarding this matter by the end of the second quarter 2022. Oil sales have been averaging approximately 1,250 BOPD (net to Pan Orient's 50.01%) over the first nine days in May and approximately four additional workovers are anticipated to be completed over the next 30 days, with an additional two well appraisal program planned to commence in early August."

HIGHLIGHTS

Thailand (net to Pan Orient's 50.01% equity interest in the Thailand Joint Venture)

  • Net to Pan Orient's 50.01% equity interest in the Thailand Joint Venture, oil sales from Concession L53 in the first quarter of 2022 were 1,105 BOPD. Oil sales declined 23% from 1,426 BOPD in the fourth quarter of 2021 primarily due to natural declines related to flush production from workovers completed in late 2021 and delays in the commencement of the 2022 multi-well workover program.

  • Adjusted Thailand funds flow from operations of $5.7 million ($57.19 per barrel) in the first quarter of 2022 compared with $5.7 million ($43.56 per barrel) in the fourth quarter of 2021. The average realized oil price per barrel increased 25% in the first quarter of 2022 to $122.67 per barrel compared with $98.02 in the fourth quarter of 2021.

  • Thailand adjusted funds flow from operations funded $1.3 million of Thailand exploration and development activities. Pan Orient's share of working capital and long-term deposits in Thailand at March 31, 2022 was $7.9 million.

Indonesia East Jabung Production Sharing Contract (Pan Orient is non-operator with a 49% ownership interest)

  • Pan Orient is withdrawing from operations in Indonesia and the office in Jakarta was closed March 31, 2020. The East Jabung Production Sharing Contract expired in January 2020 and the operator is completing final steps to be taken for formal approval of the expiry from the Government of Indonesia, including reclamation requirements.

  • Activities of the Company in Indonesia are reported in 2020 and 2021 as discontinued operations. Discontinued operations in Indonesia for the first quarter of 2022 were $122 thousand of expenses and $84 thousand in unrealized foreign exchange gains on currency exchange rates since the end of 2021.

Sawn Lake (Operated by Andora Energy Corporation, in which Pan Orient has a 71.8% ownership)

  • For the first quarter of 2022, Pan Orient reports total operating expenses of $66 thousand for Sawn Lake, primarily associated with maintaining the suspended Steam Assisted Gravity Drainage ("SAGD") facility and wellpair.

  • In March 2022, Andora entered into an agreement with a joint venture partner at Sawn Lake whereby Andora acquired certain assets and assumed certain liabilities at Sawn Lake. Assets acquired consist of (i) an additional 25% working interest in the Sawn Lake joint venture (Sawn Lake Central Block), (ii) security deposits of the vendor for Sawn Lake placed with the Alberta Energy Regulator and other parties, and (iii) a payment from the vendor of $578 thousand. In connection with the acquisition, Andora assumed the abandonment and reclamation costs, and natural gas tariff commitments associated with the additional 25% working interest in the Sawn Lake joint venture. Following the transaction, Andora has a 75% working interest in the Sawn Lake joint venture.

  • An updated contingent bitumen resources evaluation effective March 31, 2022 is being prepared for Andora by an independent qualified reserves evaluator to evaluate all of Andora's Oil Sands Leases at Sawn Lake based on exploitation using SAGD.

  • There is continued strength in Western Canada Select reference prices for heavy oil. At May 2, 2022, the price for Western Canada Select was Cdn$118.42 per barrel and the forward market for Western Canada Select in 2024 was Cdn$81.07 per barrel. Andora is considering alternatives to move the Sawn Lake project forward with minimum development costs to Andora, including partnership, farmout, sourcing additional funds, partial sale or outright sale, and achieve value for Andora and Pan Orient shareholders.

Corporate

  • Corporate adjusted funds flow from operations (including Pan Orient's 50.01% equity interest in the Thailand Joint Venture) in the first quarter of 2022 were $4.5 million ($0.09 per share) compared with $4.4 million ($0.09 per share) in the fourth quarter of 2021.

  • Net income attributable to common shareholders for the first quarter of 2022 was $3.5 million ($0.07 income per share) compared with net income attributable to common shareholders for the fourth quarter of 2021 of $3.0 million ($0.06 per share).

  • At the Annual and Special Meeting of Shareholders on January 18, 2022, shareholders approved the previously announced capital reorganization resulting in a $0.40 per common share return of capital distribution to shareholders on February 10, 2022. The total amount of the distribution was $19.9 million.

  • Common shares outstanding were 49.8 million at March 31, 2022. Pan Orient has not repurchased any common shares in 2022 under its normal course issuer bid.

  • Pan Orient continues to maintain a strong financial position with working capital and non-current deposits of $11.5 million and no long-term debt at March 31, 2022. In addition, the Thailand Joint Venture has $7.9 million in working capital and long-term deposits, net to Pan Orient's 50.01% equity interest, and Thailand funds flow from operations are expected to expand the Company's cash balance through the remainder of 2022.

OUTLOOK

CORPORATE

Pan Orient is currently engaged in the advanced stages of a due diligence process related to the sale of the Company's Thailand interests. We anticipate being in a position to make an announcement regarding this matter by the end of the second quarter 2022.

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 express or implied to Pan Orient's intention and efforts to sell its Thailand assets; the timing of any announcement of a sale transaction; well workover and drilling plans in Thailand; withdrawal from the East Jabung PSC in Indonesia; the obtaining of an updated contingent bitumen resources evaluation of Andora's Sawn Lake oil sands leases; forward market expectations for Western Canada Select reference prices for heavy oil; and alternatives being considered by Andora to move the Sawn Lake project forward. 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 reserves 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.

Financial and Operating Summary

Three Months Ended
March 31,

% Change

(thousands of Canadian dollars except where indicated)

2022

2021

FINANCIAL




Financial Statement Results – Excluding 50.01% Interest in Thailand Joint Venture
(Note 1)




Net income attributed to common shareholders

3,514

1,140

208%


Per share – basic and diluted

$ 0.07

$ 0.02

208%

Cash flow used in operating activities (Note 2 & 3)

(967)

(991)

-2%


Per share – basic and diluted

$ (0.02)

$ (0.02)

-2%

Cash flow from investing activities (Note 2 & 3)

283

2,610

-89%


Per share – basic and diluted

$ 0.01

$ 0.05

-89%

Cash flow used in financing activities (Note 2 & 3)

(19,918)

(1,240)

1506%

Per share – basic and diluted

$ (0.40)

$ (0.02)

1506%

Change in cash and cash equivalents used in discontinued operations (Note 3)

(151)

(33)

358%

Working capital

10,675

22,805

-53%

Working capital & non-current deposits

11,513

23,415

-51%

Long-term debt

-

-


Shares outstanding (thousands)

49,794

50,303

-1%

Capital Commitments (Note 4)

1,590

801

99%

Working Capital and Non-current Deposits




Beginning of period – Excluding Thailand Joint Venture

32,084

23,577

36%


Adjusted funds flow used in continuing operations (Note 3 & 6)

(1,162)

(924)

26%


Adjusted funds flow used in discontinued operations (Note 3)

(38)

(20)

90%


Cash and deposits acquired (Note 13)

752

-



Special distribution (Note 14)

(19,917)

-



Amounts received from (advanced to) Thailand Joint Venture

(204)

10



Dividend received from Thailand Joint Venture

-

2,600

-100%


Finance lease payments

(1)

(2)

-50%


Normal course issuer bid

-

(1,238)

-100%


Automatic shares purchase plan (Note 8)

-

(629)

-100%


Effect of foreign exchange

(1)

41

-102%

End of period – Excluding Thailand Joint Venture

11,513

23,415

-51%

Pan Orient 50.01% interest in Thailand Joint Venture Working Capital and Non-Current
Deposits

7,925

4,438

79%

Economic Results – Including 50.01% Interest in Thailand Joint Venture




Total corporate adjusted funds flow from (used in) operations by region (Note 6)





Canada

(1,154)

(916)

26%


Thailand (Note 9)

(8)

(8)

0%


From continuing operations

(1,162)

(924)

26%


Indonesia - Discontinued Operations

(38)

(20)

90%


Adjusted funds flow used in operations (excl. Thailand Joint Venture)

(1,200)

(944)

27%


Share of Thailand Joint Venture (Notes 1 & 5)

5,694

4,326

32%

Total corporate adjusted funds flow from operations

4,494

3,382

33%


Per share – basic and diluted

$ 0.09

$ 0.07

35%

Capital Expenditures - Petroleum and Natural Gas Properties (Note 7)




Share of Thailand Joint Venture capital expenditures

1,336

1,829

-27%

Total capital expenditures (incl. Thailand Joint Venture and discontinued operations)

1,336

1,829

-27%

Investment in Thailand Joint Venture




Beginning of period

24,094

28,329

-15%


Net income from Joint Venture

4,350

1,902

129%


Other comprehensive loss from Joint Venture

(484)

(1,369)

-65%


Dividend paid

-

(2,600)

-100%


Amounts (received from) advanced to Joint Venture

204

(10)


End of period

28,164

26,252

7%


Three Months Ended
March 31,

%

(thousands of Canadian dollars except where indicated)

2022

2021

Change

Thailand Operations




Economic Results – Including 50.01% Interest in Thailand Joint Venture (Note 5)




Oil sales (bbls)

99,424

121,733

-18%

Average daily oil sales (BOPD) by Concession L53

1,105

1,353

-18%

Average oil sales price, before transportation (CDN$/bbl)

$ 122.67

$ 73.82

66%

Reference Price (volume weighted) and differential





Crude oil (Brent $US/bbl)

$ 99.45

$ 60.41

65%


Exchange Rate $US/$Cdn

1.28

1.28

-0%


Crude oil (Brent $Cdn/bbl)

$ 127.21

$ 77.36

64%


Sale price / Brent reference price

96%

95%

1%

Adjusted funds flow from (used in) operations (Note 6)





Crude oil sales

12,196

8,986

36%


Government royalty

(618)

(479)

29%


Transportation expense

(244)

(292)

-16%


Operating expense

(636)

(756)

-16%


Field netback

10,698

7,459

43%


General and administrative expense (Note 9)

(207)

(247)

-16%


Foreign exchange gain

1

14

-93%


Current income tax

(4,806)

(2,909)

65%


Thailand – Adjusted funds flow from operations

5,686

4,317

32%

Adjusted funds flow from (used in) operations / barrel (CDN$/bbl) (Note 6)





Crude oil sales

$ 122.67

$ 73.82

66%


Government royalty

(6.22)

(3.93)

58%


Transportation expense

(2.45)

(2.40)

2%


Operating expense

(6.40)

(6.21)

3%


Field netback

107.60

61.27

76%


General and administrative expense (Note 9)

(2.08)

(2.03)

3%


Foreign exchange gain

0.01

0.12

-91%


Current income tax

(48.34)

(23.90)

102%


Thailand – Adjusted funds flow from operations

$ 57.19

$ 35.46

61%

Government royalty as percentage of crude oil sales

5.1%

5.3%

0%

Income tax & SRB as percentage of crude oil sales

39%

32%

7%

As percentage of crude oil sales





Expenses - transportation, operating, G&A and other

9%

14%

-5%


Government royalty, SRB and income tax

44%

38%

7%


Adjusted funds flow from operations, before interest income

47%

48%

-1%

Wells drilled





Gross

-

2

-100%


Net

-

1.0

-100%

Financial Statement Presentation

Results – Excl. 50.01% Interest in Thailand Joint Venture (Note 1)





General and administrative expense (Note 9)

(8)

(9)

-11%


Adjusted funds flow used in consolidated operations

(8)

(9)

-11%

Adjusted fund flow Included in Investment in Thailand Joint Venture





Net income from Thailand Joint Venture

4,350

1,902

129%


Add back non-cash items in net income

1,344

2,424

-45%


Adjusted funds flow from Thailand Joint Venture

5,694

4,326

32%

Thailand – Economic adjusted funds flow from operations (Note 5)

5,686

4,317

32%

Canada Operations




Interest income

4

6

-33%

General and administrative expenses (Note 9)

(578)

(520)

11%

Operating expense (Note 10)

(66)

(42)

57%

Stock based compensation on restricted share units (Note 11)

(267)

(99)

170%

Realized foreign exchange loss (Note 12)

(22)

(1)

2100%

Unrealized foreign exchange gain (loss) (Note 12)

(225)

(260)

-13%


Canada – Adjusted funds flow used in operations

(1,154)

(916)

26%

Add Thailand general and administrative expense (note 9)

(8)

(9)

-11%

Add back changes in non-cash working capital, continuing operations

(30)

(327)

-91%

Add back unrealized foreign exchange loss

225

261

-14%

Cash flow used in operating activities, continuing operations

(967)

(991)

-2%

Indonesia - Discontinued Operations




General and administrative expense (Note 9)

(40)

(51)

-22%

Other expense

(82)

(1)


Unrealized foreign exchange gain (loss)

84

32

163%


Indonesia – Adjusted funds flow used in operations

(38)

(20)

90%

Add back changes in non-cash working capital, discontinued operations

(91)

(13)

600%

Settlement of decommissioning provision

(22)

-


Cash flow used in operating activities, discontinued operations

(151)

(33)

358%

(1)

Pan Orient holds a 50.01% equity interest in Pan Orient Energy (Siam) Ltd. as a joint arrangement where the Company shares joint control with the 49.99% equity interest holder. The resulting joint arrangement is classified as a Joint Venture under IFRS 11 and is accounted for using the equity method of accounting where Pan Orient's 50.01% equity interest in the assets, liabilities, working capital, operations and capital expenditures of Pan Orient Energy (Siam) Ltd. are recorded in Investment in Thailand Joint Venture.

(2)

As set out in the Consolidated Statements of Cash Flows in the Consolidated Financial Statements of Pan Orient Energy Corp.

(3)

The East Jabung Production Sharing Contract ("PSC") expired in January 2020 and the operator is continuing to complete the final steps to be taken for formal approval of the expiry from the Government of Indonesia, including reclamation requirements. Pan Orient is withdrawing from operations in Indonesia and the office in Jakarta was closed March 31, 2020. For accounting purposes, the operation in Indonesia for accounting purposes is considered a discontinued operation since 2020.

(4)

Refer to Commitments note disclosure of the March 31, 2022 and March 31, 2021 Interim Condensed Consolidated Financial Statements.

(5)

For the purpose of providing more meaningful economic results from operations for Thailand, the amounts presented include 50.01% of results of the Thailand Joint Venture. Pan Orient has a 50.01% ownership interest in Pan Orient Energy (Siam) Ltd., but does not have any direct interest in, or control over, the crude oil reserves, operations or working capital of on-shore Concession L53.

(6)

Total corporate adjusted funds flow from operations is cash flow from operating activities prior to changes in non-cash working capital, unrealized foreign exchange gain or loss plus the corresponding amount from Pan Orient's 50.01% interest in the Thailand Joint Venture which is recorded in Joint Venture for financial statement purposes. This measure is used by management to analyze operating performance and leverage. Adjusted 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. Adjusted 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.

(7)

(8)

Cost of capital expenditures excluded decommissioning costs and the impact of changes in foreign exchange.

In December 2020, the Company entered into an Automatic Share Purchase Plan ("ASPP"), which permits an independent broker to repurchase shares during certain blackout periods under the Company's normal course issuer bid, subject to agreed trading parameters and other instructions for such purchases. At March 31, 2021, the Company recognized a provision of $1.5 million (December 31, 2020 - $0.9 million) in accounts payable and accrued liabilities as an estimate for the number of shares that may be repurchased during the potential blackout periods at the maximum share price under the ASPP.

(9)

General & administrative expenses, excluding non-cash accretion expense. Thailand operations includes a small amount of G&A shown in the three months ended March 31, 2022 and March 31, 2021 for Thailand operations related to G&A of the holding company of Pan Orient Energy (Siam) Ltd.

(10)

Operating expense related to Andora's suspended demonstration project facility and wellpair at Sawn Lake Central.

(11)

The Company granted 1,050,000 and 520,000 restricted share units ("RSUs") to directors, senior management, employees and consultant on May 19, 2020 and May 14, 2021, respectively. At March 31, 2022, 599,998 RSUs are outstanding. The amount represents the stock-based compensation expenses.

(12)

Realized and unrealized foreign exchange gain or loss mainly related to the U.S. dollars denominated cash balances held in Canada.

(13)

In March 2022, Andora entered into an agreement with a joint venture partner at Sawn Lake whereby Andora acquired certain assets and assumed certain liabilities at Sawn Lake. Assets acquired consist of (i) an additional 25% working interest in the Sawn Lake joint venture (Sawn Lake Central Block), (ii) security deposits of the vendor for Sawn Lake placed with the Alberta Energy Regulator and other parties, and (iii) a payment from the vendor of $578 thousand. In connection with the acquisition, Andora assumed the abandonment and reclamation costs, and natural gas tariff commitments associated with the additional 25% working interest in the Sawn Lake joint venture. Following the transaction, Andora has a 75% working interest in the Sawn Lake joint venture.

(14)

In February 2022, the Company paid a $0.40 per share special distribution to shareholders following shareholder approval of a reorganization of the Company's share capital. The amount paid on February 10, 2022 was $19.9 million.

(15)

Tables may not add due to rounding.



SOURCE Pan Orient Energy Corp.

Cision
Cision

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