Mr. Jeff Chisholm reports
PAN ORIENT ANNOUNCES 2017 YEAR-END THAILAND RESERVES UPDATE
Pan Orient Energy Corp., on behalf of Pan Orient Energy (Siam) Ltd. (POS), has released the results of its Dec. 31, 2017, independent reserves evaluation for Thailand on-shore concession L53/48 where POS is the operator and has a 100-per-cent working interest.Pan Orient has a 50.01-per-cent equity interest in POS, which is classified as a joint venture under international financial reporting standards and accounted for using the equity method.Pan Orient's 50.01-per-cent equity interest in the assets, liabilities, working capital, operations and capital expenditures of POS are recorded in investment in the Thailand joint venture.
The evaluation for the Thailand assets as at Dec. 31, 2017, was conducted by Sproule International Ltd. of Calgary and was prepared in accordance with Canadian Securities Administrators' National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities.
Summary of Thailand reserves at Dec. 31, 2017, for concession L53/48:
Thailand reserves and values at Dec. 31, 2017, of POS (representing the 100-per-cent working interest of POS in concession L53/48): Proved crude oil reserves of 545,000 barrels at Dec. 31, 2017, from conventional sandstone reservoirs is unchanged from Dec. 31, 2016.Proved plus probable crude oil reserves of 1,093,000 barrels at Dec. 31, 2017, from conventional sandstone reservoirs, compared with proved plus probable oil reserves of 1.14 million barrels at Dec. 31, 2016.The 4.1-per-cent decrease in 2017 reflects the following changes during 2017: 2017 oil sales of 185,117 barrels (507 barrels of oil per day), with 115,334 barrels (316 bopd) from the L53G field, 22,365 barrels (61 bopd) from the L53D field, 47,386 barrels (130 bopd) from the L53A field and 33 barrels from the L53B field;the L53B field produced 33 barrels as test production in January, 2017, and POS was granted a production licence for the L53B field on May 5, 2017;A positive technical revision of 138,000 barrels, most significantly at the L53G field. Net present value (after tax) of Thailand proved plus probable crude oil reserves at Dec. 31, 2017, using forecast prices and costs discounted at 10 per cent per year, of $28.0-million.The 6-per-cent increase in the net present value (after tax) of Thailand proved plus probable crude oil reserves from $26.4-million at Dec. 31, 2016, results primarily from a 14-per-cent increase in average oil sales prices offsetting the 4.1-per-cent reduction in oil reserves and the higher royalty and income tax expenses associated with the higher oil revenue.Net to Pan Orient's 50.01-per-cent equity interest in POS: Pan Orient does not have any direct interest in, or control over, the crude oil reserves or operations of on-shore concession L53/48.The values at Dec. 31, 2017, identified as net to Pan Orient's 50.01-per-cent equity interest in Pan Orient Energy (Siam) Ltd. represent 50.01-per-cent of POS reserves and values. Net to Pan Orient's 50.01-per-cent equity interest in POS, proved plus probable crude oil reserves of 546,500 barrels at Dec. 31, 2017, from conventional sandstone reservoirs.Net to Pan Orient's 50.01-per-cent equity interest in POS,net present value (after tax) of Thailand proved plus probable crude oil reserves at Dec. 31, 2017, using forecast prices and costs discounted at 10 per cent per year, of $14.0-million, or 25 cents per Pan Orient share based on the current 54.9 million Pan Orient shares outstanding.
SUMMARY OF THAILAND CRUDE OIL RESERVES AS OFDEC. 31, 2017, AS PROVIDED BY SPROULENet to Pan Orient's 50.01-per-cent interest in Pan Orient Energy (Siam) Ltd.Marketable reserves -- company gross (thousands of barrels) Light and medium oil Heavy oil TotalProved23042 272Probable22549 275Total proved plus probable45592 547 SUMMARY OF THAILAND NET PRESENT VALUES (AFTER INCOME TAX) AS OF DEC. 31, 2017, AS PROVIDED BY SPROULE Net to Pan Orient's 50.01-per-cent interest in Pan Orient Energy (Siam) Ltd.Present value -- after tax ($ million)Undiscounted5%10% 15%Proved10 99 8Probable 8 65 4Total proved plus probable1816 1413 Per Pan Orient share (note)$0.33 $0.29$0.25 $0.23 Note Per-share values were calculated based on 54,900,407 Pan Orient shares currently outstanding. SUMMARY OF THAILAND CRUDE OIL RESERVES AS OF DEC. 31, 2017, AS PROVIDED BY SPROULE Pan Orient Energy (Siam) Ltd. (with a 100-per-cent working interest in concession L53/48)Marketable reserves -- company gross (thousands of barrels)Light and medium oilHeavy oil Total Proved 461 84 545 Probable 450 98 548 Total proved plus probable 910183 1,093 SUMMARY OF THAILAND CRUDE OIL PROVED PLUS PROBABLE RESERVES ASOF DEC. 31, 2017, BY MAJOR FIELD AS PROVIDED BY SPROULE -- COMPANY GROSS (THOUSANDS OF BARRELS)Pan Orient Energy (Siam) Ltd. (with a 100-per-cent working interest in concession L53/48)ConcessionMajor fieldProved Probable Proved plus probableL53/48 L53A field 143130272 L53B field83100183 L53D field 174160334 L53G field 1441593035455481,093 RECONCILIATION OF CHANGES IN THAILAND CRUDE OIL RESERVES AS OFDEC. 31, 2017, AS PROVIDED BY SPROULE -- COMPANY GROSS (LIGHTAND MEDIUM OIL AND HEAVY OIL)Pan Orient Energy (Siam) Ltd. (with a 100-per-cent working interest in concession L53/48)(thousands of barrels)ProvedProbableProved plus probableDec. 31, 2016545 595 1,140Extensions - - -Improved recovery- - -Technical revision 185 (47)138Discoveries- - -Acquisitions - - -Dispositions - - -Economic factors - - -Production(185)-(185)Dec. 31, 2017545 548 1,093SUMMARY OF THAILAND NET PRESENT VALUES (AFTER INCOME TAX) ASOF DEC. 31, 2017, AS PROVIDED BY SPROULE Pan Orient Energy (Siam) Ltd. (with a 100-per-cent working interest in concession L53/48)Present value -- after tax ($ million) Undiscounted5% 10% 15%Poved21191816Probable 161310 9Total proved plus probable 36322825
Thailand concession L53/48 reserves evaluation as of Dec. 31, 2017, as provided by Sproule Pan Orient Energy (Siam) Ltd. (with a 100-per-cent working interest in concession L53/48):
Pan Orient Energy (Siam) Ltd. is the operator and 100-per-cent working interest owner of concession L53/48.Pan Orient holds a 50.01-per-cent equity interest in Pan Orient Energy (Siam) Ltd.Thailand reserves and values at Dec. 31, 2017, shown as 100-per-cent working interest of Pan Orient Energy (Siam) Ltd. represent a 100-per-cent working interest in concession L53/48.Reserves volumes reported above are company gross reserves, a classification of reserves used in the evaluation which represents production and reserves before deduction of royalties. The tables shown have assessed reserves at forecast crude oil reference prices and costs. The U.S.-dollar reference price for crude oil per barrel (U.S.-dollar United Kingdom Brent per barrel) is $58 for 2018, $67 for 2019, $72 for 2020, $75 for 2021, $76.50 for 2022 and prices increase at 2.0 per cent per year thereafter.Oil revenue for these reserves is based on 90 per cent of the forecast crude oil Brent reference price. Tables show assessed reserves with a foreign exchange rate of $1 to 79 U.S. cents for 2018, $1 to 82 U.S. cents for 2019, $1 to 85 U.S. cents thereafter. The capital cost inflation rate starting in 2019 is 2.0 per cent per year.The operating expense inflation rate starting in 2019 is 2.0 per cent per year. Estimated future undiscounted development costs, in nominal dollars, at Dec. 31, 2017, were $6.7-million for proved reserves and $11.5-million for proved plus probable reserves.Net present values after income tax are after deduction of the SRB (special remuneratory benefit tax) and income tax in Thailand.SRB tax rate is forecast to be 0 per cent per year based on the forecast oil rates and prices. Well abandonment and reclamation costs of $3.5-million for the proved plus probable case were included in this report and include abandonment and reclamation costs for all existing and future wells.No allowances for reclamation or salvage values were made.The net present values disclosed may not represent fair market value.Totals may not add exactly due to rounding.
About Pan Orient Energy Corp.
Pan Orient is a Calgary-based oil and gas exploration and production company with operations currently located onshore Thailand, Indonesia and in Western Canada.
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