Mr. Jeff Chisholm reports
PAN ORIENT ENERGY CORP.: 2018 FIRST QUARTER FINANCIAL & OPERATING RESULTS
Pan Orient Energy Corp. has released 2018 first quarter consolidated financial and operating results.
The company has filed its unaudited consolidated financial statements as at and for the three months ended March 31, 2018, and related management's discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained on-line on SEDAR or the company's website.
Commenting today on Pan Orient's 2018 first quarter results, president and chief executive officer Jeff Chisholm stated: "The first quarter of 2018 activities in Thailand saw a successful multiwell workover program and progress toward a two-well drilling program (one exploration and one appraisal well) that is expected to commence in the fourth quarter of 2018. Given the current high oil prices and success of the just-completed workover program, plans have just been completed for an additional three-well workover program that is expected to commence in July, 2018. In Indonesia, permitting activities related to the drilling of the Anggun-1X exploration well continue with the exact timing of a key permit approval expected to be better defined within the next few weeks. Upon receipt of this permit approval, road construction will commence immediately. The commencement of drilling Anggun-1X has been revised by the operator to October, 2018, with further possible revisions based on the timing of the approval of the key permit described above. The stage is currently being set for an active second half of 2018 with drilling in both Thailand and Indonesia."
2018 first quarter highlights:
Oil sales, net to Pan Orient's 50.01-per-cent equity interest in the Thailand joint venture, were 182 barrels of oil per day (bbl/d) in the first quarter of 2018, with funds flow from operations of $700,000 ($42.45 per barrel). The multiwell workover program has been completed and oil sales in April increased to 256 bbl/d, net to Pan Orient's 50.01-per-cent equity interest. Total corporate funds flow from operations in the first quarter of 2018 was $800,000, including Pan Orient's 50.01-per-cent equity interest in the Thailand joint venture, and the net loss attributable to common shareholders was $300,000. Pan Orient has a strong financial position for the planned exploration activities at the East Jabung PSC in Indonesia and at Concession L53 in Thailand with working capital and non-current deposits at March 31, 2018, of $36.9-million and no long-term debt.
2018 first quarter results:
Net loss attributable to common shareholders for the first quarter of 2018 of $300,000 (one-cent loss per share) compared with $600,000 (one-cent loss per share) in the fourth quarter of 2017. For the first quarter of 2018, the company recorded total corporate funds flow from operations, which includes the economic results of the 50.01-per-cent interest in the Thailand joint venture, of $800,000 (one cent per share) compared with $500,000 (one cent per share) in the fourth quarter of 2017. Pan Orient had limited capital expenditures in the first quarter of 2018 as preparations are under way in Indonesia for drilling of the Anggun-1X exploration well, and as Pan Orient's 71.8-per-cent subsidiary, Andora Energy Corp., continues to work toward a potential commercial expansion at the Sawn Lake SAGD property of Andora after receiving regulatory approval in December, 2017. Capital expenditures of $300,000 incurred in the first quarter of 2018, with $100,000 in Indonesia associated with the East Jabung PSC, and $200,000 in Canada at Sawn Lake. In addition, Pan Orient's share of Thailand joint venture capital expenditures was $500,000 primarily for the multiwell workover program, which was recorded in the investment in Thailand joint venture. At March 31, 2018, Pan Orient had $36.9-million of working capital and non-current deposits. Working capital and non-current deposits consisted of $32.1-million cash, $5.7-million of Indonesian and Canadian accounts and taxes receivable, $700,000 of non-current deposits, and less accounts payable of $1.6-million. In addition, Pan Orient's investment in Thailand joint venture includes $5.4-million of Thailand working capital and non-current deposits and $2.0-million of equipment inventory to be utilized for future Thailand joint venture operations. Pan Orient renewed its normal course issuer bid in April, 2018, and Pan Orient is authorized to purchase, for cancellation, up to 4,514,494 of its common shares during the period from April 30, 2018, to April 30, 2019. No common shares have been repurchased under this renewed normal course issuer bid. Results net to Pan Orient's 50.01-per-cent interest in the Thailand joint venture for Concession L53:Average oil sales of 182 bbl/d during the first quarter of 2018 and generated $700,000 in funds flow from operations, or $45.42 per barrel. This compares with 233 bbl/d in the fourth quarter of 2017 and $42.01 per barrel in funds flow from operations. The average realized sales price per barrel increased 7 per cent from $70.80 in the fourth quarter of 2017 to $75.50 in the first quarter of 2018. Per barrel amounts during the first quarter of 2018 were a realized price for oil sales of $75.50, transportation expenses of $1.71, operating expenses of $15.88, general and administrative expenses of $11.85 and a 5-per-cent royalty to the Thailand government of $3.67. Oil sales revenue during this period was allocated 39 per cent to expenses for transportation, operating, and general and administrative, 5 per cent to the government of Thailand for royalties, and 56 per cent to the Thailand joint venture. No Thailand petroleum income taxes or special remuneratory benefit tax were recorded during the quarter.
Outlook
Indonesia
East Jabung, PSC, Onshore Sumatra (Pan Orient 49-per-cent ownership and non-operator)
Drilling of the Anggun-1X exploration well is estimated to commence in about October, 2018, subject to permit approval timing described earlier, with an estimated cost (dry hole) of $15.4 (U.S.) (Pan Orient's 49-per-cent share $7.55-million (U.S.)). A contingent multizone testing program will also be conducted if justified by drilling results.
Thailand
Concession L53 Onshore (Pan Orient Energy (Siam) Ltd., in which Pan Orient has a 50.01-per-cent ownership)
Concession L53 is benefiting from the strengthening of world crude oil prices and continues to generate funds flow from operations as a low-cost operation and limited capital expenditures. The remaining 2018 Thailand capital program is expected to include one exploration well and an appraisal well at L53-B with drilling commencing in the fourth quarter. On the basis of strong oil prices and the success of the first multiwell workover program, a second three-well workover program will commence in July, 2018.Exploration and development activities in 2018 are expected to be financed by Thailand working capital and funds flow from operations.
Canada
Sawn Lake (operated by Andora, in which Pan Orient has a 71.8-per-cent ownership)
Pan Orient continues to move forward toward potential commercial expansion to 3,200 bbl/d at the Sawn Lake, Alta., steam assisted gravity drainage project (in which Andora has a 50-per-cent working interest and is the operator) using Andora's proprietary Produced Water Boiler. The potential expansion has an estimated cost of approximately $50-million to $60-million (on a 100-per-cent working interest basis) and bitumen production would commence about 24 months after an investment decision by Andora and its partners. Although the West Texas Intermediate reference price for crude oil has strengthened and the differential between WTI and the Western Canada Select reference price for heavy oil has narrowed in recent months, it is recognized that stable heavy oil prices will have a significant impact on any decision by the Sawn Lake partners regarding the timing and extent of future development, and the ability to finance the project.
Corporate
Pan Orient is maintaining a strong cash balance, denominated mainly in United-States-dollar deposits, to conduct key exploration and development activities and ensure financial flexibility. With an asset portfolio in Indonesia, Thailand and Canada, Pan Orient constantly reviews its exploration and development asset portfolio in with the aim of maximizing corporate value and achieving the best allocation of resources.
Pan Orient is a Calgary-based oil and gas exploration and production company with operations currently located onshore Thailand, Indonesia and in Western Canada.
FINANCIAL AND OPERATING SUMMARY(thousands of Canadian dollars except where indicated)Three months ended March 31,20182017FinancialFinancial statement results -- excluding 50.01 per centinterest in Thailand joint ventureNet (loss) attributed to common shareholders $(338)$(1,514)Per share -- basic and diluted (0.01)(0.03)Cash flow used in operating activities(4,670) (1,730)Per share -- basic and diluted (0.09)(0.03)Cash flow used in investing activities(1,573) (807)Per share -- basic and diluted$(0.03) $(0.01)Working capital 36,15943,018Working capital and non-current deposits36,86747,344Long-term debt - -Capital commitments104 2,212Working capital and non-current depositsBeginning of period 36,89749,818Funds flow from (used in) operations (excluding Thailand joint venture)116(1,085)Consolidated capital expenditures (303) (937)Amounts advanced to Thailand joint venture2524Disposal of petroleum and natural gas assets 133 -Settlement of decommissioning liabilities-(430)Effect of foreign exchange(1)(46)End of period 36,867Economic results -- including 50.01-per-cent interest in Thailand joint ventureTotal corporate funds flow from (used in) operations by regionCanada 244(589)Thailand (13)(15)Indonesia (115) (481)Funds flow from (used in) operations (excluding Thailand joint venture)116(1,085)Share of Thailand joint venture702 913Total corporate funds flow from (used in) operations 818(172)Per share -- basic and diluted $0.01$(0.00)Capital expenditures -- petroleum and natural gas propertiesCanada 218 235Indonesia 85 702Consolidated capital expenditures (excluding Thailand joint venture) 303 937Share of Thailand joint venture capital expenditures 46694Total capital expenditures (including Thailand joint venture)769 1,031Disposition -- petroleum and natural gas properties (133)-Investment in Thailand joint ventureBeginning of period 32,18532,795Net (loss) from joint venture (191) (178)Other comprehensive gain from joint venture1,906 723Amounts received from joint venture(25)(24)End of period 33,87533,316
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