FOR: PAN ORIENT ENERGY CORP.
TSX VENTURE SYMBOL: POE
Date issue: May 18, 2017
Time in: 8:30 AM e
Attention:
CALGARY, ALBERTA–(Marketwired – May 18, 2017) – Pan Orient Energy Corp. (“Pan
Orient”) (TSX VENTURE:POE) reports 2017 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.
The Corporation is today filing its unaudited consolidated financial statements
as at and for the three months ended March 31, 2017 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.
Commenting today on Pan Orient’s 2017 first quarter results, President and CEO
Jeff Chisholm stated: “Despite the recent weather related delay to the
commencement of drilling of the AYU-1X exploration well at the East Jabung PSC
in Sumatra, Indonesia, significant progress has been made towards the drilling
of this prospect with the access road completed in March and the first phase of
rig mobilization started on May 8th”.
2017 FIRST QUARTER HIGHLIGHTS
/T/
— The AYU-1X exploration well at the Anggun prospect of the East Jabung
Production Sharing Contract (“PSC”) is estimated to commence drilling
late in the second quarter of 2017.
— The Batu Gajah PSC expired on January 15, 2017. Information on nearby
wells indicated that the Akeh-1 accumulation was much more complex and
substantially smaller than first believed and highly unlikely to achieve
commercial thresholds set by the Government of Indonesia, as a result,
Pan Orient elected not to drill the Akeh-2 appraisal well and allowed
the PSC to expire.
— Oil sales, net to Pan Orient’s 50.01% equity interest in the Thailand
Joint Venture, were 245 BOPD in the first quarter of 2017 and generated
$0.9 million in funds flow from operations ($40.79 per barrel).
— The 2017 Thailand capital program will include one exploration well and
a multi-well work-over program.
— Total corporate funds flow used in operations in the first quarter of
2017 was $0.2 million and the net loss attributable to common
shareholders was $1.5 million.
— Pan Orient continues to maintain a strong financial position for
upcoming planned exploration activities during 2017 at the East Jabung
PSC in Indonesia and at Concession L53 in Thailand with working capital
and non-current deposits at March 31, 2017 of $47.3 million and no long-
term debt.
/T/
2017 FIRST QUARTER OPERATING RESULTS
/T/
— Net loss attributable to common shareholders for the first quarter of
2017 was $1.5 million ($0.03 loss per share) compared to a net loss
attributable to common shareholders of $2.2 million ($0.04 per share) in
the first quarter of 2016.
— For the first quarter of 2017, the Company reported total corporate
funds flow used in operations, which includes the economic results of
the 50.01% equity interest in the Thailand joint venture, of $0.2
million ($0.04 loss per share). This compares with total corporate funds
flow from operations for the fourth quarter of 2016 of $1.2 million
($0.02 per share). This change is primarily due to a reduction in
foreign exchange losses and a recovery of income tax in Canada.
— Pan Orient reports capital expenditures of $0.9 million in the first
quarter of 2017, with $0.7 million in Indonesia at the East Jabung PSC
and $0.2 million in Canada related to the operations at the Sawn Lake
Steam Assisted Gravity Drainage (“SAGD”) project of Andora. In addition,
Pan Orient’s share of Thailand joint venture capital expenditures was
$0.1 million, which was recorded in Investment in Thailand Joint
Venture.
— At March 31, 2017 Pan Orient had $47.3 million of working capital and
non-current deposits. Working capital and non-current deposits consisted
of $44.4 million of cash, $4.3 million of non-current deposits, $0.1
million of Canadian taxes receivable, other receivables of $0.4 million
and net of accounts payable of $1.9 million. In addition, Pan Orient’s
Investment in Thailand Joint Venture includes $3.1 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 had outstanding capital commitments as at March 31, 2017 of
$2.0 million in Indonesia associated with the Company’s 49%
participating interest in the East Jabung PSC. In Canada, capital
commitments are $0.2 million with respect to contracted natural gas
pipeline tie-in and tariff charges associated with the Sawn Lake SAGD
demonstration project of Andora that continue until October 2018.
— Pan Orient renewed the normal course issuer bid in April 2017 and Pan
Orient is authorized to purchase, for cancellation, up to 4,512,964 of
its common shares during the period from April 12, 2017 to April 12,
2018. No common shares have been repurchased under the renewed normal
course issuer bid.
— Results Net to Pan Orient’s 50.01% Interest in the Thailand Joint
Venture for Concession L53
— Pan Orient holds a 50.01% equity interest in Pan Orient Energy
(Siam) Ltd. (“POS”) which is classified in the financial statements
as a jointly controlled Joint Venture and Pan Orient’s 50.01% equity
interest in the working capital, assets, capital expenditures,
liabilities and operations of POS are recorded as Investment in
Thailand Joint Venture.
— Average oil sales of 245 BOPD during the first quarter of 2017
generated $0.9 million in funds flow from operations, or $40.79 per
barrel. This compares to 290 BOPD in the fourth quarter of 2016 (a
16% decrease) and $37.30 per barrel in funds flow from operations (a
9% increase). The average realized sales price per barrel increased
from $60.22 in the fourth quarter of 2016 to $65.50 in the first
quarter of 2017.
— Per barrel amounts during the first quarter of 2017 represented a
realized price for oil sales of $65.50, transportation expenses of
$1.59, operating expenses of $10.77, general and administrative
expenses of $9.18 and a 5% royalty to the Thailand government of
$3.23. Oil sales revenue during this period was allocated 33% to
expenses for transportation, operating, and general &
administrative, 5% to the government of Thailand for royalties, and
62% to the Thailand Joint Venture. No Thailand petroleum income
taxes or Special Remuneratory Benefit tax was recorded during the
quarter.
— Oil sales in April 2017 at Concession L53 were 241 BOPD.
— POS received approval for the 1.96 square kilometer L53-B production
license in April 2017 and is currently about to commence the
approximately six month production Environmental Impact Assessment
that is required prior to the start of production.
— Indonesia
— At the East Jabung PSC, where Pan Orient is non-operator with a 49%
ownership interest, preparations are underway for the drilling of
the AYU-1X exploration well at the Anggun prospect pursuant to the
terms of the 2015 farm-out agreement. The access road was completed
in March and the first phase of rig mobilization started on May 8,
2017.
— Capital expenditures of $0.7 million during the first quarter of
2017 related to seismic reprocessing at the East Jabung PSC.
— The Batu Gajah PSC, where Pan Orient was operator with a 77%
ownership interest, expired on January 15, 2017. As a result, the
Company reported in the fourth quarter of 2016 a $102.3 million
impairment charge of Batu Gajah Exploration and Evaluation assets,
offset by a $22.6 million associated reduction in accumulated other
comprehensive income related to foreign currency translation
resulting in a net impairment expense of $79.7 million.
— Sawn Lake Alberta Heavy Oil (Operated by Andora, in which Pan Orient has
a 71.8% ownership)
— Andora is completing detailed engineering for its proprietary
Thermal System and Process for Producing Steam from Oilfield
Produced Water (“Produced Water Boiler”).
— An application for a potential expansion at the demonstration
project site to 3,200 BOPD was submitted in April 2016 and Andora is
awaiting approval of the application. It is expected that a
reactivation of the demonstration project facility and wellpair
would be part of a potential commercial expansion to 3,200 BOPD. The
expansion application requests the drilling of up to seven
additional SAGD wellpairs which are tied into the existing
demonstration project facility. The facility would be expanded to
generate the additional necessary steam, and it is anticipated that
additional steam generation would include the test installation of
Andora’s proprietary produced water boiler. Andora believes that its
produced water boiler could achieve significant benefits for Sawn
Lake SAGD field development. An expansion is dependent on regulatory
approval, completion of detailed engineering and a higher commodity
price environment to support project economics and financing.
— Capital expenditures for the Sawn Lake project during the first
quarter of 2017 were $0.2 million related to drilling of a core well
associated with lease retention, engineering design work associated
with the Produced Water Boiler, and capitalized expenses during the
quarter.
/T/
OUTLOOK
INDONESIA
East Jabung PSC, Onshore Sumatra Indonesia (Pan Orient 49% ownership & Non
Operator)
Drilling of the AYU-1X exploration well, the first exploration well at the
Anggun prospect of the East Jabung PSC, is now estimated to commence
approximately late in the second quarter of 2017. The results of the AYU-1X
exploration well will have a significant impact on Pan Orient’s future
strategy, which will be addressed upon completing analysis after the drilling
of the AYU-1X well.
THAILAND
Concession L53 Onshore (Pan Orient Energy (Siam) Ltd., in which Pan Orient has
50.01% ownership)
The 2017 Thailand capital program will include one exploration well in
approximately the third quarter of 2017 and well work-overs throughout the
remainder of the year.
CANADA
Sawn Lake (Operated by Andora, in which Pan Orient has a 71.8% ownership)
Pan Orient continues to move forward with long lead time steps towards
potential future development at Sawn Lake. It is recognized that the need for
stable crude oil prices, and specifically higher Western Canada Select
reference prices, will have a significant impact on any decision regarding the
timing and extent of future development. The first steps will be receiving
approval for the Sawn Lake expansion and completing detailed engineering for
Andora’s proprietary Produced Water Boiler.
Corporate
Pan Orient continues to maintain a strong cash balance denominated mainly in
United States dollar deposits that will allow the Company to conduct key
exploration and development activities and ensure financial flexibility. During
2017, Pan Orient will continue to review its worldwide exploration and
development asset portfolio with the aim of maximizing corporate value and the
best allocation of its significant financial resources. These activities range
from the potential divestment of existing assets to the ongoing screening of
new venture and corporate opportunities.
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 may
include, but is not limited to, references to: renewal, extension or
termination of oil concessions and production sharing contracts; other
regulatory approvals; well drilling programs and drilling plans; the benefits
of patented technology; estimates of reserves and potentially recoverable
resources, information on future production and project start-ups; potential
purchases of common shares under the normal course issuer bid; and sufficiency
of financial resources. 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.
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.
/T/
—————————
Three Months Ended
Financial and Operating Summary March 31,
——————-
(thousands of Canadian dollars except where %
indicated) 2017 2016 Change
—————————————————————————-
FINANCIAL
—————————————————————————-
Financial Statement Results – Excluding 50.01%
Interest in Thailand Joint Venture (Note 1)
Net loss attributed to common shareholders (1,514) (2,221) -32%
Per share – basic and diluted $ (0.03) $ (0.04) -31%
Cash flow from operating activities (Note 2) (1,730) (197) 778%
Per share – basic and diluted $ (0.03) $ (0.00) 100%
Cash flow used in investing activities (Note 2) (807) (2,340) -66%
Per share – basic and diluted $ (0.01) $ (0.04) -63%
Working capital 43,018 49,006 -12%
Working capital & non-current deposits 47,344 53,151 -11%
Long-term debt – –
Shares outstanding (thousands) 54,885 54,885 0%
Capital Commitments (Note 3) 2,212 2,635 16%
Contingencies (Note 4)
—————————————————————————-
Working Capital and Non-current Deposits
Beginning of period 49,818 79,160 -37%
Funds flow used in operations (excluding
Thailand Joint Venture) (1,085) (2,409) -55%
Special Distribution (Note 6) – (21,954) -100%
Consolidated capital expenditures (Note 7) (937) (1,626) -42%
Amounts advanced to Thailand Joint Venture 24 (20) -220%
Disposal of petroleum and natural gas assets
(Note 8) – 105 -100%
Settlement of decommissioning liabilities (430) – 100%
Foreign operations – unrealized foreign
exchange impact (46) (105) -56%
—————————
End of period 47,344 53,151 -11%
—————————————————————————-
—————————————————————————-
Economic Results – Including 50.01% Interest in
Thailand Joint Venture (Note 9)
Total corporate funds flow used in operations
(Note 5) (172) (2,066) -92%
Per share – basic and diluted $ (0.00) $ (0.04) -92%
Total corporate funds flow used in operations by
region (Note 5)
Canada (Note 10) (589) (2,189) -73%
Thailand (Notes 11) (15) (8) 88%
Indonesia (481) (212) 127%
—————————
Funds flow used in operations (excluding
Thailand Joint Venture) (1,085) (2,409) -55%
Share of Thailand Joint Venture (Note 9) 913 343 166%
—————————
Total corporate funds flow used in operations (172) (2,066) -92%
————————————————-===========================
Petroleum and natural gas properties
Capital expenditures (Note 7) 1,031 1,653 -38%
Disposition (Note 8) – (105) -100%
Capital Expenditures (Note 7)
Canada (Note 10) 235 1,071 -78%
Indonesia 702 555 26%
—————————
Consolidated capital expenditures 937 1,626 -42%
Share of Thailand Joint Venture capital
expenditures 94 27 248%
—————————
Total capital expenditures 1,031 1,653 -38%
—————————————————————————-
—————————————————————————-
Investment in Thailand Joint Venture
—————————————————————————-
Beginning of period 32,795 35,088 -7%
Net loss from Joint Venture (178) (558) -68%
Other comprehensive gain (loss) from Joint
Venture 723 (1,073) -167%
Amounts advanced to (received from) Joint
Venture (24) 20 -220%
—————————
End of period 33,316 33,477 0%
—————————————————————————-
—————————————————————————-
—————————
Three Months Ended
March 31,
——————-
(thousands of Canadian dollars except where
indicated) 2017 2016 Change
—————————————————————————-
Thailand Operations
—————————————————————————-
Economic Results – Including 50.01% Interest in
Thailand Joint Venture from February 2, 2015
onwards (Note 9)
Oil sales (bbls) 22,014 24,442 -10%
Average daily oil sales (BOPD) by Concession L53 245 269 -9%
Average oil sales price, before transportation
(CDN$/bbl) $ 65.50 $ 37.07 77%
Reference Price (volume weighted) and
differential
Crude oil (Brent $US/bbl) $ 53.72 $ 33.53 60%
Exchange Rate $US/$Cdn 1.35 1.40 -4%
Crude oil (Brent $Cdn/bbl) $72.58 $ 47.05 54%
Sale price / Brent reference price 90% 79% 15%
Funds flow from (used in) operations (Note 5)
Crude oil sales 1,442 906 59%
Government royalty (71) (45) 58%
Transportation expense (35) (36) -3%
Operating expense (237) (300) -21%
—————————
Field netback 1,099 525 109%
General and administrative expense (Note 12) (202) (191) 6%
Interest income 1 -100%
Foreign exchange loss 1 – 100%
—————————
Thailand – Funds flow from operations 898 335 168%
—————————
—————————
Funds flow from (used in) operations / barrel
(CDN$/bbl) (Note 5)
Crude oil sales $ 65.50 $ 37.07 77%
Government royalty (3.23) (1.84) 75%
Transportation expense (1.59) (1.47) 8%
Operating expense (10.77) (12.27) -12%
—————————
Field netback 49.92 21.48 132%
General and administrative expense (Note 12) (9.18) (7.81) 17%
Interest Income – 0.04 -100%
Foreign exchange loss 0.05 – 100%
—————————
Thailand – Funds flow from operations $ 40.79 $ 13.71 198%
—————————
—————————
Government royalty as percentage of crude oil
sales 5% 5% 0%
Income tax & SRB as percentage of crude oil sales – – 0%
As percentage of crude oil sales
Expenses – transportation, operating, G&A and
other 33% 58% -25%
Government royalty, SRB and income tax 5% 5% 0%
Funds flow from operations, before interest
income 62% 37% 25%
—————————————————————————-
Financial Statement PresentationResults –
Excluding 50.01% Interest in Thailand Joint
Venture from February 2, 2015 onwards (Note 1)
General and administrative expense (Notes 11 &
12) (15) (8) 88%
—————————
Funds flow from (used in) consolidated
operations (15) (8) 88%
—————————
—————————
Fund flow Included in Investment in Thailand
Joint Venture
Net loss from Thailand Joint Venture (178) (558) -68%
Add back non-cash items in net loss 1,091 901 21%
—————————
Funds flow from Thailand Joint Venture 913 343 166%
—————————
—————————
Thailand – Economic funds flow from operations
(Note 9) 898 335 168%
—————————————————————————-
—————————————————————————-
Canada Operations (Note 10)
—————————————————————————-
Interest income 59 46 28%
General and administrative expenses (Note 12) (560) (467) 20%
Foreign exchange loss (236) (1,187) -80%
Current income tax 148 (581) -125%
—————————
Canada – Funds flow used in operations (589) (2,189) -73%
—————————————————————————-
Indonesia Operations
—————————————————————————-
General and administrative expense (Note 12) (499) (170) 194%
Exploration expense (Note 13) (5) (114) -96%
Foreign exchange gain 23 72 -68%
—————————
Indonesia – Funds flow used in operations (481) (212) 127%
—————————————————————————-
—————————————————————————-
(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
unaudited Interim Condensed Consolidated Financial Statements of Pan
Orient Energy Corp.
(3) Refer to Commitments in Note 11 of the March 31, 2017 Notes to the
unaudited Interim Condensed Consolidated Financial Statements and Note
10 of the March 31, 2016 Notes to the unaudited Interim Condensed
Consolidated Financial Statements.
(4) Refer to Contingencies in Note 12 of the March 31, 2017 Notes to the
unaudited Interim Condensed Consolidated Financial Statements and Note
11 of the March 31, 2016 Notes to the unaudited Interim Condensed
Consolidated Financial Statements.
(5) Total corporate funds flow from operations is cash flow from operating
activities prior to changes in non-cash working capital and
decommissioning expenditures plus the corresponding amount from the
Thailand operations which is recorded in Joint Venture for financial
statement purposes. This measure 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.
(6) On February 16, 2016, the Company paid a return of capital special
distribution of $0.40 per share to common shareholders.
(7) Cost of capital expenditures, excluding decommissioning provision and
the impact of changes in foreign exchange rates.
(8) In 2016, the joint venture partners in Andora’s Sawn Lake SAGD
demonstration project purchased the SAGD reservoir data.
(9) For the purpose of providing more meaningful economic results from
operations for Thailand, and for comparison to previous periods, the
amounts presented include 50.01% of results of the Thailand Joint
Venture.
(10) The Sawn Lake project in Alberta has not yet proven that it is
commercially viable and all related costs and revenues are being
capitalized as exploration and evaluation assets until commercial
viability is achieved.
(11) The nominal amount of G&A shown in the first quarters of 2016 and 2017
for Thailand operations related to G&A of the holding company of Pan
Orient Energy (Siam) Ltd.
(12) General & administrative expenses, excluding non-cash accretion on
decommissioning provision and stock-based payments.
(13) Exploration expense relates to exploration costs associated with the
Citarum and Batu Gajah PSCs in Indonesia.
(14) Tables may not add due to rounding.
/T/
– END RELEASE – 18/05/2017
For further information:
Pan Orient Energy Corp.
Jeff Chisholm
President and CEO (located in Bangkok, Thailand)
jeff@panorient.ca
OR
Pan Orient Energy Corp.
Bill Ostlund
Vice President Finance and CFO
(403) 294-1770, Extension 233
COMPANY:
FOR: PAN ORIENT ENERGY CORP.
TSX VENTURE SYMBOL: POE
INDUSTRY: Energy and Utilities – Oil and Gas
RELEASE ID: 20170518CC0024
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