2021 Third Quarter Financial & Operating Results
CALGARY, November 10, 2021
Pan Orient Energy Corp. (“Pan Orient” or the “Company”) (POE – TSXV) reports 2021 third 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 Company is today filing its unaudited consolidated financial statements as at and for the nine months ended September 30, 2021 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.
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 nine months of 2021 were 1,385 BOPD, with 1,179 BOPD from the L53-DD field.
➢ Adjusted Thailand funds flow from operations after tax of $5.3 million ($41.45 per barrel) in the third quarter of 2021 increased 6% compared with $5.0 million ($39.60 per barrel) in the second quarter of 2021. Per barrel amounts during the third quarter of 2021 were a realized price for oil sales of $87.55, transportation expenses $2.36, operating expenses $5.21, general and administrative expenses $1.68, foreign exchange loss and other $0.18, a 5% royalty to the Thailand government $4.67 and income tax $32.00. Oil sales revenue during this period was allocated 11% to expenses for transportation, operating, and general & administrative, 42% to the government of Thailand for royalties & income tax, and 47% to the Thailand Joint Venture.
➢ Thailand adjusted funds flow from operations of $14.7 million in the first nine months of 2021 funded $5.0 million of Thailand exploration and development activities and dividends paid to Pan Orient from the Thailand Joint Venture of $8.6 million. Pan Orient’s share of working capital and long-term deposits in Thailand at September 30, 2021 was $5.3 million.
Indonesia East Jabung Production Sharing Contract (Pan Orient is non-operator with a 49% ownership interest)
➢ The East Jabung Production Sharing Contract (“PSC”) expired in January 2020 and the operator is determining final steps to be taken for formal approval of the expiry from the Government of Indonesia. The estimated cost by the operator for abandonment and reclamation of the East Jabung PSC is US$0.7 million (Cdn$0.9 million) net to Pan Orient’s 49% interest.
➢ Activities of the Company in Indonesia are reported in 2020 and 2021 as discontinued operations. Discontinued operations in Indonesia for 2021 were $168 thousand of expenses and $7 thousand of unrealized foreign exchange gains on currency exchange rates since the end of 2020. In addition, during the third quarter of 2021 the Company recorded $0.6 million in the current decommissioning expense for discontinued operations related to the East Jabung PSC. The total provision recorded for abandonment and reclamation for East Jabung PSC at September 30, 2021 is $0.9 million.
Sawn Lake (Operated by Andora Energy Corporation, in which Pan Orient has a 71.8% ownership)
➢ For the first nine months of 2021, Pan Orient reports total operating expenses of $220 thousand associated with the Sawn Lake suspended SAGD facility and wellpair. In addition, the estimated decommissioning provision for Sawn Lake was reduced by $0.9 million during the third quarter of 2021 based on an assessment of Sawn Lake by a specialized third-party reclamation company.
➢ Corporate adjusted funds flow from operations (including Pan Orient’s 50.01% equity interest in the Thailand Joint Venture) was $5.0 million ($0.10 per share) in the third quarter and a total of $12.3 million ($0.24 per share) for the first nine months of 2021. The increase in the third quarter from $3.9 million ($0.08 per share) in the second quarter of 2021 was primarily due to a $0.3 million increase in Pan Orient’s equity interest in Thailand Joint Venture adjusted funds flow from operations and unrealized foreign exchange gain on Canadian cash holdings denominated in US dollars.
➢ Net income attributable to common shareholders for the first nine months of 2021 was $5.5 million ($0.11 income per share). This compares to a net loss attributable to common shareholders for the first nine months of 2020 of $59.2 million ($1.12 loss per share), with a net $57.6 million impairment charge for the Sawn Lake, Alberta Exploration and Evaluation assets at March 31, 2020.
➢ Pan Orient repurchased 1,950,100 common shares in the first nine months of 2021, at an average price of $0.87 per share, for $1.7 million. The Company repurchased 87,100 shares in the third quarter at an average price of $1.09 per share. Common shares outstanding at September 30, 2021, and currently, are 49.8 million.
➢ Pan Orient is in a strong financial position with working capital and non-current deposits of $28.4 million, mainly comprised of cash and cash equivalents held in Canada, and no long-term debt at September 30, 2021. In addition, the Thailand Joint Venture has $5.3 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 increase the Company’s cash balance during the remainder of 2021.
Concession L53 Onshore (Pan Orient Energy (Siam) Ltd., in which Pan Orient has 50.01% ownership)
We are now focused on a series of workovers, that with success will define new reserves in the AA2 sand, which had no reserves attributed to it at year-end 2020. In addition, an updated reservoir simulation is underway that will incorporate: 1) updated production data, 2) some AA sand model changes made in response to observed production performance, and 3) the addition of the AA1 and AA2 sands into the model. No further drilling is anticipated in 2021.
The Company has started a process to accelerate shareholder value given the mid to late stage development of Thailand, the desire to allocate no further funds to the Sawn Lake asset, and strength in current oil prices. It is expected this process will involve both the Thailand assets and the Sawn Lake, Canada assets, and be completed by mid-2022. Discussions for both assets are currently underway with interested parties. It seems most likely that no individual potential purchaser is interested in both assets due to their contrasting nature, and that distinct transactions are the more likely outcome. It is intended that the proceeds from any potential sale of any of the assets will be returned to Pan Orient shareholders through a return of capital.
Based on this new direction, the Company announced on October 28th that it plans to pay a $0.40 per share special distribution to shareholders, subject to shareholder and regulatory approval. The distribution is intended to be a return of capital, which would require shareholder approval of a reorganization of the Company’s share capital. Pan Orient anticipates that the required annual and special meeting of shareholders will be held in mid-January 2022. If approved by shareholders, the record date for the determination of shareholders entitled to receive the distribution would be set and the distribution paid in early-February 2022.
It is currently proposed that in the period after the sale of the Company’s oil and gas interests, and the distribution of the vast majority of cash to shareholders, the Company will continue to pursue international oil and gas opportunities with a substantially scaled down cost structure.
The operations in Thailand of Pan Orient Energy (Siam) Ltd. (“POS”) continue to be somewhat affected by the worldwide COVID-19 coronavirus pandemic. The Thailand government imposed a state of emergency in late March 2020, giving it wide-ranging powers to address the crisis. Domestic travel restrictions have now been eased and restrictions on fully vaccinated foreigners entering Thailand are being reduced. Prudent measures have been taken by POS to help protect the health and safety of staff, which are of paramount importance. Fortunately, POS in Thailand was able to complete its initial three well 2021 appraisal drilling program. POS and Pan Orient are well-positioned to withstand these unprecedented events. The Company is optimistic about a return to normal operations and continued strength in world oil prices.
Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand and Western Canada.
This news release contains forward-looking information. Forward-looking information is generally identifiable by the terminology used, such as “expect”, “believe”, ”plans”, estimate”, “should”, “anticipate” and “potential” or other similar wording. Forwardlooking information in this news release includes, but is not limited to, references express or implied to; well drilling and workover programs; the scope of an updated reservoir simulation; the initiation of a process to accelerate shareholder value; a planned special cash distribution to shareholders and the timing and manner of that distribution; and the Company’s intentions regarding operations after the sale of its oil and gas interest and distribution of cash to shareholders. 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, regulatory and legal requirements, shareholder opinions and voting results, availability of other oil and gas opportunities 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.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Pan Orient Energy Corp.
Jeff Chisholm, President and CEO (located in Bangkok, Thailand)
- or –
Bill Ostlund, Vice President Finance and CFO
Telephone: (403) 294-1770, Extension 233