Pan Orient Energy Corp.: 2019 First Quarter Financial & Operating Results

Source Press Release
Company Pan Orient Energy Corp. 
Tags Strategy - Upstream, Strategy - Corporate, Financial & Operating Data
Date May 15, 2019

Pan Orient Energy Corp. (“Pan Orient” or the “Company”) (POE – TSXV) reports 2019 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 Company is today filing its unaudited consolidated financial statements as at and for the three months ended March 31, 2019 and related management’s discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained online at  or the Company’s website,  .

Commenting today on Pan Orient’s 2019 first quarter results, President and CEO Jeff Chisholm stated: “2019 is shaping up to be one of the Company's best years in recent memory with strong cash flow from Concession L53 generated from the recent L53 DD oil field discovery supporting significant, potential exploration upside in Thailand that will commence in July 2019 and Indonesia exploration drilling that will commence in August 2019.”

HIGHLIGHTS

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

  • Two successful Thailand appraisal wells were drilled in the first quarter of 2019 as follow-up to the discovery of the Concession L53-DD field in the fourth quarter of 2018. The L53-DD Production License was approved on April 22nd and these two wells, plus the original L53-DD1 and L53-DD2 wells, were put on productionApril 25th. 
  • Net to Pan Orient’s 50.01% equity interest in the Thailand Joint Venture, oil production from Concession L53 averaged 1,412 BOPD during the 10 day period from April 27th to May 6th with 1,234 BOPD from the four L53-DD wells that commenced stable production on April 27, 2019.
  • Strong financial results in Thailand during the first quarter of 2019. Net to Pan Orient’s 50.01% equity interest in the Thailand Joint Venture, oil sales increased to 507 BOPD, adjusted funds flow from operations was $2.8 million ($60.35 per barrel) and working capital and long-term deposits at March 31, 2019 were $6.3 million.  

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

  • East Jabung Production Sharing Contract (“PSC”) received approval on January 11, 2019 for a four year exploration extension period to January 20, 2023 with a remaining area of 1,245.56 square kilometers, representing 20% of the original PSC area.
  • Construction of the access road and wellpad for the Anggun 1X exploration well at the East Jabung PSC in Indonesia is proceeding. The operator has advised that the estimated rig mobilization date is approximately July 1, 2019 with drilling to commence approximately August 1, 2019. 
  • On January 22, 2019 Pan Orient received the net $3.0 million refund from the Government of Indonesia relating to Pan Orient’s successful appeal of the 2013 and 2014 Land and Building Tax assessment,.

Corporate

  • Total corporate adjusted funds flow from operations in the first quarter of 2019 was $1.6 million ($0.03 per share), including Pan Orient’s 50.01% equity interest in the Thailand Joint Venture. 
  • The net loss attributable to common shareholders was $0.8 million ($0.02 loss per share) with a foreign exchange loss of $0.4 million on United States dollar holdings and higher expenses with respect to general and administrative expenses and stock-based compensation.
  • Pan Orient maintains 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, 2019 of $31.6 million and no long-term debt. In addition, Pan Orient’s 50.01% equity interest in the Thailand Joint Venture includes working capital and long-term deposits of $6.4 million and $2.2 million of equipment inventory to be utilized for future Thailand Joint Venture operations.
  • The normal course issuer bid has been renewed and Pan Orient is authorized to purchase, for cancellation, up to 4,504,064 of its common shares (10% of the public float) during the period of May 16, 2019 to May 16, 2020.
  • The Annual and Special Meeting of Shareholders will be held on July 4, 2019 in Calgary.

OUTLOOK

INDONESIA

East Jabung PSC, Onshore Sumatra (Pan Orient 49% ownership & Non Operator)
The Anggun-1X exploration well is expected to commence drilling approximately August 1, 2019. The estimated cost (dry hole) for the well is US$15.4 million (Pan Orient’s 49% share US$7.5 million). Approximately US$5.8 million (Pan Orient’s 49% share US$2.8 million) in capital expenditures have been recorded to date. A contingent multi-zone 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 50.01% ownership)
Current activities are focused on the L53-DD3 workover that will commence in three days and a multi-well exploration/appraisal drilling program that is expected to commence in late July to early August 2019, targeting exploration prospects offsetting the L53-DD field and appraisal drilling at L53-B. A second multi-well explorationdrilling program focused mainly in the L53-DD field area is anticipated in late 2019 to early 2020 subject to the timing of required Government of Thailand approvals. All exploration and development activities in 2019 are expected to be financed by Thailand working capital and Thailand adjusted funds flow from operations.

CANADA

Sawn Lake (Operated by Andora, in which Pan Orient has a 71.8% ownership) 
Since January 2019 the WTI reference price for crude oil has strengthened and the differential between WTI and the Western Canada Select reference price for heavy oil has narrowed. Pan Orient continues to work with joint venture partners towards potential commercial expansion to 3200 BOPD at the Sawn Lake, Alberta steam assisted gravity drainage (“SAGD”) project (in which Andora has a 50% working interest and is the operator) using Andora’s proprietary Produced Water Boiler. The level of stability in heavy oil prices will have a significant impact on any decision by the Sawn Lake partners regarding the timing and extent of investment in future development, and the ability to finance the project.

Corporate

Pan Orient maintains a strong cash balance, denominated mainly in United States dollar deposits, which allows the Company to conduct key exploration and development activities and ensure financial flexibility. The Company is continually reviewing its exploration and development asset portfolio in Indonesia, Thailand and Canada with the aim of maximizing corporate value and achieving the best allocation of resources. The next six months will be important in defining the go forward opportunities and strategies for Pan Orient based on drilling results in Indonesia and Thailand, and the evolving heavy oil situation in Canada.

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.

Financial and Operating Summary  Three Months
Ended
March 31, 
%
Change 
(thousands of Canadian dollars except where indicated)    2019      2018   
FINANCIAL       
Financial Statement Results – Excluding 50.01% Interest in Thailand Joint Venture (Note 1)       
Net loss attributed to common shareholders    (849    (338  151 
Per share – basic and diluted  $ (0.02  $ (0.01  151 
Cash flow used in operating activities (Note 2)    (2,449    (4,670  -48 
Per share – basic and diluted  $ (0.04  $ (0.09  -48 
Cash flow from (used in) investing activities (Note 2)    2,180      (1,573  -239 
Per share – basic and diluted  $  0.04    $ (0.03  -239 
Cash flow used in financing activities (Note 2)    (26      100 
Per share – basic and diluted  $  0.00        100 
Working capital    30,970      36,159    -14 
Working capital & non-current deposits    31,566      36,867    -14 
Long-term debt           
Shares outstanding (thousands)    54,900      54,900   
Capital Commitments (Note 3)    2,068      104    1888 
Working Capital and Non-current Deposits       
Beginning of period – Excluding Thailand Joint Venture    33,139      36,897    -10 
Adjusted funds flow from (used in) operations (excluding Thailand Joint Venture) (Note 4)    (1,172    116    -1110 
Consolidated capital expenditures (Note 5)    (705    (303  133 
Amounts received from Thailand Joint Venture    113      25    352 
Disposal of petroleum and natural gas assets (Note 6)        133    -100 
Finance lease payments    (26      100 
Effect of foreign exchange    217      (1  -21800 
End of period – Excluding Thailand Joint Venture    31,566      36,867    -14 
Pan Orient 50.01% interest in Thailand Joint Venture Working Capital and Non-Current Deposits    6,413      5,435    18 
Economic Results – Including 50.01% Interest in Thailand Joint Venture (Note 7)       
Total corporate adjusted funds flow from (used in) operations by region (Note 4)       
Canada (Note 8)    (1,179    244    -583 
Thailand (Notes 1 & 9)    (8    (13  -38 
Indonesia    15      (115  -113 
Adjusted funds flow from (used in) operations (excl. Thailand Joint Venture)    (1,172    116    -1110 
Share of Thailand Joint Venture (Note 7)    2,760      702    293 
Total corporate adjusted funds flow from operations    1,588      818    94 
Per share – basic and diluted  $  0.03    $ 0.01    189 
Capital Expenditures - Petroleum and Natural Gas Properties (Note 5)       
Canada (Note 8)    124      218    -43 
Indonesia    581      85    584 
Consolidated capital expenditures (excl. Thailand Joint Venture)    705      303    133 
Share of Thailand Joint Venture capital expenditures    2,678      466    475 
Total capital expenditures (incl. Thailand Joint Venture)    3,383      769    340 
Disposition - Petroleum and Natural Gas Properties (Note 6)        (133  -100 
Investment in Thailand Joint Venture       
Beginning of period    34,504      32,185   
Net income (loss) from Joint Venture    654      (191  -442 
Other comprehensive gain from Joint Venture    135       1,906    -93 
Amounts advanced to Joint Venture    (113    (25  352 
End of period    35,180      33,875   




  Three Months
Ended
March 31, 
(thousands of Canadian dollars except where indicated)    2019      2018    Change 
Thailand Operations       
Economic Results – Including 50.01% Interest in Thailand Joint Venture (Note 7)       
Oil sales (bbls)    45,601      16,370    179 
Average daily oil sales (BOPD) by Concession L53    507      182    178 
Average oil sales price, before transportation (CDN$/bbl)  $ 80.17    $ 75.50   
Reference Price (volume weighted) and differential       
  Crude oil (Brent $US/bbl)  $ 62.24    $ 66.92    -7 
  Exchange Rate $US/$Cdn    1.37      1.30   
  Crude oil (Brent $Cdn/bbl)  $ 85.25    $ 87.09    -2 
  Sale price / Brent reference price    94    87 
Adjusted funds flow from (used in) operations (Note 4)       
  Crude oil sales    3,656      1,236    196 
  Government royalty    (178    (60  197 
  Transportation expense    (103    (28  268 
  Operating expense    (449    (260  73 
  Field netback    2,926      888    230 
  General and administrative expense (Note 9)    (196    (194 
  Foreign exchange gain    22        2100 
  Thailand – Adjusted funds flow from operations    2,752      695    296 
Adjusted funds flow from (used in) operations / barrel (CDN$/bbl) (Note 4)       
  Crude oil sales  $ 80.17    $ 75.50   
  Government royalty    (3.90    (3.67 
  Transportation expense    (2.26    (1.71  32 
  Operating expense    (9.85    (15.88  -38 
  Field netback    64.17      54.24    18 
  General and administrative expense (Note 9)    (4.30    (11.85  -64 
  Foreign exchange gain    0.48      0.06    704 
  Thailand – Adjusted funds flow from operations  $ 60.35    $ 42.45    42 
Government royalty as percentage of crude oil sales     
Income tax & SRB as percentage of crude oil sales         
As percentage of crude oil sales       
  Expenses - transportation, operating, G&A and other    20    39  -19 
  Government royalty, SRB and income tax     
  Adjusted funds flow from operations, before interest income    75    56  19 
Wells drilled       
  Gross          100 
  Net    1.0        100 
Financial Statement Presentation
Results – Excl. 50.01% Interest in Thailand Joint Venture (Note 1) 
     
  General and administrative expense (Notes 9)    (8    (13  -38 
  Adjusted funds flow used in consolidated operations    (8    (13  -38 
Adjusted fund flow Included in Investment in Thailand Joint Venture       
  Net income (loss) from Thailand Joint Venture    654      (191  -442 
  Add back non-cash items in net loss    2,106      893    136 
  Adjusted funds flow from Thailand Joint Venture    2,760      702    293 
Thailand – Economic adjusted funds flow from operations (Note 7)    2,752      689    299 
Canada Operations (Note 8)       
Interest income    67      102    -34 
General and administrative expenses (Note 9)    (791    (514  54 
Realized foreign exchange gain        11    -100 
Unrealized foreign exchange gain (loss)    (455    645    -171 
  Canada – Adjusted funds flow from (used in) operations    (1,179    244    -583 
 Indonesia Operations       
General and administrative expense (Note 9)    (51    (70  -27 
Exploration expense        (1  -100 
Realized foreign exchange gain (loss)    66      (44  -250 
  Indonesia – Adjusted funds flow from (used in) operations    15      (115  -113 
Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd