Press Release: PAN ORIENT ENERGY CORP. - 2022 Second Quarter Financial & Operating Results

Dow Jones2022-08-10

PAN ORIENT ENERGY CORP. - 2022 Second Quarter Financial & Operating Results

Canada NewsWire

CALGARY, AB, Aug. 10, 2022

CALGARY, AB, Aug. 10, 2022 /CNW/ - Pan Orient Energy Corp. ("Pan Orient" or the "Company") (TSXV: POE) reports 2022 second 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 six months ended June 30, 2022 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.

Commenting today on Pan Orient's 2022 second quarter results, President and CEO Jeff Chisholm stated: "The Pan Orient sale transaction is progressing smoothly into the August 23, 2022 shareholder vote. Pan Orient management and directors recommend that shareholders support this transaction given the late stage development of the Thailand L53 asset."

HIGHLIGHTS

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 second quarter of 2022 were 1,124 
      BOPD compared with 1,105 BOPD in the first quarter of 2022. 
 
   -- Thailand adjusted funds flow from operations of $7.6 million ($73.93 per 
      barrel) in the second quarter of 2022 compared with $5.7 million ($57.19 
      per barrel) in the first quarter of 2022. The average realized oil price 
      per barrel increased 27% in the second quarter of 2022 to $156.27 per 
      barrel compared with $122.67 in the first quarter of 2022. 
 
   -- In the first half of 2022, Thailand adjusted funds flow from operations 
      of $13.2 million funded $2.5 million of Thailand exploration and 
      development activities. Working capital and long-term deposits, net to 
      Pan Orient's 50.01% equity interest in the Thailand Joint Venture, at 
      June 30, 2022 was $12.7 million. 

Sawn Lake (Operated by Andora Energy Corporation, in which Pan Orient has a 71.8% ownership)

   -- In March 2022, Andora entered into an agreement with a joint venture 
      partner at Sawn Lake whereby Andora acquired certain assets and assumed 
      certain liabilities at Sawn Lake. Through the transaction, Andora 
      increased its working interest in the Sawn Lake joint venture to 75%. 
 
   -- The March 31, 2022 Contingent Bitumen Resources Report ("Resources 
      Report"), a National Instrument 51-101 compliant resources evaluation for 
      Andora's oil sands interests at Sawn Lake Alberta based on exploitation 
      using Steam Assisted Gravity Drainage ("SAGD") as evaluated by Sproule 
      Associates Limited, assigned unrisked "Best Estimate" contingent 
      resources for Andora of 292.0 million barrels of bitumen recoverable 
      (209.6 million barrels net to Pan Orient's 71.8% interest in Andora) and 
      unrisked "Best Estimate" net present value, discounted at 15%, for 
      Andora's interests of $192 million on an after-tax basis ($138 million 
      net to Pan Orient's 71.8% interest in Andora). The Sawn Lake operations 
      are currently suspended and awaiting restart and commercial expansion. 
      Contingent resources are those quantities of petroleum estimated, as of a 
      given date, to be potentially recoverable from known accumulations by the 
      application of development projects, but which are not currently 
      considered to be commercially recoverable due to one or more 
      contingencies. The contingent resources volumes estimated in the 
      Resources Report are considered contingent until such time as there are 
      additional delineation wells confirming reservoir quality and continuity, 
      refinement of the commercial development plan, regulatory approval for 
      full field development, corporate commitment to move forward and 
      financing for commercial development. There is uncertainty that it will 
      be commercially viable to produce any portion of the reported contingent 
      resources volumes. Please refer to Pan Orient's press release of June 13, 
      2022 for additional information. 
 
   -- Western Canada Select reference prices for heavy oil remained strong in 
      the second quarter of 2022. At August 8, 2022, the price for Western 
      Canada Select was Cdn$91.34 per barrel and the forward market for Western 
      Canada Select in 2024 was Cdn$79.13 per barrel. Andora is considering 
      alternatives to restart the existing steam SAGD facility and wellpair at 
      Sawn Lake and move the Sawn Lake project forward with minimum development 
      costs to Andora, including partnership, farmout, sourcing additional 
      funds, partial sale or outright sale, and achieve value for shareholders. 
 
   -- For the first half of 2022, Pan Orient reports total operating expenses 
      of $171 thousand associated with the Sawn Lake suspended SAGD facility 
      and wellpair. 

Corporate

   -- On June 6, 2022 Pan Orient announced that it had entered into an 
      agreement to be acquired by a subsidiary of Dialog Group Berhad 
      ("Dialog") and for Pan Orient's non-Thailand business to be transferred 
      to CanAsia Energy Corp. ("CanAsia"), a new company to be owned by Pan 
      Orient shareholders (the "Arrangement"). Upon completion of the 
      transaction, a holder of a common share of Pan Orient will receive, for 
      each such common share, cash consideration of USD $0.788 and one common 
      share of CanAsia. The cash consideration is approximately CAD $1.01 at 
      the current exchange rate.As a result of the Arrangement: (a) Dialog, 
      through a subsidiary, will hold all of the issued and outstanding Pan 
      Orient shares, and Pan Orient will continue to own Pan Orient's Thailand 
      business; (b) Pan Orient shareholders (other than dissenting 
      shareholders) will receive, through a series of steps, for each Pan 
      Orient share held, a cash payment of USD $0.788 and one CanAsia share; 
      and (c) CanAsia will be a new public company with its shares expected to 
      be listed on the TSX Venture Exchange ("TSXV") (subject to satisfaction 
      of the conditions of the TSXV), that will own Pan Orient's non-Thailand 
      business, which includes: Pan Orient's 71.8% interest in Andora Energy 
      Corporation, which has interests in oil sands properties in Sawn Lake, 
      Alberta; convertible loans receivable from Andora; Pan Orient's interests 
      in Indonesia, which operations are, effective January 1, 2020, considered 
      discontinued operations for accounting purposes; and working capital and 
      long term deposits, estimated to be approximately $6.7 million. The 
      estimate of working capital and long-term deposits has been reduced to 
      reflect changes in foreign exchange rates and higher transaction expenses, 
      mainly legal fees.Completion of the Arrangement is subject to certain 
      conditions, including approval of the Pan Orient shareholders, final 
      approval of the Court of Queen's Bench of Alberta and conditional 
      approval of the delisting of the Pan Orient shares and listing of the 
      CanAsia shares by the TSXV. If all conditions to the completion of the 
      Arrangement are satisfied or waived, Pan Orient anticipates that the 
      Arrangement will become effective on or about August 25, 2022. 
 
   -- Net income attributable to common shareholders for the second quarter of 
      2022 was $4.8 million ($0.10 per share) compared with net income 
      attributable to common shareholders for the first quarter of 2022 of $3.5 
      million ($0.07 per share). Corporate adjusted funds flow from operations 
      (including Pan Orient's 50.01% equity interest in the Thailand Joint 
      Venture) in the second quarter of 2022 were $6.1 million ($0.12 per 
      share) compared with $4.5 million ($0.09 per share) in the first quarter 
      of 2022. 
 
   -- Common shares outstanding were 49.8 million at June 30, 2022. 
 
   -- Pan Orient paid a $0.40 per common share return of capital distribution 
      to shareholders on February 10, 2022 following shareholder approval on 
      January 18, 2022. The total amount of the distribution was $19.9 million. 
 
   -- Pan Orient maintains a strong financial position with working capital and 
      non-current deposits of $12.8 million and no long-term debt at June 30, 
      2022. In addition, the Thailand Joint Venture has $12.7 million in 
      working capital and long-term deposits, net to Pan Orient's 50.01% equity 
      interest. 

OUTLOOK

A special meeting of Pan Orient shareholders to vote on the Arrangement and other matters will be held on Tuesday, August 23, 2022. If all conditions to the completion of the Arrangement are satisfied or waived, Pan Orient anticipates that the Arrangement will become effective on or about August 25, 2022.

The Arrangement is an opportunity for Pan Orient shareholders to realize value for their investment in Pan Orient while continuing to participate, through CanAsia, in the Sawn Lake heavy oil project and potential exploration and development activities in Thailand through an anticipated future bid round for new oil concessions

Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand and Western Canada.

Cautionary Statements

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August 10, 2022 08:30 ET (12:30 GMT)

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