CALGARY, ALBERTA–(Marketwired – March 3, 2015) – Pan Orient Energy Corp. (TSX VENTURE:POE), on behalf of its 71.8% owned subsidiary Andora Energy Corporation (“Andora”), is pleased to release the December 31, 2014 National Instrument 51-101 compliant resource evaluation for Andora’s oil sands project at Sawn Lake Alberta, Canada, as evaluated by Sproule Unconventional Limited (“Sproule”). The evaluation included all of Andora’s Oil Sands Leases at Sawn Lake based on exploitation using Steam Assisted Gravity Drainage (“SAGD”). This evaluation does not evaluate the exploitation potential through the use of cyclic steam stimulation.
Summary and Highlights of Sawn Lake, Alberta Contingent Resources as at December 31, 2014
SAGD Demonstration Project
Andora is focused on developing the bitumen resources at the Sawn Lake property in the Peace River Oil Sands Region using SAGD development. The first step towards determining the commercial viability of the SAGD recovery process at Sawn Lake is a demonstration project to establish that the SAGD process works in the Bluesky formation reservoir and to provide an indication of the productivity of the reservoir and the amount of steam injection required to produce the bitumen, which are key components in assessing the potential for SAGD development at Sawn Lake.
Andora is the operator and holds a 50% working interest in the demonstration project, located in the Central Block of Sawn Lake, which commenced in 2013. For Phase 1 of the SAGD demonstration project, one SAGD well pair was drilled in the fourth quarter of 2013 to a depth of 650 meters and a horizontal length of 780 meters. Construction of the SAGD facility for steam generation, water handling and bitumen treating was completed in 2014, steam injection commenced May 21, 2014 and bitumen production commenced September 16, 2014.
The results to date of the initial SAGD well pair indicate that the SAGD process works in the Bluesky formation reservoir. The well is still in its ramp-up phase and during February 2015 bitumen production averaged 293 barrels per day with an SOR of 5.6. Andora is now focused on reaching bitumen production of between 345 and 449 barrels of bitumen per day, with an associated SOR of between 4.0 and 3.1. These bitumen production parameters correspond to the Best and High case estimates used by Sproule in the December 31, 2014 contingent resource evaluation for the 16-30 -91-12W5M well pair which was drilled in a 15 to 20 meter thick reservoir with no bottom or top water. We expect the steam chamber to reach the top of the Bluesky formation sandstone reservoir in March 2015 and maximum production is anticipated to occur in approximately September 2015, corresponding to the end of the first year of production.
In January 2015, Andora and its joint venture partners made a decision to defer the drilling of a second SAGD well pair until there is greater clarity on the direction of future oil prices. Andora expects to continue producing from the existing SAGD well pair for the foreseeable future in order to obtain key reservoir performance inputs that will form the basis for future planning. Andora had working capital at December 31, 2014 of $8.1 million and no debt.
Production results to date are of course not necessarily indicative of long-term performance or of ultimate recovery and the Sawn Lake demonstration project has not yet proven that it is commercially viable.
Andora Sawn Lake, Alberta Interests at December 31, 2014 | ||||
Gross Sections | Working Interest | |||
South Block (Andora operated) | 16 | 100 | % | |
Central Block (Andora operated) | 12 | 50 | % | |
North Block (Andora operated) | 9 | 100 | % | |
North Block (non-operated) | 51 | 10 | % | |
88 | ||||
Summary of Canada Contingent Bitumen Resources as of December 31, 2014 as provided by Sproule | ||||
Marketable Resources – Company Gross (million barrels) | Andora | Pan Orient 71.8% | ||
Contingent – Low Estimate “1C” | 194.7 | 139.8 | ||
Contingent – Best Estimate “2C” | 214.4 | 153.9 | ||
Contingent – High Estimate “3C” | 251.0 | 180.2 |
Sawn Lake Oil Sands Project | |||||||
Summary of Net Present Values Before Tax as of December 31, 2014 | |||||||
Contingent Resources as provided by Sproule | |||||||
Andora 100% (Cdn$ million) | |||||||
0% | 5% | 10% | 15% | ||||
Contingent – Low Estimate “1C” | 3,990 | 1,230 | 361 | 42 | |||
Contingent – Best Estimate “2C” | 5,194 | 1,537 | 469 | 92 | |||
Contingent – High Estimate “3C” | 7,160 | 2,047 | 620 | 136 |
1 | Resources assessed at forecast crude oil reference prices and costs. | |
2 | The reference prices for crude oil per barrel (Western Canada Select WCS 20.5 API in Canadian dollars) are $60.50 for 2015, $75.13 for 2016, $84.52 for 2017, $85.79 for 2018, $87.07 for 2019, $89.31 for 2020 and increase at 1.5% per year thereafter. | |
3 | Oil revenue for these resources is on average $22.90 less than the associated Western Canada Select WCS 20.5 API reference price. | |
4 | The reference prices for natural gas (AECO-C Spot price per MMBTU in Canadian dollars) are $3.32 for 2015, $3.71 for 2016, $3.90 for 2017, $4.47 for 2018, $5.05 for 2019 and increase at approximately 1.5% to 1.7% per year thereafter. | |
5 | Future development costs for Contingent Resources which have been deducted in calculating the before tax NPV: | |
• | Low Estimate – CDN$2,183 million with the drilling of 389 gross well pairs and building facilities | |
• | Best Estimate – CDN$2,198 million with the drilling of 389 gross well pairs and building facilities | |
• | High Estimate – CDN$2,246 million with the drilling of 389 gross well pairs and building facilities | |
6 | The engineered values disclosed may not represent fair market value. | |
7 | There is no certainty that it will be commercially viable to produce any portion of the resources. | |
Sawn Lake Oil Sands Project | |||||||
Summary of Net Present Values Before Tax as of December 31, 2014 | |||||||
Contingent Resources as provided by Sproule | |||||||
Pan Orient 71.8% Interest in Andora (Cdn$ million) | |||||||
0% | 5% | 10% | 15% | ||||
Contingent – Low Estimate “1C” | 2,865 | 883 | 259 | 30 | |||
Contingent – Best Estimate “2C” | 3,729 | 1,103 | 337 | 66 | |||
Contingent – High Estimate “3C” | 5,141 | 1,470 | 445 | 97 |
1 | Resources assessed at forecast crude oil reference prices and costs. | |
2 | The reference prices for crude oil per barrel (Western Canada Select WCS 20.5 API in Canadian dollars) are $60.50 for 2015, $75.13 for 2016, $84.52 for 2017, $85.79 for 2018, $87.07 for 2019, $89.31 for 2020 and increase at 1.5% per year thereafter. | |
3 | Oil revenue for these resources is on average $22.90 less than the associated Western Canada Select WCS 20.5 API reference price. | |
4 | The reference prices for natural gas (AECO-C Spot price per MMBTU in Canadian dollars) are $3.32 for 2015, $3.71 for 2016, $3.90 for 2017, $4.47 for 2018, $5.05 for 2019 and increase at approximately 1.5% to 1.7% per year thereafter. | |
5 | Future development costs for Contingent Resources which have been deducted in calculating the before tax NPV: | |
• | Low Estimate – CDN$1,567 million with the drilling of 389 gross well pairs and building facilities | |
• | Best Estimate – CDN$1,578 million with the drilling of 389 gross well pairs and building facilities | |
• | High Estimate — CDN$1,613 million with the drilling of 389 gross well pairs and building facilities | |
6 | Results represent Pan Orient’s 71.8% interest in Andora. | |
7 | The engineered values disclosed may not represent fair market value. | |
8 | There is no certainty that it will be commercially viable to produce any portion of the resources. |
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.
[expand title=”Advisories & Contact”]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 includes, but is not limited to, references to: well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, and information on future production and project start-ups. 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.
Pan Orient Energy Corp.
Jeff Chisholm
President and CEO (located in Bangkok, Thailand)
jeff@panorient.ca
Pan Orient Energy Corp.
Bill Ostlund
Vice President Finance and CFO
(403) 294-1770
[/expand]