CALGARY, ALBERTA–(Marketwired – April 9, 2015) – Pan Orient Energy Corp. (“Pan Orient”) (TSX VENTURE:POE) reports 2014 year-end and fourth 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 net to Pan Orient unless otherwise stated.
The Corporation is today filing its audited consolidated financial statements as at and for the year ended December 31, 2014 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 2014 results, President and CEO Jeff Chisholm stated: “Because of a series of initiatives undertaken by management in 2014 to de-risk the Company’s portfolio and reduce future capital commitments, including the sale of a 50% interest in Thailand Concession L53, the Company is currently in the enviable position of being cash and opportunity rich.”
HIGHLIGHTS
2014 RESULTS
OUTLOOK
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 includes, but is not limited to, references to: renewal, extension or termination of oil concessions and production sharing contracts, well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, information on future production and project start-ups, and negotiation, agreement, closing and financing and other terms of farmout and other transactions. 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.
Financial and Operating Summary | Three Months Ended December 31, |
Twelve Months Ended December 31, |
Change | |||
(thousands of Canadian dollars except where indicated) | 2014 | 2013 | 2014 | 2013 | ||
FINANCIAL | ||||||
Oil revenue, before royalties and transportation expense | 3,708 | 8,880 | 23,583 | 32,196 | -27% | |
Funds flow from operations (Note 1) | 543 | 5,598 | 13,231 | 22,596 | -41% | |
Per share – basic and diluted | $ 0.01 | $ 0.10 | $ 0.23 | $ 0.40 | -42% | |
Funds flow from (used in) operations by region (Note 1) | ||||||
Canada (Note 10) | (206) | 79 | (888) | (157) | 466% | |
Thailand | 1,447 | 6,272 | 16,162 | 24,209 | -33% | |
Indonesia | (698) | (753) | (2,043) | (1,456) | 40% | |
Total | 543 | 5,598 | 13,231 | 22,596 | -41% | |
Cash flow from (used in) operating activities (Note 2) | (302) | 4,734 | 12,362 | 21,675 | -43% | |
Per share – basic and diluted | ($0.01) | $0.08 | $0.22 | $0.38 | -43% | |
Net loss attributed to common shareholders | (1,793) | 7,083 | (2,488) | (93,362) | -97% | |
Per share – basic and diluted | $ (0.03) | $ 0.13 | $ (0.04) | $ (1.64) | -97% | |
Working capital | 36,227 | 45,635 | 36,227 | 45,635 | -21% | |
Working capital & non-current deposits | 40,854 | 47,889 | 40,854 | 47,889 | -15% | |
Long-term debt | – | – | – | – | 0% | |
Petroleum and natural gas properties | ||||||
Capital expenditures (Note 3) | 4,254 | 11,144 | 22,609 | 101,280 | -78% | |
Dispositions (Note 14) | – | (1,239) | (2,698) | (1,239) | 118% | |
Shares outstanding (thousands) | 56,760 | 56,760 | 56,760 | 56,760 | 0% | |
Funds Flow from (used in) Operations per Barrel (Note 1) | ||||||
Canada operations | $ (4.37) | $ 0.89 | $ (3.71) | $ (0.49) | 657% | |
Thailand operations | 30.72 | 70.79 | 67.49 | 74.79 | -10% | |
Indonesia operations | (14.83) | (8.50) | (8.52) | (4.50) | 90% | |
$ 11.52 | $ 63.18 | $ 55.26 | $ 69.80 | -21% | ||
Capital Expenditures (Note 3) | ||||||
Canada (Note 10) | 2,666 | 4,634 | 11,265 | 8,061 | 40% | |
Thailand | 864 | 1,765 | 4,780 | 40,209 | -88% | |
Indonesia | 724 | 4,745 | 6,564 | 53,010 | -88% | |
Total | 4,254 | 11,144 | 22,609 | 101,280 | -78% | |
Working Capital and Non-current Deposits | ||||||
Beginning of period | 44,573 | 40,879 | 47,889 | 116,376 | -59% | |
Funds flow from operations (Note 1) | 543 | 5,598 | 13,231 | 22,596 | -41% | |
Proceeds from 2012 sale of Thailand interests | (152) | – | 22 | – | 100% | |
Capital expenditures (Note 3) | (4,254) | (11,144) | (22,609) | (101,280) | -78% | |
Disposal of petroleum & natural gas assets (Note 14) | – | 1,239 | 2,698 | 1,239 | 118% | |
Settlement of decommissioning liabilities | – | – | (225) | – | 100% | |
Recovery of 2012 taxes (Note 4) | – | 12,458 | – | 14,243 | -100% | |
Accrued relinquishment costs | – | (513) | – | (3,246) | -100% | |
Foreign exchange impact on working capital | 144 | (628) | (152) | (2,169) | -93% | |
Net proceeds on share transactions | – | – | – | 130 | -100% | |
End of period | 40,854 | 47,889 | 40,854 | 47,889 | -15% | |
Canada Operations (Note 11) | ||||||
Interest income | 35 | 135 | 241 | 787 | -69% | |
General and administrative expense (Note 5) | (268) | (427) | (1,803) | (1,429) | 26% | |
Current income tax recovery | – | 185 | – | 437 | -100% | |
Realized foreign exchange gain | 27 | 186 | 674 | 48 | 1304% | |
Funds flow from (used in) operations (Note 1) | (206) | 79 | (888) | (157) | 466% | |
Wells drilled – Andora Energy Corporation | ||||||
Gross | – | 2 | – | 2 | -100% | |
Net | – | 1.0 | – | 1.0 | -100% | |
Thailand Operations (Note 7) | ||||||
Oil sales (bbls) | 47,118 | 88,603 | 239,453 | 323,676 | -26% | |
Average daily oil sales (BOPD) for Concession L53 | 512 | 963 | 656 | 887 | -26% | |
Average oil sales price, before transportation (Cdn$/bbl) | $ 78.70 | $ 100.22 | $ 98.49 | $ 99.47 | -1% | |
Reference Price (volume weighted) and differential | ||||||
Crude oil (Brent $US/bbl) | $ 77.09 | $ 109.02 | $ 100.98 | $ 108.31 | -7% | |
Exchange Rate $US/$Cdn | 1.14 | 1.05 | 1.11 | 1.03 | 8% | |
Crude oil (Brent $Cdn/bbl) | $ 87.67 | $ 115.04 | $ 112.36 | $ 112.37 | 0% | |
Sale price / Brent reference price | 90% | 87% | 88% | 89% | -2% | |
Funds flow from operations (Note 1) | ||||||
Crude oil sales | 3,708 | 8,880 | 23,583 | 32,196 | -27% | |
Government royalty | (182) | (438) | (1,161) | (1,590) | -27% | |
Transportation expense | (79) | (142) | (394) | (513) | -23% | |
Operating expense | (925) | (1,547) | (3,613) | (4,294) | -16% | |
Field netback | 2,522 | 6,753 | 18,415 | 25,799 | -29% | |
General and administrative expense (Note 5) | (739) | (491) | (1,932) | (1,625) | 19% | |
Interest income | 24 | 10 | 40 | 37 | 8% | |
Current income tax | (1) | – | (2) | (2) | 0% | |
Concession L53 – Funds flow from operations | 1,806 | 6,272 | 16,521 | 24,209 | -32% | |
Concession L45 – Exploration expense (Note 6 & 16) | (359) | – | (359) | – | 100% | |
Thailand Funds flow from operations | 1,447 | 6,272 | 16,162 | 24,209 | -33% | |
Concession L53 Funds flow from operations / barrel (Cdn$/bbl) (Note 1) | ||||||
Crude oil sales | $ 78.70 | $ 100.22 | $ 98.49 | $ 99.47 | -1% | |
Government royalty | (3.86) | (4.94) | (4.85) | (4.91) | -1% | |
Transportation expense | (1.68) | (1.60) | (1.65) | (1.58) | 4% | |
Operating expense | (19.63) | (17.46) | (15.09) | (13.27) | 14% | |
Field netback | 53.53 | 76.22 | 76.90 | 79.71 | -4% | |
General and administrative expense (Note 5) | (15.68) | (5.54) | (8.07) | (5.02) | 61% | |
Interest Income | 0.51 | 0.11 | 0.17 | 0.11 | 55% | |
Current income tax | (0.02) | – | (0.01) | (0.01) | 0% | |
Concession L53 – Funds flow from operations | $ 38.34 | $ 70.79 | $ 68.99 | $ 74.79 | -8% | |
Government royalty as percentage of crude oil sales | 5% | 5% | 5% | 5% | 0% | |
SRB as percentage of crude oil sales | 0% | 0% | 0% | 0% | 0% | |
Income tax as percentage of crude oil sales | 0% | 0% | 0% | 0% | 0% | |
As percentage of crude oil sales | ||||||
Expenses – transportation, operating, G&A and other | 47% | 25% | 25% | 20% | 5% | |
Government royalty, SRB and income tax | 5% | 5% | 5% | 5% | 0% | |
Funds flow from operations, before interest income | 48% | 70% | 70% | 75% | -5% | |
Wells drilled | ||||||
Gross | – | – | 1 | 13 | -92% | |
Net | – | – | 1.0 | 13.0 | -92% | |
Indonesia Operations | ||||||
General and administrative expense (Note 5) | (615) | (665) | (1,547) | (1,482) | -4% | |
Exploration expense (Note 6) | (47) | – | (362) | – | 100% | |
Realized foreign exchange gain (loss) | (36) | (88) | (134) | 26 | -612% | |
Indonesia – Funds flow used in operations | (698) | (753) | (2,043) | (1,456) | 40% | |
Wells drilled | ||||||
Gross | – | – | – | 3 | -100% | |
Net | – | – | – | 3.0 | -100% | |
Year Ended December 31, |
Change | |||||
(thousands of Canadian dollars except where indicated) | 2014 | 2013 | ||||
RESERVES AND CONTINGENT RESOURCES | ||||||
Onshore Thailand – Concession L53 (Pan Orient 100% working interest & operator as at December 31, 2014) (Refer Subsequent Event Note 7) | (Note 8) | (Note 9) | ||||
Proved oil reserves (thousands of barrels) | 435 | 621 | -30% | |||
Proved plus probable oil reserves (thousands of barrels) | 1,166 | 1,509 | -23% | |||
Net present value of proved + probable reserves, after tax discounted at 10% | 33,100 | 56,120 | -41% | |||
Per Pan Orient share – basic (Note 10) | $ 0.58 | $ 0.99 | -41% | |||
Onshore Thailand – Concession L53 (Pan Orient 50% share of December 31, 2014 reserves (Refer Subsequent Event Note 7) | (Note 8) | |||||
Proved oil reserves (thousands of barrels) | 218 | |||||
Proved plus probable oil reserves (thousands of barrels) | 583 | |||||
Net present value of proved + probable reserves, after tax discounted at 10% | 16,550 | |||||
Per Pan Orient share – basic (Note 10) | $ 0.29 | |||||
Canada (Pan Orient’s 71.8% share of the oil sands leases of Andora at Sawn Lake, Alberta) | (Note 12) | (Note 13) | ||||
Contingent Bitumen Resources – Best Estimate “2C” (thousands of barrels) (Note 14) | 153,900 | 153,900 | 0% | |||
Net Present value, before tax discounted at 10% | 336,500 | 400,000 | -16% | |||
Per Pan Orient share – basic (Note 10) | $ 5.93 | $ 7.05 | -16% | |||
Net present value, before tax discounted at 15% | 66,400 | 115,000 | -42% | |||
Per Pan Orient share – basic (Note 10) | $ 1.17 | $ 2.03 | -42% | |||
Net Present value, after tax discounted at 10% | 213,700 | 261,700 | -18% | |||
Per Pan Orient share – basic (Note 10) | $ 3.76 | $ 4.61 | -18% | |||
Net present value, after tax discounted at 15% | 9,200 | 44,900 | -80% | |||
Per Pan Orient share – basic (Note 10) | $ 0.16 | $ 0.79 | -80% | |||
INTERNATIONAL INTERESTS AT DECEMBER 31, 2014 | ||||||
All amounts reflect Pan Orient’s interest | Status | Net Square Kilometers | December 31, 2014 Financial Commitments (Cdn thousands) |
2014 Avg. Production (BOPD) | P+P Reserves (thousands of barrels) | |
Onshore Thailand Concession | ||||||
L53/48 (Pan Orient 100% working interest & operator as at December 31, 2014) (Note 15 and Subsequent Event Note 7) | Partially developed | 975 | $ 120 | to January 2016 | 656 | 1,166 |
Onshore Indonesia PSCs | ||||||
Citarum PSC, West Java (97% interest & operator) (Note 16 & 17) | Undeveloped | 861 | Commitments to date have been completed | |||
Batu Gajah PSC, South Sumatra (77% interest & operator) (Note 16 & 18) | Undeveloped | 610 | Commitments to date have been completed | |||
East Jabung PSC, South Sumatra (100% interest & operator) (Note 19 & 20) | Undeveloped | 2,948 | $ 9,180 | to November 2015 | ||
3,809 | $ 9,180 | |||||
Total for Thailand and Indonesia | 4,784 | $ 9,300 | ||||
(1) | Funds flow from operations (cash flow from operating activities prior to changes in non-cash working capital, decommissioning expenditures and excluding the recovery of prior year income taxes) 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. |
(2) | As set out in the Consolidated Statements of Cash Flows in the audited Consolidated Financial Statements of Pan Orient Energy Corp. |
(3) | Cost of capital expenditures, excluding decommissioning provision and the impact of changes in foreign exchange rates. |
(4) | The current income tax recovery in 2013 is the result of losses on loans made to the Company’s subsidiaries which hold the South CPP and Citarum Production Sharing Contracts in Indonesia. The 2013 losses are being carried back and applied to 2012’s gain on the sale of the Company’s Thailand interests to recover the related taxes paid. The current income tax recovery in 2013 is based on management’s application of current income tax laws and subject to audit by the Canadian taxation authorities. |
(5) | General & administrative expenses, excluding non-cash accretion on decommissioning provision and stock-based payments. |
(6) | Exploration expense relates to exploration costs associated with the Citarum and South CPP PSCs in Indonesia and Concession L45/50 in Thailand. The South CPP PSC in Indonesia and Concession L45/50 in Thailand were terminated in 2014. |
(7) | On February 2, 2015 the Company completed the sale of a 50% equity interest in its subsidiary Pan Orient Energy (Siam) Ltd. for a cash price of USD $42.5 million, before adjustments, which includes working capital adjustment of USD $2.4 million. Pan Orient Energy (Siam) Ltd. holds the Company’s 100% interest in Concession L53/48 in Thailand. |
(8) | Thailand reserves as at December 31, 2014 as evaluated by Sproule International Limited of Calgary assessed at forecast crude oil reference prices and costs. The US$ reference price for crude oil per barrel (US$ UK Brent per barrel) in the evaluation is $68.00 for 2015, $83.00 for 2016, $93.00 for 2017, $94.40 for 2018, $95.81 for 2019, $97.25 for 2020 and prices increase at 1.5% per year thereafter. Foreign exchange rate used of Cdn$1=US$0.85 for 2015 and Cdn$1=US$0.87 thereafter. The engineered values disclosed may not represent fair market value. |
(9) | Thailand reserves as at December 31, 2013 as evaluated by Sproule International Limited of Calgary assessed at forecast crude oil reference prices and costs. The US$ reference price for crude oil per barrel (US$ UK Brent per barrel) in the evaluation is $96.00 for 2014, $91.25 for 2015, $86.54 for 2016, $94.28 for 2017, $95.70 for 2018, $97.13 for 2019 and prices increase at 1.5% per year thereafter. Foreign exchange rate used of Cdn$1=US$0.94. The engineered values disclosed may not represent fair market value. |
(10) | Per share values calculated based on 56,760,307 Pan Orient Shares outstanding at December 31, 2014 and December 31, 2013. |
(11) | The Sawn Lake Demonstration 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. |
(12) | Pan Orient’s 71.8% share as at December 31, 2014 of the “Best Case” contingent resources of Andora, a private company as evaluated by Sproule Unconventional Limited assessed at forecast crude oil reference prices and costs. The reference prices for crude oil per barrel (Western Canada Select WCS 20.5 API in Canadian dollars) is $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 prices for the reference price (WCS) increase at 1.5% per year thereafter. Undiscounted future capital expenditures for Pan Orient’s 71.8% share are estimated at $1,578 million. The engineered values disclosed may not represent fair market value and there is no certainty that it will be commercially viable to produce any portion of the resources. |
(13) | Pan Orient’s 71.8% share as at December 31, 2013 of the “Best Case” contingent resources of Andora, a private company as evaluated by Sproule Unconventional Limited assessed at forecast crude oil reference prices and costs. The reference price for crude oil per barrel (Western Canada Select WCS 20.5 API in Canadian dollars) is $77.81 for 2014, $75.02 for 2015, $75.29 for 2016, $85.36 for 2017, $86.64 for 2018, and prices for the reference price (WCS) increase at 1.5% per year thereafter. Undiscounted future capital expenditures for Pan Orient’s 71.8% share are estimated at $1,558 million. The engineered values disclosed may not represent fair market value and there is no certainty that it will be commercially viable to produce any portion of the resources. |
(14) | In March 2014, the 3% gross overriding royalty (“GORR”) on a portion of the non-owned working interests in 36.5 sections was repurchased by a joint venture partner for $2.7 million, the price Andora paid for the GORR in 2007, as part of an agreement with joint venture partners that enabled the joint venture partners to fund their 50% share of the demonstration project and allow the demonstration project to move forward. |
(15) | At December 31, 2014 Concession L53/48 in Thailand consisted of 975 square kilometers of lands of which 20.26 square kilometers associated with the L53-A, L53-D and L53-G fields are held through production licenses (with a 20 year primary term plus an additional 10 year renewal period that can be applied for) and 955.74 square kilometers of exploration lands. The original term of the exploration lands ended on January 7, 2013 and the Company has renewed the exploration period for a further three years to January 7, 2016. Additionally, the concessionaire may apply to retain a “reserved area” of up to 12.5% of the original area of the exploration block for a period of up to five years with the payment of a surface reservation fee. The original area of the Concession L53/48 exploration block was 3,997 square kilometers. |
(16) | Pan Orient’s share of commitments in Indonesia reflect amounts to be paid by Pan Orient in respect of a Production Sharing Contract (“PSC”), including the share of carried interest partners (3% for Citarum and 23% for Batu Gajah). Commitments in Indonesia include the completion of a work program as well as the Company’s estimated amount of the expenditure. Financial commitments as provided above represent management’s assessment of the costs of the work program required under the initial 3-year firm commitment exploration period of the PSC. The work program commitment is based on the original contract and timing is subject to Government of Indonesia (“GOI”) approval. With respect to the East Jabung PSC, the extension of this initial exploration period has been agreed to with the GOI to the date indicated above. If Pan Orient exercises its options to continue beyond the initial exploration period, additional commitments will be determined on a year-by-year basis through submission of a work program and approval from the GOI. Although extension of the exploration period is a departure from the original contract, it is considered standard practice in Indonesia. |
(17) | Pan Orient has a 97% interest in the Citarum PSC, which has an area of 887.99 square kilometers and which expires in October 2015. |
(18) | Pan Orient has a 77% interest in the Batu Gajah PSC, which has an area of 791.71 square kilometers. |
(19) | In November 2014 Pan Orient entered into an agreement for the transfer of a 51% direct working interest and operatorship of the East Jabung PSC for a consideration of an upfront cash payment of USD$8 million, a firm commitment to fund the first USD$10 million towards the first exploration well in addition to all related G&A and overhead costs incurred by the operator until the first USD$10 million expenditure has been completed, and a Pan Orient option to acquire a 20% working interest another South Sumatra Joint Study Area. There is also a contingent commitment to fund the first USD$5 million towards an appraisal well, if justified, in addition to all associated G&A and overhead incurred by the operator until the first USD$5 million expenditure has been completed. The transaction is subject only to GOI approval on transferring the working interest and operatorship of the PSC and is anticipated to close upon the receipt of this approval by approximately June 2015. There is no certainty that such approvals will be received on a timely basis, or at all. |
(20) | The Company relinquished the East Jabung PSC’s offshore area of 3,279.96 square kilometers in 2013, and this relinquishment was finalized in 2014. The result of the relinquishment does not impact the PSC’s onshore exploration activities. As at December 31, 2014 Pan Orient had a 100% interest in the East Jabung PSC, which had an area of 2,947.76 square kilometers. |
(21) | Tables may not add due to rounding. |
Pan Orient Energy Corp.
Jeff Chisholm, President and CEO
(located in Bangkok, Thailand)
Email: jeff@panorient.ca
Bill Ostlund, Vice President Finance and CFO
Telephone: (403) 294-1770, Extension 233