CALGARY, ALBERTA–(Marketwired – March 23, 2017) – Pan Orient Energy Corp. (“Pan Orient”) (TSX VENTURE:POE) reports 2016 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.
The Corporation is today filing its audited consolidated financial statements as at and for the year ended December 31, 2016 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 2016 results, President and CEO Jeff Chisholm stated: “While 2016 was a difficult year for the industry as a whole, Pan Orient weathered the storm by virtue of a very strong balance sheet, large cash position, low cost and high net back onshore Thailand oil production and made progress towards providing shareholders potentially substantial near term growth at the East Jabung PSC in Indonesia with the completion of the permitting process and the start of road and well pad construction for the upcoming AYU-1 exploration well. We now look forward to the drilling of AYU-1 which is anticipated to commence in late April after a modest delay in construction activities due to very heavy rain”.
2016 HIGHLIGHTS
Indonesia
Thailand
Sawn Lake, Canada (Pan Orient’s 71.8% subsidiary Andora owns a 50% working interest and is the operator)
Corporate
2016 FOURTH QUARTER OPERATING RESULTS
The financial statements reflect that on February 2, 2015 the Company sold a 49.99% equity interest in its subsidiary Pan Orient Energy (Siam) Ltd. (“POS”) and retained a 50.01% equity interest. From February 2, 2015 forward the retained 50.01% equity interest is reclassified as a jointly controlled Joint Venture and Pan Orient’s 50.01% equity interest in the working capital, assets, capital expenditures, liabilities and operations of POS are recorded as Investment in Thailand Joint Venture.
OUTLOOK
INDONESIA
East Jabung PSC, Onshore Sumatra Indonesia (Pan Orient 49% ownership & Non Operator)
Drilling of the AYU-1 exploration well, the first exploration well at the Anggun prospect of the East Jabung Production Sharing Contract (“PSC”), is estimated to commence in late-April 2017. Construction of the five kilometer access road has been completed and well pad construction is underway. Exploration success with AYU-1 could have a significant impact on Pan Orient. With the expiry of the Batu Gajah PSC, Pan Orient will have substantially reduced overhead and G&A in Indonesia.
THAILAND
Concession L53 Onshore (Pan Orient Energy (Siam) Ltd., in which Pan Orient has 50.01% ownership)
Concession L53 has continued to generate funds flow from operations throughout 2016 due to its low cost structure. Exploration activities in 2017 are expected to be financed by Thailand working capital and funds flow from operations. The 2017 Thailand capital program, soon to be finalized with partners, will include at least one exploration well and a multi-well work-over program.
CANADA
Sawn Lake (Operated by Andora, in which Pan Orient has a 71.8% ownership)
Pan Orient continues to move forward with steps towards potential future development at Sawn Lake. It is recognized that higher crude oil prices, and specifically higher Western Canada Select reference prices, will have a significant impact on any decision regarding the timing of future development. The first steps will be receiving approval for the Sawn Lake expansion and completing detailed engineering for its proprietary Produced Water Boiler.
Corporate
The Company maintains a strong financial position to conduct key exploration and development activities in all three countries during 2017 and ensure financial flexibility. Pan Orient continues to review its worldwide exploration and development asset portfolio with the aim of maximizing corporate value and the best allocation of a substantial net cash balance that is in excess of future capital commitments. These activities range from the potential divestment of existing assets to the ongoing screening of new venture opportunities.
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; other regulatory approvals; well drilling programs and drilling plans; the benefits of patented technology; 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; potential purchases of common shares under the normal course issuer bid; and sufficiency of financial resources. 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) | 2016 | 2015 | 2016 | 2015 | |||||||
FINANCIAL | |||||||||||
Financial Statement Results – Excluding 50.01% Interest in Thailand Joint Venture from February 2, 2015 onwards (Note 1) | |||||||||||
Net income (loss) attributed to common shareholders | (78,149 | ) | (3,980 | ) | (82,837 | ) | 29,053 | -385 | % | ||
Per share – basic and diluted | $ (1.42 | ) | $ (0.07 | ) | $ (1.51 | ) | $ 0.52 | -390 | % | ||
Cash flow from operating activities (Note 2) | 82 | 80 | 8,620 | 1,439 | 499 | % | |||||
Per share – basic and diluted | $ 0.00 | $ 0.00 | $ 0.16 | $ 0.03 | 424 | % | |||||
Cash flow from (used in) investing activities (Note 2) | (65 | ) | (6,057 | ) | (5,864 | ) | 40,342 | -115 | % | ||
Per share – basic and diluted | $ (0.00 | ) | $ (0.11 | ) | $ (0.11 | ) | $ 0.72 | -115 | % | ||
Working capital | 45,447 | 74,901 | 45,447 | 74,901 | -39 | % | |||||
Working capital & non-current deposits | 49,818 | 79,160 | 49,818 | 79,160 | -37 | % | |||||
Long-term debt | – | – | – | – | 0 | % | |||||
Shares outstanding (thousands) | 54,885 | 54,885 | 54,885 | 54,885 | 0 | % | |||||
Capital commitments (Note 3) | 2,318 | 2,399 | 2,318 | 2,399 | 59 | % | |||||
Contingencies (Note 4) | |||||||||||
Working Capital and Non-current Deposits | |||||||||||
Beginning of period | 49,945 | 81,128 | 79,160 | 40,854 | 94 | % | |||||
Corporate funds flow from (used in) operations (Note 6) | 251 | 558 | (3,778 | ) | 1,088 | -447 | % | ||||
Special distribution | – | – | (21,954 | ) | – | 100 | % | ||||
Funds flow from sale of Thailand interest | – | – | – | 48,877 | -100 | % | |||||
Working capital and non-current deposits derecognized on sale of Thailand interest and recorded in Investment in Joint Venture | – | – | – | (3,151 | ) | -100 | % | ||||
Consolidated capital expenditures (Note 8) | (431 | ) | (4,301 | ) | (3,905 | ) | (17,055 | ) | -77 | % | |
Amounts received from Thailand Joint Venture | 40 | 1,391 | 172 | 1,293 | -87 | % | |||||
Disposal of petroleum and natural gas assets (Note 9) | 56 | – | 161 | 9,764 | -98 | % | |||||
Normal course issuer bid | – | – | – | (2,691 | ) | -100 | % | ||||
Foreign operations – unrealized foreign exchange gain (loss) | (43 | ) | 384 | (38 | ) | 181 | -121 | % | |||
End of period | 49,818 | 79,160 | 49,818 | 79,160 | -37 | % | |||||
Economic Results – Including 50.01% Interest in Thailand Joint Venture from February 2, 2015 onwards (Note 5) | |||||||||||
Total corporate funds flow from (used in) operations (Note 6) | 1,249 | 1,837 | (1,301 | ) | 4,676 | -128 | % | ||||
Per share – basic and diluted | $ 0.02 | $ 0.03 | $ (0.02 | ) | $ 0.08 | -130 | % | ||||
Corporate funds flow from (used in) operations by region (Note 6) | |||||||||||
Canada (Note 7) | 255 | 1,063 | (2,424 | ) | 4,222 | -157 | % | ||||
Thailand – 100% to February 1, 2015 (Note 1) | (2 | ) | 19 | (29 | ) | 305 | -110 | % | |||
Indonesia | (2 | ) | (524 | ) | (1,325 | ) | (3,439 | ) | -61 | % | |
Funds flow from (used in) consolidated operations | 251 | 558 | (3,778 | ) | 1,088 | -447 | % | ||||
Share of funds flow from Thailand Joint Venture (Note 5) | 998 | 1,279 | 2,477 | 3,588 | -31 | % | |||||
Total corporate funds flow from (used in) operations | 1,249 | 1,837 | (1,301 | ) | 4,676 | -128 | % | ||||
Funds flow from sale of Thailand interest | – | – | – | 48,877 | -100 | % | |||||
Petroleum and natural gas properties | |||||||||||
Capital expenditures (Note 8) | 1,444 | 4,538 | 5,400 | 20,997 | -74 | % | |||||
Dispositions – excluding sale of Thailand interest (Note 9) | (56 | ) | – | (161 | ) | (9,764 | ) | -98 | % | ||
Capital Expenditures (Note 8) | |||||||||||
Canada (Note 7) | 176 | 703 | 1,980 | 4,669 | -58 | % | |||||
Thailand – 100% to February 1, 2015 (Note 1) | – | – | – | 60 | -100 | % | |||||
Indonesia | 255 | 3,598 | 1,925 | 12,326 | -84 | % | |||||
Consolidated capital expenditures | 431 | 4,301 | 3,905 | 17,055 | -77 | % | |||||
Share of Thailand Joint Venture capital expenditures | 1,013 | 237 | 1,495 | 3,942 | -62 | % | |||||
Total capital expenditures | 1,444 | 4,538 | 5,400 | 20,997 | -74 | % | |||||
Investment in Thailand Joint Venture | |||||||||||
Beginning of period | 33,316 | 36,328 | 35,088 | – | 100 | % | |||||
Investment retained on sale of Thailand interest | – | – | – | 38,587 | -100 | % | |||||
Net loss from Joint Venture | (226 | ) | (928 | ) | (1,542 | ) | (1,992 | ) | -23 | % | |
Other comprehensive gain (loss) from Joint Venture | (255 | ) | 1,078 | (579 | ) | (214 | ) | 171 | % | ||
Amounts received from Joint Venture | (40 | ) | (1,391 | ) | (172 | ) | (1,293 | ) | -87 | % | |
End of period | 32,795 | 35,088 | 32,795 | 35,088 | -7 | % | |||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||
(thousands of Canadian dollars except where indicated) | 2016 | 2015 | 2016 | 2015 | Change | ||||||
Thailand Operations | |||||||||||
Economic Results – Including 50.01% Interest in Thailand Joint Venture from February 2, 2015 onwards (Note 5) | |||||||||||
Oil sales (bbls) | 26,702 | 38,740 | 94,539 | 118,269 | -20 | % | |||||
Average daily oil sales (BOPD) by Concession L53 | 290 | 421 | 258 | 324 | -20 | % | |||||
Average oil sales price, before transportation (CDN$/bbl) | $ 60.22 | $ 49.61 | $ 48.95 | $ 57.94 | -16 | % | |||||
Reference Price (volume weighted) and differential | |||||||||||
Crude oil (Brent $US/bbl) | $ 49.12 | $ 44.02 | $ 43.51 | $ 50.84 | -14 | % | |||||
Exchange Rate $US/$Cdn | 1.34 | 1.35 | 1.34 | 1.28 | 4 | % | |||||
Crude oil (Brent $Cdn/bbl) | $ 65.72 | $ 59.34 | $ 58.33 | $ 65.23 | -11 | % | |||||
Sale price / Brent reference price | 92 | % | 84 | % | 84 | % | 89 | % | -6 | % | |
Funds flow from (used in) operations (Note 6) | |||||||||||
Crude oil sales | 1,608 | 1,922 | 4,628 | 6,853 | -32 | % | |||||
Government royalty | (80 | ) | (94 | ) | (229 | ) | (336 | ) | -32 | % | |
Transportation expense | (41 | ) | (56 | ) | (143 | ) | (186 | ) | -23 | % | |
Operating expense | (289 | ) | (371 | ) | (1,057 | ) | (1,626 | ) | -35 | % | |
Field netback | 1,198 | 1,401 | 3,199 | 4,705 | -32 | % | |||||
General and administrative expense (Note 10) | (202 | ) | (102 | ) | (756 | ) | (777 | ) | -3 | % | |
Interest income | 5 | 2 | 11 | 9 | 22 | % | |||||
Foreign exchange loss | (5 | ) | (3 | ) | (5 | ) | (44 | ) | -89 | % | |
Current income tax | – | – | (1 | ) | – | 100 | % | ||||
Funds flow from operations – Thailand | 996 | 1,298 | 2,448 | 3,893 | -37 | % | |||||
Funds flow from (used in) operations / barrel (CDN$/bbl) (Note 6) | |||||||||||
Crude oil sales | $ 60.22 | $ 49.61 | $ 48.95 | $ 57.94 | -16 | % | |||||
Government royalty | (3.00 | ) | (2.43 | ) | (2.42 | ) | (2.84 | ) | -15 | % | |
Transportation expense | (1.54 | ) | (1.45 | ) | (1.51 | ) | (1.57 | ) | -4 | % | |
Operating expense | (10.81 | ) | (9.58 | ) | (11.18 | ) | (13.75 | ) | -19 | % | |
Field netback | $ 44.87 | $ 36.16 | $ 33.84 | $ 39.78 | -15 | % | |||||
General and administrative expense (Note 10) | (7.57 | ) | (2.63 | ) | (8.01 | ) | (6.57 | ) | 22 | % | |
Interest Income | 0.19 | 0.05 | 0.12 | 0.08 | 53 | % | |||||
Foreign exchange loss | (0.19 | ) | (0.08 | ) | (0.05 | ) | (0.37 | ) | -86 | % | |
Current income tax | – | – | (0.01 | ) | – | 100 | % | ||||
Funds flow from operations – Thailand | $ 37.30 | $ 33.51 | $ 25.89 | $ 32.92 | -21 | % | |||||
Government royalty as percentage of crude oil sales | 5 | % | 5 | % | 5 | % | 5 | % | |||
Income tax & SRB as percentage of crude oil sales | – | – | – | – | |||||||
As percentage of crude oil sales | |||||||||||
Expenses – transportation, operating, G&A and other | 33 | % | 28 | % | 42 | % | 38 | % | 4 | % | |
Government royalty, SRB and income tax | 5 | % | 5 | % | 5 | % | 5 | % | 0 | % | |
Funds flow from operations, before interest income | 62 | % | 68 | % | 53 | % | 57 | % | -4 | % | |
Wells drilled | |||||||||||
Gross | 1 | – | 1 | 3 | -67 | % | |||||
Net | 0.5 | – | 0.5 | 1.5 | -67 | % | |||||
Financial Statement PresentationResults – Excluding 50.01% Interest in Thailand Joint Venture from February 2, 2015 onwards (Note 1) | |||||||||||
Crude oil sales | – | – | – | 809 | -100 | % | |||||
Government royalty | – | – | – | (38 | ) | -100 | % | ||||
Transportation expense | – | – | – | (24 | ) | -100 | % | ||||
Operating expense | – | – | – | (257 | ) | -100 | % | ||||
Field netback | – | – | – | 490 | -100 | % | |||||
General and administrative expense (Note 10) | (3 | ) | (2 | ) | (30 | ) | (199 | ) | -85 | % | |
Interest income | – | – | – | 1 | -100 | % | |||||
Foreign exchange gain | 1 | 21 | 1 | 13 | -92 | % | |||||
Funds flow from (used in) consolidated operations | (2 | ) | 19 | (29 | ) | 305 | -110 | % | |||
Funds flow included in Investment in Thailand Joint Venture | |||||||||||
Net loss from Thailand Joint Venture | (226 | ) | (928 | ) | (1,542 | ) | (1,992 | ) | -23 | % | |
Add back non-cash items in net loss | 1,224 | 2,207 | 4,019 | 5,580 | -28 | % | |||||
Funds flow from Thailand Joint Venture | 998 | 1,279 | 2,477 | 3,588 | -31 | % | |||||
Thailand – Economic funds flow from operations | 996 | 1,298 | 2,448 | 3,893 | -37 | % |
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||
(thousands of Canadian dollars except where indicated) | 2016 | 2015 | 2016 | 2015 | Change | ||||||
Canada Operations (Note 7) | |||||||||||
Interest income | 46 | 32 | 173 | 149 | 16 | % | |||||
General and administrative expenses (Note 10) | (637 | ) | (604 | ) | (2,303 | ) | (2,425 | ) | -5 | % | |
Foreign exchange gain (loss) | 696 | 1,635 | (165 | ) | 6,498 | -103 | % | ||||
Current income tax | 150 | – | (129 | ) | – | 100 | % | ||||
Canada – Funds flow from (used in) operations | 255 | 1,063 | (2,424 | ) | 4,222 | -157 | % | ||||
Indonesia Operations | |||||||||||
General and administrative expense (Note 10) | (110 | ) | (430 | ) | (516 | ) | (1,678 | ) | -69 | % | |
Exploration expense (Note 11) | 101 | (58 | ) | (831 | ) | (464 | ) | 79 | % | ||
Foreign exchange gain (loss) | 7 | (76 | ) | 22 | (881 | ) | -102 | % | |||
Current income tax | – | 40 | – | (416 | ) | -100 | % | ||||
Indonesia – Funds flow used in operations | (2 | ) | (524 | ) | (1,325 | ) | (3,439 | ) | -61 | % | |
Wells drilled | |||||||||||
Gross | – | – | – | 1 | -100 | % | |||||
Net | – | – | – | 0.8 | -100 | % |
Year Ended December 31, |
Change | |||||||
(thousands of Canadian dollars except where indicated) | 2016 | 2015 | ||||||
RESERVES AND CONTINGENT RESOURCES | ||||||||
Onshore Thailand – Concession L53 (50.01% economic interest) (Note 1) | (Note 12) | (Note 13) | ||||||
Proved oil reserves (thousands of barrels) | 273 | 253 | 8 | % | ||||
Proved plus probable oil reserves (thousands of barrels) | 570 | 599 | -5 | % | ||||
Net present value of proved + probable reserves, after tax discounted at 10% | 13,187 | 13,051 | 1 | % | ||||
Per Pan Orient share – basic (Note 14) | $0.24 | $ 0.24 | 0 | % | ||||
Canada (Pan Orient’s 71.8% share of the oil sands leases of Andora at Sawn Lake, Alberta) | (Note 15) | (Note 16) |
INTERNATIONAL INTERESTS AT DECEMBER 31, 2016 | ||||||||
All amounts reflect Pan Orient’s economic interest | Status | Net Square Kilometers | December 31, 2016 Financial Commitments (Cdn thousands) |
2016 Avg. Production (BOPD) | P+P Reserves (thousands of barrels) | |||
Onshore Thailand Concession (Recorded in Investment in Joint Venture) | ||||||||
L53/48 (Pan Orient 50.01% ownership as at December 31, 2016) (Note 1 & 17) | Partially developed | 108 | – | to January 2021 (Note 17) | 258 | 570 | ||
Onshore Indonesia PSCs (Consolidated subsidiaries) | ||||||||
East Jabung PSC, South Sumatra (49% interest & non-operator) (Note 18, 10 & 20) | Undeveloped | 1,445 | $ 2,049 | to November 2017 | ||||
Batu Gajah PSC, South Sumatra (77% interest & operator) (Note 21) | Undeveloped | – | – | PSC expired January 15, 2017 | ||||
1,553 | $ 2,049 | |||||||
(1) | On February 2, 2015 the Company sold a 49.99% equity interest in its subsidiary Pan Orient Energy (Siam) Ltd. and retained a 50.01% equity interest in the company. The transaction resulted in Pan Orient Energy (Siam) Ltd. changing from a wholly-owned and controlled subsidiary to a joint arrangement where the Company shares joint control with the purchaser of the 49.99% equity interest. The resulting joint arrangement is classified as a Joint Venture under IFRS 11 and is required to be accounted for using the equity method of accounting rather than consolidated as it had previously been when Pan Orient Energy (Siam) Ltd. was a controlled subsidiary. The change in accounting from consolidation to the equity method has resulted in the accounts of Pan Orient Energy (Siam) Ltd. being derecognized from the consolidated financial statements and a net investment related to the portion of the interest retained being recognized at its estimated fair value upon initial recognition. Pan Orient’s 50.01% equity interest in the assets, liabilities, working capital, operations and capital expenditures of Pan Orient Energy (Siam) Ltd. from February 2, 2015 forward are recorded in Investment in Joint Venture. | |
(2) | As set out in the Consolidated Statements of Cash Flows in the Consolidated Financial Statements of Pan Orient Energy Corp. | |
(3) | Refer to Commitments in Note 19 of the December 31, 2016 and December 31, 2015 Consolidated Financial Statements. | |
(4) | Refer to Contingencies in Note 20 of the December 31, 2016 and December 31, 2015 Consolidated Financial Statements. | |
(5) | For the purpose of providing more meaningful economic results from operations for Thailand, and for comparison to previous period, the amounts presented consist of: | |
(a) | Company’s share of Thailand funds flow from operation at 100% from January 1, 2015 to February 1, 2015 (being the beginning of the year to the last date before the equity interest was completed as discussed in note 1) | |
(b) | Company’s share of Thailand funds flow from operating at 50.01% subsequent to February 2, 2015 (when the Company completed the equity sale transaction). | |
(6) | Corporate funds flow from operations is cash flow from operating activities prior to changes in non-cash working capital, and reclamation costs plus the corresponding amount from the Thailand operations which is recorded in Investment in Joint Venture for financial statement purposes. This measure 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. | |
(7) | 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. | |
(8) | Cost of capital expenditures, excluding decommissioning provision and the impact of changes in foreign exchange rates. | |
(9) | During the second quarter of 2015 the Company completed a farmout of a 51% interest of the East Jabung PSC in Indonesia and received an upfront cash payment of USD $8.0 million, less 5% withheld for transfer taxes, plus USD $181 thousand reimbursed for G&A, which has been recorded as a disposal of E&E assets with no gain or loss recorded on the transaction. | |
(10) | General & administrative expenses, excluding non-cash accretion on decommissioning provision and stock-based payments. | |
(11) | Exploration expense relates to exploration costs associated with the Citarum and South CPP PSCs in Indonesia. | |
(12) | Thailand reserves as at December 31, 2016 as evaluated by Sproule International Limited of Calgary assessed at forecast crude oil reference prices and costs. The US$ reference price for crude oil per barrel (US$ UK Brent per barrel) in the evaluation is $55.00 for 2017, $65.00 for 2018, $70.00 for 2019, $71.40 for 2020, $72.83 for 2021 and prices increase at 2.0% per year thereafter. Foreign exchange rate used of Cdn$1=US$0.78 for 2017, Cdn$1=US$0.82 for 2018 and Cdn$1=US$0.85 thereafter. The engineered values disclosed may not represent fair market value. | |
(13) | Thailand reserves as at December 31, 2015 as evaluated by Sproule International Limited of Calgary assessed at forecast crude oil reference prices and costs. The US$ reference price for crude oil per barrel (US$ UK Brent per barrel) in the evaluation is $45.00 for 2016, $60.00 for 2017, $70.00 for 2018, $80.00 for 2019, $81.20 for 2020, $82.42 for 2021 and prices increase at 1.5% per year thereafter. Foreign exchange rate used of Cdn$1=US$0.75 for 2016, Cdn$1=US$0.80 for 2017, Cdn$1=US$0.83 for 2018 and Cdn$1=US$0.85 thereafter. The engineered values disclosed may not represent fair market value. | |
(14) | Per share values calculated based on 54,885,407 Pan Orient Shares outstanding at December 31, 2016 and December 31, 2015. | |
(15) | The evaluation of the Andora’s contingent resources of the oil sands project at Sawn Lake Alberta, Canada as at June 30, 2016 was conducted by Sproule Unconventional Limited. The evaluation assigned an 85% chance of development for Sawn Lake, or a 15% development risk, and the risked “Best Estimate” contingent resources for Andora were 196.9 million barrels of bitumen recoverable (141.4 million barrels net to Pan Orient’s interest in Andora). Andora’s unrisked “Best Estimate” contingent resources were 231.6 million barrels (166.3 million net to Pan Orient’s interest in Andora) of recoverable bitumen as at June 30, 2016. The June 30, 2016 report has been updated for results of the Sawn Lake demonstration project, the June 30, 2016 price forecasts for crude oil, bitumen, natural gas and exchange rates, and a revised date of 2020 for the estimated commencement of commercial production. | |
(16) | A contingent resource report was not prepared for December 31, 2015. 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 “Best Case” company gross contingent resources at Sawn Lake were 214 million barrels of bitumen recoverable attributed to Andora’s working interest, which is 154 million barrels attributed to the 71.8% ownership interest of Pan Orient in Andora. 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. | |
(17) | At December 31, 2016 Concession L53/48 in Thailand consisted of 20 square kilometers associated with the L53-A, L53-D and L53-G fields held through production licenses (with a 20 year primary term to 2036 plus an additional 10 year renewal period that can be applied for) and 215.87 square kilometers of “reserved area” exploration lands. The original nine year exploration period for Concession L53 expired on January 7, 2016. The Government of Thailand approved a 215.87 square kilometer “reserved area” within Concession L53 for up to five years, with the payment of a surface reservation fee of $0.8 million gross ($0.4 million net to Pan Orient), for each year the Company elects to retain the reserved area. The Company is entitled to receive a refund of the surface reservation fee for a particular year in an amount equal to the petroleum exploration expenditures spent in that year within the reserved area up to the reservation fee paid. The Company intends to spend at least the full amount each year the reserved area is renewed and, therefore, it is expected that the annual reservation fee will be fully refunded. |
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(18) | Pan Orient’s share of commitments in Indonesia reflects amounts to be paid by Pan Orient in respect of the East Jabung Production Sharing Contract (“PSC”). 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. 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. | |
(19) | In the fourth quarter of 2014 the Company entered into a farmin agreement for the transfer of a 51% direct working interest and operatorship of the East Jabung PSC. The agreement includes a firm commitment by the farminee to fund the first USD $10.0 million towards the first exploration well and a contingent commitment to fund the first USD $5.0 million towards an appraisal well, if justified. The transaction closed on June 1, 2015 and the Company transferred the operatorship of the PSC to the farminee and reduced its interest to 49%. The commitment provided above represents the Company’s 49% interest in the two exploration wells and its share of the outstanding geological studies. | |
(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, 2016 Pan Orient had a 49% interest in the East Jabung PSC, which had a gross area of 2,947.76 square kilometers (1,445 square kilometers net). | |
(21) | At December 31, 2016 Pan Orient held a 77% interest in the Batu Gajah PSC, which had a gross area of 791.71 square kilometers (610 square kilometers net). On January 15, 2017 the Batu Gajah PSC expired. | |
(22) | Tables may not add due to rounding. |
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, Extension 233