The Company is today filing its audited consolidated financial statements as at and for the year ended December 31, 2021 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 2021 results, President and CEO Jeff Chisholm stated:
“In the fourth quarter of 2021 the Company announced its intention to take a number of steps that would accelerate Pan Orient shareholder value. The first of these steps was completed in February 2021 with the payment of a $0.40 per share special distribution to Pan Orient shareholders. Since late 2021 the Company has also been actively engaged in a process that would potentially result in the sale of the Company’s onshore Thailand L53 asset. Industry interest has been very strong and oil prices have certainly been a positive factor. Pan Orient hopes to be in a position to announce a potential transaction late in the first half of 2022.”
HIGHLIGHTS
Thailand (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 were 1,395 BOPD in 2021, an increase of 15% from 1,213 BOPD in 2020. The L53-DD10 and L53-DD11 appraisal wells were drilled in the L53-DD field and brought onto production in 2021. In addition, water disposal capacity at the L53-DD field was increased through conversion of the L53-DD8 well to a water disposal well and drilling of the L53-DD12 water disposal well.
- Adjusted Thailand funds flow from operations of $20.4 million in 2021 ($40.10 per barrel), with $5.7 million ($43.56 per barrel) in the fourth quarter, net to Pan Orient’s 50.01% equity interest in the Thailand Joint Venture. During 2021, the realized price of Concession L53 crude oil was higher than the previous year by 56% as the Brent reference price increased 60%. Operating expenses in 2021 declined 27% to $5.66 per barrel primarily due to increased water handling capacity for the L53-DD field and higher oil volumes.
- Net to Pan Orient’s 50.01% equity interest in the Thailand Joint Venture, adjusted funds flow from Thailand operations of $20.4 million in 2021 funded $5.8 million of Thailand exploration and development activities and $13.7 million of dividends from the Thailand Joint Venture to Pan Orient. Pan Orient’s share of working capital and long-term deposits in Thailand at December 31, 2021 was $5.0 million.
- December 31, 2021 reserves report assigned proved plus probable crude oil reserves of 2.3 million barrels (a decrease of 3%), net to Pan Orient’s 50.01% equity interest in the Thailand Joint Venture, with an after tax net present value using forecast prices and costs discounted at 10% per year of $54.1 million (an 39% increase). The 3% decrease in proved plus probable crude oil reserves results from 509,195 barrels of oil sales largely offset by a 445,809 barrel increase from positive technical revisions, economic factors and extension of fields. The 39% increase in the net present value is the result of the 31% increase average oil sales prices more than offsetting the 3% decrease in proved plus probable reserves.
Indonesia East Jabung Production Sharing Contract (Pan Orient is non-operator with a 49% ownership interest)
- The operator of the East Jabung Production Sharing Contract (“PSC”) provided notice to the Government of Indonesia in January 2020 of withdrawal from the East Jabung PSC and is continuing to complete final steps to be taken for formal approval of the expiry from the Government of Indonesia, including reclamation requirements. Pan Orient is withdrawing from operations in Indonesia and the office in Jakarta was closed March 31, 2020.
- Activities of the Company in Indonesia for 2021 are reported as discontinued operations. Discontinued operations in Indonesia for 2021 were $212 thousand of G&A expense, $23 thousand in foreign exchange loss and $165 thousand increase of impairment expense for the East Jabung PSC.
Sawn Lake (Operated by Andora Energy Corporation (“Andora”), in which Pan Orient has a 71.8% ownership)
- Since March 31, 2020, no Sawn Lake operating expenses or G&A have been capitalized. For 2021, Pan Orient reports total operating expense of $279 thousand associated with the Sawn Lake suspended SAGD facility and wellpair.
Corporate
- Total 2021 corporate adjusted funds flow from operations (including Pan Orient’s 50.01% equity interest in the Thailand Joint Venture) of $16.7 million ($0.33 per share), with $4.4 million ($0.09 per share) in the fourth quarter of 2021. The 75% increase from $9.5 million ($0.18 per share) in 2020 is largely due to the Thailand Joint Venture with 56% higher realized prices of Concession L53 crude oil and 15% higher oil sales volume.
- Net income attributable to common shareholders was $8.5 million ($0.17 per share) for 2021 and $3.0 million ($0.06 per share) for the fourth quarter of 2021.
- Pan Orient repurchased 1,950,100 common shares in 2021 at an average price of $0.87 per share (before the $0.40 per share special distribution to Pan Orient shareholders in February 2022). There have been no shares repurchased in 2022 to date.
- Pan Orient had working capital and non-current deposits of $32.1 million and no long-term debt at December 31, 2021. In addition, the Thailand Joint Venture had $5.0 million in working capital and long-term deposits, net to Pan Orient’s 50.01% equity interest, and Thailand funds flow from operations are expected to fund remaining development activities at Concession L53.
- At the Annual and Special Meeting of Shareholders January 18, 2022, shareholders approved the previously announced capital reorganization resulting in a $0.40 per common share return of capital distribution to shareholders on February 10, 2022. The total amount of the distribution was $19.9 million.
OUTLOOK
CORPORATE
In the fourth quarter of 2021, the Company announced a process to accelerate shareholder value given the mid to late stage development of Thailand, intention to minimize further investment into the Sawn Lake asset, and strength in current oil prices. This process will involve both the Thailand assets and the Sawn Lake, Canada assets and it is expected that there will be two distinct transactions due to the contrasting nature of the assets. It is intended that the proceeds from any potential sale of any of the assets will be paid or distributed to Pan Orient shareholders.
An updated December 31, 2021 independent reserves evaluation for Thailand on-shore Concession L53/48 of Pan Orient Energy (Siam) Ltd. was prepared at the end of January 2022 and financial statements for December 31, 2021 are now available. Both the Brent and Western Canada Select reference prices for oil have continued to increase. Pan Orient is reviewing alternatives and having discussions with interested parties to achieve value for Pan Orient shareholders. The outcome, timing and amount of potential transactions is uncertain at this time.
It is currently proposed that in the period after the sale of the Company’s oil and gas interests, and the distribution of the vast majority of cash to shareholders, the Company will continue to pursue international oil and gas opportunities with a substantially scaled down cost structure.
THAILAND
Pan Orient Energy (Siam) Ltd. is currently undertaking an approximately eight to ten well workover program with the aim of increasing oil production and take advantage of the current oil price environment.
Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand and Western Canada.