Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE) is pleased to provide
highlights of its 2010 year end and fourth quarter consolidated financial and
operating results, and provide an outlook for 2011. 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.
The Corporation today filed its audited consolidated financial statements as at
and for the year ended December 31, 2010 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.
2010 HIGHLIGHTS
- Funds flow from operations of $59.0 million ($1.22 per share) and net income
attributable to common shareholders of $20.6 million ($0.43 per share) for 2010.
- Total 2010 capital programs in Thailand, Indonesia and Canada of $61.3 million
were financed 96% by after tax funds flow from operations and 4% from working
capital.
- Capital expenditures were $43.4 million in Thailand, $17.0 million in
Indonesia and $0.9 million in Canada.
- Average 2010 oil sales in Thailand of 3,884 BOPD with 4,056 BOPD for the
fourth quarter of 2010.
- Strong generation of after tax funds flow from Thailand operations with $17.7
million for the fourth quarter of 2010 ($47.46 per barrel) and $58.2 million for
2010 ($41.05 per barrel).
- Drilling of 25 exploration and appraisal wells in Thailand during 2010 with 10
wells at the Wichian Buri Extension Field ("WBEXT"), five wells at Bo Rang,
seven wells at Na Sanun East, two wells at Concession L33, and one well at
Concession L53.
-- Discovery of the WBEXT field in Concession L44 (Pan Orient operator and 60%
ownership) resulted in a new 12.45 square kilometer production license, 382,051
barrels of oil sales in the second half of 2010, and 8.2 million barrels of
proven plus probable reserves were assigned at year-end.
-- Drilling of two exploration wells in Concession L33 (Pan Orient operator and
60% ownership) resulted in the first discovery of hydrocarbons at commercial
rates in Concession L33, a new 11.94 square kilometer production license, oil
sales of 25,039 barrels commencing in November 2010, and 2.8 million barrels of
proven plus probable reserves were assigned at year-end.
-- At Concession L53 (Pan Orient operator and 100% ownership) a production
license of 2 square kilometers was granted to Pan Orient, first oil sales from
Concession L53 commenced in August 2010, and 1.4 million barrels of proven plus
probable reserves were assigned at year-end.
- Thailand proved plus probable reserves of 31.9 million barrels at December 31,
2010 with 12.4 million barrels of new oil field discoveries in 2010 offset by a
15.7 million barrel downward revision of previously assigned reserves mainly at
the Na Sanun Central and NSE-F1 fields in Concession L44/43. The net present
value of proved and probable reserves after tax (using forecast prices and
discounted at 10%) of Cdn$509 million, representing $9.00 per Pan Orient share
based on the current 56.5 million Pan Orient shares outstanding.
- At December 31, 2010 Pan Orient had $31.4 million of working capital and
long-term deposits, and no long-term debt.
- Subsequent to the year-end, Pan Orient closed a bought deal financing on March
8, 2011 with the issuance of 7,557,264 shares at a price of $6.55 per share for
proceeds of $46.7 million net of expenses.
2010 OPERATING RESULTS
- Total 2010 capital programs in Thailand, Indonesia and Canada of $61.3 million
were financed 96% by the $59.0 million in after tax funds flow from operations
and 4% from working capital. Capital expenditures were $43.4 million in
Thailand, $17.0 million in Indonesia and $0.9 million in Canada.
- Active 2010 drilling program in Thailand with the drilling of 25 wells (15.4
net wells) focused on exploration and appraisal wells to add new reserves and
new development drilling opportunities for 2011. Six wells (4.0 net) were
drilled in the fourth quarter of 2010, with five appraisal or exploration wells
at the WBEXT field in Concession L44, and the L53-C well in Concession L53
(which spudded on December 30, 2010). Total capital expenditures in Thailand
were $11.7 million in the fourth quarter of 2010 and a total of $43.4 million in
2010.
- Pan Orient drilled 22 wells in Concession L44 (Pan Orient operator and 60%
ownership) during 2010 resulting in 12 producing wells and 5 wells which are
waiting for workovers or sidetracking operations to evaluate different potential
reservoirs.
-- The WBEXT field was discovered in the third quarter of 2010 and a total of 10
exploration or appraisal wells were drilling during the year with capital
expenditures for drilling of $14.7 million, and resulted in 382,051 barrels of
oil sales. A production license of 12.45 square kilometers was granted for the
portion of the field in Concession L44 by the Thailand Department of Mineral
Fuels in February 2011. Proved and probable oil reserves assigned at December
31, 2010 were 8.2 million barrels from volcanic and sandstone reservoirs (with
5.3 million barrels assigned to reserves in Concession L44 and 2.9 million
barrels assigned to reserves in Concession L33).
-- Five wells were drilled at the Bo Rang fields during the first half of 2010
with capital expenditures for drilling of $5.8 million to further appraise and
develop this field which was discovered in 2009. Oil sales in 2010 from the four
producing wells resulting from this drilling program were 226,504 barrels.
-- Seven wells were drilled at Na Sanun East in the Central and NSE-F1 fields
during the first half of 2010 to continue appraisal of these fields and to
evaluate further exploration potential. The program resulted in three producing
wells, the NSE-G3 well which will be sidetracked to test a deeper volcanic
objective, the NSE-F4 well which is being evaluated for a potential workover,
and two wells not capable of production. Capital expenditures related to this
drilling program were $10.7 million and oil sales in 2010 were 69,952 barrels.
- The two exploration wells drilled in Concession L33 (Pan Orient operator and
60% ownership) during the third quarter of 2010 resulted in the first discovery
of hydrocarbons at commercial rates in Concession L33. Oil sales commenced in
November 2010 with a production license of 11.94 square kilometers for the L33
field being granted by the Thailand Department of Mineral Fuels. Total capital
expenditures during 2010 for drilling were $1.9 million and resulted in 25,039
barrels of oil sales and proved and probable oil reserves assigned at December
31, 2010 of 2.8 million barrels.
- Production in Concession L53 (100% ownership by Pan Orient) commenced in
August 2010 with the L53-A well being placed back on-stream after Pan Orient
received formal approval by the Thailand Department of Mineral Fuels for the 2.0
square kilometers L53-A Production License around the L53-A exploration well.
Oil sales were 28,676 barrels in 2010, with 8,097 barrels (88 BOPD) in the
fourth quarter of 2010. This new core area of operations west of Bangkok began
production during 2010 and revenue from oil sales was used to fund the start-up
of operations. This area has active operations in 2011 with a workover of the
L53-A well to produce from additional sandstone zones, and drilling of new wells
at L53-C (spudded December 30, 2010), L53-B and L53-A1. Proved and probable oil
reserves assigned at December 31, 2010 were 1.4 million barrels from sandstone
reservoirs.
- The independent reserves evaluation conducted by Gaffney, Cline & Associates
(Consultants) Pte. Ltd. of Singapore ("Gaffney Cline") for the Thailand assets
at December 31, 2010 assigned proved plus probable reserves of 31.9 million
barrels at December 31, 2010, a 13% decrease from 36.7 million barrels at
December 31, 2009. Proved plus probable reserves at December 31, 2010 include
12.4 million barrels of new oil field discoveries in 2010 at the Wichian Buri
Extension field ("WBEXT") in Concessions L44/43 & L33/43, the L33 field in
Concession L33/43, and the L53A field in Concession L53/48 offset by a 15.7
million barrel downward revision of previously assigned reserves mainly at the
Na Sanun Central and NSE-F1 fields in Concession L44/43.
The net present value of proved and probable reserves after tax for the four
concessions in Thailand, using forecast prices and discounted at 10%, is Cdn$509
million, an increase of 11% over the prior year and representing $9.00 per Pan
Orient share, based on the current 56.5 million Pan Orient shares outstanding.
- Average Thailand oil sales in 2010 were 3,884 BOPD and 4,056 BOPD for the
fourth quarter of 2010. Pan Orient continued to experience significant
fluctuations in production levels in 2010 from volcanic reservoirs which can be
initially very prolific before they achieve a stabilized production level and
water cut.
Oil sales averaged 2,246 BOPD in the first quarter of 2011 reflecting the
temporary shut-in of WBEXT-1, WBEXT-1A and WBEXT-1B wells starting in December
2010 at the expiry of their respective 90 day production test periods, and
reduced oil production of the WBEXT-1C well as a result of water incursion as
outlined in the press releases of January 6th and February 9th, 2011. The WBEXT
production license was granted on February 24, 2011 and the three temporarily
shut-in wells were brought on-stream at reduced rates to minimize the water cut.
- The oil sands project at Sawn Lake, Alberta operated by Andora Energy
Corporation (which is owned 53.4% by Pan Orient) as at December 31, 2010 was
evaluated by Sproule Associates Ltd. ("Sproule"). The contingent resource
volumes estimated in the Sproule report are considered contingent until such
time as commercial recovery has been demonstrated, regulatory approvals have
been obtained and the company has committed to proceed with commercial
development. Contingent Resources are further classified as "High", "Best" and
"Low" in accordance with the level of certainty.
The report assigned Sawn Lake "Best Case" contingent resources of 114.4 million
barrels attributed to the 53.4% ownership interest of Pan Orient in Andora. The
net present value of the "Best Case" (discounted at 10% before income tax using
forecast prices) attributed to Sawn Lake contingent resources is $222 million to
the 53.4% ownership interest of Pan Orient in Andora. The Net present value of
the "Best Case" (discounted at 10% after income tax using forecast prices)
attributed to Sawn Lake contingent resources is $136 million to the 53.4%
ownership interest of Pan Orient in Andora.
- Capital expenditures in Indonesia were $1.6 million for the fourth quarter and
a total of $17.0 million for 2010.
At the Batu Gajah PSC in 2010 (onshore Sumatra - POE 97% working interest and
operator) there was completion of the 500 line kilometre 2D seismic program, the
associated seismic data processing and mapping, permitting and initial field
work related to the 2011 three well exploration program. The Tuba Obi Utara-1
well started drilling in March 2011 and will be followed immediately by the SE
Tiung-1 and Betano-1 wells. Capital expenditures in 2010 related to the Batu
Gajah PSC were $8.3 million.
At the Citarum PSC in 2010 (onshore Java - Pan Orient 77% working interest and
operator) there was completion of the 2D seismic program and the associated
seismic data processing and mapping. Targets have been selected for a three well
exploration program that is scheduled for commencement of drilling late in the
third quarter or early in the fourth quarter of 2011. Capital expenditures in
2010 related to the Citarum PSC were $8.3 million.
FINANCIAL RESULTS
- Fourth Quarter of 2010
-- Funds flow from operations for the fourth quarter was $17.8 million compared
with $15.4 million for the third quarter of 2010 and $9.9 million for the fourth
quarter of 2009. Funds flow from operations per share (basic) was $0.37 for the
fourth quarter of 2010.
-- For the fourth quarter of 2010, Thailand generated $17.7 million in funds
flow from operations, compared with $15.4 million the third quarter of 2010
primarily as a result of a 9% increase in the realized price for crude oil
partially offset by a 5% decrease in oil sales volumes. For the quarter,
transportation expenses were $2.73 per barrel, operating expenses and other
royalty $7.83 per barrel, general and administrative expenses $2.61 per barrel
and amounts to the Thailand government of $15.76 per barrel resulted in after
tax funds flow from operations per barrel of $47.46. The WTI reference price for
crude oil per barrel increased 8% during the quarter to CDN$85.83 from CDN$79.69
in the third quarter of 2010, as the 10% increase in the United States dollar
WTI reference price was reduced through the rise in the Canadian dollar.
Operating expenses increased to $2.9 million or $7.73 per barrel in the fourth
quarter from $2.5 million or $6.46 per barrel in the third quarter of 2010 as a
result of additional year-end personnel expenses and engineering fees. For the
fourth quarter of 2010, Thailand crude oil revenue was allocated 17% to expenses
for transportation, operating, and general & administrative, 21% to the
government of Thailand in the form of royalties, Special Remuneratory Benefit
("SRB") and Income Tax, and 62% to Pan Orient.
-- Net income attributable to common shareholders of $8.5 million, or $0.17 per
share (basic), for the fourth quarter of 2010 compared with net income
attributable to common shareholders of $4.7 million, or $0.10 per share (basic),
for the third quarter of 2010.
- Year Ended December 31, 2010
-- Funds flow from operations for 2010 was $59.0 million compared with $53.0
million for 2009, representing funds flow from operations per share (basic) of
$1.22 compared with $1.15 for the prior year. The $6.0 million increase in funds
flow from operations from the prior year is primarily due to a $3.4 million
increase in funds flow from Thailand operations and a $2.4 million increase in
funds flow from Canada.
-- Thailand operations in 2010 generated $58.2 million in funds flow from
operations after tax, or $41.05 per barrel in 2010 compared with $54.8 million
or $33.40 per barrel in 2009. The Thailand operations in 2010 experienced a 21%
increase in the realized crude oil price and a 14% decrease in oil sales
volumes. For 2010, transportation expenses were $2.58 per barrel, operating
expenses and other royalty of $6.81 per barrel, general and administrative
expenses $3.06 per barrel and amounts to the Thailand government of $19.21 per
barrel resulted in after tax funds flow from operations per barrel of $41.05.
Operating expenses increased to $9.5 million or $6.73 per barrel in 2010 from
$7.6 million or $4.60 per barrel in 2009 due to the increased number of wells,
expenses for maintenance and water hauling, start-up expenses for Concession L53
and a lower production level. For 2010, Thailand crude oil revenue was allocated
17% to expenses for other royalties, transportation, operating, and general &
administrative, 27% to the government of Thailand in the form of royalties, SRB
and income tax, and 56% to Pan Orient (before interest income and realized
foreign exchange gain).
-- Funds flow from Canada was $0.7 million in 2010 compared with a funds flow of
negative $1.7 million in 2009. There was a net recovery of $0.7 million of
general and administrative expenses for Canada in 2010 compared with $1.7
million of net expenses in 2009.
-- Net income attributable to common shareholders for 2010 was $20.6 million or
$0.43 per share (basic) compared with $15.1 million or $0.33 per share (basic)
for 2009.
-- Pan Orient continues to maintain its financial strength and flexibility. At
December 31, 2010 Pan Orient had $31.4 million of working capital and long-term
deposits, and no long-term debt. In 2010 Pan Orient had internally generated
funds flow from operations of $59.0 million, funding 96% of the $61.3 million of
capital expenditures in Thailand, Indonesia and Canada. In addition, at December
31, 2010 Pan Orient had $8.7 million of equipment inventory to be utilized for
future Thailand and Indonesia operations that is included in petroleum and
natural gas assets on the balance sheet.
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: 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.
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Three Months Ended Year Ended Change
Operations Summary December 31, December 31,
(thousands of Canadian
dollars except
where indicated) 2010 2009 2010 2009
----------------------------------------------------------------------------
FINANCIAL
----------------------------------------------------------------------------
Oil revenue, before
royalties and transportation
expense 28,495 22,280 103,019 98,236 5%
Funds flow from operations
(Note 1) 17,803 9,945 59,014 52,950 11%
Per share - basic $ 0.37 $ 0.21 $ 1.22 $ 1.15 6%
Per share - diluted $ 0.36 $ 0.20 $ 1.21 $ 1.10 10%
Funds flow from operations
by region (Note 1)
Canada (97) (1,062) 718 (1,716) -142%
Thailand 17,709 11,063 58,198 54,811 6%
Indonesia 191 (56) 98 (145) -167%
--------------------------------------------------
Total 17,803 9,945 59,014 52,950 11%
--------------------------------------------------
--------------------------------------------------
Net Income (Loss) 8,495 6,996 20,574 15,145 36%
Per share - basic $ 0.17 $ 0.15 $ 0.43 $ 0.33 30%
Per share - diluted $ 0.17 $ 0.14 $ 0.42 $ 0.31 34%
Working capital 26,768 28,659 26,768 28,659 -7%
Working capital &
non-current deposits 31,396 32,738 31,396 32,738 -4%
Long-term debt - - - -
Capital expenditures
(Note 2) 13,638 18,960 61,328 63,495 -3%
Shares outstanding
(thousands) 48,741 46,313 48,741 46,313 5%
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Funds flow from operations
per barrel (Note 1)
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Canada operations $ (0.26) $ (3.42) $ 0.51 $ (1.04) -148%
Thailand operations 47.46 35.69 41.05 33.40 23%
Indonesia operations 0.51 (0.18) 0.07 (0.09) -174%
-------------------------------------------------
$ 47.71 $ 32.09 $ 41.63 $ 32.27 29%
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Capital Expenditures (Note 2)
----------------------------------------------------------------------------
Canada 268 567 863 917 -6%
Thailand 11,746 16,351 43,441 51,996 -16%
Indonesia 1,624 2,042 17,024 10,582 61%
-------------------------------------------------
Total 13,638 18,960 61,328 63,495 -3%
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Working Capital and
Non-current Deposits
----------------------------------------------------------------------------
Working capital &
non-current deposits
- beginning of
period 27,746 39,830 32,738 46,386 -29%
Funds flow from operations
(Note 1) 17,803 9,945 59,014 52,950 11%
Capital expenditures
(Note 2) (13,638) (18,960) (61,328) (63,495) -3%
Non-cash settlement of
Andora receivable - - (600) -
Unrealized effect of FX
on working capital (847) 1,338 (2,097) (4,214) -50%
Net proceeds on share
transactions 332 585 3,669 1,111 230%
-------------------------------------------------
Working Capital &
Non-current Deposits
- end of period 31,396 32,738 31,396 32,738 -4%
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Canada Operations
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Interest income 21 12 50 43 16%
General and administrative
expense 38 (359) 708 (1,450) -149%
Realized foreign exchange
(loss) (212) (692) (39) (247) -84%
Foreign new ventures
expenditures 57 (23) - (62) -100%
-------------------------------------------------
Funds flow from operations
(Note 1) (97) (1,062) 718 (1,716) -142%
-------------------------------------------------
-------------------------------------------------
Funds flow from operations
per barrel (Note 1)
Interest income $ 0.06 $ 0.04 $ 0.04 $ 0.03 34%
General and administrative
recovery (expense) 0.10 (1.16) 0.50 (0.88) -156%
Realized foreign exchange
(loss) (0.57) (2.23) (0.03) (0.15) -82%
Foreign new ventures
expenditures 0.15 (0.07) - (0.04) -100%
-------------------------------------------------
$ (0.26) $ (3.43) $ 0.51 $ (1.04) -148%
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Indonesia Operations
----------------------------------------------------------------------------
General and administrative
recovery (expense) 191 (56) 98 (145) -167%
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Three Months Ended Year Ended Change
December 31, December 31,
(thousands of Canadian
dollars except where
indicated) 2010 2009 2010 2009
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Thailand Operations
----------------------------------------------------------------------------
Oil sales (bbls) 373,147 310,006 1,417,750 1,640,894 -14%
Average daily oil sales
by Concession (BOPD)
L44/43 3,572 3,183 3,575 4,264 -16%
SW1 124 187 161 232 -30%
L53/48 88 - 79 - -
L33/43 272 - 69 - -
-------------------------------------------------
Total 4,056 3,370 3,884 4,496 -14%
-------------------------------------------------
Average oil sales price,
before transportation
(CDN$/bbl) $ 76.36 $ 71.87 $ 72.66 $ 59.87 21%
Reference Price (volume
weighted) and differential
Crude oil (WTI $US/bbl) $ 84.70 $ 75.97 $ 79.36 $ 58.56 36%
Exchange Rate $US/$Cdn 1.01 1.07 1.04 1.16 -10%
Crude oil (WTI $Cdn/bbl) $ 85.83 $ 81.42 $ 82.17 $ 67.72 21%
Sales price / WTI reference
price 89% 88% 88% 88% 0%
Funds flow from operations
Crude oil sales 28,495 22,280 103,019 98,236 5%
Government royalty (1,826) (1,344) (6,498) (6,729) -3%
Other royalty (37) (37) (110) (114) -4%
Transportation expense (1,017) (761) (3,653) (3,866) -6%
Operating expense (2,886) (2,278) (9,535) (7,555) 26%
-------------------------------------------------
Field Netback 22,729 17,860 83,224 79,972 4%
General and administrative
expense (974) (735) (4,345) (3,394) 28%
Interest Income 11 14 68 407 -83%
Special Remuneratory
Benefit tax (SRB) (1,549) (1,868) (6,413) (6,751) -5%
Current income tax (2,508) (4,208) (14,336) (15,423) -7%
-------------------------------------------------
Funds flow from operations 17,709 11,063 58,198 54,811 6%
-------------------------------------------------
-------------------------------------------------
Funds flow from operations
per barrel (CDN$/bbl)
Crude oil sales $ 76.36 $ 71.87 $ 72.66 $ 59.87 21%
Government royalty (4.89) (4.34) (4.58) (4.10) 12%
Other royalty (0.10) (0.12) (0.08) (0.07) 11%
Transportation expense (2.73) (2.45) (2.58) (2.36) 9%
Operating expense (7.73) (7.35) (6.73) (4.60) 46%
-------------------------------------------------
Field Netback 60.91 57.62 58.70 48.74 20%
General and administrative
expense (2.61) (2.37) (3.06) (2.07) 48%
Interest Income 0.03 0.05 0.05 0.25 -81%
Special Remuneratory Benefit
(SRB) (4.15) (6.03) (4.52) (4.11) 10%
Current income tax (6.72) (13.57) (10.11) (9.40) 8%
-------------------------------------------------
Thailand - Funds flow
from operations $ 47.46 $ 35.69 $ 41.05 $ 33.40 23%
-------------------------------------------------
-------------------------------------------------
Government royalty as
percentage of crude oil sales 6.4% 6.0% 6.3% 6.8% -0.5%
SRB as percentage of crude
oil sales 5.4% 8.4% 6.2% 6.9% -0.6%
Income tax as percentage of
crude oil sales 8.8% 18.9% 13.9% 15.7% -1.8%
As percentage of crude oil sales
Expenses - transportation,
operating, G&A and other 17.2% 17.1% 17.1% 15.2% 2%
Government royalty, SRB
and income tax 20.6% 33.3% 26.4% 29.4% -3%
Funds flow from operations,
before interest income
and realized foreign
exchange gain 62.1% 49.6% 56.4% 55.4% 1%
Wells drilled
Gross 6 6 25 24 4%
Net 4.0 4.4 15.4 15.2 1%
----------------------------------------------------------------------------
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Year Ended
December 31,
(thousands of Canadian dollars
except where indicated) 2010 2009 Change
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RESERVES AND CONTINGENT RESOURCES
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Onshore Thailand (reserves assigned to
Concessions L44/43, L33/43 and SW1 where
Pan Orient is the operator with a 60% interest,
and Concession L53/48 where Pan Orient is the
operator with a 100% interest) (Note 3)
Proved oil reserves (thousands of barrels) 7,363 9,525 -23%
Proved plus probable oil reserves
(thousands of barrels) 31,935 36,684 -13%
Net present value of proved + probable reserves,
after tax discounted at 10% 509,000 459,000 11%
Per Pan Orient share - basic (using year-end
shares outstanding) (Note 6) $ 10.44 $ 9.91 5%
Per Pan Orient share - basic (after
March 2011 share issue) (Note 7) $ 9.00
Net present value of proved + probable
reserves, after tax discounted at 15% 413,000 362,000 14%
Per Pan Orient share - basic (using
year-end shares outstanding) (Note 6) $ 8.47 $ 7.82 8%
Per Pan Orient share - basic (after
March 2011 share issue) (Note 7) $ 7.30
Canada (share of the oil sands leases of
Andora at Sawn Lake, Alberta)
Contingent Oil Resources - Best Estimate
"2C" (thousands of barrels) (Note 4) 103,900
Probable oil reserves (thousands of barrels)
(Note 5) 70,121
Net Present value, before tax discounted
at 10% 222,000 745,864 -70%
Per Pan Orient share - basic (using
year-end shares outstanding) (Note 6) $ 4.55 $ 16.10 -72%
Per Pan Orient share - basic (after
March 2011 share issue) (Note 7) $ 3.93
Net present value, before tax discounted
at 15% 45,000 529,872 -92%
Per Pan Orient share - basic (using
year-end shares outstanding) (Note 6) $ 0.92 $ 11.44 -92%
Per Pan Orient share - basic (after
March 2011 share issue) (Note 7) $ 0.80
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International Concessions
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December
31, 2010
Financial
Net Commitments 2010 Avg. P+P
All amounts reflect Square CDN Production Reserves
Pan Orient's interest Status Kilometers thousands) (BOPD) (Mstb)
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Onshore Thailand (December 31, 2010)
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SW1 (60% working
interest &
operator) Developed 9 - - 161 886
L44/43 (60% working
interest & operator) Partially to July
developed 545 $ 18 2012 3,575 23,997
L33/43 (60% working
interest & operator) Partially to July
developed 557 $ 48 2012 69 5,649
53/48 (100% working to
interest & operator) Partially January
developed 1,961 $1,063 2013 79 1,403
Onshore Indonesia (Interests at March 31,2011)
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Citarum PSC, West
Java (77% working to
interest & operator) October
(Notes 8, 9 & 10) Undeveloped 2,216 12,853 2011 - -
Batu Gajah PSC,
South Sumatra (97%
working interest to
& operator) January
(Notes 8, 9 & 10) Undeveloped 2,447 22,392 2012 - -
CPP South PSC,
Central Sumatra
(97% working to
interest & operator) November
(Notes 8&9) Undeveloped 4,339 5,514 2011 - -
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Notes:
(1) Funds flow from operations ("funds flow" before changes in non-cash working
capital and reclamation costs) is used by management to analyze operating
performance and leverage. Funds flow as presented does not have any standardized
meaning prescribed by Canadian GAAP and therefore it may not be comparable with
the calculation of similar measures of other entities.
Funds flow is not intended to represent operating cash flow or operating profits
for the period nor should it be viewed as an alternative to cash flow from
operating activities, net earnings or other measures of financial performance
calculated in accordance with Canadian GAAP. All references to funds flow
throughout this report are based on funds flow from operations before changes in
non-cash working capital and reclamation costs.
(2) Cost of capital expenditures, excluding any asset retirement obligation and
excluding the impact of changes in foreign exchange rates.
(3) Thailand reserves as at December 31, 2010 and December 31, 2009 as evaluated
by Gaffney Cline & Associates (Consultants) Pte. Ltd. of Singapore assessed at
forecast crude oil reference prices and costs. The reference price for crude oil
per barrel (US$ WTI per barrel) for the December 31, 2010 evaluation is $88.40
for 2011, $89.14 for 2012, $88.77 for 2013, $88.88 for 2014, $90.22 for 2015,
$91.57 for 2016, and prices increase at 1.5% per year thereafter. The engineered
values disclosed may not represent fair market value.
(4) Pan Orient's 53.4% share as at December 31, 2010 of the reserves of Andora
Energy Corporation, a private company as evaluated by Sproule Associates Ltd.
assessed at forecast crude oil reference prices and costs. The reference price
for crude oil per barrel (Western Canada Select WCS 20/5 API adjusted for
quality and transportation in Canadian dollars) is $63.64 for 2012, $60.57 for
2013, $57.91 for 2014 and prices increasing to $83.92 in 2020. Future capital
expenditures estimated at $1,170 million. The engineered values disclosed may
not represent fair market value.
(5) Pan Orient's 53.2% share as at December 31, 2009 of the reserves of Andora
Energy Corporation, a private company as evaluated by DeGolyer and MacNaughton
Canada Limited assessed at forecast crude oil reference prices and costs. The
reference price for crude oil per barrel (crude bitumen 9 API Plant Gate in
Canadian dollars) is $58.32 for 2010, $59.21 for 2011, $58.83 for 2012 and
prices increasing to $67.81 in 2021. Future capital expenditures estimated at
$910 million. The engineered values disclosed may not represent fair market
value.
(6) Per share values calculated based on 48,740,866 Pan Orient Shares
outstanding at December 31, 2010 and 46,313,366 Pan Orient Shares outstanding at
December 31, 2009.
(7) Per share values after equity financing in March 2011 calculated based on
56,543,807 Pan orient Shares outstanding.
(8) Interests in Indonesia at March 31, 2011 include the repurchase of carried
interests in each of the Indonesian PSC's in the first quarter of 2011. Carried
interests repurchased were 8% at Citarum PSC, 7% at Batu Gajah PSC and 7% at
South CPP PSC. The repurchase of carried interests does not change the level of
commitments since carried interests paid for by Pan Orient are already included.
(9) Share of commitments reflect amounts to be paid by Pan Orient, including
carried interest partners in Indonesia. Note that commitments for a concession
in Thailand or a Production Sharing Contract ("PSC") in Indonesia include the
completion of a work program as well as the amount of expenditure. Work program
commitment is based on the original contract and timing is subject to government
approval.
(10) Indonesia financial commitments as provided above represent the current
exploration phase that the Company is conducting. The obligation period ending
for Citarum and Batu Gajah differs from the PSC agreement as commitments from
previous years have been deferred and rolled forward. Every year the Company
submits a work program for each PSC to the GOI and along with it, a request to
roll forward any incomplete commitments from the previous year. Although this
request is a departure from the original contract, it is considered standard
practice in Indonesia. The above obligation periods for Citarum and Batu Gajah
are consistent with this practice.
To see the Pan Orient Thailand 2010 Drilling Map and Table, click the following
link: http://media3.marketwire.com/docs/boe_drilling.pdf
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