Mr. Jeff Chisholm reports

PAN ORIENT ENERGY CORP.: CORPORATE UPDATE

On Nov. 5, 2014, Pan Orient Energy Corp. announced it had entered into an agreement for the sale of a 50-per-cent equity interest in subsidiary Pan Orient Energy (Siam) Ltd. to a wholly owned subsidiary of Sea Oil Public Co. Ltd., of Thailand, for a cash price of $42.5-million (U.S.), including a working capital adjustment of $2.4-million (U.S.). Pan Orient Energy (Siam) Ltd. holds Pan Orient's 100-per-cent interest in concession L53/48 in Thailand.

On Jan. 12, 2015, Pan Orient was informed that Sea Oil required additional time to complete certain closing conditions to be satisfied by it. Accordingly, Pan Orient and Sea Oil had agreed to delay closing of the transaction for up to three weeks.

On Feb. 2, 2015, Sea Oil and Pan Orient have satisfied the conditions to closing and accordingly a $38.5-million (U.S.) wire transfer has been initiated to the account of Pan Orient. This wire transfer is anticipated to be received within approximately two to three business days, as is customary in most international wire transfers. An additional $4-million (U.S.) break fee has been released from escrow and is being wired to Pan Orient's account. It is anticipated that net proceeds to Pan Orient, after closing adjustments and costs, will be approximately $40.9-million (U.S.) ($50.5-million (Canadian)).

Completion of the sale of a 50-per-cent interest in Pan Orient's subsidiary Pan Orient Energy (Siam) Ltd., in combination with existing working capital, provides the corporation with substantial financial strength in an uncertain oil price environment.

Thailand operations update

The first of a three-well drilling program on concession L53 is anticipated to commence in approximately two weeks, with the first well targeting the high-impact L53-A North Central prospect (ANC-1). ANC-1 will be targeting one of six structural closures defined on recently acquired 3-D seismic data which are located approximately 4.5 kilometres south of the U-Thong oil field, operated by another oil company, which has produced over 4.5 million barrels of oil from equivalent sandstone reservoirs that are the primary objective of the ANC-1 well. Further guidance regarding the 2015 Thailand capital program will be provided upon the completion of drilling of the upcoming program and discussions with the company's new partner Sea Oil.

Indonesia operations update

All documents supporting the transfer of a 51-per-cent working interest and operatorship in the East Jabung production sharing contract (PSC) to a subsidiary of Talisman Energy were submitted to the government of Indonesia regulator prior to year-end 2014. It is anticipated that approval of the transfer of working interest and operatorship to Talisman's subsidiary will be granted in late March to April, 2015. Upon receipt of government of Indonesia approvals, Pan Orient will receive $8-million (U.S.) in accordance with the farm-out agreement.

The company continues to work toward the drilling of the Akatara/Selong offset well in Batu Gajah PSC, which is anticipated to commence drilling in September, 2015. The well will be drilled regardless whether or not the company farms out a portion of the company's interest in the PSC. Farm-out discussions are continuing with nothing material to report at this time.

The company also continues to seek a partner in the Citarum PSC located onshore Java, Indonesia. While some progress had been made in late 2014 toward securing a farm-out partner, the recent decline in oil prices has created greater uncertainty regarding the company's ability to secure a partner. Farm-out discussions are continuing with nothing material to report at this time.

Summary

Pan Orient president and chief executive officer Jeff Chisholm stated: "I am very pleased to welcome Sea Oil as our new partner in concession L53 and look forward to the imminent drilling of the ANC-1 exploration well. Pan Orient is financially well positioned as a result of an initiative to strengthen the balance sheet that commenced long before the recent drop in world oil prices and is now experiencing the benefits of this initiative. We have built a large cash position and an excellent portfolio of relatively low-cost conventional onshore Southeast Asian oil and gas assets that are expected to be very profitable, even in an extended low oil price environment. A strong balance sheet, low outstanding share count and a prospect portfolio that to a large degree has been derisked through partnerships, 3-D seismic and offsetting oil discoveries allows me to look forward to 2015 with a great deal of optimism and high expectations."

We seek Safe Harbor.