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Pan Orient Energy Corp
Symbol C : POE
Shares Issued 54,900,407
Close 2019-01-31 C$ 1.45
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Pan Orient's L53/48 2018 P+P oil reserves at 2.73 mmbbl

2019-01-31 16:44 ET - News Release

Mr. Jeff Chisholm reports

PAN ORIENT ANNOUNCES 2018 YEAR-END THAILAND RESERVES UPDATE

Pan Orient Energy Corp., on behalf of Pan Orient Energy (Siam) Ltd. (POS), has released the results of its Dec. 31, 2018, independent reserves evaluation for Thailand onshore concession L53/48, where POS is the operator and has a 100-per-cent working interest. Pan Orient has a 50.01-per-cent equity interest in POS, which is classified as a joint venture under international financial reporting standards and accounted for using the equity method. Pan Orient's 50.01-per-cent equity interest in the assets, liabilities, working capital, operations and capital expenditures of POS is recorded in investment in the Thailand joint venture.

The evaluation for the Thailand assets as at Dec. 31, 2018, was conducted by Sproule International Ltd. of Calgary and was prepared in accordance with Canadian Securities Administrators' National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities.

Reserves volumes reported herein are company gross reserves, a classification of reserves used in the evaluation which represents production and reserves before deduction of royalties.

Summary of Thailand reserves at Dec. 31, 2018, for concession L53/48:

  • Thailand crude oil reserves and values at Dec. 31, 2018, of POS (representing the 100-per-cent working interest of POS in concession L53/48):
    • Proved oil reserves of 901,000 barrels at Dec. 31, 2018, a 65-per-cent increase from the 545,000 barrels at Dec. 31, 2017;
    • Proved plus probable oil reserves increased 150 per cent to 2,731,000 barrels at Dec. 31, 2018, compared with proved plus probable oil reserves of 1,093,000 barrels at Dec. 31, 2017; the increase in 2018 reflects the following changes during 2018:
      • 2018 oil sales of 182,162 barrels (499 barrels of oil per day), with 77,933 barrels (214 barrels of oil per day) from the L53G field, 51,334 barrels (141 barrels of oil per day) from the L53A field, 25,205 barrels (69 barrels of oil per day) from the L53D field and 27,667 barrels from the new L53DD field, which started production in November, 2018;
      • Discovery of the L53-DD field in the fourth quarter of 2018 added 27,667 barrels of oil sales in 2018 and has been assigned proved reserves of 399,000 barrels and proved plus probable reserves of 1.7 million barrels at Dec. 31, 2018;
      • Positive technical revisions were reported for each of the four existing L53 fields totalling 73,000 barrels (7 per cent of Dec. 31, 2017, proved plus probable reserves);
    • Net present value (after tax) of Thailand proved plus probable oil reserves at Dec. 31, 2018, using forecast prices and costs discounted at 10 per cent per year, of $79-million; the 182-per-cent increase in the net present value (after tax) of Thailand proved plus probable oil reserves from $28-million at Dec. 31, 2017, results primarily from the discovery of the L53-DD field and resulting 150-per-cent increase in proved plus probable oil reserves and a 4-per-cent increase in average oil sales prices;
    • Given the early-stage development of the recent L53-dd oil discovery, the company requested the inclusion of possible oil reserves at Dec. 31, 2018, in order to define the potential upside of the field; possible reserves are those additional reserves that are less certain to be recovered than probable reserves; there is a 10-per-cent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves; possible oil reserves were not evaluated at Dec. 31, 2017;
    • Possible oil reserves of 3,122,000 barrels at Dec. 31, 2018, with 2,667,000 barrels of possible reserves assigned to the L53-DD field; total proven plus probable plus possible oil reserves are 5,853,000 barrels at Dec. 31, 2018, with a net present value (after tax) using forecast prices and costs discounted at 10 per cent per year, of $153.6-million;
    • Thailand concession L53/48 reserves are from conventional sandstone reservoirs.
  • Net to Pan Orient's 50.01-per-cent equity interest in POS:
    • Pan Orient does not have any direct interest in, or control over, the crude oil reserves or operations of onshore concession L53/48; the values at Dec. 31, 2018, identified as net to Pan Orient's 50.01-per-cent equity interest in Pan Orient Energy (Siam) represent 50.01 per cent of POS reserves and values;
    • Net to Pan Orient's 50.01-per-cent equity interest in POS, proved plus probable crude oil reserves of 1,365,500 barrels at Dec. 31, 2018. Net to Pan Orient's 50.01-per-cent equity interest in POS, net present value (after tax) of Thailand proved plus probable crude oil reserves at Dec. 31, 2018, using forecast prices and costs discounted at 10 per cent per year, of $39.5-million, or 72 cents per Pan Orient share based on the current 54.9 million Pan Orient shares outstanding;
    • Net to Pan Orient's 50.01-per-cent equity interest in POS, proved plus probable plus possible crude oil reserves of 2,927,000 barrels at Dec. 31, 2018; net to Pan Orient's 50.01-per-cent equity interest in POS, net present value (after tax) of Thailand proved plus probable plus possible crude oil reserves at Dec. 31, 2018, using forecast prices and costs discounted at 10 per cent per year, of $76.8-million, or $1.40 per Pan Orient share based on the current 54.9 million Pan Orient shares outstanding.

 
         SUMMARY OF THAILAND CRUDE OIL RESERVES AS OF DEC. 31, 2018, 
         AS PROVIDED BY SPROULE (NET TO PAN ORIENT'S 50.01-PER-CENT
                   INTEREST IN PAN ORIENT ENERGY (SIAM))                           

Marketable reserves -- company              Light and     Heavy oil       Total
gross (thousands of barrels)               medium oil      

Proved                                            413            38         451  
Probable                                          866            49         915  
Total proved plus probable                      1,279            87       1,366
Possible                                        1,524            37       1,561
Total proved, probable and possible             2,804           124       2,927

                   SUMMARY OF THAILAND NET PRESENT VALUES AS OF DEC. 31, 2018, 
                   AS PROVIDED BY SPROULE (NET TO PAN ORIENT'S 50.01-PER-CENT
                          INTEREST IN PAN ORIENT ENERGY (SIAM) LTD.) 
                                    
Present value -- after tax ($ millions)              Undiscounted         5%        10%        15% 

Proved                                                      $  17      $  17      $  16         16     
Probable                                                       31         27         23         20     
Total proved plus probable                                     49         44         40         36     
Possible                                                       59         46         37         31     
Total proved, probable and possible                           107         90         77         67     
Per Pan Orient share -- proved and probable                 $0.88      $0.79      $0.72      $0.66   
Per Pan Orient share -- proved, probable 
and possible                                                $1.96      $1.63      $1.40      $1.23   

Note: Per-share values were calculated based on 54,900,407 Pan Orient shares 
currently outstanding.

          SUMMARY OF THAILAND CRUDE OIL RESERVES AS OF DEC. 31, 2018, 
          AS PROVIDED BY SPROULE (PAN ORIENT ENERGY (SIAM) LTD. 
         (WITH A 100-PER-CENT WORKING INTEREST IN CONCESSION L53/48)
              
Marketable reserves -- company             Light and      Heavy oil      Total
gross (thousands of barrels)              medium oil 
  
Proved                                           826             75        901 
Probable                                       1,732             98      1,830
Total proved plus probable                     2,558            173      2,731
Possible                                       3,048             74      3,122
Total proved, probable and possible            5,606            247      5,853

 
         SUMMARY OF THAILAND CRUDE OIL RESERVES AS OF DEC. 31, 2018, BY MAJOR FIELD
             AS PROVIDED BY SPROULE -- COMPANY GROSS (THOUSANDS OF BARRELS)                            
  (PAN ORIENT ENERGY (SIAM) LTD. (WITH A 100-PER-CENT WORKING INTEREST IN CONCESSION L53/48))  
                                                                                     
Concession L53/48       Proved      Probable      Proved plus     Possible     Proved, probable
(by Major Field)                                     probable                      and possible

L53A field                 124           142              266          125                  390                      
L53B field                  85           103              188           79                  267                       
L53D field                 163           158              321          138                  459                       
L53G field                 130           107              237          114                  350                       
L53DD field                399         1,320            1,719        2,667                4,386                     
                           901         1,830            2,731        3,122                5,853

        RECONCILIATION OF CHANGES IN THAILAND CRUDE OIL PROVED PLUS PROBABLE 
       RESERVES AS OF DEC. 31, 2018, AS PROVIDED BY SPROULE -- COMPANY GROSS 
        (LIGHT AND MEDIUM OIL AND HEAVY OIL) (PAN ORIENT ENERGY (SIAM) LTD. 
           (WITH A 100-PER-CENT WORKING INTEREST IN CONCESSION L53/48))

(thousands of barrels)        Proved              Probable         Proved plus probable

Dec. 31, 2017                    545                   548                        1,093
Extensions                         -                     -                            -
Improved recovery                  -                     -                            -
Technical revision               111                   (38)                          73
Discoveries                      427                 1,320                        1,747
Acquisitions                       -                     -                            -
Dispositions                       -                     -                            -
Economic factors                   -                     -                            -
Production                      (182)                    -                         (182)
Dec. 31, 2018                    901                 1,830                        2,731

             SUMMARY OF THAILAND NET PRESENT VALUES AS OF DEC. 31, 2018, 
            AS PROVIDED BY SPROULE (AFTER INCOME TAX) (PAN ORIENT ENERGY 
       (SIAM) LTD. (WITH A 100-PER-CENT WORKING INTEREST IN CONCESSION L53/48)

Present value -- after tax          Undiscounted         5%          10%          15%
($ million)                        
Proved                                        35         34           33           32
Probable                                      62         53           46           41
Total proved plus probable                    97         87           79           72
Possible                                     117         92           75           62
Total proved, probable and possible          215        179          154          135

Notes:

  1. Pan Orient Energy (Siam) is the operator and 100-per-cent working interest owner of concession L53/48. Pan Orient holds a 50.01-per-cent equity interest in Pan Orient Energy (Siam). Thailand reserves and values at Dec. 31, 2018, shown as 100-per-cent working interest of Pan Orient Energy (Siam), represent a 100-per-cent working interest in concession L53/48.
  2. Reserves volumes reported above are company gross reserves, a classification of reserves used in the evaluation which represents production and reserves before deduction of royalties.
  3. The tables shown have assessed reserves at forecast crude oil reference prices and costs.
  4. The U.S.-dollar reference price for crude oil per barrel (U.S.-dollar United Kingdom Brent per barrel) is $70 for 2019, $72 for 2020, $73 for 2021, $74.46 for 2022 and $75.95 for 2023, and prices increase at 2.0 per cent per year thereafter.
  5. Oil revenue for these reserves is based on 90 per cent of the forecast crude oil Brent reference price.
  6. Tables show assessed reserves with a foreign exchange rate of $1 to 77 U.S. cents for 2019, $1 to 80 U.S. cents for 2020 and $1 to 80 U.S. cents thereafter.
  7. The capital cost inflation rate starting in 2020 is 2 per cent per year. The operating expense inflation rate starting in 2020 is 2 per cent per year.
  8. Estimated future undiscounted development costs, in dollars, at Dec. 31, 2018, were $7.7-million for proved reserves, $17.3-million for proved plus probable reserves and $22.3-million for proved plus probable plus possible reserves.
  9. Net present values after income tax are after deduction of the SRB (special remuneratory benefit) tax and income tax in Thailand. SRB tax rate is forecast to be 0 per cent per year based on the forecast oil rates and prices.
  10. Well abandonment and reclamation costs of $4.1-million for the proved plus probable case were included in this report and include abandonment and reclamation costs for all existing and future wells. Well abandonment and reclamation costs of $4.9-million were included for the proved plus probable plus possible case. No allowances for reclamation or salvage values were made.
  11. The net present values disclosed may not represent fair market value.
  12. Totals may not add exactly due to rounding.

Pan Orient is an oil and gas exploration and production company based in Calgary, Alta., with operations currently located onshore Thailand, Indonesia and in Western Canada.

We seek Safe Harbor.

© 2019 Canjex Publishing Ltd. All rights reserved.