Pan Orient Announces 2017 Year-End Thailand Reserves Update

CALGARY, Alberta, Jan. 31, 2018 (GLOBE NEWSWIRE) — Pan Orient Energy Corp. (“Pan Orient”) (TSX-V:POE), on behalf of Pan Orient Energy (Siam) Ltd. (“POS”), announced the results of its December 31, 2017 independent reserves evaluation for Thailand on-shore Concession L53/48 where POS is the operator and has a 100% working interest.  Pan Orient has a 50.01% 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% equity interest in the assets, liabilities, working capital, operations and capital expenditures of POS are recorded in Investment in the Thailand Joint Venture.

The evaluation for the Thailand assets as at December 31, 2017 was conducted by Sproule International Limited of Calgary (“Sproule”) and was prepared in accordance with Canadian Securities Administrators National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities

Please note that all amounts are in Canadian dollars unless otherwise stated and BOPD refers to barrels of oil per day.  Reserves volumes reported below 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 December 31, 2017 for Concession L53/48

  • Thailand reserves and values at December 31, 2017 of POS (representing the 100% working interest of POS in Concession L53/48):
    • Proved crude oil reserves of 545,000 barrels at December 31, 2017 from conventional sandstone reservoirs is unchanged from December 31, 2016.
    • Proved plus probable crude oil reserves of 1,093,000 barrels at December 31, 2017 from conventional sandstone reservoirs, compared with proved plus probable oil reserves of 1,140,000 barrels at December 31, 2016.  The 4.1% decrease in 2017 reflects the following changes during 2017:
      • 2017 oil sales of 185,117 barrels (507 BOPD), with 115,334 barrels (316 BOPD) from the L53G field, 22,365 barrels (61 BOPD) from the L53D field, 47,386 barrels (130 BOPD) from the L53A field and 33 barrels from the L53B field.  The L53B field produced 33 barrels as test production in January 2017 and POS was granted a production license for the L53B field on May 5, 2017.
      • A positive technical revision of 138,000 barrels, most significantly at the L53G field.
    • Net present value (after tax) of Thailand proved plus probable crude oil reserves at December 31, 2017, using forecast prices and costs discounted at 10% per year, of Cdn$28.0 million.  The 6% increase in the net present value (after tax) of Thailand proved plus probable crude oil reserves from $26.4 million at December 31, 2016 results primarily from a 14% increase in average oil sales prices offsetting the 4.1% reduction in oil reserves and the higher royalty and income tax expenses associated with the higher oil revenue.
  • Net to Pan Orient’s 50.01% equity interest in POS:
    • Pan Orient does not have any direct interest in, or control over, the crude oil reserves or operations of on-shore Concession L53/48.  The values at December 31, 2017 identified as “Net to Pan Orient’s 50.01% Equity Interest in Pan Orient Energy (Siam) Ltd.” represent 50.01% of POS reserves and values.
    • Net to Pan Orient’s 50.01% equity interest in POS, proved plus probable crude oil reserves of 546,500 barrels at December 31, 2017 from conventional sandstone reservoirs. 
    • Net to Pan Orient’s 50.01% equity interest in POS,  net present value (after tax) of Thailand proved plus probable crude oil reserves at December 31, 2017, using forecast prices and costs discounted at 10% per year, of Cdn$14.0 million, or $0.25 per Pan Orient share based on the current 54.9 million Pan Orient shares outstanding.
 
Summary of Thailand Crude Oil Reserves as of December 31, 2017, as provided by Sproule
Net to Pan Orient’s 50.01% Interest in Pan Orient Energy (Siam) Ltd.
Marketable Reserves – Company Gross
(thousands of barrels)
Light and
Medium Oil
Heavy Oil Total
Proved 230 42 272
Probable 225 49   275
Total Proved plus Probable 455 92   547
       

 
Summary of Thailand Net Present Values (After Income Tax) as of December 31, 2017, as provided by Sproule
Net to Pan Orient’s 50.01% Interest in Pan Orient Energy (Siam) Ltd.
Present Value – After Tax 
(Cdn$ million)
Undiscounted   5%   10%   15%
Proved   10   9   9   8
Probable   8   6   5   4
Total Proved plus Probable   18   16   14   13
Per Pan Orient share (Note) $   0.33 $   0.29 $   0.25 $   0.23
                 

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

 
Summary of Thailand Crude Oil Reserves as of December 31, 2017, as provided by Sproule
Pan Orient Energy (Siam) Ltd. (with a 100% working interest in Concession L53/48)
Marketable Reserves – Company Gross
(thousands of barrels)
Light and
Medium Oil
Heavy Oil Total
Proved 461 84 545
Probable 450 98 548
Total Proved plus Probable 910 183 1,093
       

 
Summary of Thailand Crude Oil Proved plus Probable Reserves as of December 31, 2017, by Major Field as provided by Sproule – Company Gross (thousands of barrels)
Pan Orient Energy (Siam) Ltd. (with a 100% working interest in Concession L53/48)
Concession Major Field Proved Probable Proved plus
Probable
L53/48 L53A Field 143 130 272
  L53B Field 83 100 183
  L53D Field 174 160 334
  L53G Field 144 159 303
    545 548 1,093
         

 
Reconciliation of Changes in Thailand Crude Oil Reserves as of December 31, 2017, as provided by Sproule – Company Gross (Light and Medium Oil and Heavy Oil)
Pan Orient Energy (Siam) Ltd. (with a 100% working interest in Concession L53/48)
(thousands of barrels)   Proved   Probable   Proved plus
Probable
 
December 31, 2016     545     595     1,140  
Extensions     –      –      –   
Improved Recovery     –      –      –   
Technical Revision     185     (47 )   138  
Discoveries    –      –      –   
Acquisitions     –      –      –   
Dispositions     –      –      –   
Economic Factors      –      –      –   
Production       (185 )   –      (185 )
December 31, 2017     545     548     1,093  
               

 
Summary of Thailand Net Present Values (After Income Tax) as of December 31, 2017, as provided by Sproule
Pan Orient Energy (Siam) Ltd. (with a 100% working interest in Concession L53/48)
Present Value – After Tax
(Cdn$ million)
Undiscounted 5% 10% 15%
Poved 21 19 18 16
Probable 16 13 10 9
Total Proved plus Probable 36 32 28 25
         

 
Thailand Concession L53/48 Reserves Evaluation as of December 31, 2017, as provided by Sproule
Pan Orient Energy (Siam) Ltd. (with a 100% working interest in Concession L53/48)
           
1) Pan Orient Energy (Siam) Ltd. is the operator and 100% working interest owner of Concession L53/48.  Pan Orient holds a 50.01% equity interest in Pan Orient Energy (Siam) Ltd. 

Thailand reserves and values at December 31, 2017 shown as “100% working interest of Pan Orient Energy (Siam) Ltd.” represent a 100% 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 & costs.   
4) The US$ reference price for crude oil per barrel (US$ UK Brent per barrel) is $58.00 for 2018, $67.00 for 2019, $72.00 for 2020, $75.00 for 2021, $76.50 for 2022 and prices increase at 2.0% per year thereafter.   
5) Oil revenue for these reserves is based on 90% of the forecast crude oil Brent reference price.  
6) Tables show assessed reserves with a foreign exchange rate of CDN$1=US$0.79 for 2018, CDN$1=US$0.82 for 2019, CDN$1=US$0.85 thereafter.  
7) The capital cost inflation rate starting in 2019 is 2.0% per year.  The operating expense inflation rate starting in 2019 is 2.0% per year.  
8) Estimated future undiscounted development costs, in nominal dollars, at December 31, 2017 were Cdn$6.7 million for proved reserves and Cdn$11.5 million for proved plus probable 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 zero percent per year based on the forecast oil rates and prices.  
10) Well abandonment and reclamation costs of Cdn$3.5 million for the proved plus probable case were included in this report and include abandonment and reclamation costs for all existing and future wells.  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 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:  estimates of reserves and the net present value of those reserves, anticipated future production performance, estimates of future crude oil reference prices and the percentage of those prices received by Pan Orient, and estimates of development costs, foreign exchange rates, inflation rates, taxes and well abandonment and disconnect costs.  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. 

FOR FURTHER INFORMATION, PLEASE CONTACT:
Pan Orient Energy Corp.
Jeff Chisholm, President and CEO (located in Bangkok, Thailand)
Email: jeff@panorient.ca

- or -

Bill Ostlund, Vice President Finance and CFO
Telephone: (403) 294-1770

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