CALGARY, AB,
May 12, 2022 /CNW/ - Pan Orient Energy Corp.
("Pan Orient" or the "Company") (TSXV: POE) reports 2022 first
quarter consolidated financial and operating results.
Please note that all amounts are in Canadian dollars unless
otherwise stated, BOPD refers to barrels of oil per day and BOPD
for Thailand operations represents
volumes net to Pan Orient's 50.01% equity interest in the Thailand
Joint Venture.
The Company is today filing its unaudited consolidated financial
statements as at and for the three months ended March 31, 2022 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 2022 first quarter results,
President and CEO Jeff Chisholm
stated: "Pan Orient is currently engaged in the advanced stages of
a due diligence process related to the sale of the Company's
Thailand interests. We anticipate
being in a position to make an announcement regarding this matter
by the end of the second quarter 2022. Oil sales have been
averaging approximately 1,250 BOPD (net to Pan Orient's 50.01%)
over the first nine days in May and approximately four additional
workovers are anticipated to be completed over the next 30 days,
with an additional two well appraisal program planned to commence
in early August."
HIGHLIGHTS
Thailand (net to 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 in the first quarter
of 2022 were 1,105 BOPD. Oil sales declined 23% from 1,426 BOPD in
the fourth quarter of 2021 primarily due to natural declines
related to flush production from workovers completed in late 2021
and delays in the commencement of the 2022 multi-well workover
program.
- Adjusted Thailand funds flow
from operations of $5.7 million
($57.19 per barrel) in the first
quarter of 2022 compared with $5.7
million ($43.56 per barrel) in
the fourth quarter of 2021. The average realized oil price per
barrel increased 25% in the first quarter of 2022 to $122.67 per barrel compared with $98.02 in the fourth quarter of 2021.
- Thailand adjusted funds flow
from operations funded $1.3 million
of Thailand exploration and
development activities. Pan Orient's share of working capital and
long-term deposits in Thailand at
March 31, 2022 was $7.9 million.
Indonesia East Jabung
Production Sharing Contract (Pan Orient is non-operator with a 49%
ownership interest)
- Pan Orient is withdrawing from operations in Indonesia and the office in Jakarta was closed March 31, 2020. The East Jabung Production
Sharing Contract expired in January
2020 and the operator is completing final steps to be taken
for formal approval of the expiry from the Government of
Indonesia, including reclamation
requirements.
- Activities of the Company in Indonesia are reported in 2020 and 2021 as
discontinued operations. Discontinued operations in Indonesia for the first quarter of 2022 were
$122 thousand of expenses and
$84 thousand in unrealized foreign
exchange gains on currency exchange rates since the end of
2021.
Sawn Lake (Operated by Andora Energy Corporation, in which Pan
Orient has a 71.8% ownership)
- For the first quarter of 2022, Pan Orient reports total
operating expenses of $66 thousand
for Sawn Lake, primarily associated with maintaining the suspended
Steam Assisted Gravity Drainage ("SAGD") facility and
wellpair.
- In March 2022, Andora entered
into an agreement with a joint venture partner at Sawn Lake whereby
Andora acquired certain assets and assumed certain liabilities at
Sawn Lake. Assets acquired consist of (i) an additional 25% working
interest in the Sawn Lake joint venture (Sawn Lake Central Block),
(ii) security deposits of the vendor for Sawn Lake placed with the
Alberta Energy Regulator and other parties, and (iii) a payment
from the vendor of $578 thousand. In
connection with the acquisition, Andora assumed the abandonment and
reclamation costs, and natural gas tariff commitments associated
with the additional 25% working interest in the Sawn Lake joint
venture. Following the transaction, Andora has a 75% working
interest in the Sawn Lake joint venture.
- An updated contingent bitumen resources evaluation effective
March 31, 2022 is being prepared for
Andora by an independent qualified reserves evaluator to evaluate
all of Andora's Oil Sands Leases at Sawn Lake based on exploitation
using SAGD.
- There is continued strength in Western Canada Select reference prices for
heavy oil. At May 2, 2022, the price
for Western Canada Select was Cdn$118.42 per barrel and the forward market for
Western Canada Select in 2024 was Cdn$81.07 per barrel. Andora is considering
alternatives to move the Sawn Lake project forward with minimum
development costs to Andora, including partnership, farmout,
sourcing additional funds, partial sale or outright sale, and
achieve value for Andora and Pan Orient shareholders.
Corporate
- Corporate adjusted funds flow from operations (including Pan
Orient's 50.01% equity interest in the Thailand Joint Venture) in
the first quarter of 2022 were $4.5
million ($0.09 per share)
compared with $4.4 million
($0.09 per share) in the fourth
quarter of 2021.
- Net income attributable to common shareholders for the first
quarter of 2022 was $3.5 million
($0.07 income per share) compared
with net income attributable to common shareholders for the fourth
quarter of 2021 of $3.0 million
($0.06 per share).
- At the Annual and Special Meeting of Shareholders on
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.
- Common shares outstanding were 49.8 million at March 31, 2022. Pan Orient has not repurchased
any common shares in 2022 under its normal course issuer bid.
- Pan Orient continues to maintain a strong financial position
with working capital and non-current deposits of $11.5 million and no long-term debt at
March 31, 2022. In addition, the
Thailand Joint Venture has $7.9
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 expand the Company's cash balance through the remainder
of 2022.
OUTLOOK
CORPORATE
Pan Orient is currently engaged in
the advanced stages of a due diligence process related to the sale
of the Company's Thailand
interests. We anticipate being in a position to make an
announcement regarding this matter by the end of the second quarter
2022.
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 express or
implied to Pan Orient's intention and efforts to sell its
Thailand assets; the timing of any
announcement of a sale transaction; well workover and drilling
plans in Thailand; withdrawal from
the East Jabung PSC in Indonesia;
the obtaining of an updated contingent bitumen resources evaluation
of Andora's Sawn Lake oil sands leases; forward market expectations
for Western Canada Select reference prices for heavy oil; and
alternatives being considered by Andora to move the Sawn Lake
project forward. 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
reserves 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.
|
Financial and Operating Summary
|
Three Months
Ended
March 31,
|
% Change
|
|
(thousands of Canadian dollars except where
indicated)
|
2022
|
2021
|
|
FINANCIAL
|
|
|
|
|
Financial Statement Results – Excluding 50.01%
Interest in Thailand Joint Venture
(Note 1)
|
|
|
|
|
Net income attributed
to common shareholders
|
3,514
|
1,140
|
208%
|
|
Per share – basic and
diluted
|
$
0.07
|
$ 0.02
|
208%
|
|
Cash flow used in
operating activities (Note 2 & 3)
|
(967)
|
(991)
|
-2%
|
|
Per share – basic and
diluted
|
$
(0.02)
|
$ (0.02)
|
-2%
|
|
Cash flow from
investing activities (Note 2 & 3)
|
283
|
2,610
|
-89%
|
|
Per share – basic and
diluted
|
$
0.01
|
$
0.05
|
-89%
|
|
Cash flow used in
financing activities (Note 2 & 3)
|
(19,918)
|
(1,240)
|
1506%
|
|
Per share – basic and
diluted
|
$
(0.40)
|
$ (0.02)
|
1506%
|
|
Change in cash and cash
equivalents used in discontinued operations (Note 3)
|
(151)
|
(33)
|
358%
|
|
Working
capital
|
10,675
|
22,805
|
-53%
|
|
Working capital &
non-current deposits
|
11,513
|
23,415
|
-51%
|
|
Long-term
debt
|
-
|
-
|
|
|
Shares outstanding
(thousands)
|
49,794
|
50,303
|
-1%
|
|
Capital Commitments
(Note 4)
|
1,590
|
801
|
99%
|
|
Working Capital and
Non-current Deposits
|
|
|
|
|
Beginning of period –
Excluding Thailand Joint Venture
|
32,084
|
23,577
|
36%
|
|
Adjusted funds flow
used in continuing operations (Note 3 & 6)
|
(1,162)
|
(924)
|
26%
|
|
Adjusted funds flow
used in discontinued operations (Note 3)
|
(38)
|
(20)
|
90%
|
|
Cash and deposits
acquired (Note 13)
|
752
|
-
|
|
|
Special distribution
(Note 14)
|
(19,917)
|
-
|
|
|
Amounts received from
(advanced to) Thailand Joint Venture
|
(204)
|
10
|
|
|
Dividend received from
Thailand Joint Venture
|
-
|
2,600
|
-100%
|
|
Finance lease
payments
|
(1)
|
(2)
|
-50%
|
|
Normal course issuer
bid
|
-
|
(1,238)
|
-100%
|
|
Automatic shares
purchase plan (Note 8)
|
-
|
(629)
|
-100%
|
|
Effect of foreign
exchange
|
(1)
|
41
|
-102%
|
|
End of period –
Excluding Thailand Joint Venture
|
11,513
|
23,415
|
-51%
|
|
Pan Orient 50.01%
interest in Thailand Joint Venture Working Capital and
Non-Current
Deposits
|
7,925
|
4,438
|
79%
|
|
Economic Results – Including 50.01% Interest in
Thailand Joint Venture
|
|
|
|
|
Total corporate
adjusted funds flow from (used in) operations by region (Note
6)
|
|
|
|
|
Canada
|
(1,154)
|
(916)
|
26%
|
|
Thailand (Note
9)
|
(8)
|
(8)
|
0%
|
|
From continuing
operations
|
(1,162)
|
(924)
|
26%
|
|
Indonesia -
Discontinued Operations
|
(38)
|
(20)
|
90%
|
|
Adjusted funds flow
used in operations (excl. Thailand Joint Venture)
|
(1,200)
|
(944)
|
27%
|
|
Share of Thailand Joint
Venture (Notes 1 & 5)
|
5,694
|
4,326
|
32%
|
|
Total corporate
adjusted funds flow from operations
|
4,494
|
3,382
|
33%
|
|
Per share – basic and
diluted
|
$
0.09
|
$ 0.07
|
35%
|
|
Capital Expenditures -
Petroleum and Natural Gas Properties (Note 7)
|
|
|
|
|
Share of Thailand
Joint Venture capital expenditures
|
1,336
|
1,829
|
-27%
|
|
Total capital
expenditures (incl. Thailand Joint Venture and discontinued
operations)
|
1,336
|
1,829
|
-27%
|
|
Investment in Thailand Joint
Venture
|
|
|
|
|
Beginning of
period
|
24,094
|
28,329
|
-15%
|
|
Net income from Joint
Venture
|
4,350
|
1,902
|
129%
|
|
Other comprehensive
loss from Joint Venture
|
(484)
|
(1,369)
|
-65%
|
|
Dividend
paid
|
-
|
(2,600)
|
-100%
|
|
Amounts (received from)
advanced to Joint Venture
|
204
|
(10)
|
|
|
End of
period
|
28,164
|
26,252
|
7%
|
|
Three Months
Ended
March 31,
|
%
|
|
(thousands of Canadian dollars except where
indicated)
|
2022
|
2021
|
Change
|
|
Thailand Operations
|
|
|
|
|
Economic Results – Including 50.01% Interest in
Thailand Joint Venture (Note 5)
|
|
|
|
|
Oil sales
(bbls)
|
99,424
|
121,733
|
-18%
|
|
Average daily oil sales
(BOPD) by Concession L53
|
1,105
|
1,353
|
-18%
|
|
Average oil sales
price, before transportation (CDN$/bbl)
|
$
122.67
|
$ 73.82
|
66%
|
|
Reference Price (volume
weighted) and differential
|
|
|
|
|
Crude oil (Brent
$US/bbl)
|
$
99.45
|
$ 60.41
|
65%
|
|
Exchange Rate
$US/$Cdn
|
1.28
|
1.28
|
-0%
|
|
Crude oil (Brent
$Cdn/bbl)
|
$
127.21
|
$ 77.36
|
64%
|
|
Sale price / Brent
reference price
|
96%
|
95%
|
1%
|
|
Adjusted funds flow
from (used in) operations (Note 6)
|
|
|
|
|
Crude oil
sales
|
12,196
|
8,986
|
36%
|
|
Government
royalty
|
(618)
|
(479)
|
29%
|
|
Transportation
expense
|
(244)
|
(292)
|
-16%
|
|
Operating
expense
|
(636)
|
(756)
|
-16%
|
|
Field
netback
|
10,698
|
7,459
|
43%
|
|
General and
administrative expense (Note 9)
|
(207)
|
(247)
|
-16%
|
|
Foreign exchange
gain
|
1
|
14
|
-93%
|
|
Current income
tax
|
(4,806)
|
(2,909)
|
65%
|
|
Thailand – Adjusted
funds flow from operations
|
5,686
|
4,317
|
32%
|
|
Adjusted funds flow
from (used in) operations / barrel (CDN$/bbl) (Note
6)
|
|
|
|
|
Crude oil
sales
|
$
122.67
|
$ 73.82
|
66%
|
|
Government
royalty
|
(6.22)
|
(3.93)
|
58%
|
|
Transportation
expense
|
(2.45)
|
(2.40)
|
2%
|
|
Operating
expense
|
(6.40)
|
(6.21)
|
3%
|
|
Field
netback
|
107.60
|
61.27
|
76%
|
|
General and
administrative expense (Note 9)
|
(2.08)
|
(2.03)
|
3%
|
|
Foreign exchange
gain
|
0.01
|
0.12
|
-91%
|
|
Current income
tax
|
(48.34)
|
(23.90)
|
102%
|
|
Thailand – Adjusted
funds flow from operations
|
$
57.19
|
$ 35.46
|
61%
|
|
Government royalty as
percentage of crude oil sales
|
5.1%
|
5.3%
|
0%
|
|
Income tax & SRB as
percentage of crude oil sales
|
39%
|
32%
|
7%
|
|
As percentage of crude
oil sales
|
|
|
|
|
Expenses -
transportation, operating, G&A and other
|
9%
|
14%
|
-5%
|
|
Government royalty, SRB
and income tax
|
44%
|
38%
|
7%
|
|
Adjusted funds flow
from operations, before interest income
|
47%
|
48%
|
-1%
|
|
Wells
drilled
|
|
|
|
|
Gross
|
-
|
2
|
-100%
|
|
Net
|
-
|
1.0
|
-100%
|
|
Financial Statement
Presentation
Results – Excl. 50.01% Interest in Thailand Joint
Venture (Note 1)
|
|
|
|
|
General and
administrative expense (Note 9)
|
(8)
|
(9)
|
-11%
|
|
Adjusted funds flow
used in consolidated operations
|
(8)
|
(9)
|
-11%
|
|
Adjusted fund flow
Included in Investment in Thailand Joint Venture
|
|
|
|
|
Net income from
Thailand Joint Venture
|
4,350
|
1,902
|
129%
|
|
Add back non-cash items
in net income
|
1,344
|
2,424
|
-45%
|
|
Adjusted funds flow
from Thailand Joint Venture
|
5,694
|
4,326
|
32%
|
|
Thailand – Economic
adjusted funds flow from operations (Note 5)
|
5,686
|
4,317
|
32%
|
|
Canada Operations
|
|
|
|
|
Interest
income
|
4
|
6
|
-33%
|
|
General and
administrative expenses (Note 9)
|
(578)
|
(520)
|
11%
|
|
Operating expense (Note
10)
|
(66)
|
(42)
|
57%
|
|
Stock based
compensation on restricted share units (Note 11)
|
(267)
|
(99)
|
170%
|
|
Realized foreign
exchange loss (Note 12)
|
(22)
|
(1)
|
2100%
|
|
Unrealized foreign
exchange gain (loss) (Note 12)
|
(225)
|
(260)
|
-13%
|
|
Canada – Adjusted funds
flow used in operations
|
(1,154)
|
(916)
|
26%
|
|
Add Thailand general
and administrative expense (note 9)
|
(8)
|
(9)
|
-11%
|
|
Add back changes in
non-cash working capital, continuing operations
|
(30)
|
(327)
|
-91%
|
|
Add back unrealized
foreign exchange loss
|
225
|
261
|
-14%
|
|
Cash flow used in
operating activities, continuing operations
|
(967)
|
(991)
|
-2%
|
|
Indonesia - Discontinued
Operations
|
|
|
|
|
General and
administrative expense (Note 9)
|
(40)
|
(51)
|
-22%
|
|
Other
expense
|
(82)
|
(1)
|
|
|
Unrealized foreign
exchange gain (loss)
|
84
|
32
|
163%
|
|
Indonesia – Adjusted
funds flow used in operations
|
(38)
|
(20)
|
90%
|
|
Add back changes in
non-cash working capital, discontinued operations
|
(91)
|
(13)
|
600%
|
|
Settlement of
decommissioning provision
|
(22)
|
-
|
|
|
Cash flow used in
operating activities, discontinued operations
|
(151)
|
(33)
|
358%
|
|
(1)
|
Pan Orient holds a
50.01% equity interest in Pan Orient Energy (Siam) Ltd. as a joint
arrangement where the Company shares joint control with the 49.99%
equity interest holder. The resulting joint arrangement is
classified as a Joint Venture under IFRS 11 and is accounted for
using the equity method of accounting where Pan Orient's 50.01%
equity interest in the assets, liabilities, working capital,
operations and capital expenditures of Pan Orient Energy (Siam)
Ltd. are recorded in Investment in Thailand Joint
Venture.
|
|
(2)
|
As set out in the
Consolidated Statements of Cash Flows in the Consolidated Financial
Statements of Pan Orient Energy Corp.
|
|
(3)
|
The East Jabung
Production Sharing Contract ("PSC") expired in January 2020 and the
operator is continuing to complete the 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. For accounting purposes, the operation in
Indonesia for accounting purposes is considered a discontinued
operation since 2020.
|
|
(4)
|
Refer to Commitments
note disclosure of the March 31, 2022 and March 31, 2021 Interim
Condensed Consolidated Financial Statements.
|
|
(5)
|
For the purpose of
providing more meaningful economic results from operations for
Thailand, the amounts presented include 50.01% of results of the
Thailand Joint Venture. Pan Orient has a 50.01% ownership
interest in Pan Orient Energy (Siam) Ltd., but does not have any
direct interest in, or control over, the crude oil reserves,
operations or working capital of on-shore Concession
L53.
|
|
(6)
|
Total corporate
adjusted funds flow from operations is cash flow from operating
activities prior to changes in non-cash working capital, unrealized
foreign exchange gain or loss plus the corresponding amount from
Pan Orient's 50.01% interest in the Thailand Joint Venture which is
recorded in Joint Venture for financial statement purposes.
This measure is used by management to analyze operating performance
and leverage. Adjusted funds flow as presented does not have
any standardized meaning prescribed by IFRS and therefore it may
not be comparable with the calculation of similar measures of other
entities. Adjusted 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 IFRS.
|
|
(7)
(8)
|
Cost of capital
expenditures excluded decommissioning costs and the impact of
changes in foreign exchange.
In December 2020, the
Company entered into an Automatic Share Purchase Plan ("ASPP"),
which permits an independent broker to repurchase shares during
certain blackout periods under the Company's normal course issuer
bid, subject to agreed trading parameters and other instructions
for such purchases. At March 31, 2021, the Company recognized
a provision of $1.5 million (December 31, 2020 - $0.9 million) in
accounts payable and accrued liabilities as an estimate for the
number of shares that may be repurchased during the potential
blackout periods at the maximum share price under the
ASPP.
|
|
(9)
|
General &
administrative expenses, excluding non-cash accretion
expense. Thailand operations includes a small amount of
G&A shown in the three months ended March 31, 2022 and March
31, 2021 for Thailand operations related to G&A of the holding
company of Pan Orient Energy (Siam) Ltd.
|
|
(10)
|
Operating expense
related to Andora's suspended demonstration project facility and
wellpair at Sawn Lake Central.
|
|
(11)
|
The Company granted
1,050,000 and 520,000 restricted share units ("RSUs") to directors,
senior management, employees and consultant on May 19, 2020 and May
14, 2021, respectively. At March 31, 2022, 599,998 RSUs are
outstanding. The amount represents the stock-based
compensation expenses.
|
|
(12)
|
Realized and unrealized
foreign exchange gain or loss mainly related to the U.S. dollars
denominated cash balances held in Canada.
|
|
(13)
|
In March 2022, Andora
entered into an agreement with a joint venture partner at Sawn Lake
whereby Andora acquired certain assets and assumed certain
liabilities at Sawn Lake. Assets acquired consist of (i) an
additional 25% working interest in the Sawn Lake joint venture
(Sawn Lake Central Block), (ii) security deposits of the vendor for
Sawn Lake placed with the Alberta Energy Regulator and other
parties, and (iii) a payment from the vendor of $578
thousand. In connection with the acquisition, Andora assumed
the abandonment and reclamation costs, and natural gas tariff
commitments associated with the additional 25% working interest in
the Sawn Lake joint venture. Following the transaction,
Andora has a 75% working interest in the Sawn Lake joint
venture.
|
|
(14)
|
In February 2022, the
Company paid a $0.40 per share special distribution to shareholders
following shareholder approval of a reorganization of the Company's
share capital. The amount paid on February 10, 2022 was $19.9
million.
|
|
(15)
|
Tables may not add due
to rounding.
|
|
|
SOURCE Pan Orient Energy Corp.
