PAN ORIENT ENERGY CORP. - 2022 Second Quarter Financial & Operating Results
CALGARY, AB, Aug. 10, 2022 /CNW/ - Pan Orient Energy Corp. ("Pan Orient" or the "Company") (TSXV: POE) reports 2022 second quarter consolidated financial and operating results. Please note that all amounts are in Canadian dollars unless otherwise stated and BOPD refers to barrels of oil per day.
The Company is today filing its unaudited consolidated financial statements as at and for the six months ended June 30, 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 second quarter results, President and CEO Jeff Chisholm stated: "The Pan Orient sale transaction is progressing smoothly into the August 23, 2022 shareholder vote. Pan Orient management and directors recommend that shareholders support this transaction given the late stage development of the Thailand L53 asset."
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 second quarter of 2022 were 1,124 BOPD compared with 1,105 BOPD in the first quarter of 2022.
- Thailand adjusted funds flow from operations of $7.6 million ($73.93 per barrel) in the second quarter of 2022 compared with $5.7 million ($57.19 per barrel) in the first quarter of 2022. The average realized oil price per barrel increased 27% in the second quarter of 2022 to $156.27 per barrel compared with $122.67 in the first quarter of 2022.
- In the first half of 2022, Thailand adjusted funds flow from operations of $13.2 million funded $2.5 million of Thailand exploration and development activities. Working capital and long-term deposits, net to Pan Orient's 50.01% equity interest in the Thailand Joint Venture, at June 30, 2022 was $12.7 million.
Sawn Lake (Operated by Andora Energy Corporation, in which Pan Orient has a 71.8% ownership)
- 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. Through the transaction, Andora increased its working interest in the Sawn Lake joint venture to 75%.
- The March 31, 2022 Contingent Bitumen Resources Report ("Resources Report"), a National Instrument 51-101 compliant resources evaluation for Andora's oil sands interests at Sawn Lake Alberta based on exploitation using Steam Assisted Gravity Drainage ("SAGD") as evaluated by Sproule Associates Limited, assigned unrisked "Best Estimate" contingent resources for Andora of 292.0 million barrels of bitumen recoverable (209.6 million barrels net to Pan Orient's 71.8% interest in Andora) and unrisked "Best Estimate" net present value, discounted at 15%, for Andora's interests of $192 million on an after-tax basis ($138 million net to Pan Orient's 71.8% interest in Andora). The Sawn Lake operations are currently suspended and awaiting restart and commercial expansion. Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by the application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies. The contingent resources volumes estimated in the Resources Report are considered contingent until such time as there are additional delineation wells confirming reservoir quality and continuity, refinement of the commercial development plan, regulatory approval for full field development, corporate commitment to move forward and financing for commercial development. There is uncertainty that it will be commercially viable to produce any portion of the reported contingent resources volumes. Please refer to Pan Orient's press release of June 13, 2022 for additional information.
- Western Canada Select reference prices for heavy oil remained strong in the second quarter of 2022. At August 8, 2022, the price for Western Canada Select was Cdn$91.34 per barrel and the forward market for Western Canada Select in 2024 was Cdn$79.13 per barrel. Andora is considering alternatives to restart the existing steam SAGD facility and wellpair at Sawn Lake and 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 shareholders.
- For the first half of 2022, Pan Orient reports total operating expenses of $171 thousand associated with the Sawn Lake suspended SAGD facility and wellpair.
Corporate
- On June 6, 2022 Pan Orient announced that it had entered into an agreement to be acquired by a subsidiary of Dialog Group Berhad ("Dialog") and for Pan Orient's non-Thailand business to be transferred to CanAsia Energy Corp. ("CanAsia"), a new company to be owned by Pan Orient shareholders (the "Arrangement"). Upon completion of the transaction, a holder of a common share of Pan Orient will receive, for each such common share, cash consideration of USD $0.788 and one common share of CanAsia. The cash consideration is approximately CAD $1.01 at the current exchange rate.
As a result of the Arrangement: (a) Dialog, through a subsidiary, will hold all of the issued and outstanding Pan Orient shares, and Pan Orient will continue to own Pan Orient's Thailand business; (b) Pan Orient shareholders (other than dissenting shareholders) will receive, through a series of steps, for each Pan Orient share held, a cash payment of USD $0.788 and one CanAsia share; and (c) CanAsia will be a new public company with its shares expected to be listed on the TSX Venture Exchange ("TSXV") (subject to satisfaction of the conditions of the TSXV), that will own Pan Orient's non-Thailand business, which includes: Pan Orient's 71.8% interest in Andora Energy Corporation, which has interests in oil sands properties in Sawn Lake, Alberta; convertible loans receivable from Andora; Pan Orient's interests in Indonesia, which operations are, effective January 1, 2020, considered discontinued operations for accounting purposes; and working capital and long term deposits, estimated to be approximately $6.7 million. The estimate of working capital and long-term deposits has been reduced to reflect changes in foreign exchange rates and higher transaction expenses, mainly legal fees.
Completion of the Arrangement is subject to certain conditions, including approval of the Pan Orient shareholders, final approval of the Court of Queen's Bench of Alberta and conditional approval of the delisting of the Pan Orient shares and listing of the CanAsia shares by the TSXV. If all conditions to the completion of the Arrangement are satisfied or waived, Pan Orient anticipates that the Arrangement will become effective on or about August 25, 2022. - Net income attributable to common shareholders for the second quarter of 2022 was $4.8 million ($0.10 per share) compared with net income attributable to common shareholders for the first quarter of 2022 of $3.5 million ($0.07 per share). Corporate adjusted funds flow from operations (including Pan Orient's 50.01% equity interest in the Thailand Joint Venture) in the second quarter of 2022 were $6.1 million ($0.12 per share) compared with $4.5 million ($0.09 per share) in the first quarter of 2022.
- Common shares outstanding were 49.8 million at June 30, 2022.
- Pan Orient paid a $0.40 per common share return of capital distribution to shareholders on February 10, 2022 following shareholder approval on January 18, 2022. The total amount of the distribution was $19.9 million.
- Pan Orient maintains a strong financial position with working capital and non-current deposits of $12.8 million and no long-term debt at June 30, 2022. In addition, the Thailand Joint Venture has $12.7 million in working capital and long-term deposits, net to Pan Orient's 50.01% equity interest.
A special meeting of Pan Orient shareholders to vote on the Arrangement and other matters will be held on Tuesday, August 23, 2022. If all conditions to the completion of the Arrangement are satisfied or waived, Pan Orient anticipates that the Arrangement will become effective on or about August 25, 2022.
The Arrangement is an opportunity for Pan Orient shareholders to realize value for their investment in Pan Orient while continuing to participate, through CanAsia, in the Sawn Lake heavy oil project and potential exploration and development activities in Thailand through an anticipated future bid round for new oil concessions
Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand and Western Canada.
This press release contains forward-looking information. Forward-looking information is generally identifiable by the terminology used, such as "will", "expect", "believe", "estimate", "should", "anticipate", "potential", "opportunity" or other similar wording. Forward-looking information in this press release includes, but is not limited to, references, express or implied, to: estimates of recoverable contingent resources and the net present value thereof; forward prices for Western Canada Select heavy oil; the strength of Pan Orient's financial position; closing of the Arrangement transaction generally; transfer of Pan Orient's non-Thailand business to CanAsia; payment of cash consideration by the Purchaser and distribution of common shares of CanAsia to Pan Orient shareholders at closing; approval of the transaction by Pan Orient shareholders, the court and the TSXV; the date of closing; satisfaction of conditions to closing; the opportunity for Pan Orient shareholders to realize value for their investment and to continue to participate in the Sawn Lake heavy oil project and potential exploration and development activities in Thailand.
By its very nature, the forward-looking information contained in this press release requires Pan Orient and its management to make assumptions that may not materialize or that may not be accurate. The assumptions on which the forward-looking information is based include, but are not limited to: the satisfaction of the conditions to closing of the Arrangement in a timely manner; completing the Arrangement on the expected terms and on the timing anticipated; the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary shareholder, court and TSXV approvals; and other matters.
In addition, the forward-looking information is subject to known and unknown risks and uncertainties and other factors, some of which are beyond the control of Pan Orient, which could cause actual events, results, expectations, achievements or performance to differ materially. These risks and uncertainties include, without limitation, the ability to complete the Arrangement on the terms contemplated by the Arrangement Agreement and a related Separation Agreement on the timing and terms anticipated or at all; and that completion of the Arrangement is subject to a number of conditions which are typical for transactions of this nature and failure to satisfy any of these conditions, the emergence of a superior proposal or the failure to obtain approval of the shareholders, the court or the TSXV may result in the termination of the Arrangement Agreement. 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. The foregoing list of risks and uncertainties is not exhaustive.
Although Pan Orient believes that the expectations reflected in its forward-looking information are reasonable, it can give no assurances that those expectations will prove to be correct. Pan Orient undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
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 June 30, | Six Months Ended June 30, | % Change | |||
(thousands of Canadian dollars except where indicated) | 2022 | 2021 | 2022 | 2021 | ||
FINANCIAL | ||||||
Financial Statement Results – Excluding 50.01% Interest in Thailand Joint | ||||||
Net income attributed to common shareholders | 4,849 | 1,516 | 8,363 | 2,656 | 215 % | |
Per share – basic and diluted | $ 0.10 | $ 0.03 | $ 0.17 | $ 0.05 | 215 % | |
Cash flow used in operating activities (Note 2 & 3) | (1,044) | (620) | (2,011) | (1,611) | 25 % | |
Per share – basic and diluted | $ (0.02) | $ (0.01) | $ (0.04) | $ (0.03) | 25 % | |
Cash flow from investing activities (Note 2 & 3) | 2,693 | 6,012 | 2,976 | 8,622 | -65 % | |
Per share – basic and diluted | $ 0.05 | $ 0.12 | $ 0.06 | $ 0.17 | -65 % | |
Cash flow used in financing activities (Note 2 & 3) | - | (388) | (19,918) | (1,628) | 1,123 % | |
Per share – basic and diluted | $ 0.00 | $ (0.01) | $ (0.40) | $ (0.03) | 1,123 % | |
Change in cash and cash equivalents from discontinued operations (Note 3) | 4 | (103) | (147) | (136) | 8 % | |
Working capital (Other Financial Measure) (Note 6) | 11,917 | 28,931 | 11,917 | 28,931 | -59 % | |
Working capital & non-current deposits (Other Financial Measure) (Note 6) | 12,756 | 29,542 | 12,756 | 29,542 | -57 % | |
Long-term debt | - | - | - | - | - | |
Shares outstanding (thousands) | 49,794 | 49,881 | 49,794 | 49,881 | 0 % | |
Capital Commitments (Note 4) | 1,590 | 801 | 1,590 | 801 | 99 % | |
Working Capital and Non-current Deposits (Other Financial Measure) (Note 6) | ||||||
Beginning of period – Excluding Thailand Joint Venture | 11,513 | 23,415 | 32,084 | 23,577 | 36 % | |
Adjusted funds flow used in continuing operations (Note 3 & 6) | (1,298) | (1,163) | (2,460) | (2,087) | 18 % | |
Adjusted funds flow used in discontinued operations (Note 3) | (154) | (2) | (192) | (22) | 773 % | |
Cash and deposits acquired (Note 13) | - | - | 752 | - | 100 % | |
Special distribution (Note 14) | - | - | (19,917) | - | 100 % | |
Amounts received from (advanced to) Thailand Joint Venture | 132 | 38 | (71) | 48 | -250 % | |
Dividend received from Thailand Joint Venture | 2,565 | 5,974 | 2,565 | 8,574 | -70 % | |
Finance lease payments | - | (17) | (1) | (19) | -95 % | |
Normal course issuer bid | - | (371) | - | (1,609) | -100 % | |
Automatic shares purchase plan (Note 8) | - | 1,574 | - | 945 | -100 % | |
Effect of foreign exchange and other | (2) | 94 | (4) | 135 | -102 % | |
End of period - Excluding Thailand Joint Venture | 12,756 | 29,542 | 12,756 | 29,542 | -57 % | |
Pan Orient 50.01% interest in Thailand Joint Venture Working Capital and Non- | 12,699 | 1,383 | 12,699 | 1,383 | 818 % | |
Economic Results – Including 50.01% Interest in Thailand Joint Venture | ||||||
Total corporate adjusted funds flow (used in) from operations by region (Note 6) | ||||||
Canada | (1,290) | (1,158) | (2,444) | (2,074) | 18 % | |
Thailand (Note 9) | (8) | (5) | (16) | (13) | 23 % | |
From continuing operations | (1,298) | (1,163) | (2,460) | (2,087) | 18 % | |
Indonesia – Discontinued Operations | (154) | (2) | (192) | (22) | 773 % | |
Adjusted funds flow used in operations (excl. Thailand Joint Venture) | (1,452) | (1,165) | (2,652) | (2,109) | 26 % | |
Share of Thailand Joint Venture (Notes 1 & 5) | 7,571 | 5,045 | 13,265 | 9,371 | 42 % | |
Total corporate adjusted funds flow from operations | 6,119 | 3,880 | 10,613 | 7,262 | 46 % | |
Per share – basic and diluted | $ 0.12 | $ 0.08 | $ 0.21 | $ 0.14 | 48 % | |
Capital Expenditures – Petroleum and Natural Gas Properties (Note 7) | ||||||
Share of Thailand Joint Venture capital expenditures | 1,209 | 1,848 | 2,545 | 3,677 | -31 % | |
Total capital expenditures (incl. Thailand Joint Venture) | 1,209 | 1,848 | 2,545 | 3,677 | -31 % | |
Investment in Thailand Joint Venture | ||||||
Beginning of period | 28,164 | 26,252 | 24,094 | 28,329 | -15 % | |
Net income from Joint Venture | 6,071 | 2,669 | 10,421 | 4,571 | 128 % | |
Other comprehensive loss from Joint Venture | (693) | (1,011) | (1,177) | (2,380) | -51 % | |
Dividend paid | (2,565) | (5,974) | (2,565) | (8,574) | -70 % | |
Amounts (received from) advanced to Joint Venture | (132) | (37) | 72 | (47) | -253 % | |
End of period | 30,845 | 21,899 | 30,845 | 21,899 | 41 % | |
Three Months Ended June 30, | Six Months Ended June 30, | % Change | ||||
(thousands of Canadian dollars except where indicated) | 2022 | 2021 | 2022 | 2021 | ||
Thailand Operations | ||||||
Economic Results – Including 50.01% Interest in Thailand Joint Venture (Note 5) | ||||||
Oil sales (bbls) | 102,295 | 127,266 | 201,719 | 248,999 | -19 % | |
Average daily oil sales (BOPD) by Concession L53 | 1,124 | 1,399 | 1,114 | 1,376 | -19 % | |
Average oil sales price, before transportation (CDN$/bbl) | $ 156.27 | $ 78.43 | $ 139.71 | $ 76.18 | 83 % | |
Reference Price (volume weighted) and differential | ||||||
Crude oil (Brent $US/bbl) | $ 113.68 | $ 68.96 | $ 106.67 | $ 64.78 | 65 % | |
Exchange Rate $US/$Cdn | 1.29 | 1.24 | 1.29 | 1.26 | 2 % | |
Crude oil (Brent $Cdn/bbl) | $ 146.65 | $ 85.40 | $ 137.10 | $ 81.50 | 68 % | |
Sale price / Brent reference price | 107 % | 92 % | 102 % | 93 % | 9 % | |
Adjusted funds flow from (used in) operations (Note 6) | ||||||
Crude oil sales | 15,986 | 9,982 | 28,182 | 18,968 | 49 % | |
Government royalty | (824) | (538) | (1,442) | (1,017) | 42 % | |
Transportation expense | (254) | (296) | (498) | (588) | -15 % | |
Operating expense | (685) | (689) | (1,321) | (1,445) | -9 % | |
Field netback | 14,223 | 8,459 | 24,921 | 15,918 | 57 % | |
General and administrative expense (Note 9) | (195) | (164) | (402) | (411) | -2 % | |
Interest income | 1 | 1 | 1 | 1 | 0 % | |
Foreign exchange loss | (10) | (29) | (9) | (15) | -40 % | |
Current income tax | (6,456) | (3,227) | (11,262) | (6,136) | 84 % | |
Thailand - Adjusted funds flow from operations | 7,563 | 5,040 | 13,249 | 9,357 | 42 % | |
Adjusted funds flow from (used in) operations / barrel (CDN$/bbl) (Note 6) | ||||||
Crude oil sales | $ 156.27 | $ 78.43 | $ 139.71 | $ 76.18 | 83 % | |
Government royalty | (8.06) | (4.23) | (7.15) | (4.08) | 75 % | |
Transportation expense | (2.48) | (2.33) | (2.47) | (2.36) | 5 % | |
Operating expense | (6.70) | (5.41) | (6.55) | (5.80) | 13 % | |
Field netback | $ 139.04 | $ 66.47 | $ 123.54 | $ 63.93 | 93 % | |
General and administrative expense (Note 9) | (1.91) | (1.29) | (1.99) | (1.65) | 21 % | |
Interest Income | 0.01 | 0.01 | - | - | 23 % | |
Foreign exchange loss | (0.10) | (0.23) | (0.04) | (0.06) | -26 % | |
Current income tax | (63.11) | (25.36) | (55.83) | (24.64) | 127 % | |
Thailand – Adjusted funds flow from operations | $ 73.93 | $ 39.60 | $ 65.68 | $ 37.58 | 75 % | |
Government royalty as percentage of crude oil sales | 5.2 % | 5.4 % | 5.1 % | 5.4 % | 0 % | |
Income tax as percentage of crude oil sales | 40 % | 32 % | 40 % | 32 % | 8 % | |
As percentage of crude oil sales | ||||||
Expenses - transportation, operating, G&A and other | 7 % | 12 % | 8 % | 13 % | -5 % | |
Government royalty, SRB and income tax | 46 % | 38 % | 45 % | 38 % | 7 % | |
Adjusted funds flow from operations, before interest income | 47 % | 50 % | 47 % | 49 % | -2 % | |
Wells drilled | ||||||
Gross | - | 1 | - | 3 | -100 % | |
Net | - | 0.5 | - | 1.5 | -100 % | |
Financial Statement Presentation Results – Excl. 50.01% Interest in Thailand Joint Venture (Note 1) | ||||||
General and administrative expense (Note 9) | (8) | (4) | (16) | (13) | 23 % | |
Adjusted funds flow used in consolidated operations | (8) | (4) | (16) | (13) | 23 % | |
Adjusted fund flow Included in Investment in Thailand Joint Venture | ||||||
Net income from Thailand Joint Venture | 6,071 | 2,669 | 10,421 | 4,571 | 128 % | |
Add back non-cash items in net income | 1,500 | 2,376 | 2,844 | 4,800 | -41 % | |
Adjusted funds flow from Thailand Joint Venture | 7,571 | 5,045 | 13,265 | 9,371 | 42 % | |
Thailand – Economic adjusted funds flow from operations (Note 5) | 7,563 | 5,041 | 13,249 | 9,358 | 42 % | |
Three Months Ended June 30, | Six Months Ended June 30, | % Change | |||
(thousands of Canadian dollars except where indicated) | 2022 | 2021 | 2022 | 2021 | |
Canada Operations | |||||
Interest income | 6 | 12 | 10 | 18 | -44 % |
General and administrative expenses (Note 9) | (527) | (521) | (1,105) | (1,041) | 6 % |
Operating expense (Note 10) | (105) | (97) | (171) | (139) | 23 % |
Transaction costs | (910) | - | (910) | - | 100 % |
Stock based compensation on restricted share units (note 11) | (101) | (253) | (368) | (352) | 5 % |
Realized foreign exchange (loss) gain (Note 12) | (50) | 2 | (72) | 1 | -7,300 % |
Unrealized foreign exchange gain (loss) (Note 12) | 397 | (301) | 172 | (561) | -131 % |
Canada – Adjusted funds flow used in operations | (1,290) | (1,158) | (2,444) | (2,074) | 18 % |
Add Thailand general and administrative expense (note 9) | (8) | (4) | (16) | (13) | 23 % |
Add back changes in non-cash working capital, continuing operations | 651 | 242 | 621 | (85) | -831 % |
Add back unrealized foreign exchange gain (loss) | (397) | 300 | (172) | 561 | -131 % |
Cash flow used in operating activities, continuing operations | (1,044) | (620) | (2,011) | (1,611) | 25 % |
Indonesia - Discontinued Operations | |||||
General and administrative expense (Note 9) | (54) | (48) | (94) | (99) | -5 % |
Exploration recovery (expense) | 3 | (2) | (79) | (3) | 2,533 % |
Unrealized foreign exchange (loss) gain | (103) | 48 | (19) | 80 | -124 % |
Indonesia – Adjusted funds flow used in operations | (154) | (2) | (192) | (22) | 773 % |
Add back changes in non-cash working capital, discontinued operations | 172 | (101) | 81 | (114) | -171 % |
Settlement of decommissioning provision | (14) | - | (36) | - | 100 % |
Cash flow from (used in) operating activities, discontinued operations | 4 | (103) | (147) | (136) | 8 % |
(1) | Pan Orient holds a 50.01% equity interest in Pan Orient Energy (Siam) Ltd. as a joint arrangement where the Company | ||
(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 determining final steps | ||
(4) | Refer to Commitments note disclosure of the June 30, 2022 and June 30, 2021 Interim Condensed Consolidated Financial | ||
(5) | For the purpose of providing more meaningful economic results from operations for Thailand, the amounts presented include | ||
(6) | Total corporate adjusted funds flow from operations (non-GAAP Financial Measure) is cash flow from operating activities prior | ||
(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 | ||
(9) | General & administrative expenses, excluding non-cash accretion expense. The nominal amount of G&A shown in the six | ||
(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 | ||
(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 | ||
(14) | In February 2022, the Company paid a $0.40 per share special distribution to shareholders following shareholder approval | ||
(15) | Tables may not add due to rounding. | ||
SOURCE Pan Orient Energy Corp.
Pan Orient Energy Corp., Jeff Chisholm, President and CEO (located in Bangkok, Thailand), Email: [email protected] - or - Bill Ostlund, Vice President Finance and CFO, Telephone: (403) 294-1770, Extension 233
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