CALGARY, ALBERTA -- (Marketwire) -- 03/28/13 -- Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE: POE) reports 2012 year-end and fourth 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 net to Pan Orient.
The Corporation is today filing its audited consolidated financial statements as at and for the year ended December 31, 2012 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 Corporation's website, www.panorient.ca.
-- On June 15, 2012 Pan Orient completed the sale of Pan Orient's 60% interests in Thailand Concessions L44, L33 and SW1 for proceeds, net of estimated costs and income tax, of $159.3 million. The Company recorded an after tax gain of $79.7 million for this Thailand disposition transaction. As at December 31, 2012 there was $3.0 million held in escrow to support any warranty claims until December 15, 2013.-- On September 6, 2012 Pan Orient paid shareholders a special distribution of $42.5 million ($0.75 per share) associated with the June 15, 2012 sale of Thailand subsidiaries. The special distribution represented a return of capital to shareholders and additional tax information related to the special distribution is available on the Pan Orient website.-- Total corporate funds flow from operations in 2012 of $34.8 million ($0.61 per share), net proceeds from the Thailand disposition of $159.3 million ($2.81 per share) and net income attributable to common shareholders of $86.6 million ($1.53 per share). This compares with corporate funds flow from operations in 2011 of $45.9 million ($0.83 per share), and net income attributable to common shareholders of $24.0 million ($0.43 per share).-- Thailand oil sales in 2012 averaged 1,430 BOPD with 937 BOPD from Concession L53 and oil sales from Concessions L44, L33 and SW1 until their sale June 15, 2012 contributed 493 BOPD in average oil sales for 2012. Funds flow from operations in Thailand for 2012 were $38.7 million, or $73.97 per barrel.-- After the sale of the majority of Pan Orient's Thailand interests in June 2012 Pan Orient retained its operated 100% interest in Concession L53 in onshore Thailand which has oil production from conventional sandstone reservoirs and exploration acreage. In early 2013 the exploration period for Concession L53 was renewed until January 2016 with a relinquishment of 25% of Concession lands and new commitments including a 3D seismic survey and three exploration wells with a stated commitment of US$2.6 million. Average oil sales in 2012 for Concession L53 from the L53-A and L53-D fields of 937 BOPD contributed funds flow from operations after tax of $27.6 million (or $80.55 per barrel). Oil sales from Concession L53 were 1,029 BOPD in the fourth quarter of 2012. Oil sales averaged 824 BOPD in the first two months of 2013 due to downtime associated with workovers and declining oil production rates from the deeper "C" sandstone zones at the L53-DST3 well. Capital expenditures in 2012 for Concession L53 of $26.9 million included $12.3 million for drilling (the L53-G and L53-DST3 wells drilled in 2012 and the L53-D2 well which spudded in mid-December 2011), $4.9 million of equipment inventory, $4.6 million for workovers and water disposal facilities, $3.5 million for the 100 square kilometer 3D seismic program northeast of the previous 3D seismic coverage and $1.6 million in costs associated with the 2013 drilling program.-- In November 2012, the Company entered into an agreement for a farm-in at Thailand on-shore Concession L45/50 ("L45"), which is immediately west of Concession L53, whereby the Company will become the operator and will earn up to a 60% interest by the acquisition of a minimum of 50 square kilometers of 3D seismic data late in first quarter of 2013 following by the drilling of up to two exploration wells.-- Pan Orient conducted active exploration programs in Indonesia during 2012 with capital expenditures of $40.0 million relating to the Citarum, Batu Gajah, South CPP and East Jabung Production Sharing Contract ("PSC") areas.-- Capital expenditures of $35.9 million at the Citarum PSC were primarily focused on exploration drilling with $4.7 million for the Cataka-1 well, $18.8 million for the Jatayu-1 well, $4.9 million for the Geulis-1 well, $5.0 million for the Cataka-1A well, and $2.5 million for capitalized exploration overhead and other costs. Difficult drilling was experienced in 2012 in the complex fold belt environment of the Citarum PSC. -- The Cataka-1 exploration well commenced drilling on December 31, 2011 and was junked and abandoned due to severe drilling difficulties. The Cataka prospect is being re-drilled with the Cataka-1A well. -- The Jatayu-1 exploration well commenced drilling in March 2012 and was suspended in September due to drilling difficulties. Drilling recommenced in December utilizing slim hole drilling equipment. A severe overpressure gas zone encountered created an unacceptable level of well control risk and formation water present in gas zone suggested no commercial potential resulting in the well being abandoned. -- The Geulis-1 exploration well was drilled from early October to early November and the results indicated that the Geulis prospect is not deemed commercially viable on a stand-alone basis but may be commercially viable as part of a larger development should exploration success be achieved at the Cataka or Jatayu prospects. The well has been abandoned. -- The Cataka-1A well spudded in early December and the well was drilled and cased to a depth of 1,692 feet before the well was suspended in January 2013 due to numerous issues encountered relative to the operation of the drilling rig. The Chief Operating Officer, based in Jakarta, Indonesia, who joined Pan Orient in January 2013, has implemented a number of initiatives with regard to drilling personnel, equipment, contractors and well design for the re-entry of the Cataka-1A well to recommence drilling by early June.-- The Company entered into two agreements in October 2012 to adjust Indonesia PSC ownership interests in conjunction with drilling operations. The Company purchased an additional 20% participating interest in the Citarum PSC in consideration for assuming the partner's work program obligations effective July 2012 plus contingent future payments upon the delivery of petroleum from a commercial development of hydrocarbons from discoveries made within the Citarum PSC. The Company also completed the access agreements with the surface rights holder of lands covering a large portion of the Batu Gajah and South CPP PSCs. In consideration for unlimited access to an extensive road network and surface lands covering the Batu Gajah and South CPP PSCs through the entire exploration, development and production period, the Company will hold in trust a 20% carried interest in both the Batu Gajah and South CPP PSC's for the surface rights holder and will continue to pay certain access fees as mandated by the various Government of Indonesia bodies. All costs incurred by the Company in relation to the 20% carried interest will be preferentially recovered from the future cost recovery on any potential future discovery that is brought on stream.-- In August 2012 Pan Orient increased its ownership of Andora Energy Corporation ("Andora") to 71.8% through providing funding of $24.7 million to Andora pursuant to a rights offering by Andora. Proceeds will be used for the procurement and construction of a thermal facility, drilling of one horizontal well pair, and operations in respect of its Sawn Lake Steam Assisted Gravity Drainage ("SAGD") development project at an estimated cost of $23.5 million. In addition, Andora acquired a private company in July 2012 which provides Andora with proprietary thermal facility design / process capabilities and expands the Andora team with thermal facility design and operating specialists. The cash balances, capital expenditures and operations of Andora are reported as part of Pan Orient.-- Working capital and non-current deposits at December 31, 2012 of $116.4 million, with no long-term debt and $10.3 million of equipment inventory to be utilized for future Thailand and Indonesia operations. Pan Orient will maintain financial strength while at the same time conducting active seismic and drilling programs in Thailand and Indonesia, and with $23.5 million of capital expenditures through Andora for advancement of the SAGD pilot program at Sawn Lake in Alberta.-- Pan Orient continued to strengthen the organization during 2012. In September 2012 Mr. Jeff Chisholm, President and CEO of the Corporation, relocated to Bangkok, Thailand to be closer to Pan Orient's key Asian operations and business development activities. In November 2012 Mr. Gerry Macey, a director of Pan Orient since 2005, was appointed Chairman of the Corporation, and in January 2013 Mr. Edward Bush joined Pan Orient as Chief Operating Officer and is based in Jakarta, Indonesia.