2015 Second Quarter Financial & Operating Results
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E-mailCALGARY, ALBERTA -- (Marketwired) -- 08/12/15 -- Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE: POE) reports its 2015 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 Corporation is today filing its unaudited consolidated financial statements as at and for the six months ended June 30, 2015 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.
Commenting today on Pan Orient's second quarter 2015 results, President and CEO Jeff Chisholm stated: "In the second quarter Pan Orient received the necessary Government of Indonesia approvals to complete the East Jabung farmout and received the upfront $9.8 million cash payment, further strengthening the Company's balance sheet with working capital and deposits of $86.9 million, mainly held in United States dollars, and zero debt at a time of weak oil prices and in stark contrast to many of our peers. The third quarter will be focused on increasing production in Concession L53 in Thailand where two workovers are currently underway, and drilling in Indonesia of the Akeh-1 exploration well in the 77% Pan Orient held and operated Batu Gajah PSC."
HIGHLIGHTS FOR THE FIRST HALF OF 2015
-- Completed the sale on February 2, 2015 of a 50% equity interest in
Thailand subsidiary for estimated net proceeds to Pan Orient, after
closing adjustments and costs, of $52.0 million, including a working
capital adjustment of $3.1 million.
-- Completed the farm-out on June 1, 2015 of a 51% participating interest
and operatorship of the East Jabung Production Sharing Contract ("PSC")
to a subsidiary of Talisman Energy Inc. Pan Orient received initial
consideration of $9.8 million and the farminee is funding the first
USD$5 million of Pan Orient's share of the exploration program plus
funding the associated general and administrative expenses of the PSC.
The first well is planned to be drilled in the second quarter of 2016 at
the Anggun Prospect.
-- Preparation is underway in Indonesia to commence drilling of the Akeh-1
exploration well at Batu Gajah PSC in late August 2015 for an
approximate cost of $5 million.
-- Bitumen production at the Sawn Lake, Alberta steam assisted gravity
drainage ("SAGD") demonstration project of Andora Energy Corporation
("Andora") continues to ramp-up and the steam chamber has still not yet
reached the top of the Bluesky reservoir. Bitumen production on a 100%
basis averaged 399 BOPD (200 BOPD net to Andora) in July 2015 with a
steam-oil ratio ("SOR") of 4.4.
-- On June 16, 2015 a subsidiary of Andora was granted the Canadian patent
for Thermal System and Process for Producing Steam from Oilfield
Produced Water. The Company believes that this technology could achieve
significant benefits in SAGD field development.
-- Pan Orient's 50% interest in the Thailand Joint Venture for Concession
L53 in the second quarter reported oil sales of 262 BOPD, a realized oil
price of $70.32 per barrel and generated $1.0 million in funds flow from
operations, or $39.92 per barrel.
-- Repurchased 1,330,800 common shares under the Normal Course Issuer Bid
to June 30, 2015, resulting in 55.4 million outstanding Pan Orient
shares at June 30, 2015.
-- Strong financial position with working capital and non-current deposits
of $86.9 million as at June 30, 2015, which is mainly held as cash
deposits in Canada denominated in United States dollars. Pan Orient has
no long-term debt.
2015 SECOND QUARTER OPERATING RESULTS
-- The financial statements reflect that on February 2, 2015 the Company
sold a 50% equity interest in its subsidiary Pan Orient Energy (Siam)
Ltd. and retained a 50% equity interest. From February 2, 2015 forward
the retained 50% equity interest is reclassified as a jointly controlled
Joint Venture and Pan Orient's 50% equity interest in the working
capital, assets, capital expenditures, liabilities and operations of Pan
Orient Energy (Siam) Ltd. are recorded as Investment in Thailand Joint
Venture.
-- Net loss attributable to common shareholders for the second quarter of
2015 of $3.2 million ($0.06 loss per share). Net income attributable to
common shareholders for the first six months of 2015 of $30.7 million
($0.54 per share) is primarily due to the sale a 50% equity interest in
its subsidiary Pan Orient Energy (Siam) Ltd. during the first quarter of
2015.
-- For the second quarter of 2015, the Company recorded total corporate
funds used in operations of $0.9 million ($0.02 per share), including
the results of the 50% interest in the Thailand joint venture. For the
six months ended June 30, 2015, total corporate funds used in operations
were $0.6 million ($0.01 per share) and funds flow from sale of the
Thailand interest of $48.9 million ($0.88 per share).
-- Pan Orient reports capital expenditures of $2.8 million in the second
quarter of 2015, with $1.1 million in Indonesia and $1.7 million in
Canada at the Sawn Lake SAGD demonstration project of Andora. In
addition, Pan Orient's share of Thailand joint venture capital
expenditures was $1.1 million, which was recorded in Investment in
Thailand Joint Venture. During the first six months of 2015 capital
expenditures reported were $1.5 million in Indonesia, $0.1 million in
Thailand prior to February 2, 2015 and $3.1 million in Canada at the
Sawn Lake SAGD demonstration project of Andora. In addition, Pan
Orient's share of Thailand joint venture capital expenditures from
February 2 to June 30, 2015 was $3.6 million, which was recorded in
Investment in Thailand Joint Venture.
-- During the second quarter of 2015, Pan Orient repurchased 1,187,900
common shares at prices ranging from $1.40 to $1.67 per share under its
normal course issuer bid. Subsequent to June 30th, Pan Orient
repurchased an additional 40,300 common shares at prices ranging from
$1.25 to $1.35 per share.
-- At June 30, 2015 Pan Orient had $86.9 million of working capital and
non-current deposits. Working capital and non-current deposits were
comprised of $73.2 million cash, $3.9 million of non-current deposits,
$12.7 million of Canadian taxes receivable, other receivables & prepaid
expenses of $2.3 million and less accounts payable of $5.2 million.
There is $1.8 million of equipment inventory at the Batu Gajah PSC in
Indonesia to be utilized in future drilling operations. In addition, Pan
Orient's Investment in Thailand Joint Venture includes $0.2 million of
Thailand working capital and non-current deposits and $2.0 million of
equipment inventory to be utilized for future Thailand Joint Venture
operations.
-- Pan Orient had outstanding capital commitments as at June 30, 2015 of
$1.9 million in Indonesia associated with the Company's 49%
participating interest in the East Jabung PSC. In Canada, there are
capital commitments of $300,000 with respect to outstanding purchase
orders and natural gas pipeline tie-in and tariff charges associated
with the Sawn Lake SAGD demonstration project of Andora.
-- Pan Orient's 50% Interest in the Thailand Joint Venture for Concession
L53
-- Average oil sales of 262 BOPD during the second quarter of 2015 and
generated $1.0 million in funds flow from operations, or $39.92 per
barrel. For the first half of 2015, average oil sales of 287 BOPD
and $1.7 million in funds flow from operations, or $33.20 per
barrel.
-- Per barrel amounts during the second quarter of 2015 were a realized
price for oil sales of $70.32, transportation expenses of $1.68,
operating expenses of $17.61, general and administrative expenses of
$7.76 and a royalty to the Thailand government of $3.52. Oil sales
revenue during this period was allocated 38% to expenses for
transportation, operating, and general & administrative, 5% to the
government of Thailand for royalties, and 57% to Pan Orient. No
Thailand petroleum income taxes or Special Remuneratory Benefit tax
was recorded during the quarter.
-- Oil sales in July 2015 at Concession L53 were 236 BOPD net to Pan
Orient's 50% interest in the Joint Venture.
-- Pan Orient commenced a three well Thailand drilling program in late
February. The L53-ANC1 exploration well failed to encounter
commercial hydrocarbons but initial interpretations suggest that
potential quality reservoir sands may be expected further east. The
L53-DC1ST1 appraisal well encountered 52 meters of true vertical
thickness of net oil pay in ten sandstone intervals, was placed on
production in March to test various zones, added 8 BOPD in the first
quarter and added 67 BOPD in the second quarter net to Pan Orient.
The L53-DEXT1ST2 appraisal well encountered 24 meters of true
vertical thickness of net oil pay in nine sandstone intervals, was
placed on production in April to test various zones and added 12
BOPD in the second quarter net to Pan Orient.
-- Capital expenditures were $1.1 million in Thailand during the second
quarter of 2015. The $3.6 million of Thailand capital expenditures
during the first half of 2015 at Concession L53, including the 50%
interest in the Thailand Joint Venture from February 2, 2015
onwards, were comprised of $3.1 million for the three well drilling
program, $0.4 million for workovers and other capital expenditures
and $0.1 million for capitalized general and administrative
expenses.
-- Indonesia
-- Capital expenditures in Indonesia were $1.5 million during the first
half of 2015, with $0.4 million in the first quarter and $1.1
million in the second quarter as preparation began for drilling of
the Akeh-1 exploration well at Batu Gajah PSC. On a year to date
basis, there have been capital expenditures of $0.5 million at the
Batu Gajah PSC related to the Akeh-1 exploration well and $1.0
million related to capitalized general and administrative expenses
and other expenditures.
-- Canada
-- Andora is the operator and holds a 50% working interest the Sawn
Lake, Alberta SAGD demonstration project. Andora is a 71.8% owned
subsidiary of Pan Orient and is consolidated with Pan Orient for
reporting purposes.
-- Capital expenditures for the Sawn Lake demonstration project during
the first six months of 2015 have been $3.1 million. Capital
expenditures are related to final construction of the SAGD facility,
installation of additional equipment for processing and treating the
bitumen production at site, replacement of the electrical
submersible pump, purchase of inventory and capitalization of costs
and revenues of the demonstration project.
-- The SAGD producing well is still in its ramp-up phase and the steam
chamber has not reached the top of the Bluesky formation sandstone
reservoir. During the first quarter of 2015, bitumen production
averaged 290 BOPD (145 BOPD net to Andora) with an SOR of 5.6.
During the second quarter of 2015, bitumen production averaged 306
BOPD (153 BOPD net to Andora) with an SOR of 5.6 despite being shut-
in from April 11th to April 30th due to a problem with the
electrical submersible pump.
-- Production results to date are not necessarily indicative of long-
term performance or of ultimate recovery and the Sawn Lake
demonstration project has not yet proven that it is commercially
viable. All related costs and revenues are being capitalized as
exploration and evaluation assets until commercial viability is
achieved.
OUTLOOK
-- Indonesia
-- The Company is preparing to commence drilling of the Akeh-1
exploration well at the Batu Gajah PSC by the end of August.
-- Following completion of the East Jabung PSC farm-out on June 1,
2015, a subsidiary of Talisman Energy Inc. is now the operator with
a 51% participating interest. The first exploration well at the PSC
is expected to be drilled at the Anggun prospect in the second
quarter of 2016 under the terms of the farm-out agreement.
Gaffney Cline & Associates completed third party engineer NI-51-101
compliant Prospective Resources Report for the Anggun Prospect
effective June 30, 2015. Prospective Resources are defined as those
quantities of petroleum estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective Resource
volumes are presented as unrisked. Prospective Resources have an
associated geological chance of success. Prospective Resources are
further classified as "High", "Best" and "Low" in accordance with
the range of uncertainty. "Mean" refers to the expected average
value of all possible successful outcomes. The report assigned
unrisked mean estimated ultimate recoverable oil Prospective
Resources of 44, 28 and 51 million barrels net to Pan Orient's 49%
working interest in three potential reservoir horizons at the Anggun
prospect. The assigned geological chance of success for each of
these three potential reservoir horizons is 20%, 11% and 26%
respectively. There is no certainty that any portion of the
Prospective Resources will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any portion
of the resources.
-- Canada - Sawn Lake (Operated by Andora, in which Pan Orient has a 71.8%
ownership)
-- The Company expects the steam chamber to reach the top of the
Bluesky formation sandstone reservoir by the end of September 2015
and maximum production is anticipated to occur by the end of
November 2015.
-- Thailand
-- The focus for the remainder of 2015 is on workovers of existing wells to
maximize production including one workover at L53-A field and another at
L-53G currently underway. A decision on the timing of further Thailand
exploration drilling will be made later in 2015.
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: well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, and information on future production and project start-ups. 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.
------------------------------------------------
Financial and Operating Three Months Ended Six Months Ended
Summary June 30, June 30,
-----------------------------------------------
(thousands of Canadian
dollars except where
indicated) 2015 2014 2015 2014 % Change
----------------------------------------------------------------------------
FINANCIAL
----------------------------------------------------------------------------
Financial Statement Results
- Excluding 50% Interest in
Thailand Joint Venture from
February 2, 2015 onwards
(Note 1)
Net income (loss) attributed
to common shareholders (3,248) (147) 30,692 (332)
Per share - basic and
diluted $ (0.06) $ (0.01) $ 0.54 $ (0.01)
Cash flow from (used in)
operating activities (Note
2) (2,224) 3,881 (2,734) 8,480 -132%
Per share - basic and
diluted $ (0.04) $0.07 $ (0.05) $ 0.15 -132%
Cash flow from (used in)
investing activities (Note
2) 7,734 (11,661) 51,737 (22,477) -330%
Per share - basic and
diluted $ 0.14 $ (0.21) $ 0.92 $ (0.40) -330%
Working capital 82,965 41,291 82,965 41,291 101%
Working capital & non-
current deposits 86,909 43,789 86,909 43,789 98%
Long-term debt - - - - 0%
Shares outstanding
(thousands) 55,430 56,760 55,430 56,760 -2%
----------------------------------------------------------------------------
Working Capital and Non-
current Deposits
Beginning of period 84,955 44,040 40,854 47,889 -15%
Funds flow from (used in)
consolidated operations
(Note 4) (1,893) 4,600 (2,010) 8,967 -122%
Proceeds from 2012 sale of
Thailand interest - 174 - 174 -100%
Funds flow from sale of
Thailand interest - - 48,877 - 100%
Working capital and non-
current deposits
derecognized on sale of
Thailand interest and
recorded in Investment in
Joint Venture - - (3,151) - 100%
Consolidated capital
expenditures (Note 6) (2,816) (4,182) (4,680) (15,192) -69%
Funds flow used in
investment in Thailand
Joint Venture (16) - (44) - 100%
Disposal of petroleum and
natural gas assets (Note
7) 9,764 - 9,764 2,698 262%
Settlement of
Decommissioning
liabilities - (98) - (98) -100%
Normal course issuer bid (1,809) - (2,011) - 100%
Foreign exchange impact on
working capital (1,276) (745) (690) (649) 6%
------------------------------------------------
End of period 86,909 43,789 86,909 43,789 98%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Economic Results - Including
50% Interest in Thailand
Joint Venture from February
2, 2015 onwards (Note 3)
Total funds flow from (used
in) operations (Note 4) (941) 4,600 (581) 8,967 -106%
Per share - basic and
diluted $ (0.02) $ 0.08 $ (0.01) $ 0.16 -106%
Funds flow from (used in)
operations by region (Note
4)
Canada (Note 5) (615) (609) (632) (509) 24%
Thailand - 100% to
February 1, 2015 (Note 1) - 5,423 298 10,404 -97%
Indonesia (1,278) (214) (1,676) (928) 81%
------------------------------------------------
Funds flow from (used in)
consolidated operations (1,893) 4,600 (2,010) 8,967 -122%
Share of Thailand Joint
Venture (Note 3) 952 - 1,429 - 100%
------------------------------------------------
Total funds flow from
(used in) operations (941) 4,600 (581) 8,967 -106%
------------------------------------------------
------------------------------------------------
Funds flow from sale of
Thailand interest
Sales proceeds - - 53,456 -
Transaction costs - - (1,428) -
Working capital and non-
current deposits in
Thailand interest sold - - (3,151) -
------------------------------------------------
Total funds flow from
disposition of Thailand
interest - - 48,877 -
----------------------------------------------------------------------------
Petroleum and natural gas
properties
Capital expenditures (Note
6) 3,871 4,182 8,260 15,192 -46%
Dispositions - excluding
sale of Thailand interest
(Note 7) (9,764) - (9,764) (2,698) 262%
Capital Expenditures (Note
6)
Canada (Note 5) 1,693 2,576 3,067 6,722 -54%
Thailand - 100% to February
1, 2015 (Note 1) - 879 60 3,433 -98%
Indonesia 1,123 727 1,553 5,037 -69%
------------------------------------------------
Consolidated capital
expenditures 2,816 4,182 4,680 15,192 -69%
Share of Thailand Joint
Venture capital
expenditures 1,055 - 3,580 - 100%
------------------------------------------------
Total capital expenditures 3,871 4,182 8,260 15,192 -46%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Investment in Thailand Joint
Venture
----------------------------------------------------------------------------
Beginning of period 38,758 - - -
Investment retained on
sale of Thailand interest - - 38,587 -
Net loss from Joint
Venture (290) - (583) -
Other comprehensive loss
from Joint Venture (1,798) - (1,362) -
Amounts advanced to Joint
Venture 16 - 44 -
------------------------------------------------
End of period 36,686 - 36,686 -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
(thousands of Canadian
dollars except where
indicated) 2015 2014 2015 2014 Change
----------------------------------------------------------------------------
Thailand Operations
----------------------------------------------------------------------------
Economic Results - Including
50% Interest in Thailand
Joint Venture from February
2, 2015 onwards (Note 3)
Oil sales (bbls) 23,848 70,016 52,023 134,133 -61%
Average daily oil sales
(BOPD) by Concession L53 262 769 287 741 -61%
Average oil sales price,
before transportation
(CDN$/bbl) $ 70.32 $ 104.05 $ 64.86 $ 104.63 -38%
Reference Price (volume
weighted) and differential
Crude oil (Brent $US/bbl) $ 61.66 $ 109.79 $ 64.87 $ 108.96 -40%
Exchange Rate $US/$Cdn 1.23 1.10 1.24 1.11 12%
Crude oil (Brent $Cdn/bbl) $ 75.93 $ 120.92 $ 70.22 $ 120.93 -42%
Sale price / Brent
reference price 93% 86% 92% 87% 6%
Funds flow from (used in)
operations (Note 4)
Crude oil sales 1,677 7,285 3,374 14,035 -76%
Government royalty (84) (364) (165) (693) -76%
Transportation expense (40) (116) (86) (220) -61%
Operating expense (420) (884) (895) (1,922) -53%
------------------------------------------------
Field netback 1,133 5,921 2,228 11,200 -80%
General and administrative
expense (Note 8) (185) (510) (499) (809) -38%
Interest income 4 12 6 14 -57%
Realized foreign exchange
loss - - (8) - 100%
Current income tax - - - (1) -100%
------------------------------------------------
Funds flow from operations 952 5,423 1,727 10,404 -83%
------------------------------------------------
------------------------------------------------
Funds flow from operations /
barrel (CDN$/bbl) (Note 4)
Crude oil sales $ 70.32 $ 104.05 $ 64.86 $ 104.63 -38%
Government royalty (3.52) (5.20) (3.17) (5.17) -39%
Transportation expense (1.68) (1.66) (1.65) (1.64) 1%
Operating expense (17.61) (12.63) (17.20) (14.33) 20%
------------------------------------------------
Field netback 47.51 84.56 $ 42.83 $ 83.49 -49%
General and administrative
expense (Note 8) (7.76) (7.28) (9.59) (6.02) 59%
Interest Income 0.17 0.17 0.12 0.10 15%
Realized foreign exchange
loss - - (0.15) - 100%
Current income tax - - - (0.01) -100%
------------------------------------------------
Thailand - Funds flow from
operations $ 39.92 $ 77.45 $ 33.20 $ 77.56 -57%
------------------------------------------------
------------------------------------------------
Government royalty as
percentage of crude oil
sales 5% 5% 5% 5% 0%
Income tax & SRB as
percentage of crude oil
sales - - - - 0%
As percentage of crude oil
sales
Expenses - transportation,
operating, G&A and other 38% 21% 44% 21% 23%
Government royalty, SRB
and income tax 5% 5% 5% 5% 0%
Funds flow from
operations, before
interest income 57% 74% 51% 74% -23%
Wells drilled (wells were
drilled after February 1,
2015)
Gross - - 3 1 200%
Net - - 1.5 1.0 50%
----------------------------------------------------------------------------
Financial Statement
PresentationResults -
Excluding 50% Interest in
Thailand Joint Venture from
February 2, 2015 onwards
(Note 1)
Crude oil sales - 7,285 809 14,035 -94%
Government royalty - (364) (38) (693) -95%
Transportation expense - (116) (24) (220) -89%
Operating expense - (884) (257) (1,922) -87%
------------------------------------------------
Field netback - 5,921 490 11,200 -96%
General and administrative
expense (Note 8) - (510) (185) (809) -77%
Interest income - 12 1 14 -93%
Realized foreign exchange
loss - - (8) -
Current income tax - - - (1) -100%
------------------------------------------------
Funds flow from
consolidated operations - 5,423 298 10,404 -97%
------------------------------------------------
------------------------------------------------
Included in Investment in
Thailand Joint Venture
Net loss from Thailand
Joint Venture (290) - (583) -
Add back non-cash items in
net loss 1,242 - 2,012 -
------------------------------------------------
Funds flow from Thailand
Joint Venture 952 - 1,429 -
------------------------------------------------
------------------------------------------------
Thailand - Economic funds
flow from operations 952 5,423 1,727 10,404 -83%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
(thousands of Canadian dollars
except where indicated) 2015 2014 2015 2014 Change
----------------------------------------------------------------------------
Canada Operations (Note 6)
----------------------------------------------------------------------------
Interest income 39 61 86 149 -42%
General and administrative
expenses (Note 8) (860) (679) (1,434) (1,226) 17%
Realized foreign exchange gain 206 9 716 568 26%
----------------------------------------------
Canada - Funds flow used in
operations (615) (609) (632) (509) 24%
----------------------------------------------------------------------------
Indonesia Operations
----------------------------------------------------------------------------
General and administrative
expense (Note 8) (329) (255) (786) (552) 42%
Exploration expense (Note 9) (133) 15 (294) (294) 0%
Realized foreign exchange gain
(loss) (360) 26 (140) (82) 71%
Current income tax (456) - (456) - 100%
----------------------------------------------
Indonesia - Funds flow used
in operations (1,278) (214) (1,676) (928) 81%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) On February 2, 2015 the Company sold a 49.99% equity interest in its
subsidiary Pan Orient Energy (Siam) Ltd. and retained a 50.01% equity
interest in the company. The transaction resulted in Pan Orient Energy
(Siam) Ltd. changing from a wholly-owned and controlled subsidiary to a
joint arrangement where the Company shares joint control with the
purchaser of the 49.99% equity interest. The resulting joint arrangement
is classified as a Joint Venture under IFRS 11 and is required to be
accounted for using the equity method of accounting rather than
consolidated as it had previously been when Pan Orient Energy (Siam)
Ltd. was a controlled subsidiary. The change in accounting from
consolidation to the equity method has resulted in the accounts of Pan
Orient Energy (Siam) Ltd. being derecognized from the consolidated
financial statements and a net investment related to the portion of the
interest retained being recognized at its estimated fair value upon
initial recognition. Pan Orient's 50.01% equity interest in the assets,
liabilities, working capital, operations and capital expenditures of Pan
Orient Energy (Siam) Ltd. from February 2, 2015 forward are recorded in
Investment in Thailand Joint Venture.
(2) As set out in the Consolidated Statements of Cash Flows in the unaudited
Consolidated Financial Statements of Pan Orient Energy Corp.
(3) For the purpose of providing more meaningful economic results from
operations for Thailand, and for comparison to previous periods, the
amounts presented consist of:
Company's share of Thailand funds flow from operation at 100% from
January 1, 2015 to February 1, 2015 (being the beginning of the year to
the last date before the equity interest was completed as discussed in
note 1)
Company's share of Thailand funds flow from operating at 50.01%
subsequent to February 2, 2015 (when the Company completed the equity
sale transaction).
(4) Funds flow from operations is cash flow from operating activities prior
to changes in non-cash working capital, reclamation costs and excluding
the recovery of prior year income taxes plus the corresponding amount
from the Thailand operations which is recorded in Investment in Joint
Venture for financial statement purposes. This measure is used by
management to analyze operating performance and leverage. 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. 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.
(5) The Sawn Lake Demonstration Project in Alberta has not yet proven that
it is commercially viable and all related costs and revenues are being
capitalized as exploration and evaluation assets until commercial
viability is achieved.
(6) Cost of capital expenditures, excluding decommissioning provision and
the impact of changes in foreign exchange rates.
(7) During the second quarter of 2015 the Company completed a farmout of a
51% interest of the East Jabung PSC in Indonesia and received an upfront
cash payment of USD $8.0 million, less 5% withheld for transfer taxes,
plus USD $181 thousand reimbursed for G&A, which has been recorded as a
disposal of E&E assets with no gain or loss recorded on the transaction.
In 2014 the joint venture partners in Andora's Sawn Lake SAGD
demonstration project repurchased the 3% gross overriding royalty on a
portion of the non-owned working interests in 36.5 sections for $2.7
million.
(8) General & administrative expenses, excluding non-cash accretion on
decommissioning provision and stock-based payments.
(9) Exploration expense relates to exploration costs associated with the
Citarum and South CPP PSCs in Indonesia.
(10)Tables may not add due to rounding.
Contacts: Pan Orient Energy Corp. Jeff Chisholm, President and CEO (located in Bangkok, Thailand) [email protected] Pan Orient Energy Corp. Bill Ostlund, Vice President Finance and CFO (403) 294-1770
Source: Pan Orient Energy Corp.
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