Working capital review.€¦ · This presentation contains forward looking statements which involve...

© 2020 Pan Orient Energy Corp.

February 2020 Update


Cautionary Statement

This presentation contains forward looking statements which involve subjective judgment and analysis and

are subject to significant uncertainties, risks and contingencies including those risk factors associated with

the oil and gas industry, many of which are outside the control of and may be unknown to Pan Orient. No

representation, warranty or assurance, express or implied, is given or made in relation to any forward looking

statement. In particular, no representation, warranty or assumption, express or implied, is given in relation to

any underlying assumption or that any forward looking statement will be achieved. Actual and future events

may vary materially from the forward looking statements and the assumptions on which the forward looking

statements were based.

Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking

statements, and should rely on their own independent enquiries, investigations and advice regarding

information contained in this presentation. Any reliance by a reader on the information contained in this

presentation is wholly at the readers own risk.

Readers are cautioned that well test results are not necessarily indicative of long-term performance or of

ultimate recovery.

Pan Orient and its related bodies corporate and affiliates and their respective directors, partners, employees,

agents and advisors disclaim any liability for any direct, indirect or consequential loss or damages suffered

by a person or persons as a result of relying on any statement in, or omission from, this presentation.

Subject to any continuing obligations under applicable law or any relevant listing rules of the TSX-V, Pan

Orient disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking

statements in this presentation to reflect any change in expectations in relation to any forward looking

statements or any such change in events, conditions or circumstances on which any such statements were

based.


Corporate Summary

Financial

Basic Common Shares Outstanding (TSX:POE) Dec31-2019 54.5 million

Insider Holdings 7.5%

Total Long-term Debt nil

Market Capitalization @$1.07/Share (Dec31-2019) $58.3 million

Total Corporate Adjusted Funds Flow from Operations 2019 Q3 (9 months) $13.7 million

Working Capital & Non-current Deposits – Pan Orient Sept30-2019 $32.5 million

Working Capital & Non-current Deposits – Thailand Joint Venture Sept30-2019 $ 9.4 million

Working Capital & Non-current Deposits (Pan Orient & Thailand JV) $41.9 million ($0.77/POE Share)

Reserves1 & Contingent Resources2

Thailand Proved + Probable Reserves (“2P”)1 (50% of POS) 1.834 million

NPV10 (after income tax) $ 43.7 million

per Pan Orient share $0.80

Sawn Lake Alberta - Risked Best Estimate Contingent Bitumen Resources 2

(71.8% of Andora) 139 million bbls recoverable

Notes:

1. Thailand oil reserves at December 31, 2019 evaluated by Sproule International Limited for Pan Orient Energy (Siam) Ltd. (POS),

value shown here reflects POE’s 50% ownership in POS.

2. Sawn Lake Contingent Bitumen Resources at September 30, 2019 evaluated by Sproule Associates Limited, volume shown here

reflects POE’s 71.8% ownership in Andora Energy Corporation (Andora)


Normal Course Issuer Bid

(Share Buy Back)

• The Company received approval from TSX Venture Exchange for renewal of its Normal Course

Issuer Bid (“NCIB”) for the period of May 16, 2019 to May 16, 2020.

• Under the terms of the NCIB, Pan Orient is authorized to purchase, for cancellation, up to

4,504,064 of its common shares (10% of the public float), subject to a maximum of 1,098,008

common shares (2% of the 54,900,407 issued and outstanding common shares) during any 30

day period.

• Between May 16 and December 20, 2019 the Company purchased 654,400 shares at an average

price of $1.22 per POE share. There have been no purchases since December 20, 2019.

• Purchases by the company under the NCIB are not allowed while the company is in blackout

pending news such as pending reserve reports, financials and drilling results as has been the

case since December 20, 2019, to the present.

• The Company will continue to purchase shares under the NCIB while not in blackout and anytime

the Company believes its share price is undervalued by the market.


Thailand Reserves & Production

YE2018 2P: +150%

YE2019 2P: +34%

POS 100% (POE 50%

ownership in POS)


Thailand Oil Sales

POS 100% (POE 50%

ownership in POS)


Thailand Crude Oil Sales

Agreement

• All previous L53 crude oil sales agreements used High Sulphur Fuel Oil (“HSFO”) as the basis for pricing despite the

fact L53 crude oil is low Sulphur (~0.3%). This was simply because HSFO was the most traded (~80% of sales) bunker

fuel in Singapore

• Historically, L53 oil sales have averaged an approximately 10% discount to Brent crude oil. The basis of contract pricing

has been a price for various per barrel yields the majority of which was tied to high Sulphur fuel oil (“HSFO” 3.5%

Sulphur bunker fuel) in Singapore. This was despite the fact that L53 crude oil is low Sulphur in composition at an

average less than 0.3% and was simply a result of the fact that over 85% of all fuel oil traded in Singapore was HSFO,

by far the highest volume, highest demand market

• The IMO2020 regulations that were implemented globally on January 1, 2020 specified that all bunker fuels after this

date must be 0.5% Sulphur or less. The impact of IMO2020 was seen in the Singapore market starting in October 2020

and has continued through to the present. During this time, L53 realized crude oil sales saw an average discount to

Brent of 23.4% from October 2019 to January 2020.

• In accordance with the L53 crude oil sales agreement, discussions between Pan Orient Energy (Siam) Ltd. (“POS”) and

the buyer have resulted in an agreed repricing effective February 1, 2020 that would see, on a comparable basis, the

average 23.4% discount to Brent experienced through the October 2019 to January 2020 period, reduced to a 2.75%

discount to Brent.

• For comparison purposes, the discount to Brent estimated for the POS December 31, 2019 reserves report was 10%.


DD Reserves

SH1

AA

DD

D

D-

3

D

D-

2

D

D-

1

EE1

EE2

20%

2P RF

22%

2P RF

20%

2P RF

BB/CC

20%

2P RF

2P Area OOIP RF EUR RR. 2019

Sq.km. M BBL % M BBL M BBL

AA 0.44 3,009 20 602 498

BB 0.75 4,022 20 805 694

CC 0.50 3,923 22 863 697

CC N 0.08 574 22 126 63

DD+EE 0.47 4,430 20 886 667

Total 3,282 2,619

Currently Producing No Reserves

assigned YE 2019

• There remains material future potential

upside in the DD field from recovery

factors alone, 2P ~20% versus 3P 30%

• There are a number of zones that are

clearly oil bearing on open hole logs that

are yet to be tested, AA2 being the most

significant, plans are to test this zone in

2020

POS 100% (POE 50% ownership in POS)


Concession L53/48

Thailand Oil sales prices (% of Brent)

• Pan Orient owns a 50% interest in Pan Orient

Energy (Siam) Ltd. with one local Thai partner

holding the remaining interest.

• Per barrel costs ($CAD) during the third quarter of

2019 were:

• Transportation expenses of $2.46

• Operating expenses of $4.70

• General and administrative expenses of $1.85

• A 5% to 6.25% royalty to the Government of

Thailand

• December 31, 2019 Reserves (net to POE) - 2P:

1.834MMbbls (+34%) 1P: 0.618 MMbbls (+37%),

2PNPV(10) after tax: Cdn$43.7 million (+10%)

• 2019 Thailand oil sales averaged 89% of Brent price

• Effective February 1, 2020 a revised oil pricing

agreement will come into effect

POS 100% (POE 50%

ownership in POS)


Thailand Production Forecast

DD-6ST2

DD-9

DD-7

POS 100% (POE 50%

ownership in POS)


L53 Prospects

Prospects

Prospects (drilled)

Oil window

5 km.

PTTEP

L53/48

West A-A4

West A7

South B1-B4A

Prospect Most likely

closure

(km2)

WEST_A1-A4 2.01

WEST_A7 4.20

2020 Firm 2020 Contingent

Prospect Most Likely

closure (km2)

AA (AA2 Well) 0.77

AA North (AA1

Well)

0.40

BB (BB1 Well) 0.35

BB West 0.38

TOTAL 1.90

DD Area

3D Coverage

• In January 2021 all exploration lands (indicated

by the red outline on the map) outside of an

existing discovery Production License will

expire. For this reason the 2020 capital/work

program is focused on exploration drilling – at

the end of 2020 everything worth drilling will

have been drilled.


Prospect Closure (km2)

2P EUR

YE 2019

MMbbls

AA (AA2 Well) 0.77 NA

AA North (AA1 Well) 0.40 NA

BB (BB1 Well) 0.35 NA

BB West 0.38 NA

TOTAL 1.90 NA

AA South (DD5ST1) 0.17 0.178

DD 2P 0.64 3.282

BB

1 KM

• The size of any oil discovery is not only a function of

the areal extent but as importantly, the number of sands

(AA South: 1 sand – DD: 4 sands) that are oil bearing

• BB1 well is currently sitting cased at 150m TVD with

the rig moved to AA2 while the wellpad is reinforced

•Currently drilling ahead on AA2 well, then AA1 back to

BB1 afterward

AA Pad

BB Pad

DD Area Prospects

DD Pad

2020 Firm Exploration Well

AA

North

AA

BB

West

AA South

Field

DD

Field

Prospects Unsuccessful

Prospects Oil Fields

2020 Contingent Exploration

Well


AA2 Sandstone @ DD Field

DD-6ST2

DD-7

AA2 Sandstone Depth Structure

AA2 Sandstone Penetrations interpreted oil bearing

Planned in

2020

AA2 Sandstone in just drilled DD6ST2

• The AA2 sand has now been penetrated by 3 wells

in the DD field area – DD4, DD3 & DD6ST2

• The DD7 well planned later in 2020 will be

specifically targeting this zone in addition to others

• No test have been conducted on the AA2 sand yet

and no reserves were attributed to it at YE 2019


A

A’

ML

0.46 km2

ML

0.6 km2

ML

0.29 km2

ML

0.66 km2

West A1-A4 Prospects

A A’

L53-D Field West A1-A3

A6 Sandstone

Structure

WEST_A

Total

2.01 km2


2020 Thailand

Capital Program

Drilling and Workover Expenditures 100%

• The 2020 Thailand capital program will be

funded entirely through Thailand cash flow

• Any significant exploration success may

result in increased drilling


Sawn Lake, Alberta, Canada


Andora’s Sawn Lake SAGD Project

• Pan Orient Energy Corp. owns 71.8% of Andora

• Andora is focused on developing the bitumen resources at Sawn Lake using SAGD development.

• Currently interests in approximately 78 sections of Alberta oil sand leases.

• 139 million barrels of risked “Best Estimate” contingent bitumen resources attributed to Pan Orient’s 71.8% ownership of Andora (Andora has 194 million barrels). Andora operates all lands assigned contingent resources at Sept30-2019.

• Demonstration project produced bitumen September 2014 to February 2016 and indicated that Sawn Lake is a top quartile SAGD asset.

• Intended development with Andora’s patented “Produced Water Boiler” (PWB) which enables use of “battery scale SAGD” to significantly reduce financial, reservoir and operating risk.

Sawn Lake

(Company Gross)

(15% development risk)

High

Estimate

Best

Estimate

Low

Estimate

Millions of barrels of

Bitumen - SAGD 164 139 126

Sawn Lake Risked Contingent Bitumen Resources September 30, 2019 (net Pan Orient’s 71.8%) Evaluated by Sproule Associates Limited. Refer Press Release December 2, 2019.

Red

Earth

T79

R1

W5

R24 T98

Husky

Baytex

5th

Me

rid

ian

Shell

Penn

West

Sawn Lake

Koch

Peace River Oil Sands Area


Andora’s Oil Sands Leases

Sawn Lake Central

• 50% of 11 sections (Andora is Operator)

• 127 MMbbls risked “Best Estimate” contingent

resources net to Andora

• SAGD Demonstration Project facility & wellpair

at 7-30-91-12W5

Sawn Lake South


• 67 MMbbls risked “Best Estimate” contingent

resources net to Andora

Sawn Lake North


• 10% of estimated 42 sections (non-operated)

(August 2019 is the end of the lease term for 31

sections and it is uncertain what lands the

operator is able to continue indefinitely – no

impact on contingent resources assigned)

• No risked “Best Estimate” contingent resources

assigned at September 30, 2019

Andora holds varying interests in 88 sections Dec31-2017

With 194 MMbbls contingent bitumen resources assigned. Pan

Orient has a 71.8% ownership in Andora.


Progress at Sawn Lake

Demonstration Project 2014 - 2016

• Bitumen production in January and February 2016 averaged 615 barrels BOPD with an average

instantaneous steam-oil ratio (“ISOR”) of 2.1 from the one SAGD wellpair.

• Established viability of the SAGD process in the Bluesky formation at Sawn Lake.

Potential Expansion to 3200 BOPD at Sawn Lake Central (Andora operator with 50% WI),

• Andora finalized detailed engineering for its patented PWB in 2017.

• Regulatory approval received Dec5-2017 for potential commercial expansion to 3200 BOPD (in

which Andora has a 50% working interest and is the operator) using Andora’s PWB.

• First stage is reactivation of existing SAGD facility and wellpair, expansion to install the first PWB

and drill an additional wellpair at an estimated cost of $11 million net to Andora. Andora’s share of

production estimated at 620 BOPD.

• A further expansion is for drilling of an additional three wellpairs plus facilities work at an estimated

cost of $16 million to increase Andora’s share of production to 1547 BOPD.

• Bitumen production would commence approximately 24 months after an investment decision by

Andora and its partners.

• It is recognized that stable crude oil prices, and specifically Western Canada Select benchmark

prices, will have a significant impact on project economics and financing, and on decisions

regarding the timing and extent of future development .

Note: 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.


Sawn Lake Quality

Sawn Lake

Tier 1 Projects


Andora Summary

Andora Value Components

1. Sawn Lake Interests & Operations - “Tier 1” SAGD asset with significant potential

• 194 million barrels of Bluesky Risked “Best Estimate” Contingent Resources

• Control of Sawn Lake development as Operator per the JOA

• Existing Sawn Lake 7-30-91-12W5 SAGD $34 million facility & wellpair ready for

expansion to 3200 BOPD with AER approval in place (Andora 50% working interest &

operator). Intended development is in stages with first stage of development, net to

Andora, of $11 million in capital expenditures with bitumen production of 620 BOPD.

2. Andora proprietary technology for “Produced Water Boiler” to for intended use at Sawn

Lake and utilized at other projects

3. SAGD experience for drilling, installation of facilities & operations


Contacts

Pan Orient Energy Corp

Suite 1505, 505 3rd St SW

Calgary, Canada

Telephone: +1 403 294-1770

Fax: +1 403 294-1780

www.panorient.ca

Working capital review.€¦ · This presentation contains forward looking statements which involve...

Documents

Transcript of Working capital review.€¦ · This presentation contains forward looking statements which involve...