Author Topic: POE.V - Pan Orient Energy  (Read 19891 times)

sculpin

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POE.V - Pan Orient Energy
« on: May 28, 2012, 11:34:58 AM »
Pan Orient just announced sale of its interest in several blocks in Thailand for $162MM US net. With current cash of about $48MM they will have about $215MM cdn cash or $3.77 per share. POE currently trades at $3.45. The Company has no debt & has retained its best assets – a Thai block with production of light oil 1,000 to 1,500 bbls/d, significant Indonesian land position now being explored & a 50% interest in a heavy oil project in Canada. Whole company should easily be worth $6+ per share. The potential for a large dividend in the form of a return of capital is likely as detailed in the research note from Fraser Mackenzie (below):

From Mackie Research…
This morning, Pan Orient Energy announced the sale of its 60% operated interest in the L44/43, L33/43 and SW1 concessions in Thailand. The company will retain its other assets in Thailand, including the L53/48 (100% W.I.) concession.
Under the terms of the agreement, Pan Orient will receive a cash payment of ~US$170 million (US$162 million net of working capital) for its interest in the two concessions. Given that Pan Orient has ~56.7 million outstanding common shares, this transaction increases the company’s cash position by ~$2.86/ share.
We view this news as very positive, as Pan Orient will be able to re-invest this cash in its high working interest, high impact exploration in Indonesia and its recent discovery in the L53/48 concession in Thailand.
We maintain our BUY recommendation and our $7.00 target price.

From Fraser Mackenzie...

Pan Orient – POE – Beats on cash flow, 1,358 bopd in Thailand (L53) and continued drilling problems at Jatay-1 (POE:TSX)
   Pan Orient announced EPS of $0.14 relative to consensus $0.12 (18.7m in funds flow more than double Q4)
   On March 31st POE had $48.5m in w/c with NO long term debt (near $0.80 cents a share in cash!)
   So the cash from the deal (expected close of mid June) – is $2.86
   W/C - $0.80 per shares (at 48.5m)
   L53 concession at 20k per flowing barrel is worth approximately $1/share
   Exploration update (undeveloped locations), Vic Vallance says conservatively is worth $15m or $0.26 cents per share
   Indonesia (which includes 4 large concessions Citarum, Batu Gajah, East Jabung and South CPP) is conservatively worth $6m or $0.10 cents per share
   Ultimately this all adds up to a $5.02 on a company currently trading at $3.47 or less than the cash they will have upon closing.
   Happy to risk it but POE should be trading north of $4.
   The company will go through a process to decide what to do with the money but after discussions with them we believe there is an intention to special dividend out some or all of the money from the transaction.
   We believe the buyer is a very large over $2b company, management will not disclose whom they are until the transaction is closed
   Indonesia though continues to have its difficulties has encountered some gas and will re-drill vertically
   In this market these defensive type plays are where the opportunity lays, get paid to wait and we believe there is a higher reward to risk ratio for risk appetite to come back into the market.
« Last Edit: May 28, 2012, 03:34:14 PM by Parsad »


sculpin

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Re: POE.V - Pan Orient Energy
« Reply #1 on: July 17, 2012, 01:44:07 PM »
Since last posting POE has declared a $0.75/share dividend and looks to have discovered a significant natural gas find in Indonesia - "suggesting a possible gas column of 390 feet that the company appears yet to have encountered the base of." Share price has moved from $3.45 to the current $4.20 level.

"The company has also announced it plans to pay a 75-cent-per-share special distribution to shareholders of approximately $42.5-million in early September, 2012, subject to shareholder and regulatory approval."

"Since the last operations update, the Jatuyu-1 well was drilled to a depth of approximately 5,920 feet true vertical depth (TVD). Strong overpressure estimated at approximately 600 pounds per square inch and extremely high mud gas readings of up to 80 per cent were observed between approximately 5,530 and 5,920 feet TVD with difficulty maintaining adequate mud weight from 5,631 feet due to the influx of gas. This section drilled was interbedded sandstone and shale with an inferred gas column based on the mud log data of approximately 390 feet. Some of the best gas shows were encountered at the bottom of the drilled section. While conducting a wiper trip from 5,920 feet the drill string became stuck and was backed off to 5,300 feet TVD.

After sidetracking, the well was drilled to a depth of approximately 5,500 feet TVD and seven-inch casing was set just above the interval where high mud gas and overpressure was encountered in the previous well bore. The company will be drilling ahead through the zone of high mud gas readings starting within the next 24 hours and stop drilling at approximately 6,000 feet TVD to log the well. A decision to continue drilling an additional 1,700 feet down to the main Parigi reservoir target will be made after the analysis of the wireline logs. The possibility exists that the company may decide to stop drilling and immediately test the well.

The company is very encouraged by: 1) the indications of gas and reservoir it has observed in this well thus far, and 2) the fact it was still drilling within sands with high mud gas readings at 5,920 feet TVD when the drill pipe became stuck, suggesting a possible gas column of 390 feet that the company appears yet to have encountered the base of."

sculpin

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Re: POE.V - Pan Orient Energy
« Reply #2 on: July 17, 2012, 01:55:55 PM »
http://www.theenergyreport.com/pub/co/1251#quote

TER: Shifting gears to Pan Orient, you recently spoke to some investors earlier this summer who were surprised when you told them the company had a producing field that could be scaled up in a short period of time, significantly mitigating cash burn. Why is this development flying under the radar?

CL: Pan Orient's stock had a lot of wild swings in the past a few years, and it doesn't have a strong shareholder base, much like Mart's earlier days. This means a small rumor could crush the share price and there are all kinds of false perceptions about the company. However, I believe as the management continues to execute, much of the misperception will gradually go away.

TER: On May 23, Pan Orient agreed to sell its 60% interest in its Thailand concessions, from which it would net about $162M. The stock rebounded dramatically, and has held its gains. What does this asset sale mean for the company?

CL: It means that the company is trading at the cash level. All the rest of the assets, which the company has been accumulating for the past five years, are "free" to investors. That includes Batu Gajah, the crown jewel of the company. Pan Orient holds 50% of the concession. PetroChina holds the other 50%, currently producing about 50,000–60,000 barrels of oil equivalent per day, with pipelines and all the other infrastructure in place. The company is planning to start drilling Batu Gajah in two to three months.

It is amazing how cheap Pan Orient is right now. It will also be drilling about 10 wells in the next 12 months. Each well costs a few million dollars to drill, but the upside is it would add $2–3 to the dividend if successful. In terms of risk-reward, there are no other companies like Pan Orient. It is still one of my largest positions.

Cardboard

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Re: POE.V - Pan Orient Energy
« Reply #3 on: July 18, 2012, 03:53:50 PM »
Hi Sculpin,

Were you holding before the sale announcement?

What gives you so much confidence about management and how the rest of their cash will be used? In their last press release, they talk about $186 million in cash. Is it proforma the $75 million distribution? If not where has been employed the $40 million or so?

What do you think they can earn with their remaining producing assets?

Thanks
Cardboard

sculpin

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Re: POE.V - Pan Orient Energy
« Reply #4 on: July 19, 2012, 07:02:13 AM »
Hi Cardboard - Yes I was holding & adding to POE in the $2 range before the announcement. After the announcement, I bought more in the $3.15 to $3.50 range as I did not see any other investment with such a favourable margin of safety (trading well below net working capital) & possessing numerous catalysts that could substantially add to shareholder value:

** potential for a large dividend - which was announced as $0.75/per share
** monetization of its oil sand assets ( 114.4 million barrels attributed to the 53.4% ownership interest of Pan Orient & net present value of resources of $327 million to the 53.4% ownership interest of Pan Orient)
** further development & exploration upside of its 100% owned L53 block in Thailand which already has productive capacity of over 1,000 bbls/d
** high impact exploration in Indonesia with relatively low drilling costs compared to the size of the prize in all 4 blocks POE owns there.

Purchasing below cash, one received all of these other assets for free. Even now with the $1 upward move in the share price an investor is paying very little for what could be $10+/share upside in these assets.  Indonesian has drill targets that could alone could add that much value to Pan Orient's equity upon discovery.

Currently the Company has $186 million in free cash with positive working capital and escrowed cash adding up to around the $200MM level. Approximately $42 will go to the dividend & anywhere from $13 to $25 MM will go to fund the oil sand pilot project. Cash flow from L53 should be anywhere from $25MM to $40MM assuming annual production of 1,000 bbls/d to 1,500 bbls/d - this should fund all of Thai & Indonesian cap ex.

Any other questions or comments, feel free to ask.

sculpin

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Re: POE.V - Pan Orient Energy
« Reply #5 on: July 20, 2012, 06:36:31 AM »
POE Overview from Mackie Research:

PAN ORIENT ENERGY (POE-V, BUY, TARGET $6.50)

Pan Orient recently monetized its interest in three of its mature concessions in Thailand for net
proceeds of US$162 million. The company plans to pay a special distribution of $0.75/share or ~$42.5
million in September 2012, subject to shareholder approval. Following the distribution, the company
remains very well capitalized to fund its aggressive exploration program on its 3 million net acres in
Indonesia and the recent L53D discovery on its L53 concession in Thailand. Additionally, the
company holds an interest in the Sawn lake heavy oil project through its majority owned subsidiary
Andorra.
Recent Events:
 January 23, 2012: Places the L53-D2 well in Indonesia on a 90 day test at a restricted rate of 1,015
bbl/d with a 0.1% water cut.
 February 14, 2012: Announces that the Cataka-1 exploration well in Indonesia encountered severe
drilling difficulties and was abandoned after 400 metres of drilling. Pan Orient plans to return
and drill a twin to the well after drilling another well on the block.
 February 27, 2012: Puts the L53-DST3 well on production at 1,200 bbl/d from an offsetting
location and separate interval from the L53-D2 well.
 May 28, 2012: Intercepts a potential gas zone in a secondary target of the Jatayu-1 well on the
Citarum block (77% W.I.). Unfortunately the pipe became stuck before reaching TD and was
plugged back to the casing shoe before resuming drilling vertically.
 June 18, 2012: Closes the sale of its 60% operated interest in the L44/43, L33/43 and SW1
concessions in Thailand. In exchange for its interest in the concessions, Pan Orient receives a cash
payment of US$170 million (US$162 net of working capital and taxes).
 June 25, 2012: Announces plans to pay a $0.75/share Special Distribution to shareholders equating
to ~$42.5 million, subject to shareholder approval, and with a date of record likely in September
2012.
 July 9, 2012: Announces encouraging indications during drilling of the Jatuyu-1 exploration well
in the Citarum block (77% W.I.). The well encountered a 390 foot section of inter-bedded
sandstone and shale, which the company plans log. With positive results, POE will immediately
test the well. Additionally, announces that it will take part in a $25 million rights offering for
Andora Energy to fund a pilot project on the Sawn Lake Heavy Oil asset.

Upcoming Catalysts:

 Additional drilling and testing results from L53 discovery (August)

 Receipt of production license at L53-East (August)

 Results from Jatayu-1 exploration well (August)

 Shareholder meeting to approve $0.75/share cash Special Distribution (September)

 Commence SAGD pilot project for Sawn Lake

sculpin

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Re: POE.V - Pan Orient Energy
« Reply #6 on: May 25, 2016, 07:10:39 PM »
Resurrecting the POE thread. No debt and about 65% of market cap in cash. Oil prices rebounding which should place decent value on the Sawn Lake oilsands property and production in Thailand. The drill of the Angunn prospect in Indonesia by Repsol in Q4 could be the Company maker.

One Canadian junior remains as cheerful as ever in Asia. Pan Orient Energy Corp. (POE), up five cents to $1.37 on 17,900 shares, is looking forward to its exploration programs later this year in Indonesia and Thailand. The company also has an interest in the Sawn Lake bitumen project in the Alberta oil sands, but operations there were suspended in February because of low prices. As prices recover, Pan Orient's cheerleaders will certainly start to chant about Alberta again, but for now their pom-poms are thoroughly emblazoned with Indonesia and Thailand -- particularly Indonesia, where Pan Orient has a joint venture with Repsol's Talisman Energy at the East Jabung project. Talisman agreed in 2014 to acquire a 51-per-cent interest in East Jabung by paying $8-million (U.S.) upfront and carrying Pan Orient for the first $10-million (U.S.) of work. That should be enough to fully cover the first exploration well, which is expected to be spudded in the fourth quarter of this year. Besides East Jabung, Pan Orient holds 77 per cent of the Batu Gajah block in Indonesia, where it is seeking more joint venturers. Meanwhile, in Thailand, Pan Orient produced a net 269 barrels of oil a day in the first quarter from its 50.01-per-cent-owned L53 concession and says it might do some exploration drilling there this year or in early 2017.

The above assumes that Pan Orient will actually keep all those assets. According to newsletter writer Chen Lin, who gave an interview this month to The Energy Report (sister newsletter to The Gold Report, The Mining Report and The Life Sciences Report), Pan Orient is looking to sell all of its assets except the one that will be explored by Talisman. If it can close the sales, it should have about $2 a share in cash, up from the current level of 75 cents, calculated Mr. Lin. He added that if Talisman makes a discovery at East Jabung, "[Pan Orient's] share price will obviously explode," and if Talisman fails, Pan Orient can still reward shareholders by distributing any asset sale proceeds, as it has previously done in 2012 and earlier this year. Therefore, Pan Orient has "almost no downside," declared Mr. Lin

sculpin

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Re: POE.V - Pan Orient Energy
« Reply #7 on: February 03, 2017, 11:36:40 AM »
Is There a Better Asymmetric Investment Play in E&P Land Than Pan Orient (POE - TSX - $1.30)?

Playing the slots for $15 for $1 payoff with 25% COS and almost certain to get your dollar back…

For Pan Orient there is a very important catalyst coming up in the drilling of a well in Indonesia that is being fully funded by global super major Repsol in the next 3 months. The upside potential dwarfs any downside in the short term and over the longer term the value of POE is likely in excess of the current market value of the Company today even without this Indonesian well.

The way to look at this is what do we get for our $1.30 current value (market price) in POE…

Cash (no debt) $0.86/share
Thailand asset $0.24 (570,000 bbls oil P&P)
SAGD asset $4.15 (option on $70+ oil pricing (see below #1))
Angunn well $0 to $11+ (outcome of Repsol well #2 below)

Total potential upside —– $16+
Total potential downside — perhaps trade in short term to cash value. Most likely POE would be broken up & sold on Angunn failure. SOTP > $1.30


#1……Canada – Sawn Lake: On September 26th, 2016, POE announced the results of an -updated NI 51-101 compliant contingent resource estimate for the Sawn Lake SAGD project in Alberta. The unrisked “Best Case” contingent resource estimate increased by 8% to 166.3 million barrels net to POE’s 71.8% interest with the NPV (10% dcf) on an after-tax bases increased by 26% to $228 million ($4.15/sh). The Sawn Lake SAGD project represents significant longer term upside but will require higher oil prices before development.

Successful Demonstration Project In late 2013, the operators drilled one SAGD well pair to a vertical depth of 650 metres and with a horizon section of 780 metres within the Bluesky formation. Steam injection commenced on May 21, 2014 with first bitumen production commencing on September 16, 2014. Over a 17 month period, bitumen production continually increased and the steam to oil ratio continuously decreased. In January and February 2016, bitumen production reached a steady state average rate of 615 bbl/d with cumulative steam-oil ratio (“CSOR “) of 2.1. Although the final production test results of the Sawn Lake SAGD pilot project are impressive, the demonstration project was suspended at the end of February 2016 due to low oil prices.

#2…….EAST JABUNG, INDONESIA –HIGH-IMPACT EXPLORATION PLANNED FOR Q1/17 Background: On June 1, 2015, POE completed a farmout agreement with a subsidiary of Talisman Energy Inc. (now a subsidiary of Repsol). POE transferred an operated 51% interest in the East Jabung block to Talisman (“the Operator”), in return of a US$8 million cash payment, the funding of the first US$10 million of the cost of the first exploration well as well as funding the first US$5 million of the cost of a contingent appraisal well, if the first well is successful.

POE retains a 49% non-operated working interest in the East Jabung PSC. Drilling to commence in Q1/17: Construction of the access road and drilling pad is expected to commence late December. The Ayu-1 exploration well is expected to spud in late Q1/17 and will be drilled to a total depth of ~1,500 metres. The well is targeting the company maker Anggun prospect. Large Resource Potential: Gaffney Cline & Associates completed a NI 51-101 compliant Prospective Resource Report for the Anggun effective June 30, 2015 (Figure 1). The Anggun prospect has three potential reservoir targets; the Intra Air Benakat formation, the Gumai Formation and the Batu Raja Fromation. All three horizons hold large resource potential with a geological chance of success ranging from 11% to 26%.

As shown in the presentation below, POE has various chances with 3 different reservoirs in this prospect. The outcome as modelled by the reservoir engineer provides an outcome listed to POE’s net interest as follows: Low 16.2mm bbls, Best 73mm bbls and High 417mm bbls. My guess it will either be $0 outcome or possibly the mean of the engineer estimates. For a company with a market cap of $72mm and EV of about $26mm this is an extraordinary option! Even the mean outcome of 123mm bbls at a conservative $5 bbl reserve value would be worth over $11 per share to little POE. If it is 0 bbls this is disappointing and there is likely some short term selling and price weakness. However the Company would remain worth more than the current share price on a break up or sale.

http://www.panorient.ca/images/stories/file/Pan_Orient_Presentation_June_15_2016.pdf

wachtwoord

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Re: POE.V - Pan Orient Energy
« Reply #8 on: February 03, 2017, 12:52:22 PM »
Very interesting. Based on admittedly extremely shallow research I opened a small position (<1%) purely based on odds and EV based on a situation I only understand at a shallow level.

I will do more reading, thanks for sharing the idea.
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

sculpin

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Re: POE.V - Pan Orient Energy
« Reply #9 on: February 03, 2017, 01:00:06 PM »
Best of luck to both of us. I will attach a report (should be pdf at bottom of this reply) from the only analyst that covers this Company. Newman at Mackie Research in Canada. Here is the summary:

November 17, 2016

PAN ORIENT ENERGY CORP. – BUY


High Impact Well To Spud in Q1/17

ACTION – Maintain BUY On Indonesia Exploration Upside

POE has a strong balance sheet with no debt and $50 million of net positive working
capital. We maintain our BUY recommendation and $3.25 target price on POE’s strong
financial position and high-impact exploration potential in Indonesia.

DETAILS – Q3/16 Financial & Operational Results

Indonesia – East Jabung PSC (49% W.I.): Construction of a 5 km road and drilling pad is
expected to commence December which should be followed by the drilling of the Ayu-1
exploration well in late Q1/17 targeting the 250 million barrel Anggun prospect (Figure
1). The first US$10 million of the cost of the exploration well will be funded by POE’s
farm-in partner.

Indonesia - Batu Gajah PSC (77% W.I.): Following the drilling of the Akeh-1 natural gas
and condensate discovery well, POE applied for an additional exploration period beyond
the stated January 15, 2017 expiry date. A decision by the Government of Indonesia on the
status of the application is expected prior to year-end. Without an extension, POE may
allow the block to expire before drilling the Akeh-2 commitment well. Note that we have
$0.16/sh risked value for the Akeh discovery in our risked NAV estimate.

Thailand – L53/48 Concession (50.01% W.I.): As previously announced, average Q3/16
production in Thailand was 236 bbl/d net to POE. Production in October was up slightly
averaging 303 bbl/d, subsequent to a successful five well workover program. As
previously announced, the ANE-A1 exploration well encountered high quality reservoir
but failed to encounter commercial hydrocarbons. POE plans to announce additional
exploration plans on the L53/48 concession prior to year-end.

Canada – Sawn Lake: On September 26th, 2016, POE announced the results of an -updated
NI 51-101 compliant contingent resource estimate for the Sawn Lake SAGD project in
Alberta. The unrisked “Best Case” contingent resource estimate increased by 8% to 166.3
million barrels net to POE’s 71.8% interest with the NPV (10% dcf) on an after-tax bases
increased by 26% to $228 million ($4.15/sh). The Sawn Lake SAGD project represents
significant longer term upside but will require higher oil prices before development. We
have no value in our risked NAV for Sawn Lake.

IMPACT – Neutral. Financial Flexibility And a Carried Exploration Program

 We maintain our BUY recommendation and our $3.25 on POE’s strong financial position
and the potential of the high impact Ayu-1 well in Indonesia.