Target price upgrade by 33%!Today, Pan Orient's target price has been upgraded at Octagon by W. Verbonac.
BUY: Pan Orient Energy Corp.
POE-TSXV: $7.00
Target:$10.00 (increase from $7.50)
BoRang Production License Approved
·Pan Orient has received approval of its application for a production icense from the Thai government for
the discoveries at Bo Rang A and B, and NSE-F1 (all 60% interests).
·Almost 15 million barrels of contingent resources have been associated with the Bo Rang discoveries,
and 6.1 million barrels of prospective resources at NSE-F1.
·Significant reserve additions for year-end 2009 are now possible. Previously, the Company had 25 million
barrels of Proven and Probable reserves in Thailand,which reservoir engineers valued at $15.50/b.
As an example of the possible increase in year-end values, if 2P reserves increase by 20 million barrels,
and they receive a present valuation of $15.50 per barrel, the asset value of Pan Orient could increase
by up to $6.65 per share (based on 46.6 million shares outstanding).
·The asset value we calculated on 2008 year-end reserves was $8.73 per share. Based on the potential
rise in asset value, we are raising our target to $10.00 (from $7.50).
·If Pan Orient averages 6,000 bd in 2010, production will increase an estimated 31% over the 2009 average
of 4,579 bd. Our cash flow estimate for 2010 is $2.18 per share; the new target is a 4.6x multiple.
·Pan Orient remains debt-free.
·We maintain our BUY rating.3Indicates that the analyst has received payment of travel expenses from the Company for a site visit.
4 The Analyst who prepared this comment has viewed the material operations of the issuer.