CALGARY, ALBERTA--(Marketwire - May 1, 2008) -
NOT FOR DISSEMINATION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THEUNITED STATES.
Pan Orient Energy Corp. (TSX VENTURE:POE) has released its December 31, 2007Consolidated Financial Statements and related Management's Discussion andAnalysis ("MD&A"). The following are excerpts from the MD&A which can beviewed in its entirety on SEDAR at www.sedar.com.
SELECTED QUARTERLY INFORMATION
2007
Q4 Q3 Q2 Q1
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Revenues
Oil - Thailand $15,435,470 4,213,990 2,811,536 1,572,582
Royalties - Thailand (930,896) (241,511) (264,804) (119,486)
Interest - Canada 233,627 117,656 98,215 125,065
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14,738,201 4,090,135 2,644,947 1,578,161
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Expenses
Stock based compensation 1,487,409 235,183 237,199 641,534
General and administrative 1,085,586 763,766 764,776 550,188
Foreign expenditures - - - 40,000
DD & A 1,185,117 1,565,965 1,164,110 789,733
Operating & transportation 1,064,841 411,053 866,345 546,050
Non-controlling interest 457,560 (22,800) 3,865 (127,565)
Foreign exchange loss (gain) (472,731) 1,079,351 807,364 (88,357)
Current tax 4,645,510 - - -
Future income tax increase
(reduction) (1,414,209) (28,158) 39,850 (70,450)
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8,039,083 4,004,360 3,883,509 2,281,133
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Net income (loss) $6,699,118 85,775 (1,238,562) (702,972)
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Income (loss) per share $ 0.15 0.00 (0.03) (0.02)
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Average quarterly production,
net to Pan Orient (bbl/d) 2,320 722 501 344
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The Company recorded oil revenues of $24,033,578 for the year ended December31, 2007, nearly twenty times the $1,256,447 in oil revenues in 2006. The fourthquarter 2007 oil revenues of $15.4 million were approximately 3.7 times thoserecorded in the third quarter of 2007. Oil production, net to Pan Orient,averaged 2,320 bbl/d in the fourth quarter, and 974 bbl/d for all of 2007. Oilproduction averaged 69 bbl/d in 2006. Oil prices averaged $67.45 for the year(2006 - $49.98). The production in the fourth quarter of 2,320 bbl/d was enoughfor the Company to achieve net income of $6.7 million in the quarter. Oilrevenues are expected to continue to rise substantially as the Company continuesits exploration and Na Sanun East development programs in 2008.
Royalty expenses on Thailand oil production were $1,556,697 in 2007 (up from$179,280 in 2006), or about 6.5% of sales. The included government royalty is 5%of gross production up to 2,000 bbl/d, and increases to 6.25% for grossproduction between 2,000 and 5,000 bbl/d, 10% for gross production between 5,000and 10,000 bbl/d, and 20% for gross production between 10,000 and 20,000 bbl/d.Gross production of 10,000 bbl/d will yield a 7.9% royalty rate.
Interest income on the Company's cash balances was $574,563 for 2007 (2006 -$704,827). Non-cash stock based compensation expenses totaled $2,601,325 in 2007(2006 - $1,773,121). As required under Canadian GAAP, the Company uses the fairvalue method to account for its stock based compensation. Included in non-cashbased stock compensation expense is $300,000 related to stock options granted inAndora, entitling the holders to acquire common shares of Andora.
General and administrative expenses (G&A) during 2007 totaled $3,164,316,up from $1,743,260 in 2006. The 2007 G&A levels reflect additional Thaistaff and administrative costs relating to the increased levels of drilling andproduction activities compared to 2006. The Company does not anticipate anysignificant G&A increases based on existing Thai concessions, as it feels itis adequately staffed for planned growth.
Thailand production and operating costs totaled $2,024,265 in 2007 (2006 -$779,121). Transportation costs (trucking of the oil) totaled $864,024 in 2007(2006 - $45,085). Operating costs averaged $5.68 per barrel in 2007, and oiltransportation costs averaged $2.42 per barrel during 2007. Operating costs perbarrel continue to fall as production rises, as a significant portion of theThailand operating costs are fixed including expatriate production managerssalaries. The fourth quarter of 2007 operating and transportation costs combinedtotaled $4.99 per barrel.
Depletion, depreciation and accretion (DD&A) totaled $4,704,925($13.20/bbl) in 2007 (2006 - $843,863 or $33.50/bbl). The Company's fourthquarter of 2007 depletion rate fell to $5.41 per barrel due to the productionsuccess of the Na Sanun and Na Sanun East oil fields being recognized in theform of higher proven reserves in the 2007 year end reserve report.
The Company expensed $40,000 in foreign new ventures expenditures in 2007(2006 - $126,297), relating to costs incurred pursuing acquisitions in India.
As a result of holding both Thai Baht and US dollar currency and workingcapital, the Company posted a foreign exchange loss of $1,325,627 for the yearcompared to a gain of $141,125 in 2006. The 2007 loss is largely unrealized andresults from the Canadian dollar appreciating against the US dollar.
The Company recorded income of $4,843,359 ($0.12 per share) for the 2007year, as compared to a loss of $2,286,489 ($0.07 per share) in 2006.
The Company expects that it will pay both a Thai income tax, at a 50% rate,and a Thai special remuneratory benefit tax on profits, at sliding scale rates(0-75% by concession) in 2008 and beyond.
As a result of increasing production levels and revenues, the Companygenerated positive cash flow prior to changes in non cash working capital fromits consolidated operating activities of $11,853,329 during 2007. The fourthquarter's cash flow prior to changes in non cash working capital represented$7.9 million of that number.
During 2007 the Company spent approximately $22.2 million on petroleum andnatural gas property additions including a Na Sanun East seismic program ($3.0million), the 100% L53/48 seismic program ($4.7 million), and significantinventory additions ($2.1 million) in preparation for continued drilling.
At December 31, 2007, Pan Orient's consolidated accounts includedapproximately $38.6 million of working capital including $36.9 million of cash.The Company's Thailand activities are now self funding and generate excess cashat current operating levels.
This news release contains forward-looking information. Forward-lookinginformation is generally identifiable by the terminology used, such as "expect","believe", "estimate", "should", "anticipate" and "potential" or other similarwording. Forward-looking information in this news release includes, but is notlimited to, references to: well drilling programs and drilling plans, estimatesof reserves and potentially recoverable resources, and information on futureproduction and project start-ups. By their very nature, the forward-lookingstatements contained in this news release require Pan Orient and its managementto make assumptions that may not materialize or that may not be accurate. Theforward-looking information contained in this news release is subject to knownand unknown risks and uncertainties and other factors, which could cause actualresults, expectations, achievements or performance to differ materially,including without limitation: imprecision of reserve estimates and estimates ofrecoverable quantities of oil, changes in project schedules, operating andreservoir performance, the effects of weather and climate change, the results ofexploration and development drilling and related activities, demand for oil andgas, commercial negotiations, other technical and economic factors or revisionsand other factors, many of which are beyond the control of Pan Orient. AlthoughPan Orient believes that the expectations reflected in its forward-lookingstatements are reasonable, it can give no assurances that the expectations ofany forward-looking statements will prove to be correct.
45,391,442 common shares issued
FOR FURTHER INFORMATION PLEASE CONTACT:
Pan Orient Energy Corp.
Jeff Chisholm
President and CEO
(403) 294-1770
or
Pan Orient Energy Corp.
Jason Bednar
Vice President Finance and CFO
(403) 294-1770
Email: jason@panorient.ca
The TSX Venture Exchange has neither approved nor disapproved the contents ofthis press release. The TSX Venture Exchange has not reviewed and does notaccept responsibility for the adequacy or accuracy of this release.