Pan Orient Energy (TSX: V.POE, Stock Forum) gave its investors a round of good news when the company posted a corporate update today announcing that it had entered into an agreement with a unit of Sea Oil Public Company, of Thailand, to sell a 50% equity interest in the company's subsidiary, Pan Orient Energy (Siam).
According to the news release, the transaction will be carried out for a cash price of US$42.5 million, including a working capital adjustment of US$2.4 million. Pan Orient Energy (Siam) holds Pan Orient's 100% interest in Concession L53/48 in Thailand.
As of today, Sea Oil has satisfied certain closing conditions connected to the sales agreement and as a result, a US$38.5 million wire transfer has been initiated to the account of Pan Orient which is expected to be received within approximately two to three business days. A further US$4.0 million break fee has been released from escrow and is being wired to Pan Orient's account.
The company also provided an update on operations in Thailand, stating that the first of three wells included in a drilling program on Concession L53 is expected to start in approximately two weeks, targeting the high impact L53-A North Central prospect.
On the Indonesian operational side, all documents related to the transfer of a 51% working interest and operatorship in the East Jabong Production Sharing Contract (“PSC”) to a unit of Talisman Energy have been submitted to the Government of Indonesia regulator before the year-end 2014. Approval is expected to arrive some time in late March to April 2015.
The company also continues to progress toward drilling the Akatara/Selong offset well in Batu Gajah PSC, which is expected to start drilling in September 2015. Drilling will happen regardless if the company is able to farm out a portion of its interest in the PSC.
A partner is still being sought out in the Citarum PSC which is located onshore Java, Indonesia. The process is experiencing some challenges with the recent drop in oil prices, but discussions are ongoing although with nothing material to report as yet.
Company President and CEO, Jeff Chisholm, commented, “I am very pleased to welcome Sea Oil as our new partner in Concession L53 and look forward to the imminent drilling of the ANC-1 exploration well.”
He went on to illustrate, “Pan Orient is financially well positioned as a result of an initiative to strengthen the balance sheet that commenced long before the recent drop in world oil prices and is now experiencing the benefits of this initiative. We have built a large cash position and an excellent portfolio of relatively low cost conventional onshore South East Asian oil and gas assets that are expected to be very profitable, even in an extended low oil price environment.”
Then he concluded, “A strong balance sheet, low outstanding share count and a prospect portfolio that to a large degree has been de-risked through partnerships, 3D seismic and offsetting oil discoveries allows me to look forward to 2015 with a great deal of optimism and high expectations.”
Pan Orient Energy was in the news recently when the Calgary-based oil and gas exploration company provided an earlier update to the Thailand transaction back in the middle of January.
Shares climbed 14.77% on the news to $1.71 per share.
Currently there are 56.8m outstanding shares with a market cap of $97.1 million.