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TSX VENTURE SYMBOL: POE - | View Quote |  View Chart |  View Financials | 

Pan Orient Provides Sawn Lake Update

Oct 12, 2006 - 07:15 ET

CALGARY, ALBERTA--(CCNMatthews - Oct. 12, 2006) -


Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE) has been informed by the operator, Signet Energy Inc., that the production tests of horizontal wells located at 4-32-91-12W5M ("4-32") and 7-30 -91-12W5M ("7-30") have concluded. The vertical pilot wells at 4-32 and 7-30 were cored, logged and drill-stem tested in the Bluesky formation. The cores indicate that the formation has porosity greater than 30%, permeability's ranging from one to eight darcies, and are impregnated with heavy oil. Log analysis assigns net oil pays of 23 and 22 meters to the 4-32 and 7-30 wells respectively with average oil saturations over the pay sections of 78 and 68 percent, respectively. The ratio of vertical to horizontal permeability within the oil bearing sands, a critical parameter in any thermal recovery scenario, was unusually high in both wells. However, analysis of the oils spun out of the cores at 4-32 and 7-30 locations and oil samples recovered at surface indicate an oil viscosity that would not flow at commercial rates under a conventional production scenario. This preliminary oil analysis combined with the absence of produced oil from the wells indicates no conventional heavy oil production potential.

As previously announced on August 1, 2006, Pan Orient has transferred its 10% working interest in these 69.5 northern sections of Sawn Lake oil sands leases (where this 4-32 and 7-30 wells were drilled) to Andora Energy Corporation ("Andora"), a privately held company of which Pan Orient currently owns approximately 67% of the outstanding Andora shares.

Both wells in the program were in close proximity to a southern 16 sections of Sawn Lake oil sand leases in which Andora owns a 100% working interest. Four of the sixteen 100% owned Andora sections of oil sands leases have been assigned net probable and possible recoverable reserves of 98 million barrels (25.9 million probable and 72 million barrels possible) based on an independent third party NI 51-101 compliant reserves report completed by DeGolyer and McNaughten (D&M) utilising a thermal recovery ("SAG-D") model in September of 2005. D&M assigned 256 million barrels of original oil in-place on these four sections. It is anticipated that the recent well results will have no negative impact on the volume of oil estimated to be recoverable in the D&M reserve report or the value attributed to it. The northern 63 of 69.5 sections of the Sawn Lake oil sands leases (10% Andora owned) have been assigned 1.2 billion barrels of original oil in-place (120 million barrels net to Andora) by AMJ Petroleum Consultants in a NI 51-101 compliant engineering evaluation in November, 2004, and management believes there will be no negative impact on these prior estimates based on the current well results.

Andora Energy will proceed with a work program focused on full definition of the large in-place resource on their operated 16 sections of oil sands leases. This will likely include a two vertical well program in winter 2007 based on a 3D seismic survey acquired earlier. In addition, work is underway towards a full Blue Sky reservoir model, a preliminary SAG-D engineering study and a year end NI-51-101 compliant reserve report that will evaluate all of Andora's oil sand interests.

Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand and in Western Canada.

This news release contains forward-looking information. Forward-looking information is generally identifiable by the terminology used, such as "expect", "believe", "estimate, "should" "anticipate" and "potential" or other similar wording. Forward-looking information in this news release includes, but is not limited to, references to: well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, and information on future production and project start-ups. By their very nature, the forward-looking statements contained in this news release require Pan Orient and its management to make assumptions that may not materialize or that may not be accurate. The forward-looking information contained in this news release is subject to known and unknown risks and uncertainties and other factors, which could cause actual results, expectations, achievements or performance to differ materially, including without limitation: imprecision of reserve estimates and estimates of recoverable quantities of oil, changes in project schedules, operating and reservoir performance, the effects of weather and climate change, the results of exploration and development drilling and related activities, demand for oil and gas, commercial negotiations, other technical and economic factors or revisions and other factors, many of which are beyond the control of Pan Orient. Although Pan Orient believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved the contents of this press release.

40,040,770 common shares issued

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
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Pan Orient Energy Corp.
Jeff Chisholm
President and CEO
(403) 294-1770


Pan Orient Energy Corp.
Jason Bednar
Vice President Finance and CFO
(403) 294-1770