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NEWS RELEASE TRANSMITTED BY Marketwire

FOR: PAN ORIENT ENERGY CORP.

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

Pan Orient Energy Corp.: 2008 Financial and Operating Results

Apr 22, 2009 - 07:01 ET

CALGARY, ALBERTA--(Marketwire - April 22, 2009) - 

NOT FOR DISSEMINATION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE) is pleased to provide highlights of its 2008 fourth quarter and 2008 year-end consolidated financial and operating results. Please note that all amounts are in Canadian dollars unless otherwise stated.

The Corporation today filed its audited financial statements as at and for the year ended December 31, 2008 and related management's discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained online at www.sedar.com or the Corporation's website, www.panorient.ca.

2008 HIGHLIGHTS

- Pan Orient achieved tremendous growth during 2008 in terms of oil production, funds flow from operations, net income, reserve additions, and an increase in exploration acreage & internally generated drilling prospects.

-- Average daily oil production in 2008, net to Pan Orient, increased 408% to 4,947 barrels per day from 974 barrels per day in 2007, and averaged 6,982 per day in the fourth quarter of 2008. Oil production for the first quarter of 2009, net to Pan Orient, is estimated to be 6,165 barrels per day with the reduction from the fourth quarter of 2008 a result of wells coming off flush production and drilling programs in the last three months focusing on exploration targets versus development opportunities.

-- Funds flow from operations increased 439% to $63.9 million for 2008 from $11.9 million in 2007, with $24.9 million in the fourth quarter of 2008 despite the downturn in commodity prices. On a per share basis (diluted), funds flow from operations was $1.31 for 2008 and $0.52 for the fourth quarter of 2008.

-- Net Income of $31.8 million for 2008 and $10.8 million in the fourth quarter of 2008 reflects the success Pan Orient has achieved in creating value through full cycle exploration and drilling. On a per share basis (diluted), net income was $0.65 for 2008 and $0.23 for the fourth quarter of 2008.

-- Year-end proven plus probable reserves reported for Thailand increased by 47% to 25 million barrels.

-- Pan Orient acquired high working interests and operatorship in three concessions in Indonesia resulting in 11,468 square kilometers of new exploration lands. These lands complement the exploration lands onshore Thailand which includes a significant portion of Concession L44/43 which is currently undeveloped, Concession L33/43 and Concession L53/48.

-- Pan Orient continued its emphasis on exploration activities with seismic programs, geological & geophysical work and drilling to deliver growth and profitability through the drill bit. With respect to future development programs, Pan Orient has now built an inventory of 17 development locations in Na Sanun East and will become more active in development and appraisal drilling in 2009.

- The results achieved by Pan Orient in 2008 are the result of successful exploration and development of the Na Sanun East field in Concession L44/43 for which Pan Orient is the operator and a 60 percent working interest owner. The Na Sanun East field commenced production in January 2007 and daily production net to Pan Orient grew to approximately 6,800 barrels per day in December 2008.

- During 2008, the capital program of Pan Orient drilled 22 (13.2 net) wells in Thailand with 20 (12.0 net) wells drilled in the Na Sanun East field and an overall drilling success rate of 68%. Drilling for the year was balanced between exploration targeting new reserves and development.

- The operations in Thailand delivered very strong results for 2008 with $65.7 million in funds flow from operations, transportation and operating expenses of $4.62 per barrel, and funds flow from operations per barrel after tax of $36.27. For the fourth quarter of 2008, the Thailand operations generated $23.8 million in funds flow from operations, operating and transportation expenses were $4.16 per barrel, and funds flow from operations per barrel after tax of $36.27 even though the reference price for crude oil declined to US$58.15 per barrel. For Thailand production in 2008, crude oil revenue was allocated 7% to expenses for other royalties, transportation, operating, and general & administrative, 51% to the government of Thailand in the form of royalties, Special Remuneratory Benefit and Income Tax, and 42% to Pan Orient (before interest income and realized foreign exchange gain).

- These strong results have been achieved while preserving financial strength and flexibility. At December 31, 2008 Pan Orient had $46.4 million of working capital and deposits, and no long-term debt. Internally generated funds flow from operations of $63.9 million in 2008 completely funded the $40.5 million of capital expenditures in Thailand, Indonesia and Canada, $15.2 million for the cash portion of acquisition of exploration interests in Indonesia, and increased working capital plus deposits by $5.6 million.

OPERATIONS

Pan Orient's base capital budget for 2009 will be approximately $60 million, with 57% directed towards exploration and development in Thailand and 43% high grading exploration opportunities in Indonesia. The base 2009 capital program includes the following:

- Thailand

-- Capital program of $34 million that includes the drilling of 29 wells. Exploration and development activity will continue in Concession L44/43 (operator and 60% working interest owner) with the drilling of 25 wells, site upgrades and workovers. In addition, there is expected to be two exploration wells drilled in Concession L33/43 (operator and 60% working interest owner) and two exploration wells drilling in Concession L53/48 (operator and 100% working interest owner).

- Indonesia

-- Capital program of $26 million that includes 500 kilometers of 2D seismic in the Batu Gajah PSC, and 1,250 kilometers of 2D seismic in the Citarum PSC to bring exploration prospects and leads on those concessions up to drill ready status.

-- In addition to the stated capital budget of $26 million for Indonesia, there will be a contingent budget of an additional $7 million related to the cost of long lead time drilling equipment and the potential drilling of one exploration well in late 2009.

- Sawn Lake, Canada

-- No capital expenditures are planned by Andora for 2009.

The $60 million capital program for 2009 will be funded through utilizing the $46.4 million of working capital and deposits at December 31, 2008, plus an additional $5.4 million of equipment inventory on hand at the beginning of 2009, and through cash flow generated from the Thailand operations.

OUTLOOK

Thailand

The 29 wells Pan Orient plans to drill on three company operated concessions will utilize two drilling rigs which are under long term contract. At least two wells are planned on the 100% working interest L53/48 concession starting in October 2009. The remainder of the Thailand drilling program in Concession L44/43 and L33/43 will focus on the continued development of the NSE field (south and central), appraisal at NSE-E1, NSE north, Na Sanun, NSE-F1 and up to four exploration wells in the Bo Rang and Si Thep areas.

The 2009 program is intended to strike a balance between development drilling targeting new production, and exploration defining potential new reserves. The goal is to reach and hold production in the range of 7,200 to 9,000 barrels per day net to Pan Orient (12,000 to 15,000 barrels per day gross) by the third quarter of 2009 and add proven and probable reserves of 12 million barrels net. Any exploration success will be evaluated after initial appraisal drilling as to the impact on production targets with updated guidance provided by the company at that time.

Indonesia

At the Citarum PSC located onshore Java (operated and 69% working interest) a 2D seismic program is currently underway, with the initial 750 kilometer program approximately 25% complete. Upon completion of this initial 750 kilometer program, an additional 500 kilometers of infill 2D will be acquired in order to convert leads defined in the reconnaissance program into drillable prospects. All seismic operations are anticipated to be completed by year end with drilling anticipated in the second quarter of 2010.

At the Batu Gajah PSC located in South Sumatra (operated and 90% working interest) a 2D seismic program is planned to commence within the next 2 months with 500 kilometers of 2D data to be acquired over five prospects and leads defined on pre-existing data. It is anticipated this program will be completed late in the third quarter of 2009 with the drilling of 3 exploration wells to commence in the first quarter of 2010 with a possibility of the drilling of the first well starting in late 2009.

Sawn Lake, Canada

Andora is currently waiting on approval from the Alberta Energy Resources Conservation Board (ERCB) to build and operate a Steam Assisted Gravity Drainage (SAGD) demonstration project. The proposed project includes a single well pair designed for peak anticipated production rates of 750 barrels per day. Given the current oil price environment it is most likely the decision by Andora to proceed with the demonstration project will be deferred into 2010.

/T/



--------------------------------------------------------------------------
2008 Highlights            Three Months Ended         Years Ended     Year
(thousands of Canadian            December 31,        December 31,    Over
 dollars except where                                                 Year
 indicated)                     2008     2007       2008     2007   Change
--------------------------------------------------------------------------
FINANCIAL
--------------------------------------------------------------------------
Oil revenue, before
 royalties and
 transportation
 expense                      36,329   15,435    147,554   24,034     514%
Funds flow from
 operations (Note 1)          24,973    7,942     63,897   11,853     439%
  Per share                    $0.55    $0.18      $1.40    $0.29     389%
  Per share - diluted          $0.52    $0.17      $1.31    $0.28     368%
Funds flow from
 operations by region
  Canada                       1,407     (418)    (1,313)  (1,512)
  Thailand                    23,845    8,360     65,667   13,365     391%
  Indonesia                     (278)       -       (458)       -
Net Income                    10,813    6,699     31,751    4,843     556%
  Per share                    $0.24    $0.15      $0.70    $0.12     482%
  Per share - diluted          $0.23    $0.14      $0.65    $0.11     490%
Working capital               42,087   38,586     42,087   38,586       9%
Working capital
 plus deposits                46,386   40,763     46,386   40,763      14%
Long-term debt                     -        -          -        -
Capital expenditures
 (Note 2)                     16,598    6,524     40,491   22,226      82%
Acquisition - Indonesia
 (Note 3)                        516              20,180        -
Shares outstanding
 (thousands)                  45,568   45,219     45,568   45,219       1%
--------------------------------------------------------------------------
THAILAND OPERATIONS
--------------------------------------------------------------------------
  Avg. daily oil
   production (bbls/d)         6,982    2,320      4,947      974     408%
  Avg. oil sales price,
   before transportation
   (CDN$/bbl)                 $56.56   $72.32     $81.50   $67.60      21%
  Funds flow from
   operations
    Crude oil sales           36,329   15,435    147,554   24,034     514%
    Field Netback             30,733   13,439    128,857   19,589     558%
    Funds flow from
     operations               23,845    8,360     65,667   13,365     391%
  Funds flow from
   operations per barrel
   (CDN$/bbl)
    Crude oil sales           $56.56   $72.32     $81.50   $67.60      21%
    Government royalty         (4.51)   (3.86)     (5.54)   (3.53)     57%
    Other royalty              (0.04)   (0.50)     (0.17)   (0.85)    -80%
    Transportation expense     (2.42)   (2.38)     (2.51)   (2.43)      3%
    Operating expense          (1.74)   (2.61)     (2.11)   (5.69)    -63%
                              ------------------------------------
    Field Netback              47.85    62.97      71.17    55.10      29%
    General and
     administrative expense    (0.29)   (2.12)     (1.05)   (4.53)    -77%
    Realized foreign
     exchange                   5.83                2.10
    Interest Income             0.55     0.09       0.28     0.10     192%
    Special Remuneratory
     Benefit (SRB)             (9.90)       -     (19.60)       -
    Current income tax         (6.92)  (21.77)    (16.63)  (13.07)     27%
                              ------------------------------------
    Thailand - Funds flow
     from operations          $37.12   $39.17     $36.27   $37.59      -4%
                              ------------------------------------
  Wells drilled
    Gross                          7        4         22       15      47%
    Net                          4.2      2.4       13.2      9.0      47%
    Success Rate                  71%      75%        68%      80%    -12%
--------------------------------------------------------------------------
OVERALL CORPORATE OPERATIONS
--------------------------------------------------------------------------
Thailand - funds flow from
 operations per barrel        $37.12   $39.17     $36.27   $37.59      -4%
Canada and Indonesia
 Operations
    Interest income             0.11     1.01       0.27     1.52     -82%
    General and
     administrative expense    (1.97)   (2.97)     (1.98)   (4.37)    -55%
    Realized foreign
     exchange gain (loss)       3.79        -       1.14    (1.29)
    Foreign new ventures
     expenditures              (0.17)       -      (0.40)   (0.11)    259%
                              ------------------------------------
                              $38.88   $37.21     $35.29   $33.34      6%
                              ------------------------------------
Total corporate G&A expense
 per barrel - cash based      $2.26     $5.09      $3.03    $8.90    -66%
--------------------------------------------------------------------------
--------------------------------------------------------------------------


--------------------------------------------------------------------------
                                                      Years Ended     Year
(thousands of Canadian                                December 31,    Over
 dollars except where                                                 Year
 indicated)                                         2008     2007   Change
--------------------------------------------------------------------------
RESERVES
--------------------------------------------------------------------------
Onshore Thailand (reserves assigned
 to concessions SW1 and L44/43; 60%
 interest) (Note4)
  Proved reserves (thousands of barrels)           5,580    3,849      45%
  Proved plus probable reserves
  (thousands of barrels)                          24,963   17,006      47%
  Net present value of proved +
   probable reserves, after tax
   discounted at 10%                             357,000  252,000      42%
  Net present value of proved +
   probable reserves, after tax
   discounted at 15%                             296,000  222,000      33%
Canada (53.2% share of the oil sands
 leases of Andora at Sawn Lake, Alberta)
 (Note 5)
  Probable reserves (thousands of barrels)        70,253   73,451      -4%
  Net present value of probable reserves,
   after tax discounted at 10%                   487,695  281,000      74%
  Net present value of probable reserves,
   after tax discounted at 15%                   320,796  158,000     103%
--------------------------------------------------------------------------
--------------------------------------------------------------------------



--------------------------------------------------------------------------
Operations Summary         Three Months Ended         Years Ended     Year
(thousands of Canadian            December 31,        December 31,    Over
 dollars except where                                                 Year
 indicated)                     2008     2007       2008     2007   Change
--------------------------------------------------------------------------
THAILAND OPERATIONS
--------------------------------------------------------------------------
  Average daily oil
   production (bbls/d)         6,982    2,320      4,947      974     408%
  Average oil sales price,
   before transportation
   (CDN$/bbl)                 $56.56   $72.32     $81.50   $67.60      21%
  Reference Price
   (volume weighted)
   and differential
    Crude oil (WTI $US/bbl)   $58.15   $91.34     $93.37   $82.47      13%
    Exchange Rate $US/$Cdn     1.211    0.982      1.087    1.024       6%
    Crude oil (WTI $Cdn/bbl)  $70.41   $89.74     $98.93   $84.44      17%
    Sales price /
     WTI reference price         80%      81%        82%      80%       2%
  Funds flow from
   operations
    Crude oil sales           36,329   15,435    147,554   24,034     514%
    Government royalty       (2,897)    (824)   (10,027)  (1,254)     700%
    Other royalty               (29)    (107)      (309)    (303)       2%
    Transportation expense   (1,557)    (507)    (4,551)    (864)     427%
    Operating expense        (1,114)    (558)    (3,809)  (2,024)      88%
                             ------------------------------------
    Field Netback             30,733   13,439    128,857   19,589     558%
    General and
     administrative expense    (183)    (452)    (1,900)  (1,612)      18%
    Realized foreign
     exchange                  3,744               3,802
    Interest Income              354       19        506       34    1388%
    Special Remuneratory
     Benefit (SRB)           (6,358)        -   (35,489)        -
    Current income tax       (4,445)   (4,646)  (30,108)   (4,646)    548%
                             -------------------------------------
    Funds flow from
     operations               23,845     8,360    65,667    13,365    391%
                             -------------------------------------
  Government royalty as
   percentage of sales            8%        5%        7%        5%      2%
  SRB as percentage of crude
   oil sales                     21%         -       24%         -     24%
  Income tax as percentage
   of crude oil sales            14%       35%       20%       24%     -4%
  As percentage of crude
   oil sales
    Expenses - transportation,
     operating, G&A and other     8%       11%        7%       20%    -13%
    Government royalty, SRB
     and income tax              38%       35%       51%       25%     26%
    Funds flow from
     operations, before
     interest income and
     realized foreign
     exchange gain               54%       54%       42%       55%    -13%
--------------------------------------------------------------------------
Capital Expenditures (Note 2)
--------------------------------------------------------------------------

Thailand                      10,460     6,318    31,319    21,164     48%
Indonesia                      5,299         -     7,345         -
Canada                           909       206     1,827     1,062     72%
                              ------------------------------------
Total                         16,598     6,524    40,491    22,226     81%
--------------------------------------------------------------------------
--------------------------------------------------------------------------


--------------------------------------------------------------------------
International Concessions at December 31, 2008

                                    Net  Net Share of
                                 Square  Commitments                  P+P
                     Status  Kilometers  Note 6          2008 Avg Reserves
                                         (CDN thousands)   BBLS/D   (Mstb)
--------------------------------------------------------------------------
Onshore Thailand
  SW1A (60% working
   interest &
   operator)      Developed          14                       795      900
  L44/43 (60%
   working
   interest &
   operator)      Partially              $29      to July   4,152   24,063
                  developed       1,111              2009

  L33/43
   (60% working
   interest &
   operator)    Undeveloped       1,170
  
  L53/48
   (100% working
   interest &
   operator)    Undeveloped       3,997  $954    to January
                                                       2010

Indonesia
  Citarum, West
   Java (69%
   working
   interest &
   operator)    Undeveloped       1,991  25,014  to October
                                                       2009
  Batu Gajah,
   South Sumatra
   (90% working
   interest &
   operator)    Undeveloped       3,590  40,294  to January
                                                       2010
  South CPP,
   Central Sumatra
   (90% working
   interest &
   operator)    Undeveloped       4,026   6,175 to November
                                                       2011
--------------------------------------------------------------------------

(1) Funds flow from operations ("funds flow" before changes in non-cash
    working capital and reclamation costs) is used by management to
    analyze operating performance and leverage.  Funds flow as presented
    does not have any standardized meaning prescribed by Canadian GAAP and
    therefore it may not be comparable with the calculation of similar
    measures of other entities.

    Funds flow is not intended to represent operating cash flow or
    operating profits for the period nor should it be viewed as an
    alternative to cash flow from operating activities, net earnings or
    other measures of financial performance calculated in accordance with
    Canadian GAAP.  All references to funds flow throughout this report
    are based on funds flow from operations before changes in non-cash
    working capital and reclamation costs.

(2) Cost of capital expenditures, excluding any asset retirement
    obligation.
(3) Cost of acquisition allocated to petroleum and natural gas properties
    (see Note 3 of the notes to consolidated financial statements).
(4) Thailand reserves as at December 31, 2008 as evaluated by Gaffney
    Cline & Associates Ltd., Singapore. (refer to news release of March
    16, 2009)
(5) Pan Orient's 53.2% share of the reserves of Andora Energy Corporation,
    a private company, as at December 31, 2008 as evaluated by DeGolyer
    and MacNaughton Canada Limited. (refer to news release of February 23,
    2009)
(6) Share of commitments reflect amounts to be paid by Pan Orient,
    including carried interest partners in Indonesia.  Note that
    commitments for a concession include the completion of a work program
    as well as the amount of expenditure.  Commitments have been
    translated at December 31, 2008 from US dollars to Canadian dollars at
    the rate of US$1 equals CAD$1.233.

/T/

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.

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

Pan Orient Energy Corp. shares trade on the TSX Venture Exchange under the symbol POE.

45,568,366 common shares issued
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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