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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. 2010 Year End Financial & Operating Results

Apr 14, 2011 - 08:30 ET

CALGARY, ALBERTA--(Marketwire - April 14, 2011) -

Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE) is pleased to provide highlights of its 2010 year end and fourth quarter consolidated financial and operating results, and provide an outlook for 2011. Please note that all amounts are in Canadian dollars unless otherwise stated and BOPD refers to barrels of oil per day net to Pan Orient.

The Corporation today filed its audited consolidated financial statements as at and for the year ended December 31, 2010 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.

2010 HIGHLIGHTS

- Funds flow from operations of $59.0 million ($1.22 per share) and net income attributable to common shareholders of $20.6 million ($0.43 per share) for 2010.

- Total 2010 capital programs in Thailand, Indonesia and Canada of $61.3 million were financed 96% by after tax funds flow from operations and 4% from working capital.

- Capital expenditures were $43.4 million in Thailand, $17.0 million in Indonesia and $0.9 million in Canada.

- Average 2010 oil sales in Thailand of 3,884 BOPD with 4,056 BOPD for the fourth quarter of 2010.

- Strong generation of after tax funds flow from Thailand operations with $17.7 million for the fourth quarter of 2010 ($47.46 per barrel) and $58.2 million for 2010 ($41.05 per barrel).

- Drilling of 25 exploration and appraisal wells in Thailand during 2010 with 10 wells at the Wichian Buri Extension Field ("WBEXT"), five wells at Bo Rang, seven wells at Na Sanun East, two wells at Concession L33, and one well at Concession L53.

-- Discovery of the WBEXT field in Concession L44 (Pan Orient operator and 60% ownership) resulted in a new 12.45 square kilometer production license, 382,051 barrels of oil sales in the second half of 2010, and 8.2 million barrels of proven plus probable reserves were assigned at year-end.

-- Drilling of two exploration wells in Concession L33 (Pan Orient operator and 60% ownership) resulted in the first discovery of hydrocarbons at commercial rates in Concession L33, a new 11.94 square kilometer production license, oil sales of 25,039 barrels commencing in November 2010, and 2.8 million barrels of proven plus probable reserves were assigned at year-end.

-- At Concession L53 (Pan Orient operator and 100% ownership) a production license of 2 square kilometers was granted to Pan Orient, first oil sales from Concession L53 commenced in August 2010, and 1.4 million barrels of proven plus probable reserves were assigned at year-end.

- Thailand proved plus probable reserves of 31.9 million barrels at December 31, 2010 with 12.4 million barrels of new oil field discoveries in 2010 offset by a 15.7 million barrel downward revision of previously assigned reserves mainly at the Na Sanun Central and NSE-F1 fields in Concession L44/43. The net present value of proved and probable reserves after tax (using forecast prices and discounted at 10%) of Cdn$509 million, representing $9.00 per Pan Orient share based on the current 56.5 million Pan Orient shares outstanding.

- At December 31, 2010 Pan Orient had $31.4 million of working capital and long-term deposits, and no long-term debt.

- Subsequent to the year-end, Pan Orient closed a bought deal financing on March 8, 2011 with the issuance of 7,557,264 shares at a price of $6.55 per share for proceeds of $46.7 million net of expenses.

2010 OPERATING RESULTS

- Total 2010 capital programs in Thailand, Indonesia and Canada of $61.3 million were financed 96% by the $59.0 million in after tax funds flow from operations and 4% from working capital. Capital expenditures were $43.4 million in Thailand, $17.0 million in Indonesia and $0.9 million in Canada.

- Active 2010 drilling program in Thailand with the drilling of 25 wells (15.4 net wells) focused on exploration and appraisal wells to add new reserves and new development drilling opportunities for 2011. Six wells (4.0 net) were drilled in the fourth quarter of 2010, with five appraisal or exploration wells at the WBEXT field in Concession L44, and the L53-C well in Concession L53 (which spudded on December 30, 2010). Total capital expenditures in Thailand were $11.7 million in the fourth quarter of 2010 and a total of $43.4 million in 2010.

- Pan Orient drilled 22 wells in Concession L44 (Pan Orient operator and 60% ownership) during 2010 resulting in 12 producing wells and 5 wells which are waiting for workovers or sidetracking operations to evaluate different potential reservoirs.

-- The WBEXT field was discovered in the third quarter of 2010 and a total of 10 exploration or appraisal wells were drilling during the year with capital expenditures for drilling of $14.7 million, and resulted in 382,051 barrels of oil sales. A production license of 12.45 square kilometers was granted for the portion of the field in Concession L44 by the Thailand Department of Mineral Fuels in February 2011. Proved and probable oil reserves assigned at December 31, 2010 were 8.2 million barrels from volcanic and sandstone reservoirs (with 5.3 million barrels assigned to reserves in Concession L44 and 2.9 million barrels assigned to reserves in Concession L33).

-- Five wells were drilled at the Bo Rang fields during the first half of 2010 with capital expenditures for drilling of $5.8 million to further appraise and develop this field which was discovered in 2009. Oil sales in 2010 from the four producing wells resulting from this drilling program were 226,504 barrels.

-- Seven wells were drilled at Na Sanun East in the Central and NSE-F1 fields during the first half of 2010 to continue appraisal of these fields and to evaluate further exploration potential. The program resulted in three producing wells, the NSE-G3 well which will be sidetracked to test a deeper volcanic objective, the NSE-F4 well which is being evaluated for a potential workover, and two wells not capable of production. Capital expenditures related to this drilling program were $10.7 million and oil sales in 2010 were 69,952 barrels.

- The two exploration wells drilled in Concession L33 (Pan Orient operator and 60% ownership) during the third quarter of 2010 resulted in the first discovery of hydrocarbons at commercial rates in Concession L33. Oil sales commenced in November 2010 with a production license of 11.94 square kilometers for the L33 field being granted by the Thailand Department of Mineral Fuels. Total capital expenditures during 2010 for drilling were $1.9 million and resulted in 25,039 barrels of oil sales and proved and probable oil reserves assigned at December 31, 2010 of 2.8 million barrels.

- Production in Concession L53 (100% ownership by Pan Orient) commenced in August 2010 with the L53-A well being placed back on-stream after Pan Orient received formal approval by the Thailand Department of Mineral Fuels for the 2.0 square kilometers L53-A Production License around the L53-A exploration well. Oil sales were 28,676 barrels in 2010, with 8,097 barrels (88 BOPD) in the fourth quarter of 2010. This new core area of operations west of Bangkok began production during 2010 and revenue from oil sales was used to fund the start-up of operations. This area has active operations in 2011 with a workover of the L53-A well to produce from additional sandstone zones, and drilling of new wells at L53-C (spudded December 30, 2010), L53-B and L53-A1. Proved and probable oil reserves assigned at December 31, 2010 were 1.4 million barrels from sandstone reservoirs.

- The independent reserves evaluation conducted by Gaffney, Cline & Associates (Consultants) Pte. Ltd. of Singapore ("Gaffney Cline") for the Thailand assets at December 31, 2010 assigned proved plus probable reserves of 31.9 million barrels at December 31, 2010, a 13% decrease from 36.7 million barrels at December 31, 2009. Proved plus probable reserves at December 31, 2010 include 12.4 million barrels of new oil field discoveries in 2010 at the Wichian Buri Extension field ("WBEXT") in Concessions L44/43 & L33/43, the L33 field in Concession L33/43, and the L53A field in Concession L53/48 offset by a 15.7 million barrel downward revision of previously assigned reserves mainly at the Na Sanun Central and NSE-F1 fields in Concession L44/43.

The net present value of proved and probable reserves after tax for the four concessions in Thailand, using forecast prices and discounted at 10%, is Cdn$509 million, an increase of 11% over the prior year and representing $9.00 per Pan Orient share, based on the current 56.5 million Pan Orient shares outstanding.

- Average Thailand oil sales in 2010 were 3,884 BOPD and 4,056 BOPD for the fourth quarter of 2010. Pan Orient continued to experience significant fluctuations in production levels in 2010 from volcanic reservoirs which can be initially very prolific before they achieve a stabilized production level and water cut.

Oil sales averaged 2,246 BOPD in the first quarter of 2011 reflecting the temporary shut-in of WBEXT-1, WBEXT-1A and WBEXT-1B wells starting in December 2010 at the expiry of their respective 90 day production test periods, and reduced oil production of the WBEXT-1C well as a result of water incursion as outlined in the press releases of January 6th and February 9th, 2011. The WBEXT production license was granted on February 24, 2011 and the three temporarily shut-in wells were brought on-stream at reduced rates to minimize the water cut.

- The oil sands project at Sawn Lake, Alberta operated by Andora Energy Corporation (which is owned 53.4% by Pan Orient) as at December 31, 2010 was evaluated by Sproule Associates Ltd. ("Sproule"). The contingent resource volumes estimated in the Sproule report are considered contingent until such time as commercial recovery has been demonstrated, regulatory approvals have been obtained and the company has committed to proceed with commercial development. Contingent Resources are further classified as "High", "Best" and "Low" in accordance with the level of certainty.

The report assigned Sawn Lake "Best Case" contingent resources of 114.4 million barrels attributed to the 53.4% ownership interest of Pan Orient in Andora. The net present value of the "Best Case" (discounted at 10% before income tax using forecast prices) attributed to Sawn Lake contingent resources is $222 million to the 53.4% ownership interest of Pan Orient in Andora. The Net present value of the "Best Case" (discounted at 10% after income tax using forecast prices) attributed to Sawn Lake contingent resources is $136 million to the 53.4% ownership interest of Pan Orient in Andora.

- Capital expenditures in Indonesia were $1.6 million for the fourth quarter and a total of $17.0 million for 2010.

At the Batu Gajah PSC in 2010 (onshore Sumatra - POE 97% working interest and operator) there was completion of the 500 line kilometre 2D seismic program, the associated seismic data processing and mapping, permitting and initial field work related to the 2011 three well exploration program. The Tuba Obi Utara-1 well started drilling in March 2011 and will be followed immediately by the SE Tiung-1 and Betano-1 wells. Capital expenditures in 2010 related to the Batu Gajah PSC were $8.3 million.

At the Citarum PSC in 2010 (onshore Java - Pan Orient 77% working interest and operator) there was completion of the 2D seismic program and the associated seismic data processing and mapping. Targets have been selected for a three well exploration program that is scheduled for commencement of drilling late in the third quarter or early in the fourth quarter of 2011. Capital expenditures in 2010 related to the Citarum PSC were $8.3 million.

FINANCIAL RESULTS

- Fourth Quarter of 2010

-- Funds flow from operations for the fourth quarter was $17.8 million compared with $15.4 million for the third quarter of 2010 and $9.9 million for the fourth quarter of 2009. Funds flow from operations per share (basic) was $0.37 for the fourth quarter of 2010.

-- For the fourth quarter of 2010, Thailand generated $17.7 million in funds flow from operations, compared with $15.4 million the third quarter of 2010 primarily as a result of a 9% increase in the realized price for crude oil partially offset by a 5% decrease in oil sales volumes. For the quarter, transportation expenses were $2.73 per barrel, operating expenses and other royalty $7.83 per barrel, general and administrative expenses $2.61 per barrel and amounts to the Thailand government of $15.76 per barrel resulted in after tax funds flow from operations per barrel of $47.46. The WTI reference price for crude oil per barrel increased 8% during the quarter to CDN$85.83 from CDN$79.69 in the third quarter of 2010, as the 10% increase in the United States dollar WTI reference price was reduced through the rise in the Canadian dollar. Operating expenses increased to $2.9 million or $7.73 per barrel in the fourth quarter from $2.5 million or $6.46 per barrel in the third quarter of 2010 as a result of additional year-end personnel expenses and engineering fees. For the fourth quarter of 2010, Thailand crude oil revenue was allocated 17% to expenses for transportation, operating, and general & administrative, 21% to the government of Thailand in the form of royalties, Special Remuneratory Benefit ("SRB") and Income Tax, and 62% to Pan Orient.

-- Net income attributable to common shareholders of $8.5 million, or $0.17 per share (basic), for the fourth quarter of 2010 compared with net income attributable to common shareholders of $4.7 million, or $0.10 per share (basic), for the third quarter of 2010.

- Year Ended December 31, 2010

-- Funds flow from operations for 2010 was $59.0 million compared with $53.0 million for 2009, representing funds flow from operations per share (basic) of $1.22 compared with $1.15 for the prior year. The $6.0 million increase in funds flow from operations from the prior year is primarily due to a $3.4 million increase in funds flow from Thailand operations and a $2.4 million increase in funds flow from Canada.

-- Thailand operations in 2010 generated $58.2 million in funds flow from operations after tax, or $41.05 per barrel in 2010 compared with $54.8 million or $33.40 per barrel in 2009. The Thailand operations in 2010 experienced a 21% increase in the realized crude oil price and a 14% decrease in oil sales volumes. For 2010, transportation expenses were $2.58 per barrel, operating expenses and other royalty of $6.81 per barrel, general and administrative expenses $3.06 per barrel and amounts to the Thailand government of $19.21 per barrel resulted in after tax funds flow from operations per barrel of $41.05. Operating expenses increased to $9.5 million or $6.73 per barrel in 2010 from $7.6 million or $4.60 per barrel in 2009 due to the increased number of wells, expenses for maintenance and water hauling, start-up expenses for Concession L53 and a lower production level. For 2010, Thailand crude oil revenue was allocated 17% to expenses for other royalties, transportation, operating, and general & administrative, 27% to the government of Thailand in the form of royalties, SRB and income tax, and 56% to Pan Orient (before interest income and realized foreign exchange gain).

-- Funds flow from Canada was $0.7 million in 2010 compared with a funds flow of negative $1.7 million in 2009. There was a net recovery of $0.7 million of general and administrative expenses for Canada in 2010 compared with $1.7 million of net expenses in 2009.

-- Net income attributable to common shareholders for 2010 was $20.6 million or $0.43 per share (basic) compared with $15.1 million or $0.33 per share (basic) for 2009.

-- Pan Orient continues to maintain its financial strength and flexibility. At December 31, 2010 Pan Orient had $31.4 million of working capital and long-term deposits, and no long-term debt. In 2010 Pan Orient had internally generated funds flow from operations of $59.0 million, funding 96% of the $61.3 million of capital expenditures in Thailand, Indonesia and Canada. In addition, at December 31, 2010 Pan Orient had $8.7 million of equipment inventory to be utilized for future Thailand and Indonesia operations that is included in petroleum and natural gas assets on the balance sheet.

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.

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.

----------------------------------------------------------------------------
                           Three Months Ended           Year Ended   Change
Operations Summary                December 31,         December 31,
(thousands of Canadian 
 dollars except 
 where indicated)              2010      2009      2010       2009
----------------------------------------------------------------------------
FINANCIAL
----------------------------------------------------------------------------
Oil revenue, before 
 royalties and transportation 
 expense                     28,495    22,280   103,019     98,236        5%
Funds flow from operations 
 (Note 1)                    17,803     9,945    59,014     52,950       11%
 Per share - basic        $    0.37    $ 0.21  $   1.22   $   1.15        6%
 Per share - diluted      $    0.36    $ 0.20  $   1.21   $   1.10       10%
Funds flow from operations 
 by region (Note 1)
 Canada                         (97)   (1,062)      718     (1,716)    -142%
 Thailand                    17,709    11,063    58,198     54,811        6%
 Indonesia                      191       (56)       98       (145)    -167%
                          --------------------------------------------------
 Total                       17,803     9,945    59,014     52,950       11%
                          --------------------------------------------------
                          --------------------------------------------------
Net Income (Loss)             8,495     6,996    20,574     15,145       36%
 Per share - basic        $    0.17  $   0.15  $   0.43   $   0.33       30%
 Per share - diluted      $    0.17  $   0.14  $   0.42   $   0.31       34%
Working capital              26,768    28,659    26,768     28,659       -7%
Working capital & 
 non-current deposits        31,396    32,738    31,396     32,738       -4%
Long-term debt                    -         -         -          -
Capital expenditures 
 (Note 2)                    13,638    18,960    61,328     63,495       -3%
Shares outstanding 
 (thousands)                 48,741    46,313    48,741     46,313        5%
----------------------------------------------------------------------------
Funds flow from operations 
 per barrel (Note 1)
----------------------------------------------------------------------------
 Canada operations         $  (0.26)  $ (3.42) $   0.51   $  (1.04)    -148%
 Thailand operations          47.46     35.69     41.05      33.40       23%
 Indonesia operations          0.51     (0.18)     0.07      (0.09)    -174%
                           -------------------------------------------------
                           $  47.71   $ 32.09  $  41.63   $  32.27       29%
----------------------------------------------------------------------------
Capital Expenditures (Note 2)
----------------------------------------------------------------------------
Canada                          268       567       863        917       -6%
Thailand                     11,746    16,351    43,441     51,996      -16%
Indonesia                     1,624     2,042    17,024     10,582       61%
                           -------------------------------------------------
Total                        13,638    18,960    61,328     63,495       -3%
----------------------------------------------------------------------------
Working Capital and 
 Non-current Deposits
----------------------------------------------------------------------------
Working capital & 
 non-current deposits 
 - beginning of
 period                      27,746    39,830    32,738     46,386      -29%
 Funds flow from operations 
  (Note 1)                   17,803     9,945    59,014     52,950       11%
 Capital expenditures 
  (Note 2)                  (13,638)  (18,960)  (61,328)   (63,495)      -3%
 Non-cash settlement of 
  Andora receivable               -         -      (600)         -
 Unrealized effect of FX 
  on working capital           (847)    1,338    (2,097)    (4,214)     -50%
 Net proceeds on share 
  transactions                  332       585     3,669      1,111      230%
                           -------------------------------------------------
Working Capital & 
 Non-current Deposits 
 - end of period             31,396    32,738    31,396     32,738       -4%
----------------------------------------------------------------------------
Canada Operations
----------------------------------------------------------------------------
Interest income                  21        12        50         43       16%
General and administrative 
 expense                         38      (359)      708     (1,450)    -149%
Realized foreign exchange 
 (loss)                        (212)     (692)      (39)      (247)     -84%
Foreign new ventures 
 expenditures                    57       (23)        -        (62)    -100%
                           -------------------------------------------------
Funds flow from operations 
 (Note 1)                       (97)   (1,062)      718     (1,716)    -142%
                           -------------------------------------------------
                           -------------------------------------------------
Funds flow from operations 
 per barrel (Note 1)
 Interest income           $   0.06  $   0.04  $   0.04   $   0.03       34%
 General and administrative 
 recovery (expense)            0.10     (1.16)     0.50      (0.88)    -156%
 Realized foreign exchange 
  (loss)                      (0.57)    (2.23)    (0.03)     (0.15)     -82%
 Foreign new ventures 
  expenditures                 0.15     (0.07)        -      (0.04)    -100%
                           -------------------------------------------------
                           $  (0.26)  $ (3.43) $   0.51   $  (1.04)    -148%
----------------------------------------------------------------------------
Indonesia Operations
----------------------------------------------------------------------------
General and administrative 
 recovery (expense)             191       (56)       98       (145)    -167%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                           Three Months Ended           Year Ended   Change
                                  December 31,         December 31,
(thousands of Canadian 
 dollars except where 
 indicated)                     2010     2009       2010      2009
----------------------------------------------------------------------------
Thailand Operations
----------------------------------------------------------------------------
Oil sales (bbls)             373,147  310,006  1,417,750 1,640,894      -14%
Average daily oil sales 
 by Concession (BOPD)
 L44/43                        3,572    3,183      3,575     4,264      -16%
 SW1                             124      187        161       232      -30%
 L53/48                           88        -         79         -        -
 L33/43                          272        -         69         -        -
                           -------------------------------------------------
 Total                         4,056    3,370      3,884     4,496      -14%
                           -------------------------------------------------
Average oil sales price, 
 before transportation 
 (CDN$/bbl)                $   76.36  $ 71.87  $   72.66   $ 59.87       21%
Reference Price (volume 
 weighted) and differential
 Crude oil (WTI $US/bbl)   $   84.70  $ 75.97  $   79.36   $ 58.56       36%
 Exchange Rate $US/$Cdn         1.01     1.07       1.04      1.16      -10%
 Crude oil (WTI $Cdn/bbl)  $   85.83  $ 81.42  $   82.17   $ 67.72       21%
 Sales price / WTI reference 
  price                           89%      88%        88%       88%       0%
Funds flow from operations
 Crude oil sales              28,495   22,280    103,019    98,236        5%
 Government royalty           (1,826)  (1,344)    (6,498)   (6,729)      -3%
 Other royalty                   (37)     (37)      (110)     (114)      -4%
 Transportation expense       (1,017)    (761)    (3,653)   (3,866)      -6%
 Operating expense            (2,886)  (2,278)    (9,535)   (7,555)      26%
                           -------------------------------------------------
 Field Netback                22,729   17,860     83,224    79,972        4%
 General and administrative 
  expense                       (974)    (735)    (4,345)   (3,394)      28%
 Interest Income                  11       14         68       407      -83%
 Special Remuneratory 
  Benefit tax (SRB)           (1,549)  (1,868)    (6,413)   (6,751)      -5%
 Current income tax           (2,508)  (4,208)   (14,336)  (15,423)      -7%
                           -------------------------------------------------
 Funds flow from operations   17,709   11,063     58,198    54,811        6%
                           -------------------------------------------------
                           -------------------------------------------------
Funds flow from operations 
 per barrel (CDN$/bbl)
 Crude oil sales           $   76.36  $ 71.87  $   72.66   $ 59.87       21%
 Government royalty            (4.89)   (4.34)     (4.58)    (4.10)      12%
 Other royalty                 (0.10)   (0.12)     (0.08)    (0.07)      11%
 Transportation expense        (2.73)   (2.45)     (2.58)    (2.36)       9%
 Operating expense             (7.73)   (7.35)     (6.73)    (4.60)      46%
                           -------------------------------------------------
 Field Netback                 60.91    57.62      58.70     48.74       20%
 General and administrative 
  expense                      (2.61)   (2.37)     (3.06)    (2.07)      48%
 Interest Income                0.03     0.05       0.05      0.25      -81%
 Special Remuneratory Benefit 
  (SRB)                        (4.15)   (6.03)     (4.52)    (4.11)      10%
 Current income tax            (6.72)  (13.57)    (10.11)    (9.40)       8%
                           -------------------------------------------------
 Thailand - Funds flow 
  from operations          $   47.46  $ 35.69  $   41.05   $ 33.40       23%
                           -------------------------------------------------
                           -------------------------------------------------
Government royalty as 
 percentage of crude oil sales  6.4%      6.0%       6.3%      6.8%    -0.5%
SRB as percentage of crude 
 oil sales                      5.4%      8.4%       6.2%      6.9%    -0.6%
Income tax as percentage of 
 crude oil sales                8.8%     18.9%      13.9%     15.7%    -1.8%
As percentage of crude oil sales
 Expenses - transportation, 
  operating, G&A and other     17.2%     17.1%      17.1%     15.2%       2%
 Government royalty, SRB 
  and income tax               20.6%     33.3%      26.4%     29.4%      -3%
 Funds flow from operations, 
  before interest income
  and realized foreign 
  exchange gain                62.1%     49.6%      56.4%     55.4%       1%
Wells drilled
 Gross                            6         6         25        24        4%
 Net                            4.0       4.4       15.4      15.2        1%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                        Year Ended          
                                                       December 31,  
(thousands of Canadian dollars 
 except where indicated)                            2010      2009   Change
----------------------------------------------------------------------------
RESERVES AND CONTINGENT RESOURCES
----------------------------------------------------------------------------
Onshore Thailand (reserves assigned to 
 Concessions L44/43, L33/43 and SW1 where 
 Pan Orient is the operator with a 60% interest, 
 and Concession L53/48 where Pan Orient is the 
 operator with a 100% interest) (Note 3)                                    
 Proved oil reserves (thousands of barrels)        7,363     9,525      -23%
 Proved plus probable oil reserves 
  (thousands of barrels)                          31,935    36,684      -13%
 Net present value of proved + probable reserves, 
  after tax discounted at 10%                    509,000   459,000       11%
  Per Pan Orient share - basic (using year-end 
   shares outstanding) (Note 6)               $    10.44 $    9.91        5%
  Per Pan Orient share - basic (after 
   March 2011 share issue) (Note 7)           $     9.00                    
 Net present value of proved + probable 
  reserves, after tax discounted at 15%          413,000   362,000       14%
  Per Pan Orient share - basic (using 
   year-end shares outstanding) (Note 6)      $     8.47 $    7.82        8%
  Per Pan Orient share - basic (after 
   March 2011 share issue) (Note 7)           $     7.30                    
Canada (share of the oil sands leases of 
 Andora at Sawn Lake, Alberta)                                              
 Contingent Oil Resources - Best Estimate 
  "2C" (thousands of barrels) (Note 4)           103,900                    
 Probable oil reserves (thousands of barrels) 
  (Note 5)                                                  70,121          
 Net Present value, before tax discounted 
  at 10%                                         222,000   745,864      -70%
  Per Pan Orient share - basic (using 
   year-end shares outstanding) (Note 6)      $     4.55 $   16.10      -72%
  Per Pan Orient share - basic (after 
   March 2011 share issue) (Note 7)           $     3.93                    
 Net present value, before tax discounted 
  at 15%                                          45,000   529,872      -92%
  Per Pan Orient share - basic (using 
   year-end shares outstanding) (Note 6)      $     0.92 $   11.44      -92%
  Per Pan Orient share - basic (after 
   March 2011 share issue) (Note 7)           $     0.80                    
----------------------------------------------------------------------------
International Concessions                                                   
----------------------------------------------------------------------------
                                              December
                                              31, 2010
                                             Financial
                                     Net   Commitments    2010 Avg.     P+P
All amounts reflect               Square           CDN  Production Reserves 
Pan Orient's interest  Status Kilometers     thousands)      (BOPD)   (Mstb)
----------------------------------------------------------------------------
Onshore Thailand (December 31, 2010)
----------------------------------------------------------------------------
SW1 (60% working 
 interest & 
 operator)          Developed          9    -        -         161      886 
L44/43 (60% working 
 interest & operator) Partially                to July
                      developed      545 $ 18     2012       3,575   23,997 
L33/43 (60% working 
 interest & operator) Partially                to July
                      developed      557 $ 48     2012          69    5,649 
53/48 (100% working                                to
 interest & operator) Partially                January
                      developed    1,961 $1,063   2013          79    1,403
Onshore Indonesia (Interests at March 31,2011)                             
----------------------------------------------------------------------------
Citarum PSC, West                                   
 Java (77% working                                  to
 interest & operator)                          October
 (Notes 8, 9 & 10)  Undeveloped    2,216 12,853   2011           -        - 
Batu Gajah PSC, 
 South Sumatra (97% 
 working interest                                   to
 & operator)                                   January
 (Notes 8, 9 & 10)  Undeveloped    2,447 22,392   2012           -        - 
CPP South PSC, 
 Central Sumatra 
 (97% working                                       to
 interest & operator)                         November
 (Notes 8&9)        Undeveloped    4,339  5,514   2011           -        - 
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Notes:

(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 and excluding the impact of changes in foreign exchange rates.

(3) Thailand reserves as at December 31, 2010 and December 31, 2009 as evaluated by Gaffney Cline & Associates (Consultants) Pte. Ltd. of Singapore assessed at forecast crude oil reference prices and costs. The reference price for crude oil per barrel (US$ WTI per barrel) for the December 31, 2010 evaluation is $88.40 for 2011, $89.14 for 2012, $88.77 for 2013, $88.88 for 2014, $90.22 for 2015, $91.57 for 2016, and prices increase at 1.5% per year thereafter. The engineered values disclosed may not represent fair market value.

(4) Pan Orient's 53.4% share as at December 31, 2010 of the reserves of Andora Energy Corporation, a private company as evaluated by Sproule Associates Ltd. assessed at forecast crude oil reference prices and costs. The reference price for crude oil per barrel (Western Canada Select WCS 20/5 API adjusted for quality and transportation in Canadian dollars) is $63.64 for 2012, $60.57 for 2013, $57.91 for 2014 and prices increasing to $83.92 in 2020. Future capital expenditures estimated at $1,170 million. The engineered values disclosed may not represent fair market value.

(5) Pan Orient's 53.2% share as at December 31, 2009 of the reserves of Andora Energy Corporation, a private company as evaluated by DeGolyer and MacNaughton Canada Limited assessed at forecast crude oil reference prices and costs. The reference price for crude oil per barrel (crude bitumen 9 API Plant Gate in Canadian dollars) is $58.32 for 2010, $59.21 for 2011, $58.83 for 2012 and prices increasing to $67.81 in 2021. Future capital expenditures estimated at $910 million. The engineered values disclosed may not represent fair market value.

(6) Per share values calculated based on 48,740,866 Pan Orient Shares outstanding at December 31, 2010 and 46,313,366 Pan Orient Shares outstanding at December 31, 2009.

(7) Per share values after equity financing in March 2011 calculated based on 56,543,807 Pan orient Shares outstanding.

(8) Interests in Indonesia at March 31, 2011 include the repurchase of carried interests in each of the Indonesian PSC's in the first quarter of 2011. Carried interests repurchased were 8% at Citarum PSC, 7% at Batu Gajah PSC and 7% at South CPP PSC. The repurchase of carried interests does not change the level of commitments since carried interests paid for by Pan Orient are already included.

(9) Share of commitments reflect amounts to be paid by Pan Orient, including carried interest partners in Indonesia. Note that commitments for a concession in Thailand or a Production Sharing Contract ("PSC") in Indonesia include the completion of a work program as well as the amount of expenditure. Work program commitment is based on the original contract and timing is subject to government approval.

(10) Indonesia financial commitments as provided above represent the current exploration phase that the Company is conducting. The obligation period ending for Citarum and Batu Gajah differs from the PSC agreement as commitments from previous years have been deferred and rolled forward. Every year the Company submits a work program for each PSC to the GOI and along with it, a request to roll forward any incomplete commitments from the previous year. Although this request is a departure from the original contract, it is considered standard practice in Indonesia. The above obligation periods for Citarum and Batu Gajah are consistent with this practice.

To see the Pan Orient Thailand 2010 Drilling Map and Table, click the following link: http://media3.marketwire.com/docs/boe_drilling.pdf

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.

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

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