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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.: Operations Update

Apr 26, 2011 - 08:30 ET

CALGARY, ALBERTA--(Marketwire - April 26, 2011) - Pan Orient Energy Corp. (TSX VENTURE:POE)

INDONESIA OPERATIONS UPDATE

Batu Gajah Production Sharing Contract – POE 97% Interest & Operator

Tuba Obi Utara-1Sidetrack Exploration Well

NTO-1ST is currently awaiting repairs to the hydraulic system at a true vertical depth ("TVD") depth of 3,312 feet towards a subsurface Lower Talang Akar formation target approximately 780 meters northeast of the original NTO-1 Lower Talang Akar formation reservoir penetration at a depth of approximately 4,112 feet TVD.

Drilling has been delayed for the past six days after mechanical issues were encountered with the drilling rig mud pumps. Replacement pumps have now arrived on site and drilling is expected to resume in the next two days with drilling estimated to be completed in approximately nine days.

THAILAND OPERATIONS UPDATE

Concession L53 (Pan Orient 100% working interest and operator)

L53-A1 Development Well

The L53-A1 development well is currently on production at a stabilized rate of 270 BOPD from the K40-D sand after producing at an initial flush rate of approximately 465 BOPD. This represents the first oil production from the K40-D sandstone interval. An additional 2 shallower zones (K40-C and K40-A) are also interpreted to be hydrocarbon bearing and will be targeted by additional development wells.

L53-A2 Development Well

The L53-A2 development well is currently drilling near the top of the deepest sandstone target interval (K40-D) and expected to be completed drilling within the next three days.

L53-B Appraisal Well

The L53-B appraisal well, located approximately 2.1 kilometers north of the L53-A discovery well and outside of the L53-A production license, is currently testing the deepest of two zones interpreted as oil bearing on logs, the K40-A and an as yet unproven shallower zone.

L53-A3 Development Well

The L53-A3 development well will twin the earlier drilled L53-A1 development well targeting the shallow K40-C and K40-A sands identified in the L53-A1 well that are behind pipe as the well is producing from the deeper K40-D interval.

L53-C Exploration well

The L53-C exploration has been plugged and abandoned after failing to produce hydrocarbons at commercial rates.

Summary – Concession L53

Drilling in Concession L53 was delayed for almost the entire month of March as the result of mechanical issues with the rig which have now been rectified, at the contractor's expense. With the first production from the deep K40-D sand in the L53-A1 well, stacked pay zones identified in most wells and the possible extension of oil bearing sands into the area of L53-B, initial results are very encouraging. The exact number of wells that will be drilled at Concession L53 in 2011 will be determined once all the test results are in. Environmental approval is currently in process for a new prospect along trend and south of the L53-A discovery, which in combination with the L53-E exploration prospect that is currently ready to drill, has the potential to add significant reserves to those currently booked for the Concession, in the success case.

Concession L33 (Pan Orient 60% working interest and operator)

L33-2 Exploration & Appraisal Sidetracks

The original L33-2 discovery well was shut in at the end of the 90 production test at a rate of approximately 84 BOPD (net) with a high water cut. In order to quickly evaluate the WBV1 volcanic reservoir at a subsurface location 682 meters north east and up structure from the WBV1 volcanic at L33-2, in an area defined as prospective resources in Gaffney Cline and Associates' recent third party resource report, the original well was sidetracked. The primary volcanic reservoir was encountered at a depth of 677 meters TVD, 28 meters high to the L33-2 discovery well, and exhibited high mud gas reading and oil shows over the upper five meters of a 37 meter thick volcanic section. Due to the lack of drilling fluid losses, the well was sidetracked again, approximately 60 meters east, a location interpreted to be closer to the main bounding fault and more highly fractured. Unfortunately, the wellbore intersected to main bounding fault prior to encountering the top of the volcanic target as a result of poor fault resolution on the 2D seismic data that this well was drilled on. A third sidetrack was drilled to the proven WBV1 reservoir 40 meters southeast of the original discovery well intersecting the WBV1 volcanic approximately five meters structurally lower than the original well but with drilling stopped 30 meters shallower than the base of the section encountered at L33-2. Testing resulted in initial oil cuts of approximately 30% that have since gone to 100% water. The well has been suspended.

L33-4 Exploration Well

The L33-4 exploration well is currently drilling ahead towards the target WBV1 volcanic approximately 2.2 kilometers north of the L33-2 oil discovery and in an area assigned as prospective resources in Gaffney Cline's most recent reserve report. Drilling is anticipated to be completed in the next three days at which the well will be tested if justified by results.

Concession L44 (Pan Orient 60% working interest and operator)

L44-F Exploration Well

The L44-F exploration well was targeting both conventional sandstone and unconventional volcanic reservoirs within a large, approximately 11 square kilometer maximum structural closure at the sandstone reservoir level and approximately 13 square kilometer structural closure at the volcanic target reservoir level. The vertical well was located approximately 4.2 kilometers southwest of the Wichian Buri oilfield and 1.8 kilometers due west and 100 meters up structure from the POE-7 well drilled by Pan Orient in 2006 that encountered over 50 meters of high quality sand at the L44-F sandstone target level, with oil shows interspersed throughout The well encountered the thickest sands ever drilled in Concession L44 with an associated complete lack of effective top seal resulting in only water bearing sands.

L44-E Exploration Well

The L44-E exploration well was drilled approximately six kilometers north of L44-F, structurally up dip and targeting thinner sands with more effective seal than those observed in the L44-F well. A volcanic zone approximately mid way through the planned total depth of the well was encountered at 740 meters with drilling mud losses of approximately 24 barrels per hour and elevated mud gas readings near the top of the volcanic interval. The decision was made to stop drilling and test the well which resulted in the recovery of only minor quantities of formation water. The well has been suspended and will be drilled to the deeper sandstone reservoir targets later in 2011.

ST-3 Exploration Well

The ST-3 exploration well was drilled to target a sandstone prospect with no currently assigned reserves due west and adjacent to the proven Si Thep field in the southern portion of Concession L44. The well failed to encounter reservoir quality sands and will be abandoned.

NSE-E4 Exploration Well

The NSE-E4 exploration well was drilled from the NSE-E well pad across a large bounding fault to the east targeting a potential volcanic reservoir underlying the main NSE Central volcanic reservoir. A 30 meter thick volcanic was encountered at a depth of 1,088 meters TVD exhibiting good oil shows and high mud gas readings over the top ten meters of this interval. Testing resulted in the recovery of minor quantities of 34 degree API oil in the early stages of the test followed by only formation water. The well appears to have been drilled in close proximity to a possible oil water contact with the follow-up potential in a structurally higher position currently being evaluated.

WBEXT-1C Discovery Well

The 2010 WBEXT-1C discovery well that initially produced at approximately 2,100 BOPD (net) before starting to cut significant water as discussed in the press releases of January 6th and February 9, 2011, has been perforated in a new shallow zone resulting in stabilized rates of approximately 26 BOPD. Plans are now to perforate the main WBEXT sand that was also encountered in the WBEXT-1C well and commingle it with the 26 BOPD (net) zone once the service rig is available upon the completion of operations on Concession L53.

Summary – Concessions L33 & L44

Drilling since the beginning of 2011 at Concessions L33 and L44 has focused exclusively on high risk areas of new potential reserves balanced approximately 50/50 with regard to volcanic versus sandstone reservoirs. The result has been the potential for lower risk follow up drilling at NSE-E4.

There remains a large inventory of drilling prospects in both conventional sandstone and unconventional volcanic reservoirs in Concessions L33 and L44, but the focus will now shift to development and appraisal drilling for at least the next four to six wells.

The new oil zone that tested 26 BOPD (net) at WBEXT-1C in combination with the soon to perforated main WBEXT sand present in this well, highlights the stacked multi zone oil potential in the WBEXT field area whereby shallow zones behind pipe can be brought on as deeper zones deplete or water out.

Thailand Production

Production sales from Concessions L44, L33 and L53 averaged 2,246 BOPD (net) in the first quarter of 2011 as disclosed on April 14, 2011, with the WBEXT-1, WBEXT-1A and WBEXT-1B wells brought back on with the granting of the WBEXT production license on February 24, 2011. Initial rates from the WBEXT-1 and WBEXT-1A wells producing from volcanic reservoirs were restricted to approximately 360 BOPD (net) per well with no water observed for the first week of production. As rates were increased water cuts increased significantly to approximately 75% and 50% respectively and total fluid rates reduced to approximately 500 barrels per day.

Current production is approximately 1,960 BOPD net to Pan Orient with 1,495 BOPD (net) from Concessions L44 and L33, and 465 BOPD from Concession L53. The current level of production is mainly as a result of the factors described above and natural declines. Production growth from Concession L53 was limited in March due to the shut-down of the drilling rig for almost the entire month as a result of mechanical issues, which have since been resolved. It is anticipated testing of two wells at Concession L53 within the next seven days plus an additional two development wells over the next three weeks, in combination with planned near term development drilling at WBEXT field targeting the WBEXT sands and the prolific WBV2 volcanic reservoir, will have the potential to increase production in the short term.

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.

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