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Oil/Gas E&P Expects to Spud High-Impact Well in Q4/18
Research Report

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Analyst Bill Newman with Mackie Research Capital Corp. provided a post-Q1/18 update on this energy firm.

In a May 17 research note, Bill Newman, an analyst with Mackie Research Capital Corp., reported that Pan Orient Energy Corp. (POE:TSX.V) delayed commencement of spudding the Anggun-1X well a month to October 2018, as it has yet to receive the requisite permits. Once they're in hand, construction should start immediately. "A successful well could be a major catalyst for the stock," Newman added.

This high-impact well sits about 5.6 kilometers to the northwest of the Ayu-1X well and about 70 meters "structurally updip at the Gumai sandstone level," explained Newman. Anggun-1X will target a large prospective resource at both the Batu Raja formation and the Gumai sandstone reservoir that the Ayu-1X and Elok-1X wells previously encountered. The dry hole cost is an estimated "US$15.4 million (US$15.4M), or US$7.55M net to Pan Orient's 49% interest."

In Thailand, at the L53/48 concession, which Pan Orient has a 50.01% working interest in, Q1/18 oil production was lower than anticipated. Average net production of 182 barrels a day (182 bbl/day) compared to Mackie's estimate of 245 bbl/day. In contrast, cash flow during the quarter beat expectations, coming in at CA$818,000 versus a forecasted CA$634,000 "due to a higher-than-expected realized oil price of $75.50 per barrel," Newman wrote.

Also in Q1/18, Pan Orient completed several well workovers at L53/48 and plans to do three more starting in July. In Q4/18, the company intends to drill one exploration well and one appraisal well at L53-B. Cash flow should fund these Thailand projects.

As for the energy company overall, it ended Q1/18 with "a strong balance sheet and no big work commitments," noted Newman. At quarter's end, it had no debt and CA$31.6M in cash and CA$36.8M in working capital, the latter essentially unchanged since year-end 2017. Ultimately, Newman pointed out, the company has "financial flexibility to fund high-impact exploration."

Therefore, Mackie maintained its Buy recommendation on the company. With Pan Orient's stock currently trading at roughly CA$1.15 per share, Mackie's CA$3.25 per share price target represents a greater than 180% projected return.

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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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