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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