The NI 51-101 compliant report dated Sept. 30, 2019, prepared by Sproule Associates, outlines a development plan for the Sawn Lake Central and Sawn Lake South blocks. Development would be staged with five standardized, steam assisted gravity drainage (SAGD) facilities. Growth would be capitalized mainly through cash flow from the project. Each SAGD battery would have a production capacity of 5,000–6,000 barrels of bitumen per day.
Andora Energy Corp., the Sawn Lake blocks owner-operator subsidiary in which Pan Orient owns a 71.8% interest, would use its proprietary water boiler technology at the SAGD batteries. With this methodology, Andora would use water generated from production to create steam and meet Alberta's water recycling requirements. "This strategy significantly reduces financial, reservoir and operating risk," the release noted.
The project's first commercial development stage would involve reactivating the existing SAGD facility and well pair, installing the first production wing block and drilling another well pair. In year two, another expansion would follow, which would constitute drilling three more well pairs and facilitating a production increase for Andora's share to 1,547 barrels per day from 620.
The contingent estimated resource for the Sawn Lake Central and Sawn Lake South blocks encompasses an estimated 227.8 million barrels (227.8 MMbbl) of recoverable bitumen. This equates to 163.6 MMbbl for Pan Orient.
The net present value for these resources, discounted at 10%, is about $311 million on a pretax basis and $232 million on a post-tax basis. For Pan Orient, this amounts to roughly $223 million and $167 million net, respectively.
Andora also has a 50% working interest in the 11 sections of the Central block, with an estimated 149.6 MMbbl of recoverable bitumen, as well as a 100% working interest in the 16 sections of the South block, with about 78.2 MMbbl of recoverable bitumen.
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