In a March 18 research note, Mackie Research Capital Corp. analyst Bill Newman reported that this year's appraisal drilling is in progress at Pan Orient Energy Corp.'s (POE:TSX.V) joint venture L53 Concession in Thailand and that the company's 2020 financial and operational results were in line with his firm's projections.
Newman relayed that the current appraisal drill program will consist of two wells. Drilling of the first, L53-DD12, is underway, after which drilling of the second, L53-DD11 will follow. Completion of the program is expected next month, in April 2021. At that time, the joint venture partners will decide how best to create shareholder value from the L53/48 Concession.
This could mean an outright sale, Newman purported, particularly since Pan Orient's licenses on the concession lands expired earlier this year, on Jan. 7. He pointed out that the company has previously sold Thailand assets for cash.
"In the meantime, Pan Orient remains in a strong financial position to develop and appraise its production licenses in Thailand," the analyst wrote.
Specifically, the oil and gas company's "strong balance sheet" includes $23.6 million in working capital and no debt as of Dec. 31, 2020, Newman indicated. Pan Orient also has $4.9 million of working capital and long-term deposits for its 50.01% equity interest in the Thailand Joint Venture, taking its total net working capital to $26.8 million.
Pan Orient's funds flow in Q4/20 was $1.5 million, or $0.03 per fully diluted (fd) share. This was down, mostly due to higher taxes, from Q3/20 when it was $2.4 million, or $0.04 per fd share.
Net production in Q4/20 averaged 1,491 barrels per day (1,491 bbl/d), 34% greater than in Q3/20, when it averaged 1,114 bbl/d. Full-year 2020 average net production was 1,213 bbl/d, which generated $9.6 million, or $0.18 per fd share.
More recently, in 2021, net production averaged 1,466 bbl/d in January and 1,430 bbl/d in February.
"We are targeting Q1/21 average production of 1,432 bbl/d," noted Newman.
Mackie has a Buy and a CA$1.35 per share target price on Pan Orient Energy, the stock of which is trading now at about CA$0.87 per share.
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