In an Aug. 13 research note, Research Capital Corp. analyst Bill Newman reported Pan Orient Energy Corp.'s (POE:TSX.V) Q2/21 financial and operational highlights, noting the numbers were generally in line with his firm's estimates.
A primary takeaway from Pan Orient's financial report for the quarter, Newman wrote, is that the energy company's balance sheet remains strong due to free cash flow. At the end of Q2/21, Pan Orient had CA$30.9 million (CA$30.9M) in working capital and zero debt.
During the quarter, from the Thailand joint venture operations in which Pan Orient has a 50.01% working interest, it garnered a field netback of CA$66.47 per barrel and CA$3.9M in total cash flow. The latter was lower than Research Capital's forecasted CA$4.6M, due mostly to higher corporate taxes.
"Pan Orient Energy remains in a strong financial position to develop and appraise its existing license in Thailand and to participate in future licensing rounds," wrote Newman.
As for the oil and gas company's Q2/21 production, Newman relayed it averaged 1,399 barrels per day on a net basis, consistent with Research Capital's estimate of 1,400 barrels per day. Pan Orient continues to work on optimizing production.
On the operational front, Newman summarized work performed earlier this year at the Thailand joint venture. Two wells were drilled and place on production, L53-DD10, a development well, and L53-DD11, an appraisal well. A third drilled well, L53-D12, encountered 6 meters of net oil pay and will be completed as a water injection well.
Pan Orient incorporated these well results into its geological model of the project, which showed drainage of the four reservoir sands is subpar. To improve the drainage, the company is considering drilling four more development wells in the L53-DD field this year.
Research Capital has a Buy rating and a CA$1.35 per share target price on Pan Orient, the stock of which is now trading at about CA$0.98 per share.
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Disclosures from Research Capital Corp., Pan Orient Energy Corp., Update, August 13, 2021
RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE
1. The analyst holds shares in Pan Orient Energy Corp.
2. Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report
are available on our web site at www.researchcapital.ca.
Mackie Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein.