In a Nov. 13 research note, Mackie Research Capital Corp. analyst Bill Newman reported that Pan Orient Energy Corp.'s (POE:TSX.V) Q3/20 financial and operational results were in line with expectations and noted that the company offers "low risk production growth in Thailand."
Newman summarized the Canadian energy company's achievements and reviewed the numbers, from Q3/20.
Operationally, oil production from Pan Orient's Thailand Joint Venture was up, noting that in September 2020, the company placed the L53-DD7 and L53-DD8 development wells and the L53-AA2 exploration well in production. September 2020 net production surged to an average of about 1,575 barrels of oil per day (1,575 boe/d) from an average of roughly 881 boe/d in August. Net production in October came in at an average of 1,417 boe/d.
Overall Q3/20 net production for Alberta-headquartered Pan Orient averaged 1,114 barrels of oil per day (boe/d), slightly higher than its Q2/20 average of 1,060 boe/d.
During the quarter, the oil and gas company's total funds flow doubled, to $2.4 million from $1.2 million in Q2/20, driven by a higher realized oil price.
During Q3/20, the L53-DD9 appraisal well in Thailand was successfully drilled, hitting 29 meters of net oil pay in the four main producing sands, AA, BB, CC and DD. Testing of this well is scheduled to start in about 10 days, Newman noted. Two other wells were drilled during the quarter but failed to encounter oil.
As for Pan Orient's balance sheet at Sept. 30, 2020, it showed $26.4 million in working capital and non-current deposits and no debt. The energy company also holds $3.5 million of working capital and long-term deposits for its 50.01% equity interest in the Thailand Joint Venture. This additional amount takes Pan Orient's total net working capital to $29.9 million.
Looking forward, Pan Orient intends to "focus on low-risk development operations in Thailand" for the rest of the year, indicated Newman, and restart appraisal drilling there in 2/21.
Mackie has a Buy rating and a CA$1.35 per share target price on Pan Orient "based on the company's strong financial position and expected production growth in Thailand," Newman noted. Pan Orient's current share price is about CA$0.60.
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Disclosures from Mackie Research, Pan Orient Energy Corp., Update, November 13, 2020
RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE
1. The analyst holds shares in Pan Orient Energy Corp.
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Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
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