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 noted the "L53-DD10 development well was recently drilled and will commence testing after the completion of the appraisal drilling program (2 to 3 wells) currently underway." The current appraisal drill program consists 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 in April 2021. At that time, the company stated it "will be in a position to best determine the future of the Thailand asset that would maximize shareholder value."
"We assume this could include the outright sale of the L53/48 concession, Newman wrote. "We note that the exploration lands associated with the L53/48 concession, which are not held by POE's production licenses, expired on January 7, 2021."
The analyst pointed out that in two past occasions, Pan Orient sold some of its assets for substantial cash consideration.
"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$0.92 per share.
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Disclosures from Mackie Research, Pan Orient Energy Corp., Update, March 18, 2021
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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