Pan Orient Announces 2013 Year-End Heavy Oil Resources for Sawn Lake, Alberta Project of Andora Energy Corporation
April 09 2014 - 8:30AM
Marketwired
Pan Orient Announces 2013 Year-End Heavy Oil Resources for Sawn
Lake, Alberta Project of Andora Energy Corporation
CALGARY, ALBERTA--(Marketwired - Apr 9, 2014) - Pan Orient
Energy Corp. (TSX-VENTURE:POE), on behalf of its 71.8% owned
subsidiary Andora Energy Corporation ("Andora"), is pleased to
release the December 31, 2013 National Instrument 51-101 compliant
resource evaluation for Andora's oil sands project at Sawn Lake
Alberta, Canada, as evaluated by Sproule Unconventional Limited
("Sproule"). The evaluation included all of Andora's Oil Sands
Leases in Sawn Lake based on exploitation using Steam Assisted
Gravity Drainage ("SAGD").
Andora is focused on developing the bitumen resources at the
Sawn Lake property in the Peace River Oil Sands Region using SAGD
development. Andora received regulatory approval for a
demonstration project at under the Oil Sands Conservation Act from
the Energy Resources Conservation Board and approval from the
Government of Alberta under the Environmental Protection and
Enhancement Act prior to 2013. The first step towards determining
the commercial viability of the SAGD recovery process at Sawn Lake
is completion of Phase 1 of our SAGD Demonstration Project to
provide an indication of the productivity of the reservoir and the
amount of steam injection required to produce the bitumen, which
are key components in assessing the potential for SAGD development
at Sawn Lake.
The demonstration project is located in the Central Block of
Sawn Lake where Andora is the operator and holds a 50% working
interest. Phase 1 of the SAGD demonstration project in 2013 / 2014
consists of drilling one SAGD well pair, construction of the SAGD
facility for steam generation, water handling and oil treating, and
installing water source and disposal facilities. The SAGD well pair
was drilled in the fourth quarter of 2013 to a depth of 650 meters
and have a horizontal length of 780 meters. Final construction of
the SAGD facility is currently being completed and steam injection
at the Sawn Lake SAGD demonstration project is scheduled for April
2014. After three months of steam injection, bitumen production is
anticipated by the end of July 2014.
Summary and Highlights of Sawn Lake, Alberta Contingent
Resources as at December 31, 2013
- The oil sands project at Sawn Lake Alberta as at December 31,
2013 was evaluated by Sproule. Contingent resources are those
quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations using established
technology or technology under development, but which are not
currently considered to be commercially recoverable due to one or
more contingencies. The contingent resource volumes estimated in
the Sproule report are considered contingent until such time as
commercial recovery has been confirmed with SAGD production rates
from a SAGD pilot, regulatory approvals for commercial SAGD
development have been obtained and the company has a firm
commercial development plan and funding for the commercial
development. Contingent Resources are further classified as "High",
"Best" and "Low" in accordance with the level of certainty. There
is no certainty that it will be economically viable to produce any
of the reported contingent resource volumes.
- The December 31, 2013 contingent resource report by Sproule
represents a mechanical update incorporating new forecasted prices
for crude oil, natural gas and exchange rates, and revised
estimates of capital expenditures associated with drilling SAGD
wells. There is no change from the estimate of contingent resource
volumes as at December 31, 2012 prepared by Sproule. The net
present value of the "Best Case" (discounted at 10% before income
tax using forecast prices) attributed to Sawn Lake contingent
resources increased by 14% to $557 million as a result of a 6%
increase in crude oil prices, a 5% decrease in forecast natural gas
prices and a 10% decrease in the estimated capital cost for
drilling of SAGD wells, partially offset by a 12% increase in the
bitumen differential and a 20% increase in Crown royalties.
- Sawn Lake "Best Case" contingent resources of 214 million
barrels of bitumen attributed to Andora's working interests, or 154
million barrels attributed to the 71.8% ownership interest of Pan
Orient in Andora, have been assigned almost entirely in the South
and Central Blocks of Sawn Lake. Andora is the operator of these
lands and holds a 100% working interest in the 16 sections of the
South Block and currently holds a 50% working interest in the 12
sections of the Central Block. Contingent resource volumes are only
assigned to working interests and are not assigned to GORR
interests.
- Net present value of the "Best Case" (discounted at 10% before
income tax using forecast prices) attributed to Sawn Lake
contingent resources for the working interests and the GORR
interests is $557 million for Andora, with $481 million attributed
to the working interests. The amount attributed to the 71.8%
ownership interest of Pan Orient in Andora is $400 million for the
working interests and the GORR interests, and $346 million to the
working interests alone.
- Net present value of the "Best Case" (discounted at 10% after
income tax using forecast prices) attributed to Sawn Lake
contingent resources for the working interests and the GORR
interests is $364 million for Andora, with $307 million attributed
to the working interests. The amount attributed to the 71.8%
ownership interest of Pan Orient in Andora is $262 million for the
working interests and the GORR interests, and $220 million to the
working interests alone.
Andora Sawn Lake, Alberta Interests at December 31,
2013 |
|
Gross Sections |
|
Working Interest |
|
Additional Interest |
South Block (Andora operated) |
16 |
|
100% |
|
|
Central Block (Andora operated) |
12 |
|
50% |
|
3% GORR on non-owned 40% working interest |
North Block (Andora operated) |
9 |
|
100% |
|
|
North Block |
51 |
|
10% |
|
3% GORR on non-owned 80% working interest in 24.5 sections |
|
88 |
|
|
|
|
Note: GORR interests sold in March 2014 |
|
Summary of Canada Contingent Bitumen Resources as of
December 31, 2013, as provided by Sproule |
Marketable Resources - Company Gross (million barrels) |
Andora |
Pan Orient 71.8% |
Contingent - Low Estimate "1C" |
194.7 |
139.9 |
Contingent - Best Estimate "2C" |
214.4 |
154.0 |
Contingent - High Estimate "3C" |
251.0 |
180.3 |
|
|
|
Sawn Lake Oil Sands Project |
Summary of Net Present Values Before Tax as of December
31, 2013 |
Contingent Resources as provided by Sproule for Working
Interests and GORR Interests |
Andora 100% (Cdn$ million) |
|
0% |
5% |
10% |
15% |
Contingent - Low Estimate "1C" |
3,740 |
1,292 |
453 |
117 |
Contingent - Best Estimate "2C" |
4,877 |
1,599 |
557 |
160 |
Contingent - High Estimate "3C" |
6,720 |
2,142 |
747 |
228 |
1 |
Resources assessed at forecast crude oil reference
prices and costs. |
2 |
The reference prices for crude oil per barrel (Western
Canada Select WCS 20.5 API adjusted for quality and transportation
in Canadian dollars) are $77.81 for 2014, $75.02 for 2015, $75.29
for 2016, $85.36 for 2017, $86.64 for 2018, and increase at 1.5%
per year thereafter. |
3 |
Oil revenue for these resources is equal to ~70% of the
forecast crude oil reference price. |
4 |
The reference prices for natural gas (AECO-C Spot price
per MMBTU in Canadian dollars) are $4.00 for 2014, $3.99 for 2015,
$4.00 for 2016, $4.93 for 2017, $5.01 for 2018 and increase at
approximately 1.5% to 1.7% per year thereafter. |
5 |
Future development costs for Contingent Resources which
have been deducted in calculating the before tax NPV: |
|
- Low Estimate - CDN$2,165 million with the drilling of
390 gross well pairs and building facilities |
|
- Best Estimate - CDN$2,169 million with the drilling
of 390 gross well pairs and building facilities |
|
- High Estimate - CDN$2,196 million with the drilling
of 390 gross well pairs and building facilities |
6 |
The engineered values disclosed may not represent fair
market value. |
7 |
There is no certainty that it will be commercially
viable to produce any portion of the resources. |
|
|
Sawn Lake Oil Sands Project |
Summary of Net Present Values Before Tax as of December
31, 2013 |
Contingent Resources as provided by Sproule for Working
Interests and GORR Interests |
Pan Orient 71.8% Interest in Andora (Cdn$ million) |
|
0% |
5% |
10% |
15% |
Contingent - Low Estimate "1C" |
2,687 |
928 |
325 |
84 |
Contingent - Best Estimate "2C" |
3,504 |
1,149 |
400 |
115 |
Contingent - High Estimate "3C" |
4,828 |
1,539 |
537 |
165 |
1 |
Resources assessed at forecast crude oil reference
prices and costs. |
2 |
The reference prices for crude oil per barrel (Western
Canada Select WCS 20.5 API adjusted for quality and transportation
in Canadian dollars) are $77.81 for 2014, $75.02 for 2015, $75.29
for 2016, $85.36 for 2017, $86.64 for 2018, and increase at 1.5%
per year thereafter. |
3 |
Oil revenue for these resources is equal to ~70% of the
forecast crude oil reference price. |
4 |
The reference prices for natural gas (AECO-C Spot price
per MMBTU in Canadian dollars) are $4.00 for 2014, $3.99 for 2015,
$4.00 for 2016, $4.93 for 2017, $5.01 for 2018 and increase at
approximately 1.5% to 1.7% per year thereafter. |
5 |
Future development costs for Contingent Resources which
have been deducted in calculating the before tax NPV: |
|
- Low Estimate - CDN$1,555 million with the drilling of
390 gross well pairs and building facilities |
|
- Best Estimate - CDN$1,558 million with the drilling
of 390 gross well pairs and building facilities |
|
- High Estimate -- CDN$1,578 million with the drilling
of 390 gross well pairs and building facilities |
6 |
Results represent Pan Orient's 71.8% interest in
Andora. |
7 |
The engineered values disclosed may not represent fair
market value. |
8 |
There is no certainty that it will be commercially
viable to produce any portion of the resources. |
|
|
Subsequent Event - Sale of GORR Interest in March 2014
In March 2014, the 3% gross overriding royalty ("GORR") on a
portion of the non-owned working interests in 12 sections of the
Central Block and 24.5 sections of the North Block was repurchased
by a joint venture partner with $2.7 million paid to Andora. This
sale of the GORR by Andora was part of an agreement with joint
venture partners that allowed the demonstration project to move
forward and enabled the joint venture partners to fund their share
50% share of the demonstration project. The net present value of
the "Best Case" (discounted at 10% after income tax using forecast
prices) attributed to Pan Orient's 71.8% share of the Sawn Lake
contingent resources for the GORR interests is $55 million on a
before tax basis and $41 million on an after tax basis. The sale
price of the GORR reflects that commercial viability of SAGD
development at Sawn Lake has not yet been established, and that key
economic parameters need to be determined with the demonstration
project
The December 31, 2013 evaluation of Sawn Lake "Best Case"
contingent resources attributed to the working interests of Andora
is 214 million barrels of bitumen and an associated net present
value (discounted at 10% before income tax using forecast prices)
of $481 million. The amount attributed to the 71.8% ownership
interest of Pan Orient in Andora is 154 million barrels of bitumen
and an associated net present value (discounted at 10% using
forecast prices) before income tax of $346 million, and $220
million on an after tax basis.
Pan Orient is a Calgary, Alberta based oil and gas exploration
and production company with operations currently located onshore
Thailand, Indonesia and in Western Canada.
This news release contains forward-looking information.
Forward-looking information is generally identifiable by the
terminology used, such as "expect", "believe", "estimate",
"should", "anticipate" and "potential" or other similar wording.
Forward-looking information in this news release includes, but is
not limited to, references to: well drilling programs and drilling
plans, estimates of reserves and potentially recoverable resources,
and information on future production and project start-ups. By
their very nature, the forward-looking statements contained in this
news release require Pan Orient and its management to make
assumptions that may not materialize or that may not be accurate.
The forward-looking information contained in this news release is
subject to known and unknown risks and uncertainties and other
factors, which could cause actual results, expectations,
achievements or performance to differ materially, including without
limitation: imprecision of reserve estimates and estimates of
recoverable quantities of oil, changes in project schedules,
operating and reservoir performance, the effects of weather and
climate change, the results of exploration and development drilling
and related activities, demand for oil and gas, commercial
negotiations, other technical and economic factors or revisions and
other factors, many of which are beyond the control of Pan Orient.
Although Pan Orient believes that the expectations reflected in its
forward-looking statements are reasonable, it can give no
assurances that the expectations of any forward-looking statements
will prove to be correct.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Pan Orient Energy Corp.Jeff ChisholmPresident and CEO (located
in Bangkok, Thailand)jeff@panorient.caPan Orient Energy Corp.Bill
OstlundVice President Finance and CFO(403) 294-1770
Pan Orient Energy (TSXV:POE)
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