Pan Orient Energy Corp., on behalf of its 53.4% owned subsidiary Andora Energy Corporation ("Andora"), released the December 31, 2011 National Instrument 51-101 compliant resource appraisal for Andora's oil sands project at Sawn Lake Alberta, Canada, as evaluated by Sproule Associates Ltd. ("Sproule"). The evaluation included a complete geological and economic evaluation of all of Andora's Oil Sands Leases in Sawn Lake based on exploitation using Steam Assisted Gravity Drainage (SAGD).
Sawn Lake, Alberta Project 2011 Year-End Evaluation Summary and Highlights:
- The oil sands project at Sawn Lake Alberta as at December 31, 2011 was evaluated by Sproule. The contingent resource volumes estimated in the Sproule report are considered contingent until such time as commercial recovery has been demonstrated, regulatory approvals have been obtained and the company has committed to proceed with commercial development. Contingent Resources are further classified as "High", "Best" and "Low" in accordance with the level of certainty.
- Sawn Lake "Best Case" contingent resources of 214.2 million barrels attributed to Andora's working interests, or 114.4 million barrels attributed to the 53.4% ownership interest of Pan Orient in Andora, have been assigned largely 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 holds a 50% working interest plus an additional 3% gross overriding royalty ("GORR") on non-owned 40% working interest in the 12 sections of the Central Block.
- Net present value of the "Best Case" (discounted at 10% before income tax using forecast prices) attributed to Sawn Lake contingent resources is $612 million for Andora and $327 million to the 53.4% ownership interest of Pan Orient in Andora.
- Net present value of the "Best Case" (discounted at 10% after income tax using forecast prices) attributed to Sawn Lake contingent resources is $400 million for Andora and $214 million to the 53.4% ownership interest of Pan Orient in Andora.
- There is no change from the estimate of contingent resource volumes as at December 31, 2010 prepared by Sproule. The December 31, 2011 contingent resource report by Sproule represents a mechanical update incorporating new forecasted prices for natural gas and crude oil, and revised estimates of operating expenses and capital expenditures. The most significant changes are a reduction in natural gas prices and an increase in crude oil prices.
- Andora received Commercial Scheme Approval for a Steam Assisted Gravity Drainage (SAGD) recovery process under the Oil Sands Conservation Act from the Energy Resources Conservation Board (ERCB) and approval from the Government of Alberta under the Environmental Protection and Enhancement Act (EPEA) in 2009. The pilot project location is on Andora 100 percent owned acreage within the South Block of its Sawn Lake Property in the Peace River Oil Sands Region.