Canada's Pan Orient Energy Corp. (Pan Orient or the Company) reported Monday that on Nov. 5, 2014, the firm announced it had entered into an agreement for the sale of a 50-percent equity interest in subsidiary Pan Orient Energy (Siam) Ltd. to a wholly owned subsidiary of Sea Oil Public Company Limited (Sea Oil), of Thailand, for a cash price of $42.5 million, including a working capital adjustment of $2.4 million. Pan Orient Energy (Siam) Ltd. holds Pan Orient's 100 percent interest in Concession L53/48 in Thailand.
On Jan. 12, Pan Orient was informed that Sea Oil required additional time to complete certain closing conditions to be satisfied by it. Accordingly, Pan Orient and Sea Oil had agreed to delay closing of the transaction for up to three weeks.
On Feb. 2, Sea Oil and Pan Orient have satisfied the conditions to closing and accordingly a $38.5 million wire transfer has been initiated to the account of Pan Orient. This wire transfer is anticipated to be received within approximately 2 to 3 business days, as is customary in most international wire transfers. An additional $4 million break fee has been released from escrow and is being wired to Pan Orient's account. It is anticipated that net proceeds to Pan Orient, after closing adjustments and costs will be approximately $40.9 million (CAD 50.5 million).
Completion of the sale of a 50-percent interest in Pan Orient's subsidiary Pan Orient Energy (Siam) Ltd., in combination with existing working capital, provides the corporation with substantial financial strength in an uncertain oil price environment.
Thailand Operations Update
The first of a three well drilling program on Concession L53 is anticipated to commence in approximately two weeks, with the first well targeting the high impact L53-A North Central prospect (ANC-1). ANC-1 will be targeting one of six structural closures defined on recently acquired 3D seismic data which are located approximately 2.8 miles (4.5 kilometers) south of the U-Thong oil field, operated by another oil company, which has produced over 4.5 million barrels of oil from equivalent sandstone reservoirs that are the primary objective of the ANC-1 well. Further guidance regarding the 2015 Thailand capital program will be provided upon the completion of drilling of the upcoming program and discussions with our new partner Sea Oil.
Indonesia Operations Update
All documents supporting the transfer of a 51-percent working interest and operatorship in the East Jabung Production Sharing Contract (PSC) to a subsidiary of Talisman Energy were submitted to the Government of Indonesia regulator prior to year end 2014. It is anticipated that approval of the transfer of working interest and operatorship to Talisman's subsidiary will be granted in late March to April. Upon receipt of Government of Indonesia approvals, Pan Orient will receive $8 million in accordance with the Farmout Agreement.
The Company continues to work towards the drilling of the Akatara/Selong offset well in Batu Gajah PSC, which is anticipated to commence drilling in September. The well will be drilled regardless whether or not the Company farms out a portion of the Company's interest in the PSC. Farmout discussions are ongoing with nothing material to report at this time.
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