Oil and gas E&P for active spin outs

“The market is valuing the new company very low, and given our continued high oil price outlook, we believe this is a buying opportunity,” noted a report from Research Capital Corp. regarding Pan Orient Energy Corp.

Pan Orient Energy Corp. (POE: TSX.V) has agreed to be taken over, including its Thai assets, for approximately C$0.99 per share in cash consideration by DIALOG Group subsidiary Berhad, Research Capital analyst Bill Newman reported. Corp. 14 research notes. DIALOG is a Malaysian provider of technical services to the oil, gas and petrochemical industry.

Additionally, Pan Orient will divest all of its non-Thai assets, including its Sawn Lake project and C$7.1 million (C$7.1 million) of working capital and long-term deposits, into a new entity. which will be called CanAsia Energy Corp. Pan Orient shareholders will own CanAsia and will receive one CanAsia share for each Pan Orient share they own.

“At the C$1.12 share price, the market is valuing the new company very little, and given our expectations of continued high oil prices, we believe this is an opportunity. buying,” Newman wrote.

In other news, Pan Orient, which is now focused on the Sawn Lake heavy oil project in northern Alberta, released an updated independent resource estimate for it. Pan Orient owns Sawn Lake through its 71.8% stake in Andora Energy, the operator of the project.

The best estimate indicates a contingent resource of 248,200,000 net barrels towards Andora and, consequently, 178,200,000 net barrels towards Pan Orient. The associated post-tax net present value discounted at 15% is CA$165 million for Andora’s stake and CA$119 million for Pan Orient.

Years ago, as part of a steam-assisted gravity drainage (SAGD) pilot project, Andora advanced Sawn Lake to steady-state production of 620 barrels per day (620 bpd) , reaching an instantaneous steam/oil ratio of 2.1.

“The demonstration project has proven that the SAGD process works in the Bluesky formation at Sawn Lake, however, the project has been sidelined by low oil prices,” Newman explained.

Research Capital is bullish on Sawn Lake and estimates initial production at 1,235 bpd, Newman noted.

“Given the relatively large amount of capital invested in the SAGD facilities to date, the relatively low amount of capital requirements for the development phase, and our bullish outlook for oil prices, we believe it is very likely development of Swan Lake will continue,” Newman added.

Because Sawn Lake is at an early stage, the investment firm values ​​CanAsia at C$0.32 per share based on an assumption of C$25,000 per barrel of oil outstanding, “leaving a development additional upside for the investor,” Newman wrote.

As for Pan Orient, Research Capital maintains its buy rating and its target price of C$1.35 per share.


You want to be the first to know about interesting information Oil & Gas – Exploration & Production investment ideas? Sign up to receive the FREE Streetwise’ reports newsletter.

Subscribe

Disclosures:
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own shares in the following companies mentioned in the article: None. She or members of her household are compensated by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are Streetwise Reports billboard sponsors: Pan Orient Energy Corp. Click here for important information on sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is provided for informational purposes only and does not constitute a recommendation to buy or sell any securities.

4) The article does not constitute investment advice. Each reader is encouraged to consult their financial professional and any action taken by a reader as a result of the information presented here is their own responsibility. By opening this page, each reader accepts and consents to the full Streetwise Reports Terms of Service and Legal Notice. This article is not an investment solicitation. Streetwise Reports does not provide general or specific investment advice and information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the activities, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or their family members, as well as those interviewed for articles and interviews on the site, may take a long or short position in the titles mentioned. Directors, officers, employees or members of their immediate family are prohibited from making purchases and/or sales of such securities on the open market or otherwise from the time of the decision to publish an article until three days working days after the publication of the article. The foregoing prohibition does not apply to articles which, in substance, merely reproduce previously published company press releases.

Disclosures for Research Capital Corp., Pan Orient Energy Corp., June 14, 2022

Analyst Certification: I, Bill Newman, CFA, certify that the opinions expressed in this report have been formed by my review of relevant company and industry survey data, and accurately reflect my opinion on the investment merits of the securities mentioned in the report. I also certify that my compensation is not tied to any specific recommendations or opinions expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our recommendation categories, quarterly summaries of the percentage of our recommendations that fall into each category, and our policies regarding the publication of our research reports are available at www.researchcapital.com or can be requested by contacting the analyst. Each Research Capital Corporation analyst whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the personal opinions of the analyst and (ii) no part of the the research analyst has been or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

General Disclosures: The opinions, estimates and projections contained in any research reports published by Research Capital Corporation (“RCC”) are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the content has been compiled or derived from sources believed to be reliable and which contain accurate and complete information and opinions; RCC makes no representations or warranties, express or implied, with respect thereto, assumes no responsibility for any errors or omissions contained therein, and accepts no liability for any loss arising from any use of or reliance on its reports of research or its content. . Information may be available for the RCC that is not there. Research reports disseminated by RCC do not constitute a solicitation to buy or sell. Not all titles are available in all jurisdictions.

Potential Conflicts of Interest: All Research Capital Corporation (“RCC”) analysts are compensated in part based on RCC’s aggregate revenues, a portion of which is generated from investment banking activities. RCC may have had, or seek to have, an investment banking relationship with the companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our research reports as principal or agent. The RCC makes every effort to avoid conflicts of interest, but readers should assume that a conflict may exist and, therefore, not rely solely on this report to assess whether or not to purchase or to sell the securities of the companies concerned.

Comments are closed.