Pan Orient Energy has entered into an agreement to be acquired by a subsidiary of DIALOG Group Berhad and for Pan Orient’s non-Thailand business to be transferred to CanAsia Energy Corp., a new company to be owned by Pan Orient shareholders.

DIALOG Systems (Asia) Pte Ltd., a wholly-owned subsidiary of DIALOG Group Berhad, will acquire, through a newly-incorporated Alberta subsidiary, all the outstanding shares of Pan Orient. A holder of a common share of Pan Orient will receive, for each such common share, cash consideration of USD $0.788 and one common share of CanAsia. The cash consideration is approximately CAD $0.991 at the current exchange rate. Pan Orient and DIALOG Group Berhad are at arm’s length to each other, and the Arrangement is not a related party transaction.

Pan Orient will transfer to CanAsia all of Pan Orient’s non-Thailand assets, including Pan Orient’s 71.8% ownership of Andora Energy Corporation (“Andora“) and approximately CAD $7.1 million in working capital and long-term deposits. CanAsia will assume all liabilities relating to the non-Thailand business, consisting primarily of accounts payable and accrued liabilities included in working capital, the decommissioning provision in Pan Orient’s financial statements, and transaction costs. Andora owns interests in oil sands leases at Sawn Lake in Northern Alberta where it developed a steam assisted gravity drainage pilot project that awaits financing, commercial development and operation.

Highlights

• Summary:
  • Pan Orient Energy Corp. will be acquired by a subsidiary of DIALOG Group Berhad of Malaysia
  • Pan Orient’s non-Thailand business will be transferred to CanAsia Energy Corp., a new company to be owned by Pan Orient shareholders
    • Included will be Pan Orient’s 71.8% ownership of Andora Energy Corporation and approximately CAD $7.1 million in working capital and long-term deposits
    • Andora owns interests in oil sands leases at Sawn Lake in Northern Alberta where it developed a steam assisted gravity drainage pilot project
• Consideration: A holder of a common share of Pan Orient will receive:
  • cash consideration of USD $0.788, and
  • one common share of CanAsia
• Closing:
  • Expected mid to late August 2022
  • Shareholder, court and TSX Venture Exchange approvals are required
  • Pan Orient common shares will be delisted from the TSXV; anticipated that CanAsia common shares will be listed on the TSXV

Strategic Rationale

Pan Orient holds, through a wholly-owned subsidiary, a 50.01% equity interest in Pan Orient Energy (Siam) Ltd., which is the operator of and holds a 100% working interest in Concession L53/48 (“Concession L53“) in Thailand. Concession L53 is at a mid to late stage of development, with oil production and an active development program.

Average daily oil sales for the first quarter of 2022 from Concession L53 was 1,105 BOPD (net to Pan Orient’s 50.01% equity interest) and to date in 2022 has averaged 1,129 BOPD (net). An independent reserves evaluation for Concession L53 effective December 31, 2021 was prepared in early 2022 by Sproule International Limited in accordance with Canadian Securities Administrators National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. Net to Pan Orient’s 50.01% equity interest in Pan Orient Energy (Siam) Ltd., proved plus probable crude oil reserves were 2.313 million barrels from conventional sandstone reservoirs and proved, probable and possible crude oil reserves were 2.986 million barrels. (Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.)

Pan Orient announced in late October 2021 that it was initiating a process to accelerate shareholder value, including a potential sale of all, or a portion, of Pan Orient’s assets. Concession L53 is at a mid to late stage of development and current oil prices are attractive. A confidential sale process was undertaken, confidentiality agreements were entered into with a large number of prospective purchasers and multiple non-binding offers were received. An offer from DIALOG Group Berhad was considered to be the most promising. A non-binding letter of intent was entered into to permit further due diligence and exclusive negotiations, the result of which is the Arrangement Agreement announced today.

The Arrangement is an opportunity for Pan Orient shareholders to realize value for their investment in Pan Orient while continuing to participate, through CanAsia, in the development or monetization of the Sawn Lake heavy oil project and potential exploration and development activities in Thailand through participation in an anticipated future bid round for new oil concessions.

KeyFacts Energy: Pan Orient Energy Thailand country profile