Pan Orient Energy: The New Orient Express

Source: Chen Lin for Streetwise Reports   10/16/2019

Veteran investor and newsletter writer Chen Lin explains the upside he sees with this energy company.

In late 2008, when the world was in the middle of the great recession, a young energy company was looking to take advantage of the circumstances by bargain hunting. Led by CEO Jeff Chisholm, a well-known goldbug, Pan Orient Energy Corp. (POE:TSX.V) has always maintained a strong balance sheet. When the market crashed and everyone, including the largest energy companies in the world, was looking for cover, POE was able to take advantage of it. One of POE’s key acquisitions was East Jabung PSC. POE was the sole bidder in that bid round. (Where were Exxon, Repsol and PetroChina?)

In the years prior to the tender of the East Jabung PSC, the surface area covering the majority of the Anggun prospect was re-classified from restricted forest (where only seismic is allowed) to production forest (where both seismic and drilling are allowed). Jabung PSC is in the region of the most prolific oil and gas fields in South Sumatra, Indonesia. It hosts the largest gas discovery in the past 18 years in Indonesia. That news was announced earlier this year by Repsol. POE had acquired the acreage next to it for a song!

As the sole bidder, POE became 100% owner of the concession. This was a huge concession and POE decided to partner with Talisman (now part of Repsol) for down payment, part of Repsol exploration concessions and to carry the cost of the first two wells. Repsol drilled one well at the edge of the structure two years ago and had a very promising find of oil and gas. Now they are moving the rig to the center of the structure. We expect the rig to be spud in late October and TD in 30–40 days.

Repsol had high hopes for the East Jabung target. A permanent road was constructed so they can use it in the long run to drill more wells, should they have a major discovery in the area. The permanent road probably delayed the drilling for about one year and add a lot to the cost. However, it will be a good move if they hit the next high impact well.

( Companies Mentioned: POE:TSX.V, )