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Bought Some Pan Orient Energy

Bought Some Pan Orient Energy

The summer doldrums are ostensibly over but the junior resource stocks continue to get no love or trading volume. That said, it might be time to start picking up some stock in interesting resource stories. I did exactly that today by buying some Pan Orient Energy (TSXV – POE) at an average cost of $1.10.

This is a company that was initially brought to my attention in 2017 by my good friend Dave Forest who is now, once again, working with Doug Casey as the editor of the International Speculator newsletter.

My attraction to the story is all about the East Jabung PSC in Sumatra, Indonesia where Pan Orient has a 49% interest and is partnered with Spain’s Repsol (51%). At the request of Dave, Dr. Neil Pendock, a Ph.D. remote sensing expert from South Africa, did some interesting satellite interpretation work on the East Jabung prospect – you can find the compelling details in Dave Forest’s article: OilPrice – Could This Be The Biggest NatGas Find Of The Decade. Dave and I followed this up with an in-person meeting with Jeff Chisolm, CEO of Pan Orient, at the company’s head office in Bangkok, Thailand in June of 2017. I came away very impressed with Pan Orient’s Indonesian prospect.

One hole was poked on the outer fringe of the East Jabung prospect back in August of 2017; and although not a discovery, the hole was what the industry calls a technical success. Pan Orient and Repsol are scheduled to drill the bulls-eye of the East Jabung target, Anggun-1X in 2019.

Anggun Map

The Anggu-1X well was previously scheduled to be drilled in Q4 2018 but with all things Indonesia, there have been delays getting a permit to build a road to the prospect. Throw in the rainy season in Sumatra (from November to March) and I think the earliest we can realistically expect drilling to commence would be towards the end of Q2 2019 when Ramadan might also become an issue. I would view drilling any time earlier than Q2 2019 as a very pleasant surprise.

Pan Orient has a $60 million market cap with about $32 million in cash. Its $28 Million enterprise value (EV) can nearly all be back-stopped by its steady albeit somewhat boring Thai production. At a $1.10 a share, Pan Orient can nearly be considered a free punt on East Jabung where a discovery hole would result in a return in the multiples of that share price. I view it a compelling re-entry point since the share price has drifted down during this “wait” period.

Philip O'Neill
Philip O'Neill
poneill@mp1capital.com