01 Apr Pan Orient’s Anggun-1X Well Could Be Huge
Earlier this evening, I got the chance to talk with Jeff Chisolm, CEO of Pan Orient Energy (TSXV – POE), who, like the company, is based in Bangkok, Thailand.
The main purpose of my phone call was to get an update on road construction. And I got that. Basically, the end of June schedule provided in the last corporate update still stands. And Repsol/Pan Orient will handle any potential Ramadan related delays by mobilizing the rig on site in early May. Like clockwork, the rainy season in South Sumatra usually stops in the 3rd or 4th week of April. If that’s the case, Jeff doesn’t foresee any major delays to the late June schedule for the finishing of road construction and the end of June/early July spudding of the Anggun-1X well.
Pan Orient is by far my biggest position and as such, I follow the story very closely. But I’m not a geologist. And with the little bit of geology I do understand, the vast majority is hard-rock. I typically get in a lot of trouble when I don’t keep things simple with soft-rock geology. All that to say I wanted to get a better geological understanding from Jeff of any potential relationship between the East Jabung PSC and Repsol’s huge 2 TCF Sakakemang find in February of 2019, located just a few kilometers away. It’s the biggest find in Indonesia in the last 18 years.
Jeff was able to confirm that the plumbing at Sakakemang is the same at-depth plumbing that is believed to have fed the East Jabung PSC. Sakakemang is located deeper; hence, the gas find. With the Anggun-1X well, they will be testing a massive structural closure and it’s being drilled right in the middle of the bullseye. The main risk, and it’s a real risk, is whether thy system is charged or not. But that risk has been somewhat diminished by the results of the Ayu-1 oil discovery in 2017. If the structural closure at the East Jabung PSC is oil charged, the Anggun-1X well could prove to be a massive discovery offering a share price return in the multiples of Pan Orient’s current share price. I believe a big find could realistically yield $10 a share.
Furthermore, Jeff was also able to briefly discuss the new Thai discoveries at Concession L53. Beyond the expansion of 2P reserves, the play offers the potential of spitting off a ridiculous amount of cash. The production permits should be in hand shortly but to give you an idea of how much cash the discovery might spit off, the exploration wells have paid for themselves in just their 90 day production testing phase – that’s what you call a short payback.
Pan Orient already has about $0.70/share in cash. With Thai production to ramp up throughout 2019, it not inconceivable to think that the company’s current $1.88 share price could be entirely covered by cash/share from Thai production by this time next year. That makes for a really cheap punt on the Anggun-1X well – possibly the world’s most highly anticipated onshore well of 2019.