Drill results from the ELOK-1X exploration well, which Pan Orient Energy Corp. (POE:TSX.V) owns in a joint venture, confirmed "the findings of the AYU-1X well," which were the presence of oil and gas within the Gumai sandstone formation, concluded Bill Newman, an analyst with Mackie Research Capital Corp.
The ELOK-1X showed "high gas reading and oil staining" also in the BFR formation, the analyst explained. That well's "subsurface location was ~700m southwest from the AYU-1X well and encountered the BRF formation 26m structurally lower than the AYU-1X well."
Both the ELOK-1X and AYU-1X wells fall under the East Jabung production sharing contract (PSC), in which Pan Orient Energy has a 49% working interest. With the drilling of ELOK-1X, the company "has now met its current drilling commitments for East Jabung PSC which had a November 2017 deadline," noted Newman, referring to phase 1. "The partners will now meet in early November to discuss future drilling plans."
The next phase of the PSC involves "drilling of the high-impact ANGGUN-1X exploration well," which "has potential in both the BRF and the Gumai," Newman indicated. "We find it encouraging that the partners elected to incur the cost to drill the ELOK-1X well to retain the East Jabung license which allows for the drilling of the ANGGUN-1X well."
Newman added that "it's likely that the ANGGUN-1X well will be drilled next year" and that the activity "could commence in late Q2/18 or early Q3/18."
Mackie Research reiterated its Buy recommendation and $3.25 per share target price on Pan Orient Energy based on the company's "strong financial position and high-impact exploration potential in Indonesia," Newman wrote. The oil and gas company's shares are currently trading at around $1.12 per share.
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