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Pan Orient Energy Corp. 2012 Second Quarter Financial & Operating Results

CALGARY, ALBERTA--(Marketwire - Aug. 23, 2012) - Pan Orient Energy Corp. ("Pan Orient") (POE.V) is pleased to provide highlights of its 2012 second quarter consolidated financial and operating results. Please note that all amounts are in Canadian dollars unless otherwise stated and BOPD refers to barrels of oil per day net to Pan Orient.

The Corporation is today filing its unaudited consolidated financial statements as at and for the six months ended June 30, 2012 and related management's discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained online at www.sedar.com or the Corporation's website, www.panorient.ca.

HIGHLIGHTS

-- On June 15, 2012 Pan Orient completed the sale of subsidiaries which

held Pan Orient's 60% interests in Thailand Concessions L44, L33 and SW1

for proceeds, net of estimated costs and income tax, of $158.0 million.

The Company recorded an after tax gain of $77.3 million for this

Thailand disposition transaction. As at June 30, 2012 there was $19.3

million held in escrow accounts jointly controlled by Pan Orient and the

purchaser of the interests. After receipt of a further $16.2 million in

July, there is currently $3.1 million held in escrow to support any

warranty claims until December 15, 2013.

-- On August 20th shareholders approved the $0.75 per share special

distribution and the record date has been set as August 30, 2012 with a

payment date of September 6, 2012.

-- Working Capital and non-current deposits at June 30, 2012 of $184.5

million, with no long-term debt and $4.9 million of equipment inventory

to be utilized for future Thailand and Indonesia operations. Pan Orient

will maintain financial strength while directing $24.7 million to Andora

for advancement of the SAGD pilot program, the special distribution of

$42.5 million, and up to $73.2 million for the 2012 / 2013 drilling and

seismic programs in Indonesia. The $11 million Thailand drilling program

at Concession L53 is expected to be funded through funds flow from

Thailand operations. As at June 30, 2012 estimated commitments in

Indonesia to November 2014 were $49.3 million for the Citarum, Batu

Gajah, South CPP and East Jabung PSC's. Commitments in Thailand at June

30, 2012 were $0.1 million to January 2013.

-- Second quarter 2012 corporate funds flow from operations of $7.0 million

($0.12 per share) and net income attributable to common shareholders of

$79.3 million ($1.40 per share).

-- Thailand oil sales in the second quarter of 2012 of 1,318 BOPD,

including oil sales from the Thailand interests sold to June 14, and

corresponding funds flow from Thailand operations of $7.8 million

($64.94 per barrel). July oil production from Concession L53 was 1,046

BOPD.

-- Pan Orient has retained its operated 100% interest in Concession L53 in

onshore Thailand.

-- Conventional sandstone oil production from Concession 53 was 1,358

BOPD in the first quarter of 2012 as a result of the L53D East field

discovery and production from the L53-DST3 and L53-D2ST3 wells. Oil

production of 520 BOPD in the second quarter of 2012 was impacted by

the shut-in of L53-D2 well on April 17th at the end of its 90

production testing period and the L53-DST3 well being shut in during

the majority of the quarter awaiting the service rig. Concession L53

oil sales for the first six months of 2012 averaged 939 BOPD with

funds flow from operations of $15.7 million (or $91.79 per barrel).

-- July oil sales at Concession L53 were 1,046 BOPD and the L53-DST3

well was shut-in during the last week of July when it completed the

initial 90 day testing period. The L53D production license was

granted July 30th with an area of 11.98 square kilometers but the

Company is still awaiting the associated environmental approval. A

90 day extension for the testing period for wells in the L53D East

field was also received on July 30th and current oil production is

about 1,150 BOPD with approximately 350 BOPD shut-in until August

25th due to water disposal limitations.

-- A 3D seismic survey has been completed over the unexplored northeast

portion of Concession L53 and initial interpretation of the

preliminary processing has confirmed the presence of the prospect

which had been identified on the old vintage, sparsely spaced 2D

seismic data.

-- There are four firm development wells and one water disposal well

planned for the remainder of 2012 for approximately $8 million. The

drilling of two exploration wells in the new 3D area, with

incremental capital of $3 million, is expected in the first quarter

of 2013.

-- Active exploration programs at all four Production Sharing Contracts

("PSC's") in Indonesia:

-- At the Citarum PSC (Pan Orient operator & 77% ownership) there are

three exploration wells to be drilled in 2012 for approximately

$23.7 million. The Jatayu #1 well currently drilling and the Geulis-

1 and Cataka-1A wells will follow immediately thereafter. The

increase of $8.1 million in the forecast from the earlier estimated

$16.6 million provides for the potential re-drilling of the Jatayu-1

well if required, which has yet to be determined.

-- At the Batu Gajah PSC (Pan Orient operator & 97% ownership) land

access agreements are being finalized with the surface rights

holder. The drilling of two exploration wells is expected for late

2012 or early 2013 at a combined cost of $10 million, and a 400

square kilometer 3D seismic program is planned in late 2012 for

$15.5 million. Total go forward capital is estimated at $25.5

million.

-- At the South CPP PSC (Pan Orient operator & 97% ownership) a 250

line kilometer 2D seismic program and one exploration well are

planned for 2012 / 2013 for approximately $7 million.

-- At the East Jabung PSC (Pan Orient operator & 100% ownership) a 440

line kilometer 2D seismic program and two exploration wells are

planned for 2012 / 2013 for approximately US$17 million.

-- On August 10, 2012 Pan Orient increased its ownership of Andora Energy

Corporation ("Andora") to 71.8% through an additional $24.7 million

investment in Andora pursuant to a rights offering by Andora. Proceeds

from the rights offering will be used for the procurement and

construction of a thermal facility, drilling of one horizontal well

pair, and operations in respect of its Sawn Lake Steam Assisted Gravity

Drainage ("SAGD") development project at an estimated cost, including

operating costs, of $23.5 million. Additionally, Andora acquired a

private company in July which provides Andora with proprietary thermal

facility design / process capabilities and expands the Andora team with

thermal facility design and operating specialists.

2012 SECOND QUARTER OPERATING RESULTS

-- On June 15, 2012 Pan Orient completed the sale of subsidiaries which

held Pan Orient's 60% interest in Thailand Concessions L44, L33 and SW1

for a cash price of $185.3 million. This resulted in net proceeds of

$158.0 million after deducting $11.2 million of transaction costs and

$16.1 million of estimated income tax associated with the transaction.

The carrying value of the assets and liabilities of the subsidiaries

sold was $80.6 million, resulting in net income after tax attributable

to common shareholders of $77.3 million.

-- The financial and operating results in Thailand include revenue,

expenses and capital expenditures of the subsidiaries sold, and the

interests in Thailand Concessions L44, L33 and SW1, until June 14, 2012.

-- Pan Orient had total corporate funds flow from operations of $25.6

million ($0.45 per share) for the first half of 2012 compared to $25.6

million ($0.48 per share) for the first half of 2011.

Funds flow from operations for the second quarter of 2012 was $7.0

million ($0.12 per share) compared to $18.7 million ($0.33 per share)

for the first quarter of 2012 and $13.3 million ($0.23 per share) for

the second quarter of 2011. The reduction in funds flow from operations

in the second quarter of 2012 compared to the first quarter of 2012 is

primarily due to the lower oil production.

-- Net income attributable to common shareholders of $87.4 million ($1.54

per share) for the first half of 2012 and $79.3 million ($1.40 per

share) for the second quarter of 2012 was driven by the $77.3 million

after tax gain on the Thailand disposition transaction. This compared

with net income attributable to common shareholders of $8.5 million

($0.16 per share) for the first half of 2011 and $4.6 million ($0.08 per

share) for the second quarter of 2011.

-- Total capital programs for the first half of 2012 were $45.5 million,

with $26.8 million in Thailand for development of the L53-D East field,

the L53-G exploration well and the drilling of five gross wells in

Concessions L44 and SW1, $18.5 million in Indonesia mainly for

exploration activities in the Citarum PSC with drilling at Cataka#1 and

Jatayu #1, and $0.2 million in Canada. Capital expenditures in Thailand

were funded by Thailand funds flow from operations and the capital

programs in Indonesia and Canada were funded from working capital.

-- Capital expenditures were $24.0 million in the second quarter of 2012

with $13.2 million in Thailand and $10.7 million in Indonesia primarily

at the Citarum PSC exploration program for drilling costs of the Jatayu-

1 well and site preparation for the Geulis-1and Cataka-1A wells.

-- Thailand

-- Oil sales in Thailand for the second quarter of 2012 averaged 1,318

BOPD with 520 BOPD from Concession L53, 581 BOPD from Concession

L44, 33 BOPD from Concession L33, and 184 BOPD from Concession SW1.

The reduction in oil sales compared to first quarter 2012 oil sales

of 2,541 BOPD is primarily the result of temporarily shut-in

production at Concession L53, approximately 280 BOPD of production

temporarily shut-in in mid-May at Concession L44 awaiting approval

for long term use on surface lands held by the Agricultural Land

Reform Office (ALRO) of the Government of Thailand, and the sale of

Pan Orient's interests in Concessions L44, L33 and SW1 on June 15,

2012.

-- In the first half of 2012 Concession L53 averaged oil sales of 939

BOPD and generated $15.7 million in after tax funds flow from

operations, or $91.79 per barrel. On a per barrel basis, this

represents oil sales of $109.03, transportation expenses of $1.35,

operating expenses of $6.68, general and administrative expenses of

$3.77 and amounts to the Thailand government of $5.43. Oil sales

during this period were allocated 11% to expenses for

transportation, operating, and general & administrative, 5% to the

government of Thailand in the form of royalties and minor amount of

income tax, and 84% to Pan Orient. Minimal Thailand income tax has

been recorded for the first half of 2012 for Concession L53, and at

June 30, 2012 there are approximately $23 million of income tax cost

pools and losses which can be used in future periods.

-- Capital expenditures in the first six months of 2012 were $26.8

million in Thailand primarily with $16.3 million at Concession L53

and $10.5 million at Concessions L44, L33 and SW1 which were sold

June 15, 2012. Capital expenditures of $13.2 million in the second

quarter of 2012 were focused on Concession L53 with the seismic

program and continued drilling activity at the new L53-D East field.

Drilling activity at the L53-D East field in the second quarter

included three sidetracks drilled off of the original L53-D2

wellbore which had been spudded in December 2011 and brought into

production in January 2012, and which had reached the end of its 90

day production test after production of 41,171 barrels of oil. The

L53-D2ST1 well targeted untested deep sands within fault block "C"

which proved water bearing. The L53-D2ST2 well into fault

compartment "B" was unsuccessful. The L53-D2ST3 well is producing

oil within the previously proven "A" fault compartment from new

sandstone intervals with approximately 65 meters of net oil pay.

-- Indonesia

-- Capital expenditures in Indonesia during the first half of 2012 have

been $18.5 million, with of $17.4 million at the Citarum PSC (Pan

Orient operator and 77% ownership), $0.4 million at the Batu Gajah

PSC (Pan Orient operator and 97% ownership), $0.1 million at the

South CPP PSC (Pan Orient operator and 97% ownership) and $0.6

million at the East Jabung PSC (Pan Orient operator and 100%

ownership).

-- At the Citarum PSC on-shore Java, Pan Orient commenced the

exploration drilling program at the end of December 2011 with the

Cataka-1 well. Capital expenditures of $17.4 million in the first

half of 2012 include $4.7 million for the Cataka-1 well, $10.3

million for the Jatayu-1 well, $2.0 million for site preparation at

the Geulis-1 and Cataka-1A well sites and $0.4 million for

capitalized exploration overhead and other costs. Difficult drilling

has been experienced to date in this complex fold belt environment

and a number of initiatives have been implemented with regard to

personnel and the present / future well design.

-- The Cataka-1 exploration well commenced drilling on December 31,

2011. The well encountered severe drilling difficulties and the

decision was made in February 2012 to junk and abandon the well

at a depth of approximately 400 meters true vertical depth,

1,500 meters above the primary reservoir objective. The primary

reservoir objective of the well, at approximately 1,900 meters

depth, had not been penetrated. Upon the completion of the

Jatayu-1 and Geulis-1 wells drilling will commence on the re-

drill of the Cataka prospect (with the Cataka-1A well)

incorporating a redesigned well plan incorporating the

information gathered from the original well.

-- The Jatayu-1 exploration well commenced drilling March 21, 2012

towards a primary reservoir objective target depth of 7,382

feet. At 6,156 feet the pipe became stuck after a drilling break

and the well was plugged back at 4,700 feet and drilled

vertically to avoid the issues associated with the initial

directional / deviated hole. While conducting a wiper trip from

5,920 feet the drill string became stuck and was backed off to

5,300 feet. While drilling at a depth of 6,173 feet at the end

of June severe lost circulation was encountered and a cement

plug was set in an attempt to cure drilling fluid losses.

OUTLOOK

-- Indonesia

-- Citarum PSC (Pan Orient Operator and 77% Working Interest)

Jatayu-1 Exploration Well

Since the operations update of July 25th, the well was drilled

through the first loss zone at 6,173 feet to a depth of 6,330 feet

where total drilling fluid losses were once again encountered

resulting in heavily gasified mud resulting in a four meter gas

flare when the mud was run through a separator at surface. A cement

plug was run to cure the losses and was drilled out to 6,329 feet

where losses were once again encountered and the decision was made

to run wireline logs and pressure points, which were run

successfully. A preliminary interpretation of the wireline logs and

pressure data collected over the interval of interest was unable to

confirm the presence of gas pay.

Two further attempts were made to drill through the loss zone at

6,330 feet with a maximum depth of 6,346 feet achieved before once

again having to set a cement plug in an attempt to deal with the

drilling fluid losses. Presently, one last cement plug has been set

and the well is currently drilling cement just above the loss zone.

In the event that the drilling fluid losses that are unable to be

controlled are experience in this latest attempt, the well will be

suspended and the rig will mobilize to the Geulis-1 location with

that well anticipated to spud in the next three to four weeks.

-- Batu Gajah PSC (Pan Orient Operator and 97% Working Interest)

Negotiations are currently focused on the final draft access

agreements. It is expected that these agreements will be finalized

within the next two weeks, allowing for the drilling of two wells

and the acquisition of 3D seismic to commence prior to year-end

2012. In the event that final agreements are unable to be agreed

between Pan Orient and the Indonesian forestry company within two

weeks, the start of operations will be delayed to the end of the

first quarter of 2013 due to the rainy season.

-- East Jabung PSC (Pan Orient Operator and 97% Working Interest)

A 2D seismic acquisition program is anticipated to commence in mid-

March 2013 as the permitting for the program will not be completed

until December 2012 and the end of the rainy season is typically in

early March.

-- South CPP PSC (Pan Orient Operator and 100% Working Interest)

A 2D seismic acquisition program at the South CPP PSC is expected to

commence in October 2012 with the drilling of one exploration well

planned for the first half of 2013.

-- Thailand - Concession L53 (Pan Orient Operator and 100% Working

Interest)

A 20 year production license has been granted over the L53-D East oil

discovery. The production Environmental Impact Assessment for this

production license and related development well drilling locations was

not approved at early August meeting of the environmental regulatory

organization and the second hearing is expected to take place in mid-

September. Regardless of the outcome of the mid-September meeting,

construction of drilling locations cannot take place until the end of

the annual monsoon season which typically ends in late October each

year. With a construction time of approximately one month per well pad,

the drilling of four development wells is not anticipated to commence in

Concession L53 until December 2012 with exploration drilling on the

newly acquired 3D seismic survey likely to take place late in the first

quarter of 2013.

-- Canada - Sawn Lake (Operated by Andora, in which Pan Orient has a 71.8%

ownership)

Activities are currently underway to commence steam injection at the

Sawn Lake SAGD demonstration project in the second quarter of 2013, and

production anticipated in the fourth quarter of 2013.


Pan Orient is a Calgary, Alberta based oil and gas exploration and production company with operations currently located onshore Thailand, Indonesia and in Western Canada.

This news release contains forward-looking information. Forward-looking information is generally identifiable by the terminology used, such as "expect", "believe", "estimate", "should", "anticipate" and "potential" or other similar wording. Forward-looking information in this news release includes, but is not limited to, references to: well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, and information on future production and project start-ups. By their very nature, the forward-looking statements contained in this news release require Pan Orient and its management to make assumptions that may not materialize or that may not be accurate. The forward-looking information contained in this news release is subject to known and unknown risks and uncertainties and other factors, which could cause actual results, expectations, achievements or performance to differ materially, including without limitation: imprecision of reserve estimates and estimates of recoverable quantities of oil, changes in project schedules, operating and reservoir performance, the effects of weather and climate change, the results of exploration and development drilling and related activities, demand for oil and gas, commercial negotiations, other technical and economic factors or revisions and other factors, many of which are beyond the control of Pan Orient. Although Pan Orient believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct.

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Financial and Operating Three Months Ended Six Months Ended

Summary June 30, June 30,

(thousands of Canadian

dollars except where

indicated) 2012 2011 2012 2011 Change

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FINANCIAL

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Oil revenue, before

royalties and

transportation expense 12,502 18,521 38,156 36,970 3%

Funds flow from operations

(Note 1) 6,966 13,283 25,634 25,644 0%

Per share - basic $ 0.12 $ 0.23 $ 0.45 $ 0.48 -6%

Funds flow from operations

by region (Note 1)

Canada (769) 19 (989) (405) 144%

Thailand (Note 2) 7,790 13,494 26,744 26,353 1%

Indonesia (55) (231) (121) (304) -60%

------------------------------------------------

Total 6,966 13,282 25,634 25,644 0%

Funds flow - Thailand

disposition net proceeds

(Note 2) 157,952 157,952

Net income attributable to

common shareholders 79,285 4,608 87,409 8,536 924%

Per share - basic $ 1.40 $ 0.08 $ 1.54 $ 0.16 864%

Working capital 180,775 56,686 180,775 56,686 219%

Working capital & non-

current deposits 184,536 60,469 184,536 60,469 205%

Long-term debt - - - -

Petroleum & natural gas

properties (excluding

disposition)

Capital expenditures (Note

3) 23,980 22,495 45,451 42,467 7%

Acquisitions - Indonesia

(Note 4) - (19) - 1,761 -100%

Acquisitions - Sawn Lake,

Canada (Note 7) - - - 3,192 -100%

Shares outstanding

(thousands) 56,685 56,685 56,685 56,685 0%

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Funds Flow from Operations

per Barrel (Note 1)

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Canada operations $ (6.41) $ 0.10 $ (2.82) $ (1.04) 171%

Thailand operations (Note

2) 64.94 72.27 76.16 67.76 12%

Indonesia operations (0.46) (1.24) (0.34) (0.78) -56%

------------------------------------------------

$ 58.06 $ 71.14 $ 73.00 $ 65.94 11%

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Capital Expenditures (Note

2)

----------------------------------------------------------------------------

Canada 131 147 174 214 -19%

Thailand (Note 2) 13,156 13,345 26,769 27,759 -4%

Indonesia 10,693 9,003 18,508 14,494 28%

------------------------------------------------

Total 23,980 22,495 45,451 42,467 7%

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Working Capital and Non-

current Deposits

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Working capital & non-

current deposits -

beginning 48,501 69,166 51,632 31,396 64%

Funds flow from operations

(Note 1) 6,966 13,283 25,634 25,644 0%

Thailand disposition net

proceeds (Note 2) 157,952 - 157,952 -

Thailand disposition -

sale of working capital

(Note 2) (4,591) - (4,591) -

Capital expenditures (Note

3) (23,980) (22,495) (45,451) (42,467) 7%

Acquisitions - Indonesia

(Note 5) - 19 - (1,417) -100%

Foreign exchange impact on

working capital (312) 10 (640) (303) -214%

Net proceeds on share

transactions - 486 - 47,616 -100%

------------------------------------------------

Working capital & non-

current deposits - end of

period 184,536 60,469 184,536 60,469 205%

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Canada Operations (excluding

Thailand disposition)

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Interest income 68 139 137 160 -15%

General and administrative

expense (Note 5) (1,061) (43) (1,317) (306) 330%

Realized foreign exchange

gain (loss) 224 (77) 191 (259) -174%

Foreign new ventures

expenditures - - - -

------------------------------------------------

Funds flow from operations

(Note 1) (769) 19 (989) (405) 144%

------------------------------------------------

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Funds flow from operations

per barrel

Interest income $ 0.56 $ 0.75 $ 0.39 $ 0.41 -5%

General and administrative

expense (Note 5) (8.84) (0.23) (3.75) (0.79) 375%

Realized foreign exchange

gain (loss) 1.87 (0.41) 0.54 (0.67) -181%

------------------------------------------------

$ (6.41) $ 0.10 $ (2.82) $ (1.04) 171%

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Indonesia Operations

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General and administrative

expense (Note 5) (55) (231) (121) (304) -60%

Foreign new ventures

expenditures - - - -

------------------------------------------------

(55) (231) (121) (304) -60%

------------------------------------------------

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Wells drilled Gross - 1 1 2 -50%

Net - 1.0 0.8 2.0 -60%

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Three Months Ended Six Months Ended

June 30, June 30,

(thousands of Canadian

dollars except where

indicated) 2012 2011 2012 2011 Change

----------------------------------------------------------------------------

THAILAND OPERATIONS (Note 2)

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Oil sales (bbls) 119,970 186,727 351,158 388,894 -10%

Average daily oil sales

(bbls/d) by Concession

L44 (interests sold June

15, 2012) 581 1,289 780 1,394 -44%

SW1 (interests sold June

15, 2012) 184 103 171 112 54%

L33 (interests sold June

15, 2012) 33 155 39 183 -79%

L53 520 505 939 460 104%

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Total 1,318 2,052 1,929 2,149 -10%

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Average oil sales price,

before transportation

(CDN$/bbl) $ 104.21 $ 99.19 $ 108.66 $ 95.06 14%

Reference Price (volume

weighted) and differential

Crude oil (Brent $US/bbl) $ 111.35 $ 117.31 $ 116.32 $ 111.22 5%

Exchange Rate $US/$Cdn 1.01 0.98 1.01 0.99 3%

Crude oil (Brent $Cdn/bbl) $ 111.94 $ 114.96 $ 117.97 $ 109.74 8%

Sale price / Brent $Cdn

reference price 93% 86% 92% 87% 5%

Funds flow from operations

(Note 1)

Crude oil sales 12,502 18,521 38,156 36,970 3%

Government royalty (619) (927) (1,892) (1,883) 0%

Other royalty - (40) (49) (85) -42%

Transportation expense (249) (407) (693) (876) -21%

Operating expense (1,761) (2,397) (3,887) (4,534) -14%

------------------------------------------------

9,873 14,750 31,635 29,592 7%

General and administrative

expense (Note 6) (603) (634) (1,524) (1,626) -6%

Interest income 30 41 39 58 -32%

Special Remuneratory

Benefit tax (SRB) - 23 - - 0%

Current income tax (1,510) (686) (3,406) (1,671) 104%

------------------------------------------------

Funds flow from operations 7,790 13,494 26,744 26,353 1%

------------------------------------------------

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Funds flow from operations /

barrel (CDN$/bbl) (Note 1)

Crude oil sales $ 104.21 $ 99.19 $ 108.66 $ 95.06 14%

Government royalty (5.16) (4.96) (5.39) (4.84) 11%

Other royalty - (0.21) (0.14) (0.22) -37%

Transportation expense (2.08) (2.18) (1.97) (2.25) -12%

Operating expense (14.68) (12.84) (11.07) (11.66) -5%

------------------------------------------------

82.30 78.99 90.09 76.09 18%

General and administrative

expense (Note 6) (5.03) (3.39) (4.34) (4.18) 4%

Interest Income 0.25 0.22 0.11 0.15 -25%

Special Remuneratory

Benefit (SRB) - 0.12 - - 0%

Current income tax (12.59) (3.67) (9.70) (4.30) 126%

------------------------------------------------

Thailand - Funds flow from

operations $ 64.94 $ 72.27 $ 76.16 $ 67.76 12%

------------------------------------------------

------------------------------------------------

Government royalty as

percentage of crude oil

sales 5.0% 5.0% 5.0% 5.2% -0.2%

SRB as percentage of crude

oil sales 0.0% -0.1% 0.0% 0.0% 0.0%

Income tax as percentage of

crude oil sales 12.1% 3.7% 8.9% 4.5% 4.4%

As percentage of crude oil

sales

Expenses - transportation,

operating, G&A and other 21% 18.8% 16% 19.2% -3%

Government royalty, SRB

and income tax 17% 8.6% 14% 9.7% 4%

Funds flow from

operations, before

interest income and

realized foreign exchange

gain 62% 72.6% 70% 71.1% -1%

Wells drilled

Gross 1 9 7 15 -53%

Net 0.6 6.6 5.0 11.0 -55%

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Thailand Concession L53

Funds flow from operations

(Note 1) 3,824 3,482 15,685 6,235 152%

Funds flow from operations

/ barrel (CDN$/bbl) $ 80.78 $ 75.77 $ 91.79 $ 74.88 23%

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(1) Funds flow from operations ("funds flow" before changes in non-cash

working capital and reclamation costs) is used by management to analyze

operating performance and leverage. Funds flow as presented does not

have any standardized meaning prescribed by IFRS and therefore it may

not be comparable with the calculation of similar measures of other

entities. Funds flow is not intended to represent operating cash flow

or operating profits for the period nor should it be viewed as an

alternative to cash flow from operating activities, net earnings or

other measures of financial performance calculated in accordance with

IFRS.    

(2) Thailand Concessions SW1, L44 and L33 were sold on June 15, 2012.    

Proceeds of $185.3 million less transaction costs of $11.2 million and

estimated tax of $16.1 million results in proceeds net of expenses of

$158.0 million. After deducting $80.6 million related to the carrying

value of petroleum and equipment, exploration and evaluation costs, and

working capital sold (including the elimination of the associated

deferred tax liabilities, employee pension liabilities, and

decommissioning provision). The net gain on sale is $93.4 million

before tax and $77.3 million net after tax. The 2012 financial

statements and operating results include revenue, expenses and capital

expenditures associated with these properties to June 14, 2012.    

(3) Cost of capital expenditures, excluding any decommissioning provision

and excluding the impact of changes in foreign exchange rates.    

(4) Cost of acquisitions, including deemed value of equity issued in the

transaction.    

(5) Cost of acquisitions, excluding deemed value of equity issued in the

transaction.    

(6) General & administrative expenses, excluding non-cash accretion on

decommissioning provision.    

(7) The acquisition transaction was reversed in the fourth quarter of 2011.


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