Pan Orient Energy Corp.: Indonesia Operations Update

CALGARY, ALBERTA--(Marketwire - May 16, 2011) - Pan Orient Energy Corp. (TSX VENTURE:POE)

Batu Gajah Production Sharing Contract, Sumatra (Pan Orient 97% working interest and operator)

Tuba Obi Utara-1 Sidetrack Appraisal Well

Pan Orient Energy Corp.'s Tuba Obi Utara-1 (NTO-1) exploration well, the first of three back-to-back high-impact exploration wells located in the Batu Gajah production-sharing contract on-shore Sumatra, had encountered approximately 10.5 feet of gas pay within a good-quality sand at a depth of 3,991 feet near the top of the primary target Lower Talang Akar formation ("LTAF") as indicated by wire-line logs, mud logs and wire-line pressure data. A reservoir sample was obtained at a depth of 4,001 feet and analyzed by Core Lab in Jakarta indicating natural gas with a very low carbon dioxide content of approximately 1%. Fields in proximity to Tuba Obi are known to have natural gas with carbon dioxide content of up to 40%.

Based on three nearby fields where oil is present with gas, management believed there was a possibility of an oil leg down dip of the indicated gas accumulation encountered at NTO-1. On this basis, and in combination with actual drilling costs for NTO-1 coming in significantly lower than predrilling estimates, the decision was made to side track NTO-1 (NTO-1ST) to determine if a down-dip oil leg is present at this location.

NTO-1ST was drilled to a true vertical depth of approximately 4,478 feet encountering the gas sand identified at NTO-1 at a depth of 4,105 feet true vertical depth ("TVD"), 114 feet structurally lower than at NTO-1. Porosity at NTO-1ST was much lower than observed in the original NTO-1 well (12% versus 22%), and this tight sand had approximately the same 10 feet in thickness as the NTO-1 well. Oil shows were observed in the overlying Upper Talang Akar sand ("UTAF") but not within the primary LTAF objective where only high mud gas readings were observed while drilling.

The highest known water in NTO-ST1 was interpreted at approximately 4,144 feet indicating a potential hydrocarbon bearing area of between approximately 40.5 (based on the highest known water) and 16.2 square kilometers (based on the lowest known gas). The exact area of hydrocarbon bearing sands will not be known until the field oil water contact (if present) and gas water contact have been identified through further drilling. Drilling costs for both the vertical well and the side track well came in at combined cost of approximately US$3.5 million, with the vertical well coming in at approximately US$2.1 million dollars, which is substantially below the initial pre drill estimate of US$3.5 million.

Plans are currently underway to seek Government of Indonesia approval for the drilling of three additional phase two wells at Batu Gajah in late 2011 (bringing the total wells at Batu Gajah in 2011 to six in total). One of these three phase two wells drilled in late 2011 will include Tuba Obi Utara-2 (NTO-2), to be located approximately 5.7 kilometers east of the NTO-1 well and approximately 627 feet structurally higher at the LTAF sand level. Approximately 102 feet of sand at the base of the LTAF at NTO-1 will be encountered significantly above the lowest known gas interpreted at 4,004 feet. In addition to the LTAF sands, primary objectives at NTO-2 will include the 41 feet of net sand in the UTAF and 312 feet of net sand in the Air Benakat formation ("ABF") encountered at NTO-1, all to be penetrated at a significantly structurally higher position. Ministry of Forestry approval for NTO-2 and two additional wells at Batu Gajah is already in place.

SE Tiung-1 Exploration Well

The drilling rig used at NTO-1 is currently mobilizing to the SE Tiung-1 drilling location approximately 120 kilometers by road from the NTO-1 well location. It is anticipated drilling operations will commence in approximately two weeks and take an estimated additional two weeks to drill to total depth. Reservoir objectives for this well include the Gumai, UTAF and LTAF sandstones directly offsetting proven accumulations at all three target levels in the adjacent acreage operated by another company. Upon the completion of SE Tiung-1 well, the rig will immediately mobilize approximately 3.6 kilometers away to the Betano-1 drilling location. Because of the highly deviated well plan at Betano-1, it is anticipated that this well take approximately three weeks to drill to total depth.

Summary

Despite start up delays, Batu Gajah drilling operations have commenced and the initial drilling results at North Tuba Obi are encouraging with proven gas in the LTAF and additional hydrocarbon potential in the overlying UTAF and ABF sandstones existing eastward towards the crest of the Tuba Obi structure. Further appraisal drilling will be required to determine the commerciality and size of this accumulation, and this is expected to commence in late 2011 with the drilling of the NTO-2 well.

Drilling at SE Tiung-1, a multi target exploration well, is anticipated to commence in approximately fourteen days and take an additional fourteen days to drill to total depth. SE Tiung-1 will be immediately followed by Betano-1.

Please refer to the Pan Orient's website (www.panorient.ca) where an updated corporate presentation can be viewed.

Operations are proceeding at the Citarum Production Sharing Contract on-shore Java, (Pan Orient 77% working interest and operator) with land purchase and the building of locations well underway towards an anticipated commencement of drilling of the first of three back to back wells in late September 2011.

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.