Pan Orient Energy Corp.: 2010 First Quarter Financial & Operating Results and Operations Update

Pan Orient Energy Corp. ("Pan Orient") (TSX VENTURE:POE) is pleased to provide
highlights of its 2010 first quarter consolidated financial and operating
results. Please note that all amounts are in Canadian dollars unless otherwise
stated.


The Corporation today filed its unaudited consolidated financial statements as
at and for the three months ended March 31, 2010 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.


2010 FIRST QUARTER HIGHLIGHTS

- The operating results for Pan Orient in the first quarter of 2010 compared to
the previous quarter reflect a 13% increase in production volumes, a 1% increase
crude oil prices, and a 4% reduction in operating expenses.


-- Funds flow from operations for the first quarter of 2010 was $12.3 million
compared with $9.9 million for the fourth quarter of 2009 and $15.2 million for
first quarter of 2009. Funds flow from operations per share was $0.26 for the
first quarter of 2010.


-- Net income of $3.4 million, or $0.07 per share, for the three months ended
March 31, 2010 compared with net income of $7.0 million, or $0.15 per share, for
the fourth quarter of 2009 and $2.9 million, or $0.06 per share, for the first
quarter of 2009.


- Thailand oil sales volumes for the first quarter of 2010 were 3,816 BOPD
(excluding an average of 150 BOPD of oil production from the L53-A well which is
being stored in tanks until a production license for Concession L53 is granted).
This compares with 3,370 BOPD for the fourth quarter of 2009 and 6,165 BOPD in
the first quarter of 2009. The oil sales increase compared with oil sales in the
fourth quarter of 2009 is primarily the result of oil sales from new wells at Bo
Rang drilled in the fourth quarter of 2009 and the first quarter of 2010. For
the first quarter of 2010, the Bo Rang field contributed 44% of oil sales
volume.


- For the first quarter of 2010, operations in Thailand generated $12.4 million
in funds flow from operations, with transportation expenses of $2.52 per barrel,
operating expenses of $6.40 per barrel, G&A of $3.70 and funds flow from
operations per barrel of $36.01. The WTI reference price for crude oil increased
2% during the quarter to Cdn$83.39 per barrel from Cdn$81.42 per barrel in the
fourth quarter of 2009, and increased from Cdn$54.08 in the first quarter of
2009.


-- Operating expenses decreased to $2.2 million or $6.40 per barrel in the first
quarter from $2.3 million or $7.35 per barrel in the fourth quarter of 2009 as a
result of lower expenses for repairs and maintenance and higher oil sales
volumes.


-- Thailand G&A in the current quarter includes $758,000 or $2.20 per barrel of
severance and other non routine expenses associated with the reduction of
expatriate personnel in Thailand.


-- For the first quarter of 2010, Thailand crude oil revenue was allocated 17%
to expenses for transportation, operating, and general & administrative, 33% to
the government of Thailand in the form of royalties, Special Remuneratory
Benefit and Income Tax, and 49% to Pan Orient.


- Pan Orient continued active capital programs in both Thailand and Indonesia in
the first quarter of 2010. Total capital expenditures for the quarter were $20.3
million, with $13.4 million in Thailand and $6.8 million in Indonesia.


- Total capital expenditures of Pan Orient in the first quarter of $20.3 million
were financed 61% from the $12.4 million of after tax funds flow from operations
in Thailand and $7.9 million, or 39%, from working capital. Capital expenditures
in the first quarter of 2010 included $4.4 million to finish the drilling and
testing of the two exploration wells in L53/48.


- Capital expenditures for the first quarter of 2010 in Thailand focused on
development in Concession L44 with two horizontal development wells at the Bo
Rang "B" field discovered in 2009; $4.4 million of expenditures in Concession
L53 (100% working interest) for finishing the two exploration wells drilled at
the end of 2009; three exploration / appraisal wells at Na Sanun East; and
approximately $1.3 million in expenditures for future drilling sites at the Bo
Rang, NSE-F1 and L44-W fields. The five wells drilled during the first quarter
of 2010 resulted in two new producing horizontal wells at Bo Rang "B", which had
combined oil sales of 762 BOPD in April net to Pan Orient, and one new Na Sanun
East producing well at NSE-E3 which commenced production in April and is
currently producing at approximately 450 BOPD net to Pan Orient. The NSE-G3
exploration well is currently suspended and will be re-entered and sidetracked
in order to test a deeper volcanic objective that was encountered at NSE-G1 with
100 meters of oil stained potential volcanic reservoir. The NSE-H3 appraisal
well experienced a collapsed open hole section through the main reservoir and is
currently waiting for a work-over to clean out and deepen the well.


- Pan Orient drilled the first two exploration wells in Concession L53 (100%
working interest) during the fourth quarter of 2009 and work continued on these
wells into the first quarter of 2010. Capital expenditures in the first quarter
of 2010 were $4.4 million for completing the drilling and testing of the wells.
The L53-A well produced approximately 13,500 barrels of crude oil into tanks
under a 90 day production test which expired on April 2nd. This crude oil is
being stored in tanks until a Production License ("PL") Application is approved.
Pan Orient is in the process of preparing the Production License ("PL")
Application covering two square kilometers of the L53-A structure that is
anticipated to be submitted to the Thailand Department of Mineral Fuels ("DMF")
on May 24, 2010. The contingent resource report for the 2009 L53-A oil discovery
as at March 31, 2010 indicated 2C contingent resources of 1.8 million barrels,
with 1.4 million barrels assigned to the two square kilometer area of the
proposed PL, and this report will form the basis of the PL application currently
being submitted to the Thailand Department of Mineral Fuels. Upon approval of
the PL, the crude oil will be sold, the L53-A well will be brought back
on-stream and additional development of the pool will commence in 2010.


- Capital expenditures in Indonesia of $6.8 million in the first quarter of 2010
are primarily associated with the two seismic programs underway in Indonesia.
The seismic program of 500 kilometers of 2D seismic in the Batu Gajah Production
Sharing Contract area in central Sumatra has been completed, and will be
followed by the initial drilling of three exploration wells commencing in the
fourth quarter of 2010. The seismic program of 1,110 kilometers of 2D seismic in
the Citarum Production Sharing Contract area in central Java is scheduled for
completion in July 2010, and drilling of the three exploration wells will follow
the drilling program at Batu Gajah.


- Pan Orient continues to maintain its financial strength and flexibility. At
March 31, 2010 Pan Orient had $25.4 million of working capital and deposits, and
no long-term debt. Of the working capital, $12.1 million is cash balances in
Canada, and this cash balance in Canada has increased to $14.7 million at May
19, 2010. For the three months ended March 31, 2010 Pan Orient had internally
generated funds flow from operations of $12.3 million which funded 61% of the
$20.3 million of total capital expenditures in Thailand, Indonesia and Canada.
The capital expenditures for the first quarter of 2010 included $4.4 million for
completing the drilling and testing of the two exploration wells in Concession
L53, and the 2010 plans do not currently include this level of expenditures in
Concession L53. In addition, at March 31, 2010 Pan Orient had $6.6 million of
equipment inventory to be utilized for future Thailand and Indonesia operations
that is included in petroleum and natural gas assets on the balance sheet.


THAILAND OPERATIONS UPDATE

Concession L44

NSE-E1 Field

The NSE-E3ST1 horizontal well completed at the end of March 2010 is currently on
production at a rate of 750 BOPD gross, 450 BOPD net to Pan Orient. This was the
third producing well drilled into the NSE-E3 pool.


NSE Central Field

NSE-H3, an infill development well targeting the main volcanic reservoir within
the NSE Central field experienced collapse of the one meter open hole reservoir
section of the well very shortly after the start of testing. A service rig is
scheduled open up the original one meter section and drill an additional ten
meters of reservoir.


NSE-B3, an infill horizontal development well targeting the main volcanic
reservoir within the NSE Central field is currently producing at unstablized
rates of between 70 to 150 BOPD (gross) as the well continues to flow back
completion and drilling fluids combined with oil.


Bo Rang "B" Field

The L44W-A15ST1 well, a key step out horizontal appraisal well targeting the
edge of the probable reserve ("2P") envelope on the eastern flank of the Bo Rang
"B" field has started initial testing at initial rates of approximately 270
barrels of oil per day (gross) with a 20% drilling mud/load fluid cut as the
well continues to clean up. Prior to kicking off horizontally, L44W-A15 was
drilled vertically to determine the thickness of the main Bo Rang "B" volcanic
reservoir at this eastern flank location. The well penetrated approximately 60
meters of volcanic reservoir, which is significantly thicker than the 24 meters
encountered in the central and western portion of the field. The field oil water
contact has yet to be encountered. In addition to the main Bo Rang "B" volcanic
zone, two volcanic intervals of approximately 25 meters and a 10 meters thick
were encountered between the depths of 335 to 390 meters. These zones appear to
be gas bearing based on elevated mud gas readings observed while drilling and
they exhibit good reservoir characteristics on logs. A future well will target
these volcanic intervals in a down dip position looking for a possible oil leg.


The L44W-A15-2 well is a deviated appraisal well drilled from the same six well
pad surface location as the L44W-A14ST1 well detailed above. The well is
currently setting casing at a depth of 100 meters and is targeting the Bo Rang
"B" volcanic reservoir. Upon completion of this well a third Bo Rang "B"
appraisal well will be drilled from the same surface location leaving three
additional well slots to target the deeper Bo Rang "A" field reservoir.


An additional six well pad at the L44W-A14 location has been constructed 1.2
kilometers due east of the L44W-A15 well pad. Upon the completion of the
drilling of the third well at the L44W-A15 pad, the rig will likely move
immediately to the L44W-A14 pad to drill two wells targeting the Bo Rang "B"
volcanic reservoir within the 2P reserve envelope and at least one well within
the possible reserve "3P" envelope. Should success be achieved extending the
field limits out to the 3P envelope, up to an additional three wells will be
drilled from this location.


NSE-F1 Field

Upon the completion of drilling operations from the L44W-A15/14 drill pad- at Bo
Rang "B", the first appraisal wells to the NSE-F1 oil discovery made in 2009
will be drilled from the NSE-F2 pad that has been constructed approximately 1.2
kilometers north east of the discovery well surface location. In the success
case, there are an additional four surface locations, each with multiple well
cellars have been approved by the Government of Thailand.


Concession L53

The two square kilometer L53-A production license over the L53-A discovery will
be submitted to the Government of Thailand on May 24, 2010 with approval
anticipated within a 30 to 90 day period, at which time the L53-A well will be
put back on production at approximately 200 BOPD and the 13,500 barrels of oil
currently in storage will be sold. Further drilling on the concession in 2010
will be partly a function of production levels achieved in concession L44 and
the possibility of a second rig being utilized.


Production

Current production of approximately 3,900 barrels per day (net-excluding L53) is
behind plan mainly as a result of approximately half of the wells forecast to be
drilled to date, having been completed. This has been largely a result of
difficulties with the collapse of well bores in the shale just above the
volcanic reservoir occurring in horizontal wells when massive drilling fluid
losses are encountered in the top few meters of the target zone prior to the
setting of casing. To address this issue, casing is now set prior to
encountering the top of the volcanic reservoir objective with the most recently
drilled L44W-A15 well being a successful application of this process.


The 2010 operational plan forecast 2.5 wells per month with average production
of 400 BOPD per well (gross), while the production estimates have been achieved
on an average per well basis, the number of wells drilled has been less than
half of the forecast for the reasons discussed above. This is completely
unrelated to the performance of the new rig which has been exceptional, with rig
moves of averaging 36 hours and drilling rates of approximately 725 meters per
day. In order to: 1) accelerate development drilling 2) evaluate a number of
high quality exploration prospects prior to year end, and 3) drill 3-4
development wells and 1 exploration well in concession L53, the company will
make a decision to take on a second rig or not, in July 2010. Factors
influencing this decision include production rates over the next two months and
world oil prices.


INDONESIA OPERATIONS UPDATE

Batu Gajah PSC

A 500 kilometer seismic program over the 90% owned and operated Batu Gajah
production sharing contract ("PSC") has been competed and tendering for all
drilling and related services is currently underway. Negotiations are also
underway for the surface land acquisition for two locations and the Ministry of
Forestry approval for a third location has been submitted and is anticipated to
be granted in July. Pan Orient is working on a timetable targeting an October 1,
2010 commencement of drilling for the first well of three back to back wells.


Citarum PSC

An approximately 1,000 km 2D seismic program over the Citarum PSC is anticipated
to be completed in July 2010. Two locations have been defined with the exact
position of a third location subject to the completion of the remainder of the
2D seismic program. The timing of drilling of the first three wells on Citarum
is anticipated to commence immediately upon the completion of drilling in Batu
Gajah PSC in late Q4/10.




                                              ------------------------------
                                               Three Months Ended    Change
Operations Summary March 31,

(thousands of Canadian dollars except where
 indicated)                                        2010       2009
----------------------------------------------------------------------------
FINANCIAL
Oil revenue, before royalties and transportation
 expense                                         25,038     26,699       -6%
Funds flow from operations (Note 1)              12,336     15,238      -19%
 Per share - basic                             $   0.26    $  0.33      -22%
 Per share - diluted                           $   0.25    $  0.32      -21%
Funds flow from operations by region (Note 1)
 Canada                                              29       (910)
 Thailand                                        12,364     16,057      -23%
 Indonesia                                          (57)        91
                                              ------------------------------
 Total                                           12,336     15,238      -19%
                                              ------------------------------
Net income attributable to common shareholders    3,405      2,881       18%
 Per share - basic                             $   0.07    $  0.06       21%
 Per share - diluted                           $   0.07    $  0.06       17%
Working capital                                  21,498     41,919      -49%
Working capital plus deposits                    25,358     47,705      -47%
Long-term debt                                        -          -
Capital expenditures (Note 2)                    20,269     13,596       49%
Shares outstanding (thousands)                   47,414     45,568        4%
----------------------------------------------------------------------------
Funds flow from operations per barrel
----------------------------------------------------------------------------
 Canada operations                             $   0.09    $ (1.64)
 Thailand operations                              36.01      28.94       24%
 Indonesia operations - G&A expense               (0.17)      0.15
----------------------------------------------------------------------------
                                               $  35.93    $ 27.45       31%
----------------------------------------------------------------------------
Capital Expenditures (Note 2)
Canada                                               63        145      -56%
Thailand                                         13,419     10,778       25%
Indonesia                                         6,787      2,673      154%
                                              ------------------------------
Total                                            20,269     13,596       49%
----------------------------------------------------------------------------
Working Capital and Deposits
----------------------------------------------------------------------------
Working Capital & Deposits - beginning of period 32,738     46,386      -29%
 Funds flow from operations (Note 1)             12,336     15,238      -19%
 Capital expenditures (Note 2)                  (20,269)   (13,596)      49%
 Non-cash settlement of Andora receivable          (600)         -
 Foreign exchange impact on working capital        (373)      (323)      15%
 Net proceeds on share transactions               1,526          -
                                              ------------------------------
Working Capital & Deposits - end of period       25,358     47,705      -47%
----------------------------------------------------------------------------
Canada Operations
----------------------------------------------------------------------------
Interest income                                       8         19
General and administrative expense                   29       (670)
                                              ------------------------------
Realized foreign exchange loss                       (8)      (223)
Foreign new ventures expenditures                     -        (36)
Funds flow from operations                           29       (910)
Funds flow from operations per barrel
 Interest income                               $   0.02    $  0.03
 General and administrative expense                0.09      (1.21)
 Realized foreign exchange loss                   (0.02)     (0.40)
 Foreign new ventures expenditures                    -      (0.06)
                                               --------------------
                                               $   0.09    $ (1.64)
----------------------------------------------------------------------------


                                              ------------------------------
                                                  Three Months Ended Change
                                                                   March 31,
(thousands of Canadian dollars except where
 indicated)                                        2010       2009
----------------------------------------------------------------------------
Thailand Operations
----------------------------------------------------------------------------
Total production                                343,400    554,820      -38%
Average daily oil production (bbls/d)             3,816      6,165      -38%
Average oil sales price, before transportation
 (CDN$/bbl)                                     $ 72.91  $   48.12       52%
Reference Price (volume weighted) and
 differential
 Crude oil (WTI $US/bbl)                        $ 78.83  $   43.04       83%
 Exchange Rate $US/$Cdn                           1.058      1.257      -16%
 Crude oil (WTI $Cdn/bbl)                       $ 83.39  $   54.08       54%
 Sales price / WTI reference price                   87%        89%      -2%
Funds flow from operations
 Crude oil sales                                 25,038     26,699       -6%
 Government royalty                              (1,589)    (2,095)     -24%
 Other royalty                                      (21)       (21)
 Transportation expense                            (864)    (1,253)     -31%
 Operating expense                               (2,198)    (1,415)      55%
                                               -----------------------------
 Field Netback                                   20,366     21,915       -7%
 General and administrative expense              (1,274)      (943)      35%
 Interest Income                                     28        285      -90%
 Special Remuneratory Benefit (SRB)              (2,169)    (2,920)     -26%
 Current income tax                              (4,587)    (2,280)     101%
                                               -----------------------------
 Funds flow from operations                      12,364     16,057      -23%
                                               -----------------------------
                                               -----------------------------
Funds flow from operations per barrel (CDN$/bbl)
 Crude oil sales                                $ 72.91  $   48.12       52%
 Government royalty                               (4.63)     (3.78)      23%
 Other royalty                                    (0.05)     (0.04)      35%
 Transportation expense                           (2.52)     (2.26)      11%
 Operating expense                                (6.40)     (2.55)     151%
                                               -----------------------------
 Field Netback                                    59.31      39.50       50%
 General and administrative expense               (3.70)     (1.70)     118%
 Interest Income                                   0.08       0.51      -84%
 Special Remuneratory Benefit (SRB)               (6.32)     (5.26)      20%
 Current income tax                              (13.36)     (4.11)     225%
                                               -----------------------------
 Thailand - Funds flow from operations          $ 36.01  $   28.94       24%
                                               -----------------------------
                                               -----------------------------
Government royalty as percentage of sales             6%         8%      -2%
SRB as percentage of crude oil sales                  9%        11%      -2%
Income tax as percentage of crude oil sales          18%         9%      10%
As percentage of crude oil sales
 Expenses - transportation, operating, G&A and
  other                                              17%        14%       4%
 Government royalty, SRB and income tax              33%        27%       6%
 Funds flow from operations, before interest
  income and realized foreign exchange gain          49%        59%     -10%
Wells drilled
 Gross                                                5          7      -29%
 Net                                                  3        4.2      -29%
----------------------------------------------------------------------------

(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 Canadian GAAP 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 Canadian GAAP. All
    references to funds flow throughout this report are based on funds flow
    from operations before changes in non-cash working capital and
    reclamation costs.
(2) Cost of capital expenditures, excluding any asset retirement obligation
    and excluding the impact of changes in foreign exchange rates.



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.


To view an image of the Thailand 2010 Drilling, please visit the following link:
http://media3.marketwire.com/docs/520poe1.pdf.