PXP Energy trims nine-month losses on cost reduction efforts

Posted on October 27, 2016
http://www.bworldonline.com/content.php?section=Corporate&title=pxp-energy-trims-nine-month-losses-on-cost-reduction-efforts-&id=135480

UPSTREAM oil and gas company PXP Energy Corp. trimmed its losses for the nine-month to September to P26.3 million from P65.9 million a year ago, the company told the stock exchange on Wednesday.

Reported consolidated net loss as of September dropped to P38.5 million, compared with P118.1 million during the same period last year.

“The lower net loss was primarily attributable to a 77.4% reduction in overhead resulting from management’s continuing cost reduction efforts, net of lower petroleum revenues contributed by its subsidiary, Forum Energy Limited, arising from the decline in oil output and lower oil prices,” the company said.

PXP Energy, formerly Philex Petroleum Corp., directly and indirectly owns oil and gas exploration and production assets in the Philippines, and indirectly owns an exploration asset in offshore Peru.

In its disclosure, PXP Energy said the assignment of its service contract in Mindoro had been approved by the Department of Energy on Oct. 24, 2016. The company’s 53.43%-owned subsidiary Pitkin Petroleum Ltd. assigned on April 27, 2016 its 70% participating interest in Service Contract 53 in Mindoro to Mindoro-Palawan Oil and Gas, Inc.

The review period also saw the company’s former parent Philex Mining Corp. distributing its holdings in PXP Energy as property dividends on July 15, 2016. The move reduced the Philex Mining’s holdings in PXP Energy to 19.8% from 64.7%.

PXP Energy said the distribution of its holdings allowed its shareholder base to broaden, thus publicly floated shares increased to around 30% from 16.4% previously.

Earlier this week, PXP Energy Chairman Manuel V. Pangilinan said he was hopeful that the recent visit of President Rodrigo R. Duterte to China would offer a positive outcome for the company’s exploration project in the disputed area in the West Philippine Sea.

Forum Energy, a 67.19% direct and indirectly owned subsidiary of PXP Energy, has been awaiting guidance from the government on the future activity in service contract (SC) 72, which is covered by the decision handed down by the Permanent Court of Arbitration in The Hague on July 12, 2016.

The court ruled that Reed Bank or Recto Bank, where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea.

On March 2, 2015, the DoE granted a force majeure on SC 72 because the contract area falls within the territorial disputed area of the West Philippine Sea, which was the subject of the arbitration process.

Under the terms of the force majeure, all exploration work at SC 72 was suspended from Dec. 15, 2014 until the DoE notifies Forum Energy that it may continue drilling. The service contract is in offshore west Palawan and covers 8,800 square kilometers and contains the Sampaguita gas discovery.

First Pacific Co. Ltd., which owns more than a quarter of PLDT, Inc., is the single biggest shareholder of PXP Energy Corp.’s parent, Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

On Wednesday, shares in PXP Energy fell by 5.16% to P4.04 each. -- Victor V. Saulon