Posted on March 29, 2017
PXP ENERGY Corp. intends to keep a majority stake in Forum Energy Ltd., a company whose main asset is a controlling interest in an offshore exploration service contract (SC) 72 west of Palawan island in the disputed West Philippine Sea.
In a disclosure to the stock exchange, PXP Energy said it infused $11.805 million into Forum Energy, as it raised its direct interest in the latter to 69.5% from 48.8% previously.
“Additional capital was infused in Forum primarily to fund Forum’s share in the drilling expenses in Galoc 7 well which is expected to commence later this week,” Mark Raymond H. Rilles, PXP Energy’s finance controller, said via e-mail.
“We will proceed to a Phase 3 Galoc development that would entail further drilling of wells if Galoc 7 is successful,” he added.
Directly or indirectly, its interest in the UK incorporated company has reached 77.5% from 67.5% before the transaction took place on March 23. Its indirect stake is through a 54.99%-owned subsidiary, FEC Resources, Inc., a Canadian public company.
“We intend to maintain majority holdings in Forum because this company holds majority interest in SC 72, in addition to SC 14C1 Galoc,” Mr. Rilles said.
Aside from SC 72, Forum also has 100% operating interest in SC 40 in north Cebu held through Forum Exploration, Inc., and minority interests in the SC 6 and SC 14 sub-blocks in offshore northwest Palawan, including a 2.27% interest in the producing Galoc field, held through Forum Energy Philippines Corp.
In a separate disclosure on Tuesday, PXP Energy said Nido Petroleum Ltd., which is part of the Galoc joint venture, mobilized the drillship “Deepsea Metro I” from Labuan, Malaysia to the Galoc 7 well in Block C1 of SC 14 in Northwest Palawan Basin.
“Further updates will be provided once the rig arrives on location at Galoc-7/7ST and commences drilling operations, which is expected to occur on 31 March 2017,” PXP Energy said.
Earlier, PXP Energy Chairman Manuel V. Pangilinan said the atmosphere had become better to resume discussions between the company and China National Offshore Oil Corp. (CNOOC) to jointly explore an area in West Philippine Sea for its potential natural gas reserves.
Forum has been awaiting guidance from the government on the future activity in SC 72, which is covered by the decision handed down by the Permanent Court of Arbitration in The Hague in the Netherlands on July 12, 2016.
The court ruled that 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 Department of Energy (DoE) placed SC 72 under force majeure because the contract site falls within the disputed area of the West Philippine Sea, which was the subject of the arbitration process.
Under the terms of the force majeure, exploration work at SC 72 is suspended from Dec. 15, 2014 until the DoE notifies Forum that it may continue drilling.
SC 72 is located offshore west Palawan and covers 8,800 square kilometers and contains the Sampaguita gas discovery.
On Tuesday, shares in PXP Energy were trading higher by 3.13% to P3.29 each.