PNOC exploration unit mulls secondary offering

The PNOC-Exploration Corp. (PNOC-EC), the oil and gas exploration subsidiary of state-owned Philippine National Oil Co., is planning to undertake a secondary offering soon, an energy official said, over the weekend.

Energy Undersecretary Guillermo Balce said the idea has been discussed in a board meeting of PNOC. "It is an idea floated by PNOC-EC president Rafael del Pilar.   They have been discussing this and it is already being studied," he said.

He said the company is looking at the possibility of increasing the number of shares listed in the stock market from only 0.2 percent to 10 percent.

Most of the company’s cash flow is being used to pay up a $129 million loan secured by PNOC for a 10-percent stake of PNOC-EC in the $4.5 billion Malampaya deep water gas to power project.

The secondary offering, he said, would give PNOC-EC an opportunity to raise funds for its project.

He said if PNOC-EC is intent on getting more money, it could raise the offering up to 40 percent by getting a strategic partner. The PNOC board is currently weighing the pros and cons of an offering.

He said a concern is that if PNOC-EC issues more shares, the government’s share in corporation will be diluted.

"What the board is looking at is the issue of oil security," he said, noting that PNOC-EC holds government’s share in various oil and gas explorations in the country which would ensure as adequate supply of oil for the country if needed.

According to Balce, if PNOC-EC decides to increase the share of private investors in the company, it should consider becoming a private entity rather than a government-owned and controlled corporation. "If that is the case, they should go straight private," he said. 

Balce, said should PNOC-EC decide to become a private entity, its mother unit, PNOC, can take care of the job of addressing the oil security issue.

The energy official recalled that the function of ensuring oil security has been in the hands of PNOC before.

"The old setup was the PNOC and the Department of Energy are the ones looking after the country’s oil security.  So I think, there would be no problem should PNOC-EC decide to become private," he said.

It will be recalled that another subsidiary of PNOC, PNOC-Energy Development Corp., had successfully undertaken an initial public offering (IPO).

PNOC president Pedro Aquino Jr. said in an earlier interview that they also plan to list additional shares of the mother company after all its other subsidiaries have been privatized.