Philodrill sees profits hitting P2B in 2 yrs

MANILA, Philippines - Listed upstream oil firm Philodrill Corp. expects to hit the P2- billion profit mark in the next two years through higher oil sales.

An expansion program in a producing oil field in Northwest Palawan basin that will require around $13 million from Philodrill is already funded, executives said.

“This year, because we stopped operations for three months, we will probably make P300 to 400 million in net income,” said Philodrill executive vice-president Francisco A. Navarro.

Net income will likely more than double to P1 billion next year and then P2 billion in 2014 because of new production wells, Navarro said.

Navarro said the company wants to establish a track record of giving out dividends to its shareholders given available cash.

The listed upstream oil firm recorded P1.045 billion in consolidated earnings last year, up from P640 million a year ago due to strong oil sales.

In the nine months to September, Philodrill’s net income sank to P212.7 million from P957 million last year as revenues fell 59 percent to P812 million.

In November last year, consortium Galoc Production Co. (GPC) temporarily stopped operations at the oil field to give way for upgrades. Gross output slipped to 1.135 million barrels in the nine-month period from 1.966 million barrels a year ago.

GPC resumed its commercial operations on April 2.

The consortium allotted $188 million for the Galoc Phase 2 project, which will increase output in the oil field to 12,000 barrels of oil per day from the current 5,000 barrels.

“We are paying a little around seven percent of that,” Navarro said. Hence, Philodrill needs to spend $13.16 million for the expansion.

GPC, which holds 58.29 percent of Service Contract (SC) 14C, is jointly-owned by the Vitol Group and Otto Energy Ltd. Other stakeholders in SC 14C include Oriental Petroleum and its unit Linapacan Oil Gas & Power Corp. (7.57 percent); Philodrill (7.03 percent); Forum Energy Corp. (2.27 percent); Alcorn Gold (1.53 percent) and PetroEnergy (1.03 percent).

“We generate enough revenue to keep paying our share in the production,” said Philodrill chairman and CEO Alfredo C. Ramos, adding that the company has more than P1 billion available cash.

“We have been producing since 2008 so we think we are familiar with the field already,” Navarro said, adding that the company is not looking to borrow from banks.

Drilling for additional production wells will start in the third quarter next year.

Remaining recoverable volumes of the Galoc oil field is estimated at 8.9 million barrels on a proven basis and 13.4 million barrels on a proven and probable basis, both figures up by 156 percent and 134 percent, respectively, from previous data.

Galoc lies within SC 14 in 300 meters deep of water, some 60 kilometers offshore of Palawan. The Galoc reservoir lies 2,200 meters below the sea floor, with its first production on October 9, 2008.

Philodrill was incorporated in 1969 to engage in oil, gas and mineral exploration and development. In 1989, it changed its primary purpose to that of a diversified holding company while retaining petroleum and mineral exploration and development as one of its secondary purposes.

Active petroleum projects of the company include the production and exploration areas in offshore Palawan and South Sulu Sea and onshore Mindoro.