Philex beefing up war chest

MANILA, Philippines - Philex Petroleum Corp., the upstream oil and gas unit of listed mining firm Philex Mining Corp., is beefing up its war chest to finance exploration and drilling in different petroleum blocks here and abroad in 2016.

This is partly in view of the possible lifting of the force majeure in several petroleum blocks in disputed waters by next year, its top official said.

Last week, its 53 percent-owned subsidiary Pitkin Petroleum Plc decided to abandon exploration works in Block XXVIII onshore Peru and surrendered the petroleum block to the Peruvian government.

Block XXVIII was still in early stage of exploration and the company decided to re-allocate financing for capital expenditure for 2016, Philex Petroleum’s newly-elected president Daniel Stephen Carlos told The STAR.

“It is for capital re-allocation because we have a lot of blocks, especially under subsidiary Forum Energy Plc,” he said.

Carlos said the company is optimistic it could start drilling in the projects is disputed waters since the Philippine tribunal won the first round in a United Nations arbitration process.

“If there will be a decision by next year, who knows, may be the force majeure will be lifted by DOE. Then Philex Petroleum will be very active next year,” he said.

Currently, Philex Petroleum has several projects under force majeure, namely Service Contract (SC) 72 Reed Bank offshore west Palawan and SC 75 in offshore Northwest Palawan Basin because these projects are located in the disputed West Philippine Sea.

Once force majeure is lifted, Carlos said SC 72 will be up for drilling while seismic survey will be commenced in SC 75.

Philex Petroleum holds a 60.49-percent interest in Forum Energy, which has a 70 percent interest in SC 72 west Palawan and a 2.27 percent interest in the SC 14 Block C-1 Galoc offshore northwest Palawan.

Meanwhile, the consortium owning SC 75 is composed of state-owned Philippine National Oil Co.-Exploration Corp. (PNOC-EC) with 35 percent, Philex Petroleum with 50 percent as operator and PetroEnergy Resources Corp. (PERC) with the remaining 15 percent.

Apart from these projects, Philex Petroleum is proposing to start drilling SC-14 by the middle of 2016 and the Peru Block Z-38 located in offshore Tumbes Basin, where Pitkin has a 25 percent participating interest, sometime soon.

The company will also continue exploration works in other blocks in the Philippines.

“We’re going to have drilling preparations for an offshore block in Philippines, which is Galoc,” Carlos noted.

The company official also said Peru Block Z-38 has “more prospective resources” than the other Peru block it surrendered.

“The offshore block is now for drilling. We will have a meeting on this soon,” Carlos said.

Apart from the Peru blocks, Pitkin has a 29.14 percent participating interest in SC 14 Block C-2 West Linapacan, a 70 percent operating interest in SC 74 Northwest Palawan, and a 35 percent participating interest in SC 53 Mindoro.

In the nine months ending September this year, Philex Petroleum incurred a net loss of P65.9 million, 65 percent lower than the P188.8 million incurred in the same period last year due to a charge in impairment to Pitkin’s SC 6a – Octon.

Philex Petroleum chairman Manuel Pangilinan earlier said this trend would likely continue until 2016 because the firm’s oil and gas prospects are still under exploration, while its major projects are still under force majeure.