PXP Energy hopeful governement will lift SC 72 exploration moratorium

MANILA, Philippines — Upstream oil and gas firm PXP Energy Corp. is hoping the government will soon lift the moratorium to allow it to start exploring its service contracts amid widening losses.

“The company is mindful that the Malampaya gas resource, which supplies about 40 percent of Luzon’s power requirements, could be exhausted within the next decade. In that light, resumption of exploration in SC 72 is in the national interest,” PXP Energy said.

PXP Energy holds a 78.98-percent interest operating interest in Service Contract (SC) 72 or the contract to explore Recto Bank in the West Philippine Sea through London-listed Forum Energy Plc.

It also has a direct operating interest of 50 percent in SC 75 northwest Palawan.

“The company remains hopeful that the force majeure imposed on SC 72 and SC 75 will be lifted by the Department of Energy soon for the company to be able to resume exploration works in these SCs,” PXP Energy said.

In the first half, the company reported wider losses on higher costs and decommissioning of two wells.

Consolidated net loss attributable to equity holders was P20.1 million versus P11.3 million last year.

PXP Energy recorded a 27 percent jump in consolidated petroleum revenues from to P66.7 million as a result of the 33 percent improvement in crude oil price offset by lower crude production. 

The company’s consolidated cost and expenses jumped 42 percent to P110.5 million “brought about by higher depletion cost in Galoc and the decommissioning of Tara and Libro wells in Service Contract 14, offset by continuous containment of group overhead.”

At the start of the year, PXP Energy and its partners have gotten a new investor in the Peru oil prospect called Block Z-38 with the entry Tullow Oil, a UK-listed oil explorer.

Karoon Gas Australia Ltd. said the consortium owning offshore exploration Block Z-38 in Tumbes Basin Peru signed a farm-out of a 35 percent interest with Tullow Peru Limited, a wholly owned subsidiary of Tullow Oil.    

Under the deal, Tullow will fund 43.75 percent of the cost of the first exploration well amounting to $27.5 million at 100 percent, beyond which Tullow will pay its 35 percent share. It will also pay $2 million upon completion with a further $7 million payable upon declaration of commercial discovery and submission of a development plan to Perupetro. 

Once the farm-out well is completed, Tullow will have an option to assume operatorship of the block. 

Block Z-38 sits in the heart of the Tumbes Basin, adjacent to the prolific oil producing Talara Basin which has produced 1.7 billion barrel of oil equivalent since 1880.