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THE Securities and Exchange Commission (SEC) has approved the
application of Basic Energy Corp.’s follow-on offering, involving
the sale of existing shares to the public to raise funds for its
ethanol and geothermal projects.
Based on documents from the regulator, Basic
will sell 537.5 million common shares valued at P134.4 million at
par value P0.25 per share. These shares held by its selling
stockholders will be listed with the Philippine Stock Exchange after
the offering that is yet to be scheduled.
In November last year, the SEC approved the
increase in the company’s authorized capital stock from P500
million consisting of 2 billion common shares to P2.5 billion
consisting of 10 billion common shares to support this fund raising
exercise.
Company officials earlier said they are mulling
over the possibility of issuing P1.6-billion worth of bonds that may
be converted into equity within three to five years. The
quasi-equity instruments would be sold to institutional investors
interested in joint venture projects with the firm that is now
gearing toward production of biofuels.
Another option open to Basic is direct private
placements in the company by strategic investors, which may be
financial institutions or firms with a stake in energy production.
Among the beneficiaries of these fund raising
activities include Basic’s ethanol project. This calls for the
development of 10,000 hectares of sugarcane farm to help feed a
fully integrated ethanol plant facility for ethanol cogeneration and
carbon dioxide production. This 8-megawatt cogeneration plant is
targeted to produce 200,000 liters of ethanol a day and 50 tons a
day of C02 after two years from construction.
With this, Basic clinched a deal with Chevron
Philippines Inc. (CPI) for the possible supply of 25 to 50 million
liters of ethanol a year. Basic also may have a possible supply
contract with Pilipinas Shell Petroleum Corp. of up to 50 million
liters of ethanol a year.
Besides funding its ethanol projects, the energy
firm is also planning to go back to oil and gas exploration through
its subsidiary, Southwest Resources Inc. (SWR), which has
development and exploitation contract areas in offshore and onshore
Mindoro. In offshore Mindoro under Service Contract 47, two
prospects, Cherry and Tablas, were already mapped, evaluated and
matured for drilling.
SWR and Laxmi Organic Industries Ltd., the
operator of the other contract area under Service Contract 53—also
in offshore Mindoro—have agreed to conduct an expanded geological
and geo-chemical program. Before exploiting this area, the two firms
will conduct remote sensing data acquisition, surface geochemical
survey, seismic data recovery reprocessing, interpretation, and
integration of all data with previous studies.
In addition, SWR and the other consortium
members of Service Contract 41 in Sanakan Basin have a farm-in
agreement with TAP Oil Ltd., an Australian firm, to acquire, process
and interpret 3D seismic data to guide them in drilling an
exploration well to test the hydrocarbon potential of the identified
leads in the contract area.
In addition to oil and gas, Basic is also
working towards bagging the right to run the Mabini Geothermal plant
in Batangas, one of the generating facilities the government will
privatize.
In its annual report, the energy firm said it is
evaluating two oil and gas areas in Indonesia and is seeking joint
venture partners for the project. Evaluation of coal properties in
Indonesia and the Philippines are also in the pipeline as Basic
considers direct development, mining and trading of coal.
-- Likha C. Cuevas-Miel
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