Philex Petroleum Corp. (Philex) reported a net loss amounting to P448.7 million last year, more than four times the net loss it incurred in 2013, due to increasing operating expenditures and the exit of some of its units from service contracts.
The Manny Pangilinan-led oil and gas firm reported a net loss of P101.2 million in 2013.
In a disclosure to the Philippine Stock Exchange (PSE), Philex attributed the broadening of its net loss to the decision of its subsidiary, Pitkin Petroleum Plc. (Pitkin), to exit from Service Contract 6A (SC 6A), which resulted in an impairment loss for the company of P338.5 million.
This was, however, partly offset by higher petroleum revenues from Forum Energy Plc (Forum), a reduction in general and administrative expenses, and decreased interest expenses.
Pitkin, a 53-percent owned subsidiary, elected not to enter Phase 2 of a farm-in agreement to earn a 70 percent participating interest in SC 6A, which is located offshore Northwest Palawan.
Philex said Pitkin is in the process of reassigning its participating interest back to the farm-out partners, which will be subject to the approval of the Department of Energy (DOE).
The DOE granted Forum (GSEC 101) Limited’s request to extend the completion date of the second Exploration Sub-Phase of Service Contract 72 (SC 72) by one year to August 15, 2016.
The Sub-Phase 2 exploration work program of SC 72, which is located offshore West Palawan, comprises the drilling of two wells.
Forum (GSEC 101) Limited is a wholly-owned subsidiary of Forum that holds a 70 percent operating interest in SC 72. Philex Petroleum holds a 60.49-percent voting interest and a 48.76-percent economic interest in Forum.|
Meanwhile, the Peruvian oil and gas regulator, Perupetro S.A., approved the application to place Peru Block Z-38, wherein Pitkin holds a 25-percent participating interest, into force majeure. The application for force majeure was requested on the basis of the Operator, Karoon Gas, being unable to secure a suitable drilling unit within the required timeframe on the Pacific side of the Americas.
The force majeure was granted effective September 1, 2013. As a result, the term of the current third exploration period will have approximately 22 months remaining once the force majeure is lifted.
On July 2, 2014, Pitkin repurchased 11.099 million or 7.93 percent of its total issued shares at a price of $1 per share.
Philex Petroleum sold 2 million or 2.84 percent of its Pitkin shares. Philex Petroleum’s shareholding in Pitkin after the repurchase of shares increased from 50.29 percent to 53.07 percent.
On April 15, 2014, Philex Petroleum completed the acquisition of 2,237 line-kilometers of 2D seismic data in Service Contract 75 (SC 75) which is located offshore Northwest Palawan.
The processing and interpretation of the 2D seismic data is currently ongoing and is expected to be completed in the first quarter of 2015. Philex Petroleum has a 50-percent operating interest in SC 75.
Another factor that contributed to the bigger net loss of Philex is Coal Operating Contract 130 (COC 130) in Zamboanga Sibugay, the company said.
The underground coal mines in COC 130 were closed in September 2013, following suspension of operations in January 2013 due to low coal prices.
Brixton, a wholly-owned subsidiary, finalized agreements for the assignment of COC 130 to Grace Coal Mining and Development on January 7, 2014. The assignment is awaiting the approval of the DOE.
To mitigate the losses, Philex said it will continue to reduce operating expenditures through the rationalization of the company’s business structure and asset portfolio, particularly in the current low oil-price environment.