Forum Energy profit down on Galoc closure

MANILA, Philippines - Forum Energy Plc., a UK-based oil and gas exploration company with focus on the Philippines, said its gross profit dropped to $918,000 last year from $5.8 million a year earlier, partly due to a decrease in oil production from the Galoc oil field in offshore Palawan.

Forum, which is 60.49-percent owned by corporate taipan Manuel V. Pangilinan’s Philex Petroleum Corp., reported a drop in revenues to $4.522 million last year from $12.7 million in 2011. The temporary closure of the Galoc oil field in the early part of 2012 resulted in a decrease in production to 5,410 barrels of oil per day in 2012 from 6,637 bopd in 2011.

“Production from the Galoc development reached 1.5 million barrels gross in 2012 and is expected to produce 2.6 million barrels in 2013. The company has a 2.27-percent interest in the field and received $2.5 million (from $10.1 million in 2011) after deduction of share of operating costs from crude sales from the field during the year, Forum said.

“A second phase of development is expected to commence in the second half of 2013 with the drilling of two additional production wells, which is expected to boost production from the current 5,410 bopd to 12,000 bopd in the third quarter of 2013, “ Forum chairman Robert Nicholson said in a report.

Forum reported a net loss after tax of $26.4 million after impairment charges, compared to a net profit after tax of $3.4 million in 2011, Nicholson added.

The company spent $2.3 million last year for the development of its principal assets, Service Contract 72 in the Sampaguita oil field off the disputed Recto Bank in the West Philippine Sea.

Nicholson lamented the territorial dispute between China and the Philippines, saying this has affected the company’s exploration program despite an independent report indicating increased resources in the field.

“Whilst we received an independent report on Service Contract 72 in April 2012 which indicated increased resources, we were unable to commence our drilling program because of territorial disputes between the Philippine and Chinese governments,” Nicholson said.

However, the Department of Energy has extended Forum’s work program by two years to August 2015 from the original deadline of August 2013 to allow it to complete its obligations under the service contract.

Forum sought an extension in the government-mandated work program because of delays in their drilling activities, dragged largely by the geopolitical issues between the Philippines and China.

“In the meantime, and recognizing our on-going commitment to the project, a seismic reprocessing program is being planned in 2013 to further assess the prospectivity of other areas outside the Sampaguita field within SC 72. The program will concentrate on mapping other prospects and leads outside the Sampaguita discovery,” Nicholson said.

He said the company would remain in close dialogue with the government on the developments in the disputed territory.

As for the Libertad gas field in Cebu, wherein the company has a 66.67 percent stake, Forum said commercial production already commenced in February 2012 and that as of end-December last year, the field has produced 72.5 million cubic feet of gas.