Philex eyes oil, gas exploration projects

MANILA, Philippines - Philex Petroleum Corp., the upstream oil and gas subsidiary of listed mining firm Philex Mining Corp., is eyeing to invest in one or two existing oil and gas exploration prospects nearing production after the suspension of its project located in the disputed West Philippine Sea, according to its top official.

Philex Petroleum chairman Manuel Pangilinan said in a recent interview the company is interested in oil exploration prospects that would soon commence production to provide cash flow for the company.

So far, one to two exploration prospects are nearing that phase, he said.

“We’re prepared to go for that but we have to make an investment case to the board. It makes senses for cash flow purposes,” Pangilinan said.

Last March, the Department of Energy (DOE) suspended all drilling and exploration works in the disputed West Philippine Sea. 

In particular, it granted a force majeure on service contract (SC) 72 in Recto (Reed) Bank, which is the subject of a territorial dispute between the Philippines and China.

UK-listed Forum Energy has a 70-percent stake in SC 72, which covers the Sampaguita Gas Field as well as several oil and gas leads.

In turn, Philex Petroleum holds a 60.49-percent interest in Forum Energy.

The contract was awarded to Forum Energy by the government in 2010. Exploration and development in the area, however, have failed to proceed since 2012 amid geopolitical tensions in the disputed sea.

Pangilinan said the DOE suspension is a cause of concern but they have to comply. 

“Certainly you can’t proceed especially with this political issue hanging. We’d like to (proceed with the exploration works), but we’re not allowed to do anything,” he said.

In the first six months of 2015, Philex Petroleum widened its net loss to P85.99 million from P40.71 million in the same period last year due to lower petroleum output and revenues from Forum Energy, as well as declining crude prices.

Pangilinan said this trend is seen to persist in 2016 given that its oil and gas prospects are still under exploration.