PXP Energy eyes more oil, gas prospects

MANILA, Philippines — PXP Energy Corp. is participating in the government’s Philippine Conventional Energy Contracting Program (PCECP) as it awaits the go signal to start works on its oil and gas contracts located in the disputed waters.

Manuel V. Pangilinan, chairman of PXP Energy, said the company is looking at domestic prospects that are not in the disputed territory.

“I know we’ve gained some certain concessions that are outside the disputed territory,” he said.

This as the company continues to post net losses—albeit at a smaller amount—amid lack of activities in its oil and gas prospects, Pangilinan said.

In the first half, PXP Energy incurred a net loss of P17.9 million, down from the P32.8 million loss recorded last year.

This was  due to reduction in oil production costs, lower depletion rate, and higher other income (charges), partially offset by lower petroleum revenues.

Consolidated petroleum revenues dropped 22.9 percent to P51.4 million due to the 13.6 percent slide in crude oil price in Service Contract (SC) 14C-1 Galoc, and the plug and abandonment of SC 14A Nido and SC 14B Matinloc production wells.

Meanwhile, consolidated cost and expenses fell 22 percent to P86.2 million on the back of lower depletion cost in SC 14C-1 Galoc, and the cessation of operational costs in SC 14A Nido and SC 14B Matinloc.

While the firm continues to incur losses, Pangilinan said the company still has enough money to stay afloat.

“It has enough cash to stay where it is in the next few years. The question really is, when something does break out, then we have to raise funds for development. That’s a better problem than the balance sheet,” he said.

The company, formerly called Philex Petroleum Corp., incurred net losses from 2012 to 2018 as its coal and oil investments turned sour.

It is pushing for the resumption of oil and gas exploration and development, particularly in SC 72 and 75 which were affected by a moratorium issued by the government  in 2014 and 2015 amid rising tension with China.

PXP Energy holds a 78.98-percent operating interest in 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 SC 72 consortium earlier announced plans to spend $80 million to $100 million, roughly P4 billion to P6 billion over a two-year period to find the country’s new Malampaya project.

Its exploration work program includes geotechnical surveys and the drilling of two wells in the Sampaguita gas discovery and 3D seismic surveys for the North Bank Prospect north of Sampaguita.

Earlier this year, the contractors of SC 72 invested $490,000 or over P25 million to redo 3D seismic data for the Sampaguita gas discovery. This activity is necessary before it can start drilling within the prospect.

The group hopes to resume exploration and drilling works in the Sampaguita discovery, which has the potential to contain approximately 2.5 trillion cubic feet of recoverable gas and could be the country’s new source of gas as replacement for the Malampaya project.

The contract for the Malampaya gas field in northwest Palawan will expire in 2024, but this can be applied for extension with the Department of Energy.

Operating since 2001, the Malampaya gas project supplies fuel to around 40 percent of gas-fired plants in Luzon namely the Ilijan, Sta. Rita plant, San Lorenzo, San Gabriel and Avion plants – which supply 3,211 megawatts to the Luzon grid.