Eastern Petroleum plans $50M public offering

Eastern Petroleum. PHOTO FROM EASTERNPETROLEUM.COM.PH

MANILA, Philippines—The Eastern Petroleum Group is planning an initial public offering (IPO) this year to fund expansion and diversification efforts.

“If it’s possible late this year, we will do it,” company chair and chief executive Fernando Martinez said on the sidelines of the launch of EC Gas, Eastern Petroleum’s LPG cylinder product.

Martinez said the proceeds from the proposed IPO could be at least $50 million depending on market valuation. He added that the company might offer to the public up to 40 percent of its primary and secondary shares because the company had “so many projects and opportunities” to fund in the energy field.

The Eastern Petroleum Group is near the final stage in completing the feasibility study for its $70-million biomass project in power-starved Mindanao. The tree-planting component for feedstock supply was now attracting some foreign funders, Martinez said.

“There are three potential advisers (for the IPO) and we will be deciding on that by December. There will at least be a conclusion on who the adviser will be [by the end of this year],” Martinez said. He said there were foreign and local firms offering their services on the IPO.

Martinez noted that a public offering might be viable given the excess market liquidity although there could be some movement in interest rates from presently low levels.

“I think the Philippines will remain to be a robust economy. We need to succeed in maintaining the momentum of growth in the country especially in energy,” he said.

Eastern Petroleum is set to post about P300 million in net income by end-2014 as its newly launched LPG business is projected to boost performance.

EC Gas is encased in an innovative plastic composite tank with an automatic shutdown mechanism to ensure users’ safety. Netherlands-based LiquiGaz will supply the LPG and the tank will be supplied by Norway-based Hexagon Ragasco AS.

Martinez said the company might generate P1.4 billion in gross sales from LPG alone by 2014 and another P3 billion from its traditional fuel station business.

“By next year the full brand of EC Gas will be more than our fuel business,” Martinez said.

The potential market in the Philippines alone is 7 million households, according to industry estimates.

Eastern Petroleum and its European partners are challenging more established brands in the LPG market in the Philippines, where they are considering setting up a regional manufacturing hub.