Frontier Oil IPO approved

The Philippine Stock Exchange has approved the stock market debut on Dec. 9 of oil exploration firm Frontier Oil Corp., which will embark on an initial public offering (IPO) worth about P2.2 billion.

Based on an offering circular posted on Friday, the PSE has cleared the offering by Frontier Oil of up to 883.626 million in primary common shares for as much as P2.50 per share, bringing to public hands about a third of the company’s outstanding shares after the IPO.

This firms up Frontier Oil’s offering, which will run from Nov. 25 to 29 while listing on the PSE’s main board under the ticker “FOC” will be on Dec. 9.

The issue managers and joint lead underwriters are Philippine Commercial Capital Inc. and Unicapital Inc.

Frontier Oil will start the domestic roadshow on Nov. 4, end book-building by Nov. 15 and set the IPO price by Nov. 18.

The company plans to use the bulk of the proceeds amounting to P1.55 billion for the Calauit Field covered by Service Contract 50.

Another P256.87 million was earmarked for Nassipping Field in SC 52 and P202.87 million for working capital.

Frontier Oil holds interests and/or rights to interests in four of the 26 active exploration service contracts (SCs) currently in place with the Department of Energy, but the two most mature or “production-ready” projects are SC 50 and 52.

SC 50 lies in the country’s “most prospective” oil and gas basin off northwest Palawan. This hosts the Calauit Field, which was discovered in 1991 by Petrocorp Exploration Philippines Ltd.

SC 52 is an onshore block in the Cagayan Basin at the northernmost part of Luzon.

The prospectus said the presence of gas in the basin was proven by previous drilling conducted from 1956 to 2008.

Out of the 30 wells drilled, three turned out to be discoveries, most notable of which was the San Antonio well of PNOC-EC, which produced 3.5 BCF (billion cubic feet) of gas that in turn powered a one-megawatt plant for 14 years (1994-2008) in Echague, Isabela. SC 52 hosts the Nassipping gas field, which has “contingent gas resources” in place.

The biggest shareholders of Frontier Oil are Panther Petroleum Ltd. (21.85 percent); BioProspect Ltd. (18.02 percent), Middle Petroleum Services Ltd. (9.28 percent), Phil Resource Invest Pte Ltd. (7.77 percent), Aytek Co. Inc. (7.35 percent) and Frontier Investment Ltd. (6.46 percent).

The company is chaired by Filipino fund manager Astrolito Romulo Del Castillo while the president is Kristoffer Kenneth Fellowes, who has managed several oil and gas exploration projects.