Philex Petroleum shares sizzle on listing debut

MANILA, Philippines—Shares of Philex Petroleum Corp. sizzled on the company’s stock listing debut on Monday as the company unveiled an $80-million exploration plan for its concession area in the Recto Bank (Reed Bank), which contains the Sampaguita natural gas discovery in offshore west Palawan.

Philex Petroleum, which listed by way of introduction on the PSE under the ticker “PXP,” saw its shares surge by 617 percent to close at P8.60 from an initial listing price of P1.20 per share.

“PXP’s activity was a mix of speculation and bona fide investing. The listing of P1.20 was likewise based on very conservative assumptions,” said PNB Securities deputy chief Manuel Lisbona.

During the listing on Monday, top officials led by chairman Manuel V. Pangilinan said the group would invest about $80 million in Service Contract 72 (SC72) covering part of the Recto Bank. This amount will cover survey, appraisal and other exploratory works on the 8,800-square-kilometer concession area within the next two years.

Philex Petroleum’s UK-incorporated oil and gas unit Forum Energy Plc (FEP) has a 70-percent interest in this service contract 72, which the Philex group was hoping to be the “next Malampaya” gas field.

This Recto Bank service contract, apart from its international exposure in oil and gas exploration, was what was setting Philex Petroleum apart from other listed peers, said company president and chief operating officer Carlo Pablo.

“This is one of the few assets (in the Philippines) with a (gas) discovery (referring to the Sampaguita discovery) and it’s a sizeable discovery compared with other assets that have been opened up for bid. So this is more advanced than other opportunities and we have 70-percent interest in it,” said Pablo, when asked to explain why the company would prioritize SC 72.

“We know that Malampaya is a very successful project. The question is, can it be the next Malampaya?” he said.

The concession area is subject to international boundary issues pertaining to certain areas of the West Philippine Sea. In PXP’s prospectus, the company said the uncertainty of how these issues would be resolved may be a “source of continuing risk to the operations in offshore Palawan.” The company said it would “continue to rely on government support and policy in addressing such geopolitical issues.”

“As a Filipino, how can I say that it belongs to the Chinese? Recto Bank belongs to us,” Pangilinan said.

SC72 has a seven-year exploration period extendible by three years and a 25-year production period that can be extended by 15 years.  It was awarded by the Department of Energy in February last year. It contains the Sampaguita gas field discovered in 1976 and a number of leads identified from earlier seismic evaluation.

The remaining 30-percent interest in SC72 is held by Monte Oro Resources and Energy Inc., which is led by businessman Enrique Razon.

In September 2006, results of the interpretation of a 3D seismic program at the Sampaguita gas discovery performed by independent consultants Count Geophysics Ltd. indicated 3.4 trillion cubic feet gas-in-place with significant upside potential.