Force majeure granted to PXP exploration contracts
PXP Energy Corp. said on Monday that the Department of Energy (DoE) granted the declaration of force majeure for two service contracts separately operated by the company and its subsidiary in northwest Palawan.
Pangilinan-led PXP Energy told the stock exchange that it received the DoE’s response dated Oct. 11, 2022 to the company’s request dated April 11, 2022 regarding the suspension of exploration activities under Service Contract (SC) 75.
It also said that Forum (GSEC 101) Ltd., as operator of SC 72, also received a similar response from the department.
SC 72 covering Recto Bank has a total area of 8,800 square kilometers. Within this block is the Sampaguita gas discovery, which is estimated to contain about 2.6 trillion cubic feet of contingent gas resources. It is operated by PXP Energy’s subsidiary Forum (GSEC 101) with a 70% participating interest.
Exploration activities in the areas covered by the two service contracts had been suspended after the DoE’s directive to put on hold “all exploration activities for SC 75 and SC 72 until such time that the [Security, Justice and Peace Coordinating Cluster or SJPCC] has issued the necessary clearance to proceed.”
SJPCC is composed of the Department of the Interior and Local Government, Department of Foreign Affairs, Department of National Defense, Department of Justice, and the Office of the Presidential Adviser on the Peace Process with the National Security Council as secretariat.
For SC 75, the DoE said that total expenses amounting to about $5.18 million that were incurred as a result of the DoE directive will be part of the recoverable costs, subject to the department’s audit.
The department also said that the suspension nullified all the work done since the previous lifting of force majeure on Oct. 14, 2020.
“Hence, SC 75 shall, in addition to the period [from April 6, 2022 until the force majeure’s lifting], be entitled to an extension of the exploration period corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the [DoE’s] suspension order,” it said.
For SC 72, the corresponding expenses incurred as a result of the DoE directive were placed at around $8.603 million.
PXP Energy holds a 50% interest in SC 75 located in northwest Palawan. Forum Energy Ltd., in which PXP Energy holds a direct and indirect interest of 79.13%, has a 70% participating interest in SC 72, also in northwest Palawan, through its wholly-owned subsidiary Forum (GSEC 101).
PXP Energy has a total economic interest of 54.36% in SC 72.
On Friday, Energy Undersecretary Giovanni Carlo J. Bacordo, said during the Norway-Philippines Maritime and Energy Conference that companies must submit a work program to regulators before any exploration activities can resume in the West Philippine Sea.
On Monday, shares in the company closed 14.71% higher or P0.75 to finish at P5.85 apiece. — A.E.O. Jose