Udenna unit ‘financially ready’ to operate Malampaya project
UDENNA Corp. subsidiary Malampaya Energy XP Pte Ltd. said it is financially prepared to operate the Malampaya project as its pending acquisition of shares in the gas field’s operator Shell Philippines Exploration B.V. (SPEx) was fully underwritten and funded through bank loans.
In an e-mailed statement on Monday, the entity also said that when it takes control of SPEx’s stake in the offshore project, it will have more than P10 billion in cash.
The unit of businessman Dennis A. Uy’s holding firm said it is “ready to operate the Malampaya field.”
The statement comes days after Senator Sherwin T. Gatchalian, chairman of the Senate energy committee, pointed out that Malampaya Energy had a paid-up capital of $100 or around P5,000, citing figures from the Singapore Accounting and Corporate Regulatory Authority. The lawmaker added that it would be impossible to run a rig with such an amount.
Malampaya Energy said its bid to acquire the SPEx shares is “supported by international reputable financial institutions who saw the latter’s capability to meet its obligations and to deliver value.”
“The acquisition of [the SPEx shares] is 100% underwritten and funded via bank loans from our existing lenders. These full facility agreements have been provided to the relevant decision makers,” the statement, which was sent by Udenna unit UC38 LLC President Belinda C. Racela to reporters, read.
Malampaya Energy said its capitalization shows only one element of its capital structure and does not reflect the firm’s ability to fund deals. It did not specify, however, whether this was in response to Mr. Gatchalian’s earlier claims about its paid-up capital.
It added that the Senate energy committee “has unfortunately looked at a very thin slice of information” and that it is Malampaya Energy’s responsibility to work with the Department of Energy (DoE) and Philippine National Oil Co. Exploration Corp. (PNOCEC) “to ensure all the facts are properly presented and the financing certainty and significant cash is known.”
No drilling activity has taken place in the gas field for seven years, the Udenna subsidiary said.
“Malampaya Energy is all out to rejuvenate Malampaya through a drilling campaign once the transaction is completed,” it added.
Reserves from the offshore gas field will be completely used up by the first half of 2027, based on Energy department estimates.
UC38 LLC’s Ms. Racela said Service Contract (SC) 38 consortium is working with the DoE to address the decline in reserves.
SC 38, which covers the gas field, is made up of three consortium members: UC38 LLC (which holds 45%), operator SPEx (45%), and state-led PNOC-EC (10%).
“The more pressing issue is the Malampaya field decline and its impact on consumers... We implore everyone’s support, including the Senate’s, to focus on this issue,” she told BusinessWorld in an e-mail on Monday.
“Malampaya Energy is willing to take the risk of exploring and developing more within SC 38 and augment Malampaya supply,” she added.
Two months ago, Dutch oil and energy company Shell Petroleum N.V. announced that it had signed an agreement with Malampaya Energy for the sale of SPEx for $380 million, with additional payments of up to $80 million between 2022 to 2024 depending on asset performance and commodity prices.
The DoE earlier said that the Shell-Udenna deal is a “private transaction” but added that the department will be evaluating the legal, financial and technical aspects of the agreement.
DoE Secretary Alfonso G. Cusi previously stated that the sale is not yet final until it is deemed compliant with the government’s requirements. —