PXP trims losses as oil lifting brings revenues

PXP ENERGY Corp. trimmed its net loss in the first quarter to P2.7 million from the P4.3-million loss to parent firm equity holders as it recorded higher profit from its Galoc operations while reducing overhead costs.

In a disclosure on Thursday, PXP said its core net loss during the first three months of 2022 was also lower at P1.4 million or a quarter of the P5.6 million recorded a year ago.

Petroleum revenues were recorded during the period at P18.8 million from none previously. These came from one completed lifting of 144,897 barrels at $78.1 per barrel in Service Contract (SC) 14C-1 Galoc.

SC 14 is in offshore northwest Palawan and spans an area of 720 square kilometers. Block C-1 Galoc covers 164 square kilometers and contains the producing Galoc oil field development.

PXP said cost and expenses during the quarter rose by 13.2% to P20.4 million because of higher petroleum production costs in SC14C-1 at P9.4 million. Overhead expenses were down 38.9% to P11 million.

The listed firm’s quarterly financial performance precedes developments in April, including its receipt on April 6 of a directive from the Department of Energy (DoE) to put on hold any exploration activities for SC 72 and 75 until such time that an interagency panel has issued the necessary clearance to proceed.

SC 72, which is within Recto Bank, is located in the West Philippine Sea, west of Palawan island and southwest of the Malampaya gas field. SC 75 covers an area of 6,160 square kilometers in the offshore northwest Palawan basin.

PXP and its subsidiary Forum (GSEC 101) Ltd. have put on hold activities for the two petroleum exploration service contracts as directed by the Energy department until the issuance of the necessary clearance.

On April 8, PXP and Forum advised the DoE that in compliance with the agency’s directive, they “have suspended (or caused the suspension of) all activities in the West Philippine Sea beginning April 6, 2022, in the process, incurring substantial stand-by and other costs.”

In the same letter, they also advised the DoE that they were prepared to resume operations immediately provided they receive written confirmation from the DoE by April 10 that they can resume their exploration activities.

On April 11, they told the department that without their receipt of the DoE advice, they had stopped all exploration activities, and that they had been constrained to terminate their agreements with suppliers and incurred substantial liabilities for termination costs and penalties.

They also affirmed their declaration of force majeure under SC 72 and SC 75 effective April 6 “arising from what appeared as an indefinite suspension” by the DoE of the exploration activities under the two service contracts.

“Each of PXP and Forum will continue to coordinate with the Government on the resumption of activities in both SC 75 and SC 72,” PXP said in its disclosure.

It added that the group would continue to pursue exploration work with respect to its other projects in the Philippines, including SC 40 in the Visayan basin and SC 74 in northwest Palawan.

SC 72 had been under force majeure since 15 Dec. 15, 2014 while SC 75 had been under the same since Dec. 27, 2015, due to the West Philippine Sea maritime dispute.

In October 2020, Forum said that it had received a letter from the DoE that the force majeure for SC 72 and SC 75 had been lifted effective immediately and that exploration activities were to resume.

At the stock exchange, shares in PXP remained unchanged at P4.74 apiece on Thursday. —