PXP Energy Reports Unaudited Financial and Operating Results for 9M2018

PXP Energy Corp. (PSE: PXP) has reported 9M 2018 Consolidated Net Loss Attributable to Equity Holders of the Parent Company at PhP31.4 million
(9M 2017: PhP23 million). Reported consolidated net loss at P49.1 million (9M 2017: PhP34.3 million).

Consolidated petroleum revenues 38.3% higher at PhP106.1 million (9M 2017: PhP76.7 million) resulting from the 38% improvement in crude oil price and the 1% increase in volume.

Consolidated cost and expenses 43.6% higher at PhP173.7 million (9M 2017: PhP121 million) brought about by higher depletion cost in Galoc and the decommissioning of Tara and Libro wells in Service Contract 14; Group overhead flat year-on-year.

Net loss of PhP49.1 million (9M 2017: PhP34.3 million) due to higher depletion cost and decommissioning, other charge of PhP11.9 million, and a provision for income tax of PhP1.6 million; offset by a Forex gain of PhP30 million.

On January 10, 2018, Karoon Gas Australia Ltd announced that it has executed a Farm-in Agreement with Tullow Peru Ltd, a wholly owned subsidiary of Tullow Oil plc, wherein Tullow will acquire a 35% interest in the Peru Block Z-38 under the following terms:

  1. Fund 43.75% of the cost of the first exploration well, capped at US$27.5 million (at 100%), beyond which Tullow will pay its 35% share.
  2. Pay US$2 million to Karoon, upon completion of the first exploration well referred to above, with a further US$7 million payable upon declaration of commercial discovery and submission of a development plan to Perupetro.

The Agreement remains subject to the satisfaction of certain licensing conditions and regulatory approvals in Peru. Following completion of the farm-out well, Tullow will have an option to assume operatorship of the block.

Following the farm-in of Tullow, the resulting participating interests in Z-38 are as follows:

  • Karoon: from 70% to 40%
  • Tullow: from 0% to 35%
  • Pitkin Petroleum Ltd: from 25% to 25%

On September 21, 2018, Karoon announced that it has been positively impacted by recent changes to the hydrocarbon law in Peru, which has resulted in the force majeure being lifted from Block Z-38. Karoon added that it has been actively working with the Peruvian authorities with this outcome in mind, and considers these changes as a step forward for exploration in Peru.

Karoon and its new farm-in partner (subject to regulatory approval), Tullow are moving forward to drill the Marina-1X exploration well during early 2020.

Pitkin, a 53.43% owned subsidiary, is carried in the cost of the Marina-1, plus another future well under a separate Farm-In Agreement that Pitkin signed with Karoon in 2009.

PXP, through Forum Energy Limited, a 78.98% owned subsidiary, will take guidance from the Philippine Government in respect of any future activity in SC 72 and SC 75. The Company is mindful that the Malampaya gas resource, which supplies about 40% of Luzon’s power requirements, could be exhausted within the next decade; in that light, resumption of exploration in SC 72 is of national interest. The Company, therefore, remains hopeful that the force majeure imposed on SC 72 and SC 75 will be lifted by the Department of Energy soon for the Company to be able to resume exploration works in these SCs.

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