Davao City-based businessman Dennis Uy is infusing more than P4 billion, representing a 14.8-percent stake, in oil and gas exploration company PXP Energy Corp.
PXP Energy Corp., formerly Philex Petroleum Corp., said its board approved the subscription by Dennison Holdings Corp., a company led by Uy, to 340 million common shares at a price of P11.85 apiece, or a total of P4.029 billion.
PXP Energy said in a disclosure to the stock exchange the price represented a 20-percent discount to the 90-day volume weighted average price of the company’s shares. It is subject to the execution of a definitive subscription agreement.
The board also approved the subscription by Philex Mining Corp. to 260 million common shares of PXP under the same terms for P3.081 billion, subject to the execution of a definitive subscription agreement.
Total subscription of both Dennison and Philex in PXP reached P7.11 billion which the oil and gas firm plans to use to fund exploration projects.
“PXP intends to use the proceeds it expects to raise from the private placement to Dennison and Philex to fund its exploration activities and other oil assets within the Philippines and in Peru, and to repay its advances from Philex,” the company said.
Philex owns 19.76 percent of PXP prior to the new subscription. Other shareholders are Asia Link B.V., Social Security System, First Pacific Co. Ltd. Group and Two Rivers Pacific Holding Corp.
Dennison, a company beneficially owned and controlled by Uy, signed a non-binding term sheet with the company Thursday.
This is the first oil and gas exploration investment of Uy, whose investments include downstream oil and retail network, shipping, liquefied petroleum gas, food and education.
“Details of the transaction will be disclosed upon execution of the definitive subscription agreement,” PXP said.
After the subscription of Dennison and Philex to the foregoing shares, Dennison will have a total ownership interest in PXP of 14.78 percent while Philex will increase its stake to 25.91 percent.
PXP is an upstream oil and gas company that directly and indirectly owns oil and gas exploration and production assets in the Philippines and abroad.
PXP, through Forum Energy Ltd., a 78.98 percent owned subsidiary, is waiting for guidance from the government concerning Service Contract 72 (Recto Bank) and SC 75 (Northwest Palawan).
Both service contracts are under force majeure because of the territorial dispute with China.
“The company is mindful that the Malampaya gas resource, which supplies about 40 percent 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,” PXP said.