PXP Energy to acquire 49% stake in LNG hub

PXP Energy Corp., a unit of Philex Mining Corp., will acquire up to a 49-percent interest in the planned liquefied natural gas project of Phoenix Petroleum Philippines Inc. as part of the subscription agreement with Dennison Holdings Corp.

Phoenix and Dennison are companies owned by Davao-based businessman Dennis Uy. Phoenix has teamed up with China National Offshore Oil Corp. to put up the country’s first LNG hub. 

PXP Energy disclosed to the Philippine Stock Exchange the parties signed the subscription agreement Friday, with Dennison buying 340 million common shares of PXP Energy at P11.85 per share, or for a total of P4.03 billion. 

“In addition, as a substantial consideration... Dennison shall cause its affiliate or related party, Phoenix, subject to its board approval and consent of CNOOC, to grant certain preferential rights to the company... to acquire up to 49 percent of the equity... of Phoenix Petroleum and/or its affiliates... ,” PXP Energy said.

Tanglawan Philippines LNG Inc., joint venture company of Phoenix and CNOOC, has submitted a technical and financial proposal to develop the country’s LNG hub. Tanglawan is supposed to be the first company to submit a proposal to the Department of Energy for an LNG project but it was asked to resubmit due to some documentary concerns related to their Securities and Exchange Commission submission.

Phoenix signed an agreement in June with CNOOC Gas and Power Group Co. Ltd., a subsidiary of CNOOC, China’s largest LNG importer and terminal operator, to study, plan and develop an LNG receiving terminal project in the Philippines.

PXP Energy said the subscription price represents a discount of 20 percent to the 90-day volume weighted average price of the company’s shares. 

It said the subscription price would be payable in two tranches and following the subscription to the shares, Dennison would be entitled to at least one seat in the board and nominate the vice chairman of the board.

PXP Energy also disclosed that it signed and executed a subscription agreement in relation to the company’s subscription to 260 million common shares of PXP Energy at P11.85 per share or an aggregate amount of P3.081 billion.

Philex Mining said it would fund the said subscription from a combination of proceeds from PXP Energy’s repayment of Philex Mining’s advances and cash.

Dennison will now have a total ownership interest of 14.78 percent in PXP 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 on Service Contract 72 (Recto Bank) and SC 75 (Northwest Palawan). 

Both service contracts are covered by force majeure because of the territorial dispute with China.

Topics: PXP Energy Corp. , Philex Mining Corp. , liquefied natural gas , Phoenix Petroleum Philippines Inc. , Dennison Holdings Corp.
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