Malampaya Energy XP Pte. Ltd., a unit of Udenna Corp., said Monday it will embark on a drilling campaign to “rejuvenate” the Malampaya gas field in northwest Palawan once it completes the acquisition of the 45-percent stake of Shell Philippines Exploration B.V.
Malampaya Energy, in a statement, assured the acquisition of the Spex stake was funded by reputable financial institutions. The company issued the statement in response to the concerns raised by Senator Sherwin Gatchalian, who questioned the group’s technical, financial and legal capability to become the operator of the Malampaya gas project.
Gatchalian questioned the low capitalization of Malampaya Energy and the high debts of Udenna, which is “creating a lot of concern in the financial market.”
Malampaya Energy said the capitalization of the company is only one element of a capital structure and is not on its own a reflection of its ability to fund the deals.
“The acquisition of SPEX is 100-percent underwritten and funded via bank loans from our existing lenders. These full facility agreements have been provided to the relevant decision makers,” the company said.
It said the company would have over P10 billion in cash upon the Spex share sale completion.
“After the SPEX transaction is completed, Malampaya Energy will be focused on ensuring continued safe and reliable operations of the Malampaya asset, finalizing a bridging solution and the exploration program to augment Malampaya gas. DOE can attest to a number of exploration opportunities inside the SC38 license area and the consortium is going to mature these to the extent possible,” Malampaya Energy head Belinda Racela said.
The company said the Senate energy committee “looked at a very thin slice of information” and it is Malampaya Energy’s responsibility to work with the Department of Energy and PNOC-Exploration Corp. “to ensure all the facts are properly presented and the financing certainty and significant cash is known.”
Malampaya Energy said no drilling was taken to arrest the depletion of the Malampaya field by 2024. “It has been seven years since the last drilling activity. Malampaya Energy is all out to rejuvenate Malampaya through a drilling campaign once the transaction is completed,” it said.
“The country will surely be short of natural gas by 2022 and further delay will exacerbate the worsening electricity situation,” the company said.
Racela said the Malampaya field was declining as expected from a finite resource producing the past 20 years.
“There is enough to meet our current obligations to our customers but not for additional demand. To supply demand, exploration and development projects need to get underway ASAP. Drilling new wells is a challenging task that needs careful planning and excellent execution,” Racela said.