PNOC to fully privatize its oil, gas exploration arm

After selling a majority stake in its geothermal subsidiary, the Philippine National Oil Co. (PNOC) will now start the full privatization of its oil and gas exploration arm, PNOC-Exploration Corp. (PNOC-EC).

PNOC President Pedro Aquino Jr. told reporters that after PNOC-Energy Development Corp. (PNOC-EDC), the next in their list to be fully-privatized is PNOC-EC.

“We are in the process now of selecting a financial advisor to package the sale of PNOC-EC.  We will privatize the whole company,” he said.

PNOC had successfully sold 53 percent of its geothermal subsidiary, PNOC-EDC.  It intends to sell another 40 percent of its stake by the last quarter of the year.

Aquino said if possible, they expect to sell PNOC-EC by yearend or first quarter of next year.

He said the sale of PNOC-EC would include its 10 percent share in the consortium that is operating the $4.5-billion Malampaya deep water gas to power project in Northwest Palawan.

Since it involves sale of a company that deals with exploration of natural resources, Aquino said they would need to determine if the privatization of PNOC-EC will not encroach “national patrimony” issue.

According to Aquino, there are at least six firms that have signified interest to become the financial advisor for the sale of the PNOC-EC.

Aquino said they expect to discuss the selection process for the financial advisor in the next board meeting of PNOC next week.

The PNOC chief said included in the financial advisor’s task is to undergo the valuation of the oil and gas exploration firm.

“There may be some appreciation on the value of PNOC-EC assets.  We would need to know the new valuation of its assets,” he said.

Previously, PNOC-EC had raised the possibility of issuing an additional 38.3 percent of its shares through a secondary offering at the stock market this year to raise funds for its projects in the pipeline.

At present, PNOC-EC’s 1.7 percent is already listed at the country’s stock market.

Since 2006, PNOC-EC had been experiencing a drop in earnings when its total sales revenue dropped by seven percent to P6.2 billion from P6.7 billion in 2005.

The full recovery of PNOC EC’s investments in the Malampaya Project substantially reduced its cost recovery entitlement from P4.1 billion in 2005 to P2.4 billion in 2006.