Minority shareholders seek higher valuation of stake in Forum Energy

MANILA, Philippines — Minority shareholders of FEC Resources, a subsidiary of PXP Energy, are seeking a significantly higher valuation of the company’s 6.8 percent stake in Forum Energy Ltd. should FEC decide to sell its shares in Forum Energy.

The brewing controversy comes amid a potential for Forum Energy — which holds a 70 percent interest in Service Contract 72 — to finally move forward with the exploration of the West Philippine Sea following the signing of a framework joint exploration agreement between the Philippines and China.

In an e-mail to The STAR over the weekend, FEC shareholder Matt O’ Malley said retail and institutional shareholders of Calgary headquartered FEC Resources are threatening to go to court in Canada if they don’t get a valuation that is “tied directly to the private placement recently completed by Dennis Uy in PXP Energy.”

Uy, the Davao-based businessmen, recently invested in PXP Energy, the Philippine listed upstream oil and gas company chaired by tycoon Manuel V. Pangilinan.

“We believe a conservative, current state valuation is $40 million for our 6.8 percent of Forum Energy. It is important to note that we believe in PXP Energy and their leadership team and will accept the same in PXP Energy shares,” said Malley, managing member of Looking Glass Investments.

He claims that their shareholder group now consists of 39 individuals and institutions and represents over 52 million shares.

The tension, however, is between the shareholders of FEC Resources and management and is unlikely to affect Uy’s private placement in PXP Energy, industry sources said.

Last month, PXP Energy announced that Uy is investing in the upstream oil and gas company through a private placement of shares.

Uy, through his Dennison Holdings Corp., placed a subscription amounting to 340 million shares at a price of P11.85 per share or P4.03 billion in total.

The price per share represents a 20 percent discount to the 90-day volume weighted average price of the PXP shares.

This gives Dennison a 14.78 percent interest in PXP Energy, while Philex Mining will raise its shareholding to 25.91 percent from 19.76 percent.

This came ahead of the signing of a framework agreement between the Philippines and China on joint exploration in the West Philippine Sea during President Xi Jinping’s State Visit last week.

Pangilinan expressed hopes the signed framework agreement would translate to positive developments for Forum Energy.

“I do hope that this could lead to some positive steps that we can take in respect of the work program that the group has presented to the previous government with regard to the exploration and development work,” Pangilinan said last week at Meralco’s Technology & Innovation Summit 2018.

FEC Resources, in an official announcement, said FEC has not been provided with a copy of the memorandum of understanding for joint exploration and “to the best of FEC’s knowledge, the situation regarding SC 72 remains unchanged and the force majeure with respect to exploration of SC 72 remains in place.”

In December last year, FEC Resources agreed to the sale of one million Forum Energy shares to its parent company PXP Energy in order to obtain the necessary working capital.

This reduced FEC’s interest in Forum Energy to 6.8 percent from 8.03 percent previously.