PXP Energy Surrenders Linapacan Block Development Due to Lack of Drillable Prospects

Pangilinan-led PXP Energy Corp. has officially surrendered its service contract (SC) for the exploration and development of the Linapacan block in offshore northwest Palawan to the Philippine government.

Details of the Surrender

In a disclosure to the Philippine Stock Exchange, PXP Energy announced that the Department of Energy (DOE) approved the Notice of Surrender of SC 74 submitted by PXP Energy and its consortium partners, The Philodrill Corp. and Philippine National Oil Company-Exploration Corp. (PNOC-EC). PXP Energy held a 70% operating interest in SC 74.

“This will not have a material impact on PXP’s 2024 financial statements,” the company stated.

The decision to surrender the service contract was due to the absence of “drillable prospects” in the contract area, which spans 4,268 square kilometers in the shallow waters of northwest Palawan.

Background of SC 74

The SC 74 (Linapacan block) was awarded in September 2013 to Pitkin and its consortium partner Philodrill through the Philippine Energy Contracting Round 4, with Pitkin holding a 70% operating interest and Philodrill a 30% participating interest.

In June 2015, Philodrill transferred 5% of its participating interest to PNOC-EC. Later, in February 2016, Pitkin transferred its share and operatorship of SC 74 to PXP Energy, formerly Philex Petroleum Corp., a move approved by the DOE in April 2016.

DOE’s Response

Energy Secretary Raphael Lotilla confirmed the DOE’s approval of the relinquishment of SC 74, conditional on the settlement of a $55,000 scholarship commitment under the DOE’s Energy Iskolar ng Bayan Program. Lotilla also directed the contractors to abandon the contract area and restore any sites affected by petroleum operations.

Financial Impact

In the first quarter of 2024, PXP Energy reported a net loss of P2.61 million, an improvement from the P6.08 million net loss in the same period the previous year.

Other Interests

Apart from SC 74, PXP Energy holds several other interests:

• 100% operating interest in North Recto Bank
• 50% operating interest in SC 75
• 40% non-operating interest in the Sulu Sea Basin
• 79.13% controlling interest in Forum Energy Ltd., which has a 70% operating interest in SC 72 (Recto Bank)