By Myrna M. Velasco
It was a “get-engaged-then-don’t marry” kind of arrangement on the oil and gas exploration deal at the Recto Bank between the groups of business magnates Manuel V. Pangilinan and Dennis A. Uy.
The parties through a disclosure at the Philippine Stock Exchange (PSE) indicated that the cancellation of the business tie-up between PXP Energy Corporation of the Pangilinan group and Uy’s Dennison Holdings Corporation had been a “mutual” decision.
Pangilinan-led PXP Energy in particular noted that “the cancellation of the agreement does not affect the funding obligations of the company in respect of its various service contracts this year.”
In January this year, Uy made a P40 million down payment to his company’s shares subscription into PXP Energy, which should have been consummated for an aggregate acquisition value of P4.03 billion. The deal was first sealed October last year; and their separation was not seen coming just after five months.
PXP Energy stressed that “the company and the strategic investor mutually agreed to terminate the agreement effective March 29, 2019.” It has to be noted that in this joint venture deal, Uy intended to bring in China National Offshore Oil Corporation (CNOOC) into the triumvirate for the targeted oil and gas exploration off Palawan basin.
Relative to that move, the Pangilinan firm noted that it also “relinquished any and all preferential rights granted under the preferential rights agreement dated October 26, 2018 among Phoenix Petroleum Philippines Inc., PXP and the strategic investor following the termination of the agreement.”
In the deal then, Dennison Holdings opted to subscribe into 340,000,000 common shares of PXP Energy at P11.85 per share – but it was specified that the completion of the transaction shall be “subject to the fulfillment of certain conditions.”
PXP Energy, for its part, had gone up to the extent of asking the government’s imprimatur for the lifting of petroleum exploration moratorium at conflict areas within the West Philippine Sea – of which the Recto Bank has been labeled to be a part of.
The moratorium lifting was favorably endorsed by the Department of Energy (DOE), but it remains pending at the Department of Foreign Affairs (DFA) for its action.
This week, however, fresh round of legal skirmish erupted at the conflict areas because of the filing of a case by former government officials at the International Criminal Court.
In fact, for petroleum service areas that are considered to have diplomatic hurdles, the energy department had always been forthright in declaring that it is not keen on processing applications for petroleum exploration.