Report of the President and CEO

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ACCOMPLISHMENTS

PNOC EC vigorously pursued its mandate to explore, develop, and produce indigenous sources of energy despite the decline in global prices of oil and coal.

The year 2016 saw PNOC EC continuing its explorations into promising new sites, with an eye toward expansion of its operations. Seismic data, covering a total of 4,630 kilometers were collected at Service Contract (SC) 59 in West Balabac, and in SC 74 in Linapacan.

By year-end, the Company successfully concluded an arduous three-year Free and Prior Informed Consent (FPIC) Process engaging 69 barangays in Zamboanga Sibugay Province. As a result, PNOC EC has been authorized by the indigenous leaders to conduct exploration activities at Coal Operating Contract 185 and 186.

The Company continues to fuel progress in the country by exploring new possibilities, all the while holding its operations up to the highest standards.

FINANCIAL PERFORMANCE

The Company focused on prudent financial management in 2016. Total Revenue was P3.89 billion, 18% lower than the 2015 level. Also, Net Profit was posted at P1.004 billion, 23% lower as compared to 2015. This is due to the continuous drop in the average price of SC 38 gas and condensate, and coal trading activities.

Net Cash stood at P4.068 billion which is 49% higher than the 2015 level. This is essentially due to lower capital expenditures.

Dividends declared for the year were at P520.52 million.

EMPLOYEE WELFARE

The health and safety of all employees, especially workers on-site, remains a top priority for PNOC EC. This year, no Lost Time Incident (LTI) was reported in any of our operations. This Zero-LTI achievement is a testament to the effectiveness of PNOC EC’s safety rules and policies. The Energy Supply Base (ESB) particularly exemplifies the discipline of our workers, having achieved Safety and Health Association of the Philippine Energy Sector (SHAPES) award.

COMMUNITY ENGAGEMENT

The Company seeks to promote the development and well-being of all the communities that host PNOC EC operations. This 2016, PNOC EC launched several livelihood programs in Zamboanga Sibugay and Isabela, alongside medical missions, tree-planting activities, and educational assistance.

This is an important year doe the Company’s Corporate Social Responsibility (CSR) efforts, as PNOC EC is releasing itsd first ever CSR Report, covering 20123 – 2015, together with this Annual Report. The Company has taken an important step in improving its CSR performance. By adopting the Global Reporting Initiative (GRI) framework for both reports, PNOC EC has also recognized that sustainability is an essential part of its business, and sustainability reporting the best way to enact it.

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(page update February 15, 2017)