Report of the President and CEO

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ACCOMPLISHMENTS

The year 2015 was still productive for PNOC EC even as global prices of oil and coal continue to decline, the company has continued to fulfill its mandate to explore, develop and produce indigenous sources of energy to contribute to energy self-sufficiency.

PNOC EC, as 100% equity holder and Operator, pursued its exploration program in Service Contract (SC) 37, an onshore block covering the City of Santiago and the Provinces of Isabela and Quirino. This is in line with the company’s aim of finding new petroleum reserves to replace the San Antonio Gas Field which has previously supplied gas for power generation and provided electricity to about 10,000 households in the area.  From March to May, 2015, PNOC EC safely and successfully drilled the Mangosteen 1 Well to a depth of 2,423 meters. It was the first well that PNOC EC drilled in SC 37 after about 25 years.  Based on the drilling results, Mangosteen-1 has been considered a gas discovery well.

To achieve operational excellence, PNOC EC established its Quality Management System (QMS) and is now ISO 9001:2008 certified. As the country’s exploration company, we are committed to improve the quality of our services to be at par with other players in the energy industry. Our QMS ensures that we always satisfy our stakeholders’ requirements, and with the improvement in the company’s internal processes, we have become more efficient in achieving our goals towards our vision of becoming the leading energy exploration company in the country.

Throughout all of our operations, Health, Safety, Security, and the Environment (HSSE) remain foremost among our core concerns. “Zero Accident” is not merely a slogan but a way of life for us. The prestigious Safety and Health Association of the Philippines, Energy Sector (SHAPES) bestowed awards for the Energy Supply Base and the Naga Coal Terminal in Cebu. Our businesses units have been recipients of various SHAPES Awards since 2009. Strict compliance with all HSSE policies permeates all of our operational and administrative undertakings.

PNOC EC also continueto be a business with a deep social conscience. Our Corporate Social Responsibility programs are focused on livelihood programs, healthcare and education in all of our host communities. We are also relentless in our Information, Education, and Communications (IEC) campaign for our Coal Operating Contract 122 (COC 122) in Isabela, to gain the needed endorsements from the local communities for the Isabela Coal Mine Development Project. Moreover, PNOC EC is also involved in IEC campaign together with the Malampaya Foundation Inc (MFI), the social arm of the SC38 Consortium, especially in Palawan where the company has existing petroleum blocks.

 

FINANCIAL PERFORMANCE

Total revenue for the year was at P4.72 billion, of which85% was contributed by our 10% equity stake in SC 38 Malampaya Gas-to-Power Project with Shell Philippines Exploration BV and Chevron Malampaya LLC. The net income is P1.30 billion, a 46% decrease from the 2014 level. This is essentially due to the decrease in revenues brought about by the lower SC38 gas and condensate sales. Likewise, Earnings Per Share (EPS) stood at P0.65, lower than the P1.21 level for 2014.

Net Cash stood at P2.73billion, 11% lower than the 2014 level ofP3.0 billion.  This is due to the settlement of obligations with suppliers and contractors to the drilling of SC37 as well as payment of dividends.

Dividends declared were at P1.50 billion.

 

FUTURE PLANS

PNOC EC will conduct post well evaluation work to determine the commerciality of the gas find as well as the way forward for the well. The Mangosteen-1 gas discovery has opened up a new petroleum play in the area and may provide impetus for renewed exploration in this onshore basin. Likewise, we will be looking at new upstream oil and gas exploration opportunities in frontier areas in the country as well as producing fields overseas

We will actively pursue the expansion of our international oil trading currently in Bangladesh and Indonesia and other countries in Asia. Through our trading counterparts, we will explore oil trading opportunities in other emerging markets.

In all aspects of our business, PNOC EC continues to build meaningful partnerships with all stakeholders in the fulfillment of our mandate and in pursuit of our vision of becoming the country’s leading energy exploration company.

 

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(page update February 15, 2017)