MVP, Dennis Uy team up for LNG venture

By Danessa Rivera – October 27, 2018 -12:00am
from The Philippines Star

MANILA, Philippines — A teamup is brewing for top businessmen Manuel V. Pangilinan and Dennis Uy in the liquefied natural gas (LNG) sector.

Pangilinan-led PXP Energy Corp. has finalized a deal with Dennison Holdings Corp., Uy’s holding firm, allowing the former to acquire up to 49 percent in Phoenix Petroleum Philippines Corp.’s joint venture with China National Offshore Oil Corp. (CNOOC) for LNG development in exchange for shares.

In a disclosure to the Philippine Stock Exchange yesterday, PXP Energy said it signed a subscription agreement with Dennison Holdings for 340 million shares priced at P11.85 per share.

The subscription amount totals P4.03 billion, which shall be payable in two tranches, PXP Energy said.

The subscription price represents a discount of 20 percent to the 90-day volume weighted average price (VWAP) of PXP Energy’s shares, the upstream oil and gas firm said.

The deal also contains a provision where Dennison will grant “preferential rights” to PXP Energy or any of its affiliate companies to acquire up to 49 percent interest in the planned joint venture of Phoenix Petroleum and CNOOC.

This is subject to the approval of Phoenix Petroleum board and consent of CNOOC.

PXP Energy said the provision is “a substantial consideration for the company agreeing to the subscription by Dennison.”

The tandem of Phoenix Petroleum and CNOOC is eyeing the construction, development, and operation of a LNG terminal and gas-fired power plant in the Philippines.

Last June, Uy’s Phoenix Petroleum entered into a memorandum of understanding with China’s CNOOC Gas and Power Group Co. Ltd. to study, plan and develop an integrated LNG project in the country.

The Department of Energy (DOE) earlier announced its target to start constructing the country’s LNG hub by mid-2019 to safeguard against the anticipated contract expiration of the Malampaya gas facility by 2024.

The facility is also targeted to become an LNG hub for Asia, complementing those in Japan and Singapore.

With the subscription, Dennison will secure at least one board seat in PXP Energy and will be entitled to nominate the vice chairman of the board.

Meanwhile, Philex Mining Corp., another Pangilinan-led firm, also signed a subscription agreement for 260 million common shares of PXP Energy at P11.85 per share or a total P3.081 billion in total, which is also payable in two tranches.

In a separate disclosure, Philex said it would fund the private placement “from a combination of proceeds from PXP’s repayment of Philex’s advances and cash.”

The subscription will raise Philex’s shareholding in PXP Energy from 19.76 percent to 25.91 percent. Meanwhile, Dennison will own a 14.78 percent interest in the company.

Other investors include Asia Link B.V. (16.73 percent), Social Security System (13.73 percent), First Pacific Co. Ltd. (8.23 percent), Two Rivers Pacific Holding Corp. (7.72 percent), with the balance publicly held.

PXP Energy said the total subscription of 600 million shares with Dennison and Philex would be issued out of its unissued capital stock of 5.1 billion.

“PXP intends to use the proceeds from the private placement shares to fund its exploration activities and other oil assets within the Philippines and in Peru, and to repay advances from Philex,” it said.