THE Department of Energy (DOE) has granted force majeure to the work commitments of Palawan55 Exploration and Production Corporation under service contract (SC) 55 due to operational and financial risks cited by the subsidiary of ACE Enexor (ENEX).
“The DOE has granted the request of the company’s subsidiary, Palawan55 Exploration and Production Corporation, for Force Majeure relief due to the operational and financial risks associated with conducting drilling operations in the Service Contract [SC] 55 contract area in the West Philippine Sea,” ENEX, the oil and gas exploration unit of ACEN Corp., said Tuesday.
Pursuant to Section 26.01 of SC 55, the DOE found basis to place SC 55 under force majeure from December 6, 2022 until such time that a clearance to proceed with exploration activities in the West Philippine Sea has been issued by the government.
The DOE earlier placed SC 55 under force majeure in May 2021 upon request of the SC 55 consortium due to the adverse impact of the Covid-19 pandemic.
In June last year, ACEN announced the cancellation of the property-for-share swap deal with ENEX due to unfavorable market conditions.
The supposed deal involved the issuance of 339,076,058 ENEX shares to ACEN worth P3.4 billion in exchange for ACEN’s interest in Palawan55 Exploration and Production Corp., Bulacan Power Generation Corp. (BPGC), CIP II Power Corp., Ingrid3 Power Corp. (Ingrid3) and One Subic Power Generation Corp. (OSPGC).
Palawan55 is the operator of SC 55. BPGC owns and operates a 52-MW diesel plant in Norzagaray, Bulacan. Likewise, CIP II owns a diesel plant (21MW) in Bacnotan, La Union. OSPGC, meanwhile, leases 116MW diesel plant in Subic.
Ingrid3 is a development special purpose vehicle for a potential gas power generation project.
The deal would have required a follow-on offering and a stock rights offering, which will be challenging to execute under current market conditions. “During the past few months, the management teams of ACEN and ENEX have exerted diligent and good faith efforts in planning and mapping out the implementation of the various steps needed to comply with the foregoing requirements. However, this has proven to be very challenging given the economic uncertainties due to the continuing pandemic and exacerbated by the Ukraine-Russia conflict,” it said.