analysts’ briefing
TRANSCRIPT
Analysts’ Briefing March 3, 2020
2019 Financial and
Operating Results
FY 2019 Highlights
Core Net Income of P156 million for 2019
Core net income of P116 million for the fourth quarter of 2019, 100% higher
than core net income in third quarter of P58 million.
Increasing tonnage and metal prices sustained the positive momentum of
both revenue and core net income on a quarter by quarter basis
Core EBITDA reached P1.664 billion for 2019
Reported Net Loss of P648 million for 2019 due to non-cash impairment
provisions
On going search for strategic partners for Silangan Project
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Production Performance
• Mining Operations: Highest metal output
for Q4 2019 due to continued operational
efficiencies
Q1 2019 Q2 2019 Q3 2019 Q4 2019+/- (Q4 vs
Q3)FY 2019 FY 2018 +/-
Tonnes Milled (‘000) 1,832 1,973 2,134 2,174 2% 8,113 8,517 -5%
Production:
Gold – ozs 10,493 13,182 14,450 14,939 4% 53,064 61,977 -14%
Copper – lbs (‘000) 5,727 6,280 6,852 6,878 0.4% 25,737 26,575 -3%
Recovery:
Gold 74% 78% 78% 78% 0% 77% 76% 1%
Copper 81% 82% 81% 81% 0% 81% 78% 4%
Ore Grade:
Gold – gms/dmt 0.239 0.266 0.272 0.275 1% 0.264 0.298 -11%
Copper - % 0.175 0.176 0.179 0.177 -1% 0.177 0.181 -2%
Average Realized Prices:
Gold – (US$/oz) 1,304 1,329 1,445 1,466 2% 1,388 1,294 7%
Copper – (US$/lb) 2.96 2.66 2.57 2.75 7% 2.72 2.92 -7%
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4
Financial Results Summary
• Operating Income: Continuous improvement in quarterly production and higher
gold prices
• Core Net Income: Q4 core net income of P116 M,100% higher than core net
income in Q3 of P58 M, and increased core net income from P39 M for the 9M
2019 to P156 M for FY 2019.
(in Php Million) Q1 2019 Q2 2019 Q3 2019 Q4 2019+/- (Q4 vs
Q3)FY 2019 FY 2018 +/-
Gross Revenues 1,613 1,752 1,943 2,091 8% 7,399 8,314 -11%
Smelting Charges 137 139 165 169 2% 610 674 -9%
Net Revenues 1,476 1,613 1,777 1,923 8% 6,790 7,640 -11%
Costs and Expenses 1,895 1,567 1,677 1,778 6% 6,917 6,821 1%
Operating Income (Loss) (419) 46 101 144 43% (127) 820 -115%
Other Income (Charges) 624 143 (2) (1,642) 0% (876) (136) 544%
Net Income (Loss) 206 185 48 (1,087) 0% (648) 608 -207%
Core Net Income (Loss) (112) 93 58 116 100% 156 600 -74%
Core EBITDA 217 443 475 529 11% 1,664 2,493 -33%
Margins:
EBITDA Margin 13% 25% 24% 25% -1% 22% 30% -8%
Net Income Margin 13% 11% 2% -52% -9% -9% 7% -16%
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Capital Expenditures
• 2019 Capex amounted to P1.745 billion
• Silangan Project: Mainly for the completion of the DFS covering the
Boyongan deposit.
• On going search for Silangan strategic partners
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• Total Assets: Silangan Project
accounts for 59% of total assets
• Short-Term Debt: Additional loan
availments for Silangan’s DFS
completion and preparatory works
for the development phase
• The improvement of tonnage,
metal outputs and sustained
metal prices in 2019 is a jumpstart
for a positive outlook for 2020 and
will provide a window for the
Company to undertake debt
reduction program from 2020
onwards.
(in Php Million) Dec-19 Dec-18
Cash & Cash Equivalents 796 871
Receivables & Others 2,125 3,582
Total Current Assets 2,921 4,453
Property, Plant & Equipment 3,185 5,404
Deferred Exploration Costs 26,616 25,448
Others 5,177 5,406
Total Assets 37,899 40,712
Short-Term Debt 2,532 2,156
Others 2,397 4,104
Total Current Liabilities 4,929 6,260
Bonds Payable 7,743 7,333
Deferred Tax Liabilities & Others 2,258 3,419
Total Liabilities 14,930 17,012
Total Equity 22,969 23,699
Balance Sheet
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PXP Energy Corporation
Financial Highlights and
Operational Updates
Financial Highlights – Profit and Loss
8 03 March 2020
• 33% decrease in gross revenue due to:
Shut-in of SC 14 Nido and Matinloc wells; Lower average crude price.
• 14% decrease in cost and expenses due to:
Lower depletion in Galoc and
Plug and Abandonment of SC14 Nido and Matinloc
• 208 % increase in net loss due to:
Other charges of P179 million related to impairment in Galoc due to
the lower net recoverable value of the asset.
(in PhP millions)
Dec 31,
2019
Dec 31,
2018
% Inc
(Dec)
Gross revenue ₱ 72 ₱ 108 -33%
Cost and expenses 191 221 -14%
Loss from operations (118) (113) 4%
Other income (charges) - net (179) 17 -1152%
Reported net income (loss) ₱ (297) ₱ (96) 208%
Financial Highlights – Financial Position
9 03 March 2020
As at Dec 31 ,
2019
As at Dec 31 ,
2018
% Inc
(Dec)
Cash & cash equivalents ₱ 246 ₱ 342 -28.2%
Receivables and other CA 57 86 -34.5%
Current assets 303 429 -29.4%
Deferred exploration costs & other NCA 6,590 6,818 -3.4%
Tota l assets ₱ 6 ,892 ₱ 7 ,247 -4 .9%
As at Dec 31 ,
2019
As at Dec 31 ,
2018
% Inc
(Dec)
Due to affiliate ₱ 0 ₱ 2,125 -100.0%
Accounts payable & others 64 34 86.1%
Current liabilities 64 2,160 -97.0% Deferred income tax liability 1,111 1,113 -0.2%
Others 207 192 8.1%
Non-current liabilities 1,318 1,305 1.0%
Total l iabi l ities 1 ,382 3 ,465 -60 .1% Capital stock 1,960 1,960 0.0%
Additional Paid-in Capital 2,817 2,821 -
Subscription receivable (184) (2,311) -
Deficit (1,644) (1,374) 19.7%
Others 205 276 -25.7%
Non-controlling interest 2,357 2,410 -2.2%
Total equity 5,510 3,782 45.7%
Tota l Liab i l ities and SHE ₱ 6 ,892 ₱ 7 ,247 -4 .9%
ASSETS ( in PHP mil l ions)
LIABILITIES AND STO CKHO LDERS’ EQUITY
(in PHP millions)
Operations Update
10 03 March 2020
INCLUDE AREA 7 SULU SEA ONLY
SC 14C2
SC 6A
Cadlao (SC 6B)
SC 6B
SC 14C1
SC 14B
SC 14A
TUMBES BASIN, OFFSHORE PERU
SC 72 Recto Bank (Forum 70%)
Under Force Majeure (FM) since 15 December 2014
Sub-Phase (SP) 2 with remaining 20 months upon lifting of FM. Minimum work commitment is the drilling of 2 wells
The Sampaguita Field Re-evaluation is ongoing with VGS Consultancy as contractor. The scope of work includes 3D seismic interpretation of the newly reprocessed PSDM data, update of volume calculation, petrophysics study, economic analysis, and well drilling strategies.
In accordance with the Memorandum of Understanding (MOU) on cooperation on oil and gas development signed in November 2018, the Philippines and China recently created an inter-governmental Steering Committee to be composed of government officials from both countries. Under the MOU, the Steering Committee is tasked to create Working Group(s) on the entrepreneurial, technical, and commercial aspects of the planned joint exploration
The Company looks forward to the immediate creation of such working groups for the Company’s SC 72 Recto Bank and SC 75 NW Palawan blocks, which are both currently under FM.
SC 75 NW Palawan (PXP 50%)
Under FM since 27 December 2015
SP 2 with 18 months term will start upon lifting of FM. Minimum work commitment is the acquisition of 1,000 sq. km of 3D seismic data
SC 40 North Cebu (Forum 66.67%)
Land Gravity Survey is ongoing in parts of Bogo City (Maya area) and Daanbantayan town (Dalingding area) until March 2020. The survey aims to further delineate the carbonate bodies detected in the said areas by the initial 3D gravity modelling exercise
Operations Update 1/4
11 03 March 2020
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SC 74 Linapacan Block (PXP 70%)
Ongoing palynology and radiolarian age dating and geochemical analysis of potential source rocks with Core Laboratories Malaysia as contractor.
Ongoing Phase 2 Quantitative Interpretation (QI) of Linapacan & West Linapacan areas. It aims to better define the turbidite channels within the Linapacan and Galoc Clastic Unit (GCU) reservoir sections using seismic and well data.
PXP’s request for a one (1) year extension of the current SP 3 from 13 December 2019 to 13 December 2020 remains pending with the DOE.
Peru Block Z-38 (Pitkin 25%)
The Marina-1X well was spudded on 26 January 2020 in 362m water depth. It reached a Total Depth (TD) of 3,021.2m TVD (2,889.1m MD) on 15 February 2020.
Mudlogging and LWD results from the Primary Target in the Tumbes Formation indicated that the well encountered thin water-bearing sands with no oil and some gas shows which are not considered to be commercial.
Marina‐1X provided a large amount of valuable data on the geological setting for this region of the Tumbes Basin. Several potential reservoir sequences were encountered in the well, unfortunately these sections were water wet and provide no prospectivity at this location. The well results will now be thoroughly analysed, but no further drilling is planned in Block Z-38 for this year.
Well P&A was completed on 20 February 2020. Stena Forth Rig demobilization commenced on 25 February 2020.
03 March 2020
Operations Update 2/4
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SC 6A Octon Block (PXP 5.56% / Forum 5.56%) On 18 November 2019, the DOE approved the work program for 2020 which consists of the following:
G&G studies in support of establishing a final well location and well design to test the hydrocarbon potential of the Malajon-Salvacion-Saddle Rock anticlinorium; and
G&G work to identify additional resources at the Octon South and other opportunities immediately around the Octon Field to support its development.
SC 6B Bonita/Cadlao Block (Forum 2.4546%) Farm-In Agreement (FIA), Deed of Assignment and transfer of operatorship from Philodrill to Manta Oil
Company Ltd. (Manta) was approved by the DOE on 17 October 2019.
Under the FIA, Manta will carry the JV up to First Oil to earn 70% interest. Forum’s interest will be reduced from 8.182% to 2.4546% upon completion of the farm-in.
A plan of development (POD) for Cadlao Field will be submitted to the DOE around June 2020. It includes the drilling of 2 production wells. The development of the East Cadlao prospect could form part of a Phase 2 development, depending on whether Manta’s evaluation would later show if the prospect contains commercially viable recoverable resources.
PCECP Area 7 Sulu Sea (PXP 40%) The Area 7 Sulu Sea was among the Pre-Determined Areas (PDAs) offered by the DOE for bidding under the
Philippine Conventional Energy Contracting Program (PCECP). It has an area of 358,000 hectares.
The Consortium of Philodrill (60% interest and operator) and PXP (40% interest) was the only bidder for that area. The evaluation of the bid is currently on hold due to pending settlement of matters with the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).
03 March 2020
Operations Update 3/4
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SC 14A Nido (Forum 8.468%)
P&A of Nido Wells Seven (7) production wells were successfully plugged and abandoned (P&A) from April to May 2019: Nido - 3
out of 5 wells, Matinloc - 3 out of 3 wells, North Matinloc - 1 out of 1 well
Two (2) remaining Nido wells, A1 and A2, were only partially abandoned due to difficulties encountered during operations. P&A of these wells is being planned in April 2020.
Turnover of Production Platforms to AFP The JV turned over the Nido and Matinloc platforms to the DOE last December 2019.
In turn, DOE and DND-AFP have agreed to sign a Deed of Donation, to turn over the facilities to the AFP for defense use.
SC 14C1 Galoc (Forum 2.27575%) Continued production in Galoc Field. Cumulative production from October 2008 to January 2019 stood at
22.15 million barrels of oil.
Galoc Field’s actual production for 2019 of 746,189 barrels is 23% below forecast of 965,483 barrels, mainly due to Galoc-4 well not in production since January 2019 following a multi-rate well test. The well’s immediate reinstatement is a priority program by the Consortium for 2020.
Production forecast for 2020 is around 628,987 barrels.
Two (2) liftings are scheduled for 2020 (March and September) - vs. three liftings in 2019.
SC 14C2 West Linapacan (Forum 9.103%) The SC 14C-2 JV partners have completed the review of the Sale and Purchase Agreement and the Farm-out
Agreement and have forwarded the same to Desert Rose for final review which will then issue execution copies for the partners’ signature. Desert Rose has earlier indicated interest to farm-in to the block.
03 March 2020
Operations Update 4/4