Philippine PNOC-EC to raise $500mln in share sale

By Karen Lema

MANILA (Reuters) - The Philippines' state oil and gas explorer aims to raise around $500 million from selling a near 60 percent stake before the year-end to fund domestic and overseas exploration projects and pay down debt, its chief said.

"We will be in the market with our new shares by the fourth quarter," PNOC-Exploration Corp. president Rafael del Pilar said in an interview on Thursday as part of the Reuters Energy Summit.

The government owns more than 99 percent of PNOC-Exploration (PNOC-EC) (PECB.PS: Quote, Profile, Research, Stock Buzz) through the Philippine National Oil Co., with the rest held by the public. Manila wants to sell 1.5 billion primary and 600 million secondary shares now held by the parent firm.

Del Pilar said PNOC Exploration is looking at exploring in West Africa, the Middle East, Brunei, East Timor and Indonesia.

It is also looking at various domestic oil and gas exploration projects, particularly in Mindoro and Palawan, both south of the capital, he added.

At present, a large portion of PNOC-EC's revenue goes into paying a $129 million loan it raised to fund the Malampaya gas project, in which it holds a 10 percent stake.

But del Pilar said: "We have substantially reduced that debt."

He said the company is racing to secure an investor to drill for oil in the Malampaya field by the end of this year, before declining gas pressure erodes its potential.

AUCTION

Del Pilar said PNOC-EC will hold an auction later this month for the $700-$800 million contract to drill at the offshore field, estimated to hold up to 41 million barrels in recoverable reserves.

At least seven foreign companies have expressed interest to develop the project with the government, but the number of potential bidders could drop should they decide to form joint ventures, del Pilar said.

"We want to level the playing field. We want to give them two months to study the data so that we will give anybody, even newcomers, sufficient time to make a decision," he said.

"They can get as much as 85 percent participation in the project."

He said PNOC-EC hoped to sign a final agreement in the last quarter of this year and begin production late in 2009 from Malampaya, a field in the South China Sea, southwest of Manila.

Malampaya is the Philippines' main source of natural gas, but operators Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and Chevron Corp. (CVX.N: Quote, Profile, Research, Stock Buzz) opted not to invest in oil production several years ago.  Continued...