Industry

Dennis Uy's Energy Company on the Defensive Re: Purchase of Shell Stake in Malampaya

Market cap is just an element of a capital structure, it said.
IMAGE Udenna Corp. / Shell
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The energy subsidiary of Dennis Uy’s Udenna Corp defended its acquisition of the shares of Shell Philippines Exploration B.V. (SPEx) in the Malampaya gas field venture. Officials of Malampaya Energy XP Pte. said that the Senate Energy Committee failed to look at the bigger picture and focused on a “very thin slice of information” when it questioned the company’s financing capacity. 

The Udenna Corp unit was reacting to Senator Sherwin Gatchalian, who last week questioned the company’s financial capacity given that figures from the Singapore Accounting and Corporate Regulatory Authority showed that Malampaya Energy XP only has a paid-up capital of $100 (about P5,000). Gatchalian said this means that the company could not possibly operate a rig with that amount. 

“Basically that is the capital, will it qualify? Will this be declared as financially qualified?” the senator asked Energy Secretary Alfonso G. Cusi during a hearing by the Senate Committee on Energy, which Gatchalian chairs.

But Malampaya Energy XP clarified that its market capitalization is just “one element of a capital structure and is not on its own a reflection of the company’s ability to fund the deals.”

“The acquisition of SPEX is 100-percent underwritten and funded via bank loans from our existing lenders. These full facility agreements have been provided to the relevant decision makers,” the company said in a statement. “The acquisition is supported by international reputable financial institutions who saw Malampaya Energy’s capability to meet its obligations and to deliver value.”

Upon the share sale completion, the company will have “over P10 billion of cash,” it added.

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“The Energy committee has unfortunately looked at a very thin slice of information and it is Malampaya Energy’s responsibility to work with DOE [Department of Energy] and PNOC-EC to ensure all the facts are properly presented and the financing certainty and significant cash is known,” the statement read. 

The company also said that “no drilling has been taken to arrest the depletion of the Malampaya field.” 

“It has been seven years since the last drilling activity. Malampaya Energy is all out to rejuvenate Malampaya through a drilling campaign once the transaction is completed,” it said.

The company added that the Philippines will be short of natural gas by 2022, and that delaying its entry into Malampaya will “exacerbate the worsening electricity situation.”

Udenna Corp first acquired a 45-percent stake in Malampaya from Chevron Malampaya LLC in March last year. Months later, in September 2020, Udenna expressed interest in purchasing Shell’s 45-percent stake in the gas field. The government, through the state-owned Philippine National Oil Company Exploration Corporation (PNOC-EC), owns the remaining 10 percent.

The Malampaya gas field is one of the most important energy projects in the country, supplying an estimated 30 percent of energy in the Philippines.

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