Corporate News

Forum Energy discloses plans to delist shares from UK exchange

Posted on April 21, 2015

UK-based Forum Energy Plc has bared plans to delist its shares from the London Stock Exchange (LSE) after the Philippines’ Department of Energy granted a force majeure on one of its petroleum contracts that affected its share prices.

Majority shareholder Philex Petroleum Corp. may buy out the shares of the minority, Forum Energy said in its disclosure to the foreign bourse.

Forum Energy said its Board of Directors noted recent movements in the company’s share prices.

“Following the company’s announcement on 2 March 2015 in relation to the decision by the Philippine Department of Energy to grant a force majeure on Service Contract (SC) 72, the Board is considering applying for the cancellation of admission to AIM of the company’s ordinary shares...,” the disclosure read.

The AIM -- one of the four capital markets of the LSE -- caters to smaller growing companies that need access to capital. The move to cancel the shares’ admission at AIM would require a shareholder resolution at the company’s annual general meeting scheduled in June, the company noted.

Forum Energy said it “has been exploring options to allow minority shareholders the ability to trade out of their shares prior to the cancellation taking effect.”

The company said it was unable to conduct a tender offer for its shares due to negative reserves that prompted to explore other alternatives.

“It is currently in discussions with Philex Petroleum… regarding Philex potentially making an offer to minority shareholders to acquire their shares for cash prior to the cancellation…” the disclosure read.

This would give the shareholders an option to sell their shares to Philex Petroleum instead of retaining their stake in the unlisted company.

Philex Petroleum -- together with its subsidiary FEC Resources, Inc. -- has a 60.57% interest in Forum Energy.

“Philex is currently considering whether such an offer will be made and there is no certainty that such an offer will be made,” Forum Energy said. “However, Philex has indicated to the company that, were such an offer to be made, Philex would offer minority shareholders cash consideration of 20 pence per share.”

Forum Energy clarified that the announcement does not constitute a firm intention to make an offer.

It added that Philex Petroleum is required to make a final announcement on the possible offer by May 15.

“A further announcement will be made in due course, as appropriate,” it added.

Forum Energy has a 70% stake in SC 72, which is located in the Reed Bank that is part of the contested waters of the South China Sea.

The disputed body of water is being subject to a United Nations arbitration process between the Republic of the Philippines and the People’s Republic of China.

As a result, the second sub-phase of the petroleum contract -- which involves the drilling of two appraisal wells -- was put on hold until further notice.

Actual drilling at the Sampaguita gas field were originally targeted to commence in the first half of 2016.

This recent development further stalls the exploration activity within the Reed Bank, which was estimated to hold 165 million barrels of oil and 3.5 trillion cubic feet of gas.

Forum Energy in July last year secured a one-year extension for the exploration, allowing the company to drill the wells until Aug. 15, 2016.

The SC 72 was granted to Forum Energy in February 2010. Under the work program, the contractors have an obligation to drill the wells by August 2011. This was extended to Aug. 2015 to avoid further inflaming a row with China.

Shares of Philex Petroleum ended at P2 apiece yesterday, up five centavos or 2.56% from P1.95 apiece on Friday last week.

First Pacific Co. Ltd., which owns more than a quarter of Philippine Long Distance Telephone Co. (PLDT), is the single biggest shareholder of Philex Petroleum’s parent, Philex Mining Corp.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. -- Claire-Ann Marie C. Feliciano