PXP unit launches case vs Australia’s Karoon Energy
PXP Energy Corp. said on Tuesday that its subisidary Pitkin Petroleum Z-380 SRL had filed a dispute against the Karoon Energy Ltd. for breaching its obligations related to the drilling of a well in the Peru Block Z-38.
The block is situated in the Tumbes Basin offshore Northwest Peru.
In its disclosure, Manuel V. Pangilinan-led PXP said that Karoon Energy’s unit KEI Sucursal del Peru, the operator of the block, was supposed to drill a second well during the third exploration phase, as stated in its contract.
If the well is not drilled during this time, KEI must continue drilling activities until the fourth period of the exploration phase.
KEI is also required to pay Pitkin’s participating interest of 25% in all expenses incurred until the second well is completed.
“KEI is in breach of its obligations to Pitkin by not entering into the [fourth exploration phase],” PXP said.
According to KEI’s April 23 letter, it “will not take any action to extend the term of the contract or any exploration phase, including by seeking to enter into the fourth period of the exploration phase.”
“This suggests that KEI will not comply with the guarantee obligation,” PXP said.
KEI also stated in its letter that: “if Pitkin wishes to exercise its rights by entering into the [fourth exploration phase], KEI would exercise its rights to withdraw from the Joint Operating Agreement.”
This implies that KEI will not comply with its second well obligation, PXP said.
The listed Filipino firm is asking for more than $100 million in damages for KEI’s failure to comply with its obligations.
Pitkin Petroleum Ltd., a 53.43%-owned subsidiary of PXP, holds a 25% participating interest in Peru Block Z-38 located in offshore Peru.
On Tuesday, shares in PXP Energy declined by 6.82% or 56 centavos to finish at P7.65 apiece.
PXP is a unit of Philex Mining Corp., which in turn is one of the Philippine units of Hong Kong-based First Pacific Co. Ltd, the others being Metro Pacific Investments Corp. and PLDT, Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Angelica Y. Yang
