By Victor V. Saulon

SHARES in PXP Energy Corp. plunged by nearly 19% on Monday, the first trading day of the week after it announced that the deal calling for Davao City businessman Dennis A. Uy to invest in the listed company fell through.

The oil and gas exploration company, which has a contract to exploit an area in the disputed West Philippine Sea, was the day’s biggest loser as it ended at P9.96 per share, or down by P2.32 from its previous close.

“This was due to the termination of the investment agreement. The deal was supposedly for P4.03 billion, or the issuance of 340 million shares for 11.85 each,” said Luis A. Limlingan, business development head at Regina Capital Development Corp., when asked to comment on PXP Energy’s share fall.

On Friday, PXP Energy Corp. said that the subscription agreement it had signed with Mr. Uy’s Dennison Holdings Corp. had been terminated by the two parties effective on March 29.

On the termination date, the company said all rights of Dennison to subscribe to the common shares of the Pangilinan-led company, and any of the latter’s obligation to issue those shares to the investor are terminated “without any residual rights of any kind remaining” with Mr. Uy’s holding firm.

Accordingly, all other rights of PXP Energy under the agreement are terminated, it said, including the right to receive payment of the remaining balance of the subscription price.

At one point during trading on Monday, PXP Energy reached P9.20 per share. Its 52-week low was at P9.80 per share.

Mr. Limlingan said since PXP Energy was the target acquisition, the terminated deal would have a bigger impact on the company, than on Phoenix Petroleum Philippines, Inc., which closed lower by 0.16% at P12.20 per share on Monday.

In a trading note, RCBC Securities, Inc.’s Fiorenzo de Jesus said the reason for PXP Energy’s stock slump was its disclosure that the share purchase deal with Mr. Uy’s holding firm fell through.

Officials of both PXP Energy and Phoenix Petroleum did not immediately respond when ask to comment on the reason for their decision to mutually terminate the deal.

The termination came after Mr. Uy in January this year paid P40.29 million or the 1% downpayment for Dennison’s subscription to PXP Energy’s shares.

The payment followed the forging of an amended subscription agreement between the two parties on Dec. 26, 2018, wherein they agreed to reschedule and accelerate the full payment of Dennison’s subscription to not later than March 31, 2019. The amendment also called for Dennison to pay the downpayment on or before Jan. 7, 2019.

The subscription agreement was announced by PXP Energy on Oct. 26, 2018. In the same month, Phoenix Petroleum granted preferential rights to PXP Energy to participate and acquire up to a 49% equity in the former’s liquefied natural gas (LNG) project under subsidiary Tanglawan Philippine LNG, Inc.

In the event Dennison fails to pay the entire subscription price by March 31, the entire amount of the downpayment will be forfeited in favor of Mr. Pangilinan’s company and the subscription agreement will be terminated at the option of PXP Energy.

After the subscription to the shares and full payment of the subscription price, Dennison will be entitled to at least one seat in the PXP Energy board, as well as to nominate the board’s vice-chairman. Mr. Uy’s firm is also entitled to all other rights of a shareholder.

PXP Energy directly and indirectly owns oil and gas exploration and production assets in the Philippines, and indirectly owns an exploration asset located in offshore Peru.

The amendment came after PXP Energy disclosed on Dec. 21 that Forum (GSEC 101) Ltd., or Forum GSEC, had sent a letter of request on the same date to the Department of Energy (DoE) to lift the force majeure imposed on Service Contract (SC) 72 on Recto Bank.

Forum Energy Ltd., in which PXP Energy holds a direct and indirect interest of 78.98%, has a 70% participating interest in SC 72 located in Northwest Palawan, through its wholly owned subsidiary Forum GSEC. PXP Energy has a total economic interest of 53.1% in SC 72.

The DoE placed SC 72 under force majeure on March 2, 2015 because the contract area falls within the area that was at that time the subject of an arbitration process with China.