FORUM ENERGY PLC IS A UK INCORPORATED OIL & GAS EXPLORATION AND PRODUCTION COMPANY WITH A FOCUS ON THE PHILIPPINES.   

The company's primary focus is on developing its current production and exploration licences.

SC72   
The principal asset of the company is a 70% interest in Service Contract 72 (SC72), an 8,800-square kilometre (Km2) offshore petroleum licence situated west of Palawan Island in the West Philippine Sea.   In 2006, results from a 250 Km2 3D seismic survey over the licence area indicated a mean volume of 3.4 trillion cubic feet (TCF) gas-in-place (GIP) with significant upside potential. It is a primary objective of the company to establish the commerciality of the hydrocarbons within SC72.   

In March 2011, a total of 565 Km2 of 3D seismic data was acquired over the Sampaguita Gas Field and 2,202 Line-Km of 2D seismic data was acquired to further define additional leads identified within the SC72 acreage and to possibly upgrade existing leads to prospects. This work, which satisfied Forum's obligations with the Philippine Department of Energy under the first sub-phase of the SC72 contract, was primarily designed to provide a more comprehensive evaluation of the SC72 property and to identify potential sites for appraisal wells.   

SC72 seismic interpretation and resources update was completed in April 2012, which showed an improvement in the resources previously known and supported the case to proceed with the drilling programme.   

During 2012, the increased territorial disputes between the Philippine and Chinese governments resulted in the company being unable to obtain permission to deploy vessels to perform the planned drilling programme. Recognising that these matters were beyond the control of the company, in January 2013 the Philippine Department of Energy granted an extension to August 2015 for the company to complete its second sub-phase work obligations which are expected to cost in excess of US$50 million.   

Galoc
Our largest producing asset is the Galoc oil field which accounts for 76% of our total income (2012: 81%). We plan to continue participating in the continued development of the field to maximise our revenue stream.   

HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

  • Unable to commence SC72 drilling programme due to the on-going territorial dispute between the Philippine and Chinese governments. An extension has been granted to August 2015 to complete the second sub‑phase obligations of drilling wells on SC72   
  • Galoc Phase II completed in November 2013, with the drilling of two additional wells, which resulted in increased production, at the Galoc Oil field from an average 4,720 barrels of oil per day (bopd) to an average daily rate of 9,800 bopd since Phase II commenced   
  • Continued technical review of the SC40 onshore area to determine any potential drilling prospects   
FINANCIAL AND CORPORATE HIGHLIGHTS
  • Revenues of US$4.4 million in 2013 (2012: US$4.5 million)  
  • Gross Profit of US$1.5 million in 2013 (2012: US$0.9 million)  
  • Administrative expense reduced to US$2.5 million in 2013; including payments of US$0.5 million restructuring costs in 2013 (2012 - total administrative expense of US$2.8 million)  
  • Impairment charge of US$1.3 million in 2013 (2012: US$25.4 million), mainly relating to the Libertad Field   
  • Net Loss attributable to owners of the parent of US$2.9 million (2012: US$26.3 million after impairment)   
  • Working capital of US$0.3 million at year end (2012: US$6.1 million - excluding the Philex loan facility)   
  • Available funds of US$2.8 million under the Philex loan facility as at 31 December 2013 (2012: Nil)   
  • Capital spend on Galoc Phase II of US$4.2 million (2012: US$0.7 million) which will improve our future production and revenue stream   
  • Increased loan facility from Philex Group to US$18 million and extended repayment date to 24 November 2016   


ASSET SUMMARY

SC72 (70% interest)
The SC72 licence was awarded on 15 February 2010. It covers an area of 8,800 Km2 and contains the Sampaguita Gas Discovery which has the potential to contain In-Place Contingent Resources of 2.6 TCF of gas plus another In-Place Prospective Resources totalling 5.5 TCF based on a resource assessment performed in 2012 by Weatherford Petroleum Consultants, an independent qualified competent person. The results of the study were used to define the location of two wells, to be named Sampaguita-4 and Sampaguita-5. The drilling of two wells is part of the work programme of the company for the second sub-phase of SC72, which must be completed by 14 August 2015, having been granted an extension by the Philippine Department of Energy.   

Galoc (2.27% interest)
Production from the Galoc development reached 1.72 million barrels gross in 2013 (1.48 million barrels gross in 2012) and is expected to produce 2.9 million barrels in 2014. The company has a 2.27% interest in the field and received US$2.1 million (US$2.5 million in 2012) after deduction of share of operating costs from crude sales from the field during the year. The second phase of development was completed in November 2013 with the drilling of two additional production wells, which increased production from 4,720 gross bopd to an average 9,800 bopd from the second phase commencing. The company secured US$2.58 million of financing from BNP Paribas in 2012 to help fund its share of development costs for this phase of the project.   

SC40 (66.67% interest)
SC40 contains the producing Libertad gas field and the Maya field as well as several other prospects and leads. On 30 January 2009, the company entered into a Gas Sale & Purchase Agreement (GSPA) with Desco, Inc., for the development of the Libertad gas field for power generation. On 3 February 2012, commercial production at the Libertad Field commenced and, as at 31 December 2013, the field has produced 151 million cubic feet of gas gross. However these revenues are not material to the group's cash flow. Having received a resource assessment from Petroleum Geo-Services Asia Pacific Pte Ltd (PGS), an independent competent person, on 19 February 2013 the investment in SC40 was impaired in 2012 by US$25.4 million to US$3.25 million. An important factor in this assessment was that third parties had experienced a dry hole while drilling within the Tañon Straits which significantly reduced the likelihood of commercially viable hydrocarbon deposit in the offshore part of SC40. Further technical studies were undertaken in onshore prospects in Cebu and will continue in 2014 to determine whether an exploration well will be drilled.

Latest resource estimates, Executive Chairman's statement, Report of the Directors, Corporate Governance statement, Independent auditors' report and financial statements and notes are all contained within the full report, click to download: Forum Energy plc Annual Report and Accounts 2013
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