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Philex May Spin Off Gas Field Comparable to Malampaya

June 3 (Bloomberg) -- Philex Mining Corp., the Philippines’ biggest miner, may spin off hydrocarbon assets, including 70 percent of a gas field that could cut the number of power failures in the nation.

The “initial indications” are that the undeveloped field is similar in size to Royal Dutch Shell Plc.’s Malampaya gas field, Philex Chairman Manuel Pangilinan said in an interview in Hong Kong yesterday. “The plan is really to spin off the hydrocarbon assets into a Philex energy company away from the mining business,” he said.

The Philippines needs new power sources to avert power failures resulting from under-investment. Some parts of the country experienced hours without electricity this summer as an El Nino-induced dry spell idled hydropower plants. Shares in Aboitiz Power Corp., a hydroelectric power generator, more than doubled this year as higher electricity prices boosted its profit 19-fold.

Malampaya, off the western island of Palawan, is the Southeast Asian nation’s biggest gas field. It supplies power plants that comprise 18 percent of the country’s generating capacity, according to the energy department. Philex’s Forum Energy Plc unit owns 70 percent of Service Contract 72, which covers the Sampaguita gas field also off Palawan.

Forum’s shares more than doubled in September 2006 after the company said seismic testing of a natural-gas field showed potential reserves of up to 20 trillion cubic feet.

‘Unlocking Its Value’

“Philex is unlocking its value under Pangilinan’s management,” said Ron Rodrigo, research head at DBP-Daiwa SB Capital Markets in Manila. “With the lifespan of its main mining asset already limited, Philex is now reinventing itself to become an even bigger player.”

Shares in Philex rose 6.1 percent, the biggest gain since Nov. 19, to 13 pesos at the close of trading at noon in Manila.

Separately, Philex plans to start developing its Silangan copper-gold mine in Surigao del Sur province as early as next year, Pangilinan said.

The Silangan mine may provide Philex with similar reserves of copper and gold as its Padcal site in Benguet province did 50 years ago, he said. The company is also exploring whether Padcal operations can extend past 2017, when it is projected to expire.

The company will spend $600 million to develop Silangan and plans to close Padcal in 2014, President Ernesto Villaluna said in April last year.

Meanwhile, Pangilinan said Metro Pacific Investments Corp., where he is also chairman, may be able to work together with San Miguel Corp. to develop the airport in the former Clark Air Base north of Manila.

“We might announce something soon,” he said, declining to elaborate.

To contact the reporters on this story: Frank Longid in Hong Kong at flongid@bloomberg.net; Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editor responsible for this story: Francisco Alcuaz Jr. at falcuaz@bloomberg.net

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