August 22, 2014

Salient points of TAPET investors’ briefing

We attended yesterday an investors’ briefing by Trans Asia Petroleum Corp (TAPET) and the following are the salient points of the briefing:

Listing at P4.60/sh - The company is set to list on the Exchange by way of introduction on 28 August. Initial market capitalization is estimated at P1.15b, equivalent to 250m common shares priced at P4.60/sh.

Lock-up period - Shareholders with ownership of more than 10% are subjected to 365-day lock-up period.

TAPET participating in oil and gas contracts - The company has interests in four oil and gas service contracts (SC), namely: (a) a 6.82% gross interest in SC 55 West Palawan (through its 69.35% share in its subsidiary, Palawan55 Exploration & Production Corporation (Palawan55)), (b) 6.67% interest in SC 51 East Visayas, (c) 6.00% in SC 69 Camotes Sea, and (d) a 2.334% in SC 6 Block A and 14.063% in SC 6 Block B. the The company also has the option to take 10% participating interest in SC52. The company is currently planning to undertake 10% participating interest in SC50.

Possible rights offering - Based on company data, the company has total cash of P18.4m as of end-March 2014. The company said it might do a rights offering in 4Q14 to finance is various capital investments, including payment for its participating interest in SC 50 and SC 52.

SC 55 - With regard to SC 55, the company said BHP Billiton, which withdrew its participation from the project had already paid Otto Energy Limited an initial US$3m in cash. The remaining US$24.5m will only be paid upon the drilling of SC 55's Hawkeye prospect. Total drilling cost is estimated at US$48m. The Department of Energy (DoE) has granted an extension of the drilling of the exploratory well until 23 December. Otto is currently looking for potential partners for the drilling of the Hawkete prospect.

Should Otto withdraw, Palawan55 will be given 100% ownership of SC 55. TAPET will then have the option to seek for another extension from the DoE and allow Palawan55 the time to find a new partner. However, if Otto fails to drill the Hawkeye prospect and does not withdraw, the DoE may take the SC 55 back and TAPET will lose its participation in the contract. – WealthSec