By Denise A. Valdez, Reporter
BASIC ENERGY Corp. on Friday said it is withdrawing from three geothermal and natural gas exploration projects.
In a disclosure, the listed energy company said it notified the Department of Energy (DoE) of its intention to back out of its service contracts in Mabini, Batangas and Mariveles, Bataan. These contracts were for the exploration and development of geothermal energy in those locations.
It also told the consortium led by Pitkin Petroleum Plc. of its withdrawal from the natural gas exploration project in inshore Mindoro province. Basic Energy has a 3% participating interest in this project.
The company provided different reasons in choosing to pull out of the contracts. For the Mabini service contract, which was first awarded to the company in 2008, the DoE extended its term for the project until 2021, provided that Basic Energy drills two geothermal wells during the extended period.
But the company said the cost of drilling the two wells would go beyond its contractual commitments. It added, “…vis-a-vis the low potential return for this project and the long gestation period thereof, the company was constrained to withdraw from this project.”
For the Mariveles project, Basic Energy has a pending request with the DoE to reconsider its termination of the company’s service contract. To recall, the DoE terminated Basic Energy’s contract in February 2018 due to the company’s difficulties in getting permits from related agencies and host communities.
The company now wants to withdraw its request for reconsideration, saying a review of a study on the project implies it “does not fully support a viable geothermal resource.”
“The withdrawal of the request for reconsideration of the earlier termination of this service contract will thus put into immediate effect the termination of the service contract,” it said.
Lastly, Basic Energy wants to exit the consortium studying natural gas in onshore Mindoro. It said it wants to back out of the consortium’s motion for reconsideration with the DoE over its terminated contract, which was suspended by the government due to failure to perform obligations.
“The withdrawal of the company from this service contract will entail the surrender to the consortium of the company’s 3% participating interest,” it said, without explaining its reason for pulling out of the project.
In 2018, Basic Energy President and Chief Executive Officer Oscar L. de Venecia, Jr. said the company was holding on to its geothermal exploration projects as it believes this type of energy is “the future.” He also noted then that geothermal exploration projects were more expensive than other energy resources, but Basic Energy found it still viable in the long run.
Aside from the mentioned projects, information on Basic Energy’s website say it also has geothermal explorations in east Mankayan, Benguet; Iriga, Camarines Sur; and west Bulusan, Sorsogon.
Shares in Basic Energy at the stock exchange closed flat on Friday at P0.224 each.