Shell may offer over 10% of shares in IPO

by Alena Mae S. Flores – December 09, 2015 at 11:35 pm

from Manila Standard

Pilipinas Shell Petroleum Corp. is studying the possibility of selling more than 10 percent of the company’s shares to the public once it firms up its initial public offering next year, its top executive said late Tuesday.

“The minimum required by law is 10 [percent of total shares] but we will see if 10 [percent] is good or we should do more. It’s not yet final,” Pilipinas Shell country chairman Ed Chua told reporters.

Shell’s planned IPO aims to comply with the Oil Deregulation Law of 1998, which required oil refiners to list at least 10 percent of their shares in the local bourse.

Shell’s IPO has been delayed for more than a decade because of unfavorable market conditions, low oil prices and regulatory issues in the previous years.

“We’re planning for it [IPO] next year. Somewhere middle of next year but because of the elections we’ll have to see the timing… The Philippines is a good place to invest but of course it depends on those from outside the country whether they share the same view,” Chua said.

He said the company would assess the environment before conducting the IPO.

Shell plans to use the proceeds from the planned IPO to fund “growth projects,” which Chua declined to identify.

He added Shell was still reviewing the company’s financial performance in the wake of the slump in world oil prices.

Crude prices hovered at $50 per barrel at the start of 2015 before plunging to below $40 recently, resulting in inventory losses for oil companies like Shell.

“Last year that happened to us, we had $110 at the start of 2014 then by the end of 2014 it went down to about $60 so $50 per barrel,” Chua said.

“How can I offer a good IPO if we would incur losses. The stock market was good last year but now it is not doing so well, so that’s the factors that we are considering,” he said.

Chua, however, is more optimistic of profits this year.

Shell, a unit of Royal Dutch/Shell Group, owns a 110,000-barrels-a-day refinery in Batangas, the country’s second after Petron Corp.’s facility in Bataan province.

Shell recently raised concerns on the decision of the Commission on Audit to impose impose P53.14 billion in taxes on the contractors of the Malampaya gas-to-power project in northwest Palawan.

Shell was also forced to shut down its oil depot in Pandacan to comply with a Supreme Court ruling directing the oil companies to move out of the Manila residential district.

“We want to settle amicably. We are also looking at all the legal remedies and obviously, the consortium will go through the legal remedies,” Shell Philippines Exploration B.V. managing director Sebastian Quiniones earlier said.

Quiniones said talks were ongoing between the Malampaya consortium and the Energy Department on how to settle the issue.