Friday, 6 August 2010

Gov’t may pursue broadband infra project via public-private partnership

Manila Bulletin

The Aquino government can pursue the construction of a broadband infrastructure through a public-private partnership that will ensure ownership by a private company while government provides subsidy to guarantee its viability.

The construction of a broadband facility is as essential to economic development as much constructing roads and bridges is and should be pushed by the new government amid past controversies faced by the broadband project.

"The private sector should own it, but the government should provide subsidies for its viability," according to a key official of the Commission on Information and Communications Technology (CICT).

One of the greatest challenges in broadband infrastructure is how to provide broadband service to rural areas where population density is low which makes the facility non-financially viable. However, such facility will play an important part in rural development as it provides limitless information supply to agricultural activities, mining, rural government, and other industries contributing to economic development.

Because of the threat of financial failure, government needs to provide subsidies for the operation of the facility. And yet private sector ownership of the infrastructure will guarantee operational efficiency and long term sustainability.

The presence of broadband infrastructure has already become an economic indicator on how progressive an economy is even as the facility is believed to empower citizens and consumers.

Broadband connection speed is also an important factor in this infrastructure where even the United States has been left behind by Japan, France, and nine other countries in speed terms. According to the Organization for Economic Cooperation and Development (OECD), Japan posted as of October 2007 the highest broadband download speed at 93.7 megabits per second (MBPS), followed by France, 44.2 MBPS; Korea, 43.3 MPBS while the US only had 8.9 MBPS.

According to an Educause report, a government policy of unbundling costs in broadband service is a key to reducing prices a “countries without unbundling policies exceed prices in countries with unbundling policies.”

There has been an increased use of Wireless Internet Service Provider (WISP) to provide for broadband service in rural areas. One such successful wireless project is found in Scotland under the Tegola project. However, WISPs have the disadvantage of non-continuous connection in mountainous and heavily-foliated areas. Other related disadvantages of WISPs are security threats, lower speeds of up to 50 times slower, less stable network due to interference, and weather problems.

Similarly, satellite internet is an alternative in broadband data transmission. However, it has been known to be the most expensive option.

Prior to its cancellation on corruption charges, the government has committed to putting up the National Broadband Network in partnership with China’s ZTE for the original cost of $329.5 million.

Aboitiz Power core net income surges 590% to P12.9 billion

Manila Bulletin

With the significant revenue stream coming from the power generation segment of its business, publicly-listed Aboitiz Power Corporation logged 590 percent core net income growth to P12.9 billion in the first half from the last year’s P1.9 billion.


Chief Justice Corona is new Asean Law Association chair

Manila Bulletin

Supreme Court Chief Justice Renato C. Corona will be inducted as new Chairman of the Asean Law Association of the Philippines and the ALA Philippine National Committee at a Testimonial Dinner Reception on Friday, August 6, 2010, 6:00pm at the InterContinental Manila. in Makati City
ALA Philippines President, Atty. Avelino V. Cruz, announced that Chief Justices and ranking Justices of the respective Supreme Courts of the Asean member nations, Brunei, Indonesia, Malaysia, Singapore and Thailand, have arrived for the occasion. A courtesy call at 2:00 pm on Chief Justice Corona by foreign guests as well as principal officers of the Association will precede the ceremony.

The Asean Law Association marked its 30th year Anniversary last February 2010 in appropriate ceremonies with ALA ’s founding President, Senator Edgardo J. Angara, as guest of honor.

Through the years, ALA Philippines has published a nine-volume ASEAN Comparative Law Series in 1980 and launched the ALA Newsletter (1982), and published the ASEAN Law Journal (1982), the Proceedings of the 1987 ASEAN Women Judges Conference, and the 1997 book entitled “Doing Business in the ASEAN.”

Gov’t eyes P240 billion from VAT next year

Manila Bulletin

The Department of Finance (DoF) has set a bigger collection target of P240.7 billion from the 12 percent value added tax (VAT) next year, up 15 percent from its P209.7 billion revised target set this year.

Finance department data showed the P31 billion expansion would come from increased consumer spending on the back of higher gross domestic product (GDP) growth target of between 7 percent and 8 percent.

The DoF originally pegged a lower consumption tax goal this year at P199.2 billion due to expected continued slump in the economy as a spill-over of the global financial meltdown.

But the government now expects the economy to grow by around 5 percent to 6 percent this year from the original target of 2.6 percent to 3.6 percent.

The government also maintained this year and next year's inflation targets of 3.5 percent to 5.5 percent and 3 percent to 5 percent, respectively

Last year’s VAT collection was short of its full-year target of P195.98 billion.

Republic Act 9337 or the Expanded Value-Added Tax Act, passed in 2005 as part of the Arroyo administration’s efforts to put its fiscal house in order, raised the rate from 10 percent to 12 percent and increased the corporate income tax rate from 32 to 35 percent.

Former Finance Secretary Margarito B. Teves had urged the Aquino administration to raise the VAT rate from 12 percent to 15 percent to narrow the record budget deficit program of P325 billion.

But President Aquino said he will not raise VAT just to shore up government revenues, citing he instead plans to run after tax evaders to boost state revenue and cut the budget deficit.

Initial estimates from the DoF showed the increase in VAT would generate an ultimate windfall of about P73.92 billion yearly if VAT rate is increased gradually from the current 12 percent to 15 percent in the next five years.

The increased revenues are expected to be realized even if the corporate income tax of 30 percent is reduced to a final 25 percent by 2013.

An increase in VAT to 13 percent next year with the reduction of corporate income tax to 28 percent would bring in fresh revenues of P11.33 billion.

Thursday, 5 August 2010

Keppel takes over Subic Shipyard for P2.8b

Jeremiah F. de Guzman
Manila Standard

Listed Keppel Philippines Marine Inc. said Tuesday it acquired an additional 41.6 percent of Subic Shipyard and Engineering Inc. for P2.8 billion to boost its stake in the company to 79.1 percent.

Keppel said in a disclosure to the Philippine Stock Exchange that the P2.8-billion investment was equivalent to about 58 percent Keppel Marine’s total book value and 48 percent of total asset.

Keppel bought the stakes from Magsaysay Shipping Corp., International Container Terminal Services Inc., the government, SM Development Corp. and Insular Life Assurance Co.

“The Philippine sellers have decided to dispose of their interest in [Subic Shipyard] to concentrate on their core business,” Keppel Marine said.

Subic Shipyard serves ocean going vessels of up to 340,000 dead- weight tons. It provides repair, conversion and building services, tank cleaning, internal tank coating as well as voyage repairs for internal tanks using ultra-high pressure.

It also undertakes steel fabrication for land based and marine or offshore structures.

Ayala Land goes to China

by Jenniffer B. Austria
Manila Standard

Ayala Land Inc., the country’s biggest property company, will develop a 9.78-hectare property in Tianjin Eco-City in China for $220 million into a residential complex, its first in the world’s largest market.

Ayala Land said in a disclosure to the stock exchange that wholly-owned unit Regent Wise Investments Ltd. signed an equity joint venture agreement with Sino-Singapore Tianjin Eco-City Investments and Development Co. Ltd. to build the project.

The project is located in Tianjin Eco-City, a 3,000-hectare joint venture between the Chinese and Singaporean governments that aims to showcase the future direction of urban planning and sustainable development.

Ayala Land will build more than 1,100 units within a 19-tower residential complex located at the gateway of the Eco-City’s start-up area. The project will be among the first developments that visitors will see when they enter the Eco-City.

AECOM, one of the US’ top design consultants, will design the project, which will be constructed in two phases.

The first phase comprising 11 towers will start construction by the end of 2010 and is expected to be completed within 20 months.

Ayala Land and SSTEC are also exploring the possibility of collaborating on additional joint ventures within the Eco-City.

“We are pleased to have been invited to participate as a partner in this groundbreaking new development. The Tianjin Eco-City is a public-private partnership that will show to the world what can be achieved when the best developers from the region collaborate with two very progressive and forward-thinking governments,” Ayala Land president and chief executive Antonino Aquino said.

“We believe that this will have significant impact of how the cities of the future will be conceived, built and run. This is also very important for Ayala Land’s future because we will be able to take the learnings from the Eco-City project and apply these to our major growth centers, thus, reinforcing our position as a builder of communities which are truly sustainable in very sense of the word,” he added.

Leveraging on China’s and Singapore’s experience in integrating urban planning and eco-development, the Tianjin Eco-City is expected to be a commercially viable “city-in-a-garden” development, with the convenient proximity to Beijing and well-developed transportation networks and infrastructure. The Tianjin area has been selected as the most ideal site for the development.

IT, BPO firm expands footing in Philippines

By Katherine Evangelista

MANILA, Philippines—A world-leading information technology, consulting, and business process outsourcing services company on Wednesday formally announced the expansion of its recently opened global delivery center in Manila.

Cognizant , which employs some 200 professionals in Manila, said that the expansion would allow the company to accommodate as much as 600 more professionals.

“Within months of opening our Manila center in October 2009, we have steadily grown our presence and investment in the Philippine capital, and have moved into a larger facility,” said R Chandrasekaran, president and managing director of Global Delivery, Cognizant.

“Our Manila center will continue to strengthen our integrated global delivery capabilities, as our investments in new global, regional, and local delivery centers help our clients harness specialized talent globally in order to meet their requirements and risk preferences, as well as provide business continuity,” Chandrasekaran said in an emailed statement.

“ We are committed to working closely with the academic community in the Philippines to develop talent across our full range of services,” he added.

Oscar Sañez, president and chief executive officer of the Business Processing Association of the Philippines, welcomed Cognizant’s expansion in the Philippines.

“We are pleased to see Cognizant expand its operations in the Philippines,” said Sañez.

“As one of the world’s fastest growing consulting, technology, and BPO/KPO companies, Cognizant’s deep insight into global best practices earned through its exposure to Global 2000 companies and a footprint spanning five continents will help the IT and BPO/KPO industry in the Philippines increase its competitiveness and define newer benchmarks,” Sañez said .

“We thank Cognizant for investing in the Philippines and providing an opportunity for experienced professionals as well as fresh graduates in the country to serve global customers,” he added.

President Benigno Aquino III also commended Cognizant for providing job opportunities for Filipino professionals. He said that the company’s expansion affirms the surging demand for global BPO services currently dominating the business arena.

“It is gratifying to note that you have again placed your confidence upon us by allotting about six hundred (600) job posts specifically for Filipinos. I know that our people are prepared to take on the global challenges that come with the demands of the industry. Together, we shall work hand in hand towards world class excellence,” Aquino said in a separate text message.

The Cognizant’s Manila office, which provides high-end operational and contact center business process services to clients worldwide, also runs on Cognizant 2.0, a Web 2.0-based platform that allows the company’s associates worldwide to collaborate and deliver important time-to-market, cost and transformational value to its clients.

Cebu Pacific to become RP’s largest airline

By Jerome Aning
Philippine Daily Inquirer

ITS MAIN RIVAL plagued by labor woes and flight cutbacks, Cebu Pacific Wednesday said it would increase the number of flights to several international destinations as part of its expansion plan in the Asia-Pacific.

The current twice weekly flights from Manila to Kota Kinabalu will get an additional flight every Wednesday starting Oct. 20, the airlines said in a statement.

Starting Oct. 31, Cebu Pacific will operate daily flights from Manila to Taipei, an increase from its current five times weekly service. Its Cebu-Singapore flights will also become a daily service on the same day.

Starting Dec. 15, three more flights will be added to the airline’s Manila-Kuala Lumpur service, making it a daily frequency.

The airline is also increasing flights from Manila to Jakarta (four times weekly starting Dec. 19) and Manila to Seoul (twice daily starting Jan. 24, 2011).

“Cebu Pacific is willing to add more flights to serve the flying public should there be a need to do so. With the arrival of three more brand-new Airbus A320 aircraft this year, we will continue strengthening our extensive network for the convenience of our guests,” said Candice Iyog, the firm’s vice president for marketing and distribution.

The airline is also set to launch direct Manila-Brunei flights on Aug. 21 and Manila-Beijing flights on Sept. 5.

The company’s lowest year-round ‘Go Lite’ fares for these routes are P2,899 and P4,999, respectively. Those with check-in luggage will just add P100 upon booking.

Based on Civil Aeronautics Board data, Cebu Pacific overtook Philippine Airline’s passenger numbers in the first quarter of 2010, making it the largest airline in the Philippines.

SM Prime profits up 10% at P3.8 billion in 1H

Manila Bulletin

SM Prime Holdings, Inc. (SM Prime), the Philippines’ dominant shopping mall developer and operator, reported a 10 percent hike in consolidated net income to P3.8 billion in the first half of 2010 from P3.4 billion in the same period last year.


Manny Pacquiao’s boxing and the stock market

Written by John Mangun
Outside the Box
Business Mirror

It is becoming more obvious each month that the long-awaited boxing match between Manny Pacquiao and Floyd Mayweather is never going to happen. I never thought that it would, and I will be surprised if it ever does go off.

There have been many comments and excuses from both sides. First, there were the disputes about who should receive how much for their participation. Then, the Mayweather allegations that Pacquiao was on performance-enhancing drugs. Pacquiao countered that Mayweather was simply afraid. Contracts almost signed with negotiations suddenly failing at the end. Each fighter saying that he was anxious to fight and that it was the other person’s fault. Both fighters found other opponents easily, leading the commentators to say that each was just raising the excitement for a bigger payday.

The fact is that both men understand one of the basics of the fact of war and investing.

Many decisions we make in life—from the seemingly insignificant to the serious—are based on incomplete thinking and analysis. Because people do not think things through thoroughly enough and with enough looking at the big picture, we tend to base too many of our decisions on how much we assume our chances are for success.

Driving down the highway, we decide to speed up and overtake the car in front of us based on whether we think we can make it without causing an accident.

We look at the probability of success or failure, the odds of winning or losing. But there is another consideration that we need to factor in to our decision-making.

Both Pacquiao and Mayweather believe they can win. But both also know that there is a possibility of losing. A confusing unseen punch or a slip of the foot, and it’s all over. So, we and the fighters, in fact, know that on any given day, either one could come out the victor. The next and perhaps more important consideration than winning or losing comes into play. What do you win? What can you lose?

Driving down the road, you see you’re off ramp just ahead and you know you have to cut the other car off to make your exit. Maybe you can do it safely or not. Therefore, you quickly think about the reward of getting off where you want to go, or driving to the next turnoff and having to spend five minuets coming back. Are those five minutes worth the possibility of a car accident that could ruin the rest of your day?

If Mayweather wins, he will be the man who stopped Pacquiao and retired undefeated. But if he loses, the only thing he will be remembered for after his long-undefeated career is losing to Pacquiao. “Floyd Mayweather? He is the guy Pacquiao beat.”

If Pacquiao wins, everyone would say, “See. That proves he was the best pound-for-pound boxer in the world.” But everyone is saying that right now, so what more can he gain?

But if Pacquiao loses, then he ends as a loser, regardless of a magnificent career that led to being the best pound-for-pound boxer in the world.

Further, no matter who might win, no one, including the boxers, would be satisfied without a rematch. Therefore, a single fight really means nothing in the big picture. And the loser of two fights would be disgraced.

In this case, no matter what the odds of success or failure might be, each has too little to gain and too much to lose by fighting the other.

People buy lotto tickets “knowing” they are going to lose. But the loss is so small in comparison with the amount of potential gain, that it makes the wager, the investment, sensible.

The first risk/reward concern is the probability of winning or losing. The second factor is how much you lose against how much you can win.

In order to be a successful stock-market player, the second consideration is critical.

For over a year, the market has been trending up. That puts the odds of success in your favor. While there have been issues that have doubled and tripled in price, there have been some big losers. GMA 7 is down 30 percent since reaching its high. Paxys is still down 90 percent from its high in 2007. Others went up and are now going down.

Assume then that it is 50/50 that your stock will go up or down. If it goes up, what is the potential gain? If it goes down, what is the possible loss? Charting and technical analysis can help with your decision-making by looking at supports and resistances.

Support is the price that investors consider is cheap and theoretically where everyone comes in to buy. Resistance is the price that is too high and most people want to sell. Therefore, you want to buy near support and sell near resistance. And further, you want to buy near support when resistance is a long way up to maximize your potential gain.

One issue on the PSE is 9 percent above support and more than 35 percent below its resistance. The trend is neutral. It is a 50/50 proposition. The risk is 10 percent since if it goes lower than that, the stock will fall considerably farther. But the upside potential is large.

If and when you find opportunities like this, it becomes much more sensible to trade without sleepless nights. You know where the downside stop loss point is and you know the high price objective that you are hoping to reach.

The stock market is not about winning and losing. It is about losing small and winning big and support and resistance levels can make that easier.

E-mail comments to PSE stock-market information and technical analysis tools provided by Inc.

Wednesday, 4 August 2010

BDO almost doubles net profit to P4.1 billion

Manila Bulletin

Banco De Oro Unibank, Inc. (BDO) reported that its profit almost doubled to P4.1 billion in the first half of 2010, up 94 percent from the P2.1 billion earnings recorded in the same period last


Tuesday, 3 August 2010

Lawyers' Group dares Aquino to discipline officials who fed him wrong info

Manila Bulletin

A nationwide organization of lawyers dared President Aquino Monday to impose disciplinary action against officials of government responsible for feeding him wrong data that he used as bases for lambasting his predecessor in his State of the Nation Address (SoNA).

The National Association of Lawyers for Justice and Peace (NALJP) noted that the President’s credibility has been placed in serious jeopardy as a result of the wrong information he aired in his SoNA.

“Where is President Aquino getting his facts and figures? How can we be sure now of the accuracy and truth of whatever the administration will say?” the NALJP said in a statement sent to the media.

Headed by lawyer Jesus Santos, the NALJP raised theses questions as it noted the continued reversal of supposed irregularities revealed by Aquino in his SoNA.

“Clearly, President Aquino had shot at the former administration from the hip. What is our guarantee now that he won’t do it again and mislead the people for the second time,” the NALJP said.

The lawyers group noted that documents have been produced proving that P105 million out of P200 million in calamity funds, which had been allegedly given by former President Gloria Arroyo to her district in Pampanga, remains intact and undisbursed.

They said the release order for the funds was dated May 27 or more than two weeks after the May 10 polls, contrary to insinuations by Aquino that the money was aimed to help Mrs. Arroyo in her candidacy for congresswoman.

On the allegedly illegal housing project for MWSS personnel at the La Mesa Watershed, the NALJP pointed out that residents have faced the media with evidence of the legality of their homes.

“One resident even explained that the area covered by the housing project was no longer part of the watershed,” the group said.

They pointed out that Budget Secretary Florencio Abad himself described as incorrect Aquino’s claim that only P100 billion or about 6 percent of the P1.54 trillion national budget has been left behind by the Arroyo administration.

The NALJP said somebody must be held accountable for the lies in the SoNA.

“The people have a right to know who is responsible and why. If nobody will be held responsible, then this administration should not be surprised if its credibility will be highly suspect, to say the least,” the statement said.

It added: “This administration is supposed to be on a reform agenda. How come they have been caught lying and misleading the people this early?”

UCPB’s 6-month profit soars 238%

Written by Erik dela Cruz
Business Mirror

THE United Coconut Planters Bank (UCPB) said on Monday its first-half profit soared 238 percent to P1.14 billion, putting it on track to achieving its 2010 targets.

It previously reported a net income of P576 million in the first quarter. It made a profit of P1.6 billion last year, recovering from losses in the previous years, after the government injected P30 billion in fresh capital into the bank.


Why your e-passport keeps getting delayed

Editorial: Those prized passports
Business Mirror

CALL it the price of modernization. Whatever it is, the unintended effect of the Department of Foreign Affairs’ (DFA) ambitious passport-modernization program has wreaked havoc on the travel plans of hundreds of thousands of Filipinos, who were looking forward to getting that precious machine-readable passport after years of being discriminated against in airports around the world because the old green passports were hand-scripted and so prone to tampering by criminal syndicates.

When the DFA announced a few months ago it was moving its consular office to the new facility on Bradco Avenue in Parañaque, many people were confident it meant the end of those many years of humiliation. For those who got their new, machine-readable passports, traveling indeed became a breeze. And then the system got short-circuited along the way. Thousands of would-be passport holders were horrified to learn that, while the new system appeared as world-class as the final product (the passport), some smart guys had found a way to tinker with it, apparently to make money. Passport applicants started to wonder why, the processing time had gotten longer and, worse, why the appointments for personal appearance (for the biometrics part) got pushed back farther and farther. The DFA, hounded by mounting complaints, started taking a look at its data and found something odd. According to a special report by this paper’s DFA reporter in last Sunday’s edition: “A few months after the implementation of the online schedule for passport application, Assistant Secretary Jaime Ledda said the ‘nonappearance’ among those who have set appointments online jumped to 40 percent.

“From the 2,300 applicants who set online appointments in March, the number jumped to 3,500 to 4,600 applicants between April and May this year.”

However, applicants who personally appear at the consular office remain at an average of 2,500 to 2,700 every day. The gaps apparently are explained by the use by online fixers of ghost names to reserve slots, which they can then peddle.

“Initial investigation showed the existence of ‘online fixers’ who bloat the appointment system.”

For instance, these fixers make appointments for around 50 slots under fictitious names and cancel these appointments “en masse” so they can encode the names of the legitimate applicants who paid for their service.

DFA officials are amazed at the talent of these people, and sought help from the National Police and the NBI. Said Ledda: “These fixers must be using a different IT system, that’s why they are able to block appointments and make way for the schedule of their clients.”

We hope they move fast, because whoever are the geniuses who have hijacked the DFA appointments system should be stopped right away for messing up a system so crucial to millions of Filipinos. Especially when one considers that in this country—one of the world’s top labor exporters—getting a passport is almost routine for anyone of working age.

As for those complaining about the prices of those prized passports, we’re inclined to believe the DFA claim that our e-passports are actually among the cheapest in the world and in the region. The passports are fine. Please just fix the system so people get them in a reasonably short time, and our less sophisticated countrymen don’t get abused by scammers.

Monday, 2 August 2010

Aquino targets NAIA 3 full operations in December

MANILA, Philippines - President Benigno Aquino III said the government is expecting to fully operate the Ninoy Aquino International Airport (NAIA) 3 in December.

This developed after the International Criminal Court (ICC) in Singapore on Saturday, favored the Philippine government in the arbitration case against the Philippine International Air Terminals Co. (Piatco) in connection with the NAIA 3 contract.

The ICC decision is similar to the decision of the arbitration in Washington which dismissed the complaint of Fraport AG, a German investor in NAIA 3, against the government.

"It is with very intense delight that I was informed that we won by the dismissal of the complaint in Singapore," said Aquino in a press conference on Sunday, adding it is significant that the government won in both cases.

The favorable ruling meant the Philippine government will not be obligated to pay $1.1 billion to the complainants.

Aquino said however, that he wants to know the details of the ruling.

"As you know the devil is in the details. I am awaiting for briefings of the details to move foreward and have NAIA 3 used to its maximum capacity."

"We are targeting (full operations) in time for the Christmas holidays," said Aquino.

On Saturday, Presidential spokesperson Edwin Lacierda said that with the case dealt with finality, the Department of Transportation and Communications will thresh out details on how the operations of the NAIA 3 will be done.

Sunday, 1 August 2010

Philippine Seven bullish, to open 500 more outlets

by Jenniffer B. Austria
Manila Standard

Philippine Seven Corp., the local franchise holder of global chain store 7-Eleven, is investing P2.5 billion to put up 500 more stores over the next three years.

Philippine Seven president Joseph Victor Paterno told reporters during the opening of its 500th store in the country that the company aimed to put up 1,000 stores over the same period.

One store requires P5 million of investment on the average.

The company aims to open 100 stores and another 130 in 2011, either company-owned or franchised outlets.

About 60 percent of the 500 existing stores are franchised while 40 percent are company-owned in contrast with other countries. Around 85 percent of 7-Eleven stores in Taiwan are franchised stores while as much as 98 percent in Japan are not company-owned.

“We want to increase the number of franchise stores because they are better taken cared of,” Paterno said.

He said the company’s expansion would be mainly in Luzon because of less distribution problems.

Philippine Seven reported a net income of P155.8 million in 2009, up 85 percent from P84.5 million in 2008, due to efficient operations and an increase in economies of scale.

Systemwide revenues totaled P7 billion, up 13 percent from the 2008 level.

“With the expansion and successful business strategies that have helped 7-Eleven push ahead despite the adversities that have affected this country and the world in the past years, the year 2010 looks like an even better and brighter year for the company,” Philippine Seven said.

Share price of Philippine Seven rose to P15 Friday from P14 on July 21.

Exxon eyes fourth well; investment hits $400m

by Alena Mae S. Flores
Manila Standard

ExxonMobil Exploration and Production Philippines B.V., a unit of Exxon Mobil Corp., will drill a fourth exploratory well in Sulu Sea by the end of August.

The Energy Department said ExxonMobil had completed drilling of the third well called Palendag-1A covered by service contract 56. The contract area, which includes the gas-rich Sandakan Basin, covers 8,200 square kilometers.

ExxonMobil is now conducting plug and abandon procedures in the third well, which will take at least 10 days, before moving the rig to a new site.

ExxonMobil would spend another $100 million for the drilling of the fourth well, Energy Undersecretary Ramon Oca said. The company spent at least $300 million in drilling the first three wells.

The department said with the completion of drilling of the third well, ExxonMobil has fulfilled its fifth exploration sub-phase commitment under SC 56.

“ExxonMobil plans to drill immediately in SC-56 a fourth exploration well, Babendil-1, to a total depth of 4,531 meters [14,865 feet] using the drilling rig West Aquarius,” Energy Secretary Jose Rene Almendras said.

He said Exxon’s three exploratory wells had given the government “very useful data.’’

“Palendag-1A well was drilled to a total depth of 4,756 meters or 15,604 feet and encountered gas. Drilling in that well began last June 7,” Almendras said.

The energy chief said it was the second well that encountered gas in SC-56 block. Dabakan-1, the first well, showed gas indications.

“The data will now be analyzed by ExxonMobil. Studies are being conducted to integrate the results of all the wells into a further geologic understanding of the block’s potential,” Almendras said.

ExxonMobil as operator holds a 50-percent stake in SC 56. Mitra Energy (Philippines) Ltd. and BHP Billiton (International Exploration Pty Ltd.) owns 25 percent each.

All the risks during the exploration stage are borne by contractors ExxonMobil, Mitra and BHP Billiton at no cost to the government.

The Energy Department earlier estimated that the service contract could contain about 750 million barrels of oil, or enough to supply the domestic market for seven years.

Texas-based ExxonMobil is the world’s largest publicly-traded international oil and gas company.