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PHILEX PETROLEUM CORPORATION

Distribution of 598,626,045 Common Shares of the Capital Stock of Philex Petroleum Corporation as

Property Dividends to the Stockholders of Philex Mining Corporation

and

Listing By Way of Introduction of 1,700,000,000 Common Shares

of the Capital Stock of Philex Petroleum Corporation on the Second Board of the Philippine Stock Exchange

with an Initial Listing Price of P1.20 Per Share

ALL REGISTRATION REQUIREMENTS HAVE BEEN MET AND ALL INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.

This Final Prospectus is dated August 31, 2011

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PHILEX PETROLEUM CORPORATION Philex Building 27 Brixton Street, Pasig City Telephone Number: (632) 631-1381 to 88 This Prospectus relates to the common shares of the capital stock (“Shares”) of Philex Petroleum Corporation (the “Company” or “Philex Petroleum” or the “Issuer”), a corporation organized under Philippine law, in connection with (a) the distribution of 598,626,045 Shares as property dividends, which represent approximately 36% of the issued and outstanding Shares (“Dividend Distribution”), and (b) the listing by way of introduction of 1,700,000,000 Shares on the second board of the Philippine Stock Exchange (“PSE”), representing 100% of the issued and outstanding Shares (“Listing”). As of the date of this Prospectus, the Issuer has an authorized capital stock of 6,800,000,000 Shares, each with a par value of P1.00, and its issued share capital consists of 1,700,000,000 Shares. Philex Mining Corporation (“Philex Mining”), a Philippine corporation listed on the PSE, is the parent company of the Issuer. At the time the Shares were declared as property dividends, Philex Mining was the legal or beneficial owner of 100% of the Issuer’s outstanding Shares. On May 25, 2011, the Board of Directors of Philex Mining approved the dividend declaration, which resulted in the distribution to Philex Mining shareholders of one Share for every eight shares in Philex Mining, and to U.S. based stockholders of Philex Mining of cash, instead of Shares, at the rate of P0.96 for every Philex Petroleum share. A registration statement and an amendment thereof covering 1,700,000,000 Shares were filed by the Company on June 17, 2011 and June 21, 2011, respectively. The Shares subject of the registration statement are covered by (i) the application for the approval of property dividend, which was filed by Philex Mining on June 17, 2011 and approved by the Securities and Exchange Commission (“SEC”) on July 19, 2011, and (b) the application for listing by way of introduction which was filed by Philex Petroleum with the PSE on July 26, 2011 and approved by the PSE on August 24, 2011. In an Order dated August 12, 2011, the SEC declared effective the Registration Statement of Philex Petroleum. Dividend distribution commenced on August 18, 2011. As a result of the property dividend to Philex Mining shareholders, the Company has 37,085 stockholders (excluding Philex Mining), 10,718 of whom own at least one board lot each. It will also allow Philex Petroleum to list its Shares under Section 1(b) of the Amended Rules on Listing by Way of Introduction of the PSE dated March 8, 2011. Target listing date is on September 12, 2011. Philex Petroleum and its stockholders will not be offering Shares to the public for subscription or sale in connection with the Dividend Distribution or Listing. The Company believes that the price of the Shares is of such amount, and the Shares would be so widely held, that their adequate marketability when listed can be assumed. Consequently, there will be no change in the total number of issued and outstanding common shares as a result of the Dividend Distribution and Listing. There will be no underwriter for, and no proceeds from, the Dividend Distribution and Listing. Nonetheless, the indicative reference opening price (“Initial Listing Price”) of the Shares upon Listing shall be at P1.20 per share. Such price is based on the valuation report and fairness opinion issued by Isla Lipana & Co. PricewaterhouseCoopers on July 14, 2011, which is annexed to this Prospectus. All of the Shares are unclassified and have identical rights and privileges. The Shares may be owned by any person or entity regardless of citizenship or nationality. However, considering that Philex Petroleum currently holds substantial shareholdings in a corporation that holds a coal operating contract (“COC”) and a corporation that currently holds a Mineral Production Sharing

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Agreement (“MPSA”), no more than 40% of the issued and outstanding shares should be owned by foreigners in order to maintain the Philippine nationality of the Company and the corporations in which it has invested (where Philippine nationality is required because such corporations hold COCs or MPSAs). Only Filipino citizens or corporations or associations at least 60% of whose capital is owned by Filipino citizens are qualified to hold COCs and MPSAs. Each holder of the Shares will be entitled to such dividends as may be declared by the Company’s Board of Directors (the “Board”), provided that any stock dividend declaration requires the approval of shareholders holding at least two-thirds of the Company’s total outstanding capital stock. Dividends may be declared only from the Company’s unrestricted retained earnings. Currently, the Company does not have a dividend policy; however, the Board may decide to declare cash dividends in the future. The Board may also decide to adopt a dividend policy after the listing of the Shares. In any event, there can be no guarantee that the Company will pay any dividends in the future. See “Dividends and Dividend Policy” on page 67 of this Prospectus. Philex Petroleum, having made all reasonable inquiries, confirms that (a) this Prospectus contains all information with respect to the Company, which is material in the context of the Dividend Distribution and Listing; (b) the statements contained in it relating to the Company are in every material respect true and accurate and not misleading; (c) there are no other facts in relation to the Company or the Shares which would make any statement in this Prospectus misleading in any material respect; and (d) reasonable inquiries have been made by the Company to ascertain facts, information and statements in this Prospectus. The Company accepts full responsibility for the accuracy of the information contained in this Prospectus. Information relating to entities other than the Company’s subsidiaries and affiliates in this Prospectus was obtained from publicly available sources that are believed to be reliable but such information has not been independently verified. Philex Petroleum does not make any representation as to the accuracy of such information regarding such entities. References to Philex Petroleum, the Company and the Issuer are references to Philex Petroleum Corporation and its consolidated subsidiaries as the context requires. However, for the avoidance of doubt, please see the table in pages 31 and 32 of this Prospectus, which sets out the actual interest of the Company, its affiliates and subsidiaries in the contracts held by them and the business described in this Prospectus. Forward Looking Statements and Use of Estimates This Prospectus includes forward-looking statements and information that involve risks and uncertainties. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about: • the performance of the oil, gas and coal market in the Philippines; • the global economic environment and industry outlook generally; • the availability of and changes to bank loans and other forms of financing; • changes in political, economic, legal and social conditions in the Philippines; • changes in competitive conditions and the Company’s ability to compete under these

conditions; • the Company’s ability to manage its growth and diversified businesses; • the performance of the obligations and commitments of the Company’s joint venture

partners under existing service contracts, operating contracts and future agreements; and • other factors beyond the Company’s control.

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In some cases, one can identify forward-looking statements by terms such as “may,” “might,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, one should not place undue reliance on these forward-looking statements. Many of these risks are discussed in greater detail in this Prospectus under the heading “Risk Factors.” Also, these forward-looking statements represent estimates and assumptions only as of the date of this Prospectus. Unless required under Philippine law, the Company does not intend to update any of these forward-looking statements to reflect circumstances or events that occur after the statement is made. One should read this Prospectus and the documents referenced in this Prospectus and filed as exhibits to the registration statement, of which this Prospectus is a part, completely and with the understanding that actual future results may be materially different from what the Company expects. Forward-looking statements contained herein are qualified by these cautionary statements. This Prospectus includes estimates made by the Company and third parties of oil, gas and coal reserves and resources. Estimates of reserves and resources should be regarded only as estimates that may change as additional technical and commercial information becomes available. Not only are such estimates based on information which are currently available, but such estimates are also subject to the uncertainties inherent in the application of judgmental factors in interpreting such information. The quantities that might actually be recovered should they be discovered and developed may differ significantly from the estimates presented herein. As of the date of this Prospectus, the Company has not independently verified the estimates provided by third parties. As estimates of reserves and resources change over time, the Company will have to adjust its business plans and strategies. Any significant downward revision in the estimates of reserves and resources may adversely affect the Company’s financial condition, future prospects and market value. The distribution of this Prospectus in certain jurisdictions may be restricted by law. Persons who come into possession of this Prospectus should inform themselves with and comply with any such restrictions. Investor Relations For investor relations matters, please contact Mr. Renato N. Migriño, Director of Philex Petroleum, at (632) 631-1381 to 88. ALL REGISTRATION REQUIREMENTS HAVE BEEN MET AND ALL INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT.

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TABLE OF CONTENTS

SUMMARY ............................................................................................................................................................................. 1

SUMMARY FINANCIAL INFORMATION .......................................................................................................................... 3

GLOSSARY OF TERMS ........................................................................................................................................................ 7

RISK FACTORS ................................................................................................................................................................... 12

USE OF PROCEEDS ............................................................................................................................................................ 19

DETERMINATION OF INITIAL LISTING PRICE ................................................................................................................. 20

DILUTION ............................................................................................................................................................................. 22

PLAN OF DISTRIBUTION ................................................................................................................................................... 23

INTERESTS OF NAMED EXPERTS AND INDEPENDENT COUNSEL .............................................................................. 24

AUDIT AND AUDIT-RELATED FEES .................................................................................................................................. 24

DIVIDEND DISTRIBUTION AND LISTING EXPENSES ..................................................................................................... 25

DESCRIPTION OF BUSINESS ......................................................................................................................................... 26

DESCRIPTION OF PROPERTY ........................................................................................................................................... 61

LEGAL PROCEEDINGS ....................................................................................................................................................... 63

SECURITIES OF THE ISSUER ............................................................................................................................................ 64

DIVIDENDS AND DIVIDEND POLICY ............................................................................................................................. 67

SELECTED FINANCIAL DATA .......................................................................................................................................... 69

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .... 72

MANAGEMENT AND CERTAIN SECURITY HOLDERS .................................................................................................... 80

PRINCIPAL SHAREHOLDERS ........................................................................................................................................... 87

PHILIPPINE TAXATION ...................................................................................................................................................... 94

PHILIPPINE STOCK MARKET ............................................................................................................................................ 98

CORPORATE GOVERNANCE .......................................................................................................................................... 103

ANNEXES ......................................................................................................................................................................... 104

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SUMMARY The following summary is qualified in its entirety by more detailed information, including the Company's consolidated financial statements and notes relating thereto, beginning on page 69 of this Prospectus. OVERVIEW OF THE COMPANY Philex Petroleum Corporation (“Philex Petroleum” or “the Company” or the “Issuer”) is a Philippine corporation organized in December 2007 as a wholly-owned subsidiary of Philex Mining Corporation (“Philex Mining”), a leader in mining and a pioneer in oil and gas exploration in the Philippines. The Company has interests in various petroleum service contracts and one coal service contract in the Philippines, held directly and through its subsidiaries, Forum Energy plc (“FEP”) and Brixton Energy & Mining Corporation (“BEMC”). The Company has a 64.45% controlling interest (held directly and indirectly) in FEP, which is a UK incorporated oil and gas exploration and production company with focus on the Philippines. FEP has: (a) a 70% interest in Service Contract (“SC”) 72 Recto Bank (formerly Reed Bank) which contains the Sampaguita natural gas discovery in offshore west Palawan, held through Forum (GSEC 101) Limited (“Forum (GSEC 101)”), (b) a 66.67% interest in SC 40 North Cebu held through Forum Exploration, Inc. (“FEI”), and (c) and various minority interests in SC 6 Cadlao and SC 14 Offshore Northwest Palawan including a 2.27% interest in the producing Galoc field, held through Forum Energy Philippines Corporation (“FEPC”). The Company owns 100% of BEMC, which is a coal mining company currently operating Coal Operating Contract (“COC”) 130 in Zamboanga Sibugay, Northern Mindanao. An independent estimate of reserves and resources of the petroleum and coal assets held by the Company and its subsidiaries are as follows:

Asset Gross 100% Net attributable to Company Classification (Standard) Independent Consultant/

Report Date

Oil Reserves – Galoc Oil Field 8.45 mln bbls 0.10 mln bbls Proved & Probable

Developed (PRMS)1

Resource Investment Strategy Consultants

March 2011 Coal Resources – COC 130 2.2 mln MT 2.2 mln MT Measured and Indicated

(PMRC)2 Rolando Pena

July 2011 The independent resource estimate for the Sampaguita gas field in SC 72 is yet to be reviewed and updated after completion of the processing and interpretation of seismic data acquisition completed in March 2011. Independent resource estimation of other blocks are pending results of further exploration and technical evaluation. The Company also owns 18.46% of Pitkin Petroleum Plc (“Pitkin”) and 10.31% of PetroEnergy Resources Corporation (“PERC”). Pitkin is a UK-incorporated international oil and gas exploration and production company with assets in the Philippines, Peru, Vietnam and the United States. PERC is a Philippine oil and gas exploration and production company listed on the Philippine Stock Exchange, with interests in producing offshore oil fields in Gabon, West Africa and petroleum service contracts in the Philippines.

1 Petroleum Resources Management System approved in March 2007 by the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists, and the Society of Petroleum Evaluation Engineers 2 Philippine Minerals Reporting Code. Please see Competent Person’s Report dated July 30, 2011 (by Rolando Pena) which is annexed to this Prospectus.

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A more detailed discussion of the various service contracts and operating contracts held by the Company and its subsidiaries and affiliates is set out in the section “Description of Business – Statement of Active Business Pursuits”. Petroleum and coal service contracts are awarded by the DOE through a competitive bidding process. While there is competition in the acquisition of service contracts, the significant financial commitments and technical risks also provide opportunities for partnership, particularly between local and international companies in petroleum service contracts. Under a petroleum service contract, substantial financial incentive is given to consortia with at least 15% aggregate Filipino equity. The Company’s strategy for creating long-term value is to (a) accelerate exploration and appraisal of the Sampaguita gas field and the large underexplored area of SC 72 Recto Bank to establish the hydrocarbon potential of the entire contract area, (b) develop near-term production cash flow by pursuing development and re-development opportunities of assets with existing oil fields and discoveries that have remained undeveloped or shut-in, and (c) manage exploration risks through partnerships with international oil companies to access global technical expertise and to share exploration risk capital, and by developing a diversified portfolio of exploration assets within and outside the Philippines. In pursuing the Company’s strategy, the Company will leverage its key strengths which include (a) a substantial participating interest in SC 72 Recto Bank, which allows the Company to bring in a strategic partner to accelerate exploration and appraisal, and still retain a material interest in the service contract, (b) minority interests in SC 6 Cadlao and SC 14 Offshore Northwest Palawan, which provide opportunities for joint development of existing small undeveloped oil discoveries and oil fields that have been shut-in due to technical and/or commercial reasons, (c) an experienced management team with a diverse range of industry and business expertise and a board of directors with extensive corporate governance experience in leading companies in the Philippines and Asia, and (d) strong principal shareholders, which make the Company an ideal joint venture partner of foreign oil and gas companies to access local business knowledge and incentives granted to petroleum service contracts with participation of Philippine companies. RISKS OF INVESTING Before making an investment decision, investors should carefully consider the risks associated with an investment in the Shares. These risks include: • risks relating to the Company and its businesses; • risks relating to the Philippines; and • risks relating to the Shares. Please refer to the section entitled "Risk Factors" on page 12 of this Prospectus, which, while not intended to be an exhaustive enumeration of all risks, must be considered in connection with an investment in the Shares.

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SUMMARY FINANCIAL INFORMATION

The selected consolidated financial information set forth in the following tables have been derived by the Company from its consolidated financial statements as at and for the years ended December 31, 2008, 2009 and 2010 and the consolidated financial statements comprising the consolidated balance sheet as at December 31, 2010 and March 31, 2011, and the consolidated statements of income, statements of comprehensive income, statements of changes in equity and statements of cash flows for the three-month periods ended March 31, 2011 and 2010, which have been audited by independent auditors, SyCip Gorres Velayo & Co. (“SGV”) in accordance with Philippine Standards on Auditing. These financial data should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes included elsewhere in this Prospectus. The information below is not necessarily indicative of the results of future operations and does not purport to project the results of the Company’s operations or financial condition for any future period or date.

For the years ended For the three-month periods

ended March 31, December 31,

(Amounts in Thousands, 2008

2009

2010 2010

2011

Except Per Share data)

CONSOLIDATED STATEMENTS OF INCOME DATA

Revenue P- P- P111,912 P- P137,367

Costs and expenses 3,483 20,017 131,034 176 86,151

Other income (charges)

(83,773)

(144,388)

(166,792)

(19,106)

402,960

Income (Loss) before income tax

(87,256)

(164,405)

(185,914)

(19,282)

454,176

Net Income (Loss) (P87,256) (P164,405) (P190,674) (P19,834) P452,261

Attributable to: Equity holders of the Parent Company (P87,256) (P164,405) (P167,334) (P19,834) P427,842

Non-controlling interests - - (23,340) - 24,419

(P87,256) (P164,405) (P190,674) (P19,834) P452,261 Basic/diluted earnings (loss) per Share (P0.175) (P0.311) (P0.098) (P0.012) P0.252

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As at December 31, As at March 31,

In Thousand Pesos

2009

2010 2011

CONSOLIDATED BALANCE SHEETS DATA

Current Assets

Cash and cash equivalents

P1,193,030

P250,006

P153,612

Accounts receivable 53 81,847 160,016

Inventories - 31,249 58,628

Other current assets 3,405 17,742 17,993

Total Current Assets 1,196,488 380,844 390,249 Noncurrent Assets

Available-for-sale (AFS) financial assets

125,304

170,771

1,508,181

Property, plant and equipment -

432,494

415,119

Goodwill - 258,593 258,593

Investments in associates 699,978

909,823

-

Deferred oil and gas exploration costs, and other noncurrent assets

- 920,754 1,132,817

Total Noncurrent assets 825,282 2,692,435 3,314,710

TOTAL ASSETS P2,021,770 P3,073,279 P3,704,959

LIABILITIES AND EQUITY

Current Liabilities

Short-term bank loan

P-

P150,000

P250,000

Accounts payable and accrued liabilities

150

46,623

240,902

Advances from related parties

573,281

788,368

743,380

Provision for losses - 51,586 -

Total Current Liabilities 573,431 1,036,577 1,234,282

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Noncurrent Liabilities

Provision for losses - 532,576 528,871

Deferred income tax liability

-

4,692

6,606

Provision for rehabilitation and decommissioning costs

-

4,102

2,327

Total Noncurrent Liabilities - 541,370 537,804

Total Liabilities 573,431 1,577,947 1,772,086

Equity Attributable to Equity Holders of the Parent Company

Capital stock 1,700,000 1,700,000 1,700,000

Equity reserves - 40,588 40,588 Retained Earnings (Deficit)

(251,661)

(418,995)

8,847

Unrealized gain on AFS financial asset

-

29,638

53,348

Cumulative translation adjustment on foreign subsidiaries

-

(70,696)

(90,616)

1,448,339 1,280,535 1,712,167

Non-controlling Interests

-

214,797

220,706

TOTAL EQUITY 1,448,339 1,495,332 1,932,873

TOTAL LIABILITIES AND EQUITY P2,021,770 P3,073,279 P3,704,959

For the years ended December 31,

For the three-month periods ended

March 31,

(Amounts in Thousands)

2008

2009

2010 2010

2011

CONSOLIDATED STATEMENTS OF CASH FLOWS:

Cash Flows from Operating Activities (P51,060) (P21,631) (P20,574) (P15,131) (P44,240)

Cash Flows from Investing Activities (683,343) (81,413) (1,161,084) (36,910) (105,534)

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Cash Flows from Financing Activities 236,609 1,308,755 238,639 (1,093,228) 56,903

Effect of Exchange Rate Changes on Cash and Cash Equivalents - (20,094) (5) (9,412) (3,523)

Net Increase (Decrease) in Cash and Cash Equivalents

(497,794) 1,185,617 (943,024) (1,154,681) (96,394)

Cash and Cash Equivalents, Beginning of Period 505,207 7,413 1,193,030 1,193,030 250,006

Cash and Cash Equivalents, End of Period P7,413 P1,193,030 P 250,006 P 38,349 P 153,612

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GLOSSARY OF TERMS In this Prospectus, unless the context otherwise requires, the following terms shall have the meanings set out below. GENERAL AND TECHNICAL TERMS 2D seismic Two dimensional seismic exploration

3D seismic Three dimensional seismic exploration

AFS Available-for-sale investments

API gravity A specific gravity scale developed by the American Petroleum

Institute for measuring the relative density of various petroleum liquids, expressed in degrees

Articles of Incorporation The Articles of Incorporation of the Company, as amended as of the date of this Prospectus

Barrel 42 U.S. gallons or 9,702 cubic inches at a temperature of 60 degrees Fahrenheit

Board or Board of Directors The board of directors of Philex Petroleum Corporation

By-Laws The By-Laws of the Company, as amended as of the date of this Prospectus

CB Coal blocks

COC Coal Operating Contract

condensate Hydrocarbons that change from gaseous to liquid phase during the extraction of natural gas deposits, and can be used as raw material for producing petroleum and petrochemical products and as fuel for power generation and industries

Constitution 1987 Philippine Constitution

contract area The area defined in a Service Contract over which the Government grants a company the right to undertake petroleum exploration, development and production

crude oil, oil Natural deposits of liquid hydrocarbons that can be refined to produce petroleum products such as transportation, domestic and industrial fuels, lubricants, asphalt and petrochemicals

discovery A well that locates a new petroleum deposit

ECC Environmental Compliance Certificate

EGF Environmental Guarantee Fund

Exploration well A well drilled to find new oil or gas deposits

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Farmee/s The party or parties in a Farmin or Farmout Agreement who will be acquiring the participating interest from the Farmor/s

Farmin To acquire a participating interest in an existing service contract in return for a consideration such as a free carry of an agreed work program and/or cash

Farmor/s The party or parties in a Farmin or Farmout Agreement who will be assigning and transferring a participating interest to the Farmee/s

Farmout To assign and transfer a participating interest in an existing service contract for a consideration such as a free carry of an agreed work program and/or cash

field An area consisting of one or more reservoirs on the same trap (i.e., an area in a rock that can hold and transmit fluids because of its porosity and permeability in which oil and/or gas can accumulate and not escape)

FPSO Floating Production, Storage and Offloading vessel

FTAA Financial and/or Technical Assistance Agreement

Free carry The Farmor’s share of cost that will be paid for by the Farmee as consideration for the assignment and transfer of a participating interest.

gas-in-place The amount of gas in pores of a reservoir

Group The Company and the corporations in which it has invested

GSEC Geophysical Survey and Exploration Contract

Hydrocarbon/s Molecules formed primarily by carbon and hydrogen atoms

Initial Listing Price Indicative reference opening price

km Kilometers

Listing The listing by way of introduction of the Shares on the PSE

MPSA Mineral Production Sharing Agreement

9

Natural gas, Gas Natural deposits of gaseous hydrocarbons that can be used for power generation, industrial, domestic and transportation fuel; and raw material for producing petroleum and petrochemical products

NREP National Renewable Energy Program

oil-in-place The estimated amount of oil in pores of a reservoir

P Philippine pesos, the legal currency of the Republic of the Philippines

participating interest Equity in a petroleum service contract

Petroleum Crude oil and natural gas

prospect A potential hydrocarbon accumulation that is sufficiently well defined to be a viable drilling target

Reserves The calculated amount of oil and/or gas that is estimated to be produced from a well or field. Proven reserves are estimates with reasonable certainty. Probable and possible reserves are estimates with less certainty than proven reserves.

reservoir The subsurface deposit of oil and/or gas located in the pores of a reservoir rock

seismic exploration A petroleum exploration method using sound energy reflected off subsurface rock layers and recorded by detectors on the surface

Service Contract or SC An agreement entered into by the Government and a company in which the company funds the exploration, development and production of petroleum or coal over a defined area in return for a share of production revenues in the event of a commercial discovery and development

Shares The common shares of Philex Petroleum

SRC Republic Act No. 8799, otherwise known as the Securities Regulation Code

Tax Code National Internal Revenue Code of the Philippines, as amended

US$ United States Dollars, the legal currency of the United States of America

Work Program Plans formulated for the performance of exploration, development, and/or production under a petroleum service contract

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CORPORATE AND GOVERNMENT ENTITIES AGRC

Alcorn Gold Resources Corporation

APH

Anglo Philippine Holdings Corporation

APPI

Alcorn (Production) Philippines, Inc.

BEC

Basic Energy Corporation

BEMC

Brixton Energy & Mining Corporation

BIR

Bureau of Internal Revenue

Blade Petroleum

Blade Petroleum Philippines Ltd.

BPMI

Basic Petroleum and Minerals, Inc.

DENR Department of Environment and Natural Resources DOE

Department of Energy

EMB

Environmental Management Bureau

FEC

FEC Resources, Inc.

FEI

Forum Exploration, Inc.

FEP

Forum Energy Plc

FEPC

Forum Energy Philippines Corporation

First Pacific

First Pacific Company Limited

Forum (GSEC 101) Forum (GSEC 101) Limited FPHL

Forum Philippine Holdings Limited

Government

The government of the Republic of the Philippines

GPC

Galoc Production Company W.L.L.

GSIS Government Service and Insurance System Karoon

Karoon Gas Australia Ltd.

LMC Lascogon Mining Corporation

LOGPOCOR

Linapacan Oil Gas & Power Corporation

Meralco Manila Electric Company

Nido Petroleum Nido Petroleum Philippines Pty. Ltd.

NSAI

Netherland, Sewell and Associates, Inc.

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OPMC

Oriental Petroleum & Minerals Corporation

PCDNC PCD Nominee Corporation

PDTC

Philippine Depository & Trust Corporation

Peak Oil Peak Oil & Gas Philippines Limited

PERC

PetroEnergy Resources Corporation

PetroGreen

PetroGreen Energy Corporation

PGPI

Philex Gold Philippines, Inc.

Philex Mining

Philex Mining Corporation

Philex Petroleum or the Company or the Issuer

Philex Petroleum Corporation

Philodrill Corporation

The Philodrill Corporation

Phoenix

Phoenix Gas & Oil Exploration Corporation

Pitkin Pitkin Petroleum Plc

PNOC EC

PNOC Exploration Corporation

PRCI Phil. Remnants Co., Inc.

PSE

The Philippine Stock Exchange, Inc.

PSPC

Pilipinas Shell Petroleum Corporation

SEC

Securities and Exchange Commission

SGV

SyCip Gorres Velayo & Co.

SyCipLaw SyCip Salazar Hernandez & Gatmaitan

Trans-Asia

Trans-Asia Oil & Energy Development Corporation

Two Rivers Two Rivers Pacific Holdings Corp.

VenturOil VenturOil Philippines, Inc.

VIMC Vulcan Industrial & Mining Corporation

Vitol

Vitol GPC Investments S.A.

12

RISK FACTORS

Investors should carefully consider the risks described below, in addition to other information contained in this Prospectus (including the Company’s consolidated financial statements and notes relating thereto which are included herein), whenever making any investment decision relating to the Shares. This section does not purport to disclose all the risks and other significant aspects of an investment in the Shares. The Company’s past performance is not an indication of its future performance. Investors deal in a range of investments, each of which may carry a different level of risk. The occurrence of any of the events discussed below and any additional risks and uncertainties not presently known to the Company or that are currently considered immaterial could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects, and cause the market price of the Shares to fall significantly and investors may lose all or part of their investment. An investor should seek professional advice if he or she is uncertain of, or has not understood any aspect of the securities to be invested in or the nature of risks involved in holding and trading of such securities, especially in the trading of high-risk securities. Investors should undertake independent research regarding the Company and the trading of securities before commencing any trading activity, and may request all publicly available information regarding the Company and the Shares from the SEC. Each investor should consult its own counsel, accountant and other advisors as to legal, tax, business, financial and related aspects of an investment in the Shares. The following risks are listed in the order of importance to the Issuer. RISKS RELATING TO THE COMPANY’S BUSINESS There are uncertainties inherent in the business of petroleum and coal exploration and development. It is vulnerable to contingencies such as: • Failure to discover oil and gas resources that can be developed for commercial production

The Company’s ability to sustain itself depends on the discovery of oil and gas resources that can be developed for commercial production. There is no assurance that exploration activities of the Company and the corporations in which it has invested (collectively with the Company, the “Group”) will result in the discovery of oil or gas deposits because of the uncertainties in locating and estimating the size of subsurface deposits of oil or gas despite advances in exploration technology. Even if a substantial oil or gas deposit is discovered, there are other factors that may prevent or delay its commercial development, such as drilling and production hazards; political, social and/or environmental issues; and insufficient market demand and/or infrastructure, particularly for a natural gas development. If exploration and development activities of the Group are not successful, the Company’s ability to generate future cash flow and obtain additional financing to continue operations may be adversely affected.

The Company mitigates exploration and development risks mainly by investing in a portfolio of exploration assets, working with partners and contractors with proven track records, and undertaking phased exploration with exit options.

• Failure to fund expenditures and investments for exploration and development activities

The exploration and development of oil, gas and coal resources are capital intensive. The Company’s ability to fund such expenditures and investments depends on numerous factors, including the ability to generate cash flow from the Group’s production, availability and terms of external financing, and the extent to which work commitments can be

13

adjusted under the relevant service and coal operating contracts and similar agreements. If the Group is unable to obtain the required funding, the Group will have to adjust its business plans and strategies, which may adversely affect the Company’s future prospects, market value and results of operations. The Company mitigates the foregoing risks by sharing the costs and risks of exploration and development with suitable joint venture partners and undertaking phased exploration with exit options. Where funding is still insufficient, the Company may adjust its business plans and strategies.

• Operating risks and natural disasters resulting in losses

Exploration and production of oil, gas and coal are subject to various operating risks such as fires, explosion, spills, gas leaks, collisions, mechanical failures, and natural disasters that may result in injuries, loss of lives, suspension of operations, and damage to property and the environment. As a result, losses and liabilities arising from the occurrence of any of these risks may have a material adverse effect on the Company’s business and results of operations. The foregoing risk is mitigated by insurance; however, please note that insurance coverage applies against some, but not all, potential losses and liabilities. The Company will assess the acceptability of residual risks not covered by insurance policies, and if the Company deems that such risks are not within the levels that the Company is willing to accept, the Company may decide to avoid the risk by either terminating or forgoing the activity, project or investment.

• Laws, regulations and contingencies adding to the cost and effort of doing business

The petroleum and coal mining industries are highly regulated. In addition to complying with the laws and regulations for doing business in the Philippines and in the other jurisdictions where the Group operates, the nature of the Group’s business also subjects the Group to laws and regulations regulating the industry, as well as those on environment, occupational health and safety standards. Despite efforts to comply with all such laws and regulations, the Company's business may be exposed to significant liabilities and restrictions due to accidents and unforeseen circumstances. Furthermore, such laws and regulations are subject to changes which may result in delays or restrictions on exploration, development or production activities as well as increased cost of compliance. There is no assurance that these costs will not have a material adverse effect on the Company's business and results of operations. The foregoing risk is mitigated by the Group’s respective policies, which are geared towards compliance with laws and regulations, as well as with good industry practice relating to health, safety and environment. Some of the risks and some of the potential losses and liabilities arising therefrom may not be covered by insurance. The Company will assess the acceptability of residual risks not covered by insurance policies, and if the Company deems that such risks are not within the levels that the Company is willing to accept, the Company may decide to avoid the risk by either terminating or forgoing the activity, project or investment.

• Price fluctuations and substantial or extended decline in prices

Prices for oil and coal have demonstrated significant volatility in the past. Historically, prices of oil and coal are influenced by a number of factors, including global and regional supply and demand, geopolitical uncertainty, domestic and foreign governmental regulations and actions, global and regional economic conditions, and weather conditions

14

and natural disasters. It is not possible to accurately forecast future oil and coal price movements and trends. Declines in crude oil and coal prices will adversely affect the Company’s business, prospects, and results of operations. The Company mitigates price risks by evaluating the economic sensitivity of investment opportunities to low product prices and taking this into consideration when making investment decisions.

• Estimates used in the business may be unreliable or incorrect This Prospectus includes estimates made by the Company and third parties of oil, gas and coal reserves and resources. Estimates of reserves and resources should be regarded only as estimates that may change as additional technical and commercial information becomes available. Not only are such estimates based on information which is currently available, but such estimates are also subject to the uncertainties inherent in the application of judgmental factors in interpreting such information. The quantities that might actually be recovered should they be discovered and developed may differ significantly from the estimates presented herein.

As of the date of this Prospectus, the Company has not independently verified the estimates provided by third parties. As estimates of reserves and resources change over time, the Company will have to adjust its business plans and strategies. Any significant downward revision in the estimates of reserves and resources may adversely affect the Company’s financial condition, future prospects and market value.

• International boundary issues over the Western Philippine Sea

The Company has been granted SC 72 in the Recto Bank Area, offshore west Palawan, which is subject to international boundary issues pertaining to certain areas of the Western Philippine Sea. The uncertainty of how these issues will be resolved may be a source of continuing risk to the operations in offshore Palawan. The Company will continue to rely on Government support and policy in addressing such geopolitical issues.

• Compliance with laws, regulations and contracts, failing which the Company may lose its contracts, licenses and approvals from the Government or otherwise be penalized Substantially all of the Company's revenues are or will be derived from service and coal operating contracts, which give the Group and their respective joint venture partners exclusive rights to conduct exploration and development operations over certain blocks in the jurisdictions in which they have invested. The Group and their joint venture partners are also expected to secure business licenses and permits in relation to their operations. The Group and their joint venture partners’ operations may be restricted, suspended or terminated if the Group, their joint venture partners or any of their respective contractors and assignees fail to satisfy its contractual obligations under the contracts, and the laws, rules and regulations governing such contracts, or to secure and maintain required licenses and permits. This may prevent the Group and their joint venture partners from further exploration and development activity within the relevant concession areas which in turn could materially and adversely affect the Company’s business, financial condition, results of operations and prospects. The foregoing risk is mitigated by the Group’s respective policies, which include compliance with laws, regulations and contracts, and exerting all reasonable efforts to secure and maintain licenses and permits required for its business and undertakings. The Group also

15

adopts provisions in their agreements with their joint venture partners to address defaults and non-compliance with laws, regulations and contracts.

• Competition in securing exclusive rights may hamper the company’s growth and expansion

The Government has been taking steps to attract investments in the exploration and development of oil and gas in the Philippines, particularly with respect to the application and award of petroleum service contracts, which is done through competitive public bidding. The Company’s competitors may have greater financial, technical, and organizational capabilities than the Company, particularly international oil and gas companies. Significant competitive pressure could result in the failure or increased costs to acquire additional exploration and production assets, thereby causing a material adverse effect on the Company’s business and results of operations. The Company intends to remain competitive by leveraging the strengths discussed in description of “Business – Strengths and Strategies”.

RISKS RELATING TO THE PHILIPPINES Note: Certain subsidiaries and affiliates of the Company are operating or have businesses or asset in jurisdictions outside of the Philippines, such as the United Kingdom in the case of FEP, and Peru, Vietnam and the United States in the case of Pitkin. Investors may wish to inquire about the risks of doing business in those jurisdictions. • Any political instability in the Philippines may adversely affect the Company’s business,

results of operations and financial condition

The Philippines has from time to time experienced political and military instability. In the last few years, there has been political instability in the Philippines, including public and military protests arising from alleged misconduct by the former administration. No assurance can be given that the political environment in the Philippines will stabilize and any political or social instability in the future could result in inconsistent or sudden changes in regulations and policies that affect the Group or any member of the Group, which could have an adverse effect on the Company’s business, results of operations and financial condition.

President Benigno S. Aquino III was declared President of the Philippines after the presidential elections held on May 10, 2010. There is no assurance that the new President of the Philippines will continue to implement the economic policies favored by the previous administration. Any potential instability could have an adverse effect on the Philippine economy, the Company’s business, and the Company’s results of operations and financial condition.

• Terrorist activities in the Philippines could destabilize the country, adversely affecting the

Company’s business environment

The Philippines has been subject to sporadic terrorist attacks in the past several years. The Philippine military has been in conflict with the Abu Sayyaf organization, which has been identified as being responsible for kidnapping and terrorist activities in the country, and is also alleged to have ties to the Al-Qaeda terrorist network. There can be no assurance that the Philippines will not be subject to further acts of terrorism in the future, and violent acts arising from, and leading to, instability and unrest may have a material adverse effect on the Company’s business, results of operations and financial condition.

16

• The low sovereign credit ratings of the Philippines may adversely affect the Company’s business

The relatively low sovereign credit ratings of the Government directly affect companies residing in the Philippines as international credit rating agencies issue credit ratings by reference to that of the sovereign. No assurance can be given that Moody’s, Standard & Poor’s or any other international credit rating agency will not in the future downgrade the credit ratings of the Government and, therefore, Philippine companies, including the Company (although in June 2011, Moody’s upgraded the Philippines’ sovereign rating from Ba3 to Ba2). Any such downgrade could have an adverse impact on the liquidity in the Philippine financial markets, the ability of the Government and Philippine companies, including the Company, to raise additional financing and the interest rates and other commercial terms at which such additional financing will be made available.

• The occurrence of natural catastrophes may materially disrupt the Company’s operations

The Philippines has experienced a number of major natural catastrophes in recent years, including typhoons, volcanic eruptions, earthquakes, mudslides, droughts, floods and other weather-related events. Natural catastrophes may disrupt the Company’s business operations, lead to disruptions in the electrical supply to the Company’s project sites and impair the economic conditions in the affected areas, as well as the Philippine economy. The Company cannot assure prospective investors that the insurance coverage it maintains for these risks will adequately compensate the Company for all damages and economic losses resulting from natural catastrophes, including possible business interruptions.

RISKS RELATED TO THE SHARES • The market price of securities can and does fluctuate. The Shares have not been publicly

traded and the relative volatility and illiquidity of the Philippine securities market may substantially limit investors’ ability to sell the Shares at a suitable price or at a time they desire.

The market prices of securities can and do fluctuate, and it is impossible to predict whether the price of the Shares will rise or fall. Securities may experience upward or downward movements, and may even lose all value. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities. There may be a substantial difference between the buying price and the selling price of such securities. Trading prices of the Shares will be influenced by, among other things:

variations in the Company’s operating results;

success or failure of the Company’s management team in implementing business and

growth strategies;

gain or loss of an important business relationship;

changes in securities analysts’ recommendation, perceptions or estimates of the Company’s financial performance;

changes in conditions affecting the industry, the general economic conditions or stock market sentiments or other events or factors;

differences between the Company’s actual financial operating results and those expected by investors and analysts;

17

additions or departures of key personnel;

changes in general market conditions and broad market fluctuations; and

involvement in litigation.

These fluctuations may be exaggerated if the trading volume of the Shares is low.

Prior to the listing of the Shares at the PSE, there has been no public market for the Shares in the Philippines. There can be no assurance that even after the Shares have been approved for listing on the PSE, an active trading market for the Shares will develop or be sustained after the listing, or that the Initial Listing Price will correspond to the price at which the Shares will trade in the Philippine public market subsequent to the listing. There is no assurance that investors may sell the Shares at prices or at times deemed appropriate.

• Future sales of Shares in the public market could adversely affect the prevailing market

price of the Shares and shareholders may experience dilution in their holdings.

In order to finance the Company’s business and operations, and any expansion thereof, the Board will consider funding options available to the Company, which may include the issuance of new Shares. The market price of the Shares could decline as a result of future sales of substantial amounts of the Shares in the public market or the issuance of new shares, or the perception that such sales, transfers or issuances may occur. This could also materially and adversely affect the prevailing market price of the Shares or the Company’s ability to raise capital in the future at a time and at a price that the Company deems appropriate.

In addition, if additional funds are raised through the issuance of new equity or equity-linked securities by the Company other than on a pro rata basis to existing shareholders, the percentage ownership of existing shareholders may be diluted. Such securities may also have rights, preferences and privileges senior to those of the Shares.

• The Company’s investment structure may impede the Company’s ability to pay dividends.

The Company holds most of its interests in petroleum and coal contracts through corporations that it has invested in. Thus, the availability of funds to pay dividends to its shareholders and to service debt obligations depends in part upon dividends that may be received from the Company’s subsidiaries and affiliates. If the Company’s subsidiaries and affiliates incur debt or losses, such indebtedness or losses may impair their ability to pay dividends or other distributions to the Company. As a result, the Company’s ability to pay dividends and to service the Company’s indebtedness may be restricted. The Company’s ability to declare dividends in relation to the Company’s Shares will also depend on the Company’s future financial performance, which, in turn, depends on successfully implementing the Company’s strategy, and on financial, competitive, regulatory, and other factors, general economic conditions, demand and prices for the Company’s petroleum, coal and other future products, costs of raw materials and other factors specific to the Company’s industry or specific projects, many of which are beyond the Company’s control. The receipt of dividends from the Company’s subsidiaries and affiliates may also be affected by the passage of new laws, adoption of new regulations or changes to, or in the interpretation or implementation of existing laws and regulations and other events outside the Company’s control. Philippine law requires that dividends be paid only out of unrestricted retained earnings calculated according to Philippine accounting principles. In addition, restrictive covenants in bank credit facilities, convertible bond

18

instruments or other agreements that the Company or its subsidiaries may enter into in the future may also restrict the ability of the Company’s subsidiaries to make contributions to the Company and the Company’s ability to receive distributions or distribute dividends. Finally, there is no assurance that the Company will maintain and increase its holdings in its various subsidiaries and affiliates. The Company evaluates each additional investment in these subsidiaries, and may choose to waive its right to invest in these entities, which could result in the dilution of its interest therein.

19

USE OF PROCEEDS Philex Petroleum and its stockholders will not be offering Shares for subscription or sale in connection with the Dividend Distribution or the Listing. Consequently, there will be no proceeds from the Dividend Distribution or the Listing.

20

DETERMINATION OF INITIAL LISTING PRICE Upon Listing, the Initial Listing Price for the Shares will be P1.20 per share. The Initial Listing Price is supported by the Fairness Opinion dated July 14, 2011 prepared by Isla Lipana & Co. PricewaterhouseCoopers, a firm accredited by the PSE in accordance with the PSE Guidelines for Fairness Opinions and Valuation Reports, as required under Article III, Part H, Section 3 of the Amended Rules on Listing by Way of Introduction. A copy of the Fairness Opinion is attached to this Prospectus.

Summary of Valuation Report and Fairness Opinion

Based on the data provided by the Company, Isla Lipana & Co. PricewaterhouseCoopers calculated that the estimated equity value of the Company ranges from P1,914.8 million to P4,533.1 million as of April 30, 2011 (the “Valuation Date”). Isla Lipana & Co. PricewaterhouseCoopers adopted both the discounted cash flow and relative valuation methods in estimating this range. Using 1,700 million shares, the table below summarizes the estimated price per Share using the two methodologies adopted in the valuation: Valuation Methodology (P per Share)

Low High Discounted Cash Flow 1.59 2.67 Relative Valuation 1.13 1.25

Basis of Valuation

The basis of the valuation is fair value. Fair value was defined as the amount that would be negotiated at the Valuation Date, in an open and unrestricted market, between a knowledgeable, willing, but not anxious buyer, and a knowledgeable, willing, but not anxious seller, acting at arm’s-length basis. It was assumed that the Company’s future cash flows will continue only up to the end of the life of the SCs and the coal mine as estimated by the Company and/or internal/ third party experts. Thus, no terminal value is assumed given that the assets are subject to finite resource estimates. The valuation consists of a low case scenario and a high case scenario. For the low case scenario, the 2P value for reserves was estimated, but no value was assumed for either contingent or prospective resources (2P is defined as the sum of proved and probable reserves or in-place quantities, depending on the context; denotes best estimate scenario of reserves). On the other hand, for the high case scenario, the estimated values for resources classified as 2P reserves, 2C contingent, and best estimate prospective have been summed up (2C denotes the best estimate scenario of contingent resources).

Valuation Approaches Adopted

Isla Lipana & Co. PricewaterhouseCoopers considered the use of the following methodologies to calculate a range of estimated values for the shares of the Company: • Income approach (discounted cash flow) – indicates the value of a business based

on the cash flows projected to be generated in the future; and,

21

• Market approach (relative valuation) – indicates the value of a business based on a comparison of the valuation subject to comparable publicly-traded companies, or an analysis of statistics derived from transactions in a similar industry.

Note that a valuation exercise is not a precise science and the conclusions arrived at, in many cases, will of necessity be subjective and dependent on the exercise of individual judgment.

22

DILUTION Since there is no additional issuance of shares, except to the extent that 36% of Philex Mining’s Shares has been distributed to its stockholders, there will be no dilution as a result of the Dividend Distribution and Listing.

23

PLAN OF DISTRIBUTION Philex Mining distributed 598,626,045 common shares issued by Philex Petroleum to Philex Mining’s shareholders as property dividends at the ratio of one Share for every eight shares in Philex Mining; and cash to U.S. based stockholders of Philex Mining, instead of Philex Petroleum common shares, at the rate of P0.96 for every Philex Petroleum share. The rate of P0.96 is based on the carrying cost of Philex Mining’s investment in the Company. In connection with the Dividend Distribution, Philex Petroleum filed with the PSE on July 26, 2011 an application for listing by way of introduction of all of the outstanding Shares on the second board of the PSE. The application was approved by the PSE on August 24, 2011. Apart from the Dividend Distribution, Shares will not be distributed, and no offer of Shares will be conducted.

24

INTERESTS OF NAMED EXPERTS AND INDEPENDENT COUNSEL LEGAL MATTERS Certain legal matters under Philippine law relating to the Dividend Distribution and Listing were passed upon by SyCipLaw, the independent legal and tax counsel. SyCipLaw does not have and will not receive any direct or indirect interest in the Company or in any of the Company’s securities (including options, warrants or rights thereto) pursuant to, or in connection with the Shares, and has not acted as promoter, underwriter, voting trustee, or as the Company’s employee. FINANCIAL ADVISER ATR KimEng Capital Partners, Inc. provided advice in connection with the Dividend Declaration, the SEC registration and the Listing processes. INDEPENDENT AUDITORS SGV, independent certified public accountants, has audited the Company’s consolidated financial statements without qualification as at and for the years ended December 31, 2008, 2009 and 2010, and the consolidated financial statements comprising the consolidated balance sheet as at December 31, 2010 and March 31, 2011, and the consolidated statements of income, statements of comprehensive income, statements of changes in equity and statements of cash flows for the three-month periods ended March 31, 2010 and 2011. Such consolidated financial statements are included in this Prospectus on SGV’s authority as independent auditors. SGV has agreed to the inclusion of its report dated July 19, 2011 with respect to the Company’s consolidated financial statements as at and for the years ended December 31, 2008, 2009 and 2010 in the registration statement dated June 17, 2011 in connection with the registration of the Shares under the provisions of the SRC, preparatory to the Listing. SGV does not have and will not receive any direct or indirect interest in the Company or in any of the Company’s securities (including options, warrants or rights thereto) pursuant to, or in connection with the Shares, and has not acted as promoter, underwriter, voting trustee, or as the Company’s employee. Audit and Audit-Related Fees For 2010 and 2009, the independent auditors were engaged to express an opinion on the consolidated financial statements of the Company and its subsidiaries. Total fees were P350,000 for 2010 and P150,000 for 2009. The independent auditors were also engaged to perform agreed-upon procedures relating to the proposed increase in authorized capital stock in 2009 for a fee of P100,000. The Company’s audit committee’s approval policies and procedures for external audit fees and services are stated in the Company’s Code of Corporate Governance. Tax Fees There were no tax-related services rendered by the independent auditors. All Other Fees There were no other professional services rendered by the independent auditors.

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DIVIDEND DISTRIBUTION AND LISTING EXPENSES

Although no proceeds will be derived from the Dividend Distribution and Listing, Philex Petroleum will incur the following estimated expenses:

Estimated expenses: SEC Filing and Listing Fees P999,900 PSE Fees (with value added tax) Listing Fees 2,284,800 Processing Fees 56,000 Legal and Professional Fees 10,400,000 Documentation expenses 343,250

Total Estimated Expenses P14,083,950

26

DESCRIPTION OF BUSINESS

OVERVIEW AND HISTORY Philex Petroleum is a Philippine corporation organized in December 2007 as a wholly-owned subsidiary of Philex Mining, a leader in mining and a pioneer in oil and gas exploration in the Philippines. Pursuant to various assignment agreements executed in 2010, Philex Petroleum acquired Philex Mining’s interest in three petroleum service contracts in the Philippines, as well as various petroleum contracts in the Philippines, Gabon, Peru, the United States and Vietnam, through its stockholdings in FEP, Pitkin, PERC and FEC. Philex Petroleum also acquired from Philex Mining 100% of the outstanding shares in BEMC, which is engaged in coal mining. Timeline November 2007 Philex Mining subscribes to four million shares of Pitkin representing

4.4% of Pitkin.

December 2007 Philex Petroleum is incorporated as a wholly-owned subsidiary of Philex Mining.

December 2007 Philex Mining, on behalf of Philex Petroleum, subscribes to six million shares of Pitkin representing 6.4% of Pitkin.

December 2007 Philex Mining acquires 50.6% of FEC.

March-June 2008 Philex Mining acquires 20.6% of PERC.

April 2008 Anatolian Property B.V., a corporation whose shareholders are funds managed by Ashmore Investment Management Limited, acquires 49% of Philex Petroleum.

July-September 2008 Philex Mining and FEC acquire an effective 61.44% controlling interest in FEP.

November 2008 BEMC obtains the Environmental Compliance Certificate for the Brixton Coal Project.

March 2009 Philex Mining subscribes to 14 million new shares in Pitkin increasing its shareholding to 21% of Pitkin.

June 2009 Blade Petroleum, as operator, secures DOE approval of its field development plan for SC 6 Cadlao.

July 2009 Philex Mining purchases 49% interest of Ashmore Mining B.V. (formerly Anatolian Property B.V.) in Philex Petroleum, regaining full control thereof.

27

November 2009 A placement of new shares increases combined holdings of Philex Petroleum and FEC in FEP to 62.60%.

December 2009 SEC approves increase of capital of Philex Petroleum. Philex Mining subscribes to additional 1.2 billion shares in Philex Petroleum.

January 2010 Philex Mining increases holdings in FEC to 51.24% through an equity placement.

February 2010 DOE awards SC 72 Recto Bank over the GSEC 101 license area to Forum (GSEC 101).

February 2010 Philex Petroleum together with FEC increases holdings in FEP to 64.9%

July 2010 Philex Petroleum interest in PERC is reduced to 10.31% due to non-participation in a 1:1 Stock Rights Offering to fund the Maibarara Geothermal Project.

August 2010 DOE approves transfer of participating interest of Philex Mining in SC 6 Cadlao, SC 6A Octon and SC 41 to Philex Petroleum.

The SC 41 consortium members elect not to enter the next phase of the service contract; thus the service contract is relinquished to the Philippine government.

September 2010 Philex Mining transfers to Philex Petroleum all of its holdings in Pitkin, FEC and BEMC.

November 2010 FPHL enters into a US$10 million Facility Agreement with Philex Mining to enable Forum (GSEC 101) to fund its share of the Sub-Phase 1 work program of SC 72 Recto Bank.

February 2011 Philex Petroleum interest in Pitkin is reduced to 18.46% due to a share placement arranged for new institutional investors.

March 2011 Forum (GSEC 101) completes 2D and 3D seismic surveys as part of Sub-Phase 1 work program of SC 72 Recto Bank.

May 2011 FEP and BEC agree settlement of dispute relating to the implementation of a Sale and Purchase Agreement executed in April 2006.

No Bankruptcy, Receivership or other Similar Proceedings The Company and its subsidiaries have never been subject to bankruptcy, receivership or other similar proceedings.

C S

NaD

CORPORATE OR Set forth below

Note that the interesand FEP, the participDOE. See discussion

RGANIZATION

is Philex Petrole

sts shown are the intpating interest of PPn under the section O

eum’s corporate

terests as of the datC in SC 6A Octon anOther Material Agree

e organizational

te of this Prospectusnd of FEPC in all its ements and Legal Pr

28

chart as of the

s. Under the SC 6A blocks will reduce inroceedings.

date of this Pros

Octon and SC 6B Bn accordance with sa

spectus.

Bonita farmin agreemaid agreements upon

ments, and the Settlen fulfilment of the pre

ement Agreement bee-conditions and app

etween BEC roval by the

29

Also set forth below is Philex Mining’s corporate organizational chart after the Dividend Distribution.

As shown in the corporate organizational chart of Philex Petroleum, Philex Petroleum has direct and indirect interests in several companies. Certain details of these companies and the percentage of Philex Petroleum’s interest in each are described below:

Company Name Date of Incorporation Place of Incorporation

Ownership (%)

Direct Indirect

FEC February 8, 1982 Alberta, Canada 51.24% None

FEP April 2005 England and Wales 38.82%

25.63% (through

FEC)

BEMC July 19, 2005 Philippines 100% None

Pitkin April 2005 England and Wales 18.46%

None

PERC September 29, 1994 Philippines 10.31% None

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PRODUCT AND DISTRIBUTION The Company’s primary business is the exploration and production of crude oil, natural gas, and coal, through interests in petroleum contracts and through holdings in resource development companies with interests in petroleum and coal contracts. Crude oil, natural gas and coal are fossil fuels that are derived from organic material deposited and buried in the earth’s crust millions of years ago. Fossil fuels currently account for more than half of primary energy mix in the Philippines. Coal and natural gas is also used to fuel nearly two-thirds of power generation in the country. It is likely that fossil fuels will continue to be major energy source over the next decades, even with the aggressive development of alternative sources of energy. All of the Company’s revenues are currently sourced from FEPC’s share of revenues from crude oil production in SC 14 in offshore Northwest Palawan, and from BEMC’s revenues from coal production in COC 130 in Zamboanga Sibugay. In 2010, the Company generated P111.9 million in consolidated revenues, P99.7 million from sales of crude oil and P12.2 million from sales of coal. The rest of the petroleum licenses are for projects still in the exploration or development stage and are not yet generating any revenues for the Company. All of FEPC’s share of revenues from crude oil production in SC 14 in 2010 were from crude oil sales to North Asia, while all revenues from BEMC were from coal sales to the domestic market. The Company did not generate any revenues in 2009 and 2008, as the Company’s subsidiaries were acquired only in September 2010. Prior to acquisition by the Company, FEPC’s revenues amounted to P85.1 million in 2009 and P31.4 million in 2008, and BEMC’s revenues amounted to P37.0 million in 2009 and NIL in 2008. In 2010, FEPC’s full year revenues amounted to P298.5 million, and BEMC’s full year revenues amounted to P31.1 million. Crude oil sales are transported via marine crude oil tankers which are arranged either by the customer or the service contract operator depending on contract terms, while coal sales are transported by trucks from the mine site to the Malangas Port in Zamboanga Sibugay where the coal is loaded into 5,000 to 8,000 metric ton barges provided by the customer. The Company does not have any publicly-announced new product or service. STATEMENT OF ACTIVE BUSINESS PURSUITS The Company has interests in various petroleum service contracts and one coal service contract in the Philippines, held directly and through subsidiaries FEP and BEMC. The Company has a 64.45% controlling interest3 (held directly and indirectly) in FEP, which is a UK-incorporated oil and gas exploration and production company with a focus on the Philippines. FEP has (a) a 70% interest in SC 72 Recto Bank which contains the Sampaguita natural gas discovery in offshore west Palawan held through Forum (GSEC 101) Ltd., (b) a 66.67% interest in SC 40 North Cebu held through FEI, and (c) various interests in SC 6 Cadlao and SC 14 Offshore Northwest Palawan including a 2.27% interest in the producing Galoc field held through FEPC. The Company owns 100% of BEMC, which is a coal mining company currently operating COC 130 in Zamboanga Sibugay, Northern Mindanao. An independent estimate of reserves and resources of the petroleum and coal assets held by the Company and its subsidiaries are as follows:

3 The Company effectively owns 64.45% of FEP, of which 38.82% is held directly and 25.63% is held indirectly through FEC.

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Asset Gross 100% Net attributable to Company Classification (Standard) Independent Consultant/

Report Date

Oil Reserves – Galoc Oil Field 8.45 mln bbls 0.10 mln bbls Proved & Probable

Developed (PRMS)4

Resource Investment Strategy Consultants

March 2011 Coal Resources – COC 130 2.2 mln MT 2.2 mln MT Measured and Indicated

(PMRC)5 Rolando Pena

July 2011 The independent resource estimate for the Sampaguita gas field in SC 72 is yet to be reviewed and updated after completion of the processing and interpretation of seismic data acquisition completed in March 2011. Independent resource estimation of other blocks are pending results of further exploration and technical evaluation. The Company also owns 18.46% of Pitkin and 10.31% of PERC. Pitkin is a UK-incorporated international oil and gas exploration and production company with assets in the Philippines, Peru, Vietnam and the United States. PERC is a Philippine oil and gas exploration and production company listed on the Philippine Stock Exchange, with interests in producing offshore oil fields in Gabon, West Africa and petroleum service contracts in the Philippines. Interests in Petroleum and Coal Contracts The following describes the Company’s interest in various petroleum and coal contracts. This includes a discussion of the status of the exploration projects and estimated investment requirements for each participative interest. A summary of the Group’s interests in petroleum SCs and COCs is as follows:

Contract Location Area,

square kms.

Interest Held6 Operator Status Award & Expiry Dates

SC 6 Cadlao Offshore

Northwest Palawan

34 Philex

Petroleum 1.65%*

Blade Petroleum

Production Period*

September 1, 1973 February 28, 2024

SC 6A Octon Offshore

Northwest Palawan

1,080

Philex Petroleum

5.56% FEPC 5.56%


Production Period


SC 6B Bonita Offshore

Northwest Palawan

533 FEPC 7.031% Philodrill Corporation

Production Period


SC 14 Offshore Northwest Palawan

Offshore Northwest Palawan

December 17, 1975 December 17, 2025

₋ Block A Nido

23.8 FEPC 8.468% Philodrill Corporation Production

₋ Block B Matinloc

15 FEPC 12.406% Philodrill Corporation Production

4 Petroleum Resources Management System approved in March 2007 by the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists, and the Society of Petroleum Evaluation Engineers 5 Philippine Minerals Reporting Code 6 The participating interest of FEPC in SC 6 and SC 14 blocks is subject to a settlement agreement between FEP and BEC. Please see section “Legal Proceedings” on page 63 for discussion.

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square kms.


₋ Block B-1 N. Matinloc


₋ Block C-1 Galoc

163 FEPC 2.27575% GPC Production

₋ Block C-2 W. Linapacan

176.5 FEPC 2.27575% Pitkin Appraisal

₋ Tara 10.28 FEPC 10.000% Trans-Asia Exploration

₋ Block D 185 FEPC 8.168% Philodrill Corporation Exploration

SC 40 North Cebu

Onshore North Cebu 4,580

FEI 66.67% FEI Production February 9, 1995

November 24, 2030

SC 72 Recto Bank

Offshore West Palawan 8,880 Forum (GSEC

101) 70% Forum (GSEC

101) Exploration February 15, 2010 February 14, 2017**

COC 130 Zamboanga Sibugay 20 BEMC 100% BEMC Production February 23, 2005

May 5, 2018

* SC 6 (which covers SC 6 Cadlao, SC 6A Octon and SC 6B Bonita) is in the production period based on Section 3.2 of the SC. Production in the Cadlao field commenced in 1981 and ceased in 1991, when the consortium decided to transfer the FPSO to SC 14 to achieve a higher production rate. The resumption of production is pending the successful redevelopment of the Cadlao field to produce the remaining oil reserves, and the development of the Octon and Bonita discoveries.

** Expiry date of Exploration Phase SC 6 Northwest Palawan: Cadlao Block A and B SC 6 presently covers three contract areas, namely: Cadlao production area, Block A Octon and Block B Bonita, all in offshore Northwest Palawan. The service contract has a seven-year exploration period, extendible by three years, and a 25-year production period, extendible by 15 years. SC 6 was awarded on September 1, 1973, and is presently in the 15-year production period extension ending on February 28, 2024. SC 6 Cadlao

SC 6 Cadlao is located offshore Northwest Palawan covering an area of 34 square kilometers. The contract area contains the Cadlao field which came on stream in 1981 and produced around 11 million barrels of oil before production ceased in 1991. Blade Petroleum, the current operator, believes the field has a potential to produce a further six million barrels of oil (proved plus probable reserve estimate) and is understood to be evaluating various low cost development options for this. The operator and non-operating partners in SC 6 Cadlao and their respective participating interests are as follows:

Blade Petroleum 80% VenturOil 20%

As one of the concessionaires in the petroleum exploration concessions under the Petroleum Act of 1949, which was in effect prior to conversion of the concessions into a service contract in 1973 under the provision of Presidential Decree No. 87, Philex Mining is entitled to an

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overriding royalty interest (i.e., Interest which does not share in costs, but derives a percentage of the gross proceeds from petroleum production) of 1.65% of gross revenues from the sale of oil produced throughout the life of the SC. The royalty interest in SC 6 Cadlao was transferred from Philex Mining to Philex Petroleum in August 2010. SC 6A Octon SC 6A Octon is located offshore Northwest Palawan covering an area of 1,081 square kilometers. The contract area contains the Octon field discovered in January 1991 and appraised in April 1992. The discovery well was drilled to a measured depth of 2,652 meters and yielded 1,816 barrels per day of oil and 1.8 million cubic feet of gas during testing. The field is estimated to contain both oil and gas resources. Prior to exiting the consortium in November 2010, Vitol worked on the interpretation of re-processed seismic data and reviewed the petrophysics of the Octon wells to estimate the hydrocarbon resources in the Octon field. The results of the evaluation indicated a mid-case estimate of 22 million barrels oil-in-place and 61 billion cubic feet gas-in-place for both the northern and southern blocks of the Galoc structure. The Company holds a 5.56% participating interest in SC 6A Octon, and another 5.56% interest through FEPC. The Company also holds 10.31% of the outstanding shares of PERC, which holds a 16.67% participating interest in SC 6A Octon. The operator and non-operating partners in SC 6A Octon and their respective participating interests are as follows:

Philodrill Corporation 44.430% PERC 16.670% APH 11.110% Trans-Asia 7.780% VIMC 7.220% Philex Petroleum 5.560% FEPC 5.560% AGRC 1.670%

The 2011 work program and budget approved by the DOE consists of the reprocessing of some 400 square kilometers of 3D seismic data over the northern block to firm up the various exploration prospects and play in the area including the West Malajon, Barselisa and Salvacion. The whole reprocessing program will cost the consortium approximately US$546,000 and will be its contractual commitment for 2011, while interpretation and evaluation of the reprocessed data will be the contemplated work program for 2012. On July 11, 2011, the consortium and Pitkin signed a Farmin Agreement which provides for the transfer of 70% participating interest to Pitkin in consideration for an agreed work program. Upon completion of the Farmin, the participating interest of the Company and FEPC in SC 6A Octon will be reduced from 5.560% to 1.668% in exchange for a free carry of exploration costs up to Phase 3 Work Program. Details of the Farmin Agreement are discussed in pages 41 and 42. SC 6B Bonita SC 6B Bonita is located offshore Northwest Palawan adjacent to SC 6 Cadlao, covering an area of 533 square kilometers. The contract area contains the Bonita discovery by APPI in 1989 that yielded 765 to 2,107 barrels per day of oil during testing. In 2001, Nido Petroleum Philippines PTY LTD (“Nido Petroleum”) performed seismic interpretation of 3D data and was able to identify some exploration prospects and leads within the contract area. FEPC holds a 7.031% participating interest in SC 6B Bonita. The operator and non-operating partners in SC 6B Bonita and their respective participating interests are as follows:

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Phoenix 28.125% Philodrill 21.875% OMPC 14.063% Trans-Asia 14.063% Nido Petroleum 7.812% FEPC 7.031% AGRC 7.031%

In February 2011, members of the SC 6B Bonita consortium excluding Nido Petroleum, signed a farmin agreement with Peak Oil, Blade Petroleum and VenturOil. The agreement gave the farmees a farmin option in return for completing a work program comprising geological, geophysical and reservoir analysis, interpretation, data processing and reporting. In May 2011, Peak Oil formally provided notice of the farmees’ intention to exercise their option to acquire the farmin interest. Preparation of the farmin documents and work program for the DOE approval is currently in progress. Upon completion of the farmin, the participating interest of FEPC in SC 6B Bonita will reduce from 7.031% to 2.109% in exchange for a free carry of exploration and development costs up to first oil. SC 14 Northwest Palawan SC 14 is located offshore Northwest Palawan covering an area of 720 square kilometers. The service contract has a seven-year exploration period, extendible by three years, and a 25-year production period, extendible by 15 years. SC 14 was awarded on December 17, 1975, and is presently in the 15-year production period extension ending on December 17, 2025. The SC 14 contract area is divided into seven blocks and FEPC’s respective participating interests in each contract area are as follows:

Block A Nido 8.468% Block B Matinloc 12.406% Block B-1 North Matinloc 19.463% Block C-1 Galoc 2.27575% Block C-2 West Linapacan 2.27575% Tara Block 10.000% Block D Retention Block 8.168%

• Block A Nido, Block B Matinloc and Block B-1 North Matinloc Block A has an area of 23.8 square kilometers and contains the Nido Production Area which was first put in production in 1979. Block B has an area of 154 square kilometers and contains the Matinloc Oil Production Complex which was first put in production in 1982. Block B1 has an area of 8 square kilometers and contains the North Matinloc field which was first put in production in 1989. The combined gross (100%) production from these three producing blocks in 2010 totaled 174,868 barrels. The consortium completed a total of nine shipments from the three fields in 2010, all with PSPC. The yearly crude sale and purchase agreement with PSPC was renewed in March 2011. The Nido and Matinloc fields are in late-life and cyclical production, meaning intermittent production to allow time for oil to accumulate on top of the reservoir. Aside from production performance of the wells, continued production from Nido and Matinloc is dependent on oil price due to the relatively high operating cost and the ability to share operating expenses.

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To extend production in Block A, the operator has proposed a re-evaluation of Nido 1X1, a discovery in 1979 which straddles SC 14A and SC 54A. The evaluation will involve processing of about 40 square kilometers of 3D seismic data covering the Nido 1X1 structure that will help in the robust calculation of potential reserves for the Nido 1X1 field and identification of the best drilling location for any new production wells. The operator and non-operating partners in Block A Nido, Block B Matinloc and Block B-1 North Matinloc and their respective participating interests are as follows: Block A Nido

OPMC 42.940% Philodrill Corporation (operator) 26.106% Nido Petroleum 22.486% FEPC 8.468%

Block B Matinloc

Philodrill Corporation (operator) 41.608% Nido Petroleum 28.283% OPMC 17.703% FEPC 12.406%

Block B-1 North Matinloc

Philodrill Corporation (operator) 33.111% OPMC 27.772% FEPC 19.463% AGRC 13.551% Trans-Asia 6.103%

• Block C-1 Galoc

Block C-1 Galoc has an area of 163 square kilometers and contains the producing Galoc Oil Field Development which was put into production in October 2008. Total gross (100%) production from the Galoc field in 2010 was 2,694,720 barrels of crude oil. A total of eight offtakes were carried out in 2010. The buyers included Nippon Energy of Japan, and Chevron, Hyundai Oil and SK Energy. Galoc crude oil is produced with two horizontal wells which are tied back via subsea riser to the Floating Production Storage and Offtake (“FPSO”) vessel Rubicon Intrepid. The field currently produces around 6,000 to 8,000 barrels per day of crude oil with an API gravity of 35°. The field is expected to continue producing until approximately 2014 to 2018 on the basis of the existing two wells alone. The gross (100%) proved and probable developed reserves estimate of the Galoc field as at January 1, 2011 is 8.45 million barrels, based on a review by independent consultants, Resource Investment Strategy Consultants (“RISC”), which was commissioned by the operator, GPC, on behalf of the Galoc joint venture. The RISC report was completed in accordance with instructions from GPC to review, opine on and provide certification on the Proved Developed and Proved plus Probable Developed Reserves of the Galoc Oil Field in accordance with SPE standards. RISC reviewed the reserves in accordance with the SPE/WPC/AAPG/SPEE Petroleum Resource Management System (PRMS) definitions, guidelines and auditing standards. RISC has evaluated reserves using an economic cut-off of 1,320 barrels per day 2P based on the Brent forward curve at 3rd March 2011 adjusted for quality differentials. The estimates are deterministic estimates based on history-matched reservoir simulation models which were developed by

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GPC in consultation with RISC from specific realizations identified by RISC from a suite of stochastic static reservoir models. The estimates are based on GPC’s completed implementation of the Phase 1 Plan of Development approved by the Philippines Department of Energy on 15 March 2006. The scope for the RISC reserves estimation did not include estimation of Possible Reserves or Contingent Resources in Galoc, or estimation of other reserves and resources in Block C-1. The operator and non-operating partners in Block C-1 Galoc and their respective participating interests are as follows:

GPC 59.84473% Nido Petroleum 22.87952% OPMC 7.78505% Philodrill Corporation 7.21495% FEPC 2.27575%

Further development potential in Block C-1 Galoc includes a Phase 2 development comprising between one to three new wells to extend production from the Galoc field, and drilling of an oil prospect which lies north of the Galoc field.

• Block C-2 West Linapacan Block C-2 contains the West Linapacan A discovery drilled in October 1990 and the West Linapacan B discovery drilled in March 1993. The West Linapacan A field was developed with subsea wellheads connected to an FPSO. The field came on stream in mid-1992 with initial production from three wells of 18,700 barrels per day of crude oil with an API gravity of 32°. The field produced 8.5 million barrels of oil before it was shut in as of early 1996 because of the low oil price and high water production. It is believed that an additional 10 million barrels of oil can be produced if water intrusion problems can be addressed. Pitkin’s proposed re-development program for the West Linapacan A field consists of a 1,500-meter lateral appraisal/development well drilled along the crest of the structure to optimize the intersection of reservoir fractures while minimizing fault intercepts. This well will be completed as a producing well. One redundant development well, also a 1,500 meter lateral borehole, will be drilled as a backup to the primary producing well. Pitkin plans to produce the field through a Floating Production Unit with target commercial first oil in 2014. The operator and non-operating partners in Block C-2 W. Linapacan and their respective participating interests are as follows:

Pitkin (operator) 29.145375% RMA (HK) Limited Nido Petroleum

29.145375% 22.27900%

OPMC 7.57200% Philodrill Corporation 7.01750% FEPC 2.27575% AGRC 1.53075% PERC 1.03425%

The operator of the block, Pitkin, is an affiliate of the Company, with the Company owning 18.46% of the share capital of Pitkin.

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• Block D Retention Block and Tara Block There is currently no production or exploration activity in these two blocks.

SC 40 North Cebu SC 40 covers the northern area of Cebu Island and the adjacent offshore areas in the Central Tañon Strait and Visayan Sea, with a total area of 4,580 square kilometers. The service contract has a seven-year exploration period, extendible by three years, and a 25-year production period, extendible by 15 years. SC 40 was awarded on February 9, 1995, and is presently in the 25-year production period ending on November 24, 2030. SC 40 contains the Libertad and Maya discoveries, and other onshore and offshore prospects. The Libertad gas field is currently being developed with DESCO Incorporated for a 1.0 MW power generation unit in northern Cebu. First production is anticipated in late 2011. Independent consultant, Petroleum Geo-Services, estimates potential gas resource of 1.14 billion cubic feet from the two discoveries. FEP holds a 66.67% equity interest in FEI, which operates and holds a 100% participating interest in SC 40. FEI is also undertaking a Geological and Geophysical study to generate prospects for possible drilling in 2011 or 2012. The results of the study will also be used as basis in delineating the area to be retained under the Production Period of the Service Contract. SC 72 Recto Bank SC 72 is located in the Recto Bank area offshore West Palawan covering an area of 8,800 square kilometers which was previously covered by the Geophysical Survey and Exploration Contract No. 101 (“GSEC101”). The service contract has a seven-year exploration period, extendible by three years, and a 25-year production period, extendible by 15 years. The seven-year exploration period is divided into four sub-phases with an option to exit at the end of each sub-phase. SC 72 was awarded by the DOE on February 15, 2010, and is presently in the first sub-phase of the seven-year exploration period ending on February 14, 2017. SC 72 contains the Sampaguita gas field discovered in 1976 and a number of leads identified from earlier seismic evaluation. In September 2006, results of the interpretation of a 3D seismic program at the Sampaguita gas discovery performed by independent consultants, Count Geophysics Limited, indicated a mean of 3.4 trillion cubic feet gas-in-place with significant upside potential. The partners in the SC 72 consortium and their respective participating interests are as follows:

Forum (GSEC 101) (operator) 70.00% Monte Oro Resources and Energy, Inc. 30.00%

The operator, Forum (GSEC 101) is a wholly owned subsidiary of FEP. Forum (GSEC 101) is currently undertaking the work program under the first exploration sub-phase which runs from February 15, 2010 to August 14, 2011. In March 2011, Forum (GSEC 101) completed the acquisition of 564 square kilometers of 3D seismic data over the Sampaguita field and 2,202 line-kilometers of 2D seismic data over identified leads within the 8,800 square kilometer contract area. Processing and interpretation of the acquired seismic data is ongoing and will be the basis for planning the appraisal and/or exploration wells planned to be drilled during the second exploration sub-phase which runs from August 15, 2011 to August 14, 2013. The estimated cost of the first exploration sub-phase work program is approximately US$ 7.4 million. FEP’s share of the SC 72 Recto Bank exploration work program in 2011 and 2012 is being funded through a US$10,000,000 loan facility extended by Philex Mining to FPHL executed in November 2010. The receivables of Philex Mining under the Facility Agreement will be

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purchased by Philex Petroleum from Philex Mining. This Facility Agreement will be assigned by Philex Mining to Philex Petroleum so that the obligation to extend further funding to Forum (GSEC 101) after the amount of US$6 million which was drawn by FPHL as of June 13, 2011 will be assumed by Philex Petroleum. The loan facility will be available for a three-year period and funds can be borrowed at an interest rate of US LIBOR + 4.5%. The objective of the phased exploration work program is to prove-up commercial quantities of natural gas and condensate to underpin the capital intensive development of pipelines and/or liquefaction facilities needed to transport the natural gas to markets in the Philippines and the region. FEP is also assessing potential partnerships in SC 72 to accelerate the development of the project. Brixton Coal Project (COC 130) – Zamboanga Sibugay Brixton Coal Project is under COC 130 covering a total area of 2,000 hectares in two CB – CB 41-I-321 and CB 41-H-360 located in the Municipalities of Buug and Diplahan, Zamboanga Sibugay. The exploration period of the COC is two years, extendible by another two years, and the development and production phase is ten years, extendible by another ten years, and a series of three- year periods not exceeding twelve years. COC 130 is presently in the first ten-year development and production phase ending on May 5, 2018. In November 2010, the Company started its coal production in COC 130. Under the five-year Work Program approved by the DOE, the Company is committed to produce a total of 414,500 metric tons of coal during the first five years of production. Coal production is expected to continue for more than 20 years at an average annual production of 100,000 metric tons based on a Competent Person’s estimate of measured and indicated coal resources of 2.2 million metric tons. A Competent Person’s Report is annexed to this Prospectus. The quality of the coal produced is mostly bituminous with a calorific value ranging from 5,200 to 6,000 Kcal/Kg, ash content of 24 - 31% and sulfur of 0.9 - 1.2%. Existing coal production is currently supplied to a local cement plant in Mindanao Island but this type of coal can also be used in power plants and steel industries. Coal operation in COC 130 involves extraction from the coal seams by underground mining method, stockpiling within 5.4 hectares of leased industrial area and hauling of the coal to the Malangas Port Facility managed by Philippine Ports Authority, which is located about 15 kilometers from the project. The project currently employs at least 520 workers who reside within the municipalities near the project. This will eventually increase in the future as the Company plans to explore for additional coal resource within the COC area to be able to develop another viable coal mining project. HOLDINGS IN UPSTREAM OIL & GAS COMPANIES Pitkin Petroleum Plc Pitkin is an international upstream oil and gas company focused on tertiary basins primarily in the Pacific Rim region, with operations in Peru, Vietnam, the Philippines and the USA. Pitkin is involved throughout the exploration and production value chain, with an active exploration program, a re-development project and equity interests in small-scale production. The Company currently holds 18.46% of the current issued ordinary share capital of Pitkin. Pitkin’s key assets are as follows:

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Contract Location Area km2

Interest Held Operator Status

Block Z-38 Offshore Peru 4,875 25% Karoon Exploration

Block XXXIII Onshore Peru 3,143 100% Pitkin Exploration

Block 07/03 Offshore Vietnam 4,915 40% Premier Oil Exploration

SC 14C-2 West Linapacan


176.5 29.145% Pitkin Development Planning

SC 53 Mindoro Onshore and Offshore Mindoro

7,240 70% Pitkin Exploration

SC 71 Cuyo Offshore East Palawan 11,640 85% Pitkin Exploration

White Castle Field Louisiana, United States 5.35 3% Orx Resources,

Inc. Production

Pitkin recently raised funds, primarily to allow it and its subsidiaries to access certain opportunities in the short term in South America and Southeast Asia, principally in the Philippines. The fundraising will provide additional working capital to be used for general corporate purposes.

Block Z-38, Peru

Block Z-38 is an undrilled exploration block located west of known producing fields in the offshore Tumbes-Progreso Basin and north of producing giant fields in the onshore-offshore Talara Basin. A report by DeGolyer and MacNaughton conducted for the operator and dated August 31, 2010 estimates the geologically risked gross mean prospective resources (i.e., those quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects) of 148 million barrels of oil from four of the prospects in Block Z-38. Karoon is the operator of the block and has agreed to pay all of Pitkin’s costs through to the completion of the third period of the exploration phase. The carry through to the completion of the third period of the exploration phase includes a commitment to drill two exploration wells and follows the most recent election by Karoon to acquire an additional 15% interest from Pitkin. The acquisition and processing of 1,500 km2 of 3D seismic data on the block in the current exploration period has now been completed and interpretation is under way. Drilling of the two exploration wells in the block by Karoon is expected to commence in 2012.

Block 07/03, Vietnam

Block 07/03 lies between the Nam Con Son Basin hydrocarbon fields to the north and the East Natuna Basin discoveries to the south. BP plc is producing from the giant Lan Tay and Lan Do gas fields approximately 30 km to the north. Several additional oil discoveries including Dua and Blackbird are located in Block 12, approximately the same distance to the northwest as Lan Tay. Several gas discoveries offset Dua by only a few km to the northwest. The super-giant D-Alpha gas discovery is located 150 km to the south, and the 1978 oil discovery well, Bursa-1, is located 70 km south of the block.

A discovery was made in the block by the Ca Rong Do (CRD) 1X well drilled on the Red Emperor prospect in June 2009. An appraisal well (to determine the size of an oil or gas deposit), CRD-2X, was drilled in April 2011 and successfully tested gas and condensate in two reservoir zones in the Oligocene section. This was followed by an appraisal sidetrack CRD-2X-ST. The results of both penetrations are being incorporated into the assessment of the resource potential of the Ca Rong Do accumulation. SC 14 Block C-2 West Linapacan –please refer to discussion in page 36.

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SC 53 Mindoro

Pitkin completed a 200 km 2D onshore seismic acquisition program in May 2010 to define prospects in the block which include structures where gas shows have been encountered in earlier exploration wells, Progreso and Cambayan. Once the new seismic data has been interpreted and the structure confirmed, an exploration well is expected to be drilled on Progreso in 2012. Pitkin is also developing concepts to monetize the potential gas resources via a third-party power generation scheme. In April 2011, Pitkin concluded a farm-out agreement in respect of the SC 53 license which will involve Pitkin transferring half its participating interest to the farmee in exchange for being carried through a defined work program. This agreement is awaiting the necessary government consents.

SC 71 Cuyo

Pitkin completed the reprocessing of at least 3,000 km of 2D seismic data acquired in the Cuyo Block in the 1990s. Work to date has not provided sufficient encouragement to commence a new seismic program and it is expected that Pitkin will relinquish the Cuyo Block after completing its first Sub-Phase obligation in July 2011.

PetroEnergy Resources Corporation

PERC is an upstream oil exploration and production company listed in the PSE. At present, PERC’s revenues are derived mainly from its 2.525% share of producing offshore oil fields in Gabon, West Africa. PERC also has interests in petroleum, geothermal and wind energy service contracts in the Philippines. The Company currently holds 10.31% of the outstanding shares of PERC.

PERC’s key assets are as follows:

Contract Location Area km2

Interest Held

Operator Status

Petroleum Contracts

• Etame Permit PSC 93

Offshore Gabon, West Africa 3,073 2.525%

VAALCO Energy, Inc.

Gabon Production

• SC 6A Octon Offshore North-west Palawan 1,080 16.670% Philodrill

Corporation Development

Planning • SC 14 C-2 W.

Linapacan Offshore North-west Palawan 176.5 4.140% Pitkin Development

Planning • SC 47 Offshore Mindoro 10,480 2.000% PNOC EC Exploration

• SC 51 Cebu-Leyte 3,320 4.012% NorAsian Energy Ltd. Exploration

Geothermal Contracts

• SC 2010-02-012 Sto. Tomas, Batangas 65% PetroGreen

Energy Corp. Development

Wind Energy Contracts

• SC 2009-09-002 Nabas-Buruanga-

Malay, Aklan 20 100% PetroGreen Energy Corp. Feasibility Study

• SC 2009-09-003 Sual, Pangasinan 17 100% PetroGreen Energy Corp. Feasibility Study

Etame Permit PSC 93, Gabon

Current production is around 22,000 barrels per day from three oil fields – Etame, Avouma-Tachibala, and Ebouri. The oil produced from these fields is pumped by pipelines to the Petroleo Nautipa, a one-million barrel FPSO. Transfers/sales via commercial tanker generally

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occur from the FPSO every 30 to 45 days. The independent consultant, NSAI, reported in March 2009 that the oilfields have produced 42 million barrels since September 2002 and yet still have an estimated remaining reserves of 50.2 million barrels.

SC 47 Offshore Mindoro

The operator, PNOC EC, is completing the prospect mapping that will be the basis for the consortium’s decision to enter the third sub-phase of the exploration period. The third sub-phase covers the period from July 10, 2011 to July 10, 2012, and involves a commitment to drill one exploration well.

SC 51 Cebu-Leyte

Drilling of Duhat-1 exploration well commenced on April 19, 2011 on a site 2.5 kilometers east of the town of San Isidro in Leyte. The well has an estimated cost of US$3.864 million and will be drilled to a total depth of 1,000 meters. The success case volumetric estimates are in the range of 12 to 263 million barrels oil-in-place with a P50 estimate of 76 million barrels. Hydrocarbon shows in several of the shallow wells drilled in the block and the presence of numerous oil seeps in the area indicate the presence of an active petroleum system. A success at Duhat-1 could be followed up by additional exploration drilling on nearby look-alike structures.

Maibarara Geothermal Project

Geothermal Service Contract 2010-02-012 contains the Maibarara geothermal field adjacent to the MakBan geothermal field in Batangas and Laguna. The Maibarara field was discovered by Philippine Geothermal Inc. in 1979 as a commercial-grade geothermal resource. PERC has completed the rehabilitation of three existing wells and the successful flow testing of two production wells. An updated resource assessment is being prepared for third-party validation of the reserves and the commercial feasibility of a 20 MW geothermal power plant development. Potential offtakers of the power generated include Meralco, Wholesale Electricity Spot Market, electric cooperatives and industrial customers in South Luzon. The project is scheduled to start up in 2013 and is estimated to cost approximately US$60 million. Wind Energy Service Contracts

The feasibility study phase of the two wind energy contracts started in February 2010. The feasibility study phases involves gathering of wind data for a period of 18 to 24 months, to determine the technical and commercial feasibility of a power generation project using wind turbine-generators. The total committed costs for the pre-development phase amounts to US$420,000 for each contract.

OTHER MATERIAL AGREEMENTS Farmin Agreement in respect of SC No. 6A, Octon Block, Northwest Palawan among AGRC, APHC, FEPC, PERC, Philex Mining, and Philodrill Corporation (collectively, the “Farmors”) and Pitkin (the “Farmee”), dated July 11, 2011. Farmors hold 100% of the participating interests in SC 6 dated September 1, 1973. They are also parties to the Operating Agreement dated September 13, 2007 which governs the joint oil and gas operations conducted under the terms of SC 6. Subject to the conditions of the Farmin Agreement and procurement of unconditional government approvals, the Farmors agreed to assign 70% of their participating interest in Octon Block (which will reduce the Company’s direct interest to 1.67% of SC 6A), and allocate US$40,000,000 from their unrecovered historical costs, of which 70% or US$28,000,000 shall be assigned to Farmee upon the initial commencement of commercial production. In

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exchange, the Farmee agreed to pay all costs and expenses attributable to the Farmors’ participating interests relating to the Phase 1 Work Program7 which shall be completed no later than the last day of the 18th calendar month following the later to occur of (i) the month in which Farmee has received from Farmors all data necessary for the full performance of the Phase 1 Work Program, and (ii) the effective date of the Farmin Agreement. For funding the Phase 1 Work Program, the Farmee shall have the right (but not the obligation) to fund the costs of the Phase 2 Work Program8 attributable to Farmors’ participating interest. If the Farmee exercises this option, it shall complete the Phase 2 Work Program no later than the last day of the 18th calendar month following the DOE’s approval of the said work program, subject to the availability of appropriate and commercially competitive rigs and equipment. On the other hand, if the Farmee does not exercise its option to fund the Phase 2 Work Program, the Farmee shall cede, transfer, revert, and re-assign its participating interest to the Farmors. For funding the Phase 2 Work Program, the Farmee shall have the right (but not the obligation) to fund the costs of the Phase 3 Work Program9 attributable to Farmors’ participating interest. In the event that Farmee elects to exercise this option, it shall complete the Phase 3 Work Program no later than the last day of the 18th calendar month following the DOE’s approval of the said work program, subject to the availability of appropriate and commercially competitive rigs and equipment. On the other hand, if the Farmee does not exercise its option to fund the Phase 3 Work Program, the Farmee shall cede, transfer, revert, and re-assign its participating interest to the Farmors. Expenses for any and all work conducted within the Octon Block after the conclusion of the Phase 3 Work Program shall be funded by the parties in accordance with their proportionate ownership interest and in accordance with the terms of the Joint Operating Agreement to be entered into by the parties. In the event of a discovery leading to the subsequent development and production of commercial quantities of hydrocarbons in the Octon Block, the parties shall recover from revenues all past expenses and total historical and recoverable costs in proportion to their participating interests. This Agreement has been signed and the assignment of participating interests pursuant thereto is currently pending approval by the DOE. Farmin Agreement in respect of SC No. 14, West Linapacan Area, Northwest Palawan among AGRC, FEP, LOGPOCOR, OPMC, PERC, Phoenix, and Philodrill Corporation (collectively, the “Farmors”) and Pitkin (the “Farmee”), dated May 29, 2008, as amended. Farmors hold 77.7210% of the participating interests in SC 14 dated December 17, 1975. They are also parties to the Operating Agreement dated July 17, 1976 (“Operating Agreement”) which governs the joint oil and gas operations conducted under the terms of SC 14. Under the Farmin Agreement, each of the Farmors agreed to assign 75% of their participating interest in West Linapacan Area to the Farmee, resulting in an aggregate assignment of an undivided 58.29075% participating interest. In exchange, the Farmee agreed to reimburse each of the Farmors for documented expenditures previously incurred in relation to the West Linapacan Area in an amount up to but not to exceed, such Farmor’s pro-rata share of

7 The Phase 1 Work Program consists of acquiring, processing and interpreting 500 square kilometers of 3D seismic data. 8 The Phase 2 Work Program consists of drilling one well. 9 The Phase 3 Work Program consists of drilling one well.

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US$150,000, and pay 100% of the costs and expenses attributable to the Farmors’ participating interests in the Phase 1 Work Program10 which must be completed on or before June 30, 2010. All work in connection with the Phase 1 Work Program will be conducted by Farmee, under authority from the current operator, at Farmee’s sole discretion, direction and control. For funding the Phase 1 Work Program, the Farmee shall have the right (but not the obligation) to fund the costs of the Phase 2 Work Program11 attributable to Farmors’ participating interest. If the Farmee exercises this option, the Farmors will submit all documents and perform all acts necessary to place Farmee as the official operator of record of the West Linapacan Area and shall obtain all government approvals needed to accomplish the same. Upon approval of the transfer of operatorship to Farmee, the Parties shall execute a Joint Operating Agreement which will supersede and replace the Operating Agreement to the extent that it applies to the West Linapacan Area, and shall govern all operations and activities related to the West Linapacan Area with Farmee as Operator. The Phase 2 Work Program shall be completed within 18 months following the month in which Farmee received all governmental approvals necessary to place it as the official operator of record of West Linapacan Area, subject to the availability of appropriate and commercially-competitive rigs and equipment. On the other hand, if the Farmee does not exercise its option to fund the Phase 2 Work Program, the Farmee shall cede, transfer, revert, and assign its participating interest to the Farmors. For funding the Phase 2 Work Program, the Farmee shall have the right (but not the obligation) to fund the costs of the Phase 3 Work Program12 attributable to Farmors’ participating interest. In the event that Farmee elects to exercise this option, the Farmee will submit a detailed and complete plan for the Phase 3 Work Program within six months of its election. The Phase 3 Work Program shall be completed no later than the last day of the 24th calendar month following the approval of the plan by the DOE, subject to the availability of appropriate and commercially-competitive rigs and equipment. Expenses for any and all work conducted within the West Linapacan Area after the conclusion of Phase 3 Work Program shall be funded by the Parties in accordance with their proportionate ownership interest and in accordance with the terms of the Operating Agreement. In the event of a discovery leading to the subsequent development and production of commercial quantities of hydrocarbons in the West Linapacan Area, each Farmor also agreed to assign 100% of its entitlement of revenues from such production to the Farmee. The Farmee shall be entitled to 100% of the revenues from production until such revenues is equal to 100% of the expenses Farmee incurred in funding the Phase 1, Phase 2, and Phase 3 Work Programs. Following Farmee’s recovery of all such costs, Farmors and Farmee shall each be entitled to their respective shares of revenues from the West Linapacan Area based upon their respective participating interests until such revenues equal 100% of the expenses Farmors and Farmee have incurred in funding work programs following the completion of Phase 1, Phase 2 and Phase 3 Work Programs. Thereafter, Farmors and Farmee shall be entitled to share in revenues based upon their percentage shares of the unrecovered historical costs. After the historical costs are recovered, the Farmors and Farmee shall share the revenues based upon their relative participating interests.

10 The Phase 1 Work Program includes: (i) reprocessing of approximately 200 sq km of 2D Seismic Data; (ii) FMS Reprocessing and Interpretation; (iii) Petrophysics, Petrography and Other Necessary Laboratory Rock Analysis; (iv) Sequence Stratigraphy; (v) Integrated G&G Assessment and Coordination; (vi) Petroleum and Reservoir Engineering Review. 11 The Phase 2 Work Program includes: (i) one Firm Well; (ii) Reserves Re-certification; and (iii) FEED, FID, and other related work. 12 The Phase 3 Work Program includes the development of one field up to commercial “first oil”.

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Galoc Block Decommissioning Agreement among GPC, AGRC, FEPC, OPMC, LOGPOCOR, PERC, Nido Petroleum, Philodrill Corporation, and Phoenix dated December 2007. Under the Galoc Block Decommissioning Agreement, the parties agreed upon the terms on which the wells, offshore installations, offshore pipelines and the FPSO facility used in connection with the joint operations in respect of the first Galoc Development shall be decommissioned and abandoned in accordance with the laws of the Philippines including all regulations issued pursuant to the Oil Exploration and Development Act of 1972. The agreement also sets forth the manner in which the parties will fund the costs related to the decommissioning and abandonment. Galoc Production Joint Marketing Agreement (the “Joint Marketing Agreement”) among GPC, AGRC, FEPC, PERC, Phoenix, Philodrill Corporation, OPMC, and LOGPOCOR dated August 24, 2007. Under the Joint Marketing Agreement, GPC as agent for the other parties and as principal for itself, agreed to enter into a “Crude Agency Agreement” with a crude oil marketing company for the joint marketing of each party’s percentage interest share in all Galoc Petroleum. GPC agreed to manage the joint marketing of the party’s entitlement to Galoc Production in accordance with the procedures specified in the Joint Marketing Agreement. Joint Operating Agreement for Service Contract 6 – Block A among AGRC, APHC, FEPC, PERC, PMC, Phoenix, Philodrill, Trans-Asia, VIMC and Vitol dated September 13, 2007 This Joint Operating Agreement, which superseded the May 1988 Operating Agreement for SC 6, was entered into by the parties for the purpose of regulating the joint operations under SC 6A. And under this Joint Operating Agreement, Vitol was designated as the Operator, who has the right to resign or may also be removed by the parties. Vitol has the right and obligation to conduct the operations within the Contract Area by itself, its affiliates, its agents or its contractors. Meanwhile, the Operating Committee exercises overall supervision and control of all matters pertaining to the operations within the Contract Area. The Operator must propose explorations, development, and production programs and budgets, subject to the review and approval of the Operating Committee. The Joint Operating Agreement is to continue for as long as SC 6A remains in force and until all the joint property of the parties have been disposed of and a final settlement has been made between the parties in accordance with their respective rights and obligations under the Joint Operating Agreement. In addition, during its term, the Operator has the sole charge of and shall conduct all operations under the Joint Operating Agreement, which it may place in its duly authorized agent or independent contractor engaged by it. An amendment to the JOA for SC 6A has been executed by the members of the block consortium to reflect the necessary changes resulting from the exit of Vitol GPC from the consortium on November 18, 2010. Joint Operating Agreement (“JOA”) for Service Contract 14-C Galoc Block Offshore Philippines among GPC, AGRC, FEPC, OPMC, LOGPOCOR, PERC, Phoenix, Nido Petroleum, and Philodrill Corporation dated September 12, 2006. Pursuant to the JOA, GPC was designated to act as the Operator for the development of Galoc Block. As the Operator, GPC has the right and obligation to conduct joint operations by itself, its affiliates, its agents or its contractors under the overall supervision and control of the operating committee. GPC’s responsibilities include but are not limited to the following: (i) the preparation of programs, budgets and authority for expenditure;

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(ii) the implementation of such programs and budgets as will, together with the relevant

authority for expenditure, have been approved by the operating committee;

(iii) the provision to each of the Parties of reports, data and information concerning joint operations;

(iv) the planning for and obtaining of all requisite services and material;

(v) the direction and control of statistical and accounting services;

(vi) the provision of all technical and advisory services required for the efficient performance of the joint operations;

(vii) the preparation of a plan in respect of health, safety and the environment on an annual basis;

(viii) obtaining any necessary governmental or statutory consents or permissions in respect of the performance of any of the joint operations;

(ix) the preparation of the development program for the Galoc development and its submission to the DOE; and

(x) the conduct of such other activities as the operating committee shall decide as appropriate for the proper and efficient carrying out of the joint operations.

The provisions of the JOA will continue for so long as SC 14 remains in force, and until all joint property has been disposed of and final settlement has been made between the parties. Block C Agreement in respect of SC 14-C, Northwest Palawan, Offshore Philippines among GPC, Philodrill Corporation, AGRC, FEPC, OPMC, LOGPOCOR, PERC, Phoenix, and Nido Petroleum. The Block C Agreement specifies the rights and obligations of the parties under SC 14, relating to their respective ownership interests in the Galoc block and, except for GPC, their respective ownership interests in the remaining block. Under the Block C Agreement, GPC as Operator of the Galoc Block and Philodrill as Operator of the remaining block also agreed to perform all petroleum operations associated with their respective area. GPC and Philodrill agreed to work together to ensure that each of their petroleum operations will not interfere with or prejudice the other. The Block C Agreement will terminate when SC 14 ceases to be in force. Addendum to the Operating Agreement among APPI, Alcorn (Palawan) Inc., Alcorn Petroleum and Minerals Corporation, Alsons Consolidated Resources, Inc., Basic Consolidated, Inc., Petrofields Corporation, Phoenix, Philodrill Corporation, Seafront Resources Corporation, OPMC. Under this Addendum to the Operating Agreement, the parties acknowledged, among others, the cancellation of the Participation Agreement dated December 2, 1975 between the parties, the new division of the Contract Area as defined in the Joint Operating Agreement, and the revised participating interest of the parties. Farmin Agreement for SC – 6B Bonita Block among Philodrill Corporation, Phoenix, OPMC, Trans-Asia, FEPC, AGRC, (collectively, the “Farmout Parties”), and Peak Oil, Blade Petroleum, VenturOil, (collectively, the “Farmees”).

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Pursuant to this Farmin Agreement, Peak will conduct a review of the technical data held by Philodrill in respect of the latter’s petroleum activities in the area. Upon completion of the technical review, Peak will, on behalf of the Farmees, execute and complete the Committed Work Program13 by April 30, 2011. By completing the Committed Work Program on time and providing copies of its report thereon to the parties, the Farmees will be entitled to an option to acquire a 70% undivided share of the aggregate participating interests of the Farmout Parties, including a 70% undivided share of the aggregate participating interests of such parties in SC – 6B Bonita Block (the “Farmin Interest”). If the Farmees exercise their option to acquire the Farmin Interest, the Farmees must shoulder the Farmout Parties’ contribution to the cost of joint venture operations until first oil production excluding that from drillstem testing from the Bonita Block. On May 12, 2011, Peak, on behalf of the Farmees, sent a notice of their intent to exercise their option to acquire the Farmin Interest and requested that the period to execute a deed of assignment and assumption relating to the Farmin Interest be extended to a maximum of 60 days. Philodrill, on behalf of the Farmout Parties, has already acknowledged receipt of the notice and agreed to the extension sought. COMPETITION Petroleum and Coal Industry Overview The information presented in this section has been extracted from publicly available documents that have not been prepared nor independently verified by the Company, the Financial Adviser or any of their respective affiliates or advisers in connection with the Listing. Petroleum Exploration and Production Crude oil and natural gas, collectively referred to as “petroleum”, are natural deposits of hydrocarbons derived from organic material deposited and buried in the earth’s crust millions of years ago. Crude oil can be refined to produce petroleum products such as transportation, domestic and industrial fuels, lubricants, asphalt and petrochemicals. Natural gas can be used for power generation, industrial, domestic and transportation fuel, and petrochemical feedstock. Petroleum exploration in the Philippines dates back to 1896 with the drilling of Toledo-1 in Cebu Island by Smith & Bell. Exploration activities increased from the 1950s to 1970s, under Republic Act No. 387, known as the "Petroleum Act of 1949" which ushered in the era of the concession system. The current Service Contract system was introduced in 1973 with the enactment of Presidential Decree No. 87, known as the "Oil Exploration and Development Act of 1972". Under the Service Contract system, the service contractor is obligated, among others, to perform all petroleum operations in the contract area and provide all necessary services, technology and financing for such operations. In consideration for its performance of its obligations as a service contractor, the contractor it entitled to a share in petroleum revenues in case of a commercial discovery and production. The extensive exploration program in the 1970s resulted in several oil and gas discoveries in the West Palawan basins. Nido-1 well, drilled by Philippine Cities Service in 1976, was the first

13 The Committed Work Program consists of geological and geophysical program, reservoir analysis program, and a contingent program.

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oil discovery in the NW Palawan basin. Several small fields, all located in offshore Northwest Palawan, were subsequently discovered and produced. In 1989, relatively large fields were discovered in the deep waters off Palawan when Occidental discovered the Camago gas field. Alcorn Philippines, in 1990, discovered the West Linapacan Field and commenced production two years later until 1996. Also in 1990, Shell discovered Malampaya-Camago gas field becoming the largest natural gas discovery in the country to date. The Malampaya-Camago gas field was produced in 2002, providing fuel for 2,700 MW of gas-fired power generation in the Luzon grid. At the end of 2005, the estimated petroleum resources of the Philippines totaled 456 million Barrels of Fuel Oil Equivalent (BFOE). This consists of 25 million barrels of oil, 2,135 billion cubic feet of gas and 54 million barrels of condensate. These petroleum resource estimates are based on the sixteen sedimentary basins situated from the Cagayan Valley Basin in the north down to the Agusan-Davao Basin in the south as well as the Northwest Palawan Basin and the Sulu Sea Basin along the western flank of the archipelago. These basins extend on both offshore and onshore areas. Under Presidential Decree No. 87, the following incentives are provided for petroleum service contractors: • Service fee of up to 40% of net production • Cost reimbursement of up to 70% gross production with carry-forward of unrecovered

costs • FPIA grants of up to 7.5% of the gross proceeds for service contract with minimum

Filipino company participation of 15% • Exemption from all taxes except income tax • Income tax obligation paid out of government's share • Exemption from all taxes and duties for importation of materials and equipment for

petroleum operations • Easy repatriation of investments and profits • Free market determination of crude oil prices, i.e., prices realized in a transaction

between independent persons dealing at arms-length • Special income tax of 8% of gross Philippine income for subcontractors • Special income tax of 15% of Philippine income for foreign employees of service

contractors and subcontractors There are presently 30 petroleum service contracts in the Philippines, and another 15 currently being offered by the DOE on a competitive basis under the fourth Philippine Energy Contracting Round. Coal Exploration and Production Coal is a sedimentary rock composed predominantly of solid organic materials derived from the accumulation of plant remains in sedimentary basins. Its quality varies according to the content of ash, impurities, and volatile matter which decreases as coal rank gets higher, and is primarily used as a fuel. The Philippines’ total coal resource potential based on data of the DOE as of December 31, 2007 has been estimated at 2.37 billion MT of which the total in-situ reserves and total mineable reserves amounted to about 438.70 million MT and 329.34 million MT, respectively. Of the total in-situ reserves, about 34.2% is located in Semirara Island, Antique; 18,.8% in Cagayan and Isabela; 15.9% in Surigao; 15.4% in South Cotabato; 8.7% in Zamboanga; 2.7% in Cebu; and the remaining 38.5% is distributed in various provinces of the country.

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Of the total coal demand of approximately 13 million MT per year, about half is supplied from local coal and half from imported coal. Coal is primarily used as fuel for power generation and cement manufacturing. Coal-fired power generation comprises approximately 35% of gross power generation. Under the Coal Operating Contract system, the operator is obligated, among others, to perform all coal operations in the contract area and provide all necessary services, technology and financing for such operations. In consideration for its performance of its obligations, the operator is entitled to recover its expenses from the sales proceeds of coal produced and a share of net operating income. The current Coal Operating Contract system gives the following incentives to contractors: • Exemption from all taxes except income tax • Exemption from payment of tariff duties and compensating tax on importation of • machinery/equipment/spare parts/materials required for the coal operations • Allow entry of alien technical personnel • The right of ingress to and egress from the COC area • Recovery of operating expenses There are presently 60 coal operating contracts of which 31 are for exploration and 29 for development and production. Industry Competition Petroleum and coal service contracts are awarded by the DOE through a competitive bidding process. Proposals are evaluated based on the Department Circular No. DC2006-12-0014 as amended by DC2009-04-0004 and DC-2010-03-0005. Indicative weighing factors published by the DOE for fourth Philippine Energy Contracting Round launched in June 2011 are as follows:

Criteria Key Elements Weight in Percent

Work Program − Resource potential and exploration approach − Work commitment − Development concepts

30%

Financial qualifications − Evidence of available funds − Finance track record

30%

Technical qualifications

− Experience and track record 30%

Legal qualifications − Completeness and validity of required legal documents

10%

While there is competition in the acquisition of petroleum service contracts, the significant financial commitments and technical risks also provide opportunities for partnership, especially between local and international companies. Under a service contract, a substantial financial incentive is given to consortia with at least 15% aggregate Filipino equity. Thus, many international companies invite local companies to join their venture to benefit from the said incentive. The other active foreign and domestic petroleum exploration and production companies in the Philippines include Shell Philippines Exploration B.V., PNOC EC, BHP Billiton Petroleum, Norasian Energy Limited, Pearl Oil Limited, ExxonMobil Exploration and Production, Philippines B.V. and the various consortium partners mentioned in “Business - Statement of Active Business Pursuits”. Other active coal exploration and production companies in the Philippines

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include Semirara Mining Corporation, MG Mining and Energy Corporation, PNOC EC, SMC Global Power Holdings Corporation, and SKI Energy Resources, Inc. The success of the Company’s petroleum and coal business is highly dependent on the Company’s ability to secure exclusive rights to explore and develop resources. The Company faces threats to such exclusivity. The Company is currently one of the more active players in the Philippines in terms of exploration activity and believes it can effectively compete in the industry on the basis of its strengths and strategies which are described in the following section. STRENGTHS AND STRATEGIES The Company aims to become a leading Philippine upstream oil and gas company by leveraging the strengths and pursuing the strategies outlined below: Strengths • The Company has an effective interest of 36.3% (through Forum (GSEC101), which has a

70% participating interest) in SC 72 Recto Bank. With the presence of natural gas proven by the discovery of the Sampaguita gas field, and potential for additional discoveries from a large underexplored area, the Company considers SC 72 Recto Bank as an opportunity for transformational growth over the longer term. The Company’s substantial participating interest in SC 72 Recto Bank also allows the Company to access funding and technology through a farm-out arrangement while retaining a material interest in the service contract.

• The Company has minority interests in a number of service contracts which contain oil fields and discoveries that have remained undeveloped or shut-in due to poor economics and/or technical issues from earlier production periods. These oil fields and discoveries include the W. Linapacan field and Nido 1X-1 discovery in SC 14 Offshore Northwest Palawan, and the Cadlao field, and Octon and Bonita discoveries in SC 6. The recent increase in oil prices and advances in well drilling and production technology have presented opportunities for near-term development of these fields and have attracted farmin interest from a number of foreign oil companies.

• The Company is managed by a team of experienced professionals and business leaders with a diverse range of expertise including upstream oil and gas business development, project management, project finance, investment management, and mergers and acquisitions. The Company’s board also has extensive corporate governance experience in leading companies in the Philippines and Asia.

• As a Philippine national, the Company is entitled to the Filipino participation allowance in

accordance with the fiscal terms of petroleum service contracts in the Philippines. The combination of its Filipino participation allowance entitlement and strong principal shareholders makes the Company an ideal joint venture partner of foreign oil and gas companies in petroleum service contracts.

• The Company’s principal shareholders, Philex Mining and First Pacific, are leaders in business and industry in the Philippines and Asia. Philex Mining is a leader in the Philippine mining industry with continuous operations since 1958. First Pacific is a Hong Kong-based investment management and holding company with existing and planned investments in Asia relating to telecommunications, power distribution and generation, water utilities, infrastructure development, natural resource development and consumer food products. Through First Pacific, Philex Petroleum is affiliated with Meralco, the largest power

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distribution company in the Philippines. Meralco has determined to expand into power generation, making it a potential off-taker for gas from SC 72.

Strategies • Accelerate exploration and appraisal in SC 72 Recto Bank to obtain an early indication of

the natural gas and condensate potential of the entire contract area. This would enable the Company to determine the optimum development concept for the contract area, and provide a head start with the relatively long lead times associated with monetizing offshore natural gas resources.

• Develop near-term production cash flow by pursuing development and re-development of assets with existing oil fields and discoveries that have remained undeveloped or shut-in. The Company will consider opportunities for funding development and re-development through farm-outs particularly to operators in adjacent blocks to improve project economics through the integrated development of relatively small oil fields.

• Diversify exploration risks by maintaining exposure to multi-country exploration projects through a combination of joint ventures and investments in affiliates. The Company currently has exposure to exploration and production projects in Vietnam, Peru and Gabon through its holdings in Pitkin and PERC, but may also consider participating directly as a non-operating partner in other petroleum licenses outside the Philippines.

• Seek additional exploration opportunities in the Philippines through participation in future service contract bid rounds including the fourth Philippine Energy Contracting Round which is taking place in 2011. The Company may also consider farming-in to existing service contracts that are in a more advanced stage of exploration and appraisal.

• Funding of early stage exploration assets through a combination of debt financing and farm-out arrangements, and deferring equity financing when assets have moved up the value chain from exploration to development. A number of exploration assets held by the Company and its affiliates are still in the early stages of exploration, and equity financing while the value of such assets have not been fully assessed may result in substantial dilution to current shareholders.

• Access global technical expertise and new technology through partnerships with international oil majors and independents. The Company will also continue deploying the services of international contractors and industry experts to allow access to current technology and international experience.

SUPPLIERS OF SERVICES The Company and the operators of assets in which the Company has direct or indirect interest, have contracts with third party suppliers of services. The Company’s business, however, is not dependent on any single supplier or a limited number of suppliers, and normally procures required third party services through a competitive bidding process.

CUSTOMERS The Company currently sells its coal production to Iligan Cement Corporation in Iligan City and to Lafarge Cement Services Philippines, Inc. in Lanao del Norte. The coal is sold on a free on board basis and is loaded into 5,000 to 8,000 metric ton barges at the Malangas Port in Zamboanga Sibugay. Another potential customer for the Company’s coal is the cement plant of Holcim Philippines in Lugait, Ozamis Oriental.

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The Company’s current crude oil production from the Nido, Matinloc and Galoc fields in SC 6 Cadlao is sold directly and through oil traders to petroleum refineries in Japan, Korea, the Philippines and other Southeast Asian countries.

TRANSACTIONS AND DEPENDENCE ON RELATED PARTIES Philex Mining has extended loans and advances to the Company and some of its subsidiaries, and provides certain services to the Company, as described below. Loan Facility Agreement between FPHL and Philex Mining On November 24, 2010, FPHL, a wholly-owned subsidiary of FEP, which is an affiliate of Forum (GSEC 101), entered into a US$10 million loan facility agreement with Philex Mining. The facility agreement will be available for a three-year period and funds can be borrowed at an interest rate of US LIBOR + 4.5% for the drawn portion and a commitment fee of 1% for the undrawn portion. The facility agreement will enable FPHL to fund its 70% share of a first sub-phase work program over SC 72 Recto Bank. Obligations arising from funds drawn under this facility agreement are not convertible into FEP’s or FPHL’s ordinary shares. The first drawdown of the facility occurred in April 2011 in the amount of US$4 million. The total drawdown as of July 19, 2011 was US$6 million. Accrued commitment fee for the three-month period ended March 31, 2011 amounted to P1.536 million. Advances to the Company from Philex Mining Philex Mining made advances to Philex Petroleum to be used as additional working capital of the Company and for the acquisition of Philex Petroleum’s investment in shares of stock in 2010. These advances are non-interest-bearing, unguaranteed and payable on demand through cash. As of March 31, 2011, the advances from Philex Mining consist of US dollar-denominated advances of US$14.2 million and peso-denominated advances of P15.5 million compared to US$14.2 million and P14.3 million, respectively, as at end 2010. Advances to BEMC from Philex Mining BEMC has significant transactions with related parties involving advances to provide funding for BEMC’s exploration and development activities. Advances from Philex Mining and PGPI, an affiliate, amounted to P99.1 million and P163 thousand, respectively, as of March 31, 2011, compared to P139.2 million and P163 thousand, respectively, as of December 31, 2010. These advances are payable on demand Provision of Services Philex Mining provides technical, accounting, statutory reporting and compliance, and administrative services at no cost to Philex Petroleum. Philex Mining also allows the Company to use, without charge, its office premises and equipment. Philex Mining also extends to BEMC the services of some of its senior management and head office personnel at no cost. FEP performed consultancy services for the Company in 2009 amounting to P9 million. Advances to FEC from Philex Mining Philex Mining made cash advances in 2009 to FEC for its working capital requirements. These advances are unsecured, due and demandable, and bear interest at LIBOR + 3% per annum. As of March 31, 2011 and December 31, 2010, no amount of the loan has been repaid and the outstanding balance includes accrued interest. There have not been any discussions on the

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repayment of the outstanding amount and no demand has been made by Philex Mining for repayment. The total advances from Philex Mining to FEC as of March 31, 2011 amounted to P12.8 million compared to P13.0 million as of December 31, 2010. Accrued interest expense on the advances from PMC amounted to P940 thousand and P829 thousand as of March 31, 2011 and December 31, 2010, respectively. Key Management Personnel Compensation

The total compensation of the key management personnel of the Company and its subsidiaries amounted to P12.023 million for the first quarter of 2011 and P58.6 million in 2010.

For the three-month periods ended March 31, 2011 and 2010, the compensation received by the key officers of the Group was P12.023 million and nil, respectively.

PATENTS, TRADEMARKS AND LICENSES The Company currently has no registered patents, copyrights, licenses, and franchises. Service contracts are discussed under the heading “Statement of Active Business Pursuits”. GOVERNMENT APPROVALS Compliance with petroleum service contracts is primarily monitored through the submission of the annual work program and annual budget to the DOE. The annual work program and budget for a contract area must be submitted before the end of each contract year and would set forth the petroleum operations to be carried out during the ensuing contract year. The proposed annual work program and budget must be approved by the DOE. The approved annual work program and the budget serve as the contractor’s guide in conducting the petroleum operations over the contract area. Should petroleum be discovered in commercial quantities, the contractor must delineate the discovered reservoir, which shall serve as the production area. The contractor must submit to the DOE an Appraisal Work Program for its approval, providing in detail the appraisal work and timetable for such discovery. Upon approval, the contractor must carry out the operations and thereafter prepare a detailed report on the appraisal of the commerciality of the discovery. Should the contractor and the DOE decide that the oil field may contain petroleum in commercial quantity, the contractor must submit an Overall Development Program to the DOE for its approval. Operation of the field must be done in accordance with accepted good oil field practices using modern and scientific methods to enable maximum economic production of petroleum. Moreover, the contractor is required to: (a) promptly furnish the DOE with geological and other information, data and reports relative to the petroleum operations, (b) maintain detailed technical records and accounts of the petroleum operations, (c) maintain all meters and measuring equipment in good order and allow access to the exploration and production sites and operations to inspectors authorized by the DOE, (d) allow examiners of the BIR and other representatives authorized by the DOE full access to accounts, books and records relating to petroleum operations, and (e) post a bond or other security in favor of the Philippine government conditioned upon the contractor’s faithful performance of its obligations under a service contract. As regards a COC, the operator is required to secure: (a) a Certificate of Non-Coverage from the DENR within one year from the award of the contract, (b) an Environmental Compliance Certificate from the DENR and a Precondition Certificate from the National Commission on Indigenous People before the commencement of coal development and production activities if

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the contract area is part of the ancestral land or domain of the indigenous people, (c) an Annual Exploration Work Program before the start of any contract year, and (d) a Coal Development and Production Work Program, should the contract enter the development and production phase. The submission to the DOE of the Annual Work Program and Budget for SC 6B and SC14 Block C-2 W Linapacan for 2011 and 2012 has been deferred pending completion of the respective farmin agreements. The Annual Exploration Work Program for the rest of the petroleum and coal contracts have been submitted to and approved by the DOE. EXISTING AND PROBABLE GOVERNMENTAL REGULATIONS

Existing Governmental Regulations Various laws and regulations in the Philippines regulate different aspects of the Company’s business. Below is a discussion of some of the principal laws that affect the Company’s business. 1. Oil and Gas Exploration The Oil Exploration and Development Act of 1972 Presidential Decree (“P.D.”) No. 87, as amended, aims to promote the discovery and production of indigenous petroleum through the use of government or private resources. Pursuant to this law, the government may, on its own, undertake the exploration and development of petroleum, or it may undertake the same through service contracts entered into with contractors (whether acting alone or in consortium with others) who must be technically competent and financially capable as determined by the Petroleum Board (now the DOE). Service contracts are executed after public bidding or concluded through negotiations. As provided in the said law, the government will oversee the management of the operations contemplated in the service contract. The contractor, on the other hand, will be required to, among other duties and responsibilities, (i) provide all necessary services and technology, (ii) provide the requisite financing, (iii) perform the exploration work obligations and program prescribed in the service contract, (iv) once petroleum in commercial quantity is discovered, operate the field on behalf of the government in accordance with accepted good oil field practices using modern and scientific methods to enable maximum economic production of petroleum; and (v) assume all exploration risks such that if no petroleum in commercial quantity is discovered and produced, it will not be entitled to reimbursement. The contractor may market petroleum either domestically or for export, subject to supplying the domestic requirements of the Republic of the Philippines on a pro-rata basis, as required by law. Pursuant to the said law, the contractor is entitled to a service fee which will not exceed 40% of the balance of the gross income after subtracting the Filipino participation incentive (if any) and operating expenses recovered pursuant to the provisions of the law. The Filipino participation incentive is the government subsidy granted by the DOE to contractors where Philippine citizens or corporations have a minimum participating interest of 15%. The amount of the subsidy depends upon the scope of Filipino participation. Such Filipino participation incentive as well as certain operating expenses (including amortization and depreciation) may be deducted by the contractor from its gross income. In addition to the above, the contractor enjoys benefits, which include: (i) exemption from all taxes except for income tax; (ii) exemption from tariff duties for all machinery, equipment and spare parts necessary for petroleum operations, subject to certain conditions; and (iii) entry of

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foreign technical and specialized personnel to be employed by the contractor, provided approval of the DOE is obtained. The exploration period for each service contract is seven years, extendible for three years and for another year if petroleum is discovered by the end of the 10th year for the purpose of determining whether it is in commercial quantity. If petroleum in commercial quantity has been discovered, the contractor may retain after the exploration period and during the effectivity of the contract 12.5% of the initial area in addition to the delineated production area, subject to payment of rentals by the contractor. If petroleum in commercial quantity is discovered during the exploration period in any area covered by the contract, the contract with respect to said area will remain in force for the remainder of the 10-year exploration period and for an additional period of 25 years, renewable for a period not to exceed 15 years. It is mandated that the service contract provide for the compulsory relinquishment of 25% of the initial area after five years from the effective date of the contract, but in the event that the contract is extended from 7 to 10 years, there must be an additional relinquishment of 25% of the initial area after seven years. This requirement shall not include, however, the area designated as dedicated to production. 2. Coal Exploration Coal Development Act of 1976, as amended P.D. No. 972, as amended by P.D. No. 1174, was enacted to accelerate the exploration, development, exploitation, production and utilization of the country’s coal resources. The said decrees allow coal development and exploration activities to be undertaken by the Government, either by itself or through entering into coal operating contracts. Coal operating contracts are perfected through bidding or negotiation with qualified parties. By virtue of Republic Act (“R.A.”) No. 7638 (DOE Act of 1992), the DOE has been tasked to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the Government relative to energy exploration, development, utilization, distribution and conservation. As such, the Company's exploration, development, and production of coal resources under its coal operating contracts are regulated by the DOE. Under coal operating contracts entered into between the government and the operator, the operator provides the services, technology, and financing, and is entitled to a specific fee and reimbursement for operating expenses. The operator is tasked with the exploration of the coal block, its mining, and extraction and utilization of the coal within the coal contract area, which activities must be done in such a way that would avoid hazards to life, health and property, pollution of air, land and waters, and pursuant to an efficient and economic program of operation. Various incentives are provided for operators, and these include (among other incentives): (i) exemption from taxes except for income tax; (ii) exemption from tariff duties for the importation of machinery or equipment as well as spare parts required for coal operations; (iii) accelerated depreciation of fixed assets owned by the coal units in the performance of the coal operating contract; (iv) preference in the grant of government loans; and (v) entry upon the sole approval of the DOE of alien technical and specialized personnel (including the immediate members of their families) who may exercise their profession only for the operation of the operator as prescribed in the coal operating contract with the government. In addition, the operator is entitled to (i) a reimbursement for all operating expenses not exceeding 90% of the gross proceeds from production in any year; provided, that if in any year, the operating expenses exceed 90% of the gross proceeds from production, then the unrecovered expenses will be recovered from the operation of succeeding years; (ii) payment of a fee, the net amount of

55

which will not exceed 40% of the balance of the gross income after deducting all operating expenses; and (iii) reimbursement of operating expenses and payment of the operator's fee in the form and manner provided for in the COC. The exploration period of each coal operating contract is two years, extendible for another two years. The contract shall be cancelled, however, if coal of commercial quantity is not found by the operator. Otherwise, the contract shall remain in force for development and production during the balance of the exploration period or for an additional period ranging from 10 to 20 years. The contracts are renewable for a series of three-year periods not exceeding 12 years.

MINING OPERATIONS

Note: Philex Petroleum does not have any interest in any ongoing mining project as of the date of this Prospectus. However, through FEC, Philex Petroleum has an indirect interest in LMC, which holds MPSA No. 148. There was a full write-down of FEC’s investment in LMC in 2011 because the explored area of the project was not feasible to mine based on declared ore resources (see discussion under the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in page 72). Notwithstanding the write-down, FEC remains a stockholder of LMC, which remains to be the holder of MPSA No. 148 as of the date of this Prospectus. Philippine Mining Act of 1995 Enacted on March 3, 1995, the “Philippine Mining Act of 1995” (R.A. No. 7942) promotes the sustainable and effective use of mineral resources to enhance national development. It offers incentives and an improved tax structure to promote mining in the Philippines. Mineral Agreements Under this law, all mineral resources are owned by the state and their extraction and processing is likewise under its full control and supervision. The private sector participates in the utilization of these resources through mineral agreements with the government. Generally, all mineral resources in public or private land are open to mineral agreements. These agreements, which have a term not exceeding 25 years but renewable for another term, grant the right to undertake mining operations and extraction of all resources in the designated area. There are four forms of mineral agreement: 1. MPSA – the contractor has the exclusive right to conduct mining operations within a

contract area while government shares in the gross output.

2. Co-production agreement – the government provides inputs other than the mineral resource

3. Joint venture agreement – a joint venture company is organized between the government and contractor wherein both have equity shares. The government likewise shares in the gross output.

4. FTAA – contracts which involve financial and/or technical assistance for large-scale exploration, development and utilization of mineral resources.

Government Share/Taxes Although mineral resources are owned by the state, the government’s share in the mining operation for MPSAs is collected through the excise tax imposed on mineral resources. Various rates of tax apply for different mineral products.

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For co-production or joint-venture agreements, the government’s share is negotiated between the government and the contractor taking into account the following considerations: capital investment, risks involved, contribution to the economy, and such other factors will help in determining a sharing that is fair and equitable. As for FTAAs, the government’s share in an FTAA consists, of among other things, the following: contractor’s corporate income tax, excise tax, special allowance, withholding tax due from the contractor’s foreign stockholders arising from dividend or interest payments to the said foreign stockholders, in case of a foreign national, and all such other taxes, duties and fees as provided under existing laws. The collection of the government’s share commences after the contractor has fully recovered its operating expenses, including all exploration and development expenditures. The government is also entitled to an additional share equivalent to the difference between 50% of the net mining revenue and the government share described above. Incentives and rights To further encourage private sector participation in mining, RA 7942 entitles contractors in mineral agreements and FTAA to the following (among others): (i) fiscal and non-fiscal incentives under the Omnibus Investments Code of the Philippines; (ii) exemption from real property taxes or assessments of pollution control devices; (iii) carryover of the net operating loss without the benefit of incentives incurred in any of the first 10 years of operations as a deduction from taxable income for the next five years immediately following the year of such loss (although if the contractor chooses to avail of the income tax holiday under the Omnibus Investments Code, the incentive on income tax carry forward of losses will not be granted to the contractor, and vice versa); (iv) accelerated depreciation of fixed assets; and (v) entitlement to the certain rights and guarantees, which include repatriation of investments, remittance of earnings, remittance of payments for foreign loans and contracts, freedom from expropriation except for public use or in the interest of national welfare or defense and upon payment of just compensation, freedom from requisition of investment except in case of war or national emergency and only for the duration thereof, and confidentiality of information supplied by the contract or to the government during the term of the project to which it relates. RENEWABLE ENERGY Renewable Energy Act of 2008 R.A. No. 9513 establishes the Philippine framework for the accelerated development and advancement of renewable energy resources, and the development of a strategic program to increase its utilization. It was enacted to, among others, increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in the use of renewable energy systems, and encourage the development and utilization of renewable energy resources as tools to effectively prevent or reduce harmful emissions. “Renewable Energy Resources” are energy resources that include, among others, biomass, solar, wind, geothermal, ocean energy, and hydropower. To encourage the development of renewable energy facilities, renewable energy developers are entitled to incentives including, but not limited to: (i) income tax holiday for the first seven years of commercial operations, (ii) duty-free importation of renewable energy machinery, equipment and materials, (iii) special realty tax rates on equipment and machinery, (iv) corporate tax rate of 10% on its net taxable income after the lapse of the income tax holiday period, (v) zero-rated value added tax on the sale of fuel or power generated from renewable sources of energy, (vi) tax exemption from the sale of carbon emission credits, and (vii) tax credit on domestic capital equipment and services. Moreover, government financial institutions have been tasked to

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provide preferential financial packages for the development, utilization and commercialization of renewable energy projects. Pursuant to this law, the government is entitled to a share on renewable energy development projects equal to 1% of the gross income of renewable energy resource developers resulting from the sale of renewable energy produced and such other income incidental to and arising from the renewable energy generation, transmission and sale of electric power. The DOE is the lead agency mandated to implement the provisions of the Renewable Energy Act, which it does through the Renewable Energy Management Bureau. The Renewable Energy Act also created the National Renewable Energy Board which is tasked to, among others, recommend specific actions to facilitate the implementation of the NREP to be executed by the DOE and other appropriate agencies of government, monitor and review the implementation of the NREP and monitor the utilization of the Renewable Energy Trust Fund. The Renewable Energy Trust Fund was established to enhance the development and greater utilization of renewable energy and will be exclusively used to: (i) finance the research, development, demonstration, and promotion of the widespread and productive use of renewable energy systems for power and non-power applications, (ii) support the development and operation of new renewable energy resources to improve their competitiveness in the market, and (iii) conduct nationwide resource and market assessment studies for the power and non-power applications of renewable energy systems.

ENVIRONMENTAL LAWS Philippine environmental laws are primarily implemented by the DENR, which is responsible for carrying out the state’s constitutional mandate to control and supervise the exploration, development, utilization and conservation of the country’s natural resources. Philippine environmental law compliance would include compliance with: (1) the terms and conditions of the Environmental Compliance Certificate issued by the DENR certifying that based on the proponent’s representations and the DENR’s review, the proposed project or undertaking will not cause a significant negative environmental impact and that the proponent has complied with all the requirements of the Environmental Impact Statement System; (2) the terms and conditions of a permit to discharge, which allows the discharge of regulated effluents (i.e., discharges from known sources, such as manufacturing plants, industrial plants, including domestic, commercial and recreational facilities which traverse to the bodies of waters), pursuant to the Philippine Clean Water Act of 2004 and the Revised Effluent Regulations of 1990; (3) the guidelines imposed by the Marine Pollution Decree of 1976, which prohibits, among others, the discharging or dumping oil, noxious gaseous and liquid substances, and other harmful substances from or out of any ship, vessel, barge or any other floating craft, or other man-made structures at sea, by any method, means or manner into or upon the territorial and inland navigable water of the Philippines; (4) the Water Code of the Philippines, which allows the dumping of tailings from mining operations into rivers and waterways upon prior approval by the National Water Resources Board; and (5) the Philippine Clear Air Act of 1999, which seeks to prevent air pollution by controlling emission, greenhouse gasses that could stimulate global warming, and, through the DENR, imposing emission fees from industrial dischargers through its emission permitting system. PROBABLE GOVERNMENTAL REGULATIONS There are currently no House and Senate bills that are pending approval (i.e., passed the second reading) that would directly or indirectly affect the business of Philex Petroleum. The table below summarizes the relevant House and Senate bills that are pending, or have been approved, at the committee level:

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Title Description HOUSE OF REPRESENTATIVES

HB00007 – Hazardous and Radioactive Wastes Mgt. Act Status: Approved by the Committee on Appropriations on February 2, 2011

The proposed bill will make waste generators primarily responsible for the management and disposal of hazardous and radioactive wastes. It will command the DENR, DOH, and PNRI, to create, within six months of promulgation, a list of hazardous wastes, a comprehensive waste management scheme and its implementing rules – the latter based on industry best practices.

HB00008 – Environmental Assessment Act of 2010 Status: Pending with the Committee on Ecology (July 27, 2010)

The proposed bill will provide for a systematic application of environmental assessment strategies from initial project proposal, to preliminary scanning, to conducting, reporting and finally, to monitoring. It will cover all industries that may have an adverse impact on the environment such as resource exploration. The DENR will serve as the overseer, while the actual conduct of the Strategic Environmental Assessment will be left to the project proponent. Critical projects, which are presumed to have a negative impact on the environment, will be identified by the Department and required to conduct an Environmental Impact Assessment (“EIA”) in accordance with its rules. Project proponents are mandated to inform the LGUs about the proposed project to ensure public participation in the EIA process.

HB00045 – Sustainable Forest Management Act Status: Approved by the Committee on Appropriations on February 2, 2011

The proposed bill will mandate the development and adoption of a sustainable forest management strategy based on rational allocation of forestland uses and promotion of land use practices that increase productivity and conserve soil, water and other forestland resources. The proposed bill reiterates the need for EIAs for critical projects which may impact forest resources as determined by the DENR. Permanent forests are created subject to special regulation and incentives for sustainable forest management strategies are provided.

Title Description SENATE

S.B. No. 59 - An Act Creating the Environmental Protection Agency of the Philippines Status: Pending with the Committee (July 27, 2010)

The proposed bill will create an agency that will (a) establish and enforce environmental standards, (b) undertake exploration, assessment and inventory of natural resources, (c) undertake geological surveys including territorial waters, (d) assume responsibility for assessment, development, protection and conservation of all natural resources, and (e) oversee, supervise and police all natural resources.

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S.B. No. 1363 - An act providing for the framework in the conservation, development and management and utilization of environment and natural resources Status: Pending with the Committee (August 31, 2010)

The proposed bill will provide a framework that shall serve as the official blue print with which all environmental managers and users must comply. The act seeks to harmonize the policies and functions of government including Government Owned and Controlled Corporations.

S.B. No. 2788 - An act providing for the regulation of oil and gas pipelines, creating the national pipeline board for the purpose Status: Pending with the Committee (May 9, 2011)

The proposed bill requires a franchise for the construction and operation of pipelines. The franchisee will be considered as a common carrier for other entities which may use the pipeline for transportation of petroleum. The pipeline franchise shall last for 25 years and renewable for another 25 years. The proposed bill will create a National Pipeline Board which shall: (a) prescribe environment and safety standards in the construction, installation, ownership, operation and maintenance of oil and gas systems, and (b) require minimum standards for integrity management standards for oil and gas pipelines.

RESEARCH AND DEVELOPMENT The Company has spent minimal amounts for research and development activities during the last three fiscal years, which amounted to an insignificant percentage of revenues. COMPLIANCE WITH ENVIRONMENTAL LAWS An ECC was issued by the EMB of the DENR to BEMC on November 7, 2008. In compliance with the ECC conditions, the Company has allotted P5 million for an EGF for the entire life of the coal mine. The EGF is divided as a Trust Fund of P3 million and a Cash Fund of P2 million. The Company has also budgeted approximately P300,000 per year for costs to ensure compliance with environmental laws. A certificate of Non-Coverage was issued by the EMB to Forum (GSEC 101) on December 22, 2010 for the 2D and 3D seismic surveys conducted in the Recto Bank area from January to March 2011. Forum (GSEC 101) allots approximately US$50,000 for costs to ensure compliance with environmental laws. An ECC was issued by the EMB to FEI on February 19, 2010 for the extraction of natural gas from the SC 40 contract area and for a two MW natural gas-fired power plant project in Barangay Libertad, Bogo City, Cebu. An estimate of costs relating to compliance with

SENATE S.B. No. 1362 - An Act to enhance the Philippine Environmental Impact Assessment system to strengthen public participation therein Status: Pending with the Committee (August 31, 2010)

The EIA system will identify, forecast and evaluate adverse effects on the environment and the community of a proposed project of any private individual or entity or government instrumentality. The act further outlines the mechanism by which the EIA system will function.

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environmental laws is pending ongoing discussions with the DOE which includes cost allocation for compliance with the ECC conditions. Compliance by the Company with environmental laws helps assure the management that the Company’s business can be operated in a sustainable manner. As far as the Company is aware, the Group has complied with all environmental regulations with regard to the SCs.

EMPLOYEES The Company is managed by its directors and executive officers with finance, legal and technical support provided by Philex Mining and specialist consultants. The day-to-day operations and administration of assets operated by the Company are handled by the employees of the operating subsidiaries, FEP and BEMC, in accordance with established policies and agreed objectives. As of December 31, 2010, FEP and its subsidiaries had three management and 10 operations and administrative regular employees, and BEMC had 30 management and supervisory and 15 operations and administrative regular employees, and the Company had one management regular employee. In the ensuing 12 months, the Company anticipates to have three management employees and one administrative regular employee. The Company and its subsidiaries have no collective bargaining agreement with its employees, and have not experienced any strikes from its employees. There are no supplemental benefits or incentive arrangements with employees.

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DESCRIPTION OF PROPERTY SERVICE CONTRACTS AND COAL OPERATING CONTRACT A summary of the Group’s interests in petroleum SCs and COCs is as follows:


square kms.


SC 6 Cadlao Offshore

Northwest Palawan

34 Philex

Petroleum 1.65%*

Blade Petroleum

Production Period*


SC 6A Octon Offshore

Northwest Palawan

1,080

Philex Petroleum

5.56% FEPC 5.56%


Production Period*


SC 6B Bonita Offshore

Northwest Palawan

533 FEPC 7.031% Philodrill Corporation

Production Period*


SC 14 Offshore Northwest Palawan


December 17, 1975 December 17, 2025

₋ Block A Nido


₋ Block B Matinloc

15 FEPC 12.406% Philodrill Corporation Production

₋ Block B-1 N. Matinloc


₋ Block C-1 Galoc

163 FEPC 2.27575% GPC Production

₋ Block C-2 W. Linapacan

176.5 FEPC 2.27575% Pitkin Appraisal

₋ Tara 10.28 FEPC 10.000% Trans-Asia Exploration

₋ Block D 185 FEPC 8.168% Philodrill Corporation Exploration

SC 40 North Cebu

Onshore North Cebu 4,580 FEI 66.67% FEI Production February 9, 1995

November 24, 2030

SC 72 Recto Bank

Offshore West Palawan

8,880 Forum (GSEC 101) 70%

Forum (GSEC 101)

Exploration February 15, 2010 February 14, 2017**

COC 130 Zamboanga Sibugay 20 BEMC 100% BEMC Production February 23, 2005

May 5, 2018 * SC 6 (which covers SC 6 Cadlao, SC 6A Octon and SC 6B Bonita) is in the production period based on Section 3.2

of the SC. Production in the Cadlao field commenced in 1981 and ceased in 1991, when the consortium decided to transfer the FPSO to SC 14 to achieve a higher production rate. The resumption of production is pending the successful redevelopment of the Cadlao field to produce the remaining oil reserves, and the development of the Octon and Bonita discoveries.

** Expiry date of Exploration Phase These constitute the principal properties of the Company. For a more detailed discussion, see the section “Statement of Active Business Pursuits” in this Prospectus.

14 The participating interest of FEPC in SC 6 and SC 14 blocks is subject to a settlement agreement between FEP and BEC. Please see section “Legal Proceedings” on page 63 for discussion.

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Plant and equipment consist mainly of the Company’s share in the wells, platform and facilities in various operating service contracts amounting to US$3.6 million as at end 2010, as well as transport and office equipment amounting to US$93,000 for its oil exploration activities, and mine and mining properties, mine machinery and equipment, transportation equipment, surface structures and facilities, office equipment and construction in progress for BEMC’s coal operations amounting to P275.1 million. There are no mortgages, liens and/or encumbrances over the foregoing property, plant and equipment which are under the full use and control of the Company. The Company has not entered into any leases of property. There is no intention to acquire additional property, plant and equipment other than those that may be required for the continued activities.

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LEGAL PROCEEDINGS In the Matter of the Ad Hoc Arbitration between BEC, the claimant, and FEP, the respondent, before the Arbitral Tribunal composed of (Ret) Justice Jose C. Vitug, as Chairman, and (Ret) CA Justice Hector L. Hofilena and Atty. Fernando S. Penarroyo, as members, at the Diamond Hotel, Manila. Notice of Arbitration sent by FEP to BEC on June 12, 2008. In the course of an arbitration proceeding, on May 10, 2011, BEC and FEP entered into an agreement (the “Settlement Agreement”) for the purpose of settling their disputes and other issues relating to BEC's share in the historical cost recoveries arising from SC 14A and B (Nido-Matinloc Blocks), SC 14C (Galoc Block), and other blocks of SC 14 and SC 6, pursuant to the Sale and Purchase Agreement dated April 3, 2006 involving the assignment of BEC’s shares in BMPI (now FEPC) to FEP. Based on, and subject to the terms and conditions, of the Settlement Agreement, FEP will pay BEC US$650,000 and cause the conveyance of (i) 50% of FEPC's participating interests in the foregoing service contracts, and (ii) 50% of the related recoverable costs, subject to, among others, the approval of the DOE. Upon fulfillment of certain pre-conditions, the parties will submit the Settlement Agreement to the arbitral tribunal for the rendition of a final consent award and accordingly FEPC's minority participating interests in its producing fields will be reduced, and consequently FEP’s group revenues and its gross profits will be reduced accordingly, as follows: • SC 14C-1 (Galoc): participating interest will fall by 50% from 2.27575% to

1.137875%. Galoc produced 2.69 million barrels in 2010 (gross) with an estimated 1.76 million barrels expected to be produced in 2011 (gross)

• SC 14A (Nido): participating interest will fall by 50% from 8.468% to 4.234%. Nido produced 86,626 barrels in 2010 (gross) with an estimated 65,000 barrels expected to be produced in 2011 (gross)

• SC 14B (Matinloc) and SC14B-1 (North Matinloc): participating interests will fall by 50% from 12.406% and 19.463% to 6.203% and 9.7315%, respectively. Matinloc and North Matinloc had a combined production of 88,237 barrels in 2010 (gross) with an estimated 91,680 barrels expected to be produced in 2011 (gross).

Upon fulfillment of certain pre-conditions, and subject to the terms and conditions of the Settlement Agreement, the Sale and Purchase Agreement will be deemed terminated and FEP will no longer be liable to pay potential additional consideration of up to US$9.03 million on the acquisition of FEPC.

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SECURITIES OF THE ISSUER MARKET INFORMATION As of the date of this Prospectus, the Issuer has an authorized capital stock of 6,800,000,000 Shares, each with a par value of P1, and its issued share capital consists of 1,700,000,000 Shares. The Shares are not traded in any market, nor are they subject to outstanding options or warrants to purchase, or securities convertible into Shares of the Issuer. LISTING; NO PUBLIC OFFER Shortly after the approval of the Dividend Distribution, the Issuer will apply for Listing based on Section 1(b) of the PSE’s Amended Rules on Listing by Way of Introduction, which provides that Listing may be appropriate where the securities of an unlisted issuer are distributed by a way of property dividend by a listed issuer to shareholders of that listed issuer. In such a case, a public offering does not need to be undertaken because the securities for which listing is sought would be of such an amount and would be so widely held that their adequate marketability when listed can be assumed. HOLDERS Prior to the Dividend Distribution, the Issuer has ten stockholders, nine of whom are individuals with one Share each. The following sets out the names of the top 20 stockholders of the Issuer before and after the Dividend Distribution: Note: The following is a list of stockholders of record; the beneficial ownership of the following stockholders in Shares held by PCDNC is described in pages 83-84 of this Prospectus.

Name of Stockholder

Class of

Securities

Before Dividend Distribution After Dividend Distribution

Number of Shares

% of Outstanding

Shares

Number of Shares

% of Outstanding

Shares Philex Mining Corporation Common 1,699,999,991 99.99% 1,101,373,946 64.79% Manuel V. Pangilinan Common 1 <0.01% 391,251 0.02% Carlo S. Pablo Common 1 <0.01% 1 <0.01% Jose E. C. Villaluna, Jr. Common 1 <0.01% 1 <0.01% Renato N. Migriño Common 1 <0.01% 118,751 <0.01% Rogelio G. Laraya Common 1 <0.01% 1 <0.01% Robert C. Nicholson Common 1 <0.01% 1 <0.01% Barbara A. C. Migallos Common 1 <0.01% 1 <0.01% Benjamin S. Austria Common 1 <0.01% 86 <0.01% Emerlinda R. Roman Common 1 <0.01% 1 <0.01% Social Security System Common - - 107,680,616 6.33% Asia Link B.V. Common - - 127,909,498 7.52% PCD Nominee Corporation Common - - 171,474,365 10.09% Two Rivers Pacific Holdings Corp.

Common - - 56,511,020 3.32%

Government Service Insurance System

Common - - 35,847,918 2.11%

Richard Ng Lim Common - - 10,673,720 0.63% Cheng Han Sui &/or Diana Y. Cheng

Common - - 2,750,005 0.16%

The First National Investment Company, Inc.

Common - - 1,524,380 0.09%

Albert Awad Common - - 1,105,559 0.07% Makati Supermarket Corp. Common - - 1,044,153 0.06% Estate of Allen Cham Common - - 840,059 0.05% Philippine Remnants Co., Inc. Common - - 609,375 0.04% Frank Pao Common - - 454,907 0.03% The Roman Catholic Archbishop of Manila

Common - - 402,641 0.02%

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Name of Stockholder

Class of

Securities


Number of Shares

% of Outstanding

Shares

Number of Shares

% of Outstanding

Shares Religious of the Virgin Mary – B

Common - - 390,722 0.02%

Paulino de Ugarte &/or Elena E. de Ugarte

Common - - 383,517 0.02%

Ack Construction, Inc. Common - - 374,653 0.02% Carol Joan Reif Common - - 371,760 0.02% Robin John Pettyfer Common - - 330,593 0.02% Others (Aggregate) Common - - 77,436,499 4.56% Total Outstanding 1,700,000,000 100.00% 1,700,000,000 100.00%

The Dividend Distribution will result in the following:

• Philex Mining’s shareholdings will decrease from approximately 99.99% to approximately 64.79%;

• Aside from Philex Mining, Social Security System and First Pacific (on account of Shares

issued to Asia Link B.V. and PCDNC) will become beneficial owners of more than 5% of the Shares;

• Because Manuel V. Pangilinan, Jose Ernesto C. Villaluna, Jr., Renato N. Migriño, Robert

C. Nicholson, Barbara Anne C. Migallos and Benjamin S. Austria are directors of Philex Petroleum and stockholders of Philex Mining, they will receive Shares as property dividends in the amounts set out above; and

• Philex Petroleum, which used to be 99.99% Filipino owned will have foreign

stockholders, which will beneficially own approximately 220,970,600 equivalent to 12.998% of the Shares.

DIVIDENDS The Company has not declared any cash or other dividends from the time of its incorporation. Apart from legal restrictions governing the declaration of dividends, which are discussed in page 67 of this Prospectus, there are no restrictions that limit the Company’s ability to pay dividends whether currently or in the future. RECENT SALES OF UNREGISTERED OR EXEMPT SECURITIES (INCLUDING RECENT ISSUANCE OF SECURITIES CONSTITUTING AN EXEMPT TRANSACTION) On November 10, 2009, the Board and stockholders representing at least two-thirds of the Company’s outstanding capital stock approved the increase in authorized capital stock from P2,000,000,000 to P6,800,000,000. Out of the increase, Philex Mining subscribed to an additional P1,200,000,000 divided into 1,200,000,000 Shares at P1 per share, which subscription was fully paid for in cash. The increase of capital stock was approved by the SEC on December 22, 2009. Subscription for shares of the capital stock of a corporation in pursuance of an increase in its authorized capital stock, when no expense is incurred, no commission, compensation or remuneration is paid or given in connection with the sale or disposition of such securities, and only when the purpose for soliciting, giving or taking of such subscriptions is to comply with the required minimum 25% subscribed capital stock, is exempt from registration under the SRC. No notice or confirmation of exemption is required to be filed for the issuance of shares pursuant to an increase in authorized capital stock.

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DESCRIPTION OF THE SECURITIES OF THE COMPANY The Company’s authorized capital consists of 6,800,000,000 Shares, which are common shares. 598,626,045 will be covered by the Dividend Distribution, and 1,700,000,000 Shares will be covered by the Listing. The Shares will not be offered to the public, although they are expected to be traded after the Listing. The Shares have the following features: Dividend Rights Aside from what is stated in the Company’s By-Laws and as provided in existing laws, the Company does not have a specific dividend policy. The Company’s By-laws provide that dividends shall be declared and paid out of the unrestricted retained earnings which shall be payable in cash, property or stock to all shareholders on the basis of outstanding stock held by them, as often and at such times as the Board may determine and in accordance with law and applicable rules and regulations. No fractional shares shall be issued from any declaration of stock dividends. Voting Rights Each holder of share has full voting rights. At each meeting of the stockholders, every stockholder entitled to vote on a particular question or matter involved shall be entitled to one vote for each share of stock standing in his name in the books of the Company at the time of closing of the transfer books for such meeting. Pre-Emptive Rights The Company’s Articles of Incorporation provide that there shall be no pre-emptive rights with respect to shares of stock to be issued, sold or otherwise disposed of by the Company for any corporate purpose, including shares of stock to be issued pursuant to a duly approved stock option, stock purchase, stock subscription or similar plans. Change in Control There is no provision in the Company’s Articles of Incorporation and By-laws which may delay, deter, or prevent a change in control in the Company.

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DIVIDENDS AND DIVIDEND POLICY Under Philippine law, dividends may be declared out of a corporation’s unrestricted retained earnings which shall be payable in cash, in property, or in stock to all stockholders on the basis of outstanding stock held by them. The amount of retained earnings available for declaration as dividends may be determined pursuant to regulations issued by the SEC. The approval of the board of directors is generally sufficient to approve the distribution of dividends, except in the case of stock dividends which requires the approval of stockholders representing not less than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the purpose. RECORD DATE The Company’s By-Laws provide that for purposes of determining the shareholders entitled to receive payment of any dividends, whether cash, property or stock, the Board may fix in advance a date as the record date for any such determination of shareholders. The said By-Laws likewise provide that, in connection with the determination of the shareholders entitled to receive payment of any dividend, the Board may provide that the stock and transfer book be closed for a period to be fixed by the Board, but not to exceed in any case 20 business days. No stock may be transferred during the period when the books are closed. In each case, the set record date shall not be less than 10 trading days from disclosure to the PSE of the declaration of the dividend. DIVIDEND POLICY Aside from what is stated in the Company’s By-Laws and as provided in existing laws, the Company does not have a specific dividend policy. The Company’s By-laws provide that dividends shall be declared and paid out of the unrestricted retained earnings which shall be payable in cash, property or stock to all shareholders on the basis of outstanding stock held by them, as often and at such times as the Board may determine and in accordance with law and applicable rules and regulations. No fractional shares shall be issued from any declaration of stock dividends. The Board may decide to declare cash dividends in the future after taking into account various factors, including: • the level of the Company’s cash, gearing, return on equity and retained earnings;

• the Company’s results for, and the Company’s financial condition at the end of the year, the

year in respect of which the dividend is to be paid and the Company’s expected financial performance;

• the Company’s projected levels of capital expenditure and other investment plans;

• restrictions of payment of dividends that may be imposed on the Company by any of its financing arrangements and current and prospective debt service requirements; and

• such other factors as the Board deems appropriate. The Company, however, cannot assure the public that it will pay any dividends in the future. Apart from the discussion on dividends under “Risk Factors” in page 12 of this Prospectus, there are no restrictions that limit the Company’s ability to pay dividends in the future.

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DIVIDEND HISTORY The Company has not declared any dividends as of the date of this Prospectus.

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SELECTED FINANCIAL DATA Investors should read the selected financial data with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s consolidated financial statements and related notes included elsewhere in this Prospectus. The information below is not necessarily indicative of the results of future operations and does not purport to project the results of the Company’s operations or financial condition for any future period or date. The amounts below were taken from the consolidated financial statements of the Company, audited by independent auditors, SyCip Gorres Velayo & Co. (“SGV”).

For the years ended For the three-month periods ended March 31, December 31,

(Amounts in Thousands, 2008

2009

2010 2010

2011 Except Per Share data)

CONSOLIDATED STATEMENTS OF INCOME DATA

Revenue P- P- P111,912 P- P137,367

Costs and expenses 3,483 20,017 131,034 176 86,151 Other income (charges) (83,773) (144,388) (166,792) (19,106) 402,960 Income (Loss) before income tax (87,256) (164,405) (185,914) (19,282) 454,176

Net Income (Loss) (P87,256) (P164,405) (P190,674) (P19,834) P452,261

Attributable to: Equity holders of the Parent Company (P87,256) (P164,405) (P167,334) (P19,834) P427,842 Non-controlling interests - - (23,340) - 24,419

(P87,256) (P164,405) (P190,674) (P19,834) P452,261 Basic/diluted earnings (loss) per Share

(P0.175)

(P0.311)

(P0.098)

(P0.012)

P0.252

As at December 31, As at March 31,

In Thousand Pesos 2009

2010 2011

CONSOLIDATED BALANCE SHEETS DATA

Current Assets

Cash and cash equivalents P1,193,030 P250,006 P153,612

Accounts receivable 53 81,847 160,016

Inventories - 31,249 58,628

Other current assets 3,405 17,742 17,993

Total Current Assets 1,196,488 380,844 390,249

Noncurrent Assets Available-for-sale (AFS) financial assets 125,304 170,771 1,508,181

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Property, plant and equipment - 432,494 415,119

Goodwill - 258,593 258,593 Investments in associates 699,978 909,823 - Deferred oil and gas exploration costs, and other noncurrent assets

- 920,754 1,132,817

Total Noncurrent assets 825,282 2,692,435 3,314,710

TOTAL ASSETS P2,021,770 P3,073,279 P3,704,959

LIABILITIES AND EQUITY

Current Liabilities

Short-term bank loan P- P150,000 P250,000 Accounts payable and accrued liabilities 150 46,623 240,902 Advances from related parties 573,281 788,368 743,380

Provision for losses - 51,586 -

Total Current Liabilities 573,431 1,036,577 1,234,282

Noncurrent Liabilities

Provision for losses - 532,576 528,871 Deferred income tax liability - 4,692 6,606

Provision for rehabilitation and decommissioning costs - 4,102 2,327

Total Noncurrent Liabilities - 541,370 537,804

Total Liabilities 573,431 1,577,947 1,772,086

Equity Attributable to Equity Holders of the Parent Company

Capital stock 1,700,000 1,700,000 1,700,000

Equity reserves - 40,588 40,588 Retained Earnings (Deficit) (251,661) (418,995) 8,847 Unrealized gain on AFS financial asset - 29,638 53,348 Cumulative translation adjustment on foreign subsidiaries - (70,696) (90,616)

1,448,339 1,280,535 1,712,167

Non-controlling Interests - 214,797 220,706

TOTAL EQUITY 1,448,339 1,495,332 1,932,873

TOTAL LIABILITIES AND EQUITY P2,021,770 P3,073,279 P3,704,959

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For the years ended December 31,

For the three-month periods ended

March 31,

(Amounts in Thousands)

2008

2009

2010 2010

2011

CONSOLIDATED STATEMENTS OF CASH FLOWS:

Cash Flows from Operating Activities (P51,060) (P21,631) (P20,574) (P15,131) (P44,240) Cash Flows from Investing Activities (683,343) (81,413) (1,161,084) (36,910) (105,534) Cash Flows from Financing Activities 236,609 1,308,755 238,639 (1,093,228) 56,903 Effect of Exchange Rate Changes on Cash and Cash Equivalents

- (20,094) (5) (9,412) (3,523)

Net Increase (Decrease) in Cash and Cash Equivalents

(497,794) 1,185,617 (943,024) (1,154,681) (96,394)

Cash and Cash Equivalents, Beginning of Period

505,207 7,413 1,193,030 1,193,030 250,006

Cash and Cash Equivalents, End of Period P7,413 P1,193,030 P250,006 P38,349 P153,612

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial position and results of operations should be read together with “Selected Financial Data” and the Company’s consolidated financial statements and related notes which are annexed to this Prospectus. In addition to historical information, this discussion and analysis may contain forward-looking statements that involve risks, uncertainties, and assumptions. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors including those set forth under “Risk Factors” and elsewhere in this Prospectus. FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008 Information on the Company’s results of operations and financial position presented in the 2010 Audited Consolidated Financial Statements and accompanying Notes to the Consolidated Financial Statements are incorporated hereto by reference. The Company, which has ownership interests in corporations in the petroleum and coal business, derives revenue from the corporations which it has acquired and invested in. The Company’s consolidated operating revenue consists solely of petroleum and coal revenues, which amounted to P111.9 million in 2010, compared to NIL in 2009 and 2008 as the Company’s subsidiaries were acquired only in September 2010. Petroleum revenue at P99.7 million from FEP consisting of sales from Galoc – P84 million, Nido P4.6 million, Matinloc – P8.2 million and North Matinloc – P2.9 million, comprised 89% of the total revenue; while coal revenue at P12.2 million from BEMC comprised the remaining 11%. Production costs in 2010 amounted to P61.4 million for petroleum and P10.9 million for coal and none in 2009 and 2008. General and Administrative Expenses amounted to P58.2 million, higher by 191% than P20.0 million expense in 2009 and by 1570% than the P3.5 million expense in 2008. Total Costs and Expenses amounted to P131.0 million in 2010, which now included production costs from petroleum and coal, compared to only general and administrative expenses of P20.0 million in 2009 and P3.5 million in 2008. Other Income (Charges) amounted to (P166.8) million in 2010 compared to (P144.4) million in 2009 and (P83.8) million in 2008 which comprised mainly of a Loss on Dilution of Interest in an Associate, Loss on Write-down of Investment, Foreign Exchange Losses and Equity in Net Earnings (Losses) of Associates. The Loss on Dilution of Interest in an Associate amounted to P119.8 million, representing the difference between the fair value and carrying value of the investment in shares of stock of PERC after its reclassification to Available-for-Sale (“AFS”) Investment following the dilution of the Company’s interest from 20.62% to 10.31%. The Loss on Write-down of Investment of P44.7 million pertains to the full write-down of FEC’s 40% investment in LMC. The write-down was brought about by the completion of the Technical Report on MPSA No. 148 under LMC declaring the explored area of the project not feasible to mine based on the limited resources. Foreign Exchange Losses amounted to P23.6 million in 2010 due to the stronger peso closing rate of P43.84:US$1 as of December 31, 2010 that was used to translate the dollar-denominated advances of Philex Mining to the Company, compared to the losses of P8 million in 2009 which was at the peso closing rate of P46.20:$US1 and P71.7 million in 2008 then at the peso closing rate of P47.52. Equity in Net Earnings (Losses) of Associates amounted to P19.1 million, consisting of P18.2 million income from Pitkin, P4.9 million income from PERC and P4 million loss from FEP and LMC. Equity in Net Earnings (Losses) of Associates amounted to (P50.4) million in 2009 and (P14.4) million in 2008. A Provision for Impairment of Deferred Oil and Gas Exploration Costs of P86.6 million was recorded in 2009 as full provision for the impairment of SC 6, 6A and 41.

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Consolidated Net Loss amounted to P190.7 million in 2010, compared to P164.4 million in 2009, and P87.3 million in 2008. Total Current Assets amounted to P380.8 million in 2010 from P1.196 billion in 2009 due to the lower balance of Cash and Cash Equivalents which decreased to P250.0 million in 2010 primarily from the Company’s acquisition of its investments in FEC, BEMC and Pitkin, compared to the P1.193 billion balance in 2009 from the additional equity contribution of Philex Mining to the Company to increase the Capital Stock to P1.7 billion in 2009 from P500 million in 2008. With the acquisition by the Company of 100% of BEMC and the Company’s purchase of Philex Mining’s ownership in FEC which effectively increased the Company’s ownership interest in FEP by 25.63% in September 2010, the Company is now required to consolidate the accounts of FEC, FEP and BEMC in the Company’s balance sheet. This increased Total Assets to P3.073 billion as of December 31, 2010. Accounts Receivable increased to P81.8 million in 2010 mainly from trade receivables from the sale of coal and petroleum products of subsidiaries. Inventories now comprised of inventory of coal and materials and supplies at a total amount of P31.2 million in 2010, compared to none in 2009. Other Current Assets also increased from P3.4 million in 2009 to P17.7 million in 2010, mainly due to Prepaid Expenses amounting of P11.1 million. The increase in Noncurrent Assets in 2010 was brought about mainly by the consolidation of subsidiaries’ Property, Plant and Equipment amounting to P432.5 million and Deferred Oil and Gas Exploration Costs, and Other Noncurrent Assets amounting to P920.8 million. Deferred Oil and Gas Exploration Costs consist of expenditures for the following as at year end:

SC 40 – P601.7 million (2010): NIL (2009) SC 72 – P313.8 million (2010): NIL (2009) SC 6 – P49.4 million (2010): P44.5 million (2009) SC 4115 – P32.9 million (2010): P32.9 million (2009) SC 6 – P9.3 million (2010): P9.3 million (2009) Others – P328 thousand (2010): NIL (2009) Less : Allowance for Unrecoverable Portion – P86.6 million (2010): P86.6 million (2009)

The Company also recorded a goodwill amounting to P258.6 million from the acquisition of FEC and FEP. AFS increased to P170.8 million in 2010 from P125.3 million in 2009 due to the reclassification of investment in PERC from an Associate to AFS by P170.8 million following the dilution of the Company’s interest in PERC to 10.31%; correspondingly, the reclassification of the investment in Pitkin of P909.8 million to Investment in Associates reduced the AFS account by P125.3 million. At year-end, Total Assets of the Company amounted to P3.073 billion in 2010 compared to P2.022 billion in 2009.

15 Relinquished by the contractors to the Republic of the Philippines in August 2010

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Current Liabilities as of December 31 amounted to P1.037 billion in 2010 compared to P573.4 million in 2009. Short-term Bank Loan in 2010 represents the availment by BEMC of a P150 million short-term loan for its working capital requirements. Accounts Payable and Accrued Liabilities increased to P46.6 million in 2010 from P150 thousand in 2009. Advances from Related Parties also increased to P788.4 million in 2010 from P573.3 million arising from the additional advances from Philex Mining to the Company for additional working capital, and the recording of the advances of Philex Mining to BEMC amounting to P139.2 million as well as related party advances under FEC at P13.0 million. Provisions for Losses amounted to P51.6 million in 2010 under FEP. The increase in Total Current Liabilities contributed to the increase in Total Liabilities to P1.578 billion in 2010 compared to P573.4 million in 2009. Total Noncurrent Liabilities amounted to P541.4 million in 2010 versus none in 2009. The Noncurrent Liabilities comprised of Provision for Losses of P532.6 million, Provision for Rehabilitation and Decommissioning Costs of P4.1 million and Deferred Income Tax of P4.7 million. The Provision for Losses amounting to P532.6 million was mainly for the potential consideration on the acquisition of BPMI contingent to FEP and amount due from future net revenues from SC 40. Total Equity amounted to P1.495 billion in 2010 from P1.448 billion in 2009. The Net Losses of P190.7 million and Cumulative Translation Adjustment on Foreign Subsidiaries of P70.7 million, all account for the decrease in Total Equity in 2010 versus 2009, partially offset by the Equity Reserves of P40.6 million, Unrealized Gain on AFS of P29.6 million and Non-controlling Interests of P214.8 million. The Equity Reserves and Non-controlling Interests both resulted from the acquisition of FEC, FEP and BEMC in 2010. Equity Reserves (see Note 2 of the Notes to the Consolidated Financial Statements) can be derecognized when the subsidiaries are deconsolidated at the date from which control over the subsidiaries ceases. The last paragraph in Note 4 page 26 of the consolidated financial statements of Philex Petroleum and its subsidiaries as of and for the years ended December 31, 2010, 2009 and 2008 should be read as follows:

In the process of applying the pooling-of-interests method, [Philex Petroleum] initially presented the goodwill relating to [Philex Mining's] acquisition of FEP and FEC, which were recognized previously in [Philex Mining's] consolidated financial statements, amounting to P258.6 million as part of the “Equity reserve” account in the equity section of [Philex Petroleum's] consolidated balance sheet as of December 31, 2010. This presentation resulted in a debit balance in the “Equity reserve” account amounting to P217.5 million. Since the goodwill came from the investment transactions of [Philex Mining] in prior years, [Philex Petroleum] subsequently presented this amount as “Goodwill” in the noncurrent assets section of the consolidated balance sheet as of December 31, 2010 (see Note 31). [Philex Petroleum] did not recognize any goodwill from the internal reorganization effected on September 24, 2010 in accordance with the pooling-of-interests method. Consequently, the adjusted balance of the “Equity reserve” account as of December 31, 2010 amounted to a credit of P40.6 million.

Net Cash Used in Operating Activities amounted P20.6 million in 2010, P21.6 million in 2009 and P51.1 million in 2008. Cash Used in Investing Activities, principally for the acquisition of FEC, FEP and BEMC, and additions to Property, Plant and Equipment and Deferred Oil and Gas Exploration Costs, amounted to P1.161 billion in 2010 compared to P81.4 million in 2009 and P683.3 million in 2008. Cash from Financing Activities amounted to P238.6 million in 2010 on

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account of additional advances from related parties, compared to P1.309 billion in 2009 mainly from additional equity contribution of Philex Mining of P1.2 billion and P236.6 million also from advances from Philex Mining in 2008. Please refer to Note 2 of the Notes to the Consolidated Financial Statements for discussions on new and revised accounting standards that the Company adopted in 2010. FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2011 AND 2010 In the first quarter of 2011, the Company’s consolidated operating revenue consists of petroleum revenues and coal revenues which amounted to P136.1 million and P1.3 million, respectively., No revenues were reported in the same period in 2010 as the Company’s subsidiaries were acquired by the Company only in September 2010. Petroleum revenue contributed by FEP from its participating interests in the Galoc – P126.0 million, Nido – P3.6 million, Matinloc – P3.7 million and North Matinloc – P2.8 million, comprised 99% of the total revenue; while Coal revenue from BEMC comprised the remaining 1%. Coal production started during the last quarter of 2010 under the debugging stage with 16,599 tons of coal remaining in inventory as of March 31, 2011. Production costs in 2011 amounted to P52.7 million for petroleum and P1.3 million for coal and none in 2010. General and Administrative Expenses amounted to P32.1 million, significantly higher than P176 thousand in 2010. Total Costs and Expenses amounted to P86.2 million in 2011, which now included production costs from petroleum and coal, compared to only general and administrative expenses of P176 thousand in 2010. Other Income (Charges) amounted to P403.0 million in 2011 compared to (P19.1) million in 2010 which comprised mainly of a Gain on Dilution of Interest in an Associate and the Equity in Net Losses of Associates. The Gain on Dilution of Interest in an Associate amounted to P443.7 million, representing the difference between the fair value and carrying value of the investment in shares of stock of Pitkin after its reclassification to AFS following the dilution of the Company’s interest from 21.0% to 18.46%. The Equity in Net Losses of Associates amounted to P 39.8 million representing the Company’s share in Pitkin’s additional 2010 losses. A lower foreign exchange rate of P43.390:$US1 as of March 31, 2011 against P43.84:$US1 at end 2010 resulted to a P2.6 million Foreign Exchange Gain for the first quarter 2011 compared to a loss of P13.3 million for the same period in 2010. Consolidated Net Income amounted to P452.3 million for the first quarter 2011, primarily from the gain on dilution of interest in Pitkin, compared to a loss of P19.8 million for the same period in 2010. As of March 31, 2011, the Company’s Total Assets amounted to P3.705 billion as against P3.073 billion as at end 2010. The 21% increase was mainly from the reclassification of investment in Pitkin from Investment in Associate to AFS and increase in Deferred Oil and Gas Exploration Costs and Other Noncurrent Assets. Total Current Assets increased slightly to P390.2 million as of March 31, 2011 from P380.8 million in 2010 due to the lower balance of Cash and Cash Equivalent which decreased to P153.6 million from P250.0 million in 2010 primarily due to expenditures for oil and gas exploration activities. Accounts Receivable increased to P160 million from P81.8 million in 2010 due mainly to from Trade Receivables from the sale of coal and petroleum products of subsidiaries amounting to P149.6 million versus P67.8 million in 2010, partially offset by lower Other Receivables. Inventories on coal, oil and materials and supplies also increased to P58.6 million from P31.2

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million in 2010 as coal produced remained unsold as at quarter end 2011. Other Current Assets slightly increased to P18.0 million from P17.7 million in 2010. The increase in Noncurrent Assets in the first quarter 2011 was primarily due to the reclassification of the investment in Pitkin from Investment in Associate to AFS following the dilution of the Company’s interest in Pitkin. The Company did not participate in Pitkin’s fund raising program by way of a share placement in February 2011. With the issuance of 15.7 million new ordinary shares at US$1.25 per share for the program, the Company’s interest in Pitkin was reduced from 21.00% to 18.46%. As AFS, the investment in Pitkin was revalued based on fair value of P1.314 billion from its carrying cost of P870.0 million. Deferred Oil and Gas Exploration Costs and Other Noncurrent Assets also increased to P1.133 billion from P920.8 million in 2010 due to the exploration expenditures on the oil and gas activities with breakdown as follows:

SC 40 – P602.0 million (P601.7 million in 2010) SC 72 – P525.4 million (P313.8 million in 2010) SC 6 – P49.6 million (P49.4 million in 2010) SC 4116 – P32.9 million (P32.9 million in 2010) SC 6 – P9.3 million (P9.3 million in 2010) Others – P328 thousand (P328 thousand in 2010) Less : Allowance for Unrecoverable Portion – P86.6 million (P86.6 million in 2010)

Property, Plant and Equipment decreased to P415.1 million from P432.5 million in 2010 due to higher amount of depletion and depreciation as against the capital expenditures for BEMC and FEP for the period. Current Liabilities as of March 31, 2011 increased by 19% to P1.234 billion from P1.037 billion in 2010. The Short-term Bank Loan represents the additional availment of P100 million in working capital loans by BEMC in the first quarter 2011 versus P150 million in 2010 for its working capital requirements. Accounts Payable and Accrued Liabilities increased to P240.9 million from P46.6 million in 2010, mainly due to the increase in Trade Payable to P220.7 million from the P8.8 million. Advances from Related Parties, however, decreased to P743.4 million from P788.4 million in 2010 from the payment of subsidiary. Total Current Liabilities increased by P197.7 million to P1.234 billion from P1.037 million in 2010, which increase was primarily due to the increase in Total Liabilities to P1.772 billion from P1.578 billion in 2010. Total Noncurrent Liabilities slightly decreased to P537.8 million from P541.4 million in 2010. The Noncurrent Liabilities were comprised of Provision for Losses of P528.9 million, Deferred Income Tax of P6.6 million and Provision for Rehabilitation and Decommissioning Costs of P2.3 million. The Provision for Losses amounting to P528.9 million was mainly due to the potential liability of FEP arising from the acquisition of BPMI.

16 Relinquished by the contractors to the Republic of the Philippines in August 2010

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As of March 31, 2011, Total Equity amounted to P1.933 billion from P1.495 billion in 2010. The Retained Earnings amounted to P8.8 million from a deficit in 2009 due to the first quarter 2011 Net Income attributable to the Parent Company of P427.8 million, the Unrealized Gain on AFS of P53.3 million, the Non-controlling Interests of P220.7 million and the Equity Reserves of P40.6 million versus 2010, partially offset by the Cumulative Translation Adjustment on Foreign Subsidiaries of P90.6 million. The Equity Reserves and Non-controlling Interests both resulted from the acquisition of FEC, FEP and BEMC in 2010. Net Cash Used in Operating Activities amounted to P44.2 million in the first quarter 2011 and P15.1 million for the same period in 2010. Cash Used in Investing Activities, mainly additions to Property, Plant and Equipment and Deferred Oil and Gas Exploration Costs, amounted to P105.5 million in 2011 compared to P36.9 million in 2010. Cash from (Used in) Financing Activities amounted to P56.9 million in 2011 compared to (P1.093) billion in 2010. During the first quarter of 2011, BEMC availed of short-term loans partially offset by payment of advances from related parties. TOP FIVE (5) KEY PERFORMANCE INDICATORS 1) Revenues derived from Subsidiaries The Company’s financial performance is dependent primarily on revenues contributed by its subsidiaries which are driven by the volume of oil lifting under FEP and the sale of coal products under BEMC. Oil prices, which contribute to a major extent the determination of the level of such revenue, are dictated by world market. As to coal, the selling price is currently based on a short-term arrangement with the buyer. FEP The revenues of FEP are derived from its 2.27% participating interest in the Galoc field under SC 14C which went to full production in 2010 resulting to a 240% increase in revenues of US$6.068 million from US$1.786 million in 2009. An increase in oil price by 23% also boosted revenues in 2010. The gross profit in 2010 amounted to US$2.059 million, higher compared to US$196 thousand for 2009. FEP continuously seeks to maximize its revenue streams for this service contract. The higher revenues reduced the loss from continued operations before tax by 78% to US$558 thousand in 2010 from US$2.5 million in 2009 resulting to lower loss per share of US$0.013 in 2010 versus US$0.075 in 2009. BEMC BEMC recorded P31.1 million revenues from coal in 2010 and P37.0 million in 2009 from the trading of coal purchased from small scale miners. BEMC started its debugging stage in the last quarter of 2010 producing in the process a small quantity of coal during the period. 2) Costs and Expenses of Subsidiaries The minimization of costs and expenses, both capital and operating, by the Company and its subsidiaries would consequently result to improved net income and better financial stability for the Company. FEP Total administrative expenses in 2010 and 2009 amounted to US$2.4 million and US$2.6 million, respectively. Net financial expenses increased to US$220 thousand in 2010, compared

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to US$115 thousand in 2009 primarily due to unrealized losses on a Philippines-peso-based long-term creditor. FEP continuously monitors its expenses to ensure that value for money is always obtained for services provided to it. BEMC Total costs and expenses decreased by 17% following lower cost of sales at P19.4 million in 2010 compared to P22.4 million in 2009 as a result of lower quantities of coal sold in 2010. 3) Foreign Exchange Rate As the financial statements of FEP and FEC and the loan obligations of the Company are stated in U.S. dollars, any movement in the dollar exchange rate impacts into the Company’s consolidated financial statements. At higher exchange rates, the balance sheet accounts of FEP and FEC would result in high asset of the Company in peso terms but would reflect foreign exchange losses from the restatement of its dollar obligation and equity deficit in its subsidiaries’ financial position. At lower exchange rate, the reverse would happen. As of December 31, 2010, the peso to dollar exchange rate was at P43.84 compared to P46.20 as of December 31, 2009. 4) Development Program on its Existing Assets The continuation of the Company’s development and operating program for the oil and coal properties under its subsidiaries would enhance the Company’s asset base and thus its financial position. In March 2011, the Company’s 64.45% controlled subsidiary, FEP, concluded a 3D and high resolution 2D seismic survey over the block of SC 72 over which FEP has 70% participation. A positive development in any of the Company’s other properties would have the same impact on the Company’s valuation. FEP continues to assess potential partnerships to accelerate the development of the project, although there are no concrete proposals currently in place. 5) Financial Management Prudent and well-implemented financial management could prolong the Company’s ability to finance its activities and thus its corporate life. The Company’s parent company, Philex Mining, currently provides the fund for the medium-term requirements of the Company through a US$10 million facility agreement between Philex Mining and FEP. Prior to the transfer of the oil assets to the Company, Philex Mining also made an additional capital contribution to FEC of US$2.5 million also to meet its working capital requirement and future project funding requirement. It is not determinable up to what extent and when will Philex Mining continue to provide financial assistance to the Company. Thus, it is important for the Company to develop other sources for its funding needs to the extent possible. KNOWN TRENDS, EVENTS OR UNCERTAINTIES On February 24, 2011, Pitkin raised US$19.6 million of funds by way of a share placement in order to advance its business plan and for new opportunities. Pitkin issued 15.7 million new ordinary shares at US$1.25 per share giving the Pitkin an implied equity capitalization of

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US$162.5 million following completion of the transaction. As a result, Philex Petroleum’s ownership interest in Pitkin was reduced from 21.00% to 18.46%. On May 11, 2011, FEP and BEC signed a settlement agreement in relation to disputes on BEC’s share in the historical cost recoveries arising from SC 14 Block A Nido, SC 14 Block B Nido-Matinloc, SC 14 Block C1 Galoc, and other blocks of SC 14 Northwest Palawan and SC 6 Cadlao, pursuant to the Sale and Purchase Agreement executed by BEC and FEP in April 2006. The settlement agreement provides that upon satisfaction of its terms and conditions, FEP will make cash payment of US$650 thousand to BEC and cause the conveyance to BEC of 50% of Forum Energy Philippines Corporation’s (FEPC, formerly BPMI) participating interests and related recoverable costs on the service contracts covered by the settlement agreement, subject to the approval of the DOE. The completion of the terms and conditions of the settlement agreement will release FEP from paying the potential additional consideration of up to US$9.03 million on the acquisition of FEPC as disclosed in the FEP’s 2010 audited financial statements. There is no known event that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation that has not been booked, although the Company could be contingently liable for lawsuits and claims arising from the ordinary course of business, which contingencies are not presently determinable. Other than what have been discussed above, there are no known significant trends, demands, commitments or uncertainties that will result in or that are reasonably likely to result in the Company’s liquidity increasing or decreasing in a material way. There are no material commitments for capital expenditures not reflected in the Company’s financial statements. There is likewise no significant seasonality or cyclicality in its business operation that would have material effect on the Company’s financial condition or results of operation. There were no other significant elements of income or loss that did not arise from the Company’s continuing operations. There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationship of the Company with unconsolidated entities or other persons created during the reporting period. There are no line items in the Company’s financial statements not already explained for causes either above or in the Notes to the Consolidated Financial Statements other than due to the usual period-to-period fluctuations in amounts natural in every business operations. CHANGES IN, AND DISAGREEMENTS WITH, ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements with any accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, nor was there any resignation or dismissal of any accountant who was previously engaged as the principal accountant to audit the Company’s financial statements, or an independent accountant who was previously engaged to audit a significant subsidiary and on whom the principal accountant expressed reliance in its report.

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MANAGEMENT AND CERTAIN SECURITY HOLDERS

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The overall management and supervision of the Company is undertaken by the Board. There are nine members of the Board. The regular directors were elected during the annual meeting of the stockholders held on May 17, 2011, to serve for a term of one year and until their successors are elected and qualified. As of the date of this Prospectus, the composition of the Company’s Board is as follows:

Name Age Citizenship Position

Year Position

was Assumed

Manuel V. Pangilinan 64 Filipino Chairman of the Board 2009 Carlo S. Pablo 48 Filipino President and Chief Operating Officer 2010 Jose Ernesto C. Villaluna, Jr. 71 Filipino Director 2007 Robert C. Nicholson 55 British Director 2011 Rogelio G. Laraya 65 Filipino Director 2007 Renato N. Migriño 61 Filipino Director and Treasurer 2007 Barbara Anne C. Migallos 56 Filipino Director and Corporate Secretary 2007 Benjamin S. Austria 65 Filipino Independent Director 2011 Emerlinda R. Roman 61 Filipino Independent Director 2011

As of the date of this Prospectus, the following are the Company’s executive officers:

Name Age Citizenship Position Year

Position was Assumed

Manuel V. Pangilinan 64 Filipino Chairman 2009 Carlo S. Pablo 48 Filipino President and Chief Operating Officer 2010 Edgardo C. Crisostomo 62 Filipino SVP - Administration and Materials 2010 Renato N. Migriño 61 Filipino Treasurer 2007 Barbara Anne C. Migallos 56 Filipino Corporate Secretary 2007

The following discussion presents a brief description of the business experience of each of the Company’s directors and executive officers over the past five years. MANUEL V. PANGILINAN - 64, Filipino citizen. Chairman since December 8, 2009. He is also the Chairman effective June 24, 2009 and subsequently Chairman and Chief Executive Officer effective December 7, 2009 to present of Philex Mining. He was elected as Director of Philex Mining and PGPI on November 28, 2008. He is the Managing Director and Chief Executive Officer of First Pacific and the Chairman of the Philippine Long Distance Company since February 2004 from President and Chief Executive Officer in November 1998. He is also the Chairman of Metro Pacific Investments Corporation, Smart Communications, Inc., First Philippine Infrastructure, Inc., Manila North Tollways Corporation, First Philippine Infrastructure Development Corporation, Tollways Management Corporation, Landco Pacific Corporation and Medical Doctors Inc., as well as President Commissioner of PT Indofood Sukses Makmur Tbk. He is also the President and Chief Executive Officer of Meralco. CARLO S. PABLO - 48, Filipino citizen. President and Chief Operating Officer of the Company since May 18, 2010. He is presently a Director of FEC, BEMC, and PERC. He was a Director of PT KridapetraGraha between October 2001 and September 2005. Prior to his current role, he worked in various management, commercial and engineering positions with Shell upstream and downstream companies in the Philippines, Indonesia and Malaysia from 1985 to 2010.

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JOSE ERNESTO C. VILLALUNA, JR. – 71, Filipino citizen. He has been a Director of the Company since December 27, 2007. He has been the President & Chief Operating Officer of Philex Mining since July 26, 2005. He was Executive Vice President & Chief Operating Officer of Philex Mining from August 1, 2004 up to July 25, 2005. He is also the President and Chief Operating Officer of PGPI, President and Chief Executive Officer of FEC, BEMC, Silangan Mindanao Mining Co., Inc. and LMC. He was the Vice Chairman and President of Itogon Suyoc Mines, Inc. in 1993 to 2001. He has been a Director of ISM Communications Corporation since July 2001. ROBERT C. NICHOLSON - 55, British citizen. He was elected as Director of the Company on February 23, 2011. He has been a Director of Philex Mining and PGPI since November 28, 2008. He is an Executive Director of First Pacific since November 2003 from Director in June 2003. He is Executive Director of First Pacific, a Commissioner of PT Indofood Sukses Makmur Tbk, a Director of Level Up International Holdings Pte. Ltd., an Independent Non-Executive Director of QPL International Holdings Limited and Pacific Basin Shipping Limited, and a Non-Executive Director of India Capital Growth Fund Limited. He was a senior adviser to the Board of Directors of PCCW Limited from August 2001 to September 2003. ROGELIO G. LARAYA – 65, Filipino citizen. He has been a Director of the Company since December 27, 2007. He is also the President of Philex Gold Inc., a Director of LMC, and an adviser to Philex Mining. He was formerly the Treasurer, Executive Vice President – Finance and Chief Finance Officer of Benguet Corporation from 1980 to 1997, founder and Chief Executive Officer of Petrofields Exploration from 1989 to 1996, and Technical Assistant to the President of Philex Mining from 1974 to 1980. RENATO N. MIGRIÑO – 61, Filipino citizen. Director from December 27, 2007 to June 11, 2008, and from October 6, 2009 to present. He has been the Treasurer of the Company since December 27, 2007. He is also the Treasurer, Chief Financial Officer, Senior Vice President for Finance and Compliance Officer of Philex Mining since November 2010, previously Treasurer, Chief Financial Officer, Vice President – Finance and Compliance Officer in November 2003 and Vice President – Finance in March 1998. He is a Director and the Chief Financial Officer of Philex Gold Inc. since 2006. He is also a Director and the Treasurer of FEC, BEMC, Silangan Mindanao Mining Co., Inc., and LMC. He was formerly Senior Vice- President & Controller of Benguet Corporation. He is an Independent Director of Mabuhay Vinyl Corporation since September 2005. BARBARA ANNE C. MIGALLOS – 56, Filipino citizen. Director from December 27, 2007 to June 11, 2008, and from May 18, 2010 to present. She has been the Corporate Secretary since December 27, 2007. She is also the Corporate Secretary of Philex Mining since July 1998. She was Director of Philex Mining and PGPI from March 12, 2001 to July 31, 2003. She is also currently a Director of BEMC. She is also the Corporate Secretary of BEMC, Silangan Mindanao Mining Co., Inc., and LMC. She is the Managing Partner of the Migallos & Luna Law Offices. She has been a Director of Mabuhay Vinyl Corporation since 2000, a Director of Philippine Resins Industries since 2001 and Corporate Secretary of Eastern Telecommunications Philippines, Inc. since 2005 and Nickel Asia Corporation since March 2010. BENJAMIN S. AUSTRIA – 65, Filipino citizen. He is a Senior Consultant of Trans-Asia Oil & Energy Development Corporation, and Executive Director of the Petroleum Association of the Philippines and the Energy Council of the Philippines. He also holds the position of Vice President of the Energy Development & Utilization Foundation, Inc. and Vice President (Earth Sciences & Geography) of the Philippine Association for the Advancement of Science & Technology. He is currently the Secretary/Treasurer & Director of the American Institute of Mining Engineers (Philippine Section). EMERLINDA R. ROMAN – 61, Filipino citizen. She is the Chair of the Board of Trustees of the International Rice Research Institute and the Board of Advisers of Manila Tytana Colleges, Inc.

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She is also a member of the Board of Advisers of the Development Center for Finance. She served as the President of the University of the Philippines (“UP”) from February 10, 2005 to February 9, 2011, and is known to be the first woman president, as well as the centennial president of UP. Prior to becoming the President of UP, she served as the Chancellor of the UP Diliman Campus from 1999 to 2005 and from 1991 to 1993. She also held positions in different foundations. From 2005 to 2011, she served as the Chair of the UP Provident Fund, Inc. and the President of UP Foundation, Inc., NEC Foundation, Inc. and UP Foundation in America. EDGARDO C. CRISOSTOMO – 62, Filipino citizen. Vice-President for Administration and Materials since May 18, 2010. He was a Director of the Company from May 18, 2010 to February 23, 2011. He is also the Senior Vice President for Materials Management & Corporate Office Administration of Philex Mining since November 2010, previously Vice President – Admin. & Materials Management in March 2007, Vice President – Purchasing & Materials Management from 2000 to February 28, 2007, Assistant Vice President – Purchasing from 1996 to 1999 and Purchasing Manager in 1995.

SIGNIFICANT EMPLOYEES While all employees are expected to make a significant contribution to the Company, there is no one particular employee, not an executive officer, expected to make a significant contribution to the business of the Company on his own. FAMILY RELATIONSHIP There are no family relationships up to the fourth civil degree either of consanguinity or affinity among any of the directors and executive officers. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS The Company is not aware of any adverse events or legal proceedings during the past five years that are material to the evaluation of the ability or integrity of its directors or executive officers. DIRECTOR AND EXECUTIVE COMPENSATION At present, the Directors do not receive any allowance or per diem per meeting. The Board may, however, provide, in its discretion, an allowance or per diem to each member of the Board during each regular meeting of the Board, provided that the said director participates in the said meeting. Additionally, the Company’s By-Laws provides that as compensation of the directors, the Board at its discretion shall receive and allocate yearly an amount up to but not exceeding 1 ½% of the net income before income tax of the Company during the preceding year. Such compensation shall be determined and apportioned among the directors in such manner as the Board may deem proper. The Company’s By-Laws further provides that the officers enumerated therein (i.e., the Chairman of the Board, the President, the Vice-Presidents, the Treasurer and the Corporate Secretary) shall receive such remuneration as the Board may determine. All other officers shall receive such remuneration as the Board may determine upon recommendation of the President. Compensation to executive officers currently comprising of the President and Chief Operating Officer, the Treasurer, and the Corporate Secretary amounted to P1.4 million for the first quarter of 2011, P3.1 million for 2010 and NIL in 2009. Estimated compensation to executive officers for 2011 amount to P7 million.

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There were no other compensation paid to the Directors for 2010 and 2009. Employment Contract between the Company and Executive Officers There are no special employment contracts between the Company and its named executive officers. Warrants and Options Held by the Executive Officers and Directors As of the date of this Prospectus, none of the Company’s directors and executive officers holds any warrants or options in the Company. Other Arrangements Except as described above, there are no other arrangements pursuant to which any of the Company’s directors and officers was compensated, or is to be compensated, directly or indirectly since the Company’s incorporation in December 2007. SECURITY OWNERSHIP OF CERTAIN RECORD AND BENEFICIAL OWNERS AND MANAGEMENT The Issuer’s parent company, Philex Mining, was the only record and/or beneficial owner of 5% or more of the Company’s voting securities prior to the Dividend Distribution.

Title of Class

Name and Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and

Relationship with Record Owner

Citizenship No. of Shares Held (includes shares held by nominees before

Dividend Declaration)

% of Total Outstanding

Shares

Common Philex Mining 27 Brixton Street,

Pasig City (Parent Company)

Philex Mining Filipino 1,699,999,998

99.99%

After the Dividend Distribution, the list of record and/or beneficial owners of 5% or more of the Company’s voting securities is as follows:

Title of Class

Name and Address of Record Owner and Relationship with

Issuer

Name of Beneficial Owner and

Relationship with Record Owner

Citizenship No. of Shares Held (includes shares held

by nominees after Dividend Declaration)

% of Total Outstanding

Shares

Common Philex Mining 27 Brixton Street,

Pasig City

Philex Mining Filipino 1,101,373,953 64.79%

Common Social Security System c/o Loan and

Investment Office, 7/F SSS Building,

Diliman, Quezon City

Social Security System

Filipino 132,785,055 7.81%

Common Asia Link B.V. Prins Bernhardplein

200, 1097 JB Amsterdam,

The Netherlands

First Pacific (Parent Company)

Bermuda 127,909,498 7.52%

Common PCD Nominee Corporation

First Pacific

Bermuda 64,914,170 3.82%

As regards security ownership of management, the table below shows the beneficial ownership of the directors and officers of the Company in the following:

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Philex Mining (as of April 30, 2011)

Title of Class

Name of Beneficial Owner

Amount and Nature of Beneficial Ownership

Citizenship % of Class

Common Manuel V. Pangilinan

2,630,000 (Direct) Filipino 0.053%

Common Jose Ernesto C. Villaluna, Jr.

6,768,750 (Indirect) Filipino 0.137%

Common Robert C. Nicholson

1,250 (Indirect) British <0.001%

Common Renato N. Migriño

950,000 (Direct) Filipino 0.019%

Common Barbara Anne C. Migallos

423,875 (Indirect) Filipino 0.009%

Common Benjamin S. Austria

686 (Direct) Filipino <0.01%

Note: “Indirect” means the Philex Mining shares are held by PCDNC for the beneficial owner. Philex Petroleum (after the Dividend Distribution)

Title of Class

Name of Beneficial Owner

Amount and Nature of Beneficial Ownership

Citizenship % of Class


391,250 (Direct) Filipino 0.02%


846,092 (Indirect) Filipino 0.05%


155 (Indirect) British <0.01%


118,751 (Direct) Filipino <0.01%


40,483 (Indirect) Filipino <0.01%

Common Benjamin S. Austria

86 (Direct) Filipino <0.01%

Note: “Indirect” means the Shares are held by PCDNC for the beneficial owner. The table below sets out the details of the Company’s voting securities in the name of the directors and officers of the Company before and after the Dividend Distribution.

Title of Class

Name and Address of

Record Owner and

Relationship with Issuer

Position Name of Beneficial Owner and Relation-ship with Record Owner

Citizen-ship

No. of Shares Held Before

Dividend Distribution

% of Total

Outstan-ding

Shares

No. of Shares Held After Dividend

Distribution

% of Total

Outstan-ding

Shares


10F PLDT MGO Building, De la

Rosa corner Legaspi St. Makati City

Chairman Indirect - Philex Mining

(nominee) and Direct Ownership

Filipino 1 <0.01% 391,251 0.02%

Common Carlo S. Pablo 27 Brixton

corner Fairlane Sts. Pasig City

Director, President and Chief Operating

Officer

Indirect - Philex Mining

(nominee)

Filipino 1 <0.01% 1 <0.01%

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Title of Class

Name and Address of

Record Owner and

Relationship with Issuer

Position Name of Beneficial Owner and Relation-ship with Record Owner

Citizen-ship

No. of Shares Held Before

Dividend Distribution

% of Total

Outstan-ding

Shares

No. of Shares Held After Dividend

Distribution

% of Total

Outstan-ding

Shares


28 Kingfisher St., Greenmea-

dows, Quezon City

Director Indirect - Philex Mining

(nominee)

Filipino 1 <0.01% 1 <0.01%


24th Floor, Two Exchange Square, 8

Connaught Place, Central

Hong Kong SAR

Director Indirect-Philex Mining

(nominee)

British 1 <0.01% 1 <0.01%

Common Rogelio G. Laraya

12 Sta. Teresita St., Barangay

Kapitolyo, Pasig City

Director Indirect - Philex Mining

(nominee)

Filipino 1 <0.01% 1 <0.01%


24 Martigan Street,

BF Homes, Paranaque City

Director and

Treasurer

Indirect-Philex Mining

(nominee) and Direct Ownership

Filipino 1 <0.01% 1 <0.01%


623 Diamond Street, Posadas

Village, Muntinlupa City

Corporate Secretary

Indirect-Philex Mining

(nominee)

Filipino 1 <0.01% 1 <0.01%

Common Edgardo C. Crisostomo

665-A Lee St., Mandaluyong

City

Vice President

for Adminis-tration

and Materials

n/a Filipino 0 0% 0 0%

Common

Benjamin S. Austria

10 J. Bocobo St. Xavierville Subdivision,

Loyola Heights, Quezon City

Indepen-dent

Director

Direct Ownership

Filipino 1 <0.01% 86 <0.01%

Common

Emerlinda R. Roman

College of Business

Administration University of

the Philippines Diliman, Q.C.

Indepen-dent

Director

Direct Ownership

Filipino 1 <0.01% 1 <0.01%

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VOTING TRUST None of the stockholders are under a voting trust or similar agreement. CHANGE IN CONTROL The Company is not aware of any arrangements that may result in a change in control of the company. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company was not involved in transactions or series of similar transactions in the last two years with a corporation (or any of its subsidiaries) in which any of the Company’s directors, executive officers or stockholders owned 10% or more of the total outstanding shares, and members of their immediate family had or is to have a direct or indirect material interest.

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PRINCIPAL SHAREHOLDERS The stockholders of the Company, their respective number of shares before and after the property dividend declaration, and the corresponding percentage of these shares out of the total common shares outstanding, are as follows: Note: The following is a list of stockholders of record; the beneficial ownership of the following stockholders in Shares held by PCDNC is described in pages 83-84 of this Prospectus.

Name of Stockholder

Class of

Securities


Number of Shares

% of Outstanding

Shares

Number of Shares

% of Outstanding

Shares Philex Mining Corporation Common 1,699,999,991 99.99% 1,101,373,946 64.79% Manuel V. Pangilinan Common 1 <0.01% 391,251 0.02% Carlo S. Pablo Common 1 <0.01% 1 <0.01% Jose E. C. Villaluna, Jr. Common 1 <0.01% 1 <0.01% Renato N. Migriño Common 1 <0.01% 118,751 <0.01% Rogelio G. Laraya Common 1 <0.01% 1 <0.01% Robert C. Nicholson Common 1 <0.01% 1 <0.01% Barbara A. C. Migallos Common 1 <0.01% 1 <0.01% Benjamin S. Austria Common 1 <0.01% 86 <0.01% Emerlinda R. Roman Common 1 <0.01% 1 <0.01% Social Security System Common - - 107,680,616 6.33% Asia Link B.V. Common - - 127,909,498 7.52% PCD Nominee Corporation Common - - 171,474,365 10.09% Two Rivers Pacific Holdings Corp.

Common - - 56,511,020 3.32%

Government Service Insurance System

Common - - 35,847,918 2.11%

Richard Ng Lim Common - - 10,673,720 0.63% Cheng Han Sui &/or Diana Y. Cheng

Common - - 2,750,005 0.16%

The First National Investment Company, Inc.

Common - - 1,524,380 0.09%

Albert Awad Common - - 1,105,559 0.07% Makati Supermarket Corp. Common - - 1,044,153 0.06% Estate of Allen Cham Common - - 840,059 0.05% Philippine Remnants Co., Inc. Common - - 609,375 0.04% Frank Pao Common - - 454,907 0.03% The Roman Catholic Archbishop of Manila

Common - - 402,641 0.02%

Religious of the Virgin Mary – B

Common - - 390,722 0.02%

Paulino de Ugarte &/or Elena E. de Ugarte

Common - - 383,517 0.02%

Ack Construction, Inc. Common - - 374,653 0.02% Carol Joan Reif Common - - 371,760 0.02% Robin John Pettyfer Common - - 330,593 0.02% Others (Aggregate) Common - - 77,436,499 4.56% Total Outstanding 1,700,000,000 100.00% 1,700,000,000 100.00%

Foreign and Local Investors Ownership After the Dividend Distribution, the percentage ownership of the Company’s shares of stock by Filipino citizens and non-Filipino shareholders are 87.002% and 12.998%, respectively. Minimum Public Ownership As a result of the property dividend to Philex Mining shareholders, the Company has 37,085 stockholders (excluding Philex Mining), 10,718 of whom own at least one board lot each.

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BACKGROUND OF TOP 20 STOCKHOLDERS17 Philex Mining Corporation Philex Mining is the Company’s single largest shareholder and, as of the date hereof, it directly owns approximately 99.99% of the Company’s issued share capital. After the distribution of the Company’s shares as property dividends to Philex Mining’s stockholders, Philex Mining will hold approximately 64.79%of the Company’s issued share capital. Philex Mining was incorporated in the Philippines in 1955 to engage primarily in mining activities. Its shares are listed in the PSE. As of June 15, 2011, Philex Mining had an authorized capital of 8,000,000,000 shares with a par value of P1 and issued, outstanding and fully paid shares of 4,926,486,868. The top 20 stockholders of Philex Mining as of March 31, 2011 are as follows:

Name of Stockholder Number of Shares % of Outstanding Shares

1 PCD Nominee Corporation 1,182,386,749 24.01 2 Social Security System (inclusive of 609,379,575 shares

lodged with PCD Nominee Corporation) 1,085,920,449 22.05

3 Asia Link B.V. 1,023,275,990 20.78 4 Two Rivers Pacific Holdings Corp. 452,088,160 9.18 5 Government Service Insurance System 286,783,350 5.82 6 Richard Ng Lim 85,389,767 1.73 7 Cheng Han Sui &/or Diana Y. Cheng 22,000,042 0.45 8 The First National Investment Company, Inc. 12,195,042 0.25 9 Albert Awad 8,844,478 0.18 10 Makati Supermarket Corp. 8,353,226 0.17 11 Estate of Allen Cham 6,720,476 0.14 12 Estate of Eudaldo Boix 5,025,422 0.10 13 Philippine Remnants Co., Inc. 4,875,000 0.10 14 Frank Pao 3,639,260 0.07 15 The Roman Catholic Archbishop of Manila 3,221,135 0.07 16 Religious of the Virgin Mary – B 3,125,777 0.06 17 Estate of Eudaldo Boix & Petra Hernando 3,093,203 0.06 18 Paulino de Ugarte &/or Elena E. de Ugarte 3,068,143 0.06 19 ACK Construction, Inc. 2,997,225 0.06 20 Carol Joan Reif 2,974,086 0.06 TOTAL 4,205,976,980 85.40

As of the date of this Prospectus, Philex Mining’s board of directors and executive officers are as follows: Board of Directors Name Position Manuel V. Pangilinan Chairman Juan B. Santos Vice-Chairman Eliza R. Antonino Member Marilyn A. Victorio-Aquino Member Eulalio B. Austin, Jr. Member Emilio S. de Quiros, Jr. Member

17 Information on the stockholders, such as company profile, capital structure, shareholders, directors and officers were based on the company’s website and recent General Information Sheets available in the Securities and Exchange Commission.

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Oscar J. Hilado Independent Director Robert C. Nicholson Member Wilfredo A. Paras Independent Director Edward A. Tortorici Member Jose Ernesto C. Villaluna, Jr. Member Executive Officers Name Position

Manuel V. Pangilinan Chairman & CEO Jose Ernesto C. Villaluna, Jr. President & COO Renato N. Migriño Treasurer, CFO and SVP-Finance

Barbara Anne C. Migallos Corporate Secretary Eulalio B. Austin, Jr. SVP – Operations & Padcal Resident Manager Edgardo C. Crisostomo SVP- Materials Mgmt. & Corporate Office

Administration Benjamin Deodato R. Garcia SVP-Human Resource Redempta P. Baluda VP-Exploration Victor A. Francisco VP-Environment & Community Relations Denis Ricardo G. Lucindo VP – Business Development Enrique C. Rodriguez, Jr. VP-Legal Guadaflor C. Malonzo Assistant Corporate Secretary Social Security System Social Security System is an agency which is created to establish a social security protection to workers in the private sector, wage earners as well as self-employed persons. It is implemented in accordance with the R.A. No. 1161, otherwise known as Social Security Act of 1954. As of the date of this Prospectus, the Social Security Commission is composed of:

Name

Position

Juan B. Santos Chairman Emilio S. de Quiros, Jr. Vice-Chairman, President and CEO Rosalinda D. Baldoz Member Diana V. Pardo-Aguilar Member Daniel L. Edralin Member Marianita O. Mendoza Member Eliza Bettina R. Antonino Member Ibarra A. Malonzo Member Bienvenido E. Laguesma Member

Asia Link B.V. and First Pacific Asia Link B.V. is a wholly-owned subsidiary of First Pacific with address at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands. First Pacific is a Hong Kong-based investment management and holding company with operations located in Asia. Its principal business interests relate to Telecommunications, Infrastructure, Consumer Food Products and Natural Resources.

Listed in Hong Kong, First Pacific's shares are also available for trading in the United States through American Depositary Receipts.

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As at March 31, 2011, First Pacific has substantial investments in PLDT, MPIC, Indofood and Philex Mining18.

As of the date of this Prospectus, First Pacific’s board of directors and senior executives are as follows: Board of Directors Name Position Anthoni Salim Chairman Manuel V. Pangilinan Managing Director and CEO Edward A. Tortorici Executive Director Robert C. Nicholson Executive Director Napoleon L. Nazareno Non-executive Director Professor Edward K.Y. Chen Independent Non-executive Director Dr. Loh Kung Wai Independent Non-executive Director Graham L. Pickles Independent Non-executive Director Jun Tang Independent Non-executive Director Tedy Djuhar Non-executive Director Ibrahim Risjad Non-executive Director Benny S. Santoso Non-executive Director Senior Executives Name Position Richard L. Beacher EVP – Group Financial Controller Maisie M.S. Lam EVP – Group Human Resources Joseph H.P. Ng EVP – Group Finance John W. Ryan EVP – Group Corporate Communications Richard P.C. Chan VP – Group Finance Sara S.K. Cheung VP – Group Corporate Communications Nancy L.M. Li VP – Company Secretary Peter T. H. Lin VP – Group Tax and Treasury PCD Nominee Corporation PCDNC is a wholly-owned subsidiary of PDTC which acts as trustee-nominee for all shares lodged in the PDTC System. The beneficial owners of such shares are either PDTC’s participants (Brokers) or the clients of these PDTC participants in whose names these shares are recorded in their respective books. As of May 27, 2011, PCDNC’s authorized capital stock is P2,000,000.00 consisting of 20,000 shares with a par value of P100.00 per share. It has a subscribed and paid-up capital of P500,000.00 consisting of 5,000 shares with a par value of P100.00 per share.

18 Two Rivers, a Philippine affiliate of First Pacific, holds an additional 15.0% interest in Philex.

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Board of Directors Name George S. Chua Vicente B. Castillo George S. Chua Paul Robert Y. Murga Jose Luis S. Javier Deogracias N. Vistan Officers Name Position George S. Chua Chairman Paul Robert Y. Murga President & CEO Cesar O. Virtusio Treasurer Socorro B. Lerer Corporate Secretary Two Rivers Pacific Holdings Corp. Two Rivers is a corporation incorporated on September 13, 2007. As of June 16, 2011, Two Rivers’ authorized capital stock is P40,000,000.00 consisting of 400,000 shares with a par value of P100.00 per share. It has a subscribed capital stock of P10,000,000.00, consisting of 100,000 shares, with a total of 60,000 shares owned by Filipino citizens (60%) and 40,000 shares owned by a Hong Kong national (40%). Board of Directors Name Manuel V. Pangilinan Napoleon L. Nazareno Ray C. Espinosa Augusto P. Palisoc, Jr. Officers Name Position Manuel V. Pangilinan Chairman & President Augusto P. Palisoc, Jr. Treasurer Marilyn A. Victorio-Aquino Corporate Secretary Government Service Insurance System

The GSIS is a social insurance institution created under Commonwealth Act Number 186 that was passed on November 14, 1936. To secure the future of all employees of the Philippine government, it provides and administers a pension fund that has the following social security benefits: compulsory life insurance, optional life insurance, retirement benefits, and disability benefits for work-related accidents and death benefits.

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Likewise, the GSIS manages the General Insurance Fund as mandated by R.A. No. 696 or the Property Insurance Law. It provides comprehensive protection to government insurable interests.

Executive Officers

Name Position Robert G. Vergara President and General Manager Leila M. Brian EVP-Corporate Support Sector Consuelo D. Manansala EVP-Operations Sector Benedicto Jose R. Arcinas EVP-Finance Sector Arnaldo C. Cuasay SVP-Administration Group Nora M. Saludares SVP-Corporate Planning Group Robert M. Agustin SVP-Membership Group Makati Supermarket Corp. Makati Supermarket Corp. is a corporation incorporated on October 17, 1961 and engaged in general supermarket business. As of January 28, 2011, its authorized capital stock is P100,000,000.00 consisting of 1,000,000 shares with a par value of P100.00 per share. It has a subscribed capital stock of P74,213,300.00 consisting of 742,133 shares. Board of Directors Name Peter T. Ng Josephine Ng Lo Christine Ng Chuang Edwin B. Villanueva Mary June Ng Wong Officers Name Position Peter T. Ng Chairman& President Edwin B. Villanueva Vice-Chairman Josephine Ng Lo CFO Christine Ng Chuang Asst. CFO Cynthia Roxas-del Castillo Corporate Secretary Frances T. Yuyucheng Asst. Corporate Secretary Phil. Remnants Co., Inc. PRCI is a corporation engaged in the trading of goods such as preformed products, steel wires and other electrical products. Based on its latest General Information Sheet, PRCI has an authorized capital stock of 40,000 no par value common shares. Its total subscribed capital stock consists of 26 shares owned by Filipinos amounting to P80,726.00 and 33,554 shares owned by foreign nationals amounting to P43,688,501.00

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Board of Directors Name Albert Awad Kenneth Richard Awad Samuel Craig Awad Miguel P. Bichara Yvonne Awad Officers Name Position Albert Awad President Kenneth Richard Awad Senior Vice-President Samuel Craig Awad Vice-President Albert Keith Awad Vice-President Miguel P. Bichara Corporate Secretary TRANSACTIONS WITH PROMOTERS The Company was organized in 2007 by Philex Mining as a wholly-owned subsidiary that will own, develop and operate the various petroleum and energy assets of Philex Mining. In 2010, pursuant to various assignment agreements, Philex Petroleum acquired Philex Mining’s interest in three petroleum service contracts in the Philippines, as well as various other petroleum service contracts in the Philippines, Gabon, Peru, the United States and Vietnam, through its stockholdings in FEP, Pitkin, PERC and FEC. Philex Petroleum also acquired from Philex Mining 100% of the outstanding shares in BEMC, which is engaged in coal mining. These contracts are described in pages 31 to 41 of this Prospectus.

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PHILIPPINE TAXATION The statements made regarding taxation in the Philippines are based on the laws in force at the date hereof and are subject to any changes in law occurring after such date. The following summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to invest in the Shares and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities) may be subject to special rates. Prospective purchasers of the Shares are advised to consult their own tax advisers concerning the tax consequences of their investment in the Shares. DIVIDENDS ON THE SHARES Individual Philippine citizens and resident aliens are subject to a final tax on dividends derived from the Shares at the rate of 10%, which tax shall be withheld by the Company. Non-resident alien individuals engaged in trade or business in the Philippines are subject to a final withholding tax on dividends derived from the Shares at the rate of 20% and non-resident alien individuals not engaged in trade or business in the Philippines are subject to a final withholding tax on dividends derived from the Shares at the rate of 25%, subject to applicable preferential tax rates under tax treaties in force between the Philippines and the country of domicile of such non-resident alien individuals. Dividends derived by domestic corporations (i.e., corporations created or organized in the Philippines or under its laws) and resident foreign corporations from the Shares shall not be subject to tax. Dividends received from a domestic corporation by a non-resident foreign corporation are generally subject to final withholding tax at the rate of 30%, subject to applicable preferential tax rates under tax treaties in force between the Philippines and the country of domicile of such non-resident foreign corporation. The 30% rate for dividends paid to non-resident foreign corporations that are domiciled in countries which do not have tax treaties with the Philippines may be reduced to a special 15% rate if: • the country in which the non-resident foreign corporation is domiciled imposes no taxes on

foreign-sourced dividends; or • the country in which the non-resident foreign corporation is domiciled allows a credit

equivalent to 15% against the tax due from the non-resident corporation taxes which are deemed to have been paid in the Philippines.

The BIR has prescribed, through an administrative issuance, procedures for availment of tax treaty relief. Subject to the approval by the BIR of a corporation’s application for tax treaty relief, the corporation will withhold taxes at a reduced rate on dividends paid to a non-resident holder of the Shares if such non-resident holder provides the corporation with proof of residence and, if applicable, individual or corporate status. Proof of residence for an individual consists of a certification from his embassy, consulate or other proper authority as to his citizenship and residence. Proof of residence and corporate status for a corporation consists of authenticated copies of its articles of association, or other equivalent certifications issued by the proper government authority, or any other official document proving residence. If the regular rate of tax is withheld by the corporation instead of the reduced rates applicable under a treaty, the non-resident holder of the Shares may file a claim for a refund from the BIR. However, because the refund process in the Philippines requires the filing of an administrative claim and the submission of supporting information, and may also involve the filing of a judicial appeal, it may be impractical to pursue such a refund.

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The term “non-resident holder” means a holder of the Shares: • who is an individual who is neither a citizen nor a resident of the Philippines or an entity

which is a foreign corporation not engaged in trade or business in the Philippines; and • should a tax treaty be applicable, whose ownership of the Shares is not effectively

connected with a fixed base or a permanent establishment in the Philippines. SALE OR OTHER DISPOSITION OF THE SHARES Sales, exchanges or other dispositions of the Shares which are effected through the PSE by persons other than a dealer in securities are subject to a stock transaction tax at the rate of 0.5% based on the gross selling price of the Shares. This tax is required to be collected by and paid to the Philippine government by the selling stockbroker on behalf of his client. The stock transaction tax is classified as a percentage tax in lieu of a capital gains tax. Notwithstanding its classification as a percentage tax, exemptions from capital gains tax may also apply to the stock transaction tax under the terms of some tax treaties. Subject to applicable tax treaty rates, a capital gains tax of 5% on the net capital gains realized during the taxable year, not in excess of P100,000, and 10% on the net capital gains realized during the taxable year, in excess of P100,000, is imposed on sales, exchanges or other dispositions of shares of stock not traded through a local stock exchange. The BIR has effectively expanded the application of the 5%/10% capital gains tax by extending it even to trades through the stock exchange of shares of listed companies which do not maintain their public ownership requirement.19 The BIR, in a letter dated December 28, 2010 addressed to the SEC, stated that it would “strictly impose the 5%/10% capital gains tax” for trades in listed companies “who will not maintain their public ownership requirement”, said public ownership requirement being the 10% to 33% public ownership levels (based on the listed company’s market capitalization) required for an initial public offering or IPO. This BIR letter was referred to the PSE by the SEC on January 3, 2011. The PSE subsequently issued a memorandum dated January 20, 2011 in response to the SEC on the BIR’s statements. The PSE noted that the Tax Code imposes a stock transaction tax of ½ of 1% of the gross selling price or gross value in money of shares of stock listed and traded on the PSE, without qualification, and that the power of the Secretary of Finance to promulgate rules and regulations implementing the Tax Code should be confined to the details for the implementation of the law and does not include the power to amend the law. TAX TREATIES The following table lists some of the countries with which the Philippines has tax treaties and the tax rates currently applicable to non-resident holders who are residents of those countries:

19 Please note, however, that the BIR has not yet issued Revenue Regulations on this subject.

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Country

Dividends in

percentage (%)

Stock transaction tax on sale or disposition

effected through the PSE*

Capital Gains Tax due on disposition of Shares outside the PSE

Canada 25(1) Exempt(8) Exempt(8) France 15(2) Exempt(8) Exempt(8) Germany 15(3) 0.5 5/10(9) Japan 25(4) Exempt(8) Exempt(8) Singapore 25(5) Exempt(8) Exempt(8) United Kingdom 25(6) Exempt(10) Exempt(10) United States 25(7) Exempt(8) Exempt(8)

Notes: (1) 15% if recipient company controls at least 10% of the voting power of the company paying the dividends. (2) 10% if the recipient company holds directly at least 15% of the voting shares of the company paying the

dividends. (3) 10% if the recipient company owns directly at least 25% of the capital of the company paying the dividends. (4) 10% if the recipient company holds directly at least 25% of either the voting shares of the company paying

the dividends or of the total shares issued by that company during the period of six months immediately preceding the date of payment of the dividends.

(5) 15% if during the part of the paying company’s taxable year which precedes the date of payment of

dividends and during the whole of its prior taxable year at least 15% of the outstanding shares of the voting stock of the paying company were owned by the recipient company.

(6) 15% if the recipient company is a company which controls directly or indirectly at least 10% of the voting

power of the company paying the dividends. (7) 20% if during the part of the paying corporation’s taxable year which precedes the date of payment of

dividends and during the whole of its prior taxable year, at least 10% of the outstanding shares of the voting stock of the paying corporation were owned by the recipient corporation. Notwithstanding the rates provided under the RP-US Treaty, residents of the US may avail of the 15% withholding tax rate under the tax-sparing clause of the Tax Code provided certain conditions are met.

(8) Capital gains are taxable only in the country where the seller is a resident, provided the shares are not those

of a corporation, the assets of which consist principally of real property situated in the Philippines, in which case the sale is subject to Philippine taxes.

(9) Under the RP-Germany Tax Treaty, capital gains from the alienation of shares of a Philippine corporation

may be taxed in the Philippines irrespective of the nature of the assets of the Philippine corporation. Tax rates are 5% on the net capital gains realized during the taxable year not in excess of P100,000 and 10% on the net capital gains realized during the taxable year in excess of P100,000.

(10) Under the RP-UK Tax Treaty, capital gains on the sale of the stock of Philippine corporations are subject to

tax only in the country where the seller is a resident, irrespective of the nature of the assets of the Philippine corporation.

* The BIR, in a recent ruling, has taken the position that the stock transaction tax is not identical or

substantially similar to the income tax/capital gains tax on a sale of shares in a domestic corporation, and, hence, not covered by the treaty exemption.

In order for an exemption under a tax treaty to be recognized, an application for tax treaty relief must be filed and approved by the BIR. A non-resident holder must submit proof of residence as described above. A certificate from the tax authority of the recipient’s country is a generally accepted proof of residence, for both individuals and corporations. Aside from proof of residence, the BIR also requires the following documents:

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• a letter providing information on the transaction covered by treaty provisions and requested tax treaty treatment for such transactions along with legal justification;

• special power of attorney duly executed by the recipient in favor of its Philippine

agent/withholding agent to file a claim for tax treaty relief; • certification from the SEC that the recipient company is not registered to engage in

business in the Philippines; • duly notarized certificate of the corporate secretary of the Philippine corporation in respect

of the resolution of its board of directors declaring the dividends; and • duly notarized certification by the corporate secretary of the Philippine corporation showing

the number and value of the shares of the applicant and the percentage of the latter’s ownership in the Philippine corporation as of the date of the transaction.

DOCUMENTARY STAMP TAX The Philippines imposes a documentary stamp tax upon transfers of the Shares at a rate of P0.75 on each P200, or fractional part thereof, of the par value of the Shares. The documentary stamp tax is imposed on the person making, signing, issuing, accepting or transferring the document and is thus payable either by the seller or the purchaser of the Shares. However, the sale, barter or exchange of Shares should they be listed and traded through the PSE are exempt from documentary stamp tax. ESTATE AND GIFT TAXES The transfer of the Shares upon the death of a registered holder to his heirs by way of succession, whether such an individual was a citizen of the Philippines or an alien, regardless of residence, will be subject to Philippine estate tax at progressive rates ranging from 5% to 20% if the net estate is over P200,000. Individual registered holders, whether or not citizens or residents of the Philippines, who transfer shares by way of gift or donation will be liable for Philippine donor’s tax on such transfers at progressive rates ranging from 2% to 15% if the total net gifts made during the calendar year exceed P100,000. The rate of tax with respect to net gifts made to a stranger (one who is not a brother, sister, spouse, ancestor, lineal descendant or relative by consanguinity within the fourth degree of relationship) is a flat rate of 30%. Corporate registered holders are also liable for Philippine donor’s tax on such transfers, but the rate of tax with respect to net gifts made by corporate registered holders is always at a flat rate of 30%. Estate and gift taxes will not be collected in respect of intangible personal property, such as shares of stock, (a) if the deceased at the time of death, or the donor at the time of donation, was a citizen and resident of a foreign country which at the time of his death or donation did not impose a transfer tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the deceased or the donor was a citizen and resident at the time of his death or donation allow a similar exemption from transfer or death taxes of every character or description in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country.

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PHILIPPINE STOCK MARKET The information presented in this section has been extracted from publicly available documents which have not been prepared or independently verified by the Company or its affiliates and advisors in connection with the Dividend Distribution and Listing. BRIEF HISTORY The Philippines Initially had two stock exchanges: the Manila Stock Exchange, which was organized in 1927, and the Makati Stock Exchange, which began operations in 1963. Each exchange was self-regulating and governed by its Board of Governors elected annually by its members. Several steps initiated by Government and undertaken over the last few years have resulted in the unification of the two bourses into the PSE. The PSE was incorporated in 1992 by officers of both the Makati and the Manila Stock Exchanges. In March 1994, the licenses of the two exchanges were revoked. While the PSE maintains two trading floors, one in Makati City and the other in Pasig City, these floors are linked by an automated trading system which integrates all bids and ask quotations from the bourses. In June 1998, the Philippine SEC granted the PSE a Self-Regulatory Organization (“SRO”) status, allowing it to impose rules as well as implement penalties on erring trading participants and listed companies. On August 8, 2001, PSE completed its demutualization, converting from a non-stock member-governed institution into a stock corporation in compliance with the requirements of the Securities Regulation Code. The PSE has an authorized capital stock of P36.8 million, of which P15.3 million is subscribed and fully paid-up. Each of the 184 member-brokers was granted 50,000 shares of the new PSE at a par value of P1 per share. In addition, a trading right evidenced by a "Trading Participant Certificate" was immediately conferred on each member broker allowing the use of the PSE's trading facilities. As a result of the demutualization, the composition of the PSE Board of Governors was changed, requiring the inclusion of seven brokers and eight non-brokers, one of whom is the President. On December 15, 2003, the PSE listed its shares by way of introduction at its own bourse as part of a series of reforms aimed at strengthening the Philippine securities industry. Classified into financial, industrial, holding firms, property, services, mining and oil sectors, companies are listed either on the PSE’s First Board, Second Board or the Small and Medium Enterprises Board. Each index represents the numerical average of the prices of component stocks. The PSE has an index, referred to as the PSEi, which as at the date hereof reflects the price movements of 30 selected stocks listed on the PSE, based on traded prices of stocks from the various sectors. The PSE shifted from full market capitalization to free float market capitalization effective April 3, 2006 simultaneous with the migration to the free float index and the renaming of the PHISIX to PSEi. With the increasing calls for good corporate governance, PSE has adopted an online daily disclosure system to improve the transparency of listed companies and to protect the investing public. SELECTED STOCK EXCHANGE DATA The table below sets forth movements in the composite index from 1999 to 2010, and shows the number of listed companies, market capitalization, and value of shares traded for the same period (in billions): Composite

Index at Closing

Number of Listed

Companies

Aggregate Market

Capitalization

Combined Value of Turnover

Year 1999 …………...… 2,142.9 226 1,937.7 713.9

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Composite Index at Closing

Number of Listed

Companies

Aggregate Market

Capitalization

Combined Value of Turnover

Year 2000 …………...… 1,494.5 230 2,577.6 357.6 2001 …………...… 1,168.1 232 2,142.6 159.5 2002 …………...… 1,018.4 234 2,083.2 159.7 2003 …………...… 1,442.4 236 2,973.8 145.4 2004 …………...… 1,822.8 236 4,766.2 206.6 2005 …………...… 2,096.0 237 5,984.4 383.5 2006 …………...… 2,982.5 240 7,172.6 572.6 2007 …………...… 3,621.6 244 7,978.5 1,338.2 2008 …………...… 1,872.8 246 4,069.2 763.9 2009 …………...… 3,052.7 248 6,029.1 994.2 2010 …………...… 3,265.4 250 6,563.2 480.3 TRADING The PSE is a double auction market. Buyers and sellers are each represented by stock brokers. To trade, bids or ask prices are posted on the PSE’s electronic trading system. A buy (or sell) order that matches the lowest asked (or highest bid) price is automatically executed. Buy and sell orders received by one broker at the same price are crossed at the PSE at the indicated price. Transactions are generally invoiced through a confirmation slip sent to customers on the trade date (or the following trading date). Payment of purchases of listed securities must be made by the buyer on or before the third trading day (the settlement date) after the trade. For Small- Denominated Treasury Bonds, settlement is on the day the trade was made. Trading on the PSE starts at 9:30 am and ends at 12:00 pm with a 10-minute extension during which transactions may be conducted, provided that they are executed at the last traded price and are only for the purpose of completing unfinished orders. Trading days are Monday to Friday, except legal and special holidays. Minimum trading lots range from 5 to 1,000,000 shares depending on the price range and nature of the security traded. Odd-sized lots are traded by brokers on a board specifically designed for odd-lot trading. To maintain stability in the stock market, daily price swings are monitored and regulated. Under current PSE regulations, when the price of a listed security moves up by 50% or down by 50% in one day (based on the last traded price), the price of that security is automatically frozen by the PSE, unless there is an official statement from the relevant company or a government agency justifying such price fluctuation, in which case the affected security can still be traded but only at the frozen price. If the issuer fails to submit such explanation, a trading halt is imposed by the PSE on the listed security the following day. Resumption of trading will be allowed only when the disclosure of the issuer is disseminated, subject again to the trading band. SETTLEMENT The Securities Clearing Corporation of the Philippines (“SCCP”) is a wholly-owned subsidiary of the PSE, and was organized primarily as a clearance and settlement agency for SCCP-eligible trades executed through the facilities of the PSE. It is responsible for (a) synchronizing the settlement of funds and the transfer of securities through Delivery versus Payment clearing and settlement of transactions of Clearing Members, who are also Trading Participants of the Exchange; (b) guaranteeing the settlement of trades in the event of a Trading Participant’s default through the implementation of its Fails Management System and administration of the Clearing and Trade Guaranty Fund, and; (c) performance of Risk Management and Monitoring to ensure final and irrevocable settlement.

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SCCP settles PSE trades on a three-day rolling settlement environment, which means that settlement of trades takes place three days after transaction date (T+3). The deadline for settlement of trades is 12:00 noon of T+3. Securities sold should be in scripless form and lodged under PDTC�s book entry system. Each Trading Participant maintains a Cash Settlement Account with one of the two existing Settlement Banks of SCCP which are Banco De Oro Unibank, Inc. and Rizal Commercial Banking Corporation. Payment for securities bought should be in good, cleared funds and should be final and irrevocable. Settlement is presently on a broker level. SCCP implemented its new clearing and settlement system called Central Clearing and Central Settlement (CCCS) last May 29, 2006. CCCS employs multilateral netting whereby the system automatically offsets “buy” and “sell” transactions on a per issue and a per flag basis to arrive at a net receipt or a net delivery security position for each Clearing Member. All cash debits and credits are also netted into a single net cash position for each Clearing Member. Novation of the original PSE trade contracts occurs, and SCCP stands between the original trading parties and becomes the Central Counterparty to each PSE-Eligible trade cleared through it. CENTRAL DEPOSITORY In 1995, PDTC (formerly the Philippine Central Depository, Inc.), was organized to establish a central depository in the Philippines and introduce scripless or book-entry trading in the Philippines. On December 16, 1996, the PDTC was granted a provisional license by the Philippine SEC to act as a central securities depository. All listed securities at the PSE have been converted into book-entry settlement in the PDTC. The depository service of the PDTC provides the infrastructure for lodgment (deposit) and upliftment (withdrawal) of securities, pledge of securities, securities lending and borrowing and corporate actions including shareholders� meetings, dividend declarations and rights offerings. The PDTC also provides depository and settlement services for non-PSE trades of listed equity securities. For transactions on the PSE, the security element of the trade will be settled through the book-entry system, while the cash element will be settled through the current settlement banks, Rizal Commercial Banking Corporation and Banco De Oro Unibank, Inc. In order to benefit from the book-entry system, securities must be immobilized into the PDTC system through a process called lodgment. Lodgment is the process by which shareholders transfer legal title (but not beneficial title) over their shares of stock in favor of PCD Nominee Corporation (“PCD Nominee”), a corporation wholly owned by the PDTC whose sole purpose is to act as nominee and legal title holder of all shares of stock lodged into the PDTC. “Immobilization” is the process by which the warrant or share certificates of lodging holders are cancelled by the transfer agent and the corresponding transfer of beneficial ownership of the immobilized shares in the account of PCD Nominee through the PDTC participant will be recorded in the Issuer’s registry. This trust arrangement between the participants and PDTC through PCD Nominee is established by and explained in the PDTC Rules and Operating Procedures approved by the SEC. No consideration is paid for the transfer of legal title to PCD Nominee. Once lodged, transfers of beneficial title of the securities are accomplished via book-entry settlement. Under the current PDTC system, only participants (e.g. brokers and custodians) will be recognized by the PDTC as the beneficial owners of the lodged equity securities. Thus, each beneficial owner of shares, through his participant, will be the beneficial owner to the extent of the number of shares held by such participant in the records of the PCD Nominee. All lodgments, trades and uplifts on these shares will have to be coursed through a participant. Ownership and transfers of beneficial interests in the shares will be reflected, with respect to the participant’s aggregate holdings, in the PDTC system, and with respect to each beneficial

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owner’s holdings, in the records of the participants. Beneficial owners are thus advised that in order to exercise their rights as beneficial owners of the lodged shares, they must rely on their participant-brokers and/or participant-custodians. Any beneficial owner of shares who wishes to trade his interests in the shares must course the trade through a participant. The participant can execute PSE trades and non-PSE trades of lodged equity securities through the PDTC system. All matched transactions in the PSE trading system will be fed through the SCCP, and into the PDTC system. Once it is determined on the settlement date (trading date plus three trading days) that there are adequate securities in the securities settlement account of the participant-seller and adequate cleared funds in the settlement bank account of the participant-buyer, the PSE trades are automatically settled in the CCCS, in accordance with the SCCP and PDTC Rules and Operating Procedures. Once settled, the beneficial ownership of the securities is transferred from the participant-seller to the participant-buyer without the physical transfer of stock certificates covering the traded securities. If a stockholder wishes to withdraw his stockholdings from the PDTC System, the PDTC has a procedure of upliftment under which PCD Nominee will transfer back to the stockholder the legal title to the shares lodged. The uplifting shareholder shall follow the Rules and Operating Procedure of the PDTC for the upliftment of shares lodged under the name of PCD Nominee. The transfer agent shall prepare and send a Registry Confirmation Advice to the PDTC covering the new number of shares lodged under PCD Nominee. The expenses for upliftment are for the account of the uplifting shareholder. In the depository set-up, shares are simply immobilized, wherein customers’ certificates are cancelled and a confirmation advice is issued in the name of PCD Nominee Corp. Transfers among/between broker and/or custodian accounts, as the case may be, will only be made within the book-entry system of PDTC. However, as far as the issuing corporation is concerned, the underlying certificates are in the nominee’s name. In the registry set-up, settlement and recording of ownership of traded securities will already be directly made in the corresponding issuing company’s transfer agents� books or system. Likewise, recording will already be at the beneficiary level (whether it be a client or a registered custodian holding securities for its clients), thereby removing from the broker its current “de facto” custodianship role. AMENDED RULE ON LODGMENT OF SECURITIES One June 24, 2009, the PSE apprised all listed companies and market participants through Memorandum No. 2009-0320 that commencing on July 1, 2009, as a condition for the listing and trading of the securities of an applicant company, the applicant company shall electronically lodge its registered securities with the PDTC or any other entity duly authorized by the SEC, without any jumbo or mother certificate, in compliance with the requirements of Section 43 of the SRC. In compliance with the foregoing requirement, actual listing and trading of securities on the scheduled listing date shall take effect only after submission by the applicant company of the documentary requirements stated in Article III Part A of the PSE’s Revised Listing Rules. For listing applications, the amended rule on lodgment of securities is applicable to:

a. The offer shares/securities of the applicant company in the case of an initial public offering;

b. The shares/securities that are lodged with the PDTC, or any other entity duly authorized

by the Commission in the case of a listing by way of introduction;

c. New securities to be offered and applied for listing by an existing listed company; and

d. Additional listing of securities of an existing listed company.

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Pursuant to the said amendment, the PDTC issued an implementing procedure in support thereof to wit:

“For new companies to be listed at the PSE as of July 1, 2009 the usual procedure will be observed but the Transfer Agent of the companies shall no longer issue a certificate to PCD Nominee Corp. but shall issue a Registry Confirmation Advice, which shall be the basis for the PDTC to credit the holdings of the Depository Participants on listing date. “On the other hand, for existing listed companies, the PDTC shall wait for the advice of the Transfer Agents that it is ready to accept surrender of PCNC jumbo certificates and upon such advice the PDTC shall surrender all PCNC jumbo certificates to the Transfer Agents for cancellation. The Transfer Agents shall issue a Registry Confirmation Advice to PCNC evidencing the total number of shares registered in the name of PCNC in the issuer’s registry as a confirmation date.”

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CORPORATE GOVERNANCE

To fully comply with the adopted leading practices on good corporate governance, the Company has prepared and executed the Company’s Corporate Governance Manual which was adopted by the Board of the Company on May 25, 2011. The Company’s Corporate Governance Manual provides for, among others, the following: • Appointment of a compliance officer, who will have the rank of at least vice president, and

have direct reporting responsibilities to the Chairman of the Board, and monitor compliance with the provisions and requirements of the Corporate Governance Manual;

• Responsibilities, specific duties and functions of the Board of Directors, which includes

ensuring that the Company complies with all relevant laws, regulations and codes of best business practices, adopting a system of internal checks and balances, and identify key risk areas and key performance indicators and monitor these factors with due diligence;

• Creation of Board Committees, such as the Audit Committee, the Nominations Committee

and the Compensation Committee; • The conduct of a training process for the purpose of conducting an orientation program or

workshop to operationalize the Corporate Governance Manual; • Procedures for monitoring and assessment compliance with the Corporate Governance

Manual; and • Penalties for non-compliance with the Corporate Governance Manual. The Code of Corporate Governance prescribes the detailed qualifications and disqualifications, duties, functions and responsibilities of the Board of Directors and each member thereof, the Chairman, the Chief Executive Officer, the Corporate Secretary and the Compliance Officer. It also mandates the creation of specific board committees in aid of good corporate governance, to wit, an Audit Committee, a Nominations Committee and a Compensation Committee, and requires the Board to commit itself to the protection of the rights of stockholders.

• To fully comply with the leading practices in good governance, the Board establishes the

vision, strategic objectives, key policies, and procedures for the management of the company, as well as the mechanism for monitoring and evaluating Management’s performance. The Board also ensures the presence and adequacy of internal control mechanisms for good governance.

• The Company is prepared to take further steps to enhance adherence to principles and

practices of good corporate governance.

104

ANNEXES

FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORTS Audited Consolidated Financial Statements of the Company for the years ended December 31, 2008, 2009 and 2010 Audited Consolidated Financial Statements of the Company for the three-month periods ended March 31, 2010 and 2011 FAIRNESS OPINION ON THE INITIAL LISTING PRICE AND SUMMARY VALUATION REPORT DATED JULY 14, 2011 ENDORSEMENT OF THE DEPARTMENT OF ENERGY DATED JULY 27, 2011 COMPETENT PERSON’S REPORT DATED JULY 30, 2011

REGISTERED HEAD OFFICE OF THE COMPANY

Philex Petroleum Corporation Philex Building, 27 Brixton Street

Pasig City

FINANCIAL ADVISOR ATR KimEng Capital Partners, Inc.

17th Floor, Tower One and Exchange Plaza Ayala Triangle, Ayala Avenue

Makati City

LEGAL ADVISOR Migallos and Luna Law Offices

7th Floor, The Phinma Plaza 39 Plaza Drive, Rockwell Center

Makati City

INDEPENDENT LEGAL AND TAX COUNSEL SyCip Salazar Hernandez & Gatmaitan

SyCipLaw Center 105 Paseo de Roxas

Makati City

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SyCip Gorres Velayo & Co.

6760 Ayala Avenue Makati City

INDEPENDENT FINANCIAL ADVISER

(FAIRNESS OPINION) Isla Lipana & Co.

29th Floor, Philamlife Tower 8767 Paseo de Roxas

Makati City

philex petroleum corporation - amazon s3 · philex mining corporation (“philex mining”), a...

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