Razon not buying Malampaya for nothing, might be eyeing Ayala’s ACEX SC55

It has been reported that tycoon Enrique Razon will be buying Dennis Uy’s 90% stake in the Malampaya gas-to-power project.  But the Malampaya gas reserves are nearing depletion.  In fact, FGEN’s natural gas plants were plagued by gas interruptions at the Malampaya field and were forced to run on liquid fuel.

With Malampaya gas running out, why would then Enrique Razon buy 90% of the Malampaya project?  The Malampaya project is a built infrastructure.  It can transport gas directly to end-users in mainland Luzon.

Maybe, for the tycoon, the Malampaya is just one of the pieces of the puzzle.  Malampaya will make sense if Enrique Razon has a gas field.

Several local conglomerates have gas fields but do not have the capital to develop them.  One conglomerate is the Ayala group.  Through their ACE Enexor (ACEX), Ayala’s controls 75% of Service Contract 55.

SC 55 is estimated to have some 2.2 trillion cubic feet of gas.  Its Hawkeye well is believed to have an estimated 480 million barrels of oil.

The Ayala’s has been holding on SC 55.  Last year, the Ayala’s requested the DOE to place SC 55 under Force Majeure for one year. The force majeure gave the conglomerate time to raise capital for the scheduled drilling period.

The force majeure is expiring, and SC 55 is now up for drilling.  The Ayala conglomerate is presently in the mood for value realization and deleveraging.  In fact, the group has been selling assets to realize value and pay down debts.

With value realization in their focus, Ayala will also have to realize the value of SC 55.  They will probably sell some of their stake in SC 55 while inviting a strategic partner with the capital to develop the gas field.

Among the local tycoons, probably it is only Enrique Razon who is flush with capital. Enrique Razon’s port and terminal business, ICT, is trading at all-time high levels.

He has been the Ayala’s white knight in Manila Water.  He is the go-to guy for money right now.

If Enrique Razon is buying 90% of the Malampaya project, then, probably, he is also eyeing a gas field. ACEX’s SC 55 fits the bill.

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