Change in ownership of Iriga geothermal project, Philippines

Change in ownership of Iriga geothermal project, Philippines

The Philippines Department of Energy has approved the transfer of a 80%
stake in the Iriga geothermal service contract from Basic Energy Corp. to
local company Desco Inc.

Already in January this year, Basic Energy signed the deed of assignment to
Desco for an 80-percent stake in the Iriga service contract, which has been
in regulatory approval process since. Under the agreement Basic Energy will
keep the remaining 20% stake in the service contract.

"Basic received the DOE letter on Nov. 8. Desco will gain an 80-percent
stake and Basic will retain 20 percent. In exchange, Basic will be fully
carried in all activities leading to the drilling of the first well," Basic
Energy senior vice president Anthony Cuaycong said.

Under the approved terms, Desco will undertake for and on behalf of the
consortium the geophysical activities, including the conduct of a
magneto-telluric survey, and all other steps required to bring the project
to drilling.

"The move allows Basic to concentrate resources on Mabini, as well as on the
pursuit of projects with faster turnaround times and nearer-term revenue
streams," Cuaycong said. The department awarded Iriga geothermal service
contract No. 2013-02-043 to Basic Energy on Feb. 26, 2013.

Desco's entry following an extensive review underscores its bullishness on
the project. Desco will complete the pre-drilling activities in accordance
with the work program previously approved by the department.

Desco will also cover the total cost of drilling the first well, with Basic
Energy fully carried.

For succeeding work, including the drilling of more wells and the
construction of a production facility, costs will be shared pro rata between
Basic Energy and Desco.

The Iriga, Camarines Sur geothermal area is bounded in the north by the
Isarog geothermal block of PNOC Renewables Corp.

The areal landscape is dominated by Mount Asog, a stratovolcano southwest of
Lake Buhi.

Basic Energy and Desco believe the project holds great potential in light of
its close proximity to the Tiwi geothermal service contract of AP Renewables
Inc. (formerly Chevron), which currently covers an installed capacity of 275
megawatts.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com