=== dc2011-12-0010-pages-01.ppm ===
Republic of the Philippines
DEPARTMENT OF ENERGY

DEPARTMENT CIRCULAR NO. _D C20)|-[2-D010
ft-
REITERATING A TRANSPARENT AND COMPETITIVE SYSTEM OF
AWARDING SERVICE AND OPERATING CONTRACTS FOR PETROLEUM AND
COAL PROSPECTIVE AREAS REPEALING FOR THIS PURPOSE DEPARTMENT
CIRCULAR NOS. DC2009-04-0004 AND DC2010-03-0005, AND
DEPARTMENT ORDER NO. 2010-06-0011

WHEREAS, Section 4 of Presidential] Decree No. (PD) 87, as amended, otherwise known
as the “Oil Exploration and Development Act of 1972” and Section 4 of PD 972, as amended,
otherwise known as ” The Coal Development Act of 1976”, allow the Philippine Government (the
“Government”) to promote and undertake the exploration, development, and production
of the country’s indigenous. petroleum and coal resources through service/ operating
contracts with contractors;

WHEREAS, Republic Act No. 7638, as amended, otherwise known as “The Department
of Energy (DOE) Act of 1992”, mandates the DOE 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;

WHEREAS, the DOE through Department Circular No. DC2006-12-0014 resolved to
enhance government participation, through the government corporate sector, in the
exploration, development, and production of indigenous oil and gas resources through the
grant of option to the Philippine National Oil Company (PNOC) to participate in petroleum
service contracts;

WHEREAS, the DOE issued Department Circular Nos. DC2009-04-0004 and
DC2010-03-0005, and Department Order No. 2010-06-0011 reiterating a transparent and
competitive system of awarding service and operating contracts for petroleum and
coal, and the reconstitution of the DOE-Contracts Negotiating Panel to among others,
negotiate reasonable and just terms and conditions for the award. of service and
operating contracts;

WHEREAS, the DOE reiterates and acknowledges the need to continue adopting a
transparent and competitive system for awarding service and operating contracts for the
exploration, development, and production of the country’s petroleum and coal resources;
and

WHEREAS, the DOE desires to adopt the most effective strategy of promoting exploration,
development and utilization of petroleum and coal resources in the Philippines and
streamline the service contracting process.

NOW, THEREFORE, in consideration of the aforementioned premises, the following
procedures shall govern the transparent and competitive system of awarding service and
operating contracts for petroleum and coal exploration, development and production.

Energy Center, Merritt Rd., Fort Bonifacio, Taguig City, Metro Manila, Philippines
Fax #812-61-94 Tel. # 840-20-08 Fax # 840-21-38 Tel # 840-22-36 Fax # 840-17-31 Tel # 817-86-03 Trunkline 479-29-00
Website: www.doe.gov.ph, E-mail: info@doe.gov.ph
=== dc2011-12-0010-pages-02.ppm ===
Section 1. Scope of Coverage. This Circular shall apply to the determination of the legal,
technical and financial qualifications of applicants, the evaluation of their proposals, and the
award of corresponding service and operating contracts for petroleum and coal resources.

Section 2. Creation of the Review and Evaluation Committee (REC). The REC is hereby
constituted to carry out the responsibilities set forth in this Circular and shall be composed
of the following officials:

Chair

Vice Chair
Members

Undersecretary-in-charge of Energy Resource Development
Bureau (ERDB)

Assistant Secretary-in-charge of ERDB

Director of the Legal Services (LS)

Director of the Financia] Services (FS)

Director of the ERDB

Section 3. Responsibilities of the REC. The REC shall. perform the following
responsibilities: . ;

3.1

3.2

3.3

34

Prepare the specific guidelines for the requisite documentation to be
submitted by the proponents for each Philippine Energy Contracting Round
(PECR) for petroleum and coal and submit a written endorsement for the
publication thereof to the Secretary;

Examine, evaluate, and review the legal, technical, and financial capabilities
of the project proponents and their proposals as provided for in PD Nos. 87
and 972, the pertinent constitutional provisions and existing rules, and
regulations thereon;

Recommend to the Secretary the award of the service and operating contracts
after a successful evaluation of the legal, technical, and financial capabilities
of the highest ranked project proponent; and

Address any questions and inquiries that may be raised by the Secretary in
connection with the petroleum and coal service and operating contracts
endorsed for execution and approval.

Section 4. Procedure for Awarding Service and Operating Contracts.

4.1

Preparation for PECR Applications

a. The REC shall determine prospective petroleum and coal areas
found in the Philippine territory including its maritime zones and
continental shelf for inclusion in the PECR. ‘The Secretary, based on
reports submitted by REC, and if he deems fit, shall declare such
areas open for application for the PECR.

The REC shall not accept any application or proposals for
exploration, development, and production of service and operating

contracts for petroleum and coal except during the PECR.

No application for small-scale mining permits for coal operations
=== dc2011-12-0010-pages-03.ppm ===
shall be entertained in the offered areas until after the service or
operating contracts for the PECR have been awarded.

b. The REC shaii prepare the PECR documents with a description of
available data and the prospect of petroleum and coal resources in
each area which shall include, among others, the following:

i. Location Map and Technical Description of the areas being
offered during the PECR;
ii. Schedule of activities for the PECR; and

iii. Such other information as the REC may deem appropriate.

c. The REC, or through its authorized agent, shall prepare the PECR
data package, which shall be available to interested parties upon .
payment of applicable fees.

4.2 Submission of PECR Applications

a. Interested parties for the PECR shall submit complete set of
documents for evaluation by the DOE within the periods prescribed in
the guidelines to the PECR. The REC may require submission of
additional information and documents, as may be necessary, during
evaluation of the proposals for clarification purposes only. Contract
proposals shall be submitted in accordance with the guidelines for
petroleum and coal, attached herein as Annexes A and B, respectively.

b. As a pre-qualification requirement, interested parties shall submit the
following:

i. Intention to Apply;

ii. Legal Documentation;

iii. Company Profile detailing the organizational background and
personnel of the proponent; and ;

iv. Payment of Ten Thousand Pesos (Php 10,000.00) as one-time
pre-qualification review fee.

No PECR application for petroleum and coal shall be accepted from a
proponent who has not passed the pre-qualification review.

c. PECR Applications shall only be accepted and considered for review
upon presentation of the following:

i. Letter from the REC certifying that the proponent has passed

pre-qualification review;
ii. DOE official receipt evidencing payment of the non-refundable

application fee of One Hundred Thousand Pesos
(Php 100,000.00) per Petroleum area and Fifty Thousand Pesos
(Php 50,000.00) per Coal area.
=== dc2011-12-0010-pages-04.ppm ===
d.

The submission of proposals will be up to 1130H of the announced
deadline and the REC shall open the submitted proposals relative to
the PECR at 1330H on the same day.

43 Awarding of PECR Applications

a,

The REC shall then conduct evaluation of the submitted proposals
based on the following criteria:

i. Legal qualification - 10%
ii. Technical qualification - 30%
iii. Financial qualification - 30%
iv. ° Work Program - 30%

The REC, for sufficient and valid cause, may at any given time reject
any or all proposals submitted.

The highest ranked proponent who meets the legal, technical, and
financial requirements shall be selected.

LS in coordination with ERDB and the Compliance Division of the FS
shall prepare the final service or operating contract using the Model
Contracts and its accounting procedures. No deviations from the
Model Contract and its accounting procedures shall be allowed.

The highest ranked proponent shall be charged a processing fee of
Forty-eight centavos (Php 0.48)/hectare for petroleum and Thirty
Thousand Pesos (Php 30,000.00)/block for coal based on the DOE’s
schedule of fees and charges in compliance with Executive Order No.
197, series of 2000.

After complete review and evaluation of the legal, technical, and
financial qualifications of the applicant for petroleum and coal service
and operating contracts and the production of the execution copy of
the service or operating contract, the REC shall transmit to the
Secretary their written endorsements of the application in the form of
Annex C hereof.

4.4 Review and Approval by the Secretary

a.

Upon receipt of the written endorsement of the REC, the Secretary
may approve the application for service and operating contracts for
petroleum and coal resources.

At his sole discretion and prior to execution of the petroleum and coal
service and operating contracts, the Secretary may convene the REC
for any questions or inquiries pertaining to the review and evaluation
undertaken.

Section 5. Contract Areas. The definition and delineation of prospective petroleum and coal
contract areas shall be in accordance with the provisions of applicable government laws, rules
=== dc2011-12-0010-pages-05.ppm ===
and existing procedures such as the National Integrated Protected Areas System Law and
the Indigenous People's Right Act, among others.

Section 6. Creation of the REC Secretariat. The Office of the Director of the ERDB shall
serve as Secretariat of the REC and be responsible for the flow of documents from receipt of
application to processing by the various pane] members for technical, financial, and legal
evaluation. The REC Secretariat shal] be composed of the following:

Head : Assistant Director, ERDB

Members: Chief, Contracts Division (LS)
Chief, Compliance Division (FS)
Chief, ERDB Division Concerned

Section 7. Option for PNOC to participate in Petroleum Service Contracts. For
petroleum service contracts proposed under this Circular, an option shall be reserved for
. the Philippine National Oil Company (PNOC) for a maximum of five percent (5%)
participating interest in a proposed service contract involving one (1) or more Filipino
participant or maximum of ten percent (10%) participating interest in a proposed service
contract involving no Filipino participant. Within ‘thirty (30) days after winning
proponent is determined, PNOC shall give proper notice to the winning proponent and
the DOE whether or not it decides to exercise said option. All rights, privileges, benefits,
costs, expenses, obligations and liabilities of PNOC shall be in proportion to its
participating interest in the proposed service contract.

Section 8. Nominated Areas. Applicants for petroleum or coal service contracts may
formally nominate areas of interest not included in the PECR for the DOE's
consideration. The DOE may include such nominated area in the upcoming PECR and
its award shall be subject to this Circular.

As much as practicable, the DOE may conduct PECRs in accordance with this Circular
every two (2) years.

Section 9. Separability Clause. If for any reason, any section or provision of this
Circular and its Annexes is declared unconstitutional of invalid, such parts not affected
- shall remain in full force and effect.

Section 10. Repealing Clause. Department Circular Nos. DC2009-04-004 and DC2010-03-
0005, Department Order No. 2010-06-0011, and all other department issuances that are
inconsistent with the provisions of this Circular are hereby repealed. ,
Section 11. Effectivity. This Circular shall take into effect fifteen (15) days following its
publication in at least two (2) newspapers of general circulation and shall remain in effect
until otherwise revoked.

Issued this 01 December 2011 in Fort Bonifacio, Taguig City, Metro Manila.

JOSE RENE D. ALMENDRAS
; Re ublic of the Phitippincs
PEM DEPP RTMENT OF LUERGY

ik tat SD EN "5 bane

i

=== dc2011-12-0010-pages-06.ppm ===
ANNEX A

Republic of the Philippines
DEPARTMENT OF ENERGY
Energy Center, Merritt Road, Fort Bonifacio
Taguig City, Metro Manila

4th PHILIPPINE ENERGY CONTRACTING ROUND (PECR 4)
FOR PETROLEUM GUIDELINES

Requisites for documentation to be submitted by proponents in the 4 Philippine Energy
Contracting Round for Petroleum, within the periods prescribed in Annex A-1:

General Information

1. Proponents may be any local/foreign individual company or group of f companies
forming a joint venture or consortium.

2. If a proposal involves more than one company, # the following must be stated in the
proposal:

a. Name of Operator and co-venturers
b. Participating interest of each co-venturer

The Operator must submit the proposal on behalf of the group.

The Operator must meet all legal, technical, and financial requirements while each
co-venturer must be legally and financially qualified.

3. The DOE will award one Service Contract for each Predefined Contract Area
(hereinafter called Contract Area) as given in the PECR 4 Contract Area Map for
Petroleum. The Contract Areas shall be annotated as on the said map (e.g. Contract
Area 1).

A proposal covering more than one Contract Area must have separate work
programs and budget for each Contract Area being applied for.

4. Submitted proposals must be in both paper and digital (CD-ROM in Microsoft
Word, *.pdf, or a web-legible format) copies. Times New Roman 12 font and single
line spacing are recommended. Figures shall be submitted in an appropriate format,
no larger than A3 size. If necessary for legibility, figures and maps may be submitted
at a larger scale as appendices.

5. Proponents shall submit a complete set of the following documents for evaluation by
the Review and Evaluation Committee (REC). The REC may require submission of
additional information/ documents, as may be necessary, during evaluation of the
proposals for clarification purposes only.

A non-refundable one-time pre-qualification fee of Php 10,000.00 shall be paid by the
proponent upon submission of its bid and the pre-qualification documents. A non-
=== dc2011-12-0010-pages-07.ppm ===
refundable application fee of Php 100,000.00 per area shall be paid by the proponent
upon submission of the proposal and its supporting documents. The winning
proponent shall be charged an additional processing fee of Php 0.48 per hectare
based on DOE's Schedule of Fees and Charges in compliance with Executive Order
No. 197, series of 2000.

Proposals must be sent by courier, registered mail or hand delivered to:

The Chair

Review and Evaluation Committee
Department of Energy

Energy Center, Fort Bonifacio
Taguig City, Metro Manila
Philippines

Telefax: (632) 817-8603

Digital submissions of the proposals may be submitted to pecr4@doe.gov.ph which

must later be accompanied by paper copies of the same.

The submission of proposals will be up to 1130H of the announced deadline and the
REC shall open the submitted proposals relative to the contracting round at 1330H
on the same day.

To facilitate the effective processing of the proposal, the headings in the Guidelines
for PECR4 - Petroleum shall be used. The following documentations shall be

included in the proposal:

Documentation Requirements

A brief summary of the proposal shall be given.

PROPONENT’S NAME

NATURE OF : PECR - Petroleum Service Contract
APPLICATION ; *
LOCATION : Ex: Petroleum Contract Area 1
AREA : sq-km or hectares

SALIENT FEATURES
Term : Exploration Period is 7 years consisting of

Sub-Phases, the duration of which
depends on the proposed work program

Work Program and : Contract Year and Sub-Phase / Work
Expenditures Commitment / Minimum Expenditure
Minimum Footage : meters of test wells

A. Work Program Documentation

A.1_ All proposed Petroleum Service Contracts (PSC) shall conform with the
DOE Model PSC.
=== dc2011-12-0010-pages-08.ppm ===
A.2

Proposed work program (discussion of the exploration strategies and
methodologies to be employed in delineating petroleum resources at
depth with subsequent manpower complement should be in detailed
narrative format and the Schedule of Activities in a Gantt Chart) and
minimum expenditure on annual/sub-phase basis for each proposed
activity with respect to the area or areas specified in the proposal; and

Narrative presentation of data and information (such as geology,
stratigraphy, geochemistry, geophysics, water quality, resource
estimate, resource indicators, etc.) suggesting presence of energy
resources at depth.

AA Geological and geophysical evaluation of the Contract Area applied for

Database

Seismic and well data on which the geological evaluation is based
must be listed, and the location must be illustrated on a base map
(seismic coverage with wells) in appropriate scale (1:250,000).

Petroleum Potential Analysis

The following aspects for each Contract Area applied for must be
described briefly:

e stratigraphic and sedimentologic framework including reservoir
development and reservoir quality;

e structural framework including trap development and evaluation
of seal/retention characteristics;

e basin development including source rocks, maturity and
migration; and

e description of play types.

The analysis must focus on aspects that are considered critical in the

evaluation of the prospectivity of the Contract Area applied for.

Prospect/Lead evaluation

The following shall be evaluated for each prospect:

e depositional environment/ reservoir type(s);
* trap and seal; and
e hydrocarbon type, source, migration and trap fill.

The following documentation is required for each prospect:
* overview map with coordinates and prospect ;
e seismic and geological cross-section(s);
¢ seismic line showing well ties, where relevant reservoir horizon ©
time-and-depth maps presented at identical scales; and
e seismic attribute maps.
=== dc2011-12-0010-pages-09.ppm ===
AS

Resources
Brief comments may be submitted on the following:

e method of resource volume calculation;

e hydrocarbon type;

¢ choice of GOR and expansion/ shrinkage factors;
e choice of reservoir parameters; and

e estimate of recovery factor.

Probability of Discovery

Component probability factors and the probability of discovery must
be explained and documented. The methods of risk analysis must also
be briefly described.

Economics and development concepts of possible discoveries

Reservoir Technology

Production profiles shall be prepared for the different resource
estimate outcomes for each prospect.

The assumptions for preparation of the profiles shall be described

briefly. These shall include:

e number of development wells and flow rates;

e possible production limitations; and

e the methods by which the resources will be recovered (e.g. drive
mechanisms and reservoir management).

Technological Assumptions

Development and transport scenarios for the different resource
outcomes shall be prepared for each prospect.

In this chapter a description shall be given only of the development
and transport scenarios for the expected (most likely) resource
outcome.

Prospect Economics

Development scenarios and production profiles shall be calculated for
the different outcomes in the resource distribution. Key economic
parameters are calculated either by stochastic (Monte Carlo
simulation) or deterministic (P10, P90 and expected/most likely)
methods.

Key economic parameters shall be calculated for each prospect.
=== dc2011-12-0010-pages-10.ppm ===
A6 Work program and minimum expenditure in respect to the proposal:

Plan for exploration and_work commitment

A description of the exploration strategy for the Contract Area applied
for. This shall include:

e seismic data acquisition as appropriate;
e exploration and appraisal wells; and
¢ other geological and geophysical studies.

A proposed minimum exploration commitment including:

e Seismic program, size, and timing
e Line km 2D
e Aerial coverage 3D
¢ Well program, number, and timing
¢ Depth
« Target
e Other geological and geophysical work
¢ Geochemical

¢ Sampling
e Reprocessing
¢ Others

Each item in the minimum exploration commitment shall be given a
stipulated cost figure, the sum of which will constitute the minimum
cost of the work program.

Financial Documentation
B.1 Annual Report or comparative Financial Statements

a. Audited financial statements and annual reports for the last three
(3) years or comparative audited financial statements not more
than six (6) months at the date of filing;

b. If latest audited financial statements are unavailable or the audited
financial statements are more than six (6) months, unaudited
financial statements duly signed by the company’s finance officer
and/or president not more than three (3) month’s old at the date of
filing shall be submitted; -

c. Particulars of the kind of financial resources available to the
proponent including capital and guarantees so available;

d. For newly-organized subsidiary corporations with insufficient
funds to finance the proposed work program, a financial statement
of the proponent’s Parent Company shall be submitted together
with the Parent Company’s guarantee for full financial obligation.
=== dc2011-12-0010-pages-11.ppm ===
NOTE:

The financial statement of the Parent Company shall be in
accordance with items (a) and (b) above. If the Parent Company is a
foreign company, the financial statement and guarantee shall be
duly authenticated by the Philippine Consulate in the country
where it is registered or where it operates; and

e. Certified true copy of latest income business tax returns filed with
the Bureau of Internal Revenue, and duly validated with the tax
payments made thereon, if applicable.

B.2 Projected Cash Flow
e Projected cash flow covering a three (3)-year period to include the
sources and uses of funds for future activities including other

businesses / commitments.

Minimum working capital must be equivalent to one hundred percent (100%)
of the cost of the firm work obligation (at least for the first Sub-Phase of the

' Exploration Period) on the Contract Area being applied for.

Working capital refers to the company’s liquid assets [consisting primarily of
cash, temporary investments (marketable securities), short-term receivables,
and deposits] less current liabilities. It should be net of the financial]
commitment from other existing service contracts (if applicable).

In case of consortium, each member's working capital shall be pro-rata based
on its participating interest in the service contract.

C. Technical Documentation

C1 ‘Particulars of the technical and industrial qualifications, eligibilities
and work-related experiences of the proponent and its employees

e The proponent shall submit an overview of its expertise and
experience in petroleum exploration, development, production,
and operations.

e The proponent shall demonstrate how its expertise could
contribute to cost effective exploration and possible development
of the Contract Area applied for.

e A brief summary of the proponent’s experience from relevant
projects within exploration, field development, and operation shall
also be submitted. The role and level of responsibility in the actual
project shall be stated (Operator or partner).

C.2 Particulars of the technical and industrial resources available to the
proponent for the exploration, development, and production of
petroleum resources.
=== dc2011-12-0010-pages-12.ppm ===
C3 Particulars on the experiences, achievements, and track records of the
proponent and its employees related to technical and industrial
undertakings.

C4 Operational organization, including resources, expertise, and
experience

D. Legal Documentation
D1 Certified true copies of the following:

e Articles of incorporation and by-laws;

e Securities and Exchange Commission (SEC) Registration; and

¢ Company Profile and/or latest General Information Sheet
submitted stamped received by the SEC

D.2 Original Copy of the Certificate of Authority from the Board of
Directors of the proponent authorizing a designated representative/s
to negotiate the Service Contract. The said Certificate of Authority
shall be executed under oath by .the Corporate Secretary and, if
executed abroad, shall be properly authenticated by the Philippine
Consulate Office.

For financial, legal and technical documentation, if the interested party is a joint
venture, all entities forming part of the joint venture shall comply with the above
‘requirements. In addition, the interested party shall submit a copy of the joint
venture agreement. Furthermore, any interested party, acting singly or forming part
of a joint venture, that is organized in a foreign country shall submit documents
equivalent to the above, issued by the appropriate governing body and duly
authenticated by the Philippine Consulate in the country where it is registered or
where it operates.

Summary

The proposal shall only include data, analyses, calculations, interpretations, and
studies that are relevant to the Contract Area applied for. All studies that are
employed in the evaluation of the Contract Area shall be reviewed in a summary
containing both conclusions and the arguments for the relevance of the study.
=== dc2011-12-0010-pages-13.ppm ===
ANNEX A-1

TIMELINE FOR PETROLEUM

DATE ACTIVITY

30 June 2011 Launch of PECR 4

Within 90 calendar days upon availability of
online data package or within such period as | Submission of Pre-qualification documents
determined by the REC

Within 150 calendar days Last day of acceptance of vr 1
upon availability of online data package or y oraceeP on Proposals

within such period as determined by the (1150 hours, Philippine Time)
REC Opening of proposals

(1330 hours, Philippine Time)

=== dc2011-12-0010-pages-14.ppm ===
ANNEX B

4th PHILIPPINE ENERGY CONTRACTING ROUND (PECR 4)
FOR COAL GUIDELINES

Requisites for documentation to be submitted by proponents in the 4 Philippine Energy
Contracting Round for Coal, within the periods prescribed in Annex B-1:

General Information

1.

Proponents may be any Filipino company or group of companies forming a joint
venture or consortium.

If a proposal involves more than one company, the following shall be stated in the
proposal:

a. Name of Operator and co-venturers
b. Participating interest of each co-venturer

The Operator shall submit the proposal on behalf of the group.

The Operator shall meet all legal, technical and financial requirements while each
co-venturer must be legally and financially qualified.

The DOE shall award one Coal Operating Contract for each Predefined Contract
Area (hereinafter called Contract Area) as given in the PECR 4 Contract Area Map
for Coal. The Contract Areas shall be annotated as on the said map (e.g. Contract
Area 1)

Submitted proposals shall be in both paper and digital (CD-ROM in Microsoft Word,
*pdf, or a web-legible format) copies. Times New Roman 12 font and single line
spacing is recommended. Figures shall be submitted in an appropriate format, no
larger than A3 size. If necessary for legibility, figures and maps may be submitted at
a larger scale as appendices.

Proponents shall submit a complete set of the following documents for evaluation by
the DOE-Review and Evaluation Committee (REC). The DOE-REC may require
submission of additional information/documents, as may be necessary, during
evaluation of the proposals for clarification purposes only. A non-refundable
application fee of Php 50,000.00 per area shall be paid by the proponent upon
submission of the proposal. The winning proponent shall be charged a processing fee
of Php 30,000.00 per block based on DOE’s Schedule of Fees and Charges in
compliance with EO 197.

Both the original paper copy and the digital copy of the proposal shall be sent by

‘courier, registered mail or hand delivered to:
=== dc2011-12-0010-pages-15.ppm ===
The Chair

Review and Evaluation Committee
Department of Energy

Energy Center, Fort Bonifacio
Taguig City, Metro Manila
Philippines

Telefax: (632) 817-8603

The submission of proposals will be up to 1130H of the announced deadline
and the REC shall open the submitted proposals relative to the contracting
round at 1330H on the same day. Proposals with incomplete documents
shall be automatically disqualified from the contracting round.

The following documentation should be included in the proposal:

Documentation Requirements

A brief summary of the proposal should be given.

PROPONENT’s NAME : _

NATURE OF | : | PECR - Coal Operating Contract

APPLICATION

LOCATION :_| Ex.: Boljoon, Cebu

AREA NUMBER . | Area 1 CBS Nos.: 35-I-17, -18, -57 & -58

NUMBER OF BLOCKS : | Four Coal Blocks or 4,000 hectares

SALIENT FEATURES

TERM : | Two (2) years exploration period plus two
(2) years extension. An additional 10 to 20
years for development and production
period plus 3-years extensions not
exceeding 12 years.

WORK PROGRAM AND :

EXPENDITURES

A. Work Program Documentation

A.1. Work program (discussion on the application of the different
exploration strategies and methodologies to be employed in delineating
coal resources at depth with subsequent manpower complement should
be in detailed narrative format and the Schedule of Activities in Gantt
Chart) and minimum expenditure on annual basis for each activity with
respect to the area or areas specified in the proposal; and

A.2 Narrative presentation of data and information (such as geology,
stratigraphy, geochemistry, geophysics, coal quality, resource estimate,
resource indicators etc.) indicating presence of coal resources at depth.
=== dc2011-12-0010-pages-16.ppm ===
B. Financial Documentation
B.1 Annual Report or comparative Financial Statements

a. Audited financial statements and annual reports for the last three (3)
years or comparative audited financial statements not more than
six (6) months old at the date of filing;

b. If latest audited financial statements are unavailable or the audited
financial statements are more than six (6) months old, unaudited
financial statements duly signed by the company’s finance officer
and/or president not more than three (3) months old at the date of
filing shall be submitted

c. Particulars of the kind of financial. resources available to the
proponent including capital, credit facilities and guarantees so
available;

d. For newly-organized subsidiary corporations with insufficient
funds to finance the proposed work program, a financial statement
of the proponent’s Parent Company shall be submitted together
with the Parent Company guarantee for full financial obligation.
The financial statement of the Parent Company shall be in
accordance with items (a) and (b) above; and

e.Certified true copy of latest income business tax returns filed with the
Bureau of Internal Revenue, and duly validated with the tax
payments made thereon, if applicable.

B.3 Projected Cash Flow

. Projected cash flow covering a three (3)-year period to include the
sources and uses of funds for future activities including other
businesses / commitments.

‘NOTE: Minimum working capital must be equivalent to one hundred fifty percent
(150%) of the cost of the firm work obligation for the first year of the
Exploration Period on the Contract Area being applied for.

. Working capital refers to the company’s liquid assets [liquid assets
consisting primarily of cash, temporary investments (marketable
securities), short-term receivables and deposits] less current liabilities. It
should be net of the financial commitment from other existing service
contracts (if applicable)

e In case of consortium, each member's working capital shall be pro-rata
based on its participating interest in the service contract
=== dc2011-12-0010-pages-17.ppm ===
Cc. Technical Documentation

C.1 Technical and industrial qualifications, eligibilities and work related
experiences of the proponent and its employees;

C.2 Technical and industrial resources available to the proponent for the
exploration, development and production of coal resources;

C.3 Experiences, achievements and track records of the proponent and its
employees related to technical and industrial undertakings; and

C4 Organizational and management structure of the proponent.
D. Legal Documentation
D.1 Certified true copies of the following:

e Articles of incorporation and by-laws;

e Securities and Exchange Commission (SEC) Registration; and

e Company Profile and/or latest general information sheet
submitted to the SEC

D.2 Original Copy of the Certificate of Authority from the Board of
Directors of the proponent authorizing a designated representative (s)
to negotiate the Coal Operating Contract. The said Certificate of
Authority must be executed under oath by the Corporate Secretary and,
if executed abroad, must be properly authenticated by the Philippine
Consulate Office.

For financial, legal and technical documentation, if the proponent is a joint venture,
all entities forming part of the joint venture shall comply with the above
requirements. In addition, the proponent shall submit a copy of the joint venture
agreement. ’

Summary

The proposal must only include data, analyses, calculations, interpretations and studies
that are relevant to the Contract Area applied for. All studies that are employed in the
evaluation of the Contract Area shall be reviewed in a summary containing both
conclusions and the arguments for the relevance of the study.

To facilitate the effective processing of the proposal, the headings in the Guidelines for
‘PECR 4 - Coal shall be used.
=== dc2011-12-0010-pages-18.ppm ===
ANN EX B-1

TIMELINE FOR COAL

DATE ACTIVITY
December 1, 2011 Official launch of PECR 4 for Coal

Last day of submission of Pre-qualification

January 31, 2012 documents

Last day of submission of proposals

(11:30 AM, Philippine Time)

March 1, 2012

Opening of proposals
(1:30 PM Philippine Time)

=== dc2011-12-0010-pages-19.ppm ===
ANNEX C

REC’S ENDORSEMENT TO THE SECRETARY

Republic of the Philippines
DEPARTMENT OF ENERGY
Energy Center, Merritt Road, Fort Bonifacio
Taguig City, Metro Manila

For the Approval of: The Secretary

Area/ Location:
Title of the Contract:
Parties: .

The attached [service/ operating] contract have been reviewed by the undersigned and the
terms and conditions thereof are reasonable and in compliance with [Presidential Decree
No. 87/Presidential Decree No. 972], its implementing rules and regulations, applicable
department issuances and guidelines.

Undersecretary in-charge of ,
Energy Resource Development Bureau (ERDB)

Assistant Secretary in-charge of Director of the Legal Services
the ERDB
Director of the Financial Services Director of the ERDB

rey ei dh ie