=== dc2014-02-0005-pages-01.ppm === Republic of the Philippines DEPARTMENT OF ENERGY DEPARTMENT CIRCULAR NO. DC201403 0005 he 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. DC2011-12-0010 AND DC2012-02-0003 WHEREAS, Section 4 of Presidential Decree No. (PD) 87, as amended, otherwise known as the “Oi/ 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 Govemment relative to energy exploration, development, utilization, distribution, and conservation; WHEREAS, the DOE through Department Circular No. DC201 1-12-0010 (the “4” Philippine Energy Contracting Round {[PECR4] Guidelines”) desires to adopt the most effective strategy of promoting expforation, devclopment and utilization of petroleum and coal resources in the Philippines and streamline the service contracting process; WHEREAS, the DOE issued Department Circular No. DC2012-02-0003 guaranteed greater participation of interested applicants and ensured the transparent and competitive nature of submission and evaluation of proposals, extended the timelines for submission, subdivided the previous offered areas, provided additional guidelines and clarified certain provisions in the PECR4 Guidelines: WHEREAS, the DOE reiterates and acknowledges the nced 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. 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. 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 applications. 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: Energy Center, Merritt Rd., Fort Bonifacio, Taguig, Metro Manila, Philippines Tal. Nos.: (Trunkline) 840-1401 to 21; Fax 840-1731; 840-2138; 840-2067 ; (632) 840-1731; (632) 840-2138; Telefax (632) 840-2067 Website: www.doe.gov.ph, E-mail: info@doe.gov.ph === dc2014-02-0005-pages-02.ppm === Chair Undersecretary-in-charge of Energy Resource Development Bureau (ERDB) Vice Chair — : Assistant Secretary-in-charge of ERDB Members : Director of the Legal Services (LS) Director of the Financial Services (FS) Director of the ERDB Section 3. Responsibilities of the REC. The REC shall perform the following responsibilities: 3.1 ve) i) 3.3 3.4 3.5 Identify prospective petroleum and coal areas found in the Philippine territory including its maritime zones and continental shelf for inclusion in the PECR. In this regard, the REC shall notify the local government units (LGUs) of the offered areas within their territorial jurisdiction, prior to the inclusion to the PECR; Examine, evaluate, and review the legal, technical, and financial capabilities of the project applicants and their applications 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 winning applicant; Address any questions and inquiries that may be raised by the Secretary in connection with the petroleum service and coal operating contracts endorsed for execution and approval; and Resolve issues in relation to the legal, technical and financial capabilities of applicants, including motions for reconsideration. Section 4. Procedure for Awarding Petroleum Service and Coal Operating Contracts. 4.1 Preparation for PECR Applications a. The REC shall submit to the Secretary for approval the prospective petroleum and coal areas 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 for exploration, development, and production of petroleum service and coal operating contracts except through the PECR. No application for small-scale mining permits for coal operations shall be entertained in the offered areas until after the coal operating contracts for the PECR have been awarded. === dc2014-02-0005-pages-03.ppm === 4.2 4.3 44 b. The REC shall 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: 1. Location Map and Technical Description of the areas being offered during the PECR; i. Schedule of activities for the PECR; and ll. Such other information as the REC may deem appropriate. 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. Pre-submission Conference for PECR Applications The REC shall schedule a pre-submission conference to discuss relevant circulars and rules and entertain questions or clarifications from prospective applicants within the period prescribed in Section 4.5 hereof. Submission of PECR Applications a. Submission of PECR applications shall be in accordance with the guidelines for petroleum and coal, attached herein as Annexes A and B, respectively, and within the period prescribed in Section 4.5 hereof. Applications with incomplete documents based on the checklist for petroleum and coal attached hereto as Annexes C-] and C-2, respectively, shall be automatically disqualified from the PECR during the opening of applications. No additional documentary requirements shall be accepted after the deadline of submission for PECR applications. The REC shall issue additional guidelines on the venue, set-up and procedures in the opening of the PECR applications. Awarding of Petroleum Service and Coal Operating Contracts a. The REC shall conduct evaluation of the submitted applications based on the following criteria: i. Legal qualification - Pass or Fail il. Work Program - 40% ill. Technical qualification - 20% iv. Financial qualification - 40% EF === dc2014-02-0005-pages-04.ppm === The highest ranked applicant who meets the legal, technical and financial requirements shal] be selected. LS in coordination with ERDB and the Compliance Division of the FS shall prepare the final petroleum service or coal operating contract using the Model Contracts and its accounting procedures. No deviations from the Model Contract and its accounting procedures shall be allowed. Within seven (7) days from receipt of notice of award, the winning applicant shall pay 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 service and coal operating contracts and the production of the execution copy of the petroleum service or coal operating contract, the REC shall transmit to the Secretary their written endorsements of the winning applicant in the form of Annex D hereof. The REC, for sufficient and valid cause, may at any given time reject any or all applications submitted. Any motion for reconsideration or appea! from the decision of the REC and/or the Secretary shall comply with applicable provisions of Department Circular No. DC2002-07-004 or the “Rules of Practice and Procedure Before the Department of Energy”. 4.5 Timelines for PECR 5 Timelines for all activities in relation to PECR 5 shall be referred to in Annexes A- / (Petroleum) and B-/ (Coal). 4.6 Review and Approval by the Secretary Based on the written endorsement of the REC, the Secretary may approve the application for petroleum service and coal operating contracts. The Secretary may convene the REC for any questions or inquiries pertaining to the review and evaluation undertaken. Section 5. Creation of the REC Secretariat. The REC Secretariat shall assist the REC in all activities related to PECR and shall be composed of the following: Head Members Assistant Director, ERDB Chief, Contracts Division (LS) Chief, Compliance Division (FS) === dc2014-02-0005-pages-05.ppm === Chief, Information Services Division, Information Technology and Management Services (ITMS) Chief, Petroleum Resources Development Division (ERDB) Chief, Coal and Nuclear Minerals Division (ERDB) Section 6. Option for Philippine National Oil Company - Exploration Corporation (PNOC- EC) to participate in Petroleum Service Contracts. For petroleum service contracts proposed under this Circular, an option shall be reserved for the PNOC-EC for a maximum of ten percent (10%) participating interest in a proposed service contract involving one (1) or more Filipino participant or maximum of fifteen percent (15%) participating interest in a proposed service contract involving no Filipino participant. DOE shall inform PNOC-EC_ within thirty (30) days from the award of the service contract, and, PNOC-EC shall give proper notice, within thirty (30) days from receipt thereof, to the winning applicant and the DOE whether it shall exercise said option. All rights, privileges, benefits, costs, expenses, obligations and liabilities of PNOC- EC shall be in proportion to its participating interest in the proposed service contract. Section 7. Track Record. Previous petroleum service and coal operating contractors with cancelled/terminated service/operating contracts for cause and/or with outstanding work and financial obligations with the DOE, as determined by the REC, are not eligible to join the PECR. Section 8. Nominated Areas. Prospective applicants for petroleum service or coal operating contracts may formally nominate areas of interest, subject to the DOE Blocking System for petroleum and coal areas, for inclusion in the PECR within the period prescribed in Section 4.5 hereof. The REC may include such nominated area in the offered areas under the PECR. Section 9. Separability Clause. If for any reason, any section or provision of this Circular and its Annexes is declared unconstitutional or invalid, such parts not affected shall remain in full force and effect. Section 10. Repealing Clause. Department Circular Nos. DC2011-12-0010 and DC2012-02- 0003 and provisions of all other DOE 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 _ January 2014 in Bonifacio Global City, Taguig City, Metro Manila. flak CARLOS|JERICHO L. PETILLA Secretary Fag str SOE-JLP-14001116 FEB24 2014 WMI === dc2014-02-0005-pages-06.ppm === ANNEX A Republic of the Philippines DEPARTMENT OF ENERGY Energy Center, Rizal Drive, Bonifacio Global City Taguig City, Metro Manila 5" PHILIPPINE ENERGY CONTRACTING ROUND (PECR 5) GUIDELINES FOR PETROLEUM Requisites for documentation to be submitted by applicant in the 5" Philippine Energy Contracting Round for Petroleum, within the periods prescribed in Annex A-/: J. General Information I. Applicant may be any local/foreign individual company or group of companies forming a joint venture/consortium, organized or authorized for the purpose of engaging in petroleum exploration and development; If an applicant ts a joint venture/consortium, it shall submit a copy of the joint venture agreement. The Operator must submit the application on behalf of the joint venture/consortium and must meet all legal, technical, and financial requirements. Members of the joint venture/consortium, on the other hand, shall be legally and financially qualified. The working capital of each member of the joint venture/consortium shall be pro-rata based on its participating interest in the proposed work program and budget. Furthermore, any interested party, acting singly or forming part of a joint venture, that is organized in a foreign country shall submit legal and financial documents, or its equivalent, as required hereunder, issued by the appropriate governing body and duly authenticated by the Philippine Consulate having the appropriate jurisdiction. Applicant shall submit three (3) complete sets of legal, technical, and financial documents for evaluation by the Review and Evaluation Committee (REC). Each application shall cover only one predefined Contract Area as given in the PECR 5 Contract Area Map for Petroleum (hereinafter called “Contract Area’). . Submitted application must be in both paper and digital (CD-ROM / USB Drive in Microsoft Word or *.pdf 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. For Icgibility, figures and maps shall be submitted at a larger scale as appendices. === dc2014-02-0005-pages-07.ppm === 4. II. A non-refundable application fee of Php 200,000.00 per area shall be paid by the applicant upon submission of the application and its supporting documents. Payment may be made in cash, manager/company cheque payable to Department of Energy or wire/bank transfer. All wire/bank transfer should be net of all applicable foreign and local bank and financial charges. . Both the original paper copy and the digital copy of the application shall be addressed to: The Chair Review and Evaluation Committee Department of Energy Energy Center, Rizal Drive Bonifacio Global City Taguig City, Metro Manila, 1632 Philippines Telefax: (632) 840-2074 The application may be sent by courier, registered mail, or hand delivered and shal! be stamped received by the DOE Records Division not later than 1100H of the announced deadline and the REC shall open the submitted applications at 1330H on the same day as prescribed in Annex A-1 hereof. The DOE will award one Petroleum Service Contract for each Contract Area. Within seven (7) days from receipt of notice of award, the winning applicant shall pay a 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. Documentation Requirements The following documentation requirements should be included in the application: A. Legal Documentation A.1 Duly filled-out covering information sheet showing a brief summary of the application. e.g. === dc2014-02-0005-pages-08.ppm === COVERING INFORMATION SHEET (Petroleum) CompanyName _ Participating Country of Parent Interest % Registration Compan JV/Consortium Member: Address of Operator: Telephone No.: Fax No.: | Mobile Phone No.: Email Address: Website: Address of JV / Consortium Member: Telephone No.: | Fax No.: Mobile Phone No.: Email Address: | Website: PECR Area Applied for: Proposed Signature Bonus: Proposed Development Assistance Fund: Training Assistance Fund: It is certified that the foregoing information are true and correct. It is understood that any omission or misrepresentation of the required information shall be sufficient cause for the rejection of this application. Authorized Representative and Signature === dc2014-02-0005-pages-09.ppm === A.2 Certified true copies of the Securities and Exchange Commission (SEC) Certificate of Registration, Articles of Incorporation and By-Laws. The corporate purpose of the applicant shall include the exploration, development and utilization of petroleum resources; A.3 Certified true copy of the General Information Sheet (GIS) stamped received by the Securities and Exchange Commission (SEC) not more than twelve (12) months old at the time of filing of application; A.4 Original Copy of the Certificate of Authority from the Board of Directors of the applicant authorizing a designated representative/s to apply, negotiate, sign any documents and execute the petroleum service contract. The said Certificate of Authority shall be executed under oath by the Corporate Secretary. Work Program Documentation B.1 Proposed work program (discussion of the exploration strategies and methodologies to be employed in delineating petroleum resources with subsequent manpower complement should be in detailed narrative format including the Schedule of Activities in a Gantt Chart) and minimum expenditure for each proposed activity with respect to the area or areas specified in the proposal. Work program and minimum expenditure with 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 e 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 e Well program, number, and timing e Depth e Target e Other geological and geophysical work e Geochemical === dc2014-02-0005-pages-10.ppm === e Sampling e Reprocessing e 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. B.2 Geological and geophysical evaluation of the Contract Area applied for: a. 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). b. 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. c. Prospect/Lead evaluation The following shall be evaluated for each prospect: « depositional environment/reservoir type(s); e trap and seal; and « hydrocarbon type, source, migration and trap fill. The following documentation is required for each prospect: e overview map with coordinates and prospect ; e seismic and geological cross-section(s); === dc2014-02-0005-pages-11.ppm === * seismic line showing well ties, where relevant reservoir horizon time- and-depth maps presented at identical scales; and ¢ seismic attribute maps. d. 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; « choice of reservoir parameters; and e estimate of recovery factor. e. Probability of Discovery (Whenever applicable) Component probability factors and the probability of discovery must be explained and documented. The methods of risk analysis must also be briefly described.. B.3. Economics and development concepts of possible petroleum discoveries a. Plan of Development Projected production profiles to include: e number of development wells and flow rates; e possible production limitations; and e methods by which the resources will be recovered (e.g. drive mechanisms and reservoir management), e development and transport scenarios for the different resource outcomes shall be prepared for each prospect (description shall be given only of the development and transport scenarios for the expected (most likely) resource outcome). b. Project 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 the project. === dc2014-02-0005-pages-12.ppm === C. Technical Documentation C.1 Upstream Petroleum Projects The applicant shall submit an overview of all its Upstream Petroleum related Projects. C.2 Technical Personnel a. Relevant Experience b. Educational Attainment Cc. Employment Status Particulars of the technical and industrial qualifications, eligibilities and work- related experiences of the applicant and its employees. Particulars on the experiences, achievements, and track records of the applicant and _ its employees related to technical and industrial undertakings. Operational organization, including resources, expertise, and experience. D. Financial Documentation D.1 For corporations existing for more than two (2) years at the time of filing of application: a. Original Copy of the Annual Report or Audited Financial Statements (FS) for the last two (2) years from the filing date and Original Copy of the latest Unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer if the Audited FS is more than six (6) months old at the time of filing; b. Original Copy of the Bank Certification to substantiate the cash balance as Cc. of the latest unaudited FS; Original Copy of the Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable; and, For domestic corporations, certified true copy of the Jatest income tax return filed with the Bureau of Internal Revenue, and duly validated with the tax payments made thereon. D.2 For newly-organized corporations existing for less than two (2) years at the time of filing of application: === dc2014-02-0005-pages-13.ppm === D.3 D4 D.5 a. Original Copy of the Audited Financial Statements (FS) or unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer; b. Original Copy of the Bank Certification to substantiate the cash balance as of the latest unaudited FS; and, c. Original Copy of the Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable. For Parent Company that guarantees for corporations with insufficient working capital: Parent Company’s fund guarantee shall be limited to the corresponding participating interest and shall submit the following: a. Original Copy of the Parent Company's financial documents per D.!.a and D.1.b; and b. Original Copy of duly notarized Letter of Undertaking / Support from the Parent Company to fund the Work Program. Minimum working capital (Liquid Assets less Current Liabilities) is 100% of the financial commitment for the first contract year of the proposed work program and budget. Liquid Assets shal! consist only of cash, trade accounts receivables and short term investments/placements. Credit line is not a Liquid Asset. The applicant shal! have available working capital for each PECR application separate from other applied PECR areas, renewable energy service contract applications and existing energy service/operating contracts, if applicable. (" === dc2014-02-0005-pages-14.ppm === 28 March 2014 25 April 2014 ANNEX A-1! TIMELINE FOR PETROLEUM Deadline for submission of nominated areas Official launch of PECR 5 30 April 2014 (A.M.) 5 May 2014 7 November 2014 23 January 2015 Pre-submission Conference Start of PECR application submission Last day of acceptance of PECR Application (1100 hours, Philippine Standard Time) Opening of PECR Application (1330 hours, Philippine Standard Time) Endorsement of winning applicants === dc2014-02-0005-pages-15.ppm === ANNEX B Republic of the Philippines DEPARTMENT OF ENERGY Energy Center, Rizal Drive, Bonifacio Global City Taguig City, Metro Manila Sth PHILIPPINE ENERGY CONTRACTING ROUND (PECR 5) GUIDELINES FOR COAL Requisites for documentation to be submitted by applicants in the sth Philippine Energy Contracting Round for Coal, within the periods prescribed in Annex B-/: I. General Information L. Applicant may be any Filipino corporation or partnership with at least sixty percent (60%) of its capitalization is owned by Filipinos duly registered with the Securities and Exchange Commission (SEC), or cooperative, organized or authorized for the purpose of engaging in coal exploration and development. Applicant shall submit three (3) complete sets of legal, technical, and financial documents for evaluation by the Review and Evaluation Committee (REC). Each application shall cover only one predefined Contract Area as given in the PECR 5 Contract Area Map for Coal (hereinafter called “Contract Area’). Submitted application must be in both paper and digital (CD-ROM / USB Drive in Microsoft Word or *.pdf 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. For legibility, figures and maps shall be submitted at a larger scale as appendices. A non-refundable application fee of Php 50,000.00 per area shall be paid by the applicant upon submission of the application and its supporting documents. Payment may be made in cash, manager/company cheque payable to Department of Energy or wire/bank transfer. All wire/bank transfer should be net of all applicable bank and financial charges. Both the original paper copy and the digital copy of the application shall be addressed to: The Chair Review and Evaluation Committee Department of Energy Energy Center, Rizal Drive Bonifacio Global City === dc2014-02-0005-pages-16.ppm === Hi. 11. Taguig City, Metro Manila, 1632 Philippines Telefax: (632) 840-2074 The application may be sent by courier, registered mail, or hand delivered and shall be stamped received by the DOE Records Division not later than 1100H of the announced deadline and the REC shall open the submitted applications at 1330H on the same day as prescribed in Annex B-! hereof. The DOE will award one Coal Operating Contract for each Contract Area. Within seven (7) days from receipt of notice of award, the winning applicant shall pay a processing fee of Php 30,000.00 per block based on DOE’s Schedule of Fees and Charges in compliance with Executive Order No. 197, series of 2000. Interested applicants may apply for non-exclusive reconnaissance permit with the REC valid until the deadline for submission of applications as prescribed in Annex B-1 hereof. The work equivalents as provided for in Chapter 4 Section III of BED Circular 81-11-10 or “Guidelines for Coal Operations in the Philippines” shall be applied. . Only exploration work program in the application for coal operating contract that conforms to the exploration Work Program Documentation as required under this Circular shall be accepted. A company shall be entitled to not more than fifteen (15) blocks of coal lands, including existing COCs, in any one coal region pursuant to Section 6, PD 972 as amended. Documentation Requirements The following documentation requirements should be included in the application: A. Legal Documentation A.1 Duly filled-out covering information sheet showing a brief summary of the application, e.g. === dc2014-02-0005-pages-17.ppm === COVERING INFORMATION SHEET (Coal) Telephone No.: Mobile Phone No.: Email Address: Website: Address of Applicant: PECR Area Applied for: Proposed Signature Bonus: Proposed Training Assistance: Proposed Development Assistance Fund: It is certified that the foregoing information are true and correct. It is understood that any omission or misrepresentation of the required information shall be sufficient cause for the rejection of this application. Authorized Representative Name and Signature === dc2014-02-0005-pages-18.ppm === A.2 Certified true copies of the Securities and Exchange Commission (SEC) Certificate of Registration, Articles of Incorporation and By-Laws. The corporate: purpose of the applicant shall include the exploration, development and utilization of coal resources; A.3 Certified true copy of the General Information Sheet (GIS) stamped received by the Securities and Exchange Commission (SEC) not more than twelve (12) months old at the time of filing of application; A.4 Original Copy of the Certificate of Authority from the Board of Directors of the applicant authorizing a designated representative/s to apply, negotiate, sign any documents and execute the coal operating contract. The said Certificate of Authority shall be executed under oath by the Corporate Secretary; and A.5 In case the applicant is a partnership or cooperative, it shall submit the legal documents as specified in A.2 to A.4 above, or its equivalent, issued or authenticated by the appropriate governing authorities. B. Work Program Documentation B.1 Geological Report (Narrative presentation of available data such as geology, coal quality, resource estimate, if available etc. indicating presence of coal resources at depth); B.2 Proposed Exploration Work Program (Narrative discussion of the different exploration strategies and methodologies to be employed in delineating coal resources at depth with subsequent manpower complement and projected expenditures on annual basis for each activity with respect to the area or areas specified in the proposal); B.3 Schedule of Works and Manpower Requirements in Gantt Chart; and, B.4 Projected Exploration Expenditures. Cc. Technical Documentation C.1 Particulars of technical and industrial resources available to the applicant for the exploration of coal resources; C.2 Particulars on the technical and industrial qualifications, eligibilities and work related experiences of the applicant and its employees; Mhy === dc2014-02-0005-pages-19.ppm === C.3 Particulars on the experiences, achievements and track records of the applicant and its employees related to technical and industrial undertakings; and, C.4 Particulars on organizational and management structures relative to administration, financial and technical aspects of the applicant. Financial Documentation D.1 For corporations existing for more than two (2) years at the time of filing of application: a. Original Copy of the Annual Report or Audited Financial Statements (FS) for the last two (2) years from the filing date and Original Copy of the latest Unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer if the Audited FS is more than six (6) months old at the time of filing; Original Copy of the Bank Certification to substantiate the cash balance as of the latest unaudited FS; Original Copy of the Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable; and, A certified true copy of the latest income tax return filed with the Bureau of Internal Revenue, and duly validated with the tax payments made thereon. D.2 For newly-organized corporations existing for less than two (2) years at the time of filing of application: a. Original Copy of the Audited Financial Statements (FS) or unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer; Original Copy of the Bank Certification to substantiate the cash balance as of the latest unaudited FS; and, Original Copy of the Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if hi === dc2014-02-0005-pages-20.ppm === applicable;. D.3 For Parent Company that guarantees for corporations with insufficient working capital. Financial guarantees of foreign companies to their subsidiaries that are shareholders of the applicant shall be limited to their equity participation in the allowable maximum forty percent (40%) foreign capitalization. a. Original Copy of the Parent Company's financial documents per D.1.a and D.1.b; b. Original Copy of duly notarized Letter of Undertaking/ Support from the Parent Company to fund the Work Program; and, c. General Information Sheet (GIS) of the shareholders of the applicant availing of the Parent Company fund guarantee. D.4 Minimum working capital (Liquid Assets less Current Liabilities) is 150% of the financial commitment for the first contract year of the proposed work program and budget. Liquid Assets shall consist only of cash, trade accounts receivables and short term investments/placements. Credit line is not a Liquid Asset. D.5 The applicant shall have available working capital for each PECR application separate from other applied PECR areas, renewable energy service contract applications and existing energy service/operating contracts. \% === dc2014-02-0005-pages-21.ppm === ANNEX B Republic of the Philippines DEPARTMENT OF ENERGY Energy Center, Rizal Drive, Bonifacio Global City Taguig City, Metro Manila Sth PHILIPPINE ENERGY CONTRACTING ROUND (PECR 5) GUIDELINES FOR COAL Requisites for documentation to be submitted by applicants in the 5" Philippine Energy Contracting Round for Coal, within the periods prescribed in Annex B-/: I. General Information l. lo Applicant may be any Filipino corporation or partnership with at least sixty percent (60%) of its capitalization is owned by Filipinos duly registered with the Securities and Exchange Commission (SEC), or cooperative, organized or authorized for the purpose of engaging in coa] exploration and development. Applicant shall submit three (3) complete sets of legal, technical, and financial documents for evaluation by the Review and Evaluation Committee (REC). Each application shall cover only one predefined Contract Area as given in the PECR 5 Contract Area Map for Coal (hereinafter called “Contract Area”). Submitted application must be in both paper and digital (CD-ROM / USB Drive in Microsoft Word or *.pdf 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. For legibility, figures and maps shall be submitted at a larger scale as appendices. A non-refundable application fee of Php 50,000.00 per area shall be paid by the applicant upon submission of the application and its supporting documents. Payment may be made in cash, manager/company cheque payable to Department of Energy or wire/bank transfer. A]] wire/bank transfer should be net of all applicable bank and financial charges. Both the original paper copy and the digital copy of the application shall be addressed to: The Chair Review and Evaluation Committee Department of Energy Energy Center, Rizal Drive Bonifacio Global City === dc2014-02-0005-pages-22.ppm === Il. ll. Taguig City, Metro Manila, 1632 Philippines Telefax: (632) 840-2074 The application may be sent by courier, registered mail, or hand delivered and shall be stamped received by the DOE Records Division not later than 1100H of the announced deadline and the REC shall open the submitted applications at 1330H on the same day as prescribed in Annex B-1 hereof. The DOE will award one Coal Operating Contract for each Contract Area. Within seven (7) days from receipt of notice of award, the winning applicant shall pay a processing fee of Php 30,000.00 per block based on DOE’s Schedule of Fees and Charges in compliance with Executive Order No. 197, series of 2000. Interested applicants may apply for non-exclusive reconnaissance permit with the REC valid until the deadline for submission of applications as prescribed in Annex B-1 hereof. The work equivalents as provided for in Chapter 4 Section II] of BED Circular 81-11-10 or “Guidelines for Coal Operations in the Philippines” shal\ be applied. .Only exploration work program in the application for coal operating contract that conforms to the exploration Work Program Documentation as required under this Circular shall be accepted. A company shall be entitled to not more than fifteen (15) blocks of coal lands, including existing COCs, in any one coal region pursuant to Section 6, PD 972 as amended. Documentation Requirements The following documentation requirements should be included in the application: A. Legal Documentation A.1 Duly filled-out covering information sheet showing a brief summary of the application, e.g. === dc2014-02-0005-pages-23.ppm === COVERING INFORMATION SHEET (Coal) Company Name Telephone No.: ; Mobile Phone No.: Email Address: Website: Address of Applicant: PECR Area Applied for: Proposed Signature Bonus: Proposed Training Assistance: Proposed Development Assistance Fund: It is certified that the foregoing information are true and correct. It 1s understood that any omission or misrepresentation of the required information shall be sufficient cause for the rejection of this application. Authorized Representative Name and Signature === dc2014-02-0005-pages-24.ppm === A.2 A.3 A.4 A.5 B.1 B.2 B.3 B.4 Certified true copies of the Securities and Exchange Commission (SEC) Certificate of Registration, Articles of Incorporation and By-Laws. The corporate purpose of the applicant shall include the exploration, development and utilization of coal resources; Certified true copy of the General Information Sheet (GIS) stamped received by the Securities and Exchange Commission (SEC) not more than twelve (12) months old at the time of filing of application; Original Copy of the Certificate of Authority from the Board of Directors of the applicant authorizing a designated representative/s to apply, negotiate, sign any documents and execute the coal operating contract. The said Certificate of Authority shall be executed under oath by the Corporate Secretary; and In case the applicant is a partnership or cooperative, it shall submit the legal documents as specified in A.2 to A.4 above, or its equivalent, issued or authenticated by the appropriate governing authorities. Work Program Documentation Geological Report (Narrative presentation of available data such as geology, coal quality, resource estimate, if available etc. indicating presence of coal resources at depth); Proposed Exploration Work Program (Narrative discussion of the different exploration strategies and methodologies to be employed in delineating coal resources at depth with subsequent manpower complement and projected expenditures on annual basis for each activity with respect to the area or areas specified in the proposal); Schedule of Works and Manpower Requirements in Gantt Chart; and, Projected Exploration Expenditures. C. Technical Documentation C.l Particulars of technical and industrial resources available to the applicant for the exploration of coal resources; C.2 Particulars on the technical and industrial qualifications, eligibilities and work related experiences of the applicant and its employees; "hy === dc2014-02-0005-pages-25.ppm === C.3 C.4 Particulars on the experiences, achievements and track records of the applicant and its employees related to technical and industrial undertakings; and, Particulars on organizational and management structures relative to administration, financial and technical aspects of the applicant. Financial Documentation D.1 D.2 For corporations existing for more than two (2) years at the time of filing of application: a. Original Copy of the Annual Report or Audited Financial Statements (FS) for the last two (2) years from the filing date and Original Copy of the latest Unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer if the Audited FS is more than six (6) months old at the time of filing; Original Copy of the Bank Certification to substantiate the cash balance as of the latest unaudited FS; Original Copy of the Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable; and, A certified true copy of the latest income tax return filed with the Bureau of Internal Revenue, and duly validated with the tax payments made thereon. For newly-organized corporations existing for less than two (2) years at the time of filing of application: a. Original Copy of the Audited Financial Statements (FS) or unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer; Original Copy of the Bank Certification to substantiate the cash balance as of the latest unaudited FS; and, Original Copy of the Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if === dc2014-02-0005-pages-26.ppm === applicable. D.3 For Parent Company that guarantees for corporations with insufficient working capital. Financial guarantees of foreign companies to their subsidiaries that are shareholders of the applicant shall be limited to their equity participation in the allowable maximum forty percent (40%) foreign capitalization. a. Original Copy of the Parent Company's financial documents per D.1.a and D.1.b; b. Original Copy of duly notarized Letter of Undertaking/ Support from the Parent Company to fund the Work Program; and, c. General Information Sheet (GIS) of the shareholders of the applicant availing of the Parent Company fund guarantee. D.4 Minimum working capital (Liquid Assets less Current Liabilities) is 150% of the financial commitment for the first contract year of the proposed work program and budget. Liquid Assets shall consist only of cash, trade accounts receivables and short term investments/placements. Credit line is not a Liquid Asset. D.5 The applicant shall have available working capital for each PECR application separate from other applied PECR areas, renewable energy service contract applications and existing energy service/operating contracts. 1° === dc2014-02-0005-pages-27.ppm === 28 March 2014 ANNEX B-1 TIMELINE FOR COAL Deadline for submission of nominated areas 25 April 2014 Official launch of PECR 5 30 April 2014 (A.M) 05 May 2014 05 September 2014 21 November 2014 Pre-submission Conference Start of PECR application submission Last day of acceptance of PECR Application (1100 hours, Philippine Standard Time) Opening of PECR Application (1330 hours, Philippine Standard Time) Endorsement of winning applicants === dc2014-02-0005-pages-28.ppm === I. LEGAL C4) [ 5) [ 6) ANNEX C-1 CONTRACTING ROUND APPLICATION CHECKLIST (Petroleum) Duly filled-out covering information sheet (DOE Format); SEC Certificate of Registration or Incorporation, SEC Articles of Incorporation and By-Laws (The corporate purpose of the applicant shall include the exploration and development of petroleum resources); General Information Sheet (GIS) stamp-received by the SEC not more than 12 months old at the time of filing of application; Certificate of Authority from the Board of Directors of the applicant authorizing designated representative/s to apply, negotiate, sign any document and execute the petroleum service contract. The said Certificate of Authority shall be executed under oath by the Corporate Secretary; Joint Venture Agreement, if applicable; NOTE: For foreign applicants: Document Nos. 2 — 5, applicants shall submit equivalent legal documents issued by the appropriate governing body and duly authenticated by the Philippine Consulate having the appropriate jurisdiction. For local applicants: Document Nos. 2-4 shall be duly authenticated by the SEC All members of a Joint Venture shall submit Documents 2-5. [| 7) Proof of payment for processing / application fee (DOE Official Receipt) NOTE: Payment Order / Remittance Slip to be secured from the Office of the Director, ERDB before payment to the Treasury Division Petroleum = Php 200,000.00 DOCUMENT FORMAT Original Certified Copy Certified Copy Certified Copy Original Original Original === dc2014-02-0005-pages-29.ppm === If. TECHNICAL [] WL 1) Work program 2) a) b) c) Summary of proposed work program and minimum expenditure per Sub-Phase for each proposed activity with respect to the area specified in the proposal - Gantt Chart format - Minimum Exploration and Work Commitment/ Minimum Financial Commitment Matrix Geological and geophysical evaluation of the area applied for - database; - petroleum potential analysis - prospect lead evaluation - resources - probability of discovery Development and economic concepts of possible discoveries - plan of development - project economics NOTE: Each item in the exploration and work commitment matrix must be given a stipulated cost figure, the sum of which will constitute the minimum cost of the work program Technical documentation a) b) The applicant shall submit an overview of all its Upstream Petroleum Related Projects. Particulars of the technical and industrial qualifications, eligibilities and work-related experiences of the applicant and its employees. Particulars on the experiences, achievements, and track records of the applicant and its employees related to technical and industrial undertakings. Operational organization, including resources, expertise, and experience. DOCUMENT FORMAT Digital and printed copy Digital and printed copy Digital and printed copy Digital and printed copy Original === dc2014-02-0005-pages-30.ppm === It. FINANCIAL [ | ae 1) For corporations existing for more than 2 years at the time of filing: 2) a) d) Annual Report or Audited Financial Statements (FS) for the last two (2) years from the filing date and latest Unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer if the Audited FS is more than six (6) months old at the time of filing; Bank Certification to substantiate the cash balance as of the latest unaudited FS; and Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable, with supports by any or all of the following: - Sales Agreement/Purchase Order of Buyer for projected revenues on existing operations; - Swom Letter of Commitment from. stockholders for additional equity/cash infusion within one (1) year of operation; - Bank-approved loan/credit line earmarked for the proposed operation. For domestic corporations, latest income tax returns filed with the Bureau of Internal Revenue, and duly validated with tax payments made thereon. For newly-organized corporations (existing for two (2) years or less at the time of filing) a) b) c) Audited Financial Statements (FS) or unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer; Bank Certification to substantiate the cash balance as of the latest unaudited FS; Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable, with supports by any or all of the following: DOCUMENT FORMAT Original Original Original Certified True Copy Original Original Certified True Copy Original Original Original === dc2014-02-0005-pages-31.ppm === PUL - Sales Agreement/Purchase Order of Buyer for projected revenues on existing operations; Sworn Letter of Commitment from stockholders for additional equity/cash infusion within one (1) year of operation; Bank-approved loan/credit line earmarked for the proposed operation. 3) For Parent Company's guarantee for corporations with insufficient working capital: a) b) c) Parent Company's financial documents per Petroleum Application Checklist Items III.1.a and II.1.b; Duly notarized Letter of Undertaking/ Support from the Parent Company to fund the Work Program; and Genera! Information Sheet (GIS) of the shareholder availing of the Parent Company fund guarantee. NOTE: - Minimum working capital (Liquid Assets less Current Liabilities) is 100% of the financial commitment of the first contract year of the proposed work program and budget. Liquid Assets shall consist only of cash, trade accounts receivables and short-term investments/placements. Credit line is not a Liquid Asset. - The available working capital for each PECR application shall be net of the fund requirements for other applied PECR areas, renewable energy service contract applications and existing energy service/operating contracts, if applicable. Certified True Copy Original Original Original Original Certified True Copy === dc2014-02-0005-pages-32.ppm === ANNEX C-2 CONTRACTING ROUND APPLICATION CHECKLIST (Coal) DOCUMENT I. LEGAL FORMAT [___] 1) Duly filled-out covering information sheet (DOE Format); Original [| 2) SEC Certificate of Registration or Incorporation; Certified True Copy | 3) SEC Articles of Incorporation and By-Laws (The corporate Certified purpose of the applicant shall include the exploration and True Copy development of coal resources); [ 4) General Information Sheet (GIS) stamp-received by the SEC not Certified more than 12 months old at the time of filing of application True Copy (The applicant must have a Filipino capitalization of at least 60%); [ | 5) Certificate of Authority from the Board of Directors of the Original applicant authorizing designated representative/s to apply, negotiate, sign any document and execute the coal operating contract. The said Certificate of Authority shall be executed under oath by the Corporate Secretary; NOTE: = Jn case the applicant is a partnership or cooperative, it shall submit Documents 2-4, or its equivalent, issued or authenticated by the appropriate governing authorities. [| 6) Proof of payment for processing / application fee Original (DOE Official Receipt) NOTE: Payment Order / Remittance Slip to be secured from the Office of the Director, ERDB before payment to the Treasury Division Coal = Php 50,000.00 === dc2014-02-0005-pages-33.ppm === Il. TECHNICAL PLL WU Ue [ 1) Work program 2) a) b) c) d) e) f) g) h) Letter of Transmittal Application for Coal Operating Contract (DOE-N-Coal | Form) Technical Description and Map of Application Area Geological report of the area applied for signed by a licensed geologist Proposed Exploration Work Program and Detailed discussion of exploration activities to be conducted Map showing distribution of work commitments (scale: 1:10,000) Schedule of works and manpower requirements in Gantt Chart Detailed cost estimate of exploration expenses Summary of the proposed work program using the DOE- TD-Coal 1 Form and minimum expenditure Technical documentation a) Technical Resources - Particulars of the technical and industrial resources available to the applicant for coal exploration - Evidence of ownership of drilling and surveying equipment or original copy of negotiated drilling and surveying contract - List of company-owned equipment available for coal exploration b) Qualification of key technical and administrative personnel - Particulars of the technical and industrial qualification, eligibilities and work-related experiences of the applicant and its employees - Particulars on the experiences, achievement and track DOCUMENT FORMAT Digital and printed copy Digital and printed copy Original === dc2014-02-0005-pages-34.ppm === record of the interested party and its employees related to technical and industrial undertaking c) Experience and track record of the company Digital and printed copy - Records of past and present experiences including predecessor company - Performance track record - Organizational set-up and _ staffing pattern for administrative, financial, and technical === dc2014-02-0005-pages-35.ppm === III. FINANCIAL | 7 —_ | ae 1) For corporations existing for more than 2 years at the time of filing: 2) a) b) c) d) Annual Report or Audited Financial Statements (FS) for the last two (2) years from the filing date and latest Unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer if the Audited FS is more than six (6) months old at the time of filing; Bank Certification to substantiate the cash balance as of the latest unaudited FS; and Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable, with supports by any or all of the following: - Sales Agreement/Purchase Order of Buyer for projected revenues on existing operations; - Sworm Letter of Commitment from stockholders for additional equity/cash infusion within one (!) year of operation; - Bank-approved loan/credit line earmarked for the proposed operation. Latest income tax returns filed with the Bureau of Internal Revenue, and duly validated with tax payments made thereon. For newly-organized corporations (existing for two (2) years or less at the time of filing) a) b) 9) Audited Financial Statements (FS) or unaudited FS duly signed by the responsible official such as the President and/or Chief Finance Officer, Bank Certification to substantiate the cash balance as of the latest unaudited FS; Projected Cash Flow Statement for three (3) years covering fund sources and uses for the particular offered area, other applied PECR areas, renewable energy service contract applications, existing service/operating contracts with DOE and other existing business, if applicable, with supports by any or all of the following: DOCUMENT FORMAT Original Original Original Certified True Copy Original Original Certified True Copy Original Original Original === dc2014-02-0005-pages-36.ppm === J uw - Sales Agreement/Purchase Order of Buyer for projected revenues on existing operations; Swom Letter of Commitment from stockholders for additional equity/cash infusion within one (1) year of operation; Bank-approved loan/credit line earmarked for the proposed operation. 3) For Parent Company's guarantee for corporations with insufficient working capital (Financial guarantees of foreign companies to their subsidiaries that are shareholders of the applicant shall be limited to their equity participation in the allowable forty percent (40%) foreign capitalization): a) b) c) Parent Company's financial documents per Coal Application Checklist Items III. {.a and [II.1.b; Duly notarized Letter of Undertaking/ Support from the Parent Company to fund the Work Program; and General Information Sheet (GIS) of the shareholder availing of the Parent Company fund guarantee. NOTE: - Minimum working capital (Liquid Assets less Current Liabilities) is 150% of the financial commitment of the first year of the proposed work program and budget. Liquid Assets shall consist only of cash, trade accounts receivables and short-term investments/placements. Credit line is not a Liquid Asset. The available working capital for each PECR application shall be net of the fund requirements for other applied PECR areas, renewable energy service contract applications and existing energy service/operating contracts, if applicable. Certified True Copy Original Original Original Original Certified True Copy === dc2014-02-0005-pages-37.ppm === ANNEX D REC’S ENDORSEMENT TO THE SECRETARY Republic of the Philippines DEPARTMENT OF ENERGY Energy Center, Rizal Drive, Bonifacio Global City Taguig City, Metro Manila For the Approval of: The Secretary Area/Location: Title of the Contract: Parties: The attached [petroleum service/coal 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.