EDC Core Net Income Rises 26.5 Percent to P7.38 Billion in 2009

Geothermal leader Energy Development Corporation (EDC) registered positive income results in 2009 with its core net income rising 26.5 percent to P7.38 billion from P5.83 billion and net income up 150.4 percent to P3.37 billion from P1.34 billion in 2008.  The significant improvement in the core net income is largely attributable to the hike in total revenues, more favorable exchange rates and impact of the Renewable Energy (RE) Law on accounting treatment.

The resulting net income, meanwhile, is P2.02 billion higher primarily due to the P2.73 billion increase in revenues from electricity sales and drilling services, and the complete turnaround of the P9.4 billion foreign exchange loss in 2008 to a P1.3 billion foreign exchange gain in 2009.  These offset the write-down of P2.9 billion deferred tax assets arising under the RE Law, the P2.22 billion increase in operating expenses mainly due to steam augmentation activities, and the impact of the P3.1 billion one-time arbitration award in 2008 which reduced expenses and increased other income in said year.

“Although the one time write down in deferred tax assets affected our income, it was a necessary step before we can realize the fiscal benefits afforded by the RE law.  The long wait for the law’s implementation is well worth it.  With the assistance of the RE law’s incentives, we will push hard to develop new geothermal areas in the country and expand what we have in a sustainable manner,” EDC President and COO Richard Tantoco stated.

Tantoco is happy with the pace at which the company is proceeding with the redenomination of debt stock and upcoming retirement of its Miyazawa II and other on-lent loans. “Our loan currency mix is now predominantly peso denominated after the full payment of our Miyazawa I loan and the raising of P25.1 billion through fixed corporate notes and bonds last year.  After a decade, we are finally eliminating third currency risk by paying off our Yen loans and converting most of our debt to pesos,” he explained. 

EDC used a portion of the funds it raised to prepay the 7-year PSALM staple financing for the acquisition of Tongonan I and Palinpinon plants, purchase of state-of-the-art drilling rig, and repayment of JPY12B Miyazawa 1 loan in June 2009.  Last year’s revenue from drilling services increased by 16.8 percent to P848 million from P726 million in 2008. 

 “We are committed to deliver best value for our stockholders by improving further on operational efficiencies and sustaining robust profits and cash flows.  We will keep our balance sheet healthy to maintain the confidence of financial institutions as we expand our footprint both here and abroad,” Tantoco concluded.

EDC Annual Report Gets Highest Anvil Honors For PR Tools

EDC bagged four Anvils for its annual report, energy camp and coffeetable book.  EDC Vice Chairman & CEO Paul Aquino (5^th from left) received the Bronze Anvil for the annual report.  Also in photo from left to right are EDC Corporate Communications Manager Fernando Diaz de Rivera, EDC Corporate Communications Officers Frances Ariola and Dave Devilles, Anvil Awards Chair Ed Alcaraz, Paul Aquino, PRSP President Butch Raquel, Anvil juror Jarius Bondoc, EDC Accounting Deputy Manager Jhunar Abbot, EDC Corporate Communications Deputy Manager Toni Nieva and EDC Corporate Communications Supervisor Jun Dumlao. 

Geothermal leader Energy Development Corporation (EDC) received the Bronze Anvil for its 2008 annual report titled “Greenergized.”  The Public Relations Society of the Philippines (PRSP) bestowed the highest Anvil for PR tools to “Greenergized” for successfully communicating its sustainable energy brand by highlighting its intrinsic value as a renewable energy company and providing comprehensive information on its triple bottomline performance. 

Aside from the Bronze Anvil, EDC also took home Anvils for Energy Camp, its summer project for indigent youths and Voices of the Mountain: The People of Mount Apo Speak, a coffeetable book.  The Energy Camp received the Anvil Award of Excellence for successfully creating a fun and alternative learning experience for the youth while the coffeetable book was cited for successfully communicating EDC’s initiatives and accomplishments in enhancing Mount Apo’s biodiversity as well as its contribution to the development of the Indigenous Peoples and host communities.

New Rig To Boost EDC’s Savings and Income From Drilling

Rig 14 is the most modern drilling rig in the country with unique features such as the variable frequency drive and Amphion integrated rig control system.

Geothermal leader Energy Development Corporation (EDC) expects to save US$40,000 a day from its new drilling rig, the most modern in the country.  The savings will be realized from the reduced number of days it takes to drill a well, as a result of the increased rate of penetration measured in meters per day. 

            “With this new state-of-the-art rig, we will achieve significant operational efficiency by reducing our drilling days by 40 to 50%.  For every day deducted from each well we drill, not only do we save US$40,000 but we also accelerate the production of steam that results in higher revenues.  The rig’s superior safety and mobility features will also enable us to accomplish our drilling targets in terms of programmed wells per year and this is crucial since we are in an expansionary mode,” EDC President and COO Richard Tantoco explained. 

            The new rig which EDC purchased for almost P1 billion has two unique features: the Variable Frequency Drive (VFD) and Amphion Integrated Rig Control System.  The former allows for a more accurate speed and torque control while the latter centralizes control of various rig equipment.  In addition, its mud system has a 1,800 barrels capacity which can increase rate of penetration.  The new rig also has superior safety and mobility features.  

            “We continue to invest in drilling equipment and manpower because they form the backbone of our geothermal business.  The new rig is a valuable addition to our assets and will enable us to meet our drilling targets not only for our existing projects but also for the Mt. Labo and Mt. Mainit prospects,” Tantoco said.  EDC recently bagged the service contracts for the Mt. Labo and Mt. Mainit geothermal prospects in Camarines Norte and Davao del Norte, respectively.

            While its main revenues come from steam and electricity sales, EDC has made significant inroads in marketing its drilling services abroad.  It has an existing contract with Papua New Guinea’s Lihir Gold Limited (LGL), one of the leading gold producers in the Asia Pacific region.  LGL has been engaging EDC’s engineers and services since 1999 for various drilling contracts.  The largest onshore drilling contractor in the Philippines, EDC has been exporting its drilling services since 1997 starting with Indonesia.

EDC Awarded Patent For Homegrown On-Line Steam Purity Monitoring System

The Bureau of Patents of the Intellectual Property Office has awarded a patent to geothermal leader Energy Development Corporation (EDC) for its on-line Steam Purity Monitoring system.  The system, developed by EDC’s geoscientists and technical services engineers, and installed in all the company’s project sites since 1996, provides quick, reliable and continuous real time data of geothermal steam supplied during normal plant operations for immediate response to system upsets. 

 “We are proud of this very first patented invention of the company because it proves the world-class ingenuity and expertise of EDC in geothermal production.  The on-line steam purity monitoring system is another EDC innovation that makes our operations more efficient, cost-effective and safe,” EDC President and COO Richard Tantoco said.

Before the technology was developed, EDC relied on the manual method involving a five-man shifting crew to conduct the sampling of steam condensate.  The data would be available only after 24 hours.  Since EDC implemented the on-line steam purity monitoring system, it has displaced between PhP31 million to PhP52 million in annual operating expenses and realized gross savings of up to PhP 314 million from Y1996 up to Y2005. 

Tantoco added that EDC has pending patent applications for four other technologies it has developed through the years.  “These are the results of our long-term commitment to make our operations truly world-class.   We have been developing and applying practical technologies to improve resource management in our geothermal sites.  Our experience in managing five geothermal project sites for the past 34 years has enabled us to study various situations and problems related to resource management and invent technologies to address them.  This is an achievement that fortifies EDC’s leadership and expertise in the geothermal industry.” 

EDC owns and operates geothermal steamfields in Leyte, Negros Oriental, Negros Occidental, Sorsogon and North Cotabato with a combined capacity of 1,199 MW, as well as the 701.5-MW Unified Leyte, 192.5-MW Palinpinon, 106-MW Mindanao and 49-MW Northern Negros geothermal power plants.

EDC, AFI Ink Agreement on Bantay-Baterya & Bantay-Langis Projects

A pact for a clean environment.  Energy Development Corporation Vice Chairman & CEO Paul Aquino and ABS-CBN Foundation, Inc. Managing Director Gina Lopez seal agreement to help clean up the environment of pollution-causing junk lead acid batteries and used oil through the Bantay Baterya and Bantay Langis projects, respectively.  EDC will donate its used oil and batteries to AFI which will pick up, transport and recycle/re-refine these industrial materials in tandem with the Philippine Recyclers, Inc (PRI) and Genetron International Marketing.  Aside from recycling the batteries and used oil, PRI and Genetron will also determine the corresponding monetary value and subsequently remit the money to AFI.  The funds to be generated from the projects will be used to support the operations of AFI’s Bantay Kalikasan and Save the La Mesa Watershed Project. The project is compatible with EDC’s sustainable management principle and enables it to participate in a donation program that ensures risk-free disposal of used industrial materials.  Photo shows from L-R: Genetron PCO Jocelyn Panen, EDC SVP Agnes de Jesus, Paul Aquino, Gina Lopez, Genetron President Genovevo Sebastian, and Bantay Kalikasan OIC John Paul Balayon