Company Update / PXP May 22, 2012

Philex Petroleum (PXP) and FEC Resources Inc., another subsidiary of Philex Mining (PX), hold a combined 64.45% of the issued capital of Forum Energy Plc., which holds a 70% stake in Service Contract 72 (SC72) covering the highly prospective yet controversial Recto Bank.

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Unit 6, 3F The Fort Strip Bldg., Bonifacio Center Fort Bonifacio, Global City

Taguig City, Metro Manila 1634 Phone: (632) 887 6407

Fax: (632) 887 5457 E-mail: customercare@itrade.ph

Web: itrade.ph

UPDATES PXP to be included in the MSCI Small Cap Index effective June 1, 2012 On May 16, the addition of PXP into the MSCI Small Cap Index effective June 1 is a notable corporate action. SC72 reserves are at 16T cubic feet vs. Malampaya’s 2.7T On April 25, PXP unit Forum Energy Plc. confirmed hat there was an “improvement in the resources” estimate in SC72. Results presented eventually were significantly higher at 16T cubic feet against initil estimates of 3.4T cubic feet of gas (i.e. 449M barrels of oil). Final estimate is 5.9x higher than the existing Malampaya Gas Field which indicated 2.7T cubic feet of gas. Currently, the Malampaya field is expected to provide gas for 3 power facilities in Batangas until 2024. The facilities collectively generate 40% of Luzon’s electricity requirements. PXP seeks possible joint venture partner (China state-owned CNOOC or other), needs $75M for drilling program MVP began talks with state-owned China National Offshore Oil Corp. (CNOOC) for possible oil and gas exploration in Recto Bank, possibly even a joint venture. The move could also be the resolution to ongoing tension from the territorial dispute between Philippines and China. PXP is also in talks with other foreign oil industry giants. Forum Energy needs around $75M for the exploration phase which involves the drilling of 2 wells targeted for completion by Aug. 2013. PXP may then need a partner after drilling 2 wells. PXP intends to follow work program, citing urgency as development could take 6-10 years; DOE is willing to extend exploration PXP currently has a work program commitment to the government under their concession rights and intends to implement in schedule notwithstanding possible external factors that could delay. PXP stresses the urgency to develop the project now as development could take up to 6-10 years. In case of delay due to the ongoing territorial dispute between the Philippines and China, the DOE is willing to extend the exploration period in resource-rich Recto Bank off Western Palawan beyond 2013. PXP’s other project - Area 5 Sulu Sea is not subject to territorial dispute PXP is also considering developing Area 5 in the Sulu Sea, which is not subject to territorial dispute. (See full report published January 17 to see other PXP resources) Could a joint venture with a Chinese firm finally resolve the ongoing territorial dispute and lead to further development in the SC72 area? In May 10, it was reported that CNOOC Ltd., China’s largest offshore oil producer, asserted its territorial claim near an island chain in South China Sea, north of Paracel Islands, amid dispute with Vietnam and Taiwan. The waters are estimated to have as much as 30B tons of oil and 16T cubic meters of gas, which would account for about 1/3 of China’s oil and gas resources. As of 2010, according to BP Plc., China had 2B tons of proven oil reserves and 99T cubic feet of natural gas reserves. In an earlier interview, Pres. PNOY that he’s open to an agreement with China that would allow companies to exploit oil and gas resources while the governments separately resolve border disputes. After a meeting with CNOOC for talks on jointly exploring disputed area containing SC72, MVP was quoted saying that “Discussions were friendly, constructive,” and “We’re not closing our doors.”

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Unit 6, 3F The Fort Strip Bldg., Bonifacio Center Fort Bonifacio, Global City

Taguig City, Metro Manila 1634 Phone: (632) 887 6407

Fax: (632) 887 5457 E-mail: customercare@itrade.ph

Web: itrade.ph

Financials & Outlook 2011 net income amounted to P537.5M Earnings included P271.4M from Forum Energy Plc. (64.45%-owned) and a non-recurring gain of P443.7M from the restatement of the company's investment in Pitkin Petroleum Plc. to fair value when unit PXP’s holdings in Pitkin was diluted from 21% to 18.46%. Highlights last year included the completion of the first exploration sub-phase of SC 72 by Forum Energy and the start of commercial production from the Brixton Energy coal project in Zamboanga Sibugay. Q1 2012 net loss of P58M vs. net income of P437.5 YoY PXP recorded a 94% plunge in its consolidated operating revenue to P8.9M from P137.4M YoY. Of the P8.9M, P8.8M represented revenue from petroleum, while the remaining P84,000 came from coal sales. Lower revenue during the current period was due to the temporary closing of production in the Galoc oil field from late 2011 up to the end of Q1 2012. Revenue from petroleum came from the Galoc, Nido, Matinloc, North Matinloc and Libertad oil and gas fields off Palawan, while coal earnings came from PXP’s wholly owned subsidiary, Brixton Energy and Mining Corp. Moving forward (other projects) For 2012, it expects sustainable revenue having signed coal purchase agreement with RCM for supply of 50,000 to 60,000 tons coal in 2012. The co. also looks forward to initial drilling in Pitkin’s Block Z-38 in Peru, in “what is a potentially world-class exploration” play. Read: Corporate Report / PXP / Philex Petroleum published January 17, 2012 PXP near-term catalyst could be findings in the Sampaguita gas field under SC 72 which could be higher than Malampaya reserves. A comprehensive report. http://itrade.ph/pdf/CR/PXP%2001:17:11.pdf

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Unit 6, 3F The Fort Strip Bldg., Bonifacio Center Fort Bonifacio, Global City

Taguig City, Metro Manila 1634 Phone: (632) 887 6407

Fax: (632) 887 5457 E-mail: customercare@itrade.ph

Web: itrade.ph

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