Eastern Petroleum allocates P2B for 2013 expansion program

By Lenie Lectura, BusinessMirror

Posted at Jan 30 2013 08:10 AM | Updated as of Jan 30 2013 04:10 PM

MANILA - Eastern Petroleum Corp. is embarking on a nationwide expansion binge in hopes to attain up to P6 billion in revenues this year, its chairman and chief executive officer said on Tuesday.

“We are looking at booking P5 billion to P6 billion revenues this year as we expand our stations and launch a new product line in the market,” said Fernando Martinez at a press briefing.

Out of the projected revenue this year, the independent oil firm expects to rake in P150 million to P200 million in profit.

In 2012 Eastern Petroleum booked P30 million to 40 million in profit after it posted revenues of P3 billion.

Eastern Petroleum will double its retail stations to 100 this year from the existing 40. The additional 60 will be evenly divided in Luzon, the Visayas and Mindanao, with 21 of them either acquired already or in the final stage of negotiations.

Martinez said of the 60 additional outlets, 80 percent are company owned.

The oil firm, which operates the biggest station in Subic Bay Metropolitan Authority, is now combining other retail franchises such as drugstores and fast foods to attract and offer more services to its clients.

These will be seen in soon-to-open-stations in Biñan City, Legaspi City, Antipolo City, San Pablo City, Lucena City and Santo Tomas, Batangas in Luzon; Mactan City and Tagbilaran City in the Visayas; and Digos City, Davao del Sur in Mindanao.

Martinez said both diesel and gasoline sales will remain strong, so retail stations will be needed, especially in areas which are least served.

Aside from putting up more stations, Eastern Petroleum will also put up an oil depot in Mindanao. The depot is scheduled for commercial operation by the first quarter of next year.

Eastern Petroleum’s expansion this year will require a capital expenditure (capex) of P2 billion.

“The depot will cost P800 million and the remaining for our retail stations. Each station costs approximately P20 million because we acquired most of the land there,” Martinez said.

The company’s capex for the year is higher than the P300 million it spent in 2012.

Martinez said the P2-billion capex will be financed through a combination of internal cash and borrowing. “The mix is usually 70:30. We will borrow from local banks.”

The oil firm will probably issue bonds anywhere between P500 million and P700 million in March or April this year.