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PART I - BUSINESS AND GENERAL INFORMATION Item 1 - Business Development PetroEnergy Resources Corporation (“PERC” or “PetroEnergy” or the Parent Company) is a publicly-listed domestic corporation. Its registered office and principal place of business is 7/F, JMT Building, ADB Avenue, Ortigas Center, Pasig City. PERC was organized on September 29, 1994 as Petrotech Consultants, Inc. to provide specialized technical services to its then parent company, Petrofields Corporation, and to companies exploring for oil in the Philippines. In 1997, PERC simultaneously adopted its present name and changed its primary purpose to oil exploration and development and mining activities. Subsequently in 1999, PERC assumed Petrofields’ oil exploration contracts in the Philippines and the Production Sharing Contract covering the Etame discovery block in Gabon, West Africa. On August 11, 2004, PERC’s shares of stock were listed at the PSE by way of introduction. In 2009, following the enactment of Republic Act No. 9513, otherwise known as the “Renewable Energy Act of 2008” (RE Law), PERC amended its articles of incorporation to include among its purposes the business of generating power from renewable sources such as, but not limited to, biomass, hydro, solar, wind, geothermal, ocean and such other renewable sources of power. On March 31, 2010, PERC incorporated it’s now 90%-owned subsidiary, PetroGreen Energy Corporation (PetroGreen or PGEC), to act as its renewable energy arm and holding company. PGEC ventured into renewable energy development and power generation through its subsidiaries and affiliate: (a) Maibarara Geothermal, Inc. (MGI, 65%-owned) - owner and developer of the 20 MW Maibarara Geothermal Power Project (MGPP-1) in Santo Tomas, Batangas and its expansion, the 12 MW MGPP-2; (b) PetroSolar Corporation (PetroSolar, 56%owned) - owner and developer of the 50MWDC Tarlac Solar Power Project (TSPP-1) in Tarlac City and its 20 MWDC expansion, TSPP-2; and (c) PetroWind Energy, Inc. (“PetroWind”, 40%-owned) – owner and developer of the 36 MW Nabas Wind Power Project (NWPP-1) in Nabas and Malay, Aklan. MGI and PetroSolar are effectively indirect subsidiaries of PetroEnergy through PetroGreen. PetroGreen owns majority of the voting power of MGI and PetroSolar. PetroEnergy, PetroGreen, MGI and PetroSolar are collectively referred to as the “Group” and were incorporated in the Philippines. Business of Issuer Description of Business The Group’s four (4) main energy businesses are: (a) upstream oil exploration and development, and power generation from renewable energy resources such as, (b) geothermal, (c) solar, and (d) wind, through the Group’s affiliate, PetroWind. ( a ) Upstream Oil Exploration and Development Oil and gas are usually buried several thousand meters underneath the earth. The explorationist, therefore, neither sees nor touches his objective. This lack of physical access, however, is compensated by the employment of stateof-the art technology in remote sensing via seismology, geology, and chemistry. In the actual testing of prospects, computer-guided drills dig rock layers several kilometers below the surface. In offshore exploration and production, robot submarines are used to emplace and control subsea equipment and materials. The intensive application of modern technology is supported by large amounts of capital. Oil exploration companies worldwide had adopted the prudent strategy of pooling together, as consortia, in pursuing their projects in order to distribute risk and minimize financial exposures. The common financial arrangement between host countries and the exploration companies is the sharing in costs and revenues from the sale of the hydrocarbon products. The host country partakes in the costs by allowing the explorationists to recover an agreed percentage of the historical costs before the net proceeds are divided between the government and the consortia.
