FECOF 20-F
FEC Resources Inc. (FECOF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For Fiscal Year ended |
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| Date of event requiring this shell company report________________________ |
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| For the transition period from ________________to____________________ |
Commission file number
(Exact name of Registrant as specified in its charter) |
Not Applicable
(Translation of Registrant’s Name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Name, Telephone, E-mail, and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12 (b) of the Act: None
Securities registered or to be registered pursuant to Section 12 (g) of the Act:
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405, of the Securities Act. Yes ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.Yes ☐
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Emerging growth company |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP | ☐ | ☒ | Other | ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 ☐ Item 18 ☒
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not Applicable
FEC RESOURCES, INC.
FORM 20-F ANNUAL REPORT FISCAL YEAR 2025
TABLE OF CONTENTS
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Material Modifications to the Rights of Security Holders and Use of Proceeds |
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Purchase of Equity Securities by the Issuer and Affiliated Purchaser |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking statements. Forward-looking statements represent our current expectations or forecasts of future events and are based on our management's beliefs, as well as assumptions made by and information currently available to them. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include the words "anticipate," "believe," "budget," "estimate," "expect," "intend," "objective," "plan," “probable” "possible," "potential," "project" and other words and terms of similar meaning in connection with any discussion of future operating or financial performances. Any references to we, our, us, Company, Corporation, or FEC refer to FEC Resources Inc.
Any or all of our forward-looking statements in this Form 20-F may turn out to be incorrect. They can be affected by inaccurate assumptions, or by known or unknown risks and uncertainties. Many of these factors, including the risks outlined under "Risk Factors," will be important in determining our actual future results, which may differ materially from those contemplated in any forward-looking statements. These factors include, among others, the following:
- | oil and natural gas price volatility affecting companies we invest in; |
- | uncertainties in the estimates of proved reserves, and in the projection of future rates of production and timing of development expenditures from companies we invest in; |
- | the ability of companies we invest in to find and acquire additional reserves; |
- | risks associated with investments, acquisitions, exploration, development and production directly or by companies we invest in; |
- | risks associated with owning minority interests in unlisted investments whose shares are not readily traded nor for which there is a quoted market price; |
- | operating hazards attendant to the oil and natural gas business for companies we invest in; |
- | potential constraints on the ability of companies we invest in to market reserves due to limited transportation space; |
- | climatic conditions faced by companies we invest in; |
- | availability and cost of labor, material, equipment and capital to us and companies we invest in; |
- | the ability of companies we invest in to employ and retain key managerial and technical personnel; |
- | international, national, regional or local political and economic uncertainties, including the territorial dispute between the Republic of Philippines and the People’s Republic of China, changes in energy policies, foreign exchange restrictions and currency fluctuations faced by us and companies we invest in; |
- | adverse regulatory or legal decisions, including those under environmental laws and regulations affecting companies we invest in; |
- | environmental risks faced by companies we invest in; |
- | the strength and financial resources of competitors of companies we invest in; |
- | general economic conditions; and |
- | our ability to continue as a “going concern”. |
When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this prospectus. Our forward-looking statements speak only as of the date made.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, they are subject to a variety of variables which could cause actual results or trends to differ materially. We cannot guarantee future results, levels of activity, performance or achievements. Except as otherwise required by United States securities laws, we are under no duty to update any of the forward looking statements after the date of this Form 20-F to conform them to actual results or to changes in our expectations. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.
CURRENCY
Unless otherwise stated, “$”, when used in this Form 20-F, refers to US dollars.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.
Not applicable to Form 20-F filed as annual report.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.
Not applicable to Form 20-F filed as annual report.
ITEM 3. KEY INFORMATION.
The following is a summary of key information about our financial condition, capitalization and the risk factors pertaining to our business.
Currency Exchange Rates
Table No. 3(A)(1) below sets forth the rate of exchange for the Canadian Dollar at the end of each of the five (5) most recent fiscal years ended December 31, the average rates for each year, and the range of high and low rates for each year. Table 3(A)(2) sets forth the high and low exchange rates for each month during the previous six (6) months. The rate of exchange means the noon buying rate as posted by the Bank of Canada. The Tables set forth the number of Canadian Dollars required under that formula to buy one (1) US Dollar. The average rate means the average of the exchange rates on the last day of each month during the year.
Table No. 3(A)(1)
U.S. Dollar/Canadian Dollar
Currency Exchange Table No. 1
U.S. Dollar/Canadian Dollar
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| Average |
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| High |
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| Low |
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| Close |
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Fiscal Year Ended 12/31/25 |
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| 1.40 |
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| 1.46 |
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| 1.36 |
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| 1.37 |
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Fiscal Year Ended 12/31/24 |
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| 1.37 |
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| 1.44 |
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| 1.33 |
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| 1.44 |
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Fiscal Year Ended 12/31/23 |
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| 1.35 |
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| 1.39 |
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| 1.31 |
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| 1.32 |
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Fiscal Year Ended 12/31/22 |
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| 1.30 |
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| 1.39 |
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| 1.25 |
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| 1.35 |
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Fiscal Year Ended 12/31/21 |
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| 1.25 |
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| 1.29 |
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| 1.20 |
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| 1.27 |
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The current closing rate of exchange was 1.3664 on March 4, 2026.
Table No. 3(A)(2)
U.S. Dollar/Canadian Dollar
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| 9/25 |
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| 10/25 |
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| 11/25 |
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| 12/25 |
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| 1/26 |
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| 2/26 |
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High |
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| 1.39 |
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| 1.40 |
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| 1.41 |
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| 1.40 |
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| 1.40 |
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| 1.39 |
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Low |
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| 1.37 |
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| 1.39 |
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| 1.40 |
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| 1.38 |
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| 1.37 |
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| 1.35 |
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A. Selected Financial Data
The following financial data summarizes selected financial data for our company prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) for the five fiscal years ended December 31, 2025, 2024, 2023, 2022, and 2021. The information presented below for the five year period ended December 31, 2025, 2024, 2023, 2022, and 2021 is derived from our audited financial statements. The information set forth below should be read in conjunction with our audited annual financial statements and related notes thereto included in this annual report, and with the information appearing under the heading “Item 5 – Operating and Financial Review and Prospects”.
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| Year Ended 12/31/25 (‘000) except per share data |
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| Year Ended 12/31/24 (‘000) except per share data |
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| Year Ended 12/31/23 (‘000) except per share data |
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| Year Ended 12/31/22 (‘000) except per share data |
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| Year Ended 12/31/21 (‘000) except per share data |
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Revenue |
| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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Net (Loss) Income |
| $ | (283 | ) |
| $ | (244 | ) |
| $ | (192 | ) |
| $ | (193 | ) |
| $ | (168 | ) |
Net (Loss) Income Per Share |
| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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Diluted Net (Loss) Income Per Share |
| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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Dividends Per Share |
| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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| $ | 0.00 |
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Weighted Avg. Shares O/S |
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| 916,231 |
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| 861,082 |
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| 861,082 |
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| 861,082 |
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| 861,082 |
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Working Capital |
| $ | (51 | ) |
| $ | (923 | ) |
| $ | (679 | ) |
| $ | 140 |
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| $ | 109 |
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Resource Properties |
| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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Long-Term Debt |
| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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Shareholders’ Equity |
| $ | 6,192 |
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| $ | 7,645 |
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| $ | 1,783 |
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| $ | 1,975 |
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| $ | 2,168 |
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Share Capital |
| $ | 18,775 |
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| $ | 17,621 |
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| $ | 17,621 |
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| $ | 17,621 |
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| $ | 17,621 |
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Capital Stock Shares |
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| 992,646 |
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| 861,082 |
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| 861,082 |
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| 861,082 |
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| 861,082 |
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Total Assets |
| $ | 6,266 |
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| $ | 8,582 |
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| $ | 2,479 |
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| $ | 2,280 |
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| $ | 2,182 |
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B. Capitalization and Indebtedness
This Form 20-F is being filed as an annual report under the U.S. Exchange Act and, as such, there is no requirement to provide any information under this item.
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C. Reason for the Offer and Use of Proceeds
This Form 20-F is being filed as an annual report under the U.S. Exchange Act and, as such, there is no requirement to provide any information under this item.
D. Risk Factors
GENERAL BUSINESS RISKS
We Have Had a History of Operating Losses Which May Affect Our Ability to Continue Operations.
We had a net loss of ($282,798) during the year ended December 31, 2025 (2024 – ($244,437); 2023 – ($191,795). We have incurred operating losses in the previous fiscal years with our accumulated deficit totaling $19,422,554 as at December 31, 2025. We also anticipate sustaining a loss from operations for the fiscal year ended December 31, 2026. We have no sources of revenue in the year ended December 31, 2025, and our only source of revenue has been from the sale of the Forum Energy Limited (“Forum Energy” or “FEL”) shares and, historically, have only shown net income as a result of accounting for our equity share of profits in other companies in which we hold equity investments. The last sale of FEL shares was in 2015.
On March 10, 2022, we announced that we agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620, bringing the total to $423,020, which included $224,400 advanced in 2020. The advance to FEL was via non-interest bearing loans. In order to be able to fund the $198,620, we accepted a loan from PXP Energy Corporation (“PXP”) for the same amount (“PXP Loan”).
On October 31, 2023 and November 29, 2023, we advanced $68,000 and $136,000, respectively, to FEL representing 6.8% of a $3,000,000 financing being undertaken by FEL, bringing the total advances by us to $627,020. The funds to participate in the financing were obtained via further PXP Loans.
The PXP Loan bears interest of LIBOR plus 3.5% and both interest and principal are repayable on the earlier of: (a) August 31, 2025, (b) any equity issuance by us, (c) any sale of FEL shares by us, or (d) any third party borrowing by us. We also received an additional $260,950 for working capital from PXP during the year ended December 31, 2025 (2024 - $155,286; 2023 - $356,500 under the same terms and conditions as the PXP Loan. As at December 31, 2025, the outstanding PXP Loan balance was $40,248 (2024 - $895,637), which included accrued interest of $248 (2024 - $105,431; 2023 - $42,235). Total interest expense amounted to $41,422 for the year ended December 31, 2025 (2024 – 62,196; 2023 – 32,593). On July 31, 2025, the Company issued 131,563,725 in settlement of the PXP Loan outstanding on that date comprised of $1,011,156 principal and $146,605 in interest for a total of $1,157,761.
On December 21, 2023, $626,820 of advances made to FEL by us were converted to shares in FEL at a price of $0.30 per share. The $626,820 conversion into FEL shares represented 6.8% of $9,217,939 of debt settled by FEL.
Should FEL require additional financing requiring us to advance funds in order to maintain our 6.8% interest, there is no guarantee that we can provide the necessary funds and, as a result, our interest in FEL may be diluted.
Management considers the Company to be a going concern because of the support of PXP in the short term but there is no certainty that the Company will be able to continue as a going concern past 2026 without additional debt or equity financing.
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Unless We Are Able To Invest in Companies That Discover Economically Recoverable Reserves in the Future, There is Substantial Doubt We Will Be Able to Continue Operations as a Going Concern in the Long Term.
Our business success is dependent upon our ability to benefit from the discovery of economically recoverable reserves by companies we invest in, and for those companies to bring such reserves into profitable production. The companies we invest in are subject to a number of risks, including environmental risks, contractual risks, legal and political risks, fluctuations in the price of oil and gas, and other factors beyond our control.
The consolidated Financial Statements included herein have been prepared by management on the basis of accounting principles applicable to a “going concern”. Management believes the “going concern” basis, which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future, is appropriate. We have experienced significant operating losses and cash outflows from operations in the years ended December 31, 2025, 2024, and 2023, and have no income other than that generated from interest on cash balances, interest on a loan to FEL, and the sale of FEL shares. Our ability to continue as a “going concern” in the long term is dependent on benefiting from our investments and upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.
We Believe We Don’t Have Sufficient Working Capital to Support Our Business. We Will Need Additional Funds in Order to Sustain our Operations in Order to See if Our Investments Will be Successful and There is No Assurance that Such Funds Will Be Available As, If, and When, Needed.
Funds used in operations for the fiscal years ended December 31, 2025 and 2024 were $(249,084) and $(156,936), respectively. We have been dependent upon the proceeds of the sale of FEL shares, equity and debt financing in addition to the disposition of assets to fund operations. No assurances can be given that our actual cash requirements will not exceed our budget, that anticipated revenues will be realized, that, when needed, lines of credit will be available if necessary or that additional capital will be available to us. There is no assurance that we will be able to obtain such additional funds on terms and conditions we may deem acceptable. Failure to obtain such additional funds may materially and adversely affect our ability to acquire interests directly or indirectly in producing oil and gas and mineral properties.
On March 10, 2022, we announced that we agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620, bringing the total to $423,020, which included $224,400 advanced in 2020. The advance to FEL was via non-interest bearing loans. In order to be able to fund the $198,620, the Company accepted a PXP Loan.
On October 31, 2023 and November 29, 2023, we advanced $68,000 and $136,000, respectively, to FEL representing 6.8% of a $3,000,000 financing being undertaken by FEL, bringing the total advances by us to $627,020. The funds to participate in the financing were obtained via further PXP Loans.
The PXP Loan bears interest of LIBOR plus 3.5% and both interest and principal are repayable on the earlier of: (a) August 31, 2025, (b) any equity issuance by us, (c) any sale of FEL shares by us, or (d) any third party borrowing by us. We also received an additional $260,950 for working capital from PXP during the year ended December 31, 2025 (2024 - $155,286; 2023 - $356,500 under the same terms and conditions as the PXP Loan. As at December 31, 2025, the outstanding PXP Loan balance was $40,238 (2024 - $895,637), which included accrued interest of $248 (2024 - $105,431; 2023 - $42,235). Total interest expense amounted to $41,422 for the year ended December 31, 2025 (2024 – 62,196; 2023 – 32,593). On July 31, 2025, the Company issued 131,563,725 in settlement of the PXP Loan outstanding on that date comprised of $1,011,156 principal and $146,605 in interest for a total of $1,157,761.
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On December 21, 2023, $626,820 of advances made to FEL by us were converted to shares in FEL at a price of US$0.30 per share. The $626,820 conversion into FEL shares represented 6.8% of $9,217,939 of debt settled by FEL. The balance of $200 from the advances was assumed by PXP.
Should FEL require additional financing requiring us to advance funds in order to maintain our 6.8% interest, there is no guarantee that can provide the necessary funds and, as a result, our interest in FEL may be diluted.
Although, PXP has agreed to fund our business for the foreseeable future, there is no certainty that PXP will continue to do so and that we will be able to continue operations.
As of Now We Do Not Intend to Pay Dividends In the Foreseeable Future, and thus, You Should Not Expect to Receive Dividends.
We have paid no dividends on our common shares since inception, and do not plan to pay dividends in the foreseeable future. See "Description of Common Shares."
The Market Price of Our Common Shares Has Been, and Will Likely Continue to Be, Volatile.
The market price of our common shares has fluctuated over a wide range, and it is likely that the price of our common shares will fluctuate in the future. Further, announcements regarding acquisitions, the status of corporate collaborations, regulatory approvals, or other developments by us or our competitors could have a significant impact on the market price of our common shares.
The Value and Transferability of Our Shares May Be Adversely Impacted By the Limited Trading Market For Our Shares and the Penny Stock Rules.
There is only a limited trading market for our shares on the Pink Sheets. There can be no assurance that: (a) we will be able to be listed again on the OTCQB, due to enhanced listing requirements that were implemented by OTC Markets in 2014, (b) this market will be sustained, or (c) that we will be able to satisfy any future trading criteria that may be imposed by the Financial Industry Regulatory Authority (“FINRA”).
In addition, holders of our common shares may experience substantial difficulty in selling their securities as a result of the “penny stock rules” which apply to our common shares. Under the penny stock rules, the Securities and Exchange Commission imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the rules, a broker-dealer must make a special suitability determination for the purchaser and transaction prior to the sale. Consequently, the rules may affect the ability of broker-dealers to sell our securities, and also may affect the ability of purchasers of our stock to sell their shares in the secondary market. It may also cause fewer broker-dealers to make a market in our common shares.
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The Large Number of Shares Eligible For Future Sale By Existing Shareholders May Adversely Affect the Market Price For Our Common Shares.
Future sales of substantial amounts of common shares in the public market, or the perception that such sales could occur, could adversely affect the market price of our common shares. As of March 4, 2026, we had 992,646,096 common shares outstanding. We currently have 819,070,860 shares eligible to be resold pursuant to Rule 144. We do not intend to include these common shares in a future Registration Statement to be filed with the United States Securities and Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, registering the common shares for sale. If a decision was made to file a Registration Statement for these common shares. no prediction can be made as to the effect, if any, that sales of common shares or the availability of such shares for sale will have on the market prices of our common shares prevailing from time to time. The possibility that substantial amounts of our common shares may be sold under SEC Rule 144 into the public market may adversely affect prevailing market prices for our common shares and could impair our ability to raise capital in the future through the sale of equity securities.
Your vote may not affect the outcome of any shareholder vote since our principal stockholder currently retains approximately 81% of our outstanding stock.
Specifically, PXP Energy Corporation (“PXP”) may be able to control the outcome of all stockholder votes, including votes concerning director elections, charter and by-law amendments, and possible mergers, corporate control contests and other significant corporate transactions which may not be in the interests of all shareholders.
As of the record date, based on the information available to us, PXP beneficially owned 806,563,711 Common Shares which represents approximately 81% of the total number of our Common Shares issued and outstanding.
Foreign Laws, Rules and Environmental Regulations to Which Companies We Invest In May Adversely Affect Our Business Operations As Well As the Market Price For Our Stock.
The production of oil and gas and the extraction of minerals by companies we invest in or by ourselves is generally subject to extensive laws, rules, orders and regulations governing a wide variety of matters, including the drilling and spacing of wells, allowable rates of production, prevention of waste and pollution, and protection of the environment. In addition to the direct costs borne in complying with such regulations, operations and revenues may be impacted to the extent that certain regulations limit oil and gas and mineral production to below economic levels. Although the particular regulations applicable in each jurisdiction in which operations are conducted vary, such regulations are generally designed to ensure that oil and gas operations are carried out in a safe and efficient manner, and to ensure that similarly-situated operators are provided with reasonable opportunities to produce their respective fair share of available crude oil, natural gas, and mineral reserves. However, since these regulations generally apply to all oil and gas producers, we believe that these regulations should not put us at a material disadvantage to other oil, gas and mineral producers.
OPERATING RISKS - OIL AND GAS EXPLORATION INVESTMENT ACTIVITIES
We Do Not Currently Directly Own Assets That Provide Cash Flow and Our Failure to Find or Acquire Available Assets May Adversely Impact Our Business Operations.
We do not own any properties or investments that provide cash flow. Our cash flow and income, as well as our success are highly dependent on success in finding or acquiring cash flow through our investments and obtaining the financing necessary to acquire such investments. We cannot assure shareholders that we will be able to acquire such investments, if any.
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Exploring For and Producing Oil and Natural Gas and Minerals Are High-Risk Activities With Many Uncertainties That Could Adversely Affect Our Business, Financial Condition or Results of Operations.
Exploration and development of oil and gas and mineral resources involve a high degree of risk, and few properties which are explored are ultimately developed into producing properties. There is no assurance that exploration and development activities of companies that we invest in will result in any discoveries of commercial bodies of oil, gas or minerals. The long-term profitability of our operations will be, in part, directly related to the cost and success of exploration programs of companies we invest in which may be affected by a number of factors. Substantial expenditures are required to establish reserves through drilling, to develop processes to extract the resources, and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. Although substantial benefits may be derived from the discovery of a major deposit of oil, gas or minerals, no assurance can be given that natural resources will be discovered in sufficient quantities by companies we invest in to justify commercial operations or that the funds required for development can be obtained on a timely basis.
If Companies We Invest In Are Unable to Continue to Identify, Explore and Develop New Properties, Our Business Operations May Be Adversely Affected.
We expect that to be successful companies we invest in must continually acquire or explore for and develop new oil and gas reserves to replace those, if any, being depleted by production. Without successful drilling or acquisition ventures, our indirect oil and gas assets, mineral assets and properties and the revenues derived therefrom, if any, will decline over time. To the extent we engage in drilling activities indirectly, such activities carry the risk that no commercially viable oil or gas production or mineral extraction will be obtained. The cost of drilling, completing and operating oil and gas wells is often uncertain. Moreover, drilling for oil and gas and minerals may be curtailed, delayed or cancelled as a result of many factors, including shortage of available working capital, title problems, weather conditions, environmental concerns, government prohibitions, shortages of or delays in delivery of equipment, as well as the financial instability of well operators, major working interest owners, and drilling and well servicing companies. The availability of a ready market for oil and gas and minerals will depend on numerous factors beyond our control, including the demand for and supply of oil and gas and minerals, the proximity of natural gas reserves to pipelines, the capacity of such pipelines, the proximity of any smelting facilities in relation to any minerals found, fluctuations in seasonal demand, the effects of inclement weather, and government regulation. New gas wells may be “shut-in” for lack of a market until a gas pipeline or gathering system with available capacity is extended into an area.
The Exploration and Development of Oil and Gas and Mineral Properties are Subject to Operating Hazards and Risks for Which We Will Be Uninsured.
Exploration for natural resources involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which we have an interest will be subject to all the hazards and risks normally incidental to exploration, development and production of resources, any of which could result in work stoppages, damage to persons or property and possible environmental damage. These include the possibility of fires, earthquake activity, coastal erosion, explosions, blowouts, oil spills or seepage, gas leaks, discharge of toxic gas, over-pressurized formations, unusual or unexpected geological conditions and the absence of economically viable reserves. These hazards may result in cost overruns, substantial losses, and/or exposure to substantial environmental and other liabilities.
Fluctuating Resource Prices May Adversely Impact Our Operations and Activities.
The price of natural resources has traditionally been subject to wide fluctuations, particularly in recent years, and is affected by numerous factors beyond our control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of oil and gas and minerals, and therefore, the economic viability of any investments we have or make in exploration projects, cannot accurately be predicted.
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If We Fail to Fulfill Our Obligations Under Our Purchase Option and Joint Venture Agreements, Not Only Will Our Operations Be Adversely Affected, But We May Lose Our Interest In the Property in Question.
We may, in the future, be unable to meet our share of costs incurred under joint venture agreements or other option or joint venture agreements to which we are, or may become a party, and we may have our interest in properties, in which we may acquire interests subject to such agreements, reduced as a result. Furthermore, if other parties to such agreements do not meet their share of such costs, we may be unable to finance the cost required to complete recommended programs.
It Is Possible that Our Title for the Claims in Which We Have a Direct or Indirect Interest in Will Be Challenged By Third Parties.
Although we will attempt to ascertain the status of the title for any projects in which we have or will invest in, there is no guarantee that title to such concessions will not be challenged or impugned. In some countries, the system for recording title to the rights to explore, develop, and mine natural resources is such that a title opinion provides only minimal comfort that the holder has title. Also, in many countries, claims have been made and new claims are being made by aboriginal peoples, and other countries claiming rights that call into question the property rights granted by the governments of those countries. An example of this is the force majeure declared on SC 72 because this contract area falls within the territorial disputed area of the West Philippine Sea which was the subject of a United Nations arbitration process between the Republic of Philippines and the People’s Republic of China. On July 12, 2016, the Permanent Court of Arbitration in the Hague ruled in favor of the Philippines against China over territorial disputes in the South China Sea. China has rejected the ruling. It is uncertain whether this ruling will resolve the dispute between the parties.
Reserve Estimates for Resources That May Be Reported By Companies We Invest In Are Dependent On Many Assumptions that May Ultimately Turn Out to Be Inaccurate.
Reserve estimates are imprecise and may be expected to change as additional information becomes available. Furthermore, estimates of reserves of natural resources, of necessity, are projections based on engineering data and there are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is a subjective process of estimating underground accumulations of oil, gas and minerals that cannot be measured in an exact way and the accuracy of any reserve estimate is a function of the quality of available data of engineering and geological interpretation and judgment. Accordingly, there can be no assurance that the information regarding reserves of natural resources, if any, set forth herein will ultimately be produced.
Any Resource Production of Companies That We Have Invested In May Be Adversely Affected By Factors Beyond Our Control.
The production and marketing of resources are affected by a number of competitive factors which are beyond our control and the effect of which cannot be accurately predicted. These factors include crude oil and mineral imports, actions by foreign oil-producing nations and other mineral producers, the availability of adequate pipeline and other transportation facilities, the availability of equipment and personnel, the marketing of competitive fuels and minerals, the effect of governmental regulations, and other matters affecting the availability of a ready market such as fluctuating supply and demand.
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Operations of Companies We Invest In Will Be Subject to Numerous Environmental Risks
Resource operations of companies we invest in, if any will be subject to compliance with applicable federal, state, and local laws and regulations controlling the discharge of materials into the environment, or otherwise relating to the protection of the environment. We believe that there is a trend toward stricter standards of environmental regulation which will in all probability continue. Compliance with such laws and standards may cause substantial delays and require capital outlays in excess of those anticipated, thereby adversely affecting our earnings and competitive position in the future.
Since We May Acquire Holdings In Properties In Less Developed Countries and Have Indirectly Acquired Holdings in Properties In Less Developed Countries, Our Operations May Be Adversely Affected By Risks Associated With the Political, Economic and Social Climate of the Countries In Which We Will Operate or Have Indirect Holdings
Since our indirect exploration and development activities will occur primarily in countries other than Canada and the United States, we may be affected by possible political or economic instability in those countries. The risks include, but are not limited to, terrorism, military repression, extreme fluctuations in currency exchange rates, and high rates of inflation. Changes in resource development or investment policies or shifts in political attitude in these countries may adversely affect our business. Operations of companies we invest in may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. The effect of these factors cannot be accurately predicted. Exploration and production activities in areas outside of the United States and Canada are also subject to the risks inherent in foreign operations, including loss of revenue, property and equipment as a result of hazards such as expropriation, nationalization, war, insurrection and other political risks.
We Face Competition From Larger and Better Financed Companies Seeking to Acquire Properties In Our Sphere of Operation.
The resource industry is highly competitive, and our business could be harmed by competition from other companies. Because resources are fungible commodities, the principal form of competition is price competition. We will strive to insure companies we invest in maintain the lowest exploration and production costs possible to maximize profits. In addition, we may compete for reserve acquisitions, exploration leases, licenses, concessions and marketing agreements against companies with financial and other resources substantially larger than we possess. Many of our competitors have established strategic long term positions and maintain strong governmental relationships in countries in which we may seek entry.
We Currently Do Not Maintain Insurance Against Potential Losses and Unexpected Liabilities.
As previously stated herein, exploration for and production of resources can be hazardous, involving natural disasters and other unforeseen occurrences such as “blowouts”, “cratering”, fires and loss of well control, which can damage or destroy wells or production facilities, injure or kill people, and damage property and the environment. We do not have such insurance coverage for companies we invest in; and, even if we were able to obtain such insurance coverage, there is no assurance that it would be adequate to protect against all operational risks, or subject to defenses or exclusions against insurance coverage.
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We Are Dependent On Retaining Our Senior Management and Key Personnel.
To a large extent, we depend on the services of our senior management personnel. These individuals have critical and unique knowledge of the areas of operations that facilitate the evaluation and acquisition of potential properties in our intended sphere of operations. The loss of these experienced personnel, if that were to occur, could have a material adverse impact on our ability to compete in this region of the world. We do not maintain any insurance against the loss of any management personnel.
Our Directors May Face Conflicts of Interest In Connection With Our Participation In Certain Ventures Because They Are Directors of Other Resource Companies.
Some of our directors participate in other resource companies and to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. It is possible that due to our directors’ conflicting interests, we may be precluded from participating in certain projects that we might otherwise have participated in or we may obtain less favorable terms on certain projects than we might have obtained if our directors were not also the directors of other participating mineral resource companies. In their effort to balance their conflicting interests, our directors may approve terms that are equally favorable to all of their companies as opposed to negotiating terms that may be more favorable to us, but adverse to their other companies. Additionally, it is possible that we may not be afforded certain opportunities to participate in particular projects because such projects are assigned to our directors’ other companies for which the directors may deem the projects to have a greater benefit.
Our Security Holders May Not Be Able to Enforce U.S. Civil Liabilities Claims Thereby Limiting Their Ability to Collect on Claims Against Us.
We are incorporated in Canada and the majority of our directors and officers are nationals and/or residents of countries other than the United States. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of Canada would recognize or enforce judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in these countries against us or such persons predicated upon the securities laws of the United States or any state thereof.
As a Foreign Private Issuer, We Are Exempt From a Number Of U.S. Securities Laws And Rules Promulgated Thereunder And Are Permitted To File Less Information With The SEC Than U.S. Companies Must. This Will Limit The Information Available To Holders Of Our Shares
We currently qualify as a “foreign private issuer,” as defined in the SEC’s rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to companies organized within the U.S. For example, we are exempt from certain rules under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. We are also not subject to Regulation FD under the Exchange Act, which would prohibit us from selectively disclosing material nonpublic information to certain persons without concurrently making a widespread public disclosure of such information. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies.
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ITEM 4. INFORMATION ON THE COMPANY
A. Our Corporate History and Development.
We were incorporated on February 8, 1982, in British Columbia, Canada, under the name Tylox Corporation. Our continuance under the Canada Business Corporation Act resulted in, among other things, our name change, first in December 1991, to Tracer Petroleum Corporation, followed in July 2003, to Forum Energy Corporation. On May 18, 2005, we changed our name to FEC Resources, Inc. We have no subsidiaries. We currently hold 6.80% of the issued and outstanding capital of FEL and, in addition, we hold a 35% interest in Metalore Mining Corporation (“MMC”), a Philippine-based company that holds the rights to a 64 hectare license, which has been abandoned. We also own a 1.08% interest in Lascogon Mining Corporation, which owns the Mineral Production and Sharing Agreement 148 (“MPSA 148”), a gold exploration project in the Philippines.
We are engaged in investment into companies in the natural resource sector.
Our head office is located at Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, V6C 2B5.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov. Our website can be viewed at the following address: www.fecresources.com.
B. Business Overview
At this time, we do not have any significant revenue-generating assets, and as a result, we will rely upon issuance of new shares or debt to fund ongoing operations.
Recent Developments
On October 16, 2020, FEL received notice from the Philippine Department of Energy (“DOE”) that the force majeure (“FM”) imposed on SC 72 on December 15, 2014, was lifted with immediate effect and that FEL was to resume exploration activities on SC 72.
Since then, the 2021 and 2022 Work Program and Budget for SC 72 was approved by the DOE. Preparations for drilling activities, including the purchase of long lead items (“LLIs”), requisitions for other materials, and signing up of technical services, were undertaken for the conduct of geophysical and geotechnical surveys, and the drilling of wells Sampaguita 4 and Sampaguita 5 starting second quarter of 2022.
On April 6, 2022, Forum (GSEC 101) Limited (“FGL”) as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice, and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, force majeure was once again declared on SC 72.
In June 2022, media outlets reported that the MOU between China and the Philippines had been terminated although media outlets also reported that discussions would continue on joint exploration of SC 72.
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On October 11, 2022, the DOE granted Forum the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022 until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, Forum will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to when it was re-imposed (October 14, 2020 to April 6, 2022) will be credited back to SC 72. Consequently, once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, which is equivalent to the remaining term of Sub-Phase 2 of SC 72 prior to October 14, 2020.
On November 21, 2025, the DOE approved the Work Program and Budget (“WP&B”) for 2026 with only License Administration costs and Service Contract payments classified as firm budgets. The implementation of the Sub-Phase 2 work commitment comprising the drilling of two wells, will be contingent upon the lifting of the force majeure imposed by the DOE in April 2022.
The Philippines
We are currently a holding company with an interest in FEL, in which we own a 6.80% equity interest. FEL owns the oil and gas rights over an 8,800 square-kilometer block located in the West Philippine Sea. This block is subject to a dispute between The Republic of the Philippines and the People’s Republic of China. In addition, FEL holds interests in various other concessions located in the Philippines.
Forum Energy Plc. (“FEP”)/Forum Energy Limited (“Forum Energy” or “FEL”)
We currently own 6.80% of Forum Energy. Forum Energy was established through the consolidation in 2005 of the Philippine assets of FEC Resources, Inc. of Canada, and Sterling Energy Plc of the UK, into one corporate entity. Forum Energy is a private company, which has participating interests in six (6) oil and gas blocks in the Philippines through various subsidiaries. Forum Energy’s subsidiaries are Forum Energy Philippines Corporation (“FEPC”), Forum (GSEC 101) Limited (“FGL”), and ForumPH SC72 Holdings, Inc. (“ForumPH”).
Forum Energy and ourselves are both ultimately under the control of PXP and are therefore affiliates.
The following information related to PXP or Forum Energy has been provided to us by PXP or Forum Energy, as we do not have direct knowledge of such information.
PXP holds a 99.35% controlling interest in FEL, with 92.55% held directly and 6.80% held indirectly through its 81.25% shareholding of the Company. FEL is a company incorporated under the laws of England and Wales with focus on the Philippines and has: (a) a 70% operating interest in Service Contract (“SC”) 72 Recto Bank, which covers the Sampaguita natural gas discovery in offshore West Palawan, held through FGL; (b) minority interests in four blocks in offshore Northwest Palawan, including a 4.69% interest in the producing Galoc Field, held through FEPC; and (c) a 100% operating interest in SC 40 North Cebu held through FEPC’s 66.67%-held subsidiary, Forum Exploration Inc. (“FEI”).
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A summary of FEL’s interests are as follows:
SC Block |
| % interest |
| Currently Producing |
SC 72 Recto Bank |
| 70% |
| No |
SC 40 North Cebu |
| 66.67% |
| No |
SC 86 Octon (former SC 6A)(1) |
| 6.84% |
| No |
SC 88 Galoc (former SC 14C-1)(2) |
| 4.69% |
| Yes |
Cadlao New SC (former SC 6B Bonita)(3) |
| 2.45% |
| No |
West Linapacan New SC (former SC 14C-2)(4) |
| 9.10% |
| No |
SC 14A Nido(5) |
| 8.47% |
| No |
SC 14B Matinloc(5) |
| 12.41% |
| No |
SC 14B-1 North Matinloc(5) |
| 19.46% |
| No |
SC 14D Retention Area(5) |
| 8.16% |
| No |
SC 14 Tara(5) |
| 10% |
| No |
(1) SC 6A was surrendered to the DOE on March 31, 2021, which was approved on September 5, 2022. The area was nominated for a new Service Contract on March 17, 2023. The government awarded the new SC (No. 86) on September 30, 2025.
(2) SC 14C-1 expired on December 17, 2025 after reaching the maximum 50-year term. Prior to its expiry, the Joint Venture applied for a Development and Production Petroleum Service Contract (“DP PSC”) to enable production operations in the Galoc Field to continue. The government awarded the new contract (No. 88) on December 18, 2025.
(3) The 50-year term of SC 6B expired on February 28, 2024. Prior to its expiry, the Joint Venture applied for a new Service Contract on January 26, 2024. The application is currently awaiting final approval from the Office of the President.
(4) SC 14C-2 expired on December 17, 2025 after reaching the maximum 50-year term. Prior to its expiry, the Joint Venture submitted a Letter of Intent to apply for a DP PSC to evaluate additional prospects within the block and reassess redevelopment options for the West Linapacan A Field. The JV members are currently preparing the documents to be submitted to the DOE.
(5) A Notice to Surrender of the blocks were issued by Operators Philodrill and AC Energy (for Tara) on February 16, 2021. This was approved by the DOE on May 18, 2022.
The following is a brief description of the properties of Forum Energy together with production details where appropriate.
SC 72 Recto Bank
FEL’s principal asset is a 70% participating interest in SC 72 (previously Geophysical Survey and Exploration Contract No. 101 (“GSEC 101”)), a petroleum license located in the Recto Bank, offshore west of Palawan Island, the Philippines. The remaining 30% of SC 72 is owned by Monte Oro Resources & Energy Inc., a company incorporated in the Philippines, which is involved in a joint venture with FEL with respect to SC 72.
On February 15, 2010, the GSEC 101 license was converted to SC 72, and FEL immediately conducted geological and geophysical works to further evaluate the block and fulfill its commitment to the government. SC 72 covers 8,800 square kilometers, which is 85% of the area covered by GSEC 101.
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Exploration in the area began in 1970, and in 1976, gas was discovered in the Sampaguita structure following the drilling of a well. To date, a total of three wells have been drilled at the southwest end of the structure. Two of the wells tested gas at rates warranting further exploration.
In early 2011, FEL acquired 2,202 line-km of 2D seismic, gravity, and magnetic data over SC 72 to further define previously mapped leads. Also, 565 square kilometers of 3D seismic data were acquired over the Sampaguita Field (the “Sampaguita 3D”). These fulfilled the Consortium’s minimum work obligation under Sub-Phase (“SP”) 1.
Based on a technical evaluation conducted by Weatherford Petroleum Consultants in 2012, the Sampaguita Field is estimated to contain 2.6 trillion cubic feet (TCF) of in-place contingent gas resources and 5.4 TCF of prospective gas resources.
The 2D seismic data were reprocessed in 2013 and were subsequently interpreted, aided by gravity-magnetics data that were analyzed by Fugro and Cosine Ltd. (“Cosine”) in 2012 and 2015, respectively. In 2015, Arex Energy produced a report on the North Bank Prospect, located northwest of the Sampaguita Field, and estimated the prospective resources to be significant enough to continue with the exploration of the concession.
In October 2018, FEL started the Broadband Pre-Stack Depth Migration (“PSDM”) reprocessing of the Sampaguita 3D seismic data with DownUnder GeoSolutions (“DUG”), a company based in Perth, Australia, as contractor. The reprocessing work was completed in June 2019.
In November 2018, the governments of the Philippines and China signed a Memorandum of Understanding on Cooperation on Oil and Gas Development (“MOU”). In October 2019, the Philippines’ Department of Foreign Affairs (“DFA”) announced that the Philippines and China had officially convened an Intergovernmental Steering Committee to supervise projects under the two countries’ joint oil and gas exploration in the West Philippine Sea. However, after a series of meetings, the two parties failed to reach an agreement, and in June 2022, the negotiations were officially ended.
On October 16, 2020, FEL received notice from the Philippine Department of Energy (“DOE”) that the Force Majeure (“FM”) imposed on SC 72 on December 15, 2014, was lifted with immediate effect and that FEL was to resume exploration activities on SC 72. FEL has 20 months from the date of lifting of the FM to drill two (2) commitment wells. The total cost of drilling these wells depends on a number of factors. The Company’s management estimates the total work to be between US$70 million and US$100 million. It is important to note that, to date, there has been no announcement of any agreement between FEL and CNOOC in relation to SC 72.
Since then, the 2021 and 2022 WP&B for SC 72 was approved by the DOE. Preparations for drilling activities, including the purchase of long lead items (“LLIs”), the requisition for other materials, and the signing up of technical services, were undertaken for the conduct of geophysical and geotechnical surveys and the drilling of wells Sampaguita 4 and Sampaguita 5 starting the second quarter of 2022.
On April 6, 2022, FGL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice, and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, Force Majeure was once again declared on SC 72.
On May 27, 2022, FGL, on behalf of the SC 72 Joint Venture, and Nido Petroleum Philippines Pty Ltd (“Nido”), Operator of SC 54 and SC 6B, signed a Term Sheet in which Nido agreed to purchase most of the SC 72 LLIs, such as wellheads, casings and accessories, conductor, drill bits, etc., for $ 2.9 million, to be paid in installments within a twelve (12)-month period. A Sale and Purchase Agreement (“SPA”) with Nido was executed on June 10, 2022 to formalize the transaction.
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In June 2022, media outlets reported that the MOU between China and the Philippines had been terminated although media outlets also reported that discussions would continue on joint exploration of SC 72.
On October 11, 2022, the DOE granted FGL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022, until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, FGL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to when it was re-imposed (October 14, 2020 to April 6, 2022) will be credited back to SC 72. Consequently, once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, equivalent to the remaining term of SP 2 of SC 72 before October 14, 2020.
In May 2023, an amendment to the SPA between FGL and Nido was signed, granting Nido an extension to settle the remaining balance of the SC 72 LLIs’ purchase price. Following Nido’s full payment of the balance in early October 2023, FGL and Nido executed a Deed of Absolute Sale, finalizing the transfer of ownership of the LLIs to Nido.
On November 21, 2025, the DOE approved the WP&B for 2026 with only License Administration costs and SC payments classified as firm budgets. The implementation of the Sub-Phase 2 work commitment comprising the drilling of two wells, will be contingent upon the lifting of the force majeure imposed by the DOE in April 2022.
SC 40 North Cebu
A 100% operating interest in SC 40 is held by FEPC’s 66.67% owned subsidiary FEI.
SC 40 is located in the Visayan Basin in the central part of the Philippine Archipelago and covers an area of 340,000 hectares in the northern part of Cebu Island and adjacent offshore areas. It contains the Libertad Gas Field and several prospects and leads.
In June 2022, FEI contracted a drilling consultant to prepare drilling programs and budgets for two wells, one of which will be located in the Dalingding Prospect, a reef structure defined by seismic with the Late Miocene to Pliocene-age Barili Limestone as the primary target. A well, Dalingding-1, was drilled on this structure in 1996 and was plugged and abandoned as a dry hole with minor gas shows after reaching a total depth of 1,508 ft. FEI’s re-evaluation of the prospect concluded that the Dalingding-1 well did not reach the Barili target, which is currently estimated at 480 ft below the well’s final depth. FEI proposes drilling a new well to a depth of 4,000 ft to reach the Barili Limestone and secondary targets underneath.
In August 2022, FEI contracted a third party to dispose the Hycalog Rig and ancillary equipment stored in Brgy. Maya, Daanbantayan, Cebu Province. The sale process started on September 13, 2022, of which a Luzon-based company offered the highest bid. The pullout of the items began in December 2022, and was completed in June 2023.
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An independent technical evaluation involving a review of available data, project risk assessment, and project economics of the Maya and Dalingding Prospects started in the first quarter of 2023. The results indicate that deterministic and probabilistic volumetric estimates for the Dalingding Prospect show mean resources of 10 billion cubic feet (“BCF”) for a Gas Case and 3.5 million barrels (”MMBO”) for an Oil Case. The study was completed in March 2024.
As part of the Social Development Program commitment of SC 40 with the DOE, FEI conducted a school donation drive on September 1, 2023, at the Maya National High School in Daanbantayan, Cebu. A total of 1,050 school kits, consisting of basic study materials such as notebooks, pad papers, pens, pencils, water bottles, etc., were assembled for the students of the school. Some teaching materials were also given to the faculty.
On January 3, 2024, the DOE approved the work program and budget for 2024 that includes the conduct of a magnetotelluric (“MT”) survey over the Dalingding Prospect. The survey aims to define the top of the carbonate target and help determine its depth from surface. The results will be used to further refine the Dalingding-2 drilling program.
MT equipment testing and data acquisition in Daanbantayan, Cebu commenced on June 14, 2024, and was completed on September 2, 2024. A total of 30 stations were acquired on two parallel lines oriented in a NW-SE direction, and 20 stations on one perpendicular line oriented in a NE-SW direction.
The MT survey set-up consisted of four electric field probes buried in north, east, west, and south directions, connected to a car battery-powered ADU-07e (recording unit) via a 20-50m cable. Daily data acquisition ran at one station per day for an average of 6 hours and 46 minutes. A quick quality control check was conducted at the end of the day to identify any potential issues or errors in the acquired data and to pinpoint stations that require resurveying.
On December 23, 2024, the proposed WP&B for 2025 was submitted to the DOE. It has a firm program that includes the continuation and finalization of the MT survey data processing and interpretation, and the technical re-evaluation of the Dalingding prospect, wherein the MT data will be integrated to existing geologic, geophysical, and well data. The DOE approved the 2025 WP&B on January 7, 2025.
The evaluation of the MT data was completed in April 2025. The results successfully mapped the presence of a reef boundary, presumably the Barili Limestone, identified through sharp resistivity contrasts with surrounding formations. However, the interpreted reef depth and thickness of the overlying seal vary, possibly due to data interpolation effects, as a significant amount of cultural noise had to be removed during the interpretation process.
A data integration study was carried out by FEI following receipt of the MT report, which was completed in June 2025. The subsurface resistivity data derived from the MT method show that resistivity can vary laterally within a formation, reflecting the differences in its physical properties. When combined with other geophysical methods, MT data can provide a more comprehensive understanding of subsurface geology. The study also concludes that, while seismic remains the primary tool for defining prospect structures, MT-derived resistivity can aid in predicting porosity and fluid type within seismically delineated geologic bodies. By integrating data from multiple geophysical tools and sources, the porosity distribution on the Barili Limestone surface was successfully estimated and mapped.
On March 11, 2026, the DOE approved the WP&B for 2026.
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SC 88 Galoc (formerly SC 14 C-1)
Block C-1 Galoc covered an area of 164 square kilometers and contains the Galoc Oil Field, which had produced approximately 25.33 MMBO as of December 31, 2025.
Gross production in 2025 averaged 1,093 barrels of oil per day (“BOPD”), down from 1,224 BOPD in 2024, representing a year-on-year decline of 10.7%. This decline is consistent with the field’s natural decline rate observed for the past three to four years.
Three liftings, totaling 414,124 barrels, were delivered during 2025. The first lifting was completed on February 28, 2025, with a cargo size of 157,381 barrels; the second on June 01, 2025, totaling 123,361 barrels; and the third was completed on October 1, 2025, with a cargo of 133,382 barrels. The crude oil was sold to regional refineries at an average realized price of US$69.96 per barrel.
The field's profitability is expected to continue over the next 1-2 years, subject to effective cost management, operational efficiency, high oil prices, and sustained performance of the remaining production wells, Galoc-5 and Galoc-6.
On May 7, 2020, GPC informed the DOE of the cessation of operations for Galoc Field, starting September 24, 2020. This followed GPC’s receipt of a Notice of Termination from Rubicon Offshore International (“ROI”), the owner of the floating production storage and offloading (“FPSO”) vessel, Rubicon Intrepid. GPC also requested approval of the initial drawdown from the fund set-up under the DOE-approved Galoc Decommissioning Plan (“DP”) for implementing the field suspension plan. However, in September 2020, the Galoc Joint Venture (“JV”) negotiated with ROI to sell the Rubicon Intrepid, allowing the Galoc Field to continue production beyond the original cessation schedule of September 24, 2020. Tamarind Resources, the owner of GPC, established a subsidiary, Philippines Upstream Infrastructure (“PUI”), to acquire the FPSO from ROI. GPC and ROI then signed a Transition Operations and Maintenance (“O&M”) contract enabling ROI’s crew to manage FPSO operations during a six-month transition period. Following this, GPC entered into a 24-month O&M contract with Three60 Energy, an energy services provider, to take over FPSO operations after the transition period.
On September 14, 2020, Galoc Production Company 2 (“GPC2”) withdrew from SC 14C-1 and the Joint Operating Agreement, with the withdrawal becoming effective on December 16, 2020. The majority of the remaining members absorbed GPC2’s interest, including FEPC, which increased its participation from 2.27575% to 3.2103%.
On December 23, 2020, GPC resigned as the SC 14C-1 operator, and the JV elected GPC’s affiliate, NPG Pty Limited (“NPG”), as its replacement.
On February 1, 2021, Three60 Energy formally assumed operational control of the FPSO, now called Intrepid Balanghai, following the transition period with ROI from September 2020 to January 2021.
In June 2021, the DOE requested that NPG prepare a new decommissioning plan (“DP”) for Galoc Field’s eventual closure. This DP updated the 2016 Abandonment Plan and the 2020 Suspension & Abandonment Plan, both of which had received DOE approval. Submitted on July 30, 2021, the DP outlines the scope and estimated costs of final field decommissioning, including the FPSO, subsea equipment, and production wells. The total decommissioning cost is projected at $24 million, with $9.5 million allocated for FPSO disconnection and subsea equipment abandonment and $14.5 million for permanent plugging and abandonment (“P&A”) of the production wells.
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In January 2023, Matahio Energy completed the acquisition of NPG, which operates the Galoc Field, and PUI, which owns the FPSO Intrepid Balanghai. In March 2023, ownership of the FPSO was transferred directly from PUI to NPG. Following this transfer, NPG (acting as a corporate entity and not in its capacity as SC 14C-1 Joint Venture Participant) entered into a new bareboat charter with the other JV Partners, including FEPC, for the purpose of continuing production operations at the Galoc Field.
In December 2023, the DOE released Department Circular (“DC”) no. 2023-12-0033 on the awarding of Development and Production Petroleum Service Contracts (“DP PSC”) through direct negotiations. It took effect on January 3, 2024. The DP PSC covers expiring service contracts but with ongoing production or producible petroleum reserves as validated by the DOE. It will have an initial term aligned with the period necessary to produce the recoverable oil or gas reserves declared in the DOE-approved Plan of Development (“POD”). The contract may also be subject to renewal for an additional period based on mutually agreed terms and conditions.
SC 14C-1 qualified for the issuance of a DP PSC allowing production operations at Galoc Field beyond the original end of the SC's term on December 17, 2025. Accordingly, the Consortium applied for a DP PSC in March 2025 and submitted the required documentation over the succeeding months. The Government awarded the new contract, SC No. 88, on December 18, 2025, and following the withdrawal of one company from the application, FEPCO’s participating interest increased from 3.2103% under the expired SC 14C-1 to 4.69174%.
West Linapacan DP PSC (formerly SC 14C-2 )
Block C-2 covered an area of 176.5 square kilometers and hosts two main oil-bearing structures, West Linapacan A and West Linapacan B, which are structural traps formed by fault-related folding. The West Linapacan A Field was discovered in 1990 and, from 1992 to 1996, produced over 8.5 MMBO from fractured Linapacan Limestone, the stratigraphic equivalent of the Nido Limestone. The field is located in 300 to 350 m of water, approximately 60 km offshore from Palawan Island.
West Linapacan B, located along the same structural trend, was discovered in 1993 with the drilling of West Linapacan B1-X but was never developed. Test results confirmed reservoir productivity, and available data suggest the well did not reach the oil-water contact, indicating that additional hydrocarbon accumulations may extend beyond the currently defined structural limits.
In 2018, Philodrill completed the mapping and interpretation of reprocessed 3D seismic data, focusing on the West Linapacan B structure, which was drilled in 1991. The SC 14C-2 and SC 74 Consortia conducted joint Rock Physics and QI studies in 2019 using existing 3D seismic and well data, with Ikon Science completing the initial phase in October 2019. However, only the SC 74 JV proceeded with the second phase of the QI Study.
In September 2021, the Consortium initiated a technical study on the West Linapacan B Field, including geologic data review, well log digitization, reservoir modeling, and resource estimation. Phase 1, completed in November 2021, indicated that a stand-alone development for West Linapacan B was not economically viable. Phase 2 explored a joint development of the West Linapacan A and B Fields, concluding that feasibility depended on recoverable reserves, development costs, production rates, and oil prices.
On December 20, 2024, Philodrill submitted the WP&B for 2025 to the DOE. The firm program includes the preparation of a plan and design study for a new well, West Linapacan A-7, as well as a POD for the West Linapacan A Field. On July 4, 2025, the Consortium commissioned Three60 Energy, the current Operations and Maintenance (“O&M”) contractor for the Galoc Field, to prepare the POD, which is expected to be completed by early November 2025.
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On November 17, 2025, the Consortium submitted a Letter of Intent to apply for a DP PSC covering SC 14C-2, which expired on December 17, 2025, along with additional open acreages. The new DP PSC will provide a fresh evaluation window to assess West Linapacan B, Linapacan B in the former SC 74 block, and other adjacent structures for potential cluster development. The block qualifies for a DP PSC based on the declared reserves in the West Linapacan A Field. The JV members are currently preparing the documents to be submitted to the DOE.
SC 86 Octon (former SC 6A)
In 2018, Philodrill completed the seismic interpretation/mapping work on the northern sector of the block using the PSDM 3D volume. The evaluation focused on the Malajon, Salvacion, and Saddle Rock prospects. The Malajon and Saddle Rock closures were previously tested by wells that encountered good oil shows in the Galoc Clastic Unit (“GCU”) interval. However, no drill stem tests were conducted in this interval due to operational constraints. A seismic attribute analysis of the prospects was completed the following year, aimed at characterizing the target reservoirs and determining their distribution in terms of porosity, thickness, and lithology.
In June 2020, LMKR, a private petroleum technology company based in Dubai, completed a pilot study on the Malajon area using 3D seismic and well data. The study shows the Malajon structure has good hydrocarbon potential and thus requires further detailed analysis. LMKR also identified four (4) sand packages within the GCU after generating several elastic properties (P-impedance, Vp/Vs, etc.).
A more detailed Quantitative Interpretation (“QI”) study was approved by the JV aimed at generating pay probability maps and identifying prospective zones that could be targeted for any future wells. It also included detailed attribute analysis as several channelized sands within the GCU have been identified during the pilot study. An amended WP&B for 2020 to cover this additional study was approved by the DOE in July 2020. The LMKR report was submitted to the DOE in July 2021.
SC 6A had an original term set to expire on February 28, 2024, leaving the Consortium with limited time to drill an exploratory well and to develop a field in case of a discovery. In view of this, the Consortium decided to surrender the contract effective March 31, 2021, and subsequently re-apply for a new contract under the Philippine Conventional Energy Contracting Program (“PCECP”) through area nomination. The surrender of the SC was approved by the DOE on September 5, 2022.
On March 17, 2023, Philodrill submitted the SC application to the DOE. It has an area of 1,320 sq. km, which includes the former SC 6A and additional areas relinquished from the adjacent SC 74 in 2022. This area has been termed Nominated Area No. 10 by the DOE.
On May 15, 2023, the DOE, in its preliminary review, confirmed the completeness of the technical, legal, and financial documents submitted by the JV in support of the SC application.
The new Service Contract (No. 86) was awarded on September 30, 2025. The first sub-phase will focus on further subsurface work in addition to the G&G studies conducted by the former SC 6A JV. These activities aim to establish a final well design and location for the Malajon Prospect and to appraise the Octon Discovery.
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FEPC has a participating interest of 6.8439% in the new SC.
Cadlao Block (former SC 6B Bonita)
SC 6B had an area of 567 sq. km and contains the Cadlao Oil Field. The field was discovered in 1977 and produced about 11 MMBO from two subsea production wells from 1981-1991. The remaining recoverable reserves are estimated at 3.7 MMBO for proven reserves (1P) and 5.7 MMBO for proven plus probable reserves (2P) based on a 2012 study by Gaffney, Cline & Associates, Inc. Additionally, near Cadlao lies the East Cadlao Prospect, with estimated recoverable resources of 1.48 MMBO at the P10 level, and 1.17 MMBO at the P50 level.
In December 2021, Nido submitted a farm-in proposal to the JV to increase its participating interest in SC 6B from 9.09% to 72.727% and take over the operatorship of the Service Contract. A farm-in agreement (“FIA”) was later executed on February 11, 2022, with FEPC’s interest being reduced to 2.4546% from 8.182% in exchange for the said carry in Cadlao’s development costs. Under the FIA, Nido will fund 100% of the drilling of a well, Cadlao-4, the conduct of an extended well test (“EWT”), and the subsequent development of the Cadlao Field.
Nido proposes a two-phase redevelopment consisting of
· | Phase 1: A 3 to 9-month EWT using a new single deviated well (Cadlao-4), a mobile offshore production unit (“MOPU”), and either a floating storage and offloading (“FSO”) vessel or a shuttle tanker; and |
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· | Phase 2: Further development of the EWT well and additional wells potentially substituting the MOPU for a small wellhead platform (“WHP”) and storage barge. |
In April 2022, RISC completed an independent assessment of the Cadlao Field. Overall, RISC supports the redevelopment as an economic opportunity although costs will have to be carefully controlled.
The Deed of Assignment (“DOA”) of Participating Interest to Nido and the revised 2022 WP&B were submitted to the DOE on April 11, 2022. The WP&B includes the drilling of Cadlao-4 and the conduct of an EWT. However, the spud date of the well will depend on rig and FSO unit availability. The DOA was approved on December 19, 2022.
From November 28 to December 1, 2022, Nido conducted a geophysical site survey at Cadlao using the vessel Cassandra VI. The purpose of the survey was to identify the possible constraints and hazards on the seafloor where the Cadlao-4 well will be located.
On November 15, 2023, Nido and PNOC Exploration Corporation (“PNOC EC”) signed a FIA that provides for PNOC EC’s acquisition of a 20% participating interest in the block, including sharing the cost of drilling and EWT for the Cadlao-4 well. While PNOC EC’s participation was approved by the Consortium, the formal transfer and assignment of the 20% interest from Nido to PNOC EC shall be subject to the approval of DOE.
Nido had initially identified a drillship to drill the Cadlao-4 well, although it still requires equipment modifications. However, due to safety concerns about using a drillship at a water depth of 93.7 m, a jack-up rig is now being considered for both drilling and the EWT. Nido is currently reviewing the contract for the jack-up rig.
On January 5, 2024, the Consortium sent to DOE its letter of intent to apply for a DP PSC before the end of SC 6B’s production term. On January 26, 2024, Nido submitted the application documents over the former SC 6B block and additional open areas. These documents include a copy of the POD for the Cadlao Field. The new SC will replace SC 6B, which expired on February 28, 2024. The Consortium is now awaiting the government’s final decision on the application.
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SC 14A (Nido), SC 14B (Matinloc) & SC 14B-1 (N. Matinloc)
Production in the Nido and Matinloc Fields was terminated permanently on March 13, 2019, after producing 22,173 barrels of oil from January to March 2019. The Nido Field accounted for 93.06% of the total while Matinloc Field contributed 6.94%. Shell Philippines was the sole buyer of the crude during the period.
Nido started oil production in 1979 while Matinloc was put in place in 1982. The final inception-to-date production figures for the two fields are 18,917,434 barrels for Nido and 12,582,585 barrels for Matinloc. The North Matinloc Field, which was in production from 1988 to 2017, produced a total of 649,765 barrels of oil. The total production for the three (3) fields is 32,149,784 barrels.
Seven (7) production wells in Nido (3 out of 5), Matinloc (3), and North Matinloc (1) were successfully P&A from April to May 2019. The P&A of the remaining Nido wells, A1 and A2, were only partially abandoned due to difficulties encountered during operations.
Following the suspension of field operations and the P&A of most of the wells in March 2019, Philodrill conducted the stripping and disposal of equipment and materials aboard the production platforms from June to October 2019. In December 2019, all production platforms were turned over to the DOE. On June 26, 2020, the DOE signed a Deed of Donation and Acceptance with the Department of National Defense to formalize the transfer of ownership of the Nido and Matinloc platforms to the Armed Forces of the Philippines, which will now use the platforms for defense purposes.
The P&A of the remaining Nido production wells, A-1 and A-2 wells was completed on October 5, 2020. This was initially scheduled in April 2020 but had to be deferred due to COVID-19 related health and travel restrictions.
With the completion of P&A of all production wells, a Notice to Surrender the SC 14A, 14B, 14B-1, Tara, and SC 14D blocks was sent to the DOE on February 16, 2021. This was approved by the DOE on May 18, 2022.
Forum Energy Objectives and Strategy
The core objective of FEL is to maximize the potential of its investments and its current licences to generate income, whilst at the same time continuing to reduce administrative expenses.
FEL plans to achieve this by:
· | Development of SC 72 |
· | Continued review of exploration blocks to identify potential drilling targets |
· | Continued review of administrative expenses |
For further details regarding FEL, see its 2024 financial statement package at https://find-and-update.company-information.service.gov.uk/company/05411224/filing-history
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Please note that FEL is not required to file its financial statement package with Companies House in the UK until September 30 following the end of its fiscal year which is December 31. Accordingly, the FEL financial statement package for 2025 is not expected to be available until Q3 of 2026.
Risk factors specific to FEL
The Company is exposed to certain risk factors which are specific to its investment in FEL. These include the following:
On October 16, 2020, FEL received notice from the DOE that the FM imposed on SC 72 on December 15, 2014 was lifted with immediate effect and that FEL was to resume exploration activities on SC 72. Under the current work program commitments, FEL was given 20 months from the date of lifting of the FM to drill two commitment wells. The total cost of drilling these wells depends on a number of factors. The Company’s management estimates the total work to be between $70 million and $100 million. It is important to note that, to date, there has been no announcement of any agreement between FEL and CNOOC in relation to the implementation of the MOU involving SC 72. The risk therefore exists that should FEL not be able to meet its commitments to the DOE, it may have to surrender its rights to SC 72 and pay a penalty equivalent to the minimum financial commitment of the current sub-phase.
On April 6, 2022, FEL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice, and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, Force Majeure was once again declared on SC 72.
In June 2022, media outlets reported that the MOU between China and the Philippines had been terminated although media outlets also reported that discussions would continue on joint exploration of SC 72.
On October 11, 2022, the DOE granted FGL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022, until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, FGL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to its re-imposition (October 14, 2020 to April 6, 2022) would be credited back to SC 72. Once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, equivalent to the remaining term of Sub-Phase 2 of SC 72 before October 14, 2020.
· | FEL’s cash inflows is heavily dependent on the Galoc Field production, which continued to operate beyond the original cessation date of September 24, 2020, following an agreement the previous operator GPC signed with ROI, the owner of the FPSO Rubicon Intrepid. The viability of continued production depends on the consistent output of the producing wells as well as the price of oil. |
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· | FEL’s operations do not generate sufficient cash to fund new exploration work in Galoc and its other blocks; therefore, in the event FEL issued new capital to fund these costs, the Company’s interest in FEL may be diluted. |
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· | FEL is a closely held private company and there is a limited population of potential buyers for FEC’s relatively small interest in FEL. |
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· | FEL’s interest in its main asset SC 72 could be diluted depending on the agreement reached, if any, with potential farm-in partners in the future. |
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· | Further exploration work has to be completed on SC 72 and SC 40 to confirm the value of the resources within these properties. |
On March 10, 2022, the Company announced that it agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620. The advance to FEL was via non-interest bearing loans. To fund the $198,620, the Company accepted a loan from PXP for the same amount (“PXP Loan”). The PXP loan bore interest of LIBOR plus 3.5% and was settled in a shares for debt transaction on July 31, 2025.
In October 2023, FEL advised the Company of its intent to complete a $3,000,000 fund raising to repay its loan from PXP and for general working capital purposes. FEC agreed to participate in its pro-rata 6.8% share amounting to $204,000 through additional loans from PXP on the same terms and conditions as previous advances.
On December 21, 2023, $626,820 of advances made to FEL by the Company were converted to shares in FEL at a price of $0.30 per share. The $626,820 conversion into FEL shares represented 6.8% of $9,217,939 of debt settled by FEL.
C. Organizational Structure
We are part of a group of companies with our parent company being PXP. We have no subsidiaries.
ITEM 4A. UNRESOLVED STAFF COMMENTS
N/A
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
We have experienced significant operating losses over the last few years, and as a result, our ability to continue as a going concern is dependent on achieving profitable operations and/or upon obtaining additional financing.
Our audited financial statements were prepared in accordance with IFRS as issued by the IASB, which are different from US GAAP (refer to the Auditors’ Report dated March 31, 2026).
The Company is exposed to foreign currency fluctuations for general and administrative transactions denominated in Canadian Dollars. The majority of the Company’s cash is kept in U.S. dollars. Cash held in Canadian dollars is subject to exchange rate fluctuations between the Canadian dollars and the U.S. dollars.
The following discussion and analysis of financial results should be read in conjunction with our Audited Financial Statements for the year ended December 31, 2025, together with the notes related thereto. The discussion contains forward-looking statements that involve risks and uncertainties. Such information, although considered reasonable by our management at the time of preparation, may prove to be inaccurate and actual results may differ materially from those anticipated in the statements made.
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Fiscal year ended December 31, 2025 versus December 31, 2024
Our accounts show a loss for the twelve months ended December 31, 2025 of $282,798, or $0.00 per share, versus a loss of $244,437 for the same period in 2024.
The higher net loss due to higher professional fees (legal and auditing) incurred during the year.
General and administration expense were $241,376 for the twelve month period ended December 31, 2025 versus $182,241 for the same period in 2024. Overall expenses were higher than those experienced in the previous year. Higher professional fees accounted for the difference. Legal and audit related fees were $112,794 for the twelve month period ended December 31, 2025 versus $54,310 for the same period in the previous year as we engaged professional advice for an in depth review of our strategic options going forward in 2025. Office and miscellaneous costs were $20,486 for the twelve month period ended December 31, 2025 versus $19,219 for the same period in the previous year. The difference was not material. Consulting fees for the twelve months ended December 31, 2025 were $86,106 versus $86,397 for the previous year. The difference was not material. Listing and filing fees were$18,590 for the twelve month period ended December 31 , 2025 versus $19,929 for the same period in the previous year. The difference was due to higher filing costs in 2024. For the year ended December 31, 2025, foreign exchange loss was $2,535 versus a loss of $1,500 for the same period in the previous year. Interest expense for the year ended December 31, 2025 was $41,422 versus $62,196 for the same period in the previous year. The difference was due to the settlement in shares of the PXP Loan on July 31, 2025 resulting in lower interest expense. Comprehensive loss for the twelve months ended December 31, 2025 was $2,325,671 versus an income of $6,106,163 for the twelve month period ended December 31, 2024. The difference was a result of the change in fair value of our investment in FEL.
Fiscal year ended December 31, 2024 versus December 31, 2023
Our accounts show a loss for the year ended December 31, 2024, of $244,437, or $0.00 per share, versus a loss of $191,795 for the same period in 2023. General and administration expense were $182,241 for the year ended December 31, 2024 versus $159,202 for the same period in 2023. Overall general and administrative expenses were higher than those experienced in the previous year. Higher professional fees and higher interest expense on the PXP Loan mainly accounted for the difference. Professional fees were $54,310 for the year ended December 31, 2024 versus $23,841 for the same period in the previous year as we engaged professional advice with respect to our strategic options going forward in 2025. Office and miscellaneous costs were $19,219 for the year ended December 31, 2024 versus $22,572 for the same period in the previous year. The difference was a result of our ongoing effort to reduce costs where possible. Consulting fees for the year ended December 31, 2024 were $86,397 versus $86,749 for the previous year. The difference was not material. Listing and filing fees were $19,929 for the year ended December 31, 2024 versus $25,183 for the same period in the previous year. The difference was due to the initial conversion in 2023 of our 2022 and 2023 filings to XBRL pursuant to new filing requirements. For the year ended December 31, 2024, foreign exchange loss was $1,500 versus a loss of $191 for the same period in the previous year. The average foreign exchange for 2024 was 1.3698 versus 1.3497 in 2023. Interest expense for the year ended December 31, 2024 was $62,196 versus $32,593 for the same period in the previous year. The difference was due to the increased interest on the loans from PXP in 2024 as a result of an increase in the overall loan amount and the increase in interest rates. Comprehensive income for the year ended December 31, 2024 was $5,861,726 versus a loss of $191,795 for the year ended December 31, 2023. The difference was a result of the change in fair value of our investment in FEL.
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Balance Sheet
Our current assets were $23,776 at December 31, 2025 versus $14,245 for the year ended December 31, 2024. The difference is a result of the higher cash. Our investment in Forum Energy was reflected at a carrying value of $6,242,423 in the financial statements as at December 31, 2025 (2023 - $8,568,094). The decrease was due to the change in fair value of our investment in FEL in 2025. Our assets reflect our investment in Forum Energy on a fair value basis.
Liquidity and Capital Resources
Our working capital deficit at December 31, 2025 was $50,794 versus $922,999 at December 31, 2024 and shareholders’ equity was $6,191,629 at December 31, 2025 (2024 - $7,645,095). On December 31, 2025, our cash balance was $14,864 which was higher than on December 31, 2024. On December 31, 2025 our short-term loans payable was $40,248 versus $895,637 on December 31, 2024. In addition, our trade and accrued payables balance on December 31, 2025 was $34,322 versus $41,607 on December 31, 2024. These differences mainly accounted for the changes in working capital.
Cash used in operating activities for the year ended December 31, 2025 was $249,084 versus $156,936 for the same period in 2024 mainly as a result of the differences described in the results of operations above.
Cash provided by financing activities was $258,192 for the year ended December 31, 2025 versus $155,286 for the year ended December 31, 2024. The difference was due to a higher amount of loans received from PXP in 2025.
Cash used in investing activities was $Nil for the year ended December 31, 2025 and 2024 versus $204,000 for the year ended December 31, 2023. In 2023, we advanced an additional $204,000 to FEL as part of a financing undertaken by FEL.
On March 10, 2022, we announced that we agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620, bringing the total to $423,020, which included $224,400 previously advanced. The advance to FEL was via non-interest bearing loans. In order to be able to fund the $198,620, the Company accepted a PXP Loan.
On October 31, 2023 and November 29, 2023, we advanced $68,000 and $136,000, respectively, to FEL representing 6.8% of a $3,000,000 financing being undertaken by FEL, bringing the total advances by us to $627,020. The funds to participate in the financing were obtained via further PXP Loans.
The PXP Loan bears interest of LIBOR plus 3.5% and both interest and principal are repayable on the earlier of: (a) August 31, 2025, (b) any equity issuance by us, (c) any sale of FEL shares by us, or (d) any third party borrowing by us. We also received an additional $260,950 for working capital from PXP during the year ended December 31, 2025 (2024 - $155,286; 2023 - $356,500 under the same terms and conditions as the PXP Loan. As at December 31, 2025, the outstanding PXP Loan balance was $40,238 (2024 - $895,637), which included accrued interest of $248 (2024 - $105,431; 2023 - $42,235). Total interest expense amounted to $41,422 for the year ended December 31, 2025 (2024 – 62,196; 2023 – 32,593). On July 31, 2025, the Company issued 131,563,725 in settlement of the PXP Loan outstanding on that date comprised of $1,011,156 principal and $146,605 in interest for a total of $1,157,761.
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On December 21, 2023, $626,820 of advances made to FEL by us were converted to shares in FEL at a price of $0.30 per share. The $626,820 conversion into FEL shares represented 6.8% of $9,217,939 of debt settled by FEL.
Capital Resources
We currently own 6.80% of Forum Energy. If Forum Energy is required to raise additional funds through equity issuances, we would have to purchase our proportionate share of these equity issuances to maintain our current equity position.
We anticipate that we will require additional funds for working capital in 2026 and we are evaluating options in order to raise the additional funds. If we are unable to raise additional funds, there is significant doubt that we will be able to continue as a going concern. Currently, PXP has agreed to fund our operations for the foreseeable future, under the same terms and conditions as the PXP Loan, $1,157,761 of which was settled by way of issuance of 131,563,725 of out shares on July 31, 2025.
Since the delisting of FEL from the London Stock Exchange, there is no liquidity via a public market for the FEL shares. As we are wholly reliant on the information disclosed by PXP concerning the business of FEL, we may not be able to obtain information necessary to facilitate a wider sales process and may be reliant on significant shareholders of PXP for the disposition of any of our FEL shares. We have looked at all options, including raising funds to operate and participate in future FEL financings by way of debt or equity financings.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Contractual Obligations
None
Critical Accounting Policies and Estimates
Basis of preparation and accounting policies
We have prepared our consolidated financial statements in accordance with IFRS Accounting Standards as issued by the IASB. IFRS Accounting Standards represents standards and interpretations approved by the IASB. International Accounting Standards (“IAS’s”), and interpretations issued by the IFRS Interpretations Committee (“IFRIC’s”) and the former Standing Interpretations Committee (“SIC’s”). The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards and interpretations effective as of December 31, 2025.
Critical Accounting Estimates
The preparation of financial statements requires management to make certain judgments and estimates. Changes in these judgments and estimates could have a material impact on our reported financial result and financial condition.
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We make estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
The determination of the fair value of our investment in FEL is a significant accounting estimate.
Recent Accounting Related Pronouncements
The Company has prepared its financial statements in accordance with IFRS Accounting Standards as issued by the IASB. IFRS Accounting Standards represents standards and interpretations approved by the IASB. IAS’s, and interpretations issued by the IFRIC’s SIC’s. The financial statements have been prepared in accordance with IFRS Accounting Standards and interpretations effective as of December 31, 2025.
New IFRS Accounting Standards and interpretations or changes to existing standards with future effective dates are either not applicable or not expected to have a significant impact on the financial statements of the Company.
As at the date of authorization of these financial statements, the IASB had issued certain pronouncements that are mandatory for the Company’s accounting periods commencing on or after March 1, 2025. In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements (“IFRS 18”) which replaces IAS 1 Presentation of Financial Statements. This standard aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company is currently assessing the impact the new standard will have on its financial statements. Other recent accounting pronouncements are not applicable or do not have a significant impact to the Company, have been excluded.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
A. Directors and Senior Management
The following table lists, as of the date of this report, the names, ages, functions and areas of experience in our operations of all our directors and Senior Management. Each Director will serve until the next Annual General Meeting or until his/her successor is duly elected, unless his/her office is vacated in accordance with our charter documents. Our executive officers serve at the pleasure of the Board of Directors.
Name |
| Age |
| Position/Area of Experience/Function |
Paul Wallace (1)(2)(3) |
| 75 |
| Director since November 2012, President and CEO from August 2015 to October 2020, and CFO from June 2015 to October 2020. |
Claro Ramirez (1)(3) |
| 65 |
| Director since October 2011 |
Daniel Carlos (1)(2) |
| 62 |
| Director, President and CEO since October 2020 |
Mark Rilles |
| 42 |
| Chief Financial Officer since October 2020 |
(1) | Member of Audit Committee in 2025 |
|
|
(2) | Member of Compensation Committee in 2025 |
|
|
(3) | Member of the Corporate Governance Committee |
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Information About our Directors and Officers
Mr. Daniel Carlos, Director, President, Chief Executive Officer
Mr. Carlos is currently the President and a Director of PXP, the Company’s majority shareholder. He obtained his Bachelor of Science (B.Sc.) degree in Geology from the University of the Philippines (1984) and holds a Master of Science (M.Sc.) degree in Petroleum Geosciences from the Norwegian University of Science and Technology or NTNU in 2002. He also has a Diploma in Petroleum Exploration and Reservoir Evaluation from the University of Trondheim, now NTNU, in 1988. In February 2007, he joined Forum Energy Philippines Corporation as Vice President for Exploration and was appointed President since July 2013 to present. He was appointed President of PXP Energy Corporation in August 2015. He is also the Resident Agent in the Philippines of Forum (GSEC 101) Limited, which operates Service Contract (SC) 72 or Recto Bank. He is also the President of Forum Energy Philippines Corporation, a subsidiary with non-operated holdings in four blocks in the Northwest Palawan Basin, and Forum Exploration, Inc., which operates SC 40 or North Cebu Block. He is a licensed Filipino Geologist (PRC No. 1027) and placed third in the 1985 Geologist Licensure Examinations.
Mr. Mark Rilles, Chief Financial Officer
Mr. Rilles is currently the Finance Controller of PXP, having joined the Group in 2012. He is the Corporate Secretary of Forum Energy Limited and Pitkin Petroleum Limited, and Director and Treasurer of Forum Energy Philippines Corporation and Forum Exploration Inc. He obtained his Bachelor of Science degree in Accountancy from the University of Santo Tomas (2004) and holds a Master of Business Administration (M.B.A.) degree from the Ateneo Graduate School of Business (2014). He is a Certified Public Accountant (passed the CPA Licensure Examinations in 2004) and previously worked at SyCip Gorres Velayo & Co. (SGV & Co.) from 2004 to 2008.
Mr. Paul Wallace
Mr. Paul Frederick Wallace is a Chartered Professional Accountant and member of the CPA Canada. He was appointed as the Chief Financial Officer of Hong Kong-based First Pacific Company Limited from 1995 to 1997, between 2003 and 2004, and between 2014 and 2015. He was appointed Group Finance Director to the Sanctuary Group plc between 2005 and 2008. Mr. Wallace was Chief Executive Officer of Blue Ocean Wireless Limited between 2009 and 2011, and a Non-Executive Director of JPMorgan Global Emerging Markets Income Trust Plc between 2010 and 2015. From March 2015 through April 2019, he was the Finance Director of Forum Energy, a Director of Pitkin Petroleum Limited, and Head of Finance of Goodman Fielder Pty Limited.
Mr. Claro Ramirez
Mr. Ramirez is a resident of Richmond, British Columbia, Canada and served as Senior Vice President of Philippine Long Distance Telephone Company (“PLDT”) until 2014, and President of First Coconut Manufacturing Inc. from 2014 to May 2018.
None of our directors and/or executive officers, or those persons to be appointed, have been the subject of any order, judgment, or decree of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he or she is a director and/or executive officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he or she is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business, or of theft, or of any felony.
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There are no arrangements or understandings between any two (2) or more directors or executive officers, pursuant to which he or she was selected as a Director or Executive Officer. There are no family relationships between any two (2) or more of our directors or executive officers.
B. Compensation.
We have recently agreed to pay our directors the following consulting fees or directors’ fees on a monthly basis:
| Paul Wallace |
| $ | 2,000 |
|
|
|
|
|
|
| Claro Ramirez |
| $ | 2,000 |
|
None of our executive officers or directors received other compensation in excess of the lesser of $25,000 or 10% of such Executive Officer's or Director’s cash compensation as reported in the compensation table below and all Executive Officers and directors as a group did not receive other compensation which exceeded $25,000 times the number of persons in the group or 10% of the compensation reported in the compensation table below.
No funds were set aside or accrued by us during the year ending December 31, 2024 to provide pension, retirement or similar benefits for our directors or Executive Officers. Except for the stock option program discussed below, we have no bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or Executive Officers.
The following tables detail the compensation paid during fiscal year ended December 31, 2025 and 2024 to our directors and members of our administrative, supervisory or management bodies:
Director/Executive Officer Compensation
Director Compensation for Fiscal Year ended December 31, 2025
Directors/Officers |
| Salary |
|
| Option Exercise Net Market Value(1) |
|
| Total Compensation |
| |||
Claro Ramirez |
| $ | 24,000 |
|
| $ | 0.00 |
|
| $ | 24,000 |
|
Paul Wallace |
| $ | 24,000 |
|
| $ | 0.00 |
|
| $ | 24,000 |
|
Daniel Carlos |
| $ | Nil |
|
| $ | 0.00 |
|
| $ | Nil |
|
Mark Rilles |
| $ | Nil |
|
| $ | 0.00 |
|
| $ | Nil |
|
Total |
| $ | 48,000 |
|
| $ | 0.00 |
|
| $ | 48,000 |
|
(1). “Option Exercise Net Market Value” is defined as the aggregate difference between the exercise price and the market value of the common stock on the date of exercise.”
Director Compensation for Fiscal Year ended December 31, 2024
Directors/Officers |
| Salary |
|
| Option Exercise Net Market Value(1) |
|
| Total Compensation |
| |||
Claro Ramirez |
| $ | 24,000 |
|
| $ | 0.00 |
|
| $ | 24,000 |
|
Paul Wallace |
| $ | 24,000 |
|
| $ | 0.00 |
|
| $ | 24,000 |
|
Daniel Carlos |
| $ | Nil |
|
| $ | 0.00 |
|
| $ | Nil |
|
Mark Rilles |
| $ | Nil |
|
| $ | 0.00 |
|
| $ | Nil |
|
Total |
| $ | 48,000 |
|
| $ | 0.00 |
|
| $ | 48,000 |
|
(1). “Option Exercise Net Market Value” is defined as the aggregate difference between the exercise price and the market value of the common stock on the date of exercise.”
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Our Board may award special remuneration to any Director undertaking any special services on our behalf other than services ordinarily required of a Director. Other than indicated above no Director received any additional compensation for his or her services including committee participation and/or special assignments.
Except for the stock option program discussed below, we have no bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or Executive Officers.
Options to Purchase Our Securities.
Options to purchase securities from us are granted to directors, officers and employees on terms and conditions acceptable to the relevant regulatory authorities. We adopted a formal stock option plan on June 19, 2000. There were no stock options outstanding on December 31, 2025 and none were issued or exercised in 2025 or 2023.
C. Board Practices
We have an Audit Committee, a Compensation Committee, and a Corporate Governance Committee. No committee members receive additional compensation for serving on a committee and all committee members serve for a one year term. All board members are elected at our Annual General Meeting to serve for one year or until their successor is appointed.
Audit Committee. The Audit Committee oversees the retention, performance and compensation of our independent auditors, and the establishment and oversight of our systems of internal accounting and auditing control. Members of the Audit Committee in 2025 were Daniel Carlos, Claro Ramirez, and Paul Wallace. New members of our Audit Committee for 2026 will be appointed following our Annual and General Meeting of Shareholders.
Compensation Committee. The Compensation Committee reviews and makes recommendations to our Board concerning the terms of the compensation packages provided to our senior executive officers, including salary, bonus and awards under our stock option plan and any other compensation plans that we may adopt in the future. Members of the Compensation Committee in 2025 were Paul Wallace and Daniel Carlos. Members of our Compensation Committee for 2026 will be appointed following our Annual and General Meeting of Shareholders.
Corporate Governance Committee. The Corporate Governance Committee meets with and discusses current disclosure issuances with our management personnel, directors, and with both our Canadian and United States counsel, to report to our Board any matters which should be the subject of either public disclosure or remedial action and to assist our Board in establishing reporting and disclosure procedures to ensure that we are in compliance with our disclosure and compliance obligations under applicable laws, rules and obligations. Members of our Corporate Governance Committee in 2025 were Claro Ramirez and Paul Wallace. Members of our Corporate Governance Committee for 2026 will be appointed following our Annual and General Meeting of Shareholders,
D. Employees
As of December 31, 2025, we had no employees.
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E. Share Ownership
The following table lists as of March 4, 2026, the share ownership of our directors and executive officers.
The following table sets forth certain information as of March 4, 2026 regarding the ownership of our common stock by (i) each of our directors, (ii) each of our named executive officers, and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, the address of each person identified below is c/o FEC Resources Inc, Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, V6C 2B5. We believe that ownership of the shares by the persons identified below is both of record and beneficial and that such persons have sole voting and investment power with respect to the shares indicated. Percentage of class in the following table is calculated individually based on the following formula: (shares directly or indirectly controlled + shares issuable on the exercise or conversion of various securities) / (total shares outstanding + shares issuable on the exercise or conversion of various warrant, debentures and options by the director or officer). The total shares outstanding on March 4, 2026 was 992,646,096.
Name of Director and/or Officer and number of shares held: |
| Number of Shares |
|
| Percent of Class |
| ||
Paul Wallace |
|
| - |
|
|
| - |
|
Claro Ramirez |
|
| - |
|
|
| - |
|
Daniel Carlos |
|
| - |
|
|
| - |
|
Mark Rilles |
|
| - |
|
|
| - |
|
Number of shares held by all Directors and Officers as a group: |
|
| - |
|
|
| - |
|
The particulars of the stock options granted to officers and directors are set forth in the preceding section entitled “DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.” The particulars regarding convertible debentures and warrants acquired by certain officers and directors are as follows:
The following table lists the current directors, executive officers and employees to whom warrants to purchase our shares were sold and the number of share purchase warrants so sold as of the date of this report, as well as the number of share purchase warrants sold to directors and all employees as a group.
Warrants Held by Directors and Officers
Name |
| Number of Share Purchase Warrants |
| Exercise Price |
|
| Expiration Date |
| ||
None |
| None |
|
|
|
|
|
| ||
We are a publicly-owned corporation, the shares of which are owned by Canadian residents, U.S. residents, and residents of other countries. Currently, we are not controlled directly or indirectly by any foreign government but are controlled by PXP.
There are no arrangements, known to us, the operation of which may at a subsequent date result in a change in our control other than as noted above.
The above listed organizations and individuals have no special or separate voting rights than those rights held by our shareholders.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
We are a publicly-owned corporation, the shares of which are owned by Canadian residents, U.S. residents, and residents of other countries. We are controlled by PXP due to the fact that, as indicated in the table below, it directly owns 81.25% of our outstanding voting securities and thus controls the outcome of all matters decided stockholder votes. The following table provides the names and share ownership of those parties that have ownership of 5% or more of each class of our voting securities as of March 4, 2026, according to the information available to us.
Name |
| Number of Shares Owned |
|
| Percent of Class |
| ||
PXP Energy Corporation * |
|
| 806,563,711 |
|
|
| 81.25 |
|
Asian Coast International |
|
| 62,740,000 |
|
|
| 6.32 |
|
* Prior to July 31, 2025, PXP owned 674,999,986 common shares and on July 31, 2025 received an additional 131,563,725 commons shares for settlement of the PXP Loan outstanding on that date. No other changes in the ownership of our shares by PXP has occurred during the past three (3) years prior to that.
There are no arrangements, known to us, the effect of which may at a subsequent date result in a change in our control other than as noted in Item 5 Operating and Financial Review and Prospects.
As at March 4, 2026, management is not aware of any person holding a greater than 5% registered interest in any class of our voting securities other than as set forth above. The above listed organizations and individuals have no special or separate voting rights than those rights held by our shareholders.
On March 3, 2026, the shareholders’ list showed 592 registered shareholders and 992,646,096 shares outstanding. The number of shares held by U.S. residents was 48,759,820 representing 4.91% of the total issued and outstanding shares. The total number of U.S. resident registered shareholders was 523.
B. Related Party Transactions
On October 31, 2023 and November 29, 2023, we advanced $68,000 and $136,000, respectively, to FEL representing 6.8% of a $3,000,000 financing being undertaken by FEL, bringing the total advances by the Company to $627,020.
On December 21, 2023, $626,820 of advances made to FEL by us were converted to shares in FEL at a price of $0.30 per share. The $626,820 conversion into FEL shares represented 6.8% of $9,217,939 of debt settled by FEL. The remaining $200 of advances made to FEL was assumed by PXP.
During the year ended December 31, 2025, general and administrative expenses included key management personnel compensation totaling $48,000 (2024: $48,000; 2023: 48,000).
On March 10, 2022, we announced that we agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620. The advance to FEL was via non-interest bearing loans. In order to be able to fund the $198,620, the Company accepted a loan from PXP for the same amount (“PXP Loan”).
The PXP Loan bears interest of LIBOR plus 3.5% and both interest and principal are repayable on the earlier of: (a) August 31, 2025, (b) any equity issuance by us, (c) any sale of FEL shares by us, or (d) any third party borrowing by us. We also received an additional $260,950 for working capital from PXP during the year ended December 31, 2025 (2024 - $155,286; 2023 - $356,500 under the same terms and conditions as the PXP Loan. As at December 31, 2025, the outstanding PXP Loan balance was $40,238 (2024 - $895,637), which included accrued interest of $248 (2024 - $105,431; 2023 - $42,235). Total interest expense amounted to $41,422 for the year ended December 31, 2025 (2024 – 62,196; 2023 – 32,593). On July 31, 2025, the Company issued 131,563,725 in settlement of the PXP Loan outstanding on that date comprised of $1,011,156 principal and $146,605 in interest for a total of $1,157,761.
* Note Item 7.C not required for this Annual Report.
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Financial Statements and Other Financial Information
We know of no pending legal or arbitration proceedings, including those relating to bankruptcy, governmental receivership or similar proceeding and those involving any third party against it, nor are we involved as a plaintiff in any material pending litigation.
We know of no pending proceedings to which any director, member of senior management, or affiliate is either a party adverse to us, or our subsidiaries, or has a material interest adverse to us. We have not declared any dividends for the last five (5) years, nor do we intend to declare any dividends in the foreseeable future.
B. Significant Changes/Developments
None
ITEM 9. THE OFFER AND LISTING
A. Listing Details and Markets
Starting on September 22, 1999, our shares traded on the OTC–Bulletin Board (“OTC.BB”) under the symbol “FECOF” and since 2012, our shares have been quoted on the OTC Pink Sheets.
Our common shares trade and have traded on a limited or sporadic basis and should not be deemed to constitute an established public trading market. Broker-dealers often decline to trade in over-the-counter stocks that are quoted on the OTC Pink Sheets given the market for such securities are often limited, the stocks are more volatile, and the risk to investors is greater. These factors may reduce the potential market for our common shares by reducing the number of potential investors. This may make it more difficult for investors in our common shares to sell shares to third parties or to otherwise dispose of their shares. This could cause our share price to decline, and there is no assurance that there will be liquidity in our common shares.
In addition, The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.
ITEM 10. ADDITIONAL INFORMATION.
A. Share Capital
Not applicable
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B. Memorandum and Articles of Association
Reference is hereby made to our Certificate of Continuance, and to our Bylaws, each of which is incorporated herein by reference to, respectively, Exhibit 3.1 and 3.2 to our Registration Statement on Form F-1, file number 33-81290.
C. Material Contracts.
See "Item 4. Information on the Company."
D. Exchange Controls
Investment Canada Act
The Investment Canada Act (the “ICA”) prohibits the acquisition of control of a Canadian business enterprise in Canada by non-Canadians without the prior consent of Investment Canada, the agency that administers the ICA, unless such acquisition is exempt under the provisions of the ICA. Investment Canada must be notified of such exempt acquisitions. The ICA covers acquisitions of control of corporate enterprises, whether by purchase of assets, shares or “voting interests” of an entity that controls, directly or indirectly, another entity carrying on a Canadian business.
Apart from the ICA, there are no other limitations on the right of non-resident or foreign owners to hold or vote securities imposed by Canadian law or our Certificate of Continuance. There are no other decrees or regulations in Canada which restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities except as discussed in “Taxation”, below.
E. Taxation
The following is a summary of the principal Canadian federal income tax considerations generally applicable in respect of our common stock. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder's particular circumstances. This summary is applicable only to holders who are resident in the United States; have never been resident in Canada; deal at arm's length with us; hold their common stock as capital property; and who will not use or hold the common stock in carrying on a business in Canada.
This summary does not take into account provincial income tax consequences. This summary assumes that the publicly announced proposals will be enacted as proposed with the effective dates set out therein; otherwise, this summary assumes that there will be no other changes in law whether by judicial or legislative action.
If a non-resident were to dispose of common stock to another Canadian corporation which deals (or is deemed to deal) on a non-arm's length basis with the non-resident, and which, immediately after the disposition, is connected with us (i.e., which holds shares representing more than 10% of the voting power and more than 10% of the market value of all of our issued and outstanding shares), the excess of the proceeds over the paid-up capital of the common stock sold will be deemed to be taxable as a dividend either immediately, or eventually, by means of a deduction in computing the paid-up capital of the purchasing corporation.
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Under the Canadian Tax Act, a gain from the sale of common stock by a non-resident will not be subject to Canadian tax, provided the stockholder (and/or persons who do not deal at arm's length with the stockholder) has not held a “substantial interest” in our shares (25% or more of the shares of any class of our equity securities) at any time in the five (5) years preceding the disposition. Generally, the Canadian-United States Tax Convention (the “Tax Convention”) will exempt from Canadian taxation any capital gain realized by a resident of the United States, provided that the value of the common stock is not derived principally from real property situated in Canada.
In the case of any dividends paid to non-residents of Canada, the Canadian tax is withheld by us, which remits only the net amount to the stockholder. By virtue of Article X of the Tax Convention, the rate of tax on dividends paid to residents of the United States is generally limited to 15% of the gross dividend (or 10% in the case of certain corporate stockholders owning at least 10% of our voting shares). In the absence of the treaty provisions, the rate of Canadian withholding tax imposed on non-residents is 25% of the gross dividend. Stock dividends received by non-residents of Canada from us are taxable by Canada as ordinary dividends.
This summary is of a general nature only and is not exhaustive of all possible income tax consequences. It is not intended as legal or tax advice to any particular holder of common stock, and should not be so construed. Each holder should consult his/her own tax advisor with respect to the income tax consequences applicable to him/her in his/her own particular circumstances.
F. Dividends and Paying Agents
Not applicable
G. Summary By Experts
Not applicable
H. Documents on Display
The documents concerning us which are referred to in this Annual Report are either annexed hereto as exhibits (see Item 19) or may be inspected at our principal executive offices in Vancouver, British Columbia.
I. Subsidiary Information
Not applicable
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Currency Exchange Rate Sensitivity
In regards to transactional risk, our functional currency is the United States dollar and our activities are predominantly executed using both the U.S. and Canadian dollars. We have done a limited number of financings, and we are not subject to significant operational exposures due to fluctuations in these currencies. Our common shares are listed on the OTC.BB and are bought and sold in US dollars. We have not entered into any agreements, or purchased any instruments, to hedge any possible currency risks at this time.
Interest Rate Sensitivity
We currently have no significant short-term or long-term debt requiring interest payments other than the PXP Loan. This does not require us to consider entering into any agreements or purchasing any instruments to hedge against possible interest rate risks at this time. Thus, any reductions in future income or carrying values due to future interest rate declines are believed to be immaterial.
Commodity Price Sensitivity
Our future revenue and profitability will be dependent, to a significant extent, upon prevailing spot market prices for gold, oil and gas. In the past, gold, oil and gas prices have been volatile. Prices are subject to wide fluctuations in response to changes in supply of, and demand for, gold, oil and gas, market uncertainty, and a variety of additional factors that are beyond our control. We currently have no significant operating revenue.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
Not Applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.
None.
ITEM 15. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Board has overall responsibility for reviewing our disclosure to ensure we provide full and plain disclosure to shareholders and other stakeholders. The Board discharges its responsibilities through its committees, specifically with respect to financial disclosure. The Audit Committee is responsible for reviewing our financial reporting procedures and internal controls to ensure full and accurate disclosure of our financial position.
Our Chief Executive Officer and Chief Financial Officer are responsible for designing internal controls over financial reporting or causing them to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Annual Report (the "Evaluation Date") and concluded they are not effective as discussed below.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining for the Company adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with IFRS Accounting Standards.
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As of December 31, 2025, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls over financial reporting were not effective and that there were material weaknesses in our internal controls over financial reporting. The material weaknesses were an inability to detect the inappropriate application of IFRS Accounting Standard guidance, as more fully described below, as the result of deficiencies that existed in the design or operation of our internal control over financial reporting.
The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under COSO and SEC rules were: (1) limited number of staff, not allowing for complete segregation of incompatible duties; and (2) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of IFRS and SEC disclosure requirements. The aforementioned material weaknesses were identified by the Company’s Chief Financial Officer in connection with the preparation of our financial statements as of December 31, 2025, and communicated the matters to our management and board of directors.
Management believes that preparing and implementing sufficient written policies and checklists will remedy the insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of IFRS Accounting Standard and SEC disclosure requirements. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in proper segregation of duties.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only the management’s report in this annual report.
Changes in Internal Control over financial reporting
During the year ended December 31, 2025, and subsequently there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting or that would require corrective action.
ITEM 16 . (RESERVED)
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The Audit Committee is responsible for reviewing our financial reporting procedures, internal controls, and the performance of our auditors. The Audit Committee is also responsible for reviewing all disclosure with respect to financial matters prior to filing or release and quarterly and annual Financial Statements prior to their approval by the full Board. Members of the Audit Committee in 2025 were Daniel Carlos, Claro Ramirez, and Paul Wallace. New members of our Audit Committee for 2026 will be appointed following our Annual and General Meeting of Shareholders.
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Our Board has determined that it has at least one (1) financial expert serving on its Audit Committee. This individual is Paul Wallace. Mr. Wallace is a Chartered Professional Accountant and has significant experience in the review of financial statements and related information.
Mr. Wallace would be regarded as “independent” per Rule 5605(a)(2) of the Nasdaq Stock Market Rules, since he has not been employed by the Company as an Executive Officer during the past three (3) years.
ITEM 16 B: CODE OF ETHICS.
We have adopted a formal “Code of Ethics” applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We believe that the Code of Ethics is reasonably designed to deter wrongdoing and to promote:
1. | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
2. | Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, regulatory agencies and in other public communications made by the registrant; |
3. | Compliance with applicable governmental laws, rules and regulations; |
4. | The prompt internal reporting of violations of the standards to an appropriate person or persons identified in the standards; and |
5. | Accountability for adherence to the standards of the Code of Ethics. |
The Code of Ethics (in hard copy) is available for inspection in our headquarters during regular business hours and a copy can also be provided at no charge on request.
In addition, we practice corporate governance in accordance with rules and regulations in Canada.
Corporate Governance relates to the activities of the Board who are elected by and accountable to the shareholders, and takes into account the role of management who are appointed by the Board and who are charged with our on-going management. Our Board encourages sound corporate governance practices designed to promote our well-being and on-going development, having always as its ultimate objective our best long-term interests and the enhancement of value for all shareholders. The Board also believes that sound corporate governance benefits our employees and the communities in which we operate. The Board believes that our corporate governance policies and practices, outlined below, are appropriate and substantially consistent with the guidelines for improved corporate governance in Canada as adopted by the Toronto Stock Exchange.
To better fulfill and implement the Board’s corporate governance policies, we have established a Corporate Governance Committee. The Corporate Governance Committee meets with and discusses current disclosure issuances with our management personnel, directors, and with both our Canadian and United States counsel, in order to not only report to the Board any matters which should be the subject of either public disclosure or remedial action, but also to assist the Board in establishing reporting and disclosure procedures to ensure that we are in compliance with our disclosure and compliance obligations under applicable laws, rules and obligations. The current members of the Corporate Governance Committee are Claro Ramirez and Paul Wallace.
| 42 |
| Table of Contents |
ITEM 16 C. ACCOUNTANTS FEES AND SERVICES
Audit Fees
For the audit of the annual financial statements for the year ended December 31, 2025, an amount of $25,000 was accrued as a best estimate of fees to be billed by our external auditors Dale Matheson Carr-Hill Labonte LLP (“DMCL”). For the audit of the annual financial statements for the year ended December 31, 2024, an amount of Canadian $35,300 was billed by our external auditors DMCL.
Audit Related Fees
There were no audit related fees for the year ended December 31, 2025 or December 31, 2024.
Tax Fees
We did not incur any fees in either of the last two fiscal years for professional services rendered by DMCL for tax compliance, tax advice and tax planning.
All other fees
We did not incur any other fees in either of the last two fiscal years for products and services provided by DMCL, other than the services reported above under this Item 16C.
ITEM 16 D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
Not Applicable.
ITEM 16 E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 16 F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not Applicable
ITEM 16 G. Corporate Governance
Not Applicable.
ITEM 16 H. Mine Safety Disclosure
Not Applicable.
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| Table of Contents |
PART III
ITEM 17. FINANCIAL STATEMENTS.
We report under Item# 18.
ITEM 18. FINANCIAL STATEMENTS.
The Auditors’ Report, financial statements and notes thereto, schedules thereto, as required under Item 18 are found immediately below.
Financial Statements:
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| Table of Contents |
FEC RESOURCES INC.
Financial Statements
As of December 31, 2025 and 2024
and for each of the years in the three year period ended
December 31, 2025
(Expressed in United States dollars)
| F-1 |
| Table of Contents |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of FEC Resources Inc.
Opinion on the Financial Statements
We have audited the accompanying statements of financial position of FEC Resources Inc. (the "Company") as of December 31, 2025 and 2024, the related statements of comprehensive loss, changes in equity, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has disclosed certain conditions that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| F-2 |
| Table of Contents |
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
CRITICAL AUDIT MATTER |
| HOW THE MATTER WAS ADDRESSED IN THE AUDIT | ||
Fair value – Investment in Forum Energy Limited
Refer to Note 7 of the financial statements
The Company holds an investment in shares of a private company that are measured at fair value through other comprehensive income. As these shares are not traded in an active market, the valuation of this investment must consider other inputs, observable or unobservable, that are available.
As at December 31, 2025, the Company’s parent company, which also controls the investee company, derives substantially all of its shareholder value from its investment in Forum Energy Limited. The Company determined the fair value of the its investment in Forum Energy Limited as at December 31, 2025 based on the fair value of the common shares of its parent company.
We identified this fair value measurement as a critical audit matter because auditor judgment is required to evaluate whether the inputs used are appropriate and the most reliable indicator of fair value.
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Our audit procedures relating to this fair value measurement included the following, among others: | ||
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| · | Evaluated the reasonability of the judgement that substantially all of the fair value of the Company’s parent is attributed to its investments in Forum Energy Limited; and | ||
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| · | With the assistance of a valuation specialist: | ||
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| o | Verified the share prices used in the calculation to determine fair value of the investments; | |
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| o | Assessed the appropriateness of the valuation method used; | |
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| o | Assessed the reasonableness of the assumptions applied; and | |
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| o | Tested the mathematical accuracy of the calculations. | |
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DMCL LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
We have served as the Company’s auditor since 2017
March 31, 2026
| F-3 |
| Table of Contents |
FEC RESOURCES INC.
Statements of Financial Position
Expressed in United States Dollars
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| December 31, 2025 |
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| December 31, 2024 |
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ASSETS |
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Current assets |
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Cash (Note 6) |
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Prepaid expenses |
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Non-current assets |
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Investment in Forum Energy Limited (Note 7) |
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LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities |
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Trade and accrued payables |
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Short term loan (Note 9) |
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Shareholders’ Equity |
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Share capital (Note 8) |
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Contributed surplus (Note 8) |
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Accumulated other comprehensive income (Note 7) |
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Deficit |
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Basis of Presentation and Going Concern (Note 2)
Subsequent Event (Note 14)
SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:
“Daniel Carlos” |
| “Paul Wallace” |
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Director |
| Director |
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The accompanying notes form an integral part of these financial statements
| F-4 |
| Table of Contents |
FEC RESOURCES INC.
STATEMENTS OF COMPREHENSIVE LOSS
Expressed in United States Dollars
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| Year ended December 31, 2025 |
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| Year ended December 31, 2024 |
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| Year ended December 31, 2023 |
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General and administrative expenses |
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General and administration (Notes 9 and 10) |
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Operating loss |
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Interest expense (Note 9) |
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Net loss for the year |
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| $ | ( | ) |
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Other comprehensive income (loss) |
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Items that will not be reclassified to profit or loss: |
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Changes in fair value of investment (Note 7) |
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Comprehensive income (loss) for the year |
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Loss per common share
- Basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
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Weighted average number of shares outstanding, basic and diluted |
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The accompanying notes form an integral part of these financial statements
| F-5 |
| Table of Contents |
FEC RESOURCES INC.
STATEMENTS OF CHANGES IN EQUITY
Expressed in United States Dollars
For the years ended December 31, 2025, 2024 and 2023
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Balance January 1, 2025 |
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Total comprehensive loss for the year |
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Issued for settlement of PXP Loan, net of costs |
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Valuation loss on investment |
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Balance December 31, 2025 |
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Balance January 1, 2024 |
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Total comprehensive loss for the year |
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Valuation gain on investment |
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Balance December 31, 2024 |
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Balance January 1, 2023 |
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Total comprehensive loss for the year |
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Balance December 31, 2023 |
| $ |
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The accompanying notes form an integral part of these financial statements
| F-6 |
| Table of Contents |
FEC RESOURCES INC.
STATEMENTS OF CASH FLOWS
Expressed in United States Dollars
|
| Year ended December 31, 2025 |
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| Year ended December 31, 2024 |
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| Year ended December 31,2023 |
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Cash used in: |
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OPERATING ACTIVITIES |
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Net loss for the year |
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Accrued interest expense |
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Changes in working capital related to operating activities
Prepaid expenses |
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Trade and accrued payables |
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Net cash used in operating activities |
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FINANCING ACTIVITY |
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Loan from PXP Energy Corporation |
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Share issuance costs PXP Loan settlement |
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INVESTING ACTIVITY |
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Loan to Forum Energy Limited |
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Net cash provided by (used in) investing activity |
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Cash – beginning of the year |
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Cash – end of the year |
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Supplementary Cash Flow Information
Non-cash transactions in investing and financing activities: |
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Shares issues to for settlement of PXP Loan |
| $ |
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The accompanying notes form an integral part of these financial statements
| F-7 |
| Table of Contents |
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 1 Corporate Information
FEC Resources Inc. (“FEC” or the “Company”) was incorporated under the laws of Alberta, Canada and is a holding Company with an interest in Forum Energy Limited (“FEL”). The Company is listed in the United States on the OTC Pink (“OTC Pink”), having the symbol FECOF.
At December 31, 2025, the Company has a
The principal address of the Company is Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, V6C 2B5. The Company’s ultimate parent company is PXP Energy Corporation (“PXP”) with a registered office at 2/F LaunchPad, Reliance corner Sheridan Streets, Mandaluyong City 1550, Metro Manila, Philippines.
Note 2 Basis of Preparation and Going Concern
a) Statement of Compliance
These financial statements of the Company have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The financial statements were authorized for issue by the Board of Directors on March 31, 2026.
b) Basis of Measurement
The financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value described in the applicable notes and are presented in United States dollars, which is also the Company’s functional currency.
The preparation of financial statements in compliance with IFRS Accounting Standards requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.
c) Nature of Operations and Going Concern
As a holding company with an interest in FEL, the Company’s business is indirectly subject to risks inherent in oil and gas exploration and development operations. In addition, there are risks associated with FEL’s stage of operations and the foreign jurisdiction in which it or FEL may operate or invest. The Company has identified certain risks pertinent to its investment including: exploration and reserve risks, uncertainty of reserve estimates, ability to exploit successful discoveries, drilling and operating risks, title to properties, costs and availability of materials and services, capital markets and the requirement for additional capital, market perception, loss of or changes to production sharing, joint venture or related agreements, economic, political and sovereign risks, possibility of less developed legal systems, corporate and regulatory formalities, environmental regulation, reliance on strategic relationships, market risk, competition, dependence on key personnel, volatility of future oil and gas prices and foreign currency risk. The Company has an accumulated deficit since inception of $
| F-8 |
| Table of Contents |
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 2 Basis of Preparation and Going Concern (continued)
c) Nature of Operations and Going Concern (continued)
Management considers that the current economic environment is difficult and the outlook for holding companies investing in oil and gas exploration companies presents significant challenges in terms of raising funds through issuance of shares. To the extent necessary, the Company has relied on its ability to raise funds via dispositions of quantities of its shareholdings in FEL to PXP under terms that are consistent with the best interests of shareholders, in order to finance its operations. The Company has been successful in disposing quantities of its shareholdings in FEL in previous fiscal years. However, there can be no assurance the Company will continue to be able to dispose of quantities of its shares in FEL under suitable terms. Currently management has no plans to sell any additional FEL shares.
Since the delisting of FEL from the London Stock Exchange, there is no liquidity via a public market for the FEL shares. As the Company is wholly reliant on the information disclosed by PXP concerning the business of FEL, the Company may not be able to obtain information necessary to facilitate a wider sales process and may be reliant on significant shareholders of PXP for the disposition of any of its FEL shares. Management continues to look at all options including raising funds to operate and participate in future FEL financings by way of debt or equity financings.
Management has concluded that the combination of these circumstances gives rise to a material uncertainty that casts substantial doubt on the ability of the Company to continue as a going concern; therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.
These financial statements have been prepared on the basis of the accounting principles applicable to a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at December 31, 2025, the Company’s management believes it does not have sufficient cash to fund the ongoing operations for the next 12 months. The continuation of the Company is dependent upon its ability to raise funds via dispositions of quantities of its shareholdings in FEL to PXP under terms that are consistent with the best interests of shareholders, or obtain loans from PXP. Also, the Company may issue new shares to PXP and/or other third parties. There is no assurance that the Company will be able to obtain adequate financing in the future or that such dispositions will be on terms advantageous to the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Such adjustments could be material.
| F-9 |
| Table of Contents |
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 3 Material Accounting Policy Information
The accounting policies set out below have been applied consistently to all years presented in these financial statements.
a) Foreign Currency Translation
The functional and presentation currency of the Company is the US dollar. Accordingly, foreign currency transactions and balances are translated as follows: (i) monetary assets and liabilities denominated in currencies other than the US dollar (“foreign currencies”) are translated into US dollars at the exchange rates prevailing at the balance sheet date; (ii) non-monetary assets denominated in foreign currencies and measured at other than fair value are translated using the rates of exchange at the transaction dates; (iii) non-monetary assets denominated in foreign currencies that are measured at fair value are translated using the rates of exchange at the dates those fair values are determined; and (iv) income statement items denominated in foreign currencies are principally translated using daily exchange rates, except for depreciation and depletion which is translated at historical exchange rates. Foreign exchange gains and losses are recognized in net loss and presented in the Statements of Comprehensive Loss in accordance with the nature of the transactions to which the foreign currency gains and losses relate. Unrealized foreign exchange gains and losses on cash balances denominated in foreign currencies are disclosed separately in the statements of cash flows.
b) Income Taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in net income except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income.
Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax basis, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.
Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
| F-10 |
| Table of Contents |
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 3 Material Accounting Policy Information (continued)
c) Loss Per Share
Basic loss per share is computed by dividing the net loss applicable to common shares of the Company by the weighted average number of common shares outstanding for the relevant year.
Diluted loss per common share is computed by dividing the net loss applicable to common shares by the sum of the weighted average number of common shares issued and outstanding and all additional common shares that would have been outstanding, if potentially dilutive instruments were converted.
There were no dilutive instruments (consisting of shares issuable on the exercise of options and warrants) outstanding during the years ended December 31, 2025, December 31, 2024 and December 31, 2023. Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.
d) Financial Instruments
The Company measures financial instruments at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of the reporting date.
| F-11 |
| Table of Contents |
FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 3 Material Accounting Policy Information (continued)
d) Financial Instruments (continued)
Financial Assets
Measurement – initial recognition
Financial assets and financial liabilities are recognized in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, all financial assets and financial liabilities are recorded at fair value, net of attributable transaction costs, except for financial assets and liabilities classified as at fair value through profit or loss (“FVTPL”). The directly attributable transaction costs of financial assets and liabilities classified as at FVTPL are expensed in the period in which they are incurred.
Subsequent measurement of financial assets and liabilities depends on the classifications of such assets and liabilities.
Classification of financial assets
Amortized cost:
Financial assets that meet the following conditions are measured subsequently at amortized cost:
(i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and
(ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. Interest income is recognized using the effective interest method. Interest income is recognized in Other (Expense) Income, net in the statements of comprehensive loss.
The Company's financial assets at amortized cost consists of cash.
Fair value through other comprehensive income ("FVTOCI"):
Financial assets that meet the following conditions are measured at FVTOCI:
(i) The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
(ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 3 Summary of Material Accounting Material Policies (continued)
d) Financial Instruments (continued)
The Company's financial assets at FVTOCI include its investment in FEL (Note 7).
Equity instruments designated as FVTOCI:
On initial recognition, the Company may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in Other Comprehensive Income. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity instrument, instead, it is transferred to retained earnings.
Financial assets measured subsequently at fair value through profit or loss (“FVTPL”):
By default, all other financial assets are measured subsequently at FVTPL.
The Company, at initial recognition, may also irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.
Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated hedging relationship. The Company does not have any financial assets at FVTPL.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issuance costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Classification of financial liabilities
Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as at FVTPL, are measured at amortized cost using effective interest method.
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 3 Material Accounting Policy Information (continued)
d) Financial Instruments (continued)
Impairment of Financial Assets
At each reporting date the Company assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired, if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or the group of financial assets.
Financial Liabilities
Financial liabilities are classified as other financial liabilities, based on the purpose for which the liability was incurred, and comprise of trade payables and short term loans. These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method. This ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. Interest expense in this context includes initial transaction costs and premiums payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid. Short term loans represent liabilities for advances from PXP for working capital and pre-drilling costs.
e) Share Capital
Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares are classified as equity instruments. Incremental costs directly attributable to the issuance of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
f) Finance Income and Expenses
Finance expense comprises interest expense on borrowings, accretion of the discount on provisions and impairment losses recognized on financial assets.
Interest income is recognized as it accrues in profit or loss, using the effective interest method.
Foreign currency gains and losses, reported under finance income and expenses, are reported on a net basis.
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 4 Standards, Amendments and Interpretations
The Company has prepared its financial statements in accordance with IFRS Accounting Standards as issued by the IASB. The financial statements have been prepared in accordance with IFRS Accounting Standards and interpretations effective as of December 31, 2025.
New IFRS Accounting Standards and interpretations or changes to existing standards with future effective dates are either not applicable or not expected to have a significant impact on the financial statements of the Company.
As at the date of authorization of these financial statements, the IASB had issued certain pronouncements that are mandatory for the Company’s accounting periods commencing on or after March 1, 2025. In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements (“IFRS 18”) which replaces IAS 1 Presentation of Financial Statements. This standard aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company is currently assessing the impact the new standard will have on its financial statements. Other recent accounting pronouncements are not applicable or do not have a significant impact to the Company, have been excluded.
Note 5 Critical Accounting Estimates and Judgments
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income/loss in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.
The determination of the fair value of the Company’s investment in FEL is a significant accounting estimate (Note 7).
Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the financial statements within the next financial year are discussed below:
i) Deferred tax assets and liabilities
Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. We recognize liabilities and contingencies for anticipated tax audit issues based on our current understanding of the tax law. For matters
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 5 Critical Accounting Estimates and Judgments (continued)
i) Deferred tax assets and liabilities (continued)
where it is probable that an adjustment will be made, we record our best estimate of the tax liability including the related interest and penalties in the current tax provision. We believe we have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.
ii) Going Concern
These financial statements have been prepared on the basis of the accounting principles applicable to a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. These material uncertainties may cast substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Such adjustment could be material
Note 6 Cash
Cash held at banks earns interest at floating rates based on daily bank deposit rates.
Note 7 Investment in Forum Energy Limited (”FEL”)
i) Investment in FEL
The investment in FEL is summarized as follows:
|
| Number of shares held |
|
| Amount |
| ||
Balance December 31, 2023 |
|
|
|
| $ |
| ||
Change in fair value |
|
| - |
|
|
|
| |
Balance December 31, 2024 |
|
|
|
| $ |
| ||
Change in fair value |
|
| - |
|
|
| ( | ) |
Balance December 31, 2025 |
|
|
|
| $ |
| ||
As at December 31, 2025, the Company’s interest in FEL was
| F-16 |
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 7 Investment in Forum Energy Limited (”FEL”) (continued)
i) Investment in FEL (continued)
FEL’s assets consist of interests in various petroleum service contracts in the Philippines, the most significant of which in terms of Prospective Resources is SC 72. On December 15, 2014, the Philippine Department of Energy (“DOE”) granted a force majeure on SC 72 because the
contract area falls within the territorial disputed area of the West Philippine Sea. Under the terms of the force majeure, all exploration work at SC 72 was immediately suspended until the DOE notified FEL that it could re-commence exploration. On October 16, 2020, FEL received a letter from the DOE lifting the force majeure and directing FEL to resume exploration activities on SC 72.
On April 6, 2022, FEL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 8, 2022, FEL advised the DOE that in compliance with the DOE directive they “have suspended (or caused the suspension of) all activities in the West Philippine Sea beginning April 6, 2022, in the process, incurring substantial stand-by and other costs.” On April 11, 2022, as a result of not receiving the necessary clearance, force majeure was once again declared on SC 72.
On October 11, 2022, the DOE granted PXP and FEL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022 until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, PXP and FEL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from October 14, 2020 (when the Force Majeure was lifted) to April 6, 2022 (when the same was re-imposed) will be credited back to SC 72. Thus, once the Force Majeure is lifted, Forum (GSEC 101) Limited (“FGL”) will have 20 months to drill the two commitment wells, equivalent to the remaining term of SP 2 of SC 72 before October 14, 2020. Their have been no changes in status as of December 31, 2025.
Determination of fair value
The investment in FEL represents an investment in a private company for which there is no active market and for which there are no publicly available quoted market prices.
The Company has classified its investment in FEL as Level 2 in the fair value hierarchy.
For purposes of determining fair value of the investment in FEL, the Company considered valuation techniques described in IFRS 13 – Fair Value Measurement. In respect of the investment in FEL, management considered the fair value of $
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
i) Investment in FEL (continued)
the transaction date. The fair value of the investment is consistent with the re-calculated implied value based on the May 10, 2024 share swap between PXP and Tidemark, which is a Level 2 input. The share swap transaction closed on March 20, 2025.
Note 8 Share Capital
a) Authorized:
The Company is authorized to issue an unlimited number of common shares without par value and is authorized to issue an unlimited number of Class A and Class B preferred convertible redeemable voting shares without par value.
Issued:
Common Shares |
| Number |
|
| Amount |
| ||
Balance December 31, 2023, and 2024 |
|
|
|
| $ |
| ||
Issued for PXP Loan, net of costs (i) |
|
|
|
|
|
| ||
Balance December 31, 2025 |
|
|
|
| $ |
| ||
(i) On July 31, 2025, the Company issued
No preferred shares have been issued.
b) Nature and Purpose of Equity and Reserves
Contributed Surplus is used to recognize the value of stock option grants prior to exercise.
Deficit is used to record the Company’s change in deficit from income and losses from period to period.
c) Share based payments:
The Company has established a stock option plan whereby options may be granted to its directors, officers, consultants, and employees. The exercise price of each option equals the market price of the Company’s stock on the date of the grant and an option’s maximum term is five years. The options vest immediately. There were no stock options outstanding on December 31, 2025 or December 31, 2024, and none were issued between January 1, 2023 and December 31, 2025.
Note 9 Related Party Transactions and Balances
The Company considers its officers (CEO and CFO) and directors to be key management. Key management are those persons having authority and responsibility for planning, directing, and controlling activities, directly or indirectly, of the Company.
(i) During the year ended December 31, 2024, general and administrative expenses included key management personnel compensation totaling $
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 9 Related Party Transactions and Balances (continued)
(ii) On March 10, 2022,
Note 10 General and administrative expenses
|
| December 31, 2025 |
|
| December 31, 2024 |
|
| December 31, 2023 |
| |||
Professional fees |
| $ |
|
| $ |
|
| $ |
| |||
Bank charges |
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| |||
Listing and filing fees |
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| |||
Office and miscellaneous |
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| |||
Consulting (Note 9) |
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Foreign exchange |
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|
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|
| |||
|
| $ |
|
| $ |
|
| $ |
| |||
Note 11 Income Taxes
Reconciliation of accounting and taxable income, for the years ended December 31 are as follows:
|
| December 31, 2025 |
|
| December 31, 2024 |
|
| December 31, 2023 |
| |||
Loss before income taxes |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Tax expense (recovery) based on statutory rate of 27.0% |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Permanent differences and other |
|
| ( | ) |
|
|
|
|
| ( | ) | |
|
|
| ( | ) |
|
|
|
|
| ( | ) | |
Changes in unrecognized deferred tax assets |
|
|
|
|
| ( | ) |
|
|
| ||
Total income tax (recovery) |
| $ |
|
| $ |
|
| $ |
| |||
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 11 Income Taxes (continued)
The nature and tax effect of the temporary differences giving rise to the deferred tax assets and liabilities at December 31, 2025 and 2024 are summarized as follows:
|
| December 31, 2025 |
|
| December 31, 2024 |
| ||
Unrecognized deferred income tax assets: |
|
|
|
|
|
| ||
Allowable capital losses |
| $ |
|
| $ |
| ||
Non-capital losses |
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|
| ||
Investments |
|
|
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|
|
| ||
Exploration & development |
|
|
|
|
|
| ||
Unrecognized deferred tax assets |
|
| ( | ) |
|
| ( | ) |
|
| $ |
|
| $ |
| ||
As at December 31, 2025, the Company had estimated non-capital losses for Canadian tax purposes of $
The potential benefit of these carry-forward non-capital losses has not been recognized in these financial statements as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered.
Note 12 Financial Instruments and Risk Management
The Company is exposed through its operations to the following financial risks:
- Market Risk
- Credit Risk
- Liquidity Risk
In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Company’s exposure to financial instrument risks, its objectives, polices and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in the note.
General Objectives, Policies and Procedures
The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s finance function. The Board of Directors receive quarterly reports from the Company’s Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below.
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 12 Financial Instruments and Risk Management(continued)
a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk are comprised of foreign currency risk, interest rate risk and equity and commodity price risk.
Foreign currency exchange risk
The Company is exposed to foreign currency fluctuations for general and administrative transactions denominated in Canadian Dollars. The majority of the Company’s cash is kept in U.S. dollars. As at December 31, 2025, the Company had an insignificant amount of cash denominated in Canadian dollars that was subject to exchange rate fluctuations between the Canadian dollar and the U.S. dollar. As at December 31, 2025, the Company held $
b) Credit risk
The Company maintains cash deposits in one chartered Canadian bank which, from time to time, exceed the amount of depositor’s insurance available in each respective account. Management assesses the financial condition of this bank and believes that the possibility of any credit loss is minimal. The maximum exposure of credit risk is the Company’s cash deposit of $
c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company does not generate cash from operations but rather, the Company will, from time to time, issue shares via equity placements, borrow funds from an affiliated company or undertake to sell a portion of its investment in the shares of FEL should it be necessary to raise funds. The Company manages liquidity by maintaining cash balances available to meet its anticipated operational needs. Liquidity requirements are managed based on expected cash flow to ensure that there is adequate capital to meet short-term and long-term obligations. The Company has in place a planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its growth plans. At December 31, 2025, the Company’s trade and accrued payables were $
The carrying values of trade and accrued payables and loans from PXP approximate their fair values due to the relatively short periods to maturity of the instruments.
Liquidity risk is assessed as high.
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FEC RESOURCES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2025
(Expressed in United States Dollars)
Note 13 Capital Management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, to provide an adequate return to shareholders, to meet external capital requirements on credit facilities and to support any growth plans.
The capital of the Company consists of the items included in shareholders’ equity and cash net of debt obligations. The Company monitors capital based on the debt to debt-plus-equity ratio. Debt is total debt shown on the balance sheet, less cash. Debt-plus-equity is calculated as debt shown on the balance sheet, plus total shareholders’ equity which includes share capital, warrants, contributed surplus and deficit. The Company’s Board of Directors approves management’s annual capital expenditures plans and reviews and approves any material debt borrowing plans proposed by the Company’s management.
As at December 31, 2025 the Company had no externally imposed capital requirements nor were there any changes in the Company’s approach to capital management during the year.
Note 14 Subsequent Events
Subsequent to year end, the Company received an additional $
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FEC RESOURCES INC. (the “Company”)
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2025
(all funds in US dollars unless otherwise stated)
THE FOLLOWING MANAGEMENT DISCUSSION AND ANALYSIS (“MD&A”) IS PROVIDED AS OF MARCH 31, 2026, AND SHOULD BE READ IN CONJUNCTION WITH THE AUDITED FINANCIAL STATEMENTS AND NOTES FOR THE YEAR ENDED DECEMBER 31, 2025. THOSE FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (“IASB”).
FORWARD-LOOKING STATEMENTS
Certain statements in this MD&A, including statements regarding the Company’s current funds on hand being able to secure the Company for the foreseeable future, and the Company’s ability to raise new money by way of loans or the issuance of new shares to meet its working capital needs and future plans and objectives of the Company are forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Material risk factors that could cause actual results to differ materially from the forward-looking information include unforeseen expenses which the Company may incur and which expenses could cause current funds on hand to not be adequate to secure the Company for the foreseeable future, or arrange debt or equity financing if required to meet working capital needs and other risks and uncertainties as disclosed under the heading “Risk Factors” herein. The Company has assumed that it will not be incurring significant expenses in the short term other than normal operating expenses which the Company’s parent, PXP Energy Corporation (“PXP”), has indicated that it will fund for the foreseeable future. The reader is also cautioned that should Forum Energy Limited (“FEL”) find it necessary to raise capital to fund its current and future business, the Company’s interest in FEL may be diluted because the Company may not have the resources to participate if provided the opportunity to do so. The reader is also cautioned that assumptions used in the preparation of such information, while considered reasonable by the Company at the time, may prove to be incorrect.The Company has no policy for updating forward-looking information beyond the procedures required under applicable securities laws.
Overall Performance
Forum Energy Limited (“FEL”)
As at December 31, 2025, the Company held 8,206,638 shares (8,206,638 shares at December 31, 2024), representing a 6.80% interest of the capital of FEL, a private company, which has participating interests in six (6) oil and gas blocks in the Philippines through various subsidiaries. FEL’s subsidiaries are Forum Energy Philippines Corporation (“FEPC”), Forum (GSEC 101) Limited (“FGL”), and ForumPH SC72 Holdings, Inc. (“ForumPH”). FEL and the Company are both ultimately under the control of PXP and, therefore, are affiliates.
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The following information related to PXP or FEL has been provided to us by PXP or FEL, as we do not have direct knowledge of such information.
PXP holds a 99.35% controlling interest in FEL, with 92.55% held directly and 6.80% held indirectly through its 81.25% shareholding of the Company. FEL is a company incorporated under the laws of England and Wales with focus on the Philippines and has: (a) a 70% operating interest in Service Contract (“SC”) 72 Recto Bank, which covers the Sampaguita natural gas discovery in offshore West Palawan, held through FGL; (b) minority interests in four blocks in offshore Northwest Palawan, including a 4.69% interest in the producing Galoc Field, held through FEPC; and (c) a 100% operating interest in SC 40 North Cebu held through FEPC’s 66.67%-held subsidiary, Forum Exploration Inc. (“FEI”).
A summary of FEL’s interests are as follows:
SC Block |
| % interest |
|
| Currently Producing | ||
SC 72 Recto Bank |
|
| 70 | % |
| No | |
SC 40 North Cebu |
|
| 66.67 | % |
| No | |
SC 86 Octon (former SC 6A)(1) |
|
| 6.84 | % |
| No | |
SC 88 Galoc (former SC 14C-1)(2) |
|
| 4.69 | % |
| Yes | |
Cadlao New SC (former SC 6B Bonita)(3) |
|
| 2.45 | % |
| No | |
West Linapacan New SC (former SC 14C-2)(4) |
|
| 9.10 | % |
| No | |
SC 14A Nido(5) |
|
| 8.47 | % |
| No | |
SC 14B Matinloc(5) |
|
| 12.41 | % |
| No | |
SC 14B-1 North Matinloc(5) |
|
| 19.46 | % |
| No | |
SC 14D Retention Area(5) |
|
| 8.16 | % |
| No | |
SC 14 Tara(5) |
|
| 10 | % |
| No | |
(1) SC 6A was surrendered to the DOE on March 31, 2021, which was approved on September 5, 2022. The area was nominated for a new Service Contract on March 17, 2023. The government awarded the new SC (No. 86) on September 30, 2025.
(2) SC 14C-1 expired on December 17, 2025 after reaching the maximum 50-year term. Prior to its expiry, the Joint Venture applied for a Development and Production Petroleum Service Contract (“DP PSC”) to enable production operations in the Galoc Field to continue. The government awarded the new contract (No. 88) on December 18, 2025.
(3) The 50-year term of SC 6B expired on February 28, 2024. Prior to its expiry, the Joint Venture applied for a new Service Contract on January 26, 2024. The application is currently awaiting final approval from the Office of the President.
(4) SC 14C-2 expired on December 17, 2025 after reaching the maximum 50-year term. Prior to its expiry, the Joint Venture submitted a Letter of Intent to apply for a DP PSC to evaluate additional prospects within the block and reassess redevelopment options for the West Linapacan A Field. The JV members are currently preparing the documents to be submitted to the DOE.
(5) A Notice to Surrender of the blocks were issued by Operators Philodrill and AC Energy (for Tara) on February 16, 2021. This was approved by the DOE on May 18, 2022.
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The following is a brief description of the properties of Forum Energy together with production details where appropriate.
SC 72 Recto Bank
FEL’s principal asset is a 70% participating interest in SC 72 (previously Geophysical Survey and Exploration Contract No. 101 (“GSEC 101”)), a petroleum license located in the Recto Bank, offshore west of Palawan Island, the Philippines. The remaining 30% of SC 72 is owned by Monte Oro Resources & Energy Inc., a company incorporated in the Philippines, which is involved in a joint venture with FEL with respect to SC 72.
On February 15, 2010, the GSEC 101 license was converted to SC 72, and FEL immediately conducted geological and geophysical works to further evaluate the block and fulfill its commitment to the government. SC 72 covers 8,800 square kilometers, which is 85% of the area covered by GSEC 101.
Exploration in the area began in 1970, and in 1976, gas was discovered in the Sampaguita structure following the drilling of a well. To date, a total of three wells have been drilled at the southwest end of the structure. Two of the wells tested gas at rates warranting further exploration.
In early 2011, FEL acquired 2,202 line-km of 2D seismic, gravity, and magnetic data over SC 72 to further define previously mapped leads. Also, 565 square kilometers of 3D seismic data were acquired over the Sampaguita Field (the “Sampaguita 3D”). These fulfilled the Consortium’s minimum work obligation under Sub-Phase (“SP”) 1.
Based on a technical evaluation conducted by Weatherford Petroleum Consultants in 2012, the Sampaguita Field is estimated to contain 2.6 trillion cubic feet (TCF) of in-place contingent gas resources and 5.4 TCF of prospective gas resources.
The 2D seismic data were reprocessed in 2013 and were subsequently interpreted, aided by gravity-magnetics data that were analyzed by Fugro and Cosine Ltd. (“Cosine”) in 2012 and 2015, respectively. In 2015, Arex Energy produced a report on the North Bank Prospect, located northwest of the Sampaguita Field, and estimated the prospective resources to be significant enough to continue with the exploration of the concession.
In October 2018, FEL started the Broadband Pre-Stack Depth Migration (“PSDM”) reprocessing of the Sampaguita 3D seismic data with DownUnder GeoSolutions (“DUG”), a company based in Perth, Australia, as contractor. The reprocessing work was completed in June 2019.
In November 2018, the governments of the Philippines and China signed a Memorandum of Understanding on Cooperation on Oil and Gas Development (“MOU”). In October 2019, the Philippines’ Department of Foreign Affairs (“DFA”) announced that the Philippines and China had officially convened an Intergovernmental Steering Committee to supervise projects under the two countries’ joint oil and gas exploration in the West Philippine Sea. However, after a series of meetings, the two parties failed to reach an agreement, and in June 2022, the negotiations were officially ended.
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On October 16, 2020, FEL received notice from the Philippine Department of Energy (“DOE”) that the Force Majeure (“FM”) imposed on SC 72 on December 15, 2014, was lifted with immediate effect and that FEL was to resume exploration activities on SC 72. FEL has 20 months from the date of lifting of the FM to drill two (2) commitment wells. The total cost of drilling these wells depends on a number of factors. The Company’s management estimates the total work to be between US$70 million and US$100 million. It is important to note that, to date, there has been no announcement of any agreement between FEL and CNOOC in relation to SC 72.
Since then, the 2021 and 2022 WP&B for SC 72 was approved by the DOE. Preparations for drilling activities, including the purchase of long lead items (“LLIs”), the requisition for other materials, and the signing up of technical services, were undertaken for the conduct of geophysical and geotechnical surveys and the drilling of wells Sampaguita 4 and Sampaguita 5 starting the second quarter of 2022.
On April 6, 2022, FGL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice, and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, Force Majeure was once again declared on SC 72.
On May 27, 2022, FGL, on behalf of the SC 72 Joint Venture, and Nido Petroleum Philippines Pty Ltd (“Nido”), Operator of SC 54 and SC 6B, signed a Term Sheet in which Nido agreed to purchase most of the SC 72 LLIs, such as wellheads, casings and accessories, conductor, drill bits, etc., for $ 2.9 million, to be paid in installments within a twelve (12)-month period. A Sale and Purchase Agreement (“SPA”) with Nido was executed on June 10, 2022 to formalize the transaction.
In June 2022, media outlets reported that the MOU between China and the Philippines had been terminated although media outlets also reported that discussions would continue on joint exploration of SC 72.
On October 11, 2022, the DOE granted FGL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022, until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, FGL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to when it was re-imposed (October 14, 2020 to April 6, 2022) will be credited back to SC 72. Consequently, once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, equivalent to the remaining term of SP 2 of SC 72 before October 14, 2020.
In May 2023, an amendment to the SPA between FGL and Nido was signed, granting Nido an extension to settle the remaining balance of the SC 72 LLIs’ purchase price. Following Nido’s full payment of the balance in early October 2023, FGL and Nido executed a Deed of Absolute Sale, finalizing the transfer of ownership of the LLIs to Nido.
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On November 21, 2025, the DOE approved the WP&B for 2026, with only License Administration costs and SC payments classified as firm budgets. The implementation of the Sub-Phase 2 work commitment comprising the drilling of two wells, will be contingent upon the lifting of the force majeure imposed by the DOE in April 2022.
SC 40 North Cebu
A 100% operating interest in SC 40 is held by FEPC’s 66.67% owned subsidiary FEI.
SC 40 is located in the Visayan Basin in the central part of the Philippine Archipelago and covers an area of 340,000 hectares in the northern part of Cebu Island and adjacent offshore areas. It contains the Libertad Gas Field and several prospects and leads.
In June 2022, FEI contracted a drilling consultant to prepare drilling programs and budgets for two wells, one of which will be located in the Dalingding Prospect, a reef structure defined by seismic with the Late Miocene to Pliocene-age Barili Limestone as the primary target. A well, Dalingding-1, was drilled on this structure in 1996 and was plugged and abandoned as a dry hole with minor gas shows after reaching a total depth of 1,508 ft. FEI’s re-evaluation of the prospect concluded that the Dalingding-1 well did not reach the Barili target, which is currently estimated at 480 ft below the well’s final depth. FEI proposes drilling a new well to a depth of 4,000 ft to reach the Barili Limestone and secondary targets underneath.
In August 2022, FEI contracted a third party to dispose the Hycalog Rig and ancillary equipment stored in Brgy. Maya, Daanbantayan, Cebu Province. The sale process started on September 13, 2022, of which a Luzon-based company offered the highest bid. The pullout of the items began in December 2022, and was completed in June 2023.
An independent technical evaluation involving a review of available data, project risk assessment, and project economics of the Maya and Dalingding Prospects started in the first quarter of 2023. The results indicate that deterministic and probabilistic volumetric estimates for the Dalingding Prospect show mean resources of 10 billion cubic feet (“BCF”) for a Gas Case and 3.5 million barrels (”MMBO”) for an Oil Case. The study was completed in March 2024.
As part of the Social Development Program commitment of SC 40 with the DOE, FEI conducted a school donation drive on September 1, 2023, at the Maya National High School in Daanbantayan, Cebu. A total of 1,050 school kits, consisting of basic study materials such as notebooks, pad papers, pens, pencils, water bottles, etc., were assembled for the students of the school. Some teaching materials were also given to the faculty.
On January 3, 2024, the DOE approved the work program and budget for 2024 that includes the conduct of a magnetotelluric (“MT”) survey over the Dalingding Prospect. The survey aims to define the top of the carbonate target and help determine its depth from surface. The results will be used to further refine the Dalingding-2 drilling program.
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MT equipment testing and data acquisition in Daanbantayan, Cebu commenced on June 14, 2024, and was completed on September 2, 2024. A total of 30 stations were acquired on two parallel lines oriented in a NW-SE direction, and 20 stations on one perpendicular line oriented in a NE-SW direction.
The MT survey set-up consisted of four electric field probes buried in north, east, west, and south directions, connected to a car battery-powered ADU-07e (recording unit) via a 20-50m cable. Daily data acquisition ran at one station per day for an average of 6 hours and 46 minutes. A quick quality control check was conducted at the end of the day to identify any potential issues or errors in the acquired data and to pinpoint stations that require resurveying.
On December 23, 2024, the proposed WP&B for 2025 was submitted to the DOE. It has a firm program that includes the continuation and finalization of the MT survey data processing and interpretation, and the technical re-evaluation of the Dalingding prospect, wherein the MT data will be integrated to existing geologic, geophysical, and well data. The DOE approved the 2025 WP&B on January 7, 2025.
The evaluation of the MT data was completed in April 2025. The results successfully mapped the presence of a reef boundary, presumably the Barili Limestone, identified through sharp resistivity contrasts with surrounding formations. However, the interpreted reef depth and thickness of the overlying seal vary, possibly due to data interpolation effects, as a significant amount of cultural noise had to be removed during the interpretation process.
A data integration study was carried out by FEI following receipt of the MT report, which was completed in June 2025. The subsurface resistivity data derived from the MT method show that resistivity can vary laterally within a formation, reflecting the differences in its physical properties. When combined with other geophysical methods, MT data can provide a more comprehensive understanding of subsurface geology. The study also concludes that, while seismic remains the primary tool for defining prospect structures, MT-derived resistivity can aid in predicting porosity and fluid type within seismically delineated geologic bodies. By integrating data from multiple geophysical tools and sources, the porosity distribution on the Barili Limestone surface was successfully estimated and mapped.
On March 11, 2026, the DOE approved the WP&B for 2026
SC 88 Galoc (formerly SC 14 C-1)
Block C-1 Galoc covered an area of 164 square kilometers and contains the Galoc Oil Field, which had produced approximately 25.33 MMBO as of December 31, 2025.
Gross production in 2025 averaged 1,093 barrels of oil per day (“BOPD”), down from 1,224 BOPD in 2024, representing a year-on-year decline of 10.7%. This decline is consistent with the field’s natural decline rate observed for the past three to four years.
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Three liftings, totaling 414,124 barrels, were delivered during 2025. The first lifting was completed on February 28, 2025, with a cargo size of 157,381 barrels; the second on June 01, 2025, totaling 123,361 barrels; and the third was completed on October 1, 2025, with a cargo of 133,382 barrels. The crude oil was sold to regional refineries at an average realized price of US$69.96 per barrel.
The field's profitability is expected to continue over the next 1-2 years, subject to effective cost management, operational efficiency, high oil prices, and sustained performance of the remaining production wells, Galoc-5 and Galoc-6.
On May 7, 2020, GPC informed the DOE of the cessation of operations for Galoc Field, starting September 24, 2020. This followed GPC’s receipt of a Notice of Termination from Rubicon Offshore International (“ROI”), the owner of the floating production storage and offloading (“FPSO”) vessel, Rubicon Intrepid. GPC also requested approval of the initial drawdown from the fund set-up under the DOE-approved Galoc Decommissioning Plan (“DP”) for implementing the field suspension plan. However, in September 2020, the Galoc Joint Venture (“JV”) negotiated with ROI to sell the Rubicon Intrepid, allowing the Galoc Field to continue production beyond the original cessation schedule of September 24, 2020. Tamarind Resources, the owner of GPC, established a subsidiary, Philippines Upstream Infrastructure (“PUI”), to acquire the FPSO from ROI. GPC and ROI then signed a Transition Operations and Maintenance (“O&M”) contract enabling ROI’s crew to manage FPSO operations during a six-month transition period. Following this, GPC entered into a 24-month O&M contract with Three60 Energy, an energy services provider, to take over FPSO operations after the transition period.
On September 14, 2020, Galoc Production Company 2 (“GPC2”) withdrew from SC 14C-1 and the Joint Operating Agreement, with the withdrawal becoming effective on December 16, 2020. The majority of the remaining members absorbed GPC2’s interest, including FEPC, which increased its participation from 2.27575% to 3.2103%.
On December 23, 2020, GPC resigned as the SC 14C-1 operator, and the JV elected GPC’s affiliate, NPG Pty Limited (“NPG”), as its replacement.
On February 1, 2021, Three60 Energy formally assumed operational control of the FPSO, now called Intrepid Balanghai, following the transition period with ROI from September 2020 to January 2021.
In June 2021, the DOE requested that NPG prepare a new decommissioning plan (“DP”) for Galoc Field’s eventual closure. This DP updated the 2016 Abandonment Plan and the 2020 Suspension & Abandonment Plan, both of which had received DOE approval. Submitted on July 30, 2021, the DP outlines the scope and estimated costs of final field decommissioning, including the FPSO, subsea equipment, and production wells. The total decommissioning cost is projected at $24 million, with $9.5 million allocated for FPSO disconnection and subsea equipment abandonment and $14.5 million for permanent plugging and abandonment (“P&A”) of the production wells.
In January 2023, Matahio Energy completed the acquisition of NPG, which operates the Galoc Field, and PUI, which owns the FPSO Intrepid Balanghai. In March 2023, ownership of the FPSO was transferred directly from PUI to NPG. Following this transfer, NPG (acting as a corporate entity and not in its capacity as SC 14C-1 Joint Venture Participant) entered into a new bareboat charter with the other JV Partners, including FEPC, for the purpose of continuing production operations at the Galoc Field.
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In December 2023, the DOE released Department Circular (“DC”) no. 2023-12-0033 on the awarding of Development and Production Petroleum Service Contracts (“DP PSC”) through direct negotiations. It took effect on January 3, 2024. The DP PSC covers expiring service contracts but with ongoing production or producible petroleum reserves as validated by the DOE. It will have an initial term aligned with the period necessary to produce the recoverable oil or gas reserves declared in the DOE-approved Plan of Development (“POD”). The contract may also be subject to renewal for an additional period based on mutually agreed terms and conditions.
SC 14C-1 qualified for the issuance of a DP PSC allowing production operations at Galoc Field beyond the original end of the SC's term on December 17, 2025. Accordingly, the Consortium applied for a DP PSC in March 2025 and submitted the required documentation over the succeeding months. The Government awarded the new contract, SC No. 88, on December 18, 2025, and following the withdrawal of one company from the application, FEPCO’s participating interest increased from 3.2103% under the expired SC 14C-1 to 4.69174%.
SC 14C-2 West Linapacan
Block C-2 covered an area of 176.5 square kilometers and hosts two main oil-bearing structures, West Linapacan A and West Linapacan B, which are structural traps formed by fault-related folding. The West Linapacan A Field was discovered in 1990 and, from 1992 to 1996, produced over 8.5 MMBO from fractured Linapacan Limestone, the stratigraphic equivalent of the Nido Limestone. The field is located in 300 to 350 m of water, approximately 60 km offshore from Palawan Island.
West Linapacan B, located along the same structural trend, was discovered in 1993 with the drilling of West Linapacan B1-X but was never developed. Test results confirmed reservoir productivity, and available data suggest the well did not reach the oil-water contact, indicating that additional hydrocarbon accumulations may extend beyond the currently defined structural limits.
In 2018, Philodrill completed the mapping and interpretation of reprocessed 3D seismic data, focusing on the West Linapacan B structure, which was drilled in 1991. The SC 14C-2 and SC 74 Consortia conducted joint Rock Physics and QI studies in 2019 using existing 3D seismic and well data, with Ikon Science completing the initial phase in October 2019. However, only the SC 74 JV proceeded with the second phase of the QI Study.
In September 2021, the Consortium initiated a technical study on the West Linapacan B Field, including geologic data review, well log digitization, reservoir modeling, and resource estimation. Phase 1, completed in November 2021, indicated that a stand-alone development for West Linapacan B was not economically viable. Phase 2 explored a joint development of the West Linapacan A and B Fields, concluding that feasibility depended on recoverable reserves, development costs, production rates, and oil prices.
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On December 20, 2024, Philodrill submitted the WP&B for 2025 to the DOE. The firm program includes the preparation of a plan and design study for a new well, West Linapacan A-7, as well as a POD for the West Linapacan A Field. On July 4, 2025, the Consortium commissioned Three60 Energy, the current Operations and Maintenance (“O&M”) contractor for the Galoc Field, to prepare the POD, which is expected to be completed by early November 2025.
On November 17, 2025, the Consortium submitted a Letter of Intent to apply for a DP PSC covering SC 14C-2, which expired on December 17, 2025, along with additional open acreages. The new DP PSC will provide a fresh evaluation window to assess West Linapacan B, Linapacan B in the former SC 74 block, and other adjacent structures for potential cluster development. The block qualifies for a DP PSC based on the declared reserves in the West Linapacan A Field. The JV members are currently preparing the documents to be submitted to the DOE.
SC 86 Octon (formerly SC 6A)
In 2018, Philodrill completed the seismic interpretation/mapping work on the northern sector of the block using the PSDM 3D volume. The evaluation focused on the Malajon, Salvacion, and Saddle Rock prospects. The Malajon and Saddle Rock closures were previously tested by wells that encountered good oil shows in the Galoc Clastic Unit (“GCU”) interval. However, no drill stem tests were conducted in this interval due to operational constraints. A seismic attribute analysis of the prospects was completed the following year, aimed at characterizing the target reservoirs and determining their distribution in terms of porosity, thickness, and lithology.
In June 2020, LMKR, a private petroleum technology company based in Dubai, completed a pilot study on the Malajon area using 3D seismic and well data. The study shows the Malajon structure has good hydrocarbon potential and thus requires further detailed analysis. LMKR also identified four (4) sand packages within the GCU after generating several elastic properties (P-impedance, Vp/Vs, etc.).
A more detailed Quantitative Interpretation (“QI”) study was approved by the JV aimed at generating pay probability maps and identifying prospective zones that could be targeted for any future wells. It also included detailed attribute analysis as several channelized sands within the GCU have been identified during the pilot study. An amended WP&B for 2020 to cover this additional study was approved by the DOE in July 2020. The LMKR report was submitted to the DOE in July 2021.
SC 6A had an original term set to expire on February 28, 2024, leaving the Consortium with limited time to drill an exploratory well and to develop a field in case of a discovery. In view of this, the Consortium decided to surrender the contract effective March 31, 2021, and subsequently re-apply for a new contract under the Philippine Conventional Energy Contracting Program (“PCECP”) through area nomination. The surrender of the SC was approved by the DOE on September 5, 2022.
On March 17, 2023, Philodrill submitted the SC application to the DOE. It has an area of 1,320 sq. km, which includes the former SC 6A and additional areas relinquished from the adjacent SC 74 in 2022. This area has been termed Nominated Area No. 10 by the DOE.
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On May 15, 2023, the DOE, in its preliminary review, confirmed the completeness of the technical, legal, and financial documents submitted by the JV in support of the SC application.
The new Service Contract (No. 86) was awarded on September 30, 2025. The first sub-phase will focus on further subsurface work in addition to the G&G studies conducted by the former SC 6A JV. These activities aim to establish a final well design and location for the Malajon Prospect and to appraise the Octon Discovery.
FEPC has a participating interest of 6.8439% in the new SC.
Cadlao Block (former SC 6B Bonita)
SC 6B had an area of 567 sq. km and contains the Cadlao Oil Field. The field was discovered in 1977 and produced about 11 MMBO from two subsea production wells from 1981-1991. The remaining recoverable reserves are estimated at 3.7 MMBO for proven reserves (1P) and 5.7 MMBO for proven plus probable reserves (2P) based on a 2012 study by Gaffney, Cline & Associates, Inc. Additionally, near Cadlao lies the East Cadlao Prospect, with estimated recoverable resources of 1.48 MMBO at the P10 level, and 1.17 MMBO at the P50 level.
In December 2021, Nido submitted a farm-in proposal to the JV to increase its participating interest in SC 6B from 9.09% to 72.727% and take over the operatorship of the Service Contract. A farm-in agreement (“FIA”) was later executed on February 11, 2022, with FEPC’s interest being reduced to 2.4546% from 8.182% in exchange for the said carry in Cadlao’s development costs. Under the FIA, Nido will fund 100% of the drilling of a well, Cadlao-4, the conduct of an extended well test (“EWT”), and the subsequent development of the Cadlao Field.
Nido proposes a two-phase redevelopment consisting of
· | Phase 1: A 3 to 9-month EWT using a new single deviated well (Cadlao-4), a mobile offshore production unit (“MOPU”), and either a floating storage and offloading (“FSO”) vessel or a shuttle tanker; and |
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· | Phase 2: Further development of the EWT well and additional wells potentially substituting the MOPU for a small wellhead platform (“WHP”) and storage barge. |
In April 2022, RISC completed an independent assessment of the Cadlao Field. Overall, RISC supports the redevelopment as an economic opportunity although costs will have to be carefully controlled.
The Deed of Assignment (“DOA”) of Participating Interest to Nido and the revised 2022 WP&B were submitted to the DOE on April 11, 2022. The WP&B includes the drilling of Cadlao-4 and the conduct of an EWT. However, the spud date of the well will depend on rig and FSO unit availability. The DOA was approved on December 19, 2022.
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From November 28 to December 1, 2022, Nido conducted a geophysical site survey at Cadlao using the vessel Cassandra VI. The purpose of the survey was to identify the possible constraints and hazards on the seafloor where the Cadlao-4 well will be located.
On November 15, 2023, Nido and PNOC Exploration Corporation (“PNOC EC”) signed a FIA that provides for PNOC EC’s acquisition of a 20% participating interest in the block, including sharing the cost of drilling and EWT for the Cadlao-4 well. While PNOC EC’s participation was approved by the Consortium, the formal transfer and assignment of the 20% interest from Nido to PNOC EC shall be subject to the approval of DOE.
Nido had initially identified a drillship to drill the Cadlao-4 well, although it still requires equipment modifications. However, due to safety concerns about using a drillship at a water depth of 93.7 m, a jack-up rig is now being considered for both drilling and the EWT. Nido is currently reviewing the contract for the jack-up rig.
On January 5, 2024, the Consortium sent to DOE its letter of intent to apply for a DP PSC before the end of SC 6B’s production term. On January 26, 2024, Nido submitted the application documents over the former SC 6B block and additional open areas. These documents include a copy of the POD for the Cadlao Field. The new SC will replace SC 6B, which expired on February 28, 2024. The Consortium is now awaiting the government’s final decision on the application.
SC 14A (Nido), SC 14B (Matinloc) & SC 14B-1 (N. Matinloc)
Production in the Nido and Matinloc Fields was terminated permanently on March 13, 2019, after producing 22,173 barrels of oil from January to March 2019. The Nido Field accounted for 93.06% of the total while Matinloc Field contributed 6.94%. Shell Philippines was the sole buyer of the crude during the period.
Nido started oil production in 1979 while Matinloc was put in place in 1982. The final inception-to-date production figures for the two fields are 18,917,434 barrels for Nido and 12,582,585 barrels for Matinloc. The North Matinloc Field, which was in production from 1988 to 2017, produced a total of 649,765 barrels of oil. The total production for the three (3) fields is 32,149,784 barrels.
Seven (7) production wells in Nido (3 out of 5), Matinloc (3), and North Matinloc (1) were successfully P&A from April to May 2019. The P&A of the remaining Nido wells, A1 and A2, were only partially abandoned due to difficulties encountered during operations.
Following the suspension of field operations and the P&A of most of the wells in March 2019, Philodrill conducted the stripping and disposal of equipment and materials aboard the production platforms from June to October 2019. In December 2019, all production platforms were turned over to the DOE. On June 26, 2020, the DOE signed a Deed of Donation and Acceptance with the Department of National Defense to formalize the transfer of ownership of the Nido and Matinloc platforms to the Armed Forces of the Philippines, which will now use the platforms for defense purposes.
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The P&A of the remaining Nido production wells, A-1 and A-2 wells was completed on October 5, 2020. This was initially scheduled in April 2020 but had to be deferred due to COVID-19 related health and travel restrictions.
With the completion of P&A of all production wells, a Notice to Surrender the SC 14A, 14B, 14B-1, Tara, and SC 14D blocks was sent to the DOE on February 16, 2021. This was approved by the DOE on May 18, 2022.
Forum Energy Objectives and Strategy
The core objective of FEL is to maximize the potential of its investments and its current licences to generate income, whilst at the same time continuing to reduce administrative expenses.
FEL plans to achieve this by:
· | Development of SC 72 |
· | Continued review of exploration blocks to identify potential drilling targets |
· | Continued review of administrative expenses |
For further details regarding FEL, see its 2024 financial statement package at https://find-and-update.company-information.service.gov.uk/company/05411224/filing-history
Please note that FEL is not required to file its financial statement package with Companies House in the UK until September 30 following the end of its fiscal year which is December 31. Accordingly, the FEL financial statement package for 2025 is not expected to be available until Q3 of 2026.
Risk factors specific to FEL
The Company is exposed to certain risk factors which are specific to its investment in FEL. These include the following:
On October 16, 2020, FEL received notice from the DOE that the FM imposed on SC 72 on December 15, 2014 was lifted with immediate effect and that FEL was to resume exploration activities on SC 72. Under the current work program commitments, FEL was given 20 months from the date of lifting of the FM to drill two commitment wells. The total cost of drilling these wells depends on a number of factors. The Company’s management estimates the total work to be between $70 million and $100 million. It is important to note that, to date, there has been no announcement of any agreement between FEL and CNOOC in relation to the implementation of the MOU involving SC 72. The risk therefore exists that should FEL not be able to meet its commitments to the DOE, it may have to surrender its rights to SC 72 and pay a penalty equivalent to the minimum financial commitment of the current sub-phase.
On April 6, 2022, FEL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice, and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, Force Majeure was once again declared on SC 72.
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In June 2022, media outlets reported that the MOU between China and the Philippines had been terminated although media outlets also reported that discussions would continue on joint exploration of SC 72.
On October 11, 2022, the DOE granted FGL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022, until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, FGL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to its re-imposition (October 14, 2020 to April 6, 2022) would be credited back to SC 72. Once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, equivalent to the remaining term of Sub-Phase 2 of SC 72 before October 14, 2020.
· | FEL’s cash inflows is heavily dependent on the Galoc Field production, which continued to operate beyond the original cessation date of September 24, 2020, following an agreement the previous operator GPC signed with ROI, the owner of the FPSO Rubicon Intrepid. The viability of continued production depends on the consistent output of the producing wells as well as the price of oil. |
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· | FEL’s operations do not generate sufficient cash to fund new exploration work in Galoc and its other blocks; therefore, in the event FEL issued new capital to fund these costs, the Company’s interest in FEL may be diluted. |
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· | FEL is a closely held private company and there is a limited population of potential buyers for FEC’s relatively small interest in FEL. |
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· | FEL’s interest in its main asset SC 72 could be diluted depending on the agreement reached, if any, with potential farm-in partners in the future. |
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· | Further exploration work has to be completed on SC 72 and SC 40 to confirm the value of the resources within these properties. |
On March 10, 2022, the Company announced that it agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620. The advance to FEL was via non-interest bearing loans. To fund the $198,620, the Company accepted a loan from PXP for the same amount (“PXP Loan”). The PXP loan bore interest of LIBOR plus 3.5% and was settled in a shares for debt transaction on July 31, 2025.
In October 2023, FEL advised the Company of its intent to complete a $3,000,000 fund raising to repay its loan from PXP and for general working capital purposes. FEC agreed to participate in its pro-rata 6.8% share amounting to $204,000 through additional loans from PXP on the same terms and conditions as previous advances.
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On December 21, 2023, $626,820 of advances made to FEL by the Company were converted to shares in FEL at a price of $0.30 per share. The $626,820 conversion into FEL shares represented 6.8% of $9,217,939 of debt settled by FEL.
Selected Annual Financial Information Of The Company
Selected Financial Data
|
| Year Ended 12/31/25 |
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| Year Ended 12/31/24 |
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| Year Ended 12/31/23 |
| |||
Revenue |
| $ | - |
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| $ | - |
|
| $ | - |
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Net loss |
| $ | (282,798 | ) |
| $ | (244,437 | ) |
| $ | (191,795 | ) |
Basic and Diluted Loss per share |
| $ | (0.00)/(0.00) |
| $ | (0.00)/(0.00) |
| $ | (0.00)/(0.00) | |||
Dividends per share |
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | 0.00 |
|
Weighted Avg. Shares O/S (’000) |
|
| 916,231,001 |
|
|
| 861,082,371 |
|
|
| 861,082,371 |
|
Working Capital (Deficit) |
| $ | (50,794 | ) |
| $ | (922,999 | ) |
| $ | (678,562 | ) |
Long-Term Debt |
| $ | - |
|
| $ | - |
|
| $ | - |
|
Shareholders’ Equity |
| $ | 6,191,629 |
|
| $ | 7,645,095 |
|
| $ | 1,783,369 |
|
Total Assets |
| $ | 6,266,199 |
|
| $ | 8,582,339 |
|
| $ | 2,478,573 |
|
Results of Operations
The accounts show a loss for the twelve months ended December 31, 2025 of $282,798, or $0.00 per share, versus a loss of $244,437 for the same period in 2024.
The higher net loss due to higher professional fees (legal and auditing) incurred during the year.
General and administration expense were $241,376 for the twelve month period ended December 31, 2025 versus $182,241 for the same period in 2024. Overall expenses were higher than those experienced in the previous year. Higher professional fees accounted for the difference. Legal and audit related fees were $112,794 for the twelve month period ended December 31, 2025 versus $54,310 for the same period in the previous year as we engaged professional advice for an in depth review of our strategic options going forward in 2025. Office and miscellaneous costs were $20,486 for the twelve month period ended December 31, 2025 versus $19,219 for the same period in the previous year. The difference was not material. Consulting fees for the twelve months ended December 31, 2025 were $86,106 versus $86,397 for the previous year. The difference was not material. Listing and filing fees were$18,590 for the twelve month period ended December 31 , 2025 versus $19,929 for the same period in the previous year. The difference was due to higher filing costs in 2024. For the year ended December 31, 2025, foreign exchange loss was $2,535 versus a loss of $1,500 for the same period in the previous year. Interest expense for the year ended December 31, 2025 was $41,422 versus $62,196 for the same period in the previous year. The difference was due to the settlement in shares of the PXP Loan on July 31, 2025 resulting in lower interest expense. Comprehensive loss for the twelve months ended December 31, 2025 was $2,325,671 versus an income of $6,106,163 for the twelve month period ended December 31, 2024. The difference was a result of the change in fair value of our investment in FEL.
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Balance Sheet
The Company’s current assets were $23,776 at December 31, 2025 versus $14,245 for the year ended December 31, 2024. The difference is mainly a result of the higher cash balance on December 31, 2025. The Company’s assets reflect the investment in FEL on a fair value basis. The fair value of the investment in FEL is stated at $6,242,423 or $0.76 per share.
The investment in FEL represents an investment in a private company for which there is no active market and for which there are no publicly available quoted market prices. The Company has classified its investment in FEL as Level 2 in the fair value hierarchy.
For purposes of determining fair value of the investment in FEL, the Company considered valuation techniques described in IFRS 13 – Fair Value Measurement. In respect of the investment in FEL, management considered the fair value of 6,242,423 (2024 - $8,568,094) to be indicative of the fair value of the investment in FEL. On May 13, 2024, PXP disclosed that it was undertaking a share swap with Tidemark Holdings Limited (“Tidemark”) whereby PXP would exchange PXP shares for all FEL shares held by Tidemark at a value of US$1.17 per share (430,243,903 PXP shares at PHP3.62). This imputed a value of $9,601,766 on the transaction date. The Company re-calculated the volume weighted average price of the PXP shares as at December 31, 2025 resulting in a 34.99% (2024 - 10.77%) reduction in the fair value from the transaction date. The fair value of the investment is consistent with the re-calculated implied value based on the May 10, 2024 share swap between PXP and Tidemark, which is a Level 2 input. The share swap transaction closed on March 20, 2025.
There were no transfers between Level 2 and the other levels in the hierarchy during 2025 or 2024.
Summary of Quarterly Results
Selected Financial Data
(in ‘000, except EPS)
| 4th Qtr 25 | 3rd Qtr 25 | 2nd Qtr 25 | 1st Qtr 25 | 4th Qtr 24 | 3rd Qtr 24 | 2nd Qtr 24 | 1st Qtr 24 |
(Loss) | (53) | (54) | (114) | (62) | (85) | (57) | (57) | (45) |
Basic and Diluted Loss per share | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Liquidity
The Company’s working capital deficit at December 31, 2025, was $50,794 versus a working capital deficit of $922,999 at December 31, 2024, and shareholders’ equity was $6,191,629 at December 31, 2025 (December 31, 2024 - $7,645,095). The change was mainly due to the decrease in the valuation of FEL which is an investment in shares of a private company that are measured at fair value through other comprehensive income offset by the shares for debt conversion of the PXP Loan on July 31, 2025. As the FEL shares are not traded in an active market, the valuation of this investment is based on management’s consideration of other observable inputs that are available. For purposes of determining fair value of the investment in FEL, the Company considered valuation techniques described in IFRS 13 – Fair Value Measurement.
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Management considers that the current economic environment is difficult and the outlook for oil and gas exploration companies presents significant challenges in terms of raising funds through issuance of shares. Previously, to the extent necessary, the Company disposed of quantities of its shareholdings in FEL to PXP under terms that are consistent with the best interests of all shareholders, in order to finance its operations. In the past, the Company issued new shares under a rights offering scheme to raise new capital to fund its operations but more recently has relied on loans from PXP.
Management currently believes that it is in the best interest of all shareholders that management explores the issuance of new shares or debt to fund its future operations.
The Company’s continued operations depend on its ability to raise funds through the disposition of quantities of its shareholdings in FEL to PXP under terms that are consistent with the best interests of shareholders, or through obtaining loans from PXP. Also, the Company may issue new shares to PXP and/or other third parties.
The Company is not required to directly contribute capital to any of the projects in which it has an indirect or direct interest.
Cash used in operating activities for the twelve month period ended December 31, 2025, was $249,084 versus $156,936 for the same period in 2024 mainly as a result of the differences described above.
Cash provided by financing activity was $258,192 for the twelve months ended December 31, 2025, versus $155,286 for the same period in the previous year. The amount was from loans from PXP.
On March 10, 2022, the Company announced that it agreed to fund an additional cash call for pre-drilling costs received from FEL in the amount of $198,620. The advance to FEL was via non-interest bearing loans. In order to be able to fund the $198,620, the Company received a loan from PXP for the same amount (“PXP Loan”). The PXP Loan bears interest of LIBOR plus 3.5% and both interest and principal are repayable on the earlier of a) August 31, 2025, or b) any equity issuance by FEC, or c) any sale of FEL shares by FEC, or d) any third party borrowing by FEC. PXP advanced an additional $$356,500, $155,286, and $260,950 for the years ended December 31, 2023, 2024, and 2025 to the Company for working capital under the same terms and conditions as the PXP Loan. As at December 31, 2025, the outstanding PXP Loan balance was $40,248 (December 31, 2024 - $895,637). Total interest expense for the year amounted to $41,422 (2024 - $62,196).
On July 31, 2025, PXP agreed to convert the PXP Loan amounting to $1,011,155.58 plus accrued interest to July 31, 2025 of $146,604.90 into shares of the Company at $0.0088 per Company share. A total of 131,563,725 common shares of the Company were issued to settle $1,157,760.78 in debt.
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Fourth Quarter
During the fourth quarter there were no significant events. Other than additional legal and audit related costs for the in depth review of the Company’s strategic options, the Company incurred only basic operating costs. The Company does not experience seasonal fluctuations in its business and there were no dispositions of any business segments.
Capital Resources
Since the Company has no revenue, it will need to continue to raise funds through either debt, equity, or the sale of assets in order to continue its operations or participate in other projects. The Company currently has no plans to sell any more of its FEL shares and will be reliant on debt or equity issuances for future funding requirements.
Since the delisting of FEL from the London Stock Exchange, there is no liquidity via a public market for the FEL shares. As the Company is wholly reliant on the information disclosed by PXP concerning the business of FEL, the Company may not be able to obtain information necessary to facilitate a wider sales process and may be reliant on significant shareholders of PXP for the disposition of any of its FEL shares. Management has looked at all options including raising funds to operate and participate in future FEL financings by way of debt or equity financings. Given the current share price of the Company, and given that any external financings may have been extremely dilutive, the Company has been accepting loans from PXP in order to sustain operations and to maintain its 6.8% interest in FEL.
From January 1, 2025 to July 31, 2025, short term loans increased by $262,124 as a result of additional working capital advances ($220,950) and accrued interest ($41,174) under the PXP loan. The short term loans were settled through the issuance of common shares on July 31, 2025. From August 1, 2025 to December 31, 2025 an additional $40,000 was advanced by PXP under the same terms and conditions and interest accrued to December 31, 2025 was $248.
Off balance sheet Arrangements
There are no off-balance sheet arrangements in existence as of this date.
Transactions with Related Parties
The Company considers its officers (CEO and CFO) and directors to be key management. Key management are those persons having authority and responsibility for planning, directing, and controlling activities, directly or indirectly, of the Company.
During the year ended December 31, 2025, general and administrative expenses included key management personnel compensation totaling $48,000 (2024: $48,000; 2023: 48,000).
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Note 9 Related Party Transactions and Balances (continued)
On March 10, 2022, the Company announced that it agreed to fund an additional cash call for pre-drilling costs received from FEL. The advance to FEL was via non-interest bearing loans. In order to be able to fund the cash call, the Company accepted a loan from PXP for the same amount (“PXP Loan”). The PXP loan bears interest of Libor plus 3.5% and both interest and principal is repayable on the earlier of a) August 31, 2025 or b) any equity issuance by FEC, or c) any sale of FEL shares by FEC, or d) any third party borrowing by FEC. The Company also received an additional $260,950 for working capital from PXP during the year ended December 31, 2025 (2024 - $155,286; 2023 - $356,500) under the same terms and conditions as the PXP Loan. As at December 31, 2025, the outstanding PXP Loan balance was $40,428 (2024 - $895,637) which included accrued interest of $428 (2024 - $105,431). Total interest expense amounted to $41,422 for the year ended December 31, 2025 (2024 – $62,196; 2023 – $32,593). The PXP Loan balance was reduced by $200 as a result of the assumption by PXP of the balance of the advances made to FEL. On July 31, 2025, the Company issued 131,563,725 in settlement of the PXP Loan outstanding on that date comprised of $1,011,156 principal and $146,605 in interest for a total of $1,157,761.
Critical Accounting Estimates and Judgments
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income/loss in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.
The determination of the fair value of the Company’s investment in FEL is a significant accounting estimate.
Standards, Amendments and Interpretations Not Yet Effective
The Company has prepared its financial statements in accordance with IFRS Accounting Standards as issued by the IASB. The financial statements have been prepared in accordance with IFRS Accounting Standards and interpretations effective as of December 31, 2025.
New IFRS Accounting Standards and interpretations or changes to existing standards with future effective dates are either not applicable or not expected to have a significant impact on the financial statements of the Company.
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As at the date of authorization of these financial statements, the IASB had issued certain pronouncements that are mandatory for the Company’s accounting periods commencing on or after March 1, 2025. In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements (“IFRS 18”) which replaces IAS 1 Presentation of Financial Statements. This standard aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company is currently assessing the impact the new standard will have on its financial statements. Other recent accounting pronouncements are not applicable or do not have a significant impact to the Company, have been excluded.
Financial Instruments and Risk Management
The Company is exposed through its operations to the following financial risks:
| - | Market Risk |
| - | Credit Risk |
| - | Liquidity Risk |
| - | Dilution Risk |
In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout this management discussion and analysis.
There have been no substantive changes in the Company’s exposure to financial instrument risks, its objectives, polices and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in the note below.
General Objectives, Policies and Procedures
The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s finance function. The Board of Directors receive quarterly reports from the Company’s Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
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The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility.Further details regarding these policies are set out below.
a) | Market Risk |
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices are comprised of foreign currency risk, interest rate risk and equity and commodity price risk.
Foreign currency exchange risk
The Company is exposed to foreign currency fluctuations for general and administrative transactions denominated in Canadian Dollars. The majority of the Company’s cash is kept in U.S. dollars. As at December 31, 2025, the Company had an insignificant amount of cash denominated in Canadian dollars that was subject to exchange rate fluctuations between the Canadian dollar and the U.S. dollar. As at December 31, 2025, the Company held financial liabilities of $33,742 that are denominated in Canadian dollars that would be subject to exchange rate fluctuations between Canadian dollars and U.S. dollars.
b) | Credit risk |
The Company maintains cash deposits in one chartered Canadian bank which, from time to time, exceed the amount of depositors insurance available in each respective account. Management assesses the financial condition of this bank and believes that the possibility of any credit loss is minimal. The maximum exposure of credit risk is the Company’s cash deposit of $14,864 (December 31, 2024: $5,756).
c) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company does not generate cash from operations but rather, the Company will, from time to time, issue shares via equity placements, borrow funds from an affiliated company or undertake to sell a portion of its investment in the shares of FEL should it be necessary to raise funds.
At this time, the Company has no new business plans and if it continues to act as a holding company of FEL shares, there is a risk it will receive no return from that investment unless alternate sources of funding are found.
The Company manages liquidity by maintaining cash balances available to meet its anticipated operational needs. Liquidity requirements are managed based on expected cash flow to ensure that there is adequate capital to meet short-term and long-term obligations. The Company has in place a planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its growth plans. As at December 31, 2025, the Company’s trade and accrued payables were $34,322, all of which fall due for payment within twelve months of the date of the statement of financial position.
The carrying values of trade and accrued payables and short-term loans approximate their fair values due to the relatively short periods to maturity of the instruments.
Liquidity risk is assessed as high
d) | Dilution risk |
As discussed elsewhere in this MD&A, there is a risk of continued dilution of the Company’s interest in FEL should it either need to sell shares of FEL to raise operating funds, or not participate in any future share issuance financings undertaken by FEL. Currently there are no plans to sell any of the Company’s FEL shares to fund operations. There is a risk that shareholders may be diluted should the Company need to raise additional operating funds through debt or equity financings.
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Other Risk Factors
As a holding company with an interest in FEL, the Company’s business is indirectly subject to risks inherent in oil and gas exploration and development operations. In addition, there are risks associated with FEL’s stage of operations and the foreign jurisdiction in which it or FEL may operate or invest. The Company has identified certain risks pertinent to its investment including: exploration and reserve risks, uncertainty of reserve estimates, ability to exploit successful discoveries, drilling and operating risks, title to properties, costs and availability of materials and services, capital markets and the requirement for additional capital, market perception, loss of or changes to production sharing, joint venture or related agreements, economic and sovereign risks, possibility of less developed legal systems, corporate and regulatory formalities, environmental regulation, reliance on strategic relationships, market risk, competition, dependence on key personnel, volatility of future oil and gas prices and foreign currency risk.
Since the delisting of FEL from the London Stock Exchange, there is no liquidity via a public market for the FEL shares. As the Company is wholly reliant on the information disclosed by PXP concerning the business of FEL, the Company may not be able to obtain information necessary to facilitate a wider sales process and may be reliant on significant shareholders of PXP for the disposition of any of its FEL shares. Management has looked at all options including raising funds to operate and participate in future FEL financings by way of debt or equity financings. Given the current share price of the Company, and given that any external financings may been extremely dilutive, the Company continues to receive loans from PXP in order to continue operations and to maintain its 6.8% interest in FEL. There is no guarantee these loans will continue and the Company does not currently have any way to pay these loans back.
On April 6, 2022, FEL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, Force Majeure was once again declared on SC 72 casting substantial doubt on the future of SC 72 and the Company’s 6.8 percent interest in FEL.
In June 2022, media outlets reported that the MOU between China and the Philippines on joint exploration of the West Philippine Sea had been terminated although also reporting that both sides were going to continue with discussions on joint exploration.
On October 11, 2022, the DOE granted FGL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022, until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, FGL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
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On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to when it was re-imposed (from October 14, 2020 to April 6, 2022) will be credited back to SC 72. Thus, once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, equivalent to the remaining term of Sub-Phase 2 of SC 72 before October 14, 2020.
On November 21, 2025, the DOE approved the Work Program and Budget (“WP&B”) for 2026 with only License Administration costs and Service Contract payments classified as firm budgets. The implementation of the Sub-Phase 2 work commitment comprising the drilling of two wells, will be contingent upon the lifting of the force majeure imposed by the DOE in April 2022.
Capital Management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, to provide an adequate return to shareholders.
The capital of the Company consists of the items included in shareholders’ equity and cash net of debt obligations. The Company’s Board of Directors approves management’s annual capital expenditures plans and reviews and approves any material debt borrowing plans proposed by the Company’s management.
As at December 31, 2025, the Company had no externally imposed capital requirements nor was there any changes in the Company’s approach to capital management during the year.
General and administration
The following tables show the detailed breakdown of the components of general and administration expenditures.
General and administrative expenses
|
| December 31, 2025 |
|
| December 31, 2024 |
|
| December 31, 2023 |
| |||
Professional fees |
| $ | 112,794 |
|
| $ | 54,310 |
|
| $ | 23,841 |
|
Bank charges |
|
| 865 |
|
|
| 886 |
|
|
| 666 |
|
Listing and filing fees |
|
| 18,590 |
|
|
| 19,929 |
|
|
| 25,183 |
|
Office and miscellaneous |
|
| 20,486 |
|
|
| 19,219 |
|
|
| 22,572 |
|
Consulting (Note 9) |
|
| 86,106 |
|
|
| 86,397 |
|
|
| 86,749 |
|
Foreign exchange |
|
| 2,535 |
|
|
| 1,500 |
|
|
| 191 |
|
|
| $ | 241,376 |
|
| $ | 182,241 |
|
| $ | 159,202 |
|
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Other MD&A Requirements
Disclosure of Outstanding Share Data
As At December 31, 2025
(a) Authorized and issued share capital:
Class |
| Par Value |
| Authorized |
| Number Issued and Outstanding as at Dec. 31, 2025 |
|
| Number Issued and Outstanding as at December 31, 2024 |
| ||
Common Shares |
| NPV |
| Unlimited |
|
| 992,646,096 |
|
|
| 861,082,371 |
|
Preferred Shares (convertible redeemable voting) |
| NPV |
| Unlimited |
| None |
|
| None |
| ||
(b) Summary of Options and Warrants outstanding as at December 31, 2025.
There were no options outstanding as at December 31, 2025. There were no warrants outstanding as at December 31, 2025.
Additional information on the Company is available at www.sedarplus.ca.
Outlook
On April 6, 2022, FEL as operator under SC 72, received a directive from the DOE to put on hold all exploration activities for SC 72 until such time that the Security, Justice and Peace Coordinating Cluster (“SJPCC”) has issued the necessary clearance to proceed. On April 11, 2022, as a result of not receiving the necessary clearance, Force Majeure was once again declared on SC 72.
In June 2022, media outlets reported that the MOU between China and the Philippines on joint exploration of the West Philippine Sea had been terminated although also reporting that both sides were going to continue with discussions on joint exploration.
On October 11, 2022, the DOE granted FGL the following: (i) the Declaration of Force Majeure for SC 72 from April 6, 2022, until such time as the same is lifted by the DOE, (ii) the inclusion of total expenses incurred as a result of the DOE directive to suspend activities as part of the approved recoverable costs, subject to DOE audit, and (iii) in addition to the period in item (i) above, FGL will be entitled to an extension of the exploration period under SC 72 corresponding to the number of days that the contractors actually spent in preparation for the activities that were suspended by the DOE’s suspension order on April 6, 2022.
On March 20, 2023, the DOE further affirmed that the entire period from when the Force Majeure was lifted to when it was re-imposed (from October 14, 2020 to April 6, 2022) will be credited back to SC 72. Thus, once the Force Majeure is lifted, FGL will have 20 months to drill the two commitment wells, equivalent to the remaining term of Sub-Phase 2 of SC 72 before October 14, 2020.
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On January 8, 2025, FEL submitted a Work Program and Budget (“WP&B”) for 2025 to the DOE, with only License Administration costs and SC payments classified as firm budgets. The implementation of the Sub-Phase 2 work commitment comprising the drilling of two wells, will be contingent upon the lifting of the force majeure imposed by the DOE in April 2022.
FEL will continue to coordinate with the Philippine Government on the resumption of activities in SC 72.
For SC 40 North Cebu, FEL will continue evaluating the petroleum potential of the Dalingding Prospect. A possible exploration well is under consideration, either by FEI independently or in partnership with another company.
On FEL’s non-operated blocks, Development and Production Petroleum Service Contract (DP PSC) No. 88 was awarded for the Galoc Block on December 18, 2025, ensuring continued production the Galoc Field, which is expected to remain profitable over the next 1-2 years. The new contract replaced SC 14C-1, which expired on December 17, 2025.
SC 86 (formerly SC 6A Octon) will allow the continued appraisal of the Malajon Area, including the West Malajon Prospect, where geological and geophysical studies aim to mature the prospect to “drill-ready” status and identify a specific well location.
Meanwhile, the DP PSC for Cadlao, which replaces SC 6B that expired in February 2024, will support the planned redevelopment of the Cadlao Oil Field, beginning with the drilling of the Cadlao-4 well and, if successful, the implementation of an extended well test.
For the West Linapacan Block, a new DP PSC is being planned to replace SC 14C-2, which expired on December 17, 2025. On November 17, 2025, the Consortium submitted a Letter of Intent to apply for a DP PSC covering SC 14C-2 along with additional open acreage. This will allow the continued appraisal of the West Linapacan A for potential development, as well as the evaluation of nearby structures, such as West Linapacan B, for possible tie-backs to any future West Linapacan A development. The block qualifies for a DP PSC based on the declared reserves in the West Linapacan A Field.
The Company has limited cash resources and required additional capital to allow it to continue to trade, maintain its 6.8% interest in FEL, or invest in any new projects.
Looking Forward
This discussion contains "forward looking statements" as per Section 21E of the US Securities and Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Management is currently reviewing many options and there is no assurance that they will not make decisions other than those now contemplated. The Company is subject to political risks and operational risks identified in documents filed with the Securities and Exchange Commission, including changing oil prices, unsuccessful drilling results, change of government and political unrest in its main area of operations.
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ITEM 19. EXHIBITS
| ||
|
|
|
| ||
|
|
|
4.1 |
| Consulting Agreement dated March 1, 2004 between the Company and David Robinson *; |
|
|
|
4.2 |
| Consulting Agreement dated March 1, 2004 between the Company and Barry Stansfield *; |
|
|
|
4.3 |
| Consulting Agreement dated November 23, 2003 between the Company and Larry Youell *; |
|
|
|
4.4 |
| Consulting Agreement dated March 1, 2004 between the Company and David Wilson * |
|
|
|
4.5 |
| Consulting Agreement dated March 1, 2004 between the Company and David Thompson*; |
|
|
|
4.6 |
| Exchange and Release Agreement between Tracer Petroleum Corporation and Transmeridian Exploration, Inc., dated March 16, 2001; * |
|
|
|
4.7 |
| Share Purchase Agreement dated March 11, 2003, as amended by agreements dated March 21, and April 2, 2003; * |
|
|
|
4.8 |
| Amendment dated March 21, 2003 to Share Purchase Agreement dated March 11, 2003 as amended by an agreement dated April 2, 2003; * |
|
|
|
4.9 |
| Amendment dated April 2, 2003 to Share Purchase Agreement dated March 11, 2003 as amended by agreement dated March 21, 2003; * |
|
|
|
| ||
|
|
|
| ||
|
|
|
|
* Previously filed
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
FEC Resources Inc. | |||
|
| (Registrant) | |
| Date: May 15, 2026 | /s/ Daniel Carlos | ||
|
| President and Chief Executive Officer |
|
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