EMP in talks with Mitsubishi, Japex to sell interest in E. Java block

IDX-listed oil, gas firm PT.Energi Mega Persada (EMP) said on Wednesday it is in talks with Mitsubishi Corp. and Japan Petroleum Exploration Co.Ltd (Japex) to sell its 50 percent interest in Kangean PSC offshore East Java.

Mitsubishi and Japex are EMP?s partner in Kangean PSC which jointly own 50 percent interest in the block through Kangean Energy Indonesia Ltd.

EMP VP Investor Relation Herwin Wahyu Hidayat told Petromindo.Com that due diligence by Mitsubishi and Japex on the block may be completed this week.

Herwin said Mitsubishi and Japex have first right of refusal to buy EMP?s 50 percent interest in the block, adding that it was Mitsubishi and Japex that proposed to acquire EMP?s stake in Kangean.

He, however, said that the closure of the deal would depend on the price Mitsubishi and Japex would offer. ?If the price is not right, EMP might opt to cancel the sale or offer to third party who may be willing to give better price,? he said.

Meanwhile, CEO Christian Ponto said that there now are six companies that had expressed interest to acquire EMP's stake at Kangean.

Kangean, which is the crown jewel of EMP?s assets, currently produces some 40 MMCFD of gas from Pagerungan field. Other fields called Terang Sirasun Batur is expected to come onstream in 2010 with peak production of 300MMCFD.

EMP acquired 100 percent stake in the block from BP PLC in August 2004 for US$0.8 per BOE. The company later sold 50 percent interest in the block to Mitsubishi and Japan Japex in 2007 for $2.9 per BOE

EMP is controlled by Bakrie family, who currently face financial crises due to dwindling share price. The family is now forced to sell shares of their business units to pay debts.(denny)