Medco completes acquisition of SVI

By Godang Sitompul

IDX-listed PT Medco Energi Internasional Tbk through its wholly owned subsidiary Medco Tunisia Petroleum Ltd has finally completed the acquisition of 100 percent shares in Storm Ventures International (Barbados) Ltd (SVI) after obtaining approval from the Tunisian government and consent from existing partners in oil and gas blocks co-owned by the latter firm.

?In accordance with the January 1, 2014 effective date, Medco will have ownership rights over eight areas including four exploration blocks, two development blocks, and two production blocks,? said Lukman Mahfoedz, President Director of Medco Energi, to Petromindo.com in Tunisia on Tuesday following the signing of the closing of the transaction.

As reported in June, Medco through Medco Tunisia Petroleum Ltd has entered into an agreement, effective January 1, to acquire 100 percent of the shares of SVI from Storm Ventures International (BVI) Ltd, a subsidiary of Toronto-listed Chinook Energy Inc. SVI (together with its subsidiaries) is one of the leading active exploration and production companies in Tunisia, with a participating interest in eight working areas.

SVI?s interest in Tunisia comprises four exploration areas, two development areas and two production areas with concession periods of either 30 or 50 years. Out of these eight areas, five are located onshore and three are offshore. All of SVI?s blocks are located in prolific hydrocarbon areas. Five onshore blocks (Adam, Sud Remada, Bir Ben Tartar, Jenein and Borj El Khadra) are located in the Ghadames Basin (the same basin as the Company?s Libya Area 47 is located and where large oil and gas reserves have been discovered with a 90% exploration success rate), while the remaining three offshore blocks (Cosmos, Hammamet and Yasmin) are located in the Pelagian Basin off the northeast coast of Tunisia.

Lukman said that Medco acquired the SVI shares for a total transaction price of US$127.7 million including working capital worth $13.7 million.

He also said that Medco will become the operator of six blocks including Sud Redmana, Bir Ben Tartar, Jenein, Cosmos, Hammamet, and Yasmin.

Medco said in June that upon completion of the SVI acquisition, it anticipates adding 2P reserves and oil-and-gas production (net working interest before royalties, taxes and Government take) by 12.3 MMBOE and 2,800 BOEPD, respectively. Production is envisaged to increase to approximately 16,000 BOEPD from in-fill well drilling of the existing producing block (Bir Ben Tartar) and the development of the Cosmos and Yasmin blocks (scheduled for completion in 2018) is expected to add a further 12.6 MMBOE of 2P reserves.

?Medco will become one of the major oil and gas players in Tunisia,? Lukman said.

Elsewhere, he said that the Tunisian government has approved Medco?s request for a two-year extension of the Jenein block contract from October 2014-October 2016.

Following the acquisition of SVI, Medco becomes the operator of the block with a 65 percent interest, while the remaining shares are held by PA Resources.

Medco requested for the extension of the contract to continue exploration program for another two years. Afterward, Medco will carry out 3D seismic program this year at the Jenein block. ?Medco hopes to be able to start drilling one appraisal well in the block early 2015,? Lukman said.

Editing by Reiner Simanjuntak