Medco International's performance to exceed projections

The management of local oil company PT Medco Energi International Tbk (Medco)

has expressed its optimism that the company's financial performance would exceed projections for this year, despite the fact that its joint oil exploration in South Sumatra with Petronas of Malaysia had not yet brought up income.

Medco director Hilmi Panigoro explained that the company had initially projected that crude oil prices would average at US$22 per barrel. Nevertheless, crude oil prices rose far exceeding the target to US$31-$32 per barrel.

"So, you can calculate yourself, how much money we get from $8 difference per barrel," he said. In addition, Medco's crude oil output increased by 50 percent to 75,000 barrels per day (bpd) this year from 50,000 bpd.

In the first semester of this year, the company booked a 100 percent in net profit to Rp 349 billion from Rp 169 billion in the same period of last year. Sales increased to Rp 1.17 trillion from Rp 730 billion.

Hilmi explained that a venture between Medco and Petronas had drilled one out of three wells to be drilled in South Sumatra. But his one well did not produce oil at a commercial level. And therefore the venture would drill the other two wells.

In a bid to increase Medco's production level, the company was still eyeing other prospective oil fields to be purchased from other oil companies.

Commenting on Medco's stock price performance at the Jakarta Stock Exchange that was closed at Rp 950 on Monday, Hilmi said that the Medco stock was very undervalued. Quoting reports from Nomura, BNP and Peregrine researches, Hilmi said Medco stock should be traded at Rp 2,000 level per share. (*)