Medco’s 2018 gross profit jumps 53%

By Romel S. Gurky

IDX-listed energy company PT Medco Energi Internasional Tbk said that gross profit last year jumped by 53 percent to US$645 million from the previous year driven by higher prices of oil, gas, and power, and improved margins.

Medco said in a statement Monday that gross margin last year was higher at 52 percent compared to 46 percent in 2017.

EBITDA last year reached $596million ($582million consolidated) up 37 percent from 2017 driven by improved margins, higher commodity and power prices and the full year consolidation of power subsidiary PT Medco Power Indonesia (MPI).

Oil and gas prices increased 32 percent and 16 percent year-on-year to $67.8/bbl and $6.4/mmbtu respectively and MPI power prices (excluding fuel) increased 28 percent.

Medco said oil and gas production was 85mboepd, in line with guidance and unit cash costs were $8.7 per boe.

The oil and gas segment generated net income of $135million, increased 80 percent year-on-year, however consolidated net income was a $51 million loss due mainly to non-cash losses from mining affiliate PT Amman Mineral Nusa Tenggara (AMNT) as it accelerates development of Phase 7, Medco said.

Net debt to EBITDA excluding MPI was 3.3x (3.6x in 2017). Consolidated net debt to EBITDA was 3.7x (4.5x in 2017).

Drilling, project efficiencies and deferrals together with favorable exchange rates allowed the company to reduce capital spending to $329million.

MPI generated power sales were 2,704 GWh, 24 percent higher year on year and in line with 2018 guidance following the commissioning of Sarulla geothermal power plant in North Sumatra Province.

MPI raised Rp 1.2 trillion from its first capital market transaction through the issue of a standard and a sharia-compliant bond.

Medco said the divestment of the coal mining and water infrastructure businesses were completed in 2018.  The sale of the oil and gas assets in the US was completed in quarter one 2019 as was the sale of a 51 percent interest in the Energy Building.

The company received shareholder approval for a non-preemptive private placement of up to 10 percent of issued shares at a minimum price of Rp 868/share, ~$100million.  “Discussions continue to place these shares to qualified and preferred buyers.”

The company said it liquidity is strong with cash and cash equivalents of $627million at year-end.

Roberto Lorato, CEO, said “Our year end results were solid, with higher EBITDA and improved operating margins from continued cost discipline. The successful completion of the Block A Aceh gas development confirms our strong project capabilities, whilst the recent approval by Ophir shareholders of our acquisition of Ophir Energy is an exciting opportunity to acquire a complementary portfolio of assets, creating enhanced scale, diversification and growth opportunities for the benefit of our stakeholders, employees, partners and host countries. We will continue to work in order to complete the transaction by the end of the second quarter”.

Hilmi Panigoro, President Director, said “The company performed very well in 2018 despite a challenging business environment and our financial position has further strengthened on the back of our strong operational performance in the oil, gas and power businesses.  The recent approval by Ophir shareholders is clearly a milestone demonstrating our maturity and capability to manage a complex, multi-jurisdictional transaction. Closing the transaction in second quarter will further strengthen our position as a regional integrated energy and natural resources company.”

Editing by Reiner Simanjuntak