Medco seeks 15 pct PA growth

JSX listed oil and gas company PT Medco Energi International Tbk is aiming to grow at the rate of 15 percent per year for the next five years and said it would continue to seek farm in opportunities despite heavy acquisitions it had undertook, a company official said.

?In order to achieve 15 percent growth per annum, Medco will continue to seek farm in opportunities in Indonesia. We would combine acquisition of producing blocks which still has upside potential and exploration blocks,? CEO Hilmi Panigoro said Wednesday.

Medco Working Areas No. Block Location Working Interest (%) Operator Status 1. Asahan PSC N. Sumatra 15 Matrix Oil NL Exploration 2. Bengara-I PSC E. Kalimantan 95 Medco Exploration 3. Kampar & SS Ext. S. Sumatra 100 Medco Production 4. Madura JOB E. Java 24.75 Medco Exploration 5. Pasemah PSC S. Sumatra 50 Medco Production 6. Rimau PSC S. Sumatra 100 Medco Production 7. Sanga-Sanga TAC E. Kalimantan 100 Medco Production 8. Senoro-Toili JOB C. Sulawesi 50 Medco Exploration 9. Simenggaris JOB E. Kalimantan 24.75 Medco Exploration 10. S & C Sumatra PSC S. Sumatra 100 Medco Production 11. Rombebai PSC NE Papua 80 Medco Exploration 12. Tarakan PSC E. Kalimantan 100 Medco Production 13. Tuban JOB E. Java 25 PetroChina Production

Medco had been aggressively farming in several oil, gas blocks in Indonesia for the past year. In 200, the company acquired Simenggaris block in East Kalimantan, Madura block in East Java and Senoro-Toili in Central Sulawesi. This year the company announced it had discovered huge gas reserves in Senoro Toili that could be developed into LNG center.

In 2001, the company acquired 95 percent working interest in Bengara I PSC in East Kalimantan from Apex oil and gas.

This year saw Medco acquiring US independent oil firm EEX Corp.?s assets in Indonesia that include 25 percent working interest in Tuban JOB, an oil producing block with upside exploration potential and 15 percent interest in Asahan technical assistance contract (TAC) exploration block in North Sumatra. Medco is said to spend around US$ 30 million for the blocks.

Medco had also acquired 80 percent stake in Rombebai exploration block in northern part of Papua province and is in the process of acquiring Yapen PSC which is adjacent to Rombebai block. Medco will drill two exploration wells worth $ 10 million in Rombebai in return of 80 percent working interst and operatorship. Hilmi said one more acquisition is on the pipeline this year, but he declined to reveal further detail on the ground of confidentiality.

?In Eastern part of Indonesia, our strategy is to accumulate as much as gas reserves as we can, as gas will be the future of our business. We see gas will play dominant role in Asia-Pacific energy in the future,? said Hilmi.

Medco currently produces 82,000 barrels of oil per day, mainly from its Kaji-Semoga oil field in Rimau PSC in South Sumatra. The company?s 2001 gas production was 77.20 million standard cubic feet per day (MMCFD). Medco currently has net proven reserves of some 250 million barrels of oil equivalent. The company booked net income after tax of Rp. 704 billion in 2001 (US$ = 9,015).

Hilmi said in 2002, the company would spend some US$ 200 million in capital expenditure for its upstream oil and gas assets. Bigger portion of the fund will go to the development of oil and gas field, while the rest will be for exploration,? he said.

?We are hoping oil and gas production to significantly increased in 2004 as the result of capital spending in 2003,? he said.

Acquisition of oil producing block with upside exploration potential has been the key factor to Medco?s growth. In 1995, the company bought PT. Stanvac Indonesia from Exxon/Mobil, which operated Rimau PSC and in the following year it had discovered huge oil reserves in Kaji-Semoga field, which is located in Rimau PSC. (alex/godang/robert)