Medco sees oil production to drop, but sales to grow in 2004

Publicly listed oil and gas company PT Medco Energi Internasional expects its oil production in 2004 to drop by 14 percent but revenue to grow by between 10 percent to 15 percent due to strong oil prices, Kompas, Investor Indonesia and The Jakarta Post newspapers reported on Wednesday.

Medco's oil production in 2004 is expected to drop to 60,000 barrels per day (bpd) from 70,200 bpd this year, Medco?s finance director Sugiharto said on Tuesday during a public expose at the Jakarta Stock Exchange.

The decline is due to a depletion in reserves at the Kaji/Semoga oil field in South Sumatra, which contributes about 80% of the company's output.

Medco has been trying to develop other fields to compensate. The company acquired the Merangin-1 oil block in south Sumatra this year.

This year, Medco expected its full-year sales revenue to reach $447 million, up from $421 million last year, mainly on the increase of oil price to $27.4 per barrel from $25.3 last year.

"We expect the oil price to remain higher next year and boost our revenue despite a fall in sales volume," Sugiharto, told reporters.

In response to the decline in oil reserves, Medco plans to increase gas output next year by 50% to around 120 million cubic feet a day, from around 80 million currently, he said.

Medco, currently has around 126 billion cubic feet of proven gas reserves, mostly in its Kalimantan and Sumatra fields.

To support the revenue growth, the company next year will spend $300 million to acquire more oil and gas fields and another $135 million to develop the existing fields, he said.

Medco plans to partly finance the investment by using its internal cash reserves, which currently stand at $233 million, he said. (*)