Medco to acquire S. Sumatra, Papua oil blocks

Publicly listed oil company PT Medco Energi International Tbk said Thursday it will acquire by October stakes in two oil blocks in South Sumatra and Papua provinces for US$11 million.

"We will buy a 60 percent stake in a company that operates an oil block in South Sumatra for $6 million," Medco's Chief Executive Hilmi Panigoro said.

He said Medco will also buy an 80 percent stake in another company that operates an oil block in Papua province for $5 million.

He didn't disclose the names of the companies, but said the company that operates the oil block in South Sumatra is a British company, while the one in Papua is an American company.

He said Medco will use proceeds from the $100 million Eurobonds issued earlier this year and cash to finance the acquisition.

"(The) proceeds will also enable us to acquire and finance (other) acquisitions," he added.

Other acquisition options include acquiring interests in production blocks, new and existing oil and gas assets, and equity stakes, Panigoro said.

Medco recently spent $30 million of the proceeds to finance acquisition deals including an exploration field in East Kalimantan, an oil producing Tuban joint operating block in East Java, and the Asahan block in North Sumatra.

Thailand's PTT Exploration & Production owns a 34 percent indirect stake in Medco.(*)