Medco under pressure by oil price drop

IDX-listed integrated energy company PT Medco Energi Internasional Tbk reported a 20 percent decline in revenue as per September of this year to US$418 million from $522 million in the corresponding period of last year, Kontan reported on Monday.

This has resulted in a net loss of $44.5 million from a net profit of $9.5 million the same period of last year.

The declining performance comes as the company shut down part of its US operation (East Cameron) and a bio ethanol plant in Lampung, combined with the current drop in oil price.

Fortunately, its Senoro gas field project in Central Sulawesi has displayed positive performance, so far producing 250 mmscfd of gas. Gas from the field, operated by joint operation body Pertamina Medco Tomori Sulawesi, is channeled to the Donggi Senoro LNG plant.

?We hope the Senoro project to provide greater contribution in 2016, to be followed with contribution from Block A in early 2018,? Medco President Director Lukman Mahfoedz told the paper.

He added that for Block A, Medco has signed a gas sale and purchase agreement with state-owned oil and gas firm PT Pertamina at a price of $9.45 per mmbtu.

Meanwhile, Bisnis Indonesia reported that Medco?s exploration activities this year will be slower than initially planned due to the current low oil price environment.

The paper quoted Lukman as saying that the company will only carry out exploration activities in three wells this year from the original target of four wells.

The company has also reduced capital expenditure for exploration and exploitation from $305 million last year to $211.7 million this year.

Realized oil and gas output for this year is estimated to only reach 51,400 boepd.(*)