Merrill upgrades share price target for Medco: Report

Global investment bank Merrill Lynch has upgraded its 12-month price target for the shares of Indonesian oil and gas producer PT Medco Energi Internasional by 5.4 percent to Rp3,900 on a positive business outlook, Reuters reported Friday.

In a research note dated Jan 5, the bank said the upgrade was based on Medco's plan to produce liquefied natural gas (LNG) from its Senoro gas field and the acquisition of a 25 percent direct interest in the Jeruk oil project.

"Both should lead to reserve upgrades, probably in 2006, and generate production growth for the company," the report said.

Merrill said it kept a "buy" on the stock, which is also traded in the form of global depository shares on the Luxembourg Stock Exchange following a secondary share offering last year.

Shares in Medco, Indonesia's largest privately owned oil and gas company, closed at Rp3,750 apiece on Thursday, up about seven percent on Thursday. It gained 1.33 percent to Rp3,800 in early trade on Friday.

CSFB said in a research note on Friday that Medco's Senoro LNG plan removed uncertainty of monetising the gas reserves at the field, while the Jeruk stake acquisition could also lead to a reserve upgrade.

CSFB kept a "outperform" rating on Medco shares with a target price of Rp4,280, a 14 percent upside from Thursday's closing. (*)