S&P: Contract expiry for PT Medco Energi Internasional Tbk.'s Kampar block has no rating impact

(Singapore, Dec. 4, 2013) -- Standard & Poor's Ratings Services said today that its rating on PT Medco Energi Internasional Tbk. (Medco: B/Stable/--; axBB-/--) is not affected by the contract expiry for the Kampar block. This is because the block represents only a small proportion--about 5%--of Medco's total oil production volume.

The contract expiry on Kampar does not affect Medco's operations at South Sumatra Extension, a separate block that contributes about 80% to the company's total gas production. The South Sumatra Extension block is an important profit generator for Medco, in our view, especially amid the company's efforts to complete its major projects.

The contract for the Kampar block expired on Nov. 28, 2013. The government of Indonesia decided not to renew the concession and has declared the block as "open." It has assigned Medco as a temporary operator of the block for the six months following the expiry of the contract. (ends)