Medco may buy Australia's Novus<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
Publicly listed oil and gas firm PT Medco Energy International
\nannounced on Monday it intended to acquire Australian oil and gas
\ncompany Novus Petroleum Ltd. for A$326 million (US$240 million)
\nin what analysts said could be the largest takeover of an
\nAustralian company by a local firm.<\/p>\n
In a letter to the Australian Stock Exchange (ASX), Medco said
\nit wanted to buy 90 percent of Novus shares on issue at A$1.74
\neach, or 35 percent higher than the closing price of the
\ncompany's shares on Friday at the ASX.<\/p>\n
Medco, which is listed on the Jakarta Stock Exchange (JSX),
\nsaid the move was aimed at stemming its declining oil reserves.<\/p>\n
Novus is Australia's fifth largest upstream oil and gas
\ncompany by sales.<\/p>\n
\"The Novus assets are attractive to us, as they can expand our
\ninterest in Indonesia and give us the potential for geographic
\ndiversification of our asset base,\" said Medco president Hilmi
\nPanigoro in the letter.<\/p>\n
The acquisition plan will be fully financed from the company's
\nUS$250 million unsecured notes issued in May, and from operating
\ncash of around $40 million.<\/p>\n
Medco, which has proven and probable reserves of 754 million
\nbarrels of oil equivalent (MMBOE), said that if the acquisition
\nwas successful, it would undertake a thorough review of Novus
\noperations; but in the near term, it would maintain Novus assets
\nand existing employees, including senior management.<\/p>\n
Novus has assets in Australia, Indonesia, Oman, Pakistan, the
\nPhilippines and the U.S., with proven and probable reserves of
\n107 MMBOE.<\/p>\n
Last year, Novus' revenue totaled A$177 million, but an
\noperating loss after income tax of A$34 million.<\/p>\n
In response to Medco's plan, Novus said in a statement to the
\nASX that it had not yet received a copy of Medco's bid statement.
\nNovus noted from Medco's announcement that the offer would be
\nhighly conditional and it was immediately clear that the offer
\ndid not take into account the underlying values of Novus.<\/p>\n
Elsewhere, Norico Gaman, an energy and mining analyst with BNI
\nSecurities, said public investors should examine the acquisition
\nplan carefully.<\/p>\n
\"The plan will be financed mostly by debt. This will burden
\nMedco and risk its net profit if, in the end, it turns out that
\nNovus has no reliable long-term reserves,\" he said.<\/p>\n
The acquisition plan is slated to be approved at a
\nshareholders meeting in January.<\/p>\n
Medco shares on the JSX rose by Rp 75 to Rp 1,375 as news of
\nthe plan was released.<\/p>\n
Medco is the country's largest listed oil and gas company on
\nthe local bourse, with a market capitalization of around US$510
\nmillion and operations in Southeast Asia, the Middle East and
\nNorth America.<\/p>\n
The company was founded over 20 years ago by businessman-
\nturned-politician Arifin Panigoro.<\/p>\n
In a recent public expose, Medco projected that its 2004 oil
\nproduction would drop by 14 percent on depleted reserves, which
\nwould force the company to seek new reserves immediately to
\ncompensate for a possible decline in sales.<\/p>\n
Medco has projected that its proven oil reserves will last
\nonly four years, while its proven and probable reserves will run
\nout in 12 years.<\/p>",
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