Bumi Resources starts oil drilling in Yemen

Bumi Resources starts oil drilling in Yemen

JAKARTA (JP): Publicly listed oil and gas company PT Bumi
Resources said its wholly owned subsidiary Gallo Oil Ltd.,
began oil drilling activities at one of the company's six oil
wells in Yemen.

Bumi said that drilling activities in the Daw'an-2 oil well
began last week and it now reached a depth of 303 meters.

The company expected to conclude its drilling activities
within three weeks, after it reached a total depth of 1,400
meters.

"We have invested US$16 million in total for drilling there,
of which our share is $8 million", Bumi's corporate secretary
Ella Veronica Ma'ruf told The Jakarta Post.

Bumi has only a 50 percent stake in the Daw'an-2 oil well,
with the remaining belonging to Canadian-based oil and gas
company Pertacal Energy Limited.

The Daw'an well is part of the R-2 block, which is located 60
kilometers southwest of an oil field producing 200,000 barrels of
crude oil per day, operated by other company.

Based on a study by Chapman & Associates, an independent
engineering consultant, Daw'an-2 contains an oil layer of 77
meters thick with a coverage of 7.8 square kilometers.

Last year, Bumi changed its core business from the hotel
industry to oil and gas, after acquiring a 100 percent stake in
Gallo Oil of the United Kingdom.

Subsequently, it changed its name from Bumi Modern into Bumi
Resources last September.

To finance the acquisition, Bumi raised some Rp 9 trillion
(about US$947 million) from a rights issue that year.

However, the move sparked suspicion among analysts, since
Bumi's total assets constituted only about 5 percent of the
rights issue proceeds.

According to them, the acquisition was a ploy to make the
company's assets big enough to be pledged as collateral for its
parent company, the Bakrie Group's, debts.

Bakrie later surrendered Bumi's assets as part of
restructuring its $1 billion worth debt.

Bumi is now 72 percent owned by American company, Long Haul
Holding Company; 23 percent by Malaysian company Minara Kelabuan
and only 2 percent by the Bakrie Group.

Ella said that Bumi was seeking a buyer for its hotel in
Uzbekistan, the LeMeridian Taskan.

Bumi, she said, wanted to sell the hotel for a price higher
than the hotel's book value, which was about Rp 125 billion.(bkm)