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)