Wed, 03 Aug 1994

Drilling firm to sell shares for local and overseas expansion

JAKARTA (JP): PT Medco Energi Corporation, a private domestic company specializing in drilling for oil exploration and production, will offer 22 million new shares to the public to raise Rp 100 billion (US$46.13 million) to finance its overseas expansion projects.

The company's director of finance, Sugiharto, told reporters after a presentation here yesterday that 35 percent of the funds to be raised from the initial public offering (IPO) will be used to finance the expansion of offshore drilling activities in Asian countries.

"Medco is planning to participate in tenders for drilling wells for oil and gas exploration in Vietnam and China, which are developing their oil sources to support their economic development," Sugiharto said.

He said another 16 percent of the fund will be used to finance the development of a gas field in Tarakan, East Kalimantan, another 26 percent to increase the company's working capital and the remaining 23 percent to repay the company's debts with several banks.

Sugiharto said the offshore drilling activities, abroad and domestic, including the procurement of two oil rigs, will cost the company $42 million and the gas field development $50 million, while the working capital will get an injection of $12 million.


He declined to mention the total amount of the company's borrowings from several banks but according to its financial report, its current liabilities as of the first quarter of this year were recorded at Rp 94.9 billion.

Medco is a holding company with two subsidiaries -- PT Meta Epsi Antareja and PT Apexindo Pratama Duta -- involved in onshore and offshore drilling, and two other subsidiaries -- PT Etaksatria Petrasanga and PT Eksita Pantranagari -- operating in oil and gas exploration and production.

Medco, which will be the first oil-based company to be listed on the country's capital market, has appointed PT Niaga Securities and PT Rekaprima Sekurita as leading underwriters.

A director of Niaga Securities, Arsianto Poerwanto, said Medco will offer its shares by the end of this month and list the shares on the Jakarta Stock Exchange in September.

Medco's president, Hertriono Kartowisastro, said the company is now operating two oil fields under production sharing and technical assistance contracts with the state oil company Pertamina.

The production sharing contract promises Medco a 15 percent share of oil production and 30 percent share of gas production, while the technical assistance contract promises a 35 percent share of both oil and gas output after the recovery of investments for exploration. (02)