EMP to spend $195m to raise oil, gas output

EMP to spend $195m to raise oil, gas output

Jakarta/Bloomberg

PT Energi Mega Persada, Indonesia's second-largest listed oil and gas company, plans to spend US$195 million this year to develop three areas to increase output, the company's official said.

Energi Mega will spend $104 million to develop the Kangean area that it acquired from BP Plc. last year, Energi Mega's President Director Christopher Newton said in an interview in Jakarta today. It will spend $63 million on the Brantas area in East Java and $28 million on the Malacca Strait block, he said.

"This year our output will increase with additional output from Kangean," Newton said after a shareholder meeting. "We're still observing new opportunities and when we find something worth pursuing for, we'll add the funding."

Energi Mega has been offered incentives by the Indonesian government to develop oil and gas fields as part of a drive to boost production. Indonesia's oil output has fallen 5 percent annually during the last five years to less than 1 million barrels a day while demand has risen by more than 6 percent a year during the period.

The company plans to pump 12,000 barrels a day of crude oil from its Malacca Strait site, 3,450 barrels a day from Kangean, and 1,400 barrels a day from Brantas, Corporate Secretary Purwanto told reporters. Energi plans to produce 264 million cubic feet of natural gas a day from its Kangean, Brantas and Malacca Strait areas, he said.

The Indonesian government in April offered incentives to oil companies, including a 120-percent reimbursement on development costs. Energi Mega plans to develop three small oil fields to take advantage of the incentives that are part of the government's drive to boost oil output, Chief Commissioner Suyitno Padmosukismo said.

Energi Mega spent $280 million last year, including $165 million to acquire the Kangean block, Padmosukismo said.

Shareholders approved the use of a $275-million loan facility from Credit Suisse First Boston to refinance debt and develop the Kangean gas area, Newton said.

Energi Mega's net income rose four-fold on higher prices to Rp 74.2 billion, or Rp 8.98 a share last year, the company said on April 28. The Jakarta-based company didn't meet its estimate of Rp 189.5 billion in 2004, stated in its prospectus for public listing in June last year.