EMP to spend more than $300m to develop blocks in 2006

Leony Aurora, The Jakarta Post, Jakarta

PT Energi Mega Persada (EMP), the second-largest publicly listed domestic oil and gas firm, is planning to spend more than US$300 million next year to develop existing reserves and boost oil and gas production.

The money will also be used to develop five oil and gas fields the company would gain with its planned acquisition of PT Tunas Harapan Perkasa (THP), EMP president director and chief executive Chris Newton said during the weekend.

"(Our investment program) is primarily focused on developing proven and undeveloped reserves," Newton said.

EMP also planned to use between $30 million and $40 million, roughly 10 percent of its budget, to explore a block in the Strait of Malacca through its subsidiary Kondur Petroleum S.A. next year, Newton said.

The firm's extraordinary general shareholders meeting last week approved a planned rights issue, which is expected to raise Rp 3.8 trillion ($380 million), in late January next year. The meeting ruled the proceeds should be mainly used to fund the acquisition of THP at an estimated $300 million in February 2006.

THP through its subsidiaries owns 100-percent participating interests in the Bentu and Korinci Baru blocks in Riau, Sungai Gelam TAC in Jambi and the Semberah TAC block in East Kalimantan, along with a 50 percent participating interest in the Gebang block in North Sumatra.

With the acquisition, EMP will add 435 billion cubic feet (bcf) of gas and 31 million barrels of oil to its certified energy reserves.

Newton said Bentu and Korinci Baru would start producing 15 million standard cubic feet a day (mmscfd) of gas in January next year, which would be sold to state power utility PT Perusahaan Listrik Negara.

"In the contract, (the output) will be increased to 30 mmscfd about a year later," Newton said. Sungai Gelam would also be developed and begin production of 20 mmscfd in the third quarter of next year, he said.

EMP's audited net profit in the first half of the year jumped by nearly five fold to Rp 147.4 billion as compared to Rp 31.4 billion recorded in the same period the previous year on increased gas output and high oil prices.

As of January 2005, the company had certified probable reserves of 319.2 million oil-equivalent barrels.

The company has earmarked some $195 million this year for capital expenditure.