Gulf Indonesia won't return to markets soon

Gulf Indonesia won't return to markets soon

NEW YORK (Reuter): Gulf Indonesia Resources Ltd has no
immediate plans to return to the capital markets and will fund
capital spending of $275-$300 million a year from cashflow and
credit, president Richard Auchinleck said.

"The first issue was many times oversubscribed," he said in an
interview after the first day of trading of the company on the
New York Stock Exchange.

Auchinleck expected details of an over-allotment option to be
announced soon.

Late Monday, 21 million shares of Gulf Indonesia, which is
majority owned by Gulf Canada Resources Ltd [GOU.TO], were priced
at $19.50 per share and an additional 3.15 million are available
as an over-allotment option if demand is strong.

Auchinleck said that Gulf Canada will not be offering any more
shares in the company and will retain 72 percent, assuming the
over-allotment option is exercised.

The stock rose strongly on its first day, closing up 2-3/4 at
22-1/4 and Auchinleck said he hoped a parallel listing on the
Jakarta Stock Exchange would be achieved in three months.

Auchinleck said Gulf Indonesia could have net unrisked
reserves of 1.7-3.6 billion barrels of oil equivalent, compared
with 350 million boe of proved and probable reserves at present.

"Our exploration success is 50 percent compared with 10-15
percent for a good international exploration and production
company and we are finding reserves at $2.00 per barrel," he
said.

Gulf Indonesia will drill 40 wildcat wells over the next 30
months and plans to bring on an additional 25,000 barrels of oil
equivalent production in August 1998.

It currently produces 25,000 barrels per day, all oil, and
Auchinleck said that, on average, Gulf Indonesia will increase
production by 50 percent a year over the next three years.

Apart from the initial oil production, Gulf Indonesia's main
target is the rapidly developing market for natural gas in
Southeast Asia.

Gulf Indonesia said the Indonesian government aimed to
increase the percentage of natural gas used in electric power
generation from seven percent of energy used for electricity to
22 percent.

"We will be replacing crude and heating oil," Auchinleck said.
Production from its main development, the Corridor Block Gas
project in South Sumatra will come onstream at 300 million cubic
feet a day next year.

The company will also develop the West Natuna gas field to
supply Singapore, again displacing oil as fuel for making
electricity.