Indian Oil may buy 40% stake in Medco

Indian Oil may buy 40% stake in Medco

Shares of PT Medco Energi Internasional, Indonesia's biggest publicly traded oil and gas company, rose on a report that Indian Oil Corp. may buy a 40 percent stake in the company.

The shares surged Rp 275, or 22 percent, to Rp 1,575.

Mumbai-based Indian Oil is India's biggest oil refiner. The company may buy the Medco stake for US$600 million from Thailand's PTT Exploration & Production Plc. and an American mutual fund, India's Financial Express newspaper reported, citing an unidentified Indian Oil official.

The price that the Indian company may pay, or 45 cents a share, equals Rp 4,156 a share using an exchange rate of Rp 9,235 a dollar at 12:11 p.m. Jakarta time. Medco had a total of 3.33 billion shares outstanding as of March 31, 2004, according to Bloomberg data.

Medco expects its oil and gas output to soar by 18 percent after acquiring a majority stake in Australia-based Novus Petroleum Ltd. in June.

It said that by taking into account Novus' production, the company expected its oil and gas production to increase this year to 33 million barrels of oil equivalent (MMBOE) from 28 MMBOE last year.

Medco -- which was founded by businessman-turned-politician Arifin Panigoro -- also expects that its proven oil and gas reserves as a result of the acquisition will increase by 50 percent to about 210 MMBOE from 140 MMBOE as of the end of last year. -- Bloomberg