JP/13/MEDCO

JP/13/MEDCO

Medco to get $190m in compensation for Jeruk

Leony Aurora
The Jakarta Post/Jakarta

Indonesian energy giant PT Medco Energi Internasional will cash
in on its calculated gamble in drilling wells in the Jeruk oil
field by claiming US$190 million in compensation from the field's
original partners, Cue Energy and Singapore Petroleum Company
(SPC).

The publicly listed company's CEO Hilmi Panigoro said on
Monday he received a confirmation last Friday that Cue Energy and
SPC intended to reclaim their rights on Jeruk, a big oil field
located in East Java.

Consequently, "They have to pay for all of the costs we have
incurred on Jeruk, which is about $30 million, within 30 days
after the letter," he said.

The two firms would also have to pay penalties worth between
three times and 10 times for seismic observation and the drilling
of the first and second wells, he added.

"The total penalty is about $190 million," said Hilmi. The
funds -- almost triple the net profit of $70.1 million that Medco
accumulated last year -- would be paid after Jeruk started
pumping oil, which is estimated top be in 2008.

However, should the field produce between 50,000 and 60,000
barrels of oil per day, then the penalty would be paid off within
one year, added Hilmi.

Australia's third largest oil and gas producer, Santos Ltd.,
previously partnered up with Cue Energy and SPC to explore and
manage Jeruk, with 45 percent, 15 percent, and 40 percent of the
concessional rights, respectively.

Two years ago, when the two junior partners refused to take
the risk of exploring the field, Santos and Medco signed an
agreement to have a 50-50 share in the drilling of wells.

They struck gold when they found the equivalent of between 350
million and 500 million barrels of oil in the field, far more
than the previous certification of 170 million barrels.

Medco had previously said it was considering maintaining some
shares in the field.

"Our contract did not allow that. However, we are very happy
with the compensation," said Hilmi.

Medco, the largest Indonesian-controlled private oil company
has been aggressively expanding its business, most recently by
acquiring 100 percent of Australian-based energy firm Novus
Petroleum Ltd. for A$350 million last year.

With surging oil prices and significant additional oil and gas
reserves from its new subsidiary, Medco's net profit in 2004
jumped almost 30 percent to $70.1 million from $54.1 million in
the previous year.

Revenues increased 19.2 percent to $535.1 million last year
from $449 million in 2003, with the crude oil price averaging
higher at $36.78 per barrel from $29.33 per barrel in the
respective periods.

I-Box

London IPO set for July, road shows June

The time table for Medco's initial public offering (IPO) in
London Stock Exchange is being finalized, with the event
scheduled for mid-July, CEO Hilmi Panigoro said.

"We will make non-deal road shows to Hong Kong and Singapore
in May," Hilmi said.

After that, in June, the company would conduct official road
shows to Asian cities as well as London and several cities in the
U.S., namely Los Angeles, New York, San Francisco, Philadelphia,
and Boston, he added.

In a bid to go further in the international market, Medco is
planning to sell some 1.5 billion shares, or 40 percent of its
stake, and list its shares on the London bourse.

Medco's share ended unchanged at Rp 2,575 on Monday.