Medco boosts oil production for listing in New York

JAKARTA (JP): The largest national private oil and gas company PT Medco Energi International said it was boosting crude oil production to increase its asset value as it eyed listing on the New York Stock Exchange.

Company director Hilmi Panigoro said that the company's main concern was to boost production and find new reserves to increase its asset value.

"We expect to raise production levels to 70,000 barrels oil per day (bopd) by the end of this year from the current 68,000 bopd," Hilmi told The Jakarta Post during the Medco Group's annual sports outing on Saturday.

He said Medco had met this year's targeted production increase of 50 percent, surging to 68,000 bpd from 42,000 bopd last year.

Medco floated its shares on the Jakarta Stock Exchange in 1994 and recently announced it planned to also list its shares on the New York Stock Exchange.

But, Hilmi said, the company's assets were currently still too small for listing on the New York Stock Exchange.

"We're talking here about an international stock market, if we're too small no one will notice us," he said.

According to him, a company needs to have at least $1 billion in asset value to attract investors in New York.

In comparison, Medco's current asset value is only between about $300 million to $400 million, Hilmi said.

"This means we must boost production and reserves to the point where our size becomes attractive," he explained.

Hilmi estimated that by mid 2002 the company's asset value would be large enough for listing on the New York Stock Exchange.

He further said that in order to maintain the company's current production level, it was investing heavily in exploration activities.

This year alone, he said, Medco will spend some $24 million for exploration drilling.

"Our spending for exploration drilling will reach record highs," he said, adding that Medco's average spending on exploration drilling ranged between $5 million to $10 million per year.

He said the company's current proven reserves are 300 million barrels. But it needs to find new reserves of some 24 million barrels per year to maintain a production level of 70,000 bpd, Hilmi said.

In February this year, the company acquired the interest of Union Texas Tomori Inc in the Senoro and Toili blocks off the coast of Sulawesi with proven reserves of 100 million barrels of oil and 2.1 trillion cubic feet of gas respectively.

In January, the company acquired majority stakes in Western Simenggaris Petroleum Pty. Ltd, which runs oil and gas operations in East Kalimantan, and in Western Madura Pty. Ltd., which operates oil and gas fields in Madura, East Java.

Another factor crucial to listing Medco's shares in New York was timing, Hilmi said.

"We have to make sure that the market sentiment will have reached its peak when we go public in New York," he said.

He said a bullish oil market such as today's would provide positive sentiment to the market.

Medco founder and now member of the company's board of council Arifin Panigoro said that after listing on the New York Stock Exchange, Medco would look out for strategic partners to strengthen its global competitiveness.

He cited Malaysian Petronas as a potential partner to Medco. "We've been in talks for quite some time," he said. (bkm)