Medco boosts oil production for listing in New York
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)