Medco Energi to buy Lasmo's Malacca Straits

Medco Energi to buy Lasmo's Malacca Straits

JAKARTA (JP): Publicly-listed oil company PT Medco Energi
Corporation is acquiring a 23.4 percent interest in the Malacca
Straits Production Sharing Contracts area from Lasmo Oil (Malacca
Straits) Ltd. of Britain and its affiliates.

President of Medco Energi, Hetriono Kartowisastro, said
yesterday that his company signed an in-principle agreement with
Lasmo in May. However, he declined to mention the value of the
acquisition, saying that the acquisition process is not final
yet.

"The acquisition of Lasmo's interest is still subject to their
partners' preemption rights and an approval from the state-owned
oil company Pertamina," Hetriono said after attending the annual
Medco shareholder meeting.

He added that the operatorship of the oil contract area will
be transferred to a specially designated subsidiary of Medco.

Medco is the first oil company listed on the Jakarta Stock
Exchange. It floated 21.7 percent of its enlarged capital base
through an initial public offering on the exchange last October.

Medco is a holding company of four subsidiaries, including
onshore drilling company PT Meta Epsi Antareja, offshore drilling
firm PT Apexindo Pratama Duta and two other oil and gas
exploration and production companies PT Etaksatria Petrasanga and
PT Eksita Pantranagari.

John Karamoy, president of Etaksatria and Eksita (Expan), said
the Malacca Straits contract area currently produces some 25,000
barrels per day (bpd) of crude oil. "If we proceed with the
acquisition, we will control one third of that level."

Medco's oil production level stood at an average of 5,389 bpd
last year, decreasing by 4.6 percent from the previous year's
level of 5,638 bpd.

Methanol

The shareholders' meeting agreed on the company's plan to take
over the operation of the Bunyu methanol plant in East Kalimantan
from Pertamina.

"We received approval from Pertamina early this year, and the
operating agreement is currently under negotiation. We expect to
begin the operation of the methanol plant later this year," said
Sugiharto, Medco's finance director.

The Bunyu plant, which has an annual production capacity of
330,000 metric tons, is currently the only methanol plant in the
country.

The Humpuss Group, through its subsidiary PT Kaltim Methanol
Industry, is building the country's second methanol plant in
Bontang, East Kalimantan, with an annual capacity of 660,000
metric tons, which is expected to start its commercial production
in 1997.

Yesterday's meeting also approved Medco's plan to diversify
its operations into power generation.

Hetriono said his company, in a fifty-fifty partnership with
Enron Development Co. of the United States, is in the final stage
of negotiations with the government for a build, own and operate
(BOO) contract for a 136 megawatt gas-fueled power plant in
Samarinda, East Kalimantan.

He added that the construction of the plant is projected to
start next year with the first 68-megawatt unit to start
operating in 1997 and the second in 1999.

At the shareholders' meeting, the company reported a net
income of Rp 18.4 billion (US$8.26 million) with earnings per
share of Rp 181.6, 37 percent higher than last year's Rp 13.4
billion.

However, the company's profit margin decreased by 17.9 percent
because of the international oil price volatility and the
decrease in average oil price to an average of $16.15 per barrel
as compared to $17.55 in 1993.

This year the company expects a 50 percent increase in net
profits. "We are confident with our projection of a 50 percent
increase in net profits because of the better oil prices and the
expansion of our operations, including the methanol plant, the
Malacca Straits oil field and the operation of our new jack-up
rig," Sugiharto said. (rid)