Medco Energy acquires Stanvac for $88 million
Medco Energy acquires Stanvac for $88 million
JAKARTA (JP): Publicly-listed oil firm PT Medco Energi acquired 100 percent equity interest in PT Stanvac Indonesia and its affiliates, which it purchased from America's two largest oil companies, Mobil Oil and Exxon.
After ten months of intensive acquisition efforts, the Medco Energy board accepted the share certificates of Stanvac and affiliates from Mobil and Exxon shareholder representatives in a ceremony here yesterday.
Medco's president, Arifin Panigoro, told a press conference that the company's shareholders had agreed on the acquisition through an extraordinary meeting on Tuesday.
Arifin reported that the value of the acquisition was US$88 million, of which US$13 million came from Medco equity and the rest from loans.
The loans were provided by a syndication of 15 local and foreign banks, with Bank PDFCI and Bank Bira acting as lead coordinators, said Sugiharto, Medco's finance director.
When asked, Sugiharto declined to mention the level of the interest rates on the loans, saying that they varied from one bank to another.
"Most importantly, we're getting prime lending rates," Sugiharto said.
As part of the sale agreement, the Stanvac name will be discontinued and incorporated under PT Etaksatria Petrasanga and PT Eksita Pantranagari (Exspan), Medco's oil producing subsidiaries.
In addition to the two oil firms, Medco has two more subsidiaries -- onshore drilling company PT Meta Epsi Antareja and offshore drilling firm PT Apexindo Pratama Duta.
Exspan's oil production level stood at an average of 5,389 barrels per day (bpd) last year, a 4.6 percent decrease from the previous year's level of 5,638 bpd.
With the incorporation of Stanvac, Exspan will have a combined production level of more than 18,000 bpd.
Exspan will now be responsible for operating three production sharing contract areas -- Kampar in Riau, Rimau and Pasemah in South Sumatra -- in addition to its own production sharing contract in Tarakan and technical assistance contract in the Sanga-Sanga and Tarakan areas, all in East Kalimantan.
However, Industry analysts have criticized Medco's move to acquire Stanvac as lacking vision since the oil reserves held by Stanvac are expected to last less than ten years.
John Karamoy, president of Exspan, disagreed with the critics, saying that he plans to exploit the natural gas reserves in Stanvac's South Sumatra fields, in addition to exploiting the existing oil reserves of some 30 million barrels.
Currently Stanvac produces some 40 million cubic feet of gas, most of which is consumed by state-owned fertilizer firm PT Pupuk Sriwijaya in Palembang, South Sumatra.
Karamoy noted that Stanvac currently has a concession area of some 19,000 square kilometers, of which 8,000 square kilometers are still not exploited.
"I'm very optimistic that we will find some five million to 10 million barrels of crude oil in new reserves in addition to the existing 30 million barrels," Karamoy said.
Karamoy noted that the company has earmarked $10 million for new exploration in the unexploited fields of South Sumatra.
Stanvac is the country's oldest oil firm. It was established in 1934 as NV Standard Vacuum (better known as Stanvac) Sales Company.
Medco's success in acquiring Stanvac serves as a special reward for the company after its failure to acquire 23.4 percent equity interest in the Malacca Straits Production Sharing Contract areas from Lasmo Oil (Malacca Straits Ltd.) and its affiliates.
"It (the Malacca Straits) went to the Bakrie Group," Arifin said.
Medco, the first oil firm to be listed on the Jakarta Stock Exchange, reported a net income of Rp 18.4 billion (US$8.26 million) with earnings per share of Rp 181.6 last year, or 37 percent higher than 1993's Rp 13.4 billion.
The company projected a 50-percent increase in net profit this year and another 50-percent increase next year. (rid)