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)