Medco extends closing date for Novus takeover

Rendi A. Witular, The Jakarta Post, Jakarta

The country's only publicly listed oil and gas company, PT Medco Energi Internasional, has extended the deadline for its plan to acquire Australian energy company Novus Petroleum Ltd.

In a statement to the Australian Stock Exchange on Friday, Medco said it had decided to extend the closing date of the takeover to Feb. 24 at 7:00 p.m. Melbourne time, from Feb. 10 at 7:00 p.m.

Medco president Hilmi Panigoro said the company had to take the decision in order to give due consideration to additional information that had become available, including a recent valuation of Novus shares by an independent share valuer.

Grant Samuel & Associates valued Novus shares at between A$1.96 and $2.75 a share.

Medco, which was founded by businessman-turned-politician Arifin Panigoro, earlier offered to buy 90 percent of Novus shares on issue at $1.74 per share.

In response to the Grant Samuel report, Medco CEO Hilmi Panigoro said: "We are extremely surprised at the very high valuation range in the report. We believe that it is materially flawed."

The valuation by Grant Samuel also tops the bidding price offered by Medco's rival, a consortium consisting of Novus chief executive Bob William and Hong Kong-based Crosby Capital Partners, which bid $1.77 per share.

Last week, Hilmi said he was optimistic Novus shareholders would approve the takeover offer, and that Medco had prepared three plans to respond to any rival offers: maintaining its offer of $1.74 per share while reducing the size of shares to be acquired; matching the rival offer but with different terms, or offering a higher bid.

The acquisition of Novus will raise Medco's average oil and gas production by 21 percent, from its current 84,500 barrels oil equivalent per day (BOEPD) to 102,275 BOEPD, and gas contributions will increase from 17 percent to 26 percent.

Analysts have said Medco was anxious to acquire Novus, as the company owned natural gas reserves in Brantas, East Java, which was producing more gas over the last eight quarters to reach 64 million cubic feet per day (MMSCFD), or a gross average of 54 MMSCFD.

Novus sold 80 MMSCFD from its Brantas concession last year to state-owned gas distributor PT Perusahaan Gas Negara and to the state Oil and Gas Implementing Body, or BP Migas.

Medco once said it would switch to being a gas producer rather than an oil producer, due to a continual decline in its oil reserves lately. The company's proven reserves for oil will only last four years.

Novus' operating profit surged by 35 percent last year to $28.4 million from $21 million in 2002 on higher revenues in the U.S., increased natural gas production from Indonesia and a decline in operating costs.