Medco sets sights on IPO in Singapore, London markets

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

Indonesian energy giant Medco Energy Internasional plans to offer up to 45 percent of its stake on the Singapore and London stock exchanges over the next six months, via an initial public offering (IPO), the company's founder said on Wednesday.

Arifin Panigoro, of the Panigoro family, who is the founder of the company, said the IPO plan would commence until after the family completed the acquisition of a 59.9 percent stake of New Links Energy Resources in Medco, which should be concluded later this month.

"As part of the company's long-term expansion program, we will launch IPOs in London and Singapore in the next six months, because the price here in Jakarta is too cheap for us," Arifin told The Jakarta Post.

He was upbeat about the prospects of the offering, betting on recent findings of new oil reserves to lure international investors.

"Aside from Santos oil, we also found a new oil block with a large amount of reserves in Lybia, which makes our shares even more attractive," Arifin remarked.

He was referring to new findings by Santos of a huge oil reserve in Jeruk well in East Java, in which Medco serves as a local partner to Santos -- an Australian oil producer, temporarily replacing Santos' previous partner Cue Energy in exploring and managing the field.

Arifin did not elaborate on the proceeds target.

Santos oil and Medco signed an agreement in 2003 to have a 50- 50 share in the drilling of the Jeruk field. It was reached after Cue Energy showed no interest in participating.

Recently, Santos made its biggest oil strikes in the field, finding the equivalent of 350 million to 500 million barrels of oil, far more that the previous certification of 170 million barrels -- a move that will likely tempt Cue Energy to reclaim its right to the Jeruk field.

Gamala Katoppo, Medco investor relations officer, acknowledged that negotiations were underway to discuss the future composition in the exploration of the field.

Should Cue Energy indeed reclaim the rights, Gamala went on, Medco would then be entitled to a large amount of compensation.

"However, we are still discussing the possibility for us to have some shares in the project. The options are still on the table," said Gamala.

"Either way, whether to have the compensation or maintain some shares in the project, it would still be very profitable for us," Gamala added.

Elsewhere, the Panigoro family is now in the process of buying a 59.9 percent stake in New Links that currently controls 86 percent of Medco, at a reported price of US$400 million.

Medco is currently the largest Indonesian-controlled private oil producer in the country.