Medco's profit drops on falling oil production

Medco's profit drops on falling oil production

Bloomberg Bangkok

PT Medco Energi Internasional, Indonesia's only publicly traded oil company, posted a lower profit in the fourth quarter because of falling oil production, said PTT Exploration & Production Pcl of Thailand.

PTT Exploration, the second-biggest shareholder in Medco with a 40 percent stake, booked a loss of 53 million baht (US$1.35 million) in the fourth quarter after amortizing the difference between the price it paid for the stake and its book value, known as goodwill, because of the fall in profit at Medco, PTT Exploration President Maroot Mrigadat said in Bangkok.

"Medco will not be healthy in the short term," Maroot told reporters. "The company needs to focus more on increasing the sales of its large gas reserves. It hasn't made any progress in that attempt."

Medco's oil production may decline about 17 percent to 60,000 barrels a day this year, from about 70,000 barrels a day in 2003, because of aging fields, Medco Chief Operating Officer Rashid Mangunkusumo said on Dec. 6. The Indonesian oil company produced 85,480 barrels of oil a day in 2002, according to PTT Exploration.

Maroot didn't give a figure for the fourth-quarter earnings of Medco, which had net income of $13.5 million in the same period a year earlier, according to Bloomberg data. The Indonesian company will announce its earnings later this month, he said.

PTT Exploration, Thailand's second-biggest gas producer, reported a profit of 1.99 billion baht in the three months to December 31, its smallest quarterly profit in three years, as tax expenses increased and costs from writing down some well surged.

Medco's profit in the first nine months of 2003 rose 3.6 percent from a year earlier to $64 million. Rising oil prices boosted its sales even as oil production fell.