Bakrie banking on Energi Mega

JAKARTA. PT Energi Mega Persada is hoping for a healthy performance next year with a plan to boost its annual output by 20 percent and outline a refinancing strategy to push up its bottom line.

The oil and gas company is one of the few business entities under Aburizal Bakrie that is performing well.

Energi president director Imam Agustino told reporters on Friday that the company hoped to see its production hit 68,000 barrels of oil equivalent per day (boepd), increasing by around 33 percent from this year’s estimate of around 51,000 boepd.

Imam said the increase was attributed to additional output from one of its blocks that had been running at full capacity starting this year.

In the first nine months of this year, the company has produced up to 50,300 boepd, 44 percent of which comes from the company’s Kangean Block in East Java.

Responding to plunging oil prices, Imam said the company had nothing to worry about as it relied more on gas as its main sales generator.

In fact, his company hoped to see its revenue grow by around 20 percent from US$807 million last year to $965 billion this year from increasing gas output.

“About 70 percent of our revenue comes from gas, of which prices are relatively stable because of fixed contracts. Next year we hope the gas contribution will rise to around 75 percent of our total revenue with additional production,” he said.

In the long run, he said that Energi hoped to see production hitting 200,000 boepd in 2020, be it from maximizing its current assets or through acquisitions.

Energi, one of four of Bakrie’s firms in the bourse, the shares of which are still traded above
Rp 100 (less than 1 cent) apiece, runs 10 blocks, including one in Mozambique, with total proven and potential reserves of 165.5 million barrels of oil equivalent (mboe) that will last around nine years.

As of the third quarter of this year, the company saw its net sales up from $576.96 million to $603.07 million because of increasing gas prices, while its net profits plunged by 80.2 percent year-on-year to $40.08 million.

That included gains from selling its Masela Block recorded in the first nine months of last year to pay its outstanding debt.

To maintain its bottom line, Imam said the company was seeking to replace $170-million loans from Farallon Capital with new loans from Credit Suisse and Deutsche Bank early next year, which is expected to help the firm save $15 million from its interest cost to its net profit next year.

MNC Securities’ Reza Nugraha said Energi Mega Persada was considered one of the best performers among the seven other Bakrie firms listed in the bourse.

“Unfortunately, its shares are traded at a very low rate in the stock market simply because it is part of the Bakrie group, which investors have lost trust in,” he explained

Shares of Energi, listed in the Indonesian Stock Exchange (IDX) under the code ENRG, traded at Rp 108 each on Friday, unchanged from the previous day’s trading.

The Bakrie group’s eight listed companies, mostly struggling with debt issues and some facing legal disputes concerning their loans, recorded more than Rp 130 trillion of total debts in their January and June financial sheets.

“Even compared with other energy firms, the company showed a relative healthy performance with its DER [debt-to-equity ratio] standing at around 1.3, while other firms might record between 1.7 and 2.3,” Reza explained.

Energi’s liabilities stood at Rp 1.4 trillion while its equity was Rp 933.7 billion as of September.

Reza’s words, however, came with a warning.

“The Bakrie companies’ ‘tradition’ of selling their assets and sourcing new loans to refinance their debts must be avoided. The good thing [about Energi] is it has pledged to keep boosting its production,” he added. (Anggi M. Lubis)