Medco profit drops on lower oil prices

JAKARTA. Listed oil and gas company PT Medco Energi Internasional reported a significant drop in its profit during the first six months of the year due to lower sales prices and production.

According to a financial report submitted to the Indonesia Stock Exchange (IDX) on Friday, the company reported a 49 percent decline in net profit to US$7.51 million in the first half of the year, falling sharply from $14.91 million in the same period last year.

The 6.7 percent drop in total revenues was $428.53 million during the January to June period from $459.49 million in the same period as last year.

“The main factor causing the decline in the revenue was the fall in oil prices to $109 per barrel as of June 2013 from $120 per barrel as of June, 2012,” corporate secretary Imron Gozali said.

“There are also declines of oil production from old fields,” Imron added. However, he said the company managed to slow down the decline of production of old fields to only 3 to 5 percent per year from previously 20 to 25 percent per year.

Medco currently operates a number of oil and gas blocks in the country as well as overseas, such as Libya, Yemen and Oman.

The company, through its subsidiaries, recently entered into swap agreements with companies under London-listed Salamander Energy plc. Under the agreements, Medco exchanged its 15 percent participating interest in the Bangkanai PSC for Salamander’s 21 percent participating interest in the Simenggaris PSC and 41.7 percent in the Bengara-1 PSC in Kalimantan.

Medco has also divested part of its stake in PT Medco Power Indonesia to PT Saratoga Power. The company also sold part of its stake in PT Medco Sarana Kalibaru to Puma Energy.

President director Lukman Mahfoedz said that the company was in process of divesting its stake in its ethanol plant in Lampung. The company currently holds 100 percent stake in PT Medco Ethanol Lampung. Lukman declined to reveal the amount of Medco Ethanol’s shares to be divested by the company.

“We expect to finalize the deal next month. We will explain the details after the finalization,” Lukmad said in a text message sent to The Jakarta Post on Friday.

He added that Medco would focus on exploration and production of oil and gas, power generation and coal mining. “At this moment, we are finalizing exploration and production for two new blocks with Oman Oil and Gas Ministry,” Lukman said. According to Lukman, Medco is facing difficulties to increase production in the country not only due to permit problems but also due to the fact that some parts of its concession areas overlap with plantation areas operated by other companies. As part of the power business expansion, Medco is targeting to complete hydro electric projects with a capacity of 60 megawatts by the year end, according to Lukman. (Raras Cahyafitri)