Heaptalk, Jakarta –PT Medco Energi Internasional Tbk (MEDC) announced the completion of all the shares of Phillips Investments Inc. from ConocoPhillips Indonesia Holding Ltd. (CIHL).
Currently, CIHL owns 100% of ConocoPhillips (Grissik) Ltd (CPGL), which serves as the Operator of the Corridor PSC with a 54% working stake, and 35% of Transasia Pipeline Company Pvt. Ltd. (Transasia).
MedcoEnergi’s operations are adjacent to two oil and seven gas-producing fields in South Sumatra, Indonesia.
The majority of production is delivered to reputable partners in Indonesia and Singapore under long-term gas sales and purchase contracts. Through Transasia, MedcoEnergi has a small stake in the gas pipeline network that serves its customers in Central Sumatra, Batam, and Singapore.
“This acquisition is consistent with MedcoEnergi’s goal of owning and developing high-quality assets while generating positive cash flow,” said Hilmi Panigoro, President Director of PT Medco Energi Internasional Tbk, in an official statement released on Thursday (3/3)
This acquisition strengthens MedcoEnergi’s position as an independent energy and natural resources company in Indonesia. It also shows the company’s commitment to Indonesia’s growth.
Hilmi believes this deal will be good for MedcoEnergi’s business in Sumatra and for the company’s climate change strategy, which includes looking into ways to store carbon dioxide.
After the deal was completed, Hilmi detailed Medco Energi’s pro forma rules for the remainder of 2022. He stated that his party intends to produce 155 billion barrels of oil equivalent per day this year (MBOEPD). The cost of producing oil and gas per unit is less than US $10/boe.
Meanwhile, his entity intends to sell 3,500 GWh of electricity this year.
MEDC has planned a capital expenditure of US $275 million for the oil and gas segment and US $50 million for the electricity segment to meet this performance target.
Exciting market prospects
From the standpoint of stock exchange prospects, there is an important aspect where CIHL owns 100% of ConocoPhillips (Grissik) Ltd (CPGL) and 35% of Transasia Pipeline Company Pvt Ltd (Transasia). With a 54 percent operating interest in the Corridor PSC, CPGL runs it.
Onshore South Sumatra is home to two oil-producing fields and seven gas production fields owned by Corridor PSC. People in Indonesia and Singapore buy a lot of the gas that comes out of the plant.
Frankie Wijoyo Prasetio, Head of Equity Trading MNC Sekuritas Medan, believes that the agreement to acquire all shares issued by Conoco Phillips Indonesia Holding Ltd. (CHIL) will undoubtedly broaden MEDC’s commercial coverage area, particularly gas supply in Indonesia and Singapore.
“The price of oil is going up all over the world, which means there will be more demand for other energy products like gas,” said Franky.
He also stated that the rise in commodity prices would benefit MEDC’s performance. MEDC has both oil and gas operations.
Furthermore, Frankie believes that in order to address the issue of global climate change, it is likely that the use of coal and oil will be reduced in the future.
As a result, the acquisition is regarded as a prudent move in terms of broadening the gas sector. This sentiment, according to Frankie, will help MEDC’s performance in 2022.
According to financial records from the third quarter of 2021 released yesterday, this oil and gas mining business had a net profit of US $56.12 million at the end of September last year.
This is in contrast to the same period the previous year when MEDC reported a loss of up to the US $180.50 million.
MEDC’s bottom line improved in tandem with its sales performance. Medco’s revenue was $955.92 million, a 12.7 percent increase over the previous year’s revenue of $846.90 million during the same period.
“Despite the slight increase in revenue, net income was supported by other income such as gains from fair value measurement of US 47.22 million and profits from associates and ventures, which skyrocketed from only US 4.97 million to US 46.84 million, where this revenue is projected to grow in the fourth quarter later,” Frankie said.
The increase in performance and net profit, which is expected to be positive in the fourth quarter of 2021, together with the continued high price of energy commodities, could be a stimulus for MEDC shares to rise.
