EMP gets bids for Kangean oil and gas field

Ika Krismantari, The Jakarta Post, Jakarta | Thu, 12/11/2008 10:41 AM  

PT Energi Mega Persada (EMP) has received offers from six firms for its Kangean oil and gas block, but the second largest publicly listed oil firm will not rush into a deal as it will look for the best price for its most prized asset. 

EMP announced last month a plan to sell its 50 percent stake in the block in East Java, considered to be the most valuable asset for the company as its worth accounts for almost 70 percent of EMP's total assets. 

EMP president director Christian V. Ponto said on Wednesday the company had so far received bids from six companies, hinting that five of them are foreign firms from Asia, Australia and Europe and one of them is a local company. He refused to name names. 

He was quick to add however that the bidding process did not mean that EMP would end up selling the asset to one of these companies, as it was still studying whether the offer would benefit the company in the future. 

"The price is the most determinant factor. Should the price (offer) not suit us, there will be no deal," Christian said. 

A fact sheet from the company said EMP first acquired Kangean in August 2004 at a price of US$0.8 per barrel of oil equivalent. In May 2007, it sold a 50 percent stake in the block to Japanese energy companies -- Japan Petroleum Exploration Ltd and Mitsubishi Corporation -- at a price of $2.9 per barrel of oil equivalent. 

It is stated that the block has reserves of 239 million barrels of oil equivalent. 

Should the deal be secured, EMP will use part of the money to speed up its loan payments, its finance director Yuli Soedargo said. 

The company's net debt equity ratio stood at 85 percent in the first nine months of this year after securing loans worth $450 million from Credit Suisse in September to pay short-term loans and finance business expansion programs. 

The latest data from the company related to its operational performance showed that its oil production dropped to 10,300 barrels of oil per day in January to September 2008 from 10,900 barrels of oil per day in the same period last year, explaining this as a "natural decline" as its reserves are declining. 

Gas production however went up 10 percent to 88 million cubic feet per day in the first nine months this year as compared to the same period last year. 

It will release its third quarter financial result before the end of this year after the completion of an audit. 

EMP operational director Imam P. Agustino said that Sepanjang field in East Java would resume production in the third week of December after a year long shutdown, as a new floating storage offshore (FSO) facility was on the way to the site from Malaysia. 

"The field will start producing at a rate of 6,000 barrels of oil per day and will peak to 10,000 barrels a day within the next three months." 

EMP is a subsidiary of PT Bakrie & Brothers, a business conglomerate controlled by the family of Coordinating Minister for People's Welfare Aburizal Bakrie.