The Ministry of Energy and Mineral Resources (MEMR) bestowed the Award of Work Safety “Patra Nirbhaya Karya” to PT Medco Energi Internasional Tbk
PT Medco Energi Internasional Tbk (“MedcoEnergi”) is pleased to announce that its subsidiary, Medco Oman LLC has inked a Financial Agreement with Alizz Islamic Bank SAOG
PT Medco Energi Internasional Tbk (MedcoEnergi/Company) through Joint Operating Body Pertamina Medco Tomori Sulawesi (JOB PMTS) is pleased to announce t ...
PT Medco Energi Internasional Tbk (MedcoEnergi/Company) is proud to announce the completion of its two Major Projects' development, namely Senoro Upstream Gas ...
Gas produced from Senoro field, owned by Joint Operating Body Pertamina Medco E&P Tomori Sulawesi (JOB-PMTS), has been delivered to Donggi Senoro LNG (DSLNG) refi ...
PT Medco Energi Internasional Tbk (MedcoEnergi) as the leading national private oil and gas company, celebrates its 35th birthday this month.
PT Medco Energi Internasional Tbk, through its subsidiary of Medco Energi Global Pte. Ltd., (altogether called “MedcoEnergi” or the “Company”) announced that ...
PT Medco Energi Internasional Tbk is pleased to announce that its subsidiary, Medco Oman LLC (altogether called the “Company”) has inked an Amendment of the Karim Small Fields ...
PT Medco Energi Internasional Tbk ("MedcoEnergi" or the "Company") today convened the Annual General Meeting of Shareholders ("AGMS") in which the Company ap ...
PT Medco Energi Internasional Tbk succeeded in implementing a cost-efficiency strategy as mitigation towards the adverse impact of declining oil price i ...
Surabaya, August 27, 2015 - The Ministry of Energy and Mineral Resources (MEMR) bestowed the Award of Work Safety “Patra Nirbhaya Karya” to PT Medco Energi Internasional Tbk through its subsidiary PT Medco E&P Indonesia and PT Camar Resources Canada (together called "MedcoEnergi"). This award is given due to MedcoEnergi’s success in reaching more than 2,75 million of safe-man hours from 2012 until July 2015 in the operating Kampar Block in Riau and more than 2 million of safe-man hours from 2010 until July 2015 in the operating Bawean Block in East Java. The award ceremony was conducted today, Wednesday (26/8) in Surabaya by Director General of Oil and Gas MEMR I. Gusti Nyoman Wiratmaja Puja to Arif Rinaldi, General Manager of Indonesia West, MedcoEnergi and Dony Noerwahjono, General Manager of Camar Resources Canada.
MedcoEnergi has managed Kampar Block since 1993, a block transfer of Stanvac/Exxon. Since its operation, the Company is determined to continue to operate the field with the best quality and operating performance and continue its commitment in implementing Safety Management System, Occupational Health and Environment, known as PRIME (Performance Integrity of MedcoEnergi). PRIME is the principle of continuous improvement by implementing ISRS7 audit system which is integrated to other audit systems such as ISO 9001: 2000 (Quality Management), ISO 14001: 2004 (Environmental Management), PROPER (Performance Rating Program), OHSAS 18001: 1999 (Health and Safety), PAS 55: 2004 (Asset Management) and the Global Reporting Initiative 2002 (Corporate Social Responsibility).
An achievement of more than 4 years without lost time incident is a difficult accomplishment without the full support and commitment from all levels of workers and contractors in Kampar Block. Erri Setiawan, Indonesia West, Area Project Manager, MedcoEnergi admitted that commitment is achieved through hard effort. Some of which included regular monitoring and evaluation of work safety, starting with the implementation safety talks before carrying out work, traffic evaluation (discussion of potential for vehicle related accidents), the implementation of safety meetings and area safety meetings. "At every one of those meetings, we discuss and analyze the potential for work-related accidents. The award was also given to the workers who have done the job safely, beyond what is required and able to transmit the culture of safety and health in the Company," said Erri.
Meanwhile, Dony Noerwahjono said Bawean Block is an offshore block owned by MedcoEnergi that require an extra degree of caution. Discipline and consistency of the workers in applying the rules of health and work safety should be carried out more carefully because offshore work has unique requirements that must be met, including the need to have a special certificate of sea survival, and offshore production operator certification. "Rules applied in the offshore are very tight. All must obey the rules implemented, whether it is before work, during work, or after work, despite the high level of saturation. Safety issues are the priority and if we run it well, performance in other areas will follow," said Dony.
President Director and CEO of MedcoEnergi, Lukman Mahfoedz is very proud of this achievement. "This award demonstrates MedcoEnergi’s commitment in ensuring the safety of the workers and contractors in operating the field. For Kampar Block, this achievement is another success after holding the Green PROPER award for five consecutive years, awarded by the Ministry of Environment and Forestry in recognition of concern for the environment and local community empowerment," said the CEO of MedcoEnergi.
Lukman also added, “The workers’ efforts in Kampar Block, which are wholly comprised of our countrymen, has managed to arrest the rate of natural decline in oil production. Since late 2013, MedcoEnergi has managed the temporary management as the contract agreement will be transferred to Pertamina at the end of 2015. However, the Company remains willing to operate Kampar Block to the best quality and operating performance and maintain the current production range of 1,400 BOPD, contributing revenues amount of US$37 million to the Government in 2014. We are also ready to cooperate with Pertamina and local governments to manage this block together into the future."(***)
Jakarta, 19 August 2015 - PT Medco Energi Internasional Tbk (“MedcoEnergi”) is pleased to announce that its subsidiary, Medco Oman LLC (altogether called the “Company”) has inked a Financial Agreement with Alizz Islamic Bank SAOG through a Bank Guarantee on Wednesday (19/8) in Oman. Through this agreement, Alizz Islamic Bank defines the Bank Guarantee to MedcoEnergi to support Karim Small Fields (KSF) operation activity in Oman.
The signing of the agreement by Mr. Salaam Al Shaksy, CEO of Alizz Islamic Bank, and Mr. Lukman Ahmad Mahfoedz, President Director and CEO of PT Medco Energi Internasional Tbk, took place at Alizz Bank’s headquarters in Oman. The signing ceremony was also attended by Mr. Ehab Hashish, DGM-Head of Wholesale Banking of Alizz Islamic Bank, Mr. Faiz Shahab, Director of International E&P Operation and New Venture of MedcoEnergi, and Mr. Ahmad Syaifudin, Resident Vice President for MENA Countries of MedcoEnergi.
Commenting on the Bank’s support for a key segment of the Sultanate’s economy, Mr. Salaam Al Shaksy, said “We are very optimistic and looking forward to working with MedcoEnergi as a partner for their success in providing energy in this country”.
Mr. Lukman Ahmad Mahfoedz, President Director & CEO MedcoEnergi, cited that, “The relatively short time required to reach conclusion as well as an agreeable competitive rate demonstrates our commitment to continuously optimize our efforts in enhancing Oman’s In-Country Value, among which is by cooperating with Alizz Bank, a local bank in Oman, to contribute continuously to the State of Oman and strengthen the Company's portfolio in the Middle East. MedcoEnergi will also continue to strengthen cooperation with the Government of Oman and PDO in the next 25 years to find new oil and gas reserves while maintaining safety in our operation. We look forward to working together with Alizz Islamic Bank, not only for KSF but also for other opportunities in the future.”
Previously, PT Medco Energi Internasional Tbk through its subsidiary, Medco Oman LLC has signed an Amendment of the Karim Small Fields Agreement (“KSF Amendment”) with Petroleum Development of Oman on April 2015. The amended KSF Contract defined several favorable key terms including, among others, an additional 25 years of operations by the Company (and its Partners), improved commercial terms, and bigger exploration opportunities to find new hydrocarbon. This additional 25-year contract period demonstrates and affirms our achievement in the last nine years through diligent and successful operations in KSF by doubling the production and contributing revenues of more than US$4.6 billion in revenues to the Government of Oman amounting to date.(***)
Banggai, 18 August 2015 – PT Medco Energi Internasional Tbk (MedcoEnergi/Company) through Joint Operating Body Pertamina Medco Tomori Sulawesi (JOB PMTS) is pleased to announce that it has completed its first shipment of condensate from Senoro Gas Upstream Production Facility. The condensate cargo was sold on a FOB (Free On Board) Delivery Point basis, where the buyer would responsible for the cost of transporting the condensate. This first lifting is MedcoEnergi’s portion as one of the shareholder of JOB-PMTS, and the next shipments will be allocated for Pertamina Hulu Energi (PHE) and Government’s portion.
The tanker carrying 210,000 barrels of condensate, the Nord Snow Queen, start loading on August 16th 2015 about 05.00 p.m. and left the Senoro Marine Terminal about 02:00 a.m. on August 18, 2015.
Lukman Mahfoedz, CEO and President Director of MedcoEnergi cited, "Today's announcement marks an important milestone in MedcoEnergi’s growth strategy. This shipment is also a testament to the Company’s success in completing the last phase of important commercial aspect of this project. Thereof, we are hoping that the Government of Indonesia would provide more opportunities for National Companies to continue developing energy in Indonesia in the future."
Senoro Upstream Gas Production Facility is operated by the Joint Operating Body Pertamina - Medco E&P Tomori Sulawesi (JOB-PMTS) which comprises of MedcoEnergi (30%), PT Pertamina (50%), and Tomori E&P Ltd (20%). The project was pioneered by MedcoEnergi after acquiring JOB Senoro Tomori block in 2000. Until 2005, MedcoEnergi endeavored to develop this gas field, which has about 1.9 TCF of gas reserves, but in a remote location far from any gas infrastructure or gas market. Total investment of the upstream Senoro is US$1.2 billion. The Senoro Upstream Facility has two Trains of production facility with a total production capacity up to 310 million standard cubic feet per day (MMSCFD) of gas and 8,500 barrel per day (bpd) of condensate.(***)
PT Medco Energi Internasional Tbk (MedcoEnergi/Company) is proud to announce the completion of its two Major Projects' development, namely Senoro Upstream Gas and Senoro Downstream Donggi Senoro LNG (DSLNG) plant. In commemoration of the completion, the two projects were officially inaugurated by the President of the Republic of Indonesia, HE. Joko Widodo, and DSLNG’s first LNG cargo was released for shipment. This momentous achievement imprinted an important milestone for MedcoEnergi as it has succeeded in monetizing the Senoro gas field, which was considered as stranded gas 15 years ago, such that it can supply gas to DSLNG plant among others.
With a capacity of 2.1 million tons per year, DSLNG plant is operated by PT Donggi Senoro LNG (PT DSLNG), a joint venture company between PT Medco LNG Indonesia (11.1%), PT Pertamina Hulu Energi (29%), and Sulawesi LNG Development Ltd (59.9%) - a joint venture company between Mitsubishi Corporation and Korean Gas (KOGAS). This plant has undergone the commissioning phase successfully and safely since October 2014. Meanwhile, Senoro Upstream Gas Production Facility is operated by the Joint Operating Body Pertamina - Medco E&P Tomori Sulawesi (JOB-PMTS) which comprises of MedcoEnergi (30%), PT Pertamina (50%), and Tomori E&P Ltd (20%). The Senoro Upstream Facility has two Trains of production facility with a total production capacity up to 310 million standard cubic feet per day (MMSCFD) of gas and 8,500 barrel per day (bpd) of condensate.
DSLNG is the fourth LNG center in Indonesia and the first of its kind developed under a downstream business structure, separating the upstream gas business structure and downstream LNG processing plant. This separation enhances the economics of Senoro gas field development, which would otherwise be considered marginal, as such that the projects can provide significant contribution to government revenue. In addition, the scheme also benefits the government as the operational risks and investment risks of the LNG plant are borne by PT DSLNG. Furthermore, the government is not burdened by the cost recovery of the LNG plant investment. In due time, the operations of both upstream and downstream businesses may contribute a total revenue of approximately US$ 6.4 billion to the Government of Indonesia, at oil price of US$70 per barrel, for the 13 years period until the expiration of the PSC contract in 2027.
On 30 April 2015, Train-1 of Senoro Upstream Gas Production Facility went for full operation. The gas production from Senoro field was sent to DSLNG to produce its first LNG drop on 24 June 2015. Train-2 of Senoro has started its operation and transmitting gas to DSLNG with a ramp up production rate to meet DSLNG gas requirement of up to 250 MMSCFD. Within 40 days of operation time span, Senoro Upstream Gas Production Facility has transmitted the required gas volume for the first LNG shipment of approximately 125,000 m3, which today on 2 August 2015 will be shipped to the LNG Regasification Facility owned by PT Pertamina in Arun, Aceh. In addition to DSLNG, 55 MMSCFD of gas will be supplied to an ammonia plant operated by PT Panca Amara Utama (PAU) and 5 MMSCFD of gas to PT PLN.
Lukman Mahfoedz, President Director and CEO of MedcoEnergi stated, "The successful completions of these two projects substantiate MedcoEnergi as a National Private Oil and Gas Company making a breakthrough in monetizing gas such that it provides significant contribution to the government. We are hoping that the Government of Indonesia would provide more opportunities for National Private Oil Companies like MedcoEnergi to continue developing energy in Indonesia in the future. This success also demonstrates that MedcoEnergi, together with its partner, play a crucial role in the development of gas and LNG industry in Indonesia.”
Project history highlight
The project was pioneered by MedcoEnergi after acquiring JOB Senoro Tomori block in 2000. Until 2005, MedcoEnergi endeavored to develop this gas field, which has about 1.9 TCF of gas reserves, but in a remote location far from any gas infrastructure or gas market. In 2005, MedcoEnergi, together with its partner Pertamina, decided to build an LNG plant with a total investment of US$2.8 billion, and to develop the upstream side of Senoro with a total investment of US$1.2 billion.(***)
Jakarta, June 26, 2015 – Gas produced from Senoro field, owned by Joint Operating Body Pertamina Medco E&P Tomori Sulawesi (JOB-PMTS), has been delivered to Donggi Senoro LNG (DSLNG) refinery, reaching a rate of 145 MMSCFD, to produce first LNG (First Drop LNG) on June 24, 2015, at around 07:12 pm and within the next 30-40 days, LNG is expected to be ready for the first shipment to the buyer. Gradually, Senoro field will deliver larger amounts of gas to DSLNG until it reaches peak production capacity of 310 MMSCFD.
In addition to producing gas of 310 MMSCFD, this field will also produce condensate at 8,000 barrels oil of equivalent per day (BOEPD) with an operating contract period until 2027. JOB-PMTS will also supply 55 MMSCFD of gas to PT Panca Amara Utama (PAU) and 5 MMSCFD to PLN. JOB-PMTS is the operator of Senoro-Toili PSC Block in Central Sulawesi. JOB-PMTS shareholders consist of MedcoEnergi (30%), PT Pertamina (50%), and Tomori E&P Ltd (20%).
Donggi Senoro LNG refinery, with a capacity of 2.1 million tons per year, has undergone its commissioning phase successfully and safely since October 2014, reaching its operating phase in the early of June 2015. This refinery is the fourth LNG refinery in Indonesia and first to be developed by the new scheme that separates the upstream gas production and the downstream gas processing. The refinery is operated by PT Donggi-Senoro LNG and owned by PT Pertamina Hulu Energi, Medco LNG Indonesia, and Sulawesi LNG Development.
President Director of MedcoEnergi Lukman Mahfoedz explains, "We are proud of this achievement. Production from Senoro field will contribute and increase national production amidst Indonesia’s sluggish oil and gas production. This integration will create a new center of economic growth in the presence of a new LNG facility such as an ammonia plant that is currently being built and electricity that will meet the needs of the Banggai people among others to meet local electricity supply shortage. This project is a cornerstone achievement as the completion of this project will strengthen MedcoEnergi as a privately-owned national Oil and Gas Company that is capable in developing the LNG business in Indonesia. " (***)
Jakarta, June 16, 2015 - PT Medco Energi Internasional Tbk (MedcoEnergi) as the leading national private oil and gas company, celebrates its 35th birthday this month. MedcoEnergi was Indonesia’s first drilling services provider when founded in 1980 as under the name Meta Epsi Pribumi Drilling Company. Since then, MedcoEnergi has grown and become a world known publicly-owned local integrated energy company that has successfully expanded in seven countries.
Several outstanding achievements that have been obtained by MedcoEnergi up to its 35th year, include: started with three oil and gas blocks ownership in 1992, which now consists of 35 blocks located in three continents. The Company also became a role model in terms of conservation and environmental protection as its commitment to continue to implement best practices, in this regard, has successfully won the fourth Gold PROPER award in a row since 2011. MedcoEnergi is the first and only oil and gas exploration and production company in Indonesia to date to win this award, through Rimau Block. Whereas, other assets successfully received the Green PROPER. This achievement has been confirmed MedcoEnergi as a world-class energy company with a sustainable operation.
MedcoEnergi’s track record of success has been tried and tested over the past 35 years. This success, The Company believes, will be followed by the success of Major Projects being carried out such as the integration of Senoro Gas development project and Donggi Senoro LNG, EOR pilot project in Rimau, and the development of geothermal power plants, namely Sarulla, the largest single contract in the world. MedcoEnergi also managed to arrest the rate of production decline to only 7-8%. Abroad, MedcoEnergi has just received a 25-year contract extension in Oman as well as a 90% success rate in exploration activities in Area 47 Libya.
Lukman Mahfoedz, President Director of MedcoEnergi said, "I am proud of MedcoEnergi’s development until today. Thanks to the support and trust of all stakeholders, we continue to be on track in the energy business in Indonesia. MedcoEnergi’s contributions amounted to US$12 billion over 14 years in the form of the State's share oil and gas sales as well as tax payments. To that end, MedcoEnergi wishes the Government’s full support in order to continue to have the opportunity to work in the field of energy in Indonesia.(***)
PT Medco Energi Internasional Tbk, through its subsidiary of Medco Energi Global Pte. Ltd., (altogether called “MedcoEnergi” or the “Company”) announced that the Company has issued Medium Term Notes (MTN) of S$ (Singapore dollar) 100 million on 14 May 2015 with a fixed coupon rate of 5.9% per year and a tenor of 3 (three) years. For this issuance, the Company has appointed DBS Bank Ltd., Australia and New Zealand Banking Corporation Limited and Mitsubishi UFJ Securities (Singapore) Limited as its joint lead managers.
The issuance is part of an overall MTN program with the maximum amount of S$ 500 million. This MTN will strengthen the Company’s financial fundamentals through an improved debt profile.
Lukman Mahfoedz, President Director and CEO of MedcoEnergi commented that, “This is the right moment for MedcoEnergi to re-access the international capital market for its corporate funding. The issuance demonstrates the Company’s strong credibility in obtaining the international market confidence and trust, particularly in the current low oil price environment. The Company will continue to prudently manage its financials to uphold this trust.“
Jakarta, 28 April 2015 - PT Medco Energi Internasional Tbk is pleased to announce that its subsidiary, Medco Oman LLC (altogether called the “Company”) has inked an Amendment of the Karim Small Fields Agreement (“KSF Amendment”) on 28 April 2015. The signing of the agreement by Raoul M. Restucci, Managing Director of PDO and Lukman Mahfoedz, President Director & CEO of the Company in the presence of Minister of Oil and Gas Oman, Dr. Mohamed bin Hamad Al Rumhy, Indonesian Ambassador to Oman, Sukanto and Chairman of the Company, Hilmi Panigoro. The KSF Amendment defines the commercial and technical scope changes to the Karim Small Fields Service Agreement which was originally signed by the Company (and its Partners) with Petroleum Development of Oman (“PDO”) in 2006 for ten years contract period.
Several favorable key terms defined in the KSF Amendment include, among others, an additional 25 years of operations by the Company (and its Partners) following the signing of the KSF Amendment, an exploration program which includes three wells in the first two years, a 3-tier service fee scheme based on level of production costs that will yield better operation economics, and a reward mechanism upon successful exploration activities as measured by additional contingent resources.
As operator in Karim Small Fields, the Company holds 51% effective participating interest, with the remaining balance held by Kuwait Energy Company (KEC), two local Partners and Oman Oil Company Exploration & Production (OOCEP). Since 2007, the Company has successfully increased Karim Small Fields’ oil production to more than double, such that it reached peak production in 2012 at more than 22,000 BOPD, with over 250 development wells drilled to date. Currently, the production is 17,000 BOPD.
Lukman Mahfoedz, President Director & CEO MedcoEnergi stated, "We are very pleased to have the KSF Contract amended with improved terms and bigger opportunities in finding new hydrocarbon. We believe that this additional 25-year contract period demonstrates and affirms our achievement in the last nine years of diligent and successful operations in doubling the production. We are looking forward to working together with the Government of Oman and PDO in the next 25 years aiming to successfully increase production, execute exploration programs, and maintain safe operations.” Lukman also added, “Our operations team, which comprises of over 80% Omanis, has been working extensively to add value to our international operations and to support the Company’s business strategy in strengthening the portfolio of producing assets. In the future, we plan to extend participation of our Omani staff, not only in Oman but also in our other operation areas globally.”
PT Medco Energi Internasional Tbk ("MedcoEnergi" or the "Company") today convened the Annual General Meeting of Shareholders ("AGMS") in which the Company approved and ratified the 2014 Annual Report and 2014 Audited Consolidated Financial Statements, as well as the new composition of the Board of Commissioners and the Board of Directors. In addition to approving the Directors' report on the financial statements ending on December 31 2014, the shareholders also approved the dividend payout of US$0.00121 per share. Dividends will be paid on May 22, 2015 in the amount of US$4.05 million.
Through the continuous execution of cost-efficiency efforts started in 2013, the Company managed to maintain the stability of the operational and financial performance despite the natural oil production decline and the oil price fall in late 2014. In 2014, the Company managed to increase 2P oil and gas reserves by 40 MMBOE, hence, increasing the reserve Life Index from 14 years to 17 years. The Company also successfully arrested the decline of oil production from its mature fields in Indonesia to around 7%, much less compared to the natural decline of 20% per year. The Company recorded oil and gas production of 56,000 barrels of oil equivalent per day (BOEPD), down from 62,000 BOEPD in 2013. The realized average of oil price in 2014 was US$97.83 per barrel, lower than the US$108.26 per barrel in 2013. During 2014, the Company booked sales and operating revenues of US$750 million, of which 93% or US$701 million came from the oil and gas exploration and production business unit. As the result of renegotiation of several gas sales contracts in Indonesia, the Company achieved an increase of gas price to US$5.60 per million british thermal unit (MMBTU), compared to US$5.13/ MMBTU in 2013. This achievement boosted the Company's financial performance in 2014 by an additional revenue of US$40 million, compared to the Company's revenue from gas sales in 2013.
In line with the continuous efforts for efficiency, the Company managed to reduce selling, general, and administration costs in 2014 to US$110 million, down 5.8% from the amount recorded in 2013 of US$117 million. During the fiscal year of 2014, MedcoEnergi posted a net profit attributable to the parent entity of the Company ("Net Income") of US$10.1 million.
The Company achieved significant progress in the development of major projects and continues to do so in the first quarter of 2015. The Senoro gas develoment project in Sulawesi has now reached more than 98% completion, including drilling of 13 wells and commencing the pre-commissioning of the CPP (Central Processing Plant) facility, enabling gas delivery tests. The gas delivery to the LNG plant owned by PT DSLNG, (Donggi Senoro LNG) is planned to start in the second quarter of 2015 for a gas supply contract period of 2027. In another gas project, the Block A located in Aceh, Gas Sales Agreement (GSA) with PT. Pertamina was signed in early 2015 with a gas price of US$9.45/MMBTU for 13 years of supply. The Final Investment Decision (FID) will be made in mid-2015 with a target gas delivery in late 2017, for a gas supply of 58 billion british thermal unit (BBTU) per day and a total gas volume of 198 TBTU. In the Rimau Block in South Sumatra, the Enhanced Oil Recovery (EOR) pilot project was completed and successfully proved the feasibility of this technology on a small scale by achieving the incremental oil production as designed.
In 2014, the Company expanded its portfolio of international oil and gas assets through the acquisition of one exploration license in Papua New Guinea and eight concession blocks in Tunisia, as well as winning the tender of one exploration block in Oman. The blocks in Tunisia have increased the Company’s production by 2,500 BOEPD and 2P reserves by 12 MMBOE. Further development of these Tunisia assets will increase production to 16,000 BOEPD by 2019.
President Director and CEO of MedcoEnergi, Lukman Mahfoedz stated "We closed 2014 successfully by maintaining
our operating and financial performance. The Company's two most important projects, Senoro Gas and DSLNG, are
both ready to operate in mid-2015 and will contribute significantly to MedcoEnergi's revenues for decades ahead and
deliver value to the shareholders and the government of Indonesia. MedcoEnergi’s contribution to the government of
Indonesia in 2014 and 2013 amounted to US$680 million and US$868 million respectively, derived from oil and gas
production sharing as well as taxes. In the last 14 years, MedcoEnergi's total contribution to the state is US$11.8
billion." Lukman also added, "To anticipate weakening oil prices, the Company will continue to implement efficiency
efforts, tightly monitor costs and proceed with prudence particularly in the challenging times today and in the future."
Jakarta, Monday, 30 March 2015 – PT Medco Energi Internasional Tbk succeeded in implementing a cost-efficiency strategy as mitigation towards the adverse impact of declining oil price in 2014. The Company is able to maintain a positive net income and has announced this achievement in its financial report on 30 March 2015.
In 2014, the Company has succeeded in arresting the natural decline rate of its matured oil fields in Indonesia by 7%. This is an achievement in and of itself when compared to the average natural decline rate of oil and gas production globally which is in the range of 20%-25%. The decrease in oil production in comparison to 2013 was also attributable to the relinquishment of Sembakung Block to PT Pertamina in December 2013. The Company booked a total oil and gas production of 56,000 barrel oil equivalent per day (BOEPD) in 2014, which is lower than the 2013 production of 62,000 BOEPD. The Company recorded an average realized oil price of US$97.83/barrel, a 9.6% decrease from the realized crude oil price in 2013.
Despite the declining oil production and the lower realized crude oil price, the Company was able to increase the revenues from gas sales through successful renegotiation of several domestic gas sales contracts. The average of gas sales price increased to US$5.60/MMBTU in 2014, a 9.2% increase compared to the gas price in 2013. This achievement has significantly supported the Company’s financial performance in 2014 by contributing an additional revenue of US$40 million, compared to the Company’s revenue from gas sales in 2013.
Given the two factors above (oil and gas production and oil price), the Company booked a total net oil and gas sales of US$701 million in 2014, a 15.2% lower than the previous year which was US$827 million. The exploration and production of oil and gas business unit remains as a major contributor by providing 93.4% of the total sales and operating revenues of US$750 million. In 2014, the Company also posted a gross profit and operating profit for US$271 million and US$161 million respectively. The earnings before interest, taxes, depreciation and amortization (EBITDA) in 2014 is calculated at US$259 million, lower than 2013 figure of US$351 million.
A business process efficiency strategy, which has been implemented since 2013 to date, has fended the Company’s financial performance, mitigating the impact of the declining oil price and the natural decline rate of the Company’s oil production. In particular, MedcoEnergi succeeded in reducing its cost of sales as well as general and administrative expenses in 2014 to US$110 million, a 5.81% decrease compared to US$117 million in 2013. The Company’s head office cost was also cut by 25% compared to the previous year. The effective implementation of efficiency strategy as well as the success in reducing the Company’s borrowing costs through early repayment of several high-interest bearing loans has also contributed to a positive financial performance, maintaining a profit attributable to owner of the parent company amounting to US$10.1 million in 2014, a decline of US$2.5 million compared to US$12.6 million in 2013. The company also successfully reduced the cost of borrowing from US$77 million in 2013 to US$71 million in 2014.
Furthermore, MedcoEnergi’s achievements in 2014 include the addition of the international oil and gas asset portfolio through the acquisition of four exploration blocks in Papua New Guinea, eight oil and gas blocks in Tunisia, and Block 56 in Oman. The eight new blocks in Tunisia have increased the Company’s oil and gas production rate and 2P oil and gas reserves of 2,800 BOEPD and 11 MMBOE respectively. MedcoEnergi plans to increase its oil and gas production of Tunisian assets up to 16,000 BOEPD in 2019.
In the development of the Company’s Major Project, MedcoEnergi will complete the Senoro Gas Project and Donggi Senoro LNG (DSLNG) plant by the middle of this year. The gas from Senoro Gas to DSLNG is slated by June 2015, and the first LNG cargo is expected in October 2015. Both projects will contribute significantly to the Company's earnings starting in 2015. The next Major Project is Block A gas development in Aceh. After the signing the Gas Sales and Purchase Agreement (GSPA) in January 2015 with PT Pertamina at the agreed gas price of US$9.45/MMBTU, the Company, along with its partners, will reach its FID (Final Investment Decision) in the second quarter of this year. The first gas delivery of 58 BBTU (Billion British Thermal Unit) per day is slated by the end of 2017.
In 2014, the Company, through PT Medco Power Indonesia, successfully completed the Sarulla Geothermal project financing of US$1.2 billion from JBIC, ADB and a consortium of commercial banks. Currently the construction work at the site is underway and four production wells in Sarulla’s two geothermal fields are being drilled and tested. The completion of Sarulla 3x 110 MW Geothermal Project, which is located at North Sumatra province is scheduled for its Unit-1 by 2016, which will be followed by Unit-2 and 3 in 2017 and 2018 respectively.
Lukman Mahfoedz, President Director and CEO of MedcoEnergi said, "The Company continues to be on the right track throughout 2014, continuing to pursue long-term growth objectives as well as the completion of several major projects according to plan." Lukman added, "The Company will continue to implement efficiency strategy on its overall business process as well as operational costs including reviewing exploration activities and projects, particularly for those that have not reached FID. MedcoEnergi will continue to prioritise investments that will provide additional oil and gas production to support the Company’s sustainable growth in the future.”