Amid low global crude oil prices, publicly listed energy and mining firm PT Medco Energi Internasional has seen a robust performance in the first half of 2017, with a seven-fold jump in net profit to US$ 80.6 million, thanks to decreased costs and increased
output.
In the first six months, Medco’s oil and gas production totaled 89,800 barrels of oil equivalents per day (boepd), up 40.4 percent from the same period last year. The company produced 35,500 barrels of oil per day (bopd) and 290.6 million standard cubic feet per day (mmscfd) of gas, marking year-on-year growth of 17.5 percent and 46.9 percent, respectively.
The price of global benchmark Brent crude hovered above US$ 55 a barrel in the first two months of 2017, before falling to as low as $44.82 a barrel in the third week of June. However, that was still better than in the first half of 2016, when the price fell to 828.94 a barrel in mid-January, before gradually recovering to between $ 48 and $50 a barrel in June.
“The company continues to perform strongly; maintaining both production and cost management this year,” Medco CEO Roberto Lorato said in a statement.
In the first half of this year, Medco booked a 54.3 percent annual increase in revenue to US$ 403.5 million. The biggest contribution came from its oil and gas sales worth US$ 138.5 million to energy firm Petro-Diamond ,Singapore, a subsidiary of Japan’s Mitsubishi Corporation.
Furthermore, the firm recorded a 61.7 percent increase in earnings before interest, taxes, depreciation and amortization (EBITDA) to US$ 200.3 million, while its net profit jumped seven fold to US$ 80.67 million from the previous US$ 11.29 million.
Medco president director Hilmi Panigoro attributed the company’s financial performance to its ability to reduce operational costs at PT Amman Mineral Nusa Tenggara (AMNT), which operates the Batu Hijau mine, the country’s second-largest copper and gold mine in Sumbawa, West Nusa Tenggara.
In November last year, Medco acquired a 50 percent stake in PT Amman Mineral Investama (AMI), which controls an 82.2 percent stake of the AMNT. As of June, AMI recorded $13.6 million in losses while collecting $ 628.15 million in revenues.
During the period of February to August, AMNT exported 417,656 tons of copper concentrate, 62 percent of the quota given by the government until February next year. ‘Also this year, we will complete our rights issue, which will strengthen our capital structure,” Hilmi said.
Medco recently 'announced a plan to issue 4.45 billion new shares with preemptive rights, with 4.45 billion warrants granting the holder special rights to buy new shares. Hence, in total, there will be 8.9 billion new shares priced at Rp 25 apiece.
It is estimated that Medco will collect $150 million through the rights issue, which will be used to refinance some of its debts. In September, the firm also issued bonds worth Rp 566.5 billion consisting of two series. The A series will mature after 42 months and offer an annual coupon rate of 10.3 percent, while the B series will be due after 60 months and offer a 10.8 percent rate.
This was Medco’s sixth issuance under the company’s second round of shelf registration bond emission, which aims to collect a total of Rp 5 trillion.
As of June, Medco’s liabilities stood at $2.71 billion, up 0.15 percent year-on-year (yoy). Moreover, its long term bank loans reached $1.08 billion, US$ 198.6 million of which will mature within a year.
BCA Sekuritas analyst Nyoman Prabowo said in a note that Medco’s fundraising strategy would reduce its high interest debt portfolio. Therefore, he added, the company’s interest expenses would keep decreasing, resulting in a stronger financial performance.
Jakarta Post, Page-14, Wednesday, October 4, 2017
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