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EMP plans $196m investment in 2010, mostly from planned January rights issue
PT Energi Mega Persada (EMP), the nation’s second-largest publicly listed oil company, is targeting capital spending of US$196 million in 2010, derived mostly from a planned rights issue to commence in January
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T Energi Mega Persada (EMP), the nation’s second-largest publicly listed oil company, is targeting capital spending of US$196 million in 2010, derived mostly from a planned rights issue to commence in January.
The rights issue is expected to raise Rp 4.8 trillion ($502 million) in proceeds.
Of that amount, EMP vice president for capital markets Herwin H. Hidayat said Tuesday, $111 million would be used to help finance the company’s capital expenditure, while the rest would come from EMP’s internal cash flow.
“The capital spending will be allocated for operating expenditure for all our operating blocks,” EMP president director Imam P. Agustino said during a public exposé in Jakarta.
He added the company was also looking to acquire more assets in Indonesia and abroad, but did not elaborate.
EMP’s blocks, which include the Kangean block, Malacca block and several others, produce a total of 13,000 barrels of oil per day (bpd) and 88 million standard cubic feet of gas per day (MMSCFD).
“Thirty to 50 percent of the capital expenditure will be spent on the Kangean and Malacca blocks,” Herwin said.
He added the money generated from the planned rights issue “would change the faith of the company” that has seen year after year of losses.
In 2008, the company suffered Rp 34.9 billion in net losses. It booked a Rp 347 billion net loss in the third quarter of 2009, far bigger than the Rp 71 billion net loss registered in the same period last year.
Herwin also said $250 million of the money generated from the rights issue would be used to help pay the company’s debt to financing firm Credit Suisse, amounting to $450 million.
“This will make the company’s finances healthier and more stable,” he added.
EMP expects to boost net profits in 2010 to between $10 million an $15 million from a production increase.
The rights issue is not a new venture for the offshoot of PT Bakrie and Brothers, the flagship company of the Bakrie family.
Back in 2005, it acquired 99.99 percent of shares in PT Tunas Harapan Perkasa (THP), owned at the time by Indra Usmansyah Bakrie, through a $300 million rights issue.
The acquisition gave EMP 100 percent working interest in THP’s blocks in Sungai Gelam TAC, Semberah TAC, Bentu PSC and Korinci Baru PSC. It also gave EMP 50 percent working interest in Gebang JOB PSC.
EMP now plans to acquire 10 percent working interest in the Masela PSC block in Maluku. Herwin said $100 million of the money raised from the rights issue would be used to finance the acquisition.
The block is currently operated by Japanese oil-and-gas company INPEX Masela Ltd., and is slated for LNG and condensate production in 2016.
The Abadi field in the Masela block has estimated gas reserves of up to 9.76 trillion cubic feet (TCF).
EMP says Masela’s production is targeted to reach 4.5 million tons per annum (MTPA) of LNG and 13,000 barrels of condensate per day for more than 30 years. (adh)
