Shareholders of the publicly listed oil and gas company PT Energi Mega Persada (EMP) gave their approval on Thursday for a major rights issue to raise more than Rp 4.8 trillion, or around US$ 502 million during January 2010.
EMP vice president for capital markets Herwin Hidayat said after the meeting that the planned rights issue was aimed at strengthening the company's balance sheet so that it "can start booking a net profit next year".
The company booked a Rp 347 billion net loss in the third quarter of 2009, an even larger slump than the Rp 71 billion net loss registered in the same period in the previous year. EMP president director Imam P Agustino said this year's unaudited revenue reached Rp 1.37 trillion, down from 2008's Rp 1.86 trillion.
Around $100 million of the money generated from the planned rights issue would finance the company's acquisition of a 10 percent working interest in the Masela PSC block in Maluku.
"The acquisition has *already* been done, but not the payment. The value of the acquisition is around $77 million, but we are going to put $100 million in our budget," Herwin told The Jakarta Post.
The Masela block is currently operated by Japanese oil-and-gas company INPEX Masela Ltd., and is scheduled to begin production of LNG and condensate by 2016.
The block has estimated gas reserves of up to 18 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.
"This purchase will increase EMP's estimated gas reserves by 153 percent, or by 2.5 times," Imam said.
After the rights issue, the company also plans to repay $250 million of its debts from the proceeds of the issue to financing firm Credit Suisse.
"Our *net* debt to the firm will therefore decrease from $450 million to $200 million," Herwin said, adding that the remaining unpaid debt would then not be due until 2013.
After the repayment of the $250 million to Credit Suisse, the company's debt to equity ratio will improve to 0.43 as compared to 1.84 currently.
"Our debt level and interest expenses will also decrease, and our equity base will increase; so we hope to see a better performance in 2010," he said.
EMP expects to generate between $10 million and $15 million in net profits in 2010 on the back of a planned production increase in its Bentu and Korinci Baru blocks in Sumatra.
"We are targeting to increase our gas production *in these two main blocks* by 50 mmscfd," Imam said.
EMP through its subsidiary Kalila Ltd. has a 100 percent interest in and is the operator of both the Bentu and Korinci Baru blocks.
The company also targets to increase gas production in its Kangean block by 300 mmscfd starting by October 2011.
EMP also acquired a 100 percdent working interest in the Kangean PSC in October 2004. The acquisition added another 238 mmboe to EMP's 2P (proved plus probable) reserves. (adh)
