S

aka Energi Indonesia, upstream unit of state-owned gas distributor Perusahaan Gas Negara (PGN), has signed US$600 million in syndicated loans to help expand its business, its holding company announced on the Indonesia Stock Exchange (IDX) website over the weekend.

PGN said that the loan agreement was signed last week with a syndication of banks including BNP Paribas, the Hongkong and Shanghai Banking Corporation Limited, Mizuho Bank Ltd., Bank Mizuho Indonesia, Bank Sumitomo Mitsui Indonesia, HSBC Securities Indonesia and Sumitomo Mitsui Banking Corporation.

'€œThe facility agreement will be for five years following the effective date of the agreement,'€ the company said in the statement.

'€œThe amount of funds secured by Saka from the facility agreement will be used to finance investment and operational needs, as well as repayment of shareholders loans.'€

Saka'€™s chief financial officer, Devi Pradnya, had previously said that her company was confident about self-financing as, despite having only been in operation for two years, her company had managed to book positive cash flow. She said that the company'€™s capital expenditure (capex) potentially hit $350 to 400 billion a year.

Saka Energi saw its top line rise from $34.84 million in 2013 to $297.8 million in 2014, according to PGN'€™s annual report. The 2014 figure was equal to 9.77 percent of PGN'€™s revenue for the reported period.

Saka Energi revenue was $194.33 million in the first half of this year, an 11 percent decline from $219.36 million in the same period last year, according to PGN'€™s financial report.

The company said that it was expecting a slight hiccup in its operations this year, due to a slump in oil prices, but believed that the prices were already at bottom and would pick up next year.

PGN has been aggressively expanding its upstream business through Saka Energi and to date, the subsidiary '€” which began commercial operation in 2013 '€” owns participating assets in nine blocks. Its total assets as of September this year stood at $2.04 billion.

Saka, as previously reported, has been looking to boost revenue contribution to its publicly listed parent to 50 percent by 2019, up from its current contribution of around 9 percent of PGN'€™s top line.

Saka recently reported that it had discovered new oil and gas reserves in its wholly owned offshore Pangkah block in East Java, with oil output expected to reach 10,000 barrels of oil per day (bopd) and gas production to reach 30 to 50 million standard cubic feet per day (mmscfd). Production is expected to begin in 2017.

Last year, Saka Energi entered a deal to purchase a 36 percent stake in the Fasken block in Texas, the US, from Swift Energy Co. in a deal worth $175 million.

According to Saka Energi operational director Tumbur Parlindungan, through Fasken, the company produced 12,000 barrels of oil equivalent per day (boepd), in line with its stake in the block.

In January-October, the company produced 31,000 boepd, more than its targeted output of 30,000 boepd and far above last year'€™s reported production of below 20,000 boepd.