Medco’s Net Income Declines 31 Pct Last Year

Medco Energi

JAKARTA (TheInsiderStories)PT Medco Internasional Tbk announced it posted a net income of US$127.1 million last year, a 31.22 per cent decline from 2016.

Medco’s last year financial report already took into account several non-recurring charges and expenses against profit including pre-sale adjustments on assets held-for-sale and the profit from PT Amman Mineral Nusa Tenggara (AMNT) interest and financing charges for the repaid acquisition and mezzanine debt (US$62.3 million), unwind costs for price hedges (US$135.7 million), and early termination packages for permanent and contract employees terminated in 2017 (US$20.4 million).

However, the oil and gas company’s revenue rose to US$925.6 million, increased 56.9 per cent from 2016 due to the higher production and the stronger commodity prices. The average oil and gas price last year was US$51.5 per barrel and US$5.5 per million british thermal units (MMBtu) respectively. The revenue from Medco Power Indonesia contributed 7 per cent of the company’s total 2017 revenue following consolidation in the fourth quarter.

Furthermore, the company recorded a 31.5 per cent higher oil and gas production with an average production of 86.8 thousand barrels of oil equivalents per day (MBOEPD). It was driven by the higher production from the South Natuna Sea Fields and Senoro field, well as lower decline in the South Sumatra and Rimau fields. The Company’s 2017 annual, and three-year-average Reserve Replacement Ratio (RRR) were both approximately 1.3x.

Although the company recorded lower profit, the President Director Hilmi Panigoro pleased by the company performance. “The company performs well in 2017 despite a volatile environment, and we are well-positioned to remain competitive in the years to come,” he said in a press statement received by The Insider Stories on Wednesday (11/04).

He explained Medco have strong liquidity with cash and cash equivalents and including restricted cash of US$635 million.

The company continues to focus on efficiency with 2017’s unit cash cost of US$9.1 per barrel oil equivalent (BOE), lower than the company’s commitment to keep cash cost below US$10 per BOE by 2020.

As a result, Earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 62.2 per cent (yoy) to US$434.2 million with an improved EBITDA margin of 46.9 per cent.

In the fourth quarter 2017, the company completed a 1 for 3 righst issue raising approximately US$195 million with approximately US$200 million from attached warrants expected to be exercised from July 2018 onwards.

Furthermore, Medco projects the Block achieved commissioning on 25 March 2018, then the field will ramp up to its full capacity of 58 billion british thermal unit per day (BBTUD) during the second quarter of this year.

Following the consolidation ownership in MPI from 49 per cent to 88.6 per cent in the fourth quarter last year, the company The Company expects to generate significant future synergies from its portfolio of operated gas fields, LNG facilities and new MPI gas fired power plants. MPI’s short- term focus however is to complete the Pusaka mini-hydro and Sarulla Unit 3 geothermal facilities, both of which are expected to reach commercial operation in the second quarter 2018.

In AMNT, the Company’s mining affiliate completed its smelter feasibility studies and repaid both the senior and mezzanine acquisition debt facilities. In the fourth quarter, AMNT began development of phase-7 of the existing Batu Hijau mine from its own cash resources, and subsequently secured further financing for the development. In 2017 appraisal drilling of the Elang discovery continued and this has enabled AMNT to increase Elang’s expected resource size.

Email: fauzulmuna@theinsiderstories