Medco in massive expansion effort

PT Medco Energi International, Indonesia's biggest publicly traded oil company, has put in bids for stakes in four oil and gas blocks operated by ConocoPhillips and for a stake in one block operated by Equatorial Energy Inc.

The move is part of a plan to double crude output to 200,000 per day by 2007 with the acquisition of up to 10 blocks this year.

ConocoPhillips said it is selling its 31.25% stake in Kakap Block, 50% stake in Block A, 100% stake in Tungkal Block and 45% stake in South Jambi B Block as part of its plan to improve returns on capital and reduce debt.

Only two of the blocks, Kakap Block and Equatorial Energy's Sembakung Block, are currently producing, with 2,900 barrels of oil a day and 20.3 million cubic feet a day of natural gas at Kakap and 5,303 bopd from Sembakung.

The South Jambi B Block in southern Sumatra is the next to go on line in the first quarter of 2004 at rates around 11 million cubic feet of gas a day, eventually increasing to 42 million cubic feet a day for export to Singapore.

The Sumatran Tungkal Block and Block A are expected to be producing by 2006 with 5,000 bopd and 56 million cubic feet of gas a day respectively.

Medco said it will use proceeds from a $250 million bond issue earlier this year to help finance the acquisitions.