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Medco with a eye on Salak and Darajat geothermal assets of Chevron in Indonesia

Darajat Unit I owned by Indonesia Power (a PLN subsidiary) with steam supplied by Chevron (source: wienblog-growingtree/ blogspot)
Alexander Richter 5 Jul 2016

PT Medco Energi interested in the acquisition of the Salak and Darajat geothermal working areas of Chevron in Indonesia. Chevron has announced a possible sale of these assets earlier this year.

Reported before, PT Medco Energi Internasional Tbk (Medco) is interested in the acquisition of at least parts of the geothermal assets of Chevron in Indonesia.

The company has now announced a particular interest in the Geothermal Work Area (WK) of Salak and Darajat, which is still managed by PT Chevron Geothermal Indonesia.

Medco Energi now announces it will examine the data and information belonging to Chevron. Hilmi Panigoro, Director of Medco Energi, said the company has signed confidentiality agreement with Chevron related to the opening of the data. Companies continue to show interest in acquiring the working areas given the current low price of oil.

“If the oil price continues to be like it is today, then yes through an acquisition we can quickly increase cash flow. That’s why we are attracted to the assets by Chevron,” he said in an interview with CNN Indonesia last week.

The data now shared with Medco Energi, is also open to other potential bidders for the assets and a decision will be made by Chevron on the best offer.  Further Hilmi said, the the acquisition would be very expensive for the comapny, in line with the company’s deteriorated financial performance last year. For information, the company posted a loss of US $ 186.17 million or dropped compared to last year’s profit of US $ 8.84 million as a result of falling oil prices. “But still, we consider this option, because if the oil company revenue shortfalls, we are looking for cash flow . Whereas, if the high price of oil again, then we will multiply the exploration, “he said.

If nothing goes wrong, the company will launch the acquisition and look for external funds, one of which is derived from the issuance of debt securities Rp1.5 trillion ($88 million) in the first phase were carried out some time ago. From the issuance of the bonds, 30 per cent planned to be allocated for acquisitions. “And the allocation of this acquisition are beyond our capital expenditures with a value of US $ 120 million to $ 140 million. We emphasize, this year’s acquisition is becoming a focus of our company,” said Hilmi.

In addition to the proposed acquisition of WK Chevron, the company will complete the geothermal power project in Sarulla with a capacity of 110 MW, which is planned to be completed at the end of this year. In addition, the company will also conduct geothermal exploration in Ijen, East Java.

Source: CNN Indonesia