MedcoEnergi Acquires ConocoPhillips' Stake in South Natuna Sea Block

PT Medco Energi Internasional Tbk (MedcoEnergi) inked a share Sale and Purchase Agreement (SPA) to acquire ConocoPhillips Indonesia Inc. Ltd. (CIIL) and ConocoPhillips Singapore Operations Pte Ltd. (CSOP), both subsidiaries of ConocoPhillips Co. (COP), giving the firm a stake in South Natuna Sea Block B Production Sharing Contract (PSC) offshore Indonesia.

CIIL currently operates the South Natuna Sea Block B PSC (SNSB) with a 40 percent working interest and is also the operator of the West Natuna Transportation System (WNTS), while CSOP operates the Onshore Receiving Facility (ORF) in Singapore. The WNTS infrastructure and the Malaysian pipeline will remain the focal point for the commercialization of existing discoveries and ongoing exploration activities within the Natuna area.

MedcoEnergi, which did not disclose the value of the acquisition, expects the transaction to be completed in the fourth quarter of 2016.

"This acquisition will add substantial gas and liquids reserves and increase MedcoEnergi’s daily production by over 35 percent. With solid cash flows despite the current low oil price, the transaction is immediately accretive. Above all, we acknowledge SNSB's world class operating scale and infrastructure, it's highly experienced and proven operating team and best-in-class health, safety, and environmental record. We look forward to integrating the asset into MedcoEnergi's upstream portfolio," Roberto Lorato, CEO, said Monday in the press release.

The Indonesian-listed energy company, which also owns upstream assets overseas in Oman, Yemen, Tunisia and the U.S., produced 64.5 million barrels of oil equivalent per day (MMboepd) in the first quarter of 2016, up 29.3 percent from 49.9 MMboepd in the corresponding period last year.

"As a national private oil and gas company, we continue to seek opportunities to grow MedcoEnergi’s contribution to the Indonesian economy. This transaction will strengthen MedcoEnergi’s footprint in Indonesia and significantly enhance its upstream oil and gas capabilities through the integration of world-class offshore operations," Hilmi Panigoro, president director, commented.

Japan's Inpex Corp. and Chevron Corp. are the other partners in the South Natuna Sea Block B PSC, holding interests of 35 percent and 25 percent, respectively.