im personally short term bearish - long term bullish on MEDC.
MEDC's trouble is execution risk. sometimes its something beyond their jurisdiction. regulator's slow pace, or sometimes even politics. Senoro is a "no-go" if it has to go on domestic scheme... too big of investment and funding to be made, with little IRR on domestic demand price. size of funding local banks needed to replace JBIC's commitment if the gas is to go on "domestic supply scheme" is too big to be arranged in 12 Months time. what came to halt it (the japan upstream scheme) was an instruction from mr Kalla last year to switch the gas availability to domestic market. which is a nice decision, but If Only Domestic market could accept the gas price at the rate Kansai and Chubu willing to pay, and local Banks could give credit commitment as long and rate as low as JBIC's commitment. its a deadlock now Senoro. investment is too big and if the gas is sold not at the international market price, than it wont support the IRR needed to commence the project. good things nat gas price is soaring now. that should put a little endorsement to find a win-win solution to all stakeholders and execute the project as soon as possible. Block A is a nearer catalyst. it will be commencing on 2011 if things go well. problem is, the gas buyer is ready and have signed the term w medco. medco has prepare the capex needed to (internal cash for this project). but BP MIGAS has not give the extention license yet up til now. they were working at amazingly slow pace. no wonder our country's oil lifting is keep on declining. Area 47 is a hot prospect. Verenex was able to sell its share at $400 Mn to China Oil when its development cost up til now is only $ 100 Mn, it means Medc has the potential to cash in some parts of its 50 % ownership at about same price. around $ 300 Mn gain. well it used to, Libyan government declined the deal and chose to buy verenex's share at the same price. so a further delay too for Area 47. Rimau Is Maturing, volume wise medc's oil lifting is awful. but an additional gas lifting from singa should counter balance the overall oil equivalent declines in this 2 years. before block A starts contributing. MEDC earning outlook is bleak this 2 years given the declining lifting volume condition (unless oil soars back to $100) but my biggest concern is not all that, it is this asset play scenario ; Medc big prospects; Senoro, Block A, Area 47 is not entering GSA (General Sales Agreement) yet. On Balance Sheet, Asset Side Of The Balance, on Long Term Assets Take A Good Look at "Oil and Gas" Account after depreciation. MEDC's Volume lifting had been declining since 3 years ago. but the amount of this oil and gas assets is increasing. 100 Mn increase on 2007 from 06 and 60 Mn Increase on 08 vs 07. why so?. Assets starts Producing. the capacities is there and hefty. only the execution is lagging. Medc has booked their 2P reserves amounting 191,538 Mboe on their current balance. But They Also Has a deposit of nearly 350,000 Mboe on their contingent reserves. Contingent Reserves is not allowed to be booked on balance sheet unless its entering GSA Phase. and of their 350,000 Mboe Contingent Reserves, Libya 47 and Senoro contribute nearly 300,000 Mboe. darn MEDC asset is good, but the execution progress is really awful. Earning-Wise this year and 2010. unless Oil soars back to $100 it would not be impressive. i even go as far that earnings wont significantly folding before 2013, time when senoro and 47 starts revenue contributing. so its not a very cool investment spot from that angle. trouble is, it is already on the news, stock is battered. what might come as a surprise is there could be positive development on Senoro and 47, and that could means a big big jump comin over. the Senoro and 47 is a real prospect. The Reserves is really there available and Studies for development has already made when GSA is signed, MEDC would switch its Contingent Reserves (Off Balance) to Oil & Gas Assets on their book balance. Assets would jump, so will Book Value, so will valuation. one step further monetization would be MEDC capitalized some of its assets and sold it to strategic partner. hence cashing out some good size of money from the deal. another Non Operating Profit (Extr Items) is expected to materialized on 2-3 years period. Dang its dilemmatic this MEDC. it is the only worthy oil play in IDX. execution risk is troubling, production is declining. entering capital-intensive period too. but management is fine and long term assets is too good too be ignored.... 2009/9/16 Elaine Sui <elainesu...@gmail.com> > > > *Medco should benefit from the rise of nat. gas price. Don't forget > recently Medco made an agreement to supply a total of two million tonnes a > year of LNG to Chubu Electric Power and Kansai Electric for 15 years (cmiw) > > Fiveteen years! > > Elaine** > * > 2009/9/16 ari alex ari <arialex...@yahoo.com.sg> > >> >> >> Dear >> >> >> - Sejak tgl 10/09/2009...proses akumulasi... >> - Penutupan 16/09/2009...menunjukkan harga dalam trend naik.. menuju >> 3.100 ....(Konfirmasi TA) >> - Indikator TA..trend turun... kondisi seperti ini...harga cenderung >> mengikuti indikator TA....harga cenderung turun >> - Kondisi di atas dapat berlawanan ... jika kekuatan beli cukup besar >> di atas akumulasi rata-rata volume transaksi 1 minggu terakhir... >> kecenderungan harga dapat kembali kisaran 3.200 (awal agustus 09) ... >> - Kinerja keuangan dalam 2 periode terakhir meningkat.. >> >> >> Disclamer.. >> >> Salam >> >> ------------------------------ >> New Email names for you! >> <http://sg.rd.yahoo.com/sg/mail/domainchoice/mail/signature/*http://mail.promotions.yahoo.com/newdomains/sg/> >> Get the Email name you've always wanted on the new @ymail and @rocketmail. >> Hurry before someone else does! >> >> > > -- Each piece, or part, of the whole nature is always an approximation to the complete truth, or the complete truth so far as we know it. In fact, everything we know is only some kind of approximation, because we know that we do not know all the laws as yet. Therefore, things must be learned only to be unlearned again or, more likely, to be corrected.......The test of all knowledge is experiment. Experiment is the sole judge of scientific “truth”. - Richard Feynman
