We attended Energi Mega Persada (EMP) analyst meeting last week. The company reported total oil and gas production of 29.6kboe/d in 1Q09, hence up by 19% YoY. The increase was driven mostly by additional oil production, around 3.5kb/d or up by 32% YoY, from Sepanjang field in Kangean block, and a 10% increase in gas sales to 94.3bbtu/d to PLN and RAPP.
There could be additional oil production from Sepanjang field as only two out of three wells currently producing. The company would need to increase its processing and storage facility though. Note that oil contribution to production, for the first time, reached 60%.
Gas price this year could increase by 10% YoY to around US$3.3/mmbtu, as the company selling more gas from new contracts.
Financially, EMP looks stretch though with US$600m of debt on its balance sheet, charging interest of LIBOR plus 375bp to 1200bp. Interest expense this year could reach around US$60m while Ebitda is estimated at US$60-70m.
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