Citigroup Summary Takeaways from Citi Indonesia Investor Conference – Day 2, Medco Energy (MEDC.JK;Rp3,025;Analyzed Not Rated)

 Takeaways from Jakarta — Medco Energy presented at Citi's Indonesia Investor Conference on Aug.4-5.Below are key takeaways.

 Revenue drivers — Oil and Gas Exploration is the core business contributing 65%of the revenue from direct sales,while another 14%is from contracting in Oman.Company plans to invest US$1.4bn over the next five years in the sector.

 Reserves — The total 2P and Contingent Reserves are of 0.5bn barrels of oil equivalent (BOE).Valuations have been impacted by 1)execution delays and 2)fact that 35%of reserves are in Libya of which development is yet to start.

 Senori Toili — The production of Senori Toili gas field had been delayed due to regulatory issues.These have been addressed,and company expects gas sales to rise from 145mmcfd (1H 2010)to 190 mmcfd in 2011).

 1H metrics — 1H10 revenue was US$397mn (up 28%yoy).Growth was driven by 47%increase in oil prices (US$80.5/b)and 47%increase in gas volume (145mmcfd).Oil volume declined by 17%(30.6bpd)and gas prices increased by 16%(US$3.6/mmbtu).

 Outlook and capacity — Plans are to divest 49%of electricity business (generation plus Operation and Maintenance contract).Total generation capacity is 156MW.Total revenue in 1H 2010 was US$30mn.