Mansek Energi Mega Persada:1H10 net loss narrowed to Rp79bn,inline with our estimate (ENRG,Rp102,Buy,TP:Rp200)

1H10 revenue fell 19.0%yoy to Rp568bn,which was due to lower daily oil &gas production rate volumes of -18.7%yoy and -30.5%yoy,respectively.Mainly was driven by the lack of drilling activities in the previous year.Nevertheless,gross margin improved as well as its EBITDA by 82.3%yoy,as ENRG continues to drill lower cost development and work over
wells which resulted in a 26%drop in its COGS.

We also noticed that financing charges drop significantly by 47.1%yoy,which resulted in narrowed net loss to Rp79bn from Rp245bn in 1H09.Overall,such result is inline with ours as we expect that there will be additional oil &gas production from North Pagerungan field of Kangean PSC and Segat field of Bentu PSC in 4Q10.