Energi Mega Reports Gas Flow Incident

Oil and gas company PT Energi Mega Persada Tbk (ENRG) said in a filing to the Indonesian Stock Exchange that there was a gas flow incident occurred at the company’s oil and gas field Bentu PSC, Segat-2, in Riau, Sumatra.

The incident occurred during well work-over activities, which has led to an evacuation of the non-essential site workers.

Nevertheless, there were no casualties or property damage during the incident. It added the incident as no impact on the Bentu and Korinci Baru PSCs. The original Segat-2 discovery well was drilled back in 1995.

Hopefully there will be no more mudflow like the one in Sidoarjo (Lapindo). Energi Mega was the controlling owner of Lapindo, which drilled the oil and gas field in Sidoarjo. Partners in Lapindo were Medco and Santos. (Roffie Kurniawan)

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Energi Mega reported higher oil & gas output

PT Energi Mega Persada (ENRG) Tbk---controlled by Bakrie Group---reported average oil and gas output of 29,100 boepd in the first half 2009, increased 16% from the same period last year.

ENRG told Indonesia Stock Exchange (IDX) today that the output is below its target of 30,000 boepd. ENRG acquired 53.4% participating interest in Tonga Block PSC last year for US$11.8 million. The block is estimated to have 90 million barrels of oil equivalent of resources.

ENRG stock price declined 2.9% to Rp335 today. But the stock surged 385% since April despite poor results in Q1 2009 where the company reported net loss of Rp18.5 billion. At Rp338, ENRG has market capitalization of US$480 million.

The company has total asset of Rp13.365 trillion as of March 31, 2009 with liabilities of Rp9.463 trillion. Last year the company booked net loss of Rp34.9 billion despite strong sales growth to Rp1.86 trillion. 

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Energi op profit declined 29%

PT Energi Mega Persada Tbk booked operating income of Rp237 billion in 2006, declined 29% from Rp336 billion in 2005 due to increasing costs. But the company managed to book net profit of Rp203 billion, inched up from Rp201 billion in 2005. How much is the provision for mudflow in Sidoarjo?

According to its audited financial report 2006 published today, Energi's net sales slightly reduced to Rp1.64 trillion from Rp1.68 trillion in 2005 while its asset grew significantly by 55% to Rp9.88 trillion. Energi, parent company of Lapindo Brantas Inc---owner of 50% participating interest in the Brantas PSC, recorded significant increase in non-current liabilities to Rp6.7 trillion, mainly due to higher long-term loans.
It's not clear yet on how much the company's net provision for mudflow losses due to drilling activities in Banjar Panji-1 (Brantas PSC). But in the non-current liabilities, Energi posted estimated obligation on probable losses of Rp286 billion. (I need to read the full report filed to JSX later this afternoon)
As reported earlier, Santos---Energi's partner with 15% interest in Brantas PSC, had posted net provision of A$67 million or around Rp450 billion in its 2006 report.

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Mitsubishi acquires 50% Kangean Block, confirmed

PT Energi Mega Persada Tbk confirmed the signing of head of agreement (HOA) with Mitsubishi Corp & Japex Petroleum for the divestment of 50% shares in Kangean Block for USD360 million. Mitsubishi & Japex will own 25% working interests respectively in the block. The company didn't disclose terms and conditions of the HOA, except that it expect the definitive agreement to be signed this month.

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Mitsubishi acquires 50% Kangean Block from Energi Mega

Japan's Mitsubishi Corp is scheduled to sign sales & purchase agreement (SPA) to acquire 50% participating interest in Kangean Block from EMP Kangean, a subsidiary of listed energy company PT Energi Mega Persada Tbk at around USD360 million Tuesday, Feb 27. EMP will use the proceeds to reduce its debts.

"The initial schedule for the signing of SPA was Monday night. But there are some issues to settle," an investment banker close to the deal said.
Few weeks ago, KUPFEC from Kuwait was predicted to win the divestment. "KUFPEC was aggresive but Mitsubishi submits better offer," he said.
Mitsubishi is one of the most aggresive energy investors in recent years. The company is also in the short list of investors to acquire 30% shares in KPC and Arutmin Indonesia, both are subsidiaries of Bakrie-controlled PT Bumi Resources Tbk.
Mitsubishi is also the largest shareholder (60%) in a mini LNG plant project in partnership with Pertamina and Medco called Senoro LNG.

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Another refinancing for Energi Mega

The management of PT Energi Mega Persada (ENRG) Tbk will ask shareholders approval on assets pledge for refinancing scheme in the meeting scheduled February 15. No immediate figures on the amount of new loans to be raised.

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Lapindo raises The White Flag

Lapindo Brantas Inc says Rp1.3 trillion is the maximum amount of compensation it can provide to all parties hurt by hot mudflow in Sidoarjo, East Java, Tempointeraktif.com reported. Pardonez Mois. Indonesian people (220 million) are invited to enjoy the hot mud treatment in Porong for Rp25,000/pac (minus Adam Air one way ticket!).
"If the amount of costs increased with higher number of people affected by the mudflow, we can't provide above the approved amount at Rp1.3 trillion. That's our maximum capability. Beyond that, we'll fully hand over to government," said Yuniwati Teryana, VP for human resources & relations at Lapindo Brantas Inc.
So far, Lapindo had disbursed Rp39 billion of compensation to 3,320 families. The maximum amount mentioned by Lapindo is well below the losses of Rp7 trillion estimated by some NGOs.
It's increasingly clear, all of us would have to underwrite the cost of a catastrophe which, according to the latest study, was merely caused by improper drilling operation and nothing to do with earthquake that hit Yogyakarta as claimed by certain groups.
Regarding the costs, initially government declared all costs should be Lapindo's full responsibility. "If they ask government's money, we'll reject," VP Jusuf Kalla said in September.
But in late November, things started to shift when president SBY declared the hot mudflow as disaster. "The state should start to take care," Energy Minister Purnomo Yusgiantoro quoted the president.
But we have different figures here. From my archieve, Lapindo should start to pay compensation of Rp1.3 trillion on January 5, 2007 till March 2007. Another Rp2.5 trillion of compensation should also be paid by Lapindo, starting March 2007. So, what Lapindo really wanted to say with 'Rp1.3 trillion is our maximum capability'? Who will bear the remaining Rp2.5 trillion? State budget?
How about Minister of Public Works' statement that Lapindo should bear the cost of relocating the toll road (Rp1.3 trillion) or compensation claim from 29 factories (Rp327 billion), exporters who have to pay additional cost of Rp1 billion/day due to the closure of the turnpike, or PT Telkom's claim of Rp18 billion?
Let's refresh our memory with Bakrie Family's statement early on that they won't walk away from the liabilities of Lapindo. Lapindo is owned by Bakrie Family and we shall not let Lapindo say, "that's it, take care this shit, we have no more money!" when we know exactly the family is sitting over billion USD worth of assets, right? What's the difference with Soeharto/IMF style of massive banking bailout in 1998-2002?
Considering what Bakrie Family will do, I think they've started to sell shares in some of its listed affiliates, and on the other end buyers are waiting to grab hot money as well. My fellow taxpayers will only get 'hot mud' treatment! Hope you enjoy, Merci Bocoup!

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Energi Mega flip-flop, watchout!

Scientific study confirmed that mud vulcano erupted in Lapindo Brantas Inc's Banjarpanji working area was mainly caused by gas drilling, AFP & The Jakarta Post reported today. So, it's not due to earthquake in Yogyakarta as claimed by some 'experts' that pushed government to consider the mudflow as national disaster covered with state budget. On the other end, Energi Mega Persada, Lapindo's parent announced another flip-flop on the Rp3.8 trillion fund raised through rights issue in late 2005. Initially it was loan from Energi to its subsidiaries, including Lapindo, then changed into equity (conversion of loan), and now is asking to change that to loan again. Wanna more? Better watchout!

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Bumi Resources insider trading investigation

Jakarta Stock Exchange (JSX) has launched an insider trading investigation on PT Bumi Resources Tbk, but no such initiatives taken for Medco and Energi Mega Persada shares trading. Investigation is focused on shares trading prior to the cancellation of mega deal USD3.2 billion between Bumi Resources and Renaissance Capital in August.

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Energi resumes Kangean gas

PT Energi Mega Persada Tbk has resumed gas production and delivery from Kangean block in East Java eight days after the stoppage due to gas pipeline blast in the mudflow-covered area of Sidoarjo, East Java. Energi resumed gas delivery at minimum rate of 45 MMSCFD. Meanwhile, Santos Maleo, delivers additional 22 MMSCFD to meet the demand of PT Perusahaan Gas Negara (PGN) Tbk customers.

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Holding Company for Energi Mega & Bumi Resources

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Deutsche backs off, Energi failed to raise USD600 million

PT Energi Mega Persada (EMP) is reportedly failed to raise USD600 million as Deutsche Bank backs off from the refinancing deal.

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Lapindo-Freehold deal is off

PT Energi Mega Persada Tbk announced the cancellation of the divestment of subsidiary Lapindo Brantas Inc to Freehold Group. Energi wrote to JSX this morning that Freehold Group cancelled the deal due to controversy over the issue.

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Counting the losses

As thousands of displaced people (due to hot mudflow from gas field operated by Lapindo Brantas Inc) went on protest yesterday for months of gross neglience over the promised compensation and 12 people killed in a gas pipeline burst in the area covered by Lapindo mud, we're increasingly bussy in counting the losses and yet we have no idea who will pay. Why don't establish an escrow account, funded by Bakrie (if that's the commitment) with tight independent supervision to underwrite the costs?

Some was cynical when Greenomics claimed the cost incurred of hot mudflow could be billions of US dollars calling the NGO of exagerating. Government then put the estimated cost of US$150 million till March 2007. This magic number is being used by Lapindo-related parties as the total liabilities in their hands over the disaster.
But look at the claims so far. PT Jasa Marga, the state-owned turnpike operator, stated today that the cost to build a new toll road in the area would be Rp1.5 trillion and no way the company would finance that. "Lapindo should bear the cost," said Frans Sutikno, CEO of Jasa Marga.
I'm afraid the state-owned railway operator PT Kereta Api Indonesia would spend billions of rupiah to re-route the track. And the residents who lost their land claimed compensation of Rp1 million/square meter. Millions of toll road users have been suffered huge mental problems and economic losses due to the closure of the turnpike.
Millions of cubic metres of hot mud has spewed from the site, flooding over 400 hectares, swallowing eight entire villages, hectares of rice paddy fields and numerous factories in East Java, and displacing more than 10,000 people.
The gas pipeline burst is apparently the worst so far, killing 12 innocent people and injured 16 others.
As reported by Tempointeraktif.com, state-owned gas distribution company PT PGN Tbk recorded billions of rupiah of losses in the last few days. At least 244 companies, 74 hotels, and 1,090 households got no gas supply due to the explosion.
Paper manufacturer PT Kertas Leces, a state-owned company, reported Rp500 million losses in two days only. Industrial gases producer PT Samator had to stop its hydrogen, hydrogen peroxide, and carbondioxide facilities with billions of rupiah of losses. Who will pay all of these? Can we just separate the pipeline burst from the mudflow? When would all of these going to end or an endless mess? Is it possible that the worst is yet to come?
On the other end, PT Energi Mega Persada (the parent company of Lapindo Brantas Inc) filed bad and good news late last week. The first, bad one, due to the pipeline burst, Energi had shutdown gas production in Kangean Block. The second, the same day of the explosion, EMP Kangean which operates the block, had successfully started oil production in Sepanjang Islands at the volume of 9,000 barrel per day (generating cash of USD450,000/day). These evenly announcements have resulted in stable price of Energi shares at Rp500. What an odd world we livin! When many people could only count losses, small number of people still manage to calculate the benefits!

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Lapindo to Freehold, hold on!

I bet the following information would add more confusions. Today PT Energi Mega Persada (EMP) Tbk disclosed the selling price of Lapindo Brantas Inc to Freehold Group is US$1 million. Compare that with USD2 when it plans to sell to Bakrie Oil. No explanation why now USD1 million. But the following might answer that.

Under the sales & purchase agreement with Freehold (BVI), EMP has no right over-riding-royalty interest, no exclusive right to buyback the shares of KEL and PAN which control Lapindo Brantas Inc, no option to buyback KEL & PAN, and no obligation to provide technical assistance to buyer.
The SPA with Freehold, controlled by Singapore-registered Alsace Pte Ltd, set EMP free from any claim or charges, including those related to Banjarpanji mudflow in Sidoarjo, East Java. Nice!
When asked by JSX what is the relationship between Minarak Labuan Co (L) Ltd, a vehicle company owned by Bakrie, and the divestment of KEL & PAN to Freehold, EMP didn't clearly answer that. JSX asked that because Minarak stated last week that it had committed to provide funds needed by Lapindo Brantas to serve its obligation under Presidential Decree No. 13/2006.
If we should believe in EMP's statements that no relationship between Freehold and Bakrie, we must say that Minarak Labuan is a generous company. It's strange as well to understand why would someone want to invest USD1 million only to take other people's responsibility which could cost hundreds of million USD?
Asked about who will take the responsibility over the mudflow, EMP said it should be shared by three companies (Lapindo, Medco, and Santos) based on operating agreement signed in 1992. Lapindo owns 50% working interest in the Brantas PSC, with Medco and Santos hold 32% and 18% respectively. Medco declined to take the responsibility and filed Lapindo to International Arbitration Body in New York instead.

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People behind Free Hold

"They must be kidding with the name. I thought they should have shown at least sensitivity to public over the mudflow disaster," an analyst wrote to me commenting the announcement from PT Energi Mega Persada (EMP) Tbk to sell Lapindo Brantas Inc to Free Hold Group Ltd, a BVI company. Who are the people behind Free Hold?

Well, don't expect a straight answer. Even Bapepam (SEC) is just about to summon EMP management over the plan and hopes to get the answer which they might never get.
"You could pay to get the information from BVI. But I think they could only provide proxy names or law firms who represent the ultimate shareholders. That's the common practice for such vehicles," another analyst said.
Googling? Zero. Asking people at EMP, they would be tight-lipped. How about Bakrie family? The same. The National Team to Handle Lapindo Mud Flow (Timnas Penanggulangan Lumpur Lapindo)? Don't expect! Even though from my opinion organizations like that (plus Bapepam) must know who will be the new ultimate shareholders of Lapindo considering the social & economic responsibilities of the mudflow that already forced more than 10,000 people to leave their homes.
While Vice President Jusuf Kalla once declared that Bakrie Family had promised to take the responsibility, so far we don't know exactly whether the commitment is written or just oral commitment. Since we have so much at stake with the Lapindo issue, we need the written commitment.
I hope that Kalla will comment on the recent development of Lapindo divestment to non-Bakrie family as stated by EMP management.
Without clear legal relationship between Lapindo and Bakrie family (suppose that Free Hold will be confirmed as the new owner), I'm not sure if the nation could ask Bakrie family to stand up with their commitment unless it's stated.
That's probably why VP Jusuf Kalla didn't mention Bakrie family when he said on Friday that whoever own Lapindo, the company should take the responsibility.
To add confusion over the matter, Minarak Labuan Ltd (a company owned by Bakrie family) claimed that it will lend money to Lapindo.
"But I'm afraid President Decree No.13/2006 could secure Lapindo's interest," a respected journalist warned me yesterday.

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Another confusing statement from Energi on Lapindo

Once again, actions do speak louder than words. While people expects something substantial on how the hot mudflow in Sidoarjo could be stopped, PT Energi Mega Persada (EMP) Tbk is busy with efforts to walk away from the disaster.

This time, as reported by Bisnis Indonesia today, EMP said that Lapindo will be divested to a new company, controlled by non Bakrie family, after Bapepam (Indonesia's SEC) refused the plan to sell Lapindo for US$2 to Lyte (a vehicle controlled by Bakrie family). I got information today that the name of the new buyer is Freehold Group Ltd, a BVI company. No details available on who owns the company which may lead to the question of who will take the burdens of the environmental disaster?
It's just strange the way EMP respond Bapepam's rejection to sell as a rejection to sell Lapindo to Bakrie Family. I think the issue is not to whom EMP sell Lapindo, but the divestment itself is the real problem.
In the last few months, EMP bombarded public with tons of statements, which some investors consider as misleading information. Under the capital market law, misleading information is a crime. But so far, it seems that Bapepam is not serious enough to deal with the information issue.

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Bumi-Energi merger is off

PT Bumi Resources Tbk said it has cancelled the merger plan with PT Energi Mega Persada Tbk, Bisnis Indonesia reported. The paper quoted Nirwan Bakrie, a member of the Bakrie family that controls both companies, saying the merger with Energi surely would not go ahead because there are problems involving Energi that remain unsolved.

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Bapepam on Lapindo spin-off: NO, NO, and...

A friend journalist told me this afternoon that Bapepam Chairman Fuad Rahmany rejects to give approval for PT Energi Mega Persada Tbk's plan to spin-off the troubled subsidiary Lapindo Brantas Inc to Bakrie Family at USD2. Oh, in fact Detik.com had published Fuad statements, about the same though. Well, it's a NOT YET, and not a final NO!

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Chevron in Indonesia: A Wakeup Call (2)

I'm so glad to read an article written by Orin Basuki, reporter of Kompas, the largest newspaper in Indonesia, under the title...chasing the truth to San Ramon. The article is basically based on an audit report completed by Supreme Audit Agency (BPK) on PT Chevron Pacific Indonesia, a subsidiary of Chevron Corp, USA.

The article is centered on cost recovery, a term in oil and gas business in which contractors such as Chevron claim the costs to government/state.
BPK found the following irregularities at Chevron:
1) Caltex polytechnic Riau: Cost recovery claimed US$6.56 million. (So the education & training facility is not a donation of Chevron, it's a state-funded institution)
2) School cost: Cost recovery claimed US$6.29 million for 2004 & 2005. (Again, this is no corporate social responsibility/CSR, it's a state-sponsored)
3) Donation to international school: Cost recovery claimed US$5.94 million. (This isn't a CSR for God sake)
4) Community development & community relationship: Cost recovery claimed US$1.5 million and US$1.47 million respectively. (Not CSR, state-funded activity)
5) Interest recovery: US$4.97 million (this should not be charged as cost recovery item)
6) Modification of collecting stations US$33.98 million: No benefits for the operation.
7) Materials worth US$18.92 million, no gain, charged as cost recovery.
8) Electricity and steam supplied by PT Mandau Cipta Tenaga Nusantara have been doubted the fairness and would cost the government US$210 million and loss to the state at US$1.23 billion.
BPK auditors admit there should be a long list of items that deserved cost recovery, but government's position in most contracts is so weak that contractors tend to mark up cost recovery and charge everything in the mechanism. "Even they charged the cost to pay foreign teachers for expatriate's children or scholarship for children of local staffs. In the end, cost recovery is about the same with all the company's operational costs," Arief Handoko, BPK auditor told Kompas.
Worse, as explained by J Widodo Mumpuni, chief auditor on Chevron, government's position in the contracts is so weak that it coudn't blame contractors for the markups even though they put the country at huge financial losses.
This is what I mentioned in my previous article Chevron in Indonesia: A Wakeup Call.
I hope Kompas would continue the publication of other audit results over oil contractors such as ExxonMobil, ConocoPhillips, Petrochina, CNOOC, Medco Energi, Energi Mega Persada, Pacific Oil & Gas, Santos, Star Energy, Pertamina, Petronas, etc.
Not just that we're aware of how these contractors made lots of money from the country's resources, but we know how careless our government officers (including BP Migas) in performing their role as regulator and supervisor. With that, we know what we should fix right now.

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