Medco Shares Rise on Estimates of Libyan Oil Reserves

By Leony Aurora

Aug. 6 (Bloomberg) -- -- PT Medco Energi Internasional, Indonesia's biggest publicly traded oil company, rose in Jakarta trading after partner Verenex Energy Inc. said their Libyan venture may hold 1.187 billion barrels of oil equivalent.

Medco jumped as much as 8.7 percent, the biggest gain since May 14, to 5,025 rupiah and traded at 4,975 rupiah at 11:40 a.m. local time. The benchmark Jakarta Composite Index gained 0.7 percent.

Area 47 in Libya is estimated to have 396 million barrels of oil equivalent of discovered resources, Verenex said in a statement late yesterday. Medco and Verenex, which own the area equally, will get 13.7 percent of output while the Libyan government will take the rest.

``The announcement lends hope of higher revenue at Medco,'' said Arief Budiman, an analyst at PT Optima Kharya Capital Securities in Jakarta. ``Even if the oil price has declined recently, this is still good news.''

The so-called ``geologic risk-adjustment mean estimates'' of undiscovered resource is 1.187 billion barrels of oil equivalent, including 1.06 billion barrels of oil, Verenex said. The estimate, based on assessment from DeGolyer & MacNaughton, includes both uncertainty in volumes and geological risk.

The partners won rights to explore in Libya's Ghadames Basin in 2005 for 30 years. The area may have an initial production of 50,000 barrels a day, which may be expanded later, Verenex, the operator of the block, said in the statement.

Medco expects the Libyan area to start producing petroleum in 2010, the company said in a statement published in Bisnis Indonesia newspaper today.

Crude oil for September delivery fell as much as $1.07, or 0.9 percent, to $118.10 a barrel in electronic trading on the New York Mercantile Exchange today. Prices have fallen more than $29, or 20 percent, from the record $147.27 reached on July 11.

To contact the reporter on this story: Leony Aurora in Jakarta at laurora@bloomberg.net.