Medco to Lose 9.6% of Oil Output as Contract Expires

By Leony Aurora

Oct. 28 (Bloomberg) -- PT Medco Energi Internasional, Indonesia's biggest publicly traded oil company, stands to lose 9.6 percent of its crude output after a contract to operate PT Pertamina's fields in Borneo expired.

Pertamina, Indonesia's state oil company, didn't extend the contract, which expired Oct. 15, to operate fields including the Tarakan area in East Kalimantan province, Medco said in a statement to the Jakarta Stock Exchange today. The decision amounts to lost output of 4,456 barrels a day of oil and 1.1 million cubic feet of gas a day.

Losing the contract will make it more difficult for Medco to stem a decline in crude production as fields mature. A fall in crude oil prices, which have dropped 57 percent from a record $147.27 a barrel on July 11, may further reduce revenue.

Medco produced 46,400 barrels a day of oil in the first half of the year, 9.9 percent less than a year earlier, it said in August.

The Jakarta-based company may lose 9.21 million barrels of proven crude reserves and 74.36 billion cubic feet of gas deposits as of Oct. 15, it said.

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