Energi Mega in talks to divest 2 gas blocks

Bakrie Group-affiliated PT Energi Mega Persada Tbk (ENRG) is looking to divest part of its rights in Bentu PSC in Riau and Buzi EPCC gas blocks in Mozambique, Africa.The company said several African and European investors have put forward their bids for the blocks.“There are now three investors that have been shortlisted from 10. We are in the process of selecting the best offer,” said President Director of Energi Mega Imam Agustino in Jakarta.Energi Mega will use the sale proceeds to refinance some of its most expensive debts, he added. The company hopes to conclude the deal before year-end.The Jakarta-based firm acquired 75 per cent stake in Buzi block in October 2013, while the remaining 25 per cent is still owned by Empressa Nacional de Hidrocarbonetos. The gas block has 2P reserves of 283 billion cubic feet and prospective resource of 13.4 trillion cubic feet (on 100% basis).In Riau, Energi Mega operates Bentu and Korinci Baru blocks that sit on a 1,300 kilometre square area near the city of Pekanbaru, Sumatra. To maximize operating synergies, in view of their close proximity, EMP operates the blocks as a single business unit. Bentu PSC was originally signed by Bentu PSC was originally signed by Sceptre Resources in 1993 before Energi Mega acquired 100 per cent of both blocks in 2006. The block produces 48.1 million cubic feet gas per day and has 2P reserves of 296 billion cubic feet.Energi Mega has been struggling to reduce cost and produce greater efficiency to profit amid sluggish oil and gas prices. In 2015, revenues fell to $624.1 million from $811.4 million in the previous year. Net loss jumped from $54.3 million in 2014 to $218.5 million.Agustino said his firm is targeting to surpass last year’s EBITDA of $339 million in 2016, but was reluctant to say if it expects a net profit.“We will be making cuts of inefficient areas, workers and equipment this year while maintaining our output target,” he said.