MEYYY Medco Energi Internasional TBK PT (PK)

By Sara Schonhardt 

JAKARTA -- Indonesian listed oil and gas company PT Medco Energi Internasional Tbk announced Monday that it had signed a sales agreement to acquire U.S. oil and gas giant ConocoPhillips's 40% stake in an oil-and-gas block off the northern coast of Indonesia.

The acquisition comes at a time of increasing resource nationalism and amid a push by officials to ramp up energy projects to shore up defenses of Indonesia's maritime borders. The block is located in the Natuna Islands, an energy-rich chain at the edge of the South China sea, where Indonesia has faced increasingly aggressive maritime moves by Beijing.

It also follows an agreement Medco sealed in late June along with a group of local investors to purchase a controlling stake in a copper and gold mine operated by U.S.-based gold miner Newmont Nusa Tenggara for $1.3 billion.

A Medco spokeswoman said the ConocoPhillips sales agreement was "much smaller" than the Newmont deal, but she couldn't at present disclose the full amount of the transaction.

Medco CEO Roberto Lorato said in a statement that once the acquisition is effective it will increase Medco's daily production by more than 35%. The company expects the purchase to add around $100 million of earnings annually before interest, taxes, depreciation and amortization.

Houston-based ConocoPhillips announced last August that it was seeking to sell its interest in Block B and associated facilities in the Natunas as soon as it found the "proper buyer."

The company has been operating the facility for nearly 50 years, and has an operating contract for the block that is good to 2028. The transaction with Medco is expected to close in the fourth quarter of 2016, Medco said.

Write to Sara Schonhardt at Sara.Schonhardt@wsj.com

(END) Dow Jones Newswires

September 19, 2016 08:19 ET (12:19 GMT)

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