Indonesia's Medco seeks funding for Libyan oil field

JAKARTA, May 8 (Reuters) - Indonesian energy firm PT Medco Energi Internasional (MEDC.JK) needs to borrow as much as $250 million to finance the development of its Libyan oil project, senior executives at the firm said on Friday.

Medco Energi and partner Verenex (VNX.TO) have a 13.7 percent interest in a production-sharing agreement in area 47 with Libya's National Oil Corporation (NOC), which holds the remainder.

Medco's project director, Lukman Mahfoedz, said development of the oil project in Libya will cost about $1.1 billion.

"Medco will have to pay 25 percent of the total amount," Mahfoedz said, adding that oil reserves in the area 47 is estimated about 307 million barrels.

He said the field is expected to begin produce oil at the end of 2010 at about 50,000 barrels per day (bpd).

"We are in talks with several banks about a loan to finance the oil project in Libya. I am optimistic that we will get the loan," Darmoyo Doyoatmojo, Medco's president director, told reporters.

The firm is also planning to raise 1 trillion rupiah ($96.4 million) from a bond issue in June to finance its working capital, with a three-year and a five-year tranche.

Medco's finance director Cyril Noerhadi said the firm will price the bond to yield 12.6-13.6 percent for the three-year tranche and 13.6-14.6 percent for the five-year tranche.

Medco, which has a stock market value of $945.3 million, has already appointed PT Danareksa Sekuritas, PT Bahana Securities, PT Kresna Graha Sekurindo and PT Andalan Artha Advisindo Sekuritas to underwrite the issue.

Last October, Verenex made a new oil discovery in Libya in wildcat exploration well C1-47/02a, 180 km (112 miles) southwest of the capital Tripoli, NOC said in a statement on its website.

The flow was through a choke size of 32/64ths of an inch, with oil flowing at 1,739 barrels per day from a depth of 8,312 feet.

Medco, controlled by the Panigoro family, produces about 42,000 bpd of crude oil currently, compared with 45,000 bpd in 2008. Net profit jumped to $280 million in 2008, from $6.60 million a year earlier.

Medco shares closed up 0.85 percent to 2,975 rupiah, while the main index .JKSE closed up 1.84 percent. ($1 = 10,370 rupiah) (Reporting by Muklis Ali; Writing by Dicky Kristanto; Editing by Sara Webb)