In this briefing:
- Indonesia: Waiting To Unleash The Potential
- Indonesia Upstream Gas Asset Sale: Positive Read-Through to Other SE Asia Gas Companies
1. Indonesia: Waiting To Unleash The Potential
As regular followers would know, we at River Valley Asset Mgt. usually spend the early part of the year travelling, kicking the tyres, sniffing out opportunities, getting comfortable with our investment views and watching out for lurking risks. January 2019 took us to Indonesia where we attended a conference, met up with companies, heard the local take on politics and got a feel for the investment landscape in this emerging and dynamic economy at the heart of ASEAN. The time was well spent but we came back wondering how long it is going to take Indonesia to deliver on its full potential.
Jakarta at this time of the year is nice and pleasant and traffic was not too onerous. We had two full days of back-to-back company meetings in addition to listening to political pundits pontificating on the implication of the impending elections. While there were diverging views, nobody expected a significant change in direction after the elections. Consensus was veering round to the view that the economy should start looking up in the second half of the year, once the dust settles. There were a few cautionary risks mentioned, for instance an unexpected upset or a slip towards populism, though they were dismissed as quickly as they were raised. The economy seems to be chugging along at a steady pace and the improving global environment is providing reasons for optimism to corporates who are all directly impacted by exchange rate fluctuations of the currency.
2. Indonesia Upstream Gas Asset Sale: Positive Read-Through to Other SE Asia Gas Companies
We analyse the sale of a stake in the Mako gas field in Indonesia to Coro Energy PLC (CORO LN) by West Natuna Exploration Limited, majority owned by private Singapore company Conrad Petroleum and UK listed Empyrean Energy PLC (EME LN), which has a 10% stake. It has implications in terms of read-through valuations for other S.E. Asia focused energy companies especially those with Indonesian gas production such as Premier Oil PLC (PMO LN), Ophir Energy (OPHR LN) and Medco Energi Internasional T (MEDC IJ).
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