Medco Hires Credit Suisse to Sell Service Unit Stake (Update1)

By Leony Aurora

Sept. 14 (Bloomberg) -- PT Medco Energi Internasional, Indonesia's biggest publicly traded oil company, has appointed Credit Suisse to help sell its 52 percent stake in a drilling service unit, President Hilmi Panigoro said.

The unit, PT Apexindo Pratama Duta, may post net income of $75 million next year and should be valued at 12 times its future earnings, Panigoro said in a telephone interview today. That values the company at $900 million, or a 51 percent premium to Apexindo's market value as of yesterday.

Medco is ``open'' to offer the stake as rig rates have peaked, Panigoro said on July 19. Rig rates have more than tripled since 2004 as explorers step up efforts to find oil and benefit from record crude prices. Medco in August last year scrapped talks to sell the stake with companies including India's Aban Offshore Ltd. and China Oilfield Services Ltd.

``At the right price, everything is for sale,'' Panigoro said. Medco expects to complete the stake sale by the end of the first quarter of next year, Panigoro said.

Apexindo rose 2.4 percent to 2,175 rupiah at 10.a.m. on the Jakarta Stock Exchange today. The company is traded at 9.4 times next year's earnings, according to Bloomberg data.

The Bisnis Indonesia newspaper today reported that the stake in Apexindo has been offered to as many as 30 potential investors, including TPG Inc., a U.S. private equity firm, and Ashmore Group Plc.

``Credit Suisse is always in talks with TPG, as it's a client,'' Panigoro said. ``It's too early to say with whom we may be speaking to.''

Apexindo is 32-percent owned by SeaDrill Ltd., a company controlled by Norwegian billionaire John Fredriksen.

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

Last Updated: September 13, 2007 23:10 EDT