[Kabar-indonesia] AFR: More Indonesian Woe for Santos [+FT: KPC struggles to pay suppliers]

[JoyoNews at aol.com]

also: FT: Kaltim Prima Coal struggles to pay suppliers

Australian Financial Review
Thursday, August 3, 2006

More Indonesian Woe for Santos

Chris Milne

Oil and gas explorer Santos has reported another setback in Indonesia,
formally suspending its latest appraisal well at the Jeruk oil project
near Surabaya.

It comes in a week of bad news for Australian explorers, as Woodside
Petroleum, Hardman Resources and Roc Oil yesterday announced their
latest well in Mauritania had come up dry.

Santos has also plugged and abandoned the last two appraisal wells at Jeruk.

Santos shares, which have lost more than 15 per cent of their value in
the past six months, tumbled a further 20¢ yesterday to close at
$11.40.

The South Australian-based company is also battling a noxious mud flow
from another Indonesian well, Banjar Panji 1, which has displaced
about 8000 villagers, and further delays to its Oyong oil and gas
project off Java.

Santos spokeswoman Kathryn Mitchell said that testing of the Jeruk
well had indicated the reservoir properties were good and that further
wells would be drilled at the site.

Deutsche Bank resources analyst John Hirjee said that although the
latest results confirmed the Jeruk resource was smaller than
originally thought, there was "still a glimmer of hope" for the field.

Santos will have to undertake more studies and drilling to determine
whether or not the field is economic, with the commercial threshold
probably being for production of 50 million to 70 million barrels.

Taylor Collison analyst Michael Whiting said original estimates that
Jeruk would yield 170 million barrels of oil had been excessive. The
field was likely to have reserves of at least 100 million barrels "and
there's no doubt that would be commercial".

Santos originally announced on July 14 that the the oil column at the
third well was much shorter than expected, at 145 metres, and that the
shorter column would reduce the likely size of the reservoir.

Santos said Jeruk 3's data would be integrated with previous drilling
results and seismic information to plan the next one or two appraisal
wells and the likely resource range for the field.

Meanwhile, the drilling rig would be released to drill another
exploration well, Wortel 1, on a separate structure in the same permit
area.

Santos is expected to drill three exploration wells elsewhere in
Indonesia before returning to the Jeruk appraisal program.

In another development, Santos's takeover target and partner in the
Cooper Basin, Delhi Petroleum, said it had tipped only $3 million into
its Delhi note reserve account, instead of $8 million as forecast.

This was because Delhi had to meet its latest interest payment to
holders of its floating interest energy linked securities, or FIELDS,
and supply working capital.

Santos has made a $474 million offer to buy Delhi, including the
FIELDS, from its current owner Westpac.

Delhi said the reserve held $20.8 million, more than sufficient to
meet the $8.4 million payment to FIELDS holders, which would be the
last if Santos's takeover offer succeeded.

KEY POINTS

*There is still a 'glimmer of hope' for the Jeruk oilfield, says one analyst.

*Santos will likely drill three exploration wells elsewhere in Indonesia.

------------------------------------------

The Financial Times (UK)
August 2, 2006

Kaltim Prima Coal struggles to pay suppliers

By SHAWN DONNAN and TAUFAN HIDAYAT

Kaltim Prima Coal, the giant Borneo mine at the centre of a Dollars
3.2bn deal announced in March by Indonesia's Bumi Resources, is
struggling to pay suppliers in spite of the boom in coal prices.

The company's outstanding debts are becoming so large that in some
cases suppliers are declining to extend lines of credit, said
suppliers and other industry sources interviewed by the Financial
Times.

They said payments have regularly been delayed since Bumi Resources -
part of the Bakrie Group, which is controlled by the family of
Aburizal Bakrie, Indonesia's chief welfare minister - bought KPC from
BP and Rio Tinto in 2003.

However, in recent months the problem has worsened, raising questions
about the health of the mine, and about the future of a Dollars 3.2bn
deal to sell it and another major Borneo coal mine, Arutmin, to a
group of local investors.

The deal, the biggest transaction involving south-east Asian assets
this year - was seen as a vote of confidence in Indonesia.

Trakindo, the local distributor for machinery company Caterpillar,
declared KPC a "cash customer" in July because of outstanding debts,
according to Marihot Simamora, support services manager for the
Trakindo branch that services the mine. KPC's outstanding debts to
other suppliers are also unclear, although some reported being owed
Dollars 1m.

Bumi Resources declined to answer questions about payments to
suppliers or the status of the deal to sell KPC and Arutmin. But, in
an e-mail to the FT, Bumi's corporate secretary, Geroad Jusuf, said
the allegations were being raised to "coincide (disrupt) with the
ongoing sales transaction".

Badaruddin Wettoeng, chairman of Korppra, the biggest of five labour
unions operating at KPC, said employees were still being paid on
schedule.

The status of the Dollars 3.2bn deal to sell KPC and Arutmin remains
unclear. A Bumi director, Andrew Beckham, told reporters on Monday it
expected to close the deal this month.

Additional reporting by Taufan Hidayat

------------------------------------------
Joyo Indonesia News Service
------------------------------------------