Q2 2026 Medco Energi Internasional Tbk PT Earnings Call
Speaker #1: Good afternoon, and thank you for joining MedcoEnergi's first half 2026 results call. I'm Teresi Palisiani from Investor Relations, and I'm joined today by Bapak Ronald Gunawan, our Chief Executive Officer, Bapak Amri Siahaan, our Chief Operating Officer, Bapak Benny Setiawan, our Chief Financial Officer, and Bapak Sanjiv Bansal, our Chief Growth Officer.
Speaker #1: This is the first full set of results featuring our new management team. We will run for about 30 minutes. Pak Ronald will open with the highlights and the strategic picture, Pak Amri will take you through upstream operations and power, and Pak Benny will elaborate on the financials and 2026 guidance.
Speaker #1: We will then open the line for your questions, and Pak Sanjiv will be joining us as well for the Q&As. Before we begin, a reminder that today's presentation contains forward-looking statements: the useful disclaimers apply, as set out on the slide in front of you.
Speaker #1: Pak Ronald, the floor is yours.
Speaker #2: Good afternoon, everyone, and thank you for joining MedcoEnergi's Q3 call. Before we move into the financial and operational results, I would like to briefly introduce our leadership team and, importantly, emphasize the continuity behind MedcoEnergi's strategy.
Speaker #2: First, about myself: Ronald Gunawan, Chief Executive Officer and have been with MedcoEnergi for 11 years. I was the Chief Operating Officer from 2015 to 2026.
Speaker #2: At the center is Pak Hilmi Panigoro, our President-Director, with 28 years in this company. He has taken MedcoEnergi through every cycle it has faced.
Speaker #2: And he continues to anchor this board. Pak Amri Siahaan is our Chief Operating Officer, and has also been with the company for 11 years.
Speaker #2: Previously, he was the Chief Administration Officer from 2015 to 2026. Pak Benny Setiawan is our Chief Financial Officer, and has been with Medco Group for 7 years.
Speaker #2: He's familiar with MedcoEnergi business from his previous role as Managing Director at Medco Holding Company. And Pak Sanjiv Bansal joins us as Chief Growth Officer with 11 years at MedcoEnergi.
Speaker #2: He was the Senior Vice President of Business Development from 2015 to 2026. Our leadership team is built on a strong and proven foundation, with deep experience across operations, finance, growth, and capital markets.
Speaker #2: Together, we've remained fully aligned around the same principles that have guided Medco over many years. Disciplined growth, operational excellence, and financial discipline. As we move forward, our priority remains very clear: first, operational excellence; maintaining safe, reliable operations while continuously improving performance; second, production and cost management; delivering our production commitment while maintaining strong cost discipline and continuously optimizing our assets.
Speaker #2: Third, disciplined capital allocation: we will continue to balance investment in the business with the leveraging and shareholder returns. Growth must remain value-attractive, and supported by appropriate returns.
Speaker #2: Fourth, balance sheet and liquidity management: maintaining financial flexibility remains fundamental to our strategy. Allowing us to manage market cycles, and pursue attractive opportunities when they arise.
Speaker #2: And finally, sustainable growth: we will continue to develop our core portfolio organically, remain disciplined, and selective on M&A, and maintain our commitment to strong ESG performance.
Speaker #2: So while leadership responsibility may change, the fundamental principles by which we manage Medco remain the same, continuity, consistency, discipline, and value creation. With that, let me now take you through our performance for the first half of 2026.
Speaker #2: The key message from this slide is the strong operational execution has translated into higher profitability while maintaining a disciplined balance sheet. On operational side, production reached 170,000 barrels of oil equivalent per day, up 19% year on year.
Speaker #2: And is currently tracking above our full-year guidance. Importantly, this growth continues with strong cost discipline, with cash costs at 8.4 dollars per BOE, convertibly below our guidance of 10 dollars.
Speaker #2: Our core business also delivered solid growth, with sales increasing 16.5% to 2,323 gigawatt-hours supported by an 18.8% increase in renewable generation. This operational performance translated directly into stronger financial results.
Speaker #2: A bit that increased by 31% to 805 million US dollars, while net income rose significantly to 275 million US dollars. The results also benefited from stronger realized oil prices, and strong performance of AMA.
Speaker #2: At the same time, we have maintained disciplined capital allocation, first half CAPEX was approximately 188 million US dollars, largely in oil and gas, while return on equity reached 15.8%.
Speaker #2: And most importantly, our balance sheet remains strong. Respected group net debt remains stable at 2.1 billion US dollars, while restricted group net debt to EBITDA improved materially to 1.4 times.
Speaker #2: Down from 2.0 times at the end of 2025. This gives us substantial financial flexibility as we continue to invest in growth. Our credit and GST rating also remains solid, including a AAA ESG rating from MSCI.
Speaker #2: Overall, first half shows what we want to keep delivering. Production growth, disciplined costs, stronger earnings, and continued balance sheet strength. This slide shows how MedcoEnergi's strategy delivers long-term value through a diversified portfolio and strong operational performance.
Speaker #2: We have three complementary business pillars: oil and gas, clean power, and copper and gold mining. Together, they provide a more balanced earnings base and improve our resilience through different communities and market cycles.
Speaker #2: Starting with oil and gas, this remains the core of the portfolio. In the first half of 2026, we produced around 170,000 barrels of oil equivalent per day, with 72% of gas and 28% of liquid.
Speaker #2: The 45% of production is sold under long-term fixed price gas agreements, while the remaining 55% exposed to commodity prices split roughly evenly between oil and gas, and the export gas is linked to oil index.
Speaker #2: Importantly, we continue to maintain cost discipline. And cash costs of approximately 8.4 US dollars per BOE, our reserves and resource base also provides significant debt with over 542 million barrel equivalent of 2P reserves.
Speaker #2: And more than 1.2 billion barrel equivalent of contingent resources supporting the longevity of the business. The second pillar is clean power. We sold more than 2,300 gigawatt-hours in the first half, supported by diversified portfolio of gas-fired generation.
Speaker #2: Geothermal, and solar. With more than 1 gigawatt of installed capacity, and around 26% of capacity from renewables, the power business provides stable long-term duration cash flows while also positioning the group for the energy transition.
Speaker #2: Third pillar is our strategic investment in AMA Mineral, where Medco holds approximately 21% ownership. This provides exposure to high-quality copper, and gold resources. Copper in particular is increasingly important for electrification and energy transition.
Speaker #2: While gold provides additional diversification. AMA also has a substantial reserve base supporting long-term production feasibility. So our businesses are different but highly complementary. Oil and gas provides scale and cash generation, power provides stability and growing renewable exposure, and gold and copper provides participation in structurally effective commodities.
Speaker #2: Combined with disciplined operations and capital allocations, this diversified portfolio is what enables Medco to remain resilient through uncertainty while continuing to create long-term value.
Speaker #2: Starting with value, our objective is to build sustainable long-term value from a diversified and integrated platform across oil and gas, power, and our exposure to copper, and gold through AMA.
Speaker #2: In oil and gas, we can see the benefit of that strategy in our operating performance. Production has increased, at the same time we continue to maintain substantial reserve base.
Speaker #2: Together with our MSCI AAA ESG rating, this demonstrates that value creation is being supported by both operational performance and long-term sustainability. The second pillar is focus.
Speaker #2: Growth creates value only when supported by execution capability, and disciplined costs and capital management. Our oil and gas cash costs remain well controlled below our guidance $10 per BOE, despite the growth in production.
Speaker #2: Importantly, we have also strengthened the balance sheet with improved restricted group net debt to EBITDA. This financial discipline gives us both resilience and flexibility.
Speaker #2: Resilience to manage market volatility, and flexibility to continue investing when attractive opportunity arise. The third pillar is growth. Our approach has been very deliberate.
Speaker #2: We pursue acquisitions when we believe we can create value rather than simply adding scale. Track record at the bottom of the slide is important.
Speaker #2: Since 2016, our major acquisitions including Block B, Ofir, Corridor, and Oman have generated substantial cash recovery relative to their acquisition costs. Block B, for example, has generated cash recovery equivalent to more than three times its acquisition price.
Speaker #2: While Ofir and the original Corridor acquisition have already recovered more than their original investment. More recent acquisitions are naturally earlier in the cash recovery cycle, but they are already contributing to production reserves and cash flow.
Speaker #2: At the same time, AMA and along development provide additional long-term exposure to copper and gold. So our growth is not growth at any cost.
Speaker #2: We are increasing production and expanding the portfolio while maintaining cost discipline strengthening leverage and demonstrating that acquisitions can translate into cash and value. That is what we mean by value focus and growth.
Speaker #2: I have described the portfolio we have built, AMRI will not take you through how it performed. AMRI, over to you.
Speaker #1: Thank you, Pak Ronald. And good afternoon, everyone. I want to start with how this production number came about. Because it matters more than the number itself.
Speaker #1: 170.1 thousand barrels a day was not a surprise to us. It was scheduled. In some cases, years ago. For a lateral book, in South Natunasi Block B, were sanctioned drilled and brought on stream through last year.
Speaker #1: The additional 24% of Corridor closed in August. So this is the first half in which we have had a full six months of it.
Speaker #1: Sonoro Phase 2A reached full production in June. Bualuang Phase 1 in Thailand came on stream in the second quarter. And in Oman, the Bissat CD bottlenecking was completed.
Speaker #1: Five separate projects across three countries each delivered on or close to plan. That is what 19% growth actually looks like from the inside. Not a windfall.
Speaker #1: A queue of commitments arriving on time. Volume is only half of the story. The other half is what it costs us to produce those barrels.
Speaker #1: On cost, our cash costs for the half was 8.4 US dollar per barrel of oil equivalent. We have held this below $10 per barrel of oil equivalent every single year since 2016.
Speaker #1: On the 7.7 US dollar per barrel of oil equivalent cash cost, in the second quarter, the improvement came mainly from higher volumes. Not from cost cutting.
Speaker #1: Most of our field costs are fixed. So when we produce more, through the same facilities, the cost per barrel naturally comes down. For full year 2026, we are still guiding to below $10 per barrel of oil equivalent.
Speaker #1: That covers the barrels we produce this half. Let me turn to the barrels we have left. On reserves, two things are worth separating. Proofed and probable reserves.
Speaker #1: Stand at 542.1 million barrels of oil equivalent. 12% higher than a year ago. Driven by the additional Corridor interest. Sequentially, though, reserves are lower than at the December position because we produced roughly 27 million barrels equivalent in six months.
Speaker #1: And added less than that. That is not a concern in itself. It is the ordinary rhythm of a producing business. But it does tell you where our attention sits.
Speaker #1: Reserve replacement runs through three channels. First, contract extensions. The key terms of Madura's 20-year extension are signed. And five more Lematang, Sampang, Block B, Block A, and Bangka Nai are with the government.
Speaker #1: Extensions retain barrels we already know how to produce. Which is the cheapest reserve you can find. Second, Saka Kemang. Where the revised development plan is approved.
Speaker #1: And first gas is targeted for the third quarter of 2027. Third, the Corridor development programs. Sambar, Rebonjaro, Rawa, and Suban. Those three channels are not abstractions.
Speaker #1: They are the projects set out on the next slide. This slide is usually read as six boxes. Please read it instead as three different time horizons.
Speaker #1: Running at the same time. The first horizon is this year. Sambar in Corridor. Targets portion on stream in the fourth quarter. Building to roughly 108 million standard cubic feet a day through 2027.
Speaker #1: The second horizon is next year. Rebonjaro begins first phase drilling now. Targeting partial on stream in the first quarter of 2027. Saka Kemang. Follows in the third quarter.
Speaker #1: At around 85 million standard cubic feet a day. With the development plan approved, and binding key principles signed with buyers, the facility sharing agreement with Corridor lowers Corridor operating costs.
Speaker #1: So the benefit runs in both directions. The third horizon is the decade. Sonoro Phase 2A now holds a plateau of about 340 million standard cubic feet a day through to 2031.
Speaker #1: And we have begun assessing Phase 2B to extend it beyond that. In Oman, the Karim small fields exploration period has been extended by nine years to 2035.
Speaker #1: And full scale steam flood development at Ilham is approved. So production this year production next year and plateau protection into the next decade. Different projects different.
Speaker #1: Risks deliberately staggered. One item worth highlighting today is Cendramas. The production sharing contract offshore Malaysia becomes effective on 23rd of September with MedcoEnergi as operator, making our return as an operator in the country.
Speaker #1: There is one more thing I should address on this page directly. Rather than wait for it in questions. A word on the Middle East.
Speaker #1: Because we are asked about it constantly. Today there has been no disruption to our people, our operations, or our listings in Oman. No cargo has slipped.
Speaker #1: And we have not paid a higher freight rate. Our business continuity protocols with local partners are in place and have been tested. I say to date, deliberately, as we continue monitoring the situation and we don't assume there is a way.
Speaker #1: That concludes the operational update. Let me stay with you and move to power. And what the business is turning into. Power sales reached 2,323 gigawatt hours.
Speaker #1: Up 16.5% from last year. That is 51.1% of our full year target. So we are on pace. Renewables grew faster still. At 18.8%. And now make up a quarter of our power sales.
Speaker #1: You may ask why power revenue grew only 1.1%. That sits oddly next to 16.5% volume growth. And the reason is straightforward. The first half of last year included construction revenue from projects we were building.
Speaker #1: Strip that out and the underlying business grew properly. EBITDA was up 15.3%. And the margin improved from 31.6% to 36.1%. The story I want to leave you with on power, though, is not about this half.
Speaker #1: It is about what this business is becoming. Let's look at the shape of the portfolio on this slide. 365 megawatts of geothermal. 578 megawatts of gas fired.
Speaker #1: Solar and mini hydro on top of that. And then separately 2,160 megawatts. That we operate and maintain for other companies. The last number deserves more attention than it usually gets.
Speaker #1: Operation and maintenance are fee income. It requires almost no capital. Adds no debt to our balance sheet. And is the kind of business that compounds quietly.
Speaker #1: On growth, the Dalai Energy Batam expansion takes us from 85 to 300 megawatts. And we have a conditional power purchase agreement signed. EGEN's next phases are being worked through a PPA amendment.
Speaker #1: We are also drilling geothermal exploration in Bonjol, West Sumatra, and conducting geoscience survey at Samosir, North Sumatra. Power is an increasingly important part of our portfolio.
Speaker #1: It is growing at double digits, becoming progressively more renewable and expanding at the project level without recourse to the group. Providing a clear pathway to greater scale over time.
Speaker #1: How we build that scale matters as much as the scale itself. Which takes me to the last slide in this section. On sustainability, one slide and one argument.
Speaker #1: In March, we were upgraded to MSCI AAA rating. That is the top of their scale. And three notches above where we set five years ago.
Speaker #1: Very few companies are there. Underneath the rating, emissions from our exploration and production business are down 30% against the 2019 baseline. Which means we have already met our 2030 interim target.
Speaker #1: Methane is down 40% against a 37% target for 2030. Why does this matter in a result presentation? Because a AAA ESG rating can enhance the company's investability among ESG focused investors.
Speaker #1: Particularly those with specific sustainability criteria or mandates. We therefore do not view ESG as separate from the business. That completes operations and power. Pak Benny will now take you through the financials and our guidance for the year.
Speaker #1: Pak Benny, over to you.
Speaker #2: Thank you, Pak Amri. Let me turn now to the financials. Revenue for the half was 1.4 billion US dollars. Up 23.4%. EBITDA was 805.1 million US dollars.
Speaker #2: Up 30.7%. EBITDA grew faster than revenue. So the margin expanded from 53.7% to 56.9%. Prices helped relax oil was up 25%. But we also produced 19% more through roughly the same facilities.
Speaker #2: While unit cash costs move only from $8 to $8.4 per BOE barrels of oil equivalent. This is operating leverage. More barrels through a largely fixed cost base and it is the clearest evidence that the disciplined Pak Amri described is real rather than rhetorical.
Speaker #2: Net income was 275.3 million dollars. Against 30.7 million dollars last year. Aman swung. Is 31.1 million dollars loss to 104.2 million dollars contribution. But this is not an Aman story.
Speaker #2: Excluding Aman, net income was around 171 million dollars. Against around 62 million dollars. That is three times an alcohol business carried this result. That is the earnings picture.
Speaker #2: What matters just as much is what those earnings did to the balance sheet. Now the balance sheet where I would like to spend a little time reading cash flow for first half 2026 was 514.7 million dollars.
Speaker #2: Up 46.6%. Consolidated gross debt closed the half at 4.1 billion dollars. Around 600 million dollars higher than at the end of March. I want to explain that rather than leave it sitting there.
Speaker #2: The increase reflects drawdowns under committed facilities. Together with operating cash flow, these two cash and cash equivalents to 1.4 billion dollars. That cash sits on our balance sheet.
Speaker #2: And restricted group net debt actually fell 7.5% in the quarter. It gives us the flexibility to fund our growth plans while keeping leverage within our policy ceiling.
Speaker #2: During the half, we also completed a 200 million dollars tap of our senior nodes due 2030. Taking that issue from 400 million dollars to 600 million dollars.
Speaker #2: The restricted group net debt to EBITDA is at 1.4 times on annualized basis at the half year. From two times at the end of last year's.
Speaker #2: And at mid cycle pricing of 65 dollars per barrel, we sit at 1.9 times. That is inside our 2.5 times policy ceiling and well inside the 5 times bond ceiling.
Speaker #2: That mid cycle figure is important. Because it shows where we are if prices normalize. Rather than where we are at today's trip. On the same basis, our fixed charts coverage ratio stood at 5.6 times.
Speaker #2: Against a floor of three times. What is the natural place to turn to what we intend to do with the capacity of the rest of the year?
Speaker #2: Our first half performance keep us well on track for our 2026 targets. Production was 170.1 thousand barrels of oil equivalent per day. Around the top end of guidance.
Speaker #2: While power sales are progressing in line with plan. Cash costs remains with well below our ceiling at 8.4 US dollars per barrels of oil equivalent.
Speaker #2: Leverage is at 1.4 times and return on equity is always above our target at 15.8%. Main update is CAPEX. We are bringing forward investment to fast track Saka Kemang.
Speaker #2: Taking oil and gas CAPEX guidance to 450 to 475 million US dollars. While power CAPEX is now up to 50 million US dollars as we progress the bottom expansion.
Speaker #2: At Saka Kemang, there is fast development plan is already approved. And we have signed binding key principle with gas buyers. So we are accelerating towards first gas.
Speaker #2: At DAL Play Energy Bottom, we have signed a conditional power purchase agreement. In both cases, the capital is going into projects that are commercially viable.
Speaker #2: And that confers into production and cash flow inside our planning horizon. With Gua Luang Phase One now on stream and further catalyst across Saka Kemang, Corridor, Batam, and Aman, we remain focused on delivering this year's guidance.
Speaker #2: While positioning the portfolio for future growth. Let me close our presentation with three thoughts. First, this half was delivered. It was projects arrived on schedule and cost base stayed disciplined below $10 per barrel.
Speaker #2: Second, we grew while continuing to deleverage. That gives us greater financial flexibility to invest in growth while maintaining a disciplined approach to the balance sheet.
Speaker #2: Third, the management team has changed and the strategy has not. Value focus and growth is the same test it has always been. We are conscious that the second half carries maintenance and a more uncertain external backdrop.
Speaker #2: We are reaffirming our guidance because we believe we can deliver. With that, let us open the floor for your questions.
Speaker #1: Thank you, Pak Benny. We will now move to the Q&A session. We have received a number of questions from the audience, also questions that we receive via email.
Speaker #1: And we will take them one by one. I will read it one by one and refer it to our board of director to answer it.
Speaker #1: So let me start with the first question. Wait, let me just get to this the question from the audience. Okay. Okay. This is an interesting question.
Speaker #1: You have built a 2.6 billion liquidity US dollar buffer raised debt. You have not spent. And you keep describing your acquisition track record. Are you preparing to buy something?
Speaker #1: And this is the question that I will refer to Pak Sanjay. Over to you, Pak Sanjay.
Speaker #3: Thanks, Butes. You know, if I could tell you that, I don't think I would be very good at my job. To be clear, we're not able to comment on any specific transaction at this point.
Speaker #3: We're constantly evaluating assets and acquisitions across our operating universe. Our acquisition criteria has not changed. We remain focused on sizable high margin producing assets in Southeast Asia.
Speaker #3: And selectively, the Middle East as in the past in Oman, for example. We look for assets that generate long-term cash flow and attractive returns, offer synergies with their existing infrastructure, and establish monetization routes.
Speaker #3: And have a well understood risk supported by production history and a defined subsurface portfolio. We also prioritize markets with accessible infrastructure and predictable fiscal and regulatory frameworks.
Speaker #3: That said, our liquidity does give us the flexibility to pursue the right opportunities. But our acquisition discipline remains unchanged. Every acquisition we've made since 2016 has been value creative.
Speaker #3: And any future transaction will be assessed against the same criteria and financial discipline.
Speaker #1: Okay. That is also to answer a similar questions related to our acquisition criteria and our acquisition plan. So we will move to the second questions.
Speaker #1: Why is the first half audited? And this is also one of most recurring question that we receive, Pak Benny. Over to you.
Speaker #2: Thank you, Butes. Well, obviously, I think everyone knows that we have completed the audit for the first half 2026. And we have disclosed it to IDX and OJK.
Speaker #2: But mainly, that's just to give us flexibility for any potential corporate action in the future. At the moment, we have nothing to disclose. And we will always follow IDX and OJK regulations if and should there be any material disclosure in the future.
Speaker #1: Okay. Thank you, Pak Benny. So moving on to question number three. This is more on production so that should go to Pak Amri. Production of 170.1 million barrel equivalent per day.
Speaker #1: No, it's not kilo barrel equivalent per day. Is that the very top of your 165 to 170 guidance range? Why are you reaffirming then raising it, Pak Amri?
Speaker #2: Okay. Thank you. Thank you for the questions. The first half results is basically benefited from our full contributions from Forel and through. And the incremental of the corridor working interest that we acquired from Repsol.
Speaker #2: And also the Senoro Phase 2A ramp up. So all which provided additional production compared to the prior year. Now, we remain confident in maintaining our full year guidance considering we still have plant maintenance across some of our assets and also expected natural decline in production during the second half.
Speaker #2: Thank you.
Speaker #1: Okay. So yes, we still maintain our production guidance. And reaffirm it for anticipating that activities that we will conduct on the second half. And okay.
Speaker #1: Moving to question number four. Oh, you have this is related to PSC extension. You have six licenses extensions currently with the government. Madura, Lematang, Sampang, Block B, Block A, Aceh, and Bangka Nai.
Speaker #1: What happens to your production profile if those extensions slips? I will refer this question to Pak Ronald. Over to you, Pak Ronald.
Speaker #3: Thank you, Butes. So the answer is oil production for 2016 will not be affected. If any delay of the PSC extension. The six PSC that we submitted to the government, Madura PSC already approved.
Speaker #3: So that's the asset the PSC will be expired in 2027. And then Sampang, Lematang, will be expired in 20 November 2027. And then Block A Aceh expired in 2031.
Speaker #3: Block B will be expired in November 2028. And Bangka Nai in 2033. So we have enough time to work, you know, administration process for the extension.
Speaker #3: Maybe I give to you some of the, you know, the track record. So Metco we have an experience already with the PSC extension. We in the last five years, we have managed to extend our PSC in remote.
Speaker #3: In 2021, so that's remote. We have Tarakan that we already extended. And then we have also extended PSC extension in our asset in Thailand.
Speaker #3: And then we have also in Indonesia, we have also extended our asset in Senoro. That will be expired in 2027. So the bottom line is, you know, I think we just go through the administration process.
Speaker #3: So far, the all the technical and the justification for extension already very strong. And already passed the SKK MIGAS. And now still in the administration process for ESDF.
Speaker #3: Hope that answer your question.
Speaker #1: Okay.
Speaker #3: Thank you.
Speaker #1: Yeah. So hope it answer your curiosity as well about a PSC extension status. Now, the question we still have time. So we will move to the next question.
Speaker #1: And this time is related to our CAPEX guidance. You have raised oil and gas CAPEX from 415 million to 450 to 475 million. And power CAPEX from 15 million to as much as 15 million.
Speaker #1: Is capital discipline loosening? And this is also to ask a question about cost of run and from the audience. Okay, Pak Amri. That's for you.
Speaker #2: Thank you. I think it's a very good question. But let me explain. This is an acceleration of investment, not a cost of run. The original program remains on budget.
Speaker #2: The increase in spending reflects our decision to accelerate two projects, especially that reached key development milestones during the first half. At Sakatemang, the revised POD or plan of development has been approved.
Speaker #2: And binding key principles have been agreed with gas buyers. Now, at Dalai Energy Batam, our power a conditional PPA is now in place. These milestones provide the commercial basis for us to progress both projects further.
Speaker #2: First half capital expenditure was 188 million, where 183.3 million in oil and gas and 4.6 million dollar in power. In ENP, beyond Sakatemang, we're also starting to ramp up investment in projects targeting first production in some last quarter 2026, mostly in 2027.
Speaker #2: This includes Sambar, Rebonjaro, the Suban Wells in corridor, as well as Paus Biru in Sampang. Thank you.
Speaker #1: Okay. So reiterating that this is not acceleration. This is not a cost of run. This is actually an accelerated investment. So we are moving to question number six now.
Speaker #1: And okay, Pak Sanjiv, this is to you again, Pak. So what are assets under divestment? We talk about acquisition before. Now we talk about divestment.
Speaker #1: What are asset under divestment review? And do you have any guidance on the proceeds and then the timing as well, Pak Sanjiv?
Speaker #4: Thanks, Teres. You know, I don't think there's a very specific asset I can mention here. You know, we have a very clear track record of portfolio optimization.
Speaker #4: And it's a constant process. You know, you're constantly high grading, upgrading your portfolio. For example, we recently completed the cement garage divestment. And over the last five years, we've actually completed over 200 million dollars of divestments of non-core underperforming or non-core geographical areas divestments.
Speaker #4: With all the proceeds being used to support deleveraging. There are assets which are always under review for divestment, which are primarily mature or non-core.
Speaker #4: Or small scale assets which are quite consistent with our portfolio optimization strategy. Nevertheless, any transaction that we consider will always be subject to market conditions.
Speaker #4: And getting the right valuations. There is no committed timeline, but we do pursue opportunities selectively. And when the conditions are right.
Speaker #1: And of course, after that, we'll make the appropriate disclosure and let the IDX and also our shareholders know. Okay. So moving to questions number seven.
Speaker #1: A lot of people highlight this, that net income is up almost 800% year on year. How much of that is a genuine improvement? And.
Speaker #1: How much is simply a low comparison to previous year? Pak Benny, I think that's yours.
Speaker #2: Thank you. Thank you. Well, obviously, the increase is real. Last year's first half comparison was low because, you know, the Aman was 31 million loss last year during first half.
Speaker #2: But the improvement goes beyond that low base effect. If we exclude Aman, from both periods, our net income grew from 601.8 million to 171 million.
Speaker #2: While EBITDA if we exclude Aman, rose 30.7% to 805 million dollars. So the underlying operating improvement is clear. And the EBITDA is to measure that we would point out as the best reflections of that performance.
Speaker #1: Okay. Thank you, Pak Benny. And that's actually answer a lot of highlights that we received related to this current half performance. So okay, this is also we receive a lot of questions like this as well.
Speaker #1: And I think this is for you, Pak Ronal. Please share your views on and expected implication of the potential replacement of SKK MIGAS by BUK MIGAS.
Speaker #1: This is also to address a lot of questions related to the oil and gas flow that currently being discussed in the DTR over to you, Pak Ronal.
Speaker #3: Thank you. Before I answer the question about SKK MIGAS or BUK, maybe I will start with new oil and gas flow. I think that's the one that more important.
Speaker #3: Because the current new the current oil and gas flow that's the ratified in 2001. And that's already 25 years old. And that's basically what they call the driver for the new oil and gas flow.
Speaker #3: So in the new oil and gas flow, we are from industry because I'm sitting also in the Indonesia Petroleum Association of as a vice president in that organization.
Speaker #3: And we have already had several discussion to provide our input to government in this case ESDM. SKK MIGAS. And also to the parliament commission 12.
Speaker #3: So even tomorrow we will have another session with the commission 12. So the important thing is in here is the content of the new oil and gas flow.
Speaker #3: And so I can give you the some of the what you call key items. That basically to align the alignment among the stakeholders in here is we want to make the oil and gas low the oil and gas flow become more investment friendly.
Speaker #3: Because this country need more investment. And I think that message already been delivered government including the one energy national. So that's basically the message.
Speaker #3: Now about BUK and SKK MIGAS. I think whatever the it is SKK MIGAS or BUK, the important thing in here is that body the government body should be able to improve the process.
Speaker #3: The one that will be the current problem with our business process in Indonesia because for oil and gas is about the coordination among the government stakeholders.
Speaker #3: So the request I think the thing that will be improved for the new body either what was the name of that body we call it BUK that body will have a more what you call more power and also accountability to make a decision in order to reduce the process in the government side.
Speaker #3: By doing that one then the business process the approval process will be faster than currently. What we are experience. That's the one that basically from industry and I think government they already realize that one.
Speaker #3: They want to make sure that the new body BUK or whatever the name of the new body it will be has more accountability. To reduce all the bureaucracy in the government.
Speaker #3: Hope that's answer the question.
Speaker #1: Yes. And I think as the industry we also have experienced a lot of evolution in the implementing study. So we are keep monitoring this progression.
Speaker #1: And engage with the relevant authorities on this development. As we are now approaching the end of our allocated time. So I think we will need to close our Q&A session.
Speaker #1: We thank you to our board of directors for the time today. And also of course we thank you to all of you the audience that joining us live today.
Speaker #1: For your thoughtful questions and also for your continued interest with MedcoEnergy. So for those questions which we not address today our investor relations team will follow up to you by email.
Speaker #1: And also of course as well please do not hesitate to contact us directly through our investors.relations@medcoenergy.com email. So thank you for joining us. And hope you have a good day.
Speaker #1: Thank you.
