DETERMINING PT ENERGI MEGA PERSADA Tbk OPTIMAL CAPITAL STRUCTURE

• Main Author: ADY KUSUMA NATA 29115616, CHANDRA
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26232
• Institution: Institut Teknologi Bandung

Indonesia has a long history in the oil and natural gas (oil and gas) industry with a diversity of geological basins that continue to offer abundant potential. However, Indonesia's crude oil production has continued to decline over the past decade. The decline was due to natural aging of the oil field, slower and arguably renewable reserve levels, lack of exploration and investment activities. <br /> <br /> A few decades ago Indonesia had reached a daily production peak of up to 1.5 million bopd and contributed 62.88% of state revenue in the period 1979-2984. But now the national production achievements are only able to produce 800 thousand bopd, in terms of state revenue this sector also contributes only 4.7% of the total state revenue. <br /> <br /> Companies in the oil and gas industry are very sensitive to the volatility of world oil prices, this is evident when world oil prices fall to the range of 20 dollars per barrel, many companies are forced to reduce exploration activities and even drilling. Because this makes the financial condition of oil and gas companies experience a considerable decline, due to low selling prices but high operational costs, as a result of this makes many companies forced to make efficiency for the sustainability of the company. From this condition, the decision to find the right proportion of debt and capital of the company to run the operations and maximize the value of the company is very necessary. <br /> <br /> Macro conditions and industry analysis will use the analysis of PESTEL and Porter Five Forces, after conducting an external analysis and then proceed with financial analysis to determine the company's financial condition at present and the previous few years that will be used to project the company's future. <br /> <br /> Historically, the company's financial analysis is seen in a bad situation. This situation can be seen from the high Debt to Equity Ratio and small Return on Equity when compared to companies in the same industry. Companies in the oil and gas industry need to increase the value of the company and expand its business. This can be done by minimizing the cost of capital whose impact will increase the value of the company. Based on the Weighted Average Cost of Capital calculation, PT Energi Mega Persada received a minimum WACC of 7.74% with a Debt to Equity Ratio of 0.37 with company’s value $ 950 million then it was recommended to conduct Debt to Equity Swap and Debt Rescheduling to restructure the company's debt in relation to obtaining a capital structure optimal. <br />