JAKARTA (AFX-ASIA) Ð Shares of PT Medco Energi Internasional have changed little since announcing poor first quarter results, dealers said.

The company earlier reported a 54% year-on-year fall in its first quarter to March net profit to US$13 million amid rising costs. It said sales grew 4.6% to US$111.24 million from US$106.25 million a year ago.

But the cost of sales and direct expenses rose 52% year-on-year to US$67.89 million and as a result gross profit dropped 30% to US$43.35 million.

BNI Securities analyst Norico Gaman said that although he sees Medco fair price at around 1,800 rupiah, the poor first quarter results are likely to bring some pressure because they will raise doubts over the company’s earnings prospects.

He added he was surprised with a sharp increase in production costs.

He said it was unfortunate that Medco’s margins shrunk at a time when investors expected it to deliver better margins on the back of rising oil prices.

“I think there must be some inefficiencies in oil production. The results proved that Medco is not consistent in boosting efficiencies,” he said.

He said he suspected the increase of cost of goods sold could be due to the bookings of some other expenses which were not part of production costs.

“The table does not tell exactly what are those expenses. And I hope the company can be more transparent on this,” he said.

The company was not immediately available for comment.

Mr Gaman said questions on earnings prospect will also be linked to the declining oil production and Medco’s acquisition strategy.

Medco expects its 2004 oil output to drop 10,000 barrels per day (b/d) from 68,000 b/d last year. Meanwhile its gas production this year should rise to 100 million cubic feet per day (mmcfd) from 86 mmcfd last year.

The company is still attempting to take over Australian oil firm Novus Petroleum Ltd on hopes it may boost its oil output 20%.