2Q26: The Pieces are Falling into Place
In the midst of escalating geopolitical tensions, oil prices have surged above USD 100/bbl. This has provided a potential tailwind for MEDC, which delivered solid 2Q26 operational performance. 2Q26 total production reached 171.4 Mboepd (+1.6% QoQ, +19.0% YoY), driven by oil production of 48.8 Mbopd (+3.1% QoQ, +19.2% YoY) and gas production of 668.1 Mmscfd (+1.0% QoQ, +19.0% YoY). Meanwhile, total lifting stood at 155.0 Mboepd (-0.8% QoQ, +18.6% YoY), while realised oil and gas prices increased to USD 98.8/bbl (+31.5% QoQ, +25.0% YoY) and USD 8.9/mmbtu (+24.7% QoQ, +15.5% YoY). Importantly, cash cost declined to USD 7.7/boe (-14.5% QoQ), supporting stronger operating leverage. This brought 1H26 production to 170.1 Mboepd (+19.0% YoY), while cash cost averaged USD 8.4/boe (+4.3% YoY).

The stronger operational performance translated into solid earnings delivery. 2Q26 revenue reached USD 746mn (+11.7% QoQ, +27.3% YoY), while EBITDA rose to USD 450mn (+28.2% QoQ, +58.6% YoY), bringing 6M26 revenue to USD 1.42bn (+23.4% YoY) and EBITDA to USD 801mn (+30.1% YoY). 2Q26 net profit surged to USD 208mn (+208.6% QoQ, +1,489.4% YoY), supported by stronger Oil & Gas earnings and a sharp increase in JV income to USD 124mn (vs. USD 45mn in 1Q26), driven by AMMN’s 2Q26 audited net profit of USD 338mn (+100% QoQ), which lifted MEDC’s JV contribution to c.USD 70mn. This brought 6M26 net profit to USD 275mn (+796.6% YoY), equivalent to 63.3% of our FY26F estimate and 71.1% of consensus.

The Storm Keeps Brewing
Global oil and gas markets remain highly unsettled, caught between surplus distribution risks and rising geopolitical premiums. Oil prices have remained elevated above USD 80/bbl, vs. c. USD 60/bbl last year, as disruption along the Strait of Hormuz continues to support higher prices. Rising tensions around Bab el-Mandeb have further exacerbated supply risks, with Saudi Arabia temporarily shutting its 7 Mmbopd East-West Pipeline following drone attacks, while continued Houthi activity threatens the Red Sea route. With disruptions threatening both Hormuz and alternative export routes, global supply risks remain elevated.

Meanwhile, escalating Russia-Ukraine tensions have added further pressure, with attacks in Sep-26 disrupting c. 400 Kbopd of refinery output, including further strikes on 20-Sep-26. Russia’s Defense Ministry reported downing 1,110 Ukrainian drones across 19 regions and Crimea, the largest overnight total reported this year. Russia’s Aug-26 crude output fell to 8.72 Mmbopd (-160 Kbopd MoM), or 1.17 Mmbopd below its OPEC+ quota, while tighter fuel export restrictions remain in place. Further attacks could tighten global supply and spur an upside risk to oil prices; we maintain our FY26F Brent oil price assumption at USD 100/bbl.

Maintain BUY with Unchanged TP of IDR 2,500/sh

Looking ahead, 2H26 production should remain resilient, supported by the full contribution from Senoro Phase 2A, which came onstream in Jun-26, and Bualuang Renewal Plan Phase I. Furthermore, Sambar, one of Corridor’s new field developments, should provide an additional growth driver, with development wells targeting partial onstream in 4Q26 and expected to add c.108 Mmscfd in 2027.

Valuation-wise, we maintain our BUY call and unchanged target price at IDR 2,500/sh, implying FY26F P/E of 8.4x and offering 70% upside potential. Key risks include faster-than-expected geopolitical de-escalation, lower prices, production shortfalls, higher operating costs, and a degree of underperformance from newly-acquired assets and geothermal projects.

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