2006 Annual Reports PDF

Annual Report
Managing Adversity
Managing
Adversity
In 2006 PT Energi Mega Persada
Tbk (EMP or the Company) faced
adversity on an unprecedented
Introduction 1
scale. It was also a year from
Financial Highlights 3
which we emerged with resolve
and closed the year with a
Message from the President Commissioner 7
significantly improved outlook.
Report of the President Director 10
Review of Operations 16
One single event in 2006 - the
Management’s Discussion and Analysis of
development of a mud volcano some
the Financial Condition and Results of distance from our drilling operation
Operations (MD&A) 32 at Banjarpanji in May - has attracted
Safety, Health and Environment (SHE) 36 significant comment and debate, much
Community Relations 40 of which has been ill-informed. Seven
Corporate Governance Report 42 months on, measures to contain the
Glossary 56 mud flow continue under a Goverment-
Financial Report 61 led emergency team and the gross cost
of restitution for local communities and
infrastructure has been estimated at
The soft copy of this report and regular US$ 183 million to the end of 2007.
updated information on the Company is
available at www.energi-mp.com
This annual report contains a status
report on Banjarpanji and the actions
taken by subsidiary Lapindo Brantas Inc.
(LBI) to address the subsequent mud
flows and the impact on the surrounding
communities, on infrastructure in the area
of Sidoarjo regency, East Java and the
financial consequences. EMP’s prudent
Aerial view from Kangean approach to valuing its development
PSC of mangroves across portfolio has enabled the Company to
the sandy shallows
north of Pagerungan capitalize expenditures incurred, to be
island. Linked by a major offset through future earnings from a
pipeline to the growing
industrial market of diverse oil and gas portfolio.
East Java, Kangean PSC
is a good example of
EMP’s strategy at work
in the commercialization
and development of
significant oil and gas
reserves.
EMP Annual Report 2006

We remain committed to operational
Adversity is a fact of life. excellence: the use of innovative
It can’t be controlled. techniques has unlocked new production
and reserve potential.
What we can control is how
we react to it. Strategic acquisitions were completed
and new opportunites seized: the
completion of the Tunas Harapan Perkasa
Despite the challenging (THP) transaction at the beginning of
conditions, EMP’s four key the year has boosted reserves by 30%
strategies were in evidence in and a planned strategic partnership
2006: will strengthen the balance sheet while
introducing additional expertise and
We achieved organic growth: an further scope to accelerate production.
extensive investment program to build
new reserves continued. EMP is a company managed for
long-term value: meeting the
We maintained our focus on gas energy needs of Indonesia’s
commercialization: further progress expanding economy by playing
has been made in realizing value from a significant role in the ongoing
gas fields, in terms of new contract prices development of the upstream oil
and in unlocking asset values, through and gas sector.
a proposed new strategic partnership in
Kangean.
How to read this report

» Production, product price realizations, reserves and resources are all expressed on
a gross basis except in the MD&A section, page 32.
» Sales revenues and average sales prices as quoted in the MD&A are based on
entitlement.
» Oil and gas terms are defined in a Glossary on page 56 of the report.
Managing Adversity
PT Energi Mega Persada Tbk
Oil & Gas Properties
Thailand
N
Vietnam
Philippines
South China Sea
0 400 KM
Gebang JOB PSC

Korinci Baru PSC
Malaysia Brunei
Semberah TAC
Malaysia
Singapore
Sumatera
Kalimantan
Bentu PSC
R E P U B L I C O F I N D O N E S I A
Sulawesi
Gelam TAC Papua

Malacca Strait PSC
Java
Brantas PSC East Timor
Kangean PSC Indian Ocean
One of the leading publicly listed oil and gas exploration and production companies in Indonesia, EMP
and its wholly owned subsidiaries control working interests in a wide ranging portfolio of oil and gas
properties:
Sumatera Java and environs Kalimantan

Malacca Strait PSC (60.49%) Kangean PSC (100%) Semberah TAC (100%)
Gebang JOB PSC (50%) Brantas PSC (50%)
Bentu PSC (100%)
Korinci Baru PSC (100%)
Gelam TAC (100%)
The Company is applying its extensive skills in reservoir management, innovative use of modern
technology and drilling techniques in the exploration and production of oil and gas in an area of over
17,000 square kilometers.
EMP is a major gas supplier to the rapidly-growing industrial region of East Java.

Financial Highlights
Financial Performance
(in billion Rupiah, except EPS and Financial Ratios) 2006 2005 2004 2003
Income Statement
Revenue 1,646.5 1,682.1 972.7 513.1
EBITDA 629.5 788.1 440.0 241.7
Profit Before Tax 4.1 133.5 180.1 134.9
Income Tax 198.9 68.5 (149.7) (119.6)
Net Profit 203.0 201.0 30.0 15.4
Earnings Per Share (EPS) 14.4 21.2 3.2 2.3

Balance Sheet
Total Assets 9,883.4 6,336.2 3,492.4 662.8
Net Debt 3,957.2 2,877.1 1,095.3 72.8
Equity 1,833.2 692.8 475.0 (422.4)

Ratios (%)
Net Profit Margin 12 12 3 3
ROE 11 29 6 (4)
Net Debt/Equity 216 415 231 (17)
Interest Coverage Ratio 207 316 698 1,274
Production Performance*
2006 2005 2004 2003
Oil Production (bopd)

Brantas PSC 13 14 0 0
Malacca Strait PSC 9,182 9,328 9,887 10,567
Kangean PSC 547 773 397 -
Bentu PSC 0
Korinci Baru PSC 0
Gelam TAC 339
Semberah TAC 455
Gebang JOB PSC 97
Total 10,633 10,114 10,284 10,567
Total Oil Production (mmboe) 3.9 3.7 3.8** 3.9
Gas Sales (mmcfd)

Brantas PSC 39 51 65 48
Malacca Strait PSC 0 0 0 0
Kangean PSC 58 81 41 0
Bentu PSC 0
Korinci Baru PSC 0
Gelam TAC 0
Semberah TAC 0
Gebang JOB PSC 3
Total 100 132 106 48
Total Gas Production (mmboe) 6.1 7.7 6.5** 2.9
* On a gross basis
** EMP consolidated Kangean from August 2004
Managing Adversity
Product Price Realizations*
2006 2005 2004 2003
Average realized liquid price (US$ / bbl) 63.9 53.2 37.7 28.9
Average realized gas price (US$ / mcf) 2.5 2.3 2.1 2.5
* On a gross basis
2006 Year End Proforma Gross Reserves and Resources
(in mmboe) 1P 2P 3P Contingent Resources*
Brantas PSC
Oil 2 9 19 0
Gas 9 18 26 5
Malacca Strait PSC

Oil 21 31 43 2
Gas 0 0 0 10
Kangean PSC
Oil 4 13 36 0
Gas 131 230 335 11
Bentu PSC
Oil 0 0 0 0
Gas 24 48 76 0
Korinci Baru PSC

Oil 0 0 0 0
Gas 3 13 17 0
Gelam TAC
Oil 1 5 50 0
Gas 0 0 0 67
Semberah TAC
Oil 3 13 33 0
Gas 3 9 29 0
Gebang JOB PSC

Oil 0 0 1 0
Gas 0 1 7 20
Total
Oil 31 71 181 2
Gas 170 319 489 113
Grand Total 201 390 670 115
* best estimate
Notes
1) Gross reserves have been certified by independent certification agencies such as Gaffney, Cline and Associates, Sproule International and MHA Petroleum
Consultants.
2) The gross reserves stated in the above table reflect EMP’s latest independent reserve appraisal. EMP has taken a conservative approach to reserves in
setting depreciation, depletion and amortization (DDA) policy as outlined on Page 67 of the Audited Financial Statements. When an approved plan of
development (POD) contains reserve estimates lower than the independent certification, the POD estimate is used for DDA purposes.
3) 3P Reserves and Contingent Resources totals: figures subject to rounding.

Gross Reserves and Resources
(in mmboe) 2006 2005** 2004
1P
Oil 31 34 30
Gas 170 258 255
Total 201 292 285
2P
Oil 71 77 42
Gas 319 360 305
Total 390 437 347
3P
Oil 181 185 71
Gas 489 437 331
Total 670 622 402
Contingent Resources*
Oil 2 2 25
Gas 114 116 98
Total 116 118 123
* best estimate ** source: 2005 Annual Report
Drilling Activity
(based on year spudded) 2006 2005 2004 2003

Total
Development wells 30 20 14 4
Exploration wells* 8 5 5 5
38 25 19 9
Brantas PSC
Malacca Strait PSC

Kangean PSC
Bentu PSC
Development wells 0
Exploration wells* 0
Korinci Baru PSC

Development wells 0
Gelam TAC
Development wells 2
Semberah TAC
Development wells 6
Gebang JOB PSC

Development wells 0
* exploration includes appraisal wells
Managing Adversity
Jack up rig operating offshore, Kangean

Message from the President Commissioner
» Suyitno Patmosukismo
Dear Shareholder, Notwithstanding increased demand to customers and in turn lead to a

and attractive prices, 2006 also more sustainable gas industry for
2006 was both a landmark year, and proved to be a very challenging year the benefit of all stakeholders, and
one of unprecedented challenge. The for the upstream oil and gas sector, shareholders of EMP in particular.
landmark for the global oil and gas with demand for people, equipment,
industry was the price of oil which materials and services exceeding EMP continued to invest heavily
reached record levels in nominal supply, resulting in rapidly rising costs to develop its substantial proved
terms as indicated by WTI peaking and lengthening schedules for all undeveloped gas reserves base into
at US$ 77.03/bbl during July 2006. upstream projects. While oil projects proved developed producing reserves,
The unprecedented challenge was generally enjoyed enhanced margins, production and cash flow. We are
encountered near a drill site in East Indonesian domestic gas projects, proud of the way management and
Java from a mud volcano. with non-oil linked prices, faced staff responded with innovative
dramatic margin squeeze as well as solutions to cut costs and manage
First, I will address the broader schedule expansion. schedule challenges, thereby ensuring
picture on market conditions and the benefits of gas are realized by
prices. The more than doubling of domestic all stakeholders as early as possible.
Industry experts remain confident fuel prices in October 2005, along We also applaud the results of
that the substantial demand for with rising international oil prices, management and staff in maintaining
energy, on the back of a strong global dramatically increased the price a strong focus on safety, health and
economy and oil production capacity competitiveness of domestic natural environment issues (SHE) alongside
constraints, has elevated oil prices by gas and this is increasing gas demand. sustainable development. This was
a quantum step above the previous The Company was at the forefront evident internally through improving
long term average of US$ 18/bbl. of gas price increases with new performance metrics and externally
A number of oil producers are budgeting gas volumes contracted at prices by industry awards such as PROPER
oil prices at or above US$ 50/bbl in above US$ 3.5/mmbtu. However, ratings.
the short term as supported by the while petroleum prices have been
forward market. A robust global deregulated, gas prices still remain
economy drove demand higher for well below international levels. I am
all commodities pushing the global confident that with the optimization
commodity cycle into its second year of domestic gas policies and ongoing
of strong growth driving prices for infrastructure development,
other forms of energy, such as natural Indonesian gas prices will increase
gas, coal and uranium, higher. to levels reflecting their true value
Managing Adversity
Oil and gas supply-demand The cause of the disaster has While the issue continues into 2007,
imbalances in 2006 not only pushed naturally generated considerable management remains focused
up spot and forward prices, but the speculation, analysis and unfounded on sweeping away obstacles and
value of reserves and resources in allegations. However, as with many pursuing a fair and equitable
the ground, as reflected in asset underground events the cause may outcome. In the view of the Board of
reserve acquisition prices. Given never be known with any certainty. Commissioners, adversity precedes
the Company’s substantial reserve There is a growing body of informed growth. The Board of Directors’
and resource base, the benefits of scientific opinion that the major commitment to maximizing
the increase in reserve values will Yogyakarta earthquake was an shareholder value through innovative
ultimately accrue to shareholders. initiating factor behind this natural strategies to monetize the Company’s
disaster. This report does not set out substantial hydrocarbon reserves
The Company faced adversity on an to debate the cause, rather sets out and resource bases provides a strong
unprecedented scale in 2006. the facts to shareholders and outlines platform for future value creation and
During May mud erupted near the the scale of the response by LBI. earnings.
Banjarpanji exploration well being
drilled in Sidoarjo, East Java by an Adversity is a fact of life, it cannot The Board of Commissioners
indirectly owned operating subsidiary, be controlled. What can be controlled continued to play an active oversight
Lapindo Brantas Inc. (LBI). The mud is how we react to it. I am proud of and advisory role during the year,
subsequently inundated an area of the way LBI, a small limited liability supporting the Board of Directors. This
over 400 hectares displacing some company, coped with the incident role, along with the committees that
11,000 people from 4 villages and though a massive commitment of report to the BoC including the Audit
closing a number of factories. LBI, as financial and human resources. This Committee and the Conflict of Interest
operator of the well and 50% interest was a true test of corporate social Compliance Committee, underpinned
holder in the Brantas PSC Joint responsibility and it brought out the Company’s objective of enhancing
Venture, responded to the incident the best in their people during the corporate governance, transparency
with a massive relief effort aimed at exhausting and arduous period since and ultimately performance, in an
stopping the mud flow, mitigating May 2006. increasingly complex and competitive
the surface impact and managing upstream oil and gas environment.
the social implications. The resource Responding to the incident did
commitment of LBI to the disaster has deflect management from day to We thank the Board of Directors,
been on an unprecedented scale with day operations, but only to increase management and staff for their
intense emergency and restorative the resolve to deal promptly and focus, resolve and commitment
work and expenditures of over US$ 92 effectively with the matter. The during a challenging year in which
million gross expended by year end. need to protect the interests of their abilities and the value of the
minority shareholders drove the underlying oil and gas portfolio
Board on two separate occasions stood up to scrutiny. We also thank
to seek divestment of its indirectly the Company’s business partners,
owned stake in LBI. The proposed communities, and of course
transactions were poorly understood shareholders, for continued support
as the incident had already become given to the Company during an
highly emotive and politically unprecedented year.
charged and therefore the necessary
approvals to proceed were not
forthcoming. For and on behalf of the Board of
Commissioners,
Suyitno Patmosukismo
President Commissioner

.
A B C
Board of Commissioners
A Qoyum Tjandranegara
B Suyitno Patmosukismo
C Rennier Latief
ManagingAdversity
Managing Adversity
Report of the President Director
» Chris Newton
Dear Shareholder, The 2006 Results Banjarpanji, Sidoarjo Regency

Top line sales for 2006 were 2% lower In May, following the Yogyakarta
Emerging from exceptional and at Rp 1,646 billion on the back of a earthquake, seepage from a mud
unparalleled challenge 20% increase in average per boe price volcano 200 meters away from the
During 2006 the Board of Directors realizations for oil and 9% for gas. Banjarpanji exploration well in East
has faced exceptional and Production of oil declined by 7%, a not Java resulted in emergency relief
unparalleled challenge on a number unexpected trend in mature fields, action on an unprecedented scale in
of fronts, however I am pleased to while total gas production decreased the history of the oil and gas sector
report EMP has emerged with some by 26%, primarily affected by the in Indonesia. It is of great concern
positive news through the end of the damage to the East Java pipeline. to the Board to note the loss of the
year both in terms of operations and lives of two construction workers
strategic development. We began Net profit was virtually flat year on on routine activities in September,
2006 on a positive note and 12 year at Rp 203 billion. The result a further 14 lives in November from
months on, despite severe tests we includes a positive contribution the rupture of the East Java gas
are once again positioned well for the from deferred tax of Rp 238 billion pipeline and the displacement of local
future. associated with the heavy capital communities. The scale of the mud
investment over the last year. volcano warranted the declaration
We commenced the year with the Earnings were not significantly of a national emergency for the
landmark acquisition of Tunas impacted by the Banjarpanji incident Sidoarjo regency by the Government.
Harapan Perkasa (THP), adding 90 since the costs are capitalized under Insurance claims have been met and
mmboe to our existing 2P oil and gas full cost accounting. the East Java pipeline was being
reserves, just prior to a substantial returned to full operational status as
increase in international prices for During the year credit facilities were this report was being published. In
oil and gas. As prices continued to completed for a total of US$ 152.8 December, EMP’s indirect subsidiary,
escalate, the Board concentrated million used for the development of LBI proposed comprehensive terms
EMP’s activities on optimizing the the reserves of the Gebang, Gelam, and compensation to the displaced
existing portfolio. The THP acquisition Bentu & Korinci Baru and Semberah communities in line with Presidential
provides significant depth, diversity blocks acquired as part of the THP Decree No. 13 requiring LBI to bear
and optionality, while at Kangean, acquisition that closed in January all costs incurred in overcoming the
recent new production from 2006. incident.
Sepanjang island oil field is especially
encouraging at 3,500 bopd.
10 EMP Annual Report 2006

Measures to contain the mud flow Development costs and reserve
under a Government-led emergency values In 2006, despite many
team continue and the cost of Over the year, as exploration and distractions, the Board of EMP
restitution has been estimated at development continued, we faced maintained its focus on four key
US$ 183 million. EMP’s portion of the further delays and cost increases strategic levers:
costs incurred in 2006 under the PSC from tight supply conditions in drilling
» Organic growth of existing
is assessed at US$ 31 million, net of equipment and oil field services.
assets - new reserves and recent
insurance claims already honoured. Ironically, within the cause lies a production successes point to a
Consistent with its policy of full cost benefit. The shift of oil prices up to resumption of earnings growth
accounting, these costs have been new levels, as a trend in itself and a in 2007.
capitalized and will be amortized as factor stimulating demand for lower » Gas Commercialization
oil and gas are produced, subject to a priced natural gas, is driving the - development of Kangean is a
ceiling test, that such costs should not expansion of upstream investment, case study in realizing value.
exceed the value of EMP reserves. As hence the demand for equipment and » Operational Excellence
at reporting date, no such excess was services. At the same time, the value - innovative solutions, such
evident. We will continue to monitor of our oil and gas portfolio has been as the use of underbalanced
drilling, are improving the rate of
the situation. considerably enhanced. Our strongest
return from wells and unlocking
challenge is how best to realize the
considerable potential for new
In the interests of all shareholders, value from the new price levels. projects.
the Board has explored a number of » Strategic Acquisitions - THP has
alternatives to contain and manage The results for 2006 reflect these added 30% to 2P reserves and
the impact of this natural disaster. multiple challenges, but should be through new strategic partners
On two separate occasions the Board viewed in the context of the medium in Kangean, the Company
has sought to divest the indirect term prospects for our industry and enhances its financial and
interests of EMP in LBI through a sale specifically EMP’s step up growth and operational capacity.
to a related party, the Bakrie Group, commercialization strategies, which
without prejudice to the commitments remain robust. Our post year-end
made to local communities, however announcement of the intention to
these proposals, in both cases, build a new strategic partnership
were not given the approval of the encapsulates those strategies and
Capital Market Authority. While directly addresses the challenge of
the situation is ongoing, the Board realizing value.
takes this opportunity to record our
appreciation of the efforts of all those
involved and the support of Santos
Limited, our joint venture partner.
Managing Adversity 11
New strategic partners Kangean: EMP strategy at work Capitalizing on domestic market
During the second half of the year A year ago I outlined the key conditions for gas
we began negotiations to introduce elements of our strategy. Our The Board of Energi Mega Persada
new strategic partners, Mitsubishi Kangean property, despite short- has long recognized that the least
Corporation (Mitsubishi) and term disruption through damage to competitive sector of the Indonesian
Japan Petroleum Exploration Co., the East Java pipeline, demonstrates upstream oil and gas business has
Ltd (Japex) through their planned the effectiveness of our strategy been the domestic gas market.
subscription for shares in our particularly well. The Company has built a strong
subsidiary EMP Inc (EMPI). Subject gas reserve, resource and acreage
to formal shareholder approval, Firstly, Kangean was highly attractive position over recent years based on
Mitsubishi and Japex will assume, as it represented an opportunity the hypothesis that both volumes and
in aggregate, an indirect working for us to achieve step up growth, prices would increase as Indonesia’s
interest of 50% in the Kangean acquired in a counter cyclical period growing economy made the transition
PSC and will carry a substantial at a value of US$ 0.8/boe on a proved from an oil exporter to an oil importer.
portion of EMP’s remaining capital and probable reserves basis. Today This portfolio has been built taking
expenditure obligations for the major valuations are in the range of full advantage of attractively-priced
projects at Kangean. The benefits to US$ 3/boe for undeveloped gas counter cyclical investments, hence
shareholders from this partnership reserves. Secondly, since acquisition acquisition costs are well below
are considerable: we have achieved organic growth current market values. The Company’s
from existing assets as our 2P reserves have grown from 56
• EMP will immediately realize projects have added oil production mmboe at the time of EMP’s initial
proceeds of US$ 360 million, and reserves: from 207 mmboe public offering in July 2004 to 390
thus substantially reducing the at acquisition to a level of 257 mmboe at the end of 2006. At the
Company’s debt and cost of funds. mmboe as the basis for the sale same time the number of blocks in
• The new partners will bring of 50%. Thirdly, Kangean is an which the company has an interest
financial strength and the capacity excellent demonstration of EMP’s has increased from two to eight. Net
to accelerate delivery of the full commercialization strategy, value acreage exposure has increased from
reserve and resource potential having been added through the 7,267 to 17,075 square kilometers.
of an expanded production, extension of the life of the PSC on
development, appraisal and improved terms. A number of gas Rising oil and petroleum product
exploration portfolio at Kangean contracts have been signed to realize prices have triggered domestic energy
PSC. that value in a rising market. Finally, consumers to switch to gas and this,
• EMP will gain immediate access to Kangean serves to demonstrate along with strong Government policy
extensive offshore gas production the benefits of a commitment to support, is driving domestic gas
experience, particularly in operational excellence through the prices higher. Concurrently, the global
fractured reservoirs, which will be use of, for example, underbalanced upstream industry is, in general,
of value for the development of the drilling which has unlocked the cash long and opportunity short.
overall portfolio. potential of oil at Sepanjang island. This combination has significantly
• The value of the Kangean block increased the value of oil and gas
as defined in this transaction will reserves.
establish a true benchmark for the
Company’s undeveloped gas assets
carried in the balance sheet at
historical cost.
• Ongoing 50% exposure to this
material growth asset and
significant upside in terms of gas
prices for contracted and un-
contracted gas.

Production and Reserves EMP subsidiaries invested The successful drilling, testing and
Total oil and gas production volume US$ 198 million (gross) in drilling and completion of the fractured carbonate
in 2006 reached 10 mmboe, a operating a total of 45 wells, including reservoir of the Sepanjang island oil
decrease of 12% compared with several that began in 2005. The total field is an excellent example of the
2005, reflecting natural decline of comprised 4 exploration, 6 appraisal application of modern technology
existing reservoirs, ahead of delayed and 35 development wells with 39 by utilizing underbalanced drilling
production startup from new 2006 onshore and 6 in offshore locations. techniques. This resulted in lower
projects. Year-end certified 1P and Success rates achieved in exploration, drilling costs and vastly improved
2P reserves were 201 mmboe and appraisal and development were 75%, reservoir productivity. The success of
390 mmboe respectively, including 33% and 71% respectively. These these techniques can be leveraged in
the THP acquisition, drilling results results reflect the depth and quality other fractured carbonate reservoirs,
and updated certifications. An of the underlying portfolio and set the such as the West Kangean gas
updated reserve certification on the stage for strong production growth field, whose significant upside gas
material Terang Sirasun Batur (TSB) in 2007 and beyond. Collectively EMP resource potential will be evaluated
field has confirmed mean and 2P operations ranked among the top 2 by employing underbalanced drilling
reserves similar to the D&M 1995 to 3 operators by drilling activity in in 2007.
certification. While a wider range of Indonesia in 2006.
uncertainty was identified around The 75% exploration drilling
the 1P and 3P volumes, significantly Commercial highlights include the commercial success rate came from
increased 3P gas reserves were successful appraisal of the Sepanjang three discoveries in the Malacca Strait
confirmed, a positive indicator for island and Pagerungan Utara oil where step out development and
future production. The updated TSB fields in the Kangean PSC, the former near field exploration has consistently
certification is reflected in the 2006 commencing commercial production grown the reserves base over the
reserves numbers presented in this immediately after the year end. last decade. While small in volume
report. Sepanjang island oil, Pagerungan terms, these barrels add value as
Rancak gas and MSDA are already they can quickly be tied into existing
Drilling: issues and successes contributing to production. infrastructure at low cost.
This time last year the Board noted
our main challenge was “maintaining Organic Growth and Operational
our fast track development schedule Excellence
in a rapidly tightening market Production optimization, the
for equipment and services.” This development of reserves, and the
condition remained widespread in moving of resources to reserves
2006, and EMP was no exception to continue to be priorities in unlocking
the industry norm of escalating day the value of the Company’s deep and
rates for rig and related services, diverse project portfolio. The focus
costs in excess of budgets and has been on lower risk development
schedule delays, all of which impacted of proved undeveloped reserves
production. rather than exposure to high impact
exploration. Kangean remains
the major source of medium term
production growth with development
of the TSB fields continuing towards
first production potentially in
late 2008. The Sepanjang island,
Pagerungan Utara and Semberah
fields will deliver important new oil
production volumes in 2007.
A range of technologies and skills Corporate Governance Appreciation
have been deployed to stem Proper governance is about Through a period of extreme
production decline from mature fields, maintaining the right balance difficulty, the support and
enhance well and reservoir production between controls, management commitment of our suppliers,
and improve overall recovery at processes, systems, entrepreneurial customers and communities was
minimal cost. Horizontal drilling at flair and operational flexibility. We exceptional and much appreciated,
Pagerungan Utara, underbalanced followed through in beginning to indicating the strength of
drilling at Sepanjang island and 3D implement the recommendations relationships built over years and the
seismic programming at Gelam stood of the corporate governance review sustainability of our business.
out in 2006. conducted by a leading international
consultancy in 2005. We have more to I have highlighted the quality of our
Safety, Health & Environment (SHE) do and are committed to international assets and it is entirely appropriate to
and Corporate Social Responsibility best practice standards. Upstream make a special mention of the people
It goes without saying that the oil and gas is both a capital intensive in EMP who have been the catalyst
Board is saddened by the loss of life and a skills-driven business. High in the often complex processes of
and extremely concerned that the standards and skills in allocating creating value from our portfolio.
immense natural disaster in Sidoarjo capital are key long term value drivers Management and staff rose to
regency should be contained with for shareholders. During the year meet challenges and adversity in
minimal harm or disruption going significant organizational, system 2006 with quality teamwork, spirit
forward. This did not detract from and process enhancements were and experience. Their endurance
our commitment to the safety implemented to ensure our technical in adversity as EMP surmounted
and welfare of our employees and and commercial decisions were of the numerous hurdles is commendable.
neighbouring communities in every best quality.
location in which we operate. Our Toughened by a challenging
pursuit of the best standards in Outlook 12 months, we look forward to
SHE practice across the business We believe growth prospects in maintaining our course and realizing
continued with excellent results. The revenues and the value of underlying our goals.
establishment of the SHE Excellence assets are good, given sustained
Functional Team was undertaken to demand and the introduction of new
ensure that policy was implemented strategic partners at Kangean to
to international standards. enhance production and development For and on behalf of the Board of
Exceptional safety standards in Gelam capabilities. We expect cost pressures Directors,
were recognised by the Ministry to remain in the industry and
of Labor as we recorded 2 million therefore we will have to remain
man-hours without a single lost time innovative and alert. However, with
incident. At Kangean, our operations oil prices off the peak and supply of
continue to focus on community equipment and services responding, Chris Newton
relations through sustainable social these pressures should subside. President Director
and economic development programs.

A B C D E
Board of Directors
A Yuli Soedargo
B Faiz Shahab
C Chris Newton
D Norman Harahap
E Tom Soulsby
ManagingAdversity
Review of Operations

Kangean operations
East Java
Kangean PSC (working interest 100%)
Operator : EMP Kangean Limited (60%)
Partner : EMP Exploration (Kangean) Limited (40%)
0 40 KM Payang Pagerungan Utara Field

(PUO)
Jenggolo
Poleng
Bukit Tua Pagerungan Besar Island Field
KE (PGA, PGB, PGC & PGR)
Moncong
Bukit Panjang West Kangean Field (MCO)
JS 53A
Pangkah (WKO) Kangean Island
Petrokimia Gresik
PLN Gresik Terang Sirasun Batur Field
Madura Karangtakat Pulau Sepanjang
(TEO)
Gresik Stn.
PGN
Surabaya TERANG
South Saubi
East Pagerungan Field
BATUR SIRASUN
Oyong Maleo
PGN Tandes (SS0)
(PTO)
PGN Gn. Sari Jeruk BD GP)
e (EJ South Celukan
ipelin
PGN Waru Gas P
Java (SC0)
East
Sepanjang Island Field

(SED)
Kangean PSC
Pasuruan
Leces
East Java
Bali
Lombok
LEGEND
Thailand
BLOCK
Philippines
OIL FIELD
GAS FIELD
Malaysia Brunei OIL & GAS FIELD
Singapore PROSPECT
LEAD
REPUBLIC OF INDONESIA CUSTOMER
Java Kangean PSC GAS PIPELINE
INDEX MAP
East Timor
PGN DISTRIBUTION GRID
Contributing over half of total Two new oil fields, Pagerungan Utara Progress has been made at the
gas production in 2006, Kangean Offshore (PUO) and Sepanjang island Terang-Sirasun-Batur gas field (TSB),
produced gas of 58 mmcfd and (SED) have been appraised. A jack with first gas production planned for
condensate at 547 bpd. Nine up rig has been secured to complete late 2008. EPC contracts are in process
wells were drilled during the year, development of PUO and to appraise and a drill ship has been secured to
including 7 development wells and the West Kangean gas field. The SED- drill five new wells at TSB during 2007.
2 appraisal wells. The priority has 1A well was flow tested with first oil An independent technical review
been to develop the Pagerungan and production following in January 2007 has identified significantly increased
Sepanjang Island gas and oil fields. at a rate of 3,500 bopd. 3P reserves, a positive indicator
for future production and reserve
upgrade potential.

East Java
Brantas PSC (working interest 50%)
Operator : Lapindo Brantas Inc. (50%)
Partners : Santos Brantas Pty. Ltd. (18%)
PT Medco E&P Brantas (32%)
Payang
Jenggolo
Bukit Tua
KE
Poleng N
Bukit Panjang
Pangkah
Java Sea
0 20 KM
Tuban
Petrokimia Gresik PLN Gresik
Madura
Surabaya
JG P )
in e (E
Brantas PSC Oyong

Maleo Field
Ea st
Ja v a
Gas P
ip el
Jeruk BD
Bisma
Ketingan Kresna Shinta Salya Nakula
Kertosono
Bangil Karna
Sadewa
Pandan S. Jombang Srikandi Kunti
Bima
Kunjang Arimbi Larasati
Andjani
Carat Field
Pasuruan
Wunut Field Leces
Tanggulangin Field
Banjarpanji, Porong, Banjarsari East Java
LEGEND
BLOCK
OIL FIELD Bali
GAS FIELD
OIL & GAS FIELD Indian Ocean Thailand
Philippines
PROSPECT
LEAD Malaysia
Singapore
CUSTOMER
GAS PIPELINE REPUBLIC OF INDONESIA
Java Brantas PSC

PGN DISTRIBUTION GRID East Timor
INDEX MAP
Gross production was 39.4 mmcfd. Six wells were spudded during the Banjarpanji well, spudded early in
year with success recorded in both 2006, subsequently ceased operations
Strategic priorities for development appraisal and development drilling. after substantial seismic activity in
at Brantas include the optimization Gas was found at the Tanggulangin-5 Central Java during May. Mud, water
of gas production from Wunut, well, and both oil and gas found at and gas emissions in the vicinity have
Tanggulangin and Carat gas fields, the Wunut-19 well. Tanggulangin first impaired further development as
new gas contracts and further gas is planned for the third quarter reported on page 20.
appraisal and exploration to realize of 2007, with 4 bcf sold at a contract
the potential of the deep Kujung prices averaging US$ 4.1/mmbtu. The
exploration play. Carat field commenced gas production
in April 2006 at 2.5 mmcfd.
On May 29 mud erupted through three fissures in the vicinity of the Banjarpanji well. EMP’s indirect subsidiary, LBI
immediately activated its Emergency Response Team to undertake initial disaster assessments and containment activities.
This team was superseded by the National Mudflow Mitigation Team (Tim Nas) which was established by Presidential
Decree, and to which LBI acted as a representative of the Executing Team. A chronology of the events in 2006 follows, listing
the occurrences at and around Sidoarjo, the efforts undertaken by all concerned parties to control the natural disaster, and
the steps taken to ensure the protection and welfare of the affected communities.
Banjarpanji - a chronology
Month & Event Technical Action Taken Community Action Taken
May
Banjarpanji well The Lapindo Emergency Response Team is People in the immediate vicinity are temporarily
experiences loss activated. The broach is immediately assessed. evacuated following the detection of minor
of circulation after levels of H2S (hydrogen sulfide) in the surface
an earthquake LBI works with local officials and selected emissions.
in Yogyakarta suppliers to contain the mud by pumping drilling
measuring 6.2 on the fluid into the well. Communication between LBI offers free medical assistance to local
Richter Scale. well and mudflow could not be established and villagers.
pumping drilling fluid had no impact on the
Steam, water and gas developing mud volcano.
observed bubbling to
the surface at three Existing H2S monitoring is intensified.
locations between
200m and 500m
from the Banjarpanji
exploration well at
Sidoarjo, East Java.
June
Emissions of H2S stop. The Banjarpanji Emergency Task Force is formed LBI establishes the following priorities:
comprising LBI and seconded EMP personnel. 1. The health and safety of local communities;
Volume of mud 2. Mud flow management;
flowing from the The Ministry of Environment leads an 3. The curtailment of the mud flow.
broach increases to independent team to analyze and monitor the
50,000m3 per day, mud, ambient air, and water. LBI provides masks to students in two schools
covering a total area and community members in Renokenongo, Siring,
of 110 hectares of Abel Engineering, international well control and Jatirejo to prevent fume inhalation.
land: 1.1 million m3. specialists, carry out engineering work and assist
with the design of relief efforts. Emergency accommodation, food, drinking
6,668 villagers from water, and amenities are provided for the 6,668
Renokenongo, Siring The design of relief wells is assisted by external displaced people, along with a monthly stipend of
and Jatirejo are drilling specialists. Rp 300,000 per person. Amenities include school
displaced. transportation for children, and entertainment,
LBI builds ponds and levees to contain the mud vocational training, and religious programs.
7 factories are closed, and installs pumping systems. Pond walls are Temporary emergency shelter is located at
and 45 hectares of reinforced. Local communities assist with pond Pasar Baru Porong. In cooperation with the local
rice and sugarcane construction. Department of Education, affected schools are
fields are affected. relocated.
SATLAK is formed: a task force comprising LBI,
Mud encroaches on BPMIGAS, the Departments of Social Welfare, Potable water and sanitation facilities are
the Surabaya-Gempol Environment, and Health, and other relevant constructed for displaced citizens.
toll road. departments of the Sidoarjo local government.
SATLAK is led by the head of the local Free medical care is provided for all displaced
The toll road is closed. government. families. The Sidoarjo Department of Health
appoints 5 hospitals and 9 health centers to care
The Indonesian Association of Geologists, in for those affected. In addition, 2 emergency
cooperation with LBI, assesses mud extrusion, hospitals and 9 mobile units are set up.
and conducts surveys and geological and
geochemical studies of this and other mud
volcanoes in the area.

June (continued)
Integrated geological, geophysical and LBI provides salary compensation for the
geochemical studies are undertaken by the employees unable to work in the affected
Institute of Technology Bandung and Institute of factories.
Technology Surabaya in cooperation with LBI.
LBI announces compensation arrangements: it
A number of mud disposal options are evaluated, will pay damages for affected rice and sugarcane
including piping it to the sea. fields; rent the affected land for two years;
provide households with Rp 5 million to fund
The C-5 Galaxy, the world’s largest cargo plane, two-year housing leases, and provide a moving
was chartered to fly in a 10K Blow Out Preventer costs allowance of Rp 500.000.
from Singapore to be used in Snubbing Unit
operations. The Ministry of Energy and Mineral Resources
announces three resolutions:
SATKORLAK is formed: a task force led by 1. To stop the mud flow;
the Governor of East Java, including SATLAK 2. To determine suitable locations for the digging
members, LBI, BPMIGAS, the Ministry of Energy of mud ponds;
and Mineral Resources and the Ministry of the 3. To care for the victims.
Environment.
LBI and the Government undertake joint
Snubbing Unit activities commence to: investigations into the cause of the broach.
1. Determine conditions in the well;
2. Confirm source of mud flow; LBI makes an initial Rp 5 billion compensation
3. Staunch the flow. payout to the displaced citizens through the
local SATLAK account administered by the local
The toll road is elevated by 1.5m, drains are government head.
added, and a bridge is constructed.
Instances of loss are recorded into a database.
A media center is established to provide regular

updates.
July
The volume of mud The Snubbing Unit is unable to reach the source To date, LBI have safely evacuated 7,918 people.
from the broach of water and mud.
reaches 2.5 million m3, Affected families receive two-year rental
covering 179 hectares Worst case scenario simulations predict the areas assistance.
of land, and develops next likely to be affected by the mud as the
into a mud volcano. volume expands. Predictive maps are drawn. Studies examine the properties of the mud, and
conclude that it is:
The air above the mud The Ministry of Environment leads a Surface a. Non-toxic and not hazardous;
volcano is found to Management Team to contain the surface mud b. Suitable for producing bricks, paving blocks,
be neither toxic nor and divert it into purposely built settlement and concrete blocks.
hazardous, despite its ponds.
faint odour. LBI and the environmental division of the local
A 750 HP rig replaces the efforts of the Snubbing government support local industry in Mojokerto
The toll road reopens. Unit. by training villagers to make bricks and
construction materials from the mud.
Halliburton provide integrated equipment and
services regarding the relief wells. Local government leads a Community and Social
Impact Team to mediate between LBI and the
The location of the first relief well is prepared. communities regarding remedial actions and
Three alternate locations are prepared. compensation.
7 ponds are built with a combined capacity of A Media Relations Team is established responsible
767,000m3 covering 135 hectares of land; they for local community communications.
are worked by 70 pumps.
Traffic is diverted to Jl. Raya Porong while the toll
road is cleaned.
August
The volume of mud LBI, in cooperation with the army (ZIPUR), POLRI, Villagers from Siring and Kedung Bendo are
increases to 100,000 and the local government, repair the retaining safely evacuated following the broach in the mud
m3 per day, making mud-pond wall on the same day it was broached. pond-wall.
a total of 3.65
million m3 covering Boots & Coots, well control specialists, assist with To date, 10,860 people have been displaced.
approximately 350 the drilling of relief wells.
hectares of land. It is announced that permanent housing will be
A 1500 HP drilling rig replaces the 750 HP rig, and provided for the displaced villagers. Temporary
A retaining wall drills a relief well 500m from the Banjarpanji well, housing and food continues to be provided.
of an emergency 350m from the broach, to identify the source of
containment pond is mud and water and kill it with heavy drilling mud The fishermen are told that the water and mud
broached affecting and cement. will be separated and treated before being
the villages of Siring disposed of.
and Kedung Bendo; The first relief well is flooded two days prior to its
causing temporary spudding date. LBI tells demonstrators it will appoint a firm to
closure to the handle the technicalities of compensation for
Surabaya-Gempol toll Land is assessed for subsidence. property damage.
road and the railway.
Scientific Drilling, USA, provides specialist A sugar plantation receives Rp 592 million for
The toll road equipment to assist with drilling and relief damages incurred.
and railway are efforts.
intermittently open.
The toll road is elevated 2.5m.
Fishermen in Desa
Kalirejo demonstrate Pond construction continues, bund walls are
against the proposal reinforced with geotextile, 20km of levees are
to dump the mud built, and local irrigation canals are rehabilitated.
into the Madura
Strait, fearing The installation of 18 inch and 20 inch pipes
contamination. commences to carry the mud to the sea.
Demonstrators
block the Porong
road and railway
line demanding
compensation.
September
The Surabaya-Gempol Two fatalities occur at the site as a result of Traffic is diverted to the Porong Road. Public
toll road is reopened. contractor heavy equipment accidents. LBI roads are rehabilitated.
investigates the incidents and reviews the site’s
EMP announces safety procedures. The families of the two men A pilot project commences processing the mud
intention to divest receive compensation. into bricks, but is discontinued after the project
ownership in Kalila site is submerged by mud.
Energy Limited and The first monitoring well spudded to assess and
Pan Asia Enterprise monitor shallow drilling hazards.
Limited, which
together own 99.99%
shares in LBI, to the
Bakrie Group.

September (continued)
A retaining wall is With Presidential Decree No. 13, the National Tim Nas’s guidelines from the Government state
breached causing the Mudflow Mitigation Team (Tim Nas) is formed that families from the affected area will be
toll road to close. to take operational measures in an integrated resettled as the land is no longer fit for human
manner to overcome the mud volcano including: habitation and is considered a ‘disaster zone’.
The railway is 1. Sealing off the broach;
impaired. 2. Mitigating the impact of the mud flow; LBI presents results of a subsidence survey which
3. Managing social issues. investigated the possibility of subsidence around
relief wells, extrusion points, the gas pipeline, the
LBI is a representative member of the Executing railway and toll road.
Team and provides technical, operational and
management assistance to support Tim Nas. Donations are made to affected schools. Affected
schools are relocated.
Following further evidence that the mud is not
toxic, the Government authorizes the disposal of
the mud into the sea via the Porong river. This is
determined to be the most viable and effective
solution for short term emergency relief.
Construction of a spillway commences to increase
the flow of mud into the river.
A section of the railway is elevated and the

crossing at Siring is reinforced.
The first relief well spudded.
The Government’s guidelines for Tim Nas state

that drilling efforts should continue to stop the
mud flow; that practical uses for the mud should
be developed; that the mud containment area
should be strengthened; that the toll road, gas
pipeline, and railway should be relocated.
October
Between 100,000 Geotextile is applied to mudpond levees. LBI, the Institute of Technology Surabaya, and
– 150,000 m3 of mud the affected communities develop permanent
flow daily from the To date, three water treatment units have been relocation plans.
mud volcano. Mud has installed, and 20 inch and 32 inch pipes connect
affected an area of mud ponds to the Porong river. To date, 3,300 families have been re-located
400 hectares and 8 to safety. LBI continues to provide a monthly
villages. Ecological and hydrological studies continue to stipend of Rp 300,000 per person to cover food
ensure that the discharge of mud is conducted in costs, and provides free medical assistance.
The Surabaya-Gempol an ecological and sustainable manner. Long term
toll road reopens. environmentally sustainable solutions to mud Temporary accommodation at Pasar Baru Porong
disposal are investigated. is vacated as people utilize LBI’s rental assistance
Bapepam rejects to relocate to more permanent housing.
proposals to divest LBI LBI, the Institute of Technology Surabaya, and
to Lyte Ltd and Bakrie Tim Nas work together to minimize any effects to The Mindi Village Public Cemetery is relocated.
Oil & Gas. the ecology of the Porong river.
LBI receives the first insurance installment.
Local and international contractors continue with
relief well drilling efforts. US$ 24 million compensation is announced for
the relocation of the community and their living
costs.
October (continued)
The second relief well spudded. LBI continues to work with the owners of farms,
factories and small/medium enterprises, as well
LBI and Tim Nas work together to mitigate the as market sellers and other businesses to ensure
effects of any possible subsidence in the area. that their commercial enterprises are relocated
promptly and that compensation is made for any
A differential GPS system is used to undertake losses.
continuous readings of the bund walls and mud
elevations. LBI reiterates that the mud is neither toxic nor
poisonous, despite media reports.
The total capacity of ponds built is 11,744,000m3,
covering 252 hectares of land. The Ministry of Environment believes that the
mud can be disposed of safely without being
Penkonindo, the Indonesian subsidiary of Van treated.
Oord, assists LBI with mud containment issues.
The United Nations Environment Program finds
1,400 army personnel assist with the the current impact of the incident on human
strengthening and stabilization of levee walls health to be low.
and the mud containment area.
LBI agrees to fund a religious holiday allowance of
Rp 700,000 per worker.
November
The toll road is closed. EMP Kangean Ltd shuts in the supply of gas to There were 14 fatalities as a result of the rupture
customers following the explosion. in the gas pipeline. Families were given financial
EMP signs agreement support, and assistance with burial expenses.
to sell its shares The disposal of mud into the Porong river ceases
in Kalila Energy following the gas pipeline rupture which caused The Ministry of Energy and Mineral Resources
Limited and Pan Asia the mud to spread north instead of south into the declares the pipeline rupture a natural disaster.
Enterprise to Freehold spillway.
Group Limited. The affected communities continue to receive
GPS monitoring of subsidence levels around both food and beverages, as well as medical care.
Pertamina’s East Java relief wells continues, as does monitoring of the
Gas Pipeline ruptures spillway. 3,779 people affected by the pipeline rupture
at KM 38 of the are provided emergency shelter at Pasar Baru
Porong-Gempol toll. Construction of a spillway pump house is Porong.
underway, and bund walls are reinforced in
The toll road collapses anticipation of the rainy season. 5 additional
and is closed pumps are installed.
permanently.
Tim Nas announces the decision to broaden the
EMP announces the Porong Road.
cancellation of the
divestment to the
Freehold Group.

December
EMP Kangean Ltd Minarak Labuan Co starts supporting LBI. Refugees continue to receive free medical care. To
recommences gas date, 35,000 patients have been attended to.
supplies after an 8- Subsidence continues to be monitored through
day shut-in. the GPS system. LBI receives the second insurance installment.
A bund wall is Subsidence causes the Porong flyover bridge to Tim Nas proposes to buy affected land
broached in the become unstable and it is dismantled. and property from those with proper land
vicinity of the second certification at the following rates:
relief well and the By the end of the year, 40km of large scale » Land: Rp 1,000,000/m2
area is deemed levees had been constructed to contain the mud, » Buildings: Rp 1,500,000/m2
unsafe. measuring up to 30m in height, 30m across the » Rice fields Rp 120,000/m2
base width, and narrowing to 8m at the top.
The Association of 12,463 people are being given shelter in Pasar
National Oil and LBI estimates the total costs for drilling relief Baru Porong, Dinas Diklat, and Balai Desa
Gas Companies wells and mud management to be Ketapang.
(Aspermigas) US$ 183 million to the end of 2007. To date,
concludes the Sidoarjo LBI has paid US$ 92 million on containing the LBI announces that displaced people who meet
mud volcano is a mud, stopping the mud flow and compensating specified criteria have the option to be relocated
natural disaster. victims. to Kawasan Sidoarjo Baru, a residential area to
be developed which will include a school, medical
Pertamina, Kodeco clinic, sports facilities, a mosque, cemetery, and
Energy and LBI traditional market.
sign gas sales and
purchase agreements
with seven companies
to the total of US$ 2.8
billion.
The mud continues

to flow at a rate of
approximately 1.1
million barrels per
day.
For further information regarding the Sidoarjo mud volcano please refer to www.sidoarjo.info
Lalang platform and Ladinda FSO

Sumatera
Malacca Strait PSC (working interest 60.49%)
Operator : Kondur Petroleum S.A. (34.46%)
Partners : PT Imbang Tata Alam (26.03%)
China National Offshore Oil Corporation (32.58%)
Malacca Petroleum Limited (6.93%)
Rupat Island Malaysia
Malacca Strait PSC

St
ra
it
of
Ma
lac
ca
Bengkalis Island OA
VA QC QD
N
QF
QE
Refinery QB
Pertamina UP II BA
0 15 KM
Padang Island AG
OSB Ladinda DU
LEGEND NM
Gatam SAG
BLOCK
LE Ponder Field
OIL FIELD Sabak
B Melibur Field
GAS FIELD Pedada
Kurau Field CO
CM
OIL & GAS FIELD DD
BGW DF CN Merbau Island
PROSPECT Lalang Field
BZ FB FC
LEAD BV
CUSTOMER
Benua Kuat DC EA CA FD
BU
Dusun Field BY-2 BH Rangsang Island
OIL PIPELINE DR BK
Oil Gathering station AL BM TA
GAS PIPELINE BOP Pertamina BSP BC BQ TH TH CU
EG BT
Pusaka
BY-1 AI
CW Selatan Field
Butun Industrial Estates DB TE
TB
N
Thailand Mengkapan Field TG CH
TC
Tebing Tinggi Island
Ponak-1
Philippines
TD
Malaysia
Singapore Beruk Timur Laut
Sumatera
Malacca Strait PSC
REPUBLIC OF INDONESIA
Beruk Sumatera Mendol Island

East Timor
INDEX MAP
Contributing 86% of total oil The program of workovers and well 3 for exploration and 1 appraisal
production in 2006, Malacca Strait service continued during 2006 to well with 100% exploration success
produced 3.35 mmbbl (2005: 3.4 mitigate production decline from rate. Appraisal tests at the BY-2 well
mmbbl). Production for the year these mature fields. A total of 15 showed oil instead of gas and the
averaged 9,182 bopd. wells have been drilled during the BY2-DC-DR discoveries open up an
year including 11 development wells, exciting new deep oil play.
Sumatera
Gelam TAC (working interest 100%)
Operator : PT Insani Mitrasani Gelam (100%)
Setiti
Jambi PLN
SE Setiti
Sungai Gelam A Field (SG)

LEGEND Kecamatan
Kenali Asam Sultan Thaha
BLOCK Airport Rumpeh
OIL FIELD
GAS FIELD Sungai Gelam B Field (SG)
OIL & GAS FIELD
PROSPECT Sungai Gelam D Field (SG)
LEAD
CUSTOMER
OIL PIPELINE
GAS PIPELINE
PROPOSED GAS PIPELINE Gelam TAC
TG
Kecamatan Jambi Luar Kota

IP
ip e
lin
e
Sungai Gelam C Field (SG)
Thailand
Tempino Kecamatan Mestong

Malaysia
Singapore
South Sumatera
Oil production under contract with shifted the short-term focus towards We received approval from Pertamina
Pertamina doubled in 2006 to oil production, development drilling for our POD for gas in May 2006 and
over 117,000 bbl and encouraging and workover activity taking in July we signed an MOU to supply
progress was made on development consideration of the successful Indogas.
drilling, the SG-12 ST well delivering results of our drilling program and
volumes of 300 bopd, well in excess the increase in oil prices. A 3D seismic We achieved over 2 million man-
of EMP’s average performance for a survey is planned for the first half of hours without a lost time incident
single well. We rescheduled our gas 2007 to optimize the development and received an award recognizing
projects to 2008 and deliberately program. Contingent upon the results, our high standards of safety from
further drilling is scheduled for late in the Ministry of Labor, Republic of
the year. Indonesia.

Sumatera
Bentu PSC & Korinci Baru PSC (working interest 100%)
Bentu PSC Operator : Kalila (Bentu) Limited (100%)
Korinci Baru PSC Operator : Kalila (Korinci-Baru) Limited (100%)
Minas
Beruk Timur Laut
Zamrud
Kotabatak Baru Pipeline Beruk
Korinci Baru PSC
Pekanbaru
Minsis Perak Field
West Baru Field
Baru Field Bentu PSC
Desabaru
Korinci Field
Terusan Field
Bentu Field
Sering
LEGEND Sangkulin
BLOCK
OIL FIELD
GAS FIELD Seng Field
OIL & GAS FIELD
Nikel Timah
PROSPECT
Tra
ns
LEAD
Ga
Segat Field
sin
CUSTOMER
do
GAS PIPELINE
Ind
on
es
Besi
ia
Pip
eli
ne
Sumatera
The Bentu and Korinci Baru blocks Investment in production facilities Positive progress has been achieved
lie adjacent to each other in Riau in the Baru and West Baru fields in negotiations under an MOU with
province, Sumatera, with 2P gas proceeded in 2006 and a 10 kilometer Riau Andalan Pulp and Paper (RAPP)
reserves constituting almost one fifth pipeline was completed to connect to supply uncommitted gas from
of total Company gas reserves. to PLN’s gas turbine generating both PSCs. Multiple gas market
facility. The customer requested opportunities are available in this gas
supply postponement during the short area.
year, being unable to meet certain
conditions precedent under the GSA,
which resulted in its cancellation.
Negotiations on a revised GSA are
ongoing to incorporate the impact of
the delayed gas offtake.
Sumatera
Gebang JOB PSC (working interest 50%)
Operator : Costa International Group Limited (50%)
Partner : Pertamina (50%)
GOS
Sumatera
St
ra
it
of
Ma
Rantau
la
cc
a
Kuala Simpang
Barat
Kuala Simpang Kambuna
Serang Jaya
Anggor Field SBM

Sungai Buluh
Sembilan Island ne
0 10 KM eli
Arbei Field Pip
ort
Exp
Pangkalan Susu Oil
Gebang JOB PSC
LEGEND
HM 55
Tabuhan Timur Gebang Deep
Tabuhan Barat
BLOCK
OIL FIELD Secanggang Field
Pangkalan Brandan Gebang
GAS FIELD
OIL & GAS FIELD Besitang Securai
PROSPECT
LEAD
CUSTOMER
Darat Utara
OIL PIPELINE Tanjung Perling
GAS PIPELINE
PROPOSED GAS PIPELINE Batang Sarangan
Tanjung Pura (TPA)

Thailand
PLTG Belawan
Malaysia
Singapore
Binjai
Batu Mandi Medan Industrial Estates
Wampu (KIM)
The Gebang Joint Operation Body PSC pipeline connects to a Pertamina well is planned for 2007, subject to rig
in partnership with Pertamina is a gas gathering facility. Demand in availability. Given successful appraisal
combination of onshore and offshore the Medan gas market is rapidly and POD approval, development
fields, with water depth offshore of expanding with PLN and PGN as the drilling will follow in 2009. Exploration
less than 40 meters. Covering an area major gas consumers. The upturn in oil leads at Tanjung Pura and Gebang
of 980 square kilometers, geologically and coal prices is pulling up average Deep have also been studied with a
the block is located in the North realizations for gas to levels of over view to future drilling.
Sumatera Basin, one of the most US$ 3.5/mmbtu.
prolific basins in Indonesia. A number of alternative gas supply
To mitigate declining production, four opportunities are currently being
Oil and gas is already being produced well workovers are planned for 2007 evaluated with prospective offtakers
from 8 wells within the Arbei field at while the Anggor field is planned to in order to optimize commercial terms.
rates of 80 bopd for oil and 2 mmcfd commence development during 2007-
gas. An established 9 kilometer 2008. At Secanggang, one appraisal

Kalimantan
Semberah TAC (working interest 100%)
Operator : PT Semberani Persada Oil (100%)
Gas processing facilities and the

pipeline to serve the end user,
PLN, were 80% completed during
2006. This project was held back
TAC Pertamina by unforeseen delays in the land
Sangatta
0 10 KM acquisition process, however these
Tanjung Sangatta have now all been resolved and gas
production is expected to commence
Tanker to in the first half of 2007.
UP. V Balikpapan
LEGEND
BLOCK
oad
OIL FIELD Oil production in 2006 was at a

ss R
GAS FIELD
comparable level to the previous year,
Acce
OIL & GAS FIELD

ince
PROSPECT despite a temporary shut down of

Prov
LEAD
CUSTOMER the SBR-5 well for maintenance. Some
OIL PIPELINE Bontang
GAS PIPELINE delay was experienced in securing
PROPOSED GAS PIPELINE
Strait of Makassar
maintenance equipment for the
overhaul.
Kalimantan The drilling program in the Sambutan

Tanjung Santan field produced positive results with
a total of 5 wells completed, one,
Union
SBR-08 is already in production
Santan Terminal
and two further wells are due to
commence production during the first
Trucking to
quarter of 2007 after the installation
Sangatta of equipment to enhance flow has
VICO P
been completed. One well produced

ipeli
Oil & Gas Prod. Facility

negative results and the fifth was
ne
PLN Semberah
Gas Power Plant Field (UKM, SBR) geologically successful but the
Tanjung Batu
Semberah TAC quantities of oil and gas produced
Karangmumus Field were uneconomic. During December a
Junction Gas Plant Binangat Field
sixth well, SBT-2A, showed indications
Pelarang
Samarinda Field of considerable gas production
potential and this has subsequently
Gas Production Facility
Sambutan been completed to accommodate oil
Field (SBT)
and gas production simultaneously.
Management’s Discussion
and Analysis of the Financial
Condition and Results of
Operations (MD&A)

Overview deemed applicable to gas production take contract with Petro Diamond
EMP (the Company) derived net sales from Kangean Block, however since all Company Limited (a subsidiary of the
revenues in 2006 from the sale of gas production from Kangean Block is Mitsubishi Corporation). In 2005 and
crude oil, condensate and natural sold to domestic buyers, DMO had no prior years substantially all of the
gas produced in accordance with the impact on Company entitlement. condensate production was sold to
terms of production sharing contracts BP Singapore Pte Ltd under a sales
(PSC), including one JOB PSC and Terms relating to Gas Sales contract renewed annually.
technical assistance contracts (TAC) Sales of the Company’s net gas
relating to the development of eight entitlement, denominated in US Sales of net crude entitlement are
discrete blocks in Java, Sumatera and Dollars, are primarily through bilateral predominantly at prices based on the
Kalimantan. medium-term (two to three years) prevailing Indonesian Crude Price (ICP).
and long-term (longer than three Average realized sales prices (based
Net sales revenues are affected by the years) fixed price contracts with on entitlement) for oil per bbl for the
net entitlement volume of oil and gas leading customers, thereby avoiding years ending December 31, 2005 and
under PSC, JOB and TAC. Entitlement risks associated with volatility of 2006 were US$ 50.3 and US$ 60.1
is defined as a quantity of petroleum prices. Factors used to determine the respectively.
that a party has a right and fixed price for each contract include
obligation to take delivery of under a demand volume, contract terms, Full Cost Accounting
PSC, JOB or TAC. Entitlement consists prevailing contract prices for other The Company and subsidiaries follow
of the Company’s cost recovery medium-term and long-term fixed the full cost method of financial
and its share of production value, price contracts, alternate fuel prices accounting in recording oil and gas
net of domestic market obligations and the rate of exchange between properties. Accordingly, all costs
(DMO). A contractor must fulfill DMO, the Rupiah and US Dollar. The average related with acquisition, exploration
commencing after a period of five realized sales prices for gas per and development of oil and gas
years from the month of the first mmbtu for the years ended December reserves, including directly related
delivery of crude oil produced from 31, 2005 and 2006 were US$ 2.0 and overhead costs are capitalized.
any new field, through the sale of a US$ 2.2, respectively. It should be All costs arising from production
portion of the contractor’s share of noted that all GSA supply contracts activities are recorded at the time
the crude oil produced from the field are on a reasonable endeavors basis. they are incurred. The capitalized
at a subsidized price in accordance costs are subject to a ceiling test
with the terms set out in the PSC, Terms relating to Oil and which limits the level of such costs
JOB or TAC. The Company’s DMO Condensate Sales to the estimated present value of
accounted for 25% of the Company’s Net crude oil entitlement is sold future aggregate net revenues,
crude oil entitlement during the through one-year sales contracts discounted at a 10% interest rate
period under review for an average to the winning bidder under a using reasonable assumptions on oil
price of approximately 10% to 25% of competitive tender process, subject to and gas prices.
weighted average price of all crude oil market conditions. The largest portion
produced and sold from the Contract of this entitlement in 2006 was sold Expenditures Capitalized as Oil and
Areas. According to the Amendment under a one-year crude oil sales off Gas Properties
of the Kangean PSC, DMO was also Oil and gas properties at cost increased
from Rp 4.8 trillion to Rp 7.2 trillion.
Annual Revenues
2006 Value (Rp billion) % ∆ YoY (%) Volume (mmboe) % ∆ YoY (%)
Oil 1,081 66% 12 2.0 29% 4

Gas 565 34% (21) 4.7 71% (26)
1,646 100% (2) 6.7 100% (19)
Annual Capital Expenditures Year Ended December 31, (US$ in millions)
2006 2005 2004

Annual expenditures on Oil and Gas Properties 261.2 168.6 215.6
Total Net Sales Revenues Production Costs were 7% lower in Income from Operations
Net sales for 2006 were 2% lower at 2006 at Rp 398 billion (US$ 43.5 Income from Operations was
Rp 1,646 billion. Net sales represented million), related to the lifting of significantly lower at Rp 238 billion
revenues from oil sales of Rp 1,081 oil and gas from the sub surface (US$ 25.9 million). This result takes
billion (US$ 118 million equivalent) including the cost of collecting, into account reduced gross profit,
up 12% and Rp 565 billion (US$ 61.7 separating, clearing and storing oil down 9% to Rp 471 billion and
million) from gas sales. Volumes for and gas in production facilities prior an increase of 27% in operating
the year were 4% higher for oil at to delivery to customers. These costs expenses, relating to the costs of the
2.0 mmbbl and 25% lower for gas are mainly affected by the levels of THP acquisition and generally higher
at 28.2 bcf, the latter partly due production, overhead from oil and gas costs impacted by industry cost
to interruption to gas production field operations, as well as operations pressures.
through damage to the East Java and maintenance costs and pipeline
pipeline, which has subsequently re- fees paid for carrying the Company’s Other Charges - Net
opened. Average prices realized for gas production. Other Charges, Net increased by 15%
oil were significantly higher, by 20% from Rp 203 billion to Rp 233 billion.
year on year to US$ 60.1 per bbl with The 45% increase in Production This reflected a combination of firstly,
average gas prices 7% higher at Support Costs to Rp 389 billion an increase of 22% in financing
US$ 2.2 per mcf. (US$ 42.5 million) reflects the charges to Rp 304 billion, secondly an
increase in size of operations with the amount of interest and penalty tax
Cost of Goods Sold consolidation of the THP acquisition. of Rp 32 billion and lastly, amounts
Cost of Goods Sold of Rp 1,175 Production Support Costs comprises received under insurance claims of
billion (US$ 128.3 million) in 2006 management and administration Rp 56 billion, relating to the 2002
was almost flat year on year. Cost costs relating to each PSC and TAC damage to the pipeline connection to
of Goods Sold consists primarily including salary and employee Pagerungan field at Kangean Block.
of depreciation, depletion and benefits, office rentals and operating
production costs, as well as costs of expenses. Tax Income/Expense
production support and workovers The change in tax income/expense
directly related to the activities in Workover Costs were 5% lower year in 2006 was primarily attributed to
the operating subsidiaries. All costs on year at Rp 51 billion: primarily an increase in deferred taxes arising
arising from production activities are maintenance activities relating to as a result of incurring sunk costs at
recorded at the time they are incurred. current production capacity, including the Kangean block due to increased
Depreciation and depletion costs arise activities such as the cleaning of well drilling activities during the year
from the depletion of capitalized oil bore equipment to ensure the smooth approved by BPMIGAS, such costs
and gas exploration and development flow of oil and to reduce the rate of being deductible against future
costs, based on the total estimated natural production decline. taxable income.
proved reserves (using independent
reserve certifications) as detailed in
notes 2 and 12 of the consolidated
financial statements.
Revenue (Rp billion) Revenue Mix (Rp billion)
973 1,682 1,646 432 541 967 715 1,081 565
Oil
Gas
2004 2005 2006 2004 2005 2006

Net Income Liabilities and Equity The purchase price for the acquired
As a result of the foregoing, the The increase in current liabilities, of assets was tendered in cash, and
Company’s net income increased 19%, reflected accrued expenses was financed primarily through a
slightly from Rp 201 billion to Rp 203 relating to increased production and rights issue completed on January
billion for the year ended December drilling activity. Non-current liabilities 25, 2006 by the Company of
31, 2006. increased by Rp 2.2 trillion due to an 4,909,368,195 shares of the Company,
additional loan arranged by Credit at a price of Rp 770 per share, raising
Financial Position Suisse amounting to US$ 100 million, approximately Rp 3,780 billion.
and the drawdown of a five year The acquisition of THP reflects the
Assets credit facility to develop the Kangean Company’s strategy to selectively
Total assets increased by Rp 3.5 trillion Block amounting to US$ 90 million. acquire additional reserves and
in 2006 to Rp 9.9 trillion mainly due The potential loss in relation to the resources using equity funding
to the significant increase of Rp 2.2 Banjarpanji incident is estimated to that will contribute to strengthen
trillion in oil and gas properties as be approximately US$ 31.7 million. the portfolio of productive natural
the Company expanded through an resource assets. The acquisition
extensive drilling program as well as On January 25, 2006, the Company of THP has been accounted for in
the acquisition of THP with its five completed the acquisition of a 99.99% accordance with PSAK No. 38 as
oil and gas blocks representing an equity interest in PT Tunas Harapan described on page 13 of the Financial
additional 30% in 2P reserves. Further Perkasa (THP), plus receivables Statements.
additions to the oil and gas properties of PT Mitra Andalan Mandiri from
came from the capitalization of costs THP’s subsidiaries. THP is a special Total equity increased from Rp 692
relating to the Banjarpanji incident purpose sub-holding company which billion to Rp 1,833 billion in 2006 due
amounting to US$ 78 million in controls 99.99% equity interests in to the increase in retained earnings
accordance with full cost accounting PT Semberani Persada Oil, PT Insani plus additional capital raised through
as described in note 36 of the Mitrasani Gelam and 100% equity a fully subscribed rights issue of 4.9
financial statements. interests in Kalila (Bentu) Limited, billion shares.
Kalila (Korinci Baru) Limited and Costa
Current assets grew by Rp 1 trillion to International Group Limited. The Cash Flow
Rp 2.4 trillion in 2006 predominantly Company paid Rp 2,599 billion for a Cash flow generated from operating
due to increase in size of operations 99.99% equity interest in THP, being activities of Rp 580 billion and net
reflected in higher inventories, the Rupiah equivalent on the date cash generated from the issuance
receivables and cash. of the purchase of the agreed sale of shares and financing activities of
price of US$ 250.1 million. THP assets Rp 5,531 billion was used to acquire
Non current assets grew by 2.5 trillion comprise working interests of 50% in THP and oil and gas properties and
to Rp 7.4 trillion primarily attributable the Gebang PSC, 100% in the Bentu in settlement of financing charges,
to the additional oil and gas PSC, 100% of the Korinci Baru PSC, resulting in a net cash increase of
properties and an increase in deferred 100% of the Sungai Gelam TAC and Rp 556 billion for the year. The cash
tax assets to Rp 492 billion. 100% of the Semberah TAC. position at the end of the year was
Rp 858 billion.
EBITDA (Rp billion) Net Profit (Rp billion) Total Assets (Rp billion)
442 699 630 30 201 203 3,492 6,336 9,883
2004 2005 2006 2004 2005 2006 2004 2005 2006
Safety, Health and
Environment (SHE)

A responsible approach to providing SHE Functions SHE Performance
proper safety procedures, essential EMP’s SHE mechanisms are The establishment of the SHE
training and safety awareness is designed to cement a culture of Excellence Functional Team in 2006
central to all operations at EMP. In commitment to safe, healthy, and has yielded positive results, including
2006 a SHE Excellence Functional environmentally friendly practices the drafting of EMP SHE Corporate
Team dedicated to the development which in turn enhance the business policy, the completion of the SHE
of SHE initiatives was established. performance and sustainability of Management System Framework, the
EMP’s operations. Reporting directly establishment of risk identification
Banjarpanji and the East Java to the CEO, SHE collaborates with all and assessment guidance, and
Pipeline business units to ensure compliance the preparation of EMP’s Building
The Company is deeply concerned to SHE protocol and other applicable Emergency Procedure.
about the discomfort and disruption standards and regulations. SHE
to adjacent communities sustained as also facilitates the sharing of best During the year the SHE team also
a result of the eruption of mud in the practices, resources, and lessons conducted coordination meetings
vicinity of the Banjarpanji exploration learned between the business units. and inspections, organized and
well on May 29, 2006. In addition we deployed SHE resources, attended
report two serious accidents in 2006: The SHE function coordinates an international lessons-learned
firstly, the loss of 2 lives in a separate the satisfactory and efficient and best practice sharing workshop
incident involving third party implementation of risk management presented by Exxon entitled
construction workers, and secondly, processes throughout business “Developing World-Class Crisis
when land subsidence caused a operations with regards to crisis Response Responsibilities”, set up an
rupture in the East Java Gas Pipeline management, business continuity intranet forum for the internal sharing
at KM 38 of the Porong-Gempol planning, hazard identification, and of lessons learned and best practices,
tollway resulting in the loss of 14 lives risk assessment, implementation and assisted EMP business maintain their
in November 2006. appropriate follow-up. blue PROPER ratings, and prepared
daily, weekly and monthly SHE reports
of all wells being drilled. SHE ensures
that all rig personnel possess the
necessary certificates and safety
training required by MIGAS and
BPMIGAS.
2006 SHE Performance
Target Bentu Brantas Gebang Gelam Kangean Malacca Semberah

-Korinci Baru Strait
Lost Time Incidents (cases) 0.3 0.0 0.29 (8) 0.0 0.0 0.07 (1) 0.0 0.0
Total Recordable Incidents Rate (cases) 1.5 0.56 (1) 0.88 (24) 0.0 0.0 0.52 (8) 0.89 (20) 0.0
Spills Incidents 3 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Damage/ Loss 1 0.0 1 0.0 0.0 0.0 0.0 0.0
PROPER Ratings Blue - Blue - - Blue Blue -
Internal trainings conducted were The SHE team has identified specific Safety: Lost time incident record
wide-ranging, covering topics targets for 2007 which include the In 2006, high safety standards
from avian flu awareness, first aid, ongoing promotion of SHE awareness were evident in Gelam, Sumatera
hazardous waste training, fire- among employees; the continuation which recorded more than 2 million
fighting and defensive driving, to man of internal trainings on world-class man-hours without a single lost
overboard drills and oil pollution drills. safety improvements and risk time incident, for which we received
assessment conduct; the publication an award of recognition from the
With specific regard to Banjarpanji, of SHE Regulatory Compliance Ministry of Labor. Four other sites,
the SHE team conducted extensive Assessment Protocol; increased Bentu-Korinci Baru, Gebang, and
risk assessment studies; established reporting on near-miss instances, and Semberah also recorded no lost time
medical facilities at Wunut; deployed the preparation of an updated crisis incidents. The SHE team conducts
additional SHE officers to assist management framework and waste regular training programs to elevate
with supervision and monitoring; management handbook. awareness of general and specific
provided additional support and safety practices, and incorporates
training for on-site staff; monitored lessons learned into training programs
and analyzed the mud, water, and and risk assessment criteria.
air; established a bubble monitoring
capacity; conducted studies into mud
dispersion; monitored gas emissions
and air quality, and revised the
Emergency Preparedness Manual.

Environment
PROPER, the environmental
compliance performance evaluation
program operated by the Ministry of
Environment, assessed and awarded
a blue rating to our operations at
Brantas, Malacca Strait, and Kangean;
a rating of blue signifies good
performance and is the highest rating
attained to date by companies in the
oil and gas sector. A target of blue or
better has been set for the sites at
Bentu-Korinci Baru, Gelam, Gebang
and Semberah for 2007.
The commitment to safeguard and

support sustainable natural resources
is a crucial component of SHE. EMP
initiated a number of environmental
rehabilitation projects during 2006
across the Indonesian archipelago
with an overt emphasis on protecting,
repairing, and replenishing local
habitats; these included the
replanting of 70,000 mangrove
seedlings and the repair of the
breakwater at Melibur, Sumatera.
Community Relations

The nature of our operations locates Following the provision of skills coconut oil (VCO), a more profitable
us in often isolated areas across training to midwives in 2005, we and in-demand export. Graduates
the Indonesian archipelago among furnished a nursing and midwifery from ITB Bandung provided the
communities living beyond the bounds school with, among others, hospital 2-day training sessions and EMP
of mainstream economic and social beds, oxygen bottles, wheelchairs, marketed VCO to mainland customers.
development programs. EMP considers sterilisation equipment, and practice In cooperation with the local
these communities as neighbors, and dummies. Scholarships for 102 high government and the Department
where possible potential employees school students and 48 college of Fisheries, fishing livelihoods were
and partners. Our support projects students were provided for academic stimulated through the sponsorship
are constructed to contribute to high achievers from economically less of a 3-year fishing diploma for high
sustainable grass-roots economic advantaged homes, and parcels of school graduates. The program
development, to protect and nurture essential daily goods were donated commenced in 2003 and the 30
the natural environment, and to to 178 elementary and junior high participants graduated in 2006.
empower communities through school teachers. We also facilitated
developing vocational capacity. the strengthening of intra-community The fundamental aim for each project
relations: religious leaders were is to improve quality of life in a
Sharing Resources invited to lead ceremonies and sustainable and empowering manner
In 2006, the provision of power prayers on key days throughout in partnership with community
and potable water to neighboring the Islamic calendar and lead a 6- members.
communities were two of our day road show enhancing religious
infrastructure development projects. understanding and education in more
In partnership with members of the remote regions.
community, the local government, and
PLN, the local electricity company, we Encouraging Commerce
upgraded the local electricity service EMP encourages the development of
on Pagerungan Besar and Pagerungan economic projects which enable the
Kecil from a 7-hour to a 24-hour a day communities themselves to propel
service, and installed an underground their businesses independent of
pipeline to pump potable water to 16 outside support. Local producers of
community water tanks, providing cooking oil had their vocational skills
villagers with easy access to safe enhanced through the provision of
water. training on the processing of virgin
Corporate Governance Report

Introduction Roles, Responsibilities and Skills of Board of Commissioners: Roles and
the Boards Responsibilities
Framework and Approach to The Board of Commissioners
Corporate Governance Membership and Expertise comprises three members, one of
The Company recognises that The Board of Commissioners (BoC) and whom is independent, and undertakes
a strong commitment to good the Board of Directors (BoD) jointly a supervisory role in monitoring the
corporate governance practices share responsibility to implement best Company’s performance against its
is vital to its continued success. practices in corporate governance. stated business objectives. Aside
At its base, corporate governance The Company also maintains a full from its statutory authority, as
is about establishing a code of committee structure to help ensure stated in the Company’s Articles of
behavior and a set of values that that the key elements of governance Association with respect to approving
underpin the Company’s everyday are carried out. This structure is certain transactions and approving
activities and ensure transparency, discussed in more detail below. the annual report, the BoC has
fair dealing and protection of the The integrity, professionalism and oversight of risk management, audit
interests of stakeholders. Best accountability of Board members controls and the timely disclosure of
practice governance focuses on the are essential to implementing best information in line with prevailing
processes used to direct and manage practice in corporate governance regulations. To ensure this happens,
our business in a manner in line and to this end the Company is every effort is made to provide the
with our corporate objectives, the governed by a well-informed Board BoC with the relevant information
expectations of society and which is of Commissioners, which includes through regular formal joint meetings
fully accountable to our stakeholders. one independent commissioner and of the BoD and BoC.
a responsible and professional Board
In pursuing its commitment to best of Directors, comprising 5 Directors. In accordance with Bapepam
practice in governance, EMP has and Members of both Boards have a guidelines, the Indonesian Capital
will continue to: broad range of relevant financial Market regulator, and the Jakarta
» Review and improve governance skills, professional experience and Stock Exchange rule [1-A Kep-305/
practices managerial expertise to meet the BEJ/07-2004], 30% of the BoC is
» Monitor global developments Company’s objectives. independent to safeguard the
in best corporate governance interests of minority shareholders.
practice; and Size and Composition of the Boards The independent commissioner, as
» Strive for best practice and The size and composition of the defined by the regulations, serves
fully comply with the rules and BoC and BoD is subject to the limits as the Company’s Audit Committee
regulations of Bapepam, the imposed by the Company’s Articles chairman.
Jakarta Stock Exchange and the of Association, which stipulate that
Indonesian National Code of Good nominations to the BoC and BoD The Board of Commissioners met
Governance should be approved by shareholders formally 5 times in 2006; in each case
at a General Meeting of Shareholders an agenda including board papers and
(GMOS) for a period commencing from the minutes of the previous meeting
the date of the GMOS appointing them were distributed to Commissioners
until the closing of the fifth Annual in a timely fashion. These formal
GMOS after the date of appointment. meetings do not preclude frequent
informal contacts and information
sharing between Commissioners and
directors. 6 formal joint meetings
were held in 2006 with the Board
of Directors in addition to routine
informal meetings during the course
of the year.
Board of Commissioners Qoyum Tjandranegara, Independent Rennier Latief, Commissioner
Commissioner Rennier Latief began his career at
Suyitno Patmosukismo, President Qoyum Tjandranegara is well-known Philips Petroleum as a geologist in
Commissioner both domestically and internationally the late 1970s. From 1986 he served
Suyitno Patmosukismo has in the industry, serving in the past in different management positions
contributed extensively to the as President Director of Perum at Huffco International culminating
development of the Indonesian oil Gas Negara, President Director in his appointment as Senior Staff
and gas industry in several senior of PT Perusahaan Gas Negara, as Geologist. He then joined VICO as
positions including the Director Advisor to the Ministry of Mines & Exploration Manager in 1994 before
of Exploration and Production at Energy, Secretary of the Board of acquiring the Malacca Strait PSC from
Pertamina, the Director General Commissioners of Pertamina, and Lasmo in 1995. He acquired control
Oil & Gas within the Indonesian Special Staff to the Vice President of the Brantas PSC from Huffco, and
Department of Mines & Energy, and of the Republic of Indonesia, Energy his leadership was instrumental in
the position of Chairman of the OPEC & Industrial sector. Appointed as the commencement of commercial
Board of Governors in the mid- Independent Commissioner in March production just 3 years later. Formerly
1990s. He has served as President 2004, he serves as Chairman of the serving as President Director, Rennier
Commissioner since the Company Audit Committee. oversaw the acquisition of the
went public in June 2004. He is also Kangean PSC from BP in late 2004
currently the Executive Director of the before stepping down as President
Indonesia Petroleum Association. Director in May 2005 to assume his
current role as Commissioner.
Suyitno Patmosukismo Qoyum Tjandranegara Rennier Latief

The Board of Directors: Roles and » Establishing appropriate terms Board of Directors
Responsibilities of appointment, performance
The Board of Directors, currently evaluation and succession plans for Chris Newton, President Director
comprises 5 Directors including the the BoD Chris Newton joined EMP in January
President Director and is responsible » Representing the Company in every 2005 and was appointed to his
for the day to day management aspect of its activities and for all current position at the May 2005
of the Company and as such has legal purposes EGM of shareholders. Chris has 28
responsibility, inter alia, for the » Setting of standards for social and years of international upstream oil
following key tasks: ethical behaviour and monitoring and gas experience with 14 of the
» Administration of Company compliance with the Company’s last 16 years in Asia and 9 in total
accounts corporate social responsibility in Indonesia. He joined EMP from
» Jointly with the BoC, the policy and practice Santos Ltd. where he was President
preparation and signature of and General Manager of Santos’
the Company’s annual report for The Board of Directors convened Indonesian business. He led and
approval by shareholders formally 8 times in 2006. The managed the development of Santos’
» Approving the Company’s risk President Commissioner and President business via exploration, development
management strategy, monitoring Director establish the agenda for each and production acquisitions to ‘New
its effectiveness and maintaining meeting to ensure adequate coverage Core Business’ for Santos with 10
a direct and ongoing dialogue of financial, strategic and major risk Production Sharing Contracts focused
with the Company’s auditors and issues throughout the year. in East Java and the deepwater Kutai
regulators Basin. Prior to joining Santos, Chris
» Implementation of corporate In addition, meetings were held spent 5 years in Brunei, building,
strategies and recommendations whenever necessary to deal with leading and managing the Fletcher
on significant corporate strategic specific matters requiring attention Challenge Energy Business in the
initiatives during the periods between scheduled country. He holds an Honors Degree
» Development and recommendation meetings. In 2006 six formal meetings in Geology from the University of
of the Company’s annual budget combining both the Board of Durham, England and a Post Graduate
to the BoC and shareholders for Directors and Board of Commissioners qualification in Applied Finance
approval and management of were held, in addition to routine and Investment from the Securities
day to day operations within the informal meetings on a regular basis Institute of Australia. Chris is also
budget throughout the year. currently a member of the Indonesian
Petroleum Association’s Board of
Directors, having led the IPA for two
and a half years to the end of 2006.
Chris Newton
Faiz Shahab, Director & Chief Yuli Soedargo, Director & Chief Tom Soulsby, Business Development
Executive Officer Financial Officer Director
Faiz Shahab has 26 years extensive Yuli Soedargo has extensive Tom Soulsby has extensive merger
experience in the oil and gas industry. experience in Senior Management and acquisition expertise in the
He spent many years in VICO serving roles with leading Indonesian listed resource sector, having held several
as Facilities Project Engineer until companies. He served as Financial positions including Director of ANZ
his last position as Vice President Services Director of Kalbe Farma Singapore Ltd, ANZ’s local merchant
Support & HSE. He then moved Group in the 1990’s, as Managing bank in Singapore where he was
to Lapindo Brantas Inc. as Vice Director of BII and Head of Banking also the Director and Regional Head
President & General Manager. In Relations, Control & Audit at Asia Pulp of Corp. Finance for Asia at ANZ
2002 BP Indonesia engaged him as & Paper. He was appointed a Director Investment Bank from 1998 to
Vice President Java LNG and 2 years in December 2005. 2002. He worked with ANZ in both
later he moved to EMP Kangean Melbourne and Jakarta in investment
Ltd. as Senior Vice President before banking during the period 1994 to
being appointed a Director of EMP in 1998 and has been involved in over
December 2005. 26 successful transactions. Prior to
that, Tom worked at Potter Warburg,
Western Mining Corporation and
KPMG in various finance related
positions. Mr Soulsby is a founding
director of the Company having
joined the Board of Directors in March
2004, with responsibility for Business
Development and Investor Relations.
Faiz Shahab Yuli Soedargo Tom Soulsby

Norman Harahap, Control and Succession planning The selection of President Director is
Support Director An important function of both boards based on an evaluation as to whether
After a stint at Peat Marwick Mitchell is to ensure that the Company has the candidate is able to execute these
in the 1970’s, Norman Harahap joined the appropriate mix of skills and duties effectively.
HUFFCO Indonesia as Economic & experience. The BoC in conjunction
Planning Manager. He then moved to with the BoD, is tasked with the Review of BoD and BoC Performance
ARCO spending many years in finance responsibility of preparing the The two Boards meet on a regular
and administration. He has served selection criteria and procedures basis to review plans, budgets and
as Director, responsible for Internal for nominating appointments and performance and to discuss major
Control and Human Resources and succession planning in relation to issues and decisions facing the
Administration of the Company and members of the Boards, taking into Company. The Boards regularly review
Accounting since his appointment as account the skills, experience and their overall performance, as well
Director in March 2004. expertise required, and currently as the performance of Committees
represented, and the future direction and individual Commissioners
of the Company. and Directors. Clear criteria and
performance targets are set annually
The selection and role of the for the BoC, the BoD, each Special
President Director Committee, and each Commissioner
The President Director’s duties are to: and Director.
» Ensure that, when all BoD members
take office, they are fully briefed Orientation and training programs
on the Company strategy and On an ongoing basis training is
key performance objectives and undertaken for Board members
the contribution expected from to stay informed of current and
each Director on achieving overall forthcoming regulations and issues
objectives relating to the upstream oil and gas
» Provide effective leadership in sector, as well as developments in the
formulating strategy regulatory environment for publicly
» Represent the Company’s views to listed companies, in coordination with
the public the Corporate Secretary.
» Ensure that the BoD meets at
regular intervals throughout the Access to information and advice
year, and that minutes of meetings All Commissioners and Directors have
accurately record decisions taken unrestricted access to the Company’s
and, where appropriate, the views records and information and receive
of individual Directors regular detailed financial and
» Guide the agenda and conduct of operational reports to enable them to
all BoD meetings, and carry out their duties.
» Review the performance of Board
Directors.
Norman Harahap
Corporate Secretary Audit Committee members Meetings
» Qoyum Tjandranegara, Chairman The Audit Committee held a total of 8
Riri Harahap, Corporate Secretary (Independent Commissioner) meetings during 2006 attended by:
and Vice President Legal » Hertanto , Member » Qoyum Tjandranegara, Chairman
Riri Harahap was appointed Corporate » Toha Abidin, Member » Hertanto, Member
Secretary in June 2005 and to the » Toha Abidin, Member
position of Vice President, Legal, in Audit Committee members are
February 2006. She brings with her chosen for their skills and relevant The Audit Committee assessed and
over 14 years of experience in law. experience. reviewed the Consolidated Financial
The Company’s Corporate Secretary Statements as of December 31,
plays a key role providing effective Tasks implemented 2006 along with the notes to the
legal advice with regard to general The Audit Committee is responsible Financial Statements. To ascertain the
day-to-day matters and in compliance for providing independent fairness of the consolidated Financial
with regulations including those of professional opinions to the Board of Statements, the Audit Committee has
the capital market. The Corporate Commissioners, and to bring to their also conducted discussions with the
Secretary is also tasked to provide attention any matters related to: External Auditor and Internal Auditor
Commissioners and Directors with » Financial Statements, projections regarding the holding Company and
ongoing guidance on issues such as and other financial information to its subsidiaries in respect of:
corporate governance, on matters be published by the Company » Organization structure
relating to the Company’s Articles » Adherence to legislation and » Internal control systems
of Association and to achieve the regulation of the Capital Market » Accounting Policies, systems and
highest standards in the organization authorities and the Jakarta Stock procedures
of shareholder meetings and Exchange and any other regulatory » Compliance with capital market
meetings of the Boards. requirements related to the regulations and other regulations
Company’s activities » Other information related to the
Report of the Audit Committee » Reviewing the work undertaken Company’s management policies
The effectiveness of both Boards by Internal Audit and the External
is enhanced by the support of Auditor Summary of conclusions from Audit
the Audit Committee with a role » Reviewing any complaints, or Committee meetings:
to oversee all matters relating references made to either Board a. The External Auditor has
to the integrity of the financial from the public performed the general audit of the
statements, recommendations for » Assisting the Board of Company’s consolidated Financial
the appointment of external auditors, Commissioners with the selection Statements as of December
management of operational risks and and appointment of the External 31, 2006 independently and
compliance with legal and regulatory Auditor. objectively.
requirements. b. Internal Audit has carried out its
function satisfactorily. Further
improvement in some aspects of
the performance of the internal
audit system is still required.

c. The management of the holding Approach to audit governance Certification and discussion
Company and its subsidiaries has The Company is committed to the with external auditor on their
applied policies and governance to implementation of three basic independent status
a high standard as well as complied principles: The Audit Committee requires the
with capital market regulations » The preparation of true and fair external auditor to confirm their
and other regulations of the financial reports; independence. The Company’s
Government of the Republic of » The use of accounting methods external auditor gives assurance
Indonesia. that are comprehensive, relevant to the Audit Committee that they
d. The management of the holding and compliant with applicable have complied with all standards
Company and its subsidiaries has accounting rules and policies; and promulgated by local and overseas
prepared the Financial Statements » That external auditors are regulators and professional bodies.
of the Holding Company and its independent and serve shareholder
Subsidiaries as of December 31, interests by ensuring shareholders Relationship with external auditor
2006 in accordance with the are aware of the Company’s true Audit partners and audit firm
Financial Accounting Standards financial position. Developments employees are prohibited from
of Indonesia (PSAK) and in and practices are monitored and being officers of the Company,
accordance with the PSC Contract reviewed accordingly. while retaining their status as audit
Conditions valid for Subsidiaries partners or audit firm employees. This
with a line of business in oil and External audit also applies to any immediate family
natural gas. The Company’s independent external members of audit firm employees.
e. The compensation packages for auditor was appointed by the Financial and business relationships
the Board of Commissioners and Directors with the authorization of are also prohibited. A minimum period
Directors are in line with standing shareholders at the Annual General of five years must elapse before
procedures and were approved Meeting of Shareholders. former audit firm employees may be
at the Annual General Meeting of considered for a position on the Board
Shareholders. The Committee is responsible for or within the Company.
f. The estimate of gross proved making recommendations concerning
oil & gas reserves is based on the appointment of external auditors
certification issued by independent and the terms of their engagement.
oil and gas consultants. The Committee reviews the
g. LBI has deployed all reasonable performance of the external auditors.
resources and efforts to contain The independent external auditor
and minimize the impact of the reports directly to the Committee.
mud volcano adjacent to the drill
site at Banjarpanji and is actively The Public Accountant Office of Jimmy
managing the outcomes of the Budhi & Rekan has been appointed
event to the best of its ability. as the Company’s external auditor
to audit the Company’s Consolidated
Financial Statements for the year
ended December 31, 2006.
Restrictions on non-audit services Compliance with legal and An operational framework is
by the external auditor regulatory requirements implemented via (1) approvals
The external auditor is not authorised The Audit Committee ensures manuals (2) delegation of authority
to carry out the following types of conformity with applicable legal guides (3) authorized approval lists
non-audit services for the Company: and regulatory requirements and with specimen signatures (4) other
» Preparation of accounting records the Company’s Code of Conduct, means such as electronic storage and
and financial statements; examining material issues raised retrieval.
» Information technology systems internally or from the external
design and implementation; auditor, in conjunction with the Final approval requirements are
» Valuation services and other Corporate Secretary and in-house specified in delegation of authority
corporate finance activities; legal counsel from time to time as or equivalent guides, usually
» Internal audit services; required. within monetary, volume, or other
» Temporary senior staff appropriate limits. No employee is
assignments, management Risk Management Committee granted authority to approve his
functions; While risk management is currently or her own travel and business-
» Broker or dealer, investment handled by the Company’s Risk related expense statements or
adviser or investment banking; Management Department, the reimbursements.
» Legal services; Company is committed to the
» Litigation services; establishment of a fully functioning Authority is limited to expenditures
» Actuarial services; and Risk Management Committee (RMC) and other transactions made within
» Recruitment services for senior in 2007. one’s area of responsibility. The BoD
management. reviews the delegation of authority
Risk Management encompasses guides as required.
For all other non-audit services, a review of all risks faced by the
use of the external audit firm must Company, to quantify their impact IT Governance
be assessed in accordance with and likelihood, and ensure appropriate The Company is in the process of
the Company’s policy requiring an mitigation measures are in place. preparing all necessary requirements
independence assessment to be done in relation to the establishment of the
by the business manager requiring Delegation of Authority IT Steering Committee. The Company
the service. The approval of Internal The BoD delegates financial authority considers that the IT Steering
Audit and the Chairman of the Audit to employees who are responsible for Committee will have representatives
Committee must also be obtained. taking actions, signing documents and from all relevant business and IT areas
approving transactions affecting the to ensure that IT investments meet
Internal audit function operation and affairs of the business their objectives in terms of efficiency,
The Audit Committee approves entity. The overriding principle is effectiveness and standardisation.
the appointment of the Head of that no individual is to exercise more
Internal Audit. It reviews internal authority than that which has been Compliance policy and practices
audit responsibilities, budget delegated to him or her. The Company’s compliance approach
and staffing, significant reports focuses on ensuring strict adherence
prepared by Internal Audit and Delegation of authority is managed to all laws and regulations,
management responses thereto. The top down, is consistent across the maintaining quality control over
Audit Committee Chairman meets organization, and is based on the practices and processes, identifying
separately with the Head of Internal amount of risk - in terms of value any weaknesses and addressing any
Audit. – associated with the decision. The gaps.
authority delegated is based on the
desired balance between centralized
and decentralized decision making in
the organization.

Corporate responsibility and Corporate Governance Manual Conflict of Interest Compliance
sustainability The Company’s implementation of the Committee
Good Corporate Governance practice The Company’s Conflict of Interest
Approach to corporate has been guided by the principles Compliance Committee reports
responsibility and sustainability and practices already in place with directly to the Board of Commissioners
The Company’s aim is to manage the best interest of all stakeholders, and reviews transactions to ensure
its business in way that produces while ensuring full compliance with proper compliance with procedures
positive outcomes for all stakeholders regulatory requirements. A formal and applicable regulations. The
and maximizes economic, social and Corporate Governance Manual Committee meets five times annually
environmental value simultaneously. drawing together all current best and several routine informal meeting
In doing so, the Company accepts practice routines in existence, as during the course of the year, and is
that the responsibilities flowing described in this report, is being chaired by Suyitno Patmosukismo.
from this go beyond both strict legal prepared to be implemented by The members of this committee are
obligations and the financial bottom employees while ensuring that the Suyitno Patmosukismo, Norman
line. Transparency, the desire for fair contents are reasonable and cover Harahap, Riri Harahap and Rida
dealing, responsible treatment of all key subjects. Employees will be Handayani (Legal Manager).
staff and of customers and positive required to sign to confirm they have
links into the community, underpin read and understood all elements of In addition to formal meetings, the
everyday activities and corporate the manual. Committee continuously reviews
responsibility practices. and gives recommendations
Commissioner’s and Director’s whenever necessary in relation to the
Employee Relations interests implementation of and compliance
The Company has policies related to: The extent of share ownership by with regulations.
» Safe work environment; Board members at December 31,
» Non-discrimination; 2006 is as follows: The Company reports the
» Equal employment opportunity; » Rennier Latief : 446,912,286 shares total remuneration paid to the
» Competitive terms and conditions » Yuli Soedargo : 4,250,000 shares Commissioners and Directors in Note
of employment; and » Norman Harahap : 142 shares No. 1 of the financial statements and
» Elimination of forced or compulsory the extent of individual shareholdings
labour. Prevention of Conflict of Interest of Commissioners and Directors is
In compliance with Bapepam Rule No. fully disclosed above.
The Company’s Code of Conduct IX.E.1 regarding Conflict of Interest
The Company’s Code of Conduct on Certain Transactions, which Material Transaction
applies to the BoC, BoD and employees details the permitted transactions In compliance with Bapepam Rule No.
without exception, and if necessary and procedures to conduct and/ IX.E.2 regarding Material Transactions
facilitates the use of sanctions. The or disclose conflicts of interest, and Changes of Core Business
Code governs workplace and human the Company always ensures that (Bapepam Rule No. IX.E.2), the
resource practices and is aligned any potential conflict of interest Company ensures that any acquisition
to the Company’s core values of transaction is proposed and approved or disposal of shares or assets
teamwork, integrity and performance. by shareholders in a General Meeting transactions that are equal or greater
The Code is supported with of Shareholders prior to the execution than 10% of revenue or 20% of equity
appropriate awareness training and of such transaction. The Company are approved by half plus one of the
reviewed periodically and approved by has established a Conflict of Interest Company’s shareholders through an
the Boards. Compliance Committee. Extraordinary General Meeting of
Shareholders.
Key suppliers are required to sign
Code of Conduct before becoming
accredited.
The plan for EMP Inc.’s Shares Market disclosure practices Transparency and Disclosure
Subscription transaction shall be The Company is committed to giving
classified as a material transaction as all shareholders comprehensive and Means of communication
referred in the Bapepam Rule equal access to information about » The audited 2nd quarter was
No. IX.E.2, considering that the our activities and obligations to the published in Bisnis Indonesia and
transaction value is estimated to broader market and primarily uses its The Jakarta Post and the full year
exceed 10% of the Company’s income website www.energi-mp.com as an financial results of the Company
(Rp 1,646,538,248,288) and 20% information delivery mechanism to were published in Bisnis Indonesia,
of the Company’s equity shareholders, investors and users. Investor Daily Indonesia and
(Rp 1,833,167,047,850) as of The Jakarta Post. Both audited
December 31, 2006. The said The Corporate Secretary is Reports were also published via
transaction requires shareholder responsibile for ensuring compliance the Company’s website www.
approval at the Company’s with the continuous disclosure energi-mp.com
Extraordinary General Meeting of requirements in the Listing Rules, » Periodic audited results are filed
Shareholders. and overseeing and co-ordinating with the Jakarta Stock Exchange.
information disclosure to the Jakarta These details are also published
Stock Exchange, analysts, brokers, in the Company’s website. The
shareholders, the media and the Company makes use of its website
public. Guidelines exist for staff and for publishing official news
Directors to ensure that unpublished releases and presentations made
information, which may be price to institutional investors and
sensitive about the Company or any analysts.
other organization, is not used in an » The Company held 2 Public
illegal manner. Exposes in 2006, on August 30 and
December 21.
Distribution of shareholdings as at December 31, 2006
Range of Shares Ownership No. of share accounts %
1 - 5,000 Shares 262 13.53

5,001 - 10,000 204 10.54
10,001 - 50,000 677 34.97
50,001 - 100,000 234 12.09
100,001 - 500,000 283 14.62
500,001 - 1,000,000 74 3.82
1,000,001 - 5,000,000 88 4.54
5,000,001 - 10,000,000 21 1.08
10,000,001 - 50,000,000 60 3.10
50,000,001 - 100,000,000 13 0.67
100,000,001 - 1,000,000000 16 0.83
> 1,000,000,001 4 0.21
Total 1,936 100.00

Share Information
Share Price
The Company is quoted on the Jakarta Stock Exchange, code: ENRG.
2006 2005

Highest Price Lowest Price Volume Highest Price Lowest Price Volume
Q1 930 740 25,065,000 910 590 19,502,500

Q2 910 650 26,563,500 850 550 12,560,000
Q3 710 510 72,204,000 870 700 41,697,500
Q4 550 500 64,052,000 830 710 3,586,000
Share Performance
Volume Price
(in millions) (in Rupiah)
40 1,000
35 900
30 800
700
25
600
20
500
15
400
10
300
5
200
0 100
0
Jan‘06 Feb’06 Mar’06 Apr’06 May’06 Jun’06 Jul’06 Aug’06 Sep’06 Oct’06 Nov’06 Dec’06
Volume
Price
Corporate Structure
EMP Exploration 40%

100%
(Kangean) Ltd. WI-100%
100% Energi Mega Pratama Inc. Kangean PSC
100% EMP Kangean Ltd. 60%
Kondur Petroleum S.A. 34.46%

100%
WI-60.49%
100% RHI Corporation Malacca Strait PSC
99.99%
PT Imbang Tata Alam 26.03%
PT Energi Mega Persada Tbk.

100% Malacca Brantas Finance B.V.
100% Energi Mega Persada Finance B.V.
99.99% Kalila Energy Ltd. 84.24%

WI-50%
Lapindo Brantas, Inc. Brantas PSC
99.99% Pan Asia Enterprise Ltd. 15.76%
WI-100%
100% Kalila (Bentu) Ltd. Bentu PSC
WI-100%
100% Kalila (Korinci Baru) Ltd. Korinci Baru PSC
100% WI-50%
99.99% PT Tunas Harapan Perkasa Costa Int’l Group Ltd. Gebang JOB PSC
WI-100%
99.99% PT Insani Mitrasani Gelam Gelam TAC
WI-100%
99.99% PT Semberani Persada Oil Semberah TAC
Company
Operator
PSC (Production Sharing Contract)
TAC (Technical Assistance Contract)
JOB (Joint Operating Body)
WI Working Interest

Responsibility for Financial Reporting
This Annual Report and the accompanying financial statements and related financial information are the responsibility of
the Management of PT Energi Mega Persada Tbk and have been approved by members of the Board of Commissioners and
Board of Directors whose signatures appear below:
Board of Commissioners Board of Directors
Suyitno Patmosukismo Christopher B. Newton

President Commissioner President Director
Qoyum Tjandranegara Faiz Shahab

Independent Commissioner Director
Rennier Latief Yuli Soedargo

Commissioner Director
Thomas L. Soulsby
Director
Norman H. Harahap
Director
Glossary of Oil and Gas Terms and Units of Measurements
Defined Terms
“acquired companies comprises: Costa International Group Limited, Kalila (Korinci Baru) Limited, Kalila
(THP acquisition)” (Bentu) Limited, PT Semberani Persada Oil and PT Insani Mitrasani Gelam.
“BPMIGAS” “Badan Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi” or Upstream
Executive Body, the non-profit, Government-owned, operating board that is
succeeding Pertamina’s role as regulator of upstream oil and gas activities under
the New Oil and Gas Law.

“BPHMIGAS” “Badan Pengatur Hilir Minyak Dan Gas Bumi”, the non-profit Government-owned
operating board that is succeeding Pertamina’s role as regulator of downstream
oil and gas activities under the New Oil and Gas Law.

“GCA” Gaffney, Cline & Associates (Consultants) Pte Ltd, independent assessors of the
Company’s reserves.

“GSA” Gas Sales Agreement.

“PGN” PT Perusahaan Gas Negara (Persero) Tbk.

“PJB” PT Pembangkitan Jawa Bali.

“PKG” PT Petrokimia Gresik.

“PLN” PT Perusahaan Listrik Negara (Persero).

“PROPER” The Environmental Compliance Performance Evaluation Program or Program
Penilaian Peringkat Kinerja Perusahaan dalam Pengelolaan lingkungan.

“TSB” Terang, Sirasun and Batur fields.


Oil and Gas Terms
“1P or proved reserves” represents those quantities of petroleum which, by analysis of geological and
engineering data, can be estimated with reasonable certainty to be commercially
recoverable, from a given date forward, from known reservoirs and under current
economic conditions, operating methods, and Government regulations.

“2P or proved plus probable proved reserves plus those reserves that are unproved reserves which analysis
reserves” of geological and engineering data suggests are more likely than not to be
recoverable.

“3P or proved, probable & possible 2P reserves plus those reserves that are unproved reserves which analysis of
reserves” geological and engineering data suggests are less likely to be recoverable than
probable reserves.

“contingent resources” Volumes of recoverable hydrocarbons that are excluded from the reserve
category primarily because the Company has yet to file a definitive POD or agree
on GSA.

“crude oil” A general term for unrefined petroleum or liquid petroleum.

“deep-water play” Exploration activity located in offshore areas where water depths exceed
approximately 600 feet [200 m], the approximate water depth at the edge of
the continental shelf.
“delineation well or appraisal well” a well drilled in a newly discovered or known discovery to gain further
information.

“development well” a well that is drilled to exploit the hydrocarbon accumulation defined by an
appraisal or delineation well.

“exploration well or wild cat well” a well that is designed to test the validity of a seismic interpretation and to
confirm the presence of hydrocarbons in an undrilled formation.

“gross production” represents the sum of all oil and gas production from each of the Company’s
blocks but does not take into account cost recovery or Government take.

“gross reserves” represents the sum of all oil and gas operated reserves not adjusted for the
Government take payable.

“ICP-LC” Indonesian Crude Price-Lalang Crude.

“ICP-SLC” Indonesian Crude Price-Sumatra Light Crude Minas, a reference price calculated
using a formula determined by the Government.

“JOA” Joint Operating Agreement.

“JOB” Joint Operating Body in reference to production sharing contracts.

“lead” preliminary interpretation of geological and geophysical information that
may or may not lead to prospects.

“lifting cost or production cost” the cost incurred to operate and maintain wells and related equipment and
facilities for a given period.
“net production” represents the Company’s share of gross production.

“net reserves” represents the reserves attributable to the Company’s effective interest.

“petroleum” A complex mixture of naturally occurring hydrocarbon compounds found in rock.
Petroleum can range from solid to gas, but the term is generally used to refer to
liquid crude oil.
“POD” Plan of Development.
“PSC” Production Sharing Contract.
“snubbing” the process of using a hydraulic work-over rig to repair damaged casing,
production tubing and down-hole production equipment in a high-pressure
environment. A snubbing unit makes it possible to remove and replace down-
hole equipment while maintaining pressure in the well.

“spud” to start a well drilling process by removing rock and sedimentary material with a
drill bit.
“TAC” Technical Assistance Contract.


Units of Measurement
“bbl” barrels.

“bbl/d” barrels per day.

“bboe” billion of barrels of oil equivalent.

“bbtu” billion btu.

“bcf” billion cubic feet.

“boe” barrels of oil equivalent; natural gas is converted to boe using the ratio of
one bbl of crude oil to 5.85 mcf of natural gas.

“bopd” barrels of oil production.

“btu” British Thermal Unit, the standard measure of the heating value of natural gas.

“mbbl/d” thousand barrels per day.

“mboe/d” thousand barrels of oil equivalent per day.
“mbopd” million barrels gross oil production.

“mbtu” thousand btu.

“mcf” thousand cubic feet.
“mmbbl” million barrels.
“mmbbl/d” million barrels per day.

“mmboe” million barrels of oil equivalent.

“mmbtu” million btu.

“mmbtud” million btu per day.

“mmcf” million cubic feet.

“mmcfd” million cubic feet per day.

“mmscfd” million standard cubic feet per day.

“tcf” trillion cubic feet.
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Financial Report
PT Energi Mega Persada Tbk and Subsidiaries
Consolidated Financial Statements for the Year Ended December 31, 2006
(With Comparative Figures for the Years Ended December 31, 2005 and 2004)
and Report of Independent Auditors
Directors’ Statement Letter
Report of Independent Auditors
Financial Statements
Consolidated Balance Sheet 1
Consolidated Statement of Income 4
Consolidated Statement of Changes in Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 8
Supplementary Information (Unaudited) 67

PT ENERGI MEGA PERSADA Tbk
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
(With Comparative Figures for December 31, 2004)
(Figures in Rupiah expressed in thousands, unless otherwise stated)
ASSETS
2005 2004
(As restated - (As restated -
Notes 2006 see Note 3) see Note 3)
CURRENT ASSETS
Cash and cash equivalents 2d,5 858,434,789 323,123,189 21,730,243
Trade receivables 2e,6 320,530,734 286,503,862 112,317,540
Other receivables 2e,7 549,480,023 318,480,773 149,684,486
Inventories 2f,8 605,074,350 354,191,558 121,860,730
Prepaid expenses and advances 2g,9 99,855,609 129,025,075 21,776,214
Prepaid tax 2q,26a - 4,867,253 3,781,286
Deferred Rights Issue cost - 3,244,472 -
Total Current Assets 2,433,375,505 1,419,436,182 431,150,499
NON-CURRENT ASSETS
Due from related parties 2h,10a 500,587,596 430,901,040 59,426,226
Restricted time deposits 2i,11 126,846,622 200,915,225 73,288,308
Fixed assets - net of accumulated
depreciation of Rp 6,362,487
in 2006, Rp 4,149,925 in 2005 and
Rp 1,638,957 in 2004 2j 6,502,331 7,234,909 1,638,957
Oil and gas properties - net 2k,12 5,990,632,043 3,786,677,686 2,630,320,899
Site restoration fund 32a,34 85,644,826 71,727,804 48,302,380
Deferred tax assets 2q,26e 492,309,688 172,604,748 25,381,698
Reimbursement of Subsidiary’s
dividend tax paid 4 198,842,996 216,699,185 204,795,059
Other assets 13 48,650,315 30,040,479 18,144,112
Total Non-Current Assets 7,450,016,417 4,916,801,076 3,061,297,639
TOTAL ASSETS 9,883,391,922 6,336,237,258 3,492,448,138
The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.
1
AND SUBSIDIARIES
LIABILITIES AND EQUITY
2005 2004
CURRENT LIABILITIES
Short-term loans 14 - - 140,129,487
Trade payables 15 594,976,126 266,515,001 142,360,206
Other payables 16 42,531,777 65,916,066 58,643,863
Accrued expenses 17 500,714,411 398,157,559 136,478,763
Taxes payable 2q,26b 196,812,150 136,566,835 121,040,782
Current maturities of long-term loans 18 766,294 259,353,452 242,933,416
Total Current Liabilities 1,335,800,758 1,126,508,913 841,586,517
NON-CURRENT LIABILITIES
Long-term loans - net of current
maturities 18 4,941,733,089 3,141,760,852 807,252,079
Due to related parties 2h,10b 793,314,356 774,507,950 851,447,220
Deferred tax liabilities 2q,26e 350,138,776 275,688,092 238,340,301
Estimated obligation on probable
losses 2u,36a 286,049,453 - -
Employee benefits obligation 2p,28 40,649,262 25,220,060 24,478,989
Site restoration obligation 34 103,684,826 83,044,347 51,112,149
Subsidiary’s dividend tax liability 4 198,842,996 216,699,185 204,795,059
Total Non-Current Liabilities 6,714,412,758 4,516,920,486 2,177,425,797
MINORITY INTEREST IN
NET ASSETS OF SUBSIDIARIES 2b 11,360 2,941 (1,543,754 )
2
AND SUBSIDIARIES
2005 2004
EQUITY
Capital stock - Rp 100 par value
per share
Authorized - 55,000,000,000 shares
in 2006 15,000,000,000 shares
in 2005 and 2004
Issued and paid-in capital -
14,400,813,372 shares in 2006,
9,491,445,177 shares in 2005
and 2004 19 1,440,081,335 949,144,518 949,144,518
Additional paid-in capital 2n,20 3,354,749,228 158,420,946 158,420,946
Equity proforma from restructuring
transaction of entities under
common control 2c,3,4 - 54,886,877 54,886,877
Difference in value from
restructuring transactions of
entities under common control 2c,21 (3,376,756,375 ) (793,336,425 ) (793,336,425 )
Translation adjustments 2t (36,112,508 ) 75,488,874 58,666,134
Retained earnings 451,205,366 248,200,128 47,197,528
Total Equity 1,833,167,046 692,804,918 474,979,578
TOTAL LIABILITIES
AND EQUITY 9,883,391,922 6,336,237,258 3,492,448,138
3
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(With Comparative Figures for the Year Ended December 31, 2004)
2005 2004
NET SALES 2o,22 1,646,538,248 1,682,100,322 972,664,531
COST OF GOODS SOLD 2o,23 1,175,612,629 1,162,228,835 630,704,879
GROSS PROFIT 470,925,619 519,871,487 341,959,652
OPERATING EXPENSES 2o,24

General and administrative 233,360,933 183,192,733 93,453,266
INCOME FROM OPERATIONS 237,564,686 336,678,754 248,506,386
OTHER INCOME (CHARGES)

Income form insurance claim 2o,25b 56,438,666 - -
Interest income 17,590,085 6,359,458 7,940,868
Overhead cost recovery 34,260,991 30,980,416 22,076,239
Financing charges 25a (304,287,994 ) (249,505,266 ) (63,037,007 )
Interest and penalty tax 26b (31,615,790 ) - -
Gain (loss) on foreign exchange - net 2t (18,715,427 ) 22,064,808 5,159,651
Allocation from administrator - - (17,083,683 )
Others - net 12,853,199 (13,054,567 ) (23,451,808 )
Other Charges - Net (233,476,270 ) (203,155,151 ) (68,395,740 )
INCOME BEFORE TAX BENEFIT

(EXPENSE) 4,088,416 133,523,603 180,110,646
TAX BENEFIT (EXPENSE) 2q,26c

Current (39,050,544 ) (53,519,047 ) (97,828,649 )
Deferred 237,967,366 121,972,754 (51,873,716 )
Total 198,916,822 68,453,707 (149,702,365 )
INCOME BEFORE MINORITY

INTEREST IN NET INCOME
OF SUBSIDIARIES 203,005,238 201,977,310 30,408,281
MINORITY INTEREST IN
INCOME OF SUBSIDIARIES 2b - (974,710 ) (438,087 )
NET INCOME 203,005,238 201,002,600 29,970,194
BASIC EARNINGS PER SHARE

(in full amount) 2r,27 14.42 21.18 3.16
4
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Difference in
Equity Proforma Value from
from Restructuring Restructuring
Transaction of Transactions of
Additional Entities under Entities under Translation Retained
Notes Capital Stock Paid-in Capital Common Control Common Control Adjustments Earnings Total Equity
Balance as of December 31, 2003 - as restated 200,777,778 - (613,001,552 ) (107,541,921 ) 14,292,255 20,596,797 (484,876,643 )
Conversion of promissory notes to paid-in capital 19 463,623,390 - - - - - 463,623,390
Elimination of Subsidiaries’ equity from transactions
of entities under common control 2c - - 514,766,429 - - - 514,766,429
Equity proforma form restructuring transaction
of entities under common control 2c,21 - - 153,122,000 - - - 153,122,000
Difference in value from restructuring transactions
of entities under common control 2c - - - (685,794,504 ) - - (685,794,504 )
Translation adjustments 2t - - - - 44,373,879 - 44,373,879
Initial public offering 1b,19 284,743,350 158,420,946 - - - - 443,164,296
Cash dividend - - - - - (3,369,463 ) (3,369,463 )
Net income for the year - - - - - 29,970,194 29,970,194
Balance as of December 31, 2004 - as restated 949,144,518 158,420,946 54,886,877 (793,336,425 ) 58,666,134 47,197,528 474,979,578
Translation adjustments 2t - - - - 16,822,740 - 16,822,740
Balance as of December 31, 2005- as restated 949,144,518 158,420,946 54,886,877 (793,336,425 ) 75,488,874 248,200,128 692,804,918
Right Issue I 19 490,936,817 3,196,328,282 - - - - 3,687,265,099
Elimination of Subsidiaries’ equity from transactions
of entities under common control 2c - - (54,886,877 ) - - - (54,886,877 )
Difference in value from restructuring transactions - - - - - -
of entities under common control 2c,21 - - - (2,583,419,950 ) - - (2,583,419,950 )
Translation adjustments 2t - - - - (111,601,382 ) - (111,601,382 )
Balance as of December 31, 2006 1,440,081,335 3,354,749,228 - (3,376,756,375 ) (36,112,508 ) 451,205,366 1,833,167,046
5
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
2005 2004
CASH FLOWS FROM
OPERATING ACTIVITIES
Cash receipts from customers 6,22 1,612,511,376 1,507,914,000 1,016,277,387
Cash paid to suppliers, contractors,
and employees (1,031,626,780 ) (903,066,241 ) (684,919,209 )
Cash generated from operations 580,884,596 604,847,759 331,358,178
Financing charges paid 25 (650,358,600 ) (256,724,925 ) (29,673,537 )
Corporate income and dividend
tax paid 26b,26c (41,223,977 ) (123,743,751 ) (25,077,776 )
Net Cash Provided by (Used in)
Operating Activities (110,697,981 ) 224,379,083 276,606,865
CASH FLOWS FROM

INVESTING ACTIVITIES
Acquisition of Subsidiaries 4 (2,599,869,500 ) - (872,285,301 )
Acquisition of oil and gas properties 12 (2,304,953,084 ) (1,467,593,147 ) (485,020,194 )
Increase in other assets (32,526,857 ) (11,896,367 ) (10,522,329 )
Acquisition of fixed assets (1,612,128 ) (4,373,759 ) (1,043,780 )
Proceeds from insurance claim 2o,25b 56,438,666 - -
Interest income received 17,590,085 6,359,458 6,120,868
Net Cash Used in Investing Activities (4,864,932,818 ) (1,477,503,815 ) (1,362,750,736 )
CASH FLOWS FROM

FINANCING ACTIVITIES
Proceeds from issuance of shares 19,20 3,780,213,508 - 455,589,360
Proceeds from long-term and
short-term loans - net 14,18 1,821,442,579 2,210,799,322 942,903,843
Increase (decrease) in due
from/to related parties - net 10 297,323,234 (447,649,313 ) 289,271,842
Restricted time deposits 11 74,068,603 (127,626,917 ) (72,592,256 )
Payment of loan of acquired
Subsidiaries (348,203,384 ) - (574,482,238 )
Payment of stock issuance costs (92,948,409 ) - (12,425,064 )
Dividend paid - - (3,369,463 )
Net Cash Provided by Financing
Activities 5,531,896,131 1,635,523,092 1,024,896,024
6
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
2005 2004
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 556,265,332 382,398,360 (61,247,847 )
CASH AND CASH

EQUIVALENTS AT
BEGINNING OF YEAR 323,123,189 21,730,243 24,566,657
Effect of foreign exchange rate

changes (20,953,732 ) (81,005,414 ) 58,411,433
CASH AND CASH

EQUIVALENTS AT END
OF YEAR 5 858,434,789 323,123,189 21,730,243
Additional information for

non-cash financing activities:
Conversion of promissory notes to
paid-in capital - - 463,623,390
7
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
a. Establishment and General Information
PT Energi Mega Persada Tbk (the “Company”) was established based on notarial deed No. 16 dated
October 16, 2001 of H. Rakhmat Syamsul Rizal, S.H. Notary in Jakarta. The deed of establishment
was approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his
decision letter No. C-14507.HT.01.01.TH.2001 dated November 29, 2001 and published in State
Gazette No. 31, Supplement No. 3684 dated April 16, 2002. The Company’s Articles of Association
have been amended several times, the most recent being based on Notarial Deed No. 45, dated
January 25, 2006 of Robert Purba S.H., Notary in Jakarta, as a result of the Rights Issue I, concerning
the change of the Company’s Articles of Association articles 4(1), (2), and (3) (see Note 19). The
Amendment has been approved by the Minister of Law and Human Rights in his Decision Letter
No. C-03656.HT.01. 04.TH.2006, dated February 9, 2006 and was published in State Gazette No. 39,
dated May 16, 2006, Supplement No. 5161.
In connection with the Company’s Initial Public Offering, the Company’s Articles of Association
have been amended based on Notarial Deed No. 40 of Extraordinary General Meeting of
Shareholders (EGMS) dated March 30, 2004 of Lena Magdalena, S.H., Notary in Jakarta, which was
approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his Decision
Letter No. C-08031.HT.01.04.TH.2004 dated April 2, 2004 and published in State Gazette No. 97,
Supplement No. 11746 dated December 3, 2004. The changes include, among others, the changes of
the Company’s capital stock (see Note 19) and the Company’s name from PT Energi Mega Persada
to PT Energi Mega Persada Tbk.
In accordance with Article 3 of the Company’s Articles of Association, the scope of its activities
comprises of, among others: trading, services and mining, and providing management services in the
oil and gas industry.
The Company’s head office is located at Wisma Mulia, 33rd Floor, Jl. Jend. Gatot Subroto, Kav. 42,
Jakarta. The Subsidiaries of the Company are engaged in oil and gas exploration, and its activities are
located in Sidoarjo and Kangean Island in East Java Province, Riau, Jambi, North Sumatra, and East
Kalimantan Provinces.
The Company commenced its commercial operations in February 2003.
b. Initial Public Offering of Shares of the Company
The Company obtained the effective notice of its initial public offering from the Chairman of the
Capital Market Supervisory Agency (Bapepam) in his letter No. S.1480/PM/2004 dated May 26,
2004. On June 7, 2004, these shares were listed on the Jakarta Stock Exchange.
The Company’s Extraordinary General Meeting (EGMS) dated December 22, 2005, as recorded in
Notarial Deed No. 40 of Robert Purba S.H., Notary in Jakarta, approved the Rights Issue I to the
Company’s shareholders in connection with the Exercise Rights (ER) of 4,909,368,195 shares with
nominal value Rp 100 (full amount) per share, which were offered at Rp 770 (full amount) per share
totaling Rp 3,780,213,510,150 (full amount). On January 25, 2006, the Company completed the
Rights Issue I.
8
AND SUBSIDIARIES
1. GENERAL (Continued)
c. Structure of the Company and its Subsidiaries
The Company has ownership interest of more than 50%, directly and indirectly, in the following
Subsidiaries:
Percentage of
Ownership Total Assets
(%) Year of (Rp)
Commercial
Subsidiaries Domicile 2006 2005 2004 Operation 2006 2005 2004
RHI Corporation (RHI) Delaware, USA 100 100 100 1984 1,376,655,999 1,144,982,613 445,980,915
Kondur Petroleum SA
(KPSA) *) Panama 100 100 100 1995 1,367,846,514 1,146,093,226 446,059,043
PT Imbang Tata Alam (ITA) Indonesia 99.92 96 96 2001 719,421,920 446,837,422 228,029,302
Kalila Energy Ltd. (KEL) Hong Kong 99.99 99.99 99.99 1997 1,126,096,794 925,838,932 381,826,488
Pan Asia Ltd. (PAN) Hong Kong 99.99 99.99 99.99 1997 6,298 31,605,191 15,686,407
Lapindo Brantas Inc. (LBI) *) Delaware, USA 100 100 100 1999 1,085,652,080 861,314,860 326,614,373
Energi Mega Pratama, Inc. British Virgin
(EMP Inc) Islands 100 100 100 2003 4,523,845,486 3,158,871,287 1,855,446,727
EMP Exploration England
(Kangean), Ltd. (EEKL) *) 100 100 100 1987 1,481,836,268 990,148,813 718,102,266
EMP Kangean, Ltd. (EKL) *) Delaware, USA 100 100 100 1987 2,256,856,641 1,439,445,760 999,878,315
Malacca Brantas Finance, B.V. Netherlands
(MBF) 100 100 100 2005 1,091,642,486 1,186,827,216 -
Energi Mega Persada Netherlands
Finance, B.V. (EMP Finance) 100 100 100 - 211,247 212,770 -
PT Tunas Harapan Perkasa (THP) Indonesia 99.99 99.99 99.99 2005 1,929,252,306 1,220,637,957 1,001,823,780
PT Semberani Persada Oil
(Semco) *) Indonesia 99.99 99.99 99.99 1996 1,399,719,239 436,236,973 491,634,381
PT Insani Mitrasani Gelam
(IMG) *) Indonesia 99.99 99.99 99.99 2004 486,265,032 309,009,315 179,873,723
Kalila (Bentu) Ltd. (Bentu) *) British Virgin
Islands 100 100 100 - 294,168,940 286,849,007 208,822,887
Kalila (Korinci Baru) Ltd. British Virgin
(Korinci Baru) *) Islands 100 100 100 - 268,472,428 220,319,838 77,242,142
Costa International Group Ltd. British Virgin
(Costa) *) Islands 100 100 100 2002 267,890,371 138,233,548 96,207,797
Tunas Harapan Perkasa Pte.Ltd
(THPPL) Singapore 100 100 100 - 45,670 584 -
*) Indirect ownership interest through Subsidiaries
All the Subsidiaries of the Company, except MBF, THPPL and EMP Finance, are holders of working
interest of the following oil and gas production blocks directly or indirectly through Production
Sharing Contracts (PSC) with Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi
(BPMIGAS) or Technical Assistance Contract (TAC) with PT Pertamina (Persero) (“Pertamina”) as
follows:
Percentage of Ownership
(%)
Maturity of
Working Area Contract Owned by 2006 2005 2004
Malacca PSC 2020 Kondur Petroleum S.A. (KPSA) 34.46 34.46 34.46
PT Imbang Tata Alam 26.03 26.03 26.03
Brantas PSC 2020 Lapindo Brantas Inc. 50 50 50

Kangean PSC 2030 EMP Exploration (Kangean) Ltd. 40 40 40
EMP Kangean Ltd. 60 60 60
Semberah TAC 2015 PT Semberani Persada Oil 100 100 100
9
AND SUBSIDIARIES
Percentage of Ownership
(%)
Maturity of
Working Area Contract Owned by 2006 2005 2004
Gelam TAC 2017 PT Insani Mitrasani Gelam 100 100 100
Bentu PSC 2021 Kalila (Bentu) Ltd. 100 100 -
Korinci PSC 2027 Kalila (Korinci Baru) Ltd. 100 100 -
Gebang PSC 2015 Costa International Group Ltd. 50 50 50
MBF and EMP Finance are involved in financial and commercial activities.
d. Employees, Boards of Commissioners and Directors
As of December 31, 2006, 2005 and 2004, the members of the Company’s boards of Commissioners
and Directors were as follows:
December 31, 2006 and 2005 December 31, 2004

Board of Commissioners
President Commissioner Suyitno Patmosukismo Suyitno Patmosukismo
Independent Commissioner A. Qoyum Tjandranegara A. Qoyum Tjandranegara
Commissioner Rennier Abdul Rachman Latief Roosmania Kusmuljono
Board of Directors
President Director Christopher Basil Newton Rennier Abdul Rachman Latief
Director Yuli Soedargo Nazamudin Latief
Director Faiz Shahab Muhammad Suluhudin Noor
Director Norman Hafiz Harahap Norman Hafiz Harahap
Director Thomas Leo Soulsby Thomas Leo Soulsby
Director - Purwanto
The compositions as of December 31, 2006 and 2005 were based on the decision of the EGMS on
December 22, 2005, as stated in the Summary of EGMS Deed No. 46 on December 23, 2005 of
Robert Purba S.H., Notary in Jakarta.
The compositions as of December 31, 2004 were based on the decision of the EGMS on July 30,
2004, as stated in the Summary of EGMS Deed No. 27 dated July 30, 2004 and in connection with
the Statement of Meeting Decision Deed No. 28 on July 30, 2004, both being deeds of Lena
Magdalena, S.H., Notary in Jakarta.
Total remuneration paid to the Commissioners and Directors of the Company for the years ended
December 31, 2006, 2005 and 2004 amounted to Rp 25.30 billion, Rp 16.66 billion and
Rp 4.90 billion, respectively.
As of December 31, 2006, 2005 and 2004, the Company and its Subsidiaries had approximately 726,
875 and 585 employees, respectively.
10
AND SUBSIDIARIES
e. LBI Going Concern Issue
The accompanying consolidated financial statements include the financial statements of LBI, which
have been prepared assuming that LBI will continue as a going concern. LBI has a net capital
deficiency due to the large-scale impact of the Banjar Panji-1 (BJP-1) (see Note 36). Furthermore, it is
probable that LBI may have liquidity problems as a result of negative cash flows arising from the
costs of containment of mud in BJP-1, as well as costs that may be incurred arising from social,
economic and legal liability that may result in negative cash flows. Based on the valuation report of
Truscel Capital dated January 22, 2007, the fair value of KEL’s and PAN’s shares, intermediate
shareholders of LBI, as of December 31, 2006, amounted to negative US$ 60,654,782 and
US$ 1,743,282, respectively. The valuation report was prepared based on the estimated total losses of
the BJP-1 incident of US$ 183.3 million as of December 31, 2006.
The Company is looking at several alternatives to prevent the going concern issue of LBI from
creating impact on the Company’s going concern status.
Minarak Labuan Co. (L) Ltd., a Bakrie Group representative, has confirmed its intention to make
available adequate funds for LBI as and when required to settle the expenses related to BJP-1 with
the purpose to maintain the LBI as a going concern. As of February 28, 2007, LBI obtained
additional funding from the Bakrie Group amounting to US$ 34,500,000.
The consolidated financial statements do not include any adjustments that might result from the
outcome of the uncertainty relating to the going concern of LBI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Consolidated Financial Statements
The consolidated financial statements have been prepared using accounting principles and reporting
practices generally accepted in Indonesia.
The consolidated financial statements, except for the consolidated statements of cash flows, are
prepared under the accrual basis of accounting, with the measurement basis being historical cost,
except for certain accounts that are measured on the basis described in the related accounting
policies.
The reporting currency used in the preparation of the consolidated financial statements is Indonesian
Rupiah (“Rp”).
The consolidated statements of cash flows are prepared using the direct method, cash flows being
classified into operating, investing and financing activities.
11
AND SUBSIDIARIES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Principles of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and its
Subsidiaries wherein:
- the Company has direct or indirect ownership of more than 50% with the ability to control; or
- the Company has 50% or less ownership, but the Company has the ability to control.
The financial statements of Subsidiaries are consolidated commencing from the date on which
control is acquired and cease to be consolidated from the date on which control is transferred out of
the Company. The results of acquired or disposed of Subsidiaries during the year are included in the
consolidated statements of income from the effective date of acquisition or up to the effective date of
disposal, as appropriate.
The interest of the minority shareholders is stated as the minority’s proportion of the historical cost
of the net assets. The minority interest is subsequently adjusted for the minority’s share of
movements in equity. Any losses applicable to the minority interest in excess of the minority interest
are allocated against the interests of the parent.
Where necessary, adjustments are made to the financial statements of the Subsidiaries to bring the
accounting policies used in line with those used by the Company.
All inter-company transactions and account balances are eliminated to reflect the financial position
and the results of operations of the Company and its Subsidiaries as a single business entity.
c. Business Acquisitions
Acquisitions are accounted for using the purchase method in accordance with the requirements of
Statement of Financial Accounting Standard (PSAK) No. 22, “Business Combination”. On
acquisition date, the assets and liabilities of a Subsidiary are measured at their fair values. Any excess
of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as
goodwill. Goodwill from the acquisition of oil and gas properties is recorded in the oil and gas
properties and amortized using the unit of production method during the year of PSC or TAC. When
the cost of acquisition is less than the interest in the fair values of the identifiable assets and liabilities
acquired as at the date of acquisition (i.e. discount on acquisition), fair values of the acquired non-
monetary assets are reduced proportionately until all the excess is eliminated. The remaining excess
after reducing the fair values of non-monetary assets acquired is recognized as negative goodwill,
treated as deferred revenue and recognized as revenue on a straight-line method over twenty (20)
years.
12
AND SUBSIDIARIES
Acquisitions of Subsidiaries that represent a restructuring transaction of entities under common

control are accounted for in accordance with PSAK No. 38 (Revised 2004), “Accounting for
Restructuring Transactions of Business under Common Control”. Based on this standard, acquisition
of a subsidiary is accounted based on the pooling of interest, wherein assets and liabilities of a
subsidiary are recorded at their book values. The difference between the transfer price and the
Company’s interest in the subsidiary’s book values, if any, is recorded as “Difference in Value from
Restructuring Transactions of Entities under Common Control” and presented as a separate
component in the Company’s Equity. Accordingly, the consolidated financial statements prior to
acquisitions are restated, wherein the beginning balance of equity of the Subsidiary is presented
separately as proforma equity arising from restructuring transactions of entities under common
control. The balance of “Difference in Value from Restructuring Transactions of Entities under
Common Control” can be realized to gain or loss from the time the common control no longer exists
between the entities that entered into the transaction.
d. Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and in banks and investment with maturities of
three months or less that can be used freely to finance operating activities.
e. Receivables
Receivables are stated at face value less allowance for doubtful accounts. The level of this allowance
is based on management’s evaluation of collection experience and other factors that may affect
collectibility.
Allowance for doubtful accounts is provided based on a review of the status of the individual
receivable accounts at the end of the year.
f. Inventories
Inventories of spare-parts, chemicals and fuel are classified into capital and non-capital inventories.
Capital inventories represent spare-parts, chemicals, and fuel that are consumed or used as
components of construction or capitalized as assets. Non-capital inventories represent inventories
being consumed for the purpose of repair and maintenance of assets or used for operations. The
costs of the consumed inventories are charged when used.
Inventory purchased under the terms of the PSC and TAC becomes the property of BPMIGAS or
Pertamina when landed in Indonesia.
Inventories of spare-parts, chemicals and fuel are valued at the lower of cost or net realizable value.
Cost is determined using the weighted average method. Provision for obsolete and/or slow-moving
inventories is provided based on review of the condition of the inventories at the end of the year.
g. Prepaid Expenses
Prepaid expenses are amortized over the period benefited using the straight-line method.
13
AND SUBSIDIARIES
h. Transactions with Related Parties
The Company and its Subsidiaries have transactions with certain parties, which are related to them. In
accordance with the PSAK No. 7, “Related Party Disclosures”, related parties are defined as follows:
(1) Enterprises that, through one or more intermediaries, control, or are controlled by, or are under
common control with, the reporting enterprise (including holding companies, subsidiaries and
fellow subsidiaries);
(2) Associated companies;
(3) Individuals owning, directly or indirectly, an interest in the voting power of the Company that
gives them significant influence over the enterprise, and close members of the family of any such
individual (close members of a family are defined as those members who are able to exercise
influence or can be influenced by such individuals, in conjunction with their transactions with the
Company);
(4) Key management personnel, that is, those persons having authority and responsibility for
planning, directing and controlling the activities of the Company, including commissioners,
directors and managers of the enterprise and close members of the families of such individuals;
and
(5) Enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by
any person described in (3) or (4) or over which such a person is able to exercise significant
influence. This definition includes enterprises owned by the commissioners, directors or major
stockholders of the Company and enterprises that have a member of key management in
common with the Company.
All significant transactions with related parties are disclosed in the notes to the consolidated financial
statements.
i. Restricted Time Deposits
Time deposits that are restricted in use are presented under non-current assets.
j. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and any impairment in value.
Depreciation is computed using the straight-line method based on the estimated useful life of the
asset as follows:
Years
Machinery and equipment 4
Transportation and office equipment 4
14
AND SUBSIDIARIES
The costs of maintenance and repairs are charged to expense as incurred; expenditures that extend
the useful life of the asset or result in an increase of future economic benefits such as increase in
capacity and improvement in the quality of output or standard of performance, are capitalized. When
assets are retired or otherwise disposed of, their carrying values and the related accumulated
depreciation are removed from the accounts and any resulting gain or loss is reflected in the current
operations.
k. Oil and Gas Properties
The Company and its Subsidiaries adopted the full cost method of accounting in recording oil and
gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil
and gas reserves, including directly related overhead costs, are capitalized. All costs arising from
production activities are recorded at the time they are incurred.
Under the full cost method, a Cost Center is used to "pool" costs to be later matched with revenues
generated from the cost center's operations. The Company considers a country as a single cost center
in accordance with PSAK No. 29, and, therefore, cost centers are established on a country-by-
country basis.
The capitalized costs are subject to a “ceiling test,” which basically limits such costs to the aggregate
of (1) the “estimated present value,” discounted at a 10% interest rate of future net revenues from
estimated future production of proved reserves using prices based on current economic and
operating conditions; (2) the cost of unproved properties and major development projects not being
amortized, and (3) the lower of cost or estimated fair value of unproved properties included in cost
being amortized. Any excess over the cost is charged to expense and separately disclosed during the
year.
All capitalized costs relating to oil and gas properties, including the estimated future costs of
developing proved reserves, are amortized using the unit-of-production method based on the total
estimated proved reserves. Investments in unproved properties and major development projects are
not amortized until proved reserves associated with the projects can be determined or until
impairment occurs.
The Company and its Subsidiaries have no ownership interest in the producing assets nor in the oil
and gas reserves, but rather have the right to operate the assets and receive a share of production
and/or revenues from the sale of oil and gas in accordance with the PSC and TAC.
There is no inventory of oil and gas owned by the Company since the total production of oil and gas
shall be shared based on an agreed formula between the Subsidiaries and BPMIGAS or Pertamina
(see Notes 31a and 31b).
Sale of proved and unproved properties are accounted for as adjustments of capitalized costs with no
gain or loss recognized, unless such adjustments would significantly change the relationship between
capitalized costs and proved reserves of oil and gas, in which case, the gain or loss is recognized in
statements of income.
15
AND SUBSIDIARIES
l. Impairment of Assets Value
In compliance with PSAK No. 48, “Impairment of Asset Values”, asset values are reviewed for any
impairment and possible write-down to fair values whenever events on changes in circumstances
indicate that their carrying values may not be fully recovered. Whenever the carrying amount of an
asset exceeds its recoverable amount, an impairment loss is recognized in the statement of income of
the current year.
m. Capitalization of Borrowing Cost and Foreign Exchange Losses
In accordance with the revised PSAK No. 26 (Revised 1997), “Borrowing Cost,” interest cost,
foreign exchange differences and other costs incurred from borrowings obtained to finance the
construction or installation of major facilities are capitalized. Capitalization of these borrowing costs
ceases when the acquisition, construction or installation activities are substantially completed and the
assets are ready for their intended use.
n. Shares Issuance Costs
Based on Bapepam’s Decision Letter dated March 13, 2000, No. KEP-06/PM/2000, costs incurred
in relation to Initial Public Offering and Rights Issue are presented as part of equity.
o. Revenue and Expense Recognition
Revenue is recognized when the crude oil and/or gas are delivered and title has passed. Expenses are
recognized when incurred (accrual basis). Claim from insurance will be recognized as income upon
collection.
p. Employee Benefits
Liabilities relating to employee benefits covering retirement benefits, short-term (e.g. paid annual
leave, paid sick leave) and other long-term benefits (e.g. long-service leave, post-employement
medical benefits) are computed based on the provision stated in PSAK
No. 24 (Revised 2004). Korinci Baru, Bentu and IMG, the Subsidiaries, did not calculate estimated
employee benefits since the amount is not material.
The Company and its Subsidiaries provide defined post-employment benefits for their employees
pursuant to the terms of the Employment Work Contract/Company Policy. KPSA and ITA,
Subsidiaries, also provide post-employment benefits from defined contribution pension plans. The
contribution charged to the Subsidiaries is recognized as expense in the current year.
The cost of providing post-employment benefits is determined using the projected unit credit
method. The accumulated unrecognized actuarial gains and losses that exceed 10% of the greater of
the present value of the Company’s defined benefit obligations and the fair value of plan assets are
recognized on a straight-line basis over the expected average remaining working lives of the
participating employees. Past service cost is recognized immediately to the extent that the benefits are
already vested, and otherwise is amortized on a straight-line basis over the average period until the
benefits become vested.
16
AND SUBSIDIARIES
The benefit obligation recognized in the balance sheet represents the present value of the defined
obligation, adjusted for unrecognized actuarial gains and losses, unrecognized past service cost and
fair value of the plan assets.
q. Income Tax
The Company and its Subsidiaries determine their income taxes in accordance with PSAK No. 46,
“Accounting for Income Tax.”
Current tax expense of the Company is determined based on the taxable income for the year
computed using prevailing tax rates. Current tax expense of Subsidiaries that are domiciled and
registered as tax subjects in other countries is determined based on the taxable income for the year
computed using prevailing tax rates in the related countries.
Current tax expense of the Subsidiaries that are engaged in exploration and production of oil and gas
based on PSC and TAC is determined based on the taxable income in the related year using the
prevailing tax rates as stated in the PSC and TAC.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax liabilities are recognized for all taxable temporary differences and
deferred tax assets are recognized for deductible temporary differences to the extent it is probable
that taxable income will be available in future years against which the deductible temporary
differences can be utilized.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is charged or credited in the statement of income, except when it
relates to items charged or credited directly to equity, in which case the deferred tax is also charged or
credited directly to equity.
Deferred tax assets and liabilities are offset in the balance sheet, except if these are for different legal
entities, in the same manner as the current tax assets and liabilities are presented.
Amendments to taxation obligations are recorded when an assessment is received or, if appealed
against, when the results of the appeal are determined.
r. Earnings per Share
In accordance with PSAK No. 56, “Earnings per Share,” basic earnings per share are computed by
dividing net income by the weighted average number of shares outstanding during the year.
Diluted earnings per share are computed by dividing net income by the weighted average number of
shares outstanding as adjusted for the effects of all potential dilution.
s. Segment Information
Segment information is prepared using the accounting policies adopted for preparing and presenting
the consolidated financial statements. The Company and its Subsidiaries’ primary reporting segment
information is based on business segment, while its secondary reporting segment information is based
on geographical segment.
17
AND SUBSIDIARIES
A business segment is a distinguishable component of an enterprise that is engaged in providing

products or services or a group of products or services, which are subject to risks and returns that are
different from those of other business segments.
A geographical segment is a distinguishable component of an enterprise that is engaged in providing

products or services within a particular economic environment, which are subject to risks and returns
that are different from those of components operating in other economic environments.
Assets and liabilities that relate jointly to one or more segments are allocated to their respective
segments, if and only if, their related revenues and expenses are also allocated to those segments and
the relative autonomy of those segments.
t. Foreign Currency Transactions and Translation
The books of accounts of the Company are maintained in Indonesian Rupiah. Transactions during
the year involving foreign currencies are recorded at the rates of exchange prevailing at the time the
transactions are made. At balance sheet date, monetary assets and liabilities denominated in foreign
currencies are adjusted to reflect the exchange rates prevailing at that date. The resulting gains or
losses are credited or charged to current operations.
The books of accounts of the Subsidiaries are maintained in United States Dollar. For consolidation
purposes, assets and liabilities of the Subsidiaries at balance sheet date are translated into Rupiah
using the exchange rates at balance sheet date, while revenue and expenses are translated at the
average exchange rates for the year. Resulting translation adjustments are shown as part of Equity as
“Translation Adjustments”. The middle rates of Bank Indonesia prevailing on December 31, 2006,
2005 and 2004 were as follows:
2005 2004 2003

(full amount) (full amount) (full amount)
Currency
US$ 9,020 9,830 9,290
HK$ 1,160 1,268 1,195
Euro 11,858 11,660 12,652
u. Provisions and Contingencies
Provision is recognized only when the Company has: (a) a present obligation (legal or constructive) as
a result of a past event; (b) it is probable (i.e. more likely than not) that an outflow of resources
embodying economic benefits will be required to settle the obligation; and (c) a reliable estimate can
be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimate.
Contingent liabilities are not recognized in the financial statements, but are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are
not recognized in the consolidated financial statements but disclosed when inflow of economic
benefits is probable.
18
AND SUBSIDIARIES
v. Subsequent Events
Post year-end events that provide additional information about the Company and its Subsidiaries’
position at the balance sheet date (adjusting events) are reflected in the financial statements. Any post
year-end event that is not an adjusting event is disclosed when material to the consolidated financial
statements.
w. Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles

generally accepted in Indonesia requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
3. RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS
The Company made several acquisitions of Subsidiaries, the latest being the acquisition of PT Tunas
Harapan Perkasa (THP), which became effective on January 25, 2006 (see Note 4). Since the acquisition
of THP represents transactions of entities under common control, as required by PSAK No. 38 (Revision
2004), the Company has restated its consolidated financial statements for the years ended December 31,
2005 and 2004. The effect of the restatement of the equity of the Company’s Subsidiaries is presented as
“Proforma Equity from Restructuring Transactions of Entities under Common Control.”
The comparison of restated consolidated financial statements as of and for the year ended December 31,
2005 with the consolidated financial statements that had been previously reported is as follows:
As restated As previously reported

Total current assets 1,419,436,182 1,113,445,539
Due from related parties 430,901,040 427,202,349
Oil and gas properties 3,786,677,686 2,937,209,264
Deferred tax assets 172,604,748 89,774,398
Total non-current assets 4,916,801,076 3,945,755,535
Total assets 6,336,237,258 5,059,201,074
Trade payables 266,515,001 84,878,740
Taxes payable 136,566,835 112,711,257
Total current liabilities 1,126,508,913 582,808,272
Long-term loans 3,141,760,852 2,881,450,898
Due to related parties 774,507,950 380,989,284
Deferred tax liabilities 275,688,092 256,997,271
Total non-current liabilities 4,516,920,486 3,834,680,610
Retained earnings 248,200,128 270,968,699
Total equity - net 692,804,918 641,712,192
Net sales 1,682,100,322 1,479,359,013
Operating expenses 183,192,733 139,892,634
Net income 201,002,600 195,818,413
Basic earnings per share (in full amount) 21.18 20.63
19
AND SUBSIDIARIES
3. RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The comparison of restated consolidated financial statements as of and for the year ended December 31,
2004 with previous financial statements that had been reported is as follows:
As restated As previously reported

Total current assets 431,150,499 300,238,774
Oil and gas properties 2,630,320,899 2,028,879,880
Deferred tax assets 25,381,698 8,839,134
Total non-current assets 3,061,297,639 2,372,788,221
Total assets 3,492,448,138 2,673,026,995
Trade payables 142,360,206 28,619,113
Taxes payable 121,040,782 104,089,113
Total current liabilities 841,586,517 593,680,710
Long-term loans 807,252,079 706,783,237
Due to related parties 851,447,220 431,143,921
Deferred tax liabilities 238,340,301 238,340,301
Total non-current liabilities 2,177,425,797 1,649,324,282
Retained earnings 47,197,528 75,150,286
Total equity - net 474,979,578 431,565,544
Net sales 972,664,531 855,079,977
Operating expenses 93,453,266 59,055,718
Net income 29,970,194 74,166,617
Basic earnings per share (in full amount) 3.16 8.98
4. ACQUISITIONS OF SUBSIDIARIES
a. PT Tunas Harapan Perkasa (“THP”)
The Company (acquirer) entered into a Sales and Purchase Agreement (SPA) with PT Mitra Andalan
Mandiri (“MAM,” as seller) on October 25, 2005 as follows:
i. 2,598,830 shares or 99.99% of all issued shares of PT Tunas Harapan Perkasa (“THP” as target
company) that are owned by MAM amounting to Rp 2,599,869,500,000 (full amount). THP owns
100% shareholding in Costa International Group Ltd. (“Costa”), Kalila (Bentu) Ltd. (“Bentu”)
and Kalila (Korinci Baru) Ltd. (“Korinci Baru”) and 99.99% shareholding in PT Insani Mitrasani
Gelam (“Gelam”) and PT Semberani Persada Oil (“Semco”). Except for Costa, all of these
subsidiaries are the operators and the owners of 100% working interest in Bentu Block PSC,
Korinci Baru Block PSC, Sungai Gelam Block TAC, and Semberah Block TAC. Costa owns a
50% working interest in Gebang Block PSC and has significant authorities in the operational
activity within the Joint Operating Body (JOB), in which Pertamina acts as the operator.
ii. Trade receivables of MAM to THP’s subsidiaries, which were based on the restructuring and
debt acknowledgment agreement of MAM and THP’s subsidiaries amounting to US$ 33,497,199
or equivalent to Rp 348,203,383,605 (full amount).
The Company’s Extraordinary General Meeting of Shareholders (EGMS) approved the above
acquisition on December 22, 2005.
On January 25, 2006, the Company completed the Rights Issue I.
20
AND SUBSIDIARIES
4. ACQUISITIONS OF SUBSIDIARIES (Continued)
The acquisition represents a transaction of entities under common control, and was therefore
accounted for as restructuring transactions of entities under common control in accordance with
PSAK No. 38 (see Note 3).
The acquisition became effective on January 25, 2006.
b. Energi Mega Persada Finance B.V.
On November 21, 2005, the Company acquired 100% equity interest of Stijna Belastingadviseurs
B.V., a company incorporated in Amsterdam, Netherlands from a third party. On the same day Stijna
Belastingadviseurs B.V. changed its name to Energi Mega Persada Finance B.V. (EMP Finance). The
acquisition cost amounted to Euro 24,600 and because the difference between this purchase price
and the net assets value of EMP Finance’s shares, which amounted to Euro 6,600, was not material,
this difference was recorded as loss in the current year. This acquisition was recorded using the
purchase method.
c. Malacca Brantas Finance B.V. (MBF)
On May 23, 2005, the Company acquired 100% equity interest of A. Bohl Vastgoed B.V., a company
incorporated in Amsterdam, The Netherlands, from a third party. On June 24, 2005, A Bohl
Vastgoed B.V. changed its name to Malacca Brantas Finance B.V. (MBF). The acquisition cost
amounted to Euro 24,600 and because the difference between this purchase price and the net assets
value of MBF’s shares, which amounted to Euro 6,600, was not material, this difference was recorded
as loss in the current year. This acquisition was recorded using the purchase method.
d. ITA, PAN, KEL and EMP Inc.
In 2004, the Company acquired equity interests in PT Imbang Tata Alam (ITA) (96%), Pan Asia Ltd.
(PAN), Hong Kong (99.99%), Kalila Energy Ltd. (KEL), Hong Kong (99.99%) and Energi Mega
Pratama Inc. (EMP, Inc.), British Virgin Islands (100%), from entities under common control. ITA,
PAN and KEL were acquired on February 27, 2004, April 19, 2004, and May 6, 2004, respectively,
before the Company’s initial public offering of its shares. The acquisition of EMP Inc., which was
made on November 8, 2004 had been approved by independent stockholders on September 30, 2004
as stated in the Extraordinary Meeting of independent stockholders of the Company.
Before the Company acquired EMP Inc., a Subsidiary incorporated in the British Virgin Islands, on
August 4, 2004, EMP Inc. acquired 100% shares of BP Exploration (Kangean) Ltd. and BP Kangean
Ltd. from British Petroleum (BP). Combined, the two companies held a 100% working interest in the
Kangean Block. Acquisition cost of these companies amounted to US$ 97.79 million. Based on the
fair value assessment performed by an independent appraiser, the fair value of the purchased
companies ranged from US$ 79.59 million to US$ 156.76 million, subject to whether the Kangean
PSC could be extended or not. Subsequently, the Subsidiaries obtained the extension of the Kangean
PSC until 2030. BP Exploration (Kangean) Ltd. and BP Kangean Ltd. have subsequently changed
their names to EMP Exploration (Kangean) Ltd. and EMP Kangean Ltd, respectively.
21
AND SUBSIDIARIES
4. ACQUISITIONS OF SUBSIDIARIES (Continued)
The acquisitions of EMP Exploration (Kangean) Ltd. and EMP Kangean Ltd. were recorded by
EMP Inc. using the purchase method. Fair values of net assets of these acquired companies were,
accordingly, stated at acquisition costs while the differences between the net book value and their fair
values were attributed to oil and gas properties. Details of the fair values of net assets as of the
acquisition dates are as follows:
EMP Exploration
(Kangean) Ltd. EMP Kangean Ltd. Total
Cash on hand and in banks - 6,383,135 6,383,135
Trade receivables 4,293,696 7,041,688 11,335,384
Inventories 395,772 593,658 989,430
Due from related parties 168,107 - 168,107
Deferred tax assets - 3,289,723 3,289,723
Oil and gas properties 68,663,525 80,405,923 149,069,448
Right to reimburse prior years
dividend tax 14,062,507 7,982,171 22,044,678
Taxes payable (3,800,755 ) (5,667,465 ) (9,468,220 )
Accrued expenses (253,252 ) (343,941 ) (597,193 )
Deferred tax liabilities (6,266,751 ) - (6,266,751 )
Due to related parties (21,876,791 ) (32,092,365 ) (53,969,156 )
Prior years dividend taxes payable (14,062,507 ) (7,982,171 ) (22,044,678 )
Other payables (692,162 ) (936,457 ) (1,628,619 )
Employee benefits obligation (1,515,456 ) - (1,515,456 )
Fair Value of Net Assets 39,115,933 58,673,899 97,789,832
The acquisition cost was financed by EMP Inc. through loans obtained from Capital Management Asia,
Pte. Ltd. (CMA) and Credit Suisse (CS) (formerly Credit Suisse First Boston/CSFB), Singapore (see
Notes 14 and 18).
At the time of the acquisition, these Subsidiaries had recorded dividend tax payable and penalties
amounting to US$ 22,044,678. Based on the sales and purchase agreement, EMP Inc. has a right to
reimbursement from BP for the payment of the tax payable if this is paid by EMP Inc. EMP Inc.
recognized this right to reimbursement as an identifiable asset and thus accordingly included it in the
value of the acquired net assets.
5. CASH AND CASH EQUIVALENTS
This account consists of:

2005 2004
2006 see Note 3) see Note 3)
Cash on hand 753,610 1,237,025 395,592
Cash in banks
Rupiah
PT Bank Negara Indonesia (Persero) Tbk 2,000,022 13,908,287 795,614
PT Bank Mega Tbk 598,160 126,750 139,853
PT Bank Pan Indonesia Tbk 358,929 894,557 115,456
22
AND SUBSIDIARIES
5. CASH AND CASH EQUIVALENTS (Continued)
2005 2004
PT Bank Mandiri (Persero) Tbk 272,641 874,832 583,381
PT Bank International Indonesia Tbk 208,713 5,641,046 284,807
Citibank N.A. 174,122 684,225 840,453
Deutsche Bank 46,898 58,595 -
Hongkong Shanghai Bank Corporation 24,035 25,000 -
PT Bank Central Asia Tbk 7,119 32,822 -
PT Bank Resonia Perdania 3,272 4,970 485,588
Standard Chartered Bank 3,188 4,995 5,936
PT Bank Permata Tbk 2,398 2,423 -
PT Bank Syariah Mandiri 1,064 6,030,734 -
PT Bank Global - - 18,961
PT Bank Danamon Indonesia Tbk - 489 33,156
3,700,561 28,289,725 3,303,205
United States Dollar
Citibank N.A. 284,536,319 90,235,386 6,421,188
Credit Suisse 86,308,870 -
PT Bank International Indonesia Tbk 12,531,654 8,072,899 1,545,895
PT Bank Mandiri (Persero) Tbk 2,647,745 12,041,840 2,432,020
Societe Generale Hongkong 2,097,631 - -
PT Bank Negara Indonesia (Persero) Tbk 1,211,614 28,519,724 3,379,804
Fortis Bank 932,677 47,275,079 -
PT Bank Mega Tbk 712,222 26,284,558 726,250
PT Bank Resonia Perdania 384,634 7,022,925 2,211,234
Standard Chartered Bank 72,572 80,346 383,946
Deutsche Bank 50,693 49,688 -
Hongkong Shanghai Bank Corporation 20,485 25,738 -
PT Bank Syariah Mandiri 9,020 - -
PT Bank Danamon Indonesia Tbk - - 874,988
PT Bank Central Asia Tbk - - 51,030
391,516,136 219,608,183 18,026,355
Hongkong Dollar
Citibank N.A. - 50,410 5,091
Euro
Fortis Bank 81,635 127,851 -
Time deposits
PT Bank Mega Tbk 273,600,000 - -
PT Bank International Indonesia Tbk 8,382,847 - -
PT Bank Mandiri (Persero) Tbk - 4,999,995 -
281,982,847 4,999,995 -
23
AND SUBSIDIARIES
5. CASH AND CASH EQUIVALENTS (Continued)
2005 2004
Short-term investments
PT Danatama Makmur 180,400,000 68,810,000 -
Total 858,434,789 323,123,189 21,730,243
The Company and its Subsidiaries made investments with PT Danatama Makmur amounting to
US$ 20,000,000 and US$ 7,000,000 as of December 31, 2006 and 2005, respectively, for a term of 30
days subject to extension upon written instruction from the Company. All income earned from the
investment will be credited to the Company and its Subsidiaries account less any necessary expenses
incurred including taxes, commissions, and discounts.
The interest rates of time deposits and short-term investments were as follows:
2006 2005 2004

(%) (%) (%)
United States Dollar 2,25 - 6,00 - -
Rupiah 7,00 - 9,25 5,75 -
6. TRADE RECEIVABLES
a. By Debtor - Third Parties
2005 2004
Local debtors
Pertamina 61,195,195 89,121,484 45,108,747
PT Perusahaan Gas Negara (Persero) Tbk 27,674,008 26,110,655 34,573,952
PT Petrokimia Gresik 13,023,539 55,006,516 22,563,069
PT Perusahaan Listrik Negara (Persero) 6,183,429 27,905,853 9,901,654
Petrochina International Java Ltd 2,225,313 - -
PT Indogas Kriya Dwiguna 90,222 - -
Foreign debtors
Mitsubishi Corporation 158,590,340 - -
Petro Diamond Pte. Ltd. 51,548,688 - -
BP Singapore Pte. Ltd. - 66,513,605 -
Itochu Petroleum Co. (S) Pte. Ltd. - 21,845,749 170,118
Total 320,530,734 286,503,862 112,317,540
24
AND SUBSIDIARIES
6. TRADE RECEIVABLES (Continued)
b. By Age Category
2005 2004
Up to 30 days 251,782,543 213,949,220 93,915,183
Over 31 - 60 days 31,913,525 44,614,025 13,055,209
Over 60 days 36,834,666 27,940,617 5,347,148
Total 320,530,734 286,503,862 112,317,540
All trade receivables are in US Dollar. The Company and its Subsidiaries did not provide any allowance
for doubtful accounts as the management believes that the trade receivables are fully collectible.
Receivables from Subsidiaries as of Desember 31, 2006, are pledged as collateral for the long-term loans
(see Note 18).
7. OTHER RECEIVABLES
2005 2004
Reimbursable Value Added Tax 209,765,873 156,763,277 55,855,326
Overhead receivables from PSC participants 78,007,238 16,822,033 11,293,834
Paceworks International Ltd. 61,000,889 66,478,796 -
Receivable from suppliers 52,708,385 43,201,000 36,962,457
Loan to employees 29,483,890 30,742,743 13,592,893
Scott Asia Limited Trading 27,601,200 - -
Advances to BPMIGAS and Pertamina 1,965,067 3,804,428 77,388,598
Interest - - 1,820,000
Others 89,025,955 10,622,264 35,754,758
Total 549,558,497 328,434,541 232,667,866
Allowance for doubtful accounts (78,474 ) (9,953,768 ) (82,983,380 )
Net 549,480,023 318,480,773 149,684,486
Reimbursable Value Added Tax represents value added tax that has been paid by Subsidiaries and is
reimbursable from BPMIGAS or Pertamina in accordance with the terms of PSC and TAC agreements.
Paceworks International Ltd. (PI) is a company that assists MBF in general financial strategy and planning
activity for obtaining capital expenditure funds (fund raising). Receivable from PI represents a portion of
funds originating from a loan by Merrill Lynch, which was temporarily transferred to PI in line with its
capacity as financial advisory in accordance with the agreement between PI and MBF (see Note 31d).
25
AND SUBSIDIARIES
7. OTHER RECEIVABLES (Continued)

Receivable to Scott Asia Limited Trading (SALT) represents promissory note from SALT dated
September 22, 2006, which amounted to US$ 3,000,000, bearing interest at the rate of 6% and payable in
one year.
On March 31, 2006, the management of IMG had written off its receivables to Lirik Petroleum
amounting to US$ 952,600 (Rp 8,088,523) as they believe that such receivable will no longer be
collectible.
8. INVENTORIES
2005 2004
Spare-parts 589,082,417 341,107,281 114,485,993
Fuel 9,525,960 8,977,188 4,011,794
Chemicals 6,465,973 4,107,089 3,362,943
Total 605,074,350 354,191,558 121,860,730
Inventories were insured in an insurance package with Oil and Gas Properties (see Note 12).
Based on the evaluation of the inventory condition at year-end, management believes that no provision
for obsolete and slow-moving inventories was required.
9. PREPAID EXPENSES AND ADVANCES

2005 2004
Prepaid expenses
Rental 8,430,092 9,971,625 3,674,148
Insurance 1,849,369 1,182,682 348,774
Service charge 1,354,255 424,277 -
Others 274,202 - -
Advances
Project 86,392,372 107,444,794 15,508,256
Employees 913,063 3,904,295 1,597,536
Others 642,256 6,097,402 647,500
Total 99,855,609 129,025,075 21,776,214
Project advances represent advances for drilling services provided by suppliers in Kangean PSC and
Malacca PSC.
26
AND SUBSIDIARIES
10. DUE FROM/TO RELATED PARTIES
a. Due from Related Parties
2005 2004
PT Energi Timur Jauh (ETJ) 498,816,382 429,882,919 -
PT Kalila Energi Hijau - - 10,439,284
PT Raja Lampung Persada - - 23,225,000
PT Bakrie Capital Indonesia - - 12,354,474
PT Ladinda Petroindo (Ladinda) - - 8,707,089
Luxuriace Asset - - 1,858,000
Asian Worldwide Group Ltd. - - 954,761
PT Gunung Latimojong - - 929,000
Others 1,771,214 1,018,121 958,618
Total 500,587,596 430,901,040 59,426,226
Due from ETJ represents advances made based on the agreement dated August 1, 1998 (see
Note 31c). Out of the funds advanced to ETJ, an amount of US$ 28 million was paid by KPSA to
ETJ for the settlement of the loan obtained by Ladinda from PT Bank International Indonesia Tbk.
The loan was made available to finance the development in Brantas PSC by LBI, a Subsidiary and is
guaranteed by LBI’s working interest in the Brantas Block.
b. Due to Related Parties
2005 2004
Minarak Labuan Co. (L) Ltd. 270,600,000 - -
PT Brantas Indonesia (BI) 172,385,842 190,767,250 188,190,670
PT Kondur Indonesia (KI) 171,885,553 190,222,034 6,773,692
Enercorp Ltd. 117,260,000 - -
Asian Worldwide Group Ltd. 41,438,110 45,171,563 -
Global Overseas Enterprise 16,687,774 18,199,675 68,950
Kalila (Bentu) Pty. Ltd. 1,371,338 - 90,498,646
PT Mitra Andalan Mandiri (MAM) 985,633 329,729,663 42,795,110
Kalila (Korinci Baru) Operator Pty. Ltd. 208,317 - 39,252,294
PT Mitrasani Lestari Nusa 192,048 6,055 1,398,935
Kalila (Bentu) Operator Pty. Ltd. 132,341 - 107,689,884
PT Hartindo Adhi Kencana 7,575 - 122,564,029
PT Energi Timur Jauh (ETJ) - - 152,842,573
Semberani Persada Oil HK - - 65,803,318
Kalila (Korinci Baru) Pty. Ltd. - - 33,429,545
Others 159,825 411,710 139,574
Total 793,314,356 774,507,950 851,447,220
27
AND SUBSIDIARIES
10. DUE FROM/TO RELATED PARTIES (Continued)
On December 29, 2006, the Company obtained an unsecured and non-interest bearing loan from
PT Bakrie Capital Indonesia (BCI) amounting to US$ 13,000,000 (Rp 117.26 billion), which will
mature on December 29, 2007. On the same date, the Company entered into a novation agreement
with KEL and PAN whereby the Company assigned its loan from BCI to KEL and PAN at the
amount of US$ 12,500,000 (Rp 112.75 billion) and US$ 500,000 (Rp 4.51 billion), respectively.
Subsequently, BCI assigned its receivables from KEL and PAN to Minarak Labuan Co (L) Ltd.
(MLC) based on the Receivables Purchases Agreement dated December 29, 2006.
On December 29, 2006, LBI obtained an unsecured and non-interest bearing loan from Enercorp
Limited (EL) amounting to US$ 30,000,000 (Rp 270.6 billion), which will mature on December 29,
2007. On the same date, LBI entered into a novation agreement with KEL and PAN whereby LBI
assigned US$ 17,000,000 out of the total amount of the loan from EL to KEL and PAN in the
amounts of US$ 16,500,000 (Rp 261.58 billion) and US$ 500,000 (Rp 9.02 billion), respectively.
Subsequently, EL assigned its receivables from KEL and PAN to MLC in the amount of
US$ 17,000,000 based on the Receiveable Purchase Agreement dated December 29, 2006.
As of December 31, 2006, the balance of amounts due to MLC amounted to US$ 30,000,000 and due
to EL amounted to US$ 13,000,000.
Amounts due to BI and KI, Company’s stockholders, represent net of due from and due to related
parties that were transferred in 2004 in accordance with the acquisition of Subsidiaries under
common control, which had been executed before the Company’s initial public offering.
Due to Asian Worldwide Group Ltd. (AWGL) and Global Overseas Enterprise Ltd. (GOEL)
represent payables from taking over the working interest in Bentu PSC and Korinci Baru PSC from
Petroz Korinci Baru Ldc. and Petroz Bentu Ldc. on August 7, 2005.
Due to AWGL and GOEL represent payables arising from acquisition of THP.
Based on the restated consolidated financial statements as of December 31, 2005, the Company has
payables to MAM from taking over the liability of THP’s subsidiaries based on the restructuring and
debt acknowledgment agreement (see Note 4).
Based on the restated consolidated financial statements, as of December 31, 2004, the Company had
payables to ETJ amounting to Rp 152.8 billion. The payables represent costs paid by ETJ that were
allocated to Subsidiaries in accordance with the function of ETJ as cash manager. Due to and due
from ETJ is presented at net in the consolidated financial statements.
28
AND SUBSIDIARIES
11. RESTRICTED TIME DEPOSITS
2005 2004
Credit Suisse (CS), Singapura 82,645,531 103,439,505 67,823,810
Bank of New York, Singapura 44,201,091 97,475,720 -
PT Bank Mandiri (Persero) Tbk - - 4,999,998
Others - - 464,500
Total 126,846,622 200,915,225 73,288,308
Time deposits in CS, represent placement of time deposits pursuant to:
a. The Cash and Account Management Agreement (CAMA) between EMP Inc. and CS, which will
serve as collateral for the loan obtained from CS on May 19, 2005 (see Note 18). Time deposits
mature on a monthly basis and earn interest at a rate of LIBOR less 0.25%, or zero, whichever is
higher.
b. The Credit Agreement between Semco and CS, which will serve as collateral for the loan obtained
from CS on October 27, 2005 (see Note 18) and earn interest at a rate of LIBOR.
Time deposits in Bank of New York, Singapore (BONY) represents placement of time deposits pursuant
to the CAMA between MBF, LBI, KPSA and ITA with BONY to serve as collateral for credit facility
received from Merrill Lynch on July 27, 2005 (see Note 18). Time deposits mature on a quarterly basis
and earn interest at a rate of LIBOR.
12. OIL AND GAS PROPERTIES
The movement of this account were as follows:
2006
Translation
January 1 Additions Deductions Adjustments December 31
Cost 4,832,562,487 2,937,073,143 - (581,149,334 ) 7,188,486,296
Accumulated depreciation,
depletion and
amortization 1,045,884,801 336,411,311 - (184,441,859 ) 1,197,854,253
Net Book Value 3,786,677,686 5,990,632,043
29
AND SUBSIDIARIES
12. OIL AND GAS PROPERTIES (Continued)

2005
(As restated - see Note 3)
Translation
January 1 Additions Deductions Adjustments December 31
Cost 3,175,333,610 1,467,593,147 - 189,635,730 4,832,562,487
depletion and
amortization 545,012,711 410,968,484 - 89,903,606 1,045,884,801
Net Book Value 2,630,320,899 3,786,677,686
2004
Translation
January 1 Acquisition Additions Deductions Adjustments December 31
Cost 1,172,419,746 1,330,892,031 494,527,776 10,700,137 188,194,194 3,175,333,610

depletion and
amortization 324,802,456 - 205,090,495 32,468,172 47,587,932 545,012,711
Net Book Value 847,617,290 2,630,320,899
Depreciation, depletion and amortization for the years ended December 31, 2006, 2005 and 2004
amounting to Rp 336,411,311, Rp 410,968,484 and Rp 205,090,495, respectively, were charged to cost of
goods sold (see Note 23).
In 2006, the additions were mainly caused by capitalization of total cost incurred and estimated cost that
will be incurred in relation to the BJP-1 incident, amounting to US$ 78 million in accordance with the full
cost method adopted by the Company (see Note 36). In 2005, the additions mainly consisted of costs of
development and exploration and capitalization of borrowing cost. Total capitalized borrowing cost in
2006 and 2005 amounted to US$ 37.76 million and US$ 31.08 million, respectively (see Note 18). In 2004,
the acquisitions principally consisted of oil and gas properties of the newly acquired Subsidiaries, ITA,
KEL and EMP Inc., totaling US$ 149.1 million, while the additions represented costs of development and
exploration amounting to US$ 34.6 million.
The oil and gas properties, as well as inventories were insured with several third party insurance
companies, against risk of loss and damage. As of December 31, 2006, 2005 and 2004, total sums insured
were US$ 436,264,466, US$ 321,682,669 and US$ 256,546,699, respectively.
13. OTHER ASSETS

2005 2004
Security deposits 36,737,893 17,760,159 3,851,378
Post employment fund 8,783,937 9,317,744 5,954,323
Employees’ cooperative - - 4,262,458
Others 3,128,485 2,962,576 4,075,953
Total 48,650,315 30,040,479 18,144,112
30
AND SUBSIDIARIES
14. SHORT-TERM LOANS
2005 2004
Capital Manager Asia Pte. Ltd. - - 124,336,487
Suisse Charter Investment - - 15,793,000
Total - - 140,129,487
On August 4, 2004, EMP Inc. obtained an unsecured short-term loan from Capital Management Asia Pte.
Ltd., a related party, to finance the acquisition of 100% shares in BP Exploration (Kangean) Ltd. and BP
Kangean Ltd. amounting to US$ 14.85 million. The loan bears interest at a rate of 15.5% per annum,
which was initially due in three (3) months after loan availability but could be extended up to a maximum
of three (3) years.
On November 3, 2004, EMP Inc. obtained a loan from Suisse Charter Investment amounting to US$ 3
million with an interest rate of 8.25% per annum. The loan was due on February 11, 2005.
Both loans were fully paid in 2005.
15. TRADE PAYABLES
a. By Creditors
2005 2004
Third parties
PT Jasa Karya Utama 66,706,631 106,685,596 83,692,855
PT Indoturbine 45,432,030 2,467,350 -
PT Wijaya Karya 40,759,574 - -
PT Duta Energi Semesta 33,784,869 23,561,673 1,149,805
PT Halliburton Indonesia 30,536,453 3,534,314 -
PT Halliburton Logging Service Indonesia 29,090,457 418,470 1,100,493
PT Dwi Prima Sembada 20,356,875 23,451,657 -
PT Batam Dwi Karya 19,885,609 - -
PT Sarana Adikarya Utama 11,164,307 - -
PT Baruna Raya Logistic 10,758,335 - -
PT Pilar Dwi Perkasa 10,369,960 - -
Ficorinvest 9,269,491 - -
PT Dowell Anadrill Schlumberger 8,557,612 - -
PT Indal Steel Pipe 8,208,480 - -
31
AND SUBSIDIARIES
15. TRADE PAYABLES (Continued)
2005 2004
Promatcon Tepatguna - Aquanur
Sinergindo 8,181,290 - -
PT Unichem Candi Industri 8,162,350 - -
PT Inti Brunel Teknindo 7,976,488 - -
PT Perdana Karya 7,552,979 898,210 1,084,366
PT Supraco Indonesia 7,271,774 1,292,322 -
Medici Citra Nusa 7,254,535 - -
Alton Internasional Indonesia 7,077,583 - -
Baker Atlas Indonesia 6,557,110 - -
PT Apexindo Pratama Duta Tbk. 6,106,810 - -
PT Nana Yamano Technik 5,706,741 - -
PT Kutilang Paksi Mas 4,809,599 - -
PT Indopenta Bumi Permai 4,706,995 - -
PT Schlumberger Geophysics Nusantara 4,462,472 564,529 4,035,251
PT Pacific Mitra Bersama 4,365,680 - -
PT Wira Insani 4,096,686 - -
PT Jaya Wijaya Raya 1,918,097 - 8,127,849
Exxonmobil Oil Indonesia Inc. - 23,381,786 -
Jsl Jet Drilling - 20,077,293 -
PT Daya Alam Tehnik Inti - 4,484,855 -
PT Singgar Mulia - 4,218,669 -
Others (below Rp 4 billion each) 153,888,254 51,478,277 43,169,587
Total 594,976,126 266,515,001 142,360,206
b. By Age Category
2005 2004
Up to 30 days 138,348,060 137,518,146 41,772,846
Over 31 - 60 days 164,305,628 6,358,813 3,447,743
Over 60 days 292,322,438 122,638,042 97,139,617
Total 594,976,126 266,515,001 142,360,206
32
AND SUBSIDIARIES
15. TRADE PAYABLES (Continued)
c. By Currency
2005 2004
US Dollar 518,876,546 251,392,271 131,982,343
Rupiah 76,099,580 15,122,730 10,377,863
Total 594,976,126 266,515,001 142,360,206
Credit terms for the purchase of goods and services, both from local and foreign suppliers, ranged from
30 to 90 days.
16. OTHER PAYABLES
2005 2004
Overlifting 19,913,289 - 3,190,651
Interests 15,820,000 47,475,614 7,396,999
Take or pay 2,122,669 14,016,952 28,887,236
Others 4,675,819 4,423,500 19,168,977
Total 42,531,777 65,916,066 58,643,863
Overlifting represents liability to BPMIGAS and Pertamina on differences between lifting of oil and gas
and the Subsidiaries’ entitlement.
Take or pay liabilities represent payments received by EEKL and EKL from PT Perusahaan Gas Negara
(Persero) Tbk (PGN) in 1999 and 2000 arising from underlifting of natural gas volumes based on the
provision of the gas sales agreement between EEKL, EKL and PGN. Since 2005 such liabilities were
paid through deduction from the invoice amount EEKL and EKL to PGN.
Interest payable mostly represents accrued interest on loan of Semco, a Subsidiary, from PT Danatama
Makmur, PT Bakrie Investindo and PT Bakrie Capital Indonesia. The principal loan was transferred to
PT Hartindo Adi Kencana, whereafter based on the restructuring and debt acknowledgement agreement,
the loan was taken over by MAM.
33
AND SUBSIDIARIES
17. ACCRUED EXPENSES
2005 2004
Drilling 235,550,587 121,041,128 19,287,043
Production and material 139,991,306 166,103,383 14,044,092
Interest and financing charges 57,457,433 40,992,784 48,212,443
Support cost 43,422,487 48,894,125 30,259,448
Geological and geophysical 13,016,097 5,514,421 2,684,671
Professional fee 1,409,698 1,191,093 2,639,897
Project 8,271,333 5,698,971 1,977,655
Employee salaries and benefits 53,866 5,168,821 14,988,365
Others 1,541,604 3,552,833 2,385,149
Total 500,714,411 398,157,559 136,478,763
Accrued production and drilling represents expenditure for development of oil and gas facilities and
integrated drilling service and offshore drilling in Rancak, Ngimbang and Sepanjang areas in the Kangean
PSC Block.
Accrued interest mostly represents accrued interest on long-term loans (see Note 18).
18. LONG-TERM LOANS
2005 2004
Credit Suisse (US$ 427.75 million in 2006,
US$ 225.75 million in 2005 and
US$ 85.35 million in 2004) 3,858,305,000 2,219,122,500 792,901,453
Merrill Lynch (US$ 120 million) 1,082,400,000 1,179,599,995 -
PT Bank Niaga Tbk 1,211,042 1,844,052 -
PT Bank Permata Tbk 421,235 547,757 -
PT Bank International Indonesia Tbk 162,106 - -
PT Bank Mandiri (Persero) Tbk
(US$ 27.69 million in 2004) - - 257,284,042
Total 4,942,499,383 3,401,114,304 1,050,185,495
Less current maturities (766,294 ) (259,353,452 ) (242,933,416 )
Long-term Loans - Net 4,941,733,089 3,141,760,852 807,252,079
34
AND SUBSIDIARIES
18. LONG-TERM LOANS (Continued)
Credit Suisse, Singapore (CS)
The loan from CS as of December 31, 2006 consists of loans obtained by EMP Inc. and Semco
amounting to US$ 275,000,000 and US$ 152,750,000, respectively.
On May 19, 2005, EMP Inc. entered into another credit facility agreement with CS, whereby CS agreed to
provide a loan of a maximum US$ 275 million, of which US$ 78.5 million was used to settle the
outstanding balance of the existing CS facility, and the remaining US$ 196.5 million was used to finance
the development of Kangean PSC Block. The loan bears interest at 7% above LIBOR per annum and is
secured by the entire EMP Inc. shares, EMP Exploration (Kangean Ltd.) shares, EMP Kangean Ltd.
shares, receivables, and sales contract of EMP Inc.’s oil and gas. The loan is due in 5 years with a 3-year
grace period.
The credit facility is divided into the following 4 drawdowns:
Amount
Drawdown Date (full amount)
First June 20, 2005 US$ 115,000,000
Second September 30, 2005 60,000,000
Third December 31, 2005 65,000,000
Fourth March 31, 2006 35,000,000
US$ 275,000,000
Interest will be paid on a monthly basis within 60 months after the first drawdown has been made, and
the principal repayment will be on a monthly basis within 24 months from the grace period.
The loan agreement relating to the above facility contains covenants that, among others, require EMP
Inc. to increase its equity amount to US$ 60 million no later than 18 months after the first utilization date
and to maintain certain financial ratios computed based on EMP Inc.’s financial statements.
On October 27, 2005, Semco obtained a credit facility from CS amounting to US$ 52.75 million to be
used as follows:
(1) repayment of Semco’s loan of US$ 19 million obtained from PT Bank Mandiri (Persero) Tbk and
IMG’s loan of US$ 7.8 million obtained from PT Bank Syariah Mandiri;
(2) funding for capital expenditures for the Operating Companies (Korinci Baru, IMG, Semco and
Costa) amounting to US$ 9 million; and
(3) funding for inter-company loan.
The loan bears interest at 5% above LIBOR for the first six (6) months, 7% above LIBOR for the
following three (3) months and 9% above LIBOR up to maturity.
The loan period is three (3) years with two installments. The first installment is due on the ninth month,
while the second installment on the thirty-sixth month, both amounting to US$ 26,375,000. The first
installment was paid on August 16, 2006.
35
AND SUBSIDIARIES

Collateral used for this credit facility is as follows:
• THP and Operating Companies’ shares.

• Receivable of IMG and Semco.
• Work contract of Operating Companies.
On August 16, 2006, Semco obtained an additional loan from Credit Suisse amounting to
US$ 126,375,000, which may only be used for the following purposes:
1. Paying fees and expenses due under the credit facility;

2. Making payments of the outstanding loan and unpaid interest obtained from loan Tranche A;
3. Deposit into the debt service account;
4. Funding for capital expenditures of THP and Operating Companies.
The loan bears interest at 5% above LIBOR for the first twelve (12) months and 9% above LIBOR up to
the maturity date.
The total loan will be due on August 15, 2008.
• First ranking pledge of 100% of the issued share capital of the following: THP, Korinci Baru, Bentu,
IMG, Semco and Costa (THP and Operating Companies);
• Corporate guarantees of THP and Operating Companies;
• Work contracts of Operating Companies;
• Irrevocable payment instructions in relation to payments under all existing and future contracts from
Operating Companies;
• Assignment of all proceeds of insurance policies and reinsureance policies maintained by or on behalf
of each of THP and Operating Companies where the beneficiary is THP or Operating Companies;
and
• Security over bank accounts, assignments of dividends and irrecovable payment instructions over
dividends from the Subsdiaries.
On August 3, 2004, EMP Inc. obtained a credit facility from CS amounting to US$ 95 million to finance
the acquisition of 100% shares in BP Exploration (Kangean) Ltd. and BP Kangean Ltd. (see Note 4). The
loan is secured by the receivables (see Note 6) and shares of EMP Inc. and bears interest at 6% above
LIBOR per annum and shall be payable in 60 monthly installments commencing from the date of its
availability. This loan was fully paid on May 19, 2005.
Merrill Lynch, Singapore (ML)
On July 27, 2005, MBF obtained a credit facility, Equity Collateralized Leveraged Securities (ECOLES)
that consists of Series A Notes & Series B Notes from Merrill Lynch, Singapore (as placing agent)
amounting to US$ 120 million to be used as follows:
- payment for the LBI loan from PMA Investment Advisory Ltd. and ITA’s loan from PT Bank
Mandiri (Persero) Tbk;
- funding for the development and exploration of oil and gas fields in Malacca Straits PSC Block and
Brantas PSC Block; and
- funding for the operations of ITA, LBI and KPSA.
36
AND SUBSIDIARIES
Series A Notes of US$ 25 million and Series B Notes US$ 95 million bear interest at 8.5% above LIBOR
and at 8% above LIBOR, respectively. Notes will mature on July 2, 2008 with three (3) monthly interest
payments starting October 27, 2005.
- Corporate guarantees from ITA, LBI and KPSA.

- Stocks, directly or indirectly owned by the Company.
- Collection Accounts, Debt Service Account, and Reserve Account.
- Receivables of ITA, LBI and KPSA.
- Inter-company loan between MBF with ITA, LBI dan KPSA
- Proceeds of claim of insurance in reference to operational obstacles in Malacca Straits PSC Block and
Brantas PSC Block.
MBF entered into Stock Appreciation Rights (SAR) agreement that includes a Call Option with the
holders of Series B Notes. The call option will be paid in cash by MBF for the difference between the
Settlement Price and the Company’s basic share price (based on the weighted average price of shares
during the 20 days prior to the issuance date of the notes).
Subsequently, MBF transferred the loan to ITA, LBI and KPSA based on an agreement signed by each
party on July 27, 2005. The loan received by each Subsidiary was as follows:
ITA LBI KPSA Total

Type of Loan (US$) (US$) (US$) (US$)
Tranche A 5,632,045 12,624,490 6,743,466 25,000,001
Tranche B 21,401,769 47,973,060 25,625,170 94,999,999
Total 27,033,814 60,597,550 32,368,636 120,000,000
Specific terms and conditions applying to the loan obtained by ITA, LBI and KPSA were as follows:
a. Interest date and maturity date
Type of Loan Interest Rate Maturity Date

Tranche A LIBOR plus 8.5% 36 months from the date of the agreement
Tranche B LIBOR plus 8.0% 36 months from the date of the agreement
b. Term of Repayment
The repayment will be executed at the date of maturity.
PT Bank Niaga Tbk
In 2005, the Company obtained a credit facility from PT Bank Niaga Tbk. with a maximum amount of
Rp 2.02 billion to be used for the purchase of Company vehicles. The loan bears interest at 6.93% -
9.62% per annum and is collateralized by the vehicles. The loan will be paid on a 36 monthly installment
basis.
37
AND SUBSIDIARIES
PT Bank Permata Tbk
On February 8, 2005, IMG obtained a credit facility from PT Bank Permata Tbk. for the purchase of
Company vehicles. The loan bears interest at 8.8% per annum over its 5-year period.
PT BII Finance Center and PT Bank Internasional Indonesia Tbk (BII)
On February 1, 2006, the Company obtained a loan facility from BII for the purchase of Company
vehichles. This loan bears interest at 10.5% per annum over its 36-month period.
PT Bank Mandiri (Persero) Tbk
In 2002, ITA, a Subsidiary, obtained a credit facility from Bank Mandiri with a maximum credit of
US$ 12.25 million at an interest rate of 9% per annum, which was used to take over the working interests
of Novus Petroleum in Block Malacca Straits. It is collateralized by the working interest of ITA and
KPSA in the Malacca Straits Block, sales of oil of ITA and KPSA, and personal guarantees by Rennier
Abdul Rachman Latief and Julianto Benhayudi. Based on the letter from PT Bank Mandiri (Persero) Tbk
dated February 28, 2003, the maximum credit has been changed to US$ 11.88 million. The loan is paid on
a three-monthly installment basis and will become due on December 31, 2007. The loan has been fully
paid, as ITA received a loan from MBF on July 27, 2005.
In 2004, Semco, a Subsidiary, obtained an investment credit facility from Bank Mandiri with a maximum
amount of US$ 21,000,000. The outstanding loan as of December 31, 2004 was US$ 18,314,730. The loan
was used to finance oil and gas drilling project in Semberah TAC Block, including its production facility.
The loan is to be paid on a three-monthly installment basis starting from June 2005 and will be due in
June 2008. The interest rate for the loan is 8.25% per annum.
The investment loan was collateralized by working interest, accounts receivable, corporate guarantee of
Semco and PT Hartindo Adi Kencana, personal guarantee of Indra Usmansyah Bakrie and Rennier A.R.
Latief and Semco’s time deposits amounting to Rp 5 billion. The loan has been fully paid, as Semco
obtained a loan from CS on October 27, 2005.
19. CAPITAL STOCK
Composition of the Company’s stockholders and their respective shareholdings was as follows:
2006
Number of Percentage Total
Shares of Ownership Paid-up Capital
Name of Stockholder (full amount) (%) (Rp)
PT Kondur Indonesia 4,741,855,486 32.93 474,185,548
PT Brantas Indonesia 4,088,864,035 28.39 408,886,403
Rennier Abdul Rachman Latief 446,912,286 3.11 44,691,229
Julianto Benhayudi 314,488,667 2.18 31,448,866
Public (below 5%) 4,808,692,898 33.39 480,869,289
Total 14,400,813,372 100.00 1,440,081,335
38
AND SUBSIDIARIES
19. CAPITAL STOCK (Continued)
2005
UBS AG Singapore 800,726,388 8.44 80,072,639
Public (below 5%) 3,149,281,494 33.18 314,928,149
Total 9,491,445,177 100.00 949,144,518
2004
Public:
Above 5%
Credit Suisse 1,400,000,000 14.75 140,000,000
Below 5% 1,447,433,500 15.25 144,743,350
Total 9,491,445,177 100.00 949,144,518
Based on EGMS dated February 27, 2004, as stated in deed No. 25 dated March 17, 2004 of Lena
Magdalena S.H., Notary in Jakarta, the stockholders approved the issue of 384,970,667 shares with
nominal value of Rp 100 (full amount) per share by converting the Company’s payable to Julianto
Benhayudi and Rennier Abdul Rachman Latief amounting to Rp 31,278,867 and Rp 7,218,200,
respectively.
Based on EGMS dated March 18, 2004, as stated in deed No. 36 dated March 25, 2004 of Lena
Magdalena S.H., Notary in Jakarta, the stockholders approved the issue of 4,251,263,232 shares with
nominal value of Rp 100 (full amount) per share by converting promissory notes of Rennier Abdul
Rachman Latief, BI and KI amounting to Rp 37,433,029, Rp 193,846,647 and Rp 193,846,647,
respectively.
Based on the Meeting Statement deed No. 40 dated March 30, 2004 of Lena Magdalena, S.H., Notary in
Jakarta, the shareholders agreed to:
• Increase the authorized capital of the Company to Rp 1,500,000,000,000 (full amount);

• Change the Company’s status from a private company to a public company;
• Conduct a public offering through the capital market of 2,850,000,000 shares, being new shares
issued;
39
AND SUBSIDIARIES
19. CAPITAL STOCK (Continued)
• Delegate to the Company’s Directors authority to conduct necessary actions in relation to the Initial
Public Offering (IPO); and
• Change the Company’s name from PT Energi Mega Persada to PT Energi Mega Persada Tbk.
The deed was approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his
Decision Letter No. C-08031 HT.01.04.TH.2004 dated April 2, 2004. The deed was accepted and
recorded in the database of the Administration System for Legal Entities Directorate General of Law
Administration Department of Justice and Human Rights of the Republic of Indonesia
No. C-08309 HT.01.04.TH.2004 dated April 7, 2004.
On May 26, 2004, the Company obtained the effective notice from the Chairman of the Capital Market
Supervisory Agency (Bapepam) regarding the public offering of 2,850,000,000 shares of the Company’s
stocks with nominal value of Rp 100 (full amount) per share, which were offered at Rp 160 (full amount)
per share.
Based on EGMS dated December 22, 2005, the shareholders of the Company approved the Rights Issue
I to the Company’s shareholders in connection with the Exercise Rights of 4,909,368,195 shares with a
nominal value of Rp 100 (full amount) per share, which were offered at Rp 770 (full amount) per share
totaling Rp 3,780,213,510,150 (full amount). The Company completed all the requirements for the Rights
Issue I on January 25, 2006.
Based on the Meeting Statement deed No. 45 dated January 25, 2006 of Robert Purba, S.H., Notary in
Jakarta, the shareholders agreed to change the Articles of Association due to the increase in the
authorized capital stock of the Company to Rp 5,500,000,000,000 (full amount).
20. ADDITIONAL PAID-IN CAPITAL
2006
Excess of Price
over Par Value of
Shares Shares Issuance Cost Amount
Issuance of 7,756,801,695 shares
of the Company through:
Initial Public Offering -
2,847,433,500 shares 170,846,010 12,425,064 158,420,946
Right Issues I - 4,909,368,195 shares 3,289,276,690 92,948,408 3,196,328,282
Total 3,460,122,700 105,373,472 3,354,749,228
40
AND SUBSIDIARIES
20. ADDITIONAL PAID-IN CAPITAL (Continued)
2005 and 2004
Excess of Price
over Par Value of
Shares Shares Issuance Cost Amount
Issuance of 2,847,433,500
(full amount) shares
through Initial Public Offering 170,846,010 12,425,064 158,420,946
21. DIFFERENCE IN VALUE FROM RESTRUCTURING TRANSACTIONS OF ENTITIES

UNDER COMMON CONTROL
2006
Difference in value
from restructuring
transactions of
Acquisition entities under
Net Book Value Cost common control
Energi Mega Pratama Inc. 238,407,446 239,420,000 (1,012,554 )
RHI Corporation 92,458,079 200,000,000 (107,541,921 )
PT Tunas Harapan Perkasa 16,449,550 2,599,869,500 (2,583,419,950 )
Pan Asia Enterprise 10,891,647 74,800,000 (63,908,353 )
PT Imbang Tata Alam (43,635,241 ) 38,400,000 (82,035,241 )
Kalila Energy Limited (537,838,356 ) 1,000,000 (538,838,356 )
Total (223,266,875 ) 3,153,489,500 (3,376,756,375 )
2005 and 2004
Difference in value
from restructuring
transactions of
Acquisition entities under
Net Book Value Cost common control
Energi Mega Pratama Inc. 238,407,446 239,420,000 (1,012,554 )
RHI Corporation 92,458,079 200,000,000 (107,541,921 )
Pan Asia Enterprise 10,891,647 74,800,000 (63,908,353 )
PT Imbang Tata Alam (43,635,241 ) 38,400,000 (82,035,241 )
Kalila Energy Limited (537,838,356 ) 1,000,000 (538,838,356 )
Total (239,716,425 ) 553,620,000 (793,336,425 )
41
AND SUBSIDIARIES
22. NET SALES
2005 2004
Mitsubishi Corporation 852,313,140 - -
PT Petrokimia Gresik (Persero) 267,694,792 297,113,791 199,091,606
PT Perusahaan Gas Negara (Persero) Tbk 225,072,572 347,801,206 292,877,933
Pertamina 143,573,505 230,833,719 5,544,734
Petro Diamond Co. Ltd. 99,487,960 - -
PT Perusahaan Listrik Negara (Persero) 51,970,565 69,734,264 49,098,920
Petrochina Int'l Java Ltd. 5,227,089 - -
PT Indogas Kriya Dwiguna 1,198,625 - -
Itochu Petroleum Co. (S) Pte. Ltd. - 595,028,961 406,212,447
BP Singapore Pte. Ltd. - 141,588,381 19,838,891
Total 1,646,538,248 1,682,100,322 972,664,531
23. COST OF GOODS SOLD
2005 2004
Production 398,452,511 429,246,875 242,206,159
Production support 389,272,269 267,589,749 151,381,025
Depreciation, depletion and amortization
(see Note 12) 336,411,311 410,968,484 205,090,495
Workover 51,476,538 54,423,727 32,027,200
Total 1,175,612,629 1,162,228,835 630,704,879
Total cost of goods sold amounting to US$ 13 million in 2004 included cost of goods sold of EMP Inc.
for the first five (5) months from the acquisition date of EKL and EEKL (see Note 4).
42
AND SUBSIDIARIES
24. OPERATING EXPENSES
2005 2004
General and administrative
Salaries, allowances and employee benefits 101,062,572 58,989,816 25,435,527
Professional fees 88,450,183 54,525,245 33,285,396
Rent 15,077,586 12,080,423 1,250,782
Representation and donation 9,745,086 4,497,338 5,872,250
Office expenses 8,166,068 13,038,346 16,378,222
Business travelling 3,695,189 5,874,857 1,567,038
Depreciation 2,344,706 1,429,878 -
Bank charges 749,232 2,387,026 191,021
Provision for doubtful accounts - 4,015,977 -
Management service - 2,058,428 36,991
Others (below Rp 500 million) 4,070,311 24,295,399 9,436,039
Total 233,360,933 183,192,733 93,453,266
25. OTHER INCOME (CHARGES)
a. Financing Charges
2005 2004
Interests and financing charges 293,907,633 240,785,485 61,043,661
Others 10,380,361 8,719,781 1,993,346
Total 304,287,994 249,505,266 63,037,007
b. Income from Insurance Claim
On January 27, 2006, EKL and EEKL, Subsidiaries, received the insurance claim from PT Tugu
Pratama Indonesia amounting to Rp 56,438,666 (US$ 6,158,737) in relation to damage to the pipeline
in the Pagerungan field in the North Bali Sea in 2002.
43
AND SUBSIDIARIES
26. TAXATION
a. Prepaid tax
This account represents value added tax - net
b. Tax payable
2005 2004
Corporate income and dividend tax 64,589,674 66,763,107 101,875,459
Income tax
Article 4 (2) 131,949 160,706 928,032
Article 21 18,994,186 8,423,787 5,017,287
Article 23 34,354,084 7,835,728 8,251,044
Article 26 15,977,356 8,176,612 -
Interest and Tax Penalty 31,118,991 - -
Value Added Tax 31,645,910 45,206,895 4,968,960
Total 196,812,150 136,566,835 121,040,782
KEL and PAN owns 84.24% shares and 15.76% shares, respectively, in Lapindo Brantas Inc. (LBI).
LBI established and domiciled in Delaware, United States of America (USA) and LBI has an
obligation to calculate, pay and file the corporate income tax return to US Tax Authority under US
Tax Laws. LBI has not filed its 2005, 2004 and 2003 annual corporate income tax returns due to the
adjustments made in respect to operating expenses that pertained to capitalization and amortization
of deferred cost pior to 2003. Due to the delay, LBI has appointed an independent US Tax advisor to
calculate the tax liability and estimation of interest and tax penalty.
The LBI’s estimated income tax liability for years 2006, 2005 and 2004 is US$ nil million, US$ 0.9
million and US$ 1.3 million. As of December 31, 2006 the estimated interest and penalty is
US$ 3,449,999 (Rp 31,118,991). These amounts were included in the consolidated financial
statements.
Until 2004, EKL has been registered as United Kingdom (UK) and USA tax residents. However,
since January 1, 2005 has revoked its UK tax domicile and EKL only registered as USA tax resident.
In 2003, EEKL and EKL recognized dividend tax in Indonesia at the rate of 10%, and recognized
the under-provision of US$ 9,550,099 and US$ 5,476,627, respectively for the period from 1998 to
2002. An accrual of US$ 4,512,408 and US$ 2,801,372 for penalties in relation to the late payments of
such dividend tax as of June 30, 2004 was recognized by EEKL and EKL, respectively. EEKL and
EKL did not calculate any penalty for the period starting July 2004 to December 31, 2006 (see
Note 4). Estimated income tax expense for EEKL and EKL was amounting to US$ nil as of
December 31, 2006.
RHI has no taxable income, hence the management believes that RHI has no tax liability as of
December 31, 2006.
44
AND SUBSIDIARIES
26. TAXATION (Continued)
The estimated income tax of LBI, EKL and RHI assumes that the US IRS will accept such
recalculation. The estimated income tax could be different, should the IRS disagree with such
assumption and calculation.
MBF and EMP Finance are registered in the Netherlands.
MBF tax consultants calculated the current tax liability to be US$ nil as of December 31, 2006, 2005
and 2004.
EMP Finance has not yet started its operations and hence the management believes that EMP
Finance has no tax liability as of December 31, 2006.
c. Tax Benefit (Expense)
Details of tax benefit (expense) of the Company and its Subsidiaries were as follows:
2005 2004
Current tax
Subsidiaries (39,050,544 ) (53,519,047 ) (97,828,649 )
Deferred tax
Subsidiaries 171,451,576 106,839,148 (54,323,389 )
Company 66,515,790 15,133,606 2,449,673
Sub-total 237,967,366 121,972,754 (51,873,716 )
Total 198,916,822 68,453,707 (149,702,365 )
d. Current Tax
Reconciliation between income before tax as shown in the consolidated statements of income and
estimated fiscal losses for the years ended December 31, 2006, 2005 and 2004, calculated with the
effective tax rate, were as follows:
2005 2004
Income before income tax benefit
(expense) per consolidated
statements of income 4,088,416 133,523,603 180,110,646
Deduct income of Subsidiaries before tax (228,160,137 ) (188,374,247 ) (189,225,667 )
Loss before estimated corporate income tax (224,071,721 ) (54,850,644 ) (9,115,021 )
Timing difference
Employee benefits 1,433,281 1,313,128 2,351,428
45
AND SUBSIDIARIES
2005 2004
Permanent differences
Representation and donations 6,971,418 1,950,046 1,370,645
Interest income already subject to final tax (5,514,092 ) (29,853 ) (497,415 )
Others 895,089 2,485,098 76,214
2,352,415 4,405,291 949,444
Estimated fiscal loss of the Company (220,286,025 ) (49,132,225 ) (5,814,149 )
Estimated cumulative fiscal
losses beginning of year (56,306,379 ) (7,174,154 ) (1,360,005 )
Cumulative tax loss carried
forward - Company (276,592,404 ) (56,306,379 ) (7,174,154 )
e. Deferred Tax
The details of the Company and its Subsidiaries’ deferred tax assets and liabilities were as follows:
2006
Credited (charged)
Translation to Statements
January 1, Adjustments of Income December 31,
Deferred Tax Assets

Employee benefits 529,094 (323,086 ) 9,692,314 9,898,322
Fiscal loss 80,622,288 - 66,095,473 146,717,761
Depreciation, depletion
and amortization (120,320,521 ) 21,672,574 (299,133,029 ) (397,780,976 )
Non-capital inventory (5,655,606 ) 1,161,730 (67,214,898 ) (71,708,774 )
Unrecoverable charges 217,429,493 (39,492,494 ) 627,246,356 805,183,355
Total 172,604,748 (16,981,276 ) 336,686,216 492,309,688
Deferred Tax Liabilities

Employee benefits 5,115,030 (634,427 ) (1,909,915 ) 2,570,688
Depreciation, depletion and
amortization (262,331,418 ) 22,848,715 (78,428,325 ) (317,911,028 )
Non-capital inventory (40,591,221 ) 4,043,795 9,000,285 (27,547,141 )
Unrecoverable charges 22,119,517 (1,989,917 ) (27,380,895 ) (7,251,295 )
Total (275,688,092 ) 24,268,166 (98,718,850 ) (350,138,776 )
Deferred tax benefit 237,967,366
46
AND SUBSIDIARIES

2005
Credited (charged)
Translation to Statements
January 1, Adjustments of Income December 31,
Deferred Tax Assets

Employee benefits 7,216,323 (4,609,899) (2,077,330 ) 529,094
Fiscal loss 65,882,620 - 14,739,668 80,622,288
and amortization (104,993,962 ) (11,362,239 ) (3,964,320 ) (120,320,521 )
Non-capital inventory (5,631,225 ) (10,731 ) (13,650 ) (5,655,606 )
Unrecoverable charges 62,907,942 9,529,232 144,992,319 217,429,493
Total 25,381,698 (6,453,637 ) 153,676,687 172,604,748

Employee benefits 3,968,224 (457,998 ) 1,604,804 5,115,030
Depreciation, depletion and
amortization (220,543,262 ) (12,677,344 ) (29,110,812 ) (262,331,418 )
Non-capital inventory (21,765,263 ) 3,989,977 (22,815,935 ) (40,591,221 )
Unrecoverable charges - 3,501,507 18,618,010 22,119,517
Total (238,340,301 ) (5,643,858 ) (31,703,933 ) (275,688,092 )
Deferred tax benefit 121,972,754
2004
Credited (charged)
Translation Beginning Balance to Statements
January 1 Adjustments of Acquisition of Income December 31
Deferred Tax Assets

Employee benefits 4,366,805 492,553 - 2,356,965 7,216,323
Fiscal loss 17,396,875 3,412,578 - 45,073,167 65,882,620
and amortization (61,994,028 ) (7,482,082 ) - (35,517,852 ) (104,993,962 )
Non-capital inventory (1,137,476 ) (281,650 ) - (4,212,099 ) (5,631,225 )
Unrecoverable charges 93,511,535 7,566,005 - (38,169,598 ) 62,907,942
Total 52,143,711 3,707,404 - (30,469,417 ) 25,381,698

Employee benefits 1,919,109 259,560 5,989,518 (4,199,963 ) 3,968,224
and amortization (122,542,438 ) (15,296,385 ) (66,224,690 ) (16,479,749 ) (220,543,262 )
Non-capital inventory (18,876,316 ) (1,880,529 ) (594,025 ) (414,393 ) (21,765,263 )
Letter of credit service - - 310,194 (310,194 ) -
Total (139,499,645 ) (16,917,354 ) (60,519,003 ) (21,404,299 ) (238,340,301 )
Deferred tax expense (51,873,716 )
47
AND SUBSIDIARIES
f. Tax Assessment Letters
Lapindo Brantas Inc. (LBI)
Based on Tax Assessment Underpayment Letters (SKPKB) No. 00006/201/03/081/06 dated

August 8, 2006, the Directorate General of Taxation had assessed underpayment for income tax
article 21 for the year 2003 amounting to Rp 371,907,408. On October 16, 2006, LBI submitted their
objection letter No. 925/FN/CS/L06 opposing the fiscal tax correction for national benefit in kind.
On November 6, 2006, the Directorate General of Taxation issued a compulsory Letter
No. SP-0082/WPJ.07KP. 1004/2006, stating that LBI has to pay their tax underpayment.
Based on SKPKB No. 00006/201/03/081/06 dated September 1, 2006, the Directorate General of
Taxation had assessed underpayment for income tax article 21 for LBI for the year 2003 amounting
to Rp 25,430,392. On September 29, 2006, LBI submitted its objection letter No.9040/FN/CS/L06
opposing the fiscal tax correction for national benefit in kind. That objection letter was rejected by
the Directorate General of Taxation by its decision letter No. KEP-47/WPJ24/BD0303/2006 dated
December 26, 2006.
Costa International Group Ltd.
On November 28, 2006, the Directorate General of Taxation had issued SKPKB for corporate
income tax and income tax article 26 (4) for Costa for the years 1997, 1998, 2000, 2001 and 2002
totaling to US$ 8,860,992.
On February 27, 2007, Costa submitted their Objection Letter the Tax Service Office and filed the
lawsuit to the State Adminstration Court opposing such SKPKB. As of March 7, 2007, there has no
reply from the Tax Office regarding this matter.
Management believes that the Subsidiaries will have favorable outcomes from all the objection and
lawsuit proceedings.
27. BASIC EARNINGS PER SHARE
The computation of basic earnings per share is based on the following data:
Earnings
2005 2004
Net earnings used for calculation
(in full amount) 203,005,238,000 201,002,600,000 29,970,194,000
48
AND SUBSIDIARIES
27. BASIC EARNINGS PER SHARE (Continued)
Number of shares
2005 2004
(Shares) (Shares) (Shares)
Weighted average number of shares for the
calculation of basic earnings per share
(in full amount) 14,077,118,766 9,491,445,177 9,491,445,177
Basic earnings per share
(in full amount) 14.42 21.18 3.16
The Company did not calculate diluted earnings per share since the Company had no shares that had a
potential dilutive effect for the years ended December 31, 2006, 2005 and 2004.
28. PENSION PLANS AND EMPLOYEE BENEFITS
Pension plans and retirement benefit liabilities (assets) balances as of December 31, 2006, 2005 and 2004
were computed by an independent actuary in accordance with PSAK No. 24 (Revised 2004) regarding
“Employee Benefits”.
Pension Plans
The Company’s Subsidiaries (KPSA and ITA) provide defined contribution pension plans covering all
their permanent employees.
Pension plans are managed by PT Tugu Mandiri, the contribution amounting to 9% of employee’s salary,
of which 6% is paid by the Company and 3% by the employee.
Employee Benefits
The Company and its Subsidiaries provide post-employment benefits for all of its permanent employees
based on Employment Working Agreement/Company Policy. No funding has been made by the
Company and its Subsidiaries, except by KPSA and ITA, which funds are administrated and managed by
the Board of Trustees Contribution Fund of the Strait Malacca Employees Foundation and Trust Fund
Agreement with several banks.
49
AND SUBSIDIARIES
28. PENSION PLANS AND EMPLOYEE BENEFITS (Continued)

Amounts recognized in respect of these employee benefits were as follows:
2005 2004
Current service cost 10,512,813 8,585,833 12,977,577
Interest cost 9,076,261 8,399,768 6,039,890
Expected return on plan assets (3,881,266 ) (3,460,705 ) (2,950,418 )
Net actuarial losses recognized 12,862,044 2,838,295 1,174,011
Past service cost (98,282 ) - 1,346,140
Total 28,471,570 16,363,191 18,587,200
The amounts included in the consolidated balance sheets, arising from the Company and certain
Subsidiaries obligations in respect of these employment benefits were as follows:
2005 2004
Present value of employee benefits obligation 99,558,046 90,236,887 83,196,310
Fair value of employee benefits plan assets (52,093,325 ) (47,720,313 ) (43,258,820 )
Funding status 47,464,721 42,516,574 39,937,490
Unrecognized actuarial loss (6,899,120 ) (17,296,514 ) (15,768,695 )
Unrecognized past service liability 83,661 - 310,194
Employee benefits obligation 40,649,262 25,220,060 24,478,989
Amounts recognized in consolidated balance sheets in respect of these employment benefits were as
follows:
2005 2004
Beginning of the year 25,220,060 24,478,989 14,737,389
Contribution (10,752,777 ) (8,634,006 ) (8,845,600 )
Benefit paid (2,289,591 ) (6,988,114 ) -
Amount charged to consolidated
statement of income 28,471,570 16,363,191 18,587,200
End of the year 40,649,262 25,220,060 24,478,989
The actuarial computations of employee benefits obligations as of December 31, 2006 and 2005 for the
Company, KPSA, LBI and EMP Inc. were prepared by PT Bumi Persada Aktuaria, an independent
actuarial firm, in its reports dated February 15, 2007 and February 1, 2006, respectively, while the
computations for the year ended December 31, 2004 for the Company, KPSA and LBI were prepared by
PT Dian Artha Tama in its reports dated February 28, 2005, February 25, 2005 and March 16, 2005,
respectively. The computations used the following assumptions:
50
AND SUBSIDIARIES
28. PENSION PLANS AND EMPLOYEE BENEFITS (Continued)
December 31, 2006, 2005 and 2004

Discount rate 10% per annum
Future salary increases 10% per annum
Mortality rate Commissioner Standard Ordinary (CSO) - 1980
Disability rate 10% of Commissioner Standard Ordinary (CSO) - 1980
Actuarial method Projected Unit Credit
Resignation rate Old 18-45 = 1% per annum and old > 46 = 0%
Normal retirement age 56 years (all employees are assumed to retire
at normal retirement age)
The actuarial computations of employee benefits obligation for December 31, 2006, 2005 and 2004 for
Costa were prepared by PT Dian Artha Tama, an independent actuarial firm, in its reports dated
January 22, 2007, February 13, 2006 and August 11, 2005, respectively. The computations used the
following assumptions:
December 31, 2006, 2005 and 2004

Mortality rate Commissioner Standard Ordinary (CSO) - 1980
Disability rate 0,1% of Commissioner Standard Ordinary (CSO) – 1980
Actuarial method Projected Unit Credit
Resignation rate Old 18-45 = 1% per annum and old > 46 = 0%
Normal retirement age 56 years (all employees are assumed to retire
at normal retirement age)
The actuarial computations of employee benefits obligation for December 31, 2006, 2005 and 2004 for
Semco were prepared by PT Padma Radya Aktuaria, an independent actuarial firm, in its reports dated
January 22, 2007, June 1, 2006 and February 10, 2006, respectively. The computations used the following
assumptions:
December 31, 2006, 2005 and 2004

Mortality rate 100% TM 12
Normal retirement age 56 years old
29. NATURE OF RELATIONSHIP AND TRANSACTIONS WITH RELATED PARTIES
Nature of relationship
a. PT Brantas Indonesia and PT Kondur Indonesia are the Company’s stockholders.
b. PT Energi Timur Jauh, Asian Worldwide Group Ltd., Global Overseas Enterprise and PT Mitra
Andalan Mandiri are companies whose management is the same as the Company.
c. Minarak Labuan Co. (L) Ltd. and Enercorp Ltd. are companies whose indirect stockholders are the
same as the indirect stockholders of the Company.
51
AND SUBSIDIARIES
29. NATURE OF RELATIONSHIP AND TRANSACTIONS WITH RELATED PARTIES

(Continued)
Transactions with related parties
In the normal course of business, the Company and its Subsidiaries entered into non-trade transactions
with related parties, mainly advance payments and payment of expenditures on behalf of related parties.
30. SEGMENT INFORMATION
Primary Segment
For management purposes, the Company and its Subsidiaries are currently organized into two (2)
business divisions consisting of trading and mining. These divisions are the basis on which the Company
and its Subsidiaries report their primary segment information.
Business segment information of the Company and its Subsidiaries was as follows:
2006
Trading Mining Elimination Consolidated
SALES
External sales - 1,646,538,248 - 1,646,538,248
RESULT
Segment result - 470,925,619 - 470,925,619
Unallocated expenses (233,360,933 )
Income from operations 237,564,686

Financing cost (304,287,994 )
Other income 70,811,724
Income before tax benefit 4,088,416

Tax benefit 198,916,822
Income before minority interest 203,005,238

Minority interest -
Consolidated net income 203,005,238
OTHER INFORMATION
Assets
Segment assets 5,697,723,421 10,185,969,140 (6,462,610,328 ) 9,391,082,234
Unallocated assets 492,309,688
Consolidated total assets 9,883,391,922
Liabilities
Segment liabilities (505,622,577 ) (10,222,939,728 ) 3,201,848,343 (7,526,713,962 )
Unallocated liabilities (523,499,554 )
Consolidated total liabilities (8,050,213,516 )
Capital expenditure - 2,306,565,212 - 2,306,565,212

Depreciation, depletion and amortization - 338,756,017 - 338,756,017
52
AND SUBSIDIARIES
30. SEGMENT INFORMATION (Continued)

2005
SALES
External sales - 1,682,100,322 - 1,682,100,322
RESULT
Segment result - 519,871,487 - 519,871,487

Other income 46,350,115

Tax benefit 68,453,707

Minority interest (974,710 )
OTHER INFORMATION
Assets
Segment assets 1,526,836,195 7,961,197,422 (3,324,401,107 ) 6,163,632,510
Liabilities
Segment liabilities (160,417,534 ) (7,304,984,001 ) 2,097,660,228 (5,367,741,307 )

2004
SALES
External sales - 972,664,531 - 972,664,531
RESULT
Segment result - 341,959,652 - 341,959,652

Other income (5,358,733 )

Tax expenses (149,702,365 )

Minority interest (438,087 )
53
AND SUBSIDIARIES
30. SEGMENT INFORMATION (Continued)

2004
OTHER INFORMATION
Assets
Segment assets 305,090,702 4,732,917,560 (1,570,941,822 ) 3,467,066,440
Liabilities
Segment liabilities (119,893,470 ) (3,447,444,847 ) 786,666,304 (2,780,672,013 )

Secondary Segment
The Company and its Subsidiaries are operating in two main geographical areas; domestic and
international.
Sales based on market
The following are the Company and its Subsidiaries sales based on geographical market, regardless of the
location of the production of oil and gas:
Sales based on geographical market

2005 2004
Geographical market
Domestic
East Java 549,965,017 917,390,569 541,068,458
Jakarta 144,772,130 28,092,410 5,544,735
International
Singapore 951,801,101 736,617,343 426,051,338
Total 1,646,538,248 1,682,100,322 972,664,531
54
AND SUBSIDIARIES
31. COMMITMENTS
a. Production Sharing Contract (PSC)
The Subsidiaries entered into agreements in the exploration and production of crude oil and gas
contract area based on PSC with BPMIGAS.
A summary of significant provisions of the PSC is as follows:
1. Sales
The oil and gas production shall be shared based on an agreed formula between the Subsidiaries
and BPMIGAS.
After deducting first tranche petroleum and recoverable operating cost, the Subsidiaries are
required to pay their own Indonesian income tax for the revenues from the remaining crude oil
and gas at the PSC effective rates, consisting of income tax and dividend tax.
2. Domestic Market Obligation
The Subsidiaries are required to supply the Indonesian domestic crude oil requirements
(Domestic Market Obligation - DMO) up to a certain percentage of oil production using the
market price. The Subsidiaries receive the prevailing market price per DMO barrel for the first 60
months from commencement of commercial production from each new field in each respective
contract area. After the period of 60 months, the selling price will be lower than market price.
3. Cost Recovery
Recoverable costs are distinguished between capital and non-capital costs and are recoverable
only from production revenues derived from the related contract area.
4. Compensation, Assistance and Production Bonuses
The Subsidiaries shall pay bonus and assistance to BPMIGAS for equipment and services,
ranging between US$ 500,000 - US$ 25,000,000 within 30 - 60 days after the production of
petroleum has reached between 50 million - 325 million barrels. Such bonus payments shall be
borne solely by the Subsidiaries and shall not be included in the recoverable operating costs.
5. Exclusion of Areas
The Subsidiaries have the obligation to relinquish certain areas to BPMIGAS within a certain
period based on the agreement between the Subsidiaries and BPMIGAS. This obligation shall not
apply to any part of the surface area of any field in which petroleum has been discovered.
6. Claim Insurance
Operating cost shall include premium paid for insurance normally required to be carried for
petroleum operation, together with all expenditures incurred or paid in settlement of any and all
losses, claims, damages, judgment and other expenses.
55
AND SUBSIDIARIES
31. COMMITMENTS (Continued)
7. Abandonment and Site Restoration
The Subsidiaries are required to perform an environmental baseline assessment on the contract
area at the commencement of their activities. Upon the expiration or termination or
relinquishment of part of the contract area, or abandonment of any fields, the Subsidiaries are
required to remove all equipment and installations that have been installed in the contract area,
and perform all necessary site restoration activities. As of December 31, 2006, 2005 and 2004, the
estimated site restoration liabilities amounted to US$ 11.5 million, US$ 8.4 million and US$ 5.5
million, respectively and the provision funding amounted to US$ 9.5 million, US$ 7.3 million and
US$ 5.2 million, respectively.
8. Participation
BPMIGAS shall have the right to demand from the Subsidiaries a 10% working interest in the
total rights and obligations under the PSC. In consideration for the acquisition of the 10%
working interest, BPMIGAS shall reimburse the Subsidiary an amount equal to a certain
percentage of the cumulative operating costs that the Subsidiary has incurred over a determined
period and of the amount of the bonus and assistance for procurement of equipment or services
paid to BPMIGAS as referred to in the PSC.
b. Technical Assistance Contract (TAC)
Significant provisions of the TAC applicable to the participants, including IMG and Semco,
Subsidiaries, in the contract area are as follows:
1. Entitlement to Production
Crude oil produced, net of cost recovery and investment credit is allocated at 73.2143% for
Pertamina and 26.7857% for the Subsidiaries before consideration of tax and adjustment in
domestic market obligation, if any. Pertamina’s share of production from its properties in the
TAC contract area represents the entitlement of Pertamina to a portion of the crude oil
production. Costs related to the oil production are recoverable from Pertamina.
2. Cost Recovery
The Subsidiaries will recover all operating costs out of the sales proceeds or other disposition of
the required quantity of crude oil equal in value to such operating costs with a maximum of 65%
per annum of crude oil produced and saved hereunder and not used in petroleum operations.
3. Investment Credit
The Subsidiaries are entitled to recover an investment credit amounting to 15.78% of the capital
investment of crude oil production facilities out of gross production before recovery of operating
costs and tax deductions, commencing in the earliest production year. The investment credit may
be applied to new secondary and tertiary recovery projects, but it is not applicable to "Interim
Production Schemes."
56
AND SUBSIDIARIES
4. Domestic Market Obligation
The Subsidiaries are required to supply the domestic market in Indonesia with a portion of the
share of the crude oil to which the Subsidiaries are entitled. This portion is not to exceed 25% of
the total quantity of crude oil produced from the contract area. For the initial period of sixty
months starting from the month of the first delivery of crude oil produced and saved from each
field in the contract area, the fee per barrel for the quantity of crude oil supplied to the domestic
market from each field shall be equal to the net realized Indonesian Crude Price. Subsequent to
the initial period of sixty months, crude oil production supplied to the domestic market in
Indonesia is priced at 15% of the Indonesian crude price.
Nonetheless, if for any year, the recoverable operating costs exceed the difference of the total
sales proceeds from crude oil produced minus the investment credit, the Subsidiaries shall be
relieved from this supply obligation for such year.
5. Production Bonuses due to Pertamina
Under the terms of the TAC, the Subsidiaries are committed to pay Pertamina certain production
bonuses once production of crude oil reaches the following prescribed levels:
Production bonus
Cumulative Shareable Production (US$)
3 MMBOE (Million barrels of Oil Equivalent) 50.000
As of December 31, 2006, the Subsidiaries’ production has not reached those prescribed levels.
6. Interest Recovery
Interest on loans for capital investments in petroleum operations not exceeding the prevailing
commercial rates for capital investments in petroleum operations may be recovered as a
component of operating costs with the approval of Pertamina.
7. Overhead Allocation
General and administrative costs, other than direct charges may be allocated from an affiliate
company. Pertamina must approve the method employed to allocate affiliate overhead costs.
8. Signature Bonus Costs
Signature and commercial production bonus costs are not recoverable under the TAC agreement.
Signature bonus costs represent the signature bonus paid to Pertamina under the terms of the
TAC.
57
AND SUBSIDIARIES
c. Agreement with PT Energi Timur Jauh (ETJ)
KPSA, IMG, Semco, Costa, Bentu and Korinci Baru, the Subsidiaries, appointed ETJ as operational
and administrative coordinator, provider of general and administrative assistance and as cash manager
for the period commencing on August 1, 1998 until July 31, 1999, which shall be automatically
extended unless terminated by either party.
Based on the agreement, ETJ shall assist Subsidiaries in keeping the required books of accounts and
other records applicable in Indonesia for oil and gas industries. ETJ shall also deliver to Subsidiaries a
monthly report of operational and administrative matters and activities and provide access to duly
authorized parties of Subsidiaries to examine or inspect the books of accounts and records prepared
by ETJ. ETJ was also appointed as cash manager and authorized signatory in respect of each of
Subsidiaries’ bank accounts, without limitation, in making payment of expenditures on behalf of
Subsidiaries. ETJ shall arrange the use of Subsidiaries’ funds as necessary and use any of Subsidiaries’
money being managed by ETJ to fund expenditures of other related parties having a similar
agreement with ETJ as deemed necessary. ETJ shall also maintain separate and individual clean
records of the inter-company payables and receivables status of Subsidiaries and update them on a
regular basis.
All costs and expenses incurred by ETJ in relation to the above mentioned purposes shall be
chargeable to Subsidiaries. All interest arising from Subsidiaries’ funds in ETJ’s bank account shall be
credited to Subsidiaries.
d. Financial Advisory and Financial Management
Based on the agreement between PI and MBF dated July 28, 2005, MBF appointed PI in connection
with the general strategic and financial planning activities of MBF in respect to funding MBF’s capital
expenditure. PI will provide advisory services and financial arrangement to MBF. In accordance with
the agreement PI will arrange to channel MBF funds received from its creditors to other companies
within the Company’s group.
The period of agreement shall be one (1) year from the date of signing of the agreement.
e. Agreement with PT Perusahaan Listrik Negara (PLN)
On May 17, 2005, Bentu entered into an agreement with PLN whereby Bentu will supply gas to PLN.
The gas supplied will originate from the Bentu PSC and Korinci Baru PSC fields. This agreement
shall be effective when the following conditions precedent have been fulfilled:
• Bentu has signed the Seller Appointment Agreement with BPMIGAS,
• Bentu has signed the Trustee and Paying Agent agreement with BPMIGAS for transactions in
regard to this agreement, and
• PLN has obtained the approval from its shareholders to carry out this agreement.
The agreement shall be effective until July 15, 2020 or when the volume of gas supplied has reached
146 BCF (Billion Cubic Feet), whichever occurs earlier.
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Since approval from PLN’s shareholders to carry out the agreement had not yet been received, on
August 1, 2006, Bentu and PLN signed the Mutual Agreement on Delivery and Taking of the Gas.
The Mutual Agreement stated, among others, that since July 15, 2006 or on any other agreed date,
Bentu based on the reasonable endeavor principle will deliver the gas in the the daily delivery amount
in accordance with the nominations agreed by both parties up to December 31, 2006 or until the
conditions precedent have been met, whichever occurs earlier.
f. The Subsidiaries’ Sale and Purchase Gas Agreements
On December 2005, the Subsidiaries, EMP Kangean Ltd. and EMP Exploration (Kangean) Ltd.,
entered Sales and Purchase Gas Agreement with:
a. PT Perusahaan Listrik Negara (Persero) in the amount of 368.7 TBTU, which shall end on
December 31, 2024;
b. PT Perusahaan Gas Negara (Persero) in the amount of 6.38 TBTU, which shall end on June 30,
2007;
c. PT Petrokimia Gresik (Persero) in the amount of 241.86 BSCF, which shall end on
December 31, 2015;
d. PT Pembangkitan Jawa Bali in the amount of12.99 BBTU, which shall end on September 30,
2007;
e. Perusahaan Pertambangan Minyak dan Gas Bumi Negara in the amount of 221 TBTU, which
shall end on December 31, 2016; and
f. PT Indogas Kriya Dwiguna in the amount of 79.2 TBTU, which shall end on December 31,
2017.
g. Joint Operating Agreement (JOA)
In 1985, Japan Petroleum Exploration Co., Ltd. (Japex) approved the JOA. Under the JOA, Costa as
the successor of Japex and Japan North Sumatera (JNS), as the assistant operator of the Joint
Operating Body, (Gebang) (JOB-G) will recover its participating interest share of all operating costs
and one half (1/2) of the amount of the reimbursement having been made by Costa pursuant to the
reimbursement out of the sale proceeds or other disposition of the required quantity of its
participating interest share of crude oil equal in value to such operating cost and reimbursement that
is produced and saved and not used in the petroleum operation.
The intent is that the Operator shall neither have gain nor loss as a result of being the assistant
operator that wholly finances the JOB-G activities.
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32. CONTINGENT LIABILITIES
The Company and its Subsidiaries’ operations are subject to Indonesian laws and regulations
governing relating to environmental protection. These laws and regulations may require the
acquisition of a permit before drilling commences, which may restrict the types, quantities and
concentration of various substances that can be released into the environment in connection with
drilling and production activities, limit or prohibit drilling activities in certain lands lying within
wilderness, wetlands and other protected areas, require remedial measures to prevent pollution
resulting from the Company and Subsidiaries’ operations. The Government has imposed
environmental regulations on oil and gas companies operating in Indonesia and in Indonesian waters.
Operators are prohibited from allowing oil into the environment and must ensure that the area
surrounding any onshore well is restored to its original state insofar as this is possible after the
operator has ceased to operate on the site.
Management believes that the Company and its Subsidiaries are in compliance with current applicable
environmental laws and regulations.
Banjar Panji Incident
The Company considers the following as contingent liabilities as of December 31, 2006:
• The Company has recognized a provision for probable losses of Banjar Panji-1 incident based on
an estimate (see Note 36). As the mud flow is currently still continuing and due to the complexity
of the ongoing issue, the ultimate outcome of the measures that are being and will be undertaken
to handle the incident is currently still uncertain. Due to these uncertainties, the estimate was
made upon certain assumptions based on information currently available, which upon resolution
of the uncertainties may ultimately need to be revised and may result in ultimate costs that may
differ significantly from those presently estimated.
• All costs incurred relating to the incident are accounted for as recoverable from the Government
based on the Production Sharing Contract (“PSC”) of the Brantas Block. Given the extraordinary
nature of the incident, the Government may not approve the cost recovery requests from LBI, in
which case, the matter could be disputed through a court proceeding. As of March 7, 2007, LBI
has not filed costs recovery relating to this incident to the Government.
• Based on the Joint Operating Agreement all costs incurred are to be shared with the other
partners of the Block, namely PT Medco E&P Brantas (“Medco”) and Santos Brantas Pty. Ltd.
(“Santos”), according to their respective working interest holdings. In connection with this on
October 13, 2006, Medco filed arbitration before the American Arbitration Association against
LBI, in which Medco seeks to be excused from its obligation to pay its participating share of the
costs associated with the BJP-1 incident, plus recover its attorney’s fees and costs related to the
arbitration. The amount Medco is seeking to avoid paying is presently in the US$ 10 million. LBI
filed its answer on December 22, 2006 denying Medco’s claims and asserting certain
counterclaims including disparagement of reputation, failure to meet payment obligations under
the Joint Operating Agreement governing operation on the Brantas Block, and breach of
contractual confidentiality obligations. As of the date of this report, the arbitration process is still
ongoing.
• The Company is currently undergoing an investigation by the Authorities on the possibility of the
occurrence of willful misconduct and/ or negligence by a person(s) that caused the mudflow
and/ or caused pollution and/or environmental damages.
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AND SUBSIDIARIES
32. CONTINGENT LIABILITIES (Continued)

• On December 8, 2006, Yayasan Lembaga Bantuan Hukum Indonesia (YLBHI) has filed a lawsuit
to the Central Jakarta District Court (the Court) under the Negligent Tort against several parties
including LBI. As of March 7, 2007, no decision has yet been rendered by the Court regarding
the case filed.
• Due to the large scale impact of the incident, it is probable that the costs of the containment of
mud in BJP-1, as well as costs that may be incurred arising from social, economic and legal
liability associated with the incident are beyond the financial capability of LBI. Management is of
the opinion that, with LBI being a limited liability company established in Delaware, U.S.A., the
shareholders and the ultimate shareholders of LBI will not be held liable for LBI’s debts and
obligations or for the consequences of LBI’s actions, unless final and binding judgment of the
court of law decides otherwise, in which case, a court of competent jurisdiction would have to
find, based on a preponderance of the evidence, that the Company has engaged in unlawful
conduct.
The lawsuit filed against the Company and its Subsidiaries which were disclosed in the paragraph 7
were based on lawsuit filed as of March 7, 2007 as confirmed by the Company’s independent legal
consultant.
Lawsuits and class actions against LBI may arise if LBI fails to settle potential obligation to residents
pursuant to its public commitments and or fails to pay certain damages due to losses incurred by
businesses relating to the BJP-1 incident. As of March 7, 2007, LBI has been working to meet,
negotiate and settle claims to prevent the possibility of a lawsuit or class action suit.
It is not currently possible to determine the impact of the above contingent liabilities on the
Company. Management of the Company and LBI are of the opinion that the ultimate outcome of the
above cases will be favorable to LBI and to the Company.
33. OPERATING HAZARDS AND UNSECURED RISKS

The Company and its Subsidiaries’ operations are subject to hazards and risks inherent in drilling for and
production and transportation of natural gas and oil, such as fires, natural disasters, explosions,
encountering formations with abnormal pressures, blowout, cratering, pipeline ruptures and spills, and
which can result in the loss of hydrocarbons, environmental pollution, personal injury claims and other
damage to properties of the Company and its Subsidiaries. Additionally, certain natural gas and oil
operations of the Company and its Subsidiaries’ are subject to tropical weather disturbances, some of
which can be severe enough to cause substantial damage to facilities and possibly interrupt production. As
protection against operating hazards, the Company and its Subsidiaries maintain insurance coverage
against some, but not all for the potential losses. The Company and Subsidiaries’ coverage for the oil and
gas exploration and production activities include, but is not limited to, loss of wells, blowouts and certain
cost of pollution control, physical damage on certain assets, employer’s liability, comprehensive general
liability, automobile and worker’s compensation.
The Company and its Subsidiaries maintain coverage for their drilling rigs, equipment and machinery for
their replacement value and insure against third party liability and worker’s compensations. However, they
do not insure these assets against business interruption or loss of revenues following damage to or loss of
a drilling rig, except in respect of an offshore rig where a term of the refinancing for such rig is that
insurance coverage be in place for the benefit of the lender.
(See Note 36 for the related disclosures.)
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AND SUBSIDIARIES
34. ABANDONMENT AND SITE RESTORATION OBLIGATIONS
Under the renewal and extension of PSC signed by Kondur Petroleum S.A. - IJV, and EMP Kangean Ltd.
- IJV with BPMIGAS, the Subsidiaries are required to provide for abandonment of all exploration wells
and the restoration of their drill sites, together with all estimates of money required for the funding of any
abandonment and site restoration program established in conjunction with an approved plan of
development for a commercial discovery. Expenditures incurred in the abandonment of exploratory wells
and the restoration of their drill sites shall be charged as operating cost in accordance with PSC,
calculated based on the total estimated cost of abandonment and site restoration for each discovery
divided by the total estimated number of economic years of each discovery. The estimates shall be
reviewed on an annual basis and shall be adjusted each year as required.
35. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
As of December 31, 2006, 2005 and 2004 the Company and its Subsidiaries had monetary assets and
liabilities denominated in foreign currencies as follows:
December 31, 2006 December 31, 2005 December 31, 2004
Foreign Foreign Foreign

Currency Equivalent in Currency Equivalent in Currency Equivalent in
(full amount) Rupiah (full amount) Rupiah (full amount) Rupiah
Assets
Cash on hand and in
banks US$ 93,737,931 845,516,136 29,134,817 288,418,183 1,940,404 18,026,355
HK$ - - 39,755 50,410 4,355 5,091
Euro 6,884 81,635 10,965 127,851 - -
Restricted time
deposits US$ 14,062,818 126,846,622 20,438,985 200,915,225 7,888,946 73,288,308
Trade receivables US$ 35,535,558 320,530,734 29,145,866 286,503,862 12,090,155 112,317,540
Other receivables US$ 57,649,239 519,996,133 23,572,952 231,722,121 15,227,761 141,465,901
Abandonment and
site restoration
fund US$ 9,494,992 85,644,826 7,296,826 71,727,804 5,199,395 48,302,380
Total Assets 1,898,616,086 1,079,465,456 393,405,575
Liabilities
Trade payables US$ 57,525,116 518,876,546 25,573,985 251,392,271 14,206,926 131,982,343
Short-term loans US$ - - - - 15,083,906 140,129,487
Other payables US$ 11,540,849 104,098,462 6,643,310 65,303,738 4,184,481 38,873,826
Accrued expenses US$ 87,349,375 787,891,364 40,290,698 396,057,565 14,285,471 132,712,026
Subsidiaries’ dividen
tax liability US$ 22,044,678 198,842,992 22,044,678 216,699,185 5,934,582 204,795,059
Due to related parties US$ 25,627,503 231,160,075 78,790,229 774,507,950 113,059,713 1,050,324,734
Long-term loans US$ 547,750,000 4,940,705,000 345,750,000 3,398,722,495 113,044,725 1,050,185,495
Site restoration
obligation US$ 11,494,992 103,684,829 8,448,052 83,044,347 5,501,846 51,112,149
Total Liabilities 6,885,259,268 5,185,727,551 2,800,115,119
Net Liabilities (4,986,643,182 ) (4,106,262,095 ) (2,406,709,544 )
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AND SUBSIDIARIES
36. OTHER SIGNIFICANT INFORMATION

Other significant information in relation to the operational activities of the Company and its Subsidiaries
is as follows:
a. Banjar Panji Incident
BJP-1 exploration well is located in the Brantas PSC in the Sidoarjo, East Java province and operated
by Lapindo Brantas Inc. (LBI), which has a 50% working interest in the PSC. The other working
interest partners are PT Medco E&P Brantas (Medco) (32%) and Santos Brantas Pty. Ltd. (18%).
On May 29, 2006, a large volume of steam, hot water and mud broached to the surface approximately
200 meters from Lapindo Brantas Inc. (LBI)’s BJP-1 exploration well. Prior to the broach, on
May 27, 2006 LBI experienced well control issues at the well, which occurred on the same day as a
6.2 Richter-scale earthquake struck Yogyakarta. Correlation between the well and the broach has not
been established. Since that date, LBI has been involved in mitigating the impacts of the mud flow to
the surrounding area and has made tremendous efforts in trying to stop the mud flow and manage
the surface impact. On September 8, 2006, the President of the Republic of Indonesia issued
Presidential Decree No. 13 pertaining to the “National Task Force to Overcome the Mudflow in
Sidoarjo,” which requires LBI, to bear all the costs incurred in overcoming the incident.
As of March 7, 2007, the relief wells were temporarily suspended due to land subsidence within the
area. On December 4, LBI issued a letter to the National Team, proposing a land settlement of
(1) Rp1 million/m2 for Land; (2) Rp 1.5 million/m2 for Buildings; and (3) Rp 120,000/m2 for Rice
Fields. The land settlement has the following conditions: (1) The agreed purchase price must first be
approved by the Regent of Sidoarjo; (2) The sale-purchase transaction can only be performed based
on the official land ownership certificates; (3) The acquisition payment will be made before a two-
year lease period ends; (4) All transactions must be carried out based on the applicable laws and
regulations (Brantas PSC, Oil & Gas law, etc.) For those people who choose and meet the criteria for
relocation, they will be relocated to Kawasan Sidoarjo Baru, a future residential area that is soon to be
developed.
LBI has appointed PT Quality Management Services (QMS) to prepare an estimate of the total costs
based on the information currently available. QMS estimate that total costs to handle the mud flow
amounted to US$ 183.7 million.
On December 22, 2006 and November 3, 2006, LBI received insurance claims from PT Tugu
Pratama Indonesia amounting to US$ 4,964,644 and US$ 4,670,971, respectively.
Total estimated obligation on probable losses amounted to US$ 63,425,599. This represents the QMS
estimated costs of US$ 183,700,000 less total costs incurred of US$ 92,784,401 and expected results
from insurance claim of US$ 27,490,000. LBI recorded such liability amounting to US$ 31,712,800,
representing its participant’s share of 50% as of December 31, 2006. On December 31, 2006, LBI
also recognized a loss on impairment of assets amounting to US$ 97,884,327, as LBI’s capitalized
costs had already exceeded the ceiling test value. On LBI’s financial statements, the loss on
impairment of assets is directly charged to the statement of income for the current year.
As the mud flow is currently still continuing and due to complexity of the ongoing issue, the ultimate
outcome of the measures that are being and will be undertaken to handle the incident is currently still
uncertain. Due to these uncertainties, the above estimation was made under certain assumptions
based on information currently available, which upon resolution of the uncertainties may ultimately
need to be revised and may result in ultimate costs that differ significantly from those presently
estimated.
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36. OTHER SIGNIFICANT INFORMATION (Continued)
The Company applies the “full cost” method, and under this method, the Cost Center is used to
"pool" costs to be later matched with revenues generated from the cost center's operations. The
Company considers a country as a single cost center in accordance with the Statement of Financial
Reporting Standard (PSAK) No. 29, and, therefore, cost centers are established on a country-by-
country basis. The full cost method regards the costs of unsuccessful acquisition and exploration
activities as necessary for the discovery of reserves. All of those costs are incurred with the
knowledge that many of the Company's prospects will not result directly in the discovery of reserves.
However, the Company expects that the benefits obtained from those prospects that prove to be
successful, together with the benefits from past discoveries will be adequate to recover the costs of all
activities, both successful and unsuccessful. Thus, all costs in acquiring, exploring, and developing
properties within one cost center (i.e. a country), including those related to the BJP-1 incident, are
capitalized when incurred and are amortized as mineral reserves in the cost center are produced,
subject to a limitation that the capitalized costs do not exceed the value of those reserves (i.e. ceiling
test). As of December 31, 2006, there was no excess cost over the ceiling test that should be charged
as an expense in the consolidated statements of income.
As of March 7, 2007, the management has not been able to determine the ultimate outcome of all the
measures to be undertaken before the incident is completely overcome, and therefore, could not
determine the contingency provisions that provide all costs relating to BJP-1. As information
becomes known, further loss contingency provisions, if any, may be established, and these may create
excess costs over the ceiling test that should be charged to consolidated statement of income in the
year in which they become known.
b. Spin-off plan
On October 20, 2006 and November 6, 2006, the management of the Company scheduled an EGMS
to obtain the shareholders’ approval for the LBI divestment to a related party company, Bakrie Oil &
Gas Ltd. The LBI divestment plan was proposed by the Management based on the following
considerations: (1) For the best interest of the shareholders, including minority shareholders, (2) To
redirect the management’s focus towards developing the Company’s other prospective assets, (3) The
commitment of the Bakrie Group in supporting LBI to resolve the BJP-1 mudflow incident. The
Extraordinary Shareholders Meeting was cancelled, as the divestment was not approved by Bapepam
based on its Letter No. S-2560/BL/2006 dated October 20, 2006 and Letter No. S-2574/BL/2006
dated November 1, 2006.
Subsequently, on November 14, 2006, the Company signed a Share Sale and Purchase Agreement
(SPA) with Freehold Group Ltd to divest LBI. The Company’s management, supported by its legal
counsel felt that the transaction did not violate Bapepam policy No. IX.E.1, regarding conflict of
interest, and No. IX.E.2, regarding material transactions. The Company sent letters disclosing the
transaction to Bapepam and JSX on the same date. Bapepam, supported by the Ministry of Finance,
felt that the transaction was still improper, as quoted by many media in the month of November
2006. In late November 2006, Freehold Group requested the cancellation of the divestment and the
signed SPA, due to the controversy and misunderstanding surrounding the transaction. The
Company notified the Jakarta Stock Exchange and Bapepam of the divestment cancellation on
November 27, 2006.
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36. OTHER SIGNIFICANT INFORMATION (Continued)
c. East Java Gas Pipeline incident
On November 22, EMP Kangean Ltd., a subsidiary shut down gas production at the Pagerungan
field in the Kangean PSC due to the rupture of the East Java Gas Pipeline (“EJGP”), which
unfortunately resulted in several fatalities and serious injuries. The EJGP failure occurred at KM 38
of the Porong - Gempol Tollway, Sidoarjo, East Java, as a result of land subsidence in the
surrounding area of the mud flow and over-burdening created by the bund-wall built along the top of
the pipeline. EJGP is the main gas transmission line connecting Pagerungan gas production facilities
(EMP Kangean) and Maleo gas production facilities (Santos) to various industries and power plants
in East Java. This pipeline is owned and operated by PT Pertamina (Persero).
On December 1, 2006 based on the BPMigas Letter No. 388/BPB0000.2006-S1, EMP Kangean
commenced supply of up to 45 MMCFD of gas using the Perusahaan Gas Negara (PGN), Porong
distribution pipeline. The gas is to be used by Gresik Petrochemical (PKG). As the PGN Porong
distribution pipeline can handle a maximum flow of 67 MMCFD gas, the remaining 22 MMCFD gas
is being supplied by the Santos Maleo field.
37. SUBSEQUENTS EVENTS
a. New Shares Subscription on EMP Inc.
On March 6, 2007, the Company has signed binding agreements with Mitsubishi Corporation
(Mitsubishi) and Japan Petroleum Exploration Co., Ltd. (Japex) wherein Mitsubishi and Japex will
assume new subscription shares in EMP Inc. Based on these agreements, Mitsubishi and Japex will
assume, in aggregate, an indirect 50% working interest in the Kangean PSC block, as well as agreeing
to carry a substantial portion of the remaining development capital expenditure for Kangean PSC
block. The total subscription proceeds from this transaction will amount to US$ 360 million.
The proposed transaction is a material transaction and is subject to the approval of Bapepam and the
majority of the Company’s shareholders at EGMS.
The proposed transaction involves Mitsubishi and Japex subscribing for new shares in EMP Inc. to
dilute the Company’s current 100% shareholding to 50%.
The aforementioned Subsidiary’s financial statements as of and for the year ended December 31,
2006 were consolidated into the Company’s consolidated financial statements based on its 100%
ownership. The pro forma summary of the consolidated financial statements of the Company if the
proposed transaction is applied as of December 31, 2006 were as follows:
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AND SUBSIDIARIES
37. SUBSEQUENTS EVENTS (Continued)
Proforma Summary
Consolidated
Financial Statements
Current assets 2,895,884,644
Non-current assets 5,777,151,844
Total assets 8,673,036,488
Current liabilities 756,439,143
Non-current liabilities 4,806,813,761
Total liabilities 5,563,252,904
Equity 3,109,772,225
Net sales 1,402,895,022
Net Income 48,972,279
b. Receipt of Insurance Claim of LBI
On March 5, 2007, LBI received its remaining BJP-1 insurance claim from PT Tugu Pratama
Indonesia amounting to US$ 15,364,385 of the total LBI claim of US$ 25,000,000. Therefore, all
insurance claims of BJP-1 have been received by LBI.
38. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its Subsidiaries have been approved for release
by the Boards of Directors and Commissioners on March 7, 2007.
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SUPPLEMENTARY INFORMATION (UNAUDITED)
DECEMBER 31, 2006, 2005 AND 2004
RESERVE ESTIMATION
The following information on gross proved developed, undeveloped and probable reserve quantities are estimates only, and do not purport to reflect realizable values
or fair market values of Subsidiaries’ oil and gas reserves. The Subsidiaries emphasize that reserve estimates are inherently imprecise; accordingly, these estimates are
expected to change as future information becomes available. There are numerous uncertainties inherent in estimating oil and gas reserves including many factors
beyond the control of the Subsidiaries.
Management believes that the reserve quantities shown below are reasonable estimates based on available engineering and geological data, as follows:
Malacca 1) Brantas 2) Kangean 3) Gelam 4) Semberah 5) Gebang 6) Korinci 7) Bentu 8)

Gas and Gas and Gas and
Crude Oil Crude Oil *) Condensate *) Crude Oil Crude Oil Crude Oil *) Gas Gas
MBOE MBOE MBOE MBOE MBOE MBOE MBOE MBOE
Proved developed, undeveloped and probable reserves
Balance as of December 31, 2003 34,745 31,724 - - - - - -
Acquisition - - 285,174 - - - - -
Revision to previous estimation 8,534 - - - - - - -
Production during the year (3,609 ) (3,936 ) (7,222 ) - - - - -
Balance as of December 31, 2004 39,670 27,788 277,952 - - - - -
Revision to previous estimation (1,736 ) 3,912 (61,167 ) - - - - -
Acquisition - - - 5,181 22,699 680 12,595 48,273
Production during the year (3,405 ) (3,126 ) (4,862 ) (65 ) (300 ) (345 ) - -
Balance as of December 31, 2005 34,529 28,574 211,923 5,116 22,399 335 12,595 48,273
Revision to previous estimation - 739 35,000 - - 882 - -
Balance as of December 31, 2006 31,177 26,935 243,435 4,993 22,233 1,021 12,595 48,273
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AND SUBSIDIARIES
DECEMBER 31, 2006, 2005 AND 2004
RESERVE ESTIMATION (Continued)
Malacca 1) Brantas 2) Kangean 3) Gelam 4) Semberah 5) Gebang 6) Korinci 7) Bentu 8)

Gas and Gas and Gas and
Crude Oil Crude Oil *) Condensate *) Crude Oil Crude Oil Crude Oil *) Gas Gas
MBOE MBOE MBOE MBOE MBOE MBOE MBOE MBOE
Proved developed and undeveloped reserves
Balance as of December 31, 2003 26,564 23,591 - - - - - -
Acquisition - - 243,530 - - - - -
Revision to previous estimation 4,211 - - - - - - -
Production during the year (3,609 ) (3,936 ) (7,222 ) - - - - -
Balance as of December 31, 2004 27,166 19,655 236,308 - - - - -

Revision to previous estimatio 107 (3,935 ) (69,584 ) - - - - -
Acquisition - - - 1,052 6,847 532 2,661 23,602
Balance as of December 31, 2005 23,868 12,594 161,862 987 6,547 187 2,661 23,602
Revision to previous estimation - 739 (23,167 ) - - 38 - -
Balance as of December 31, 2006 20,516 10,955 135,207 864 6,381 29 2,661 23,602
*) Units for gas and condensate have been converted from Billion Cubic Feet (BCF) and Million Barrels of Oil (MMBO) to Thousand Barrels Oil Equivalent (MBOE).
1) Estimated oil and gas reserves in the Malacca Block as of September 30, 2005, were certified by Gaffney, Cline and Associates (GCA), independent petroleum
engineering consultants in their report dated May 5, 2006. In preparing their report, GCA utilized generally accepted petroleum engineering principles and
definitions applicable to the proved and probable reserve categories and sub-classification by the U.S. Society of Petroleum Engineering.
2) Estimated oil and gas reserves in Brantas Block as of September 30, 2005 were certified by Gaffney, Cline and Associate (GCA), independent petroleum engineering
consultants in their report dated May 5, 2006. In preparing their report, GCA utilized generally accepted petroleum engineering principles and definitions applicable
to the proved and probable reserve categories and sub-classification by the U.S. Society of Petroleum Engineering.
3) Estimated oil and gas reserves in Kangean Block were certified by DeGolyer and MacNoughton (D&M), independent petroleum engineering consultants from
United States of America in their report dated September 30, 2004 for the Pegerungan Field and April 30, 1995 for the Terang Sirasun Batur Field (TSB). The
reserve calculation for TSB field has been revised several times, the most recent being based on the Sproule certification in their report in February 2007 for
estimated oil and gas reserves as of July 31, 2006.
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DECEMBER 31, 2006, 2005 AND 2004
RESERVE ESTIMATION (Continued)
4) Estimated oil and gas reserves in Gelam Block as of September 30, 2005 were certified by Gaffney, Cline and Associate (GCA), independent petroleum engineering
consultants in their report on February 2006. In preparing their report, GCA utilized generally accepted petroleum engineering principles and definitions applicable
to the proved and probable reserve categories and sub-classification by the U.S. Society of Petroleum Engineering.
5) Estimated oil and gas reserves in Semberah Block as of September 30, 2005 were certified by Gaffney, Cline and Associate (GCA), independent petroleum
engineering consultants in their report on March 2006. In preparing their report, GCA utilized generally accepted petroleum engineering principles and definitions
applicable to the proved and probable reserve categories and sub-classification by the U.S. Society of Petroleum Engineering.
6) Estimated oil and gas reserves in Gebang Block as of January 1, 2006 were certified by Gaffney, Cline and Associate (GCA), independent petroleum engineering
consultants in their report dated March 16, 2006. In preparing their report, GCA utilized generally accepted petroleum engineering principles and definitions
applicable to the proved and probable reserve categories and sub-classification by the U.S. Society of Petroleum Engineering.
7) Estimated oil and gas reserves in Korinci Block as of September 2005 were certified by Malkewicz Hueni Associate (MHA), independent petroleum engineering
consultants in their report dated September 13, 2005.
8) Estimated oil and gas reserves in Bentu Block as of September 2005 were certified by Malkewicz Hueni Associate (MHA), independent petroleum engineering
consultants in their report dated September 13, 2005.
69
PT Energi Mega Persada Tbk. EMP Kangean Limited List of Advisers and Bankers
Wisma Mulia 33rd Floor Wisma Mulia 25th & 26th Floor
Jl. Jend. Gatot Subroto No.42 Jl. Jend. Gatot Subroto No. 4 PT Ficomindo Buana Registrar
Jakarta 12710 Jakarta 12710 - Registrar
Indonesia Indonesia Mayapada Tower 10th Floor suite 2B
Phone: 62 21 5290 6250 Phone: 62 21 2550 4880 Jl. Jendral Sudirman Kav. 28
Fax: 62 21 5290 6267 Fax: 62 21 2550 4884 Jakarta 12920
www.energi-mp.com
Surabaya Jimmy Budhi & Rekan - Auditor
Jl Raya Jemur Sari 152 Member firm of Moores Rowland
Lapindo Brantas Inc. Surabaya 60292 - Jawa Timur International
Wisma Mulia 28th Floor Indonesia Registered Public Accountants
Jl. Jend. Gatot Subroto No. 42 Phone: 62 31 841 7684/847 0596 Jl. Patimura No. 2
Jakarta 12710 Fax: 62 31 841 1339 Jakarta Selatan 12110
Indonesia
Phone: 62 21 5290 6336 Hadiputranto, Hadinoto & Partners
Fax: 62 21 5290 6335 PT Semberani Persada Oil - Legal Consultant
Wisma Mulia 29th Floor The Jakarta Stock Exchange Building,
Sidoarjo Jln. Jend. Gatot Subroto No. 42 Tower II, 21st Floor
Jl. Jend Gatot Subroto RT 07 RW 01 Jakarta 12710 Sudirman Central Business District
Dese Tebel Kec Gedangan Phone: 62 21 5290 6393 Jl. Jendral Sudirman Kav 52-53
Sidoarjo 61254 Jawa Timur Fax: 62 21 5290 6399 Jakarta 12190, Indonesia
Indonesia Tel: +62 21 5155090/91/92/93
Phone : 62 31 8912638 Fax: +62 21 5154840/45/50/55
Fax: 62 31 8912635 PT Insani Mitrasani Gelam
Wisma Mulia 23rd Floor PT Bank International Indonesia Tbk.
Wunut Jln. Jend. Gatot Subroto No. 42 - Bank
Desa Kedung Boto Jakarta 12710 Plaza BII Tower 2, 6th Floor
Kec Porong Sidoarjo 61274 - Jawa Timur Phone: 62 21 5290 5891/92 Jl. MH. Thamrin No.51
Indonesia Fax: 62 21 5290 5889 Jakarta 10350
Phone: 62 343 854604
Fax: 62 343 854603 Credit Suisse First Boston (Singapore)
Kalila (Bentu) Limited Limited - Bank
Kalila (Korinci Baru) Limited 1 Raffles Link
Kondur Petroleum S.A. Wisma Mulia 27th Floor #03/#04-01 South Lobby
Wisma Mulia 31st Floor Jln. Jend. Gatot Subroto No. 42 Singapore 039393
Jl. Jend. Gatot Subroto No. 42 Jakarta 12710
Jakarta 12710 Phone: 62 21 521 4567 PT Bank Mandiri Persero Tbk. - Bank
Indonesia Fax: 62 21 520 1313 Plaza Bank Mandiri
Phone: 62 21 5290 6100/6200 Jl. Gatot Subroto Kav.30 38
Fax: 62 21 5290 6300 Jakarta12190
Costa International Group Limited
Riau (Malacca Strait) Wisma Mulia 23rd Floor PT Bank Mega Tbk. - Bank
Desa Lukit Kec. Merbau Jln. Jend. Gatot Subroto No. 42 Kantor Cabang Pembantu Tanjung Karang
Kabupaten Bengkalis Jakarta 12710 Gedung DP MAndiri 1st Floor
Propinsi Riau - Sumatra Phone: 62 21 5214311 Jl. Tanjung Karang No.3-4a
Indonesia Fax: 62 21 52906443 Jakarta Pusat
Phone: 62 788 51245/51246/51046
Fax: 62 766 51257
www.energi-mp.com

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Annual Report

 EMP Annual Report 2006

How to read this report

Gebang JOB PSC

Gelam TAC Papua

Brantas PSC East Timor

Kangean PSC Indian Ocean

Sumatera Java and environs Kalimantan

 EMP Annual Report 2006

2006 2005 2004 2003

Oil Production (bopd)

Total Oil Production (mmboe) 3.9 3.7 3.8** 3.9

Gas Sales (mmcfd)

Total Gas Production (mmboe) 6.1 7.7 6.5** 2.9

2006 2005 2004 2003

2006 Year End Proforma Gross Reserves and Resources

(in mmboe) 1P 2P 3P Contingent Resources*

Malacca Strait PSC

Korinci Baru PSC

Gebang JOB PSC

Grand Total 201 390 670 115

 EMP Annual Report 2006

(in mmboe) 2006 2005** 2004

* best estimate ** source: 2005 Annual Report

(based on year spudded) 2006 2005 2004 2003

Malacca Strait PSC

Korinci Baru PSC

Gebang JOB PSC

* exploration includes appraisal wells

 EMP Annual Report 2006

Dear Shareholder, Notwithstanding increased demand to customers and in turn lead to a

 EMP Annual Report 2006

Dear Shareholder, The 2006 Results Banjarpanji, Sidoarjo Regency

10 EMP Annual Report 2006

12 EMP Annual Report 2006

14 EMP Annual Report 2006

16 EMP Annual Report 2006

0 40 KM Payang Pagerungan Utara Field

Sepanjang Island Field

18 EMP Annual Report 2006

Brantas PSC Oyong

Java Brantas PSC

Month & Event Technical Action Taken Community Action Taken

20 EMP Annual Report 2006

A media center is established to provide regular

22 EMP Annual Report 2006

A section of the railway is elevated and the

The first relief well spudded.

The Government’s guidelines for Tim Nas state

24 EMP Annual Report 2006

The mud continues

26 EMP Annual Report 2006

Rupat Island Malaysia

Malacca Strait PSC

Beruk Sumatera Mendol Island

Sungai Gelam A Field (SG)

Kecamatan Jambi Luar Kota

Sungai Gelam C Field (SG)

Tempino Kecamatan Mestong

EMP Annual Report 2006

EMP Annual Report 2006

EMP Annual Report 2006

EMP Annual Report 2006

EMP Annual Report 2006