EMP_AR 07_Final_Eng

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    EnErgi MEga PErsada - annual rEPort 2007

    a

    n

    n

    u

    a

    l

    r

    EP

    or

    t

    200

    7

    PT ENERGI MEGA PERSADA Tbk

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    EnErgi MEga PErsada - annual rEPort 2007

    2 Company Prole

    4 Financial Highlights

    8 Message from the PresidentCommissioner

    ContEnts

    10 Report of the President Director

    13 Review of Operations

    28 Managements Discussion and Analysis of the Financial Condition and Results of

    Operations

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    EnErgi MEga PErsada - annual rEPort 2007

    The soft copy of this report and regular

    updated information on the Company is

    available at www.energi-mp.com

    30 Safety, Health and Environment

    (SHE)

    32 Community Relations

    34 Corporate Governance Report

    49 Glossary

    51 Financial Report

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    EnErgi MEga PErsada - annual rEPort 20072

    CoMPany ProfilE

    EnErgi MEga PErsada - annual rEPort 20072

    Thailand

    Philippines

    Malaysia

    Singapore

    Timor Leste

    Gebang JOB PSC

    Korinci Baru PSC

    Bentu PSC

    Gelam TAC

    Semberah TAC

    Suci OCA

    Malacca Strait PSC

    Kangean PSC

    Vietnam

    Brunei

    Sumatera

    Kalimantan

    Java

    SulawesiPapua

    Indian Ocean

    South China Sea

    R E P U B L I C O F I N D O N E S I A

    N

    0 400 KM

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    EnErgi MEga PErsada - annual rEPort 2007

    Oil and Gas Properties

    One of the leading publicly listed oil and

    gas exploration and production companies

    in Indonesia, PT Energi Mega Persada

    Tbk (EMP or the Company) and its wholly

    owned subsidiaries control working

    interests in a wide ranging portfolio of oil

    and gas properties:

    SumateraMalacca Strait PSC (60.49%)

    Gebang JOB PSC (50%)

    Bentu PSC (100%)

    Korinci Baru PSC (100%)

    Gelam TAC (100%)

    Java and environs

    Kangean PSC (50%)

    Kalimantan

    Semberah TAC (100%)

    EMP also formed strategic alliance with

    PT Indelberg Indonesia Perkasa in Suci OCA.

    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

    21,000 km2.

    EMP is a major gas supplier to the rapidly-

    growing industrial region of East Java,as well as serving major customers in

    Sumatera and Kalimantan.

    EnErgi MEga PErsada - annual rEPort 2007

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    EnErgi MEga PErsada - annual rEPort 2007

    finanCial HigHligHts

    (in billion Rupiah, except EPS and Financial Ratios)

    Income Statement

    Revenue

    EBITDA

    Prot Before Tax

    Income Tax

    Net Prot

    Earnings Per Share (EPS)

    Balance Sheet

    Total Assets

    Net Debt

    Equity

    Ratios (%)

    Net Prot Margin

    ROE

    ROA

    Net Debt/Equity

    Interest Coverage Ratio

    Current Ratio

    Total Liability to Equity

    Total Liability to Assets

    2007

    1,137.5

    350.2

    (51.8)

    167.4

    115.6

    8.0

    9,378.2

    2,825.3

    3,352.2

    10

    3

    1

    84

    110

    65

    180

    64

    2006

    1,459.5

    190.1

    (283.8)

    20.4

    (263.4)

    (18.7)

    8,773.8

    4,194.8

    1,894.7

    (18)

    (14)

    (3)

    221

    75

    186

    363

    78

    2005

    1,423.6

    599.3

    138.8

    (14.6)

    123.2

    12.9

    6,512.8

    2,895.2

    1,176.7

    9

    10

    2

    246

    358

    117

    453

    82

    2004

    689.9

    246.7

    40.6

    (93.6)

    (53.5)

    (7.3)

    3,811.3

    1,097.1

    1,029.2

    (8)

    (5)

    (1)

    107

    433

    41

    270

    73

    2003

    356.9

    89.0

    (10.6)

    (23.0)

    (33.5)

    (5.2)

    1,132.0

    159.6

    (378.6)

    (9)

    9

    (3)

    (42)

    572

    20

    (399)

    133

    Oil Production (bopd)

    Brantas PSC

    Malacca Strait PSC

    Kangean PSC

    Bentu PSC

    Korinci Baru PSC

    Gelam TAC

    Semberah TAC

    Gebang JOB PSC

    Total

    Total Oil Production (mmbo)

    Gas Sales (mmcfd)

    Brantas PSC

    Malacca Strait PSC

    Kangean PSC

    Bentu PSC

    Korinci Baru PSC

    Gelam TAC

    Semberah TAC

    Gebang JOB PSC

    Total

    Total Gas Production (mmboe)

    2007

    8

    8,409

    1,373

    0

    0

    322

    752

    54

    10,919

    4.0

    10

    10

    44

    0

    6

    0

    8

    2

    80

    4.9

    2006

    13

    9,182

    547

    0

    0

    339

    455

    97

    10,633

    3.9

    39

    0

    58

    0

    0

    0

    0

    3

    100

    6.1

    2005

    14

    9,328

    773

    10,114

    3.7

    51

    0

    81

    132

    7.7

    2004

    0

    9,887

    397

    10,284

    3.8

    65

    0

    41

    106

    6.5

    2003

    0

    10,567

    -

    10,567

    3,9

    48

    0

    0

    48

    2. 9

    Production Performance (on a gross basis)

    Financial Performance

    * Gas is used to replace diesel as a fuel for cost efciency

    (restated)

    *

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    EnErgi MEga PErsada - annual rEPort 2007 EnErgi MEga PErsada - laPoran taHunan 2007

    Average realized liquid price (US$ / bbl)

    Average realized gas price (US$ / mcf)

    2007

    73.2

    2.6

    2006

    63.9

    2.5

    2005

    53.2

    2.3

    2004

    37.7

    2.1

    2003

    28.9

    2.5

    Product Price Realizations (on a gross basis)

    2007 Year End Proforma Gross Reserves and Resources

    (in mmboe)

    Malacca Strait PSC

    Oil

    Gas

    Kangean PSC

    Oil

    Gas

    Bentu PSC

    Oil

    Gas

    Korinci Baru PSC

    Oil

    Gas

    Gelam TACOil

    Gas

    Semberah TAC

    Oil

    Gas

    Gebang JOB PSC

    Oil

    Gas

    Total

    Oil

    Gas

    Grand Total

    1P

    28

    -

    1

    120

    -

    24

    -

    2

    1

    -

    3

    3

    -

    -

    33

    149

    182

    2P

    32

    -

    12

    230

    -

    48

    -

    12

    5

    -

    13

    9

    -

    1

    62

    300

    362

    3P

    39

    -

    22

    318

    -

    76

    -

    17

    50

    -

    33

    29

    1

    6

    145

    446

    591

    Contingent Resources*

    1

    11

    -

    11

    -

    -

    -

    -

    -

    67

    1

    -

    -

    20

    2

    109

    111

    * best estimation

    NotesGross reserves have been cer tied by independent certication agencies such as Gaffney, Cline and Associates, Sproule International and MHAPetroleum Consultants.The gross reserves stated in the above table reect EMPs latest independent reserve appr aisal. EMP has taken a conservative approach toreserves in setting depreciation, depletion and amor tization (DDA) policy as outlined on Page 59 of the Audited Financial Statements. When anapproved plan of development (POD) contains reserve estimates lower than the independent certication, the P OD estimate is used for DDApurposes.3P Reserves and Contingent Resources totals: gures subject to rounding.

    1.

    2.

    3.

    EnErgi MEga PErsada - annual rEPort 2007

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    EnErgi MEga PErsada - annual rEPort 2007

    (in mmboe)

    1P

    Oil

    Gas

    Total

    2P

    Oil

    Gas

    Total

    3P

    Oil

    Gas

    Total

    Contingent Resources*

    Oil

    Gas

    Total

    2007

    33

    149

    182

    62

    300

    362

    145

    446

    591

    2

    109

    111

    2006

    31

    170

    201

    71

    319

    390

    181

    489

    670

    2

    114

    116

    2005

    34

    258

    292

    77

    360

    437

    185

    437

    622

    2

    116

    118

    2004

    30

    255

    285

    42

    305

    347

    71

    331

    402

    25

    98

    123

    (based on year spudded)

    Development wells

    Exploration wells

    Total

    Brantas PSC

    Development wellsExploration wells

    Malacca Strait PSC

    Development wells

    Exploration wells

    Kangean PSC

    Development wells

    Exploration wells

    Bentu PSC

    Development wells

    Exploration wells

    Korinci Baru PSC

    Development wells

    Exploration wells

    Gelam TAC

    Development wells

    Exploration wells

    Semberah TAC

    Development wells

    Exploration wells

    Gebang JOB PSCDevelopment wells

    Exploration wells

    2007

    36

    3

    39

    00

    19

    3

    3

    0

    0

    0

    1

    0

    6

    0

    4

    0

    3

    0

    2006

    30

    8

    38

    42

    11

    4

    7

    2

    0

    0

    0

    0

    2

    0

    6

    0

    0

    0

    2005

    20

    5

    25

    33

    14

    1

    3

    1

    2004

    14

    5

    19

    53

    9

    2

    0

    0

    2003

    4

    5

    9

    31

    1

    4

    Drilling Activity

    Gross Reserves and Resources

    * best estimation

    Note: all development wells includes work over wells, all exploration wells includes appraisal wells

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    EnErgi MEga PErsada - annual rEPort 2007 7

    HigHligHts of tHE yEar

    JanuarySepanjang Island oil eld (SED-1Awell) in the Kangean PSC successfullycommenced commercial oil production aninitial rate of 3,500 bopd.

    FebruaryExtraordinary General Meeting ofShareholders held.

    MarchKangean PSC has recommenced directgas sales from Pagerungan eld via EastJava Gas Pipeline (EJGP).

    April

    Extraordinary General Meeting ofShareholders held.

    MayAnnual General Meeting of Shareholdersheld.Semberah TAC commenced its rstgas production from SBT-01 well toPerusahaan Listrik Negara (PLN) inSamarinda at 5.5 mmcfd.Mitsubishi Corporation (Mitsubishi) andJapan Petroleum Exploration Co. Ltd.(Japex) become strategic partners viaa share subscription in EMP subsidiary,Energi Mega Pratama Inc. (EMPI), forUS$ 360 million assuming, in aggregate,an indirect 50% working interest in theKangean PSC, while EMP retains a 50%indirect interest.

    JuneCommenced a strategic alliance withPT Indelberg Indonesia Perkasa(Indelberg) in order to secure gasproduction in East Java.

    JulySemberah TAC added gas supply fromSBT-2A. Total cumulative gas productionto PLN Samarinda reached 10 mmcfd.Korinci Baru PSC commenced gas supplyto PLN Pekanbaru at 7.1 mmcfd fromBaru-4, Baru-5 and Baru-6 wells.Gelam TAC completed its 3D seismic inefforts to minimize drilling risks.Deconsolidated Lapindo Brantas Inc.

    (LBI), the owner of 50% working interestof Brantas PSC.

    OctoberKorinci Baru PSC and Gebang JOB PSCrecorded signicant gas price increasesreected in newly signed agreementsand Kangean PSC amended price underexisting contracts.

    DecemberKorinci Baru PSC commenced the rstcommercial gas production to PT RiauAndalan Pulp & Paper (RAPP) at 4.2mmcfd.

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    EnErgi MEga PErsada - annual rEPort 2007

    Dear Shareholder,

    2007 was another landmark year for theglobal oil and gas industry with oil pricesat record nominal highs as indicated byWTI reaching US$ 98.88 per barrel (bbl)on November 20, 2007 and closing aboveUS$ 100 per bbl on January 2, 2008. For theyear WTI averaged US$ 72.28/bbl againstUS$ 66.03/bbl in 2006. Even at the recentlevels of over US$ 102/bbl, at the time ofwriting this report, real oil prices have notyet exceeded their 1980 peak. The positivedevelopments in production during theyear have given EMP the opportunity to

    capitalize on strong oil prices by continuingto expand oil production into 2008 and henceincreasing revenue and cashow.

    At last oil price momentum has had amaterial upward impact on Indonesiandomestic gas prices as the compellingproposition of gas as good value, cleanenergy was recognized by consumers.EMP benets on this upward pricemovement going forward, having signed newgas contracts at greatly improved prices,renegotiated old contracts and broughtnew gas projects on stream in 2007. The

    improvement in gas prices is vindicationof the deliberate strategy to be long ondomestic natural gas in the upstream assetportfolio.

    MEssagE froM tHE

    PrEsidEnt CoMMissionEr

    The introduction of Mitsubishi and Japex asstrategic investors into the Kangean PSC

    is tangible evidence of this gas asset priceappreciation and the delivery of substantialvalue to EMP shareholders. The transactioncompleted in May 2007, signicantlystrengthened the balance sheet andprovided new equity and new debt fundingfor ongoing development of the Companysdeep and diverse growth port folio. Indeedthe management of the Company arefocused on generating full value from EMPsassets, the more so that deconsolidation ofLBI from the EMP accounts was effectiveJuly 1, 2007. Under the stewardship of the

    Bakrie Group, work continues to restorethe communities affected. Your Companysperformance is not impaired by the ongoingefforts to manage this issue.

    A number of challenges still remain. Risingoil and gas prices were accompanied byincreased demand for people, equipment,materials and services with supply unableto keep up with demand. This furtherincreased costs and lengthened schedulesfor upstream projects around the worldand Indonesia was not immune to this. Theintroduction of the new strategic partners at

    Kangean PSC was a proactive response toindustry wide cost pressures.

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    During the year EMP has continued toinvest heavily to develop the substantialundeveloped oil and gas reser ve base andproduction from three new oil and gasprojects has now commenced and willunderpin the Companys performance in2008.

    At the April 2007 Extraordinary GeneralMeeting of Shareholders, shareholdersapproved a number of changes to theBoard of Directors. Christopher B.Newton, Thomas L. Soulsby, Faiz Shahaband Norman H. Harahap all retired andwe extend our appreciation for theircontribution in recent years. Christopher

    B. Newton and Thomas L. Soulsbycontinue in a key capacity to evaluate newportfolio opportunities. Christian V. Pontoassumed the position as President Directorand was joined by Imam P. Agustino asDirector. At the Annual General Meetingof Shareholders held in May 2007, RennierA.R. Latief stepped down from the Boardof Commissioners, Ari S. Hudaja wasappointed as President Commissioner,Nalinkant A. Rathod as Commissioner andwe thank him for his contribution.

    Outlook

    Oil remains at the centre of currentconcerns for the global economy and asprices rise and given service and equipmentconstraints and cost escalation theyear ahead will not be any easier for theCompany. The operational results from pastdrilling and facilities investment over thelater part of 2007 present a more positivepicture and your Board of Directors believesproduction increases of 30-35% over 2007levels are attainable in the year ahead.

    Rising production, higher international

    and domestic energy prices, increasingdomestic demand and a strong but stillunder valued asset base gives the Board ofDirectors condence for the future.

    I would like to formally record myappreciation for the focus and commitmentof the outgoing board members and thankthe new Board of Directors for their effortsand results in a challenging year.

    The Board of Commissioners continued toplay an active oversight and advisory roleduring the year, supporting and guiding theBoard of Directors. This role along with theCommittees that report to the BoC, such asthe Audit Committee and Conict of InterestCompliance Committee underpinned theCompanys objective of enhancing corporategovernance, transparency and performancefor the benet of all stakeholders.

    We have always recognized that the oil andgas exploration and production business iscapital intensive and skills driven and theCompanys greatest assets are its dedicatedand experienced management and staffwho showed determination, commitmentand resolve to come through the challengesof 2007, deliver strong operational andnancial results and establish a strongplatform for further growth in 2008.

    We also thank the Companys businesspartners, communities and of course

    shareholders for their continued activesupport.

    For and on behalf of the Board ofCommissioners

    Ari Saptari Hudaja

    President Commissioner

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    EnErgi MEga PErsada - annual rEPort 20070

    Dear Shareholder,

    In closing the year 2007, EMP has reached aturning point in its history.

    First, the deconsolidation of LBI has beencompleted with shareholder approval in2008 facilitating the resumption of normaloperations and business expansion. Underthe stewardship of the Bakrie Group,

    the process of resettlement and aid willcontinue for the communities impacted bythis unprecedented disaster.

    Second, signicant value has been unlockedthrough the divestment of 50 per centindirect interest in Kangean PSC block bygenerating cash of US$ 360 million, whichhas enabled the Company to reduce its levelof gearing, while acquiring experiencedstrategic partners in Mitsubishi and Japex.

    Third, while production levels havedecreased year on year, the new Sepanjang

    Island oil eld has commenced productionat 3,500 bpd, a landmark in the 27 yearhistory of the Kangean PSC and three newgas projects are producing over 20 mmcfd.Despite EJGP interruption, subsequentlyresolved, the production decline in gas wasreversed in the last quarter of the year.

    rEPort of tHE

    PrEsidEnt dirECtor

    Fourth, new gas supply agreements weresigned at above US$ 4/mmbtu in October2007. These agreements have increasedreserves as gas was moved from contingentresource to reserves category, tangibleevidence that the strategy of being long ondomestic gas was working. The well-headprice is at weighted average of some 855bcf. Anticipating the increase of oil and gasprices, the Company is continuing to review

    and renegotiate prevailing contract terms.

    Fifth we continued our investment programto build new reserves through a strategicalliance to operate the Suci OCA.

    Production and ReservesAverage gross daily production in 2007was 24.2 mboepd, an 11% reduction onvolumes recorded in 2006, reecting thedeconsolidation of LBI from July 1, 2007and the natural decline in mature producingelds.

    Gross average daily oil production increasedyear on year from 10,633 bopd in 2006 to10,919 bopd in 2007 as a result of organicgrowth and operational enhancements.Gross average daily gas productiondeclined from 100 mmcfd to 80 mmcfd in2007. However this was a trend reversedduring the fourth quarter as productioncommenced from the Tunas HarapanPerkasa (THP) assets acquired in 2006.

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    The Kangean 50% farmout while reducingnet reserves entitlement generated cash todeleverage the balance sheet. In additionthe technology transfer from new partnersis expected to speed production from theSepanjang oil eld and Terang Sirasun Batur(TSB) gas eld. EMP has also secured thecapex carry funded by the new partnersto nance the development of Kangean PSCgoing forward. Brantas PSC contributedless than 8% of 2P reserves and less than5% of sales.

    There were a number of good examples ofour strategy of operational excellence inaction during 2007. Under-balanced drillinghas ensured optimal production from thedeep fractured carbonates of SepanjangIsland in Kangean PSC, almost 30 yearsafter discovery.

    EMP continued to enhance oil productionin both existing and new wells throughan effective combination of our humanresources capability and a number ofsophisticated technologies. These includedthe use of simulation software, 3D seismic,hydraulic fracturing, gas lift and productionsimulation techniques, among others.Reservoir fracture stimulation using state ofthe art techniques and hydraulic uids hasdramatically increased oil production in thePematang tight formation of the DC eld ofMalacca Strait PSC. These Pematang tightformations are also found in the DR and BYexploration discovery elds representinga signicant new growth opportunity. 3Dseismic activity over the Gelam eld hasdelivered a completely new picture of thedistribution of oil and gas in the eld and

    will form the basis for locating new wellsto contribute to increased production andreserves in 2008.

    During the year the Company drilled atotal of 39 wells including maintained 23workover wells at a cost of US$ 147 millionand recorded a high commercial successrate, only one exploration well MSBU-01categorised as sub-economy. A total of78% of development costs was investedin drilling and 23% in facilities and otherdevelopment costs. Drilling activity levelsremained below budget reecting a lack ofavailable drilling equipment and deferralof some programs into 2008. An increasedfocus on controlling escalating drilling

    costs had some positive effects on overheadmanagement.

    Total capital investment was US$ 103.5million. Despite the tightness in creditmarkets the Company was able to fundits 2007 programs with a combination ofcashow from operations, proceeds fromthe Kangean PSC transaction and newnancing.

    OrganizationRecognizing that communication, teamwork and organizational efciency are keysuccess factors in oil and gas explorationand production, a number of organizationalenhancements were implemented duringthe year. These started in April 2007with installation of a smaller operationalfocused Board with leadership experiencein EMP business units and commitment toshareholder needs. A number of internalpromotions followed elevating highperforming Indonesian staff to leadershipand senior management line and functionalpositions. These changes enhancedcoordination, improved staff moral along

    with performance and facilitated retention ofsenior staff at a time of increasing industryturnover in a human resource constrainedindustry. We still have a lot to do to bethe local employer of choice and remaincommitted to achieving this.

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    EnErgi MEga PErsada - annual rEPort 20072

    Safety, Health and Environment andCorporate Social ResponsibilityThe continued strengthening SHEcommitment and performance culture ismanifested by exceptional SHE resultswith zero Lost Time Injury (LTI) across theCompany and performance metrics thatwe can all be proud of and are simply goodbusiness.

    The culture of operational sustainabilitygoes beyond staff and contracts safety

    but into the environment and communitieswhere we work as seen by the processesand projects that we undertake, thecorporate governance we apply and thecommunity relationships we enjoy.

    OutlookThe Company remains exceptionally wellpositioned being long on energy for localand export markets with rising demand,rising commodity prices and improvingavailability of equipment and services allhelping to sustain margins.

    Containing costs and maintaining schedulesremains challenging however betterplanning and more experience in thesemarkets is delivering results.

    Past and new investments are expected todeliver a 30- 35% production increase over2008. Increasing volumes meeting risingprices gives the Board every reason foroptimism.

    Access to capital to grow the business,organically and through acquisitionsremains challenging however the Boardis condent the quality of the assets andour people on the back of the successes of2007 will speak for themselves to support

    nancing requirements.

    AppreciationThe support and commitment of staff,customers, suppliers and communitiesremained exceptional in 2007. This supportis recognized and appreciated by theBoard who recognize the efforts of somany individuals and companies and theunderlying strength in the business thisimplies.

    EMP is a dominantly Indonesian company

    fueling the growth of the Indonesianeconomy, employing 729 staff, 99.9% ofwhom are Indonesian all demonstratingthat Bersama Kita Bisa. The Board isappreciative and proud of achievements andcondent in the future.

    For and on behalf of the Board of Directors

    Christian Victor PontoPresident Director

    < Board of Directors, from left to right:

    Imam P. Agustino , Yuli Soedargo, Christian V. Ponto

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    rEviEw of oPErations

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    Three months after drilling SED-1A well in November 2006 employing Under

    Balanced Drilling (UBD) technology to maximize the productive potential of the

    Ngimbang carbonate reservoir, EMP completed construction and commissioned

    production facilities in the Pulau Sepanjang oil eld. In January 2007, commercial

    oil production commenced at 3,500 barrels of oil per day. Oil from the Sepanjang

    Island oil eld has 32.2 API gravity oil with minor gas. Measurement during UBD

    indicates the SED-1A well has the capacity to produce up to 9,000 bopd.

    East Java

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    KangEan PsC (worKing intErEst 0%)

    After oil supplies from Sepanjang eld were temporarily stopped

    due to weather conditions and technical problems on the leased

    Floating Storage Offshore (FSO) unit, SED-1A well recommenced

    oil production at 3,500 bopd in October using a newly leased

    Concorde tanker with higher storage capacity of 230,000 bbl.

    Kangean Energy signed the Gas Sales and Purchase Agreement

    (GSPA) to supply gas at US$ 4.09/mmbtu to respective consumers.

    Operator: Kangean Energy Indonesia Limited (60%)

    Partner: EMP Exploration (Kangean) Limited (40%)

    TERANG

    BATUR

    JS 53A

    SIRASUN

    North Pagerungan Field(PUO)

    South Saubi(SS0)

    Sepanjang Island Field(SED)

    Pagerungan Besar Island Field(PGA, PGB, PGC & PGR)

    Terang Sirasun Batur Field(TEO)

    Payang

    Bukit Panjang

    Jenggolo

    Poleng

    Pangkah

    Jeruk BD

    KE

    South Celukan

    (SC0)PGN Waru

    PGN Gn. Sari

    PGN Tandes

    Suci OCA

    Gresik Stn.

    East Java

    Madura

    Bali

    Surabaya

    PasuruanLeces

    PLN Gresik

    PGN

    Kangean PSC

    Kangean Island

    Lombok

    West Kangean Field(WKO)

    Moncong(MCO)

    East Pagerungan Field(PTO)

    Java

    Thailand

    Philippines

    Malaysia Brunei

    Singapore

    INDEX MAP

    REPUBLIC OF INDONESIA

    Kangean PSC

    Timor Leste

    0 40 KM

    N

    SepanjangIsland

    Maleo

    Karangtakat

    Bukit Tua

    Oyong

    EastJavaGasP

    ipeline(EJ

    GP)

    Tuban

    Lamongan

    TanggulanginWunut

    Carat

    OIL FIELD

    PROSPECTLEAD

    GAS FIELD

    BLOCK

    OIL & GAS FIELD

    GAS PIPELINE

    PGN DISTRIBUTION GRID

    LEGEND

    CUSTOMER

    WELL

    PRODUCTION PROCESS PLANT

    Floating Storage Offshore

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    EMP commenced a strategic alliance with Indelberg in

    order to secure gas production in East Java.

    Production test results in Suci-01 proved this well is

    able to produce gas of 7 mmcfd. A workover of Suci-01

    is planned in the rst half of 2008, and expected to be

    in full production by the end of 2008.

    East Java

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    East Java

    Madura

    Bali

    Java Sea

    Indian Ocean

    Tanggulangin

    Surabaya

    Tuban

    Suci OCA

    N

    0 20 KM

    EastJava

    GasPipelin

    e(EJGP)

    Maleo Field

    PLN Gresik

    Payang

    Bukit Panjang

    Jenggolo

    PolengKE

    Bukit Tua

    Jeruk BD

    Oyong

    Leces

    Pasuruan

    Pangkah

    Petrokimia GresikLamongan

    Carat

    Wunut

    Bentu KPS & Korinci Baru KPSOIL FIELD

    GAS FIELD

    WELL

    BLOCK

    OIL & GAS FIELD

    GAS PIPELINE

    PGN DISTRIBUTION GRID

    LEGEND

    Java

    Thailand

    Philippines

    Malaysia Brunei

    Singapore

    INDEX MAP

    REPUBLIC OF INDONESIA

    Timor Leste

    Suci OCA

    suCi oCa

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    suMatEra

    DC-8 and DC-9 added another 800 bopd. A reservoir fracture

    stimulation using state of the art techniques and hydraulic uids

    has dramatically increased oil production in the Pematang tight

    formation of DC eld of Malacca Strait PSC. These Pematang tight

    formations are also found in DR and BY exploration discovery eldsin Malacca Strait PSC with signicant reserves.

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    Rupat Island

    Melibur Field

    Selatan Field

    Bengkalis Island

    Malaysia

    Padang Island

    TA

    TB

    DR

    DC

    BQBTCW

    EG

    BY-1

    BY-2

    Gatam

    Sabak

    Pedada

    Benua

    Dusun

    Pusaka

    Ponak-1

    North East Beruk

    Beruk

    Lalang Field

    MengkapanField

    Malacca Strait PSCStraitofM

    alacca

    Sumatera

    Thailand

    Philippines

    Malaysia

    Singapore

    INDEX MAP

    REP UBL I C OF I NDONESI A

    Timor Leste

    Malacca Strait PSC

    Rangsang Island

    Tebing Tinggi Island

    Kurau Field

    Merbau Island

    COCM

    DF CN

    BV BZ

    CA

    BHBK

    BM

    0 15 KM

    N

    VA QC QD

    OA

    QF

    QE

    QBBA

    DUNM

    AG

    LEB

    DD

    BGW

    SAG

    FD

    ALBC

    N

    TG CH

    DBTE

    TH TH CU

    TC

    TD

    FB

    BU

    FC

    OSB Ladinda

    Pertamina UP IIRefinery

    Oil Gathering stationBOP Pertamina BSP

    SumateraMendol Island

    Ponder Field

    Butun Industrial Estates

    BY-3

    DH

    SM

    AI

    EA

    OIL FIELD

    PROSPECT

    LEAD

    GAS FIELD

    BLOCK

    OIL & GAS FIELD

    OIL PIPELINE

    GAS PIPELINE

    LEGEND

    CUSTOMER

    WELL

    PRODUCTION PROCESS PLANT

    Kuat Field

    Brunei

    Operator: Kondur Petroleum S.A. (34.46%)

    Partner: PT Imbang Tata Alam (26.03%)

    China National Offshore Oil Corporation (32.58%)

    CNOOC Southeast Asia Ltd. (6.93%)

    MalaCCa strait PsC (worKing intErEst 0.%)

    A simulation study was applied in the Melibur eld using

    software, four development wells in Melibur eld contributed

    an additional 500 bopd. Malacca Strait PSC has been able to

    maintain a consistently high production rate of above 9,300

    bopd.

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    suMatEra

    The block just completed its 3D seismic which covered a

    total working area of 83 km2. The seismic results are useful

    in minimizing drilling related risks, conrming the existing

    certied reserves and resources, as well as identifying new

    prospects within the blocks working area.

    Electrical Submersible Pump (ESP) installed at SG-9, SG-11/ST,SG-12/ST wells to boost oil production in Gelam block.

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    Rumpeh

    Subdistrict

    Sungai Gelam A Field (SG)

    Sungai Gelam B Field (SG)

    Sungai Gelam D Field (SG)

    Sungai Gelam C Field (SG)

    Jambi

    Sultan ThahaAirport

    PLN

    JalurPipaTGI

    Jambi Luar Kota Subdistrict

    Mestong Subdistrict

    South Sumatera

    Kenali Asam

    Tempino

    SE Setiti

    Setiti

    Gelam TAC

    OIL FIELD

    OIL PIPELINE

    GAS FIELD

    BLOCK

    PROPOSED GAS PIPELINE

    GAS PIPELINE

    LEGEND

    CUSTOMER

    WELL

    Thailand

    Philippines

    Malaysia Brunei

    Singapore

    INDEX MAP

    REPUBLIC OF INDONESIA

    Timor Leste

    Gelam TACSumatera

    Operator:PT Insani Mitrasani Gelam (100%)

    gElaM taC (worKing intErEst 00%)

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    suMatEra

    Kalila (Bentu) Ltd. signed a GSPA to supply gas to RAPP at

    US$ 4/mmbtu (with 2% escalation every three years).

    Korinci Baru PSC commenced rst commercial gas

    production to RAPP at 4.2 mmcfd with expectations to attain

    8.5 mmcfd by the end of the second quarter 2008. Currently

    this block also supplies 13.2 mmcfd to PLN Riau.

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    TransGasin

    doIn

    donesia

    Pipelin

    e

    North East Beruk

    Beruk

    Zamrud

    Pekanbaru

    Sumatera

    Bentu PSC

    Bentu Field

    Segat Field

    Perak Field

    Korinci Field

    Minsis

    Desabaru

    TimahNikel

    Besi

    Minas

    Kotabatak

    Baru Field

    West Baru Field

    Terusan Field

    Korinci Baru PSC

    Baru Pipeline

    Seng Field

    OIL FIELD

    PROSPECT

    LEAD

    GAS FIELD

    BLOCK

    GAS PIPELINE

    LEGEND

    CUSTOMER

    PROPOSED GAS PIPELINE

    WELL

    PRODUCTION PROCESS PLANT

    Bentu KPS & Korinci Baru KPSSumatera

    Thailand

    Philippines

    Malaysia Brunei

    Singapore

    INDEX MAP

    REPUBLIC OF INDONESIA

    Timor Leste

    Bentu PSC & Korinci Baru PSC

    Operator Bentu KKKS: Kalila (Bentu) Limited (100%)

    Operator Korinci Baru KKKS: Kalila (Korinci Baru) Limited (100%)

    BEntu PsC (worKing intErEst 00%)

    KorinCi Baru PsC (worKing intErEst 00%)

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    Arbei Field

    Secanggang Field

    Gebang JOB PSC

    PLTG Belawan

    Medan Industrial Estates(KIM)

    Anggor Field

    Gebang Deep

    Rantau

    Serang Jaya

    West Kuala

    Simpang

    Kuala Simpang

    Sungai Buluh

    Besitang

    Gebang

    Securai

    North Darat

    Batang Sarangan

    Tanjung Pura (TPA)

    0 10 KM

    Batu Mandi

    Wampu

    Binjai

    Tanjung Perling

    Pangkalan Susu

    Pangkalan Brandan

    East TabuhanHM 55

    West Tabuhan

    StraitofM

    alacca

    GOS

    SBM

    Sumatera

    OilExpo

    rtPip

    elineSembilan Island

    OIL FIELD

    OIL PIPELINE

    PROSPECT

    GAS FIELD

    BLOCK

    OIL & GAS FIELD

    PROPOSED GAS PIPELINE

    GAS PIPELINE

    LEGEND

    CUSTOMER

    WELL

    Bentu KPS & Korinci Baru KPS

    Thailand

    Philippines

    Malaysia Brunei

    Singapore

    INDEX MAP

    REPUBLIC OF INDONESIA

    Timor Leste

    Gebang JOB PSC

    Sumatera

    Operator: Costa International Group Limited (50%)

    Partner: Pertamina (50%)

    gEBang JoB PsC (worKing intErEst 0%)

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    SBT-01 well produced its rst gas to PLN in Samarinda, in

    addition to four wells (SBR-05, SBR-06, SBR-08 and UKM-04).

    Total volumes of gas contracted through this GSPA amounts to

    62 bcf up to year 2015.

    SBT-2A has also been ready to ow gas at an average 5 mmcfd

    while waiting for PLN to nish repairing its gas turbine.

    The gas is sold at over US$ 2.72/mmbtu which is to be increased

    annually under the contract.

    Successful discovery from SBR-16 and SBR-17 produced 575

    bopd and increased the blocks total oil production to 1,194 bopd

    and gas production of 12 mmcfd.

    A gas pipeline was completed from Semberah to the Vico plant.

    KaliMantan

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    Tanjung Sangatta

    Kalimantan

    Tanker to

    UP. V Balikpapan

    PLNGas Power PlantTanjung Batu

    Trucking to

    Sangatta

    Union SantanTerminal

    Pertamina

    Sangatta

    Bontang

    Tanjung Santan

    Samarinda

    Karangmumus Field

    Semberah Field(UKM, SBR)

    Sambutan Field(SBT)

    Binangat Field

    Anggana Oil Terminal

    Pelarang Field

    Strait of Makassar

    Semberah TAC

    VICO

    Pi

    pell

    ile

    Pro

    vin

    ceA

    ccessR

    oad

    10 KM0

    Proposed PLNPower Plant

    OIL PIPELINE

    GAS FIELD

    BLOCK

    PROPOSED GAS PIPELINE

    GAS PIPELINE

    LEGEND

    CUSTOMER

    WELL

    PRODUCTION PROCESS PLANT

    Kalimantan

    Thailand

    Philippines

    Malaysia Brunei

    Singapore

    INDEX MAP

    REPUBLIC OF INDONESIA

    Timor Leste

    Semberah TAC

    OIL TERMINAL

    Operator: PT Semberani Persada Oil (100%)

    sEMBEraH taC (worKing intErEst 00%)

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    ManagEMEnt s disCussion and

    analysis of tHE f inanCial Condition

    and rEsults of oPErations (Md&a)

    OverviewNet sales revenues are derived from salesof crude oil, condensate and natural gas inaccordance with the terms of ProductionSharing Contracts (PSC), a JOB PSC,Technical Assistance Contracts (TAC) andOperational Cooperation Agreement (OCA)relating to the development of eight discreteblocks in Java, Sumatera and Kalimantan.

    Net SalesNet sales for 2007 were 2% lower atRp 1,137 billion. Net sales representedrevenues from oil sales of Rp 840 billion(US$ 97 million equivalent) down 18% andRp 247 billion (US$ 27 million) from gassales. Volumes for the year were 23% lowerfor oil at 1.5 mmbbl and 41% lower for gasat 2.8 mmboe, the latter partly due to theinterruption to gas production throughdamage to the East Java Gas Pipeline, whichhas subsequently reopened. Average prices

    realized for oil were signicantly higher, by15% year on year to US$ 73.2 per bbl withaverage gas prices 4% higher at US$ 2.6per mcf.

    Terms relating to Gas SalesSales of the Companys net gas entitlement,denominated in US Dollars, are primarilythrough bilateral medium-term (two tothree years) and long-term (longer thanthree years) xed price contracts withleading customers, thereby avoiding risksassociated with volatility of prices. Factorsused to determine the xed price for each

    contract include demand volume, contractterms, prevailing contract prices for othermedium-term and long-term xed pricecontracts, alternate fuel prices and the rateof exchange between the Rupiah and USDollar. The average realized sales prices forgas per mcf for the years ended December31, 200 6 and 2 007 w ere U S$ 2.5 andUS$ 2.6, respectively. It should be notedthat all GSPA supply contracts are on areasonable endeavors basis.

    Terms relating to Oil and Condensate SalesNet crude oil entitlement is sold throughone-year sales contracts to the winningbidder under a competitive tender process,subject to market conditions. The largestportion of this entitlement in 2007 wassold under a one-year crude oil salesoff take contract with Petro DiamondCompany Limited (a subsidiary of the

    Mitsubishi Corporation). In 2005 and prioryears substantially all of the condensateproduction was sold to BP SingaporePte Ltd. under a sales contract renewedannually. Sales of net crude entitlementare predominantly at prices based on theprevailing Indonesian Crude Price (ICP).Average realized sales prices (based onentitlement) for oil per bbl for the yearsending December 31, 2006 and 2007 wereUS$ 63.9 and US$ 73.2 respectively.

    Full Cost Accounting

    The Company and subsidiaries follow thefull cost method of nancial accountingin recording oil and gas properties.Accordingly, all costs related withacquisition, exploration and developmentof oil and gas reserves, including directlyrelated overhead costs are capitalized. Allcosts arising from production activities arerecorded at the time they are incurred. Thecapitalized costs are subject to a ceiling testwhich limits the level of such costs to theestimated present value of future aggregatenet revenues, discounted at a 10% interestrate using reasonable assumptions on oil

    and gas prices.

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    Brantas PSC(working interest 50%)Based upon a Corporate ManagementAgreement (CMA) dated July 1, 2007between the Company and Minarak LabuanCo. Ltd. (MLC) and further to the approval ofshareholders at an Extraordinary GeneralMeeting of Shareholders on March 14, 2008,

    the Company discontinued taking up anyshare of losses in LBI, Kalila Energy Ltd.(KEL), and Pan Asia Enterprise Ltd. (PAN).

    Consequently from July 1, 2007 the nancialstatements of LBI, KEL and PAN were nolonger consolidated into the consolidatednancial statements of the Company, whichhave been restated.

    New shares subscription EMP Inc.In connection with binding agreementssigned March 6, 2007 with Mitsubishi andJapex, Mitsubishi and Japex assumed

    new subscription shares in EMP Inc. andan indirect 50% working interest in theKangean PSC block including a substantialportion of the remaining developmentcapital expenditure for Kangean PSC block.Proceeds from the transaction amounted toUS$ 360 million, and were used as follows:

    In repayment of the Credit FacilityAgreement May 19, 2005 with CreditSuisse Singapore amounting to US$ 292million relating to principal plus accruedinterest and fees.Settlement of payables and receivablesrelating to an amount of US$ 48 millionrelating to companies in the Companys

    Group.The balance of US$ 7.79 million to bepaid by EMP Inc. to the Company by wayof a dividend declared by EMP Inc. in aresolution dated February 21, 2008.

    Completion of the transaction dependedupon the following conditions which havenow been met:

    Approval from shareholders andBapepam the Indonesia Capital MarketAuthority.Receipt of a letter from Credit Suisseacknowledging EMP Incs debt as

    discharged in full under the CreditFacility Agreement.Termination of the old Joint OperationAgreement (JOA) and execution of a newJOA.

    1.

    2.

    3.

    1.

    2.

    3.

    Annual Revenues

    2007 Value (Rp billion) % YoY (%) Volume (mmboe) % YoY (%)

    Oil 890 78 -18 1.5 36 -23

    Gas 247 22 -56 2.8 64 -41

    Total 1,138 100 4.3 100

    Annual Capital Expenditures

    Year Ended December 31, (US$ in millions)

    2007 2006 2005

    Annual expenditures on oil and gas proper ties 975 261.2 168.6

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    safE ty, HEaltH and EnvironMEnt (sHE)

    Leading Indicator

    Gap closure action

    Training hours from total man-hours

    PROPER Rating

    Lagging Indicator

    Lost Time Injury Rate / LTIR (cases)

    Total Recordable Injury Rate / TRIR (cases)

    Spills Incidents (>I Bbl)

    Property Damage/Loss (>US$ 50K)

    2007 SHE Performance

    EMP continuously reinforces, encourages,and improves SHE practises throughextensive trainings, monitoring activities,facility upgrades and extensions, andregulation and permit compliance.

    SHE FunctionsEMPs SHE mechanisms are designed tocement a culture of commitment to safe,healthy, and environmentally friendlypractices which in turn enhance the

    business performance and sustainabilityof EMPs operations. Reporting directlyto the CEO, SHE collaborates with allbusiness units to ensure compliance to SHEprotocol and other applicable standards andregulations. SHE also facilitates the sharingof best practices, resources, and lessonslearned between business units.

    The SHE function coordinates thesatisfactory and efcient implementationof risk management processes throughoutbusiness operations with regards to crisismanagement, business continuity planning,

    hazard identication, and risk assessment,implementation, and appropriate follow up.

    SHE PerformanceThe SHE Excellence Function Teamimplements rigorous monitoring andtracking of SHE input, activities and audits.In addition to a SHE Management Tour of alloperating units, aimed to reinforce positiveSHE behaviour, EMP retained ISO 14001 andOHSAS 18001 certication, and upheld theMinistry of Environments blue PROPERrating for environmental compliance,

    received in 2006.

    EMP takes no chances with safety andconducted full risk assessments regardingJob Safety Analysis for all operating units.

    Safety facilities and procedures tightenedwith the establishment of an IncidentManagement Plan, and all Corrective ActionRequests were investigated and followed-up. Attention to safety resulted in theachievement of 6 million man hours withouta single lost time incident, for which EMPreceived an award of recognition from theMinistry of Labour.

    In 2007, an Occupational Health Information

    System was established, and medicalcheckups carried out periodically foremployees in all EMP Operating Units.Feedback and advice were provided tomaintain health and, if required, furthercheck ups or hospitalization wererecommended.

    EMP is committed to safeguarding andsupporting sustainable natural resources,and engages in environmental managementand monitoring projects. In 2007, severalenvironmentally-focused activities carriedout around the shore and the mining area

    included the planting of 30,000 mangroveseeds in a mangrove break water projectcovering 160ha in the Malacca Shorearea; a land nursery was maintained andre-cultivation of production facilities andre-greening continued at the Gebang,Semberah, Binangat, and Sambutan elds.

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    *) The Government of Indonesia has not yet announced PROPER Rating in the year 2007

    TargetAll EMP

    75%

    0.75%

    Blue

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    CoMMunity rElations

    Located in often isolated areas acrossthe Indonesian archipelago, EMP activilyplay roles in supporting government toimprove social and economic condition ofapprehensive community. For EMP, thesecommunities are not only neighbors, butpotential partners to be trained as localtrained employees. And our community-centric projects seek to develop sustainableskills, giving them opportunity to geteducational opportunities, promote

    vocational and preserve and nurture thenatural environment.

    Participatory Rapid Community Appraisal(PARCA)PARCA is the application through whichEMP evaluates community needs in termsof economic development, health, andeducation.

    Internal and external workshops onParticipatory Rapid Appraisal for LocalEconomic Advancement Action (PRA LEAdAction) were conducted to bring together

    EMP management and staff, communitymembers and leaders, and governmentrepresentatives to devise a unitedcommunity development strategy to reducesocial disruption and develop social welfare.

    After indentifying local community needsand resources potential that is appropriateto be developed as small commercialindustry to empower the community,PARCA initiated two micronance centresfor small businesses in the communitiesclosest to EMPs Malacca Strait operations.The centres, located in Merbau and SeiApit, are run as independent community-based funding institutions, managedby the community. A Local Community

    Assistance program supports rubber andsago farmers: two prominent commoditiesin the Sungai Apit and Merbau areas; localfood sellers (empek-empekBatanghari) inGelam, Jambi received marketing support,and development assistance was given topepper farmers in Semberah.

    In 2007, quarterly medical treatmentsessions were held by EMP, in conjunctionwith local health groups, for communitymembers in Gelam and Malacca Strait, andannual mass circumcision events were heldin Malacca Strait, Gelam, and Semberah for

    152 children. A six month Nutritious Food forInfants program reached 828 local infants,and was conducted in cooperation with 17local health centres.

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    Regarding community sanitation, EMP andlocal health departments are conductingpreliminary studies into local communityhealth in relation to sanitation facilities.

    PARCA identied ve programs to increasevocational competency and empowerment:two scholarship programs with the BogorAgricultural Institute and the Academyof Midwifery, Pekanbaru for studentsimmediately local to EMP operations; half-

    yearly performance-based scholarshipsfor 104 students in Merbau, Tebing Tinggiand Sungai Apit; a youth entrepreneurshiptraining program sending 25 local youths toBandung, and an empowerment programfor 35 women involving cookery classes.

    In 2007 EMP supported infrastructuredevelopment through the construction of anew jetty in Mengkikip; road constructionin Malacca Strait, Semberah, andBentu/Korinci; assistance with mosqueconstruction and rehabilitation, and throughlending of heavy equipment support in theconstruction of public facilities in all EMPOperating Unit areas.The success of PARCA and other social

    programs, EMP have endeavor Governmentto improve the quality of life and prosperityof the society sustainably, and overcomesocial disruption and create conduciveatmoshphere in EMP operational area.

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    CorPoratE govErnanCE rEPort

    Introduction

    Framework and Approach to CorporateGovernanceThe Company recognises that a strongcommitment to good corporate governancepractices is vital to its continued success.At its base, corporate governance is aboutestablishing a code of behavior and a setof values which underpin the Companyseveryday activities and ensure transparency,fair dealing, and the protection ofstakeholder interests. Best practicegovernance focuses on the processesused to direct and manage our businessin a manner in line with our corporateobjectives and the expectations of society,and in a manner fully accountable to ourstakeholders.

    In pursuing its commitment to best practicein governance, EMP has and will continue to:

    Review and improve governancepracticesMonitor global developments in bestcorporate governance practiceStrive for best practice and fullycomply with the rules and regulationsof Bapepam-LK, the Indonesia StockExchange, and the Indonesian NationalCode of Good Governance.

    Roles, Responsibilities, and Skills of theBoards

    Membership and ExpertiseThe Board of Commissioners (BoC) andthe Board of Directors (BoD) jointly shareresponsibility to implement best practicesin corporate governance. The Company alsomaintains a full committee structure to helpensure that the key elements of governanceare carried out. This structure is discussedin more detail below. The integrity,professionalism and accountability of Boardmembers is essential to implementing bestpractice in corporate governance and to thisend the Company is governed by a well-informed Board of Commissioners, whichincludes one Independent Commissionerand a responsible and professional Boardof Directors, comprising three Directors.Members of both Boards have a broad rangeof relevant nancial skills, professional

    experience, and managerial expertise tomeet the Companys objectives.

    Size and Composition of the BoardsThe size and composition of the BoC andBoD is subject to the limits imposed by theCompanys Articles of Association, whichstipulate that nominations to the BoC andBoD should be approved by shareholders ata General Meeting of Shareholders (GMOS)for a period commencing from the date ofthe GMOS appointing them until the closingof the fth Annual GMOS after the date ofappointment.

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    Board of Commissioners:Roles and ResponsibilitiesThe Board of Commissioners comprisesfour members, one of whom is independentand undertakes a supervisory role inmonitoring the Companys performanceagainst its stated business objectives. Asidefrom its statutory authority, as stated inthe Companys Articles of Association with

    respect to approving certain transactionsand approving the annual report, theBoC has oversight of risk management,audit controls and the timely disclosureof information in line with prevailingregulations. To ensure this happens, everyeffort is made to provide the BoC with therelevant information through regular formal

    joint meetings of the BoC and BoD.

    The appointment of the IndependentCommissioner complied to Indonesian StockExchange regulation [I-A Kep-305 /BEJ/07-

    2004]. The Independent Commissioner, asdened by the regulations, serves as theCompanys Audit Committee Chairman.

    The Board of Commissioners met formallyeight times in 2007; in each case an agendaincluding board papers and the minutesof the previous meeting was distributed toCommissioners in a timely fashion. Theseformal meetings do not preclude frequentinformal contacts and information sharingbetween Commissioners and Directors.The Board of Commissioners held nineformal meetings with the Board of Directors

    during 2007, in addition to routine informalmeetings.

    Board of Commissioners

    Ari S. Hudaja, President CommissionerAri S. Hudaja was appointed PresidentCommissioner of the Company on May11, 2007. He has extensive experience inthe industry, and currently serves as thePresident Director of PT Bumi ResourcesTbk, PT Arutmin Indonesia and PT KaltimPrima Coal.

    Qoyum Tjandranegara, IndependentCommissionerQoyum Tjandranegara is well-known bothdomestically and internationally in theindustry, serving in the past as PresidentDirector of Perum Gas Negara, PresidentDirector of PT Perusahaan Gas Negara, asAdvisor to the Ministry of Mines & Energy,Secretary of the Board of Commissioners

    of Pertamina, and Special Staff to the VicePresident of the Republic of Indonesia,Energy & Industrial sector. Appointed asIndependent Commissioner in June 2004,he also serves as Chairman of the AuditCommittee.

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    Suyitno Patmosukismo, CommissionerSuyitno Patmosukismo has contributedextensively to the development of theIndonesian oil and gas industry in severalsenior positions including the Director ofExploration and Production at Pertamina,the Director General Oil & Gas within theIndonesian Department of Mines & Energy,and the position of Chairman of the OPECBoard of Governors in the mid 1990s. Heis also currently the Executive Director ofthe Indonesian Petroleum Association. Heserved as President Commissioner of theCompany between 2004 and 2007.

    Nalinkant A. Rathod, CommissionerNalinkant A. Rathod was appointed to theBoard of Commissioners on May 11, 2007.He also sits on the Board of Commissionersfor PT Bumi Resources Tbk, and is theManaging Director of both Great AsianHoldings Pte. Ltd. and Capital ManagersAsia Ltd.

    The Board of Directors:Roles and ResponsibilitiesThe Board of Directors currently comprisesthree Directors including the PresidentDirector and is responsible for the day today management of the Company and assuch has responsibility, inter alia, for thefollowing key tasks:

    Administration of Company accountsJointly with the BoC, the preparation andsignature of the Companys annual reportfor approval by shareholders

    Approving the Companys riskmanagement strategy, monitoring itseffectiveness and maintaining a directand ongoing dialogue with the Companysauditors and regulatorsImplementation of corporate strategiesand recommendations on signicantcorporate strategic initiativesDevelopment and recommendation ofthe Companys annual budget to theBoC and shareholders for approval, andmanagement of day to day operationswithin the budget

    Establishing appropriate terms ofappointment, performance evaluationand succession plans for the BoDRepresenting the Company in everyaspect of its activities and for all legalpurposesSetting of standards for social and ethicalbehavior and monitoring compliancewith the Companys corporate socialresponsibility policy and practice

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    The Board of Directors convenedformally ten times in 2007. The PresidentCommissioner and President Directorestablished the agenda for each meetingto ensure adequate coverage of nancial,strategic and major risk issues throughoutthe year.

    In addition, meetings were held whenevernecessary to deal with specic mattersrequiring attention during the periodsbetween scheduled meetings. In 2007,

    nine formal meetings combining both theBoard of Commissioners and the Board ofDirectors were held, in addition to regularinformal meetings throughout the year.

    Board of Directors

    Christian V. Ponto, President DirectorChristian V. Ponto was appointed PresidentDirector of the Company on April 19, 2007.Previously, he was President & GeneralManager of Kondur Petroleum S.A.,the Malacca Strait PSC operator whichhas dominated the Companys total oilproduction since 2003. Mr. Ponto has spentalmost ve years at the top managementlevel of the Groups various afliatedcompanies within the energy sector, and 18years in local and international positions

    with ARCO, including Chief ExplorationOfcer, ARCO Tangguh, Irian Jaya.

    Yuli Soedargo, Director &Chief Financial OfcerYuli Soedargo has extensive experiencein Senior Management roles with leading

    Indonesian listed companies. He served asFinancial Services Director of Kalbe FarmaGroup in the 1990s, as Managing Director ofBII and Head of Banking Relations, Control& Audit at Asia Pulp & Paper. He wasappointed a Director in December 2005.

    Imam P. Agustino, DirectorImam P. Agustino was appointed to theBoard of Directors on April 19, 2007. His19 year career in engineering, projectmanagement, and business developmenthas included being the President & GeneralManager of LBI, and ten years in topmanagerial positions in various foreignafliated institutions within the naturalresources sector, ranging from TrafalgarHouse UK to Energy Services Pte Ltd.

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    Succession planning

    An important function of both boardsis to ensure that the Company has theappropriate mix of skills and experience.The BoC in conjunction with the BoD istasked with the responsibility of preparingthe selection criteria and procedures fornominating appointments and successionplanning in relation to members of theBoards, taking into account the skills,experience and expertise required, andcurrently represented, and the futuredirection of the Company.

    The selection and role of the PresidentDirectorThe President Directors duties are to:

    Ensure that, when all BoD members takeofce, they are fully briefed on Companystrategy and key performance objectivesand the contribution expected from eachDirector on achieving overall objectivesProvide effective leadership informulating strategyRepresent the Companys views to thepublicEnsure that the BoD meets at regularintervals throughout the year, and that

    minutes of meetings accurately recorddecisions taken and, where appropriate,the views of individual DirectorsGuide the agenda and conduct of all BoDmeetingsReview the performance of BoardDirectors

    The selection of President Director is basedon an evaluation as to whether the candidateis able to execute these duties effectively.

    Review of BoC and BoD Performance

    The two Boards meet on a regular basis toreview plans, budgets and performance,and to discuss major issues and decisionsfacing the Company. The Boards regularlyreview their overall per formance, as wellas the performance of Committees andindividual Commissioners and Directors.Clear criteria and performance targets areset annually for the BoC, the BoD, eachspecial committee, and each Commissionerand Director.Orientation and training programs

    On an ongoing basis training is undertakenfor Board members to stay informed ofcurrent and forthcoming regulations andissues regarding the upstream oil andgas sector, as well as developments in theregulatory environment and monitoringpolicy for publicly listed companies, incoordination with the Corporate Secretary.

    Access to information and adviceAll Commissioners and Directors haveunrestricted access to the Companysrecords and information, and receiveregular detailed nancial and operational

    reports to enable them to carry out theirduties.

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    Annual & Extraordinary General Meeting

    of ShareholdersResolutions passed at the Annual GeneralMeeting of Shareholders (Annual GMOS)on May 11, 2007 are as follows:

    Ratied the Companys Balance Sheetand Income Statement for the year 2006and granted the release and discharge(acquit et de charge) to all members ofthe Companys Board of Directors andBoard of Commissioners.Determined the utilization of theCompanys prot for the nancial yearended December 31, 2006 by reinvesting

    the Companys net prot into theCompanys Retained Earning for thedevelopment of the existing assets.Approved to give the authorization tothe Board of Directors to appoint thePublic Accountant to audit the CompanysFinancial Statement that end onDecember 31, 2007 and other periods inthe 2007 nancial year whenever requiredand to authorize the Companys Board ofDirectors to determine the honorarium ofthe Public Accountant together with theother conditions.Approved the alteration of the

    composition of the CompanysBoard of Commissioners, with thenew composition of the Board ofCommissioners as follows:President Commissioner:Ari Saptari HudajaIndependent Commissioner:Ir. Drs. Qoyum TjandranegaraCommissioner:Ir. Suyitno PatmosukismoCommissioner:Nalinkant Amratlal RathodApproved to give the the authorization to

    the Companys Board of Commissionersto determine the remuneration andallowance for the members of theCompanys Board of Commissioners andBoard of Directors for the total amount ofRp1,700,000,000 per month.

    1.

    2.

    3.

    4.

    5.

    The Annual GMOS also observed and noted

    the BoD report regarding the realizationof the Rights Issue I Funds utilization, andthe BoD report concerning the Companysactivities, Balance Sheet and IncomeStatement for the nancial year 2006.

    Resolutions passed in the ExtraordinaryGeneral Meeting (Extraordinary GMOS) onFebruary 15, 2007, are as follows:

    Approved the encumbrance of all ora substantial part of the Companysand/or its subsidiaries asset or to issuecorporate guarantees with respect to

    fund raising and/or renancing.Approved the alteration of the RightsIssue I proceed funds utilization,which had been previously approvedto be changed from loan to becomethe Companys capital injection in itssubsidiaries, which are KEL, PAN and LBIto be further changed to become loan.

    Resolutions passed in the ExtraordinaryGMOS on April 19, 2007, are as follows:

    Approving the shares participationstransaction plan by the strategic partnersthrough the issuance of new shares in

    Energi Mega Pratama Inc., a Companyssubsidiary which its entire shares arewholly owned by the Company.Approving the alteration of the RightsIssue I funds utilization which had beenpreviously approved to be changedfrom loan to capital injection in itssubsidiaries, which are Energi MegaPratama Inc., EMP Kangean Limited andEMP Exploration (Kangean) Limited to befurther changed to become loan.To approve the new composition of theBoD as follows:

    President Director: Christian Victor PontoDirector: Yuli SoedargoDirector: Imam Pria AgustinoApproving the amendment of Article 21section 3 of the Companys Articles ofAssociation.

    1.

    2.

    1.

    2.

    3.

    4.

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    Corporate Secretary

    Riri Harahap, Corporate Secretary andVice President LegalRiri Harahap was appointed CorporateSecretary in June 2005 and to the position ofVice President Legal, in February 2006. Shebrings with her over 15 years of experiencein law.

    The Companys Corporate Secretaryplays a key role providing effective legaladvice with regard to general day-to-daymatters and in compliance with regulations

    including those of the capital market.The Corporate Secretary is also taskedto provide Commissioners and Directorswith ongoing guidance on issues such ascorporate governance, on matters relatingto the Companys Articles of Associationand to achieve the highest standards in theorganization of shareholder meetings andmeetings of the Boards.

    Report of the Audit CommitteeThe effectiveness of both Boards isenhanced by the support of the AuditCommittee, whose role is to oversee all

    matters relating to the integrity of thenancial statements, recommendationsfor the appointment of External Auditors,management of operational risks andcompliance with legal and regulatoryrequirements.

    Audit Committee members

    Qoyum Tjandranegara, Chairman(Independent Commissioner)See page 35.

    Hertanto, MemberHertanto has 37 years of auditingexperience, and has been a member ofthe Audit Committee since October 2005.Hertanto served as an IndependentCommissioner for PT Adhi Karya (Persero)between 2004 and 2006.

    Toha Abidin, Member

    Toha Abidin has been the member of theCompanys Audit Committee since March2005. Mr. Abidin has 29 years of extensiveworking experience in nance and auditing.He started his carrier as an auditor staffin Public Accountant Dra. Koesbandriyah,Bandung in 1978. He then worked inDirektorat PW2, DJP, Department ofFinance. In 1987, he worked for PT GarmenaAriesta.

    He is a partner in Public Accountant Pieter,Ulways & Partner from 1990 until now, he

    currently served as the President Directorof PT Piesta Dinamika Consult.

    Audit Committee members are chosen fortheir skills and relevant experience.

    Tasks implementedThe Audit Committee is responsible forproviding independent professional opinionsto the Board of Commissioners, and to bringto their attention any matters related to:

    Financial Statements, projectionsand other nancial information to bepublished by the Company

    Adherence to legislation and regulationof the capital market authorities and theIndonesia Stock Exchange and any otherregulatory requirements related to theCompanys activitiesReviewing the work undertaken byInternal Auditor and the External AuditorReviewing any complaints, or referencesmade to either Board from the publicAssisting the BoC with the selection andappointment of the External Auditor

    Meetings

    The Audit Committee held a total of fourmeetings during 2007 attended by:Qoyum Tjandranegara, ChairmanHertanto, MemberToha Abidin, Member

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    The Audit Committee assessed and

    reviewed the Consolidated FinancialStatements as of December 31, 2007 alongwith the notes to the Financial Statements.To ascertain the fairness of the ConsolidatedFinancial Statements, the Audit Committeealso conducted discussions with theExternal Auditor and Internal Auditorregarding the holding Company and itssubsidiaries in respect of:

    Organization structureInternal control systemsAccounting policies, systems andprocedures

    Compliance with capital marketregulations and other regulationsOther information related to theCompanys management policies

    Summary of conclusions from AuditCommittee meetings:

    The External Auditor has performedthe general audit of the CompanysConsolidated Financial Statements as ofDecember 31, 2007 independently andobjectively.Internal Auditor has carried outits function satisfactorily. Further

    improvement in some aspects of theperformance of the internal audit systemis still required.The management of the holding Companyand its subsidiaries has applied policiesand governance to a high standard aswell as complied with capital marketregulations and other regulations of theGovernment of the Republic of Indonesia.The management of the holding Companyand its subsidiaries has prepared theFinancial Statements of the HoldingCompany and its Subsidiaries as of

    December 31, 2007 in accordance withthe Financial Accounting Standards ofIndonesia (PSAK) and in accordance withthe PSC Contracts Conditions valid forSubsidiaries with a line of business in oiland natural gas.The Consolidated Financial Report ispresented in accordance with the PSCContract requirements applied forthe subsidiaries which have the line ofbusiness in oil and gas sector and withthe guidelines of the Financial Reportpresentation and disclosure for the oiland gas industry Listed Company from

    the Supervisory Board of Capital Market.

    a.

    b.

    c.

    d.

    e.

    The compensation packages for the

    Board of Commissioners and Directorsare in line with standing procedures andwere approved at the Annual GeneralMeeting of Shareholders.The estimated gross proved oil and gasreserves is based on certication issuedby independent oil and gas consultants.

    Approach to audit governanceThe Company is committed to theimplementation of three basic principles:

    The preparation of true and fair nancialreports;

    The use of accounting methods which arecomprehensive, relevant and compliantwith applicable accounting rules andpolicies;That the External Auditors areindependent and serve shareholderinterests by ensuring shareholders areaware of the Companys true nancialposition. Developments and practices aremonitored and reviewed accordingly.

    External AuditorThe Companys independent ExternalAuditor was appointed by the Directors with

    the authorization of shareholders at theAnnual General Meeting of Shareholders.

    The Audit Committee is responsible formaking recommendations concerning theappointment of External Auditors and theterms of their engagement. The Committeereviews the performance of the ExternalAuditors. The independent External Auditorreports directly to the Audit Committee.

    The Public Accountant Ofce of JimmyBudhi & Partner has been appointed as

    the Companys External Auditor to auditthe Companys Consolidated FinancialStatements for the year endedDecember 31, 2007.

    f.

    g.

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    Certication and discussion with External

    Auditor on their independent statusThe Audit Committee requires the ExternalAuditor to conrm their independence. TheCompanys External Auditor gives assuranceto the Audit Committee that they havecomplied with all standards promulgatedby local and overseas regulators andprofessional bodies.

    Relationship with External AuditorAudit partners and audit rm employeesare prohibited from being ofcers of theCompany while retaining their status asaudit partners or audit rm employees. This

    also applies to immediate family membersof audit rm employees. Financial andbusiness relationships are also prohibited.A minimum period of ve years must elapsebefore former audit rm employees may beconsidered for a position on the Board ofDirectors or within the Company.

    Restrictions on non-audit services by theExternal AuditorThe External Auditor is not authorized tocarry out the following types of non-auditservices for the Company:

    Preparation of accounting records andnancial statementsInformation technology systems designand implementationValuation services and other corporatenance activitiesInternal audit servicesTemporary senior staff assignments ormanagement functionsBroker or dealer, investment adviser orinvestment bankingLegal servicesLitigation servicesActuarial services

    Recruitment services for seniormanagement

    For all other non-audit services, use of

    the external audit rm must be assessedin accordance with the Companys policyrequiring an independence assessment tobe done by the business manager requiringthe service. The approval of Internal Auditorand the Chairman of the Audit Committeemust also be obtained.

    Internal Audit functionThe Audit Committee approves theappointment of the Head of Internal Audit.It reviews internal audit responsibilities,budget and stafng, signicant reportsprepared by internal audit unit and

    management responses thereto. The AuditCommittee Chairman meets separately withthe Head of Internal Audit.

    Compliance with legal and regulatoryrequirementsThe Audit Committee ensures conformitywith applicable legal and regulatoryrequirements and the Companys Code ofConduct, examining material issues raisedinternally or from the External Auditor, inconjunction with the Corporate Secretaryand in-house legal counsel from time to

    time as required.

    Risk Management CommitteeThe Risk Management Committee wasestablished in June 2007. The membersof this committee are Christian V. Ponto,Christopher B. Newton, Nalinkant A.Rathod, Yuli Soedargo, Norman H. Harahap,Agustanzil Sjahroezah, Lindawati Kusumaand Iwan Kristiantono.

    Risk Management Committee encompassesa review of all risks faced by the Companyto quantify their impact and likelihood, and

    ensure appropriate mitigation measures arein place.

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    Delegation of authority

    The BoD delegates nancial authority toemployees who are responsible for takingactions, signing documents and approvingtransactions affecting the operation andaffairs of the business entity. The overridingprinciple is that no individual is to exercisemore authority than that which has beendelegated to him or her.

    Delegation of authority is managed topdown, is consistent across the organization,and is based on the amount of risk - interms of value associated with thedecision. The authority delegated is based

    on the desired balance between centralizedand decentralized decision making in theorganization.

    An operational framework is implementedvia (1) approvals manuals (2) delegation ofauthority guides (3) authorized approval listswith specimen signatures (4) other meanssuch as electronic storage and retrieval.

    Final approval requirements are specied indelegation of authority or equivalent guides,usually within monetary, volume, or other

    appropriate limits. No employee is grantedauthority to approve his or her own traveland business related expense statements orreimbursements.

    Authority is limited to expenditures andother transactions made within ones areaof responsibility. The BoD reviews thedelegation of authority guides as required.

    IT Governance

    The Company is in the process of preparingall necessary requirements in relation to theestablishment of the IT Steering Committee.The Company considers that the IT SteeringCommittee will have representatives fromall relevant business and IT areas to ensurethat IT investments meet their objectivesin terms of efciency, effectiveness andstandardization. The establishment of the ITSteering Committee has not been completedyet, however each IT relevant staff haveidentied any point that must be preparedfor the IT Governance to be established inthe Company.

    Compliance policy and practicesThe Companys compliance approachfocuses on ensuring strict adherence to alllaws and regulations, maintaining qualitycontrol over practices and processes,identifying any weaknesses and addressingany gaps.

    Corporate responsibility and sustainability

    Approach to corporate responsibility andsustainability

    The Companys aim is to manage itsbusiness in a way which producespositive outcomes for all stakeholdersand maximizes economic, social andenvironmental value simultaneously. Indoing so, the Company accepts that theresponsibilities owing from this go beyondboth strict legal obligations and the nancialbottom line. Transparency, the desire forfair dealing, responsible treatment of staffand of customers and positive links into thecommunity, underpin everyday activities andcorporate responsibility practices.

    Employee RelationsThe Company has policies related to:

    Safe work environmentNon-discriminationEqual employment opportunityCompetitive terms and conditions ofemploymentElimination of forced or compulsorylabour

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    The Companys Code of ConductThe Companys Code of Conduct appliesto the BoC, BoD and employees withoutexception, and if necessary facilitatesthe use of sanctions. The Code governsworkplace and human resource practicesand is aligned to the Companys core valuesof teamwork, integrity and performance.The Code is supported with appropriateawareness training, reviewed periodicallyand approved by the Boards.

    Key suppliers are required to sign the Codeof Conduct before becoming accredited.

    Corporate Governance ManualThe Companys implementation of goodcorporate governance practice is guided bythe principles and practices already in placewith the best interest of all stakeholders,while ensuring full compliance withregulatory requirements. A formalCorporate Governance Manual drawingtogether all current best practice routinesin existence, as described in this report,is being prepared to be implemented byemployees while ensuring that the contentsare reasonable and cover all key subjects.Employees will be required to sign toconrm that they have read and understoodall elements of the manual.

    Commissioners and Directors interestsThe extent of share ownership by Boardmembers at December 31, 2007 is asfollows:

    Yuli Soedargo : 4,250,000 shares

    Prevention of Conict of InterestIn compliance with Bapepam Rule No. IX.E.1regarding Conict of Interest on CertainTransactions which details the permittedtransactions and procedures to conductand/ or disclose conicts of interest, theCompany always ensures that any potentialconict of interest transaction is proposedand approved by shareholders in a GeneralMeeting of Shareholders prior to theexecution of such transaction. The Companyhas established a Conict of InterestCommittee.

    Conict of Interest CommitteeThe Conict of Interest Committee reportsdirectly to the Board of Commissionersand reviews transactions to ensure propercompliance with procedures and applicableregulations. The Committee held threeformal meetings during 2007, in additionto several routine informal meetings.The committee is chaired by SuyitnoPatmosukismo, and the members compriseAri S. Hudaja, Imam P. Agustino andRiri Harahap.

    In addition to formal meetings, theCommittee continuously reviews and givesrecommendations whenever necessaryregarding the implementation of andcompliance with regulations.

    The Company reports the totalremuneration paid to the Commissionersand Directors in Note No. 1 of the nancialstatements, and the extent of individualshareholdings of Commissioners andDirectors is fully disclosed above.

    Material Transaction

    In compliance with Bapepam Rule No.IX.E.2 regarding Material Transactions andChanges of Core Business, the Companyensures that any acquisition or disposal ofshares or assets transactions that are equalor greater than 10% of revenue or 20% ofequity (shares subscription) are approved byhalf plus one of the Companys shareholdersthrough an Extraordinary General Meetingof Shareholders.

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    Kangean PSC share subscription(Japex/Mitsubishi)The plan for EMP Inc.s shares subscriptiontransaction is classied as a materialtransaction as referred in the BapepamRule No. IX.E.2, considering that thetransaction value is estimated toexceed 10% of the Companys income(Rp 1,646,538,248,288) and 20% of theCompanys equity (Rp 1,833,167,047,850) asof December 31, 2006. The said transactionwas approved by shareholders at theCompanys Extraordinary General Meetingof Shareholders on April 19, 2007.

    Market disclosure practicesThe Company is committed to giving allshareholders comprehensive and equalaccess to information about Companyactivities and obligations to the broadermarket, and primarily uses itswww.energi-mp.com as an informationdelivery mechanism to shareholders,investors and users.

    The Corporate Secretary is responsible forensuring compliance with the continuousdisclosure requirements in the ListingRules, and overseeing and co-ordinatinginformation disclosure to the IndonesiaStock Exchange, analysts, brokers,shareholders, the media and the public.Guidelines exist for staf f and Directors toensure that unpublished information, whichmay be price sensitive about the Companyor any other organization, is not used in anillegal manner.

    Transparency and Disclosure

    Means of communicationThe 2007 full year nancial results ofthe Company were published in BisnisIndonesia, Investor Daily IndonesiaandThe Jakarta Post. All nancial reportswere also published via the Companyswebsite www.energi-mp.com.Periodic audited results are led with theIndonesia Stock Exchange. These detailsare also published on the Companyswebsite. The Company makes use ofits website for publishing ofcial news

    releases and presentations made toinstitutional investors and analysts.The Company held one public expose in2007, on December 14, 2007.

    Range of Shares Ownership

    1 - 5,000 Shares

    5,001 - 10,000

    10,001 - 50,000

    50,001 - 100,000

    100,001 - 500,000

    500,001 - 1,000,000

    1,000,001 - 5,000,000

    5,000,001 - 10,000,000

    10,000,001 - 50,000,000

    50,000,001 - 100,000,000

    100,000,001 - 1,000,000,000

    >1,000,000,001

    Total

    Distribution of shareholding as at December 31, 2007

    No. of Share Accounts

    993

    539

    1,342

    383

    500

    138

    167

    42

    57

    9

    21

    2

    4,193

    %

    23.68

    12.86

    32.01

    9.13

    11.92

    3.29

    3.98

    1.00

    1.36

    0.22

    0.50

    0.05

    100.00

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    sHarE inforMation

    Share Price

    The Company is quoted on the Indonesia Stock Exchange, code: ENRG

    Quarter 1

    Quarter 2

    Quarter 3

    Quarter 4

    2007

    Highest Price Lowest Price

    750 510

    840 590

    970 710

    1,510 840

    2006

    Highest Price Lowest Price

    910 590

    850 550

    870 700

    830 710

    Volume (x10,000) Price (Rp)

    1,600

    1,400

    1,200

    1,000

    800

    600

    400

    200

    0

    64,000

    56,000

    48,000

    40,000

    32,000

    24,000

    16,000

    8,000

    0

    Share Performance

    Price (Rp) Volume (x10,000)

    EGM new BOD (Apr 19),ENRG Rp 640

    LBI Deconsolidation(Sep 12), Rp 820

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    EnErgi MEga PErsada - annual rEPort 2007 7EnErgi MEga PErsada - annual rEPort 2007 7

    CorPoratE struCturE

    Malacca Brantas FinanceB.V. (Netherlands)

    EMP

    EMP Exploration

    (Kangean) Ltd. (UK)

    PT Semberani PersadaOil (Indonesia)

    Semberah TAC

    Kangean EnergyIndonesia Ltd. (Delaware)

    Korinci Baru PSC

    Bentu PSC

    Gebang JOB PSC(Pertamina)

    Gelam TAC

    PT Tunas Harapan

    Perkasa (Indonesia)

    Malacca Strait PSC

    Kangean PSC

    49.99998%

    100%

    100%

    99.99%

    100%

    100%

    100%

    99.99%

    99.99%

    99.99%

    100%

    100%

    100%

    WI - 100%

    WI - 100%

    WI - 50%

    WI - 100%

    WI - 100%

    WI - 34.46%

    WI - 26.03%

    WI - 60%

    WI - 40%

    Kalila (Bentu) Ltd.(B.V.I.)

    Costa International Group Ltd.(B.V.I.)

    PT Insani Mitrasani

    Gelam (Indonesia)

    Kalila (Korinci Baru) Ltd.(B.V.I.)

    Kondur Petroleum S.A.(Panama)

    PT Imbang Tata Alam

    (Indonesia)

    RHI Corporation(Delaware)

    Energi Mega PersadaPte Ltd. (Singapore)

    0.00002%

    * Stra tegic Alliance with PT Indelberg Indonesia Perkasa

    WI: Working Interest

    100%

    Energi Mega Pratama Inc.(B.V.I)

    Suci OCA*

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    rEsPonsiBil ity

    for finanCial rEPorting

    This Annual Report and the accompanying nancial statements and related nancialinformation are the ressponsibility of the Management of PT Energi Mega Persada Tbk andhave been approved by members of the Board of Commissioners and Board of Directorswhose signatures appear bellow:

    Board of Commissioners

    Ari S. HudajaPresident Commissioner

    Qoyum TjandranegaraIndependent Commissioner

    Suyitno PatmosukismoCommissioner

    Nalinkant A. RathodCommissioner

    Directors

    Christian V. PontoPresident Director

    Yuli SoedargoDirector

    Imam P. AgustinoDirector

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    Dened Terms

    BPMIGAS

    BPHMIGAS

    GCA

    GSPA

    HGSA

    PGN

    PJB

    PKG

    PLN

    PROPER

    TSB

    Oil and Gas Terms

    1P or proved reserves

    2P or proved plusprobable reserves

    3P or proved, probable& possible reserves

    contingent resources

    crude oil

    development well

    exploration wellor wild cat well

    gross production

    gross reserves

    Glossary of Oil and Gas Terms and Units of Measurements

    Badan Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi or Upstream Executive Body, thenon-prot, Government-owned, operating board that is succeeding Pertaminas role as regulator ofupstream oil and gas activities under the New Oil and Gas Law.Badan Pengatur Hilir Minyak Dan Gas Bumi, the non-prot Government-owned operating boardthat is succeeding Pertaminas role as regulator of downstream oil and gas activities under the NewOil and Gas Law.Gaffney, Cline & Associates (Consultants) Pte Ltd, independent assessors of the Companys reserves.

    Gas Sales and Purchase Agreement.Heads of Gas Sales and Purchase Agreement.

    PT Perusahaan Gas Negara (Persero) Tbk.PT Pembangkitan Jawa Bali.PT Petrokimia Gresik.PT Perusahaan Listrik Negara (Persero).The Environmental Compliance Performance Evaluation Program or Program Penilaian PeringkatKinerja Perusahaan dalam Pengelolaan lingkungan.

    Terang, Sirasun and Batur elds.

    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 dateforward, from known reser voirs and under current economic conditions, operating metho