PT Energi Mega Persada Tbk

Annual Report 2005

Contents
03
05
06
08
12
20
41

48
50
52
65

2005 achievements
Corporate highlights
EMP at your finger tips: 3 year performance summary
Message from the President Commissioner
Report of the President Director
Review of Operations
Managements Discussion and Analysis of the Financial
Condition and Results of Operations
Safety, Health and Environment
Community Relations
Corporate Governance Report
Financial Report

Strategy in action
24 : 7 : 52
Relentless is an accurate description of the pace
of drilling, development and commercialization at
EMPs oil and gas properties, as the Company moves
into a new growth phase following the acquisition of
significant assets in early 2006.

Night activity, production platform at Lalang oil field,

Malacca Strait, Sumatera.

PT Energi Mega Persada Tbk (EMP)

One of the largest and fastest growing publicly-listed oil and gas exploration and production
companies in Indonesia, EMP and its wholly owned subsidiaries control working interests in 3
production sharing contracts (PSCs):
Malacca Strait (60.49%)
Brantas (50%)
Kangean (100%)
In addition to 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.
In December 2005, EMP obtained shareholders approval to acquire PT Tunas Harapan Perkasa
(THP). The acquisition, completed in early 2006, added some 90 mmboe of 2P reserves and 88
mmboe of contingent resources to EMP.
The acquired assets provide EMP with an opportunity to apply its extensive skills in reservoir
management, gas commercialization and production optimization.

EMPs Portfolio: 2005 and early 2006

Thailand
N

Vietnam

Philippines

South China Sea

400 KM

Gebang JOB PSC

Korinci Baru PSC

JANUARY 2006
EXISTING

Brunei

Malaysia

Semberah TAC

Malaysia
Sumatera

Bentu PSC

Singapore
Kalimantan

Gelam TAC

Sulawesi

A
Papua

Malacca Strait PSC

Java

Brantas PSC
Kangean PSC

East Timor
Indian Ocean

Value defined:
In the last 18 months EMP has grown in stature:
From a listing price of Rp 160 our shares have outperformed the overall
market
A rights issue in early January 2006 raised Rp 3.78 trillion, providing
greater liquidity in the Companys shares and a stronger balance sheet
The important Kangean production sharing contract has been extended to
expire in 2030
Kangean gas sales agreements have been renegotiated on improved terms
The THP acquisition boosts proved and probable reserves by 26% and
contributes to revenues in 2006
The expanded portfolio provides a deep and diverse growth
opportunity set from production optimization, through brown field
development to high impact exploration

2004 - 2005 ENRG share price

Volume (million)

Price (Rp per share)

400

1,000

350

900
800

300

750
250

600

200

500

150

400
300

100

200

50

100

Price
Volume


0

Dec 05

Sep 05

Jun 05

Mar 05

Dec 04

Sep 04

Jun 04

2005 achievements

Financial

Net profit after tax up 164% to Rp 195 billion or Rp 21 per share

Net sales up 73% to Rp 1,479 billion
EBITDA up 58% to Rp 699 billion
US$ 275 million facility signed for the development of Kangean
US$ 120 million fund raising closed for Brantas and Malacca
Strait development
Rights issue raised Rp 3.78 trillion to fund the acquisition of
THP and the development of quality assets

Operational

Gross production up 12% to 11.4 mmboe

Gross oil production steady at 3.7 mmboe
Gross gas volumes up 19% to 7.7 mmboe
Commercialized 939 Tbtu of gas and signed sales agreements
valued at US$ 1.9 billion
THP acquisition raised 2P reserves by 26% to 437 mmboe
Maintained outstanding safety and environmental record

Outlook

Oil prices shift through US$ 70 per barrel level

Drilling program expanded for 2006
Full year benefit of production from the THP acquisition
New revenue streams from recently completed Gas Sales
Agreements
Exciting exploration prospects


0

Our Guiding Principle

We are committed to innovatively delivering petroleum resources to markets,
maximizing value for shareholders.

Our Mission
To become the leading Exploration & Production company in Southeast Asia
by 2016 by:

Generating exceptional returns for investors

Being respected in the industry
Materially growing reserves and production
Being desired as an employer of choice

Corporate Structure
100%
100%

100%

EMP Exploration
(Kangean) Ltd.

Energi Mega Pratama Inc.

40%
WI-100%

100%

EMP Kangean Ltd.

60%

100%

Kondur Petroleum S.A.

34.46%
WI-60.49%

RHI Corporation
96%

PT Imbang Tata Alam

Kangean PSC

Malacca Strait PSC

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%

Pan Asia Enterprise Ltd.

15.76%

Lapindo Brantas, Inc.

99.99%

100%
100%
99.99%

100%

PT Tunas Harapan Perkasa

Kalila (Bentu) Ltd.

Kalila (Korinci Baru) Ltd.
Costa Intl Group Ltd.

99.99%

PT Insani Mitrasani Gelam

99.99%

PT Semberani Persada Oil

WI-50%

WI-100%
WI-100%
WI-50%
WI-100%
WI-100%

Company
Operator
PSC (Production Sharing Contract)

TAC (Technical Assistance Contract)

JOB (Joint Operating Body)
WI
Working Interest


0

Brantas PSC

Bentu PSC
Korinci Baru PSC
Gebang JOB PSC
Gelam TAC
Semberah TAC

Corporate highlights
May 05
AGM/EGM held, appointed Chris Newton as new President Director,
Rennier Latief appointed as Commissioner.
US$ 275 million debt facility signed to fund the development of the
Kangean PSC.

Jul 05
New Heads of Agreement signed for gas sales of 939 Tbtu from the
Kangean PSC and gas sales agreements signed for Petrokimia Gresik,
PJB, PGN and Pertamina for the East Java market.
US$ 120 million debt facility signed to fund the development of the
Malacca Strait and Brantas PSCs.

Sep 05

Nov 05

Brantas block: Tanggulangin-3 well starts producing oil.

Announced rights issue to fund

the acquisition of PT Tunas
Harapan Perkasa (THP) and
related assets for total cash
consideration of US$ 284 million.

Malacca Strait block: BY-1 well tests positive with gas and
condensate flows.
ISO 14001 achieved for the Malacca Strait and Kangean PSCs.
OHSAS 18001 certification for Malacca Strait PSC.

Dec 05

Jan 06

US$ 1.9 billion in gas sales

agreements completed with
leading customers including
Pertamina, PLN, PGN and Indogas.

Rights issue and acquisition of

THP completed.

EGM held, new Directors, Yuli

Soedargo and Faiz Shahab appointed.
EMP is among the top 45 most
liquid counters (LQ45).


0

EMP at your finger tips

Financial Performance
2005

2004

2003

1,479.4
698.6
174.8
22.0
195.8
20.6




5,059.2
2,486.6
641.7




13.2
30.4
387.9
347.1

855.1
442.2
224.9
(150.3)
74.2
8.9


2,673.0
942.1
431.6


8.7
17.2
218.3
854.8

513.1
241.7
134.9
(119.6)
15.4
2.3

2005

2004

2003

Oil production (bopd)

Brantas PSC
Malacca Strait PSC
Kangean PSC
Total

14
9,328
773
10,114

-
9,887
397
10,284

10,567
10,567

Total oil production (mmboe)

3.7

Gas sales (mmcfd)

Brantas PSC
Malacca Strait PSC
Kangean PSC
Total

51
-
81
132

Total gas production (mmboe)

7.7

(in billion Rupiah, except EPS and Financial Ratios)

Income Statement
Revenue
EBITDA
Profit before tax
Income tax
Net profit
Earnings per share
Balance Sheet
Total assets
Net debt
Equity
Ratios (%)
Profit margin
ROE
Net Debt/ Equity
Interest coverage ratio

662.8
72.8
(422.4)

2.9
(3.6)
(17.2)
1,273.6

Production Performance

3.8 *

65
-
41
106
6.5 *

3.9

48
48
2.9

* EMP consolidated Kangean from August 2004

Product Price Realizations

Average realized liquid price (US$/bbls)

Average realized gas price (US$/mcf)


0

2005

2004

2003

53.11
2.24

37.68
2.14

28.89
2.53

2005 Year End Proforma Gross Reserves and Resources

(in mmboe)

1P

2P

3P

Contingent Resources*

Brantas PSC
Oil
Gas

2
6

9
16

19
26

Malacca Strait PSC

Oil
Gas

24
-

35
-

46
-

2
11

Kangean PSC
Oil
Gas

4
222

14
273

36
282

11

Bentu PSC
Oil
Gas

-
24

-
48

-
76

Korinci Baru PSC

Oil
Gas

-
3

-
13

-
17

Gelam TAC
Oil
Gas

1
-

5
-

50
-

67

Semberah TAC
Oil
Gas

3
3

14
9

33
29

Gebang JOB PSC

Oil
Gas

-
-

-
1

1
7

21

Grand Total (8 blocks)

Oil
Gas

34
258

77
360

185
437

2
116

292

437

622

118

* best estimate
Notes
) Gross reserves have been certified by independent engineers DeGolyer and MacNaughton (D&M) as to the Kangean PSC, Gaffney Cline Association (GCA) as to Malacca
Strait PSC, Brantas PSC, Semberah TAC, Gelam TAC and Gebang JOB PSC, and Malkewicz Hueni Associates (MHA) as to Bentu and Korinci Baru PSCs.
2) EMP obtained shareholder approval to acquire the THP assets on December 22, 2005.
3) The gross reserves stated in the above table reflect EMPs latest independent reserve appraisal, EMP has taken a conservative approach to reserves in setting depreciation,
depletion and amortization (DDA) policy as outlined on Page 54 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.

Drilling activity history

2005
Brantas PSC
Development wells
Exploration wells
Malacca Strait PSC
Development wells
Exploration wells
Kangean PSC
Development wells
Exploration wells
Total
Development wells
Exploration wells

2004

2003

6
5

4
2

3
1

14
7

9
2

1
4

3
1

0
0

0
0

23
13

13
4

4
5

36

17


0

Message from the President Commissioner

Dear Shareholder,
The dramatic rise in world oil prices was the centre
of attention in 2005, and the source of considerable
change in the economy over the course of the
year. The inflationary impact of the adjustment in
local fuel prices is still with us although a tighter
monetary stance has begun to have a positive
effect. The rate of economic growth slowed in
2005 but it was still at the highest level in any
year since the financial crisis and the Governments
recent policy package announcements point to
increased spending and an improving investment
climate, good news for the oil and gas sector.
Further recent announcements on progress
toward the development of the Cepu oil field and
further investment in new oil refining capacity are
encouraging.
The management team at EMP continued to make
significant progress both in terms of the Companys
stated principle to maximize shareholder value
and our mission to attain leadership in oil and
gas exploration and production in South East
Asia. Substantial new gas agreements have been
concluded, PSC terms extended and working capital
was successfully raised in the first half of the year
to support drilling and development activity that
gained momentum in the second half. Shareholders
approved a planned rights issue to fund further
expansion. This took the form of an attractively
priced acquisition, completed post reporting date,
which provides both a boost to reserves and
immediate earnings for the year ahead.


0

I am pleased to report that much of this progress

has been the result of a strengthening of the
Companys management team with the arrival of
Chris Newton in the role of President Director and
CEO, Faiz Shahab appointed Director and COO and
Yuli Soedargo appointed as Director and CFO. Our
appreciation goes to Rennier Latief who has joined
the Board of Commissioners having served the
Company as President Director giving us valuable
continuity and experience in the oversight role. We
thank Roosmania Kusmuljono for her contribution
while serving on the Board of Commissioners.
Our appreciation also goes to Nazamudin Latief,
M. Suluhudin Noor and Purwanto who retired as
Directors in 2005.
The Board of Commissioners has been increasingly
active during the year in its oversight role on
the strategy, operations and, in concert with the
Audit Committee, on regular examination of the
financial condition of the Company. Standards have
been well maintained, and given the continued
program of expansion we took the decision
with the Board of Directors to undertake a full
independent diagnostic assessment of governance
by third party consultants. The results of this
study have given us valuable insight on how to
make further improvements to the governance
and risk management framework, as the scale and
complexity of the EMP operation continues to grow.

The Company has delivered a sound performance

in 2005 and this is discussed in detail in the body
of this report. EMP is still at a relative early stage
in its development and considerable investment in
developing the asset portfolio is required and hence
both Boards have recommended that earnings be
re-invested for the year ahead, without a dividend
payment from 2005 profits. In taking a longer
term view on returning value to shareholders we
believe there has been full recognition of the work
of the management team in the considerable
improvement of the share price since the Company
listed in 2004.

work that has gone into maintaining excellent

health and safety standards as well as sound
environmental management. And not least for the
care and enthusiasm shown to the people of the
communities that reside near our many operations
across the archipelago, in the multiple programmes
delivered under our community relations activities.
I close by extending my thanks to the Board
of Directors, to our employees, to our business
partners and not least for the support of our
shareholders.
For and on behalf of the Board of Commissioners,

EMP is a company managed with the interests

of all stakeholders in mind and we applaud the
efforts of the management and staff of EMP and
subsidiary companies on several fronts; first for
responding to the demands of the Companys
aggressive expansion strategy, second for the

Suyitno Patmosukismo
President Commissioner


0

Board of Commissioners

10

Qoyum Tjandranegara

Rennier Latief

Suyitno Patmosukismo

11

Report of the President Director

Overview
EMPs 2005 results were very encouraging.
Substantial growth in reserves, production and
product prices translated into strong revenue and
earnings growth. The achievement in building
reserves provides a solid platform for future
production as the funding secured during the year
will continue to be deployed in converting the
undeveloped proved and probable reserves into
proved developed and producing reserves.
The strong revenue and profit gains in 2005
were driven largely by the rapid rise in oil prices
and volume growth in gas sales. As customers
sought to reduce their energy bills, demand for
gas has escalated and these conditions have
facilitated our efforts to re-negotiate Kangean
gas sales agreements at much improved prices.
Additional gas sales agreements were signed worth
cumulatively over US$ 1.9 billion in future Kangean
revenues.
The completion of the PT Tunas Harapan Perkasa
(THP) acquisition added 5 additional oil and
gas blocks in January 2006, three of which are
producing and all of which contain proved oil and/
or gas reserves. The THP blocks present an excellent
strategic fit: they provide an immediate new source
of revenue and cashflow in 2006, a boost to 2P
reserves of 26%, and a substantial, low risk, growth
opportunity realizable through our core capabilities
of development and gas commercialization.
The THP assets also expand our contingent gas
resource base by 314% and with gas demand
growing rapidly through strong price pull as well
as policy push, we have an excellent opportunity
to commercialize this gas resource at higher prices
and add to our proved reserve base.

12

Chris Newton, President Director

The 2005 Results

Funding

In the Companys 2005 financial results, top line

sales were up 73% to Rp 1,479 billion. Significant
growth was achieved in operating income up
51% to Rp 475 billion and in EBITDA, up 58% to
Rp 699 billion. Year on year revenue gains were
attributable to 19% higher gas volumes and 41%
higher average oil prices. Net profit for the year was
Rp 195 billion, taking account of deferred tax gains
relating to sunk costs from drilling activities which
are deductible against future taxable income.

EMP has maintained its strategy of financing

acquisitions primarily through equity while focusing
on debt to fund development of the acquired oil
and gas fields. In addition to a US$ 275 million
facility signed in May for the development of the
Kangean PSC, we successfully concluded a
US$ 120 million financing in July for development
and exploration in the Malacca Strait and Brantas
blocks. The size and terms of these two facilities
speak to the underlying quality of the assets and
their future earnings potential. A rights issue of
4.9 billion shares was approved by shareholders at
the end of 2005 and fully subscribed at a price of
Rp 770 per share, with the Rp 3.8 trillion proceeds
mainly used to fund the THP acquisition and to
provide working capital for ongoing development of
the portfolio.

Production and reserves

The main challenge of the year was maintaining
our fast track development schedule. In a rapidly
tightening market for equipment and services,
we encountered delays in securing drilling rigs,
resulting in some production being deferred into
2006. Drilling results were mixed, as may be
expected in a diverse portfolio, however 91% of
production was replaced, and taking account of
the THP acquisition, total reserve replacement
was well over 100%. Drilling and development
activity peaked in the fourth quarter and the
momentum has continued into 2006 with 8 to 10
rigs active at any one time. We believe we have
overcome the majority of our rig procurement
difficulties and regular drilling reports on our web
site www.energi-mp.com provide both an up-todate picture of drilling results and clear evidence
that improvements have been made. At year-end
proforma certified 1P and 2P reserves (including
the effects of the THP acquisition) stood at 292
mmboe and 437 mmboe respectively. 2P reserves
plus best estimate contingent resources (largely
gas yet to be contracted) stood at 555 mmboe of
which 86% is gas and 92.5% is undeveloped.

Performance Management
Over the past year we have enhanced the
performance focus of the organization and the
alignment of management and employee objectives
with our overarching shareholder value objective,
through the implementation of a performance
management system for each business unit (block).
Key Performance Indicators (KPIs) are related
directly to shareholder value and have been set for
reserves, production, costs, major project schedules
and SHE (Safety, Health and Environment). KPIs
are cascaded down through the organization,
monitored regularly and linked directly to annual
performance bonuses.

13

Report of the President Director

Strategy
EMP is pursuing a tightly focused upstream oil
and gas sector growth strategy in Indonesia. It
combines our knowledge of customers, competitors,
resources and markets with the quality of our
assets and our capabilities to provide a sustainable
competitive advantage. The outcome is an ongoing
source of incremental value creation in a capital
intensive but skills driven industry. The 2005
annual report provides a good opportunity to
review the four growth pillars of our strategy in
more detail;
One, Acquisitions for step up growth
The highlight of the year was achieved in December
when shareholder approval was secured for the
acquisition of THP, adding some 90 mmboe of
2P reserves and 88 mmboe contingent resources
at the attractive price of US$ 1.68 per boe.
This represented one of the largest, and most
attractively priced asset acquisition deals in the
sector over the course of 2005 and provides a host
of growth options and opportunities. These range
from immediate production optimization through
to new developments and material exploration. The
THP assets, people, systems and processes have
now been fully integrated into EMP and expected
synergies are being realized as the skills already
proven in Brantas, Kangean and Malacca Strait are
applied.
Two, Gas Commercialization
During the year a significant portion (939 TBtu)
of Kangeans gas reserves were contracted on
improved terms underpinning some US$ 1.9 billion
in future revenue. The new GSAs were signed
with leading customers including Perusahaan Gas
Negara (PGN), Perusahaan Listrik Negara (PLN),
Pertamina and Indogas. The latter two are gas
aggregators and traders who have been able to
enter the market since the New Oil and Gas Law
was promulgated in 2001, breaking up distribution
monopolies to the benefit of both customers and
suppliers.

14

The THP assets contain significant onshore gas

reserves and resources which, by virtue of their
location close to existing infrastructure and enduser gas markets, will provide new opportunities
to generate new gas revenues, commercialize
assets and hence add reserves at improving prices.
Increasing numbers of customers are recognizing
benefits of clean, high quality, domestically
produced natural gas compared to imported and
increasingly expensive petroleum products.
The Governments bold move to cut petroleum
product subsidies and raise petroleum product
prices by an average of 129% in October 2005
has made gas a very competitive fuel. With further
Government policy support, prices for uncontracted
gas can be expected to increase with demand. This
in turn will stimulate further local supply and the
associated benefits in terms of import substitution
and environmental gains.
Kangean provides an excellent example of EMPs
niche domestic gas strategy in action:
November 2004:
Asset Acquired
December 2004:
Extended the expiry of the PSC to 2030
June 2005:
Heads of Agreement for gas supply signed with
a 50% improvement in well-head pricing.
July 2005:
Gas sales agreements signed with customers
Petro Kimia Gresik (PKG) and Pembankit Jawa
Bali (PJB).
September/ October 2005:
POD approved for EMPs largest undeveloped
gas fields, Terang Sirasun Batur (TSB)
BPMIGAS approval secured for 2006
appraisal drilling on the West Kangean Gas Field
POD approved with BPMIGAS for Sepanjang
Island and JS53A oil fields. Subsequent
drilling on JS53a confirmed future additional
gas supply potential.
December 2005:
GSA (Gas Sales Agreement) signed with
Pertamina, PLN, PGN and Indogas for a
cumulative sales value of US$ 1.9 billion.

Three, Organic Growth

Four, Operational Excellence

Throughout 2005 our priorities for investment

were focused on reserves and resources that
could be converted into production and cash flow
in the shortest cycle times. We have therefore
concentrated on production optimization
from facilities expansion, infield development
drilling and new field development near existing
infrastructure as well as satellite exploration in the
Brantas, Kangean and Malacca Strait PSCs. In this
investment phase we have drilled 23 development
and 13 exploration wells at commercial success
rates of 81% and 55% respectively. As expected,
results from such a diverse portfolio have ranged
from exciting new oil and gas discoveries from
exploration wells to good results and some
disappointments in appraisal and development
drilling and production optimization. A reserve
replacement ratio of 91% from drilling is pleasing,
and we expect further additions with recent
encouraging results from drilling activity in the
Malacca Strait.

Despite tightening rig supply and oil service

industry conditions, the Company significantly
increased operational activities in 2005 as seen
by production levels and the 112% increase to 36
wells drilled. Rig rates have increased dramatically,
especially for offshore rigs, however the supplydemand dynamics are more favorable onshore
where EMPs operations predominate. And while
onshore service sector prices did affect operating
costs, our margins, especially in oil operations,
have never been better. The acquisition strategy
pursued during 2004 and 2005 has resulted in a
portfolio of undeveloped gas fields located close
to end users. Combining this obvious advantage
with our low cost development track record
and economies of scale in material gas field
developments, the future bodes well for EMP in
sustained low cost hydrocarbon production.

In terms of material medium term production

growth, the most important project in EMPs
portfolio is development of the Terang, Sirasun and
Batur Gas fields (TSB) in the Kangean PSC where
competitive tendering for engineering, procurement
and construction (EPC) contracts commenced
immediately after POD approval and are continuing.
Gas supply is expected to reach peak rates in
2008. The THP assets will provide a further source
of ongoing organic growth in 2007 as new fields
in the Korinci Baru PSC and Semberah TAC, for
example, come into production.

We continue to work with service sector partners

to deploy new technologies to recover more
hydrocarbons, at greater rates to enhance
operational effectiveness and combat industry cost
pressures. We have had some excellent results and
we have some exciting new technology initiatives
for 2007.
The THP asset integration involved a proactive
organizational restructuring into a matrix
organization designed to capture economies of
scale in our extensive operations and to deploy
skills where they are most needed. Staff responded
well to the integration and the change of emphasis
towards performance-based remuneration.

Reduced petroleum subsidies in 2005 made gas a very competitively priced fuel (per mmbtu)*
EMP Distributed Natural Gas
Domestic Kerosene (subsidised)
Automotive Diesel Oil (subsidised)
Industrial Diesel Oil

US$ 4
US$ 6
US$ 13
US$ 14

Premium Gasoline(subsidised)

US$ 15

Automotive Diesel Oil

US$ 15

*January 2006 pricing

15

Report of the President Director

SHE & CSR

Corporate Governance

Our strong Safety, Health and Environmental (SHE)

record continued through 2005. The Malacca Strait
PSC recorded 14.5 million man-hours without
a single lost time incident. The Malacca Strait
and Kangean PSC operations secured ISO 14001
certification, Malacca Strait also achieved OHSAS
18001 for occupational health and safety. All three
existing blocks secured blue PROPER ratings from
the Ministry of Environment, the highest received
by any oil and gas operator. Our operations
continue to be sustainable with good programs
that support local communities while efficiently
developing Indonesias indigenous energy resources
for the benefit of all stakeholders.

From incorporation as a small private company

in 2001 through IPO in mid 2004 and major
acquisitions in late 2004 and 2005 EMP has
seen remarkable growth. The group today
comprises 14 different companies including EMP
itself and more than 1,000 employees. In order
to consolidate management practices and build
effective controls across all levels we undertook a
detailed governance and controls diagnostic review
with a leading firm of international consultants
in 2005. The objective was to identify the gaps
between current and best international practice
and build a plan to enhance and standardize the
important governance processes as we strive for
continuous improvement. We were pleased to note
that we rated well in many areas, such as portfolio
and performance management and disclosure.
We have clear plans to address shortfalls. The
Reserves Committee, reporting directly to the Board
is another new initiative as we strive to ensure
consistency, accuracy, objectivity and certification
efficiency in this most important area for an
upstream oil and gas Company.

16

Outlook

Appreciation

We have strong financial and human resources

deployed in developing our growing reserve and
resource base. Demand is escalating, and oil and gas
prices continue to rise. These factors combined auger
well for both top and bottom line growth for EMP.

The achievements of the Company in 2005

are entirely due to the devotion of our hard
working employees and the constructive
relationship between the BoC, BoD and
operating management. We welcomed the
former BP employees from the Kangean
purchase into the EMP group in early 2005 and
we now welcome the employees of THP into
EMP. I would like to take the opportunity of
thanking all of our stakeholders, and our most
important asset, our loyal and dedicated staff
for their tremendous support in 2005. Most of
all I look forward to generating further superior
shareholder returns in 2006.

EMP is already a significant participant in the

Indonesian oil and gas sector with a 2P reserve
and resource base exceeding 0.5 billion barrels of
oil equivalent, a market capitalization in excess
of US$ 1.3 billion, aggressive and entrepreneurial
management and the continued support of all our
stakeholders.
We continue to be intent on focused growth
through our 4 strategic levers:

For and on behalf of the Board of Directors,

Organic Growth of Existing Assets
Gas Commercialization
Operational Excellence
Strategic Acquisitions
Given a continuation of strong demand-side
fundamentals and supply-side capacity constraints,
plus an oil price forward curve above US$ 70
bbls for the rest of the decade (source: NYMEX),
the Board sees sustained strong oil prices. It is
inevitable that these dynamics will flow through
into higher gas prices and higher revenues for oil
and gas producers. Higher gas prices are in fact
needed to sustain development of the sector. In
mitigation of the impact of service sector capacity
constraints on schedules and costs, together
with increased competition, we are proactively
adjusting our tactics. I am confident that with the
continued commitment from management, staff
and our customers plus favorable markets and
a few positive outcomes in our extensive drilling
portfolio that we will deliver further value to our
shareholders.

Chris Newton
President Director

17

Board of Directors

18

Norman Harahap

Yuli Soedargo

Tom Soulsby

Chris Newton

Faiz Shahab

19

Review of Operations

Production
On a barrel of oil equivalent basis (boe), total oil
and gas gross production in 2005 was up 12%
to 11.4 mmboe or an average of 31,216 boepd
(barrels of oil equivalent per day).

Gross Volumes

Gross oil production was at a level of 3.7 mmbbls,

broadly unchanged year on year. The Malacca
Strait block was the major contributor to total oil
production grossing over 9,300 bopd by the end of
the year giving a total output for the year of
2.1 mmbbls of oil on a net basis.

3.8 mmboe
6.5 mmboe

2004

Gross gas production was up 19% to 7.7 mmboe

with Kangean contributing over 60% of total
annual production at an average of 81 mmcfd
(million cubic feet per day). Brantas contributed the
remainder at 51 mmcfd.

3.7 mmboe
7.7 mmboe

2005

Net Revenue (Rp Billion)

Gas
Oil
423.5

431.6
714.6

764.7

2004

2005

20

Demand for gas exceeds supply across the

Companys major market in East Java

21

22

An onshore bias to our 2005 drilling

program mitigates rig rate inflation.
Drilling activity gained momentum in 2005 with
36 wells drilled during the year. While rig rates
escalated, the supply-demand balance for rigs was
more favourable for onshore operations, where EMPs
drilling activity predominates.

23

Review of Operations
Overview

East Java
Brantas PSC

Brantas contributed significantly to our top and

bottom line in 2005 and will continue to do so
in 2006 with new fields coming into production.
Longer term growth is underpinned by some exciting
exploration prospects along the prolific deep Kujung
exploration fairway as already evident in the
substantial Jeruk and Cepu discoveries associated
with this formation.
Gross production for the year was 3.0 mmboe
of gas from ongoing development of the Wunut
field plus a minor amount of oil at year-end with
the commencement of oil production from the
Tanggulangin Field oil reservoir. Production averaged
51 mmcfd during the year with 4 development wells
completed.
To date, three fields have been discovered in the
Brantas block and all were under development at
year-end prior to production in 2006. The fields
are located immediately adjacent to East Javas gas
transmission and distribution infrastructure enabling
ready access to customers in the East Java market,
the second largest industrial area in Indonesia and a
market with consistent gas shortages. Gas is sold to
PGN who distributes gas to industrial customers in
the Surabaya area.

Development strategy
The strategic priorities in the Brantas Block are to:
Optimise development of gas production from the
Wunut, Tanggulangin and Carat gas fields.
Secure new gas customers with improved prices
for un-contracted gas
Staged development of the Tanggulangin oil
reservoir
Further step out appraisal/exploration close to
existing fields
Seismic acquisition and drilling to realize the
potential of the deep Kujung exploration play

24

Brantas PSC
Area: 3,050 square kilometers. Working interest 50%.

Java Sea
0

Tuban

Petrokimia Gresik

PLN Gresik

20 KM

Madura

Surabaya
Brantas PSC

Madura Strait

Porong Prospect
Kresna Prospect

LEGEND
BLOCK
OIL FIELD
GAS FIELD
OIL & GAS FIELD
PROSPECT

East Java

Thailand
Philippines

Wunut Gas Field

Malaysia

Carat Gas Field

Singapore

Tanggulangin Oil & Gas Fields

Banjarpanji Prospect

REPUBLIC OF INDONESIA
Java

INDEX MAP

Brantas PSC

CUSTOMER
LEAD
PGN GAS DISTRIBUTION GRID
EXISTING GAS
TRANSMISSION PIPELINE
EXISTING OIL PIPELINE

Bali

East Timor

Indian Ocean

Exploration

Development: Wunut, Tanggulangin and Carat

Exploration: Banjarpanji

In the case of the Kujung

exploration play which is
considered higher risk but
having high potential, EMP
has been approached by
several international oil
and gas companies seeking
farming in on a promoted
basis to explore in the block.
These risk management
opportunities are under
consideration.

During the year 4 development wells were drilled on the Wunut

field and one appraisal well was drilled in the Tanggulangin oil
fields. 100% of the Wunut wells were successful adding 12.2
mmcfd of gas deliver capacity.

The Banjarpanji onshore

Kujung exploration well
spudded post year end
and planning is currently
underway for an extensive
offshore 3D seismic program
to delineate Kujung leads
just south of the Jeruk field
located just to the north in
Sampang PSC.

The Tanggulangin-4 well found the oil reservoir, however

technical problems with well completion have so far precluded oil
production. The Wunut gas processing facilities were expanded
to introduce compression and the Tanggulangin-3 early oil
production and loading facilities were completed. A GSA for
the Tanggulangin gas field was under negotiation at year end
with first gas production anticipated around mid 2006 from
the Tanggulangin-1 and 2 wells. A plan of development for the
Tanggulangin oil reservoir should follow the Tanggulangin-5
appraisal well in early 2006.
The onshore Carat gas field is scheduled to commence production
in May 2006 following signing of a GSA in January 2006.

25

26

Access to markets:
a strategic advantage in new finds
EMPs acquisition strategy over 2004 and 2005 has
provided significant developed and undeveloped gas
fields in close proximity to established customers and
access to established pipelines.

27

Review of Operations

Overview

East Java
Kangean PSC

Gross production during 2005 at Kangean was

4.8 mmboe of gas. Production is from 14 wells
in the Pagerungan gas field. Kangean, currently
predominantly onshore, is also positioned
with good access to industrial customers via a
major pipeline to East Java. The ongoing focus
is to increase gas production volumes from the
Pagerungan gas field via development drilling in
the Ngimbang and Rancak reservoirs.

TSB
Another priority is the development of the TerangSirasun-Batur (TSB) gas field, 120 kilometers north
of Bali, with proved reserves of 211 mmboe and
regulatory approval for the development plan was
received in October 2005. EPC contracts to develop
this field are in process. The development planning
encompasses sub-sea production wells, gas
production facilities and a connecting pipeline to
the East Java gas pipeline operated by Pertamina.
A transportation agreement is being negotiated
with Pertamina to transport the gas directly to
three off-takers, namely PJB, PKG and PGN with
whom individual GSA contracts for 939 Tbtu have
been signed on a delivered price basis, as opposed
to making the sale via Pertamina as was previously
the case.

Offtake agreement
In terms of oil sales from Kangean, an offtake
agreement with Mitsubishi has been concluded
through their Singapore subsidiary renewable on
an annual basis.

28

Development Strategy

In September 2005 regulatory approval was

received for the plan to develop the Sepanjang
and JS53A oil fields with drilling indicating an
oil production capability of 2,800 bopd, pending
the drilling of an appraisal well.

The strategic focus for the development of

this key asset is to build gas volumes from
Pagerungan, move into production as early as
possible on the Sepanjang and JS53A oil fields
and develop the large proved reserves at TSB.

JS53A has had two wells drilled indicating

potential of 1,700 bopd and full field
development has already commenced.
In field drilling on Pagerungan was underway at
year end.

Thailand

Philippines

Malaysia

Pagerungan Gas Field

(PGA, PGR)

Singapore

40 KM

JS-53A Oil Field (PUO)

REPUBLIC OF INDONESIA

Kangean PSC

Java

Kangean PSC

East Timor

INDEX MAP

West Kangean Discovery

Kangean Island

Moncong
Klebung
G. Putih

Petrokimia Gresik
PLN Gresik

Madura

Karangtakat

Terang Sirasun Batur

Gas Fields

PGN

Surabaya
PGN Gn. Sari
Brantas PSC
PGN Waru

Pasuruan

TERANG
BATUR

SIRASUN

Sepanjang Island

South
Celukan

South Saubi Prospect (SS0)

Leces

South
Saubi

Sepanjang Island Oil Field (SED)

LEGEND
BLOCK
OIL FIELD
GAS FIELD

East Java

OIL & GAS FIELD

PROSPECT

Bali

LEAD
CUSTOMER
PERTAMINA GAS PIPELINE
PGN GAS PIPELINE

Lombok

Kangean PSC
Area: 4,508 square kilometers. Working interest 100%.
29

Malacca Strait is the flagship oil asset

Currently the largest oil producing block, the Malacca Strait
PSC contributed 3.4 mmbbls of gross production in 2005. A
program of workovers, well services, reservoir optimisation
and exploration drilling is expected to enhance production
further over the medium term.

30

31

Review of Operations

Sumatera
Malacca Strait PSC

Overview
Currently the largest oil producing block for the
Company, the Malacca Strait produced gross 3.4
mmbbls of oil in 2005. In production for twenty
one years with 110 wells across nine fields, the
Malacca Strait is a mature field with production
decline year-to-year, not unexpected. A program of
workovers and well services, reservoir optimisation
and exploration drilling has been carried out and
new areas for oil development are expected to
enhance production in the medium term.
Potentially significant gas resource discoveries
have also been made and are examined in more
detail in our discussion on reserves. Oil is processed
and delivered by pipeline into floating offshore
storage. Sales of the Companys entitlement are
through short term contracts put out to tender.

The Malacca Strait PSC is the flagship asset of

the group contributing a net 2.1 mmboe of
production.
A major value driver for the asset in the
coming years is the appraisal of a new gas
and condensate discovery called BY. BY-1 was
recently completed and tested and it has already
been assessed as containing commercial gas
quantities. Further appraisal of this play is
expected to increase gas reserves in the field by
330 bcf on a best estimate basis.
Exploration and the optimising of existing
production are the main thrusts for the Malacca
Strait block in the year ahead.

32

Rupat Island

Malacca Strait
N

Bengkalis Island

M
IN ALA
DO Y
NE SIA
SI
A

40 KM

LEGEND

Padang Island

BLOCK
OIL FIELD
GAS FIELD
OIL & GAS FIELD
PROSPECT/DISCOVERY

Rangsang Island

Kurau

LEAD

Ladinda
Tanker Storage

OIL PIPELINE
GAS PIPELINE

Melibur Field
MSBV

Lalang Oil Field

Mengkapan Oil Field
MSDC Gas & Oil Field
MSDR Gas & Oil Field
MSBY Gas & Condensate Discovery

Merbau Island

MSEA

TA Field
TB Field

Tebing Tinggi Island

Thailand
Philippines

MSEG Oil Field

Malaysia

Sumatera

Singapore

Malacca Strait PSC

Sumatera

MSAI Oil Field

REPUBLIC OF INDONESIA

INDEX MAP

East Timor

Malacca Strait PSC

Area: 9,492 square kilometers. Working interest 60.49%.
33

Review of Operations

Reserves
Total Gross 2P Reserves
Total gross proved and probable reserves (2P) at
the end of the year were 58 mmbbls in oil and 289
mmboe in gas exclusive of the THP acquisition.
Brantas PSC
Gross proved and probable reserves (2P) total 25
mmboe in oil and gas. Further development drilling
in the next 24 months is expected to show the
potential of this block which lies in close proximity
to the notable Jeruk oil field and seismic data
indicates a significant number of exploration leads
for both oil and gas. In July a US$ 120 million note
facility was completed to fund this drilling program
and the development of significant resources in the
Malacca Strait block.
Kangean PSC
Gross proved and probable reserves (2P) were 14
mmbbls in oil and 273 mmboe in gas. The expiry
of the PSC governing this block was extended from
2010 to 2030 at the end of 2004. Most of the
reserves are in the proved category, making this a
priority for development drilling in 2006, drawing
upon funding from a US$ 275 million loan facility
completed in 2005 for this purpose.

34

Malacca Strait PSC

Gross proved and probable reserves (2P) were
35 mmbbls in oil. Currently appraisal drilling is in
progress to determine the extent of gas resources
in the BY, DR and DC fields, while work on design
and engineering of production facilities and
infrastructure has started. Commercial volumes
of natural gas have been certified at 7.5 mmboe
in the BY-1 well. Subsequent to reporting date,
further success in exploratory drilling in this play
has occurred and plans to complete drilling at DR-1
and BY-2 have been accelerated. On the basis of
successful appraisal drilling, an MOU with PLN has
been signed as a key step towards commercialising
these natural gas resources, with a potential sale of
up to 200 mmcfd of natural gas.

Asset

Certification
Date

Independent
Certifier

Malacca Strait PSC

October 2005

GCA

Kangean PSC
Pagerungan
TSB

September 2004
April 1995

D&M
D&M

Brantas PSC

October 2005

GCA

Semberah TAC

April 2004

GCA

Gelam TAC

June 2005

GCA

Bentu PSC

September 2005

MHA

Korinci Baru PSC

September 2005

MHA

Gebang JOB PSC

September 2005

GCA

Carat gas field, Brantas PSC, East Java is now in production

35

Flowlines at Pagerungan Island,

Kangean PSC, East Java

36

Review of Operations

2005 Year End Gross Reserves and Resources (mmboe)

1P

2P

3P

Contingent Resources*

Brantas PSC
Oil
Gas

2
9 19
6 16
26

Malacca Strait PSC

Oil
Gas

24
-

35
-

46
2
- 11

Kangean PSC
Oil
Gas

4 14
222
273

36
282 11

Total
Oil
Gas

30
228

58
289

101
308

2
28

258

347

409

30

* best estimate

3P
308

2P

307
289

286

1P
240

228

Contingent Resources
91

101
58
23
2004

30
2005

75

33
2004

16
2005

2004

2005

2004

28

2005
Gas
Oil

37

EMP portfolio: THP broadens the asset base

South China Sea

Today EMP owns and operates proved gas reserves of over 250 mmboe and
proved oil reserves of 34 mmbbls located in 8 discrete blocks across the
Indonesian archipelago.

Gebang JOB PSC

Korinci Baru PSC
Sumatera
Kalimantan

Bentu PSC

Gelam TAC

Malacca Strait PSC

Java

Brantas PSC
Kangean PSC
Gebang JOB PSC

Bentu & Korinci Baru PSC

Area: 980.2 square kilometers,

Working interest: 50%

Total Area: 1,302.5 square kilometers,

Working interest: 100%

Gebang is predominantly offshore fields and

prospects which include Arbei, currently producing
oil, gas and condensate while at Anggor and
Secanggang gas discovery has been made.

The Bentu and Korinci Baru blocks are located

adjacent to each other in Central Sumatera, Riau.
1P and 2P reserves of gas have been discovered
while to date no oil reserves of commercial quantity
have been identified in these two blocks. The POD
for Korinci Baru was approved in October 2004 and
the POD for Bentu approved in May 2005. A Gas
Sales Agreement with PLN has been signed for the
delivery of up to 30 mmcfd, with first gas due in
2006.

Oil, gas and condensate production was constant

throughout 2005 with established infrastructure
including a nine kilometer pipeline to a Pertamina
gas facility at Pangkalan Susu. Negotiations were
successfully completed to renew gas offtake
agreements expiring end 2006. An MOU with PLN
to supply gas from the Anggor and Secanggang
fields is under consideration.

38

An MOU to meet demand from Riau Andalan Pulp

and Paper mills, and a plan for delivery through PGN
for 15 mmcfd starting 2007 is envisioned.

Indian Ocean

Semberah TAC

400 KM

JANUARY 2006
EXISTING

Sulawesi

A
Papua

Gelam TAC

Semberah TAC

Total Area: 55.6 square kilometers,

Working interest: 100%

Total Area: 40.5 square kilometers,

Working interest: 100%

This asset is already producing oil. The POD

approval was granted in 2004 for oil and Pertamina
has approved the Companys oil and gas drilling
program for the block to commence in the second
quarter of 2006. All production to date has been
sold to Pertamina.

This block consisting of a group of oil and gas fields that is already in
production. Oil produced from the Semberah field is transported by truck about
150 km to Pertaminas lifting facility in Sangatta. Pertamina has approved
the Companys 2006 budget for Semberah, which includes the drilling of 15
oil wells and 5 gas wells by the end of 2006. EMP intends to build both an oil
pipeline network and a gas pipeline.

We believe there is significant reserve and

production upside in undeveloped oil and
there is 404 bcf of contingent gas resources to
commercialize and develop.

Commercial quantities of gas have been discovered in the Sambutan field.

A GSA has been signed with PLN to supply up to 12.8 mmboe of gas with
staggered prices from US$ 2.72 to US$ 3.00. This contract expires in 2015. First
gas sales to PLN is scheduled for the first half of 2006. In addition, an MOU has
been signed with the local Government for potential gas supply to a new power
plant. Further, an MOU has been signed with Indogas to supply up to 15 mmcfd.

39

Lalang production platform, Malacca Strait PSC, Sumatera

40

Managements Discussion and Analysis of the

Financial Condition and Results of Operations

41

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

Overview
EMP (the Company) derived net sales revenues
in 2005 from the sale of crude oil, condensate
and natural gas produced in accordance with the
terms of three production sharing contracts (PSCs).
Under the Companys PSCs, which will expire 2020
in the case of Brantas and Malacca Strait and in
2030 in the case of Kangean, gross production
is shared between the Company, any partners in
the PSC, if applicable, and the Government. The
Company (including any partners) is responsible
for all investments (exploration, development and
production). Investment and production costs may
be recovered against production value and the net
production value thereafter is split between the
Company (and any partners), and the Government
in accordance with the specific terms contained in
each PSC.
Net entitlement consists of the Companys cost
recovery and its share of production value net of
domestic market obligation (DMO). A contractor
must fulfill DMO, commencing after a period of five
years from the month of the first delivery of crude
oil produced from any new field, through the sale
of a portion of the contractors share of the crude
oil produced from the field at a subsidized price
in accordance with the terms set out in the PSC.
The Companys DMO accounted for an average of
approximately 15% to 25% of the gross crude oil
production during the period under review. DMO
relates only to crude oil, not gas production.

Earnings Per Share (Rp)

In the following commentary it should be noted

that a number of variances arise from the inclusion
of the Kangean asset in the accounts for a full 12
months in 2005 versus the 5 months in 2004 from
the date of the acquisition, August 2004, to the
year end.
Terms relating to Gas Sales
Sales of the Companys net gas entitlement,
denominated in U.S. dollars, are primarily through
bilateral medium-term (two to three years) and
long-term (longer than three years) fixed price
contracts with leading customers, thereby avoiding
risks associated with volatility of prices. Factors
used to determine the fixed price for each contract
include demand volume, contract terms, prevailing
contract prices for other medium-term and longterm fixed price contracts and the rate of exchange
between Rupiah and US Dollar. The average realized
sales prices for gas per mcf for the years ended
December 31, 2004 and 2005 were US$ 2.14 and
US$ 2.24, respectively. The gas prices for GSAs
relating to the Kangean asset were at significantly
lower levels than those for more recent GSAs
relating to Brantas and Malacca Strait and due
to the relative size of Kangean volumes this had
the effect of lowering average realized gas prices.
During 2005 revised terms have been negotiated
for Kangean GSAs with prices raised by 50%. It
should be noted that all GSA contracts are on a
reasonable endeavour basis.

EBITDA (Rp billion)

699

20.6
442
8.9

242

2.3
2003

42

2004

2005

2003

2004

2005

Terms relating to Oil and Condensate Sales

Total Net Sales Revenues

Net crude oil entitlement is sold through one-year

sales contracts with the winning bidder under a
competitive tender process, subject to market
conditions. The majority of this entitlement in both
2004 and 2005 was sold to Itochu Petroleum Co.
(S) Pte Ltd. Post reporting date in January 2006,
EMP entered into a one-year crude oil sales offtake
contract with Petro Diamond Company Limited (a
subsidiary of the Mitsubishi Corporation), for the
majority of the Companys net crude entitlement,
securing better terms for the Company.

In 2005 the relative contribution to net sales revenues

of oil and gas was 52% and 48% respectively. Net
sales increased by 73% to Rp 1,479 billion
(US$ 150.5 million equivalent calculated on a
recognition basis throughout the year). This
increase reflected the full year contribution of
revenue from oil and gas lifted from the Kangean
block in 2005 compared to approximately five
months production at Kangean in 2004. An
increase of 42% in the average price of oil sold by
the Company was a further contributing factor.

In 2005 and prior years substantially all of the

condensate production was sold to BP Singapore
Pte Ltd under a sales contract renewed annually.
With effect from January 2006, the Company has
begun selling its condensate production to Petro
Diamond under a one-year short-term condensate
sales contract at improved terms that include the
flexibility for review on a regular basis.

Revenues from oil sales increased by 77.2% to

Rp 764.7 billion (US$ 77.8 million equivalent) in
2005. Average oil prices increased from US$ 37.68 per
bbls to US$ 53.11 per bbls on volumes of 3.7 mmbbls.

Sales of net crude entitlement are predominantly

at prices based on the prevailing Indonesian Crude
Price (ICP). Average realized sales prices for oil for
the years ended December 31, 2004 and 2005
were US$ 37.68 per bbls and US$ 53.11 per bbls,
respectively.

Revenue (Rp billion)

Revenues from gas sales in 2005 increased 69%

to Rp 714.7 billion (US$ 72.7 million equivalent),
reflected a 19% increase in volumes from 6.5 to
7.7 mmboe in 2005. The impact of 12 months gas
sales from Kangean in 2005 versus 5 months gas
sales recognized in 2004 was again a contributing
factor to the growth in gas revenues.
The Companys revenue in Rupiah terms from
net gas and oil sales increased as a result of the
depreciation of the Rupiah against the US Dollar
during the course of 2005. Year-on-year, as at
December 31st, the prevailing exchange rate to the
US Dollar depreciated from Rp 9,290 to Rp 9,830,
but over the course of the year the Rupiah reached
a low of Rp 11,900 in August 2005 before
strengthening during the remaining 5 months.
Revenue Mix (Rp billion)

1,479

714.6

855

423.5

513

174.4

764.7
431.6

338.7
2003

2004

2005

2003

2004

2005

Gas
Oil

43

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

Cost of Goods Sold

Cost of goods sold increased by 86% to Rp 1,004
billion (US$ 102.1 million) in 2005 due to the
full year effect of cost of goods sold relating to
the Kangean block in 2005, compared to only
five months since the acquisition in early August
2004. Cost of goods sold consists primarily of
depreciation, amortization and production costs, as
well as costs of production support and work over
directly related to the activities in the operating
subsidiaries.
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. Depreciation and
amortization arise from the depletion of capitalized
oil and gas exploration costs (using independent
reserve certifications) and development costs,
based on the total estimated proved reserves as
detailed in notes 2 and 13 of the consolidated
financial statements.
An increase in depreciation, depletion and
amortization (DDA) costs amounting to Rp 68
billion resulted from a management decision to
take a conservative approach to reserves in setting
DDA policy, as outlined on page 54 of the audited
financial statements. Using a lower proved reserve
estimate as the divisor to production costs has the
effect of increasing depreciation costs.

44

Production costs were Rp 405.9 billion, or US$ 4.90

per boe, representing an increase of 36% over
2004 levels. Production costs relate to the lifting
of oil and gas from the sub surface including the
cost of collecting, separating, clearing and storing
oil and gas in production facilities prior to delivery
to customers. These costs are mainly affected by
the levels of oil and gas production, overhead from
oil and gas field operations, as well as operations
and maintenance costs and pipeline fees paid for
carrying the Companys gas production.
Production support costs were Rp 215.4 billion, or
US$ 2.60 per boe, representing an increase of 37%
over 2004 levels. Production support comprises
management and administration costs relating to
each PSC including salary and employee benefits,
office rentals and operating expenses.
Costs relating to well work over activities were
Rp 54.4 billion, or US$ 0.70 per boe, representing
an increase of 40% over 2004 levels. Work
over activities are designed to maintain current
production capacity, including clean well bore
equipment to ensure the smooth flow of oil in
producing wells and to reduce the rate of natural
decreases in oil production reserves.

Income from Operations

Cost Recovery

Encompassing the growth in sales, gross profit

and operating expenses, income from operations
grew 31% in 2005 to Rp 335 billion. Operating
margin declined from 29.9% to 22.6% mainly from
the effect of lower gas price levels at Kangean
as previously mentioned and also reflecting the
increase in production costs relating to the inclusion
of a full 12 months of operations in 2005 at
Kangean compared with about 5 months operations
in 2004. The revision of various gas sales contracts
at higher prices was completed during the course
of the year and the full impact from this will be
evident in 2006.

Overhead cost recovery increased in 2005 by 37%

to Rp 25 billion. Cost recovery varies with the level
of cost incurred, including capital investment for
exploration, development and production, annual
operating expenses and the market prices of oil
and gas. For example, if oil prices decrease, the
Companys cost recovery portion of production
will rise and thus its net entitlement will also rise
in terms of barrels of oil. A decline in oil prices,
however, may lead to a decline in revenues despite
an increase in net entitlement. This principle applies
equally for both oil and gas.
Other Income (Charges) - Net

Operating Expenses
The Companys operating expenses increased by
137% to Rp 139.9 billion in 2005, being general
and administrative expenses. These included
increases in salaries, employee benefits, office
expenses, rental costs and legal fees associated
with various financing transactions. An increase in
employees from 585 to 875 was undertaken to
support the expansion of Kangean.

Other charges - net increased by Rp 129.5 billion

(US$ 13.2 million) to Rp 160.7 billion (US$ 16.3
million) for 2005 due to an increase in interest on
bank loans and other financing charges.
Interest and financing charges increased by
Rp 149.3 billion (US$ 15.2 million), or 288% to
Rp 201 billion (US$ 20.4 million) relating to the
drawdown of new credit facilities totaling US$ 293
million in 2005. Gains on foreign exchange to
Rp 16.4 billion (US$ 1.7 million) for the year were
due to the depreciation of the Rupiah against the
US Dollar during 2005.

45

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

Income before Tax Benefit

As a result of the foregoing, income before tax
decreased by 22% to Rp 174.8 billion (US$ 17.8
million) for the year ended December 31, 2005.
Tax Benefit/Expense
The change in tax in 2005 was attributed to an
increase in deferred taxes arising as a result of
incurring sunk costs at the Kangean block due to
intensive drilling activities during 2005 approved
by BPMIGAS in the latest plan of development for
the block. Sunk costs are deductible against future
taxable income.
Net Income
As a result of the foregoing, the Companys net
income increased 164% to Rp 195.8 billion
(US$ 19.9 million) for the year ended December 31,
2005.

Current assets grew year to year by Rp 813 billion

to Rp 1,113 billion predominantly due to the
growth in cash, inventory and receivables in line
with the increased level of sales of oil and gas. Total
receivables increased by Rp 329 billion to Rp 504
billion including trade receivables, VAT and other
receivables reimbursable from BPMIGAS.
Non current assets grew by Rp 1.57 trillion to
Rp 3.94 trillion largely representing the costs of
development and the capitalization of borrowing
costs incurred in financing the development of
Kangean.
Liabilities and Equity
Current liabilities, broadly in line with the levels
recorded in 2004, reflected the repayment of
Rp 140 billion, a short term loan incurred in 2004
to finance the Kangean acquisition and an increase
of Rp 254 billion in accrued expenses to Rp 358
billion, representing increased production and
drilling activity during the year.

Financial Position
Assets
Total assets increased by Rp 2.38 trillion in 2005 to
Rp 5.06 trillion as the Company continued to grow
through the acquisition of the Kangean property
and the development of core assets in the Kangean,
Brantas and the Malacca Strait blocks.

Non-current liabilities increased by Rp 2.19 trillion

due to the drawdown of two loan facilities during
the year. A five year credit agreement for US$ 275
million was signed in May 2005 and part drawn
to finance development of the Kangean PSC and a
further facility for US$ 120 million over three years
was obtained in July 2005 to fund the exploration
and development of oil and gas fields in the Brantas
and the Malacca Strait Blocks.
Total equity increased from Rp 431 billion to
Rp 642 billion in 2005 through increased retained
earnings.

Net profit (Rp billion)

Total assets (Rp billion)

5,059

196

2,673
74
663

15
2003

46

2004

2005

2003

2004

2005

Cash Flow

Subsequent event

Net cash flow from operating activities for year

totalled Rp 132 billion after deducting finance
charges of Rp 198 billion and corporate income
and dividend tax payments of Rp 89 billion. In
addition, net cash of Rp 1,219 billion was provided
by financing activities, principally the proceeds
from loan facilities obtained during the year for the
development of oil and gas properties and related
fixed asset acquisitions and the refinancing of
existing loans. The cash position at the end of the
year was Rp 222 billion.

On January 25, 2006, the Company completed the

acquisition of a 99.99% equity interest in PT Tunas
Harapan Perkasa (THP) and related assets.

Capital Expenditures
Capital expenditure on exploration and
development activities increased significantly
from US$ 34.6 million to US$ 86.5 million in line
with the development program for all blocks and
in particular, Kangean. In line with past practice,
EMP will fund capital expenditure requirements
from future cash flow from operations and debt
financing. As was evident in 2005, EMP may also
raise additional capital through the offering of
equity, debt and other securities, from time to time.

Annual Capital expenditures

For the Year
Ended December 31
(US$ in millions)

2005

Exploration and

Development Activities

86.5

2004

THP is a sub holding Company which controls

99.99% equity interests in PT Semberani Persada
Oil, PT Insani Mitrasani Gelam and 100% equity
interests in Kalila (Bentu) Limited, Kalila (Korinci
Baru) Limited and Costa International Group
Limited. The Company paid Rp 2,948 billion,
being the Rupiah equivalent on the date of the
purchase of the agreed sale price of US$ 284 million
comprising working interests of 50% in the Gebang
PSC, 100% in the Bentu PSC, 100% of the Korinci
Baru PSC, 100% of the Gelam TAC and 100% of the
Semberah TAC and related assets.
The purchase price for the acquired assets was
tendered in cash, and was financed primarily
through a rights issue completed on January 25,
2006 by the Company of 4,909,368,195 shares of
the Company, at a price of Rp 770 per share, raising
approximately Rp 3,780 billion (US$ 376.1 million).
The acquisition of THP reflects the Companys
strategy to selectively acquire new reserves and
resources using equity funding that will contribute
to strengthen the portfolio of productive natural
resource assets.

2003

34.6 17.6

47

Safety, Health and Environment

As EMP continues to grow in terms of scale and

diversity in its operating environments, the Board
of Directors pays close attention to ensuring
business units are able to collaborate effectively
to attain high standards in safety, health and
environmental management. EMPs corporate
objectives are to build a culture of commitment to
safety, health and the environment that directly
contributes to business performance, sustainability
and reputation.
In 2005 the management of Safety Health and
Environmental policy (SHE) has been centralized
for the benefit of all employees and contractors,
drawing on the leadership of very experienced
senior management with extensive industry
knowledge. A direct reporting line from SHE
management to the CEO is a clear indication of
the weight given to ensuring the Company is
compliant and in line with the highest of standards.
Central SHE incorporates all aspects of risk
management, risk assessment, business continuity
and contingency planning including the completion
of up to date crisis management plans for all
operations. Monitoring and identification of hazards
is ongoing.
Safety: Lost time incident records continue to
improve
During the course of the year our operations
performed well with 14,596,673 man-hours
recorded without a single lost time incident at
Kangean, which also achieved a Zero Accident
Award from the Ministry of Manpower for the
second successive year. In addition to regular
workshops and training programmes we were
active in conducting a number of safety behaviour
programmes and in establishing an emergency
support group. A new SHE manual was completed
and SHE plans for specific drilling programmes were
put in place.

48

14 million man-hours
without a single lost time
incident at Kangean.

Safety is about changing attitudes

Wider recognition of the need for diligence in
personal safety is gaining momentum through
our new STOP initiative introduced during 2005
as we encouraged staff to wear proper protective
equipment at all times, in the form of gloves,
facemasks and safety hats. We have changed
attitudes among our contractors, by insisting on
safety systems as an integral part of competitive
tender bids to handle contract work with us.

Water treatment.

OHSAS 18001

ISO 14001 Certification

The Companys operations at the Malacca Strait

PSC succeeded in obtaining full certification under
this standard for occupational health and safety
management.

The Malacca Strait and Kangean operations received

certification for environmental management
systems. Kangean has a well established record
as a recipient of environmental awards, both for
its high management standards in operations and
for supporting the development of community
vocational programmes associated with sustainable
development of local fishing resources. On a similar
theme a pilot project commenced in 2005 at our
Malacca Strait operation to convert solidified crude
into briquettes that can be used to fuel cooking
stoves.

Environment

Drill waste handling

PROPER ratings

We have taken a new direction with the way we

handle drill hole waste, a concern when trying to
monitor environmental controls in remote locations.
Using new technology on site we can dry and slice
the waste to help eliminate the risk of pollution
from any oil content that may be present.

Under the PROPER (environmental compliance

performance evaluation program) operated by the
Ministry of the Environment, all EMP operations
were given a good assessment, in the form of a blue
PROPER rating, just two levels from the top rating,
gold. Among 65 oil and gas companies reviewed
EMP achieved results equivalent to the highest
recorded for oil and gas companies.

Target

Brantas

Malacca Strait

Kangean

Lost Time Incidents Rate (LTIR)

0.30
0.27
0.35
0.00
Total Recordable Incidents Rate (TRIR) 1.50 1.06
2.30
0.30
Spills Incidents (> 1 bbls)
3
0 1 1
Property Damage/ Loss (> $ 50K) 1
0
0
0
PROPER Ratings
Blue
Blue
Blue
Blue

49

Community Relations

Reaching out
Operating in some distant parts of the Indonesian
archipelago, we observe that the reach of economic
development and social support programmes
may not always extend completely to remote
communities in the areas adjacent to our
production and drilling facilities. EMP can and does
provide selected employment opportunities where
appropriate and our presence helps stimulate the
development of local commerce, but we believe we
have a wider role to play.
Combining support with self-help opportunities
We regard our presence in these communities as
a good opportunity to provide practical self-help
initiatives as well as routine medical, food and other
assistance for those in need. During the course
of 2005, among other activities, we sponsored
training to develop sewing, embroidery and
garment making and continued our longstanding
vocational skills training programmes. We
supported local poultry breeding and taught local
women how to make nutritious food and beverages

from natural ingredients, including seaweed. We

hired experts to disseminate vital midwifery skills
that will save lives. To capture the promise of
community youth, we financed school scholarships
and sponsored teacher training.
Practical community aid
Other practical and essential programmes included
the provision of a new ambulance, training on fire
prevention and use of fire extinguishing equipment.
We renovated school buildings and built a study
centre. Food aid was provided to disadvantaged
groups. We paved roads and installed proper
drainage. We excavated irrigation canals to
support the development of local agriculture and
established a mangrove re-vegetation program to
help prevent coastal erosion and generate income
for local families.
All of these activities contribute to ensuring our
operations are managed sustainably in accordance
with local environmental conditions and the
development of neighbourhood communities.

2005 CSR Initiatives

. Financial assistance was provided to local
village cooperatives by EMP subsidiary
Lapindo Brantas Inc.
2. Local women were given classes on the
preparation of nutritious foodstuffs from
natural ingredients including seaweed.
3. Instructors demonstrate fabric cutting
and sewing techniques for garment
making.
4. An ambulance was donated to support
local needs at Pustu, Mengkapan.
5. EMP subisidiary Kondur Petroleum S.A.
provided building materials and the
construction of a study centre.

50

key mangrove re-vegetation

6. A
project to protect against coastal
erosion doubled as a source
of income generation for local
communities.
7. Midwife training.
8. Animal husbandry projects.
9. Embroidery skills.
0. Road building and proper drainage
projects contributing to local
infrastructure development.

10

Corporate Governance Report

Introduction

Roles, Responsibilities and Skills of the Boards

Framework and approach to corporate

governance

Membership and expertise

The Company recognises that a strong

commitment to good corporate governance
practices is vital to our continued success. At its
base, corporate governance is about establishing a
code of behaviour and a set of values that underpin
the Companys everyday activities and ensure
transparency, fair dealing and protection of the
interests of stakeholders. Best practice governance
focuses on the processes used to direct and
manage our business in a manner in line with our
corporate objectives, the expectations of society
and which is fully accountable to our stakeholders.
In pursuing its commitment to best practice in
governance, EMP has and will continue to:
review and improve governance practices
monitor global developments in best corporate
governance practice; and
strive for best practice and fully comply with the
rules and regulations of Bapepam, the Jakarta
Stock Exchange and the Indonesian National
Code of Good Governance

52

The Board of Commissioners (BoC) and the Board

of Directors (BoD) jointly share responsibility to
implement best practices in corporate governance.
The Company also maintains a full committee
structure to help ensure that the key elements
of governance are carried out. This structure is
discussed in more detail below. The integrity,
professionalism and accountability of Board
members are essential to implementing best
practice in corporate governance and to this end
the Company is governed by a well-informed Board
of Commissioners, which includes one independent
commissioner and a responsible and professional
Board of Directors, comprising 5 Directors.
Members of both Boards have a broad range of
relevant financial skills, professional experience
and managerial expertise to meet the Companys
objectives.
Size and composition of the Boards
The size and composition of the BoC and BoD is
subject to the limits imposed by the Companys
Articles of Association, which stipulate that
nominations to the BoC and BoD should be
approved by shareholders at a General Meeting
of shareholders (GMOS) for a period commencing
from the date of the GMOS appointing them until
the closing of the fifth Annual GMOS after the date
of their appointment.

Board of Commissioners: role and responsibilities

Board of Commissioners

The Board of Commissioners, currently comprising

three members one of whom is independent,
undertakes a supervisory role in monitoring the
Companys performance against its stated business
objectives. Aside from its statutory authority as
stated in the Companys Articles of Association
with respect to approving certain transactions and
approving the annual report, the BoC has oversight
of risk management, audit controls and the timely
disclosure of information in line with prevailing
regulations. To ensure this happens, every effort
is made to provide the BoC with the relevant
information.

Suyitno Patmosukismo, President Commissioner

Suyitno Patmosukismo has
contributed extensively to the
development of the Indonesian
oil and gas industry in several
senior positions including the
Director of Exploration and
Production at Pertamina, the
Director General Oil & Gas within the Indonesian
Department of Mines & Energy, and the position
of Chairman of the OPEC Board of Governors
in the mid-1990s. He has served as President
Commissioner since the Company went public in
June 2004.

In accordance with guidelines of Bapepam, the

Indonesian Capital Market regulator, and the
Jakarta Stock Exchange rule [1-A Kep-305/
BEJ/07-2004], 30% of the BoC is independent to
safeguard the interests of minority shareholders.
The independent commissioner, as defined by
the regulations, serves as the Companys Audit
Committee chairman.
The Board of Commissioners met formally 5 times
in 2005; in each case an agenda including board
papers and the minutes of the previous meeting
were distributed to commissioners in a timely
fashion. These formal meetings do not preclude
frequent informal contacts and information sharing
between commissioners and directors. Three formal
joint meetings were held in 2005 with the Board of
Directors in addition to routine informal meetings
during the course of the year.

Qoyum Tjandranegara, Independent Commissioner

Qoyum Tjandranegara is
well-known, both domestically
and internationally in the
industry, serving in the past
as President Director of
Perum Gas Negara, President
Director of PT Perusahaan
Gas Negara, as Advisor to the Ministry of Mines &
Energy, Secretary of the Board of Commissioners of
PERTAMINA, and Special Staff to the Vice President
of the Republic of Indonesia, Energy & Industrial
sector. Appointed as Independent Commissioner
in March 2004, he serves as Chairman of the Audit
Committee.

53

Corporate Governance Report

Rennier Latief, Commissioner

Rennier Latief began his
career at Philips Petroleum
as a Geologist in the late
1970s. From 1986 he served
in different management
positions at Huffco
International culminating in
his appointment as Senior Staff Geologist. He then
joined VICO as Exploration Manager in 1994 before
acquiring the Malacca Strait PSC from Lasmo in
1995. He acquired control of the Brantas PSC from
Huffco, and his leadership was instrumental in
commencement of commercial production just 3
years later. Formerly serving as President Director,
Rennier oversaw the acquisition of the Kangean
PSC from BP in late 2004 before stepping down
as President Director in May 2005 to assume his
current role as a Commissioner.
The Board of Directors: role and responsibilities
The Board of Directors, currently comprises 5
Directors including the President Director and is
responsible for the day to day management of the
Company and as such has responsibility, inter alia,
for the following key tasks:
administration of Company accounts
jointly with the BoC, the preparation and
signature of the Companys annual report for
approval by shareholders;
establishing and maintaining a Register of
Shareholders
approving the Companys risk management
strategy, monitoring its effectiveness and
maintaining a direct and ongoing dialogue with
the Companys auditors and regulators

54

implementation of corporate strategies and

recommendations on significant corporate
strategic initiatives
development and recommendation of the
Companys annual budget to the BoC and
shareholders for approval and management of
day to day operations within the budget
establishing appropriate terms of appointment,
performance evaluation and succession plans for
the BoD
representing the Company in every aspect of its
activities and for all legal purposes
setting of standards for social and ethical
behaviour and monitoring compliance with the
Companys corporate social responsibility policy
and practice.
The Board of Directors convened formally 20
times in the course of the year under review. The
President Commissioner and President Director
establish the agenda for each meeting to ensure
adequate coverage of financial, strategic and major
risk issues throughout the year.
In addition, meetings were held whenever necessary
to deal with specific matters requiring attention
during the periods between scheduled meetings.
In 2005 three formal meetings combining both
the Board of Directors and Board of Commissioners
were held, in addition to routine informal meetings
on a regular basis throughout the year .

Board of Directors
Chris Newton, President Director & Chief
Executive Officer
Chris Newton joined EMP
in January 2005 and was
appointed to his current
position at the May 2005 EGM
of shareholders. Chris has 27
years of international upstream
oil and gas experience with
13 of the last 15 years in Asia and 8 in total in
Indonesia. He joined EMP from Santos Ltd. where
he was President and General Manager of Santos
Indonesian business. He led and managed the
development of Santos business via exploration,
development and production acquisitions to a
New Core Business for Santos with 10 Production
Sharing Contracts focused in East Java and the
deepwater Kutai Basin. Prior to joining Santos
Chris spent 5 years in Brunei building, leading and
managing the Fletcher Challenge Energy Business
in the country. He holds an Honors Degree in
Geology from the University of Durham, England
and a Post Graduate qualification in Applied Finance
and Investment from the Securities Institute of
Australia. Chris is also currently President of the
Indonesian Petroleum Association.
Tom Soulsby, Business Development Director
Tom Soulsby has extensive
merger and acquisition
expertise in the resource
sector, having held several
positions including Director of
ANZ Singapore Ltd, ANZs local
merchant bank in Singapore
where he was also the Director and Regional Head
of Corp. Finance for Asia at ANZ Investment Bank
from 1998 to 2002. He worked with ANZ in both
Melbourne and Jakarta in investment banking
during the period 1994 to 1998 and has been
involved in over 24 successful transactions. Prior
to that, Tom worked at Potter Warburg, Western
Mining Corporation and KPMG in various finance
related positions. He joined the Board of Directors
in March 2004, with responsibility for Business
Development and Investor Relations.

Yuli Soedargo, Director & Chief Financial Officer

Yuli Soedargo has extensive
experience in Senior
Management roles with leading
Indonesian listed companies.
He served as Financial Services
Director of Kalbe Farma Group
in the 1990s, as Managing
Director of BII and Head of Banking Relations,
Control & Audit at Asia Pulp & Paper. He was
appointed as a Director in December 2005.
Faiz Shahab, Director & Chief Operating Officer
Faiz Shahab has 25 years
extensive experience in the
oil & gas industry. He spent
many years in VICO serving
as Facilities Project Engineer
until his last position as Vice
President Support & HSE.
He then moved to Lapindo Brantas Inc. as Vice
President & General Manager. In 2002 BP Indonesia
engaged him as Vice President Java LNG and 2
years later he moved to EMP Kangean Ltd. as Senior
Vice President before being appointed Director of
EMP in December 2005.
Norman Harahap, Director
After a stint at Peat Marwick
Mitchell in the 1970s, Norman
Harahap joined HUFFCO
Indonesia as Economic &
Planning Manager. He then
moved to ARCO spending
many years in finance
and administration. He has served as Director,
responsible for Internal Control and Accounting and
was appointed as a Director in March 2004.

55

Corporate Governance Report

Succession planning

Review of BoD and BoC Performance

An important function of both boards is to ensure

that the Company has the appropriate mix of skills
and experience. The BoC in conjunction with the
BoD, is tasked with the responsibility of preparing
the selection criteria and procedures for nominating
appointments and succession planning in relation
to members of the Boards, taking into account
the skills, experience and expertise required and
currently represented and the future direction of
the Company.

The two Boards meet on a regular basis to review

plans, budgets and performance and to discuss
major issues and decisions facing the Company. The
Boards regularly review their overall performance,
as well as the performance of Committees and
individual Commissioners and Directors. Clear
criteria and performance targets are set annually
for the BoC, the BoD, each Special Committee and
each Commissioner and Director.
Orientation and training programmes

The selection and role of the President Director

The President Directors duties are to:
ensure that, when all BoD members take
office, they are fully briefed on the Company
strategy and key performance objectives and
the contribution expected from each Director on
achieving overall objectives
provide effective leadership in formulating
strategy
represent the Companys views to the public
ensure that the BoD meets at regular intervals
throughout the year, and that minutes of
meetings accurately record decisions taken
and, where appropriate, the views of individual
Directors;
guide the agenda and conduct of all BoD
meetings, and
review the performance of Board Directors.
The selection of a President Director is based on an
evaluation as to whether the candidate is able to
execute these duties effectively.

On an ongoing basis training is undertaken for

Board members to stay informed of current
and forthcoming regulations and issues relating
to the upstream oil and gas sector, as well as
developments in the regulatory environment for
publicly listed companies, in coordination with the
Corporate Secretary.
Access to information and advice
All Commissioners and Directors have unrestricted
access to the Companys records and information
and receive regular detailed financial and
operational reports to enable them to carry out
their duties.
Corporate Secretary
The Companys Corporate Secretary plays a key
role in helping the Company comply with capital
market regulations, by providing Commissioners
and Directors with ongoing guidance on issues such
as corporate governance, the Companys Articles of
Association and the relevant regulations.
The Corporate Secretary is also strongly involved
in (1) ensuring the quality and currency of
information and advice to Commissioners and
Directors on applicable laws and regulations; (2)
achieving the highest standards in the organization
of shareholder meetings and meetings of the
Boards.

56

Report of the Audit Committee

The effectiveness of both Boards is enhanced by
the support of the Audit Committee with a role to
oversee all matters relating to the integrity of the
financial statements, recommendations for the
appointment of external auditors, management
of operational risks and compliance with legal and
regulatory requirements.
The Audit Committee members
A. Qoyum Tjandranegara, Chairman
(Independent Commissioner)
Hertanto , Member
Toha Abidin, Member
The Audit Committee members are chosen for their
skills and relevant experience.
Tasks implemented
The Audit Committee is responsible to provide an
independent professional opinion to the Board of
Commissioners, and to bring to their attention any
matters considered in respect of:
Financial Statements, projections and other
financial information to be published by the
Company.
Adherence to legislation and regulation of the
Capital Market authorities and the Jakarta Stock
Exchange and any other regulatory requirements
related to the Companys activities.
Reviewing the work undertaken by Internal Audit
and the External Auditor
Reviewing any complaints made or referred to
either Board from the public
Assisting the Board of Commissioners in the
process of selection and appointment of the
External Auditor.
Meetings
The Audit Committee held meetings on February
14th and 24th, 2006 and on March 29th , 2006
and during 2005 it held a total of 8 meetings
attended by:
A. Qoyum Tjandranegara, Chairman
Hertanto, Member
Toha Abidin, Member
Eddy Warnov, Internal Auditor
Jimmy Budhi, External Auditor

At these meetings the Committee reviewed and

examined:
The Consolidated Financial Statements and notes
relating thereto, dated December 31st, 2005 to
ensure the appropriateness of the presentation
and content
The organisation structure of the holding
Company and subsidiaries
Internal Control Systems for the holding
Company and subsidiaries
Policy, systems and accountancy procedures for
the holding Company and subsidiaries
Compliance under legislation and regulation of the
Capital Market authorities and other regulatory
requirements related to Company activities.
Other key information related to EMP
management policies
Summary of conclusions from Audit Committee
meetings:
a. The External Auditor has maintained proper
independence and objectivity in auditing the
Financial Statements during the year ended
December 31st, 2005.
b. Internal Audit has properly implemented the
Internal Audit function in respect of the holding
Company and subsidiaries along with the
proposed improvements.
c. The management of the holding Company and
subsidiaries apply good corporate governance
as well as compliance towards the provisions of
the Capital Market authority, the Jakarta Stock
Exchange and the other regulatory bodies.
d. The management of the holding Company
and subsidiaries has prepared the Financial
Statements as of December 31st, 2005 in
accordance with the Indonesian Generally
Accepted Accounting Principles and in
accordance with the contractual conditions of
PSCs relating to oil and natural gas.
e. The compensation for both Commissioners and
Directors has been determined as it should be and
approved by a general meeting of shareholders.
f. The estimate of gross proved oil & gas reserves is
based on certification by independent oil and gas
consultants and appraisors.

57

Corporate Governance Report

Approach to audit governance

Relationship with external auditor

The Company is committed to implement three

basic principles:

The Companys current policies on employment and

other relationships with the external auditor are:

the Company must produce true and fair

financial reports;
its accounting methods are comprehensive and
relevant and comply with applicable accounting
rules and policies; and
the external auditors are independent and
serve shareholder interests by ensuring that
shareholders know the Companys true financial
position. Developments and practices are
monitored and reviewed accordingly.

the audit partners and any audit firm employee

(and immediate family members) of the Company
audit are prohibited from being an officer of the
Company as an audit partner or any audit firm
employee. This also applies to any immediate
family members of audit firm employees. Financial
and business relationships are also prohibited. A
minimum period of five years must elapse before
former audit firm employees may be considered for
a position on the Board or within the Company.

External audit

Restrictions on non-audit services by the

external auditor

The Companys independent external auditor was

appointed by the Directors with the authorization
given by the shareholders at the Annual General
Meeting of Shareholders.
The Committee is responsible for making
recommendations concerning the appointment
of external auditors and the terms of their
engagement. The Committee reviews the
performance of the external auditors. The
independent external auditor reports directly to
the Committee.
Certification and discussion with external
auditor on their independent status
The Audit Committee requires the external auditor
to confirm that they have maintained their
independence. The Companys external auditor
gives assurance to the Audit Committee that they
have complied with the independence standards,
promulgated by local and overseas regulators and
professional bodies.

58

The external auditor is not able to carry out the

following types of non-audit services for the Company:
preparation of accounting records and financial
statements;
information technology systems design and
implementation;
valuation services and other corporate finance
activities;
internal audit services;
temporary senior staff assignments,
management functions;
broker or dealer, investment adviser or
investment banking;
legal services;
litigation services;
actuarial services; and
recruitment services for senior management.

For all other non-audit services, use of the external

audit firm must be assessed in accordance with
the Companys policy requiring an independence
assessment to be done by the business manager
requiring the service. The approval of Internal Audit
and the Chairman of the Audit Committee must also
be obtained.
Internal audit function
The Committee approves the appointment of
the Head of Internal Audit. It reviews internal
audit responsibilities, budget and staffing,
significant reports prepared by Internal Audit and
management responses thereto. The Committee
Chairman meets separately with the Head of
Internal Audit.
Compliance with legal and regulatory
requirements
The Committee ensures conformity with applicable
legal and regulatory requirements and the
Companys Code of Conduct, examining material
issues raised internally or from the external
auditor, in conjunction with the Corporate Secretary
and Legal Counsel from time to time as required.
Risk Management Committee
The Risk Management Committee will be
established and appointed by the Companys
Board of Commissioners and shall be made up of
the President Director, Chief Risk Officer (CRO),
Internal Audit, Chief Financial Officer, Business
Unit Line Managers and Legal Counsel. The Risk
Management Committees task is to review all risks
faced by the Company, to quantify their impact
and likelihood, and ensure appropriate mitigation
measures are in place.

The Committee will meet approximately once a

month, to be chaired by the CRO who monitors the
Companys entire risk profile, ensuring major risks
identified are reported to both Boards.
Delegation of Authority
The BoD delegates financial authority to employees
who are responsible for taking actions, signing
documents and approving transactions affecting
the operation and affairs of the business entity.
The overriding principle is that no individual is to
exercise more authority than that which has been
delegated to him or her.
Delegation of authority is managed top down, is
consistent across the organization, and is based on
the amount of risk - in terms of value associated
with the decision. The authority delegated is based
on the desired balance between centralized and
decentralized decision making in the organization.
An operational framework is implemented via (1)
approvals manuals (2) delegation of authority
guides (3) authorized approval lists with specimen
signatures (4) other means such as electronic
storage and retrieval.
Final approval requirements are specified in
delegation of authority or equivalent guides, usually
within monetary, volume, or other appropriate
limits. No employee is granted authority to approve
his or her own travel and business-related expense
statements or reimbursements.
Authority is limited to expenditures and
other transactions made within ones area of
responsibility. The BoD reviews the delegation of
authority guides as required.

59

Corporate Governance Report

IT Governance

The Companys Code of Conduct

The Company is planning to formally establish an IT

Steering Committee with representatives from all
relevant business and IT areas to ensure that the
IT investments meet their objectives in terms of
efficiency, effectiveness and standardisation.

The Companys Code of Conduct applies to the

BoC, BoD and employees without exception, and if
necessary facilitates the use of sanctions. The Code
governs workplace and human resource practices
and is aligned to the Companys core values of
teamwork, integrity and performance. The Code is
supported with appropriate awareness training and
reviewed periodically and approved by the Boards.

Compliance policy and practices

The Companys compliance approach focuses
on ensuring strict adherence to all laws and
regulations, maintaining the quality control of
practices and processes, identifying any weakness
and moving to fix any gaps while enhancing the
processes and practices.
Corporate responsibility and sustainability
Approach to corporate responsibility and
sustainability
The Companys aim is to manage its business in
a way that produces positive outcomes for all
stakeholders and maximises economic, social and
environmental value simultaneously. In doing so,
the Company accepts that the responsibilities
flowing from this go beyond both strict legal
obligations and the financial bottom line.
Transparency, the desire for fair dealing, responsible
treatment of staff and of customers and positive
links into the community, underpin everyday
activities and corporate responsibility practices.
Employee Relations
The Company has policies related to:

safe work environment;

non-discrimination;
equal employment opportunity;
competitive terms and conditions of employment;
and
elimination of forced or compulsory labour.

60

Key suppliers are required to sign a Code of Conduct

before becoming accredited.
Corporate Governance Manual
The Companys approach has been guided by
principles and practices already in place with the
best interest of all stakeholders considered, while
ensuring full compliance with legal requirements.
A formal Corporate Governance Manual drawing
together all current best practice routines in
existence, as described in this report, is planned
for 2006. Employees will be required to sign
to confirm they have read and understood all
elements of the manual.
Directors interests
The extent of share ownership by Board members
at 31st December 2005 is as follows:
: 446,912,286 shares
Rennier Latief
Norman Harahap : 151,142 shares
: 25,000 shares
Yuli Soedargo

Prevention of Conflict of interest

Material Transaction

In compliance with Bapepam Rule No. IX.E.1,

regarding Conflict of Interest on Certain
Transactions, which details the permitted
transactions and procedures to conduct and/
or disclose conflicts of interest, the Company
always ensures that any potential conflict of
interest transaction is proposed and approved by
shareholders in a GMOS prior to the execution of
such a transaction. The Company has established
a Conflict of Interest Compliance Committee in
2005 and has ensured appropriate awareness for
employees in the matter.

In compliance with Bapepam Rule No. IX.E.2

regarding Material Transaction and Changes of Core
Business (Bapepam Rule No. IX.E.2), the Company
make sure that any acquisition or disposal of
shares or assets transactions that are equal or
greater than 10% of revenue or 20% of equity
are approved by half plus one of the Companys
shareholders through a GMOS.

Conflict of Interest Compliance Committee

The Companys Conflict of Interest Compliance
Committee reviews and approves transactions
entered into by the Company and its subsidiaries
that might constitute conflicts of interest or related
party transactions, with a view to ensuring that
the Company remains in compliance with all Capital
Market authority regulations on conflicts of interest
and related party transactions. The Committee
meets at least two times per month, and is chaired
by Suyitno Patmosukismo. The members of this
committee are Suyitno Patmosukismo, Norman
Harahap, Riri Harahap and Rida Handayani. Ms. Riri
Harahap is the Corporate Secretary of the Company
and Ms. Rida Handayani is the Legal Manager.

The acquisition of PT THP in 2006 was classified

as material transaction as referred in the Bapepam
Rule No. IX.E.2 due to the transaction value of
Rp 2,948,073 million which exceed 10% of the
Companys 2004 income (Rp 855,080 million) and
20% of the Companys equity (Rp 591,900 million)
on 30 June 2005. The said transaction has obtained
the approval from the majority of shareholders at
the Companys Extraordinary General Meeting of
Shareholders held on 22 December 2005.
Market disclosure practices
The Company is committed to giving all
shareholders comprehensive and equal access to
information about our activities and obligations to
the broader market and primarily uses its website
www.energi-mp.com as an information delivery
mechanism to shareholders, investors and users.

The Company has a policy on public disclosure of

connected transactions and Directors interests in
such matters in the financial statements.

61

Corporate Governance Report

The Corporate Secretary has responsibility for

ensuring compliance with the continuous disclosure
requirements in the Listing Rules, and overseeing
and co-ordinating information disclosure to
the Jakarta Stock Exchange, analysts, brokers,
shareholders, the media and the public.

Distribution of shareholdings as at December 31st, 2005

Shareholding (Range)

No. of share accounts

Up to 5000

249 14.16

5001 - 10,000

229 13.03

10,001 - 50,000

629

50,001 - 100,000

204 11.61

100,001 - 500,000

233 13.25

500,001 - 1,000,000

54

3.07

Transparency and Disclosure

1,000,001 - 5,000,000

81

4.61

Means of communication

5,000,001 - 10,000,000 19 1.08

Guidelines exist for staff and Directors to ensure

that unpublished information, which may be
price sensitive about the Company or any other
organisation, is not used in an illegal manner.

10,000,001 - 50,000,000

The unaudited 2nd quarter and full year financial

results of the Company were published in the
following newspapers: Bisnis Indonesia, Investor
Daily Indonesia and The Jakarta Post and via the
Companys website www.energi-mp.com
Periodic unaudited results are filed with the
Jakarta Stock Exchange. These details are
also published in the Companys website. The
Company makes use of its website for publishing
official news releases and presentations made to
institutional investors/ analysts.

62

35.78

34 1.93

50,000,001 - 100,000,000 11

0.63

100,000,001 - 500,000,000 12

0.68

500,000,001 - 1,000,000,000 1

0.06

1,000,000,001 & above

0.11

1,758

100

Total

Share price

The Company is quoted on the Jakarta Stock Exchange, code: ENRG, traded on the Main Board and is among
the top 45 most liquid counters (LQ 45) constituting 1.49% of the LQ 45 and 1.19% of the JCI indices .

2005

2004

Closing price (Rp)

Volume

Closing price (Rp)

Q1

750

35,471,000

Not yet listed

Q2

850 12,874,500

285

34,358,500

Q3

760 15,027,500

495

62,218,000

Q4

750

600

965.5

3,586,000

Volume

63

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
President Commissioner

Christopher B. Newton
President Director

Qoyum Tjandranegara
Independent Commissioner

Norman H. Harahap
Director

Rennier A. R. Latief
Commissioner

Thomas L. Soulsby
Director

Yuli Soedargo
Director

Faiz Shahab
Director

64

Financial Report
PT Energi Mega Persada Tbk and Subsidiaries
Consolidated Financial Statements for the Year Ended
December 31, 2005
(With Comparative Figures for the Years Ended
December 31, 2004 and 2003)
and Report of Independent Auditors

65

Contents
Directors Statement Letter
Report of Independent Auditors
Financial Statements
01 Consolidated Balance Sheet
04 Consolidated Statement of Income
05 Consolidated Statement of Changes in Equity

(Capital Deficiency)
06 Consolidated Statement of Cash Flows
08 Notes to Consolidated Financial Statements

66

N ENERAI T EAAPERSADA
IhL,

DIRICTORS' STATEMIM LETTER

RILATINCTO
THE Rf,SPONSMILNY ON THN CONSOLIDATEDFINANCIAL STATEMtrMS
DECtrMBtrr 31, 2005,?004AND ?003
PT f,NERGTMDGA PERSADATBK A'{D SUBSIDL{RIES

ln ordtr b tuUill 1heBap.pan Resularid s.ipulabd in i\e EnctcDE ot Bapam Deision mdtr
Number Ka-40pM/2003 daltd Decdrb{ 22, 2001, @.ming Regolarid Nlmber vtlrc.I:
Responsibirny
ofDiredo6 up.n Fi@cial Relod, w., de undssed:

wisa MuriaL!. 32,JLJmdml Grot SubmbKrv 42.

Domicih a shredin ID card

n. P.Imb Inb nI Bbk R No. 5. Psm6 Hijlu.

(?v.42,
wbtu MuliaLr r2, Jr.Jdd.alGabrsuhrclo
sssene Kec.Knbmea, J*ft

1, we e KloBible for ine prpmlid

rd Dftsnbrid olrhe onsolidaredfinadai shrem.nc:

2. The .onsolidabd findcial sbt

s.nmllya.cepkdecounringprinciptes!

Bm!

sa..d in a.cordde widr

. Al1infomEtonconhinedin lneconsolidadnmcial sbrnens is .onplercmd orcdj

b. ft. .onslidaredfnmcial sbtdenb dono.conbinmisleading
naerial inforution or rrds,
anddonoromirmddiJ irfomrion andfrcb

'rhn sdenentrcd

h nadehihn 8.

O3

w s m aM o r i a . 3 3Frooo rJ J e n d . G a l o r s u b r o r o N o . . l 2 . J a k a r l a r 2 T r o T ( 6 2 2 r ) s 2 9 0 6 2 5 0 F ( 6 2 2 1 ) s 2

Moores
Rowland

Reporr No. 014/2006

comissionei3
Pr h6rql

!i6sa P6rEada rbk

{e

audited

hawe

lhe

2005, ard

and Dire.tors

accompdyinq
(the "conpany" ) and
bne relared co4olidated
a--

_he

subsidiaiies

as

of

leeForerbr'i

an opinion
on lhese
audit.
we
did
not
finan.ial
statemenrs based o! ou
statemenrs of Energj. Mega Pelsa.ta Frnance B.v-,
consolidated
filbcial
of
0.004* of lhe .olsolidatett
the year ended De.emler 31,
uho3e
by anorler
rindepeddent auditor
parasraph
uquarified
opinion
vith
an expla@lion
legarding lestatemen!
of lhe conaoridated
coDection
witn acquisition
of suhsidiaries
flom entiEies sde!
comor
and
td calculation
of the subsidiarieo
"RFroyee lenerit"
lhe adoption of PSAK No. 24 (Revised 2004) resardins
standards
our
auttit
in
accordance
{i!h
audirins
Tnose Etandalde
eslabltlhed
by rhe Indonesia4
audit
to obtain
leasonable
requile
chac rc plan ald
assurdce
flee of naterial
alou! uheEher fte financial
a teBc basis,
ewidence
nisstatenent.
tu andit incrudes
ciar
anomts and disclosures
i! the fin
plinciples
accountidg
uBed and
audic
also
tncludes
aB werl a! evaluating
lhe
sisnificant
estimtea
mde by mnageneli,
presentatior.
we
beliewe
that
ot!
audiE
overall
firancial
stabemencs
prowides a reasonable basis for .ur opinion.

Rowland
@ Moores
In ou! opinion,
the .do1ldated
fiducial
staErenlE !efe!!ed
to abde
i! all Etella1
reepecta,
th financial
of
PreE@t failly,
loEition
PT Enelgi Mega ler6ada Tbk dd snbsidialieB
ae of De.emb! 31, 200s and
the resurts of !hei! opelallore
and their ca8h f1m6 fo! th yea! lhen
qith
endeit, in .onfomtty
aecmtirs
plin
gerelally
ipleg
accepred
in

Irlces!

No. 03.r-0s35

\,

dbr

luldrctlo@.

tu

!td&4r,

pr@d!6

r!

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

ASSETS

Notes
CURRENT ASSETS
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Prepaid expenses and advances
Prepaid tax
Deferred of Rights Issue cost

2d,5
2e,6
2e,7
2f,8
2g,9
2q,27a
10,37

2005

2004

2003
(As restated see Note 3)

221,534,399
233,074,491
271,662,157
259,574,320
119,488,447
4,867,253
3,244,472

10,210,049
67,208,793
108,067,944
99,586,951
11,383,751
3,781,286
-

19,321,100
38,737,465
24,309,177
60,962,644
6,427,322
-

1,113,445,539

300,238,774

149,757,708

427,202,349
173,882,725

67,823,810

973,075
-

5,541,569

1,152,737

238,257

2,937,209,264
71,727,804
89,774,398

2,028,879,880
48,302,379
8,839,134

438,077,040
30,931,466
37,669,162

216,699,185
23,718,241

204,795,059
12,995,222

5,184,313

Total Non-current Assets

3,945,755,535

2,372,788,221

513,073,313

TOTAL ASSETS

5,059,201,074

2,673,026,995

662,831,021

Total Current Assets

NON-CURRENT ASSETS
Due from related party
Restricted time deposits
Fixed assets - net of accumulated
depreciation Rp 1,680,763
in 2005, Rp 148,728 in 2004
and Rp 80,113 in 2003
Oil and gas properties - net of
accumulated depreciation,
depletion and amortization
Rp 857,998,264 in 2005,
Rp 499,191,228 in 2004 and
Rp 320,446,461 in 2003
Site restoration fund
Deferred tax assets
Reimbursement of Subsidiarys
dividend tax paid
Other assets

2h,11
2i,12

2j

2k,13
32
2q,27e
4
14

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

LIABILITIES AND EQUITY (CAPITAL DEFICIENCY)

Notes
CURRENT LIABILITIES
Short-term loan
Trade payables
Other payables
Accrued expenses
Taxes payable
Current maturities of long-term loans

15
16
17
2u,18
2q,27b
19

Total Current Liabilities

NON-CURRENT LIABILITIES
Long-term loans - net of current
maturities
Due to related parties
Deferred tax liabilities
Employee benefits obligation
Site restoration obligation
Subsidiarys dividend tax liability

19
2h,11
2q,27e
2p,29
32
4

Total Non-current Liabilities

MINORITY INTEREST IN NET
ASSETS OF SUBSIDIARIES

2b

2005

2004

2003
(As restated see Note 3)

84,878,740
26,126,299
358,508,827
112,711,257
583,149

140,129,487
28,619,113
37,182,428
104,089,113
110,402,153
173,258,416

32,913,198
16,106,236
26,551,415
33,775,646
12,697,500

582,808,272

593,680,710

122,043,995

2,881,450,898
380,989,284
256,997,271
15,499,625
83,044,347
216,699,185

706,783,237
431,143,921
238,340,301
17,149,615
51,112,149
204,795,059

79,401,700
704,550,218
139,499,645
8,792,960
30,931,466
-

3,834,680,610

1,649,324,282

963,175,989

(1,543,541 )

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

Notes

2005

2003
(As restated see Note 3)

2004

EQUITY (CAPITAL DEFICIENCY)

Capital stock - Rp 100 par value per share
Authorized - 15,000,000,000 shares
in 2005 and 2004 and
8,008,000,000 shares in 2003
Issued and paid-up - 9,491,445,177
shares in 2005 and 2004 and
2,007,777,778 shares in 2003
20
Additional paid-in capital
2n,21
Equity proforma from restructuring
transaction of entities under
common control
2c,3,4
Difference in value from restructuring
transactions of entities under
common control
2c,22
Translation adjustments
2t
Retained earnings

(793,336,425 )
56,514,454
270,968,699

(793,336,425 )
42,186,219
75,150,286

(107,541,921 )
(5,211,539 )
4,353,132

Total Equity (Capital Deficiency) - Net

641,712,192

431,565,544

(422,388,963 )

5,059,201,074

2,673,026,995

TOTAL LIABILITIES AND EQUITY

(CAPITAL DEFICIENCY)

949,144,518
158,420,946

949,144,518
158,420,946

200,777,778
(514,766,413 )

662,831,021

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2005
(With Comparative Figures for the Years Ended December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

Notes

2005

2003
(As restated see Note 3)

2004

NET SALES

2o,23

1,479,359,013

855,079,977

513,102,075

COST OF GOODS SOLD

2o,24

1,004,032,045

539,973,677

331,410,350

475,326,968

315,106,300

181,691,725

139,892,634

59,055,718

43,170,792

335,434,334

256,050,582

138,520,933

25,769,339
16,403,240
5,918,950
(201,003,639 )
(7,744,866 )

18,800,547
7,921,956
7,908,771
(51,738,900 )
267,840
(14,457,271 )
185,263

8,376,670
(2,853,192 )
7,528,269
(18,975,021 )
1,114,230
(691,979 )
1,884,821

Other Charges - Net

(160,656,976 )

(31,111,794 )

(3,616,202 )

INCOME BEFORE TAX

BENEFIT (EXPENSE)

174,777,358

224,938,788

134,904,731

(53,519,047 )
75,531,657

(97,828,649 )
(52,505,435 )

(44,057,823 )
(75,566,667 )

22,012,610

(150,334,084 )

(119,624,490 )

196,789,968

74,604,704

15,280,241

GROSS PROFIT
OPERATING EXPENSES
General and administrative

2o,25

INCOME FROM OPERATIONS

OTHER INCOME (CHARGES)
Overhead cost recovery
Gain (loss) on foreign exchange - net
Interest income
Financing charges
Management fee
Allocation fee from Administrator
Others - net

TAX BENEFIT (EXPENSE)

Current tax
Deferred tax

32a
2t
26

2q,27

Total
INCOME BEFORE MINORITY
INTEREST IN NET INCOME
OF SUBSIDIARIES
MINORITY INTEREST IN
NET LOSS (INCOME)
OF SUBSIDIARIES

2b

NET INCOME
BASIC EARNINGS
PER SHARE
(in full amount)

2r,28

(971,555 )

(438,087 )

79,602

195,818,413

74,166,617

15,359,843

20.63

8.98

2.31

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CAPITAL DEFICIENCY)
FOR THE YEAR ENDED DECEMBER 31, 2005
(With Comparative Figures for the Years Ended December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

Notes
Balance as of January 1, 2003
Change in accounting policy and the Subsidiaries
equity arising from restructuring transactions
of entities under common control
Conversion of promissory notes to paid-in capital
Difference in value from restructuring transactions
of entities under common control
Translation adjustments
Net income for the year
Balance as of December 31, 2003 - as restated
Conversion of promissory notes to paid-in capital
Elimination of Subsidiaries equity from transactions
of entities under common control
Difference in value from restructuring transactions of
entities under common control
Translation adjustments
Initial public offering
Cash dividend
Net income for the year
Balance as of December 31, 2004
Translation adjustments
Net income for the year
Balance as of December 31, 2005

Equity Proforma
from Restructuring
Transaction of
Entities under
Common Control

Additional
Paid-in Capital

Capital Stock

Difference in
Value from
Restructuring
Transactions of
Entities under
Common Control

Translation
Adjustments

Retained
Earnings

Total Equity
(Capital Deficiency)

200,000

171,546,585

2c,3
20

200,577,778

(686,312,998 )
-

2c,22
2t

20

200,777,778
463,623,390

(514,766,413 )
-

2c

514,766,413

284,743,350
-

158,420,946
-

(685,794,504 )
-

47,397,758
-

949,144,518
-

158,420,946
-

(793,336,425 )
-

42,186,219
14,328,235
-

75,150,286
195,818,413

431,565,544
14,328,235
195,818,413

949,144,518

158,420,946

(793,336,425 )

56,514,454

270,968,699

641,712,192

2c,22
2t
1b,20

2t

171,746,585

(11,006,711 )
-

(697,319,709 )
200,577,778

(107,541,921 )
-

(5,211,539 )
-

15,359,843

(107,541,921 )
(5,211,539 )
15,359,843

(107,541,921 )
-

(5,211,539 )
-

4,353,132
-

(422,388,963 )
463,623,390

(3,369,463 )
74,166,617

514,766,413
(685,794,504 )
47,397,758
443,164,296
(3,369,463 )
74,166,617

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
(With Comparative Figures for the Years Ended December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

Notes
CASH FLOWS FROM
OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers, contractors
and employees
Cash generated from operations
Financing charges paid
Corporate income and dividend tax
paid

6,23

501,860,134

(919,617,320 )

(395,063,220 )

(215,907,382 )

26

419,645,334
(198,103,086 )

431,554,519
(19,677,254 )

285,952,752
(18,975,021 )

27b,c

(88,631,399 )

(48,720,489 )

(14,828,742 )

132,910,849

363,146,776

252,148,989

5,918,950
(1,116,359,011 )
(4,373,759 )
(10,723,020 )

6,088,771
(872,285,301 )
(309,357,244 )
(1,043,780 )
(7,573,889 )

7,528,269
(150,684,274 )
(317,675 )
(1,716,563 )

(1,125,536,840 )

(1,184,171,443 )

(145,190,243 )

1,802,571,948
(106,058,915 )

1,071,916,487
(67,823,810 )

(477,356,985 )
-

71,083,865
455,589,360
(3,369,463 )
(12,425,064 )
(129,012,644 )
(574,482,238 )

(78,345,411 )
(20,757,688 )
-

811,476,493

(99,103,099 )

4
13

Net Cash Used in Investing Activities

CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from long-term and short-term
loans - net
15,19
Placement of restricted time deposits
12
Increase (decrease) of due from/to
related parties
11
Receipt of paid-in capital
20,21
Dividend paid
Proceeds from issuance of capital stock
Payment of long-term and short-term loans
Payment of loan of acquired Subsidiaries
Net Cash Provided by (Used in)
Financing Activities

1,339,262,654

2004

826,607,739

Net Cash Provided by Operating

Activities
CASH FLOWS FROM
INVESTING ACTIVITIES
Interest received
Acquisition of Subsidiaries
Acquisition of oil and gas properties
Acquisition of fixed assets
Increase in other assets

2005

2003
(As restated see Note 3)

1,219,156,048

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2005
(With Comparative Figures for the Years Ended December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

Notes

2005

2003
(As restated see Note 3)

2004

NET INCREASE (DECREASE)

IN CASH AND CASH
EQUIVALENTS

226,530,057

(9,548,174 )

CASH AND CASH EQUIVALENTS

AT BEGINNING OF YEAR
Effect of foreign exchange rate changes

10,210,049
(15,205,707 )

19,321,100
437,123

11,922,794
(457,341 )

221,534,399

10,210,049

19,321,100

463,623,390

200,577,778

227,982,385

243,456,854

(663,654,248 )

(678,762,250 )

CASH AND CASH EQUIVALENTS

AT END OF YEAR
Additional information for non-cash
financing activities:
Conversion of promissory notes to
paid in-capital
Transfer of receivable from related parties
PT Brantas Indonesia (formerly
PT Energi Daya Persada)
PT Kondur Indonesia (formerly
PT Energi Bumi Persada)
Transfer of payable from related parties
PT Brantas Indonesia (formerly
PT Energi Daya Persada)
PT Kondur Indonesia (formerly
PT Energi Bumi Persada)

7,855,647

The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

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 Companys Articles of Association
have been amended several times, the most recent being based on Notarial Deed No. 28 dated
July 30, 2004 of Lena Magdalena, S.H., Notary in Jakarta, concerning the changes in articles 17, 21
and 26 regarding the Companys year-end, location and announcement of the general meetings of the
stockholders and changes in the Articles of Association. The amendment has been received and
recorded at the Database of Sisminbakum, Directorate General of General Law, Department of
Justice and Human Rights of the Republic Indonesia No. C-20685.HT.01.04.TH.2004 dated
August 16, 2004.
In connection with the Companys Initial Public Offering, the Companys Articles of Association
have been amended based on Notarial Deed No. 40 of Extraordinary General Meeting of
Shareholders (EGM) 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 includes among others, the change of
the Companys capital stock (see Note 20) in the name from PT Energi Mega Persada to PT Energi
Mega Persada Tbk.
In accordance with the article 3 of the Companys Articles of Association, the scope of its activities
comprises of among others; trading, services and mining, and making direct and indirect investments
through subsidiaries.
The Companys 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 their activities
are located in Riau province, Sidoarjo and Kangean Island in East Java province.
The Company started its commercial operations in February 2003.

b. Public Offering of Shares of the Company

The Company obtained the effective notice 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.
Based on the EGM dated December 22, 2005, the shareholders of the Company approved the Right
Issue I to the Companys shareholders in connection with the Exercise Rights (ER) of 4,909,368,195
shares of nominal value Rp 100 (full amount) per share, which being offered at Rp 770 (full amount)
per share amounted to Rp 3,780,213,510,150 (full amount), and which derives from new shares to be
listed on the Jakarta Stock Exchange after obtaining effective notice from Bapepam (see Note 20).

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

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
Subsidiaries
RHI Corporation (RHI)
Kondur Petroleum SA
(KPSA) *)
PT Imbang Tata Alam (ITA)
Kalila Energy Ltd. (KEL)
Pan Asia Ltd. (PAN)
Lapindo Brantas Inc. (LBI) *)
Energi Mega Pratama, Inc.
(EMP Inc)
EMP Exploration
(Kangean), Ltd. (EEKL) *)
EMP Kangean, Ltd. (EKL) *)
Malacca Brantas Finance, B.V.
(MBF)
Energi Mega Persada
Finance, B.V. (EMP Finance)

Total Assets

Domicile

2005
(%)

2004
(%)

2003
(%)

Year of
Commercial
Operation

Delaware, USA

100

100

100

1984

1,144,982,613

445,980,915

257,838,474

100
96
100
99.99
100

100
96
100
99.99
100

1995
2001
1997
1997
1999

1,146,093,226
446,837,422
925,838,932
31,605,191
861,314,860

446,059,043
228,029,302
381,826,488
15,686,407
326,614,373

257,954,436
183,372,487
221,659,013
14,310,743
183,528,091

100

2003

3,158,871,287

1,855,446,727

85

100
100

1987
1987

990,148,813
1,439,445,760

718,102,266
999,878,315

1,202,108,826
704,669,027

The Netherlands 100

2005

1,186,827,216

The Netherlands 100

212,770

Panama
100
Indonesia
96
Hong Kong
100
Hong Kong
99.99
Delaware, USA 100
British Virgin
Islands
100
UK
Delaware, USA

100
100

2005
(Rp)

2004
(Rp)

2003
(Rp)

*) Indirect Ownership interest through Subsidiaries

All the Subsidiaries of the Company, except MBF and EMP Finance, are holders of working interest
of the following oil and gas production blocks through Production Sharing Contracts (PSC) with
Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi (BPMIGAS) as follows:

Working Area

Maturity of
Contract

Malacca PSC

Percentage of Ownership
(%)
Owned by

2005

2004

2003

2020

Kondur Petroleum S.A. (KPSA)

PT Imbang Tata Alam

34.46
26.03

34.46
26.03

34.46
26.03

Brantas PSC

2020

Lapindo Brantas Inc.

50

50

50

Kangean PSC

2030

EMP Exploration (Kangean) Ltd.

EMP Kangean Ltd.

40
60

40
60

MBF and EMP Finance are involved in industry, financial and commercial activities.

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

1. GENERAL (Continued)
d. Employees, Boards of Commissioners and Directors
As of December 31, 2005, 2004 and 2003, the members of the Companys boards of Commissioners
and Directors are as follows:
2005

2004

2003

Board of Commissioners:
President Commissioner
Independent Commissioner
Commissioner

Suyitno Patmosukismo
A. Qoyum Tjandranegara
Rennier Abdul Rachman Latief

Suyitno Patmosukismo
A. Qoyum Tjandranegara
Roosmania Kusmuljono

Nazamudin Latief

Board of Directors:
President Director
Director
Director
Director
Director
Director

Christopher Basil Newton

Yuli Soedargo
Faiz Shahab
Norman Hafiz Harahap
Thomas Leo Soulsby
-

Rennier Abdul Rachman Latief

Nazamudin Latief
Muhammad Suluhudin Noor
Norman Hafiz Harahap
Thomas Leo Soulsby
Purwanto

Rennier Abdul Rachman Latief

Muhammad Suluhudin Noor
-

The compositions for 2005 were based on the decision of the EGM on December 22, 2005, as stated
in the Summary of EGM Deed No. 40 dated December 22, 2005 and in connection with the
Statement of Meeting Decision Deed No. 46 on December 23, 2005, both deeds of Robert
Purba S.H., Notary in Jakarta.
The compositions for 2004 were based on the decision of the EGM on July 30, 2004, as stated in the
Summary of EGM Deed No. 27 dated July 30, 2004 and in connection with the Statement of
Meeting Decision Deed No. 28 on July 30, 2004, both deeds of Lena Magdalena, S.H., Notary in
Jakarta.
The compositions for 2003 were based on the decision of the EGM on February 14, 2003, as stated
in the Summary of EGM Deed No. 3 dated February 14, 2003, deed of Rita Imelda Ginting S.H.,
Notary in Jakarta.
Total remuneration paid to the Commissioners and Directors of the Company amounted to
Rp 16,656,742 in 2005.
As of December 31, 2005, 2004 and 2003, the Company and its Subsidiaries had approximately 875,
585 and 365 employees, respectively.
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, while the measurement basis is historical cost, except
for certain accounts that are measured on the basis described in the related accounting policies.

10

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The reporting currency used in the preparation of the consolidated financial statements is the
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.
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 statement 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 minoritys proportion of the historical cost
of the net assets. The minority interest is subsequently adjusted for the minoritys 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.
Subsidiaries use the proportionate consolidation method in recording and presenting their
participating shares in Joint Ventures under PSC. The financial statements of the Joint Ventures are
reflected in the financial statement of these Subsidiaries according to their participating interest in the
PSCs.
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, the assets and liabilities of a Subsidiary are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognized as goodwill and amortized using the straight-line method over five years.
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.

11

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill of the acquired oil and gas companies is reported under Oil and Gas Properties account
and is amortized over the life of the PSC using the Unit of Production Method. 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.
Acquisitions of Subsidiaries that represent a restructuring transaction of entities under common
control are accounted for in accordance with PSAK No. 38, 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 Companys
interest in the subsidiarys 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
Companys 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. Based on
PSAK No. 38 (Revised 2004), 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.

Allowance for Doubtful Accounts

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 term of the PSC becomes the property of BPMIGAS when landed in
Indonesia. Non-capital inventories are charged to BPMIGAS during the year they are purchased
through cost recovery.
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. Allowance for obsolete and/or slow-moving
inventories is provided based on review of the condition inventories at the end of the year.

g. Prepaid Expenses
Prepaid expenses are amortized over the period benefited using the straight-line method.

12

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

h. Transaction 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 reporting
enterprise 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 reporting enterprise);
(4) Key management personnel, that is, those persons having authority and responsibility for
planning, directing and controlling the activities of the reporting enterprise, 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 reporting enterprise and enterprises that have a member of key management
in common with the reporting enterprise.
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.
Depreciation is computed using the straight-line method based on the estimated useful life of the
asset as follows:
Years
Machinery and equipment
Transportation and office equipment

4
4

13

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 follow 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.
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 proven reserves using prices based on current economic and
operating conditions, (2) the cost of unproven properties and major development projects not being
amortized, and (3) the lower of cost or estimated fair value of unproven properties included in cost
being amortized. Any excess over the cost is charged to expense and separately disclosed during the
related year.
All capitalized costs of oil and gas properties, including the estimated future costs of developing
proven reserves, are amortized using the unit-of-production method based on the total estimated
proven reserves. Investments in unproven properties and major development projects are not
amortized until proven reserves associated with the projects can be determined or until impairment
occurs. If the result of an assessment indicates that the properties are impaired, the amount of the
impairment is added to the costs to be amortized.
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.
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 (see Note 32a).
Sale of proven and unproven 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 proven reserves of oil and gas, in which case, the gain or loss is recognized in
income.
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 current year statement
of income.

14

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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
Shares issuance costs are presented as part of additional paid-in capital and are not amortized.
o. Revenue and Expense Recognition
Revenue is recognized when the crude oil and/or gas is 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
In July 2004, the Indonesian Institute of Accountants issued PSAK 24 (Revised 2004), Employee
Benefits, which regulates the accounting and disclosure for employee benefits and covers not only
retirement benefits but also short-term (e.g. paid annual leave, paid sick leave) and other long-term
benefits (e.g. long-service leave, post-employment medical benefits). PSAK No. 24 (Revised 2004)
replaced PSAK No. 24 issued in 1994, which covered only retirement benefit cost. The Company
has implemented early adoption of PSAK No. 24 (Revised 2004) commencing from 2004 and, as
required by this standard, the Company has restated the 2003 consolidated financial statements.
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 Companys 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.
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 assets program.
q. Income Tax
The Company and its Subsidiaries determine their income taxes in accordance with PSAK No. 46,
Accounting for Income Tax.

15

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Current tax expense of the Company is determined based on the taxable income for the period
computed using prevailing tax rates. Current tax expense of Subsidiaries that are domiciled and
registered as tax subjects in other countries are determined based on the taxable income for the
period 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 is determined based on the taxable income in the related period using the prevailing tax
rates as stated in the PSC.
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 periods against which the deductible temporary
differences can be utilized.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by 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.
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.
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 two 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.
16

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

t.

Foreign Currency Transactions and Translation

The books of accounts of the Company are maintained in Indonesian Rupiah. Transactions during
the period 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 rates of exchange 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 revenues and expenses are translated at the
average rates of exchange for the period. Resulting translation adjustments are shown as part of
Equity as Translation Adjustments. The middle rate of Bank Indonesia prevailing on December 31,
2005, 2004 and 2003 are as follows:
2005
(full amount)
Currency
US$
HK$
Euro

9,830
1,268
11,660

2004
(full amount)

2003
(full amount)

9,290
1,195
12,652

8,465
1,090
10,643

u. 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 has restated the consolidated financial statements for the year ended December 31, 2003
when issuing the consolidated financial statements for the year ended December 31, 2004 with details as
follows:
-

The Company applied PSAK No. 24 (Revision 2004) regarding Employee Benefits, which is to be
applied retrospectively.

The Companys Subsidiaries applied PSAK No. 46 regarding Accounting for Income Tax.

In 2004, the Company acquired equity interest of ITA, PAN, KEL, and EMP Inc. The acquisition
represents transaction of entities under common control in accordance with PSAK No. 38. The
consolidated financial statements for 2003 have been restated to reflect as if the subsidiaries had been
acquired at the beginning of 2003. The Subsidiariess equity at beginning of 2003 is presented in
equity as Proforma equity from Restructuring Transactions of Entities under Common Control.

17

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

3. RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The comparison of restated financial statements as of and for the year ended December 31, 2003 with
previous financial statements that have been reported is as follows:
As restated

As previously reported

BALANCE SHEET
ASSETS
CURENT ASSETS
Cash on hand and in banks
Trade receivables
Other receivables
Inventories
Prepaid expenses
Total Curent Assets

19,321,100
38,737,465
24,309,177
60,962,644
6,427,322

16,240,348
379,782
9,874,634
24,439,674
3,918,296

149,757,708

54,852,734

NON-CURRENT ASSETS
Due from related parties
Fixed assets
Oil and gas properties - net of accumulated
depreciation, depletion and amortization
Site restoration fund
Deferred tax assets
Other assets

973,075
238,257

760,941
-

438,077,040
30,931,466
37,669,162
5,184,313

182,964,068
17,621,066
425,399
1,902,145

Total Non-current Assets

513,073,313

203,673,619

TOTAL ASSETS

662,831,021

258,526,353

32,913,198
26,551,415
33,775,646
16,106,236
12,697,500

20,660,407
26,690,148
3,821,186
1,533,476
-

122,043,995

52,705,217

LIABILITIES AND EQUITY

(CAPITAL DEFICIENCY)
CURRENT LIABILITIES
Trade payables
Accrued expenses
Taxes payable
Other payables
Current maturities of long-term loans
Total Current Liabilities

18

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

3. RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As restated

As previously reported

NON-CURRENT LIABILITIES
Long-term loans - net of current maturities
Due to related parties
Deferred tax liabilities
Employee benefits obligation
Abandonment and site restoration obligation

79,401,700
704,550,218
139,499,645
8,792,960
30,931,466

27,271,163
4,290,587
-

Total Non-current Liabilities

963,175,989

31,561,750

200,777,778

200,777,778

EQUITY (CAPITAL DEFICIENCY)

Issued and fully paid
Equity proforma of restructuring transaction of
under common control
Difference in value from restructuring transactions
of entities under common control
Translation adjustments
Retained earning

(514,766,413 )

(107,541,921 )
(5,211,539 )
4,353,132

(28,453,415 )
(9,319,125 )
11,254,148

Total Equity (Capital Deficiency) - Net

(422,388,963 )

174,259,386

TOTAL LIABILITIES AND

EQUITY (CAPITAL DEFICIENCY)

662,831,021

258,526,353

Net sales
Cost of goods sold

513,102,075
331,410,350

195,223,415
152,252,338

Gross profit
Operating expenses

181,691,725
43,170,792

42,971,077
24,165,098

Income from operation

Other income (charges) - net

138,520,933
(3,616,202 )

18,805,979
2,226,794

Income before tax expense

Tax expense

134,904,731
(119,624,490 )

21,032,773
(9,778,625 )

Income before minority interest

Minority interest

15,280,241
79,602

11,254,148
-

Net income

15,359,843

11,254,148

2.31

6.40

STATEMENT OF INCOME

Basic earnings per share

(in full amount)

19

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

4. ACQUISITIONS OF SUBSIDIARIES
a.

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 - The 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 was Euro 24,600 and because the difference between this purchase
price and the net assets value of EMP Finances 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.

b. 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 was
Euro 24,600 and because the difference between this purchase price and the net assets value of
MBFs 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.

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 (100%) 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 Companys 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.
These acquisitions represent transactions of entities under common control, which are treated as
restructuring transactions of entities under common control in accordance with PSAK No. 38 (see
Note 3).
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 have a 100% working interest in the
Kangean Block. Acquisition cost of these companies amounted to US$ 97,789,832. 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 can 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.
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:

20

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

4. ACQUISITIONS OF SUBSIDIARIES (Continued)

EMP Exploration
(Kangean) Ltd.

EMP Kangean Ltd.

4,293,696
395,772
168,107
68,663,525

6,383,135
7,041,688
593,658
3,289,723
80,405,923

6,383,135
11,335,384
989,430
168,107
3,289,723
149,069,448

14,062,507
(3,800,755 )
(253,252 )
(6,266,751 )
(21,876,791 )
(14,062,507 )
(692,162 )
(1,515,456 )

7,982,171
(5,667,465 )
(343,941 )
(32,092,365 )
(7,982,171 )
(936,457 )
-

22,044,678
(9,468,220 )
(597,193 )
(6,266,751 )
(53,969,156 )
(22,044,678 )
(1,628,619 )
(1,515,456 )

39,115,933

58,673,899

97,789,832

Cash on hand and in banks

Trade receivables
Inventories
Due from related parties
Deferred tax assets
Oil and gas properties
Right to reimburse prior years
dividend tax
Taxes payable
Accrued expenses
Deferred tax liabilities
Due to related parties
Prior years dividend taxes payable
Other payables
Employee benefits obligation
Fair Value of Net Assets

Total

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 15 and 19).
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

2003
(As restated see Note 3)

Cash on hand

1,187,563

351,994

188,279

Cash in banks
Rupiah
PT Bank International Indonesia Tbk
PT Bank Negara Indonesia (Persero) Tbk
PT Bank Pan Indonesia Tbk
PT Bank Mandiri (Persero) Tbk
Citibank N.A.
PT Bank Mega Tbk
Deutsche Bank

5,351,445
1,106,570
894,557
769,086
684,225
126,750
58,595

284,807
23,773
115,456
368,652
840,453
139,853
-

151,574
27,291
188,677
4,183,158
21

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

5. CASH AND CASH EQUIVALENTS (Continued)

2005
Hongkong Shanghai Bank Corporation
Standard Chartered Bank
PT Bank Danamon Indonesia Tbk
PT Bank Global
United States Dollar
Citibank N.A.
Fortis Bank
PT Bank Mega Tbk
PT Bank International Indonesia Tbk
PT Bank Mandiri (Persero) Tbk
PT Bank Negara Indonesia (Persero) Tbk
Standard Chartered Bank
Deutsche Bank
Hongkong Shanghai Bank Corporation
PT Bank Danamon Indonesia Tbk
Hongkong Dollar
Citibank N.A.
Euro
Fortis Bank
Other Investment
PT Danatama Makmur
Total

2003
(As restated see Note 3)

2004

25,000
4,995
489
-

5,936
33,156
-

641,198
17,480

9,021,712

1,812,086

5,209,378

53,102,354
47,275,079
26,284,559
7,909,052
5,701,667
1,908,381
80,346
49,688
25,737
-

3,044,412
726,251
1,545,895
1,465,386
383,946
874,988

12,281,919
62,463
1,309,324
39,726
194,187

142,336,863

8,040,878

13,887,619

50,410

5,091

35,824

127,851

68,810,000

221,534,399

10,210,049

19,321,100

Other investment represents fund placement that is managed by PT Danatama Makmur (Danatama) as
investment manager based on the management fund agreement signed between EMP Inc. and Danatama
on December 9, 2005. The fund balance as of December 31, 2005 amounted to US$ 7 million.
The maximum period of the investments ranged from between one (1) week to three (3) months and the
interest rate yield was 7% per annum.
All of this investment was settled on January 20, 2006.

22

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

6. TRADE RECEIVABLES
This account consists of:
a.

By Debtor - Third Parties

2005

2004

2003
(As restated see Note 3)

Local debtors
PT Petrokimia Gresik
BPMIGAS
PT Perusahaan Listrik Negara (Persero)
PT Perusahaan Gas Negara (Persero) Tbk
Others

55,006,516
35,692,114
27,905,853
26,110,655
-

22,563,069
9,901,654
34,573,952
-

4,026,242
18,189,448
658,416

Foreign debtors
BP Singapore Pte Ltd
Itochu Petroleum Co. (S) Pte. Ltd.

66,513,604
21,845,749

170,118

15,863,359

233,074,491

67,208,793

38,737,465

Total
b. By Age Category

2005

2004

2003
(As restated see Note 3)

Up to 30 days
Over 31 - 60 days
Over 60 days

175,727,921
29,405,953
27,940,617

67,208,793
-

4,164,204
34,573,261
-

Total

233,074,491

67,208,793

38,737,465

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 EMP Inc., LBI, KPSA and ITA totaling US$ 23,710,528 and US$ 7,234,531 as of
December 31, 2005 and 2004, respectively and receivables from KPSA and ITA totaling US$ 2,417,336 as
of December 31, 2003, are pledged as collateral for the bank loans (see Note 19).

23

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

7. OTHER RECEIVABLES
This account consists of:

2005

2004

2003
(As restated see Note 3)

Reimbursable Value Added Tax

Paceworks International Ltd.
Receivable from suppliers
Loan to employees
Overhead receivables from PSC participants
Interest
Receivable to BPMIGAS
Others

112,676,340
66,478,796
33,836,944
21,669,795
16,822,033
20,178,249

32,536,228
30,617,425
13,014,089
11,293,834
1,820,000
18,786,368

16,143,161
780,820
1,873,042
3,120,318
573,148
1,818,688

Total

271,662,157

108,067,944

24,309,177

Reimbursable Value Added Tax represents value added tax that has been paid by Subsidiaries, in
accordance with the terms of PSC agreement, which is reimbursable from BPMIGAS.
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 32).
Overhead receivables represent expenditures and expenses advanced by Subsidiaries, which will be
chargeable to other participants.
8. INVENTORIES
This account consists of:

2005

2004

2003
(As restated see Note 3)

Spare-parts
Fuel
Chemicals

248,937,682
8,861,037
1,775,601

93,708,908
4,011,794
1,866,249

56,893,959
2,941,401
1,127,284

Total

259,574,320

99,586,951

60,962,644

Inventories were insured in an insurance package with Oil and Gas Properties (see Note 13).
Based on the evaluation of the inventory condition at year-end, management believes that no allowance
for obsolete and slow-moving inventories is required.

24

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

9. PREPAID EXPENSES AND ADVANCES

This account consists of:
2003
(As restated see Note 3)

2005

2004

8,778,630
989,570
424,278
368,625

2,221,480
245,275
1,845,974

1,787,136
112,937
445,847

Advances
Project
Employees
Bank fees
Others

102,366,769
2,457,567
1,620,632
2,482,376

1,059,515
6,011,507

3,157,392
924,010

Total

119,488,447

11,383,751

6,427,322

Prepaid expenses
Rental
Insurance
Service charge
Others

Project advance in 2005 represents advance for drilling services in Kangean PSC and Malacca PSC to
suppliers amounting to Rp 86.31 billion and Rp 2.94 billion respectively.
10. DEFERRED OF RIGHTS ISSUE I COST
This account represents deferred right issue cost I, which was completed on January 24, 2006 (see Note
37).
11. DUE FROM / TO RELATED PARTIES
Due from Related Party
This account represents receivable from PT Energi Timur Jauh (ETJ), based on the agreement dated
August 1, 1998 (see Note 32b). Funds received by ETJ from KPSA are used to pay the loan of
PT Ladinda Petroindo (Ladinda) to PT Bank International Indonesia Tbk amounting to US$ 28 million.
The loan was made available to finance the development in Brantas PSC by LBI, a Subsidiary and is
guaranteed by LBIs working interest in the Brantas Block.
Due to Related Parties
2005
PT Brantas Indonesia (BI) (formerly
PT Energi Daya Persada (EDP))
PT Kondur Indonesia (KI) (formerly
PT Energi Bumi Persada (EBP))
PT Energi Timur Jauh (ETJ)
PT Ladinda Petroindo (LP)
Others
Total

2004

2003
(As restated see Note 3)

190,767,250

180,287,658

352,427,095

190,222,034
-

179,772,397
64,374,033
6,709,833
-

352,060,603
41,733
20,787

380,989,284

431,143,921

704,550,218
25

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

11. DUE FROM / TO RELATED PARTIES (Continued)

Amounts due to BI and KI, Companys stockholders, represent net of due from and due to related parties
that were transferred in 2004 and 2003 in accordance with the acquisition of Subsidiaries under common
control.
In 2004, part of due to ETJ represents incurred costs that shall be chargeable to KPSA and LBI in
relation to the position of ETJ as cash manager. Amounts due to and due from ETJ in 2005, 2004 and
2003 are recorded net in the consolidated financial statements.
12. RESTRICTED TIME DEPOSITS
This account consists of:

2005
Bank of New York, Singapore
Credit Suisse, Singapore (CS)
Total

2003
(As restated see Note 3)

2004

97,475,720
76,407,005

67,823,810

173,882,725

67,823,810

Time deposits in Bank of New York, Singapore represents placement of time deposits pursuant to the
Cash and Accounts Management Agreement (CAMA) between MBF, LBI, KPSA and ITA with Bank of
New York, Singapore to serve as collateral for credit facility received from Merrill Lynch on July 27, 2005
(see Note 19). Time deposits mature on a quarterly basis and earn interest at a rate equal to LIBOR.
Time deposits in CS represents placement of time deposits pursuant to the CAMA between EMP Inc., a
Subsidiary, and CS, which will serve as collateral for the loan obtained from CS on May 19, 2005 (see
Note 19). Time deposits mature on a monthly basis and earn interest at a rate of LIBOR less 0.25%, or
zero, whichever is higher.
13. OIL AND GAS PROPERTIES
This account consists of:
2005
January 1

Acquisition

Additions

Translation
Adjustments

Deductions

December 31

Cost
Accumulated depreciation,
depletion and
amortization

2,528,071,108

1,116,359,011

150,777,409

3,795,207,528

499,191,228

328,362,315

30,444,721

857,998,264

Net Book Value

2,028,879,880

2,937,209,264

26

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

13. OIL AND GAS PROPERTIES (Continued)

2004
January 1

Acquisition

Additions

Deductions

Translation
Adjustments

December 31

Cost
Accumulated depreciation,
depletion and
amortization

758,523,501

1,330,892,032

309,357,244

(10,700,137 )

139,998,468

2,528,071,108

320,446,461

173,924,168

(32,468,172 )

37,288,771

499,191,228

Net Book Value

438,077,040

2,028,879,880

2003
(As restated - see Note 3)
January 1
Cost
Accumulated depreciation,
depletion and
amortization
Net Book Value

Acquisition

Additions

Deductions

Translation
Adjustments

December 31

1,067,135,813

60,712,503

89,971,770

(405,752,031 )

(53,544,554 )

758,523,501

423,655,604

95,229,433

(176,939,441 )

(21,499,135 )

320,446,461

643,480,209

438,077,040

Depreciation, depletion and amortization for the years ended December 31, 2005, 2004 and 2003, of
Rp 328,362,315, Rp 173,924,168 and Rp 95,229,433, respectively, were charged to cost of goods sold (see
Note 24).
In 2005, the additions consisted of costs of development and exploration amounting to US$ 86.5 million
and capitalization of borrowing cost of the CS loan obtained on May 19, 2005 amounting to US$ 27.4
million to finance the development of Kangean PSC (see Note 19).
In 2004, the acquisitions principally consisted of the oil and gas properties of the newly acquired
Subsidiaries, ITA, KEL and EMP Inc., totaling US$ 149.1 million, while the addition represents costs of
development and exploration amounting to US$ 34.6 million.
In 2003, the additions principally consisted of development and exploration of the oil and gas properties
amounting to US$ 9.6 million, while the remaining addition represents costs of the newly acquired
Subsidiary, RHI, totaling US$ 5.9 million.
Company and Subsidiaries management believes that there is no indication of impairment of oil and gas
properties.
The oil and gas properties, as well as inventories were insured with PT Tugu Pratama Indonesia, third
party, against risk of loss and damage. As of December 31, 2005, 2004 and 2003, total sums insured were
US$ 259,359,218, US$ 155,103,274 and US$ 132,266,377, respectively (see Note 8). The Company and
Subsidiaries management believes that these sums are adequate to cover the possibilities of loss on
insured assets.

27

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

14. OTHER ASSETS

This account consists of:
2003
(As restated see Note 3)

2005

2004

Security deposits
Post employment fund
Employees cooperative
Others

15,342,820
6,285,808
2,089,613

2,483,612
4,262,458
6,249,152

2,727,525
2,456,788

Total

23,718,241

12,995,222

5,184,313

15. SHORT-TERM LOAN

This account consists of:

2005

2004

2003
(As restated see Note 3)

Capital Manager Asia Pte. Ltd.

Suisse Charter Investment

124,336,487
15,793,000

Total

140,129,487

On August 4, 2004, EMP Inc. obtained an unsecured short-term loan from CMA, a related party,
amounting to US$ 14.85 million to finance the acquisition of 100% shares in BP Exploration (Kangean)
Ltd. and BP Kangean Ltd. The loan bears interest rate at 15.5% per annum, which was initially due in 3
(three) months after loan availability, but which can be extended up to a maximum of 3 (three) years.
On November 3, 2004, EMP Inc. obtained a loan from Suisse Charter Investment amounting to US$ 3
million with interest rate at 8.25% per annum. The loan is due on February 11, 2005. In 2004, EMP Inc.
partially paid US$ 1.3 million of the loan balance.
Both loans were paid in 2005.

28

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

16. TRADE PAYABLES

This account consists of:
a.

By Creditors

Third parties
Exxonmobil Oil Indonesia Inc.
JSL Jet Drilling
PT Daya Alam Tehnik Inti
PT Singgar Mulia
PT Halliburton Indonesia
PT Indoturbine
PT Maroci Line
Blue Sapphire Services Limited
PT Supraco Indonesia
PT Urawa Rekayasa Mandiri
PT Sinopun Perkasa
PT Perdana Karya
PT Petromell Karya Perdana
PT Adsco Prima Utama
PT Gema Graha Sarana Tbk
CV Tri Guna Usaha
PT Baruna Raya Logistic Inc.
PT Trigana Air Service
PT Schlumberger Geophysics Nusantara
PT Dowel Anadrill Schlumberger
PT Halliburton Logging Service
Indonesia
PT Sanggar Cipta Kreasitama
PT Kriya Eka Tama
PT Patra Dinamika
PT Airfast Indonesia
PT Geoprolog Intiwijaya
PT Jaya Wijaya Raya
PT Jaya Karya Utama
Koperasi karyawan MS Sejahtera
PT Duta Energi Semesta
United World Limited
PT Baker Atlas Indonesia
PT Reda Pump Indonesia
Kavindo Raya Semesta
Pertamina Trading Ltd.
Others (below Rp 500 million each)
Total

2003
(As restated see Note 3)

2005

2004

23,381,786
20,077,293
4,484,855
4,218,669
3,534,314
2,467,350
2,316,322
1,284,372
1,212,704
1,156,008
932,681
898,210
789,116
703,189
653,171
626,728
606,031
587,871
564,529
431,774

961,283
1,084,366
911,860

797,301
-

418,470
283,051
13,250,246

1,100,493
632,538
3,053,744
2,537,322
1,075,903
1,857,099
909,157
883,832
731,996
653,877
580,625
552,681
552,058
533,748
10,006,531

419,449
57,888
23,358,804
8,279,756

84,878,740

28,619,113

32,913,198

29

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

16. TRADE PAYABLES (Continued)

b. By Age Category
2005

c.

2004

2003
(As restated see Note 3)

Up to 30 days
Over 31 - 60 days
Over 60 days

76,445,896
4,427,239
4,005,605

23,726,340
2,809,240
2,083,533

32,824,781
8,812
79,605

Total

84,878,740

28,619,113

32,913,198

By Currency
2005

2004

2003
(As restated see Note 3)

US Dollar
Rupiah

76,531,109
8,347,631

22,334,515
6,284,598

30,167,008
2,746,190

Total

84,878,740

28,619,113

32,913,198

Credit terms for the purchase of goods and services, both from local and foreign suppliers, ranges
between 30 - 90 days.
17. OTHER PAYABLES
This account consists of:
2005

2004

2003
(As restated see Note 3)

Take or pay
Commission
Overlifting
Marketing agent
Others

14,016,952
4,423,500
7,685,847

28,887,236
3,190,651
5,104,541

966,517
13,956,660
1,183,059

Total

26,126,299

37,182,428

16,106,236

Take or pay liabilities represents payments received by EEKL and EKL from PT Perusahaan Gas Negara
(Persero) Tbk (PGN) in 1999 and 2000 arising from overlifting of natural gas volumes based on the
provision of the gas sales agreement between EEKL, EKL and PGN. Subsequently, such liabilities were
paid through deduction of the invoice amount to PGN.
Commission payable represents commission fee to Merrill Lynch on its credit facilities to MBF (see
Note 19).
Overlifting represents liability to BPMIGAS on differences between lifting of oil and gas and the
Subsidiaries entitlement.
30

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

18. ACCRUED EXPENSES

This account consists of:

2005

2004

2003
(As restated see Note 3)

Production
Drilling
Interest and financing charge
Support cost
Materials
Project
Employee salaries and benefits
Geological and geophysical
Professional fee
Rental
Others

154,682,518
114,210,280
36,389,995
30,474,546
5,921,983
5,698,971
4,691,702
3,827,986
1,180,772
1,130,149
299,925

10,480,486
12,036,616
31,638,256
29,545,204
1,977,655
14,462,495
445,084
2,630,143
873,174

4,911,068
9,262,781
5,350,802
1,149,792
1,467,616
977,533
3,431,823

Total

358,508,827

104,089,113

26,551,415

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 locations in the
Kangean Block.
19. LONG-TERM LOANS
This account consists of:

2005
Credit Suisse (US$ 173 million in 2005 and
US$ 85.35 million in 2004)
Merrill Lynch (US$ 120 million)
PT Bank Mandiri (Persero) Tbk
(US$ nil in 2005, US$ 9,380 in
2004 and US$ 10,880 in 2003)
PT Bank Niaga Tbk

2004

2003
(As restated see Note 3)

1,700,590,000
1,179,599,996

792,901,453
-

1,844,051

87,140,200
-

92,099,200
-

Total
Less current maturities

2,882,034,047
(583,149 )

880,041,653
(173,258,416 )

92,099,200
(12,697,500 )

Long-term Loans - Net

2,881,450,898

706,783,237

79,401,700

31

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

19. LONG-TERM LOANS (Continued)

Credit Suisse, Singapore (CS)
On August 3, 2004, EMP Inc. obtained a credit facility from CS (formerly Credit Suisse First Boston)
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.
On May 19, 2005, EMP Inc. entered into another credit facility agreement with CS, whereby CS agreed to
provide a US$ 275 million loan, 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. 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:
Drawdown
First
Second
Third
Fourth

Amount
(full amount)

Date
June 20, 2005
September 30, 2005
December 31, 2005
March 31, 2006

US$

115,000,000
60,000,000
65,000,000
35,000,000

US$

275,000,000

Until December 31, 2005, EMP Inc. has taken a drawdown of the loan amounting to US$ 173 million.
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 increase EMP
Inc.s equity amounting to US$ 60 million no later than 18 months after the first utilization date and to
maintain certain financial ratios computed based on the EMP Inc.s financial statements.
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 LBIs loan to PMA Investment Advisory Ltd. and ITAs loan to PT Bank Mandiri
(Persero) Tbk.;
Funding for the development and exploration of oil and gas fields in Malacca Straits Block and
Brantas Block; and
Funding for the operations of ITA, LBI and KPSA.

32

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

19. LONG-TERM LOANS (Continued)

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-monthly interest
payment starting October 27, 2005.
Collateral used for this credit facility is as follows:
-

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, KPSA.
Proceeds of claim of insurance in reference to operational obstacles in Malacca Straits Block and
Brantas Block.

For Series B Notes, 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 Companys basic share price (based on the weighted average price
of shares during 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 is as follows:
ITA
(US$)

Type of Loan

LBI
(US$)

KPSA
(US$)

Total
(US$)

Tranche A
Tranche B

5,632,045
21,401,769

12,624,490
47,973,060

6,743,466
25,625,170

25,000,001
94,999,999

Total

27,033,814

60,597,550

32,368,636

120,000,000

Certain terms and conditions applying to the loan obtained by ITA, LBI and KPSA are 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 in a single installment on the date of maturity.

33

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

20. CAPITAL STOCK

Composition of the Companys stockholders and their respective shareholdings is as follows:
2005

Name of Stockholder

Number of
Shares
(full amount)

Percentage
of Ownership
(%)

Total
Paid-up Capital
(Rp)

PT Kondur Indonesia
PT Brantas Indonesia
UBS AG Singapore - UBS Equities
Rennier Abdul Rachman Latief
Julianto Benhayudi
Public (below 5%)

2,886,355,362
1,893,780,980
800,726,388
446,912,286
314,388,667
3,149,281,494

30.41
19.95
8.44
4.71
3.31
33.18

288,635,536
189,378,098
80,072,639
44,691,229
31,438,867
314,928,149

Total

9,491,445,177

100.00

949,144,518

2004

Name of Stockholder

Number of
Shares
(full amount)

Percentage
of Ownership
(%)

Total
Paid-up Capital
(Rp)

PT Kondur Indonesia
PT Brantas Indonesia
Julianto Benhayudi
Rennier Abdul Rachman Latief
Public:
Up to 5%
Credit Suisse
Below 5%

2,941,355,362
2,941,355,362
314,388,667
446,912,286

30.99
30.99
3.31
4.71

294,135,536
294,135,536
31,438,867
44,691,229

1,400,000,000
1,447,433,500

14.75
15.25

140,000,000
144,743,350

Total

9,491,445,177

100.00

949,144,518

2003

Name of Stockholder

Number of
Shares
(full amount)

Percentage
of Ownership
(%)

Total
Paid-up Capital
(Rp)

PT Energi Bumi Persada

PT Energi Daya Persada
Julianto Benhayudi
Rennier Abdul Rachman Latief

1,002,888,889
1,002,888,889
1,600,000
400,000

49.95
49.95
0.08
0.02

100,288,889
100,288,889
160,000
40,000

Total

2,007,777,778

100.00

200,777,778

34

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

20. CAPITAL STOCK (Continued)

Based on Extraordinary General Stockholders Meeting dated February 14, 2003, the stockholders decided
to increase the authorized capital from Rp 500,000 to Rp 800,008,000, and to change the nominal value of
share from Rp 1,000 to Rp 100 (full amount) per share, and increase the issued and paid-up capital from
Rp 200,000 to Rp 200,777,778, as stated in deed No. 2 dated February 14, 2003 of Rita Imelda Ginting
S.H., notary in Jakarta. The increase of issued and paid-up capital was done through the conversion of
promissory notes and its interest to KI (formerly EBP) and BI (formerly EDP) into shares amounting to
Rp 100,288,889 each. The changes in the authorized capital were approved by the Minister of Justice and
Human Right of the Republic of Indonesia in his decision letter No. C-05378.HT.01.04.TH.2004, dated
March 4, 2004. The deed was accepted and recorded in the database of Administration system for Legal
Entities Directorate General of Law Adminstration Department of Justice and Human Right of the
Republic of Indonesia No. C-UM.02.01.2758 dated March 11, 2004.
Based on Extraordinary General Stockhoders Meeting 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 Companys
due to Julianto Benhayudi and Rennier Abdul Rachman Latief amounting to Rp 31,278,867 and
Rp 7,218,200, respectively.
Based on Extraordinary General Stockhoders Meeting 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 approved to:

Increase the authorized capital of the Company to Rp 1,500,000,000,000 (full amount);

Change the Companys status from a private company into a public company;
Conduct a public offering through the capital market of 2,850,000,000 new shares;
Delegate to the Companys Directors authority to conduct necessary actions in relation to the Initial
Public Offering (IPO);
Change the Companys 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 2,847,433,500 shares of the Companys
stock.
Based on the EGM dated December 22, 2005, the shareholders of the Company approved the Right
Issue I to the Companys shareholders in connection with the Exercise Rights (ER). The Company
completed the Right Issue I on January 24, 2006 (see Note 37).

35

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

21. ADDITIONAL PAID-IN CAPITAL

2005 and 2004
Excess of Price
over Par Value of
Shares
Issuance of 2,847,433,500
(full amount) shares
through public offering

170,846,010

Issuance Cost
of Shares

12,425,064

Amount

158,420,946

22. DIFFERENCE IN VALUE FROM RESTRUCTURING TRANSACTIONS OF ENTITIES

UNDER COMMON CONTROL
2005 and 2004

Net Book Value

Acquisition
Cost

Difference in value
from restructuring
transactions of
entities under
common control

RHI Corporation
Kalila Energy Limited
Pan Asia Enterprise
PT Imbang Tata Alam
Energi Mega Pratama Inc.

92,458,079
(537,838,356 )
10,891,647
(43,635,241 )
238,407,446

200,000,000
1,000,000
74,800,000
38,400,000
239,420,000

(107,541,921 )
(538,838,356 )
(63,908,353 )
(82,035,241 )
(1,012,554 )

Total

(239,716,425 )

553,620,000

(793,336,425 )

2003
(As restated - see Note 3)

Net Book Value

RHI Corporation

92,458,079

Acquisition
Cost
200,000,000

Difference in value
from restructuring
transactions of
entities under
common control
(107,541,921 )

36

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

23. NET SALES

This account consists of:

2005
Itochu Petroleum Co. (S) Pte. Ltd.
PT Perusahaan Gas Negara (Persero) Tbk
PT Petrokimia Gresik (Persero)
BP Singapore Pte. Ltd.
PT Perusahaan Listrik Negara (Persero)
BPMIGAS (formerly Pertamina)
Total

2004

2003
(As restated see Note 3)

595,028,961
347,801,206
297,113,791
141,588,381
69,734,264
28,092,410

406,212,447
292,877,933
81,507,051
19,838,891
49,098,920
5,544,735

332,691,936
174,426,895
5,983,244

1,479,359,013

855,079,977

513,102,075

Total sales in 2005 included sales derived from EMP Inc. for the year amounting to US$ 66 million, while
total sales in 2004 included sales of EMP Inc. for five (5) months from the acquisition date of EKL and
EEKL amounting to US$ 20 million (see Note 4).
24. COST OF GOODS SOLD
This account consists of:

2005
Production
Depreciation, depletion and amortization
(see Note 13)
Production support
Workover
Total

2004

2003
(As restated see Note 3)

405,873,837

221,471,575

150,733,283

328,362,315
215,372,166
54,423,727

173,924,168
112,550,734
32,027,200

95,229,433
50,991,391
34,456,243

1,004,032,045

539,973,677

331,410,350

Total cost of goods sold in 2005 included cost of goods sold derived from EMP Inc. for the year
amounting to US$ 49 million, while in 2004 included cost of goods sold of EMP Inc. for five (5) months
from the acquisition date of EKL and EEKL amounting to US$ 13 million (see Note 4).

37

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

25. OPERATING EXPENSES

This account consists of:

2005
General and administrative
Salaries, allowances and employee benefits
Professional fees
Rental
Office expenses
Tax
Business trip
Representation and donation
Depreciation
Advertising
Management service
Others (below Rp 500 million)
Total

2004

2003
(As restated see Note 3)

55,127,019
32,809,633
12,079,219
12,997,058
8,488,736
5,407,818
4,302,812
1,429,878
7,250,461

23,985,146
6,019,838
1,250,782
14,530,733
1,552,057
3,081,839
1,769,566
6,865,757

10,986,877
4,352,072
1,212,908
2,385,104
1,490,466
3,046,924
12,477,062
7,219,379

139,892,634

59,055,718

43,170,792

Total operating expenses in 2005 included operating expenses derived from EMP Inc. for the year
amounting to US$ 2 million, while in 2004 included operating expenses of EMP Inc. for five (5) months
from the acquisition date of EKL and EEKL amounting to US$ 0.85 million (see Note 4).
26. FINANCING CHARGES
This account consists of:

2005

2004

2003
(As restated see Note 3)

Interests and financing charges on bank

loans and financial institutions loan
Interest on loan from related parties
Interest on early payment of sale of oil
Others

186,659,845
5,624,013
1,394,774
7,325,007

10,099,930
38,032,432
3,606,538

4,392,701
13,086,897
1,495,423

Total

201,003,639

51,738,900

18,975,021

27. TAXATION
a.

Prepaid Tax
This account represents Value Added Tax of the Company amounting to Rp 4,867,253 as of
December 31, 2005, whereas at December 31, 2004 represents Value Added Tax and prepaid tax
article 26 amounting to Rp 3,724,338 and Rp 56,948, respectively.
38

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

27. TAXATION (Continued)

b. Tax Payable

2005
Corporate income and dividend tax
Income tax
Article 4 (2)
Article 21
Article 23
Article 26
Value Added Tax
Total

2004

2003
(As restated see Note 3)

66,763,107

101,875,459

29,124,586

159,469
6,781,852
1,565,726
7,659,770
29,781,333

928,032
3,596,010
4,002,113
539

825,337
1,052,606
2,773,117

112,711,257

110,402,153

33,775,646

KEL and PAN have 100% ownership in Lapindo Brantas Inc. (LBI), a Subsidiary that is located in
Delaware, United States of America (USA). The Subsidiary has an obligation to calculate and pay its
income taxes according to Tax Regulation in the USA. LBI has not filed its 2004 and 2003 due to
certain adjustments made in respect to operating expenses that were capitalized as deferred cost and
amortization of the deferred cost. Through its independent tax consultants, LBI has calculated
estimated income tax expense amounting to US$ 0.9 million, US$ 1.3 million and US$ 3.1 million in
2005, 2004 and 2003 respectively. These amounts were included in the consolidated financial
statements.
Since late 2000, EEKL and EKL are registered as United Kingdom (UK) tax residents.
In 2003, EEKL and EKL recorded dividend tax at the rate of 10%, and recognized the
underprovision 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 2005 (see Note 4).
EEKL and EKL through its independent tax consultant calculated that the UK current tax liability
for the year 2005 amounted to US$ nil.
EEKL and EKL recorded additional UK tax liability for the year 2004 in 2005 amounting to US$ 297
and US$ 12,303, respectively.
EKL is registered with the USA Internal Revenue Service (IRS). USA tax payable is calculated by an
independent tax consultant in accordance with the assumption of agreement of applicable USA tax
laws from the IRS. Through its independent tax consultants, EKL has calculated estimated income
tax expense amounting to US$ nil and US$ 132 in 2005 and 2004, respectively.
RHI independent tax consultant calculated the RHIs related tax liability as applicable in Delaware,
and the tax consultant estimated that RHIs U.S. tax liability for December 31, 2005, 2004 and 2003
amounted to US$ nil.

39

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

27. TAXATION (Continued)

The independent tax consultants estimated the income tax of KEL, PAN, LBI, EKL and RHI by
assuming that the US IRS would accept such recalculation. The estimated tax amount could be
different, should IRS disagree with such assumption and calculation.
MBF and EMP Finance are registered in the Netherlands. MBF and EMP Finance tax consultants
calculated the current tax liability to be US$ nil.
c.

Tax Benefit (Expense)

Details of tax benefit (expense) of the Company and its Subsidiaries are as follows:

2005

2004

2003
(As restated see Note 3)

Current tax
Subsidiaries

(53,519,047 )

(97,828,649 )

(44,057,823 )

Deferred tax
Subsidiaries
Company

60,398,051
15,133,606

(54,955,108 )
2,449,673

408,001
(75,974,668 )

75,531,657

(52,505,435 )

(75,566,667 )

22,012,610

(150,334,084 )

(119,624,490 )

Sub-total
Total
d. Current Tax

Reconciliation between income before tax as shown in the consolidated statements of income and
estimated taxable income (fiscal losses) for the years ended December 31, 2005, 2004 and 2003,
calculated with the effective tax rate, are as follows:

2005

2004

2003
(As restated see Note 3)

Income before income tax expense

per consolidated statements of income

174,777,358

224,938,788

134,904,731

Deduct income of Subsidiaries before tax

(229,628,002 )

(234,053,809 )

(136,322,728 )

(54,850,644 )

(9,115,021 )

(1,417,997 )

1,313,128

2,351,428

Loss before estimated corporate

income tax - Company
Timing differences
Employee benefits

40

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

27. TAXATION (Continued)

Permanent differences
Representation and donation
Interest income already subjected to final tax
Others

Estimated fiscal loss of the Company

Estimated cumulative fiscal losses
beginning of year
Cumulative tax loss carried
forward - Company
e.

2003
(As restated see Note 3)

2005

2004

1,950,046
(29,853 )
2,485,098

1,370,645
(497,415 )
76,214

57,992
-

4,405,291

949,444

57,992

(49,132,225 )

(5,814,149 )

(7,174,154 )

(1,360,005 )

(56,306,379 )

(7,174,154 )

(1,360,005 )
(1,360,005 )

Deferred Tax
The details of the Company and its Subsidiaries deferred tax assets and liabilities are as follows:
2005
January 1,
2005
Deferred Tax Assets
Employee benefits
Fiscal loss
Depreciation, depletion
and amortization
Non-capital inventory
Unrecoverable charges
Total

Translation
Adjustments

Credited (charged)
to Statements
of Income

December 31,
2005

3,745,701
2,152,246

1,031,901
-

(2,372,644 )
14,739,668

2,404,958
16,891,914

(51,559,416 )
(1,156,057 )
55,656,660

(3,287,707 )
549,220

(6,354,246 )
1,156,057
75,473,015

(61,201,369 )
131,678,895

8,839,134

(1,706,586 )

82,641,850

89,774,398

3,968,224

(631,971 )

987,686

4,323,939

Deferred Tax Liabilities

Employee benefits
Depreciation, depletion and
amortization
Non-capital inventory
Unrecoverable charges

(220,543,262 )
(21,765,263 )
-

(12,677,344 )
(1,366,246 )
3,128,784

(29,110,812 )
(9,249,671 )
30,262,604

(262,331,418 )
(32,381,180 )
33,391,388

Total

(238,340,301 )

(11,546,777 )

(7,110,193 )

(256,997,271 )

Deferred tax benefit

75,531,657

41

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

27. TAXATION (Continued)

2004
Translation
Adjustments

January 1, 2004

Credited (charged)
to Statements
of Income

Beginning Balance
of Acquisition

December 31, 2004

Deferred Tax Assets

Employee benefits
Fiscal loss
Depreciation, depletion
and amortization
Non-capital inventory
Unrecoverable charges

1,802,512
408,001

217,059
-

1,726,131
1,744,244

3,745,701
2,152,246

(56,915,409 )
(1,137,476 )
93,511,535

(5,122,139 )
(107,260 )
7,283,447

10,478,132
88,679
(45,138,322 )

(51,559,416 )
(1,156,057 )
55,656,660

Total

37,669,162

2,271,107

(31,101,136 )

8,839,134

1,919,109

259,560

5,989,518

(4,199,963 )

3,968,224

Deferred Tax Liabilities

Employee benefits
Depreciation, depletion
and amortization
Non-capital inventory
Letter of credit service

(122,542,438 )
(18,876,315 )
-

(15,296,385 )
(1,880,529 )
-

(66,224,690 )
(594,025 )
310,194

(16,479,749 )
(414,393 )
(310,194 )

(220,543,262 )
(21,765,263 )
-

Total

(139,499,645 )

(16,917,354 )

(60,519,003 )

(21,404,299 )

(238,340,301 )

Deferred tax expenses

(52,505,435 )

2003
(As restated - see Note 3)
January 1,
2003
Deferred Tax Assets
Employee benefits
Fiscal loss
Depreciation, depletion and
amortization
Non-capital inventory
Unrecoverable charges

Translation
Adjustments

1,198,577
-

Total

Credited (charged)
to Statements
of Income

(63,683 )
-

667,618
408,001

December 31,
2003
1,802,512
408,001

(53,495,083 )
(1,440,484 )
149,387,579

2,842,301
76,535
(7,937,267 )

(6,262,627 )
226,473
(47,938,777 )

(56,915,409 )
(1,137,476 )
93,511,535

95,650,589

(5,082,114 )

(52,899,313 )

37,669,162

4,412,167

(206,141 )

(2,286,917 )

1,919,109

Deferred Tax Liabilities

Employee benefits
Depreciation, depletion and
amortization
Non-capital inventory

(108,517,895 )
(19,578,439 )

6,013,586
1,044,432

(20,038,129 )
(342,308 )

(122,542,438 )
(18,876,315 )

Total

(123,684,167 )

6,851,877

(22,667,354 )

(139,499,645 )

Deferred tax expenses

(75,566,667 )

28. BASIC EARNINGS PER SHARE

The computation of basic earnings per share is based on the following data:
Earnings

Net earnings used for calculation

(in full amount)

2005

2004

2003
(As restated see Note 3)

195,818,413,285

74,166,617,000

15,359,843,000

42

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

28. BASIC EARNINGS PER SHARE (Continued)

Number of shares

Weighted average number of shares for

the calculation of basic earnings per share

2005

2004

2003
(As restated see Note 3)

(Shares)

(Shares)

(Shares)

9,491,445,177

8,258,857,528

6,644,011,680

20.63

8.98

2.31

Basic earnings per share

(in full amount)

The Company did not calculate diluted earnings per share since the Company has no shares that have a
potential dilutive effect for the years ended December 31, 2005, 2004 and 2003.
29. PENSION PLANS AND EMPLOYEE BENEFITS
Pension plans and retirement benefit liabilities (assets) balances for the years ended December 31, 2005
and 2004 are computed by an independent actuary in accordance with PSAK No. 24 (Revised 2004)
regarding Employee Benefits.
Pension Plans
The Companys 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 employees salary,
of which 6% is paid by the Company and 3% is paid by the employee.
Employee Benefits
The Company and its Subsidiaries provide post-employment benefits for all their 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.
Movement in net liability recognized in the consolidated balance sheets is as follows:

2005

2004

2003
(As restated see Note 3)

Current service cost

Interest costs
Expected return on plan assets
Net actuarial losses recognized
Past service cost

7,359,993
7,495,437
(3,460,705 )
3,006,673
-

12,005,341
5,467,672
(2,950,418 )
1,233,904
1,365,881

2,371,708
4,631,463
(2,697,840 )
101,335
583,733

Total

14,401,398

17,122,380

4,990,399

43

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

29. PENSION PLANS AND EMPLOYEE BENEFITS (Continued)

The amounts included in the consolidated balance sheet arising from the Company and certain
Subsidiaries obligations in respect of these employment benefits are as follows:

2005

2004

2003
(As restated see Note 3)

Present value of employee benefit obligation

Fair value of employee benefit plan assets

83,129,512
(48,402,407 )

76,319,165
(43,258,820 )

53,310,839
(36,880,230 )

Funding status
Unrecognized actuarial loss

34,727,105
(19,227,480 )

33,060,345
(15,910,730 )

16,430,609
(7,637,649 )

Employee benefits obligation

15,499,625

17,149,615

8,792,960

Amounts recognized in consolidated balance sheet in respect of these employment benefits are as
follows:

2005

2004

2003
(As restated see Note 3)

Beginning of the year

Contribution
Benefit paid
Amount charged to consolidated statement
of income

17,149,615
(9,071,374 )
(6,980,014 )

8,792,960
(8,765,725 )
-

12,000,935
(8,198,374 )
-

14,401,398

17,122,380

4,990,399

End of the year

15,499,625

17,149,615

8,792,960

The actuarial computation of employee benefits obligation (assets) for December 31, 2005 was prepared
by PT Bumi Persada Aktuaria, an independent actuarial firm, in its report dated February 1, 2006, while
the computations for 2004 and 2003 were prepared by PT Dian Artha Tama. The computation used the
Projected Unit Credit Method with the following assumptions:
2005, 2004 and 2003
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
Normal retirement age

Projected Unit Credit

56 years (all employees are assumed to retire
at normal retirement age)

44

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

30. NATURE OF RELATIONSHIP AND TRANSACTIONS WITH RELATED PARTIES

Nature of relationship
a.

PT Brantas Indonesia (formerly PT Energi Daya Persada) and PT Kondur Indonesia (formerly
PT Energi Bumi Persada), are the Companys stockholders (see Note 20).

b. PT Energi Timur Jauh is a company whose management is the same as the Company.
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.
These transactions are exempted transactions of the conflict of interest transactions, as stipulated in
Bapepam Rules Number IX.E.1 Point 3c.1.
31. 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 are as follows:
2005
Trading

Mining

Elimination

Consolidated

SALES
External sales

1,479,359,013

1,479,359,013

RESULT
Segment result

475,326,968

475,326,968

Unallocated expenses

(139,892,634 )

Income from operations

Financing cost
Other income

335,434,334
(201,003,639 )
40,346,663

Income before tax benefit (expense)

Tax benefit

174,777,358
22,012,610

Income before minority interest

Minority interest

196,789,968
(971,555 )

Net income

195,818,413

45

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

31. SEGMENT INFORMATION (Continued)

2005

OTHER INFORMATION
Assets
Segment assets
Unallocatable assets

Trading

Mining

Elimination

1,521,032,398

6,823,392,315

Consolidated

(3,374,998,037 )

Consolidated total assets

Liabilities
Segment liabilities
Unallocatable liabilities

4,969,426,676
89,774,398
5,059,201,074

(159,917,534 )

(6,098,407,677 )

2,097,833,599

Consolidated total liabilities

(4,160,491,611 )
(256,997,271 )
(4,417,488,882 )

Capital expenditure
Depreciation, depletion and
amortization

1,116,359,011

1,116,359,011

328,362,315

328,362,315

2004
Trading

Mining

Elimination

Consolidated

SALES
External sales

855,079,977

855,079,977

RESULT
Segment result

315,106,300

315,106,300

Unallocated expenses

(59,055,718 )

Income from operations

Financing cost
Other income

256,050,582
(51,738,900 )
20,627,106

Income before tax expense

Tax expenses

224,938,788
(150,334,084 )

Income before minority interest

Minority interest

74,604,704
(438,087 )

Net income

74,166,617

OTHER INFORMATION
Assets
Segment assets
Unallocatable assets

305,090,702

2,717,275,898

(562,973,798 )

Consolidated total assets

Liabilities
Segment liabilities
Unallocatable liabilities

2,459,392,802
213,634,193
2,673,026,995

(119,893,470 )

(2,123,732,606 )

545,631,903

Consolidated total liabilities

(1,697,994,173 )
(545,010,819 )
(2,243,004,992 )

Capital expenditure

1,640,249,276

1,640,249,276

Depreciation, depletion and

amortization

173,924,168

173,924,168

46

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

31. SEGMENT INFORMATION (Continued)

2003
(As restated - see Note 3)
Trading

Mining

Elimination

Consolidated

SALES
External sales

513,102,075

513,102,075

RESULT
Segment result

181,691,725

181,691,725

Unallocated expenses

(43,170,792 )

Income from operations

Financing cost
Other income

138,520,933
(18,975,021 )
15,358,819

Income before tax expense

Tax expenses

134,904,731
(119,624,490 )

Income before minority interest

Minority interest

15,280,241
79,602

Net income

15,359,843

OTHER INFORMATION
Assets
Segment assets
Unallocatable assets

670,465

856,902,355

(232,410,961 )

Consolidated total assets

Liabilities
Segment liabilities
Unallocatable liabilities

662,831,021

(714,545 )

(916,633,738 )

752,530

Consolidated total liabilities

Capital expenditure
Depreciation, depletion and
amortization

625,161,859
37,669,162

(916,595,753 )
(168,624,231 )
(1,085,219,984 )

150,684,273

150,684,273

95,229,433

95,229,433

Secondary Segment
The Company and its Subsidiaries are operating in two main geographical areas, which are domestic and
international.

47

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

31. SEGMENT INFORMATION (Continued)

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

Geographical market
Domestic
East Java
Jakarta
International
Singapore
Total

2005

2004

2003

714,649,260
28,092,410

423,483,904
5,544,735

5,983,244
174,426,895

736,617,343

426,051,338

332,691,936

1,479,359,013

855,079,977

513,102,075

32. COMMITMENTS
a.

Production Sharing Contract (PSC)

The Subsidiaries entered into an agreement 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 their pro-rata share of current Indonesian domestic crude
oil requirements (Domestic Market Obligation - DMO) up to a certain percentage of their equity
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 periods of 60 months, the selling price will be
lower than market price.

48

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

32. COMMITMENTS (Continued)

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$ 2 million - US$ 4 million within 30 days after the production of petroleum has
reached between 250 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.
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, 2005, 2004 and 2003, the
estimated site restoration liabilities amounted to US$ 8.4 million, US$ 5.5 million and US$ 3.65
million, respectivenly and the provision funding amounted to US$ 7.3 million, US$ 5.2 million
and US$ 3.65 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. As 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. Agreement with ETJ
KPSA, a Subsidiary, 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.

49

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

32. COMMITMENTS (Continued)

Based on the agreement, ETJ shall assist KPSA in keeping the required books of accounts and other
records applicable in Indonesia for oil and gas industries. ETJ shall also deliver to KPSA a monthly
report of operational and administrative matters and activities and provide access to duly authorized
parties of KPSA 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 KPSAs bank
accounts, without limitation, in making payment of expenditures on behalf of KPSA. ETJ shall
arrange the use of KPSA funds as necessary and use any of KPSA 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 KPSA and update them on a regular basis.
All costs and expenses incurred by ETJ in relation with the above mentioned purposes shall be
chargeable to KPSA. All interest arising from KPSA funds in ETJs bank account shall be credited to
KPSA.
c.

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 MBFs 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 creditor to other companies
within the Companys group.
The period of agreement shall be one (1) year from the date of signing of the agreement.

33. CONTINGENT LIABILITIES

The Companys operations are subject to Indonesian laws and regulations governing the discharge of
materials into the environment or otherwise 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 on certain lands lying
within wilderness, wetlands and other protected areas, require remedial measures to prevent pollution
resulting from the Companys 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.

50

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

34. 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, employers liability, comprehensive general
liability, automobile and workers 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 workers 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.
35. ABANDONMENT AND SITE RESTORATION OBLIGATIONS
Under the renewal and extension of PSCs signed by Kondur Petroleum S.A. - IJV, Lapindo Brantas Inc. 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 period as required.
36. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
At December 31, 2005, 2004 and 2003 the Company and its Subsidiaries had monetary assets and
liabilities in foreign currencies as follows:
2005
Foreign
Currency
(full amount)
Assets
Cash on hand and in
banks

US$
HK$
Euro

Restricted time
deposits
US$
Trade receivables
US$
Other receivables
US$
Abandonment and site
restoration fund
US$
Total Assets

2004
Equivalent in
Rupiah

Foreign
Currency
(full amount)

2003
Equivalent in
Rupiah

Foreign
Currency
(full amount)

Equivalent in
Rupiah

21,479,844
39,755
10,966

211,146,864
50,410
127,851

865,541
4,261
-

8,040,878
5,091
-

1,635,900
32,853
-

13,847,893
35,824
-

17,688,985
23,710,528
13,969,076

173,882,725
233,074,491
137,316,022

7,300,733
7,234,531
1,215,698

67,823,810
67,208,793
11,293,834

4,576,192
368,614

38,737,465
3,120,318

7,296,826

71,727,804

5,199,395

48,302,379

3,654,042

30,931,466

827,326,167

202,674,785

86,672,966

51

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

36. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (Continued)

2005
Foreign
Currency
(full amount)
Liabilities
Trade payables
Short-term loans
Other payables
Accrued expenses
Taxes payable
Due to related parties
Long-term loans
Site restoration
obligation

2004
Equivalent in
Rupiah

Foreign
Currency
(full amount)

2003
Equivalent in
Rupiah

Foreign
Currency
(full amount)

Equivalent in
Rupiah

US$
US$
US$
US$
US$
US$
US$

7,785,464
2,595,521
36,257,257
6,791,771
38,757,811
293,000,000

76,531,109
25,513,973
356,408,833
66,763,107
380,989,284
2,880,189,996

2,404,146
15,084,000
3,452,948
9,553,654
10,966,142
94,730,000

22,334,515
140,130,360
32,077,887
88,753,444
101,875,459
880,041,700

3,563,734
114,178
2,731,198
3,440,589
3,440,589

30,167,008
966,517
23,119,592
29,124,586
92,099,200

US$

8,448,052

83,044,347

5,501,846

51,112,149

10,880,000

30,931,466

Total Liabilities

3,869,440,649

1,316,325,514

206,408,369

Net Liabilities

(3,042,114,482 )

(1,113,650,729 )

(119,735,403 )

37. SUBSEQUENT EVENTS

a. Acquisition of 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:
a.

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% of shares of Costa International Group Ltd. (Costa), Kalila (Bentu) Ltd. (Bentu) and
Kalila (Korinci Baru) Ltd. (Korinci Baru) and 99.99% of shares of PT Insani Mitrasani Gelam
(Gelam) and PT Semberani Persada Oil (Semco), which are the operators and have a 50%
working interest in Blok Gebang PSC, 100% in Blok Bentu PSC, 100% in Blok Korinci Baru
PSC, 100% of Blok Sungai Gelam TAC, and 100% in Blok Semberah TAC, respectively; and

b. Trade receivables of MAM to THPs subsidiaries, which were based on the restructuring
agreement and debt acknowledgment of MAM and THPs subsidiaries amounting to
US$ 33,497,199 or equivalent to Rp 348,203,383,605 (full amount).
Acquisition of all MAMs share in THP and acquisition of MAMs trade receivables at THPs
subsidiaries by the Company will only occur if the following conditions have been fulfilled:
-

Approval from the Companys Extraordinary Shareholders Meeting.

Completion of the Companys Right Issue I.

Completion of the due diligence process conducted by Hadiputranto, Hadinoto & Partners
(Independent Lawyer Consultant office appointed by the Company) on the THP and
Subsidiaries.

Approval from THP and subsidiariess creditors (if any).

Based on Extraordinary General Meeting of Shareholders (EGMS) of the Company dated

December 22, 2005, the Company obtained approval from its shareholders for the acquisition of all
MAMs share in THP and acquisition of MAMs trade receivables at THPs subsidiaries.
52

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(With Comparative Figures for December 31, 2004 and 2003)
(Figures in Rupiah expressed in thousands, unless otherwise stated)

37. SUBSEQUENT EVENTS (Continued)

b. The Right Issue I
On January 24, 2006, the Company completed the Right Issue I to shareholders in the issuance
Exercise Rights of 4,909,368,195 shares with nominal value of Rp 100 (full amount) per share offered
at the price of Rp 770 (full amount) per share, in a total amount of Rp 3,780,213,510,150 (full
amount).
The fund received from the Right Issue I amounting to Rp 3,780,213,510,150 (full amount).
c.

Insurance Claim
On January 27, 2006, EKL, a Subsidiary, received an insurance claim from PT Tugu Pratama
Indonesia amounting to US$ 6,158,737 for the damage to the pipeline in the Pagerungan field, North
Bali Sea in 2002.

38. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company and its Subsidiaries have been approved for issue
by the Boards of Directors and Commissioners on March 22, 2006.

53

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION (UNAUDITED)
DECEMBER 31, 2005, 2004 AND 2003
RESERVE ESTIMATION

The following information on gross proven 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:

Proven developed, undeveloped and

probable reserves
Balance as of January 1, 2003
Revision to previous estimation
Production in 2003

Malacca 1)

Brantas 2)

Kangean 3)

Crude Oil

Gas and Crude Oil *)

Gas and
Condensate *)

MBOE

MBOE

MBOE

33,940
4,662
(3,857 )

29,658
4,995
(2,929 )

Balance as of December 31, 2003

Acquisition
Revision to previous estimation
Production in 2004

34,745
8,534
(3,609 )

31,724
(3,936 )

285,174
(7,222 )

Balance as of December 31, 2004

Revision to previous estimation
Production in 2005

39,670
(1,736 )
(3,405 )

27,788
3,912
(3,126 )

277,952
(61,167 )
(4,862 )

Balance as of December 31, 2005

34,529

28,574

211,923

Proven developed and undeveloped reserves

Balance as of January 1, 2003
Revision to previous estimation
Production in 2003

29,722
699
(3,857 )

21,525
4,995
(2,929 )

Balance as of December 31, 2003

Acquisition
Revision to previous estimation
Production in 2004

26,564
4,211
(3,609 )

23,591
(3,936 )

243,530
(7,222 )

Balance as of December 31, 2004

Revision to previous estimation
Production in 2005

27,166
107
(3,405 )

19,655
(3,935 )
(3,126 )

236,308
(69,584 )
(4,862 )

Balance as of December 31, 2005

23,868

12,594

161,862

54

PT ENERGI MEGA PERSADA Tbk

AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION (UNAUDITED)
DECEMBER 31, 2005, 2004 AND 2003
RESERVE ESTIMATION
*)

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 November 9, 2005. In
preparing their report, GCA utilized generally accepted petroleum engineering principles and definitions applicable
to the proven 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 December 16, 2005. In
preparing their report, GCA utilized generally accepted petroleum engineering principles and definitions applicable
to the proven 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 Companys
management has revised the consultants reserve calculation in TSB field as of December 31, 2005.

55

Glossary

Certain Defined Terms

acquired companies
(THP acquisition)

each of Costa International Group Limited, Kalila (Korinci Baru) Limited, Kalila
(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 Pertaminas role as regulator of upstream oil and gas activities
under the New Oil and Gas Law.

Badan Pengatur Hilir Minyak Dan Gas Bumi, the non-profit Governmentowned operating board that is succeeding to Pertaminas role as regulator of
downstream oil and gas activities under the New Oil and Gas Law.

refers to Gaffney, Cline & Associates (Consultants) Pte Ltd, independent
assessors of the Companys reserves.

Gas Sales 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 Peringkat Kinerja Perusahaan dalam Pengelolaan lingkungan.

refers to the Terang, Sirasun and Batur fields.

BPHMIGAS

GCA

GSA
PGN
PJB
PKG
PLN
PROPER

TSB



Glossary

Oil and Gas Terms

1P or proved
reserves

2P or proved plus
probable reserves

3P or proved,
probable & possible
reserves
contingent
resources

crude oil
deep-water play

delineation well or
appraisal well
development well

iiii

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.

are proved reserves plus those reserves that are unproved reserves which
analysis of geological and engineering data suggests are more likely than
not to be recoverable.

are 2P reserves plus those reserves that are unproved reserves which
analysis of geological and engineering data suggests are less likely to be
recoverable than probable reserves.

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.

A general term for unrefined petroleum or liquid petroleum.

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.
a well drilled in a newly discovered or known discovery to gain further
information.

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

exploration well or
wild cat well
gross production

gross reserves

ICP-LC
ICP-SLC

JOA
JOB
lead

lifting cost or
production cost
net production
net reserves
petroleum

a well that is designed to test the validity of a seismic interpretation and to

confirm the presence of hydrocarbons in an undrilled formation.

represents the sum of all oil and gas production from each of the Companys
blocks but does not take into account cost recovery or Government take.

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

Indonesian Crude Price-Lalang Crude.

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

Joint Operating Agreement.

Joint Operating Body in reference to production sharing contracts.

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

for a given period, the cost incurred to operate and maintain wells and related
equipment and facilities.
represents the Companys share of gross production.

represents the reserves attributable to the Companys effective interest.

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.

Technical Assistance Contract.

TAC

iiiiii

Glossary

Units of Measurement

bbls
bbls/d
bboe
bbtu
bcf
boe

bopd
btu
mbbls/d
mboe/d
mbopd

barrels.

barrels per day.

billion of barrels of oil equivalent.

billion btu.

billion cubic feet.

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

barrels of oil production.

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

thousand barrels per day.

thousand barrels of oil equivalent per day.

mcf

million barrels gross oil production.

thousand btu.

thousand cubic feet.

mmbbls

million barrels.

mmbbls/d

million barrels per day.

million barrels of oil equivalent.

million btu.

million btu per day.

million cubic feet.

million cubic feet per day.

million standard cubic feet per day.

trillion cubic feet.

mbtu

mmboe
mmbtu
mmbtud
mmcf
mmcfd
mmscfd
tcf

iv
iv

PT Energi Mega Persada Tbk.

Wisma Mulia 33rd Floor
Jl. Jend. Gatot Subroto No.42
Jakarta 12710
INDONESIA
Phone: 62 21 5290 6250
Fax: 62 21 5290 6267
www.energi-mp.com

Lapindo Brantas Inc.

Wisma Mulia 28th Floor
Jl. Jend. Gatot Subroto No. 42
Jakarta 12710
INDONESIA
Phone: 62 21 5290 6336
Fax: 62 21 5290 6335
Sidoarjo
Jl. Jend Gatot Subroto RT 07 RW 01
Dese Tebel Kec Gedangan
Sidoarjo 61254 Jawa Timur
Indonesia
Phone : 62 31 8912638
Fax: 62 31 8912635
Wunut
Desa Kedung Boto
Kec Porong Sidoarjo 61274 - Jawa timur
Indonesia
Phone: 62 343 854604
Fax: 62 343 854603
Kondur Petroleum S.A.
Wisma Mulia 31st Floor
Jl. Jend. Gatot Subroto No. 42
Jakarta 12710
Indonesia
Phone: 62 21 5290 6100/6200
Fax: 62 21 5290 6300
Riau (Malacca Strait)
Desa Lukit Kec. Merbau Kabupaten Bengkalis
Propinsi Riau - Sumatra
Indonesia
Phone: 62 788 51245/51246/51046
Fax: 62 766 51257

List of Advisers and Bankers

PT Danatama Makmur - IPO Underwriter
Menara Global, 15th Floor
Jl. Gatot Subroto Kav.27
Jakarta 12950

PT Ficomindo Buana Registrar - Registrar

Mayapada Tower 10th Floor suite 2B
Jl. Jendral Sudirman Kav. 28
Jakarta 12920
Jimmy Budhi & Rekan - Auditor
Member firm of Moores Rowland International
Registered Public Accountants
Jl. Patimura No. 2
Jakarta Selatan 12110
Hans Tuanakotta Mustofa & Halim - Auditor
Member firm of Deloitte Touche Tohmatsu
Registered Public Accountants
Wisma Antara, 4th Floor
Jl. Medan Merdeka Selatan No. 17
Jakarta 10110
PT Bank International Indonesia Tbk. - Bank
Plaza BII Tower 2, 6th Floor
Jl. MH. Thamrin No.51
Jakarta 10350
Credit Suisse First Boston (Singapore) Limited - Bank
1 Raffles Link
#03/#04-01 South Lobby
Singapore 039393
PT Bank Mandiri Persero Tbk. - Bank
Plaza Bank Mandiri
Jl. Gatot Subroto Kav.30 38
Jakarta12190
PT Bank Mega Tbk. - Bank
Kantor Cabang Pembantu Tanjung Karang
Gedung DP MAndiri 1st Floor
Jl. Tanjung Karang No.3-4a
Jakarta Pusat

EMP Kangean Limited

Wisma Mulia 25th & 26th Floor
Jl. Jend. Gatot Subroto No. 42
Jakarta 12710
Indonesia
Phone: 62 21 2550 4880
Fax: 62 21 2550 4884
Surabaya
Jl Raya Jemur Sari 152
Surabaya 60292 - Jawa Timur
Indonesia
Phone: 62 31 841 7684/847 0596
Fax: 62 31 841 1339

www.energi-mp.com

vi