EMP - AR 07 - Final - Eng

Annual Rep or t
2007
E n e r g i M e g a P e r s a d a - A n n u a l Rep o r t 2 0 0 7
PT ENERGI MEGA PERSADA Tbk
C ont e nt s
Company Profile
10
Report of the President Director
Financial Highlights
13
Review of Operations
Message from the President

Commissioner
28

Managements Discussion and Analysis of

the Financial Condition and Results of
Operations
30

Safety, Health and Environment

(SHE)
32
Community Relations
34
Corporate Governance Report
49
Glossary
51
Financial Report
The soft copy of this report and regular

updated information on the Company is
available at www.energi-mp.com
E n e r g i M e g a P e r s a d a - A n n u a l Rep
r ep o r t 2 0 0 7
C omp any Prof il e
Thailand
Vietnam
Philippines
South China Sea
Gebang JOB PSC

Korinci Baru PSC
Malaysia
Sumatera
Bentu PSC
Brunei
Semberah TAC
Singapore
Kalimantan
Gelam TAC
Sulawesi
Malacca Strait PSC
Kangean PSC
0
Timor Leste
Suci OCA
400 KM
Indian Ocean
A
Papua
Java
E n e r g i M e g a P e r s a d a - A n n u a l Rep
r ep o r t 2 0 0 7
Oil and Gas Properties

One of the leading publicly listed oil and
gas exploration and production companies
in Indonesia, PT Energi Mega Persada
Tbk (EMP or the Company) and its wholly
owned subsidiaries control working
interests in a wide ranging portfolio of oil
and gas properties:
Sumatera
Malacca Strait PSC (60.49%)
Gebang JOB PSC (50%)
Bentu PSC (100%)
Korinci Baru PSC (100%)
Gelam TAC (100%)
Java and environs
Kangean PSC (50%)
Kalimantan
Semberah TAC (100%)
EMP also formed strategic alliance with
PT Indelberg Indonesia Perkasa in Suci OCA.
The Company is applying its extensive

skills in reservoir management, innovative
use of modern technology and drilling
techniques in the exploration and
production of oil and gas in an area of over
21,000 km2.
EMP is a major gas supplier to the rapidlygrowing industrial region of East Java,
as well as serving major customers in
Sumatera and Kalimantan.
F inancial Highligh t s
Financial Performance
2007
(in billion Rupiah, except EPS and Financial Ratios)
2006
2005
2004
2003
(restated)
Income Statement
Revenue
EBITDA
Profit Before Tax
Income Tax
Net Profit
Earnings Per Share (EPS)
1,137.5
350.2
(51.8)
167.4
115.6
8.0
1,459.5
190.1
(283.8)
20.4
(263.4)
(18.7)
1,423.6
599.3
138.8
(14.6)
123.2
12.9
689.9
246.7
40.6
(93.6)
(53.5)
(7.3)
356.9
89.0
(10.6)
(23.0)
(33.5)
(5.2)
Balance Sheet
Total Assets
Net Debt
Equity
9,378.2
2,825.3
3,352.2
8,773.8
4,194.8
1,894.7
6,512.8
2,895.2
1,176.7
3,811.3
1,097.1
1,029.2
1,132.0
159.6
(378.6)
10
3
1
84
110
65
180
64
(18)
(14)
(3)
221
75
186
363
78
9
10
2
246
358
117
453
82
(8)
(5)
(1)
107
433
41
270
73
(9)
9
(3)
(42)
572
20
(399)
133
2007
2006
2005
2004
2003
8
8,409
1,373
0
0
322
752
54
10,919
13
9,182
547
0
0
339
455
97
10,633
14
9,328
773
0
9,887
397
0
10,567
-
10,114
10,284
10,567
Total Oil Production (mmbo)
4.0
3.9
3.7
3.8
3,9
Gas Sales (mmcfd)

Brantas PSC
Malacca Strait PSC
Kangean PSC
Bentu PSC
Korinci Baru PSC
Gelam TAC
Semberah TAC
Gebang JOB PSC
Total
10
10 *
44
0
6
0
8
2
80
39
0
58
0
0
0
0
3
100
51
0
81
65
0
41
48
0
0
132
106
48
Total Gas Production (mmboe)
4.9
6.1
7.7
6.5
2. 9
Ratios (%)
Net Profit Margin
ROE
ROA
Net Debt/Equity
Interest Coverage Ratio
Current Ratio
Total Liability to Equity
Total Liability to Assets
Production Performance (on a gross basis)
Oil Production (bopd)

Brantas PSC
Malacca Strait PSC
Kangean PSC
Bentu PSC
Korinci Baru PSC
Gelam TAC
Semberah TAC
Gebang JOB PSC
Total
* Gas is used to replace diesel as a fuel for cost efficiency
g ie M
- PAORAN
n n u a lTARep
ort 2007
E n eErnge ir M
g ae gPae rPse ar ds a d-aLA
H UNAN
Product Price Realizations (on a gross basis)
Average realized liquid price (US$ / bbl)

Average realized gas price (US$ / mcf)
2007
2006
2005
2004
2003
73.2
2.6
63.9
2.5
53.2
2.3
37.7
2.1
28.9
2.5
2007 Year End Proforma Gross Reserves and Resources

(in mmboe)
1P
2P
3P
Contingent Resources*
Malacca Strait PSC

Oil
Gas
28
-
32
-
39
-
1
11
1
120
12
230
22
318
11
24
48
76
Korinci Baru PSC

Oil
Gas
12
17
Gelam TAC
Oil
Gas
1
-
5
-
50
-
67
Semberah TAC
Oil
Gas
3
3
13
9
33
29
1
-
Gebang JOB PSC

Oil
Gas
1
6
20
Total
Oil
Gas
33
149
62
300
145
446
2
109
Grand Total
182
362
591
111
Kangean PSC
Oil
Gas
Bentu PSC
Oil
Gas
* best estimation
Notes
1. Gross reserves have been certified by independent certification agencies such as Gaffney, Cline and Associates, Sproule International and MHA
Petroleum Consultants.
2. The gross reserves stated in the above table reflect 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 59 of the Audited Financial Statements. When an
approved plan of development (POD) contains reserve estimates lower than the independent certification, the POD estimate is used for DDA
purposes.
3. 3P Reserves and Contingent Resources totals: figures subject to rounding.
Gross Reserves and Resources
2007
2006
2005
2004
1P
Oil
Gas
Total
33
149
182
31
170
201
34
258
292
30
255
285
2P
Oil
Gas
Total
62
300
362
71
319
390
77
360
437
42
305
347
3P
Oil
Gas
Total
145
446
591
181
489
670
185
437
622
71
331
402
Contingent Resources*
Oil
Gas
Total
2
109
111
2
114
116
2
116
118
25
98
123
2007
2006
2005
2004
2003
Development wells
Exploration wells
Total
36
3
39
30
8
38
20
5
25
14
5
19
4
5
9
Brantas PSC
Development wells
Exploration wells
0
0
4
2
3
3
5
3
3
1
Malacca Strait PSC

Development wells
Exploration wells
19
3
11
4
14
1
9
2
1
4
Kangean PSC
Development wells
Exploration wells
3
0
7
2
3
1
0
0
Bentu PSC
Development wells
Exploration wells
0
0
0
0
Korinci Baru PSC

Development wells
Exploration wells
1
0
0
0
Gelam TAC
Development wells
Exploration wells
6
0
2
0
Semberah TAC
Development wells
Exploration wells
4
0
6
0
Gebang JOB PSC

Development wells
Exploration wells
3
0
0
0
(in mmboe)
* best estimation
Drilling Activity
(based on year spudded)
Note: all development wells includes work over wells, all exploration wells includes appraisal wells
Highligh t s of t he Ye ar
January
Sepanjang Island oil field (SED-1A
well) in the Kangean PSC successfully
commenced commercial oil production an
initial rate of 3,500 bopd.
June
Commenced a strategic alliance with
PT Indelberg Indonesia Perkasa
(Indelberg) in order to secure gas
production in East Java.
February
Extraordinary General Meeting of
Shareholders held.
July
Semberah TAC added gas supply from
SBT-2A. Total cumulative gas production
to PLN Samarinda reached 10 mmcfd.
Korinci Baru PSC commenced gas supply
to PLN Pekanbaru at 7.1 mmcfd from
Baru-4, Baru-5 and Baru-6 wells.
Gelam TAC completed its 3D seismic in
efforts to minimize drilling risks.
Deconsolidated Lapindo Brantas Inc.
(LBI), the owner of 50% working interest
of Brantas PSC.
March
Kangean PSC has recommenced direct
gas sales from Pagerungan field via East
Java Gas Pipeline (EJGP).
April
Extraordinary General Meeting of
Shareholders held.
May
Annual General Meeting of Shareholders
held.
Semberah TAC commenced its first
gas production from SBT-01 well to
Perusahaan Listrik Negara (PLN) in
Samarinda at 5.5 mmcfd.
Mitsubishi Corporation (Mitsubishi) and
Japan Petroleum Exploration Co. Ltd.
(Japex) become strategic partners via
a share subscription in EMP subsidiary,
Energi Mega Pratama Inc. (EMPI), for
US$ 360 million assuming, in aggregate,
an indirect 50% working interest in the
Kangean PSC, while EMP retains a 50%
indirect interest.
October
Korinci Baru PSC and Gebang JOB PSC
recorded significant gas price increases
reflected in newly signed agreements
and Kangean PSC amended price under
existing contracts.
December
Korinci Baru PSC commenced the first
commercial gas production to PT Riau
Andalan Pulp & Paper (RAPP) at 4.2
mmcfd.
MESSAGE FROM T HE
PRESIDE NT C OMMISSIONER
Dear Shareholder,
2007 was another landmark year for the
global oil and gas industry with oil prices
at record nominal highs as indicated by
WTI reaching US$ 98.88 per barrel (bbl)
on November 20, 2007 and closing above
US$ 100 per bbl on January 2, 2008. For the
year WTI averaged US$ 72.28/bbl against
US$ 66.03/bbl in 2006. Even at the recent
levels of over US$ 102/bbl, at the time of
writing this report, real oil prices have not
yet exceeded their 1980 peak. The positive
developments in production during the
year have given EMP the opportunity to
capitalize on strong oil prices by continuing
to expand oil production into 2008 and hence
increasing revenue and cashflow.
At last oil price momentum has had a
material upward impact on Indonesian
domestic gas prices as the compelling
proposition of gas as good value, clean
energy was recognized by consumers.
EMP benefits on this upward price
movement going forward, having signed new
gas contracts at greatly improved prices,
renegotiated old contracts and brought
new gas projects on stream in 2007. The
improvement in gas prices is vindication
of the deliberate strategy to be long on
domestic natural gas in the upstream asset
portfolio.
The introduction of Mitsubishi and Japex as

strategic investors into the Kangean PSC
is tangible evidence of this gas asset price
appreciation and the delivery of substantial
value to EMP shareholders. The transaction
completed in May 2007, significantly
strengthened the balance sheet and
provided new equity and new debt funding
for ongoing development of the Companys
deep and diverse growth portfolio. Indeed
the management of the Company are
focused on generating full value from EMPs
assets, the more so that deconsolidation of
LBI from the EMP accounts was effective
July 1, 2007. Under the stewardship of the
Bakrie Group, work continues to restore
the communities affected. Your Companys
performance is not impaired by the ongoing
efforts to manage this issue.
A number of challenges still remain. Rising
oil and gas prices were accompanied by
increased demand for people, equipment,
materials and services with supply unable
to keep up with demand. This further
increased costs and lengthened schedules
for upstream projects around the world
and Indonesia was not immune to this. The
introduction of the new strategic partners at
Kangean PSC was a proactive response to
industry wide cost pressures.
During the year EMP has continued to

invest heavily to develop the substantial
undeveloped oil and gas reserve base and
production from three new oil and gas
projects has now commenced and will
underpin the Companys performance in
2008.
At the April 2007 Extraordinary General
Meeting of Shareholders, shareholders
approved a number of changes to the
Board of Directors. Christopher B.
Newton, Thomas L. Soulsby, Faiz Shahab
and Norman H. Harahap all retired and
we extend our appreciation for their
contribution in recent years. Christopher
B. Newton and Thomas L. Soulsby
continue in a key capacity to evaluate new
portfolio opportunities. Christian V. Ponto
assumed the position as President Director
and was joined by Imam P. Agustino as
Director. At the Annual General Meeting
of Shareholders held in May 2007, Rennier
A.R. Latief stepped down from the Board
of Commissioners, Ari S. Hudaja was
appointed as President Commissioner,
Nalinkant A. Rathod as Commissioner and
we thank him for his contribution.
Outlook
Oil remains at the centre of current
concerns for the global economy and as
prices rise and given service and equipment
constraints and cost escalation the
year ahead will not be any easier for the
Company. The operational results from past
drilling and facilities investment over the
later part of 2007 present a more positive
picture and your Board of Directors believes
production increases of 30-35% over 2007
levels are attainable in the year ahead.
Rising production, higher international
and domestic energy prices, increasing
domestic demand and a strong but still
under valued asset base gives the Board of
Directors confidence for the future.
I would like to formally record my

appreciation for the focus and commitment
of the outgoing board members and thank
the new Board of Directors for their efforts
and results in a challenging year.
The Board of Commissioners continued to
play an active oversight and advisory role
during the year, supporting and guiding the
Board of Directors. This role along with the
Committees that report to the BoC, such as
the Audit Committee and Conflict of Interest
Compliance Committee underpinned the
Companys objective of enhancing corporate
governance, transparency and performance
for the benefit of all stakeholders.
We have always recognized that the oil and
gas exploration and production business is
capital intensive and skills driven and the
Companys greatest assets are its dedicated
and experienced management and staff
who showed determination, commitment
and resolve to come through the challenges
of 2007, deliver strong operational and
financial results and establish a strong
platform for further growth in 2008.
We also thank the Companys business
partners, communities and of course
shareholders for their continued active
support.
For and on behalf of the Board of
Commissioners
Ari Saptari Hudaja

President Commissioner
10
Rep or t of t he
Preside nt Direc t or
Dear Shareholder,
In closing the year 2007, EMP has reached a
turning point in its history.
First, the deconsolidation of LBI has been
completed with shareholder approval in
2008 facilitating the resumption of normal
operations and business expansion. Under
the stewardship of the Bakrie Group,
the process of resettlement and aid will
continue for the communities impacted by
this unprecedented disaster.
Second, significant value has been unlocked
through the divestment of 50 per cent
indirect interest in Kangean PSC block by
generating cash of US$ 360 million, which
has enabled the Company to reduce its level
of gearing, while acquiring experienced
strategic partners in Mitsubishi and Japex.
Third, while production levels have
decreased year on year, the new Sepanjang
Island oil field has commenced production
at 3,500 bpd, a landmark in the 27 year
history of the Kangean PSC and three new
gas projects are producing over 20 mmcfd.
Despite EJGP interruption, subsequently
resolved, the production decline in gas was
reversed in the last quarter of the year.
Fourth, new gas supply agreements were

signed at above US$ 4/mmbtu in October
2007. These agreements have increased
reserves as gas was moved from contingent
resource to reserves category, tangible
evidence that the strategy of being long on
domestic gas was working. The well-head
price is at weighted average of some 855
bcf. Anticipating the increase of oil and gas
prices, the Company is continuing to review
and renegotiate prevailing contract terms.
Fifth we continued our investment program
to build new reserves through a strategic
alliance to operate the Suci OCA.
Production and Reserves
Average gross daily production in 2007
was 24.2 mboepd, an 11% reduction on
volumes recorded in 2006, reflecting the
deconsolidation of LBI from July 1, 2007
and the natural decline in mature producing
fields.
Gross average daily oil production increased
year on year from 10,633 bopd in 2006 to
10,919 bopd in 2007 as a result of organic
growth and operational enhancements.
Gross average daily gas production
declined from 100 mmcfd to 80 mmcfd in
2007. However this was a trend reversed
during the fourth quarter as production
commenced from the Tunas Harapan
Perkasa (THP) assets acquired in 2006.
The Kangean 50% farmout while reducing

net reserves entitlement generated cash to
deleverage the balance sheet. In addition
the technology transfer from new partners
is expected to speed production from the
Sepanjang oil field and Terang Sirasun Batur
(TSB) gas field. EMP has also secured the
capex carry funded by the new partners
to finance the development of Kangean PSC
going forward. Brantas PSC contributed
less than 8% of 2P reserves and less than
5% of sales.
There were a number of good examples of
our strategy of operational excellence in
action during 2007. Under-balanced drilling
has ensured optimal production from the
deep fractured carbonates of Sepanjang
Island in Kangean PSC, almost 30 years
after discovery.
EMP continued to enhance oil production
in both existing and new wells through
an effective combination of our human
resources capability and a number of
sophisticated technologies. These included
the use of simulation software, 3D seismic,
hydraulic fracturing, gas lift and production
simulation techniques, among others.
Reservoir fracture stimulation using state of
the art techniques and hydraulic fluids has
dramatically increased oil production in the
Pematang tight formation of the DC field of
Malacca Strait PSC. These Pematang tight
formations are also found in the DR and BY
exploration discovery fields representing
a significant new growth opportunity. 3D
seismic activity over the Gelam field has
delivered a completely new picture of the
distribution of oil and gas in the field and
will form the basis for locating new wells
to contribute to increased production and
reserves in 2008.
During the year the Company drilled a

total of 39 wells including maintained 23
workover wells at a cost of US$ 147 million
and recorded a high commercial success
rate, only one exploration well MSBU-01
categorised as sub-economy. A total of
78% of development costs was invested
in drilling and 23% in facilities and other
development costs. Drilling activity levels
remained below budget reflecting a lack of
available drilling equipment and deferral
of some programs into 2008. An increased
focus on controlling escalating drilling
costs had some positive effects on overhead
management.
Total capital investment was US$ 103.5
million. Despite the tightness in credit
markets the Company was able to fund
its 2007 programs with a combination of
cashflow from operations, proceeds from
the Kangean PSC transaction and new
financing.
Organization
Recognizing that communication, team
work and organizational efficiency are key
success factors in oil and gas exploration
and production, a number of organizational
enhancements were implemented during
the year. These started in April 2007
with installation of a smaller operational
focused Board with leadership experience
in EMP business units and commitment to
shareholder needs. A number of internal
promotions followed elevating high
performing Indonesian staff to leadership
and senior management line and functional
positions. These changes enhanced
coordination, improved staff moral along
with performance and facilitated retention of
senior staff at a time of increasing industry
turnover in a human resource constrained
industry. We still have a lot to do to be
the local employer of choice and remain
committed to achieving this.
11
12
Safety, Health and Environment and

Corporate Social Responsibility
The continued strengthening SHE
commitment and performance culture is
manifested by exceptional SHE results
with zero Lost Time Injury (LTI) across the
Company and performance metrics that
we can all be proud of and are simply good
business.
The culture of operational sustainability
goes beyond staff and contracts safety
but into the environment and communities
where we work as seen by the processes
and projects that we undertake, the
corporate governance we apply and the
community relationships we enjoy.
Outlook
The Company remains exceptionally well
positioned being long on energy for local
and export markets with rising demand,
rising commodity prices and improving
availability of equipment and services all
helping to sustain margins.
Containing costs and maintaining schedules
remains challenging however better
planning and more experience in these
markets is delivering results.
Past and new investments are expected to

deliver a 30- 35% production increase over
2008. Increasing volumes meeting rising
prices gives the Board every reason for
optimism.
Access to capital to grow the business,
organically and through acquisitions
remains challenging however the Board
is confident the quality of the assets and
our people on the back of the successes of
2007 will speak for themselves to support
financing requirements.
Appreciation
The support and commitment of staff,
customers, suppliers and communities
remained exceptional in 2007. This support
is recognized and appreciated by the
Board who recognize the efforts of so
many individuals and companies and the
underlying strength in the business this
implies.
EMP is a dominantly Indonesian company
fueling the growth of the Indonesian
economy, employing 729 staff, 99.9% of
whom are Indonesian all demonstrating
that Bersama Kita Bisa. The Board is
appreciative and proud of achievements and
confident in the future.
For and on behalf of the Board of Directors
Christian Victor Ponto

President Director
< Board of Directors, from left to right:

Imam P. Agustino , Yuli Soedargo, Christian V. Ponto
revie w of operat ions
13
14
EAST JAVA
Three months after drilling SED-1A well in November 2006 employing Under
Balanced Drilling (UBD) technology to maximize the productive potential of the
Ngimbang carbonate reservoir, EMP completed construction and commissioned
production facilities in the Pulau Sepanjang oil field. In January 2007, commercial
oil production commenced at 3,500 barrels of oil per day. Oil from the Sepanjang
Island oil field has 32.2 API gravity oil with minor gas. Measurement during UBD
indicates the SED-1A well has the capacity to produce up to 9,000 bopd.
15
Kange an P S C (working int eres t 50 %)

N
40 KM
North Pagerungan Field
Payang
Jenggolo
KE
(PUO)
Pagerungan Besar Island Field
Bukit Tua
Poleng
(PGA, PGB, PGC & PGR)
West Kangean Field
Bukit Panjang
Tuban
Suci OCA
PLN Gresik
Lamongan
PGN Tandes
Jeruk
BD
e (E
ipelin
Gas P
Java
East
PGN Waru
Tanggulangin
BATUR
SIRASUN
(SS0)
JGP)
Sepanjang Island
East Pagerungan Field

(PTO)
South Celukan
(SC0)
Sepanjang Island Field
Carat
(SED)
Pasuruan
JS 53A
Floating Storage Offshore
South Saubi
TERANG
Maleo
Oyong
Wunut
Karangtakat
(TEO)
PGN Surabaya
PGN Gn. Sari
Kangean Island
Terang Sirasun Batur Field
Madura
Gresik Stn.
Moncong
(MCO)
(WKO)
Pangkah
Kangean PSC
Leces
East Java
Bali
LEGEND
BLOCK
OIL FIELD
GAS FIELD
OIL & GAS FIELD
WELL
PRODUCTION PROCESS PLANT
PROSPECT
LEAD
CUSTOMER
GAS PIPELINE
PGN DISTRIBUTION GRID
Lombok
Thailand
Philippines
Malaysia
Brunei
Singapore
REPUBLIC OF INDONESIA
Java
INDEX MAP
Kangean PSC
Timor Leste
Operator: Kangean Energy Indonesia Limited (60%)

Partner: EMP Exploration (Kangean) Limited (40%)
After oil supplies from Sepanjang field were temporarily stopped

due to weather conditions and technical problems on the leased
Floating Storage Offshore (FSO) unit, SED-1A well recommenced
oil production at 3,500 bopd in October using a newly leased
Concorde tanker with higher storage capacity of 230,000 bbl.
Kangean Energy signed the Gas Sales and Purchase Agreement
(GSPA) to supply gas at US$ 4.09/mmbtu to respective consumers.
16
Eas t Java
EMP commenced a strategic alliance with Indelberg in
order to secure gas production in East Java.
Production test results in Suci-01 proved this well is
able to produce gas of 7 mmcfd. A workover of Suci-01
is planned in the first half of 2008, and expected to be
in full production by the end of 2008.
17
S uci oc a
Payang
Jenggolo
KE
Bukit Tua
Poleng
Bukit Panjang
Suci OCA
Java Sea
Pangkah
20 KM
Tuban
Lamongan
PLN Gresik
Petrokimia Gresik
Madura
Surabaya
Oyong
E a st
Ja v a
ip e li
Gas P
JG P
n e (E
BD
Jeruk
Wunut
Maleo Field
Tanggulangin
Carat
LEGEND
BLOCK
OIL FIELD
Bentu KPS & Korinci Baru KPS

GAS FIELD
Pasuruan
OIL & GAS FIELD
Leces
WELL
GAS PIPELINE
East Java
PGN DISTRIBUTION GRID
Bali
Thailand
Philippines
Malaysia
Brunei
Indian Ocean
Singapore
Java
INDEX MAP
Suci OCA
Timor Leste
18
Sumat era
DC-8 and DC-9 added another 800 bopd. A reservoir fracture
stimulation using state of the art techniques and hydraulic fluids
has dramatically increased oil production in the Pematang tight
formation of DC field of Malacca Strait PSC. These Pematang tight
formations are also found in DR and BY exploration discovery fields
in Malacca Strait PSC with significant reserves.
19
Malacca Strait PSC (working interest 60.49%)

Rupat Island
Malaysia
Malacca Strait PSC
St
N
Bengkalis Island
0
15 KM
QC
VA
ra
it
of
Ma
lac
ca
OA
QD
QF
QE
LEGEND
QB
Pertamina UP II
Refinery
BLOCK
OIL FIELD
GAS FIELD
OIL & GAS FIELD
WELL
PROSPECT
LEAD
BA
Padang Island
AG
OSB Ladinda
Gatam
Sabak

CUSTOMER
Pedada
Lalang Field
OIL PIPELINE
GAS PIPELINE
Benua
Kuat Field
Dusun
Oil Gathering station

BOP Pertamina BSP
DU
Ponder Field
Kurau Field
CO
LE
DF
BGW
DC
Philippines
Mengkapan
Field
Melibur Field
Merbau Island
CN
DH
BZ SM
CA
BH
BK
BM
BV
EA
BY-2
DR
BC
BY-1
FC
BU
Rangsang Island
TA
AI
BQ
BT
CW
Ponak-1
FB
FD
EG
Pusaka
Thailand
SAG
CM
DD
BY-3 AL
Butun Industrial Estates
NM
TG
TH
TH
CU
Selatan Field
DB
CH
TE
TB
TC
Tebing Tinggi Island

TD
Malaysia
Singapore
Brunei
North East Beruk
Malacca Strait PSC
Sumatera
INDEX MAP
Timor Leste
Beruk
Sumatera
Mendol Island
Operator: Kondur Petroleum S.A. (34.46%)

Partner: PT Imbang Tata Alam (26.03%)
China National Offshore Oil Corporation (32.58%)
CNOOC Southeast Asia Ltd. (6.93%)
A simulation study was applied in the Melibur field using

software, four development wells in Melibur field contributed
an additional 500 bopd. Malacca Strait PSC has been able to
maintain a consistently high production rate of above 9,300
bopd.
20
Sumat era
The block just completed its 3D seismic which covered a
total working area of 83 km2. The seismic results are useful
in minimizing drilling related risks, confirming the existing
certified reserves and resources, as well as identifying new
prospects within the blocks working area.
Electrical Submersible Pump (ESP) installed at SG-9, SG-11/ST,
SG-12/ST wells to boost oil production in Gelam block.
21
Gel am TAC (working int eres t 100 %)

Setiti
Jambi
SE Setiti
PLN
Sungai Gelam A Field (SG)

Kenali Asam
Sultan Thaha
Airport
Rumpeh
Subdistrict
Sungai Gelam B Field (SG)

Sungai Gelam D Field (SG)
Gelam TAC
Jambi Luar Kota Subdistrict
rP
ipa
I
TG
BLOCK
OIL FIELD
GAS FIELD
u
Jal
LEGEND
WELL
CUSTOMER
OIL PIPELINE
GAS PIPELINE
PROPOSED GAS PIPELINE
Sungai Gelam C Field (SG)
Thailand
Philippines
Malaysia
Brunei
Tempino
Mestong Subdistrict
Singapore
Gelam TAC
Sumatera
INDEX MAP
REPUBLIC OF INDONE S I A
Timor Leste
South Sumatera
Operator: PT Insani Mitrasani Gelam (100%)
22
Sumat era
Kalila (Bentu) Ltd. signed a GSPA to supply gas to RAPP at
US$ 4/mmbtu (with 2% escalation every three years).
Korinci Baru PSC commenced first commercial gas
production to RAPP at 4.2 mmcfd with expectations to attain
8.5 mmcfd by the end of the second quarter 2008. Currently
this block also supplies 13.2 mmcfd to PLN Riau.
23
Be nt u P S C (working int eres t 100 %)

Korinci Baru P S C (working int eres t 100 %)
Minas
North East Beruk
Zamrud
Baru Pipeline
Kotabatak
Beruk
Korinci Baru PSC

Pekanbaru
Minsis
West Baru Field
Perak Field
Bentu PSC
Baru Field
Desabaru
Korinci Field
Terusan Field
Bentu Field
LEGEND
BLOCK
OIL FIELD
GAS FIELD
WELL
PROSPECT
LEAD
CUSTOMER
GAS PIPELINE
Seng Field
Timah
ns
Tra
Nikel
do
sin
Ga
Segat Field
ia
es
on
Ind
ne
eli
Pip
Besi
Thailand
Philippines
Malaysia
Brunei
Singapore
& Korinci
Baru
Bentu Bentu
KPS &PSC
Korinci
Baru
KPSPSC
Sumatera
INDEX MAP
Timor Leste
Sumatera
Operator Bentu KKKS: Kalila (Bentu) Limited (100%)

Operator Korinci Baru KKKS: Kalila (Korinci Baru) Limited (100%)
24
Sumat era
Costa International Group Limited signed a Heads of
Gas Sales and Purchase Agreement (HGSA) to supply
gas at US$ 4.8/mmbtu (with 3% escalation every year)
to the PT Energasindo Heksa Karya (Energas).
25
Gebang JOB P S C (working int eres t 50 %)
GOS
it
ra
St
Sumatera
la
Ma
of
a
cc
Rantau
West Kuala
Simpang
Kuala Simpang
Serang Jaya
Sungai Buluh
10 KM
Arbei Field
Sembilan Island
Oil
Pangkalan Susu
LEGEND
HM 55
BLOCK
OIL FIELD
GAS FIELD
OIL & GAS FIELD
WELL
PROSPECT
CUSTOMER
OIL PIPELINE
GAS PIPELINE
West Tabuhan
SBM
Anggor Field
ort
p
Ex
ne
eli
Pip
Gebang JOB PSC
Gebang Deep
East Tabuhan
Pangkalan Brandan
Secanggang Field
Gebang
Securai
Besitang
North Darat
Tanjung Perling
Batang Sarangan
Tanjung Pura (TPA)
Thailand
PLTG Belawan
Philippines
Gebang JOB PSC

Malaysia
Brunei
Singapore
BentuSumatera
KPS & Korinci Baru KPS
Binjai
INDEX MAP
Timor Leste
Batu Mandi
Wampu
Medan Industrial Estates

(KIM)
Operator: Costa International Group Limited (50%)

Partner: Pertamina (50%)
26
Kalimantan
SBT-01 well produced its first gas to PLN in Samarinda, in
addition to four wells (SBR-05, SBR-06, SBR-08 and UKM-04).
Total volumes of gas contracted through this GSPA amounts to
62 bcf up to year 2015.
SBT-2A has also been ready to flow gas at an average 5 mmcfd
while waiting for PLN to finish repairing its gas turbine.
The gas is sold at over US$ 2.72/mmbtu which is to be increased
annually under the contract.
Successful discovery from SBR-16 and SBR-17 produced 575
bopd and increased the blocks total oil production to 1,194 bopd
and gas production of 12 mmcfd.
A gas pipeline was completed from Semberah to the Vico plant.
27
Semberah TAC (working int eres t 100 %)

Thailand
Philippines
Malaysia
Brunei
Singapore
Kalimantan
Pertamina
Sangatta
Semberah TAC
R E P U B LIC OF INDONESIA
INDEX MAP
10 KM
Tanjung Sangatta
Timor Leste
Tanker to
UP. V Balikpapan
LEGEND
BLOCK
Acce
ss R
oad
GAS FIELD
WELL
Prov
ince
CUSTOMER
OIL PIPELINE
GAS PIPELINE
Bontang

OIL TERMINAL
Strait of Makassar
Kalimantan
Tanjung Santan
Union Santan
Terminal
Trucking to
Sangatta
Proposed PLN
Power Plant
ile
ipell
VICO P
PLN
Gas Power Plant
Tanjung Batu
Semberah Field
(UKM, SBR)
Semberah TAC
Karangmumus Field
Binangat Field
Pelarang Field
Samarinda
Sambutan Field
(SBT)
Anggana Oil Terminal
Operator: PT Semberani Persada Oil (100%)
28
manageme nt s dis c us sion and

anal ysis of t he f inancial c ondi t ion
and res ult s of operat ions (md& a)
Overview
Net sales revenues are derived from sales
of crude oil, condensate and natural gas in
accordance with the terms of Production
Sharing Contracts (PSC), a JOB PSC,
Technical Assistance Contracts (TAC) and
Operational Cooperation Agreement (OCA)
relating to the development of eight discrete
blocks in Java, Sumatera and Kalimantan.
Net Sales
Net sales for 2007 were 2% lower at
Rp 1,137 billion. Net sales represented
revenues from oil sales of Rp 840 billion
(US$ 97 million equivalent) down 18% and
Rp 247 billion (US$ 27 million) from gas
sales. Volumes for the year were 23% lower
for oil at 1.5 mmbbl and 41% lower for gas
at 2.8 mmboe, the latter partly due to the
interruption to gas production through
damage to the East Java Gas Pipeline, which
has subsequently reopened. Average prices
realized for oil were significantly higher, by
15% year on year to US$ 73.2 per bbl with
average gas prices 4% higher at US$ 2.6
per mcf.
Terms relating to Gas Sales
Sales of the Companys net gas entitlement,
denominated in US 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 long-term fixed price
contracts, alternate fuel prices and the rate
of exchange between the Rupiah and US
Dollar. The average realized sales prices for
gas per mcf for the years ended December
31, 2 0 0 6 and 2 0 07 were US $ 2.5 and
US$ 2.6, respectively. It should be noted
that all GSPA supply contracts are on a
reasonable endeavors basis.
Terms relating to Oil and Condensate Sales

Net crude oil entitlement is sold through
one-year sales contracts to the winning
bidder under a competitive tender process,
subject to market conditions. The largest
portion of this entitlement in 2007 was
sold under a one-year crude oil sales
off take contract with Petro Diamond
Company Limited (a subsidiary of the
Mitsubishi Corporation). In 2005 and prior
years substantially all of the condensate
production was sold to BP Singapore
Pte Ltd. under a sales contract renewed
annually. Sales of net crude entitlement
are predominantly at prices based on the
prevailing Indonesian Crude Price (ICP).
Average realized sales prices (based on
entitlement) for oil per bbl for the years
ending December 31, 2006 and 2007 were
US$ 63.9 and US$ 73.2 respectively.
Full Cost Accounting
The Company and subsidiaries follow the
full cost method of financial accounting
in recording oil and gas properties.
Accordingly, all costs related 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 limits the level of such costs to the
estimated present value of future aggregate
net revenues, discounted at a 10% interest
rate using reasonable assumptions on oil
and gas prices.
Brantas PSC
(working interest 50%)
Based upon a Corporate Management
Agreement (CMA) dated July 1, 2007
between the Company and Minarak Labuan
Co. Ltd. (MLC) and further to the approval of
shareholders at an Extraordinary General
Meeting of Shareholders on March 14, 2008,
the Company discontinued taking up any
share of losses in LBI, Kalila Energy Ltd.
(KEL), and Pan Asia Enterprise Ltd. (PAN).
Consequently from July 1, 2007 the financial
statements of LBI, KEL and PAN were no
longer consolidated into the consolidated
financial statements of the Company, which
have been restated.
New shares subscription EMP Inc.
In connection with binding agreements
signed March 6, 2007 with Mitsubishi and
Japex, Mitsubishi and Japex assumed
new subscription shares in EMP Inc. and
an indirect 50% working interest in the
Kangean PSC block including a substantial
portion of the remaining development
capital expenditure for Kangean PSC block.
Proceeds from the transaction amounted to
US$ 360 million, and were used as follows:
1. In repayment of the Credit Facility

Agreement May 19, 2005 with Credit
Suisse Singapore amounting to US$ 292
million relating to principal plus accrued
interest and fees.
2. Settlement of payables and receivables
relating to an amount of US$ 48 million
relating to companies in the Companys
Group.
3. The balance of US$ 7.79 million to be
paid by EMP Inc. to the Company by way
of a dividend declared by EMP Inc. in a
resolution dated February 21, 2008.
Completion of the transaction depended
upon the following conditions which have
now been met:
1. Approval from shareholders and
Bapepam the Indonesia Capital Market
Authority.
2. Receipt of a letter from Credit Suisse
acknowledging EMP Incs debt as
discharged in full under the Credit
Facility Agreement.
3. Termination of the old Joint Operation
Agreement (JOA) and execution of a new
JOA.
Annual Revenues
2007
Value (Rp billion)
Oil
Gas
Total
890
247
1,138
YoY (%)
Volume (mmboe)
YoY (%)
78
-18
22
-56
100
1.5
2.8
4.3
36
64
100
-23
-41
Annual Capital Expenditures

Year Ended December 31, (US$ in millions)

Annual expenditures on oil and gas properties
2007
2006
2005
975
261.2
168.6
29
30
s af e t y, he alt h and e nvironme nt (she )
EMP continuously reinforces, encourages,

and improves SHE practises through
extensive trainings, monitoring activities,
facility upgrades and extensions, and
regulation and permit compliance.
SHE Functions
EMPs SHE mechanisms are designed to
cement a culture of commitment to safe,
healthy, and environmentally friendly
practices which in turn enhance the
business performance and sustainability
of EMPs operations. Reporting directly
to the CEO, SHE collaborates with all
business units to ensure compliance to SHE
protocol and other applicable standards and
regulations. SHE also facilitates the sharing
of best practices, resources, and lessons
learned between business units.
The SHE function coordinates the
satisfactory and efficient implementation
of risk management processes throughout
business operations with regards to crisis
management, business continuity planning,
hazard identification, and risk assessment,
implementation, and appropriate follow up.
SHE Performance
The SHE Excellence Function Team
implements rigorous monitoring and
tracking of SHE input, activities and audits.
In addition to a SHE Management Tour of all
operating units, aimed to reinforce positive
SHE behaviour, EMP retained ISO 14001 and
OHSAS 18001 certification, and upheld the
Ministry of Environments blue PROPER
rating for environmental compliance,
received in 2006.
EMP takes no chances with safety and
conducted full risk assessments regarding
Job Safety Analysis for all operating units.
Safety facilities and procedures tightened

with the establishment of an Incident
Management Plan, and all Corrective Action
Requests were investigated and followedup. Attention to safety resulted in the
achievement of 6 million man hours without
a single lost time incident, for which EMP
received an award of recognition from the
Ministry of Labour.
In 2007, an Occupational Health Information
System was established, and medical
checkups carried out periodically for
employees in all EMP Operating Units.
Feedback and advice were provided to
maintain health and, if required, further
check ups or hospitalization were
recommended.
EMP is committed to safeguarding and
supporting sustainable natural resources,
and engages in environmental management
and monitoring projects. In 2007, several
environmentally-focused activities carried
out around the shore and the mining area
included the planting of 30,000 mangrove
seeds in a mangrove break water project
covering 160ha in the Malacca Shore
area; a land nursery was maintained and
re-cultivation of production facilities and
re-greening continued at the Gebang,
Semberah, Binangat, and Sambutan fields.
2007 SHE Performance
Leading Indicator
Gap closure action
Training hours from total man-hours
PROPER Rating
Lagging Indicator
Lost Time Injury Rate / LTIR (cases)
Total Recordable Injury Rate / TRIR (cases)
Spills Incidents (> I Bbl)
Property Damage/Loss (> US$ 50K)
As part of EMPs environmentallyminded approach to waste management,

the Company cooperated with several
institutions. In processing and destroying of
hazardous waste, the Company cooperates
with Sulianto Saroso hospital, Jakarta
for medical waste, while other hazardous
waste is sent to PPLi (Prasada Pamunah
Limbah Industri), a company permitted
for processing and destroying hazardous
waste. Trials were conducted into phyto
remediation and bioremediation of used
drilling mud, contaminated soil, and used
cooking oil. The trials were successful, and
particular varieties of seaweed are being
used to reduce levels of heavy metal from
drilling mud and contaminated soil.
EMP manages all waste in complete
compliance with Ministry of Environment
regulations, and a new waste water
treatment system and an oil catcher is
being built at Baru, Bentu/Korinci. In the
event of an unforeseen incident, EMPs
Environmental Response Teams, stationed
in the Malacca Strait, Gebang, Semberah,
Gelam, and Bentu/Korinci, are equipped to
respond; they are also trained to respond to
fire, pollution, and medical needs.
SHE excellence involves constant training

and knowledge upgrades in order to
growing and maintaining SHE standards
in every step of production activity. EMP
manages a comprehensive training
regimen for its employees which, in 2007,
covered working risk analysis, safety
management, accident reporting and
investigating, near-miss accident; first
aid; hazardous waste management; waste
water treatment; fire-fighting; sea survival;
defensive and responsible driving; hazard
communications, and ISRS7 a world
leading system for measuring, improving,
and demonstrating safety, environmental,
and business performance.
The SHE Excellence Function Team has
identified and disseminated specific
targets for 2008, including overall SHE
improvements through a heightened
media campaign; improved near miss and
substandard action/condition reporting;
the integration of ISRS into the SHE
Management System; the endorsement
of activities to conduct High Level Risk
Assessments, and the maintenance of ISO
14001 and OHSAS 18001 certification and
blue PROPER ratings for all operating units.
Target
All EMP
Achievement
All EMP
Bentu Korinci Baru
Brantas
Gebang
Gelam
Malacca Strait
Semberah
75%
0.75%
Blue
68.29%
9.59%
Not announced*)
40.45%
0.46%
86.00%
0.92%
55.50%
0.52%
76.50%
0.37%
94.00%
43.00%
75.00%
3.60%
< 0.27 (15)

< 1.05 (59)
3 max
1 max
0.00 (0)
0.64 (20)
2
0
0.00 (0)
0.00 (0)
0
0
0.00 (0)
0.00 (0)
0
0
0.00 (0)
0.22 (1)
1
0
0.00 (0)
0.00 (0)
0
0
0.00 (0)
0.98 (18)
0
0
0.00 (0)
0.28 (1)
1
0
*) The Government of Indonesia has not yet announced PROPER Rating in the year 2007
31
32
c ommuni t y re l at ions
Located in often isolated areas across

the Indonesian archipelago, EMP activily
play roles in supporting government to
improve social and economic condition of
apprehensive community. For EMP, these
communities are not only neighbors, but
potential partners to be trained as local
trained employees. And our communitycentric projects seek to develop sustainable
skills, giving them opportunity to get
educational opportunities, promote
vocational and preserve and nurture the
natural environment.
Participatory Rapid Community Appraisal
(PARCA)
PARCA is the application through which
EMP evaluates community needs in terms
of economic development, health, and
education.
Internal and external workshops on
Participatory Rapid Appraisal for Local
Economic Advancement Action (PRA LEAd
Action) were conducted to bring together
EMP management and staff, community
members and leaders, and government
representatives to devise a united
community development strategy to reduce
social disruption and develop social welfare.
After indentifying local community needs

and resources potential that is appropriate
to be developed as small commercial
industry to empower the community,
PARCA initiated two microfinance centres
for small businesses in the communities
closest to EMPs Malacca Strait operations.
The centres, located in Merbau and Sei
Apit, are run as independent communitybased funding institutions, managed
by the community. A Local Community
Assistance program supports rubber and
sago farmers: two prominent commodities
in the Sungai Apit and Merbau areas; local
food sellers (empek-empek Batanghari) in
Gelam, Jambi received marketing support,
and development assistance was given to
pepper farmers in Semberah.
In 2007, quarterly medical treatment
sessions were held by EMP, in conjunction
with local health groups, for community
members in Gelam and Malacca Strait, and
annual mass circumcision events were held
in Malacca Strait, Gelam, and Semberah for
152 children. A six month Nutritious Food for
Infants program reached 828 local infants,
and was conducted in cooperation with 17
local health centres.
Regarding community sanitation, EMP and

local health departments are conducting
preliminary studies into local community
health in relation to sanitation facilities.
PARCA identified five programs to increase
vocational competency and empowerment:
two scholarship programs with the Bogor
Agricultural Institute and the Academy
of Midwifery, Pekanbaru for students
immediately local to EMP operations; halfyearly performance-based scholarships
for 104 students in Merbau, Tebing Tinggi
and Sungai Apit; a youth entrepreneurship
training program sending 25 local youths to
Bandung, and an empowerment program
for 35 women involving cookery classes.
In 2007 EMP supported infrastructure

development through the construction of a
new jetty in Mengkikip; road construction
in Malacca Strait, Semberah, and
Bentu/Korinci; assistance with mosque
construction and rehabilitation, and through
lending of heavy equipment support in the
construction of public facilities in all EMP
Operating Unit areas.
The success of PARCA and other social
programs, EMP have endeavor Government
to improve the quality of life and prosperity
of the society sustainably, and overcome
social disruption and create conducive
atmoshphere in EMP operational area.
33
34
c orp orat e gove rnance rep or t
Introduction
Framework and Approach to Corporate
Governance
The Company recognises that a strong
commitment to good corporate governance
practices is vital to its continued success.
At its base, corporate governance is about
establishing a code of behavior and a set
of values which underpin the Companys
everyday activities and ensure transparency,
fair dealing, and the protection of
stakeholder interests. Best practice
governance focuses on the processes
used to direct and manage our business
in a manner in line with our corporate
objectives and the expectations of society,
and in a manner 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
Strive for best practice and fully
comply with the rules and regulations
of Bapepam-LK, the Indonesia Stock
Exchange, and the Indonesian National
Code of Good Governance.
Roles, Responsibilities, and Skills of the

Boards
Membership and Expertise
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 is essential to implementing best
practice in corporate governance and to this
end the Company is governed by a wellinformed Board of Commissioners, which
includes one Independent Commissioner
and a responsible and professional Board
of Directors, comprising three 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
appointment.
Board of Commissioners:
Roles and Responsibilities
The Board of Commissioners comprises
four members, one of whom is independent
and 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 through regular formal
joint meetings of the BoC and BoD.
Board of Commissioners
Ari S. Hudaja, President Commissioner

Ari S. Hudaja was appointed President
Commissioner of the Company on May
11, 2007. He has extensive experience in
the industry, and currently serves as the
President Director of PT Bumi Resources
Tbk, PT Arutmin Indonesia and PT Kaltim
Prima Coal.
The appointment of the Independent

Commissioner complied to Indonesian Stock
Exchange regulation [I-A Kep-305 /BEJ/072004]. The Independent Commissioner, as
defined by the regulations, serves as the
Companys Audit Committee Chairman.
The Board of Commissioners met formally
eight times in 2007; in each case an agenda
including board papers and the minutes
of the previous meeting was distributed to
Commissioners in a timely fashion. These
formal meetings do not preclude frequent
informal contacts and information sharing
between Commissioners and Directors.
The Board of Commissioners held nine
formal meetings with the Board of Directors
during 2007, in addition to routine informal
meetings.
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 June 2004,
he also serves as Chairman of the Audit
Committee.
35
36
Suyitno Patmosukismo, 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
is also currently the Executive Director of
the Indonesian Petroleum Association. He
served as President Commissioner of the
Company between 2004 and 2007.
Nalinkant A. Rathod, Commissioner

Nalinkant A. Rathod was appointed to the
Board of Commissioners on May 11, 2007.
He also sits on the Board of Commissioners
for PT Bumi Resources Tbk, and is the
Managing Director of both Great Asian
Holdings Pte. Ltd. and Capital Managers
Asia Ltd.
The Board of Directors:

Roles and Responsibilities
The Board of Directors currently comprises
three 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
Approving the Companys risk
management strategy, monitoring its
effectiveness and maintaining a direct
and ongoing dialogue with the Companys
auditors and regulators
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
behavior and monitoring compliance
with the Companys corporate social
responsibility policy and practice
The Board of Directors convened

formally ten times in 2007. The President
Commissioner and President Director
established 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 2007,
nine formal meetings combining both the
Board of Commissioners and the Board of
Directors were held, in addition to regular
informal meetings throughout the year.
Board of Directors
Christian V. Ponto, President Director

Christian V. Ponto was appointed President
Director of the Company on April 19, 2007.
Previously, he was President & General
Manager of Kondur Petroleum S.A.,
the Malacca Strait PSC operator which
has dominated the Companys total oil
production since 2003. Mr. Ponto has spent
almost five years at the top management
level of the Groups various affiliated
companies within the energy sector, and 18
years in local and international positions
with ARCO, including Chief Exploration
Officer, ARCO Tangguh, Irian Jaya.
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 a Director in December 2005.
Imam P. Agustino, Director

Imam P. Agustino was appointed to the
Board of Directors on April 19, 2007. His
19 year career in engineering, project
management, and business development
has included being the President & General
Manager of LBI, and ten years in top
managerial positions in various foreign
affiliated institutions within the natural
resources sector, ranging from Trafalgar
House UK to Energy Services Pte Ltd.
37
38
Succession planning
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 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 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
Review the performance of Board
Directors
The selection of President Director is based
on an evaluation as to whether the candidate
is able to execute these duties effectively.
Review of BoC and BoD Performance

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 programs
On an ongoing basis training is undertaken
for Board members to stay informed of
current and forthcoming regulations and
issues regarding the upstream oil and
gas sector, as well as developments in the
regulatory environment and monitoring
policy 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.
Annual & Extraordinary General Meeting

of Shareholders
Resolutions passed at the Annual General
Meeting of Shareholders (Annual GMOS)
on May 11, 2007 are as follows:
1. Ratified the Companys Balance Sheet
and Income Statement for the year 2006
and granted the release and discharge
(acquit et de charge) to all members of
the Companys Board of Directors and
Board of Commissioners.
2. Determined the utilization of the
Companys profit for the financial year
ended December 31, 2006 by reinvesting
the Companys net profit into the
Companys Retained Earning for the
development of the existing assets.
3. Approved to give the authorization to
the Board of Directors to appoint the
Public Accountant to audit the Companys
Financial Statement that end on
December 31, 2007 and other periods in
the 2007 financial year whenever required
and to authorize the Companys Board of
Directors to determine the honorarium of
the Public Accountant together with the
other conditions.
4. Approved the alteration of the
composition of the Companys
Board of Commissioners, with the
new composition of the Board of
Commissioners as follows:
President Commissioner:
Ari Saptari Hudaja
Independent Commissioner:
Ir. Drs. Qoyum Tjandranegara
Commissioner:
Ir. Suyitno Patmosukismo
Commissioner:
Nalinkant Amratlal Rathod
5. Approved to give the the authorization to
the Companys Board of Commissioners
to determine the remuneration and
allowance for the members of the
Companys Board of Commissioners and
Board of Directors for the total amount of
Rp1,700,000,000 per month.
The Annual GMOS also observed and noted

the BoD report regarding the realization
of the Rights Issue I Funds utilization, and
the BoD report concerning the Companys
activities, Balance Sheet and Income
Statement for the financial year 2006.
Resolutions passed in the Extraordinary
General Meeting (Extraordinary GMOS) on
February 15, 2007, are as follows:
1. Approved the encumbrance of all or
a substantial part of the Companys
and/or its subsidiaries asset or to issue
corporate guarantees with respect to
fund raising and/or refinancing.
2. Approved the alteration of the Rights
Issue I proceed funds utilization,
which had been previously approved
to be changed from loan to become
the Companys capital injection in its
subsidiaries, which are KEL, PAN and LBI
to be further changed to become loan.
Resolutions passed in the Extraordinary
GMOS on April 19, 2007, are as follows:
1. Approving the shares participations
transaction plan by the strategic partners
through the issuance of new shares in
Energi Mega Pratama Inc., a Companys
subsidiary which its entire shares are
wholly owned by the Company.
2. Approving the alteration of the Rights
Issue I funds utilization which had been
previously approved to be changed
from loan to capital injection in its
subsidiaries, which are Energi Mega
Pratama Inc., EMP Kangean Limited and
EMP Exploration (Kangean) Limited to be
further changed to become loan.
3. To approve the new composition of the
BoD as follows:
President Director: Christian Victor Ponto
Director: Yuli Soedargo
Director: Imam Pria Agustino
4. Approving the amendment of Article 21
section 3 of the Companys Articles of
Association.
39
40
Corporate Secretary
Riri Harahap, Corporate Secretary and
Vice President Legal
Riri Harahap was appointed Corporate
Secretary in June 2005 and to the position of
Vice President Legal, in February 2006. She
brings with her over 15 years of experience
in law.
The Companys Corporate Secretary
plays a key role providing effective legal
advice with regard to general day-to-day
matters and in compliance with regulations
including those of the capital market.
The Corporate Secretary is also tasked
to provide Commissioners and Directors
with ongoing guidance on issues such as
corporate governance, on matters relating
to the Companys Articles of Association
and to achieve the highest standards in the
organization of shareholder meetings and
meetings of the Boards.
Report of the Audit Committee
The effectiveness of both Boards is
enhanced by the support of the Audit
Committee, whose role is 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.
Audit Committee members
Qoyum Tjandranegara, Chairman
(Independent Commissioner)
See page 35.
Hertanto, Member
Hertanto has 37 years of auditing
experience, and has been a member of
the Audit Committee since October 2005.
Hertanto served as an Independent
Commissioner for PT Adhi Karya (Persero)
between 2004 and 2006.
Toha Abidin, Member

Toha Abidin has been the member of the
Companys Audit Committee since March
2005. Mr. Abidin has 29 years of extensive
working experience in finance and auditing.
He started his carrier as an auditor staff
in Public Accountant Dra. Koesbandriyah,
Bandung in 1978. He then worked in
Direktorat PW2, DJP, Department of
Finance. In 1987, he worked for PT Garmena
Ariesta.
He is a partner in Public Accountant Pieter,
Ulways & Partner from 1990 until now, he
currently served as the President Director
of PT Piesta Dinamika Consult.
Audit Committee members are chosen for
their skills and relevant experience.
Tasks implemented
The Audit Committee is responsible for
providing independent professional opinions
to the Board of Commissioners, and to bring
to their attention any matters related to:
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
Indonesia Stock Exchange and any other
regulatory requirements related to the
Companys activities
Reviewing the work undertaken by
Internal Auditor and the External Auditor
Reviewing any complaints, or references
made to either Board from the public
Assisting the BoC with the selection and
appointment of the External Auditor
Meetings
The Audit Committee held a total of four
meetings during 2007 attended by:
Qoyum Tjandranegara, Chairman
Hertanto, Member
Toha Abidin, Member
The Audit Committee assessed and

reviewed the Consolidated Financial
Statements as of December 31, 2007 along
with the notes to the Financial Statements.
To ascertain the fairness of the Consolidated
Financial Statements, the Audit Committee
also conducted discussions with the
External Auditor and Internal Auditor
regarding the holding Company and its
subsidiaries in respect of:
Organization structure
Internal control systems
Accounting policies, systems and
procedures
Compliance with capital market
regulations and other regulations
Other information related to the
Companys management policies
Summary of conclusions from Audit
Committee meetings:
a. The External Auditor has performed
the general audit of the Companys
Consolidated Financial Statements as of
December 31, 2007 independently and
objectively.
b. Internal Auditor has carried out
its function satisfactorily. Further
improvement in some aspects of the
performance of the internal audit system
is still required.
c. The management of the holding Company
and its subsidiaries has applied policies
and governance to a high standard as
well as complied with capital market
regulations and other regulations of the
Government of the Republic of Indonesia.
d. The management of the holding Company
and its subsidiaries has prepared the
Financial Statements of the Holding
Company and its Subsidiaries as of
December 31, 2007 in accordance with
the Financial Accounting Standards of
Indonesia (PSAK) and in accordance with
the PSC Contracts Conditions valid for
Subsidiaries with a line of business in oil
and natural gas.
e. The Consolidated Financial Report is
presented in accordance with the PSC
Contract requirements applied for
the subsidiaries which have the line of
business in oil and gas sector and with
the guidelines of the Financial Report
presentation and disclosure for the oil
and gas industry Listed Company from
the Supervisory Board of Capital Market.
f. The compensation packages for the

Board of Commissioners and Directors
are in line with standing procedures and
were approved at the Annual General
Meeting of Shareholders.
g. The estimated gross proved oil and gas
reserves is based on certification issued
by independent oil and gas consultants.
Approach to audit governance
The Company is committed to the
implementation of three basic principles:
The preparation of true and fair financial
reports;
The use of accounting methods which are
comprehensive, relevant and compliant
with applicable accounting rules and
policies;
That the External Auditors are
independent and serve shareholder
interests by ensuring shareholders are
aware of the Companys true financial
position. Developments and practices are
monitored and reviewed accordingly.
External Auditor
The Companys independent External
Auditor was appointed by the Directors with
the authorization of shareholders at the
Annual General Meeting of Shareholders.
The Audit 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 Audit Committee.
The Public Accountant Office of Jimmy
Budhi & Partner has been appointed as
the Companys External Auditor to audit
the Companys Consolidated Financial
Statements for the year ended
December 31, 2007.
41
42
Certification and discussion with External

Auditor on their independent status
The Audit Committee requires the External
Auditor to confirm their independence. The
Companys External Auditor gives assurance
to the Audit Committee that they have
complied with all standards promulgated
by local and overseas regulators and
professional bodies.
Relationship with External Auditor
Audit partners and audit firm employees
are prohibited from being officers of the
Company while retaining their status as
audit partners or audit firm employees. This
also applies to 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 of
Directors or within the Company.
Restrictions on non-audit services by the
External Auditor
The External Auditor is not authorized 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 or
management functions
Broker or dealer, investment adviser or
investment banking
Legal services
Litigation services
Actuarial services
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 Auditor
and the Chairman of the Audit Committee
must also be obtained.
Internal Audit function
The Audit Committee approves the
appointment of the Head of Internal Audit.
It reviews internal audit responsibilities,
budget and staffing, significant reports
prepared by internal audit unit and
management responses thereto. The Audit
Committee Chairman meets separately with
the Head of Internal Audit.
Compliance with legal and regulatory
requirements
The Audit 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 in-house legal counsel from time to
time as required.
Risk Management Committee
The Risk Management Committee was
established in June 2007. The members
of this committee are Christian V. Ponto,
Christopher B. Newton, Nalinkant A.
Rathod, Yuli Soedargo, Norman H. Harahap,
Agustanzil Sjahroezah, Lindawati Kusuma
and Iwan Kristiantono.
Risk Management Committee encompasses
a review of all risks faced by the Company
to quantify their impact and likelihood, and
ensure appropriate mitigation measures are
in place.
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.
IT Governance
The Company is in the process of preparing
all necessary requirements in relation to the
establishment of the IT Steering Committee.
The Company considers that the IT Steering
Committee will have representatives from
all relevant business and IT areas to ensure
that IT investments meet their objectives
in terms of efficiency, effectiveness and
standardization. The establishment of the IT
Steering Committee has not been completed
yet, however each IT relevant staff have
identified any point that must be prepared
for the IT Governance to be established in
the Company.
Compliance policy and practices
The Companys compliance approach
focuses on ensuring strict adherence to all
laws and regulations, maintaining quality
control over practices and processes,
identifying any weaknesses and addressing
any gaps.
Corporate responsibility and sustainability
Approach to corporate responsibility and
sustainability
The Companys aim is to manage its
business in a way which produces
positive outcomes for all stakeholders
and maximizes 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
Elimination of forced or compulsory
labour
43
44
The Companys Code of Conduct

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, reviewed periodically
and approved by the Boards.
Key suppliers are required to sign the Code
of Conduct before becoming accredited.
Corporate Governance Manual
The Companys implementation of good
corporate governance practice is guided by
the principles and practices already in place
with the best interest of all stakeholders,
while ensuring full compliance with
regulatory requirements. A formal
Corporate Governance Manual drawing
together all current best practice routines
in existence, as described in this report,
is being prepared to be implemented by
employees while ensuring that the contents
are reasonable and cover all key subjects.
Employees will be required to sign to
confirm that they have read and understood
all elements of the manual.
Commissioners and Directors interests
The extent of share ownership by Board
members at December 31, 2007 is as
follows:
Yuli Soedargo : 4,250,000 shares
Prevention of Conflict of Interest

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 General
Meeting of Shareholders prior to the
execution of such transaction. The Company
has established a Conflict of Interest
Committee.
Conflict of Interest Committee
The Conflict of Interest Committee reports
directly to the Board of Commissioners
and reviews transactions to ensure proper
compliance with procedures and applicable
regulations. The Committee held three
formal meetings during 2007, in addition
to several routine informal meetings.
The committee is chaired by Suyitno
Patmosukismo, and the members comprise
Ari S. Hudaja, Imam P. Agustino and
Riri Harahap.
In addition to formal meetings, the
Committee continuously reviews and gives
recommendations whenever necessary
regarding the implementation of and
compliance with regulations.
The Company reports the total
remuneration paid to the Commissioners
and Directors in Note No. 1 of the financial
statements, and the extent of individual
shareholdings of Commissioners and
Directors is fully disclosed above.
Material Transaction
In compliance with Bapepam Rule No.
IX.E.2 regarding Material Transactions and
Changes of Core Business, the Company
ensures that any acquisition or disposal of
shares or assets transactions that are equal
or greater than 10% of revenue or 20% of
equity (shares subscription) are approved by
half plus one of the Companys shareholders
through an Extraordinary General Meeting
of Shareholders.
Kangean PSC share subscription

(Japex/Mitsubishi)
The plan for EMP Inc.s shares subscription
transaction is classified as a material
transaction as referred in the Bapepam
Rule No. IX.E.2, considering that the
transaction value is estimated to
exceed 10% of the Companys income
(Rp 1,646,538,248,288) and 20% of the
Companys equity (Rp 1,833,167,047,850) as
of December 31, 2006. The said transaction
was approved by shareholders at the
Companys Extraordinary General Meeting
of Shareholders on April 19, 2007.
Market disclosure practices
The Company is committed to giving all
shareholders comprehensive and equal
access to information about Company
activities and obligations to the broader
market, and primarily uses its
www.energi-mp.com as an information
delivery mechanism to shareholders,
investors and users.
45
The Corporate Secretary is responsible for

ensuring compliance with the continuous
disclosure requirements in the Listing
Rules, and overseeing and co-ordinating
information disclosure to the Indonesia
Stock Exchange, analysts, brokers,
shareholders, the media and the public.
Guidelines exist for staff and Directors to
ensure that unpublished information, which
may be price sensitive about the Company
or any other organization, is not used in an
illegal manner.
Transparency and Disclosure
Means of communication
The 2007 full year financial results of
the Company were published in Bisnis
Indonesia, Investor Daily Indonesia and
The Jakarta Post. All financial reports
were also published via the Companys
website www.energi-mp.com.
Periodic audited results are filed with the
Indonesia Stock Exchange. These details
are also published on the Companys
website. The Company makes use of
its website for publishing official news
releases and presentations made to
institutional investors and analysts.
The Company held one public expose in
2007, on December 14, 2007.
Distribution of shareholding as at December 31, 2007

Range of Shares Ownership
No. of Share Accounts
1 - 5,000 Shares
5,001 - 10,000
10,001 - 50,000
50,001 - 100,000
100,001 - 500,000
500,001 - 1,000,000
1,000,001 - 5,000,000
5,000,001 - 10,000,000
10,000,001 - 50,000,000
50,000,001 - 100,000,000
100,000,001 - 1,000,000,000
> 1,000,000,001
993
539
1,342
383
500
138
167
42
57
9
21
2
23.68
12.86
32.01
9.13
11.92
3.29
3.98
1.00
1.36
0.22
0.50
0.05
Total
4,193
100.00
46
share Inf ormat ion
Share Price
The Company is quoted on the Indonesia Stock Exchange, code: ENRG

Quarter 1
Quarter 2
Quarter 3
Quarter 4
2007
Highest Price

750

840

970

1,510
Lowest Price
510
590
710
840
2006
Highest Price
Lowest Price
910
850
870
830
590
550
700
710
Share Performance
Price (Rp)
Volume (x10,000)
1,600
64,000
1,400
56,000
1,200
48,000
1,000
800
600
40,000
EGM new BOD (Apr 19),
ENRG Rp 640
32,000
LBI Deconsolidation
(Sep 12), Rp 820
24,000
400
16,000
200
8,000
Volume (x10,000)
Price (Rp)
E n e r g i M e g a P e r s a d a - ANNUAL
Annual R
Rep
E P ORT
ort 2007
C orp orat e S t ruc t ure

Suci OCA*
100%
Energi Mega Persada
Pte Ltd. (Singapore)
0.00002%
49.99998%
Energi Mega Pratama Inc.
(B.V.I)
100%
EMP Exploration
(Kangean) Ltd. (UK)
WI - 40%
Kangean PSC
100%
Kangean Energy
Indonesia Ltd. (Delaware)
WI - 60%
100%
100%
RHI Corporation
(Delaware)
Kondur Petroleum S.A.

(Panama)
WI - 34.46%
Malacca Strait PSC
99.99%
PT Imbang Tata Alam
(Indonesia)
WI - 26.03%
100%
E MP
Malacca Brantas Finance

B.V. (Netherlands)
99.99%
PT Semberani Persada
Oil (Indonesia)
99.99%
PT Insani Mitrasani
Gelam (Indonesia)
99.99%
PT Tunas Harapan
Perkasa (Indonesia)
100%
Costa International Group Ltd.
(B.V.I.)
100%
Kalila (Bentu) Ltd.
(B.V.I.)
100%
Kalila (Korinci Baru) Ltd.
(B.V.I.)
WI - 100%
Semberah TAC
WI - 100%
Gelam TAC
WI - 50%
Gebang JOB PSC

(Pertamina)
WI - 100%
Bentu PSC
WI - 100%
Korinci Baru PSC
* Strategic Alliance with PT Indelberg Indonesia Perkasa

WI: Working Interest
47
48
Resp onsibili t y
f or f inancial rep or t ing
This Annual Report and the accompanying financial statements and related financial
information are the ressponsibility 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 bellow:
Board of Commissioners
Directors
Ari S. Hudaja
Christian V. Ponto
President Director
Qoyum Tjandranegara
Independent Commissioner
Yuli Soedargo
Director
Suyitno Patmosukismo
Commissioner
Imam P. Agustino
Director
Nalinkant A. Rathod
Commissioner
49
Glossary of Oil and Gas Terms and Units of Measurements
Defined Terms
BPMIGAS
BPHMIGAS
GCA
GSPA
HGSA
PGN
PJB
PKG
PLN
PROPER
TSB
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 Government-owned operating board
that is succeeding Pertaminas role as regulator of downstream oil and gas activities under the New
Oil and Gas Law.

Gaffney, Cline & Associates (Consultants) Pte Ltd, independent assessors of the Companys reserves.
Gas Sales and Purchase Agreement.

Heads of Gas Sales and Purchase Agreement.
PT Perusahaan Gas Negara (Persero) Tbk.

PT Pembangkitan Jawa Bali.

PT Petrokimia Gresik.

PT Perusahaan Listrik Negara (Persero).

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

Terang, Sirasun and Batur fields.
Oil and Gas Terms

1P or proved reserves
2P or proved plus
probable reserves
3P or proved, probable
& possible reserves
contingent resources
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.

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.

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 GSPA.
crude oil
A general term for unrefined petroleum or liquid petroleum.
development well
A well that is drilled to exploit the hydrocarbon accumulation defined by an appraisal or delineation well.
exploration well
or wild cat well
A well that is designed to test the validity of a seismic interpretation and to confirm the presence of
hydrocarbons in an undrilled formation.
gross production
Represents the sum of all oil and gas production from each of the Companys blocks but does not
take into account cost recovery or Government take.
gross reserves
Represents the sum of all oil and gas operated reserves not adjusted for the Government take
payable.
50
JOB
Joint Operating Body in reference to production sharing contracts.
lead
Preliminary interpretation of geological and geophysical information that may or may

not lead to prospects.
lifting cost or production cost
The cost incurred to operate and maintain wells and related equipment and facilities
for a given period.
net production
Represents the Companys share of gross production.
net reserves
petroleum
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.
PSC
Production Sharing Contract.
TAC
Technical Assistance Contract.
THP
Consisted of Costa International Group Limited, Kalila (Korinci Baru) Limited, Kalila
(Bentu) Limited, PT Semberani Persada Oil dan PT Insani Mitrasani Gelam.
Units of Measurement
bbl
bbl/d
bboe
bbtu
bcf
boe
bopd
btu
mbbl/d
mboe/d
mbopd
mbtu
mcf
mmbbl
mmbbl/d
mmboe
mmbtu
mmbtud
mmcf
mmcf/d
mmscfd
tcf
barrels.

barrels per day.

billion of barrels of oil equivalent.

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

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

thousand barrels per day.

thousand barrels of oil equivalent per day.
thousand barrels oil per day.

thousand btu.

thousand cubic feet.

million barrels.
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.
F inancial Rep or t
PT Energi Mega Persada Tbk and Subsidiaries
Consolidated Financial Statements
for the Year Ended 31 December 2007 and 2006
and Report of Independent Auditors
51
52
C ont e nt s
Directors Statement Letter
Report of Independent Auditors
Financial Statements
Consolidated Balance Sheet 1
Consolidated Statement of Income 4
Consolidated Statement of Changes in Equity 5
Consolidated Statement of Cash Flows 7
Notes to Consolidated Financial Statements 9
Supplementary Information (Unaudited) 59
tt L\LRlill :0 | t,uttt01 th\,
DIRtrCTORS' STATEM'NT Lf, TTf, R

FINANCIALSTATf,MENIS
THE ROSPONSIRILITY
ON THE CONSOLIDATtrD
DtrC0MAIR31,100?AND 2006
TBK AND SUBSIDIARIf,S
PT ONERCIMtrCA PtrRSADA
ln odef ro fulfill Bipepan\ ReguLalion
sripularedin rhe Enclorrc of Bal)spaFDecisio' unds Numbef
,2003,.oicemiisRcgrl ionNumbervnlC.ll:R6poisibilitvor
DiEctorsuroi Finan.ill Rcpon.ee, rheudeEieled:
wbna MuliaLi 12,Jl. rcidcmlCaro
Domicilc6 $and in lD cald
J1.DurenTigaScl anvII,RT.003,Rw.02,
Kelumlm DuEn Tigr, KecamahnPmcoru
Kav.42,
Wism MuliaLt. l2, Jl. lendenlCarorSubmro
Domicile
asi.Ed in lD Ca'd
Kcl,
TamanKebonleruklxl/16R.T.001/R.w.021
srenlseng,Kec.Kcmbagm, JdkatuBadr
L we m Esposible lor lhe prcpamrionmd presnrarionol rhccoisolidad nrancial sotmcnbi

2. nie cotrolidrbd financial sctenc s hrve beenpFpaied afd pEsmtd in e.odarce wirh
geneallyacceFed,c.ounringp nciplesin lndond'ri
friscirl iaremen$ k conpleteandconecli
L a. Allinfomolion conhinedin theconsolidared
b Th. onslidatd linanci.l naremcis do noi co.hin dnbadins matnal inlomrion or ftdq
md do not omil nat il inromrrion md t:c6.
conblsynem
inremal
4. wc ar ponsibh forlneCodpoy a|d Subsidiaries
Th s sDrcm(iilcnsEm:deruihfullJ.
WsmaLla
u.ir3dFoorJ
2 i r 0 . i d o n e s aT 1 6 2 2 1 1 5 2 9 0 6 2 5 0 F \ 6 2 . 2 1 ) 5 2 9 n 6 2
JimmyBudhi& Rekan
Reloft
of Indpndent auditois
Relot
No. 035/2003
The stockholdels
and Boards of comissioneis
PT Energi M6ga P!3aala rbk
and Directore
we lawe audited
the accompanyins
as of
and subsidiaries
FT Eneryi r1e9a Fersada rbk (the "conpmy")
and Lhe relaced
December 31,
eqnity,
and consotidaied
in consoLidaled
cash fLotrs fo!
lhe years then
the responsibitity
of lhe conlany's
on the consolidaLed financial
an olinion
the financial
on our andits.
l{e dtd not audit
assets
ald revenues
sulsidiary,
whose
December
11, 2006of
of rhe consolidated
that
subsidialy
The finarciat
have been rurnished
tndependent auditors
to amouts included
opinion,
insofar
independent audit.rs
is based o1eLy
in
accordance
wtth
auditins
we conducted
our
audtls
rnBtitute
of
established
by
rhe
Indoneeiar
Those stanitards requirc that ,e pLan and perrorn
assulance abouL
standards
the audit
eviderc
supporting
lhe
les!
basi3,
incrudes a3se33inq
financiar
statenents.
principLes
estimates mde by mrasemenL, as te]l
used ald lisnificmt
rle believe
rinar.ial
s.arenenL presenLatior'
as eaaluatlng lhe overalr
''asonsbre b"s
Praxitv-l
JimmyBudhi& Rekan
ln our oplnlon
based on ou!
Ls - d ""udr
independenr audirors, rhe consottdared financial statenents referred to
posirion
rirancial
2
200? and 005, and lxe consolidared
then erded in confolnily
princlples generally accepced i! Indonesia.
As explained in Note 3, the finalcial
rilh
accounltng
statements
rcfe no lonqe!
consolidated f inancial slalenenls 0f
consolidared financial
change of the
i! Lhe sunsidiary's
sta!emenrs
consolidation
nelhod and effecL
Nore 3r(b), rhe

colpoiatior
Lld.
(Mc)
(.rapex)
'orkirg
inreresc
in Kangean Fsc
s0* dihLion
of Lhe company's irwestment in
conpany consolidated
dihtion,
comnencing from ,taluary
to its dilured share
i$!ed
Fublic
the
AccounlanEs
PraxitY.,
PT ENERGI MEGA PERSADA Tbk AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
(Figures in Rupiah expressed in thousands, unless otherwise stated)
ASSETS
Notes
CURRENT ASSETS
Cash and cash equivalents
Restricted cash in bank
Short-term investment
Trade receivables
Other receivables
Inventories
Prepaid expenses and advances
2d,4
2d,5
2e,6
2f,7
2f,8
2g,9
2h,10
2007 *)
2006
(As restated see Note 3)
455,088,071
51,642,013
723,155,499
192,236,669
547,683,300
377,908,336
57,989,476
620,896,485
290,541,194
396,092,010
519,870,192
86,239,213
2,405,703,364
1,913,639,094
2j,11a
2k,12,17,18
1,190,308,248
548,239,536
946,672,828
126,846,622
2l
2m,13
32a,35
2s,27d
6,650,134
4,539,866,699
110,094,616
490,901,465
6,502,331
5,220,828,764
85,644,827
261,224,169
86,430,351
198,842,996
13,641,182
Total Non-Current Assets
6,972,491,049
6,860,203,719
TOTAL ASSETS
9,378,194,413
8,773,842,813
Total Current Assets

NON-CURRENT ASSETS
Due from related parties
Restricted time deposits
Fixed assets - net of accumulated
depreciation of Rp 9,979,054
in 2007 and Rp 6,362,487 in 2006
Oil and gas properties - net
Site restoration fund
Deferred tax assets
Reimbursement of Subsidiarys
dividend tax
Other assets
*)
18
In 2007 total assets, liabilities and equity are presented as percentage of ownership in EMP Inc., a Subsidiary, by
applying the proportionate consolidation method (see Note 22).
The accompanying Notes to Consolidated Financial Statements are an integral part of the consolidated financial statements.

LIABILITIES AND EQUITY
Notes
CURRENT LIABILITIES
Trade payables
Other payables
Accrued expenses
Taxes payable
Current maturities of long-term loans
14
15
16
2s,27a
17
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
17
2j,11b
2s,27d
2r,29
32a,35
18
Total Non-current Liabilities

MINORITY INTEREST IN
NET ASSETS OF SUBSIDIARIES
2b
2006
2007 *)
307,041,608
111,675,134
567,762,546
132,598,825
2,569,371,593
460,232,217
89,910,785
386,164,115
94,110,211
766,294
3,688,449,706
1,031,183,622
1,310,938,142
61,363,392
420,522,106
35,844,168
138,178,874
370,647,819
4,941,733,089
221,022,494
350,138,771
32,501,528
103,684,827
198,842,992
2,337,494,501
5,847,923,701
11,360
11,242

Notes
EQUITY
Capital stock - Rp 100 par value
per share
Authorized - 55,000,000,000 shares
Issued and paid-in capital 14,400,813,372 shares
Additional paid-in capital
Difference in value from restructuring
transaction of entities under
common control
Difference due to change of equity
in Subsidiary
Translation adjustments
Deficit
2007 *)
2006
19
20
1,440,081,337
3,354,749,228
1,440,081,337
3,354,749,228
2c,21
(2,634,645,040 )
(2,625,400,967 )
2i,22
2v
1,262,994,439
27,286,613
(98,227,731 )
(82,072,126 )
(192,633,224 )
Total Equity
3,352,238,846
1,894,724,248
TOTAL LIABILITIES AND

EQUITY
9,378,194,413
8,773,842,813
*)
In 2007 total assets, liabilities and equity are presented as percentage of ownership in EMP Inc., a Subsidiary, by

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
Notes
NET SALES
2q,23
COST OF GOODS SOLD
2q,24
342,332,879
528,909,899
(219,337,330 )
(222,494,671 )
122,995,549
306,415,228
2v
26a
46,010,884
16,628,832
9,153,712
(318,486,261 )
17,578,003
21,995,157
(17,439,774 )
(252,287,653 )
2n,3
2q,26b
26c
71,904,791
(430,645,750 )
56,438,666
14,190,615
(174,788,042 )
(590,170,736 )
(51,792,493 )
(283,755,508 )
(44,483,763 )
211,914,018
(39,050,544 )
59,409,668
167,430,255
20,359,124
2q,25
Other Charges - Net

LOSS BEFORE TAX
TAX BENEFIT (EXPENSE)
Current
Deferred
Total
1,459,460,289
(930,550,390 )
INCOME FROM OPERATIONS

OTHER INCOME (CHARGES)
Interest income
Overhead cost recovery
Gain (loss) on foreign exchange - net
Financing charges
Loss on impairment of investment
value
Gain on insurance claim
Others - net
1,137,542,666
(795,209,787 )
GROSS PROFIT
OPERATING EXPENSES
General and administrative
2007 *)
2006
2s,27b,27d

CONSOLIDATED STATEMENTS OF INCOME
Notes
INCOME (LOSS) BEFORE
MINORITY INTEREST IN NET
INCOME OF SUBSIDIARIES
MINORITY INTEREST IN NET
INCOME OF SUBSIDIARIES
*)
2007 *)
115,637,762
2b
NET INCOME (LOSS)

BASIC EARNINGS (LOSS)
PER SHARE
(in full amount)
2006
2t,28
(263,396,384 )
-
115,637,762
(263,396,384 )
8.03
(18.71 )
In 2007, total net income is presented as percentage of ownership in EMP Inc., a Subsidiary, by applying the
proportionate consolidation method (see Note 22).

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Notes
Balance as of January 1, 2006
Right Issue I
Elimination of Subsidiaries' equity
from restructuring transactions
of entities under common control
Difference in value from
restructuring transactions of
entities under common control
Net loss for the year
Balance as of December 31, 2007 *)
*)
Additional
Paid-in Capital
Difference in
Value from
Restructuring
Transactions of
Entities Under
Common Control
154,476,142
-
Difference Due to
Changes of Equity
in Subsidiary
Total Equity
949,144,518
490,936,819
158,420,946
3,196,328,282
2c
2c,21
2v
(2,434,811,251 )
-
(116,572,372 )
-
(263,396,384 )
(2,434,811,251 )
(116,572,372 )
(263,396,384 )
1,440,081,337
3,354,749,228
(2,625,400,967 )
(82,072,126 )
(192,633,224 )
1,894,724,248
1,440,081,337
3,354,749,228
(2,625,400,967 )
(82,072,126 )
(192,633,224 )
1,894,724,248
2s,27d
2c,21
2i,22
2v
1,440,081,337
3,354,749,228
(154,476,142 )
(190,589,716 )
-
Retained
Earnings
(Deficit)
Translation
Adjustments
1b
Balance as of December 31, 2006

(As restated - see Note 3)
Deferred tax adjustment
on dividend received
Difference in value from
restructuring transactions of
entities under common control
Difference due to change of equity
in Subsidiary
Net income for the year
Capital
Stock
Equity Proforma
from
Restructuring
Transactions of
Entities Under
Common Control
(9,244,073 )
(2,634,645,040 )
34,500,246
-
70,763,160
-
(21,232,269 )
1,176,715,296
3,687,265,101
(154,476,142 )
(21,232,269 )
1,262,994,439
-
109,358,739
-
115,637,762
1,262,994,439
109,358,739
115,637,762
1,262,994,439
27,286,613
(98,227,731 )
3,352,238,846
(9,244,073 )
In 2007, total equity is presented as percentage of ownership in EMP Inc., a Subsidiary, by applying the proportionate consolidation method (see Note 22).

CONSOLIDATED STATEMENTS OF CASH FLOWS
2007 *)
NET CASH FLOWS FROM
OPERATING ACTIVITIES
Cash receipts from customers
Cash paid to suppliers and employees
Cash provided from operations
Financing charges paid
Corporate income and dividend tax paid
Net Cash Flows Provided by (Used in)
Operating Activities
NET CASH FLOWS FROM
INVESTING ACTIVITIES
Interest received
Proceeds from reimbursement of
Subsidiarys dividend tax
Proceeds from insurance claim
Acquisition of Subsidiaries
Acquisition of fixed assets
Acquisition of oil and gas properties
Decrease (increase) in other assets
Net Cash Flows Used in Investing Activities
NET CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issuance of capital stock of
Subsidiary - net
Proceeds from issuance of capital stock of
the Company
Payment of stock issuance costs
Proceeds (payments) of long-term loan - net
Decrease (increase) of restricted time deposits
Payment of loan of acquired Subsidiaries
Movement of due from/to related parties - net
Net Cash Flows Provided by (Used in)
Financing Activities
2006
1,250,853,519
(694,776,352 )
1,426,543,274
(937,892,621 )
556,077,167
(459,899,404 )
(45,639,965 )
488,650,653
(576,018,389 )
(41,223,977 )
50,537,798
(128,591,713 )
46,010,884
17,578,003
370,647,822
(51,642,013 )
(723,155,499 )
(2,612,258 )
(833,396,589 )
(72,789,168 )
56,438,666
(2,599,869,500 )
(1,612,127 )
(1,785,804,942 )
5,076,210
(1,266,936,821 )
(4,308,193,690 )
1,262,994,439
(1,171,016,898 )
(421,392,913 )
(407,440,076 )
(736,855,448 )
3,780,213,508
(92,948,408 )
1,850,530,574
74,068,603
(348,203,384 )
(378,924,735 )
4,884,736,158

CONSOLIDATED STATEMENTS OF CASH FLOWS
2007 *)
2006
NET INCREASE (DECREASE) IN

CASH AND CASH EQUIVALENTS
(1,953,254,471 )
447,950,755

AT BEGINNING OF YEAR
620,896,485
304,986,078
Effect of dilution of percentage of ownership

in Subsidiary
Effect of foreign exchange rate changes
AT END OF YEAR
*)
1,695,921,815
91,524,242
455,088,071
(132,040,348 )
620,896,485
In 2007, total cash and cash equivalents is presented as percentage of ownership in EMP Inc., a Subsidiary, by

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
a.
Establishment and General Information

PT Energi Mega Persada Tbk (the Company) was established based on notarial deed No. 16 dated
October 16, 2001 of H. Rakhmat Syamsul Rizal, S.H., Notary in Jakarta. The deed of establishment
was approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his
decision letter No. C-14507.HT.01.01.TH.2001 dated November 29, 2001 and published in State
Gazette No. 31, Supplement No. 3684 dated April 16, 2002. The Companys Articles of Association
have been amended several times, the most recent being based on Notarial Deed No. 48, dated
April 20, 2007 of Humberg Lie, S.H., S.E., MKn., notary in Tangerang concerning the change of the
Companys Articles of Association articles 21 (3). The Amendment has been received by the Ministry
of Law and Human Rights of the Republic of Indonesia in their Letter No. W29.HT.01.04-583 dated
April 23, 2007.
In accordance with Article 3 of the Companys Articles of Association, the scope of its activities
comprises of, among others: trading, services and mining, and providing management services in the
oil and gas industry.
The 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 its activities are
located in Kangean Island, East Java Province, Riau, Jambi, North Sumatra, and East Kalimantan
Provinces.
The Company commenced its commercial operations in February 2003.
b. Public Offering of Shares of the Company

The Company obtained the effective notice of its initial public offering from the Chairman of the
Capital Market Supervisory Agency (Bapepam) in his letter No. S.1480/PM/2004 dated May 26,
2004. On June 7, 2004, the shares were listed on the Jakarta Stock Exchange (currently the Indonesia
Stock Exchange).
Based on Extraordinary General Meeting of Shareholders (EGMS) dated December 22, 2005, the
Company obtained the Effectivity Notice of its Rights Issue I to the public with the Exercise Rights
(ER) of 4,909,368,195 shares with nominal value Rp 100 (full amount) per share, which were offered
at Rp 770 (full amount) per share totaling Rp 3,780,213,510,150 (full amount). On January 25, 2006,
the Company listed the shares of Right Issue I on the Jakarta Stock Exchange (currently the
Indonesia Stock Exchange).
c.
Structure of the Company and its Subsidiaries

The Company has ownership interest of 50% or more, directly and indirectly, in the following
Subsidiaries:
Percentage of
Ownership
(%)
Total Assets
(in million Rp)
Subsidiaries
Domicile
2007
2006
Year of
Commercial
Operation
RHI Corporation (RHI)

Kondur Petroleum S.A.
(KPSA) *)
PT Imbang Tata Alam (ITA)
(EMP Inc.)
Delaware, USA
100
100
1984
1,543,445
1,376,656
100
99.99
100
99.99
1995
2001
1,543,445
831,706
1,367,847
719,422
50
100
2003
6,357,814
4,386,352
Panama
Indonesia
British Virgin
Islands
2007
2006

1. GENERAL (Continued)
Percentage of
Ownership
(%)
Subsidiaries
EMP Exploration
(Kangean) Ltd.
(EEKL) *)
Kangean Energy
Indonesia Ltd.
(KEIL) (formerly
EMP Kangean Ltd.) *)
Kalila Energy Ltd (KEL)
Lapindo Brantas, Inc
(LBI) *)
Pan Asia Enterprise Ltd
(PAN)
Malacca Brantas Finance, B.V.
(MBF)
Energi Mega Persada
Finance B.V.
(EMP Finance)
PT Tunas Harapan Perkasa
(THP)
PT Semberani Persada Oil
(Semco) *)
PT Insani Mitrasani Gelam
(IMG) *)
Costa International Group
Ltd (Costa) *)
Kalila (Bentu) Ltd
(Bentu) *)
Kalila (Korinci Baru) Ltd
(Korinci Baru) *)
Energy Mega
Persada Pte., Ltd.
(EMP PL)
Tunas Harapan
Perkasa Pte., Ltd.
(THPPL)
Enviroco Company Ltd.
(ECL)
Total Assets
(in million Rp)
Domicile
2007
2006
Year of
Commercial
Operation
2006
England
100
100
1987
2,057,703
1,427,792
Delaware, USA
Hong Kong
100
99.99
100
99.99
1987
1997
3,086,465
751,552
2,173,407
925,839
Delaware, USA
100
100
1999
709,324
861,315
Hong Kong
99.99
99.99
1997
31,605
Netherlands
100
100
2005
1,141,072
1,091,642
Netherlands
100
100
225
211
Indonesia
99.99
99.99
2005
2,051,715
1,765,316
Indonesia
99.99
99.99
1996
1,208,711
1,327,325
Indonesia
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
99.99
99.99
2004
462,271
361,121
100
100
2002
255,078
210,126
100
100
438,709
294,169
100
100
2007
313,061
243,326
Singapore
100
47
Singapore
100
47
46
Sychelles
100
2007
723,155
2007
*) Indirect ownership interest through Subsidiaries
Based on the Corporate Management Agreement dated July 1, 2007 between the Company and
Minarak Labuan Co. (L) Ltd. (MLC), the Company transferred the control over the management of
Kalila Energy Ltd. (KEL), Pan Asia Enterprise Ltd. (PAN) and Lapindo Brantas Inc. (LBI) to MLC
starting July 1, 2007. In accordance with the transfer of control over KEL, PAN and LBI, the
financial statements of KEL, PAN and LBI were no longer consolidated in the Companys
consolidated financial statements starting July 1, 2007 (see Note 3).
The Company established wholly-owned subsidiaries, Energy Mega Persada Pte. Ltd. (EMPPL) in
Singapore and Enviroco Company Ltd. (ECL) in Sychelles on October 19, 2006 and July 17, 2007,
respectively. All shares of EMPPL and ECL are owned by the Company.
The Companys EGMS dated March 14, 2008 agreed with respect to the conversion of MLC
receivables to KEL and PAN in stockholders to shares ownership in KEL and PAN by way of
issuance of new shares in KEL and PAN. After the conversion, the Companys ownership interest in
KEL and PAN will be diluted from 99.99% and 99.99% into 0.0117783% and 0,00099989%
respectively (see Note 38).
10

All the Subsidiaries of the Company, except MBF, EMP Finance, THPPL, EMP PL and ECL are
holders of working interest of the following oil and gas production blocks directly or indirectly
through Production Sharing Contracts (PSC) with Badan Pelaksana Kegiatan Usaha Hulu Minyak dan
Gas Bumi (BPMIGAS) or Technical Assistance Contract (TAC) with PT Pertamina (Persero)
(Pertamina) as follows:
Quantity of Production
Name of Location
Malacca Strait
Block
Kangean Block
Sungai Gelam
Block
Semberah Block
Gebang Block
Korinci Baru
Block
Bentu Block
Acquisition
Date of
Exploration
Blocks Owner
Due
Date
Quantity
Percentage of Proven
of Ownership Reserve
Current
Year
Total Accumulated
Production
Ending
Proven
Reserve
Kondur Petroleum S.A

August 5, 2000
August 4, 2020
Kangean Energy Inconesia
(formerly EMP Kangean
Ltd)
November 14, 1980 November, 13, 2030
60.49%
244,149
3,069
216,100
28,049
50.00%
327,818
2,922
195,533
132,285
PT Insani Mitra Gelam

PT Semberani Persada Oil
Costa International
Group Ltd
Kalila (Korinci Baru)
Ltd
Kalila (Bentu) Ltd
May 15, 1997

May 14, 2017
November 17, 1995 November 16, 2015
100.00%
100.00%
1,447
7,067
117
647
700
1,333
747
5,734
November 29, 1985 November 28, 2015
50.00%
16,233
121
16,233
May 15, 1997

May 20, 1991
100.00%
100.00%
2,654
23,602
357
-
350
-
2,304
23,602
May 14, 2027

Mei 19, 2021
On May 31, 2007, the Company signed the Conditional Sales and Purchase Agreement of acquisition
of 75% interest in shares of PT Indelberg Indonesia Perkasa (IIP). IIP has an Operations
Cooperation Agreement with PT Pertamina EP to operate the Suci operating area for a period of
20 years from April 25, 2007 (see Note 37a).
d. Boards of Commissioners, Directors and Audit Committee
As of December 31, 2007 and 2006, the members of the Companys boards of Commissioners and
Directors were as follows:
2007
2006
Commissioners
Commissioner
Commissioner
:
:
:
:
Ari Saptari Hudaya

A. Qoyum Tjandranegara
Rennier Abdul Rachman Latief
Directors
President Director
Director
Director
Director
Director
:
:
:
:
:
Christian Victor Ponto

Yuli Soedargo
Imam Pria Agustino
-
Christopher Basil Newton

Yuli Soedargo
Faiz Shahab
Norman Hafiz Harahap
Thomas Leo Soulsby
The composition of the Board of Commissioners as of December 31, 2007 was based on the decision
of the EGMS on May 11, 2007, as stated in the Minutes of EGMS Deed No. 37 dated May 11, 2007
of Robert Purba, S.H., Notary in Jakarta.
The composition of the Board of Directors as of December 31, 2007 was based on the decision of
the EGMS on April 19, 2007, as stated in the Minutes of EGMS Deed No. 48 dated April 20, 2007 of
Humberg Lie, S.H., S.E., MKn., Notary in Tangerang.
11

The composition of the Board of Commissioners and Directors as of December 31, 2006 was based
on the decision of the EGMS on December 22, 2005, as stated in the Minutes of EGMS Deed
No. 46 on December 23, 2005 of Robert Purba, S.H., Notary in Jakarta.
The compositions of the audit committee as of December 31, 2007 and 2006 based on the Minutes
of Meeting of the Board of Commissioners dated October 11, 2005 were as follows:
Chairman
Members
: A. Qoyum Tjandranegara
: Drs. Hertanto
: Toha Abidin
Total remuneration paid to the Commissioners and Directors of the Company for the years ended
December 31, 2007 and 2006 amounted to Rp 20.30 billion and Rp 25.30 billion, respectively.
As of December 31, 2007 and 2006, the Company and its Subsidiaries had approximately 626 and
501 employees, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in Indonesia (Indonesian GAAP), Regulation of Capital Market and
Financial Institution Supervisory Board (Bapepam-LK) and Financial Statements Presentation Guidelines
issued by Indonesia Stock Exchange (formerly Jakarta Stock Exchange). Significant accounting policies
applied consistently by the Company are as follows:
a.
Basis of Consolidated Financial Statements

The consolidated financial statements, except for the consolidated statements of cash flows, are
prepared under the accrual basis of accounting, with the measurement basis being historical cost,
except for certain accounts that are measured on the basis described in the related accounting
policies.
The reporting currency used in the preparation of the consolidated financial statements is Indonesian
Rupiah (Rp).
The consolidated statements of cash flows are prepared using the direct method, cash flows being
classified into operating, investing and financing activities.
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.
Under Statement of Financial Accounting Standards (PSAK) No. 4, Consolidated Financial

Statement, control is presumed to exist when the parent enterprise owns, directly or indirectly
through subsidiaries, more than 50% or less of the voting rights of an enterprise.
12

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Control is still presumed to exist if:
(1) Having more than 50% of the voting rights by virtue of an agreement with other investors;
(2) Having the right to govern the financial and operating policies of the enterprise under the articles
of association or an agreement;
(3) Ability to appoint or remove the majority of the members of the management; and
(4) Ability to control the majority of votes of meetings of management.
A subsidiary is excluded from consolidation when:
(1) A control is intended to be temporary because the subsidiary is acquired and held exclusively with
a view to its subsequent disposal in the near future; and
(2) It operates under long-term restrictions that significantly impair its ability to transfer funds to the
parent enterprise.
The financial statements of Subsidiaries are consolidated commencing from the date on which
control is acquired and cease to be consolidated from the date on which control is transferred out of
the Company. The results of acquired or disposed of Subsidiaries during the year are included in the
consolidated statements of income from the effective date of acquisition or up to the effective date of
disposal, as appropriate.
The financial statements of Subsidiaries that are involved in joint operations with other venturers
under a contractual arrangement are consolidated by using the proportionate consolidation method
from the commencement date of joint operations in accordance with PSAK No. 12, Financial
Reporting of Interest in Jointly Controlled Operation and Assets. The contractual arrangement may
identify one venturer as the operator or the manager of the joint venture. The operator does not
control the joint venture, but acts within the financial and operating policies that have been agreed by
the venturers in accordance with the contractual arrangement.
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.
c.
Business Acquisitions
Acquisitions are accounted for using the purchase method in accordance with the requirements of
PSAK No. 22, Business Combination. On acquisition date, the assets and liabilities of a Subsidiary
are measured at their fair values. Any excess of the cost of acquisition over the fair values of the
identifiable net assets acquired is recognized as goodwill. Goodwill from the acquisition of oil and gas
properties is recorded in the oil and gas properties and amortized using the unit of production
method during the years of PSC or TAC.
13


When the cost of acquisition is less than the interest in the fair values of the identifiable assets and
liabilities acquired as at the date of acquisition (i.e. discount on acquisition), fair values of the acquired
non-monetary assets are reduced proportionately until all the excess is eliminated. The remaining
excess after reducing the fair values of non-monetary assets acquired is recognized as negative
goodwill, treated as deferred revenue and recognized as revenue on a straight-line method over
twenty (20) years.
Acquisitions of Subsidiaries that represent a restructuring transaction of entities under common
control are accounted for in accordance with PSAK No. 38 (Revised 2004), Accounting for
Restructuring Transactions of Business Under Common Control. Based on this standard, acquisition
of a subsidiary is accounted based on the pooling of interest, wherein assets and liabilities of a
subsidiary are recorded at their book values. The difference between the transfer price and the
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. 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.
Long-term investments are usually carried at cost. However, when there is a decline in value of
a long-term investment, other than temporarily, the carrying amount is reduced to recognize the
decline. Indicators of the value of an investment may be obtained by reference to its market value, the
investees assets and results and the expected cash flows from investment.
In applying the pooling of interest method, the components of the financial statements of the
restructured company for the period, during which the restructuring occurred and for other periods
presented for comparison purposes, must be presented in such a manner as if the companies were
combined from the beginning of the period presented.
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.
Cash in bank that is not freely available to the Company in relation to the accrued production payable
is presented as Restricted Cash in Bank classified under current asset.
e.
Short-Term Investment
Time deposits and placements with maturities of more than three months that are realizable within
one year from balance sheet date are presented as short-term investment and are stated at their
nominal value.
14


f.
Receivables
Receivables are stated at face value less allowance for doubtful accounts. The level of this allowance is
based on managements evaluation of collection experience and other factors that may affect
collectibility.
Allowance for doubtful accounts is provided based on a review of the status of the individual
receivable accounts at the end of the period.
g. Inventories
Inventories of spare-parts, chemicals and fuel are classified into capital and non-capital inventories.
Capital inventories represent spare-parts, chemicals, and fuel that are consumed or used as
components of construction or capitalized as assets.
Non-capital inventories represent inventories being consumed for the purpose of repair and
maintenance of assets or used for operations. The costs of the consumed inventories are charged
when used.
Inventory purchased under the terms of the PSC and TAC becomes the property of BPMIGAS or
Pertamina when landed in Indonesia.
Inventories of spare-parts, chemicals and fuel are valued at the lower of cost or net realizable value.
Cost is determined using the weighted average method. Provision for obsolete and/or slow-moving
inventories is provided based on review of the condition of the inventories at the end of the period.
h. Prepaid Expenses
Prepaid expenses are amortized over the period benefited using the straight-line method.
i.
Investment - Change of Equity in Subsidiary

Change in the value of investment due to changes in the equity of a Subsidiary arising from capital
transactions of such Subsidiary with other parties are recognized in equity as Difference Due to
Change of Equity in Subsidiary, and recognized as income or expense in the period the investments
are disposed of under PSAK No. 40, Accounting For A Change In The Value Of Equity Of
A Subsidiary/Associate Company.
j.
Transactions with Related Parties

The Company and its Subsidiaries have transactions with certain parties, which are related to them. In
accordance with the PSAK No. 7, Related Party Disclosures, related parties are defined as follows:
(1) Enterprises that, through one or more intermediaries, control, or are controlled by, or are under
common control with, the reporting enterprise (including holding companies, subsidiaries and
fellow subsidiaries);
(2) Associated companies;
15


(3) Individuals owning, directly or indirectly, an interest in the voting power of the Company that
gives them significant influence over the enterprise, and close members of the family of any such
individual (close members of a family are defined as those members who are able to exercise
influence or can be influenced by such individuals, in conjunction with their transactions with the
Company);
(4) Key management personnel, that is, those persons having authority and responsibility for
planning, directing and controlling the activities of the Company, including commissioners,
directors and managers of the enterprise and close members of the families of such individuals;
and,
(5) Enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by
any person described in (3) or (4) or over which such a person is able to exercise significant
influence. This definition includes enterprises owned by the commissioners, directors or major
stockholders of the Company and enterprises that have a member of key management in
common with the Company.
All significant transactions with related parties are disclosed in the notes to the consolidated financial
statements.
k. Restricted Time Deposits
Time deposits that are restricted in use are presented under non-current assets.
l.
Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and any impairment in value.
Depreciation is computed using the straight-line method based on the estimated useful life of the
asset as follows:
Years
Machinery and equipment
Transportation and office equipment
4
4
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.
m. Oil and Gas Properties
The Company and its Subsidiaries adopted the full cost method of accounting in recording oil and
gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil
and gas reserves, including directly related overhead costs, are capitalized. All costs arising from
production activities are recorded at the time they are incurred.
16


Under the full cost method, a Cost Center is used to pool costs to be later matched with revenues
generated from the cost centers operations. The Company considers a country as a single cost center
in accordance with PSAK No. 29, Accounting for Oil and Gas Industry, and, therefore, cost
centers are established on a country-by-country basis.
The capitalized costs are subject to a ceiling test, which basically limits such costs to the aggregate
of (1) the estimated present value, discounted at a 10% interest rate of future net revenues from
estimated future production 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 depreciated and amortized. Any
excess over the cost is charged to expense and disclosed during the period.
All capitalized costs relating to oil and gas properties, including the estimated future costs of
developing proven reserves, are depreciated and amortized using the unit-of-production method
based on the total estimated proven reserves. Investments in unproven properties and major
development projects are not depreciated and amortized until proven reserves associated with the
projects can be determined or until indication impairment occurs.
The Company and its Subsidiaries have no ownership interest in the producing assets nor in the oil
and gas reserves, but rather have the right to operate the assets and receive a share of production
and/or revenues from the sale of oil and gas in accordance with the PSC and TAC agreements.
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
statements of income.
n. Impairment of Assets Value
In compliance with PSAK No. 48, Impairment of Asset Values, asset values are reviewed for any
impairment and possible write-down to fair values whenever events on changes in circumstances
indicate that their carrying values may not be fully recovered. Whenever the carrying amount of an
asset exceeds its recoverable amount, an impairment loss is recognized in the statement of income of
the current period.
o. Capitalization of Borrowing Cost and Foreign Exchange Losses
In compliance with PSAK No. 26 (Revised 1997), Borrowing Costs, 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.
p. Shares Issuance Costs
Based on Bapepams Decision Letter dated March 13, 2000 No. KEP-06/PM/2000, all cost incurred
in relation to Initial Public Offering and Rights Issue are presented as part of equity.
17


q. Revenue and Expense Recognition
Revenue from crude oil and/or gas is recognized on the basis of the entitys interest in a producing
field (entitlements method) when the crude oil and/or gas are delivered and title has passed to
customer. Revenue earned under a PSC and TAC is recognized on a net entitlements basis according
to the terms of the PSC and TAC. Expenses are recognized when the benefit incurred in the same
period (accrual basis). Claim from insurance will be recognized as income upon collection.
r.
Employee Benefits
Liabilities relating to employee benefits covering retirement benefits, short-term (e.g. paid annual
leave, paid sick leave) and other long-term benefits (e.g. long-service leave, post-employement
medical benefits) are computed based on the provision stated in PSAK No. 24 (Revised 2004),
Employee Benefits.
The Company and its Subsidiaries provide defined post-employment benefits for their employees
pursuant to the terms of the Employment Work Contract/Company Policy. Subsidiaries, 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 period.
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 10% 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 plan assets.
s.
Income Tax
The Company and its Subsidiaries determine their income taxes in accordance with PSAK No. 46,
Accounting for Income Tax.
Current tax expense of the Company is determined based on the taxable income for the period
computed using prevailing tax rates in Indonesia. Current tax expense of Subsidiaries that are
domiciled and registered as tax subjects in other countries is determined based on the taxable income
for the 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 and TAC is determined based on the taxable income in the related period using the
prevailing tax rates as stated in the PSC and TAC.
18


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 period against which the deductible temporary
differences can be utilized.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is charged or credited in the statement of income, except when it
relates to items charged or credited directly to equity in which case the deferred tax is also charged or
credited directly to equity.
Deferred tax assets and liabilities are offset in the balance sheet, except if these are for different legal
entities, in the same manner as the current tax assets and liabilities are presented.
Amendments to taxation obligations are recorded when an assessment is received or if appealed
against, when the results of the appeal are determined.
t.
Earnings per Share

In accordance with PSAK No. 56, Earnings per Share. basic earning per share is computed by
dividing net income by the weighted average number of shares outstanding during the period.
Diluted earnings per share is computed by dividing net income by the weighted average number of
shares outstanding as adjusted for the effects of all potential dilution.
u. 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 (individual services or a group of products or services), which are subject to risks
and returns that are different from those of other business segments.
A geographical segment is a distinguishable component of an enterprise that is engaged in providing
products or services within a particular economic environment, which are subject to risks and returns
that are different from those of components operating in other economic environments.
Assets and liabilities that relate jointly to one or more segments are allocated to their respective
segments, if and only if, their related revenues and expenses are also allocated to those segments and
the relative autonomy of those segments.
19


v. 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 exchange rates prevailing at that date. The resulting gains or
losses are credited or charged to current operations.
The books of accounts of the Subsidiaries are maintained in United States Dollar. For consolidation
purposes, assets and liabilities of the Subsidiaries at balance sheet date are translated into Rupiah
using the exchange rates at balance sheet date, while revenue and expenses are translated at the
average exchange rates for the period. Resulting translation adjustments are shown as part of Equity
as Translation Adjustments.
Middle rates of Bank Indonesia prevailing on December 31, 2007 and 2006 were as follows:
2007
(full amount)
Currency
USD
Euro
9,419
13,760
2006
(full amount)
9,020
11,858
w. Provisions and Contingencies

Provision is recognized only when the Company has: (a) a present obligation (legal or constructive) as
a result of a past event; (b) it is probable (i.e. more likely than not) that an outflow of resources
embodying economic benefits will be required to settle the obligation; and (c) a reliable estimate can
be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimate.
Contingent liabilities are not recognized in the financial statements, but are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are
not recognized in the consolidated financial statements, but disclosed when an inflow of economic
benefits is probable.
x. Subsequent Events
Post period-end events that provide additional information about the Company and its Subsidiaries
position at the balance sheet date (adjusting events) are reflected in the financial statements. Any post
period-end event that is not an adjusting event is disclosed when material to the consolidated
financial statements.
y.
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.
20

3. DECONSOLIDATION
OF
SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AND
RESTATEMENT
OF
THE
Based on the Corporate Management Agreement (CMA) dated July 1, 2007 between the Company and
Minarak Labuan Co. (L) Ltd. (MLC), the Company agreed that MLC shall have control over the
management of KEL, PAN and LBI, and therefore, the Company hereby grants power and authorizes
MLC, unconditionally and irrecovably, to perform any acts or actions, instructions, supervision and all the
right as reasonably held by a party that controls a company, either in its capability as the shareholders or
in connection with a particular arrangement.
The agreement shall become effective as from the date of the agreement, dated July 1, 2007, whereafter
the Company shall no longer hold any function and control over KEL, PAN and LBI. Subsequently as
from the effective date, the entire function for the control over all matters, including but not limited to
the business, financial and operational activities, as well as personnel affairs in KEL, PAN and LBI shall
be transferred and become under MLC. The agreement may only be terminated in the event that the
conversion of receivable be entirely undertaken, by which MLC shall own more than 50% of the total
number of shares subscribed in KEL and PAN.
Under the terms of the CMA, the Company no longer has more than 50% of the voting rights, the rights
to govern the financial and operating policies, the ability to appoint or remove the majority of the
members of the management, or the ability to control the majority of votes of meetings of management
of KEL, PAN and LBI.
On the effective date of the transfer, the financial statements of KEL, PAN and LBI will no longer be
consolidated into the consolidated financial statements of the Company. This consolidation change was
applied retroactively and, accordingly, the 2006 comparative figures were restated.
Based on the valuation report of Truscel Capital dated January 22, 2007, the fair value of KELs and
PANs shares as of December 31, 2006 amounted to negative USD 60,654,782 and USD 1,743,282,
respectively. Since the permanent impairment of carrying investment value of KEL and PAN has been
incurred, accordingly, the Company impaired the carrying investment value of KEL and PAN to nil on
December 31, 2006 and recorded a loss on impairment of investment value amounting to Rp 430,645,750
in 2006. Subsequently, based on the valuation report of Truscel Capital dated February 8, 2008, the fair
value of KELs and PANs shares as of October 31, 2007 amounted to negative USD 65,176,712 and
USD 1,758,954, respectively.
Since July 1, 2007, the Company has discontinued taking up further its share of losses in KEL and PAN
when its accumulated losses exceeded the carrying amount of the investment. The Company will resume
taking up its investments including its share of those profits only after its share of the profits equals the
share of net losses not recognized.
The Company has reported the deconsolidation to Badan Pengawas Pasar Modal dan Lembaga Keuangan
(Bapepam-LK) and the management believed that they are in compliance with prevailing regulations
relating to this matter. Subsequently, based on EGMS dated March 14, 2008, the stockholders of the
Company agreed with the conversion of MLC receivables to KEL and PAN into shares ownership in
KEL and PAN by way of issuance of new shares in KEL and PAN. With the conversion of receivables,
the Companys ownership interest in KEL and PAN will be diluted to minority accordingly
(see Note 38).
21

3. DECONSOLIDATION
OF
SUBSIDIARIES
AND
RESTATEMENT
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
OF
THE
Based on the Joint Operating Body (JOB) agreement between Pertamina and Costa International Group
Ltd. (Costa) (the JOB), Pertamina, is responsible to carry the risk of operating costs of the JOBs
operations amounted to its participating interest. Since Pertamina has not made any contributions of its
participating interest of 50% of total operating cost, because of the facts that Costa had been bearing all
the cash calls to JOB and receiving the amount of the proceeds from sales to cover the operating costs,
Costa recognized 100% of the JOBs revenue and expense. Starting 2007, Costa decided to apply the
participating method, whereby assets, liabilities, as well as revenue and expenses of the JOB, are
recognized according to its share (50%). The change was applied retrospectively, and therefore, the
previous financials statements were restated.
The restatement of consolidated financial statements also effect on the Subsidiarys deferred taxes.
Following is a summary of the significant accounts in the 2006 consolidated financial statements before
and after the restatement:
December 31, 2006
As restated
Total current assets
Oil and gas properties
Deferred tax assets
Total non-current assets
Total assets
Total current liabilities
Long-term loans
Total non-current liabilities
Retained earnings (deficit)
Total equity
Net sales
Operating expenses
Net income (loss)
Basic earnings (loss) per share (in full amount)
1,913,639,094
946,672,828
5,220,828,764
261,224,169
6,860,203,719
8,773,842,813
1,031,183,622
4,941,733,089
221,022,494
350,138,771
5,847,923,701
(192,633,224 )
1,894,724,248
1,459,460,289
222,494,671
(263,396,384 )
(18.71 )
As previously
reported
2,433,375,505
500,587,596
5,990,632,043
492,309,688
7,450,016,417
9,883,391,922
1,335,800,758
4,941,733,089
793,314,356
350,138,776
6,714,412,758
451,205,366
1,833,167,046
1,646,538,248
233,360,933
203,005,238
14.42
22

4. CASH AND CASH EQUIVALENTS

This account consists of:
2006
2007
Cash on hand
Cash in banks
Rupiah
PT Bank Internasional Indonesia Tbk
PT Bank Negara Indonesia (Persero) Tbk
PT Bank Syariah Mandiri
Others (below Rp 1 billion each)
United States Dollar
Credit Suisse
Citibank N.A.
PT Bank Mega Tbk
Societe Generale Hongkong
PT Bank Negara Indonesia (Persero) Tbk
PT Bank Resona Perdania
Fortis Bank
PT Bank Mandiri (Persero) Tbk
Euro
Fortis Bank
Time Deposits
Rupiah
PT Bank Mega Tbk
PT Bank Mega Tbk
Other investments
PT Danatama Makmur
Total
180,962
449,452
1,126,470
665,567
105
1,064,521
133,222
2,019,320
1,444,093
81,420,459
32,369,759
20,994,897
6,859,535
6,635,545
2,355,636
546,713
398,151
91,953
112,574
86,308,870
13,861,649
10,189,433
712,222
1,211,614
224,529
932,677
2,647,745
2,217,176
95,354
81,635
3,872,848
3,000,000
3,872,848
3,000,000
291,989,000
1,308,022
270,600,000
4,510,000
216,480,000
455,088,071
620,896,485
A short-term investment placed in PT Danatama Makmur amounting to USD 20 million in 2006 for a
term of 30 days is subject to extension upon written instruction from the Company and its Subsidiaries.
All income earned from the investment will be credited to the Company and its Subsidiaries account less
any necessary expenses incurred including taxes, commissions, and discounts.
Interest rates of time deposits were as follows:

Rupiah
2007
(%)
2006
(%)
2.25% - 4.75%
7.00% - 8.75%
2.25% - 3.75%
9.25% - 12.75%
23

5. RESTRICTED CASH IN BANK

The account represents a current account placed in Hongkong Shanghai Banking Corporation (HSBC)
which used as escrow account in respect with HSBC as Trustee pursuant to Gas Sales Purchase
Agreement (GSA) dated July 7, 2005 (see Note 32).
Balance of the account as of December 31, 2007 represents a fund available for payment of Gas
Transportation Fees (GTF) to PT Pertamina (Persero) that has not yet been transferred for the gas
delivered for the period from August 2005 to November 2006, and includes interest income, was credited
by bank for the period December 2005 until December 31, 2007.
6. SHORT-TERM INVESTMENT
On October 22, 2007, ECL, a Subsidiary placed a time deposit in Riseley Management Limited (RML)
amounting to USD 75 million. Based on the placement agreement with RML, ECL earns interest at the
rate of 7% above LIBOR and may terminate the deposit at any time during the period of the agreement.
The agreement will expire on 18 (eighteen) months after placement date, or otherwise may be extended,
subject to written instruction by the Subsidiary.
7. TRADE RECEIVABLES
a.
By Debtor - Third Parties
2007
Local Debtors
PT Pertamina (Persero)
PT Perusahaan Listrik Negara (Persero)
PT Petrokimia Gresik (Persero)
PT Riau Andalan Pulp & Paper
Foreign Debtors
Petro Diamond Co., Ltd.
Itochu Petroleum Co., Pte., Ltd.
Mitsubishi Corporation (MC)
Total
2006
86,211,954
26,282,300
7,058,227
3,182,842
61,195,198
6,183,429
13,023,539
-
39,165,662
30,335,684
-
51,548,688
158,590,340
192,236,669
290,541,194
b. By Age Category
2007
Up to 30 days
31 - 60 days
Over 60 days
Total
2006
87,964,799
98,613,792
5,658,078
224,018,313
31,913,525
34,609,356
192,236,669
290,541,194
24

7. TRADE RECEIVABLES (Continued)

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 of Subsidiaries as of December 31, 2007 and 2006 were pledged as collateral for the longterm loans (see Note 17).
8. OTHER RECEIVABLES
2007
2006
Reimbursable value added tax

Receivable from delivered gas
Receivable from vendors
Receivable from employees
Overhead receivables from PSC participant
Pacework International Ltd.
Others
190,346,262
79,434,878
96,719,486
23,295,085
3,307,167
154,580,422
166,132,583
15,006,329
43,787,414
23,031,802
3,992,114
61,000,889
83,140,879
Total
547,683,300
396,092,010
Reimbursable value added tax represents value added tax that has been paid by Subsidiaries and is
reimbursable from BPMIGAS or Pertamina in accordance with the terms of PSC and TAC agreements.
Paceworks International Ltd. (PI) is a company that assists MBF in general financial strategy and planning
activity for obtaining capital expenditure funds (fund raising). Receivable from PI represents a portion of
funds originating from a loan by Merrill Lynch, which was temporarily transferred to PI in line with its
capacity as financial advisor in accordance with the agreement between PI and MBF (see Note 32c). In
2007, this receivable has been transferred to LBI based on the Restructuring Agreement and
Acknowledgement of Indebtedness dated July 18, 2007.
Receivable from delivered gas in 2007 and 2006 represents receivables arising from gas delivered through
PGN Offtake Porong for the period from December 2006 to December 2007 (see Note 33). The
Company and its Subsidiaries did not provide any allowance for doubtful accounts as the management
believes that receivables are fully collectible.
25

9. INVENTORIES
This account consists of capital and non-capital inventories as follows:
2006
2007
Spare-parts
Fuel
Chemicals and others
326,357,412
45,421,025
6,129,899
508,392,536
9,525,960
1,951,696
Total
377,908,336
519,870,192
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 provision
for obsolete and slow-moving inventories was required.
10. PREPAID EXPENSES AND ADVANCES
2006
2007
Prepaid expenses
Rental
Insurance
Service charge
Advances
Project
Others
4,455,623
1,918,772
312,679
8,183,720
1,801,526
306,110
11,965,597
39,336,805
14,109,009
61,838,848
Total
57,989,476
86,239,213
11. DUE FROM/TO RELATED PARTIES

a.
Due from Related Parties
2007
Lapindo Brantas Inc. (LBI)
PT Energi Timur Jauh (ETJ)
Others
Total
2006
620,722,894
569,408,371
176,983
448,063,161
498,585,705
23,962
1,190,308,248
946,672,828
26

11. DUE FROM/TO RELATED PARTIES (Continued)

Due from LBI mainly represents a portion of funds originating from a loan by Merrill Lynch that was
received by LBI. MLC guaranteed the receivable from LBI as the new majority owner of LBI
(see Note 17).
Due from ETJ mainly represents advances made based on the agreement dated August 1, 1998
(see Note 32b). Out of the funds advanced to ETJ, an amount of USD 28 million was paid by KPSA
to ETJ for the settlement of the loan obtained by Ladinda from PT Bank Internasional
Indonesia Tbk. The loan was made available to finance the development in Brantas PSC by LBI, one
of the subsidiaries and is guaranteed by LBIs working interest in the Brantas Block.
b. Due to Related Parties
2007
2006
Asian Worldwide Group Ltd. (AWG)

Global Overseas Enterprise Ltd. (GOE)
PT Mitra Andalan Mandiri
Kalila Energy Ltd.
Pan Asia Enterprise Ltd
.
Others
43,271,126
17,425,958
485,319
180,989
41,438,110
16,687,774
445,884
157,658,843
4,451,275
340,608
Total
61,363,392
221,022,494
Due to AWG and GOE represent payables from taking over the working interest in Bentu PSC and
Korinci Baru PSC from Petroz Korinci Baru Ldc. and Petroz Bentu Ldc. on August 7, 2005. Due to
AWG and GOE represent payables arising before acquisition of THP.
12. RESTRICTED TIME DEPOSITS
2007
2006
Societe Generale Hongkong

PT Bank Mega Tbk
Credit Suisse, Singapore
Bank of New York, Singapore
377,606,247
76,293,900
50,992,607
43,346,782
82,645,531
44,201,091
Total
548,239,536
126,846,622
Time deposits placed with Societe Generale Hongkong represent placement of time deposits in respect to
the Share Subscription Agreement dated March 6, 2007, whereby the Company, EMP Inc., Mitsubishi
Corporation and Japan Petroleum Exploration Co., Ltd. agreed that EMP Inc. shall keep the proceeds
from BP under the term of Amendement Agreement in a separate account to be dedicated to the
payment of the Subsidiarys dividend tax only (see Note 18).
27

12. RESTRICTED TIME DEPOSITS (Continued)

Time deposits placed with PT Bank Mega Tbk represent placement of time deposits that are used as a
bank guarantee for PT Indelberg Indonesia Perkasa in respect to the Operations Cooperation Agreement
with PT Pertamina EP (see Note 37a).
Time deposits in Credit Suisse (CS) represent placement of time deposits pursuant to:
a.
The Cash and Account Management Agreement (CAMA) between EMP Inc. and CS, which will
serve as collateral for the loan obtained from CS on May 19, 2005 and will mature on a monthly basis
and earn interest at a rate of LIBOR less 0.25%, or zero, whichever is higher. This agreement was
terminated on May 16, 2007 (see Note 17).
b. The Credit Agreement between Semco and CS, which will serve as collateral for the loan obtained
from CS on October 27, 2005 (see Note 17) and earn interest at a rate of LIBOR.
Time deposits in Bank of New York (BONY) represent placement of time deposits pursuant to the
CAMA between MBF, LBI, KPSA and ITA with BONY, to serve as collateral for credit facility received
from Merrill Lynch on July 27, 2005 (see Note 17). Time deposits mature on a quarterly basis and earn
interest at a rate of LIBOR.
All restricted time deposits are in US Dollar.
13. OIL AND GAS PROPERTIES
This account was as follows:
2006
2007
Wells and equipment and their facilities
Wells and equipment and their facilities in progress
5,648,653,683
1,041,379,735
7,458,208,111
486,574,177
Total
Accumulated depreciation, depletion and
amortization
6,690,033,418
7,944,782,288
(2,150,166,719 )
(2,723,953,524 )
Net Book Value
4,539,866,699
5,220,828,764
The detail of movement oil and gas properties based on area of interest:
2007
Area of Interest
January 1,
Addition
Deduction
Translation
adjustment
December 31,
Malacca PSC
Kangean PSC
Gelam TAC
Bentu PSC
Korinci Baru PSC
Gebang PSC
Semberah TAC
785,147,259
3,335,125,920
234,042,628
260,592,811
200,323,584
13,362,495
278,290,628
216,453,738
564,523,255
24,309,018
14,208,587
22,528,153
8,559,532
124,227,453
99,220,912
1,757,516,877
24,128,403
30,227,900
8,338,713
30,300,655
38,322,786
110,978,556
10,358,417
11,962,654
8,625,416
597,856
15,187,899
940,702,871
2,253,110,854
244,581,660
286,764,052
201,249,253
14,181,170
387,405,325
Total
Cost Pool effect
5,106,885,325
113,943,439
974,809,736
-
1,949,733,460
(97,928,075 )
196,033,584
-
4,327,995,185
211,871,514
Net Book Value
5,220,828,764
4,539,866,699
28

13. OIL AND GAS PROPERTIES (Continued)

2006 (As restated - see Note 3)
Area of Interest
January 1,
Addition
Deduction
Translation
adjustment
December 31,
Malacca PSC
Kangean PSC
Gelam TAC
Bentu PSC
Korinci Baru PSC
Gebang PSC
Semberah TAC
566,137,726
2,187,951,144
228,256,001
277,577,407
164,921,478
34,855,007
162,852,125
396,964,819
1,441,672,901
56,904,912
5,982,007
49,773,900
3,637,257
156,550,571
126,771,522
93,016,845
31,043,185
22,554,954
25,635,758
(51,183,764 )
(201,481,280 )
(20,075,100 )
(22,966,603 )
(14,371,794 )
(2,574,815 )
(15,476,310 )
785,147,259
3,335,125,920
234,042,628
260,592,811
200,323,584
13,362,495
278,290,628
Total
Cost Pool effect
3,622,550,888
51,710,528
2,111,486,367
-
299,022,264
(62,232,911 )
328,129,666
-
5,106,885,325
113,943,439
Net Book Value
3,674,261,416
5,220,828,764
Depreciation, depletion and amortization for the years ended December 31, 2007 and 2006 amounting to
Rp 127,053,232 and Rp 236,789,369, respectively, were charged to cost of goods sold (see Note 24).
Deduction in 2007 of Rp 1,724,752,165 represents the effect of proportionate consolidation of 50%
EMP Inc.s oil and gas properties.
The additions mainly consisted of costs of development and exploration and capitalization of
borrowing cost. Total capitalized borrowing cost in December 31, 2007 and 2006 amounted to
USD 15.47 million and USD 37.76 million, respectively (see Note 17).
The oil and gas properties, as well as inventories were insured with several third party insurance
companies, against risk of loss and damage. As of December 31, 2007 and 2006, total sums insured were
USD 455,211,032 and USD 420,961,947, respectively. Total sums insured after December 31, 2007 as
follows:
Next
3 Months
(USD)
Inventory and Oil and
Gas Properties
455,211,032
Next
4 - 6 Months
(USD)
455,211,032
Next
7 - 9 Months
(USD)
Next
10 - 12 Month
(USD)
455,211,032
Next
Over 12 Months
(USD)
-
14. TRADE PAYABLES

a.
By Creditors
2007
PT Jasa Karya Utama
PT Jaya Wijaya Raya
PT Intimas Prima Pratama
PT Radiant Utama Interinsco
PT Duta Energi Semesta
PT Alton International Indonesia
59,994,718
11,508,020
9,157,698
8,494,917
8,337,049
7,050,634
2006
66,706,631
1,918,097
3,766,448
33,104,400
7,077,583
29

14. TRADE PAYABLES (Continued)
2007
2006
PT Saripari Geosains
Credit Suisse, Singapura
PT Dwi Prima Sembada
PT Agung Patria Wahana
BJ Service Indonesia
PT Sarana Adikarya Utama
PT Lubrisindo Jaya Gemilang
PT Adiguna Cakra Semesta
PT Inti Brunel Teknindo
Schlumberger Geophisic Nusantara
PT Baker Atlas Indonesia
PT Kanaka Dwi Mitra Manunggal
PT Perdana Karya
PT Halliburton Logging Service Indonesia
PT Promatcon Tepat Guna
PT Medici Citra Nusa
PT Wira Insani
PT Supraco Indonesia
PT Indoturbine
PT Batam Dwi Karya
PT Baruna Raya Logistics
Ficorinvest
Halliburton Indonesia
Dowell Anadril Schlumberger
PT Unichem Candi Industri
PT Apexindo Pratama Duta Tbk
PT Nana Yamano Technik
PT Pilar Dwi Perkasa
PT Pacific Mitra Bersama
PT Kutilang Paksi Mas
Travia Air
6,942,646
6,890,700
6,282,204
5,625,681
5,188,951
3,953,305
3,668,498
3,351,859
3,160,742
2,915,541
1,847,139
1,798,667
1,634,304
1,078,079
719,612
370,762
282,035
110,238
50,557
15,757
146,611,295
20,356,875
1,570,000
6,134,718
7,976,488
4,462,472
6,557,110
7,552,979
29,090,457
8,181,290
7,254,535
4,096,686
6,143,609
45,432,030
19,885,609
10,758,335
9,269,491
8,674,197
8,557,612
8,162,350
6,106,810
5,706,741
5,451,345
4,365,680
4,809,599
3,712,637
97,389,403
Total
307,041,608
460,232,217
b. By Age Category
2007
2006
Up to 30 days
31 - 60 days
Over 60 days
63,836,123
37,433,388
205,772,097
137,105,582
73,172,075
249,954,560
Total
307,041,608
460,232,217
30

14. TRADE PAYABLES (Continued)

c.
By Currency
2007
2006
US Dollar
Rupiah
274,618,618
32,422,990
433,344,075
26,888,142
Total
307,041,608
460,232,217
Credit terms for the purchase of goods and services, both from local and foreign suppliers, ranged
from 30 to 90 days.
15. OTHER PAYABLES
2007
Overlifting
Take or pay
Others
Total
2006
71,775,863
39,899,271
67,465,095
2,122,669
20,323,021
111,675,134
89,910,785
Overlifting represents liability to BPMIGAS or Pertamina on differences between lifting of oil and gas
and the Subsidiaries entitlement.
Take or pay liabilities represent payments received by EEKL and KEIL from PT Perusahaan Gas Negara
(Persero) Tbk (PGN) in 1999 and 2000 arising from underlifting of natural gas volumes based on the
provision of the gas sales agreement between EEKL, KEIL and PGN. Since 2005 such liabilities were
paid through deduction from the invoice amount of EEKL and KEIL to PGN.
16. ACCRUED EXPENSES

2007
Production
Drilling
Support
240,354,858
183,553,377
78,829,878
2006
119,485,373
145,492,958
41,481,641
31

16. ACCRUED EXPENSES (Continued)
2007
Interest
Project
Geological and geophysical
Others
Total
2006
55,730,677
565,140
144,323
8,584,293
44,558,877
1,144,008
12,324,315
21,676,943
567,762,546
386,164,115
Accrued drilling and production expenses mainly represent expenditures for drilling services in the
Malacca PSC Block and development of oil and gas facilities and offshore drilling in the Kangean PSC
Block.
Accrued production in 2007 includes Gas Transportation Fee (GTF) payable to Pertamina for the period
August 2005 to December 2007 amounting to USD 5,158,434. As of this report date, Pertamina has not
signed the GTF contract with EEKL and KEIL. Therefore, the GTF accrual calculated based on the
estimation may differ from the payable amount, when the GTF agreement is finally agreed. The fund for
GTF payments that has already been paid by the gas buyer, regarding the gas sales agreement, is deposited
in a specific HSBC account at Singapore branch. (see Note 5).
17. LONG-TERM LOANS
2007
Credit Suisse (USD 152.75 million in 2007
and USD 427.75 million in 2006)
Merrill Lynch (USD 120 million)
PMA Capital Management Ltd. (USD 75 million)
Japan Petroleum Exploration Co., Ltd.
(USD 32 million)
Mitsubishi Corporation (USD 32 million)
PT Bank Niaga Tbk
PT Bank Permata Tbk
2006
1,438,752,250
1,130,280,000
706,425,000
3,858,305,000
1,082,400,000
-
302,036,637
302,036,637
339,343
439,868
-
1,211,042
421,235
162,106
Total
Less Current Maturities
3,880,309,735
(2,569,371,593 )
4,942,499,383
(766,294 )
Long-term Loans - Net
1,310,938,142
4,941,733,089
32

17. LONG-TERM LOANS (Continued)

Credit Suisse (CS)
The loan from CS as of December 31, 2007 represents the loan obtained by Semco. While on
December 31, 2006, the loans from CS were those obtained by EMP Inc. and Semco amounting to
USD 275,000,000 and USD 152,750,000, respectively.
On May 19, 2005, EMP Inc. entered into another credit facility agreement with CS, whereby CS agreed to
provide a loan of a maximum USD 275 million, of which USD 78.5 million was used to settle the
outstanding balance of the existing CS facility, and the remaining USD 196.5 million was used to finance
the development of Kangean PSC Block. The loan bears interest at 7% above LIBOR per annum and is
secured by the entire EMP Inc. shares, EEKL shares, KEIL shares (formerly EKL), receivables, and sales
contract of EMP Inc. and subsidiaries oil and gas. The loan is due in five (5) years with a three (3) year
grace period.
On May 16, 2007, EMP Inc. fully paid the loan amounting to USD 275 million.
On October 27, 2005, Semco obtained a credit facility from CS amounting to USD 52.75 million. The
loan bears interest at 5% above LIBOR for the first six (6) months, 7% above LIBOR for the following
three (3) months and 9% above LIBOR up to maturity.
The loan period is three (3) years with two installments. The first installment is due on the ninth month,
while the second installment on the thirty-sixth month, both amounting to USD 26,375,000. The first
installment was paid on August 16, 2006.
Collateral used for this credit facility are THP and Operating Companies shares, receivable of IMG and
Semco and Work contract of Operating Companies.
On August 16, 2006, Semco obtained an additional loan from CS amounting to USD 126,375,000, which
may only be used for the following purposes:
(1)
(2)
(3)
(4)
Paying fees and expenses due under the credit facility;

Making payments of the outstanding loan and unpaid interest obtained from loan Tranche A;
Deposit into the debt service account;
Funding for capital expenditures of THP and Operating Companies.
The loan bears interest at 5% above LIBOR for the first twelve (12) months and 9% above LIBOR up to
the maturity date. The total loan will be due on August 15, 2008.
Collateral used for this credit facility is as follows:
-
First ranking pledge of 100% of the issued share capital of the following: THP, Korinci Baru, Bentu,
IMG, Semco and Costa (THP and Operating Companies);
Corporate guarantees of THP and Operating Companies;
Work contracts of Operating Companies;
Irrevocable payment instructions in relation to payments under all existing and future contracts from
Operating Companies;
Assignment of all proceeds of insurance policies and reinsurance policies maintained by or on behalf
of each of THP and Operating Companies where the beneficiary is THP or Operating Companies;
and
Security over bank accounts, assignments of dividends and irrevocable payment instructions over
dividends from the Subsdiaries.
33


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 USD 120 million.
Series A Notes of USD 25 million and Series B Notes USD 95 million bear interest at 8.5% above
LIBOR and at 8% above LIBOR, respectively. Notes will mature on July 2, 2008 with three (3) monthly
interest payments starting October 27, 2005.
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 and KPSA.
Proceeds of claim of insurance in reference to operational obstacles in Malacca Straits PSC Block and
Brantas PSC Block.
MBF entered into Stock Appreciation Rights (SAR) agreement that includes a Call Option with the
holders of Series B Notes. The call option will be paid in cash by MBF for the difference between the
Settlement Price and the Companys basic share price (based on the weighted average price of shares
during the 20 days prior to the issuance date of the notes).
Subsequently, MBF transferred the loan to ITA, LBI and KPSA based on an agreement signed by each
party on July 27, 2005. The loan received by each Subsidiary was as follows:
Type of Loan
ITA
(USD)
LBI
(USD)
KPSA
(USD)
Total
(USD)
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
Specific terms and conditions applying to the loan obtained by ITA, LBI and KPSA are similar to the
terms of loan from MBF and Merril Lynch.
PMA Capital Management Ltd. (PMA)
At October 18, 2007, ECL has entered into a term loan facility from PMA as a facility agent with
maximum of USD 108 million. This loan will be used for the subsidiarys general working capital purpose.
The loan bears interest at 7% above LIBOR per annum and is secured by the entire EMP Inc. shares and
ECL shares owned by the Company. The loan is due in 18 months from date of first drawn of the facility.
Mitsubishi Corporation (MC) and Japan Petroleum Exploration Co., Ltd. (Japex)
In accordance with the term sheet agreed under the Share Subscription Agreement (SSA) dated
March 6, 2007, MC and Japex agreed to provide loan facilities to the Company, EMP Inc., EEKL and
KEIL for capital expenditures. The following loan facilities were entered into under the SSA:
34


a.
Loan facilities for the Company

MC and Japex agreed to provide a loan facility to the Company for 50% of KEIL and EEKLs
expended capital expenditures for the period from July 1, 2006 to May 16, 2007, capped at a
combined total of USD 21.55 million as stipulated in the Facility Agreements dated May 16, 2007.
This loan will be due on June 30, 2017, bears interest at LIBOR plus 3.75% for time deposits for
six (6) months, has a five (5) year repayment grace period and will be repaid by semi-annual
installments thereafter.
b. Loan facilities for EEKL and KEIL

MC and Japex agreed to provide a loan facility to EEKL and KEIL in respect of subsidiarys funding
obligations for capital expenditures, capped at a combined total of USD 215 million as stipulated in
the Carry Agreement dated May 16, 2007. These loans will become due on June 30, 2017, bear
interest at LIBOR plus 3.75% for time deposits for six (6) months, have a five (5) year repayment
grace period and will be repaid by semi-annual installments thereafter.
c.
Loan facility for EMP Inc.

In addition to the above, MC, Japex and the Company agreed to provide a loan facility to EMP Inc.
to finance operating expenditures capped at USD 30 million as stipulated in the Loan Agreement
dated May 25, 2007. This loan will be due on May 16, 2009, bears interest at LIBOR plus 4.25% for
time deposits for 6 months and will be repaid by semi-annual installments starting December 2007.
Subsequently, in accordance with a Loan Agreement dated May 25, 2007, EMP Inc. agreed to provide
a loan facility to EEKL and KEIL to finance operating expenditure, capped at USD 30 million
(consisting of USD 18 million for KEIL and USD 12 million for EEKL).
This loan will be due on May 16, 2009, bears interest at LIBOR plus 4.25% for time deposits for
six months and will be repaid by semi-annual installments starting December 2007.
PT Bank Permata Tbk

On February 8, 2005, IMG obtained a credit facility from PT Bank Permata Tbk for the purchase of
Subsidiary vehicles. The loan bears interest at 8.8% per annum over its 5-year period.
PT Bank Niaga Tbk
In 2005, the Company obtained a credit facility from PT Bank Niaga Tbk with a maximum amount
of Rp 2.02 billion to be used for the purchase of Company vehicles. The loan bears interest at
6.93% - 9.62% per annum and is collateralized by the vehicles. The loan will be paid in 36 monthly
installments.
PT Bank Internasional Indonesia Tbk (BII)
On February, 2006, the Company obtained a loan facility from BII for the purchase of Company vehicles.
This loan bears interest at 10.5% per annum over its 36-month period. This loan has been fully paid.
35

18. SUBSIDIARYS DIVIDEND TAX LIABILITY

This account represents the EEKL and KEIL dividend tax and penalty liability at the time of acquisition
of both Subsidiaries. Based on the Sales and Purchase Agreement, EMP Inc. has a right for
reimbursement from BP for the payment of the tax payable if this is paid by EMP Inc. EMP Inc.
recognized this right for reimbursement as an identifiable asset and thus accordingly include it in the value
of the acquired net assets. In 2007, EMP Inc. has received the reimbursement amounting to
USD 39,351,080 based on BPs calculation and adjusted the balance of dividend tax liability in accordance
with such calculation accordingly.
19. CAPITAL STOCK
Composition of the Companys stockholders and their respective shareholdings were as follows:
2007
Name of Stockholder
PT Kondur Indonesia
PT Brantas Indonesia
Julianto Benhayudi
Public (below 5% each)
Total
Number of
Shares
Percentage
of Ownership
Total
Paid-up Capital
3,768,183,184
3,505,609,718
314,488,667
149,992,286
6,662,539,517
26.17%
24.35%
2.18%
1.05%
46.25%
376,818,318
350,560,972
31,448,867
14,999,228
666,253,952
14,400,813,372
100.00%
1,440,081,337
2006
Name of Stockholder
PT Kondur Indonesia
PT Brantas Indonesia
Julianto Benhayudi
Public (below 5% each)
Total
Number of
Shares
Percentage
of Ownership
Total
Paid-up Capital
4,741,855,486
4,088,864,035
446,912,286
314,488,667
4,808,692,898
32.93%
28.39%
3.11%
2.18%
33.39%
474,185,549
408,886,403
44,691,229
31,448,867
480,869,289
14,400,813,372
100.00%
1,440,081,337
Based on EGMS dated December 22, 2005, the shareholders of the Company approved the Rights
Issue I to the Companys shareholders in connection with the Exercise Rights of 4,909,368,195 shares
with a nominal value of Rp 100 (full amount) per share, which were offered at Rp 770 (full amount)
per share totaling Rp 3,780,213,510,150 (full amount). The Company completed all the requirements for
the Rights Issue I on January 25, 2006.
Based on the Meeting Statement deed No. 45 dated January 25, 2006 of Robert Purba, S.H., notary in
Jakarta, the shareholders agreed to change the Articles of Association due to the increase in the
authorized capital stock of the Company to Rp 5,500,000,000,000 (full amount).
36

20. ADDITIONAL PAID-IN CAPITAL

2007
2006
Sale of the Company shares through

public offering
Proceeds from issuance of 4,909,368,195
shares in 2006 and 2,847,433,500 in 2005
Share issuance cost
The balance is recognized as paid-up capital
4,235,802,870
(105,373,472 )
(775,680,170 )
4,235,802,870
(105,373,472 )
(775,680,170 )
Net
3,354,749,228
3,354,749,228
21. DIFFERENCE IN VALUE FROM RESTRUCTURING TRANSACTIONS OF ENTITIES

UNDER COMMON CONTROL
2007
Net Book
Value
Acquisition
Cost
Difference in Value
from Restructuring
Transactions of
Entities Under
Common Control
RHI Corporation
PT Imbang Tata Alam
92,458,079
(43,635,241 )
238,407,446
165,058,249
200,000,000
38,400,000
239,420,000
2,609,113,573
(107,541,921 )
(82,035,241 )
(1,012,554 )
(2,444,055,324 )
Total
452,288,533
3,086,933,573
(2,634,645,040 )
2006
Net Book
Value
Acquisition
Cost
Difference in Value
from Restructuring
Transactions of
Entities Under
Common Control
RHI Corporation
PT Imbang Tata Alam
92,458,079
(43,635,241 )
238,407,446
165,058,249
200,000,000
38,400,000
239,420,000
2,599,869,500
(107,541,921 )
(82,035,241 )
(1,012,554 )
(2,434,811,251 )
Total
452,288,533
3,077,689,500
(2,625,400,967 )
37

22. DIFFERENCE DUE TO CHANGE OF EQUITY IN SUBSIDIARY

In 2007, EMP Inc. issued 26,000,010 new shares to Mitsubishi Corporation (MC) and Japan Petroleum
Exploration Co., Ltd. (Japex) resulting in a decrease in the Companys interest in EMP Inc. from 100% to
50%. The difference between the Companys interest in EMP Inc. after the new share issuance and the
carrying value of the investment before the new share issuance was recorded under this account and is
presented as part of the Companys equity. Due to that dilution, since January 1, 2007, the Company has
proportionately consolidated EMP Inc.
23. NET SALES

2007
Itochu Petroleum Co., Pte., Ltd.
PT Perusahaan Gas Negara (Persero) Tbk
PT Petrokimia Gresik (Persero)
PT Perusahaan Listrik Negara (Persero)
Petro Diamond Co., Ltd.
PT Riau Andalan Pulp & Paper
Mitsubishi Corporation (MC)
Total
2006
621,667,715
288,286,932
83,125,513
53,629,047
50,050,834
37,694,399
3,088,226
-
123,254,175
64,739,657
267,694,792
51,970,565
99,487,960
852,313,140
1,137,542,666
1,459,460,289
24. COST OF GOODS SOLD

2007
2006
Production
Production support
Depreciation, depletion and amortization
Workover
387,027,140
203,190,082
127,053,232
77,939,333
324,753,565
321,312,547
236,789,369
47,694,909
Total
795,209,787
930,550,390
38

25. OPERATING EXPENSES

2007
Salaries, allowance and employee benefits
Professional fees
Rental
Representation and donation
Business traveling
Telephone, facsimile and internet
Depreciation
Insurance
Office expenses
Others (below Rp 500 million each)
Total
2006
96,172,079
71,215,797
11,434,368
10,699,315
6,006,642
3,209,940
2,464,455
2,187,132
1,647,512
14,300,090
91,460,025
86,642,347
15,077,587
8,879,427
3,634,723
2,867,444
2,344,706
1,377,897
2,341,352
7,869,163
219,337,330
222,494,671
26. OTHER INCOME (CHARGES)

a.
Financing Charges
2007
2006
Interest and financing charges

Others
301,725,122
16,761,139
241,907,293
10,380,360
Total
318,486,261
252,287,653
b. Income from Insurance Claim

On January 27, 2006, KEIL and EEKL, Subsidiaries, received the insurance claim from PT Tugu
Pratama Indonesia amounting to Rp 56,438,666 (USD 6,158,737) in respect of pipeline damage in the
Pagerungan field in the North Bali Sea in 2002.
c.
Other income - Net

This account mainly represents allocation cost to Subsidiaries that were not eliminated due to the
Subsidiaries proportionate consolidation.
39

27. TAXATION
a.
Taxes Payable
2007
Corporate income and dividend tax
Income tax
Article 4 (2)
Article 21
Article 23
Article 26
Value added tax
Others
Total
2006
16,116,163
17,272,365
239,040
13,471,959
17,137,060
31,787,658
44,951,434
8,895,511
131,949
17,760,937
25,670,478
15,977,356
17,297,126
-
132,598,825
94,110,211
EEKL and KEIL are registered as UK and USA tax residents, respectively. No UK and USA tax
liability was recognized as of December 31, 2007 based on the Subsidiaries calculation.
RHI has no taxable income; hence the management believes that RHI has no income tax liability as
of December 31, 2007.
The estimated income tax of KEIL and RHI assumes that the US IRS will accept such calculation.
MBF and EMP Finance are registered in the Netherlands. The MBF and EMP Finances estimated
income tax liability is USD nil as of December 31, 2007 and 2006, respectively.
On November 28, 2006, the Directorate General of Taxation issued SKPKB for corporate income
tax and income tax article 26 (4) for Costa for the years 1997, 1998, 2000, 2001 and 2002 totaling
USD 8,860,992.
On February 27, 2007, Costa submitted their Objection Letter to the Tax Service Office and filed the
lawsuit to the State Administration Court opposing such SKPKB. As of this report date, the Tax
Service Office has rejected the Objection Letter. However, the completion of the lawsuit is under
process.
In October and November 2007, Bentu has received tax assessment letters for interest penalty on late
payment of value added tax and article 23 witholding tax assessment letters amounting to
Rp 4,153,062 and Rp 3,054, respectively. While in June 2007, the Directorate General of Taxation
issued an additional tax assessment letter of value added tax of IMG amounting to Rp 1,384,078. The
Subsidiaries provided the provisions for those tax assessment letters in the current year.
40

27. TAXATION (Continued)

b. Tax Benefit (Expense)
Details of tax benefit (expense) of the Company and its Subsidiaries were as follows:
2006
2007
Current tax
The Company
Subsidiaries
(44,483,763 )
(39,050,544 )
Deferred tax
The Company
Subsidiaries
16,037,292
195,876,726
66,515,790
(7,106,122 )
Sub-total
211,914,018
59,409,668
167,430,255
20,359,124
Total
c.
Current Tax - The Company

Reconciliation between income (loss) before tax as shown in the consolidated statements of income
and estimated taxable income (fiscal losses) of the Company for the years ended December 31, 2007
and 2006, calculated with the effective tax rate, is as follows:
2006
2007
Loss before tax per consolidated
statement of income
Deduct: Income (loss) before tax the Subsidiaries
(15,670,002 )
(283,755,508 )
55,756,904
(59,683,791 )
(71,426,906 )
(224,071,717 )
Loss before tax - the Company

Timing difference:
Employee benefits
Permanent differences:
Representation and donation
Interest income subject to final tax
Others
9,176,505
(12,123,292 )
18,814,200
6,971,418
(5,514,092 )
895,089
Total
15,867,413
3,785,696
Estimated fiscal loss - the Company

Estimated cumulative fiscal losses
beginning of year
Dividend received
(55,559,493 )
(220,286,021 )
(276,592,400 )
70,774,229
(56,306,379 )
-
Cumulative tax loss carried forward the Company
(261,377,664 )
(276,592,400 )
1,433,281
41

27. TAXATION (Continued)

No provision for current income tax was made for the years ended December 31, 2007 and 2006
because the Company is still in a fiscal loss position.
d. Deferred Tax
Details of the Company and its Subsidiaries deferred tax assets and liabilities were as follows:
2007
January 1,
Translation
Adjustments
Deduction
Credited
(Charged)
to Income
Statements
and Equity
December 31,
Deferred tax assets

Employee benefit
Fiscal loss
Depreciation, depletion
and amortization
Non-capital inventory
Unrecovered charges
(605,646,340 )
(63,425,095 )
840,114,051
223,862,332
28,799,109
(279,984,744 )
(26,203,840 )
(1,815,045 )
42,343,004
(204,704,182 )
3,532,251
465,739,907
(612,692,030 )
(32,908,780 )
1,068,212,218
Total
261,224,167
(28,830,356 )
14,562,844
243,944,810
490,901,465
288,925
1,461,737
7,269,820
7,142,903
83,038,648
(1,507,053 )
-
238,725
-
563,464
(21,186,630 )
6,438,039
61,852,018

Employee benefit
Depreciation, depletion
and amortization
(317,910,982 )
(37,746,950 )
(15,802,315 )
(1,606,890 )
(56,776,092 )
2,051,303
(390,489,389 )
(37,302,537 )
Total
(350,138,774 )
(17,120,280 )
(53,263,052 )
(420,522,106 )
5,519,158
Deferred Tax Benefit credited to Income
211,914,018
Deferred Tax Expense charged to Equity
21,232,260
2006
January 1,
Deferred tax assets
Employee benefit
Fiscal loss
Depreciation, depletion and
amortization
Unrecovered charges
(156,023,529 )
(1,280,780 )
298,529,029
Total
3,818,187
16,943,175
Translation
Adjustments
(273,822 )
-
Credited
(Charged)
to Income
Staements
December 31,
3,598,547
66,095,473
7,142,912
83,038,648
20,239,726
1,099,327
(33,637,905 )
(469,862,537 )
(63,243,641 )
575,222,919
(605,646,340 )
(63,425,094 )
840,114,043
161,986,082
(12,572,674 )
111,810,761
261,224,169
2,581,527
(263,006 )
3,200,637
5,519,158

Employee benefit
Depreciation, depletion and
amortization
Unrecovered charges
(386,859,709 )
(29,841,660 )
88,747,816
31,285,741
2,624,436
(6,012,823 )
37,662,986
(10,529,723 )
(82,734,993 )
(317,910,982 )
(37,746,947 )
-
Total
(325,372,026 )
27,634,348
(52,401,093 )
(350,138,771 )
Deferred Tax Benefit
59,409,668
42

28. BASIC EARNINGS (LOSS) PER SHARE

The computation of basic earnings per share is based on the following data:
2006
2007
Earnings
Net earnings (loss) used for calculation
Number of shares
Weighted average number of shares for
the calculation of basic earnings (loss)
per share (in full amount)
115,637,762
14,400,813,372
Basic earnings per share (loss) (in full amount)
8.03
(263,396,384 )
14,077,118,776
(18.71 )
The Company did not calculate diluted earnings per share since the Company had no shares that had a
potential dilutive effect for the years ended December 31, 2007 and 2006.
29. PENSION PLANS AND EMPLOYEE BENEFITS
Pension Plans
The Companys Subsidiaries (KEIL, KPSA and ITA) provide defined contribution pension plans
covering all their permanent employees.
Pension plans for KPSA and ITA are managed by PT Tugu Mandiri, the contribution amounting to 9%
of employees salary, of which 6% is paid by the Company and 3% by the employee. While for KEIL the
pension plans are managed by Manulife, the contribution amounting to 8% of employees salary, of which
6% is paid by the Company and 2% by the employee.
Employee Benefits
The Company and its Subsidiaries provide post-employment benefits for all of its permanent employees
based on Employment Working Agreement/Company Policy. No funding has been made by the
Company and its Subsidiaries, except by KPSA and ITA, which funds are administrated and managed by
the Board of Trustees Contribution Fund of the Strait Malacca Employees Foundation and Trust Fund
Agreement with several banks.
Amounts recognized in respect of these employee benefits were as follows:
2007
2006
Current-service cost
Interest cost
Expected return on plan assets
Net actuarial losses recognized
Past-service cost
10,351,792
9,093,848
(6,795,564 )
5,599,285
304,346
9,217,092
8,546,747
(3,881,266 )
12,552,051
(98,282 )
Total
18,553,707
26,336,342
43

29. PENSION PLANS AND EMPLOYEE BENEFITS (Continued)

The amounts included in the consolidated balance sheets, arising from the Company and certain
Subsidiaries obligations in respect of these employment benefits were as follows:
2007
2006
Benefit obligation
Fair value of employee benefit plan assets
105,296,122
(54,610,322 )
92,996,652
(52,093,325 )
Funding status
Unrecognized actuarial loss
Unrecognized past-service liability
50,685,800
(14,913,256 )
71,624
40,903,327
(8,485,464 )
83,665
Employee benefits obligation
35,844,168
32,501,528
Amounts recognized in consolidated balance sheets in respect of these employment benefits were as
follows:
2007
Balance at beginning of the year
Contribution for the year
Benefit paid
Amount charged to consolidated
statement of income
Balance at end of the year
2006
32,501,528
(12,514,920 )
(2,696,147 )
18,870,191
(10,752,767 )
(1,952,238 )
18,553,707
26,336,342
35,844,168
32,501,528
The employee benefits obligations for the Company, KPSA, ITA and KEIL were computed based on the
actuarial reports that were prepared by PT Bumi Persada Aktuaria, an independent actuarial firm, in its
reports for the years ended December 31, 2007 and 2006 dated dated October 29, 2007 and February 15,
2007, respectively. The computations used the following assumptions:
Discount rate
Future salary increases
Mortality rate
Disability rate
Actuarial method
Resignation rate
Normal retirement age
:
:
:
:
:
:
:
10% per annum

10% per annum
Commissioner Standard Ordinary (CSO) - 1980
10% of Commissioner Standard Ordinary (CSO) - 1980
Projected Unit Credit
Age 18-45 = 1% per annum and age > 46 = 0%
56 years (all employees are assumed to retire at normal retirement age)
44

29. PENSION PLANS AND EMPLOYEE BENEFITS (Continued)

The employee benefits obligation for Costa was computed based on the actuarial reports that were
prepared by PT Dian Artha Tama, an independent actuarial firm, in its reports for the years ended
December 31, 2007 and 2006 dated September 24, 2007 and January 22, 2007, respectively. The
computations used the following assumptions:
Discount rate
Mortality rate
Disability rate
Actuarial method
Resignation rate
:
:
:
:
:
:
:
10% per annum

5% per annum
Commissioner Standard Ordinary (CSO) - 1980
0.1% of Commissioner Standard Ordinary (CSO) - 1980
Projected Unit Credit
Age 18-45 = 1% per annum and age > 46 = 0%
56 years (all employees are assumed to retire at normal retirement age)
The employee benefit obligation for Semco was computed based on the actuarial reports that were
prepared by PT Padma Radya Aktuaria, an independent actuarial firm, in its reports for the years ended
December 31, 2007 and 2006 dated February 29, 2008 and January 22, 2007, respectively. The
computations used the following assumptions:
Discount rate
Mortality rate
:
:
:
:
10% per annum

5% per annum
100% TM 12
56 years old
Korinci Baru, Bentu, and IMG did not calculate estimated employee benefits since the management
believed that the amount is not material.
30. NATURE OF RELATIONSHIP WITH RELATED PARTIES
Nature of relationship
a.
PT Brantas Indonesia and PT Kondur Indonesia are the Companys stockholders.
b. PT Energi Timur Jauh, Asian Worldwide Group Ltd., Global Overseas Enterprise and PT Mitra
Andalan Mandiri are companies whose indirect stockholders are the same as the indirect stockholders
of the Company.
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.
45

31. SEGMENT INFORMATION (Continued)

Business segment information of the Company and its Subsidiaries was as follows:
2007
Trading
Mining
Elimination
Consolidated
SALES
External sales
1,137,542,666
1,137,542,666
RESULT
Segment result
342,332,879
342,332,879
Unallocated expenses
(219,337,330 )
Income from operations

Financing charges
Other income-net
122,995,549
(318,486,261 )
143,698,219
Loss before tax

Tax benefit - net
(51,792,493 )
167,430,255
Income before minority interest

Minority interest
115,637,762
-
Net income
115,637,762
OTHER INFORMATION
Assets
Segment assets
Unallocated assets
6,594,841,573
9,247,533,373
(6,955,081,998 )
Consolidated total assets

Liabilities
Segment liabilities
Unallocated liabilities
9,378,194,413
(635,979,504 )
(6,833,944,392 )
1,864,501,795
Consolidated total liabilities

Capital expenditure
Depreciation, depletion, and
amortization
8,887,292,948
490,901,465
(5,605,422,101 )
(420,522,106 )
(6,025,944,207 )
974,809,736
974,809,736
2,464,455
127,053,232
129,517,687
2006
Trading
Mining
Elimination
Consolidated
SALES
External sales
1,459,460,289
1,459,460,289
RESULT
Segment result
528,909,899
528,909,899
Unallocated expenses
(222,494,671 )
Income from operations

Financing charges
Other charges
306,415,228
(252,287,653 )
(337,883,083 )
Loss before tax

Tax benefits
(283,755,508 )
20,359,124
Loss before minority interest

Minority interest
(263,396,384 )
-
Net loss
(263,396,384 )
46

31. SEGMENT INFORMATION (Continued)

2006
OTHER INFORMATION
Assets
Segment assets
Unallocated assets
Trading
Mining
Elimination
5,023,884,828
9,162,882,512
Consolidated
(5,674,148,696 )
Consolidated total assets

Liabilities
Segment liabilities
Unallocated liabilities
8,773,842,813
(505,622,577 )
(8,143,783,443 )
2,120,437,468
Consolidated total liabilities

Capital expenditure
Depreciation, depletion, and
amortization
8,512,618,644
261,224,169
(6,528,968,552 )
(350,138,771 )
(6,879,107,323 )
2,111,486,367
2,111,486,367
2,344,706
236,789,368
239,134,074
Secondary Segment
The Company and its Subsidiaries are operating in two main geographical areas; domestic and
international.
Sales Based on Market
The following are the Company and its Subsidiaries sales based on geographical market, regardless of the
location of the production of oil and gas:
2007
Domestic
Jakarta
East Java
Riau
International
Singapore
Total
2006
421,463,279
53,629,047
3,088,226
123,254,175
384,405,013
-
659,362,114
951,801,101
1,137,542,666
1,459,460,289
32. COMMITMENTS
a.
Production Sharing Contract (PSC) and Technical Assistance Contract (TAC)

The Subsidiaries entered into agreements for the exploration and production of crude oil and gas
contract area based on PSC with BPMIGAS or TAC with PT Pertamina (Persero). A summary of
the significant provisions of the PSC and TAC are as follows:
47

32. COMMITMENTS (Continued)

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. Entitlement to Production
Crude oil produced, net of cost recovery and investment credit is allocated at 73.2143% for
Pertamina and 26.7857% for the Subsidiaries before consideration of tax and adjustment in
domestic market obligation, if any. Pertaminas share of production from its properties in the
TAC contract area represents the entitlement of Pertamina to a portion of the crude oil
production. Costs related to the oil production are recoverable from Pertamina.
3. Domestic Market Obligation
The Subsidiaries are required to supply the domestic market in Indonesia with a portion of the
share of the crude oil to which the Subsidiaries are entitled. This portion is not to exceed 25% of
the total quantity of crude oil produced from the contract area. For the initial period of sixty
months starting from the month of the first delivery of crude oil produced and saved from each
field in the contract area, the fee per barrel for the quantity of crude oil supplied to the domestic
market from each field shall be equal to the net realized Indonesian Crude Price. Subsequent to
the initial period of sixty months, crude oil production supplied to the domestic market in
Indonesia is priced at 15% of the Indonesian crude oil price.
Nonetheless, if for any year, the recoverable operating costs exceed the difference of the total
sales proceeds from crude oil produced minus the investment credit, the Subsidiaries shall be
relieved from this supply obligation for such year.
4. Cost Recovery
The Subsidiaries shall recover all operating costs whether capital or non-capital cost out of the
sales proceeds or other disposition of the required quantity of crude oil equal in value to such
operating costs with a maximum of 65% per annum of crude oil produced and saved hereunder
and not used in petroleum operations.
5. Investment Credit
The Subsidiaries are entitled to recover an investment credit of the capital investment cost
directly required for developing crude oil production facilities of new producing field from
Tertiary or pre-Tertiary reservoir rock out of deduction from gross production before recovering
operating costs and tax deductions, commencing in the earliest production year.
48


6. Compensation, Assistance and Production Bonuses
The Subsidiaries shall pay bonus and assistance to BPMIGAS for equipment and services,
ranging between USD 50,000 - USD 25 million within 30 - 60 days after the production of
petroleum has reached between 3 million - 325 million barrels. Such bonus payments shall be
borne solely by the Subsidiaries and shall not be included in the recoverable operating costs.
7. 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.
8. 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.
9. 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, 2007 and 2006, the
estimated site restoration liabilities amounted to USD 14.67 million and USD 11.49 million,
respectively and the provision funding amounted to USD 11.69 million and USD 9.49 million,
respectively.
10. Participation
BPMIGAS shall have the right to demand from the Subsidiaries a 10% working interest from
total rights and obligations in the contract. In consideration for the acquisition of the 10%
working interest, BPMIGAS shall reimburse the Subsidiary an amount equal to a certain
percentage of the cumulative operating costs that the Subsidiary has incurred over a determined
period and of the amount of the bonus and assistance for procurement of equipment or services
paid to BPMIGAS as referred to in the PSC.
11. Interest Recovery
Interest on loans for capital investments in petroleum operations that does not exceed the
prevailing commercial rates for capital investments in petroleum operations may be recovered as
a component of operating costs with the approval of Pertamina.
b. Agreement with PT Energi Timur Jauh (ETJ)
KPSA, IMG, Semco, Costa, Bentu and Korinci Baru, the Subsidiaries, appointed ETJ as operational
and administrative coordinator, provider of general and administrative assistance and as cash manager
for the period commencing on August 1, 1998 until July 31, 1999, which shall be automatically
extended unless terminated by either party.
49


Based on the agreement, ETJ shall assist Subsidiaries in keeping the required books of accounts and
other records applicable in Indonesia for oil and gas industries. ETJ shall also deliver to Subsidiaries a
monthly report of operational and administrative matters and activities and provide access to duly
authorized parties of Subsidiaries to examine or inspect the books of accounts and records prepared
by ETJ. ETJ was also appointed as cash manager and authorized signatory in respect of each of
Subsidiaries bank accounts, without limitation, in making payment of expenditures on behalf of
Subsidiaries. ETJ shall arrange the use of Subsidiaries funds as necessary and use any of Subsidiaries
money being managed by ETJ to fund expenditures of other related parties having a similar
agreement with ETJ as deemed necessary. ETJ shall also maintain separate and individual clean
records of the inter-company payables and receivables status of Subsidiaries and update them on a
regular basis.
All costs and expenses incurred by ETJ in relation to the above mentioned purposes shall be
chargeable to Subsidiaries. All interest arising from Subsidiaries funds in ETJs bank account shall be
credited to Subsidiaries.
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 creditors to other companies
within the Companys group.
d. Agreement with PT Perusahaan Listrik Negara (Persero) (PLN)

On May 17, 2005, Bentu entered into an agreement with PLN whereby Bentu will supply gas to PLN.
The gas supplied will originate from the Bentu PSC and Korinci Baru PSC fields. This agreement
shall be effective when the following conditions precedent have been fulfilled:
-
Bentu has signed the Seller Appointment Agreement with BPMIGAS,
Bentu has signed the Trustee and Paying Agent agreement with BPMIGAS for transactions in
regard to this agreement, and
PLN has obtained the approval from its shareholders to carry out this agreement.
The agreement shall be effective until July 15, 2020, or when the volume of gas supplied has reached
146 BCF (Billion Cubic Feet), whichever occurs earlier.
On August 1, 2006, Bentu and PLN signed the Mutual Agreement on Delivery and Taking of the
Gas since approval from PLNs shareholders to carry out the agreement had not yet been received.
The Mutual Agreement stated, among others, that since July 15, 2006 or on any other agreed date,
Bentu based on the reasonable endeavor principle will deliver the gas in the the daily delivery amount
in accordance with the nominations agreed by both parties up to December 31, 2006, or until the
conditions precedent have been met, whichever occurs earlier. This agreement was effective from
December 22, 2006 as the approval from PLNs shareholders had been received.
50


e.
The Subsidiaries Sale and Purchase Gas Agreements

(1) KEIL and EEKL
On October 30, 2007, KEIL entered into certain amendments of the Sales and Purchase Gas
Agreements that had been agreed in December 2005 with:
a.
PT Perusahaan Listrik Negara (Persero), which shall expire on the earlier of: March 31, 2027,
or the volume of 368.7 TBTU having been fullfiled;
b. PT Petrokimia Gresik (Persero), which shall expire on the earlier of: June 30, 2018, or the
volume of 241.86 BSCF having been fullfiled;
c. Pertamina/PT Pertagas, which shall expire on the earlier of: March 31, 2019, or the volume
of 221 TBTU having been fullfiled; and
d. PT Indogas Kriya Dwiguna, which shall expire on the earlier of following: February 6, 2021,
or the volume of 79.2 TBTU having been fullfiled.
On July 7, 2005 for Gas Sales Purchase Agreements (the GSAs) between EEKL, KEIL and
BPMIGAS as sellers; PT Pembangkitan Jawa Bali, PT Perusahaan Gas Negara (Persero) Tbk, and
PT Petrokimia Gresik as buyers. Pursuant to GSA, the Trustee shall receive, hold, manage and
disburse amounts paid by buyers under the GSAs.
(2) Bentu
On October 30, 2007, Bentu entered into the Sales and Purchase Gas Agreements with PT Riau
Andalan Pulp & Paper that shall expire on the earlier of: January 31, 2020, or the volume of 86.7
BCF having been fullfiled.
(3) Semco
On October 31, 2005, PT Pertamina (Persero) signed the Sales and Purchase Gas Agreement
with PT Perusahaan Listrik Negara (Persero) in the amount of 79,026 BBTU from Semberah
field (Semco), which shall end on November 16, 2015, or when total contract volume has been
reached, whichever occurs earlier.
f.
Joint Operating Agreement (JOA)

In 1985, Japan Petroleum Exploration Co., Ltd. (Japex) approved the JOA. Under the JOA, Costa as
the successor of Japex and Japan North Sumatera (JNS), as the assistant operator of the Joint
Operating Body, (Gebang) (JOB-G) will recover its participating interest share of all operating costs
and one half (1/2) of the amount of the reimbursement having been made by Costa pursuant to the
reimbursement out of the sale proceeds or other disposition of the required quantity of its
participating interest share of crude oil equal in value to such operating cost and reimbursement that
is produced and saved and not used in the petroleum operation. The intent is that the Operator shall
neither have gain nor loss as a result of being the assistant operator that wholly finances the JOB-G
activities.
51

33. CONTINGENCIES
The Company and its Subsidiaries operations are subject to Indonesian laws and regulations governing
relating to environmental protection. These laws and regulations may require the acquisition of a permit
before drilling commences, which may restrict the types, quantities and concentration of various
substances that can be released into the environment in connection with drilling and production activities,
limit or prohibit drilling activities in certain lands lying within wilderness, wetlands and other protected
areas, require remedial measures to prevent pollution resulting from the Company and Subsidiaries
operations. The Government has imposed environmental regulations on oil and gas companies operating
in Indonesia and in Indonesian waters. Operators are prohibited from allowing oil into the environment
and must ensure that the area surrounding any onshore well is restored to its original state insofar as this
is possible after the operator has ceased to operate on the site.
Management believes that the Company and its Subsidiaries are in compliance with current applicable
environmental laws and regulations.
EEKL and KEIL Gas Sales to PGN
In November 2006 the East Java Gas Pipeline (EJGP), which was transporting the gas from EEKL and
KEIL to the customer suffered a blow-out due to the mud incident in Sidoarjo. In accordance with the
governmental instruction, EEKL and KEIL delivered gas to PT Petrokimia Gresik (PKG) and
PT Perusahaan Gas Negara (Persero) Tbk (PGN) through PGNs Offtake Porong, at that time solely
utilized to transport the gas from Santos-operated Maleo field located in Madura Offshore PSC.
The minutes of meeting dated January 25, 2007 between EEKL, KEIL, Santos, PGN, BPMIGAS and
other suppliers and customers in East Java specifically states that the quantity of gas delivery by EEKL
and KEIL to PGN will be measured based on the meter reading at PGNs Offtake Porong and Santos
Maleos field.
Regarding the delivery by EEKL and KEIL to PGN, Santos claimed that all gas delivered by EEKL and
KEIL to PGN for the period December 2006 to June 2007 should be considered as delivery by Santos
and PGN should pay to Santos for all gas delivered. Santos shall repay EEKL and KEIL in kind of gas
equivalent for the quantity of gas delivered by EEKL and KEIL after EJGP resumes normal operations.
EEKL and KEILs position is that they shall be entitled to receive the payment for all the gas delivered
by EEKL and KEIL.
The quantity of gas delivery by EEKL and KEIL through the EJGP was measured by PT Pertamina
(Persero) as the owner and operator of EJGP, but PGN has not signed the Volume of Gas Delivery
Statement due to the difference of opinion between EEKL, KEIL and Santos. PGN will not make any
payment for the gas delivery by EEKL and KEIL unless EEKL, KEIL and Santos agree on who shall be
paid for the gas delivered by EEKL and KEIL.
As of June 30, 2007, the agreement between EEKL, KEIL and PGN for the Sales and Purchase of Gas
had already expired. The continuing delivery of gas to PGN was based on extraordinary circumstances
under the direction of BPMIGAS.
As of the audit date, no new sales and purchase of gas agreement has been signed by the parties.
52

33. CONTINGENCIES (Continued)

The sales of gas for the period December 2006 to January 2007 with a volume of 1,157,988.38 MMBTU
at a price of USD 2.59 per MMBTU with the total price amounting to USD 2,999,189.90 had already
been paid to Santos. As of December 31, 2007, total receivable of EEKL and KEIL amounting to USD
16,604,225, including the amount of USD 2,999,189.90 paid by PGN to Santos. According to minutes of
meeting dated February 1, 2008 between PGN, Pertamina and KEIL, all parties agreed on the volume
sent by EEKL and KEIL to PGN, which up to December 31, 2007, was 8,395,870 MMBTU. There was
difference of 90,058 MMBTU less than the volume booked by EEKL and KEIL.
As of this report date, the amount is considered past due and with the difference in the volume as of
December 31, 2007; no provision for probable losses will be recognized as the management believes that
the whole account is collectible. Any losses or gain that will result from any mode of settlement that both
parties agree to in the future will be recognized in the books at the date the transaction is consummated.
34. OPERATING HAZARDS AND UNSECURED RISKS

The Company and its Subsidiaries operations are subject to hazards and inherent risks 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 insured 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 PSC 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.
As of the audit report date, regulation for mechanism of site restoration obligations has not yet been
issued by the government.
Even so centain Subsidiaries have provided provision for abandonements and site restoration. The
amount of annual provision is calculated by estimating all restoration costs divided by the PSC or TAC
period.
53

35. ABANDONMENT AND SITE RESTORATION OBLIGATIONS (Continued)

The movements of site restoration obligation were as follows:
2007
Area of Interest
Malacca PSC
Kangean PSC
Total
January 1,
85,644,827
18,040,000
Addition
Translation
adjustment
Deduction
20,047,086
17,942,786
8,971,393
4,402,703
1,072,865
103,684,827
December 31,
110,094,616
28,084,258
138,178,874
2006
Area of Interest
January 1,
Malacca PSC
Kangean PSC
73,214,347
9,830,000
Total
83,044,347
Addition
Translation
adjustment
Deduction
18,758,161
9,164,000
(6,327,681 )
(954,000 )
December 31,
85,644,827
18,040,000
103,684,827
36. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

As of December 31, 2007 and 2006, the Company and its Subsidiaries had monetary assets and liabilities
denominated in foreign currencies as follows:
2006
2007
Foreign Currency
Assets
Cash and cash equivalents
Restricted time deposits
Trade receivables
Other receivables
Site restoration fund
Subsidiary's dividend tax
USD 47,257,599
Euro
6,930
USD
5,482,749
USD 76,776,250
USD 58,205,705
USD 20,409,456
USD 35,024,567
USD 126,813,229
USD 11,688,567
USD
-
Total Assets
Liabilities
Trade payables
Other payables
Short-term loan
Accrued expense
Long-term loans
Site restoration obligation
Subsidiary's dividend tax
Equivalent in
Rupiah
445,119,328
95,354
51,642,013
723,155,499
548,239,536
192,236,669
329,896,400
1,194,453,802
110,094,615
-
Foreign Currency
USD 67,650,786
Euro
6,884
USD
USD
USD 14,062,818
USD 33,874,448
USD 40,700,454
USD 104,952,642
USD
9,494,992
USD 22,044,678
3,594,933,216
USD
USD
USD
USD
USD
USD
USD
USD
29,155,814
11,856,368
272,750,000
60,278,431
6,514,852
139,133,483
14,670,228
39,351,080
274,618,618
111,675,134
2,569,032,250
567,762,546
61,363,392
1,310,938,142
138,178,874
370,647,819
Equivalent in
Rupiah
610,210,093
81,635
126,846,622
305,547,523
367,118,093
946,672,828
85,644,826
198,842,996
2,640,964,616
USD 48,042,580
USD
9,967,936
USD
USD 42,811,986
USD 22,044,678
USD 547,750,000
USD 11,494,992
USD 22,044,678
433,344,074
89,910,786
386,164,115
198,842,992
4,940,705,000
103,684,827
198,842,992
Total Liabilities
5,404,216,775
6,351,494,786
Net Liabilities
(1,809,283,559 )
(3,710,530,170 )
54

37. OTHER SIGNIFICANT INFORMATION

Other significant information in relation to the operational activities of the Company and its Subsidiaries
is as follows:
a.
Acquisition of PT Indelberg Indonesia Perkasa

On May 31, 2007, the Company signed the Conditional Sales and Purchase Agreement (CSPA) with
Eka Sinto Kasih Tjia (ESKT) and Ir. Utaryo Suwanto (USW) whereby it was agreed that the
Company will acquire 75% ownership interest in PT Indelberg Indonesia Perkasa (IIP) owned by
ESKT and USW at an agreed price of USD 10,000 upon the completion of either one of the
following conditions:
(i) At least 3 years period after the effectiveness of the Operations Cooperation Agreement (OCA)
dated April 25, 2007 and the approval from PT Pertamina EP is obtained, or
(ii) IIP has obtained the approval from PT Pertamina EP to takeover the share.
The agreement stipulates among others a condition for IIP to issue a bank guarantee amounting to
USD 8,100,000, which subsequently will be used for IIP.
IIP has the OCA with PT Pertamina EP dated April 25, 2007 to operate exploration and production
of oil and gas in Suci operating area, East Java. The OCA agreement stipulates, among others,
a condition to issue a bank guarantee on the part of IIP amounting to USD 8,100,000 for the period
of three (3) years starting from the date of OCA agreement.
As of this report date, the management is still reviewing the effect of the transaction on the
Companys consolidated financial statements. The consolidated financial statements do not include
adjustments that might result from the outcome of signing the CSPA.
b. New Shares Subscription on EMP Inc.

On March 6, 2007, the Company signed binding agreements with Mitsubishi Corporation (MC) and
Japan Petroleum Exploration Co., Ltd. (Japex) whereby MC and Japex will assume new subscription
shares in EMP Inc. Based on these agreements, MC and Japex will assume, in aggregate, an indirect
50% working interest in the Kangean PSC block, as well as agreeing to carry a substantial portion of
the remaining development capital expenditure for Kangean PSC block. The total subscription
proceeds from this transaction amounts to USD 360 million.
The total proceeds from share subscription of USD 360 million will be used for the following items:
(i) Repay credit facility under the Credit Facility Agreement dated May 19, 2005 between EMP Inc.,
the Company, Credit Suisse - Singapore Branch and several financial institutions, which represent
part of Credit Suisse syndication. The payment consists of total principal plus accrued interest,
settlement value and agent fee totalling approximately USD 292 million.
(ii) Repay all EMP Inc., KEIL and EEKLs receivables from and payables to companies in the
Companys group at December 31, 2006 in the amount of approximately USD 48 million; and
(iii) The remaining balance will be paid by EMP Inc. to the Company in the form of dividend
payment based on the declaration of dividend payment at before Closing date.
55

37. OTHER SIGNIFICANT INFORMATION (Continued)

Based on the Agreement, the Company and EMP Inc. shall use their best endeavors to reschedule
payment of the outstanding trade account payables. In such circumstances, 50% of the amount in the
Debt Service Reserve Account (DSRA) at before Closing Date shall be retained by EMP Inc. for part
of payment of these amounts, and the other 50% shall be dividend (additional) to the Company.
If, the rescheduled payment cannot be made, the Company shall ensure those payables are cleared on
or prior to Closing Date. The total amount in the DSRA shall be available as dividend to the
Company. Based on the amendment letter dated May 10, 2007, it has been agreed that the amount to
be retained by EMP Inc. as part payment of trade account payables should be USD 5 million.
The completion of the transaction shall depend upon the following conditions precedent having been
fulfilled:
-
The approval from the Companys stockholders at a general meeting of stockholders and the
Bapepam-LK in respect of the transaction.
Receipt of a letter from the facility agent acknowledging that on payment by EMP Inc. of the
facility amount, EMP Inc.s debt will be discharged in full under the credit facility agreement.
Termination of the old joint operating agreement (JOA) and execution of new JOA, Shareholders
Agreement, Definitive Agreement and other completion agreements.
The transaction involves MC and Japex subscribing for new shares in EMP Inc. to dilute the
Companys current 100% shareholding to 50%.
Based on the opinion of legal consultant Hadiputranto, Hadinoto & Partner dated May 15, 2007, the
specific conditions precedent as stipulated in the agreement dated March 6, 2007 have been satisfied.
Therefore, the transaction of EMP Inc.s new shares issuance was effective on May 16, 2007.
Based on the EMP Incs director resolution dated February 21, 2008, EMP Inc declared the final
dividend to the Company in respect with the Agreement amounting to USD 7,791,944.22.
c.
East Java Gas Pipeline incident

On November 22, 2006, IJV-K shut down gas production at the Pagerungan field in the Kangean
PSC due to the rupture of the East Java Gas Pipeline (EJGP), which unfortunately resulted in
several fatalities and serious injuries. The EJGP failure occurred at KM 38 of the Porong - Gempol
Tollway, Sidoarjo, East Java, as a result of land subsidence in the surrounding area of the mud flow
and over-burdening created by the bund-wall built along the top of the pipeline. EJGP is the main gas
transmission line connecting Pagerungan gas production facilities (IJV-Kangean) and Maleo gas
production facilities (Santos) to various industries and power plants in East Java. This pipeline is
owned and operated by PT Pertamina (Persero).
On December 1, 2006 based on the BPMigas Letter No. 388/BPB0000.2006-S1, IJV-K commenced
supply of up to 45 MMCFD of gas using the PT Perusahaan Gas Negara (Persero) Tbk (PGN),
Porong distribution pipeline. As the PGN Porong distribution pipeline can handle a maximum flow
of 67 MMCFD gas, the remaining 22 MMCFD gas being supplied by the Santos Maleo field.
56

37. OTHER SIGNIFICANT INFORMATION (Continued)

d. New Accounting Standard Pronouncements
The Indonesian Institute of Accountants released revisions to several accounting standards that may
have certain impacts to the Company and Subsidiaries consolidated financial statements. These are:
-
PSAK No. 13 (Revision 2007) - Investment Properties (effective for financial statements for the
period commencing from on or after January 1, 2008)
PSAK No. 16 (Revision 2007) - Fixed Assets (effective for financial statements for the period
commencing from on or after January 1, 2008)
PSAK No. 30 (Revision 2007) - Rental (effective for financial statements for the period
commencing from on or after January 1, 2008)
PSAK No. 50 (Revision 2006) - Financial Instruments: Presentation and Disclosure (effective for
financial statements for the period commencing from on or after January 1, 2009)
PSAK No. 55 (Revision 2006) - Financial Instruments: Recognition and Measurements (effective
for financial statements for the period commencing from on or after January 1, 2009)
The Company and Subsidiaries are evaluating the impact on the consolidated financial statements as a
result of the adoption of the above new accounting standards.
38. SUBSEQUENT EVENT
Based on the Notarial Deed No. 44 of the Minutes of EGMS dated March 14, 2008 of Robert
Purba, S.H., Notary in Jakarta, the Companys stockholders agreed to:
-
Convert of MLC receivables to KEL and PAN into shares ownership in KEL and PAN by way of
issuance of new shares in KEL and PAN. MLC as the holder of receivables plans to convert its
receivables to KEL and PAN amounting to USD 29 million and USD 1 million, respectively, into
shares ownership in KEL and PAN, therefore MLC shall owned in the 99.99% shares in KEL and
PAN. Once the conversion is effective, the Companys ownership interest in KEL and PAN will be
diluted accordingly (see Note 1c).
Alter the composition of the Companys commissioners, therefore the members of the Companys
board of commissioners since March 14, 2008 were as follows:
Commissioner
Commissioner
:
:
:
:
:
Ari Saptari Hudaya

Sulaiman Zuhdi Pane
Encumber the entire and/or a substantial part of the Companys assets and/or its Subsidiaries or to
issue Corporate Guarantee(s) with respect to financing and/or refinancing.
The conversion transaction has obtained the approval from the Subsidiarys lenders in respect to MBFs
loan from Merril Lynch.
57

39. RECLASSIFICATION OF ACCOUNTS

Certain accounts in the consolidated financial statements for December 31, 2006 have been reclassified to
conform to the presentation of accounts in the consolidated financial statement for December 31, 2007.
40. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its Subsidiaries have been approved for release
by the Boards of Directors and Commissioners on March 26, 2008.
58

SUPPLEMENTARY INFORMATION (UNAUDITED)
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 (in MBOE) shown below are reasonable estimates based on available engineering and geological data, as follows:
Malacca 1)
Kangean 2)
Gelam 3)
Semberah 4)
Gebang 5)
Korinci 6)
Bentu 7)
Crude
Oil
Crude Oil, Gas

and Condensate *)
Crude
Oil
Gas and
Crude Oil
Crude Oil, Gas

and Condensate *)
Gas
Gas
Proven developed undeveloped

and probable reserves
Revision to previous estimation
Production during the year
34,529
(3,352 )
211,923
35,000
(3,488 )
5,116
(123 )
22,399
(166 )
31,177
243,435
4,993
22,233

31,177
4,352
(3,069 )
243,435
(2,922 )
4,993
(117 )
32,460
240,513
4,876
335
882
(196 )
12,595
-
48,273
-
1,021
12,595
48,273
22,233
(647 )
1,021
(121 )
12,595
(357 )
48,273
-
21,586
900
12,238
48,273
59

RESERVE ESTIMATION (Continued)
Malacca 1)
Kangean 2)
Gelam 3)
Semberah 4)
Gebang 5)
Korinci 6)
Bentu 7)
Crude
Oil
Crude Oil, Gas

and Condensate *)
Crude
Oil
Gas and
Crude Oil
Crude Oil, Gas

and Condensate *)
Gas
Gas
Proven developed and undeveloped

reserves
23,868
(3,352 )
161,862
(23,167 )
(3,488 )
987
(123 )
6,547
(166 )
187
38
(196 )
2,661
-
23,062
-
20,516
135,207
864
6,381
29
2,661
23,062

20,516
10,602
(3,069 )
135,207
(2,922 )
864
(117 )
6,381
(647 )
29
92
(121 )
2,661
(357 )
23,602
-
28,049
132,285
747
5,734
2,304
23,602
*) Units for gas and condensate have been converted from Billion Cubic Feet (BCF) and Million Barrels of Oil (MMBO) to Thousand Barrels Oil Equivalent (MBOE).
60

RESERVE ESTIMATION (Continued)
1) Estimated oil and gas reserves in the Malacca Block as of October 31, 2007, were certified by Gaffney, Cline and Associates (GCA), independent petroleum
engineering consultants in their report dated January 2008.
2) Estimated oil and gas reserves in Kangean Block were certified by:
- DeGoyler and MacNaughton (D&M), independent petroleum engineering consultants, as of September 30, 2004, in their report dated November 12, 2004 for
the Pagerungan Field and the Rancak Field;
- Gaffney, Cline and Associates (GCA), independent petroleum engineering consultants, as of September 30, 2005, in their report dated May 5, 2006 for the
Pagerungan Utara Field and the Sepanjang Field; and
- Sproule International, independent petroleum engineering consultants, as of July 31, 2006, in their report dated November 3, 2006 for the Terang Field, Sirasun
Field and Batur Field.
3) Estimated oil and gas reserves in Gelam Block as of September 30, 2005 were certified by Gaffney, Cline and Associates (GCA), independent petroleum engineering
consultants in their report dated February 24, 2006.
4) Estimated oil and gas reserves in Semberah Block as of September 30, 2005 were certified by Gaffney, Cline and Associates (GCA), independent petroleum
engineering consultants in their report dated March 9, 2006.
5) Estimated oil and gas reserves in Gebang Block as of January 1, 2006 were certified by Gaffney, Cline and Associates (GCA), independent petroleum engineering
consultants in their report dated March 16, 2006.
6) Estimated oil and gas reserves in Korinci Block as of September 2005 were certified by Malkewicz Hueni and Associates (MHA), independent petroleum
engineering consultants in their report dated September 13, 2005.
7) Estimated oil and gas reserves in Bentu Block as of September 2005 were certified by Malkewicz Hueni and Associates (MHA), independent petroleum engineering
consultants in their report dated September 13, 2005.
61
53
54
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EMP - AR 07 - Final - Eng

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Annual Rep or t

PT ENERGI MEGA PERSADA Tbk

Report of the President Director

Message from the President

Managements Discussion and Analysis of

Safety, Health and Environment

Corporate Governance Report

The soft copy of this report and regular

C omp any Prof il e

Gebang JOB PSC

Malacca Strait PSC

Oil and Gas Properties

The Company is applying its extensive

(in billion Rupiah, except EPS and Financial Ratios)

Total Oil Production (mmbo)

Gas Sales (mmcfd)

Total Gas Production (mmboe)

Production Performance (on a gross basis)

Oil Production (bopd)

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

Product Price Realizations (on a gross basis)

Average realized liquid price (US$ / bbl)

2007 Year End Proforma Gross Reserves and Resources

Malacca Strait PSC

Korinci Baru PSC

Gebang JOB PSC

Gross Reserves and Resources

Malacca Strait PSC

Korinci Baru PSC

Gebang JOB PSC

The introduction of Mitsubishi and Japex as

During the year EMP has continued to

I would like to formally record my

Ari Saptari Hudaja

Fourth, new gas supply agreements were

The Kangean 50% farmout while reducing

During the year the Company drilled a

Safety, Health and Environment and

Past and new investments are expected to

Christian Victor Ponto

< Board of Directors, from left to right:

revie w of operat ions

Kange an P S C (working int eres t 50 %)

North Pagerungan Field

Pagerungan Besar Island Field

(PGA, PGB, PGC & PGR)

West Kangean Field

East Pagerungan Field

Sepanjang Island Field

Floating Storage Offshore

Terang Sirasun Batur Field

Operator: Kangean Energy Indonesia Limited (60%)

After oil supplies from Sepanjang field were temporarily stopped

Bentu KPS & Korinci Baru KPS

OIL & GAS FIELD

PGN DISTRIBUTION GRID

Malacca Strait PSC (working interest 60.49%)

Malacca Strait PSC

PRODUCTION PROCESS PLANT