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Bambang

Bambang Yuwono
Yuwono
Outline

Production sharing Contract


Financial Aspects

Introduction
Basic Principles
Exploration & Development Activities
Production Activities
Supporting Activities
Lifting Sharing Analysis
Accounting Procedures
Fiscal Terms
Budgeting & Reporting
Budget Preparation
Introduction
Long Term Planning - Contract Years Overview

Field
Field11Production
ProductionOperations
Operations

Field
Field22Production
ProductionOperations
Operations

Field
Field33Production
ProductionOperations
Operations

Activities
Activitiesfor
forField
FieldDevelopment
DevelopmentProjects/POD
Projects/POD(AFE)
(AFE)

Activities
Activitiesfor
forExplorations
Explorations&&Other
OtherProjects
Projects(AFE)
(AFE)

Activities
Activitiesfor
forRoutines
Routines

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Exploration Phase Production Phase


Basic Principles terms

General
The term of the PS Contract is 30 years as from the date of the
contract signed, and may be extended for 20 years.
Contract extension proposed to the Minister through BPMIGAS
within 10 to 2 years prior to the original contract expiry date.
When it involves the period of gas sales agreement which is
beyond the efective date of the contract, the extension may be
proposed at a sooner date.
The activities shall commence no later than 180 days as from
the effective date (when the contract signed).
Contractor may propose to the Minister through BPMIGAS
ammendments to the terms and condition of the contract. The
proposal may be either approved or disapproved by the Minister
based on the evaluation of BPMIGAS.
Basic Principles terms
Exploration
6 years with a 4-year extension upon Contractors request,
provided that the minimum requirements have been met.
If no commercial discovery during the 10-year exploration
period, the contract shall be terminated.
During the first 3 years of exploration period, Contractor shall
perform committed work programs at the estimated amount as
set out in the contract. In the event Contractor terminates the
contract before completing the committed work programs, the
outstanding commitments shall be payable to the government
through BPMIGAS.

Development
When the plan of development (POD) of the first field approved,
the field development shall commence no later than 5 years
following the end of the exploration phase.
Basic Principles Participating Interest
Ownerships
The holder of undivided interests in each PSC may be more
than one party.
Each interest holder in a PSC is legally a single entity.

Assignment
Contractor may assign all or any part of its undivided interest to any
affiliated company, then submit a notification to BPMIGAS.
Contractor may assign all or any part of its undivided interest to a
non-affiliated company with the prior written consent of BPMIGAS.
Government Regulation No.35/2004, effective 14 October 2004,
requires that the assignments to be approved by the Minister based
on BPMIGAS evaluation. The Minister may require Contractor to
prioritize the Indonesian national companies for the assignments to
a non-affiliated company or to a non-party of the PSC. The majority
interests cannot be assigned to a non-affiliated company during the
first 3 years of exploration period.
Basic Principles Participating Interest
First Field Development
Following the approval of the first plan of development (POD)
Contractor is obligated to offer a ten percent (10%) undivided
interests to an Indonesian Participant.
The Government Regulation No.35/2004 spells out that the
Indonesia Participant is a local government owned company.
Local companies shall response to this offer within 60 days as
from the date of the offering letter.
In the event no local company responses within 60 days, the
Contractor shall offer this participating interest to national
companies.
National companies shall response to this offer within 60 days
as from the date offering letter.
In the event no national company responses within the 60 days,
Contractor has no obligation to offer the 10% undivided interest.
Basic Principles - Ringfencing
Each block (Contract Area) may be owned by several interest holders;
An interest holder is legally treated as a single entity;
When an oil company holds ownerships in several contract areas, a separate
legal entity has to be established for each interest in each contract area.

Prospect-1 Lead-2
Lead-2
Field-1
Field-1
Lead-3
Lead-3

Contract Area - B Lead-1


Lead-1
Field-2
Field-2 Prospect-2
Prospect-2

Contract Area - A Implications:


- Scope of Reporting
Lead - Consolidation
Prospect Lead - Taxation
- Unitization
Basic Principles Ringfencing
Refers to the previous slide
Contract area A is reported separately from Contract area B
No consolidation with regards to revenue, costs and taxation.
Field-2 lays in both contract areas represents a unitized field,
subject to a unitization agreement between block A and B.
The Minister appoints the operator of unitized field based on the
BPMIGAS evaluation.
When the extent of a unitized field in the adjacent area is an
open area, Contractor may request to the Minister through
BPMIGAS to extend its contract area to cover the whole field.
Such a request is applicable if the extent of a unitized field
remains an open area within 5 years as from the date of
Contractors report regarding the unitized field.
Basic Principles Ringfencing

Implications & Other Matters


Operating Costs to be to be recovered from production in the
same contract area annually.
Profit/loss resulted from a contract area never be consolidated
with profit/loss from any other contract areas. Each interest
holder in a PSC files for income tax separately.
Costs incurred dedicated for several blocks are allocated to
each block based on a method which is in accordance with
generally accepted and recognized accounting sistems.
Production and costs of a unitized field to be allocated to each
block typically based on estimated amounts of reserves.
The appointment of an operator for a unitized field is normally
based on techno-economic considerations.
Basic Principles Ringfencing

Field Development
A Study of a field development is required to determine the scale,
exploitation designs, and its economic forecast.
The study, known as Plan of Development (PoD), is proposed to
BPMIGAS for approval. Note:1st field requires Ministers approval.
Major Economic Measurements:
- Government Take & Contractor Take
- Internal Rate of Return (IRR)
- Pay Back period
Stand-alone approach & block-wise approach:
Stand-alone approach calculates the revenue & costs within
the field, to measure the the fields economic profile.
Block-wise approach calculates the whole revenue & costs
within the block, to reflect the real calculation of the PSC.
Basic Principles Typical Sharing
Gross
GrossRevenue
Revenue
First
FirstTranche
TranchePetroleum
Petroleum
Cost
Cost Recovery
Recovery

Equity
Equityto
tobe
beSplit
Split

CONTRACTOR
CONTRACTOR BPMIGAS
BPMIGAS
Share
Share Share
Share
DMO
DMO

DMOFee
DMOFee

Govt
GovtTax
Tax

Net
NetContractor
Contractor Indonesia
Indonesia
Share
Share Share
Share
Basic Principles Cost Structure

EXPENDITURES
EXPENDITURES: :
OPERATING COSTS :
EXPLORATION
EXPLORATION&&
DEVELOPMENT
DEVELOPMENT PRIOR YEARS
- G&G Studies UNREC.
- -Drillings
G&G Studies UNRECOV. COSTS UNREC.COSTS
COSTS
- Drillings
- Explor. Administration
- Explor. Administration
NON
NONCAPITAL
CAPITAL
PRODUCTION COST
PRODUCTION COST
- Direct Prod Exp - Oil
- -Direct
DirectProd
ProdExp
Exp- -Gas
Oil
DEPRECIATION
CAPITAL - Direct Prod
- Gas Processing Exp - Gas
CAPITAL
COST - -Utilities
Gas Processing
& Auxiliaies
COST - Utilities
- Field & Auxiliaies
Office, Services
-&Field Office,
General Admin Services
& General Admin

GENERAL
GENERAL&&
ADMINISTRATION
ADMINISTRATION
- Finance & Admin. COST
- -Engineering
Finance & Admin.
Services GROSS
GROSSREVENUE
REVENUE
COST
- Engineering
- Material Services
Services RECOVERY
- Material Services RECOVERY
- Transportation Costs
- -Personal
Transportation
ExpensesCosts
- Personal Expenses
- Public Relation
- -Community
Public Relation
Devel PRICE
PRICE
- -Gen.Office
Community Devel
Expenses
- Gen.Office
- Home Office O/H Expenses LIFTING Contractor
ContractorShare
Share
- -Interest
Home onOffice O/H LIFTING Indonesia Share
Loan Indonesia Share
- Interest on Loan

Sharing Mechanism
Exploration & Development Activities

Activities
Exploration
Exploration activities are normally related to efforts in searching for oil and
gas reserves.
Development
Development activities are normally related to developing oil and gas field,
based on an approved Plan of Development (POD).

Cost Structures
Exploration & Development Expenditures:
Exploratory and development studies & surveys, exploratory & development
drillings, administrations (allocated and non-allocated).
Notes:
- The terms Tangible and Intangible Costs are used for drilling activities.
- Tangible Costs of development wells are treated as Capital Costs.
- Tangible Costs of exploratory wells are treated as Non-Capital Costs.
- Intangible Costs are Non-Capital for both exploratory and devel wells.
Cost of production facilities and other related capital items are classified as
production expenditures, and treated as Capital Costs.
Exploration & Development Cost Items

Non
NonCapital
Capital
Exploratory
ExploratorySurvey :
Survey:
Labor,
Labor,materials
materials&&services
servicesused
usedininaerial,
aerial,geological,
geological,topographical, geophysical
topographical, geophysical&&
seismic
seismicsurveys,
surveys,and
andcore
corehole
holedrilling.
drilling.
Other
OtherExploratory
ExploratoryExpenditures
Expenditures::
Temporary
Temporaryfacilities
facilitiesused
usedininexploration
explorationand
andpurchase
purchaseofofG&G
G&Ginf ormation.
information.
Exploratory
ExploratoryDrilling:
Drilling:
Labor,
Labor,materials
materials&&services
servicesused
usedinindrilling
drillingexploratory
exploratorywells.
wells.
Development
DevelopmentDrilling:
Drilling:
Intangible
Intangible developmentdrilling,
development drilling,including
includingaccess
accessroad
roadand
andcanal s totowells.
canals wells.
Administration
Administrationallocable
allocabletotoexploration
explorationand
anddevelopment
development

Capital
Capital
Tangible
Tangibledevelopment
developmentdrilling :
drilling:
Casing
Casing&&Tubing,
Tubing,well
wellequipment
equipmentsurface/subsurface
surface/subsurface
Miscellaneous
Miscellaneouscapital
capitalitems
itemsdedicated
dedicatedtotoexploration
explorationand
anddevelopment
development
Development Production Capital


Construction
ConstructionUtilities
Utilities&&Auxiliaries
Auxiliaries
workshops,
workshops, power, waterfacilities,
power, water facilities,warehouse,
warehouse,fieldfieldroads
roads&&can als
canals

Construction
ConstructionHousing
Housingand andWelfare
Welfare
housing,
housing,recreational
recreationalfacilities,
facilities,etc.
etc.

Production
ProductionFacilities
Facilities
tangible
tangible development drilling,
development drilling, wellhead,
wellhead, flow
flow lines,
lines, gathering
gathering sstation,
tation,
treating
treatingplant
plant && equipment,
equipment, secondary
secondary recovery
recovery system,
system, gas
gas plant s and
plants and
steam system, delivery lines, storage facilities, offshore platf
steam system, delivery lines, storage facilities, offshore platform, jetties orm, jetties
and
andanchorages
anchorages

Movables
Movables
drilling
drilling && production
production tools,
tools, equipment
equipment && instruments,
instruments, barges,
barges, aiaircraft,
rcraft,
automotive,
automotive, construction
construction equipment,
equipment, furniture
furniture && office
office equipment
equipment, , and
and
miscellaneous equipment
miscellaneous equipment

Notes:
- Those classification relates to the useful lives and rate of depreciation.
- Construction & Housing are normally built in the production phase.
Production Activities
Activities
Production operations
relates to well operations, field production facilities, secondary recovery
operations, storage, handling, transportation and delivery operations,
repairs & maintenance, etc.
Production Supports (Field Office, Services and General Administration)
relates to supporting activities dedicated to production.

Cost Structure
Labor, materials (consumables) & services used in production activities
are treated as Non-Capital Costs.
Capital Costs are classified as listed in Development Activities.

Production Operations: Production Supports:


- Direct Production Oil - Field Office
- Direct Production Gas - Services
- Gas Processing - Production Administration
- Utilities & Auxiliaries Operations
Supporting Activities

Non
Non--capital
capital
Office
OfficeService
Serviceand
andGeneral
GeneralAdministration
Administration::
General
General Services
Services incl.
incl. Technical
Technical services
services && related
related services,
services, ma terial
material
services,
services,transportation,
transportation,rental
rentalofofheavy
heavyengineering
engineeringequipment,
equipment,site
siterental
rental&&
other
otherrentals
rentalsof
ofservices
services&&property,
property,personnel
personnelexpenses,
expenses,public
publicrelations,
relations,and
and
other expenses abroad.
other expenses abroad.
Overhead
OverheadAllocation/Home
Allocation/HomeOffice Officecharges
charges::
Direct
Directcharges
charges:: identifiable
identifiabletotocertain
certainactivities
activities
Overhead
Overhead:: determined
determinedby byaadetailed
detailedstudy
studyapproved
approvedby
byBPMIGAS,
BPMIGAS,applied
applied
consistently and subject to review by BPMIGAS and Contractor.
consistently and subject to review by BPMIGAS and Contractor.
Interest
InterestRecovery
Recovery: :
Interest
Interest onon loans
loans may
may bebe recoverable,
recoverable, not
not exceeding
exceeding prevailing
prevailing commercial
commercial
rates,
rates, dedicated for capital investment (typically for developing production
dedicated for capital investment (typically for developin g production
facilities).
facilities).Details
Detailsofoffinancing
financingplan
planshall
shallbe
beincluded
includedininannu al WP&B.
annual WP&B.

Capital
Capital
Furniture
Furniture&&Office
OfficeEquipment,
Equipment,Automotive,
Automotive,and
andmiscellaneous
miscellaneouscapi tal items
capital .
items.
Supporting Activities

Notes on General Administrative Expenditures :

Costs fall into this category are mostly common support costs,
allocated to Oil and Gas Operations based on an equitable
basis agreed by both parties.
Overhead from Abroad is subject to cost ceiling.
Interest on Loans for Capital Investment is typically applicable
to new field development with BPMIGAS approval.
Community Development falls within this category; it should be
donated in the form of inkind, not in cash.
Under normal operations, Total General & Administrative Costs
represent less than 10% Total Expenditures.
Lifting & Sharing Analysis

Total
TotalLifting
Lifting

Contractor
Contractor BPMIGAS
BPMIGAS
Lifting
Lifting Lifting
Lifting
Contractor BPMIGAS
Entitlement Entitlement
Cost
CostRecovery FTP
Recovery FTPShare
Share
FTP
FTPShare Equity
Share EquityShare
Share
Equity
EquityShare
Share DMO
DMO

Entitlement calculated after the year ends (January-December)


Lifting implemented during the year, using estimated volume/amount (provisional)
Imbalances are settled in cash (Cash Settlement)
Entitlement & Lifting
ENTITLEMENT
Contractor and BPMIGAS are annually entitled to a portion of oil &
gas produced and sold from the block.
Actual entitlement is calculated after the year ends, when the
variables are actual (Price, Lifting & Cost Recovery).

LIFTING
Oil & gas produced and sold thru joint lifting or individual lifting.
Joint Lifting: lifting using the same vessels/pipeline and destination. The
` proceed is shared between BPMIGAS and Contractor based
` on provisional (estimated) entitlement.
Individual Lifting: Each party lifts its own estimated entitlement based on
provisional entitlement.

OVER/UNDER LIFTING
Inbalances resulted from the difference between Lifting & Entitlement
will be settled in cash (Cash Settlement).
Entitlement Calculation
Calculation after the year ends Assumes:
Lifting 5,000 bbl, ICP $40/bbl
Operating Costs $100 Millions
Total Lifting
5,000
Contractor Entitlement:
FTP - 20% 1. Cost Recovery 2,500
1,000 US$100 millions / US$40
2. FTP Share: 288
Cost Recovery 28.8462% x 1,000 bbl
2,500
3. Equity Share 433
Equity to be Split
28.8462% x 1,500 bbl
712 1,500 288 4. (-) DMO 361
28.8462% x 25% x 5,000 bbl
TOTAL 2,861
Gov't Share Contractor Share
1,779 721
Government Entitlement:
DMO 1. FTP Share: 712
361 71.1538% x 1,000 bbl
2. Equity Share 1,067
71.1538% x 1,500 bbl
Government Contractor
Entitlement Entitlement 3. (+) DMO 361
2,139 2,861 28.8462% x 25% x 5,000 bbl
TOTAL 2,139
Lifting & Sharing

Notes on Government Tax


of 44%, 48% and 56%
STANDARD COMMON SPLITS
Corporate Tax 30%
NET
NET GOV'T
GOV'T GROSSED-UP
GROSSED-UPSPLIT
SPLIT Branch Profit Tax 14%
SPLIT
SPLIT TAX
TAX BPMIGAS
BPMIGAS CONTRACTOR
CONTRACTOR (20% x 100%-
100%-30%) 44%

85/15
85/15 56%
56% 65.9091
65.9091 34.0909
34.0909 Corporate Tax 35%
48% 71.1538 28.8462 Branch Profit Tax 13%
48% 71.1538 28.8462 (20% x 100%-
100%-35%) 48%
44%
44% 73.2143
73.2143 26.7857
26.7857
Corporate Tax 45%
65/35
65/35 56%
56% 20.4545
20.4545 79.5455
79.5455 Branch Profit Tax 11%
48%
48% 32.6923
32.6923 67.3077
67.3077
(20% x 100%-
100%-45%) 56%
44%
44% 37.5000
37.5000 62.5000
62.5000
Gross-Up Split for Contractor
70/30
70/30 56%
56% 31.8182
31.8182 68.1818
68.1818 Net After Tax 15%
48%
48% 42.3077
42.3077 57.6923
57.6923 Government Tax 44%
44% 46.4286 53.5714 Grossed-Up Tax 28.8462%
44% 46.4286 53.5714 (15/52)

NOTES:
New PSCs require changes in sharing split when there is changes in Rates of Income
Tax and Branch Profit Tax, to keep the same after tax share.
Lifting & Sharing
Crude Oil
Share split : 71.1538% dan 28.8462% (85/15):
Estimated Lifting during the year : 1,000,000 barrel @ US$40.00
Estimated Operating Costs-Oil during the year : US$20,000,000.

PROVISIONAL ENTITLEMENT TOTAL BPMIGAS CONTRACTOR


First Tranche Petroleum (FTP) 20.0000% 14.2308% 5.7692%
Cost Recovery 50.0000% - 50.0000%
Equity to be Split 30.0000% 21.3461% 8.6539%
Domestic Market Obligation (DMO) 0.0000% 7.2115% (7.2115%)
TOTAL 100.0000% 42.7884% 57.2116%

Joint Lifting :
If crude oil delivered to a refinery in January is 100,000 barrels at US$35.00/barrel, therefore
BPMIGAS portion would be US$1,497,594. (42.7884% x 100,000 x 35.00)

Individual Lifting:
If the crude oil available for lifting in January is estimated to be 100,000 barrels, then BPMIGAS
nominates + 42.788 barrel. Due to operational matters, BPMIGAS (through its appointed seller)
nominates 40,000 barrel dan Kontraktor 50,000 barrel. If crude oil price is US$35.00/barrel, then
BPMIGAS portion is US$1,400,000. (40,000 x 35.00).
Lifting & Sharing

Crude Oil DMO Fee

BPMIGAS portion includes Domestic Market Obligation (DMO) supplied by


Contractor, The amount of DMO Fee payable to Contractor is :

If the crude oil classified as New Oil (crude oil produced within the first
60 months since commencement of production), then the DMO Fee
payable to contractor is US$252,403.
(7.2115% x 100,000 barrels x US$35.00).

If the crude oil classified as Old Oil, (crude oil produced following the
first 60 months since commencement of production), then the DMO Fee
payable to contractor per barrel refers to the Contract. Lets say the DMO
Fee per barrel is 10%, the DMO Fee is US$25,240.
(7.2115% x 100,000 barrels x US$3.50).

In December, adjustment required to be aligned with PSC.


Lifting & Sharing
Gas
Share split 42.3077% dan 57.6923% (70/30):
Estimated Lifting during the year : 1,000,000 mmscf @ US$2.00 per mmscf.
Estimated Operating Costs-Gas during the year : US$1,000,000.

PROVISIONAL ENTITLEMENT TOTAL BPMIGAS CONTRACTOR


First Tranche Petroleum (FTP) 20.0000% 8.4615% 11.5385%
Cost Recovery 50.0000% - 50.0000%
Equity to be Split 30.0000% 12.6923% 13.3077%
TOTAL 100.0000% 21.1538% 78.8462%

Joint Lifting:
If during a month total gas delivered is 100,000 mmscf at US$2.00 per mmscf, then
BPMIGAS portion is US$42,3077 (21.1538% x 100,000 x 2.00).

Notes:
- Simplified calculation
- No DMO Gas (refers to the existing gas producing PSC)
Lifting & Sharing
Typical Gross Revenue of LNG
LNG
LNG LNG
LNG
PSC Plant Buyer
Block Field
Field- -11 PSC Plant Buyer
A Block Field
Field- -55 Sales
Sales
Agreement
Agreement- -11
C
Field
Field- -22
Field
Field- -33

PSC LNG
Block Field LNG
Field- -44 LNG Buyer
Buyer
B LNG
Plant
Plant Sales
Sales
Agreement
Agreement- -22

Netback Value : (a b) Gross Revenue


a. Sales Proceeds
Netback Value of each Sales
b. LNG Costs:
- Debt Service Contract is allocated to each PSC
- Processing Costs typically is based on contribution
- Transportation Costs of supply (producers %)
- Administrative Costs
Lifting & Sharing

Gross Revenue LNG of each PSC


(from previous slide for Sales Agreement 1) :

Sales Proceeds 10 cargo (3 millions of mmbtu @ US$5.00) . . . . . US$150 millions


LNG Costs:
- Debt Service US$ 20 millions
- Procesing Costs 3 millions
- Transportation Costs 5 millions
- Administration Costs 2 millions
Total LNG Costs . . . . . . . . . . . . . . . . . . US$ 30 millions
Netback Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$120 millions
Gross Revenue:
- PSC Block A (50% x US$120 millions) . . . . . . . US$ 60 millions
- PSC Block B (25% x US$120 millions) . . . . . . US$ 30 millions
- PSC Block C (25% x US$120 millions) . . . . . . . US$ 30 millions
Lifting & Sharing
Variable Sharing Analysis
Assuming other variables were constant,
then:
then
1. Higher price results in:
- Higher Revenue
- Lower Cost Recovery inkind (barrel/mcf/btu/mt)
- Higher Equity Split for BPMIGAS & Contractor
- FTP and DMO*) remain the same
- Higher BPMIGAS entitlement percentage, lower for Contractor
2. Higher lifting results in:
- Higher Revenue
- Lower Cost Recovery in bbl / mcf / btu
- Higher Equity Split for Pertamina & Contractor
- FTP and DMO*) remain the same
- Higher BPMIGAS entitlement percentage, lower for Contractor
3. Higher cost recovery results in:
- Higher Cost Recovery in bbl / mcf / btu
- Lower Equity Split for Pertamina & Contractor
- FTP and DMO*) remain the same
- Lower BPMIGAS entitlement percentage, higher for Contractor

*) when Gross Revenue > (FTP+Cost Recovery)


Lifting & Sharing
Pricing :
(Current Policy wap of 12 previous months)
CRUDE OIL
(Nature : develop the field then find the market)

QUOTED CRUDES : SLC, Senipah, Widuri, Cinta, Arjuna, Attaka, Duri


Current ICP Formula : 20% APPI + 40% Platts + 40% RIM

UNQUOTED CRUDES : related to a Quoted Crude


Example : Bula = Duri - $0.50

GAS
(Nature : typically a gas field developed after the market has been
determined, the development often involves external financing)
- Long-term contract
- Pricing varies (negotiable, economically feasible)
- LNG Price formula mostly relates to crude oil export price
Lifting & Sharing

Production & Lifting - Oil


- Production may be from more than one different fields
- They are grouped as per type of crude

FIELD
FIELD- -44 CRUDE-1
CRUDE-1

FIELD
FIELD- -nn
FIELD - 5
FIELD
FIELD FIELD
-5 - 6
FIELD
FIELD-1-1 -6 LIFTING
CRUDE-2
CRUDE-2

FIELD
FIELD- -22 FIELD
FIELD- -33
LIFTING
Lifting & Sharing

Production & Lifting - Gas


- Production may be from several different fields and blocks
- Grouped as per sales agreement, calculated as per PSC block

Dedicated reserves
FIELD Sales
Sales
FIELD- -44 Agreement
Agreement
Dedicated reserves 11

FIELD - -77
FIELD - -55 - FIELD
FIELDFIELD
FIELD
FIELD-1-1 FIELD -66 JOINT LIFTING
Sales
Sales
Agreement
Agreement
22

FIELD
FIELD- -22 FIELD
FIELD- -33 JOINT LIFTING
Lifting & Sharing
Cost Recovery

EXPENDITURES
EXPENDITURES: :
OPERATING COSTS :
EXPLORATION
EXPLORATION&&
DEVELOPMENT
DEVELOPMENT PRIOR YEARS
- G&G Studies UNREC.
- -Drillings
G&G Studies UNRECOV. COSTS UNREC.COSTS
COSTS
- Drillings
- Explor. Administration
- Explor. Administration
NON
NONCAPITAL
CAPITAL
PRODUCTION COST
PRODUCTION COST
- Direct Prod Exp - Oil
- -Direct
DirectProd
ProdExp
Exp- -Gas
Oil
DEPRECIATION
CAPITAL - Direct Prod
- Gas Processing Exp - Gas
CAPITAL
COST - -Utilities
Gas Processing
& Auxiliaies
COST - Utilities
- Field & Auxiliaies
Office, Services
-&Field Office,
General Admin Services
& General Admin

GENERAL
GENERAL&&
ADMINISTRATION
ADMINISTRATION COST
- Finance & Admin. COST
- -Engineering
Finance & Admin.
Services GROSS
GROSSREVENUE
REVENUE RECOVERY
- Engineering
- Material Services
Services RECOVERY
- Material Services
- Transportation Costs
- -Personal
Transportation
ExpensesCosts
- Personal Expenses
- Public Relation
- -Community
Public Relation
Devel PRICE
PRICE
- -Gen.Office
Community Devel
Expenses
- Gen.Office
- Home Office O/H Expenses LIFTING Contractor
ContractorShare
Share
- -Interest
Home onOffice O/H LIFTING Indonesia Share
Loan Indonesia Share
- Interest on Loan

Sharing Mechanism
Other Accounting Procedures

Costs Charging

Capital
Capital expenditures
expenditures are
are charged
charged through
through depreciation
depreciation beginning
beginning inin the
the
year
yearwhen
whenthe
thecorresponding
correspondingassets
assetsare
areplaced
placedinto
intoservice .
service.

An
Anassetassetisisconsidered
consideredas asplaced
placed into intoservice
service (PIS)
(PIS)when:
when:
--ItIts
s been
beencompleted
completed, , partially
partiallyor orwholly.
wholly.
--ItItstarts
startsrendering
renderingservices
servicesaccording
accordingto toits
itsfunction,
function,
For
Forexamples:
examples:
--aawell
wellisisconsidered
consideredas asPIS
PISwhen whenititstarts
startsproducing
producing, ,
--aastorage
storagetank
tankisisconsidered
consideredas asPIS
PISwhenwhenititstarts
startsreceiving
receivingcrude
crudeoil oil
totobe
bestored,
stored,
--ananoffloading
offloadingequipment
equipment/ /facilities
facilitiesisisconsidered
consideredas asPISPISwhen
whenititstarts
starts
being ulitized for lifting operations
being ulitized for lifting operations, ,
--aawellhead
wellheadplatform
platformisisconsidered
consideredas asPIS
PISwhenwhenititstarts
startsbeing
beingutilized
utilized
for
forplacing
placingwellheads
wellheadson onit.it.

Non
Noncapital
capitalexpenditures
expendituresare
arecharged
chargedwhen
whenthey
theyincur .
incur.
Other Accounting Procedures
Oil & Gas Allocation and Chargings

1.
1. Oil
OilCosts
Costsdirectly
directlyrelated
relatedtotooil
oiloperations
operations
2.
2. Gas
GasCosts
Costsdirectly
directlyrelated
relatedto togas
gasoperation
operation
3.
3. Common
CommonCosts
Costsdirectly
directlyrelated
relatedtotoboth
bothoil
oiland
andgas
gasoperations
operations
allocated
allocatedbased
basedon onrelative
relativerevenue
revenue
4.
4. Common
CommonSupport
SupportCosts
Costs--indirectly
indirectlyrelated
relatedtotoboth
bothoil
oiland
andgas
gasoperations
operations
allocated
allocatedbased
basedon onequitable
equitablebasis
basisagreed
agreedbybyboth
bothparties
parties

Recovery
Recoveryof ofGas
GasCost
Costout
outof
ofOil
OilRevenue
Revenue(vice
(viceversa):
versa):
1.
1. IfIf after
after commencement
commencement of of production,
production, the
the natural
natural gas
gas revenues
revenues do
do not
not
permit
permitfull
fullrecovery
recoveryofofnatural
naturalgas
gascosts,
costs,the
theexcess
excessshall
shallbe
berecovered
recoveredfrom
from
oil
oil revenues
revenues(vice
(viceversa).
versa).
2.
2. IfIfproduction
productionofofeither
eithergas
gasor
oroil
oilhas
hascommenced
commencedwhile
whileother
otherhas
hasnot,
not,costs
costs
allocated
allocatedininan
anequitable
equitablemanner.
manner.
Other Accounting Procedures
Typical Depreciation Table
- -Declining
DecliningBalance
BalanceMethod,
Method, - -Depreciation
Depreciationfactor
factor - -Group
Group11: :50%
50%
- -Full
Fullyear
yeardepreciation
depreciation - -Group
Group22: :25%
25%
- -Group 3 : 10%
Group 3 : 10%

Oil
Oil&& Gas
Gas
Group
Group11: : Gas
Gas<7years
<7years Reserves
Reserves>>77years
years
Automobiles
Automobiles 1.5
1.5years
years 3.0
3.0years
years Group
Group11
Light
LightTrucks
Trucksand
andTractor
TractorUnits
Units 2.0
2.0years
years 4.0
4.0years
years Group
Group11
Heavy Trucks
Heavy Trucks 3.0
3.0years
years 6.0
6.0years
years Group
Group11
Buses
Buses 4.5
4.5years
years
Aircraft
Aircraft 3.0
3.0years
years 6.0
6.0years
years Group
Group22
Construction
ConstructionEquipment
Equipment 3.0
3.0years
years 6.0
6.0years
years Group
Group22
Furniture
Furniture & OfficeEquipment
& Office Equipment 5.0
5.0years
years 10.0
10.0years
years Group
Group22

Group
Group22: :
Construction
ConstructionUtilities
Utilities&&Auxiliaries
Auxiliaries 5.0
5.0years
years 8.0
8.0years
years Group
Group33
Construction
Construction Housing &Welfare
Housing & Welfare 10.0
10.0years
years 20.0
20.0years
years Group
Group33
Production
ProductionFacilities
Facilities 5.0
5.0years
years 8.0
8.0years
years Group
Group33
Railroad
Railroad cars&&Locomotives
cars Locomotives 7.5
7.5years
years 15.0
15.0years
years Group
Group33
Water Transportation
Water Transportation 9.0
9.0years
years 18.0
18.0years
years Group
Group22
Drilling
Drilling&&Production
ProductionTools
Tools 5.0
5.0years
years 8.0
8.0years
years Group
Group22
Budget
Other
Preparation
Accounting
Other
Procedures
Schedules

Substance
Substanceof ofTSA
TSA
TSA
TSA means
means all all technical
technical services
services from
from home
home office
office or
or affiliates;
affiliates; considered
considered as as
inter -company billings
inter-company billings(at
(atcosts);
costs);
The
Theestimated
estimatedcosts
costsarearepresented
presentedinincolum
columCorporate
CorporateAssistant
Assistant provided
providedininthe
the
Attachment to Budget Schedules No 4, 8, 11 and
Attachment to Budget Schedules No 4, 8, 11 and summarized in Budget summarized in Bud get
Schedule
ScheduleNo No17. 17.
The
The actual
actual figures
figures are
are reported
reported inin colum
colum Corporate
Corporate Assistant
Assistant provided
provided inin the
the
Attachment to Reports No 4,
Attachment to Reports No 4, 8 & 11.8 & 11.
All
AllTSAs
TSAsproposed
proposedannualy
annualytotosupport
supportactivities
activitiesproposed
proposedduring
duringthetheyear.
year.
TSA
TSAisisaatemporary
temporaryaccount
accounttotobe
beallocated
allocatedtotoeach
eachprojects.
projects.
Requirement
RequirementforforTSATSA
TSA
TSAisisnon -routine or
non-routine orextraordinary
extraordinaryjobs.
jobs.
Upstream
Upstreamjobsjobsrelating
relatingtotothe
theIndonesian
Indonesianproject
projectplanning.
planning.
NoNo inhouse
inhouse personnel
personnel nornor available
available domestic
domestic consulting
consulting company
company capable
capable toto
perform
performthe
thejobs.
jobs.
Competitive
Competitivecharges
chargestotodomestic
domesticthird
thirdparty s (as
partys (asan
anagent).
agent).
NoNooverlap
overlapnor
nordouble
doublecharges
chargestotooverhead
overheadfromfromabroad.
abroad.
Included
Includedininthe
theapproved
approvedbudget
budgetand
andbe berequested
requestedby bythe
theoperator
operatorininIndonesia.
Indonesia.
Fiscal Terms

First Tranche Petroleum

STANDARD
STANDARDCLAUSE CLAUSE: :
. .. .. .the
theParties
Partiesshall
shallbe beentitled
entitledto
totake
takeand
andreceive
receiveeach
eachYe ar twenty
Year twentypercentpercent
of
of all Petroleum produced and saved and not used in Petroleum Operationsin
all Petroleum produced and saved and not used in Petroleum Op erations in
such Year before any deduction for the recovery of Investment
such Year before any deduction for the recovery of Investment Credit and Cr edit and
Operating
OperatingCosts Costs. .. .. .. .Such
SuchFirst
FirstTranche
TranchePetroleum
Petroleumshall
shallbe
besh ared between
shared between
BPMIGAS
BPMIGASand andCONTRACTOR
CONTRACTORin inaccordance
accordancewithwithsharing
sharingsplits
splits. .. ...

KEY
KEYWORDS
WORDS: :
before
beforeany
anydeduction
deduction
shall
shall be sharedbetween
be shared betweenBPMIGAS
BPMIGASand
andCONTRACTOR
CONTRACTOR

FTP
FTPDIFFERS
DIFFERSFROMFROMROYALTY
ROYALTY: :
- -FTP
FTPisisshared
sharedbetween
betweenthe
theParties
Parties
- -FTP
FTP has no impact when financialoperation
has no impact when financial operationruns
runsnormally*)
normally*)
- -FTP
FTP is merely to safeguard the minimum income ofthe
is merely to safeguard the minimum income of theproperty
propertyoowner
wner

*)*)In
Inthis
thiscontext,
context,normal
normaloperation
operationmeans
means: :
Gross
GrossRevenue
Revenue>>(FTP
(FTP++Investment
InvestmentCredit
Credit++Operating
OperatingCosts)
Costs)

Some
Somenew
newcontracts
contracts: :all
allFTP
FTPgoes
goestotoBPMIGAS.
BPMIGAS.
Fiscal Terms

Case on FTP
PRODUCTION SHARING CONTRACT - Conventional US Dollars
Operating Costs 10,000 10,000 20,000 20,000
with FTP No FTP with FTP No FTP
1 Lifting - mbbl 1,000 1,000 1,000 1,000
2 Price per bbl - $/bbl 20.00 20.00 20.00 20.00
3 Gross Revenue 20,000 20,000 20,000 20,000
4 First Tranche Petroleum 4,000 0 4,000 0
5 Gross Revenue after FTP 16,000 20,000 16,000 20,000
6 Investment Credit 500 500 0 0
7 Cost Recovery 10,000 10,000 16,000 20,000
8 Equity To Be Split 5,500 9,500 0 0

9 CONTRACTOR SHARE:
FTP Share 1,154 0 1,154 0
Equity Share 1,587 2,740 0 0
DMO 1,442 1,442 0 0
D M O Fee (New Oil) (1,442) (1,442) 0 0
Taxable Share 3,240 3,240 0 0
10 Gov't Tax Entitlement (1,555) (1,555) 0 0
11 Net Contractor Share 1,685 1,685 1,154 0
12 Total Share 11,685 11,685 17,154 20,000
13 Unrecovered Costs 0 0 4,000 0
14 Indonesia Share 8,315 8,315 2,846 0
Fiscal Terms
Investment Credit
STANDARD
STANDARDCLAUSE
CLAUSE: :

Contractor
Contractor may
may recover
recover an an investment
investment credit
credit amounting
amounting toto 17% 17% ofof the
the capital
capital
investment
investment costs directly required for developing Crude Oil production facilities .. .. .ofof
costs directly required for developing Crude Oil production facilities .
each
each new
new field
field out
out ofof deduction
deduction from
from gross
gross production
production before
before recovering
recovering operat ing
operating
costs,
costs,commencing
commencingininthe theearliest
earliestproduction
productionYear
Yearor orYears
Yearsbefore
beforetax taxdeduction
deduction(to (to
be paid in advance in such production Year when
be paid in advance in such production Year when taken). taken ).
The
The Investment
Investment Credit
Credit maymay bebe applied
applied toto new
new secondary
secondary recovery
recovery and and tertiary
tertiary
recovery EOR projects but is not applicable to interim production schemes
recovery EOR projects but is not applicable to interim production schemes or further or further
investment
investment toto enhance
enhance production
production andand reservoir
reservoir drainage
drainage inin excess
excess ofof whatwhat was
was
contemplated in the original project as approved by PERTAMINA
contemplated in the original project as approved by PERTAMINA. .

KEY
KEYWORDS
WORDS: :
capital
capitalinvestment
investmentcostscosts
developing
developing Crude Oilproduction
Crude Oil productionfacilities
facilities(now
(nowititisisapplicable
applicabletotogas )
gas)
each
eachnew
newfield
field
commencing
commencingininthe theearliest
earliestYear
YearororYears
Years
totobe
bepaid
paidininadvance
advanceininsuchsuchproduction
productionYearYearwhen
whentakentaken
new
newsecondary
secondaryrecovery
recoveryand andtertiary
tertiaryrecovery
recoveryEOREORprojects
projects
not
not applicable to interim production schemes or furtherinvestment
applicable to interim production schemes or further investment
Fiscal Terms
Case on Investment Credit
Operating Costs 10,000 10,000 20,000 20,000
No I/C with I/C No I/C with I/C *)
1 Lifting - mbbl 1,000 1,000 1,000 1,000
2 Price per bbl - $/bbl 20.00 20.00 20.00 20.00
3 Gross Revenue 20,000 20,000 20,000 20,000
4 First Tranche Petroleum 4,000 4,000 4,000 4,000
5 Gross Revenue after FTP 16,000 16,000 16,000 16,000
6 Investment Credit 0 2,000 0 100
7 Cost Recovery 10,000 10,000 16,000 15,900
8 Total Recoverables 10,000 12,000 16,000 16,000
9 Equity To Be Split 6,000 4,000 0 0

10 CONTRACTOR SHARE :
FTP Share 1,154 1,154 1,154 1,154
Equity Share 1,731 1,154 0 0
DMO 0 1,442 0 0
D M O Fee (New Oil) 0 (1,442) 0 0
Taxable Share 2,885 4,308 0 100
11 Gov't Tax Entitlement (1,385) (2,068) 0 (48)
12 Net Contractor Share 1,500 240 1,154 1,106
13 Total Contractor Share 11,500 12,240 17,154 17,106
14 Unrecovered Costs 0 0 4,000 4,100
15 Indonesia Share 8,500 7,760 2,846 2,894
*) Inv.Credit is partially claimed starting in the first years of production
Fiscal Terms

Domestic Market Obligation

STANDARD
STANDARDCLAUSE CLAUSE: :
after
after commercial
commercial production
production commences,
commences, . . . . . . Contractor
Contractor agree
agree toto sell
sell and
and deliver
deliver aa
portion
portionofofthe
theshare
shareofofCrude
Crudeoil
oiltotowhich
whichititisisentitled
entitledpursua nt totoSection
pursuant Section6.1.3
6.1.3and
and6.3.1
6.3.1
(Equity to be Split & FTP) for each Year as follows
(Equity to be Split & FTP) for each Year as follows : :
National
NationalSupply
Supply
(I)
(I) Production/Lifting
Production/Lifting XX
National
NationalProduction
Production
(ii)
(ii) 25%
25%Production
Production
(iii)
(iii) The lowerunder
The lower under(i)
(i)or
or(ii)
(ii) XX Grossed-up Split
Grossed-up Split

EXAMPLE
EXAMPLE: :
Production/Lifting
Production/Lifting 1,000
1,000MBBL
MBBL Contractor
ContractorSplit
Split28.8462%
28.8462%
National
NationalSupply
Supply 1,000 MBOD
1,000 MBOD
National Production
National Production 1,250
1,250MBOD
MBOD

(I)
(I) 1,000
1,000MBBL
MBBL XX1,000
1,000/ /1,250
1,250 == 800
800MBBL
MBBL higher
higher
(ii) 1,000 MBBL X 25%
(ii) 1,000 MBBL X 25% = 250 MBBL lower
= 250 MBBL lower
(iii) 250 MBBL X 28.8462%
(iii) 250 MBBL X 28.8462% = = 72
72MBBL
MBBL
Domestic Market Obligation
Fiscal Terms

Notes on Domestic Market Obligation


IfIfGross
GrossRevenue
Revenue>>(FTP(FTP++Investment
InvestmentCredit
Credit++Cost
CostRecovery),
Recovery), then
then
Contractor
Contractorshall
shallbe
berelieved
relievedfrom
fromthe
theobligation.
obligation.


Quantity
Quantitytotobe besupplied
suppliedduring
duringthe
theyear
year
- -Constant
Constant percentage, when GrossRevenue
percentage, when Gross Revenue>>(FTP (FTP++Cost
CostRecoverables).
Recoverables).
- -Fluctuate
Fluctuate percentage, when changes in lifting, price and costrecovery
percentage, when changes in lifting, price and cost recoveryaffect
affect
Gross
GrossRevenue
Revenuetotobecome
becomeless
lessthan
than(FTP
(FTP++Cost CostRecoverables).
Recoverables).
- -shall
shallbe
bethe
themaximum,
maximum,no nocarry
carryover
overfor
forany
anydeficiency.
deficiency.


DMODMOFeeFee
- -$0.20
$0.20/ /barrel
barrelfor
forfield
fieldstarts
startsproducing
producingprior
priortoto23
23February
February1989
1989
- -10% or 15% or 25% of Price / barrel according to the
10% or 15% or 25% of Price / barrel according to the contract contract


DMO
DMOFees
Feesare
arebilled
billedmonthly,
monthly,adjustments
adjustmentsmay
maybe
benecessary
necessarytotoreflect annual
reflect annual
PSC calculation
PSC calculation
Fiscal Terms

Case on Domestic Market Obligation

BUDGET ACTUAL ACTUAL


Price/bbl 25.00 20.00 23.00
Total Lifting - mbbl 1,000 1,000 1,000
Cost Recovery - MUS$ 18,000 18,000 18,000
Gross Revenue - MUS$ 25,000 20,000 23,000
mbbl mbbl mbbl
Total Lifting 1,000 1,000 1,000
FTP 200 200 200
Cost Recovery 720 800 783
Equity to be Split 80 0 17
Contractor Share:
- FTP Share 58 58 58
- Equity Share 23 0 5
Total 81 58 63
DMO (normal) 72 72 72
DMO Delivered 72 0 63
Introduction to Budgeting & Reporting

Annual Contents Financial


Report

Year - 8 Year - 9 Year - 10


Field
Field11Production
ProductionOperations
Operations

Field
Field22Production
ProductionOperations
Operations

Activities
Activitiesfor
forField
FieldDevelopment
DevelopmentProjects
Projects(POD/AFE)
(POD/AFE)

Activities
Activitiesfor
forExplorations
Explorations&&Other
OtherProjects
Projects(AFE)
(AFE)

Activities
Activitiesfor
forRoutines
Routines

Annual Budget (Part of WP&B)


Budgeting & Reporting

Annual Budget & Financial Report

Financial Control starts from Financial Reporting.


Financial Reporting captures all activities in each contract area
during reporting periods, including sharing of production, presented
mostly in a currency unit (US Dollars).
Main Financial Reporting :
Annual Budget
Part of Work Program and Budget (WP&B) itemizing planned
activities during the year.
Financial Report
Reporting the actual figures of all activities approved in the
Annual Budget (WP&B), presented quarterly for monitoring &
controlling purposes.
Budgeting
Budgeting &
& Reporting
Reporting
Contents
Budget Year Overview summarizes forecast activities during the budget year.
Areas subject to considerable variation should be discussed in the overview
together with the possible impact.
Annual Work Program provides technical descriptions of proposed
exploratory, development, exploitation and supporting activities. Maps and
other supporting documents are to be attached as appropriate.
Submissions, at least 3 months prior to the beginning of each calendar year,
or at such other time as agreed by the parties.
Revisions/Changes
BPMIGAS may propose a revision within 30 days after receipt.
Details of work program may be changed, provided they do not change the
general objective nor increase the approve expenditures.
In the event of emergency requiring immediate actions, proper actions may
be taken, and costs incurred included as operating costs.
Revisions on the WP&B should be submitted to BPMIGAS in the mid budget
year (no later than August).
Budgeting
Budgeting &
& Reporting
Reporting
The actual figures of expenditures estimated in the Work Program & Budget are
reported in Financial Report:

The summary of quarterly expenditures, operating costs, cost recovery,


sharing of production & others based on actuals.
Legal permanent document, source of reference for actual data.
Submitted to BPMIGAS not later than 20th calendar day after quarter-end.
For the 4th quarter Report, it will be necessary to submit the corrected
report not later than the following 1st of March.
Inclusion of estimated expenditures for the third month of any quarter. In
the next succeeding quarterly reports the adjustment to convert estimated
to actuals should be made in This Quarter figures.
Expressed in US dollars, rounded off to the nearest thousand dollars,
except for Report 16 and project control reports 18 to 26 should be
rounded off to the nearest US dollar amount.
Explains variances, generally when YTD variance is + 10% or more,
provided that it exceeds US$500,000.
Budgeting & Reporting
Budget & Financial Report

Estimates Actual
Actual
Estimates
(General
(GeneralLedger)
Ledger)
similar structures

- -Balance
BalanceSheet
Sheet
Financial
Financial Financial
Financial - -Income Statement
Income Statement
Items
Items Items
Items - -Other
OtherReports
Reports

PSC
PSCFinancial
Financial
BUDGET
BUDGET FINANCIAL
FINANCIAL Reporting
ReportingItems
Items
(Part
(Partof
ofWP&B)
WP&B) REPORT
REPORT

variance

PSC requires to meet:


- generally accepted and recognized accounting systems
- modern petroleum industry practices and procedures
Budgeting & Reporting
Reporting Requirement

PSC Section Books and Account and Audit


BPMIGAS shall be responsible for keeping complete books and accounts
with the assistance of CONTRACTOR reflecting all Operating Costs as well
as monies received from the sale of Crude Oil and Natural Gas,
BPMIGAS may at its option delegate to CONTRACTOR its obligation to keep
books and accounts.

PSC Exhibit C Accounting Procedure


Accounting Records and books will be kept in accordance with generally
accepted and recognized accounting systems, consistent with modern
petroleum industry practices and procedures.
Books and Reports will be maintained and prepared in accordance with
methods established by BPMIGAS.
The chart of accounts and related definitions will be prescribed by BPMIGAS.
Budgeting & Reporting
Complete Sets of Budget & Financial Report
BBUUDDGGEETT RREEPPOORRTT DESCRIPTION
DESCRIPTION
Schedule
Schedule 11 Report
Report 11 Financial
FinancialStatus
StatusReport
Report
Schedule
Schedule 22 Report
Report 22 Key Operating Statistics
Key Operating Statistics
Schedule
Schedule 33 Expense
ExpenseandandExpenditures
ExpendituresSummary
Summary
Schedule
Schedule 3A3A Report
Report 33 Expenditures Summary
Expenditures Summary
Schedule
Schedule 4 *)*)
4 Report
Report 4 *) Explorationand
4 *) Exploration andDevelopment
DevelopmentExpenditures
Expenditures
Schedule
Schedule 55 Exploratory
Exploratory Drilling Capital & OperatingExpenditure
Drilling Capital & Operating Expenditure
Schedule
Schedule 66 Development
DevelopmentDrilling
DrillingCapital
Capital&&Operating
OperatingExpenditure
Expenditure
Schedule
Schedule 77 Miscellaneous Exploratory Capital Expenditures
Miscellaneous Exploratory Capital Expenditures
Schedule
Schedule 88 *)*) Report
Report 8 *) ProductionExpense
8 *) Production ExpenseSummary
Summary
Schedule
Schedule 99 Production
Production Facilities CapitalExpenditures
Facilities Capital Expenditures
Schedule
Schedule10
10 Miscellaneous
MiscellaneousFacilities
FacilitiesCapital
CapitalExpenditures
Expenditures
Schedule
Schedule 11 *)*)
11 Report 11 *) Administrative Expense Summary
Report 11 *) Administrative Expense Summary
Schedule
Schedule12
12 Miscellaneous
MiscellaneousAdministrative
AdministrativeCapital
CapitalExpenditures
Expenditures
Schedule 13
Schedule 13 Capital Assets to be Placed into Service
Capital Assets to be Placed into Service
Schedule
Schedule14
14 Report
Report 14
14 Depreciation
DepreciationSchedule
Schedule
Schedule 15
Schedule 15 Report 15
Report 15 Detailed
Detailed ProjectSupport
Project SupportListing/Project
Listing/ProjectStatus
StatusReport
Report
Schedule
Schedule16
16 Report 16
Report 16 Lifting Forecast/Lifting Share Analysis
Lifting Forecast/Lifting Share Analysis
Schedule 17
Schedule 17 Expenditures
ExpendituresSummary
Summaryby byCategory
Category
*) Includes Attachment
Budgeting & Reporting
Budgeting & Reporting Summarized
WP&B is a means to control activities, expenditures and revenues to
achieve approved targets and goals.
WP&B is used internally for the purpose of running and fine-tuning
the journey of the business during the budget year; therefore, the
users of WP&B are BPMIGAS and Contractor including its partners.
When the budget year is passed, WP&B becomes irrelevant.

Financial Report (FR) is the actual figures of WP&B presented


quarterly; the 4th quarter report represents final annual actual figures.
FR is a permanent legal document; any changes requires approved
journal entries.
FR is used for use of internal and external relevant institutions.
Financial audits starts from Financial Report.
When the reporting period is passed, FR is still relevant especially
during the contract years.
Budget Preparation
Main Budget Schedules

Sch. 4 Sch. 8 Sch. 11


Exploration
Exploration&& Production
Production General
General&&
Development
Development Expense
Expense Administrative
Administrative

Sch. 3
Gross Revenue
Expenditures
Expenditures Cost Recovery
Summary Contractor Share
Summary Indonesia Share

Sch. 14 Sch. 16
Financial
Financial
Depreciation Status
Status Lifting
Lifting
Depreciation
Sch. 1
Budget Preparation
Data Flows in Budget Schedules

Sch.5
Sch.5 Sch.6
Sch.6 Sch.7
Sch.7 Sch.9 Sch.10
Sch.10 Sch.12
Sch.12
Expl.Drilling Devl.Drilling Misc.Capital
Expl.Drilling Devl.Drilling Misc.Capital Facilities Cap Misc.Capital
Misc.Capital Misc.Capital
Misc.Capital

Sch.4
Sch.4 Sch.8 Sch.11
Expl. Sch.8 Sch.11
Expl.&&Dev.
Dev. Prod.
Prod.Exp.
Exp. Gen.&Adm.
Gen.&Adm.
Attachment Attachment Attachment

Sch.14
Sch.14
Depreciation
Depreciation
Sch.3, Sch.1
Sch.3,3A
3A Sch.1
Financial
Sch.15 Sch.13 Expd.Summary
Expd.Summary FinancialStatus
Status
Sch.15 Sch.13
Project
ProjectList
List Assets
AssetsPIS
PIS

Sch.2
Sch.2 Sch.17 Sch.16
Sch.17 Sch.16
Statistics
Statistics Bgt.Year
Bgt.YearExpd.
Expd. Lifting
Lifting
Budget Preparation

Developing Budget

Step 1 : Identify planned activities as routines & projects


Step 2 : Posting Exploration & Development Expenditures
Step 3 : Posting Production Expenditures
Step 4 : Posting General & Administration Expenditures
Step 5 : Classifying Assets Placed Into Service and Depreciation
Step 6 : Summarizing Expenditures & Operating Costs
Step 7 : Matching Operating Costs to Lifting Value
Step 8 : Completing Other Schedules
Budget Preparation

Step -1 : Projects & Routine BUDGET SCHEDULE No 4, 8 & 11


Exploration & Development
Identification - Geological & Geophysical (G&G)
- Administration
- Other
Production
- Production Operations
Routine/Non-Projects - Field Office, Services & Gen.Admin
General Administration
- Finance & Administration
- Eng & Material Services
- Transportation
- Personnel Expenses
- Public Relation
- Community Development
- Estimates of routine activities - General Office Expenses
Activities - Anticipated Activities
- Anticipated Changes BUDGET SCHEDULE No 15

Geological & Geophysical (G&G) (BS#4)


Exploration Drilling (BS#5)
Development Drilling (BS#6)
Projects (AFE Required) G & G Capital (BS#7)
Misc. Expl & Devl Capital (BS#7)
Production Facilities (BS#9)
Misc. Production Facilities (BS#10)
- Exploration Programs Administrative Capital (BS#12)
- Plan of Development TSA (Allocated to projects)
- Other Projects
Budget Preparation Lists of Projects

Budget Schedule 15
List of Projects (AFE is required for each project)

OPERATOR : BPMIGAS SCHEDULE 15


CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : 2006 DETAILED PROGRAM SUPPORT LISTING
Page 1 of 3
1) 2) 3) CAPITAL PORTION NON - CAPITAL PORTION
1) ANTI- BUDGETED 7) 8) 9) ANTI- BUDGETED 12)
Line DESCRIPTION NEW OLD TOTAL CIPATED EXPENDITURES TO BE CIPATED EXPENDITURES
PROGRAMS PROGRAMS PROGRAMS EXPEND- 5) 6) TOTAL PLACED IN EXPEND- 10) 11) TOTAL
ITURES CURRENT FUTURE SERVICE ITURES CURRENT FUTURE
AS OF YEAR YEARS THIS YEAR AS OF YEAR YEARS
31/12/2005 31/12/2005
1 Exploration & Development
2 - Office Equipment 0 25,000 25,000 15,000 10,000 0 25,000 25,000
3 - Exploratory Drilling 6,000 6,000 12,000 3,000 7,000 2,000 12,000
4 - Development Drilling 9,000 9,000 18,000 4,000 12,000 2,000 18,000 11,000
5
6 Production
7 - Production Facilities 50,000 50,000 100,000 25,000 65,000 10,000 100,000 100,000
8 - Utilities & Auxiliaries 25,000 37,500 62,500 25,000 32,500 5,000 62,500 50,000
9
10 General Administration
11 - Furniture 4,000 0 4,000 0 4,000 0 4,000 4,000
12
13
14
15
16
17
18
19
20

To simplify the illustrations, no Intangible Drilling Costs given


Budget Preparation
Step - 2 : Posting for Exploration BUDGET SCHEDULE No 4, 8 & 11
& Development Expd. Exploration & Development
- Geological & Geophysical (G&G)
- Administration
- Other
Production
Schedule
Schedule44 - Production Operations
- Field Office, Services & Gen.Admin
Exploration
Exploration&& General Administration
Development
Development - Finance & Administration
- Eng & Material Services
- Transportation
- Personnel Expenses
- Public Relation
- Community Development
- General Office Expenses
Schedule
Schedule66
BUDGET SCHEDULE No 15
Development
Development Schedule
Drilling
Drilling Schedule55
Geological & Geophysical (BS#4)
Exploratory
Exploratory Exploration Drilling (BS#5)
Drilling
Drilling Development Drilling (BS#6)
G & G Capital (BS#7)
Misc. Expl & Devl Capital (BS#7)
Production Facilities (BS#9)
Schedule
Schedule77 Misc. Production Facilities (BS#10)
Administrative Capital (BS#12)
Miscl.
Miscl.Exploratory
Exploratory TSA (Allocated to projects)
Capital
Capital
Budget Preparation Exploratory Drilling
Budget Schedule 5
OPERATOR : BPMIGAS SCHEDULE 5
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : BUDGETED EXPLORATORY DRILLING CAPITAL & OPERATING EXPENDITURES

1) OLD 2) 3) 10) PROGRAMS


PROGRAMS NEW TOTAL TIME PHASED TOTAL EXPENDITURES TO BE PLACED
Line DESCRIPTION UNSPENT PROGRAMS TO BE 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ. IN SERVICE
AMOUNT SPENT QUARTER QUARTER QUARTER QUARTER YEAR YEAR THIS YEAR
1 TANGIBLE COST :
2 Casing and Tubing
3 Well Equipment Surface
4 Well Equipment Subsurface
5 Other Tangible
6 Total Tangible Costs 3,000 6,000 9,000 1,500 2,000 1,500 2,000 7,000 2,000
7 INTANGIBLE COST :
8 Preparation and Termination
9 Drilling Operation
10 Completion
11 General
12 Other Intangible Costs
13 Total Intangible Costs
14 TOTAL COSTS

Programs initiated in the budget year

Unspent balances of previous years programs

Estimated to be spent during the budget year


Estimated to be spent for the next budget year
Budget Preparation Development Drilling
Budget Schedule 6 NOTES
OPERATOR : BPMIGAS
Sch. 6.1 for Oil SCHEDULE 6
CONTRACT AREA : PRODUCTION SHARING CONTRACT Sch. 6.2 for Gas -BS-
BUDGET YEAR : BUDGETED DEVELOPMENT DRILLING CAPITAL & OPERATING EXPENDITURES

1) OLD 2) 3) 10) PROGRAMS


PROGRAMS NEW TOTAL TIME PHASED TOTAL EXPENDITURES TO BE PLACED
Line DESCRIPTION UNSPENT PROGRAMS TO BE 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ. IN SERVICE
AMOUNT SPENT QUARTER QUARTER QUARTER QUARTER YEAR YEAR THIS YEAR
1 TANGIBLE COST :
2 Casing and Tubing
3 Well Equipment Surface
4 Well Equipment Subsurface
5 Other Tangible
6 Total Tangible Costs 5,000 9,000 14,000 2,000 3,000 3,000 4,000 12,000 2,000 11,000
7 INTANGIBLE COST :
8 Preparation and Termination
9 Drilling Operation
10 Completion
11 General
12 Other Intangible Costs
13 Total Intangible Costs
14 TOTAL COSTS

Programs initiated in the budget year


Unspent balances of previous years programs

Estimated to be spent during the budget year


Estimated to be spent for the next budget year
Estimated to be placed in service this budget year
(Transferred to Depreciation Analysis -Sch.13 & 14)
Budget Preparation Misc.Expl & Devl.Capital
Budget Schedule 7 NOTES
OPERATOR : BPMIGAS
Sch. 7.1 for Oil SCHEDULE 7
CONTRACT AREA : PRODUCTION SHARING CONTRACT
BUDGETED MISCELLANEOUS CAPITAL EXPENDITURES
Sch. 7.2 for Gas -BS-
BUDGET YEAR :
Functional : Exploration & Development
1) OLD 2) 3) 10) PROGRAMS
Line DESCRIPTION PROGRAMS NEW TOTAL TIME PHASED TOTAL EXPENDITURES TO BE PLACED
UNSPENT PROGRAMS TO BE 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ. IN SERVICE
AMOUNT SPENT QUARTER QUARTER QUARTER QUARTER YEAR YEAR THIS YEAR
1 G & G Capital Expenditures
2 Geol.& Geoph. Equipment
3
4
5
6
7
8
9 Total G&G Capital
Expenditures
10 Administration Capital
Expenditures
11
12
13
14
15
16
17
18
19 Total Administrative
Capital Expenditures 10,000 0 10,000 2,000 0 8,000 0 10,000 0 25,000
20 TOTAL MISC.EXPL.AND DEV.
CAPITAL EXPENDITURES

Estimated to be placed in service this budget year


(Transferred to Depreciation Analysis -Sch.13 & 14)
Budget Preparation Exploration & Development Sumy
Budget Schedule 4 NOTES
OPERATOR : BPMIGAS SCHEDULE 4
CONTRACT AREA : PRODUCTION SHARING CONTRACT Sch. 4.1 for Oil -BS-
BUDGET YEAR : EXPLORATION AND DEVELOPMENT EXPENDITURE
BUDGET SUMMARY
Sch. 4.2 for Gas
1) 2) 3) 4) 5)
Line DESCRIPTION 1st QUARTER 2nd QUARTER 3rd QUARTER 4th QUARTER TOTALS

1 DRILLING EXPENDITURES
2 Development Drilling :
3 Intangible Costs
4 Tangible Costs 2,000 3,000 3,000 4,000 12,000
5 Total Development Drilling
6 Exploratory Drilling :
7 Intangible Costs
8 Tangible Costs 1,500 2,000 1,500 2,000 7,000
9 Total Exploratory Drilling
10 Total Drilling Expenditures
11 Total Intangible Expenditures
12 Total Tangible Expenditures
13 G&G EXPENDITURES
14 Geological
15 Geophysical
16 Seismic & Other Surveys
17 Capital Expenditures
18 Total G&G Expenditures
19 Total Non-Capital Expenditures
20 EXPLORATION ADMINISTRATION EXPENDITURES
21 Administration
22 Other
23 Capital Expenditures 2,000 0 8,000 0 10,000
24 Total Administration Expenditures
25 Total Non-Capital Expenditures
26 TOTAL EXPLORATION & DEVELOPMENT EXPENDITURES
27 TOTAL NON-CAPITAL EXPENDITURES
28 TOTAL CAPITAL EXPENDITURES
Budget Preparation
Step - 3 : Posting for Production BUDGET SCHEDULE No 4, 8 & 11
Expenditures Exploration & Development
- Geological & Geophysical (G&G)
- Administration
- Other
Production
Schedule
Schedule88 - Production Operations
- Field Office, Services & Gen.Admin
Production
Production General Administration
Expense
Expense - Finance & Administration
- Eng & Material Services
- Transportation
- Personnel Expenses
- Public Relation
- Community Development
- General Office Expenses
Schedule
Schedule99
BUDGET SCHEDULE No 15
Production
Production
Facilities
Facilities Geological & Geophysical (BS#4)
Exploration Drilling (BS#5)
Development Drilling (BS#6)
G & G Capital (BS#7)
Misc. Expl & Devl Capital (BS#7)
Schedule
Schedule1010 Production Facilities (BS#9)
Miscl. Misc. Production Facilities (BS#10)
Miscl.Production
Production Administrative Capital (BS#12)
Facil.
Facil.Capital
Capital TSA (Allocated to projects)
Budget Preparation Production Facilities
NOTES
Budget Schedule 9 Sch. 9.1 for Oil
OPERATOR : BPMIGAS Sch. 9.2 for Gas SCHEDULE 9
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : PRODUCTION FACILITIES CAPITAL EXPENDITURES BUDGET

1) OLD 2) 3) 10)PROGRAMS
PROGRAMS NEW TOTAL TIME PHASED TOTAL EXPENDITURES TO BE PLACED
Line DESCRIPTION UNSPENT PROGRAMS TO BE 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ. IN SERVICE
AMOUNT SPENT QUARTER QUARTER QUARTER QUARTER YEAR YEARS THIS YEAR
1 Civil
2 Decks and Structural Steel
3 Buildings
4 Equipment and Machinery 25,000 50,000 75,000 15,000 20,000 10,000 20,000 65,000 10,000 100,000
5 Piping
6 Electrical
7 Instrumentation
8 Paint & Corrosion Protection
9 Other
10 TOTAL PRODUCTION
FACILITIES EXPENDITURES

Production Facilities
Programs initiated in the budget year
reported separately
for Investment Credit Unspent balances of previous years programs
purposes.
Estimated to be spent during the budget year
Estimated to be spent for the next budget year
Estimated to be placed in service this budget year
(Transferred to Depreciation Analysis -Sch.13 & 14)
Budget Preparation Miscl. Production Capital
NOTES
Budget Schedule 10 Sch. 10.1 for Oil
OPERATOR : BPMIGAS
Sch. 10.2 for GasSCHEDULE 10
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : MISCELLANEOUS FACILITIES CAPITAL EXPENDITURES BUDGET
Functional Area : PRODUCTION

1) OLD 2) 3) 10)PROGRAMS
PROGRAMS NEW TOTAL TIME PHASED TOTAL EXPENDITURES TO BE PLACED
Line DESCRIPTION UNSPENT PROGRAMS TO BE 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ. IN SERVICE
AMOUNT SPENT QUARTER QUARTER QUARTER QUARTER YEAR YEARS THIS YEAR
1
2
3
4
5
6 Construction Utilities & Auxiliaries 12,500 25,000 37,500 7,500 10,000 5,000 10,000 32,500 5,000 50,000
7
8
9
10 TOTAL PRODUCTION
MISCELLANEOUS

Applied for capital items


Programs initiated in the budget year
which are not illegible
for Investment Credit Unspent balances of previous years programs

Estimated to be spent during the budget year


Estimated to be spent for the next budget year

Estimated to be placed in service this budget year


(Transferred to Depreciation Analysis -Sch.13 & 14)
Budget Preparation Production Exp Summary
Budget Schedule 8 (Line 1 33)
OPERATO R : B P M IG A S SCH EDU LE 8
CONTRACT AREA : P R O D U C T IO N S H A R IN G C O N T R A C T -B S -
BUDGET YEAR : P R O D U C T IO N E X P E N S E B U D G E T S U M M A R Y
ONSHORE / OFFSHORE
T I M E P H A S E D C A P IT A L E X P E N D IT U R E S
1) 2) 3) 4) 5 )T O T A L 6) 7)P LA C E D
L in e D E S C R I P T I O N 1st 2nd 3 rd 4 th FOR T H IS IN T O
Q TR Q TR Q TR Q TR THE YEAR YEAR S E R V IC E
1 D IR E C T P R O D U C T IO N E X P E N S E S - O IL
2 O il W e ll O p e ra tio n
3 O il P ro d u c tio n a n d P ro c e s s in g F a c ilitie s
4 S e c o n d a ry R e c o ve ry O p e ra tio n s
5 S to ra g e , H a n d lin g , T ra n s p o rta tio n , D e liv e ry
6 S u p e rv is io n
7 M a in te n a n c e
8 O th e r D ire c t P ro d u c tio n E xp e n s e s - O il 5 ,0 0 0 5 ,0 0 0 5 ,0 0 0 6 ,0 0 0 2 1 ,0 0 0 6 5 ,0 0 0 1 0 0 ,0 0 0
9 T o ta l D ire c t P ro d u c tio n E xp e n s e s - O il
10 D IR E C T P R O D U C T IO N E X P E N S E S - G A S
11 G a s W e ll O p e ra tio n s
12 G a s P ro d u c tio n F a c ilitie s O p e ra tio n s
13 G a s T ra n s p o rta tio n
14 S u p e rv is io n
15 M a in te n a n c e
16 O th e r D ire c t P ro d u c tio n E xp e n s e s - G a s
17 T o ta l D ire c t P ro d u c tio n E xp e n s e s - G a s
18 G A S P R O C E S S IN G
19 G a s P la n t
20 S to ra g e , H a n d lin g , T ra n s p o rta tio n , D e liv e ry
21 S u p e rv is io n
22 M a in te n a n c e
23 O th e r G a s P ro c e s .E xp .(In c l.fla rin g c o s ts )
24 T o ta l G a s P ro c e s s in g
25 U T IL IT IE S A N D A U X IL L IA R Y O P E R A T IO N S
26 P ro d u c tio n T o o ls a n d E q u ip t.M a in te n a n c e
27 S te a m S e rv ic e s
28 E le c tric ity S e rv ic e s
29 In d u s tria l a n d D o m e s tic W a te r S e rvic e
30 C o m p re s s e d A ir S e rv ic e
31 O th e r
32 T o ta l U tilitie s a n d A u xillia rie s 2 ,0 0 0 2 ,0 0 0 2 ,0 0 0 2 ,0 0 0 8 ,0 0 0 3 2 ,5 0 0 5 0 ,0 0 0
33 T O T A L P R O D U C T IO N O P E R A T IO N S
Budget Preparation Production Exp Summary
Budget Schedule 8 (Line 34 - 53)
OPERATOR : BPMIGAS SCHEDULE 8
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : PRODUCTION EXPENSE BUDGET SUMMARY
ONSHORE / OFFSHORE
TIME PHASED CAPITAL EXPENDITURES
1) 2) 3) 4) 5)TOTAL 6) 7)PLACED
Line DESCRIPTION 1st 2nd 3rd 4th FOR THIS INTO
QTR QTR QTR QTR THE YEAR YEAR SERVICE

34 F IE L D O F F IC E , S V C S A N D G E N E R A L A D M IN .
35 G e n e ra l a n d A d m in is tra tio n
36 T e c h n ic a l S u p p o rt S e rv ic e
37 M a te ria l S e rvic e s
38 T ra n s p o rta tio n C o s ts
39 O ffic e a n d M is c .B u ild in g O p e ra tio n s
40 P e rs o n n e l E xp e n s e s
41 P u b lic R e la tio n s
42 D e p re c ia tio n
43 O th e r
44 T o ta l F ie ld O ffic e , S vc s .a n d G e n e ra l
45 T O T A L P R O D U C T IO N E X P E N S E S
46 L e s s D e p re c ia tio n E xp e n s e s
47 N O N -C A P IT A L P R O D . E X P E N D IT U R E S
48 A L L O C A T E D T O O IL O P E R A T IO N S
49 A L L O C A T E D T O G A S O P E R A T IO N S
P R O D U C T IO N C O S T S U M M A R Y
T h o u s a n d s o f E q u iva le n t B a rre ls
8) MBBL 9) PROD. COST
P E R IO D O F P R O D U C T IO N PER BARREL
50 1st Q U AR TER
51 2nd Q UARTER
52 3 rd Q U A R T E R
53 4 th Q U A R T E R
Budget Preparation
Step - 4 : Posting for General & BUDGET SCHEDULE No 4, 8 & 11
Admin. Expenditures Exploration & Development
- Geological & Geophysical (G&G)
- Administration
- Other
Production
Schedule
Schedule11 11 - Production Operations
- Field Office, Services & Gen.Admin
General
General&& General Administration
Administration
Administration - Finance & Administration
- Eng & Material Services
- Transportation
- Personnel Expenses
- Public Relation
- Community Development
- General Office Expenses
Schedule
Schedule12
12 BUDGET SCHEDULE No 15
G&A
G&A
Capital
Capital Geological & Geophysical (BS#4)
Exploration Drilling (BS#5)
Development Drilling (BS#6)
G & G Capital (BS#7)
Misc. Expl & Devl Capital (BS#7)
Production Facilities (BS#9)
Misc. Production Facilities (BS#10)
Administrative Capital (BS#12)
TSA (Allocated to projects)
Budget Preparation Miscl. Administrative Capital
NOTES
Budget Schedule 10 Sch. 12.1 for Oil
Sch. 12.2 for Gas
OPERATOR : BPMIGAS SCHEDULE 12
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : MISCELLANEOUS CAPITAL EXPENDITURES BUDGET
Functional Area : General & Administration

1) OLD 2) 3) 10) PROGRAMS


Line DESCRIPTION PROGRAMS NEW TOTAL TIME PHASED TOTAL EXPENDITURES TO BE PLACED
UNSPENT PROGRAMS TO BE 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ. IN SERVICE
AMOUNT SPENT QTR QTR QTR QTR YEAR YEARS THIS YEAR
1
2 Furniture and Office Equipment 4,000 4,000 1,000 1,000 1,000 1,000 4,000 0 4,000
3
4
5
6
7
8
9
10 TOTAL GEN.ADMIN.MISCELLANEOUS

Programs initiated in the budget year

No unspent balances of previous years programs


Estimated to be spent during the budget year
No estimated to be spent for the next budget year

Estimated to be placed in service this budget year


(Transferred for Depreciation Analysis - Sch.13 & 14)
Budget Preparation Administrative Summary
Budget Schedule 11 (Line 1 30)
O P ER AT O R : B PM IG AS SC H E D U LE 11
C O N TR A C T A R EA : P R O D U C TIO N SH AR IN G C O N TR AC T -B S -
B U D G ET Y EAR : AD M IN IS T R A TIV E E X P E N S E B U D G E T S U M M A R Y
TIME PHASED C A P IT A L E X P E N D ITU R E S
1) 2) 3) 4) 5) 6) 7)
Line DESCRIPTION 1st 2nd 3rd 4th TO T A L F O R TH IS Y E A R P LA C E D IN
Q U A R T E R Q U A R TE R Q U A R T E R Q U A R TE R TH E Y E A R S E R V IC E
1 FIN A N C E & A D M IN ISTR AT IO N
2 Legal S ervices
3 Audit S ervices
4 Tax Services
5 Business Insurance
6 O ther
7 Total Finance and A dm inistration
8 EN G IN E E R IN G S E R V IC E S
9 M A T E R IA L S E R V IC E S
10 M aterials Adm inistration
11 H andling and Transportation
12 Stock D ifferences
13 D eterioration, B reakage
14 R econditioning
15 S alvage
16 S crap
17 O ther
18 Total M aterials S ervices
19 T R AN SP O R T A T IO N CO S TS
20 Air
21 Autom obile
22 O ther
23 Total Transportation C osts
24 PE R S O N N EL E XP EN SE S
25 E m ployee R elation
26 Training
27 Accom odation
28 W elfare
29 O ther
30 Total P ersonnel E xpenses
Budget Preparation Administrative Summary
Budget Schedule 11 (Line 31 64)
TIME PHASED CAPITAL EXPENDITURES
1) 2) 3) 4) 5) 6) 7)
Line DESCRIPTION 1st 2nd 3rd 4th TOTAL FOR THIS YEAR PLACED IN
QUARTER QUARTER QUARTER QUARTER THE YEAR SERVICE

31 PUBLIC RELATIONS
32 Trips
33 Other
34 Total Public Relation
35 COMMUNITY DEVELOPMENT
36 Community Projects
37 Other
38 Total Community Development
39 GENERAL OFFICE EXPENSES
40 Stationary and Supplies
41 Communications
42 Furniture and Equipment (Low Value)
43 Rents, Licences
44 Travel and Entertainment (non-allocated)
45 Computerization
46 Depreciation
47 Other
48 Total General Office Expenses 4,000 4,000
49 OVERHEAD FROM ABROAD
50 INTEREST ON LOANS FOR CAPITAL INVEST.
51 TOTAL ADMINISTRATIVE EXPENSES
52 Less Depreciation Expenses
53 NON-CAPITAL ADMIN. EXPENDITURES
54 ALLOCATED TO OIL OPERATIONS
55 ALLOCATED TO GAS OPERATIONS
Explanation of Interest Claimed :
Budget Preparation
Step - 5 : Assets Placed into Services
and Depreciation Analysis

Schedule
Schedule66 BUDGET SCHEDULE 13
Development
Development
Dilling
Dilling
Schedule ASSETS PLACED INTO SERVICE
Schedule77
THIS YEAR
Expl
Expl&&Devl
Devl
Capital
Capital

Schedule
Schedule99
Production
Production
Facilities
Facilities BUDGET SCHEDULE 14
Schedule
Schedule1010
Miscl
MisclProduction
Production
Capital
Capital DEPRECIATION
ANALYSIS
Schedule
Schedule12
12
Gen.&
Gen.&Admin.
Admin.
Capital
Capital
Budget Preparation Assets PIS
Budget Schedule 13
OPERATOR : BPMIGAS SCHEDULE 13.1
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : BUDGETED CAPITAL ASSETS TO BE PLACED INTO SERVICE

FUNCTIONAL AREA
EXPLORATION PRODUCTION
Line ASSET DESCRIPTION 1) Development 2) Exploratory 3)Geological 4) General 5)Production 6) General 7)GENERAL 8) TOTAL
Drilling Drilling Geophysical & Admin. Operations & Admin. & ADMIN.
1 GROUP 1
2 Automobiles
3 Light Trucks & Tractor Units
4 Heavy Trucks & Trailers
5 Buses
6 Aircraft
7 Construction Equipment
8 Furniture & Office Equipment 25,000 4,000 29,000
9 GROUP 2
10 Construction Utilities & Auxiliaries 50,000 50,000
11 Construction Housing & Welfare
12 Production Facilities 11,000 100,000 111,000
13 Water Transportation Equipment
14 Drilling Production Tools
15 Railroad Cars & Locomotive
16 TOTAL

Tangible Cost of Development Drilling (Sch.6)


Exploration Office equipment (Sch.7) NOTES
Sch 13.0 Summary
Utilities & Auxiliaries (Sch.10)
Production Facilities (Sch.9)
Sch. 13.1 < 7 years reserves
Sch. 13.2 > 7 years reserves
General Admin Offife Equipment (sch.12)
Budget Preparation Depreciation
Budget Schedule 14
OPERATOR : BPMIGAS SCHEDULE 14.1
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : 2006 BUDGETED DEPRECIATION SCHEDULE
Page 4 of 4
1) Placed Into Service 1998 - 2004 Placed Into Service 2005 Current Year 12)
ASSET 2) 3) 4) 5) 6) 7) 8) 9) 10)Assets 11) Total
Line ASSET DESCRIPTION GROUP Orig. Accum. Dep. 2006 Orig. Accum. Dep. 2006 Placed Dep. 2006
LIFE Cost Deprec. Bal. Dep. D Cost Deprec. Bal. Dep. D in Service D Dep.
1 GROUP 1
2 Automobiles
3 Light Trucks & Tractor Units
4 Heavy Trucks & Trailers
5 Buses
6 Aircraft
7 Construction Equipment
8 Furniture & Office Equipment 5/50% 29,000 14,500 D 14,500
9 GROUP 2
10 Construction Utilities & Auxiliaries 5/25% 50,000 12,500 D 12,500
11 Construction Housing & Welfare 10/25% 60,000 15,000 45,000 11,250 D 11,250
12 Production Facilities 5/25% 111,000 27,750 D 27,750
13 Water Transportation Equipment
14 Drilling Production Tools
15 Railroad Cars & Locomotive
16 TOTAL 66,000

12) Total 2006


DEPRECIATION ANALYSIS Deprec.Expenses
NOTES 17 Exploration/Development 15,250
18 Production 37,500
Sch 14.0 Summary 19 Administration 13,250
20 Total 66,000
Sch. 14.1 < 7 years reserves
Sch. 14.2 > 7 years reserves
Budget Preparation
Step - 6 : Summarizing Expenditures
and Operating Costs

Sch
Sch14
14
Depreciation
Depreciation

Sch BUDGET SCHEDULE 3


Sch4,5,6,7
4,5,6,7
Exploration
Exploration&& EXPENDITURES &
Development
Development OPERATING
COSTS
Sch
Sch8,9,10
8,9,10
Production
Production
Expenditures BUDGET SCHEDULE 3A
Expenditures
Sch EXPENDITURES
Sch11,12
11,12 CAPITAL & NON CAPITAL
Gen.&
Gen.&Admin.
Admin.
Expenditures
Expenditures
Budget Preparation Expenditures Summary
NOTES
Budget Schedule 3 & 3A Sch. 3.1 for Oil
OPERATOR : BPMIGAS SCHEDULE 3
CONTRACT AREA : PRODUCTION SHARING CONTRACT Sch. 3.2 for Gas -BS-
BUDGET YEAR : EXPENSE AND EXPENDITURES BUDGET SUMMARY

1) 2) 3) 4) CURRENT YEAR OPERATING EXPENSES


TIME PHASED
LINE DESCRIPTION CURRENT CURRENT CURRENT 5) 6) 7) 8) 9)
CAPITAL OPERATING TOTAL YEAR 1st 2nd 3nd 4nd TOTALS
EXPEND. EXPEND. EXPEND. DEPREC. QUARTER QUARTER QUARTER QUARTER
1 EXPLORATION & DEVELOPMENT
2 Drilling 12,000 7,000 19,000 1,500 2,000 1,500 2,000 7,000
3 Geological & Geophysical
4 Administration 10,000 10,000 15,250 3,813 3,813 3,813 3,813 15,250
5 Total Exploration & Development 22,000 29,000 15,250 5,313 5,813 5,313 5,813 22,250
6 PRODUCTION
7 Operations 97,500 29,000 126,500 7,000 7,000 7,000 8,000 29,000
8 Administration 37,500 9,375 9,375 9,375 9,375 37,500
9 Total Production 97,500 29,000 126,500 37,500 16,375 16,375 16,375 17,375 66,500
10 GENERAL & ADMINISTRATION 4,000 4,000 13,250 3,313 3,313 3,313 3,313 13,250
11 TOTALS 123,500 29,000 159,500 66,000 25,000 25,500 25,000 26,500 102,000

OPERATOR : BPMIGAS SCHEDULE 3A


CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : TOTAL BUDGETED EXPENDITURES

1) 2) 3) 4) 5)
Line DESCRIPTION 1st QTR 2nd QTR 3rd QTR 4th QTR TOTALS

1 Expl.& Dev. - Non Capital 1,500 2,000 1,500 2,000 7,000


2 Expl.& Dev. - Capital 4,000 3,000 11,000 4,000 22,000
3 Total Exploration 5,500 5,000 12,500 6,000 29,000
4 Production - Non Capital 7,000 7,000 7,000 8,000 29,000
5 Production - Capital 22,500 30,000 15,000 30,000 97,500
6 Total Production 29,500 37,000 22,000 38,000 126,500
7 Administration - Non Capital 0 0 0 0 0
8 Administration - Capital 1,000 1,000 1,000 1,000 4,000
9 Total Administration 1,000 1,000 1,000 1,000 4,000
10 TOTAL EXPENDITURES - NON CAPITAL 8,500 9,000 8,500 10,000 36,000
11 TOTAL EXPENDITURES - CAPITAL 27,500 34,000 27,000 35,000 123,500
12 TOTAL EXPENDITURES 36,000 43,000 35,500 45,000 159,500
Budget Preparation
Step - 7 : Matching Operating Costs
to Lifting Value

Sch
Sch16 16 Gross Revenue
Lifting
Lifting
Forecast
Forecast
Sch
Sch33 BUDGET SCHEDULE 1
Non
NonCapital
Capital FINANCIAL STATISTICAL
Costs
Costs Operating Costs REPORT

Sharing Mechanism
Sch
Sch14
14
Depreciation
Depreciation

Operating Costs consist of :


a) Current year non-capital costs
b) Current year depreciation for capital costs
c) Current year allowed recovery of prior years unrecovered Operating Costs
Budget Preparation Expenditures Summary
Budget Schedule
OPERATOR
:16 BPMIGAS SCHEDULE 16.1
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : PRODUCTION LIFTING FORECAST
CRUDE OIL/CONDENSATE - MBBLS
TIME PERIOD FIELD PRODUCTION
LINE 1) 2) 3) 4) 5) 15)
YEAR MONTH TOTAL
1 2006 JANUARY 350
2 FEBRUARY 280
3 MARCH 310 28 x 10 mb
4 1ST QUARTER 940
5
6 APRIL 300
7 MAY 310
8 JUNE 300
9 2ND QUARTER 910
10
11 JULY 310
12
13
AUGUST
SEPTEMBER
310
300
Based on Production Forecast
14 3RD QUARTER 920 Consider Begininng Inventory in January
15
16 OCTOBER 310
17 NOVEMBER 300
18 DECEMBER 310
19 4TH QUARTER 920
20
21 TOTALS 1994 3,690
22 NOTES
23 2007 1ST QUARTER 819
24 2ND QUARTER 819
Sch. 16.1 for Oil
25 3RD QUARTER 828 Sch. 16.2 for Gas
26 4TH QUARTER 828
27
28 TOTALS 2008 3,294
29 TOTALS 2009 2,920
30 TOTALS 2010 2,738
31 TOTALS 2011 2,555
Budget Preparation Financial Status Report
NOTES
Budget Schedule 1
OPERATOR : BPMIGAS Sch. 1.1 for Oil SCHEDULE 1
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : BUDGETED FINANCIAL STATUS REPORT - OIL/GAS/SUMMARYSch. 1.2 for Gas
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TOTALS
1) 2) 3) 4) 5) 6) 7) 8) 9) 10)
LINE DESCRIPTION $ $ $ $ $ $ $ $ $ $
Amount BOE Amount BOE Amount BOE Amount BOE Amount BOE
1 LIFTINGS
2 Oil/Condensate MBBLS 940 910 920 920 3,690
3 Gas MMCF
4 GROSS REVENUE 56,400 60.00 54,600 60.00 55,200 60.00 55,200 60.00 221,400 60.00
5 FIRST TRANCHE PETROLEUM 11,280 10,920 11,040 11,040 44,280
6 GROSS REVENUE After FTP 45,120 43,680 44,160 44,160 177,120
7 INVESTMENT CREDIT
8 COST RECOVERY :
9 Unrecovered Other Costs
10 Current Year Operating Costs 25,000 25,500 25,000 26,500 102,000
11 Depreciation - Prior Year Assets 2,813 2,813 2,813 2,813 11,250
12 Depreciation - Current Year Assets 13,688 13,688 13,688 13,688 54,750
13 TOTAL COST RECOVERY 41,500 42,000 41,500 43,000 168,000
14 TOTAL RECOVERABLES 41,500 42,000 41,500 43,000 168,000
15 EQUITY TO BE SPLIT 3,620 1,680 2,660 1,160 9,120
16 Indonesia Share
17 Government FTP Share 8,026 7,770 7,855 7,855 31,507
18 Government Equity Share 2,576 1,195 1,893 825 6,489
19 Domestic Requirement 0 0 0 0 0
20 Government Tax Entitlement 2,063 1,745 1,897 1,689 7,394
21 TOTAL INDONESIA SHARE 12,665 10,710 11,645 10,370 45,390
22 Contractor Share 0
23 Contractor FTP Share 3,254 3,150 3,185 3,185 12,773
24 Contractor Equity Share 1,044 485 767 335 2,631
25 Less: Gross Domestic Requirement (4,067) (3,938) (3,981) (3,981) (15,966)
26 Add : Domestic Requirement Adjustment 4,067 3,938 3,981 3,981 15,966
27 Taxable Share 4,298 3,635 3,952 3,519 15,404
28 Government Tax Entitlement (2,063) (1,745) (1,897) (1,689) (7,394)
29 Net Contractor Share 2,235 1,890 2,055 1,830 8,010
30 Total Recoverables 41,500 42,000 41,500 43,000 168,000
31 TOTAL CONTRACTOR SHARE 43,735 43,890 43,555 44,830 176,010

TAX COMPUTATION 15) 16) 17) 18) 19)


UNRECOVERED 11) 12) 13) 14) 1st QTR 2nd QTR 3rd QTR 4th QTR TOTALS
Line OTHER COST 1st QTR 2nd QTR 3rd QTR 4th QTR Taxable Share (Line 27) 4,298 3,635 3,952 3,519 15,404
32 Balance Beginning Add : Investment Credit
33 Additions Less: Bonus Payment
34 Recovered Taxable Income 4,298 3,635 3,952 3,519 15,404
35 Balance End of Quarter Gov't Tax Entitlement 2,063 1,745 1,897 1,689 7,394
Budget Preparation Other Schedules

Step - 8 : Completing
Other Budget Schedules

Sch
Sch11
Financial
FinancialStatus
Status
Sch
Sch22 Sch
Sch88
Key
KeyOperating
Operating Production
Statistics ProductionExp
Exp
Statistics
Sch
Sch1616
Lifting
LiftingForecast
Forecast

Sch
Sch4,
4,88&&11
11
Sch
Sch17
17
Attachment
Attachmentto
to Expenditures
Expenditures
Sch
Sch4,
4,88&&11 By
11 ByCategory
Category
Budget Preparation Other Schedules
Attachment to Budget Schedule 4
OPERATOR : BPMIGAS ATTACHMENT TO
CONTRACT AREA : PRODUCTION SHARING CONTRACT SCHEDULE 4
BUDGET YEAR : BUDGETED EXPLORATION AND DEVELOPMENT EXPENDITURES -BS-

PERSONNEL COST TECHNICAL CONTRACT/ MATERIALS INSURANCE ENVIRON- SUNDRIES TOTAL


DESCRIPTION SALARIES & WAGES EMPLOYEE BENEFIT SERVICES SERVICES IMPORT DOMESTIC OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC TOTAL
EXPAT NATIONAL EXPAT NATIONAL OVERSEAS DOMESTIC Consumables Capital Consumables Capital DOMESTIC
1 DRILLING EXPENDITURES
2 Development Drilling :
3 Intangible Costs
4 Tangible Costs
5 Total Development Drilling
6 Exploratory Drilling :
7 Intangible Costs
8 Tangible Costs
9 Total Exploratory Drilling
10 Total Drilling Expenditures
11 Total Intangible Expenditures
12 Total Tangible Expenditures
13 G&G EXPENDITURES
14 Geological
15 Geophysical
16 Seismic & Other Surveys
17 Capital Expenditures
18 Total G&G Expenditures
19 Total Non-Capital Expenditures
20 EXPL. ADM. EXPENDITURES
21 Administration
22 Other
23 Capital Expenditures
24 Total Administration Expenditures
25 Total Non-Capital Expenditures
26 TOTAL EXP. & DEV. EXPENDITURES
27 TOTAL NON-CAPITAL EXPENDITURES
28 TOTAL CAPITAL EXPENDITURES
Budget Preparation Other Schedules
Attachment to Budget Schedule 8
OPERATOR :
CONTRACT AREA :
BUDGET YEAR :
PERSONNEL COST TECHNICAL CONTRACT/
DESCRIPTION SALARIES & WAGES EMPLOYEE BENEFIT SERVICES SERVICES
EXPAT NATIONAL EXPAT NATIONAL OVERSEAS DOMESTIC
1 DIRECT PRODUCTION EXPENSES - OIL
2 Oil Well Operation
3 Oil Production and Processing Facilities
4 Secondary Recovery Operations
5 Storage, Handling, Transportation, Delivery
6 Supervision
7 Maintenance
8 Other Direct Production Expenses - Oil
9 Total Direct Production Expenses - Oil
10 DIRECT PRODUCTION EXPENSES - GAS
11 Gas Well Operations
12 Gas Production Facilities Operations
13 Gas Transportation
14 Supervision
15 Maintenance
16 Other Direct Production Expenses - Gas
BPMIGAS ATTACHMENT TO
PRODUCTION SHARING CONTRACT SCHEDULE 8
BUDGETED PRODUCTION EXPENSE -BS-
MATERIALS INSURANCE ENVIRON- SUNDRIES TOTAL
IMPORT DOMESTIC OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC TOTAL
Consumables Capital Consumables Capital DOMESTIC
Budget Preparation Other Schedules
Attachment to Budget Schedule 11
OPERATOR : BPMIGAS
CONTRACT AREA : PRODUCTION SHARING CONTRACT
BUDGET YEAR : ADMINISTRATIVE EXPENSE BUDGET SUMMARY
PERSONNEL COST TECHNICAL CONTRACT/ MATERIALS
Line DESCRIPTION SALARIES & WAGES EMPLOYEE BENEFIT SERVICES SERVICES IMPORT DOMESTIC
EXPAT NATIONAL EXPAT NATIONAL OVERSEAS DOMESTIC Consumables Capital Consumables Capital
1 FINANCE & ADMINISTRATION
2 Legal Services
3 Audit Services
4 Tax Services
5 Business Insurance
6 Other
7 Total Finance and Administration
8 ENGINEERING SERVICES
9 MATERIAL SERVICES
10 Materials Administration
11 Handling and Transportation
ATTACHMENT TO
SCHEDULE 11
-BS-
INSURANCE ENVIRON- SUNDRIES TOTAL
OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC TOTAL
DOMESTIC
Budget Preparation Other Schedules
Budget Schedule 17
OPERATOR : BPMIGAS SCHEDULE 17
CONTRACT AREA : PRODUCTION SHARING CONTRACT -BS-
BUDGET YEAR : BUDGET YEAR EXPENDITURES

PERSONNEL COST TECHNICAL CONTRACT/ MATERIALS INSURANCE ENVIRON- SUNDRIES TOTAL


DESCRIPTION SALARIES & WAGES EMPLOYEE BENEFIT SERVICES SERVICES IMPORT DOMESTIC OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC TOTAL
EXPAT NATIONAL EXPAT NATIONAL OVERSEAS DOMESTIC Consumables Capital Consumables Capital DOMESTIC
1 CAPITAL EXPENDITURES
2 Exploration & Development
3 Production
4 Administration
5 Total Capital Expenditures
6 OPERATING EXPENDITURES
7 Exploration & Development
8 Production
9 Administration
10 Total Operating Expenditures
11 TOTAL EXPENDITURES
Budget Preparation Other Schedules
Attachment to Schedule 4,8 11, and Schedule - 17
DESCRIPTION OF COLUMNS
1 PERSONNEL COST :
~ Salaries & Wages
- Expatriates : Expenditures for Gross Salaries & Wages of the PSC Expatriate Personnel.
- National : Expenditures for Gross Salaries & Wages of the PSC National Employees.
~ Employee Benefits
- Expatriates : Expenditures for Employee Benefits of the PSC's Expatriate personnel, provided domestically and treated as
Direct Charges.
- National : Expenditures for Employee Benefits of the PSC's National Employees.

2 TECHNICAL SERVICES : Expenditures for non-routine/extraordinary, upstream jobs with competitive tariffs done by experts/consultant from
abroad that cannot be done by domestic personnel or consultants, such as Technical Services from Abroad.
3 CONTRACT / SERVICES : Expenditures for any job or project done by local company or consultant, not including material expenditures.
4 MATERIALS
~ Import
- Consumables : Expenditures for consumable materials, purchased from/supplied by foreign market.
- Capital : Expenditures for materials to be capitalized, purchased from/supplied by foreign market.
~ Domestic
- Consumables : Expenditures for consumable materials, purchased from/supplied by domestic market.
- Capital : Expenditures for materials to be capitalized, purchased from/supplied by domestic market.
5 INSURANCE
~ Overseas : Expenditures for overseas insurance coverage, not including personnel costs.
~ Domestic : Expenditures for domestic insurance coverage.
6 ENVIRONMENTAL : Expenditures to protect the area (location) or field from environmental damage, pollution, etc., including the cost of
CONTROL inspection done by Government Officials.
7 SUNDRIES
~ Overseas : Expenditures other than mentioned earlier, spent overseas.
~ Domestic : Domestic Expenditures other than mentioned earlier.
Bambang
Bambang Yuwono
Yuwono
PSC
PSCTaxation
Taxation--Overview
Overview
Gross
GrossRevenue
Revenue
FTP
FTP INCOME
INCOMETAX
TAX&&FINAL
FINALTAX
TAXON
ONPROFIT
PROFIT
Cost
Cost Recovery
Recovery 1.1. Contractor
ContractorGross
GrossIncome:
Income:
(+)
(+)CostCostRecovery
Recovery
(+)
(+)FTP FTP&&Equity
EquityShare
Share
Equity
Equityto
tobe
beSplit
Split (-(-) )DMO
DMO
(+)
(+) DMOFee
DMO Fee
(+/
(+/-) Over/UnderLifting
- ) Over/Under Lifting
BPMIGAS
BPMIGAS CONTRACTOR 2.2. Costs/Tax
Share
CONTRACTOR
Share Costs/TaxDeductions:
Deductions:
Share Share - -PSC
PSC OperatingCosts
Operating Costs
DMO
DMO - -Non PSC Costs
Non PSC Costs
DMOFee
DMOFee
Govt 3.3. Taxable
TaxableIncome
Income(1)
(1)(2)
(2)
GovtTax
Tax Tax
TaxPayments:
Payments:
- -Income
IncomeTax
Tax
- -Dividend
DividendTax
Tax
Net
Net Cost
Cost
Indonesia
Indonesia Contr.
Contr. Recovery
Share Recovery
Share
Share Share
OTHER
Total
TotalContr.
Contr.Share
Share
OTHERTAXES
TAXES&&LEVIES
LEVIES
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit

Thru 1983 Thru 1994 To Present


Income Tax 45% 35% 30%
Tax on Interest, Dividend & Royalty 20% 20% 20%
Total 56% 48% 44%
Ordonantie 1925 UU PPh No.7/1984 UU PPh No.10/1994
Reference
KMK 267/012/1978 KMK 458/012/1984

When a partner in a PSC is subject to a tax treaty with a foreign country tax regime, the
rate of Tax on Interest, Dividend and Royalty may be so affected that the total tax rate
changes to a lower rate.
Examples of 10% Rate of Tax on Interest, Dividend and Royalty due to tax treaty:
Income Tax 45% 35% 30%
Tax on Interest, Dividend & Royalty 10% 10% 30%
Total 50.5% 41.5% 37%

- The application of tax treaty results in lower net after tax shares for the Government.
- Some, including new contracts revise production splits to have the same net after tax shares.
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit
Initial Development (thru End of 1983)

Tax Reference:
Corporate Income Tax Ordinance 1925
Ministrial Decree No. 267/KMK.012/1978 (KepMen 267)
1. Period of Prior to KepMen 267:
Cost Recovery maximum 40% of Gross Revenue.
Equity to be Split minimum 60%,shared between Pertamina and Contractor.
85%/15% for crude Oil and 70%/30% for Gas, net after tax.
All taxes and duties are paid by Pertamina.

2. Period of KepMen 267 thru 31/12/1983:


Contractor required tax receipts for corporate (PPs) & dividend tax (PBDR).
Corporate Tax 45% and Dividend Tax 20% imposed on Taxable Income.
Taxable Income calculated from Gross Income minus costs of obtaining,
collecting and maintaining income (tax deductions).
KepMen 267 ruled out that the calculation of tax deductions to be similar to
that of PSC Accounting Procedures (known as Uniformity Principle)
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit

Contractual Adjustments following KepMen 267

Contractor(s) paid Corporate tax (PPs) and Dividend Tax (PBDR) directly to the
Government.
Costs of obtaining, collecting and maintaining the income shall be in accordance
with generally accepted and recognized accounting principles.
Grossing-up contractual share splits to reflect the same net after tax.
For 85/15 Crude Oil at 45% PPs and 20% PBDR, Total Tax Rate 56%, therefore
Contractor Share 34.0909%; For 70/30 Gas, Contractor share 68.1818%
Double declining balance method of depreciation with a switchover to straight
line method.
No more of Cost Recovery 40% ceiling.
Other Taxes and levies are paid by Pertamina
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit
Period of 1984 thru End of 1994

Tax Reference:
Income Tax Law No. 7 / 1983
Ministrial Decree No. 458/KMK.012/1984 (KepMen 458)
Ministrial Decree No. 267/KMK.012/1984 (KepMen 267)

Corporate Tax Tariff changed from 45% to 35%


Dividend Tax remains the same (20%)
Grossing-up contractual share splits to reflect the same net after tax.
For 85/15 Crude Oil at 35% PPs and 20% PBDR, Total Tax rate 48%, therefore
Contractor Share 28.8462%; For 70/30 Gas, Contractor share 57.6923%
PSC signed prior to 1/1/1984 may apply the previous share splits.
All taxes and duties are paid by Pertamina.
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit
Period of 1995 thru 23/11/2001

Tax Reference:
Income Tax Law No. 10 / 1994
Ministrial Decree No. 458/KMK.012/1984 (KepMen 458)
Ministrial Decree No. 267/KMK.012/1984 (KepMen 267)

Corporate Tax Tariff changed from 35% to 30%


Dividend Tax remains the same (20%)
Grossing-up contractual share splits to reflect the same net after tax.
For 85/15 Crude Oil at 35% PPs and 20% PBDR, Total Tax Rate 44%, therefore
Contractor Share 26.7857%; For 70/30 Gas, Contractor share 53.5714%
PSC signed prior to 1/1/1995 may apply the previous share splits.
All taxes and duties are paid by Pertamina.
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit
Period of following Law No.22 / 2001
Tax Reference:
Oil and Gas Law 2001
Income Tax Law No. 17 / 2000
Ministrial Decree No. 458/KMK.012/1984 (KepMen 458)
Ministrial Decree No. 267/KMK.012/1984 (KepMen 267)
PS Contracts following the enactment of the Oil & Gas Law 2001 :
Contractor has an option to apply fixed taxation or floating taxation.
Contractor is obligated to pay exploration and exploitation fee (iuran) for
the opportunity given to operate a block and as a compensation for
extracting oil and gas reserves.
Contractor is obligated to pay all taxes and levies other than Income Tax &
Final Tax on Profit.
Provisions related to Income Tax and Final Tax on Profit remain the same
as previously set out.

Terms & conditions of PS Contracts signed prior to Oil & Gas Law remain
unchanged, except Pertamina replaced by BPMIGAS.
Current
Current Issues
Issues
Law No.22 / 2001 (Applicable to PSC signed following 23/11/2001):
Business entities shall pay Income Tax and Final Tax on Profit and all other
Indonesian taxes, import duties, local taxes and levies.

PSCs signed after Oil & Gas Law contains the following clauses:
PSC Section V : Rights and Obligations
CONTRACTOR shall pay to the Government the Republic of Indonesia the income
tax and the final tax on profit after tax deductions imposed on it pursuant to the
Indonesia Income Tax Law and its implementing regulations.

BPMIGAS shall, except with respect to CONTRACTORs obligation to pay Income Tax and
the final tax on profit after tax deductions as set forth in this Section V, assume and
discharge all other Indonesian taxes of Contractor including value added tax,
transfer tax, import and export duties on materials, equipment and supplies brought
into Indonesia by CONTRACTOR, its contractors or subcontractors, .

One
OneArgument
Argument: :TheTheterms
termsand
andconditions
conditionsofof PSC
PSC(i.e.(i.e.85/15,
85/15,70/30
70/30andandothers)
others)
are
are based on the assumptions that Contractors are not obligated to pay taxesand
based on the assumptions that Contractors are not obligated to pay taxes and
levies other than income taxes and final tax on profit, as spelled out in the contract.
levies other than income taxes and final tax on profit, as spelled out in the contract.
Another
AnotherArgument
Argument: :Compliance
Compliancewith
withthe
theLaw
Lawand
andprevailing
prevailingregulations.
regulations.
Uniformity
UniformityPrinciple
Principle

Ministrial Circuler (SE-75/PJ/1990, 12 October 1990) affirms KepMen 267:


Costs of obtaining, collecting and maintaining income shall be deemed as costs
computed under the PSC Accounting Procedures (Exhibit C).

KepMen 267 :
(1) Contractor Gross Income, consists of :
Cost Recovery
Equity and FTP Share
(-) DMO and (+) DMO Fee
(+/- )Over/Under Lifting
(2) Costs of obtaining, collecting and maitaining income = PSC Operating Costs :
Current Year Non-Capital Costs
Current Year Depreciation of Assets
Prior Year Unrecovered Costs
(3) Taxable Income = (1) minus (2)
PSC
PSCAccounting
Accountingvs
vsGeneral
General Taxation
Taxation (1)
(1)
PSC
PSCAccounting
AccountingProcedures
Procedures General
GeneralTax
TaxAccounting
AccountingPrinciples
Principles
Operating Operating
OperatingCosts
Costscomputed
computedas asspelled
spelledout
outinin
Operating Costs
Costs computed
computed based
based on
on PSC
PSC
Accounting Procedures. the
theIncome
IncomeTax
TaxLaw,
Law,Article
Article6.6.
Accounting Procedures.
Pre -signing contract Pre -establishment costs
costs having
having >1
>1 year
Pre-signing contractcosts
costsare
arenon
nonPSC
PSCCosts
Costs Pre-establishment year
benefit shall be capitalized and amortized.
benefit shall be capitalized and amortized.
Intangible Costs
Costshaving
havingmore
morethan
than11year
yearbenefit
benefitshall
IntangibleDrilling
DrillingCosts
Costsare
arechargeable
chargeablewhen
when shall
they incur. be capitalized and amortized.
be capitalized and amortized.
they incur.
Crude Crude
Crude oil
oil sold
sold toto affiliates
affiliates isis valued
valued atat the
Crudeoil
oilsold
soldtotoaffiliates
affiliatesisisvalued
valuedatatICP.
ICP. the
actual
actual price, but tax office has the right toto
price, but tax office has the right
determine
determinethethevalue
valueforforsales
salestotoaffiliates.
affiliates.
Tax
Tax paid
paid monthly
monthly based
based on
on actual
actual lifting,
lifting, Tax
Taxdue
dueisispaid
paidnonolater
laterthan
thanend
endofofMarch
March
adjusted at end og March, the following year.
adjusted at end og March, the following year. the following year.
the following year.
Unrecovered
Unrecovered costs
costs are
are carried
carried over
over toto Losses
Lossesmay
maybe
becompensated
compensatedfor
for55years.
years.
succeeding
succeedingyears.
years.
PSC
PSCAccounting
Accountingvs
vsGeneral
General Taxation
Taxation (2)
(2)
PSC
PSCAccounting
AccountingProcedures
Procedures General
GeneralTax
TaxAccounting
AccountingPrinciples
Principles

Community Community
Communitydevelopment
developmentisisnot
nottax
taxdeductible
Communitydevelopment
developmentisisnon
noncapital
capitalcosts
costs deductible
and tax deductible.
and tax deductible.
Interest
Interest on
on loan
loan may
may only
only be
be applicable
applicable toto All
Allinterest
intereston
onloan
loanisistax
taxdeductible.
deductible.
capital
capitalinvestment
investmentand
andrequires
requiresapproval.
approval.
Consumable
Consumable items
items are
are chargeable
chargeable when Consumable
when Consumableitems
itemsare
aredeductible
deductiblewhen
whenthey
they
landed in Indonesia.
landed in Indonesia. are issued for usage.
are issued for usage.
Depreciation
Depreciationstarts
startsbeginning
beginningininthe
theyear
yearwhen Depreciation
when Depreciationstarts
startsininthe
themonth
monthofofpayment
payment
an asset is placed into service.
an asset is placed into service. ororcompletion of assets.
completion of assets.
Assets
Assetsbelong
belongtotothe
theState. Assets
State. Assetsbelong
belongtotobusiness
businessentity.
entity.
Revaluation
RevaluationofofAssets
Assetsisisnot
notpossible. Revaluation
possible. RevaluationofofAssets
Assetsisispossible.
possible.
Acquisition
Acquisition costs
costs ofof economic
economic interest
interest shall
shall Acquisition
Acquisition costs
costs ofof economic
economic interest
interest shall
shall
not be charged to Operating costs according
not be charged to Operating costs according be amortized based on unit of production
be amortized based on unit of production. .
totoPSC
PSCAccounting
AccountingProcedures
Procedures
Books
Books and
and Accounts
Accounts are
are reported
reported inin English Financial
English FinancialReports
ReportsininBahasa
BahasaIndonesia
Indonesiaand
andinin
language and in US Dollars currency. Indonesian
language and in US Dollars currency. IndonesianRupiah
Rupiah..