Financial Aspects Production Sharing Contracts

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
Operations
Field
Field33Production
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
3 4
Exploration Phase
6 7
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
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.
Field-1
Field-1
Lead-2
Lead-2
Prospect-1
Lead-3
Lead-3
Contract Area - B
Field-2
Field-2
Prospect-2
Prospect-2
Contract Area - A
Prospect
Lead-1
Lead-1
Lead
Lead
Implications:
- Scope of Reporting
- Consolidation
- 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.

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.

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
Share
Share
BPMIGAS
BPMIGAS
Share
Share
DMO
DMO
DMOFee
DMOFee
Govt
GovtTax
Tax
Net
NetContractor
Contractor
Share
Share
Indonesia
Indonesia
Share
Share
Basic Principles Cost Structure

EXPENDITURES
EXPENDITURES: :
EXPLORATION
EXPLORATION&&
DEVELOPMENT
DEVELOPMENT
- G&G Studies
G&G Studies
- -Drillings
Drillings
- Explor.
Administration
- Explor. Administration
OPERATING COSTS :
PRIOR YEARS
UNRECOV. COSTS
NON
NONCAPITAL
CAPITAL
COST
COST
PRODUCTION
PRODUCTION
CAPITAL
CAPITAL
COST
COST
- Direct Prod Exp - Oil

DirectProd
ProdExp
Exp- -Gas
Oil
- -Direct
Direct
Prod
Exp
Gas
- Gas Processing
Gas Processing
- -Utilities
& Auxiliaies
Utilities
& Auxiliaies
- Field
Office,
Services
-&Field
Office,
Services
General Admin
& General Admin
DEPRECIATION
GENERAL
GENERAL&&
ADMINISTRATION
ADMINISTRATION
- Finance & Admin.

Finance & Admin.
- -Engineering
Services
Engineering
Services
- Material
Services
Material
Services
- Transportation Costs
Transportation
Costs
- -Personal
Expenses
Personal
Expenses
- Public Relation
Public Relation
- -Community
Devel
Community
Devel
- -Gen.Office
Expenses
Gen.Office
Expenses
- Home Office O/H
Home on
Office
O/H
- -Interest
Loan
- Interest on Loan
UNREC.
UNREC.COSTS
COSTS
GROSS
GROSSREVENUE
REVENUE
PRICE
PRICE
LIFTING
LIFTING
COST
COST
RECOVERY
RECOVERY
Contractor
ContractorShare
Share
Indonesia
Share
Indonesia Share
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,
hical, geophysical
Labor,materials
materials&&services
servicesused
usedininaerial,
aerial,geological,
geological,topograp
topographical,
geophysical&&
seismic
seismicsurveys,
surveys,and
andcore
corehole
holedrilling.
drilling.
Other
:
OtherExploratory
ExploratoryExpenditures
Expenditures:
Temporary
ormation.
Temporaryfacilities
facilitiesused
usedininexploration
explorationand
andpurchase
purchaseofofG&G
G&Ginf
information.
Exploratory
:
ExploratoryDrilling
Drilling:
Labor,
Labor,materials
materials&&services
servicesused
usedinindrilling
drillingexploratory
exploratorywells.
wells.
Development
DevelopmentDrilling:
Drilling:
Intangible
development
s totowells.
Intangible developmentdrilling,
drilling,including
includingaccess
accessroad
roadand
andcanal
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,
power,
water
als
workshops, power, waterfacilities,
facilities,warehouse,
warehouse,field
fieldroads
roads&&can
canals
Construction
ConstructionHousing
Housingand
andWelfare
Welfare
housing,
housing,recreational
recreationalfacilities,
facilities,etc.
etc.
Production
ProductionFacilities
Facilities
tangible
development
tation,
tangible development drilling,
drilling, wellhead,
wellhead, flow
flow lines,
lines, gathering
gathering sstation,
treating
s and
treatingplant
plant && equipment,
equipment, secondary
secondary recovery
recovery system,
system, gas
gas plant
plants
and
steam
system,
delivery
lines,
storage
facilities,
offshore
platf
orm,
jetties
steam system, delivery lines, storage facilities, offshore platform, jetties
and
andanchorages
anchorages
Movables
Movables
drilling
rcraft,
drilling && production
production tools,
tools, equipment
equipment && instruments,
instruments, barges,
barges, aiaircraft,
automotive,
, and
automotive, construction
construction equipment,
equipment, furniture
furniture && office
office equipment
equipment,
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:
- Field Office
- Direct Production Oil
- Services
- Direct Production Gas
- Production Administration
- Gas Processing
- Utilities & Auxiliaries Operations
Non
Non--capital
capital
Office
:
OfficeService
Serviceand
andGeneral
GeneralAdministration
Administration:
General
terial
General Services
Services incl.
incl. Technical
Technical services
services && related
related services,
services, ma
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
: identifiable
Directcharges
charges:
identifiableto
tocertain
certainactivities
activities
Overhead
: determined
Overhead:
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 on
on loans
loans may
may be
be recoverable,
recoverable, not
not exceeding
exceeding prevailing
prevailing commercial
commercial
rates,
dedicated
for
capital
investment
(typically
for
developin
g
rates, dedicated for capital investment (typically for developing production
production
facilities).
al WP&B.
facilities).Details
Detailsof
offinancing
financingplan
planshall
shallbe
beincluded
includedininannu
annual
WP&B.
Capital
Capital
Furniture
tal items
.
Furniture&&Office
OfficeEquipment,
Equipment,Automotive,
Automotive,and
andmiscellaneous
miscellaneouscapi
capital
items.
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
Entitlement
Contractor
Contractor
Lifting
Lifting
BPMIGAS
BPMIGAS
Lifting
Lifting
BPMIGAS
Entitlement
Cost
CostRecovery
Recovery
FTP
FTPShare
Share
FTP
FTPShare
Share
Equity
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
Total Lifting
5,000
Contractor Entitlement:
1. Cost Recovery
FTP - 20%
1,000
US$100 millions / US$40
2. FTP Share:
Cost Recovery
2,500
712
Equity to be Split
1,500
Assumes:
Lifting 5,000 bbl, ICP $40/bbl
Operating Costs $100 Millions
2,500
288
28.8462% x 1,000 bbl
3. Equity Share
433
28.8462% x 1,500 bbl

288
4. (-) DMO
361
28.8462% x 25% x 5,000 bbl

Gov't Share
1,779
Contractor Share
721
DMO
361
TOTAL
Government Entitlement:
1. FTP Share:
712
71.1538% x 1,000 bbl
2. Equity Share
Government
Entitlement
2,139
2,861
Contractor
Entitlement
2,861
1,067
71.1538% x 1,500 bbl
3. (+) DMO
361
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

NET
NET
SPLIT
SPLIT
GOV'T
GOV'T
TAX
TAX
GROSSED-UP
GROSSED-UPSPLIT
SPLIT
BPMIGAS
CONTRACTOR
BPMIGAS
CONTRACTOR
85/15
85/15
56%
56%
48%
48%
44%
44%
65.9091
65.9091
71.1538
71.1538
73.2143
73.2143
34.0909
34.0909
28.8462
28.8462
26.7857
26.7857
56%
56%
48%
48%
44%
44%
20.4545
20.4545
32.6923
32.6923
37.5000
37.5000
79.5455
79.5455
67.3077
67.3077
62.5000
62.5000
56%
56%
48%
48%
44%
44%
31.8182
31.8182
42.3077
42.3077
46.4286
46.4286
68.1818
68.1818
57.6923
57.6923
53.5714
53.5714
65/35
65/35
70/30
70/30
Corporate Tax
Branch Profit Tax
(20% x 100%100%-30%)
Corporate Tax
Branch Profit Tax
(20% x 100%100%-35%)
Corporate Tax
Branch Profit Tax
(20% x 100%100%-45%)
30%
14%
44%
35%
13%
48%
45%
11%
56%
Gross-Up Split for Contractor

Net After Tax
15%
Government Tax
44%
Grossed-Up Tax 28.8462%
(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.
TOTAL
First Tranche Petroleum (FTP)
20.0000%
Cost Recovery
50.0000%
Equity to be Split
30.0000%
21.3461%
8.6539%
0.0000%
7.2115%
(7.2115%)
100.0000%
42.7884%
57.2116%
Domestic Market Obligation (DMO)

TOTAL
BPMIGAS
CONTRACTOR
PROVISIONAL ENTITLEMENT
14.2308%
-
5.7692%
50.0000%
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.
TOTAL
First Tranche Petroleum (FTP)
20.0000%
Cost Recovery
50.0000%
Equity to be Split
30.0000%
12.6923%
13.3077%
100.0000%
21.1538%
78.8462%
TOTAL
BPMIGAS
CONTRACTOR
PROVISIONAL ENTITLEMENT
8.4615%
-
11.5385%
50.0000%
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
PSC
Block Field
Field- -11 PSC
A
Block Field
Field- -55
C
LNG
LNG
Plant
Plant
LNG
LNG
Buyer
Buyer
Sales
Sales
Agreement
Agreement- -11
Field
Field- -22
Field
Field- -33
PSC
Block Field
Field- -44
B
Netback Value : (a b)
a. Sales Proceeds
b. LNG Costs:
- Debt Service
- Processing Costs
- Administrative Costs
LNG
LNG
Plant
Plant
LNG
LNG
Buyer
Buyer
Sales
Sales
Agreement
Agreement- -22
Gross Revenue
Netback Value of each Sales
Contract is allocated to each PSC
typically is based on contribution
of supply (producers %)
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$150 millions
LNG Costs:
- Debt Service
- Procesing Costs
- Administration Costs
US$ 20 millions
3 millions
5 millions
2 millions
Total LNG Costs . . . . . . . . . . . . . . . . . . US$ 30 millions

Netback Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$120 millions
Gross Revenue:
- PSC Block A
- PSC Block B
- PSC Block C
US$ 60 millions
(25% x US$120 millions) . . . . . . US$ 30 millions
(25% x US$120 millions) . . . . . . . US$ 30 millions
(50% x US$120 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
- 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
- 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
- -nn
FIELD
FIELD
5
FIELD
6
FIELD FIELD
-5
-6
FIELD
FIELD-1-1
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
Sales
Sales
Agreement
Agreement
11
FIELD
FIELD- -44
Dedicated reserves
FIELD - -77
FIELD
- -55 - FIELD
FIELDFIELD
FIELD -66
FIELD
FIELD-1-1
JOINT LIFTING
Sales
Sales
Agreement
Agreement
22
FIELD
FIELD- -22
FIELD
FIELD- -33
JOINT LIFTING
Lifting & Sharing

Cost Recovery
EXPENDITURES
EXPENDITURES: :
EXPLORATION
EXPLORATION&&
DEVELOPMENT
DEVELOPMENT
- G&G Studies
G&G Studies
- -Drillings
Drillings
- Explor.
Administration
- Explor. Administration
OPERATING COSTS :
PRIOR YEARS
UNRECOV. COSTS
NON
NONCAPITAL
CAPITAL
COST
COST
PRODUCTION
PRODUCTION
CAPITAL
CAPITAL
COST
COST
- Direct Prod Exp - Oil

DirectProd
ProdExp
Exp- -Gas
Oil
- -Direct
Direct
Prod
Exp
Gas
- Gas Processing
Gas Processing
- -Utilities
& Auxiliaies
Utilities
& Auxiliaies
- Field
Office,
Services
-&Field
Office,
Services
General Admin
& General Admin
DEPRECIATION
GENERAL
GENERAL&&
ADMINISTRATION
ADMINISTRATION
- Finance & Admin.

Finance & Admin.
- -Engineering
Services
Engineering
Services
- Material
Services
Material
Services
Transportation
Costs
- -Personal
Expenses
Personal
Expenses
- Public Relation
Public Relation
- -Community
Devel
Community
Devel
- -Gen.Office
Expenses
Gen.Office
Expenses
- Home Office O/H
Home on
Office
O/H
- -Interest
Loan
- Interest on Loan
UNREC.
UNREC.COSTS
COSTS
GROSS
GROSSREVENUE
REVENUE
PRICE
PRICE
LIFTING
LIFTING
COST
COST
RECOVERY
RECOVERY
Contractor
ContractorShare
Share
Indonesia
Share
Indonesia Share
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.
placed into
(PIS)
An
Anasset
assetisisconsidered
consideredas
asplaced
intoservice
service
(PIS)when:
when:
--ItIts
s been
, partially
beencompleted
completed,
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
PISwhen
whenititstarts
startsreceiving
receivingcrude
crudeoil
oil
totobe
bestored,
stored,
--an
anoffloading
offloadingequipment
equipment/ /facilities
facilitiesisisconsidered
consideredas
asPIS
PISwhen
whenititstarts
starts
being
ulitized
for
lifting
operations
,
being ulitized for lifting operations,
--aawellhead
wellheadplatform
platformisisconsidered
consideredas
asPIS
PISwhen
whenititstarts
startsbeing
beingutilized
utilized
for
forplacing
placingwellheads
wellheadson
onit.it.
.
Non
Noncapital
capitalexpenditures
expendituresare
arecharged
chargedwhen
whenthey
theyincur
incur.

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
agreedby
byboth
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
recoveryof
ofnatural
naturalgas
gascosts,
costs,the
theexcess
excessshall
shallbe
berecovered
recoveredfrom
from
oil
oil revenues
revenues(vice
(viceversa).
versa).
2.
2. IfIfproduction
productionof
ofeither
eithergas
gasor
oroil
oilhas
hascommenced
commencedwhile
whileother
otherhas
hasnot,
not,costs
costs
allocated
allocatedininan
anequitable
equitablemanner.
manner.

Typical Depreciation Table
- -Declining
DecliningBalance
BalanceMethod,
Method,
- -Full
Fullyear
yeardepreciation
depreciation
- -Depreciation
Depreciationfactor
factor - -Group
Group11: :50%
50%
- -Group
Group22: :25%
25%
- -Group
3
:
10%
Group 3 : 10%
Group
Group11: :
Automobiles
Automobiles
Light
LightTrucks
Trucksand
andTractor
TractorUnits
Units
Heavy
Trucks
Heavy Trucks
Buses
Buses
Aircraft
Aircraft
Construction
ConstructionEquipment
Equipment
Furniture
&
Office
Furniture & OfficeEquipment
Equipment
Oil
Gas
Oil&&
Gas
Gas
Gas<7years
<7years Reserves
Reserves>>77years
years
1.5
1.5years
years 3.0
3.0years
years Group
Group11
2.0
2.0years
years 4.0
4.0years
years Group
Group11
3.0
3.0years
years 6.0
6.0years
years Group
Group11
4.5
4.5years
years
3.0
3.0years
years 6.0
6.0years
years Group
Group22
3.0
3.0years
years 6.0
6.0years
years Group
Group22
5.0
5.0years
years 10.0
10.0years
years Group
Group22
Group
Group22: :
Construction
ConstructionUtilities
Utilities&&Auxiliaries
Auxiliaries
Construction
Housing
&
Construction Housing &Welfare
Welfare
Production
ProductionFacilities
Facilities
Railroad
cars
Railroad cars&&Locomotives
Locomotives
Water
Transportation
Water Transportation
Drilling
Drilling&&Production
ProductionTools
Tools
5.0
5.0years
years 8.0
8.0years
years Group
Group33
10.0
10.0years
years 20.0
20.0years
years Group
Group33
5.0
5.0years
years 8.0
8.0years
years Group
Group33
7.5
7.5years
years 15.0
15.0years
years Group
Group33
9.0
9.0years
years 18.0
18.0years
years Group
Group22
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);
provided
The
Theestimated
estimatedcosts
costsare
arepresented
presentedinincolum
columCorporate
CorporateAssistant
Assistant
providedininthe
the
Attachment
to
Budget
Schedules
No
4,
8,
11
and
summarized
in
Bud
get
Attachment to Budget Schedules No 4, 8, 11 and summarized in Budget
Schedule
ScheduleNo
No17.
17.
provided
The
The actual
actual figures
figures are
are reported
reported inin colum
colum Corporate
Corporate Assistant
Assistant
provided inin the
the
Attachment
to
Reports
No
4,
8
&
11.
Attachment to Reports No 4, 8 & 11.
All
AllTSAs
TSAsproposed
proposedannualy
annualytotosupport
supportactivities
activitiesproposed
proposedduring
duringthe
theyear.
year.
TSA
TSAisisaatemporary
temporaryaccount
accounttotobe
beallocated
allocatedtotoeach
eachprojects.
projects.
Requirement
Requirementfor
forTSA
TSA
-routine or
TSA
TSAisisnon
non-routine
orextraordinary
extraordinaryjobs.
jobs.
Upstream
Upstreamjobs
jobsrelating
relatingtotothe
theIndonesian
Indonesianproject
projectplanning.
planning.
No
No inhouse
inhouse personnel
personnel nor
nor available
available domestic
domestic consulting
consulting company
company capable
capable toto
perform
performthe
thejobs.
jobs.
s (as
Competitive
Competitivecharges
chargestotodomestic
domesticthird
thirdparty
partys
(asan
anagent).
agent).
No
Nooverlap
overlapnor
nordouble
doublecharges
chargestotooverhead
overheadfrom
fromabroad.
abroad.
Included
Includedininthe
theapproved
approvedbudget
budgetand
andbe
berequested
requestedby
bythe
theoperator
operatorininIndonesia.
Indonesia.
Fiscal Terms
First Tranche Petroleum
STANDARD
STANDARDCLAUSE
CLAUSE: :
. .. .. .the
ar twenty
theParties
Partiesshall
shallbe
beentitled
entitledto
totake
takeand
andreceive
receiveeach
eachYe
Year
twentypercent
percent
of
all
Petroleum
produced
and
saved
and
not
used
in
Petroleum
Op
erations
of all Petroleum produced and saved and not used in Petroleum Operationsin
in
such
Year
before
any
deduction
for
the
recovery
of
Investment
Cr
edit
and
such Year before any deduction for the recovery of Investment Credit and
Operating
ared between
OperatingCosts
Costs. .. .. .. .Such
SuchFirst
FirstTranche
TranchePetroleum
Petroleumshall
shallbe
besh
shared
between
BPMIGAS
BPMIGASand
andCONTRACTOR
CONTRACTORin
inaccordance
accordancewith
withsharing
sharingsplits
splits. .. ...
KEY
KEYWORDS
WORDS: :
before
beforeany
anydeduction
deduction
shall
be
shared
shall be sharedbetween
betweenBPMIGAS
BPMIGASand
andCONTRACTOR
CONTRACTOR
FTP
FTPDIFFERS
DIFFERSFROM
FROMROYALTY
ROYALTY: :
- -FTP
FTPisisshared
sharedbetween
betweenthe
theParties
Parties
- -FTP
has
no
impact
when
financial
FTP has no impact when financialoperation
operationruns
runsnormally*)
normally*)
- -FTP
is
merely
to
safeguard
the
minimum
income
of
wner
FTP is merely to safeguard the minimum income ofthe
theproperty
propertyoowner
*)*)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
Operating Costs
1
2
3
4
5
6
7
8
Lifting - mbbl
Price per bbl - $/bbl
Gross Revenue
Gross Revenue after FTP
Investment Credit
Cost Recovery
Equity To Be Split
CONTRACTOR SHARE:
FTP Share
Equity Share
DMO
D M O Fee (New Oil)
Taxable Share
10 Gov't Tax Entitlement
11 Net Contractor Share
12 Total Share
US Dollars
10,000
10,000
20,000
20,000
with FTP
No FTP
with FTP
No FTP
1,000
20.00
20,000
4,000
16,000
500
10,000
5,500
1,000
20.00
20,000
0
20,000
500
10,000
9,500
1,000
20.00
20,000
4,000
16,000
0
16,000
0
1,000
20.00
20,000
0
20,000
0
20,000
0
1,154
1,587
1,442
(1,442)
3,240
(1,555)
1,685
11,685
0
2,740
1,442
(1,442)
3,240
(1,555)
1,685
11,685
1,154
0
0
0
0
0
1,154
17,154
0
0
0
0
0
0
0
20,000
13 Unrecovered Costs
14 Indonesia Share
4,000
8,315
8,315
2,846
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
costs
directly
required
for
developing
Crude
Oil
production
facilities
.
investment costs directly required for developing Crude Oil production facilities .. .. .ofof
each
ing
each new
new field
field out
out ofof deduction
deduction from
from gross
gross production
production before
before recovering
recovering operat
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
taken
).
be paid in advance in such production Year when taken).
The
The Investment
Investment Credit
Credit may
may be
be applied
applied toto new
new secondary
secondary recovery
recovery and
and tertiary
tertiary
recovery
EOR
projects
but
is
not
applicable
to
interim
production
schemes
or
further
recovery EOR projects but is not applicable to interim production schemes or further
investment
investment toto enhance
enhance production
production and
and reservoir
reservoir drainage
drainage inin excess
excess ofof what
what 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
investmentcosts
costs
developing
Crude
Oil
)
developing Crude Oilproduction
productionfacilities
facilities(now
(nowititisisapplicable
applicabletotogas
gas)
each
eachnew
newfield
field
commencing
commencingininthe
theearliest
earliestYear
Yearor
orYears
Years
totobe
bepaid
paidininadvance
advanceininsuch
suchproduction
productionYear
Yearwhen
whentaken
taken
new
newsecondary
secondaryrecovery
recoveryand
andtertiary
tertiaryrecovery
recoveryEOR
EORprojects
projects
not
applicable
to
interim
production
schemes
or
further
not applicable to interim production schemes or furtherinvestment
investment
Fiscal Terms
Case on Investment Credit
Operating Costs
1
2
3
4
5
6
7
8
9
Lifting - mbbl
Price per bbl - $/bbl
Gross Revenue
Gross Revenue after FTP
Investment Credit
Cost Recovery
Total Recoverables
Equity To Be Split
10 CONTRACTOR SHARE :
FTP Share
Equity Share
DMO
D M O Fee (New Oil)
Taxable Share
11 Gov't Tax Entitlement
12 Net Contractor Share
13 Total Contractor Share
14 Unrecovered Costs
15 Indonesia Share
10,000
No I/C
1,000
20.00
20,000
4,000
16,000
0
10,000
10,000
6,000
1,154
1,731
0
0
2,885
(1,385)
1,500
11,500
0
8,500
10,000
with I/C
1,000
20.00
20,000
4,000
16,000
2,000
10,000
12,000
4,000
1,154
1,154
1,442
(1,442)
4,308
(2,068)
240
12,240
0
7,760
20,000
No I/C
1,000
20.00
20,000
4,000
16,000
0
16,000
16,000
0
1,154
0
0
0
0
0
1,154
17,154
4,000
2,846
20,000
with I/C *)
1,000
20.00
20,000
4,000
16,000
100
15,900
16,000
0
1,154
0
0
0
100
(48)
1,106
17,106
4,100
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
nt totoSection
portionofofthe
theshare
shareofofCrude
Crudeoil
oiltotowhich
whichititisisentitled
entitledpursua
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 :
(I)
(I) Production/Lifting
Production/Lifting XX
National
NationalSupply
Supply
National
NationalProduction
Production
(ii)
(ii) 25%
25%Production
Production
(iii)
The
lower
-up Split
(iii) The lowerunder
under(i)
(i)or
or(ii)
(ii) XX Grossed
Grossed-up
Split
EXAMPLE
EXAMPLE: :
Production/Lifting
Production/Lifting
National
NationalSupply
Supply
National
Production
National Production
1,000
1,000MBBL
MBBL
1,000
MBOD
1,000 MBOD
1,250
1,250MBOD
MBOD
Contractor
ContractorSplit
Split28.8462%
28.8462%
(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%
=
250
MBBL
lower
(ii) 1,000 MBBL X 25%
= 250 MBBL lower
(iii)
250
MBBL
X
28.8462%
=
72
(iii) 250 MBBL X 28.8462%
=
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
percentage,
when
Gross
Constant percentage, when GrossRevenue
Revenue>>(FTP
(FTP++Cost
CostRecoverables).
Recoverables).
- -Fluctuate
percentage,
when
changes
in
lifting,
price
and
cost
Fluctuate percentage, when changes in lifting, price and costrecovery
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.
DMO
DMOFee
Fee
- -$0.20
$0.20/ /barrel
barrelfor
forfield
fieldstarts
startsproducing
producingprior
priortoto23
23February
February1989
1989
- -10%
or
15%
or
25%
of
Price
/
barrel
according
to
the
contract
10% or 15% or 25% of Price / barrel according to the contract
flect annual
DMO
DMOFees
Feesare
arebilled
billedmonthly,
monthly,adjustments
adjustmentsmay
maybe
benecessary
necessarytotore
reflect
annual
PSC
calculation
PSC calculation
Fiscal Terms
Case on Domestic Market Obligation
BUDGET
Price/bbl
Total Lifting - mbbl
Cost Recovery - MUS$
Gross Revenue - MUS$
25.00
1,000
18,000
25,000
mbbl
Total Lifting
FTP
Cost Recovery
Equity to be Split
Contractor Share:
- FTP Share
- Equity Share
Total
DMO (normal)
DMO Delivered
ACTUAL
20.00
1,000
18,000
20,000
mbbl
ACTUAL
23.00
1,000
18,000
23,000
mbbl
1,000
200
720
80
1,000
200
800
0
1,000
200
783
17
58
23
81
72
72
58
0
58
72
0
58
5
63
72
63
Introduction to Budgeting & Reporting

Annual Contents
Year - 8
Financial
Report
Year - 9
Year - 10
Field
Field11Production
Operations
Field
Field22Production
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)

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.

Budget & Financial Report
Actual
Actual
(General
(GeneralLedger)
Ledger)
Estimates
Estimates
similar structures
Financial
Financial
Items
Items
BUDGET
BUDGET
Financial
Financial
Items
Items
(Part
(Partof
ofWP&B)
WP&B)
FINANCIAL
FINANCIAL
REPORT
REPORT
- -Balance
BalanceSheet
Sheet
- -Income
Statement
Income Statement
- -Other
OtherReports
Reports
PSC
PSCFinancial
Financial
Reporting
ReportingItems
Items
variance
PSC requires to meet:
- generally accepted and recognized accounting systems
- modern petroleum industry practices and procedures

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.

Complete Sets of Budget & Financial Report
BBUUDDGGEETT
Schedule
Schedule 11
Schedule
Schedule 22
Schedule
Schedule 33
Schedule
Schedule 3A
3A
Schedule
4
Schedule 4 *)*)
Schedule
Schedule 55
Schedule
Schedule 66
Schedule
Schedule 77
Schedule
Schedule 88 *)*)
Schedule
Schedule 99
Schedule
Schedule10
10
Schedule
11
Schedule 11 *)*)
Schedule
Schedule12
12
Schedule
13
Schedule 13
Schedule
Schedule14
14
Schedule
15
Schedule 15
Schedule
Schedule16
16
Schedule
17
Schedule 17
RREEPPOORRTT
Report
Report 11
Report
Report 22
DESCRIPTION
DESCRIPTION
Financial
FinancialStatus
StatusReport
Report
Key
Operating
Statistics
Key Operating Statistics
Expense
Expenseand
andExpenditures
ExpendituresSummary
Summary
Report
3
Expenditures
Summary
Report 3
Expenditures Summary
Report
4
*)
Exploration
Report 4 *) Explorationand
andDevelopment
DevelopmentExpenditures
Expenditures
Exploratory
Drilling
Capital
&
Operating
Exploratory Drilling Capital & OperatingExpenditure
Expenditure
Development
DevelopmentDrilling
DrillingCapital
Capital&&Operating
OperatingExpenditure
Expenditure
Miscellaneous
Exploratory
Capital
Expenditures
Miscellaneous Exploratory Capital Expenditures
Report
8
*)
Production
Report 8 *) ProductionExpense
ExpenseSummary
Summary
Production
Facilities
Capital
Production Facilities CapitalExpenditures
Expenditures
Miscellaneous
MiscellaneousFacilities
FacilitiesCapital
CapitalExpenditures
Expenditures
Report
11
*)
Administrative
Expense
Summary
Report 11 *) Administrative Expense Summary
Miscellaneous
MiscellaneousAdministrative
AdministrativeCapital
CapitalExpenditures
Expenditures
Capital
Assets
to
be
Placed
into
Service
Capital Assets to be Placed into Service
Report
Depreciation
Report 14
14
DepreciationSchedule
Schedule
Report
15
Detailed
Project
Report 15
Detailed ProjectSupport
SupportListing/Project
Listing/ProjectStatus
StatusReport
Report
Report
16
Lifting
Forecast/Lifting
Share
Analysis
Report 16
Lifting Forecast/Lifting Share Analysis
Expenditures
ExpendituresSummary
Summaryby
byCategory
Category
*) Includes Attachment

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
Exploration
Exploration&&
Development
Development
Sch. 8
Production
Production
Expense
Expense
Sch. 11
General
General&&
Administrative
Administrative
Sch. 3
Expenditures
Expenditures
Summary
Summary
Sch. 14
Depreciation
Depreciation
Gross Revenue
Cost Recovery
Contractor Share
Indonesia Share
Sch. 16
Financial
Financial
Status
Status
Sch. 1
Lifting
Lifting
Budget Preparation
Data Flows in Budget Schedules
Sch.5
Sch.6
Sch.7
Sch.5
Sch.6
Sch.7
Expl.Drilling
Devl.Drilling
Misc.Capital
Expl.Drilling Devl.Drilling Misc.Capital
Sch.4
Sch.4
Expl.
Expl.&&Dev.
Dev.
Sch.9
Sch.10
Sch.10
Facilities Cap Misc.Capital
Misc.Capital
Sch.8
Sch.8
Prod.
Prod.Exp.
Exp.
Attachment
Attachment
Sch.14
Sch.14
Depreciation
Depreciation
Sch.15
Sch.15
Project
ProjectList
List
Sch.13
Sch.13
Assets
AssetsPIS
PIS
Sch.2
Sch.2
Statistics
Statistics
Sch.17
Sch.17
Bgt.Year
Bgt.YearExpd.
Expd.
Sch.12
Sch.12
Misc.Capital
Misc.Capital
Sch.11
Sch.11
Gen.&Adm.
Gen.&Adm.
Attachment
Sch.1
Sch.1
Financial
FinancialStatus
Status
Sch.3,
Sch.3,3A
3A
Expd.Summary
Expd.Summary
Sch.16
Sch.16
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
Identification
Routine/Non-Projects
Activities
- Estimates of routine activities

- Anticipated Activities
- Anticipated Changes
Projects (AFE Required)
- Exploration Programs
- Plan of Development
- Other Projects
BUDGET SCHEDULE No 4, 8 & 11

Exploration & Development
- Geological & Geophysical (G&G)
- Administration
- Other
Production
- Production Operations
- Field Office, Services & Gen.Admin
General Administration
- Finance & Administration
- Eng & Material Services
- Transportation
- Personnel Expenses
- Public Relation
- Community Development
- General Office Expenses
BUDGET SCHEDULE No 15
Geological & Geophysical (G&G)
Exploration Drilling
Development Drilling
G & G Capital
Misc. Expl & Devl Capital
Production Facilities
Misc. Production Facilities
Administrative Capital
TSA (Allocated to projects)
(BS#4)
(BS#5)
(BS#6)
(BS#7)
(BS#7)
(BS#9)
(BS#10)
(BS#12)
Budget Preparation Lists of Projects

Budget Schedule 15
List of Projects (AFE is required for each project)
OPERATOR
CONTRACT AREA
BUDGET YEAR
BPMIGAS
PRODUCTION SHARING CONTRACT
DETAILED PROGRAM SUPPORT LISTING
:
:
: 2006
1)
Line
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
DESCRIPTION

- Office Equipment
- Exploratory Drilling
- Development Drilling
Production
- Production Facilities
- Utilities & Auxiliaries
- Furniture
2)
3)
NEW
OLD
TOTAL
PROGRAMS PROGRAMS PROGRAMS
1) ANTICIPATED
EXPENDITURES
AS OF
31/12/2005
SCHEDULE 15
-BS-
CAPITAL PORTION
BUDGETED
7)
EXPENDITURES
5)
6)
TOTAL
CURRENT
FUTURE
YEAR
YEARS
8)
TO BE
PLACED IN
SERVICE
THIS YEAR
0
6,000
9,000
25,000
6,000
9,000
25,000
12,000
18,000
15,000
3,000
4,000
10,000
7,000
12,000
0
2,000
2,000
25,000
12,000
18,000
11,000
50,000
25,000
50,000
37,500
100,000
62,500
25,000
25,000
65,000
32,500
10,000
5,000
100,000
62,500
100,000
50,000
4,000
4,000
4,000
4,000
4,000
To simplify the illustrations, no Intangible Drilling Costs given
25,000
9) ANTICIPATED
EXPENDITURES
AS OF
31/12/2005
Page 1 of 3
NON - CAPITAL PORTION
BUDGETED
12)
EXPENDITURES
10)
11)
TOTAL
CURRENT
FUTURE
YEAR
YEARS
Budget Preparation
Step - 2 : Posting for Exploration
& Development Expd.
Schedule
Schedule44
Exploration
Exploration&&
Development
Development
Schedule
Schedule66
Development
Development Schedule
Schedule55
Drilling
Drilling
Exploratory
Exploratory
Drilling
Drilling
Schedule
Schedule77
Miscl.
Miscl.Exploratory
Exploratory
Capital
Capital

- Administration
- Other
Production
- Transportation
- Public Relation
Geological & Geophysical
G & G Capital
(BS#4)
(BS#5)
(BS#6)
(BS#7)
(BS#7)
(BS#9)
(BS#10)
(BS#12)
Budget Preparation Exploratory Drilling

Budget Schedule 5
OPERATOR
BPMIGAS
CONTRACT AREA
BUDGET YEAR
BUDGETED EXPLORATORY DRILLING CAPITAL & OPERATING EXPENDITURES

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

Budget Schedule 6
OPERATOR
BPMIGAS
CONTRACT AREA
BUDGET YEAR
BUDGETED DEVELOPMENT DRILLING CAPITAL & OPERATING EXPENDITURES

1)
Line
DESCRIPTION
OLD
2)
3)
-BS-
NEW
TOTAL
UNSPENT
PROGRAMS
TO BE
SPENT
4)
1st
5)
QUARTER
TIME
PHASED
2nd
6)
QUARTER
TOTAL EXPENDITURES
3rd
7)
QUARTER
4th
8) THIS
QUARTER
YEAR
9) SUBSEQ.
YEAR
TO BE PLACED
IN SERVICE
THIS YEAR
TANGIBLE COST :
Casing and Tubing
Well Equipment Surface
Well Equipment Subsurface
Other Tangible
Total Tangible Costs
INTANGIBLE COST :
Preparation and Termination
Drilling Operation
10
SCHEDULE 6
10) PROGRAMS
PROGRAMS
AMOUNT
1
NOTES
Sch. 6.1 for Oil
Sch. 6.2 for Gas
5,000
9,000
14,000
2,000
3,000
3,000
4,000
12,000
Completion
11
General
12
Other Intangible Costs
13
Total Intangible Costs
14
TOTAL COSTS

Estimated to be placed in service this budget year
(Transferred to Depreciation Analysis -Sch.13 & 14)
2,000
11,000
Budget Preparation Misc.Expl & Devl.Capital

Budget Schedule 7
OPERATOR
BPMIGAS
CONTRACT AREA
BUDGET YEAR
BUDGETED MISCELLANEOUS CAPITAL EXPENDITURES
NOTES
Sch. 7.1 for Oil
Sch. 7.2 for Gas
SCHEDULE 7
-BS-
Functional : Exploration & Development

1)
Line
DESCRIPTION
OLD
2)
3)
PROGRAMS
NEW
TOTAL
UNSPENT
PROGRAMS
AMOUNT
1
2
TO BE
SPENT
TIME
4)
1st
QUARTER
5)
PHASED
2nd
6)
QUARTER
3rd
7)
QUARTER
10) PROGRAMS
TO BE PLACED
TOTAL EXPENDITURES
4th
8)
QUARTER
THIS
YEAR
IN SERVICE
9) SUBSEQ.
THIS YEAR
YEAR
G & G Capital Expenditures

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
20
TOTAL MISC.EXPL.AND DEV.
Capital Expenditures
10,000
10,000
2,000
8,000
10,000
CAPITAL EXPENDITURES

25,000
Budget Preparation Exploration & Development Sumy

Budget Schedule 4
OPERATOR
CONTRACT AREA
BUDGET YEAR
:
:
:
Line
DESCRIPTION
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
BPMIGAS
EXPLORATION AND DEVELOPMENT EXPENDITURE
BUDGET SUMMARY
DRILLING EXPENDITURES
Development Drilling :
Intangible Costs
Tangible Costs
Total Development Drilling
Exploratory Drilling :
Intangible Costs
Tangible Costs
Total Exploratory Drilling
Total Drilling Expenditures
Total Intangible Expenditures
Total Tangible Expenditures
G&G EXPENDITURES
Geological
Geophysical
Seismic & Other Surveys
Total G&G Expenditures
Total Non-Capital Expenditures
EXPLORATION ADMINISTRATION EXPENDITURES
Administration
Other
Total Administration Expenditures
TOTAL EXPLORATION & DEVELOPMENT EXPENDITURES
TOTAL NON-CAPITAL EXPENDITURES
TOTAL CAPITAL EXPENDITURES
NOTES
Sch. 4.1 for Oil
Sch. 4.2 for Gas
1)
2)
3)
4)
5)
1st QUARTER 2nd QUARTER 3rd QUARTER
4th QUARTER
SCHEDULE 4
-BS-
TOTALS
2,000
3,000
3,000
4,000
12,000
1,500
2,000
1,500
2,000
7,000
2,000
8,000
10,000
Budget Preparation
Step - 3 : Posting for Production
Expenditures
Schedule
Schedule88
Production
Production
Expense
Expense
Schedule
Schedule99
Production
Production
Facilities
Facilities
Schedule
Schedule10
10
Miscl.
Miscl.Production
Production
Facil.
Facil.Capital
Capital

- Administration
- Other
Production
- Transportation
- Public Relation
G & G Capital
(BS#4)
(BS#5)
(BS#6)
(BS#7)
(BS#7)
(BS#9)
(BS#10)
(BS#12)
Budget Preparation Production Facilities

NOTES
Sch. 9.1 for Oil
Sch. 9.2 for Gas
Budget Schedule 9
OPERATOR
CONTRACT AREA
BUDGET YEAR
Line
1
2
3
4
5
6
7
8
9
10
BPMIGAS
PRODUCTION FACILITIES CAPITAL EXPENDITURES BUDGET
:
:
:
DESCRIPTION
Civil
Decks and Structural Steel
Buildings
Equipment and Machinery
Piping
Electrical
Instrumentation
Paint & Corrosion Protection
Other
TOTAL PRODUCTION
FACILITIES EXPENDITURES
reported separately
for Investment Credit
purposes.
1) OLD
2)
3)
PROGRAMS
NEW
TOTAL
UNSPENT PROGRAMS
TO BE
AMOUNT
SPENT
25,000
50,000
75,000
SCHEDULE 9
-BS-
10)PROGRAMS
TIME PHASED
TOTAL EXPENDITURES
4) 1st
5) 2nd
6) 3rd
7) 4th
8) THIS
9) SUBSEQ.
QUARTER QUARTER QUARTER QUARTER
YEAR
YEARS
15,000
20,000
10,000
20,000
65,000

10,000
TO BE PLACED
IN SERVICE
THIS YEAR
100,000
Budget Preparation Miscl. Production Capital

NOTES
Sch. 10.1 for Oil
Sch. 10.2 for GasSCHEDULE
Budget Schedule 10
OPERATOR
CONTRACT AREA
BUDGET YEAR
Line
1
2
3
4
5
6
7
8
9
10
BPMIGAS
MISCELLANEOUS FACILITIES CAPITAL EXPENDITURES BUDGET
Functional Area : PRODUCTION
:
:
:
DESCRIPTION
Construction Utilities & Auxiliaries
1) OLD
2)
3)
PROGRAMS
NEW
TOTAL
UNSPENT PROGRAMS
TO BE
AMOUNT
SPENT
12,500
25,000
37,500
10)PROGRAMS
TIME PHASED
TOTAL EXPENDITURES
4) 1st
5) 2nd
6) 3rd
7) 4th
8) THIS
9) SUBSEQ.
YEAR
YEARS
7,500
10,000
5,000
10,000
32,500
TOTAL PRODUCTION
MISCELLANEOUS
Applied for capital items

which are not illegible
for Investment Credit
10
-BS-

5,000
TO BE PLACED
IN SERVICE
THIS YEAR
50,000
Budget Preparation Production Exp Summary

Budget Schedule 8 (Line 1 33)
OPERATO R
CONTRACT AREA
BUDGET YEAR
L in e
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
31
32
33
:
:
:
D E S C R I P T I O N
D IR E C T P R O D U C T IO N E X P E N S E S - O IL
O il W e ll O p e ra tio n
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
S e c o n d a ry R e c o ve ry O p e ra tio n s
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
S u p e rv is io n
M a in te n a n c e
O th e r D ire c t P ro d u c tio n E xp e n s e s - O il
T o ta l D ire c t P ro d u c tio n E xp e n s e s - O il
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
G a s W e ll O p e ra tio n s
G a s P ro d u c tio n F a c ilitie s O p e ra tio n s
G a s T ra n s p o rta tio n
S u p e rv is io n
M a in te n a n c e
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
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
G A S P R O C E S S IN G
G a s P la n t
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
S u p e rv is io n
M a in te n a n c e
O th e r G a s P ro c e s .E xp .(In c l.fla rin g c o s ts )
T o ta l G a s P ro c e s s in g
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
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
S te a m S e rv ic e s
E le c tric ity S e rv ic e s
In d u s tria l a n d D o m e s tic W a te r S e rvic e
C o m p re s s e d A ir S e rv ic e
O th e r
T o ta l U tilitie s a n d A u xillia rie s
T O T A L P R O D U C T IO N O P E R A T IO N S
B P M IG A S
P R O D U C T IO N S H A R IN G C O N T R A C T
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
1)
2)
3)
4)
1st
2nd
3 rd
4 th
Q TR
Q TR
Q TR
Q TR
SCH EDU LE
-B S -
C A P IT A L E X P E N D IT U R E S
5 )T O T A L
FOR
THE YEAR
6)
T H IS
YEAR
7)P LA C E D
IN T O
S E R V IC E
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
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
Budget Preparation Production Exp Summary

Budget Schedule 8 (Line 34 - 53)
OPERATOR
CONTRACT AREA
BUDGET YEAR
Line
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
BPMIGAS
PRODUCTION EXPENSE BUDGET SUMMARY
ONSHORE / OFFSHORE
TIME PHASED
1)
2)
3)
4)
1st
2nd
3rd
4th
QTR
QTR
QTR
QTR
:
:
:
DESCRIPTION
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 .
G e n e ra l a n d A d m in is tra tio n
T e c h n ic a l S u p p o rt S e rv ic e
M a te ria l S e rvic e s
T ra n s p o rta tio n C o s ts
O ffic e a n d M is c .B u ild in g O p e ra tio n s
P e rs o n n e l E xp e n s e s
P u b lic R e la tio n s
D e p re c ia tio n
O th e r
T o ta l F ie ld O ffic e , S vc s .a n d G e n e ra l
T O T A L P R O D U C T IO N E X P E N S E S
L e s s D e p re c ia tio n E xp e n s e s
N O N -C A P IT A L P R O D . E X P E N D IT U R E S
A L L O C A T E D T O O IL O P E R A T IO N S
A L L O C A T E D T O G A S O P E R A T IO N S
50
51
52
53
P E R IO D
1st Q U AR TER
2nd Q UARTER
3 rd Q U A R T E R
4 th Q U A R T E R
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
MBBL
9)
PROD. COST
8)
O F P R O D U C T IO N
PER BARREL
SCHEDULE 8
-BS-
5)TOTAL 6)
FOR
THIS
THE YEAR
YEAR
7)PLACED
INTO
SERVICE
Budget Preparation
Step - 4 : Posting for General &
Admin. Expenditures
Schedule
Schedule11
11
General
General&&
Administration
Administration
Schedule
Schedule12
12
G&A
G&A
Capital
Capital

- Administration
- Other
Production
- Transportation
- Public Relation
G & G Capital
(BS#4)
(BS#5)
(BS#6)
(BS#7)
(BS#7)
(BS#9)
(BS#10)
(BS#12)
Budget Preparation Miscl. Administrative Capital

NOTES
Sch. 12.1 for Oil
Sch. 12.2 for Gas
Budget Schedule 10
OPERATOR
CONTRACT AREA
BUDGET YEAR
BPMIGAS
MISCELLANEOUS CAPITAL EXPENDITURES BUDGET
Functional Area : General & Administration
:
:
:
1)
Line
1
2
3
4
5
6
7
8
9
10
DESCRIPTION
Furniture and Office Equipment
OLD
2)
SCHEDULE 12
-BS-
3)
PROGRAMS
NEW
UNSPENT
AMOUNT
PROGRAMS
4,000
10) PROGRAMS
TOTAL
TO BE
SPENT
4,000
4) 1st
QTR
1,000
TIME
5) 2nd
QTR
1,000
PHASED
6) 3rd
7) 4th
QTR
QTR
1,000
TOTAL EXPENDITURES
8)
1,000
THIS
YEAR
9) SUBSEQ.
YEARS
4,000
TOTAL GEN.ADMIN.MISCELLANEOUS

No unspent balances of previous years programs
No estimated to be spent for the next budget year
(Transferred for Depreciation Analysis - Sch.13 & 14)
TO BE PLACED
IN SERVICE
THIS YEAR
4,000
Budget Preparation Administrative Summary

O P ER AT O R
C O N TR A C T A R EA
B U D G ET Y EAR
Line
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
:
:
:
DESCRIPTION
FIN A N C E & A D M IN ISTR AT IO N
Legal S ervices
Audit S ervices
Tax Services
Business Insurance
O ther
Total Finance and A dm inistration
EN G IN E E R IN G S E R V IC E S
M A T E R IA L S E R V IC E S
M aterials Adm inistration
H andling and Transportation
Stock D ifferences
D eterioration, B reakage
R econditioning
S alvage
S crap
O ther
Total M aterials S ervices
T R AN SP O R T A T IO N CO S TS
Air
Autom obile
O ther
Total Transportation C osts
PE R S O N N EL E XP EN SE S
E m ployee R elation
Training
Accom odation
W elfare
O ther
Total P ersonnel E xpenses
B PM IG AS
SC H E D U LE 11
P R O D U C TIO N SH AR IN G C O N TR AC T
-B S 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
C A P IT A L E X P E N D ITU R E S
TIME PHASED
1)
2)
3)
4)
5)
6)
7)
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
Budget Preparation Administrative Summary

Line
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
DESCRIPTION
PUBLIC RELATIONS
Trips
Other
Total Public Relation
COMMUNITY DEVELOPMENT
Community Projects
Other
Total Community Development
GENERAL OFFICE EXPENSES
Stationary and Supplies
Communications
Furniture and Equipment (Low Value)
Rents, Licences
Travel and Entertainment (non-allocated)
Computerization
Depreciation
Other
Total General Office Expenses
OVERHEAD FROM ABROAD
INTEREST ON LOANS FOR CAPITAL INVEST.
TOTAL ADMINISTRATIVE EXPENSES
Less Depreciation Expenses
NON-CAPITAL ADMIN. EXPENDITURES
ALLOCATED TO OIL OPERATIONS
ALLOCATED TO GAS OPERATIONS
Explanation of Interest Claimed :
TIME PHASED
1)
2)
3)
4)
5)
6)
7)
1st
2nd
3rd
4th
TOTAL FOR THIS YEAR PLACED IN
QUARTER QUARTER QUARTER QUARTER THE YEAR
SERVICE
4,000
4,000
Budget Preparation
Step - 5 : Assets Placed into Services
and Depreciation Analysis
Schedule
Schedule66
Development
Development
Dilling
Dilling
Schedule
Schedule77
Expl
Expl&&Devl
Devl
Capital
Capital
Schedule
Schedule99
Production
Production
Facilities
Facilities
Schedule
Schedule10
10
Miscl
MisclProduction
Production
Capital
Capital
Schedule
Schedule12
12
Gen.&
Gen.&Admin.
Admin.
Capital
Capital
BUDGET SCHEDULE 13
ASSETS PLACED INTO SERVICE

THIS YEAR
BUDGET SCHEDULE 14
DEPRECIATION
ANALYSIS
Budget Preparation Assets PIS

Budget Schedule 13
OPERATOR
CONTRACT AREA
BUDGET YEAR
Line
:
:
:
BPMIGAS
BUDGETED CAPITAL ASSETS TO BE PLACED INTO SERVICE
ASSET DESCRIPTION
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
9 GROUP 2
10
11
Construction Housing & Welfare
12
13
Water Transportation Equipment
14
Drilling Production Tools
15
Railroad Cars & Locomotive
16
TOTAL
FUNCTIONAL
EXPLORATION
1) Development 2) Exploratory 3)Geological 4) General
Drilling
Drilling
Geophysical
& Admin.
AREA
PRODUCTION
5)Production 6) General
Operations
& Admin.
25,000
11,000
Tangible Cost of Development Drilling (Sch.6)

Exploration Office equipment (Sch.7)
Utilities & Auxiliaries (Sch.10)
Production Facilities (Sch.9)
General Admin Offife Equipment (sch.12)
SCHEDULE 13.1
-BS-
7)GENERAL
& ADMIN.
4,000
8) TOTAL
29,000
50,000
50,000
100,000
111,000
NOTES
Sch 13.0 Summary
Sch. 13.1 < 7 years reserves
Sch. 13.2 > 7 years reserves
Budget Preparation Depreciation

Budget Schedule 14
OPERATOR
CONTRACT AREA
BUDGET YEAR
Line
BPMIGAS
BUDGETED DEPRECIATION SCHEDULE
:
:
: 2006
ASSET DESCRIPTION
1 GROUP 1
Automobiles
2
3
Light Trucks & Tractor Units
4
Heavy Trucks & Trailers
5
Buses
Aircraft
6
7
Construction Equipment
8
Furniture & Office Equipment
9 GROUP 2
10
11
Construction Housing & Welfare
12
13
Water Transportation Equipment
14
Drilling Production Tools
15
Railroad Cars & Locomotive
16
TOTAL
Placed Into Service 1998 - 2004

1)
ASSET 2)
3)
4)
5)
GROUP
Orig.
Accum.
Dep.
2006
LIFE
Cost
Deprec.
Bal.
Dep.
SCHEDULE 14.1
-BS-
6)
D
Orig.
Cost
Placed Into Service 2005

7)
8)
9)
Accum.
Dep.
2006
Deprec.
Bal.
Dep.
Current Year
10)Assets 11)
Placed
Dep.
D in Service
5/50%
5/25%
10/25%
5/25%
NOTES
Sch 14.0 Summary
Sch. 14.1 < 7 years reserves
Sch. 14.2 > 7 years reserves
60,000
15,000
45,000
11,250
Page 4 of 4
12)
Total
2006
D
Dep.
29,000
14,500
14,500
50,000
12,500
111,000
27,750
12,500
11,250
27,750
66,000
17
18
19
20
DEPRECIATION ANALYSIS
Exploration/Development
Production
Administration
Total
Total 2006
12)
Deprec.Expenses
15,250
37,500
13,250
66,000
Budget Preparation
Step - 6 : Summarizing Expenditures
and Operating Costs
Sch
Sch14
14
Depreciation
Depreciation
Sch
Sch4,5,6,7
4,5,6,7
Exploration
Exploration&&
Development
Development
Sch
Sch8,9,10
8,9,10
Production
Production
Expenditures
Expenditures
Sch
Sch11,12
11,12
Gen.&
Gen.&Admin.
Admin.
Expenditures
Expenditures
BUDGET SCHEDULE 3
EXPENDITURES &
OPERATING
COSTS
BUDGET SCHEDULE 3A
EXPENDITURES
CAPITAL & NON CAPITAL
Budget Preparation Expenditures Summary

NOTES
Sch. 3.1 for Oil
Sch. 3.2 for Gas
Budget Schedule 3 & 3A

OPERATOR
CONTRACT AREA
BUDGET YEAR
BPMIGAS
EXPENSE AND EXPENDITURES BUDGET SUMMARY
:
:
:
1)
LINE
1
2
3
4
5
6
7
8
9
10
11
DESCRIPTION
EXPLORATION & DEVELOPMENT

Drilling
Administration
Total Exploration & Development
PRODUCTION
Operations
Administration
Total Production
GENERAL & ADMINISTRATION
TOTALS
OPERATOR
CONTRACT AREA
BUDGET YEAR
2)
CURRENT
CAPITAL
EXPEND.
3)
CURRENT
OPERATING
EXPEND.
12,000
1
2
3
4
5
6
7
8
9
10
11
12
CURRENT YEAR OPERATING EXPENSES

TIME PHASED
CURRENT 5)
6)
7)
8)
9)
YEAR
1st
2nd
3nd
4nd
TOTALS
DEPREC.
19,000
10,000
22,000
10,000
29,000
97,500
29,000
97,500
4,000
123,500
1,500
2,000
1,500
2,000
7,000
15,250
15,250
3,813
5,313
3,813
5,813
3,813
5,313
3,813
5,813
15,250
22,250
37,500
37,500
13,250
66,000
7,000
9,375
16,375
3,313
25,000
7,000
9,375
16,375
3,313
25,500
7,000
9,375
16,375
3,313
25,000
8,000
9,375
17,375
3,313
26,500
29,000
37,500
66,500
13,250
102,000
126,500
29,000
126,500
4,000
159,500
29,000
BPMIGAS
TOTAL BUDGETED EXPENDITURES
:
:
:
1)
Line
4)
TOTAL
EXPEND.
7,000
DESCRIPTION
Expl.& Dev. - Non Capital
Expl.& Dev. - Capital
Total Exploration
Production - Non Capital
Production - Capital
Total Production
Administration - Non Capital
Administration - Capital
Total Administration
TOTAL EXPENDITURES - NON CAPITAL
TOTAL EXPENDITURES - CAPITAL
TOTAL EXPENDITURES
2)
1st QTR
1,500
4,000
5,500
7,000
22,500
29,500
0
1,000
1,000
8,500
27,500
36,000
SCHEDULE 3
-BS-
3)
2nd QTR
2,000
3,000
5,000
7,000
30,000
37,000
0
1,000
1,000
9,000
34,000
43,000
SCHEDULE 3A
-BS-
4)
3rd QTR
1,500
11,000
12,500
7,000
15,000
22,000
0
1,000
1,000
8,500
27,000
35,500
5)
4th QTR
2,000
4,000
6,000
8,000
30,000
38,000
0
1,000
1,000
10,000
35,000
45,000
TOTALS
7,000
22,000
29,000
29,000
97,500
126,500
0
4,000
4,000
36,000
123,500
159,500
Budget Preparation
Step - 7 : Matching Operating Costs
to Lifting Value
Sch
Sch16
16
Lifting
Lifting
Forecast
Forecast
Sch
Sch33
Non
NonCapital
Capital
Costs
Costs
Sch
Sch14
14
Depreciation
Depreciation
Gross Revenue
BUDGET SCHEDULE 1
Operating Costs
FINANCIAL STATISTICAL
REPORT
Sharing Mechanism
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
:16
OPERATOR
CONTRACT AREA
BUDGET YEAR
BPMIGAS
PRODUCTION LIFTING FORECAST
CRUDE OIL/CONDENSATE - MBBLS
FIELD PRODUCTION
2)
3)
4)
5)
:
:
TIME PERIOD
LINE
YEAR MONTH
1 2006 JANUARY
2
FEBRUARY
3
MARCH
4
1ST QUARTER
5
6
APRIL
7
MAY
8
JUNE
9
2ND QUARTER
10
11
JULY
12
AUGUST
13
SEPTEMBER
14
3RD QUARTER
15
16
OCTOBER
17
NOVEMBER
18
DECEMBER
19
4TH QUARTER
20
21
TOTALS 1994
22
23 2007 1ST QUARTER
24
2ND QUARTER
25
3RD QUARTER
26
4TH QUARTER
27
28
TOTALS 2008
29
TOTALS 2009
30
TOTALS 2010
31
TOTALS 2011
1)
350
280
310
940
SCHEDULE 16.1
-BS-
15)
TOTAL
28 x 10 mb
300
310
300
910
310
310
300
920
Based on Production Forecast

Consider Begininng Inventory in January
310
300
310
920
3,690
819
819
828
828
3,294
2,920
2,738
2,555
NOTES
Sch. 16.1 for Oil
Sch. 16.2 for Gas
Budget Preparation Financial Status Report

NOTES
Sch. 1.1 for Oil
BPMIGAS
BUDGETED FINANCIAL STATUS REPORT - OIL/GAS/SUMMARYSch. 1.2 for Gas
Budget Schedule 1
OPERATOR
CONTRACT AREA
BUDGET YEAR
:
:
:
1)
LINE
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
31
DESCRIPTION
1st Quarter
2)
$
Amount
LIFTINGS
Oil/Condensate MBBLS
Gas MMCF
GROSS REVENUE
FIRST TRANCHE PETROLEUM
GROSS REVENUE After FTP
INVESTMENT CREDIT
COST RECOVERY :
Unrecovered Other Costs
Current Year Operating Costs
Depreciation - Prior Year Assets
Depreciation - Current Year Assets
TOTAL COST RECOVERY
TOTAL RECOVERABLES
EQUITY TO BE SPLIT
Indonesia Share
Government FTP Share
Government Equity Share
Domestic Requirement
Government Tax Entitlement
TOTAL INDONESIA SHARE
Contractor Share
Contractor FTP Share
Contractor Equity Share
Less: Gross Domestic Requirement
Add : Domestic Requirement Adjustment
Taxable Share
Government Tax Entitlement
Net Contractor Share
Total Recoverables
TOTAL CONTRACTOR SHARE
3)
$
BOE
940
56,400
11,280
45,120
2nd Quarter
4)
$
Amount
3rd Quarter
6)
5)
$
BOE
$
Amount
910
60.00
54,600
10,920
43,680
Line
32
33
34
35
11)
1st QTR
12)
2nd QTR
$
BOE
920
60.00
55,200
11,040
44,160
4th Quarter
8)
$
Amount
9)
$
BOE
920
60.00
55,200
11,040
44,160
TOTALS
10)
$
Amount
60.00
221,400
44,280
177,120
25,500
2,813
13,688
42,000
42,000
1,680
25,000
2,813
13,688
41,500
41,500
2,660
26,500
2,813
13,688
43,000
43,000
1,160
102,000
11,250
54,750
168,000
168,000
9,120
8,026
2,576
0
2,063
12,665
7,770
1,195
0
1,745
10,710
7,855
1,893
0
1,897
11,645
7,855
825
0
1,689
10,370
3,254
1,044
(4,067)
4,067
4,298
(2,063)
2,235
41,500
43,735
3,150
485
(3,938)
3,938
3,635
(1,745)
1,890
42,000
43,890
3,185
767
(3,981)
3,981
3,952
(1,897)
2,055
41,500
43,555
3,185
335
(3,981)
3,981
3,519
(1,689)
1,830
43,000
44,830
31,507
6,489
0
7,394
45,390
0
12,773
2,631
(15,966)
15,966
15,404
(7,394)
8,010
168,000
176,010
13)
3rd QTR
14)
4th QTR
Taxable Share (Line 27)

Add : Investment Credit
Less: Bonus Payment
Taxable Income
Gov't Tax Entitlement
$
BOE
3,690
25,000
2,813
13,688
41,500
41,500
3,620
TAX COMPUTATION
UNRECOVERED
OTHER COST
Balance Beginning
Additions
Recovered
Balance End of Quarter
7)
SCHEDULE 1
-BS-
60.00
15)
16)
17)
18)
19)
1st QTR
2nd QTR
3rd QTR
4th QTR
TOTALS
4,298
3,635
3,952
3,519
15,404
4,298
2,063
3,635
1,745
3,952
1,897
3,519
1,689
15,404
7,394
Budget Preparation Other Schedules

Step - 8 : Completing
Other Budget Schedules
Sch
Sch22
Key
KeyOperating
Operating
Statistics
Statistics
Sch
Sch11
Financial
FinancialStatus
Status
Sch
Sch88
Production
ProductionExp
Exp
Sch
Sch16
16
Lifting
LiftingForecast
Forecast
Sch
Sch4,
4,88&&11
11
Attachment
Attachmentto
to
Sch
Sch4,
4,88&&11
11
Sch
Sch17
17
Expenditures
Expenditures
By
ByCategory
Category

Attachment to Budget Schedule 4
OPERATOR
CONTRACT AREA
BUDGET YEAR
:
:
:
BPMIGAS
BUDGETED EXPLORATION AND DEVELOPMENT EXPENDITURES
PERSONNEL COST
DESCRIPTION
1
DRILLING EXPENDITURES
Development Drilling :
3
4
Intangible Costs
Tangible Costs
Total Development Drilling
Exploratory Drilling :
Intangible Costs
Tangible Costs
Total Exploratory Drilling
10
Total Drilling Expenditures
11
Total Intangible Expenditures
12
13
14
Total Tangible Expenditures

G&G EXPENDITURES
Geological
15
Geophysical
16
Seismic & Other Surveys
17
18
Total G&G Expenditures
19
20
EXPL. ADM. EXPENDITURES
21
Administration
22
Other
23
24
Total Administration Expenditures
25
26
TOTAL EXP. & DEV. EXPENDITURES
27
TOTAL NON-CAPITAL EXPENDITURES
28
TOTAL CAPITAL EXPENDITURES
EMPLOYEE BENEFIT
EXPAT
EXPAT
NATIONAL
MATERIALS
TECHNICAL CONTRACT/
SALARIES & WAGES
SERVICES SERVICES
IMPORT
NATIONAL OVERSEAS DOMESTIC Consumables
Capital
INSURANCE
DOMESTIC
Consumables
Capital
ATTACHMENT TO
SCHEDULE 4
-BS-
ENVIRON-
SUNDRIES
TOTAL
OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC

DOMESTIC
TOTAL

OPERATOR
CONTRACT AREA
BUDGET YEAR
:
:
:
PERSONNEL COST
DESCRIPTION
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
DIRECT PRODUCTION EXPENSES - OIL

Oil Well Operation
Oil Production and Processing Facilities
Secondary Recovery Operations
Storage, Handling, Transportation, Delivery
Supervision
Maintenance
Other Direct Production Expenses - Oil
Total Direct Production Expenses - Oil
DIRECT PRODUCTION EXPENSES - GAS
Gas Well Operations
Gas Production Facilities Operations
Gas Transportation
Supervision
Maintenance
Other Direct Production Expenses - Gas
SALARIES & WAGES

EXPAT
NATIONAL
TECHNICAL CONTRACT/
EMPLOYEE BENEFIT
SERVICES SERVICES
EXPAT
NATIONAL OVERSEAS DOMESTIC
BPMIGAS
BUDGETED PRODUCTION EXPENSE
MATERIALS
IMPORT
Consumables Capital
DOMESTIC
Consumables Capital
INSURANCE
OVERSEAS
SUNDRIES
ENVIRONDOMESTIC MENT CTRL OVERSEAS DOMESTIC
DOMESTIC
ATTACHMENT TO
SCHEDULE 8
-BS-
TOTAL
OVERSEAS
DOMESTIC
TOTAL

OPERATOR
:
CONTRACT AREA :
BUDGET YEAR
:
BPMIGAS
ADMINISTRATIVE EXPENSE BUDGET SUMMARY
PERSONNEL COST
Line
DESCRIPTION
SALARIES & WAGES
EMPLOYEE BENEFIT
EXPAT
EXPAT
NATIONAL
NATIONAL
TECHNICAL CONTRACT/
SERVICES SERVICES
OVERSEAS
DOMESTIC
MATERIALS
IMPORT
Consumables
Capital
DOMESTIC
Consumables
Capital
1 FINANCE & ADMINISTRATION

2
Legal Services
Audit Services
3
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
INSURANCE
OVERSEAS DOMESTIC
SUNDRIES
ENVIRONMENT CTRL OVERSEAS DOMESTIC
DOMESTIC
ATTACHMENT TO
SCHEDULE 11
-BS-
TOTAL
OVERSEAS DOMESTIC
TOTAL

Budget Schedule 17
OPERATOR
BPMIGAS
CONTRACT AREA :
BUDGET YEAR
SALARIES & WAGES

EXPAT
Production
Administration
5
6
Total Capital Expenditures

OPERATING EXPENDITURES
Production
Administration
10
11
Total Operating Expenditures

TOTAL EXPENDITURES
-BS-
BUDGET YEAR EXPENDITURES

PERSONNEL COST
DESCRIPTION
SCHEDULE 17
NATIONAL
SERVICES
SERVICES
NATIONAL OVERSEAS
DOMESTIC
EMPLOYEE BENEFIT
EXPAT
INSURANCE
MATERIALS
TECHNICAL CONTRACT/
IMPORT
Consumables
DOMESTIC
Capital
Consumables
Capital
ENVIRON-
SUNDRIES
TOTAL
OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC

DOMESTIC
TOTAL

Attachment to Schedule 4,8 11, and Schedule - 17
DESCRIPTION OF COLUMNS
1 PERSONNEL COST :
~ Salaries & Wages
- Expatriates
- National
:
:
~ Employee Benefits
- Expatriates
- National
Expenditures for Gross Salaries & Wages of the PSC Expatriate Personnel.
Expenditures for Gross Salaries & Wages of the PSC National Employees.
Expenditures for Employee Benefits of the PSC's Expatriate personnel, provided domestically and treated as
Direct Charges.
: 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
- Capital
~ Domestic
- Consumables
- Capital
: Expenditures for consumable materials, purchased from/supplied by domestic market.

: Expenditures for materials to be capitalized, purchased from/supplied by domestic market.
5 INSURANCE
~ Overseas
~ Domestic
: Expenditures for overseas insurance coverage, not including personnel costs.

: Expenditures for domestic insurance coverage.
6 ENVIRONMENTAL
CONTROL
: Expenditures to protect the area (location) or field from environmental damage, pollution, etc., including the cost of
inspection done by Government Officials.
7 SUNDRIES
~ Overseas
~ Domestic
: Expenditures other than mentioned earlier, spent overseas.

: Domestic Expenditures other than mentioned earlier.
: Expenditures for consumable materials, purchased from/supplied by foreign market.

: Expenditures for materials to be capitalized, purchased from/supplied by foreign market.
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:
(+)
(+)Cost
CostRecovery
Recovery
(+)
(+)FTP
FTP&&Equity
EquityShare
Share
(-(-) )DMO
DMO
(+)
DMO
(+) DMOFee
Fee
(+/
)
Over/Under
(+/-) Over/UnderLifting
Lifting
Equity
Equityto
tobe
beSplit
Split
BPMIGAS
BPMIGAS
Share
Share
CONTRACTOR
CONTRACTOR
Share
Share
DMO
DMO
DMOFee
DMOFee
3.3. Taxable
TaxableIncome
Income(1)
(1)(2)
(2)
Tax
TaxPayments:
Payments:
- -Income
IncomeTax
Tax
- -Dividend
DividendTax
Tax
Govt
GovtTax
Tax
Indonesia
Indonesia
Share
Share
Net
Net
Contr.
Contr.
Share
Share
2.2. Costs/Tax
Costs/TaxDeductions:
Deductions:
- -PSC
Operating
PSC OperatingCosts
Costs
- -Non
PSC
Costs
Non PSC Costs
Cost
Cost
Recovery
Recovery
Total
TotalContr.
Contr.Share
Share
OTHER
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
KMK 267/012/1978
UU PPh No.7/1984
KMK 458/012/1984
UU PPh No.10/1994
Reference
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%
50.5%
41.5%
37%
Total
- 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
Corporate Tax Tariff changed from 45% to 35%
Dividend Tax remains the same (20%)
For 85/15 Crude Oil at 35% PPs and 20% PBDR, Total Tax rate 48%, therefore
PSC signed prior to 1/1/1984 may apply the previous share splits.
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit
Period of 1995 thru 23/11/2001
Tax Reference:
Corporate Tax Tariff changed from 35% to 30%
Dividend Tax remains the same (20%)
For 85/15 Crude Oil at 35% PPs and 20% PBDR, Total Tax Rate 44%, therefore
PSC signed prior to 1/1/1995 may apply the previous share splits.
Income
IncomeTax
Tax&
&Final
FinalTax
Taxon
onProfit
Profit
Period of following Law No.22 / 2001
Tax Reference:
Oil and Gas Law 2001
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: :The
Theterms
termsand
andconditions
conditionsofof PSC
PSC(i.e.
(i.e.85/15,
85/15,70/30
70/30and
andothers)
others)
are
based
on
the
assumptions
that
Contractors
are
not
obligated
to
pay
taxes
are based on the assumptions that Contractors are not obligated to pay taxesand
and
levies
other
than
income
taxes
and
final
tax
on
profit,
as
spell
ed
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 Costs
Costs computed
computed based
based on
on PSC
PSC
Accounting
Procedures.
Accounting Procedures.
Operating
OperatingCosts
Costscomputed
computedas
asspelled
spelledout
outinin
the
theIncome
IncomeTax
TaxLaw,
Law,Article
Article6.6.
Pre
-signing contract
Pre-signing
contractcosts
costsare
arenon
nonPSC
PSCCosts
Costs
Pre
-establishment costs
Pre-establishment
costs having
having >1
>1 year
year
benefit
shall
be
capitalized
and
amortized.
benefit shall be capitalized and amortized.
Intangible
IntangibleDrilling
DrillingCosts
Costsare
arechargeable
chargeablewhen
when
they
incur.
they incur.
Costs
Costshaving
havingmore
morethan
than11year
yearbenefit
benefitshall
shall
be
capitalized
and
amortized.
be capitalized and amortized.
Crude
Crudeoil
oilsold
soldtotoaffiliates
affiliatesisisvalued
valuedatatICP.
ICP.
Crude
Crude oil
oil sold
sold toto affiliates
affiliates isis valued
valued atat the
the
actual
price,
but
tax
office
has
the
right
actual price, but tax office has the right toto
determine
determinethe
thevalue
valuefor
forsales
salestotoaffiliates.
affiliates.
Tax
Tax paid
paid monthly
monthly based
based on
on actual
actual lifting,
lifting,
adjusted
at
end
og
March,
the
following
year.
adjusted at end og March, the following year.
Tax
Taxdue
dueisispaid
paidno
nolater
laterthan
thanend
endofofMarch
March
the
following
year.
the following year.
Unrecovered
Unrecovered costs
costs are
are carried
carried over
over toto
succeeding
succeedingyears.
years.
Losses
Lossesmay
maybe
becompensated
compensatedfor
for55years.
years.
PSC
PSCAccounting
Accountingvs
vsGeneral
General Taxation
Taxation (2)
(2)
PSC
PSCAccounting
Procedures
General
GeneralTax
TaxAccounting
AccountingPrinciples
Principles
Community
Communitydevelopment
developmentisisnon
noncapital
capitalcosts
costs
and
tax
deductible.
and tax deductible.
Community
Communitydevelopment
developmentisisnot
nottax
taxdeductible
deductible
Interest
Interest on
on loan
loan may
may only
only be
be applicable
applicable toto
capital
capitalinvestment
investmentand
andrequires
requiresapproval.
approval.
All
Allinterest
intereston
onloan
loanisistax
taxdeductible.
deductible.
Consumable
Consumable items
items are
are chargeable
chargeable when
when
landed
in
Indonesia.
landed in Indonesia.
Consumable
Consumableitems
itemsare
aredeductible
deductiblewhen
whenthey
they
are
issued
for
usage.
are issued for usage.
Depreciation
Depreciationstarts
startsbeginning
beginningininthe
theyear
yearwhen
when
an
asset
is
placed
into
service.
an asset is placed into service.
Depreciation
Depreciationstarts
startsininthe
themonth
monthofofpayment
payment
ororcompletion
of
assets.
completion of assets.
Assets
Assetsbelong
belongtotothe
theState.
State.
Assets
Assetsbelong
belongtotobusiness
businessentity.
entity.
Revaluation
RevaluationofofAssets
Assetsisisnot
notpossible.
possible.
Revaluation
RevaluationofofAssets
Assetsisispossible.
possible.
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
totoPSC
PSCAccounting
Procedures
Acquisition
Acquisition costs
costs ofof economic
economic interest
interest shall
shall
be
amortized
based
on
unit
of
production
.
be amortized based on unit of production.
Books
Books and
and Accounts
Accounts are
are reported
reported inin English
English
language
and
in
US
Dollars
currency.
language and in US Dollars currency.
Financial
FinancialReports
ReportsininBahasa
BahasaIndonesia
Indonesiaand
andinin
Indonesian
.
IndonesianRupiah
Rupiah.

Financial Aspects Production Sharing Contracts

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Bambang

Basic Principles terms

Basic Principles terms

Basic Principles Participating Interest

Basic Principles Participating Interest

Basic Principles - Ringfencing

Basic Principles Ringfencing

Basic Principles Ringfencing

Basic Principles Ringfencing

Basic Principles Typical Sharing

Basic Principles Cost Structure

- Direct Prod Exp - Oil

- Finance & Admin.

Exploration & Development Activities

Exploration & Development Expenditures:

Exploration & Development Cost Items

Development Production Capital

Production Supports (Field Office, Services and General Administration)

Labor, materials (consumables) & services used in production activities

Lifting & Sharing Analysis

Entitlement calculated after the year ends (January-December)

Entitlement & Lifting

Contractor and BPMIGAS are annually entitled to a portion of oil &

proceed is shared between BPMIGAS and Contractor based

Inbalances resulted from the difference between Lifting & Entitlement

US$100 millions / US$40

28.8462% x 1,000 bbl

28.8462% x 1,500 bbl

28.8462% x 25% x 5,000 bbl

71.1538% x 1,000 bbl

71.1538% x 1,500 bbl

28.8462% x 25% x 5,000 bbl

Lifting & Sharing

STANDARD COMMON SPLITS

Gross-Up Split for Contractor

Lifting & Sharing

First Tranche Petroleum (FTP)

Domestic Market Obligation (DMO)

Lifting & Sharing

Lifting & Sharing

First Tranche Petroleum (FTP)

Lifting & Sharing

Lifting & Sharing

Total LNG Costs . . . . . . . . . . . . . . . . . . US$ 30 millions

Lifting & Sharing

Lifting & Sharing

Lifting & Sharing

Lifting & Sharing

Lifting & Sharing

- Direct Prod Exp - Oil

- Finance & Admin.

Other Accounting Procedures

Other Accounting Procedures

Other Accounting Procedures

*) Inv.Credit is partially claimed starting in the first years of production

Introduction to Budgeting & Reporting

Annual Budget (Part of WP&B)

Budgeting & Reporting

Submissions, at least 3 months prior to the beginning of each calendar year,

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

Legal permanent document, source of reference for actual data.

Inclusion of estimated expenditures for the third month of any quarter. In

Expressed in US dollars, rounded off to the nearest thousand dollars,

Explains variances, generally when YTD variance is + 10% or more,