Company Profile MedcoEnergi 2012-2

8/10/2019 Company Profile MedcoEnergi 2012-2

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MedcoEnergi is committed to providing energy for society.Our near term goal is to double the current production rate bydelivering successful major projects, growing our reservesorganically and inorganically, while complying with high

safety, health, and environmental standards.

"

Lukman Mahfoedz, CEO of MedcoEnergi

"


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Table OfContents02 Foreword from CEO

04 Journey Towards Excellence

18 Exploration and Production

30 Other Energy Related Businesses


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2

PT Medco Energi Internasional Tbk(MedcoEnergi) is a publicly-listed Indonesiannational company with current oil and gasproduction of around 80 thousand barrels ofoil equivalent per day (including 20 thousandbarrels oil equivalent per day under a servicecontract in Oman).

MedcoEnergi was founded in 1980 by ArifinPanigoro, one of Indonesia's leading oil andgas businessmen, as the first private nationaloil and gas drilling company.

Within three decades, we have significantlygrown our business and become an integratedenergy company engaged in explorationand production (E&P), integration of gas

value chain, Liquefied Petroleum Gas (LPG)processing, high speed diesel marketing,storage and transportation, gas transportation,drilling rigs and services, electrical powergeneration and coal mining.

Today, we have expanded our operation fromIndonesia to Oman, Yemen, Libya, and theUnited States of America. In order to grow

Forewordfrom CEOour business and achieve our goals, we haveacquired an enormous amount of knowledgeand surrounded ourselves with the most

talented human capital.

MedcoEnergi is committed to providing energyfor society. The Company is set to double itscurrent production rate in the near future by

delivering successful major projects, growingits reserves organically and inorganically,while always complying with the highestsafety, health and environmental standards.

Our aim is to maximize value for ourstakeholders. We welcome your interest,involvement and support as we continue topursue aggressively the Company's growth

agenda.

Sincerely yours,

Lukman MahfoedzPresident Director & CEO


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Our vision is to be the energy companyof choice for our investors, shareholders,partners, employees, communities and thegreater public.

It is a vision that will be realized by developingenergy resource potential into profitableinvestment portfolios.

We operate our business in adherence tothe highest standards of Good CorporateGovernance (GCG) and of Safety, Healthand the Environment (SHE). In addition, weimplement a consistent Corporate SocialResponsibility (CSR) program. In all theseareas MedcoEnergi has received accoladesfrom its stakeholders.

All our work is conducted in a professional,ethical, open, and innovative way. Thesevalues are the core of our corporateculture, which drives MedcoEnergi towardssustainability.

Becoming the EnergyCompany of Choice

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OurBelief


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Journey Towards

ExcellenceObtain Highest

RecognitionThe Indonesia Vice President presented

Gold PROPER award, the highest recognitionfor preserving the environment from the

Indonesian Ministry of Environment, to the

COO of E&P MedcoEnergi, Frila B. Yaman.


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CorporateMilestones

1980

1994

1992

1995 Acquired 100% shares ofPT Stanvac Indonesia fromExxon and Mobil which heldPSCs for 3 oil and gas blocksin South Sumatra: South &Central Sumatra, Rimau, andPasemah.

2000

1997 Entered into the downstreamindustry through a JointManagement Agreement to

operate Pertamina's methanolplant at Bunyu Island.

Acquired three new workingareas: Simenggaris, WesternMadura and Senoro-Toili.Discovered an oil field in Soka,South Sumatra.

Established an oil and gassubsidiary.

Acquired a Technical

Assistance Contract (TAC) andProduction Sharing Contract(PSC) for two oil and gasblocks in East Kalimatan fromTesoro.

Initial public offering asMedcoEnergi on the IndonesiaStock Exchange.Ticker symbol is MEDC.

1996 Discovered the giant oil field,Kaji and Semoga, RimauBlock, South Sumatra.

Incorporated as an Indonesiandrilling contractor.

2002 Acquired 25% working interest inTuban block.

Awarded a "B+" corporate creditrating with stable outlook byStandard & Poor's on February4, 2002, above Indonesia's creditrating.

2003 Signed Gas Supply Agreementwith PLN (state-owned powerproducer) for gas producedfrom South & Central SumatraPSC.

Awarded Oil & Gas Explorationand Production SharingAgreement of Area 47 from theGovernment of Libya.

Acquired Langsa block andSembakung block in Indonesia.

Signed Tanjung Jati Operation& Maintenance Agreement

with PLN.

2005

2004 Acquired 100% shares of

Novus Petroleum Ltd, markingthe Company's expansion intothe international oil and gasarena.

Inaugurated the Company'sfirst gas-fueled power plant inBatam Island, Panaran I.


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2008 2010

2011

2009

2006 Awarded ten-year E&PService Agreement of KarimFields, in Oman.

Commissioned Panaran IIgasfired power plant.

Awarded 3x110 MW ofgeothermal power project inSarulla, North Sumatra.

2007 Launched exploration ofArea 47 in Libya. Made sixdiscoveries from explorationwells in 1 year.

Launched pilot project for

Enhanced Oil Recovery (EOR)in Rimau Block.

Began the developmentof Senoro Gas Project byestablishing PT Donggi-Senoro LNG (DSLNG).

Signed a Production SharingAgreement with the Ministryof Oil and Minerals of theRepublic of Yemen for Block 82and 83.

Completed the sale of itsdrilling subsidiary, PT ApexindoPratama Duta Tbk.

Signed the first CoalBedMethane (CBM) PSC inIndonesia to carry out activitiesin development of CBM in MusiBanyuasin Regency, SouthSumatra.

Secured operatorship and successfullymade three discoveries from threeexploration wells in Area 47 in Libya.

Obtained 20 year extensions for three PSCworking areas: South & Central Sumatra,Block A, and Bawean.

Approved the Final Investment Decisionfor DSLNG to develop the LiquefiedNatural Gas (LNG) project.

Issued the shelf-registration USD bond ofup to USD 150 million.

Signed to CBM PSC of Lematang andMuralim Blocks.

Completed the sale of Medco TunisiaAnaguid Limited.

Invited PT Saratoga Power to become ashareholder of PT Medco Power Indonesia.

Secured Commerciality declaration of Area47, Ghadames Basin, Libya.

Entered into the coal miningbusiness by acquiring twocompanies which holdmining concession rights inNunukan, East Kalimantan.


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MedcoEnergi is committed to managing itsoperations safely, effectively and efficiently.MedcoEnergi always ensures that all of itsassets implement Performance Integrity ofMedcoEnergi (PRIME) as its SHE managementsystem. PRIME was developed in accordancewith the International Safety Rating System7th edition (ISRS7), the audit standard that is

implemented in all MedcoEnergi assets.

As a high standard of SHE system, thecontents of PRIME are also in line with variousinternational standard management systems:ISO 9001 (Quality Management System), ISO14001 (Environmental Management Systems),OHSAS 18001 (Occupational Health andSafety Assessment Series), PAS 55-Asset

Management, and GRI (Global ReportingInitiative).

PRIME is a guideline for MedcoEnergi toimplement operation management system,risk management, employee competencymanagement, facility integrity management,crisis management, and knowledgemanagement.

MedcoEnergi has been implementing variousinitiatives to regularly enhance its SHEperformance and to show appreciation foremployees and contractors who implementour Behavior Based Safety program.

We have been conducted Health RiskAssessment programs and provided specific

health program for our employees toprevent any potential occupational illness.MedcoEnergi requires all of its contractors toimplement Contractor Safety Management andevaluates their SHE performance during theirservice to ensure that they understand andimplement CSM properly and effectively.

We also realize that our operational integrity

is highly dependent on our facility integrity.Therefore, we continuously enhance theintegrity of our facilities by conductingrisk-based facility inspections and routineinspections on our various equipment andelectrical installations.

MedcoEnergi is determined to enhance thesafety behavior of its employees at all times

to continue delivering the best quality ofoperation and performance.

High SHE Standard


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MedcoEnergi uses Performance Integrity of MedcoEnergi (PRIME) as its SHE management system. This system was developed

in accordance with ISRS7 audit standard.


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Currently about 6.8 billion people inhabitthe Earth. Our world is faced with seriouschallenges, among others: poverty,environment, and health.

MedcoEnergi is continuously trying to findbetter ways to produce and use energy

to drive the economy, industries, and

transportation.

MedcoEnergi has undertaken severalinitiatives to restore the ecological balance

that is affected by its operations, includingmanagement of water and air pollution, andhazardous solid waste materials.

We always strive for our operations to comply

with the environmental law and regulationwherever we operate. We regularly produce afeasibility study on the environment for everyactivity, such as analysis of environmentalimpact and efforts on environmentalmanagement and ecological monitoring.

In preserving the environment, we arecommitted to implementing various initiatives,including: green house gas emissionreduction, water conservation, wastemanagement, utilization of resources, andbiodiversity conservation.

These initiatives have enabled us to

enhance our performance in preserving theenvironment. We are the first E&P Company

to receive the highest recognition fromthe Indonesian Ministry of Environmentby obtaining Gold PROPER (CorporatePerformance Rating Program) rating in 2011for our major oil producing block, Rimau,in South Sumatra. We also obtained GreenPROPER ratings for our other oil and gas

producing blocks in South Sumatra and EastKalimantan.

We are endlessly pursuing better, moreenvironmentally friendly operations to produceand use energy to reduce greenhouse gasemissions and global warming.

Preserving Environment


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MedcoEnergi actively restores the ecological balance affected by its operations.


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Growing an energy business in a pluralisticsociety such as Indonesia carries theresponsibility of empowering the localcommunities and interacting respectfully with

the environment. Close cooperation with thegovernment at national and local levels is akey to ensuring the sustainability of economicand social growth in addition to conservation

of the environment..

MedcoEnergi has contributed in a uniqueway. Our community development activity inoperation areas has provided energy to localcommunities through small gas-fired andhydro-power plants in several villages in SouthSumatra. The Company provides financialsupport, such as micro financing to local

small-scale entrepreneurs (e.g. carpenters,fishermen, cracker producers, etc). We alsosupport the local community to plant organicpaddy fields. Briefly, we develop small-scaleenergy-related and community-based projectsusing locally available resources. In this way,we also preserve the environment.

Our Company has demonstrated a strongcommitment to local education particularly inour operation areas. We continue providingscholarships and improving school facilities.We believe that a better education willimprove the quality of life of the community.

MedcoEnergi has introduced various

initiatives to empower women in thecommunity, such as a community developmentprogram for organic System of RiceIntensification (SRI). Indeed, the UnitedNations has recognized MedcoEnergi with itsMillenium Development Goals award in thecategory of "Promoting Gender Equality andEmpowerment of Women."

Empowering LocalCommunities


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Children are our future. We believe that a better education will improve the quality of life of the community


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Our Human CapitalPeople are our capital and the key to oursuccess. People competency and engagementare crucial to the Company's performance.We therefore organize, develop, and rewardour employees so that they can continuouslyincrease their competency and deliver theirbest performance.

We have invested in several strategic humancapital initiatives to attract, motivate andretain the right talents. In developing ourfuture leaders, we have embarked on astructured leadership development program,involving employees from staff to seniormanagement level.

Our talent management process ensuresMedcoEnergi has a sustainable supply of

talent to fill various key positions within theorganization.

Today, MedcoEnergi employs more than2,200 people worldwide, including over 500petrotechnical professionals. Our human

capital is made up of people from variousnations who all embrace the MedcoEnergiculture and spirit.

MedcoEnergis young petro-technical professionals are ready to face the challenges in Indonesia and abroad.


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MedcoEnergi is recognized by the Indonesiancapital market community as a pioneer inadhering to the highest standards of GCGprinciples and business ethics.

We have received several GCG awards since2005 and are always striving to achieve aneven better performance.

MedcoEnergi has implemented a policywhereby all employees are required to declare

that they will comply with the GCG principlesand business ethics. In addition, the Companyhas introduced a 'whistle-blowing' system tosupport the policy, which has been utilized by

the Directors to monitor the implementationof corporate values by all members ofMedcoEnergi.

Fraud, dishonesty, harassment, unethicalbehaviour and workplace safety hazardshave a negative effect on our workplace. Byreporting misconduct, our stakeholders canhelp us to ensure that our people are safe andsecure in their work environment and also thatfraud and dishonesty can be eliminated, thussaving the company financial losses.

Type of wrongdoings that are covered in oursystem include; Fraud, Corruption, Bribery,Conflict of Interest, Misconduct Behaviours,Financial Statement Fraud, Breaches of Policy,and Other Unethical Behaviour.

Our stakeholders' active involvement willmake MedcoEnergi a safe, fair and honestplace to work.

HighestGCG Principles

MedcoEnergi guarantees the right of every individual to report any indication of violation in any forms.


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MedcoEnergi relies heavily on seamlesscommunications. We have investedextensively in Information CommunicationTechnology (ICT). Technology is our enabler,which allows us to grow as well as tostrengthen our internal control system.

Since 2001, we have used a robust

infrastructure of ICT System. The system isa single integrated centralized data centre,which is protected with disaster recoverysystem using virtualization technology.

MedcoEnergi already has most of its businessprocess already online, highly integratedwith its Enterprise Resource Program (ERP)system. In addition, we are also one of the

first companies in Indonesia to fully useonline collaboration technology in our dailybusiness system integrated with an electronicdocument management system. We areable to work any time anywhere with propersecurity and data integrity.

With such a system, we are now able to buildup our internal control system and make

decisions more quickly and more effectively.At the same time, we can reduce our carbonfootprint due to using less paper and fewerbusiness trips.

We have also established a technologycentriccollaborative room. MedcoEnergi hasempowered its employees to perform

multidisciplinary collaborative work on all ofour assets. When needed, the collaborativeroom can transform itself into a crisismanagement center.

MedcoEnergi's commitment to the informationsystem has been proven by obtaininginternational IT standard, the ISO/IEC 20000in IT service management. This ensures

reliability in the information system which willgreatly support MedcoEnergis growth.

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Information SystemExcellence


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Our technology-centric collaborative room enables MedcoEnergi employees to perform multi-disciplinary collaborative work.


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Partnership is a key success factor for

MedcoEnergi, enabling it to increaseproduction, maintain reserve growth, and

obtain advance technology.

Exploration

and ProductionGrowth through

Partnership


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In the last two decades, MedcoEnerghas successfully grown its explorationand production business andcontinuosly added to and replacedreserves. We have expanded ourbusiness to include five countries,i.e. Indonesia to Oman, Yemen,Libya, and USA. These operationsinclude exploration, development andproduction of crude oil and natural gas,as well as oil and gas exploration andproduction services.

Partnership is one of the key successfactors to expanding our explorationand production business. We have

been working together with variousexploration and production companies

worldwide to maximize the value of ourassets and at the same time to grow ourbusinesses.

We have demonstrated our expertisein enhancing production of matureand marginal fields and operating theassets efficiently, both in domestic andinternational assets. We have beenable to obtain strong support fromlocal government and communities.We empower local communities in thesurrounding areas of our operations,create jobs for them and increase theireducation level. It is our long-termcommitment to create and deliver

sustainable value to all local communitieswherever we operate.

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We are committed to providing energyfor societys needs and set our goal

to double the current production ratein the near future. We will continue toconduct exploration activities in themost potential prospects, implementEnhanced Oil Recovery (EOR)

technology at our mature assets, andpursue acquisitions of new potentialor producing oil and gas assets. Weare also looking at the opportunity toexpand our exploration and productionbusiness to CBM and to produce ourheavy oil potential in one of our blocksin Indonesia.

USA Libya Yemen Oman Indonesia

Exploration Production Economic Interest Participation Service ContractDevelopment CBM


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Block A Merangin

Block

Tarakan

Block

Bengara

Block

Nunukan

Block

Lematang

Block

Sembakung

Block

Simenggaris

Block

Jeruk

Exploration

Well

South

Central

Sumatra

Sekayu

Block

Muralim

Block

Rimau

Block

Bawean

Block

Senoro-Toili

Block

Bangkanai

Block

Our major projects, exploration anddevelopment activities at challengingareas and development of newunconventional energy require high

technology application and massivecapital investment. The involvementof our experienced partners in

those areas is a key element tomaterialize our objectives. Weare confident that our history ofsuccessful performance combinedwith partnerships with reputablecompanies will enable MedcoEnergi

to demonstrate an even betterperformance thus maximizing valuefor our stakeholders in the near

future.

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Country Partners

Indonesia Anadarko, Cue Energy, Dart Energy, JAPEX, KOGAS, Lundin, Mitsubishi Corporation,MOECO, Pertamina, Premier Oil, Salamander Energy, and SPC.

Oman Kuwait Energy, Oman Oil Company, Petrovest, and Vision Oil.

Yemen Indian Oil, Kuwait Energy, Oil India Ltd, and Yemen General Oil & Gas Corporation.

Libya Libyan Investment Authority.

USA Challenger Minerals, Leed Petroleum, Rampant Lion Energy, and Red WillowProduction Company.


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Exploration

MedcoEnergi is committed to increasing itshydrocarbon reserves and production through bothorganic and inorganic growth.

Exploration is the key to the organic growthof our business. MedcoEnergis experiencedgeoscientists have been working diligently tointegrate the database of our basins with availableseismic data to develop three dimensionalmodels of the sub-surface. By referring to thesemodels, we will be able to understand the entirehydrocarbon system, enabling us to identify andoptimize high potential exploration prospects.

MedcoEnergi achieved a major success whenit discovered giant oil reserves in Indonesia in1996. This success encouraged MedcoEnergi toaggressively implement exploration programs,resulting in a very significant increase in itsreserves and production in Indonesia.

An example of MedcoEnergis expertise isdemonstrated by its successful explorationprogram in Area 47, Libya where we discoveredenormous hydrocarbon reserves in 2008. Thissuccess enabled us to achieve an explorationsuccess ratio of 90% at the end of 2010.

As an exploration and production company,MedcoEnergi will continue to increasehydrocarbon its reserves and enhance the

value of its exploration assets by implementingextensive exploration activities at prospect areasin Indonesia, Libya, and Yemen.

MedcoEnergi also strives to increase productionand reserves through inorganic growth. Theintuition and expertise of MedcoEnergismanagement and geoscientists have enabled theCompany to acquire various attractive producing,development and exploration assets withtremendous amount of reserves since 2000. Theseacquisitions have significantly contributed to theincrease in our reserves.

We continue to search selectively for additionaloil and gas resources through new ventures. Weare currently considering several opportunitiesin Indonesia and abroad and will select the mostattractive assets.

Our partners play a big role in supporting us tocarry out our exploration programs and/or toexecute the acquisition of assets. Their supportand contribution in sharing technology, people,

expertise, and capital investment have enabledus to achieve great successes in discovering andincreasing hydrocarbon reserves.

MedcoEnergi is highly optimistic that byimplementing further exploration programs andacquiring producing assets it will be able toachieve its target to double oil production in thenear future.


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of Area 47 with a participating interest of 50%in 2005. We became the operator of Area 47 in2010.

Among all of the holders of EPSA IV, we arethe first company that obtain a declaration of

commercialization from the Government ofLibya. It shows our determination and ability torun our exploration program. Furthermore, thisdiscovery also marks the acceleration in ourmajor discovery cycle.

MedcoEnergi's reserves and contingent resources have grown significantly with the successful

exploration in Libya.

The discovery of 352 MMBOE contingentresources in Area 47 on 2008 and additionalresources discovered until the end of 2010demonstrated MedcoEnergis success inexecuting exploration program in Libya.

From the commencement of exploration drillingactivities in September 2006 to the end of2010, we have drilled 20 exploration wells and6 appraisal wells, and completed a third 3Dseismic program of 1225 sq. km in the easternpart of Area 47 and 2,400 km of 2D seismicin the western and southern part. We havesuccessfully discovered resources from 18 outof the 20 exploration wells drilled in 4 years, andachieved an exploration success ratio of 90%.

Commerciality of Area 47 was obtained in late2011. We are now working to build a productionfacility for 50,000 bopd which is expected to becompleted in 2015.

We are also continuing our exploration programin Area 47 and are confident that the programwill provide excellent results.

MedcoEnergi entered into the Exploration andProduction Sharing Agreement IV (EPSA IV)

Libya; Breaking the Record

Libya Area 47


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Development

For the last ten years, MedcoEnergi has beenstriving to increase its production. It hasactively pursued opportunities to monetizeits abundant stranded gas reserves in remoteareas in Indonesia.

MedcoEnergi has entered into the elite marketto produce LNG and has obtained the support

of the Indonesian government and partners increating a market to monetize its stranded gasfrom Senoro field in Central Sulawesi.

Subsequently, we are now also working todevelop high temperature sour gas reserves inAceh. This gas will be processed in a facilitywhich will supply the local fertilizer plant. Agas-processing unit using amine system will

be installed at the facility to remove carbondioxide (CO2) and Hydrogen Sulfide (H2S) inaddition to a sulfur recovery unit to recover

the H2S. Pupuk Iskandar Muda (PIM) andPLN, companies owned by the Indonesiangovernment and located in Aceh, will use

this gas to produce fertilizers and electricity.We are also conducting a feasibility studyregarding technical and commercial aspectsof the remaining gas reserves from this asset.

MedcoEnergi is committed to developing itsoil discovery timely. We are now working

together with our partner and the Governmentof Libya to develop the first phase of the oilproduction facility, and we plan to doubleoil production in the future. All developmentassets are managed through one chainof command. We strive to deliver project

execution of our development assets in linewith the highest industry standards, and arecommitted to implementing Medco ProjectExcellence Process (MPEP) to assure anycapital investment made by MedcoEnergi andour partners is utilized effectively.

In the near future, our development assets willplay a key role in supporting our immediate

goal to double our current oil and gasproduction. Our partners play a significant rolein sharing their technology, expertise, people,and products to help us to deliver our majorprojects on time and within the budget.


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MedcoEnergi is committed to creating value by continuously developing oil & gas resources

in many parts of the world.

MedcoEnergi is committed to monetizing andinnovatively creating a market for its abundantstranded gas reserves from remote areas inIndonesia. One of the examples is Senorogas field, which is located in a remote area inCentral Sulawesi Province. The Senoro gas field

contains sufficient reserves and contingentresources to supply 250 MMSCFD to a LNG plantunder a long term gas supply commencing in thefourth quarter of 2014. In addition, we envisageanother supply of approximately 55 MMSCFD tothe domestic market

We are proud that we can enter into the elitemarket to produce LNG and have obtained thesupport of the Indonesian government andpartners. The LNG plant is jointly owned byMedcoEnergi, Pertamina, Mitsubishi, and KoreaGas Corporation and operated under DSLNG.The plant will produce approximately 2 milliontons of LNG per annum. Construction of theplant is currently underway and production isslated to start at the end of 2014. Commercialproduction is targeted to commence and deliverthe first LNG cargo in 2015. This will be the

fourth LNG plant in Indonesia and the first LNGproject built by a national company within adownstream business scheme in Indonesia. It

is an honor for us to have the full support of theGovernment of Indonesia and to be monitoreddirectly by the President's special task force toaccelerate strategic projects (UKP4).

We rigorously apply the MPEP throughout the

lifecycle of the projects to ensure projects canbe delivered successfully.

Senoro Development; Breaking through Gas Market Barrier

DSLNG Plant


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Production

MedcoEnergis producing assets are located inIndonesia, Oman and USA. In 2011, we managed

to produce almost 80 thousand barrels of oilequivalent per day, thereby maintaining ourposition as one of the largest oil producers inIndonesia.

Our producing assets are organized by each

designated company, but managed by one chainof command, whereby we can operate andmanage all assets efficiently and effectively.We have invested significantly to ensure

that our assets are operated in a safe andenvironmentally friendly manner, and that ouremployees are in robust health, ready to deliver

their best performance at all times.

MedcoEnergi has consistently demonstratedits expertise in maintaining and increasingproduction at mature and marginal fields andin operating producing assets since enteringinto the exploration and production business in1992. This expertise has enabled MedcoEnergi

to expand its assets in an efficient and costeffective manner. Our employees have alwaysworked at a high level of competency to discover

the resources, to develop the reserves, and toproduce in a timely manner.

MedcoEnergi has also shown its ability tomonetize stranded gas reserves by finding andcreating markets for this gas. We will continue topursue any available opportunity to monetize ourgas reserves and develop it for production.

We aggressively pursue every opportunityto increase production from our assets.

MedcoEnergi is the first Indonesian oil andgas company to research and develop CBM,an unconventional gas source, in Indonesia. Inaddition, we are evaluating the technology thatcan help us to recover our heavy oil in SouthSumatra operation areas.

Our production growth is highly dependenton high technology and significant capital

investment. We are actively seeking to establishnew partnerships with reputable exploration andproduction companies to enhance our capability

to increase production and therefore add morevalue to our stakeholders.


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MedcoEnergi maintains a proven track record of enhancing oil recovery at mature fields.

One of the milestones in our successful historywas the discovery of the huge Kaji-Semogafield in South Sumatra, which played a majorpart in helping MedcoEnergi to position itselfas one of the largest oil producers in Indonesia.The fields were discovered in 1996 and started

its production in 1997. The Kaji-Semoga fieldsreached its peak production in 2002.

MedcoEnergi is striving to arrest the declining ofproduction and to increase oil recovery factor byimplementing secondary and tertiary recovery

techniques. We have taken several key initiativesto off-set oil production declines includingmaintaining reservoir pressure, developingand stimulating the Telisa sands tight reservoirformation by utilizing sand fracing techniquesin the reservoir rock, developing Talang Akarreservoir by drilling infill wells, minimizingpressure drawdown by drilling horizontalwells and implementing EOR techniques usingsurfactant and polymer to further increase therecovery factor.

By implementing this EOR techniques, we aim toincrease the recovery factor of Kaji-Semoga fields

to 60% from the current recovery factor of 40%.

In late 2011, we started our EOR pilot programby implementing pre-flush injection at severalwells. We expect to complete the injection by

the end of 2012. Upon completion of the pre-flushinjection, we will continue with EOR pilot programevaluation. EOR full scale implementation is

expected to start in 2014.MedcoEnergi is the second exploration andproduction company and the first nationalcompany in Indonesia to apply EOR technology.Having the experience and technologicalcapacity, we will be able to utilize this EOR

technique in our asset worldwide.

Rimau; Long Live the Giant

EOR Process


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Reserves and ContingentResources

MedcoEnergi estimates its remaining reservesat the end of each year, in accordancewith the International Society of PetroleumEngineers' (SPE) Generally AcceptedEngineering and Evaluation Principles.

We estimate our hydrocarbon resourcesby interpreting volumes and values. The

quantities of resources are associated withthe development and implementation ofprojects.

Our management of hydrocarbon resourcesis based on guidelines from PetroleumResources Management System (PRMS),which was initiated by the SPE, the AmericanAssociation of Petroleum Geologists (AAPG),

the World Petroleum Council (WPC), and theSociety of Petroleum Evaluation Engineers(SPEE).

In our financial statements, we classify ourresources into three categories, namelyContingent Resources, Proved and Probable(2P) Reserves, and Proved (1P) Reserves.

Starting from 2012, we expect our reserves tocontinue to grow for the next 3-year period.We will implement extensive explorationactivities at prospective areas and selectivelysearch for additional oil and gas resources

through new ventures.

Maintaining Reserve Life Index

600

500

400

300

200

100

0

MMBOE 2P Contingent

411

301

230

133

404

489471 445

1992 1995 1996 2000 2008 2009 2010 2011


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MedcoEnergi empowers its human capital to discover new reserves, thus creating value.


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Other Energy

Related BusinessCNG conversionThe use of Compressed Natural Gas (CNG) in

our operational cars can save up to around

USD 100 thousand per year and reduce

emissions by 380 tonnes of CO2 equivalent

per year, i.e. 25% lower than when using

conventional fuel-oil based cars.


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Sarulla EPE Singa Panaran I IIMPE EthanolLPG KajiGunung


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MedcoEnergi is committed toproviding energy for society. Ourexpertise and ability to grow theexploration and production businesshave strengthened our commitment

to expand the business into otherenergy-related businesses. The

year 1997 marked the beginning ofMedcoEnergis effort to become anintegrated energy company.Since then, MedcoEnergi hassignificantly grown its other relatedenergy businesses, and is engagedin LPG processing; high speed dieselmarketing, storage and transportation;

gas transportation; drilling rigs and

services; electrical power generation andcoal mining. Subsequently, MedcoEnergiis now working on a pilot project todevelop renewable energy business andbegin producing bio ethanol from cassavaand molasses.

We developed our LPG processingand gas distribution businesses asan integration of our exploration andproduction business. Meanwhile,

the establishment of drilling rigs andservices, electrical power generation andcoal mining businesses were driven by

the increasing demand for such products.

MedcoEnergi is always searching forany available opportunity to grow itsenergy business. The global issue inreducing green house gas emission hasattracted MedcoEnergi to diversify itsenergy business to renewable energy.We realize that renewable energy

demands will continue to grow in thefuture and MedcoEnergi is in a strongposition to develop renewable energy in

the near future.

We believe that our other relatedenergy businesses have great future inIndonesia.

Power Mining GasDownstream

Sarulla EPE Singa Panaran I, II,

&TM 2500

MPE EthanolLPG KajiGunung

Megang

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Tanjung Jati B SengkangFuel Storage and DistributionNunukan


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We aree endeavoring to grow thosebusinesses and integrate them withour exploration and productionbusiness.

However, we realize that toaccomplish this growth will require

more advanced technology,competent people and significantcapital. We are confident that theinvolvement of prominent strategicpartners with expertise in each areaof our energy-related businesseswill enable us to grow thesebusinesses and add more value toour stakeholders.

Business Customers, Partners

Downstream Astiku Sakti Budiarta, Acro Intertrade Pte. Ltd, Budiarta, Colliba Chemical, CitusTrading Pte.Ltd, Freeport Indonesia, Global Arta Borneo, Heartychem Corp, IndoAcidatama, Jetcon Trading Ltd, Karsavicta Satya, Medcopapua Industri Lestari,Medco E&P Rimau, Molindo Raya Industrial, Pasadena Biofuels Mandiri, ValeIndonesia (INCO).

Power Itochu Corporation, Kyushu Electric, Ormat Technologies, PLN Pusat, PLN Batam,PLN Tanjung Jati, PLN South Sumatra.

Gas & PipelineDistribution

Medco E&P Indonesia, Pertagas.

E&P Service ADERA, KSO EP (Pertamina Business Unit), Benakat Bara, Medco E&P Indonesia,Medco E&P Tarakan, Medco E&P Rimau, Medco E&P Sembakung, Pertamina EPRegion Jawa Cirebon, Pertamina E&P Tanjung.

j g g ggNunukan

Mining


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LPGProcessing PlantIn 2003, MedcoEnergi expanded itsdownstream business by constructing andoperating an LPG plant near our Kaji field, inRimau block of South Sumatra. We operate

two trains with a total production capacityof 150 MT per day of LPG, 400 BOPD ofcondensate and 12 MMSCFD of lean gas.The entire production is sent back to the Kajiproduction facility.

Besides integrating our upstream anddownstream business, the objective ofestablishing our LPG business is to meetMedcoEnergis commitment to reduce gasflare at Kaji and Semoga fields. Naturally,reducing the associated gas flare contributes

to the reduction of CO2.

Our LPG processing plant has been operatingin recent years without any lost time incidentsor accidents. In addition, we have acquired aVoluntary Emission Reduction (VER) certificateand received revenues from the carbon creditreduction produced from the operation of theLPG plant.

Not only does the plant integrate our upstream and downstream business, but it also reduces gas flaring.

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In 2007, MedcoEnergi began to operate a fuelstorage facility comprising of five storage

tanks and distribution facilities in Cilincing,North Jakarta. The operation deals withHigh Speed Diesel trading, which has nowexpanded from Jakarta to several otherareas in Indonesia, such as Palembang,Banjarmasin, and Sorong.

This facility services a large number ofindustrial customers, and is supported bya distribution fleet comprising of dedicated

truck units. Commencing in 2010, MedcoEnergihas been awarded several contracts with

Fuel Storage& Distribution Facility

The facility comprises five 22,700 KL tanks and distribution facilities.

prominent mining companies, proving ourability to deliver a high quality product andexcellent service.

Our facility is comprised of five storagetanks, with a total capacity of 22,700 KL anddistribution facilities. MedcoEnergi is open

to any opportunities for cooperation withstrategic partners to provide more energy to

industries throughout Indonesia.

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Bio-Ethanol PlantIndonesia has supported the use of bio-fuelas an alternative fuel source since 2006, thusprompting MedcoEnergi to start exploring forsuitable prospects. We began a bioethanolpilot project in Lampung, Sumatra at the endof 2006. The construction of the plant, witha daily capacity of 190 KL, was completed in2008. It was specifically designed to utilizecassava and molasses as feedstock. The plant

commenced production of industrial gradebio-ethanol in 2010 and will eventually reachfuel grade production quality level.

MedcoEnergi delivers ethanol in two differentproduct grades: EGRAExport Grade RectifiedAlcohol and a side product, Technical Alcohol,which can be exported to nearby regionalmarket.

Meanwhile, to increase the quality anddiversity of feedstock from the plantedland managed by MedcoEnergi, numerouscollaborations with sugar mills, molasses

traders and agricultural research institutions,particularly those specializing in sugar caneplantation, have been established.

Our Bio-Ethanol plant was constructed in 2008, with a daily capacity of 190KL.

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Independent Power ProducerMedcoEnergi is now operating a total ofsix gas-fired power plants in Batam andSouth Sumatra. We are also working on thedevelopment of two geothermal power plantprojects, Sarulla in North Sumatra, and Ijen,in East Java. Most of the electricity producedwill be delivered to local PLN.

Batam

In Batam, our Independent Power Producer(IPP) utilizes various types of engines toensure a continuous supply of electricity. At

the Panaran 1 plant, we have installed a 2 x27.5 MW simple cycle engine. The Panaran2 plant has 3 engines: one 2 x 27 MW simplecycle, with a 7.5 MW chiller, and a 20 MWcombined cycle engine. The IPP in Batam alsohas a 19 MW simple cycle, truck-mounted

plant.

South SumatraIn South Sumatra, our IPP employs simplecycle engines in all of its three plants. TheMPE and EPE plants both have a 2 x 6 MWcapacity, whereas the Singa plant has a 2 x3.5 MW capacity. The plants supply energy togas production facilities and the surroundingcommunities.

North SumatraMedcoEnergi and its partners are currentlypursuing development of a 3 x 110 MWgeothermal plant in Sarulla, North Sumatra.

East JavaMedcoEnergi is studying the possibility of ageothermal power plant development of 2 x 55MW in Ijen, East Java.

In Batam, our IPP utilizes various types of engines to ensure a continuous supply of electricity.

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Indonesia state-owned electricity company,PLN, has recognized MedcoEnergiscommitment and capability to supplyelectricity. PLN awarded MedcoEnergian operation and maintenance servicecontract for the 2 x 660 MW coal fired powerplant in Tanjung Jati, Central Java, whichcommenced operation in 2006. MedcoEnergihas succeeded in operating this plant to its

full capacity maintaining the highest safety,health and environment standards. We haverecently been certified with ISO 9001:2008 forQuality Management System, ISO 1400:2004for Environmental Management System onOccupational Health and Safety Standard(OHSAS), as well as ISO 18001:2007 forOccupational Health and Safety.

Power PlantOperation & Maintenance

MedcoEnergi operates and maintains 2x660 MW coal-fired power plant in Tanjung Jati.

In 2011, our operation has been awarded theBlue PROPER Award from the Ministry ofEnvironment, in addition to the Golden FlagAward from the Ministry of Manpower forHealth & Safety Management System.

Two other prestigious awards were presentedto MedcoEnergi, the Zero Accident Awardfrom the Ministry of Manpower, and Gold

Rating Award from the Indonesian PoliceDepartment.

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MedcoEnergi entered into the gas pipeline anddistribution business in 2008. Our first facilitywas the gas pipeline and booster compressionstation at Gunung Megang in South Sumatra.

This facility is used to transport the gasproduced from MedcoEnergis gas producingfield, located in Singa Lematang block. The17.5 kilometers of 10 pipeline was built to

connect the Gunung Megang facility to theSinga Lematang facility, pushing the gas

through the booster compression station at acapacity of 3 x 22.5 MMSCFD.

MedcoEnergi and its partner currently plan toconstruct a 50 kilometers of 10 pipeline thatwill connect our Simenggaris gas facility to amethanol plant in Bunyu Island, Kalimantan.

In addition, MedcoEnergi also plans to

produce Natural Gas Liquid (NGL) andconstruct multi-user gas pipelines in Sumatraand Kalimantan.

We are geared towards building a largegas distribution business in Indonesia,encompassing trading, processing,

transportation, and operating and maintainingrelevant facilities.

Gas Pipeline& Distribution

MedcoEnergi is geared towards to building a large gas distribution business in Indonesia.


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Exploration & Production Services

MedcoEnergi provides first-class E&Pservices at a competitive price. MedcoEnergisE&P Services Unit was established in 1997with the purpose of providing a first-classcompetitive services.

Our expanding network of affiliations withprominent international partners has assured

the continuing application of state-of-the-art

technologies, thus leveraging our investments.The unit has more than seven yearsexperience and employs a highly-qualifiedworkforce.

Our oil and gas E&P supporting services,which focus mainly on work-over well and wellservice hoist, are contracted in many locations

throughout Indonesia. Currently, we operate

six work-over rigs and plan to increase our

capacity and by procuring additional rigs in2012.

MedcoEnergi has always continuouslyimproved both the management andintegration of its oil and gas E&P supportingservices in order to improve client satisfaction.

We have successfully attained ISO 9001,

ISO14001 and OHSAS 18001 certification anddeclaration of competence from TV-NordIndonesia.These certificates represent asignificant accomplishment and exemplify

the Companys strong commitment toquality management system, environmentalmanagement system and occupational healthand safety in the area of oil & gas services. Ithas always been our commitment to deliver

the best possible result in whatever we do.

MedcoEnergi provides first-class E&P services at a competitive price.

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In 2009 MedcoEnergi began its coal miningbusiness by acquiring two mining companies,PT Duta Tambang Sumber Alam (DTSA) andPT Duta Tambang Rekayasa (DTR). These twocompanies own mining business licenses (IUP)in Nunukan, East Kalimantan. Based on DTSAand DTR geological data and the historicalsuccess rates of neighboring operators, it isestimated that Nunukan will be capable of

producing high-caloric coal with a kCal/kg of6,800 adb.

Our approach has always been to maintainan environmentally friendly operation withgood mining practices. Moving forward, wewill grow our business with a focus on small

to medium size of coal and mineral miner andsaleable commodity; implement joint venture

Coal Mining

MedcoEnergi is in the process of exploiting 15,000,000 metric ton of coal in East Kalimantan.

schemes with existing mining businesslicense holders; and in the long term lookfor opportunities to develop low rank coalprospects using coal utilization process.

MedcoEnergis production target is 540,000metric tons per year with initial productionstarting in February 2012. In 2012, we plan toadd our coal reserves of 500,000 metric tons

from an existing coal reserve discovery of5,700,000 metric tons. In the coming years,we believe that we will be able to discovermore coal prospects as well as enter thenew venture of gold mining as operator anddeveloper.

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Awards

2011

2010

2009

2008

2007

2006

2005

Gold PROPER for Rimau Block in South Sumatra and Green PROPER for South Sumatra ExtensionBlock (South Sumatra), Tarakan Block (East Kalimantan), and Kampar Block (Riau)

GCG award - The Best Non-Financial from Indonesian Institute for Corporate Directorship

Asias Best Corporate Social Responsibility from Finance Asia Magazine

Attained 4 awards for four different categories in CSR Award 2011 from CFCD for Rimau Block

GCG award -The Best Equitable Treatment of Shareholders from Indonesian Institute forCorporate Directorship

Green PROPER for Rimau Block, South Sumatra Extension and Kampar from the Ministry ofEnvironment of Indonesia

Millennium Development Goals award from Metro TV for category of Environmental ofSustainability

GCG award - Best GCG Overall 2009 from Indonesian Institute for Corporate Directorship

Annual Report Award 2008 as first runner-up in the category of private non-financial public andlisted company

Millennium Development Goals award from Metro TV in the category of Improvement in GenderEquality and Women Empowerment through its community development program of Organic SRI

Green Corporate award in the category of Environment for Medco Methanol Bunyu from theAssociation of Indonesian Engineers

Environmental Management & Monitoring award for Medco Power Indonesia from the Ministryof Environment of Indonesia

Zero Accident award for PT Medco LPG Kaji from the Ministry of Manpower RI

No Lost Time Accident awards from the Government for several assets including Tarakan andRimau Blocks

Social Empowerment award from the Coordinating Ministry of Peoples Welfare (Menko Kesra) in2007.

One of aIndonesias Most Admired Knowledge Enterprises (MAKE) 2007

The best Annual Report in the Annual Report Award 2005 The best of top 10 Companies at GCG Perception Index by IICG and SWA Magazine

The best Annual Report in the Annual Report Award 2004

Zero Accident award for PT Medco LPG Kaji from the Ministry of Manpower RI

Approximate Conversion Factors


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Approximate Conversion Factors

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Medcos State-of-the art office building accommodates all energy-related business units of Medco Group.


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PT Medco Energi Internasional Tbk

The Energy Building, 52nd Floor

SCBD Lot 11A

Jl. Jend. Sudirman

Jakarta 12190, IndonesiaPhone. (62-21) 2995 3000

Fax. (62-21) 2995 3001

Email. [email protected]

Documents

Company Profile MedcoEnergi 2012-2