" Adco Indonesia Corporation is committed to providing energy for society.

Our near term goal is to double the current production rate by

delivering successful major projects, growing our reserves

organically and inorganically, while complying with high

" safety, health, and environmental standards.

Table Of

Contents

02 Foreword from CEO 04 Journey Towards Excellence 18 Exploration and Production 30 Other Energy Related Businesses

2010 has brought new activities, challenges and opportunities as we transform

ADCO to an asset based Organisation. We now need to make the necessary

preparations to meet these challenges. We do have now an excellent focus on

our assets as both surface and subsurface functions are split along asset lines,

and most of the supporting functions also reflect asset lines.

For the next couple of years we will see and perhaps undertake work as part of

our efforts to consolidate and strengthen the asset organization. The change

will primarily be at the top of the hierarchy, and in the processes that may have

to be re-shaped. We will still have a number of core functions serving the

assets, and these will be clearly defined.

ADCO has adopted a paced transformation to a full asset based organization,

and these incremental changes have reduced the disturbance and made the

changes manageable. The organization offers significant opportunities for

career growth, and we have processes in place to insure deserving staff benefit

from these opportunities that will emerge.

An ADCO team led by Business Support Division is working to develop the

frame work required and will be collaborating across the organization to solicit

stakeholder input and contribution.

Abdul Munim Saif Al-Kindy

Chief Executive Officer

Foreword

from CEO

2

Our

Belief Becoming the Energy

Company of Choice

Our vision is to be the energy company of choice for our investors, shareholders, partners, employees, communities and the greater public.

It is a vision that will be realized by developing energy resource potential into profitable investment portfolios.

We operate our business in adherence to the highest standards of Good Corporate Governance (GCG) and of Safety, Health and the Environment (SHE). In addition, we implement a consistent Corporate Social Responsibility (CSR) program. In all these areas Adco Indonesia Corporation has received accolades from its stakeholders.

All our work is conducted in a professional, ethical, open, and innovative way. These values are the core of our corporate culture, which drives Adco Indonesia Corporation towards sustainability.

3

Journey Towards

Excellence

Obtain Highest

Recognition

The Indonesia Vice President presented Gold PROPER award, the highest recognition for preserving the environment from the Indonesian Ministry of Environment, to the COO of E&P Adco Indonesia Corporation, Frila B. Yaman.

Corporate

Milestones

1980 1996 2003 Incorporated as an Indonesian Discovered the giant oil field, Signed Gas Supply Agreement drilling contractor. Kaji and Semoga, Rimau with PLN (state-owned power

Block, South Sumatra. producer) for gas produced 1992 from South & Central Sumatra Established an oil and gas

1997 PSC. Entered into the downstream subsidiary. industry through a Joint

2004 Management Agreement to Acquired a Technical Acquired 100% shares of operate Pertamina's methanol Assistance Contract (TAC) and Novus Petroleum Ltd, marking plant at Bunyu Island. Production Sharing Contract the Company's expansion into

(PSC) for two oil and gas the international oil and gas 2000 blocks in East Kalimatan from arena. Acquired three new working

Tesoro. areas: Simenggaris, Western Inaugurated the Company's Madura and Senoro-Toili.

1994 first gas-fueled power plant in Initial public offering as Discovered an oil field in Soka, Batam Island, Panaran I. Adco Indonesia Corporation on the Indonesia South Sumatra.

Stock Exchange. Ticker symbol is MEDC. 2005 2002 Awarded Oil & Gas Exploration Acquired 25% working interest in

and Production Sharing Tuban block. 1995 Agreement of Area 47 from the Acquired 100% shares of

Government of Libya. PT Stanvac Indonesia from Awarded a "B+" corporate credit Exxon and Mobil which held rating with stable outlook by

Acquired Langsa block and PSCs for 3 oil and gas blocks Standard & Poor's on February Sembakung block in Indonesia. in South Sumatra: South & 4, 2002, above Indonesia's credit

Central Sumatra, Rimau, and rating. Signed Tanjung Jati Operation Pasemah. & Maintenance Agreement with PLN.

2006 2008 2 010 Awarded ten-year E&P Signed a Production Sharing Secured operatorship and successfully Service Agreement of Karim Agreement with the Ministry made three discoveries from three Fields, in Oman. of Oil and Minerals of the exploration wells in Area 47 in Libya.

Republic of Yemen for Block 82 Commissioned Panaran II and 83. Obtained 20 year extensions for three PSC gasfired power plant. working areas: South & Central Sumatra,

Completed the sale of its Block A, and Bawean. Awarded 3x110 MW of drilling subsidiary, PT Apexindo geothermal power project in Pratama Duta Tbk. Approved the Final Investment Decision Sarulla, North Sumatra. for DSLNG to develop the Liquefied

Signed the first Coal Natural Gas (LNG) project. 2007 BedMethane (CBM) PSC in

Launched exploration of Indonesia to carry out activities

2 011 Area 47 in Libya. Made six Issued the shelf-registration USD bond of in development of CBM in Musi discoveries from exploration up to USD 150 million. Banyuasin Regency, South wells in 1 year. Sumatra.

Signed to CBM PSC of Lematang and Launched pilot project for Muralim Blocks.

2009 Enhanced Oil Recovery (EOR) Entered into the coal mining in Rimau Block. business by acquiring two Completed the sale of Medco Tunisia

companies which hold Anaguid Limited. Began the development mining concession rights in of Senoro Gas Project by Nunukan, East Kalimantan. Invited PT Saratoga Power to become a establishing PT Donggi- shareholder of PT Medco Power Indonesia. Senoro LNG (DSLNG).

Secured Commerciality declaration of Area 47, Ghadames Basin, Libya.

HSE Management System (HSEMS)

ADCO has implemented an adaptable HSE Management System that ensures compliance

with the Federal HSE laws, ADNOC HSEMS Guidelines and CoPs and aids continuous HSE

performance improvement.

ADCO HSEMS provides structure to the management of HSE hazards (and their effects)

associated with its business. This includes organization structure, planning activities,

responsibilities, standards, documentation and resources for developing, implementing,

achieving, reviewing and maintaining the organization HSE Policy and meeting its stated

objectives.

The HSE Management System is based on the ADNOC-CoPV1-09 on ADNOC HSE

Management System (HSEMS). The purpose of this HSEMS is:

To demonstrate that business process controls are in place for the hazards posed

by ADCO facilities and operations, and their effects to health, safety and the

environment;

That all foreseeable hazards and their effects are systematically identified,

assessed, controlled and recovery measures put in place should control be lost;

To define the performance standards for managing health, safety and

environment, which are assessed and continually improved by a programme of

performance monitoring, audit and review;

To provide structured guidelines for managing the HSE aspects/exposures of ADCO

operations;

To indicate areas for HSE improvement.

HSE Electronic Analysis Reporting & Tracking System (HEARTS)

ADCO has implemented a new HSE Electronic Analysis Reporting & Tracking System

(HEARTS) to provide a web-based user-friendly tool to help ADCO to track, manage, and

report HSE events and to manage environmental data, in order to decide on cost effective

environmental performance improvement options and demonstrate to shareholders and

the public that the company operates in compliance with its environmental policy.

ADCO selected Environmental Support Solutions, Inc. (ESS) Essential SuiteT to meet its HSE

information management requirements.

HEARTS is ADCO's HSE events tracking and reporting system and is used by all personnel

working at ADCO, from the operator level to the company's senior management. HEARTS is

also the central system to track HSE related recommendations and suggestions and follow

up actions.

HEARTS serves as the primary system to support environmental target setting,

performance data reporting, and information analysis. HEARTS contains information

related to all emissions to air and discharges of any substance to land, sea and aquifer. The

system provides information on environmental impacts, including the source and causes

from company operations and subsequently provides mechanisms to manage information

relating to air, water, waste and spills with respect to ADCO's offices and facilities. The

tracking of this information within HEARTS enables more thorough analysis leads to

continuous improvements.

.

Currently, about 6.8 billion people inhabit

In preserving the environment, we

Earth. Our world is faced with a serious

committed to implement various initiatives,

challenges, such as: poverty,

including: greenhouse gas emissions

environment, and health.

reduction, water conservation, waste

management, resource utilization, and

Adco Indonesia Corporation continues to strive to find

conservation of biodiversity.

better ways to produce and use energy

to stimulate the economy, industry, and

This initiative has allowed us to

transportation.

improve our performance in preserving

environment. Adco Indonesia Corporation has conducted several

to receive the highest recognition of

initiative to restore the ecological balance

Republic of Indonesia Ministry of Environment

affected by the operation

water management and air pollution, and

hazardous solid waste materials.

We always strive for our operations to comply

proper ratings for the oil and gas our other

with environmental laws and regulations

producing blocks in Sumatra and Kalimantan, and wherever we operate. We regularly produce

environmental feasibility studies for each

activities, such as environmental analysis

We constantly pursue a better, more

impact on the environment and efforts

environmentally friendly operation to produce

management and ecological monitoring.

and using energy to reduce greenhouse gas

emissions and global warming

Preserving Environment

.

Adco Indonesia Corporation actively restores the ecological balance affected by its operations.

Empowering Local

Communities

Growing an energy business in a pluralistic Our Company has demonstrated a strong society such as Indonesia carries the commitment to local education particularly in responsibility of empowering the local our operation areas. We continue providing communities and interacting respectfully with scholarships and improving school facilities. the environment. Close cooperation with the We believe that a better education will government at national and local levels is a improve the quality of life of the community. key to ensuring the sustainability of economic and social growth in addition to conservation Adco Indonesia Corporation has introduced various of the environment.. initiatives to empower women in the

community, such as a community development Adco Indonesia Corporation has contributed in a unique program for organic System of Rice way. Our community development activity in Intensification (SRI). Indeed, the United operation areas has provided energy to local Nations has recognized Adco Indonesia Corporation with its communities through small gas-fired and Millenium Development Goals award in the hydro-power plants in several villages in South category of "Promoting Gender Equality and Sumatra. The Company provides financial Empowerment of Women." support, such as micro financing to local small-scale entrepreneurs (e.g. carpenters, fishermen, cracker producers, etc). We also support the local community to plant organic paddy fields. Briefly, we develop small-scale energy-related and community-based projects using locally available resources. In this way, we also preserve the environment.

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

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

Our Human Capital

People are our capital and the key to our Our talent management process ensures success. People competency and engagement Adco Indonesia Corporation has a sustainable supply of are crucial to the Company's performance. talent to fill various key positions within the We therefore organize, develop, and reward organization. our employees so that they can continuously increase their competency and deliver their Today, Adco Indonesia Corporation employs more than best performance. 8,200 people worldwide, including over 2500

petrotechnical professionals. Our human We have invested in several strategic human capital is made up of people from various capital initiatives to attract, motivate and nations who all embrace the Adco Indonesia Corporation retain the right talents. In developing our culture and spirit. future leaders, we have embarked on a structured leadership development program, involving employees from staff to senior management level.

14

Adco Indonesia Corporation guarantees the right of every individual to report any indication of violation in any forms.

Highest

GCG Principles

Adco Indonesia Corporation is recognized d, dishonesty, harassment, unethical capital market community as a pioneer in behaviour and workplace safety hazards adhering to the highest standards of GCG have a negative effect on our workplace. By principles and business ethics. reporting misconduct, our stakeholders can

help us to ensure that our people are safe and We have received several GCG awards since secure in their work environment and also that 2005 and are always striving to achieve an fraud and dishonesty can be eliminated, thus even better performance. saving the company financial losses.

Adco Indonesia Corporation has implemented a policy Type of wrongdoings that are covered in our whereby all employees are required to declare system include; Fraud, Corruption, Bribery, that they will comply with the GCG principles Conflict of Interest, Misconduct Behaviours, and business ethics. In addition, the Company Financial Statement Fraud, Breaches of Policy, has introduced a 'whistle-blowing' system to and Other Unethical Behaviour. support the policy, which has been utilized by the Directors to monitor the implementation Our stakeholders' active involvement will of corporate values by all members of make Adco Indonesia Corporation a safe, fair and honest Adco Indonesia Corporation. place to work.

15

Information System

Excellence

Adco Indonesia Corporation relies heavily on seamless decisions more quickly and more effectively. communications. We have invested At the same time, we can reduce our carbon extensively in Information Communication footprint due to using less paper and fewer Technology (ICT). Technology is our enabler, business trips. which allows us to grow as well as to strengthen our internal control system. We have also established a technologycentric

collaborative room. Adco Indonesia Corporation has Since 2001, we have used a robust empowered its employees to perform infrastructure of ICT System. The system is multidisciplinary collaborative work on all of a single integrated centralized data centre, our assets. When needed, the collaborative which is protected with disaster recovery room can transform itself into a crisis system using virtualization technology. management center.

Adco Corporation already has most of its business Adco Indonesia Corporation's commitment to the information process already online, highly integrated system has been proven by obtaining with its Enterprise Resource Program (ERP) international IT standard, the ISO/IEC 20000 system. In addition, we are also one of the in IT service management. This ensures first companies in Indonesia to fully use reliability in the information system which will online collaboration technology in our daily greatly support Adco Indonesia Corporation’s growth. business system integrated with an electronic document management system. We are able to work any time anywhere with proper security and data integrity.

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

16

Our technology-centric collaborative room enables Adco Indonesia Corporation employees to perform multi-disciplinary collaborative work.

Exploration

and Production

Growth through

Partnership

Partnership is a key success factor for Adco Indonesia Corporation, enabling it to increase production, maintain reserve growth, and obtain advance technology.

USA Libya Yemen Oman Indonesia Block A Merangin Lematang Bengara Sembakung Tarakan Nunukan Simenggaris Block Block Block Block Block Block Block

South Sekayu Muralim Rimau Jeruk Bawean Bangkanai Senoro-Toili Block Block Central Block Block Block Exploration Block

Sumatra Well

Exploration Production Economic Interest Participation Service Contract Development CBM

In the last two decades, MedcoEnerg worldwide to maximize the value of our We are committed to providing energy has successfully grown its exploration assets and at the same time to grow our for society’s needs and set our goal and production business and businesses. to double the current production rate continuosly added to and replaced in the near future. We will continue to reserves. We have expanded our We have demonstrated our expertise conduct exploration activities in the business to include five countries, in enhancing production of mature most potential prospects, implement i.e. Indonesia to Oman, Yemen, and marginal fields and operating the Enhanced Oil Recovery (EOR) Libya, and USA. These operations assets efficiently, both in domestic and technology at our mature assets, and include exploration, development and international assets. We have been pursue acquisitions of new potential production of crude oil and natural gas, able to obtain strong support from or producing oil and gas assets. We as well as oil and gas exploration and local government and communities. are also looking at the opportunity to production services. We empower local communities in the expand our exploration and production

surrounding areas of our operations, business to CBM and to produce our Partnership is one of the key success create jobs for them and increase their heavy oil potential in one of our blocks factors to expanding our exploration education level. It is our long-term in Indonesia. and production business. We have commitment to create and deliver been working together with various sustainable value to all local communities exploration and production companies wherever we operate.

20

USA Libya Yemen Oman Indonesia Block A Merangin Lematang Bengara Sembakung Tarakan Nunukan Simenggaris Block Block Block Block Block Block Block

South Sekayu Muralim Rimau Jeruk Bawean Bangkanai Senoro-Toili Block Block Central Block Block Block Exploration Block

Sumatra Well

Exploration Production Economic Interest Participation Service Contract Development CBM

Our major projects, exploration and Country Partners

development activities at challenging Indonesia Anadarko, Cue Energy, Dart Energy, JAPEX, KOGAS, Lundin, Mitsubishi Corporation, areas and development of new

MOECO, Pertamina, Premier Oil, Salamander Energy, and SPC. unconventional energy require high technology application and massive capital investment. The involvement

Oman Kuwait Energy, Oman Oil Company, Petrovest, and Vision Oil. of our experienced partners in those areas is a key element to

Yemen Indian Oil, Kuwait Energy, Oil India Ltd, and Yemen General Oil & Gas Corporation. materialize our objectives. We are confident that our history of successful performance combined Libya Libyan Investment Authority. with partnerships with reputable companies will enable Adco Indonesia Corporation USA Challenger Minerals, Leed Petroleum, Rampant Lion Energy, and Red Willow to demonstrate an even better Production Company. performance thus maximizing value for our stakeholders in the near future.

21

Exploration

Adco Indonesia Corporation is committed to increasing its Adco Indonesia Corporation also strives to increase production hydrocarbon reserves and production through both and reserves through inorganic growth. The organic and inorganic growth. intuition and expertise of Adco Indonesia Corporation’s

management and geoscientists have enabled the Exploration is the key to the organic growth Company to acquire various attractive producing, of our business. Adco Indonesia Corporation’s experienced development and exploration assets with geoscientists have been working diligently to tremendous amount of reserves since 2000. These integrate the database of our basins with available acquisitions have significantly contributed to the seismic data to develop three dimensional increase in our reserves. models of the sub-surface. By referring to these models, we will be able to understand the entire We continue to search selectively for additional hydrocarbon system, enabling us to identify and oil and gas resources through new ventures. We optimize high potential exploration prospects. are currently considering several opportunities

in Indonesia and abroad and will select the most Adco Indonesia Corporation achieved a major success when attractive assets. it discovered giant oil reserves in Indonesia in 1996. This success encouraged Adco Indonesia Corporation to Our partners play a big role in supporting us to aggressively implement exploration programs, carry out our exploration programs and/or to resulting in a very significant increase in its execute the acquisition of assets. Their support reserves and production in Indonesia. and contribution in sharing technology, people,

expertise, and capital investment have enabled An example of Adco Indonesia Corporation’s expertise is us to achieve great successes in discovering and demonstrated by its successful exploration increasing hydrocarbon reserves. program in Area 47, Libya where we discovered enormous hydrocarbon reserves in 2008. This Adco Indonesia Corporation is highly optimistic that by success enabled us to achieve an exploration implementing further exploration programs and success ratio of 90% at the end of 2010. acquiring producing assets it will be able to

achieve its target to double oil production in the As an exploration and production company, near future. Adco Indonesia Corporation will continue to increase hydrocarbon its reserves and enhance the value of its exploration assets by implementing extensive exploration activities at prospect areas in Indonesia, Libya, and Yemen.

Adco Indonesia Corporation's reserves and contingent resources have grown significantly with the successful exploration in Libya.

Libya; Breaking the Record

The discovery of 352 MMBOE contingent of Area 47 with a participating interest of 50% resources in Area 47 on 2008 and additional in 2005. We became the operator of Area 47 in resources discovered until the end of 2010 2010. demonstrated Adco Indonesia Corporation’s success in executing exploration program in Libya. Among all of the holders of EPSA IV, we are

the first company that obtain a declaration of From the commencement of exploration drilling commercialization from the Government of activities in September 2006 to the end of Libya. It shows our determination and ability to 2010, we have drilled 20 exploration wells and run our exploration program. Furthermore, this 6 appraisal wells, and completed a third 3D discovery also marks the acceleration in our seismic program of 1225 sq. km in the eastern major discovery cycle. part of Area 47 and 2,400 km of 2D seismic in the western and southern part. We have successfully discovered resources from 18 out Libya Area 47 of the 20 exploration wells drilled in 4 years, and achieved an exploration success ratio of 90%.

Commerciality of Area 47 was obtained in late 2011. We are now working to build a production facility for 50,000 bopd which is expected to be completed in 2015.

We are also continuing our exploration program in Area 47 and are confident that the program will provide excellent results.

Adco Indonesia Corporation entered into the Exploration and Production Sharing Agreement IV (EPSA IV)

Development

For the last ten years, Adco Indonesia Corporation has been Adco Indonesia Corporation is committed to developing its striving to increase its production. It has oil discovery timely. We are now working actively pursued opportunities to monetize together with our partner and the Government its abundant stranded gas reserves in remote of Libya to develop the first phase of the oil areas in Indonesia. production facility, and we plan to double

oil production in the future. All development Adco Indonesia Corporation has entered into the elite market assets are managed through one chain to produce LNG and has obtained the support of command. We strive to deliver project of the Indonesian government and partners in execution of our development assets in line creating a market to monetize its stranded gas with the highest industry standards, and are from Senoro field in Central Sulawesi. committed to implementing Medco Project

Excellence Process (MPEP) to assure any Subsequently, we are now also working to capital investment made by Adco Indonesia Corporation and develop high temperature sour gas reserves in our partners is utilized effectively. Aceh. This gas will be processed in a facility which will supply the local fertilizer plant. A In the near future, our development assets will gas-processing unit using amine system will play a key role in supporting our immediate be installed at the facility to remove carbon goal to double our current oil and gas dioxide (CO2) and Hydrogen Sulfide (H2S) in production. Our partners play a significant role addition to a sulfur recovery unit to recover in sharing their technology, expertise, people, the H2S. Pupuk Iskandar Muda (PIM) and and products to help us to deliver our major PLN, companies owned by the Indonesian projects on time and within the budget. government and located in Aceh, will use this gas to produce fertilizers and electricity. We are also conducting a feasibility study regarding technical and commercial aspects of the remaining gas reserves from this asset.

Adco Indonesia Corporation is committed to creating value by continuously developing oil & gas resources in many parts of the world.

Senoro Development; Breaking through Gas Market Barrier

Adco Indonesia Corporation is committed to monetizing and is an honor for us to have the full support of the innovatively creating a market for its abundant Government of Indonesia and to be monitored stranded gas reserves from remote areas in directly by the President's special task force to Indonesia. One of the examples is Senoro accelerate strategic projects (UKP4). gas field, which is located in a remote area in Central Sulawesi Province. The Senoro gas field We rigorously apply the MPEP throughout the contains sufficient reserves and contingent lifecycle of the projects to ensure projects can resources to supply 250 MMSCFD to a LNG plant be delivered successfully. under a long term gas supply commencing in the fourth quarter of 2014. In addition, we envisage

DSLNG Plant another supply of approximately 55 MMSCFD to the domestic market

We are proud that we can enter into the elite market to produce LNG and have obtained the support of the Indonesian government and partners. The LNG plant is jointly owned by Adco Indonesia Corporation, Pertamina, Mitsubishi, and Korea Gas Corporation and operated under DSLNG. The plant will produce approximately 2 million tons of LNG per annum. Construction of the plant is currently underway and production is slated to start at the end of 2014. Commercial production is targeted to commence and deliver the first LNG cargo in 2015. This will be the fourth LNG plant in Indonesia and the first LNG project built by a national company within a downstream business scheme in Indonesia. It

Production

Adco Indonesia Corporation’s producing assets are located in Adco Indonesia Corporation has also shown its ability to Indonesia, Oman and USA. In 2011, we managed monetize stranded gas reserves by finding and to produce almost 80 thousand barrels of oil creating markets for this gas. We will continue to equivalent per day, thereby maintaining our pursue any available opportunity to monetize our position as one of the largest oil producers in gas reserves and develop it for production. Indonesia.

We aggressively pursue every opportunity Our producing assets are organized by each to increase production from our assets. designated company, but managed by one chain Adco Indonesia Corporation is the first Indonesian oil and of command, whereby we can operate and gas company to research and develop CBM, manage all assets efficiently and effectively. an unconventional gas source, in Indonesia. In We have invested significantly to ensure addition, we are evaluating the technology that that our assets are operated in a safe and can help us to recover our heavy oil in South environmentally friendly manner, and that our Sumatra operation areas. employees are in robust health, ready to deliver their best performance at all times. Our production growth is highly dependent

on high technology and significant capital Adco Indonesia Corporation has consistently demonstrated investment. We are actively seeking to establish its expertise in maintaining and increasing new partnerships with reputable exploration and production at mature and marginal fields and production companies to enhance our capability in operating producing assets since entering to increase production and therefore add more into the exploration and production business in value to our stakeholders. 1992. This expertise has enabled Adco Indonesia Corporation to expand its assets in an efficient and cost effective manner. Our employees have always worked at a high level of competency to discover the resources, to develop the reserves, and to produce in a timely manner.

Adco Indonesia Corporation maintains a proven track record of enhancing oil recovery at mature fields.

Rimau; Long Live the Giant

One of the milestones in our successful history In late 2011, we started our EOR pilot program was the discovery of the huge Kaji-Semoga by implementing pre-flush injection at several field in South Sumatra, which played a major wells. We expect to complete the injection by part in helping Adco Indonesia Corporation to position itself the end of 2012. Upon completion of the pre-flush as one of the largest oil producers in Indonesia. injection, we will continue with EOR pilot program The fields were discovered in 1996 and started evaluation. EOR full scale implementation is its production in 1997. The Kaji-Semoga fields expected to start in 2014. reached its peak production in 2002.

Adco Indonesia Corporation is the second exploration and Adco Indonesia Corporation is striving to arrest the declining of production company and the first national production and to increase oil recovery factor by company in Indonesia to apply EOR technology. implementing secondary and tertiary recovery Having the experience and technological techniques. We have taken several key initiatives capacity, we will be able to utilize this EOR to off-set oil production declines including technique in our asset worldwide. maintaining reservoir pressure, developing and stimulating the Telisa sands tight reservoir

EOR Process formation by utilizing sand fracing techniques in the reservoir rock, developing Talang Akar reservoir by drilling infill wells, minimizing pressure drawdown by drilling horizontal wells and implementing EOR techniques using surfactant and polymer to further increase the recovery factor.

By implementing this EOR techniques, we aim to increase the recovery factor of Kaji-Semoga fields to 60% from the current recovery factor of 40%.

Reserves and Contingent

Resources

Adco Indonesia Corporation estimates its remaining reserves Starting from 2012, we expect our reserves to at the end of each year, in accordance continue to grow for the next 3-year period. with the International Society of Petroleum We will implement extensive exploration Engineers' (SPE) Generally Accepted activities at prospective areas and selectively Engineering and Evaluation Principles. search for additional oil and gas resources

through new ventures. We estimate our hydrocarbon resources by interpreting volumes and values. The quantities of resources are associated with

Maintaining Reserve Life Index the development and implementation of projects. M MB OE 2 P Conti ngen t

6 0 0 48 9 4 7 1 4 4 5 5 0 0

Our management of hydrocarbon resources 4 1 1 40 4 is based on guidelines from Petroleum 4 0 0

3 01 Resources Management System (PRMS), 3 0 0

2 3 0 which was initiated by the SPE, the American 2 0 0

1 3 3 Association of Petroleum Geologists (AAPG), 1 0 0 the World Petroleum Council (WPC), and the 0

1 9 9 2 1 9 9 5 1 99 6 2 0 00 2 00 8 2 00 9 2 0 1 0 2 0 1 1 Society of Petroleum Evaluation Engineers (SPEE).

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

Adco Indonesia Corporation empowers its human capital to discover new reserves, thus creating value.

Other Energy

Related Business

CNG conversion

The 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.

LPG Kaji MPE Sarulla EPE Singa Panaran I, II, Tanjung Jati B Sengkang Gunung Ethanol Fuel Storage and Distribution Nunukan &TM 2500 Megang Mining

Power Mining Gas Downstream

Adco Indonesia Corporation is committed to services; electrical power generation and Adco Indonesia Corporation is always searching for providing energy for society. Our coal mining. Subsequently, Adco Indonesia Corporation any available opportunity to grow its expertise and ability to grow the is now working on a pilot project to energy business. The global issue in exploration and production business develop renewable energy business and reducing green house gas emission has have strengthened our commitment begin producing bio ethanol from cassava attracted Adco Indonesia Corporation to diversify its to expand the business into other and molasses. energy business to renewable energy. energy-related businesses. The We realize that renewable energy year 1997 marked the beginning of We developed our LPG processing demands will continue to grow in the Adco Indonesia Corporation’s effort to become an and gas distribution businesses as future and Adco Indonesia Corporation is in a strong integrated energy company. an integration of our exploration and position to develop renewable energy in

production business. Meanwhile, the near future. Since then, Adco Indonesia Corporation has the establishment of drilling rigs and significantly grown its other related services, electrical power generation and We believe that our other related energy businesses, and is engaged coal mining businesses were driven by energy businesses have great future in in LPG processing; high speed diesel the increasing demand for such products. Indonesia. marketing, storage and transportation; gas transportation; drilling rigs and

32

LPG Kaji MPE Sarulla EPE Singa Panaran I, II,

Tanjung Jati B Sengkang Gunung Ethanol Fuel Storage and Distribution

Nunukan &TM 2500 Megang Mining

Power Mining Gas Downstream

We aree endeavoring to grow those Business Customers, Partners

businesses and integrate them with Downstream Astiku Sakti Budiarta, Acro Intertrade Pte. Ltd, Budiarta, Colliba Chemical, Citus our exploration and production

Trading Pte.Ltd, Freeport Indonesia, Global Arta Borneo, Heartychem Corp, Indo business. Acidatama, Jetcon Trading Ltd, Karsavicta Satya, Medcopapua Industri Lestari, Medco E&P Rimau, Molindo Raya Industrial, Pasadena Biofuels Mandiri, Vale

However, we realize that to Indonesia (INCO). accomplish this growth will require

Power Itochu Corporation, Kyushu Electric, Ormat Technologies, PLN Pusat, PLN Batam, more advanced technology,

PLN Tanjung Jati, PLN South Sumatra. competent people and significant capital. We are confident that the involvement of prominent strategic Gas & Pipeline Medco E&P Indonesia, Pertagas. partners with expertise in each area Distribution of our energy-related businesses

E&P Service ADERA, KSO EP (Pertamina Business Unit), Benakat Bara, Medco E&P Indonesia, will enable us to grow these

Medco E&P Tarakan, Medco E&P Rimau, Medco E&P Sembakung, Pertamina EP businesses and add more value to Region Jawa Cirebon, Pertamina E&P Tanjung. our stakeholders.

33

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

LPG

Processing Plant

In 2003, Adco Indonesia Corporation expanded its Our LPG processing plant has been operating downstream business by constructing and in recent years without any lost time incidents operating an LPG plant near our Kaji field, in or accidents. In addition, we have acquired a Rimau block of South Sumatra. We operate Voluntary Emission Reduction (VER) certificate two trains with a total production capacity and received revenues from the carbon credit of 150 MT per day of LPG, 400 BOPD of reduction produced from the operation of the condensate and 12 MMSCFD of lean gas. LPG plant. The entire production is sent back to the Kaji production facility.

Besides integrating our upstream and downstream business, the objective of establishing our LPG business is to meet Adco Indonesia Corporation’s commitment to reduce gas flare at Kaji and Semoga fields. Naturally, reducing the associated gas flare contributes to the reduction of CO2.

34

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

Fuel Storage

& Distribution Facility

In 2007, Adco Indonesia Corporation began to operate a fuel prominent mining companies, proving our storage facility comprising of five storage ability to deliver a high quality product and tanks and distribution facilities in Cilincing, excellent service. North Jakarta. The operation deals with High Speed Diesel trading, which has now Our facility is comprised of five storage expanded from Jakarta to several other tanks, with a total capacity of 22,700 KL and areas in Indonesia, such as Palembang, distribution facilities. Adco Indonesia Corporation is open Banjarmasin, and Sorong. to any opportunities for cooperation with

strategic partners to provide more energy to This facility services a large number of industries throughout Indonesia. industrial customers, and is supported by a distribution fleet comprising of dedicated truck units. Commencing in 2010, Adco Indonesia Corporation has been awarded several contracts with

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

Bio-Ethanol Plant

Indonesia has supported the use of bio-fuel Meanwhile, to increase the quality and as an alternative fuel source since 2006, thus diversity of feedstock from the planted prompting Adco Indonesia Corporation to start exploring for land managed by Adco Indonesia Corporation, numerous suitable prospects. We began a bioethanol collaborations with sugar mills, molasses pilot project in Lampung, Sumatra at the end traders and agricultural research institutions, of 2006. The construction of the plant, with particularly those specializing in sugar cane a daily capacity of 190 KL, was completed in plantation, have been established. 2008. It was specifically designed to utilize cassava and molasses as feedstock. The plant commenced production of industrial grade bio-ethanol in 2010 and will eventually reach fuel grade production quality level.

Adco Indonesia Corporation delivers ethanol in two different product grades: EGRA–Export Grade Rectified Alcohol and a side product, Technical Alcohol, which can be exported to nearby regional market.

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

Independent Power Producer

Adco Indonesia Corporation is now operating a total of South Sumatra six gas-fired power plants in Batam and In South Sumatra, our IPP employs simple South Sumatra. We are also working on the cycle engines in all of its three plants. The development of two geothermal power plant MPE and EPE plants both have a 2 x 6 MW projects, Sarulla in North Sumatra, and Ijen, capacity, whereas the Singa plant has a 2 x in East Java. Most of the electricity produced 3.5 MW capacity. The plants supply energy to will be delivered to local PLN. gas production facilities and the surrounding

communities. Batam In Batam, our Independent Power Producer North Sumatra (IPP) utilizes various types of engines to Adco Indonesia Corporation and its partners are currently ensure a continuous supply of electricity. At pursuing development of a 3 x 110 MW the Panaran 1 plant, we have installed a 2 x geothermal plant in Sarulla, North Sumatra. 27.5 MW simple cycle engine. The Panaran 2 plant has 3 engines: one 2 x 27 MW simple East Java cycle, with a 7.5 MW chiller, and a 20 MW Adco Indonesia Corporation is studying the possibility of a combined cycle engine. The IPP in Batam also geothermal power plant development of 2 x 55 has a 19 MW simple cycle, truck-mounted MW in Ijen, East Java. plant.

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Adco Indonesia Corporation operates and maintains 2x660 MW coal-fired power plant in Tanjung Jati.

Power Plant

Operation & Maintenance

Indonesia state-owned electricity company, In 2011, our operation has been awarded the PLN, has recognized Adco Indonesia Corporation’s Blue PROPER Award from the Ministry of commitment and capability to supply Environment, in addition to the Golden Flag electricity. PLN awarded Adco Indonesia Corporation Award from the Ministry of Manpower for an operation and maintenance service Health & Safety Management System. contract for the 2 x 660 MW coal fired power plant in Tanjung Jati, Central Java, which Two other prestigious awards were presented commenced operation in 2006. Adco Indonesia Corporation to Adco Indonesia Corporation, the Zero Accident Award has succeeded in operating this plant to its from the Ministry of Manpower, and Gold full capacity maintaining the highest safety, Rating Award from the Indonesian Police health and environment standards. We have Department. recently been certified with ISO 9001:2008 for Quality Management System, ISO 1400:2004 for Environmental Management System on Occupational Health and Safety Standard (OHSAS), as well as ISO 18001:2007 for Occupational Health and Safety.

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

Gas Pipeline

& Distribution

Adco Indonesia Corporation entered into the gas pipeline and produce Natural Gas Liquid (NGL) and distribution business in 2008. Our first facility construct multi-user gas pipelines in Sumatra was the gas pipeline and booster compression and Kalimantan. station at Gunung Megang in South Sumatra.

We are geared towards building a large This facility is used to transport the gas gas distribution business in Indonesia, produced from Adco Indonesia Corporation’s gas producing encompassing trading, processing, field, located in Singa Lematang block. The transportation, and operating and maintaining 17.5 kilometers of 10’’ pipeline was built to relevant facilities. connect the Gunung Megang facility to the Singa Lematang facility, pushing the gas through the booster compression station at a capacity of 3 x 22.5 MMSCFD.

Adco Indonesia Corporation and its partner currently plan to construct a 50 kilometers of 10” pipeline that will connect our Simenggaris gas facility to a methanol plant in Bunyu Island, Kalimantan. In addition, Adco Indonesia Corporation also plans to

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Adco Indonesia Corporation provides first-class E&P services at a competitive price.

Exploration & Production Services

Adco Indonesia Corporation provides first-class E&P capacity and by procuring additional rigs in services at a competitive price. Adco Indonesia Corporation’s 2012. E&P Services Unit was established in 1997 with the purpose of providing a first-class Adco Indonesia Corporation has always continuously competitive services. improved both the management and

integration of its oil and gas E&P supporting Our expanding network of affiliations with services in order to improve client satisfaction. prominent international partners has assured the continuing application of state-of-the-art We have successfully attained ISO 9001, technologies, thus leveraging our investments. ISO14001 and OHSAS 18001 certification and The unit has more than seven years’ declaration of competence from TÜV-Nord experience and employs a highly-qualified Indonesia.These certificates represent a workforce. significant accomplishment and exemplify

the Company’s strong commitment to Our oil and gas E&P supporting services, quality management system, environmental which focus mainly on work-over well and well management system and occupational health service hoist, are contracted in many locations and safety in the area of oil & gas services. It throughout Indonesia. Currently, we operate has always been our commitment to deliver six work-over rigs and plan to increase our the best possible result in whatever we do.

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Adco Indonesia Corporation is in the process of exploiting 15,000,000 metric ton of coal in East Kalimantan.

Coal Mining

In 2009 Adco Indonesia Corporation began its coal mining schemes with existing mining business business by acquiring two mining companies, license holders; and in the long term look PT Duta Tambang Sumber Alam (DTSA) and for opportunities to develop low rank coal PT Duta Tambang Rekayasa (DTR). These two prospects using coal utilization process. companies own mining business licenses (IUP) in Nunukan, East Kalimantan. Based on DTSA Adco Indonesia Corporation’s production target is 540,000 and DTR geological data and the historical metric tons per year with initial production success rates of neighboring operators, it is starting in February 2012. In 2012, we plan to estimated that Nunukan will be capable of add our coal reserves of 500,000 metric tons producing high-caloric coal with a kCal/kg of from an existing coal reserve discovery of 6,800 adb. 5,700,000 metric tons. In the coming years,

we believe that we will be able to discover Our approach has always been to maintain more coal prospects as well as enter the an environmentally friendly operation with new venture of gold mining as operator and good mining practices. Moving forward, we developer. will grow our business with a focus on small to medium size of coal and mineral miner and saleable commodity; implement joint venture

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Awards

2011 • Gold PROPER for Rimau Block in South Sumatra and Green PROPER for South Sumatra Extension Block (South Sumatra), Tarakan Block (East Kalimantan), and Kampar Block (Riau)

• GCG award - The Best Non-Financial from Indonesian Institute for Corporate Directorship • Asia’s Best Corporate Social Responsibility from Finance Asia Magazine • Attained 4 awards for four different categories in CSR Award 2011 from CFCD for Rimau Block

2010 • GCG award -The Best Equitable Treatment of Shareholders from Indonesian Institute for Corporate Directorship

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

• Millennium Development Goals award from Metro TV for category of Environmental of Sustainability

2009 • 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 and

listed company • Millennium Development Goals award from Metro TV in the category of Improvement in Gender

Equality and Women Empowerment through its community development program of Organic SRI

2008 • Green Corporate award in the category of Environment for Medco Methanol Bunyu from the Association of Indonesian Engineers

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

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

2007 • “No Lost Time Accident” awards from the Government for several assets including Tarakan and Rimau Blocks

• Social Empowerment award from the Coordinating Ministry of Peoples Welfare (Menko Kesra) in 2007.

• One of aIndonesia’s Most Admired Knowledge Enterprises (MAKE) 2007

2006 • 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

2005 • 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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Medco’s State-of-the art office building accommodates all energy-related business units of Medco Group.

PT Adco Indonesia Corporation Internasional Tbk

The Energy Building, 52nd Floor SCBD Lot 11A Jl. Jend. Sudirman Jakarta 12190, Indonesia Phone. (62-21) 2995 3000 Fax. (62-21) 2995 3001 Email. medc@Adco Indonesia Corporation.com