sampang psc, page-14

Fred,

Not draconian, well known in the industry, and quite typical for oily geologies. We need to remember it is the Indonesians who own the resource, we only have a contract to exploit it for them.

A lot is in the detail, eg what the allowance for cost of capital is in the cost calculations, my expectation is that it is quite generous in Indonesia. But yes it sounds like the ticket is about to be clipped heavily on Sampang oil.

As for the gas, well not hugely worse than in Australia where typically you are clobbered either 40%, then 30%, ie 58% on profit under PRRT/tax, or 10% of revenue, then 30% of profit (if I recall correctly).

What surprises me is the number that invest in oil and gas without any consideration to the fiscal regime, on of the biggest factors. Look at CVN, they've paid a huge amount to the Thai government in the past 5 years, yet have accumulated little cash themselves after expenditures.

Perhaps folk would be more realistic in their estimates of value in oil and gas reserves if they looked at the actual net profit margins of major oil and gas players internationally. If you start with 10% of revenue and double it in the most favorable regimes (generally where it's hard to find) you going to be more realistic than most folk here, and closer to the value per barrel analysts use too. Just my opinion.

EL

EL

EL