Operations in Indonesia

Kutai PSC

Kutai PSC – Offshore and Onshore East Kalimantan

Serica 30% (operator), Salamander 23.4%, KrisEnergy 24.6%, PT Ephindo 22%

The Kutai Production Sharing Contract (“PSC”), which covers an area of approximately 4,700 square kilometres within the Kutai Basin of East Kalimantan, was awarded to Serica and PT Ephindo in December 2006. The PSC is situated in and around several giant fields in the prolific Mahakam River delta, many of which were discovered in the late 1960s and 1970s. These include Tunu (1,600 million boe) and Attaka (800 million boe). This region of Indonesia has produced over two billion barrels of oil and 20 trillion cubic feet of gas and has been producing around four bcf of gas per day to the nearby Bontang LNG plant.

The PSC is divided into five areas, one of which is located onshore, with the remainder offshore in water depths varying from the shoreline to about 200 metres. The majority of the area represents the first phase of PSC relinquishments by the main operators in the basin.

During 2008, the Company completed the acquisition of a new 180 square kilometre 3D seismic survey and obtained about 2,000 square kilometres of the existing 3D seismic date. Serica recently completed a 2D seismic survey in the onshore part of the PSC. Interpretation of the seismic data has revealed some prospects with considerable potential and plans are being made to drill several wells in 2010.

In August 2008 Serica farmed-out a 23.4% interest in the PSC to Salamander Energy and in January 2010 farmed out a further 24.6% interest to KrisEnergy. Serica presently retains a 30% interest and operatorship.