SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF MARCH, 2001
GULF INDONESIA RESOURCES LIMITED
(Exact name of Registrant as specified in its charter)
COMMISSION FILE NUMBER 1-14698
NEW BRUNSWICK, CANADA
(State or other jurisdiction of incorporation or organization)
20th-24th Floor, Wisma 46 - Kota BNI, Jalan Jenderal
Sudirman Kavling 1, Jakarta, Indonesia
10220 (Address of principal executive
offices)
Registrant's telephone number, include area code:
(62-21) 574-2120
Indicate by check mark whether the Registrant
files or will file annual reports under cover Form
20-F or Form 40-F
Form 20-F Form 40-F X
---- -----
Indicate by check mark whether the Registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
--- ---
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GULF INDONESIA RESOURCES LIMITED
(Registrant)
By: /s/ ALAN P. SCOTT
-----------------------------------------
Alan P. Scott, Corporate Secretary
Date: MAY 15, 2001
Total number of sequential pages - 19
Exhibit Index appears on page 2
COMPANY NAME
FORM 6-K FOR THE THREE MONTHS ENDED MARCH 31, 2001
1. Exhibit Index
First quarter report to shareholders for the
three months ended March 31, 2001 p. 3-19
Page 2 of 19
INTERIM REPORT 1 FOR THE THREE MONTHS ENDED MARCH 31, 2001
(ALL DOLLAR AMOUNTS IN THIS REPORT ARE UNITED STATES DOLLARS)
GULF INDONESIA ADDS VALUE THROUGH
GAS MARKETING AND EXPLORATION SUCCESSES
In the first quarter of 2001, Gulf Indonesia continued to build on its strong
fundamentals with successes in gas marketing and exploration. The achievements
included:
o Signing of agreements for the supply of 2.27 trillion cubic feet (Gulf
share 700 billion cubic feet) of gas from Sumatra to Singapore over 20
years, with pricing for the gas linked to fuel oil prices;
o Completion of drilling of the Suban-5 gas delineation well in the Corridor
PSC (Gulf 54% WI), with a flow rate of 31 million cubic feet per day of
natural gas from testing;
o Discovery of oil in the offshore Ketapang PSC (Gulf 50% WI), with two tests
on the Bukit Tua-1 discovery well resulting in a combined flow rate of
7,250 barrels of oil per day;
o Completion of a delineation program on the Ujung Pangkah field in the
offshore Pangkah PSC (Gulf 12% WI), resulting in the certification of over
450 bcf (Gulf share 54 bcf) of 'technically' proved plus probable
liquids-rich gas reserves;
o Commencement of early gas deliveries from the Kakap PSC (Gulf 31.25% WI)
for the West Natuna Gas Project;
The first quarter results are as follows:
<Table>
<Caption>
Three Months Ended March 31,
2001 2000
------------ ------------
CASH GENERATED FROM OPERATIONS
Millions of dollars 37 63
Per share 0.42 0.71
EARNINGS
Millions of dollars 9 20
Per share 0.10 0.23
EBITDAX(1)
Millions of dollars 56 70
Per share 0.63 0.80
VOLUMES (gross sales)
Thousands of barrels of oil equivalent per day 41.7 47.1
PRICES (average)
Dollars per barrel of oil equivalent 21.30 22.09
OPERATING COSTS (average)
Dollars per barrel of oil equivalent 1.87 1.81
</Table>
(1) EBITDAX: earnings before interest, taxes, depletion, depreciation,
amortization, exploration expense and other non-cash charges.
o Cash generated from operations of $37 million ($0.42 per share), compared
to $63 million ($0.71 per share) in the first quarter of 2000, reflecting
the impact of lower volumes, lower realized prices for Indonesian crude
types, and the recognition of current taxes for the Corridor PSC, partially
offset by an improvement in net finance charges.
Page 3 of 19
GULF INDONESIA RESOURCES LIMITED
o Earnings of $9 million ($0.10 per share) compared to $20 million ($0.23 per
share) in the first quarter of 2000, reflecting the impact of lower
volumes, lower realized prices for Indonesian crude types, and higher dry
hole costs, partially offset by an improvement in net finance charges.
The 2001 results reflect a reduction in the company's reported share of Corridor
Gas Project results from 60 per cent to 54 per cent. Prior to 2001, the company
had recorded an increased share of production as repayment of certain costs
incurred by the company on behalf of Pertamina's working interest share of the
Corridor Gas Project development. The high level of cash generated from the
Project since startup accelerated Pertamina's repayment of these costs to the
end of 2000.
The high level of cash generated from the Project also served to increase the
present value of the tax pools related to the Corridor PSC by accelerating their
recovery. In the fourth quarter of 2000, the company fully utilized the
available tax pools of the Corridor PSC and began paying current income taxes.
EXPLORATION & DELINEATION ACTIVITIES
OFFSHORE OIL AND GAS
The company's "big-hit" offshore oil exploration program continued in the first
quarter of 2001, resulting in an oil discovery at Bukit Tua in the Ketapang PSC
area, located offshore East Java.
Two tests on the Bukit Tua-1 well flowed at a combined rate of 7,250 barrels per
day, with the test of perforations between 6,346 and 6,386 feet yielding
approximately 4,450 barrels of oil per day, and the test of a cased interval
between 6,466 and 6,488 feet yielding approximately 2,800 barrels of oil per
day. Analysis of oil samples taken from the well indicated that the oil was high
quality (38 degree API) with very low hydrogen sulfide content.
Two additional prospects in the Ketapang PSC will be drilled in the second
quarter of 2001, including the Payang-1 well, which was spudded in mid-April.
Delineation drilling and 3D seismic at Bukit Tua are being proposed for later in
2001. Gulf Indonesia holds a 50 per cent working interest and is operator of the
Ketapang PSC.
In the Pangkah Block offshore East Java, an appraisal drilling program was
successfully completed on the Ujung Pangkah field discovered in late 1998. The
appraisal program conducted during December 2000 and January 2001 consisted of
two new vertical wells, UP-2 and UP-3, and a planned step-out sidetrack of the
UP-2 well. Analysis of results by leading independent experts has resulted in
the certification of `technically' proved plus probable gas reserves for the
field of over 450 billion cubic feet of liquids-rich gas (Gulf share 54 billion
cubic feet). The appraisal program has also confirmed the presence of a
significant oil accumulation underlying the gas, which will be the subject of
further study. Gulf Indonesia has a 12 per cent non-operated working interest in
the Pangkah PSC.
In the Sebuku PSC (Gulf 100% WI), the company drilled the Pangkat-1 well in the
first quarter. The well tested small quantities of oil, but was plugged and
abandoned.
ONSHORE GAS
During the first quarter of 2001, drilling was completed on the Suban-5 well in
the large Suban gas field in the Corridor PSC area. Testing of the well resulted
in a flow rate of 31 million cubic feet per day (mmcf/d) of natural gas at 2,800
pounds per square inch flowing tubing pressure through a 3/4-inch choke.
Additional testing of Suban-5 is underway to provide further information on gas
reserves and reservoir continuity.
2
Page 4 of 19
GULF INDONESIA RESOURCES LIMITED
The Suban-6 well, located in the central region of the field, was spudded on
April 12 and drilling is expected to be completed during the second quarter. Two
more delineation wells are tentatively planned during 2001 to further establish
the size of the Suban field.
ONSHORE OIL
The company drilled two wells in the first quarter of 2001 to delineate the
Suban Baru oil accumulation that is located in shallow sands above the large
Suban gas reservoir. The first well was plugged and abandoned due to
sub-economic quantities of oil production in testing, and the results of the
second well are currently under evaluation.
PRODUCTION & DEVELOPMENT ACTIVITIES
ONSHORE GAS
Sumatra Gas to Singapore
On February 12, 2001, the company entered into definitive agreements for the
supply of 2.27 trillion cubic feet (Gulf share 700 billion cubic feet) of sales
gas from Sumatra to Singapore over 20 years. Pricing for the gas sales will be
linked to the price of high sulphur fuel oil in Singapore. First gas under these
agreements is targeted for mid-2003 at daily contract quantities of 42 mmcf/d
(net to Gulf), increasing over time to 110 mmcf/d (net to Gulf) by 2009.
Corridor Gas Project
In the first quarter of 2001, onshore natural gas sales volumes from the
Corridor Gas Project averaged 144 mmcf/d, compared to 171 mmcf/d during the same
period last year, reflecting the following:
o A reduction of approximately 17 mmcf/d related to the change in the
company's reported share of Corridor Gas Project results from 60 per cent
to 54 per cent.
o A reduction of approximately 7 mmcf/d related to the impact of operational
issues at the Duri Steamflood during the first quarter of 2001, which
reduced the gas takes by Caltex to levels below the contracted take or pay
quantities. Gas takes in the second and third quarter of 2001 are now
forecast at levels below the first quarter. During periods where the gas
takes fall below take or pay levels, Gulf will receive oil volumes
equivalent to the contracted take or pay quantities of gas, thereby
maintaining a minimum level of Duri crude oil liftings. Gulf will deliver
the make-up gas when the buyer's demand requirements increase to above take
or pay levels, which the company is forecasting could occur by the fourth
quarter of 2001 or early in 2002.
o An increase in the carbon dioxide removal capacity at the Grissik gas plant
during the latter part of 2000, which improved the energy content of the
sales gas stream in the first quarter of 2001 by over two percent and
reduced the volumes required to meet the energy demand of the buyer by
approximately 3 mmcf/d. Since the amount of Duri crude oil received in
exchange for the natural gas deliveries is calculated based on energy and
the pipeline tariff is calculated based on volume, the higher energy
content of the gas improves overall netbacks by reducing the pipeline
tariff per unit of energy sold.
Corridor gas volumes continue to be dependent on the demand from Caltex and are
now targeted to average 143 mmcf/d for the full year 2001.
ONSHORE OIL
Gulf Indonesia's share of onshore crude oil and condensate volumes for the first
quarter of 2001 was 13,900 b/d, compared to 14,500 b/d in the same period last
year, as natural reservoir declines and
3
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GULF INDONESIA RESOURCES LIMITED
reduced overriding royalty production payments more than offset the impact of
development activities in the Corridor TAC and Jambi EOR areas over the past
year. Onshore oil volumes are now forecast to average 14,200 b/d for the full
year 2001.
OFFSHORE OIL AND GAS
West Natuna Gas Project
End users in Singapore commenced taking early gas deliveries from the Kakap PSC
on March 8, 2001 and Gulf Indonesia's share of gas sales volumes for the first
quarter were approximately 1 mmcf/d. Volumes are expected to increase during the
second quarter, dependent on the requirements of the end users and the ability
of the other West Natuna Group producers to deliver gas. Offshore gas sales
volumes for the full year 2001 are now forecast to average 9 mmcf/d.
Gulf Indonesia's share of offshore crude oil and condensate sales volumes for
the first quarter of 2001 were 3,700 b/d, compared to 4,100 b/d in the same
period last year, as natural production declines more than offset the impact of
reduced inventory build-up. Full year 2001 offshore oil volumes continue to be
forecast at 3,000 b/d.
OUTLOOK
With the signing of the Sumatra Gas to Singapore sales contract, the company now
has approximately two trillion cubic feet of gas under contract, providing
definable growth in overall sales volumes from its existing asset base to around
60,000 boe/d by the third quarter of 2003, which is expected to be sustainable
through 2008.
In addition, the on-going delineation program at Suban has identified additional
gas reserves beyond current contracted amounts and discussions have begun for
the supply of gas to Malaysia, an entirely new market for Gulf Indonesia's gas,
and with export-oriented energy consumers within Indonesia.
The company's offshore exploration successes over the past few years (at Ujung
Pangkah, Ande Ande Lumut, and most recently at Bukit Tua) provide further
potential for substantial volume growth and the company is continuing its
exciting exploration program with the drilling of two more wells in the Ketapang
Block in the second quarter of 2001.
The company is also actively evaluating strategic acquisition opportunities to
further lever off of the substantial knowledge base it has acquired through its
40 years of experience in Indonesia.
On behalf of the Board of Directors and the employees of Gulf Indonesia,
William T. Fanagan
President and Chief Executive Officer
May 7, 2001
This report contains forward-looking statements within the meaning of Section
27A of the United States Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including information about forecasted sales
volumes, reserve quantities, and proposed drilling programs and the results
thereof. Although Gulf Indonesia believes that its expectations are based on
reasonable assumptions, these assumptions are subject to a wide range of
business risks and technical risks, including those inherent in exploration for
oil and gas, and there is no assurance Gulf Indonesia's objectives will be
achieved.
4
Page 6 of 19
GULF INDONESIA RESOURCES LIMITED
FINANCIAL REVIEW
CASH GENERATED FROM OPERATIONS AND EARNINGS
TOTAL COMPANY
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
2001 2000
------------------------------ ------------------------------
$MILLION $/boe $million $/boe
------------ ------------ ------------ ------------
Gross oil and gas revenue 80 21.30 95 22.09
Government take (16) (4.18) (16) (3.71)
------------ ------------ ------------ ------------
Net oil and gas revenue 64 17.12 79 18.38
Other revenue 1 0.37 1 0.26
Operating expense (7) (1.87) (8) (1.81)
Exploration expense (11) (2.98) (1) (0.39)
General and administration expense (1) (0.39) (1) (0.35)
Depreciation, depletion and amortization expense (14) (3.78) (17) (4.01)
Finance charges, net
Cash interest charges, net (1) (0.46) (5) (1.23)
Amortization of debt placement costs (1) (0.17) (1) (0.17)
Income tax expense
Current (19) (4.94) (3) (0.65)
Future (2) (0.70) (24) (5.39)
------------ ------------ ------------ ------------
Earnings 9 2.20 20 4.64
Add back non cash items 28 7.63 43 9.96
------------ ------------ ------------ ------------
Cash generated from operations 37 9.83 63 14.60
------------ ------------ ------------ ------------
WTI (US$/bbl) 28.73 28.73
Gross volumes sold (mboe/d) 41.7 47.1
Per share (dollars)
Cash generated from operations 0.42 0.71
Earnings 0.10 0.23
Capital and exploration expenditures 26 14
Net cash (debt) position (at March 31) 48 (97)
</Table>
Cash generated from operations for the three months ended March 31, 2001 totaled
$37 million or $0.42 per share, a 41 per cent decrease over the same period in
2000. Earnings for the first quarter of 2001 were $9 million compared to $20
million for the same period in 2000. A number of factors contributed to the
year-over-year decline in the company's reported results, including:
o a reduction in the company's reported share of Corridor Gas Project results
from 60 per cent to 54 per cent. Prior to 2001, the company had recorded an
increased share of production as repayment of certain costs incurred by the
company on behalf of Pertamina's working interest share of the Corridor
Gas Project development. The high level of cash generated from the Project
since startup accelerated Pertamina's repayment of these costs to the end
of 2000.
o lower sales volumes due to reduced gas deliveries to Caltex and reservoir
declines in its mature oil fields, partially offset by the positive impact
of oil development activities in the Corridor TAC and Jambi EOR areas over
the past year.
5
Page 7 of 19
GULF INDONESIA RESOURCES LIMITED
o lower realized prices due to a reduction in the relative demand for
Indonesian crude types compared to the West Texas Intermediate (WTI) crude
oil benchmark. By March 2001, the relationship of Indonesian crude prices
to WTI had returned to five-year average historical levels and in April,
the relationship strengthened further.
o recognition of current taxes for the Corridor PSC as higher than
anticipated cash generated from the Corridor Gas Project since startup
utilized the available tax pools and resulted in the payment of income
taxes for this contract area since the fourth quarter of 2000.
o higher dry hole costs resulting from increased exploration activity. In the
first quarter of 2001, the company drilled eight exploration/delineation
wells of which four were successful (including the Bukit Tua offshore oil
discovery), three were unsuccessful, and one is under evaluation. In 2000,
no exploration/delineation wells were drilled in the first quarter.
o an improvement in net finance charges as the company's high level of net
cash flow in 2000 resulted in a net cash surplus during the first quarter
of 2001 compared to net debt position during the first quarter of 2000.
The following table summarizes the impacts of the above items on the company's
reported results.
<Table>
<Caption>
SALES CASH
VOLUMES GENERATION EARNINGS
------------ ------------ ------------
(mboe/d) $MILLION $MILLION
THREE MONTHS ENDED MARCH 31, 2000 47.1 63 20
Reduction in reported share of Corridor Gas Project
results from 60 per cent to 54 per cent(1) (2.9) (5) (2)
Lower sales volumes (2.5) (6) (2)
Lower realized prices for Indonesia crude types (3) (1)
Recognition of current taxes for the Corridor PSC (16) --
Higher dry hole costs -- (9)
Improvement in net finance charges 4 3
------------ ------------ ------------
THREE MONTHS ENDED MARCH 31, 2001 41.7 37 9
</Table>
(1) includes results from both natural gas and condensate operations
ONSHORE NATURAL GAS OPERATIONS
During the first quarter of 2001, the company's reported share of results from
the onshore natural gas operations decreased from 60 per cent to 54 per cent. As
a consequence of this six per cent reduction in working interest, sales volumes,
cash generation and earnings for the natural gas operations were reduced by
2,800 boe/d, $4 million and $2 million, respectively.
Gross revenue, before pipeline tariffs, in the first three months of 2001 was
$48 million compared to $61 million for the same period last year. The $13
million decrease in gross revenue includes $6 million related to the six per
cent reduction in working interest. The remainder of the $7 million decrease in
gross revenue was due to a six per cent decline in sales volumes combined with a
four per cent reduction in realized prices.
6
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GULF INDONESIA RESOURCES LIMITED
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
2001 2000
------------------------------ ------------------------------
$MILLION $/BOE(1) $million $/boe(1)
------------ ------------ ------------ ------------
Gross gas revenue
Before pipeline tariff 48 22.43 61 23.38
Pipeline tariff (8) (3.72) (10) (3.72)
Government take (2) (1.10) (3) (1.11)
------------ ------------ ------------ ------------
Net gas revenue 38 17.61 48 18.55
Operating expense (1) (0.60) (3) (0.97)
Depreciation, depletion and amortization expense (6) (2.54) (7) (2.84)
Finance charges, net
Cash interest charges, net (1) (0.78) (5) (2.03)
Amortization of debt placement costs (1) (0.30) (1) (0.28)
Income tax expense
Current (15) (6.73) -- --
Future (1) (0.76) (18) (7.02)
------------ ------------ ------------ ------------
Earnings 13 5.90 14 5.41
Add back non cash items 8 3.60 26 10.14
------------ ------------ ------------ ------------
Cash generated from operations 21 9.50 40 15.55
------------ ------------ ------------ ------------
Gross volumes sold
Mmcf/d 144 171
Mboe/d 24.0 28.5
</Table>
(1) $/boe based on natural gas BOE volumes
Natural gas prices are dependent on crude oil prices as the company's contracted
natural gas volumes are exchanged for Duri crude oil production on an energy
equivalent basis. The four per cent decline in realized prices compared to 2000
was due to a reduction in the relative demand for Duri crude oil compared to the
WTI crude oil benchmark during the first quarter.
The year-over-year volume decrease was due to:
o a reduction of approximately 17 mmcf/d (2,800 boe/d) attributable to the
company's change in working interest from 60 per cent to 54 per cent,
o a reduction of approximately 7 mmcf/d (1,100 boe/d) related to the impact
of operational issues at the Duri Steamflood during the first quarter of
2001, which reduced the gas takes by Caltex to levels below the contracted
take or pay quantities, and
o an increase in the carbon dioxide removal capacity at the Grissik gas plant
during the latter part of 2000, which improved the energy content of the
sales gas stream in the first quarter of 2001 by over two percent and
reduced the volumes required to meet the energy demand of the buyer by
approximately 3 mmcf/d (600 boe/d).
Government take in the first quarter of 2001 and 2000 was approximately six per
cent of gross revenue. The low rate reflects natural gas cost pools and a lower
government take percentage for natural gas compared to liquids. Government take
is expected to remain at these low levels throughout 2001.
Operating expense on a per barrel of oil equivalent basis for the first quarter
of 2001 was $0.60 per boe compared to $0.97 per boe in 2000, a 38 per cent
improvement. The installation of pre-treatment facilities at the Grissik gas
plant in the second quarter of 2000 was largely responsible for the cost
7
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Gulf Indonesia Resources Limited
improvement as no membrane change outs were required during the first quarter of
2001, compared to $0.24 per boe of membrane costs incurred in the first quarter
of 2000.
Cash interest expense is net of interest income on cash restricted in use
related to the Corridor Loan. During the first three months of 2001, the company
expensed $1 million in net cash finance costs associated with the Corridor Loan
compared to $5 million in 2000 due largely to the impact of significant Corridor
Loan repayments in 2000.
Depreciation, depletion and amortization was $6 million or $2.54 per boe in 2001
compared to $7 million or $2.84 per boe in 2000. The lower depletion rates per
boe in 2001 reflect the benefit of substantial reserve additions at year-end
2000.
Income tax expense (current and future) in the first quarter of 2001 was $16
million compared to $18 million for the first quarter of 2000, or approximately
56 per cent of pre-tax earnings for both years. As a consequence of full
utilization in the fourth quarter of 2000 of the Corridor PSC's available tax
pools, the company recognized $15 million (2000 - $nil) of cash tax obligations
during 2001, which in prior years would have been recorded as future taxes.
ONSHORE OIL OPERATIONS
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
2001 2000
------------------------------ ------------------------------
$MILLION $/BBL $million $/bbl
------------ ------------ ------------ ------------
Gross liquids revenue 31 24.41 34 25.80
Government take (11) (8.62) (11) (8.15)
------------ ------------ ------------ ------------
Net liquids revenue 20 15.79 23 17.65
Operating expense (4) (3.16) (4) (2.85)
Depreciation, depletion and amortization expense (5) (4.41) (8) (5.66)
Income tax expense
Current (4) (2.90) (3) (1.89)
Future (2) (1.76) (4) (3.20)
------------ ------------ ------------ ------------
Earnings 5 3.56 4 4.05
Add back non-cash items 7 6.17 13 8.86
------------ ------------ ------------ ------------
Cash generated from operations 12 9.73 17 12.91
------------ ------------ ------------ ------------
Gross volumes sold (mb/d)
Excluding Arun 13.7 14.1
Arun 0.2 0.4
------------ ------------ ------------ ------------
13.9 14.5
------------ ------------ ------------ ------------
</Table>
Gross revenue for the first quarter of 2001 was $31 million compared to $34
million for the same period of 2000 due to declines in both realized prices and
sales volumes.
Realized prices were $24.41 per barrel in 2001 compared to $25.80 per barrel in
2000, or five per cent lower, as a result of a reduction in the relative demand
for Indonesian crude types compared to the WTI crude oil benchmark.
Excluding volumes related to the Arun overriding production payment, onshore oil
sales volumes were 13,700 b/d in 2001 compared to 14,100 b/d in 2000 as the
impact of development activities in the
8
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GULF INDONESIA RESOURCES LIMITED
Corridor TAC and Jambi EOR areas over the past year were more than offset by
natural reservoir declines and reduced overriding royalty production payments.
Government take averaged approximately 35 per cent of gross revenue during the
first three months of 2001 compared to 32 per cent of gross revenue in 2000.
The three per cent increase in the 2001 government take rate reflects the full
utilization during 2000 of certain opening cost pools for the Jambi EOR contract
area.
Operating expense for the first quarter of 2001 was $3.16 per barrel, compared
to $2.85 per barrel in 2000, and reflects the impact of fixed costs and lower
production.
Depreciation, depletion and amortization to date was $5 million or $4.41 per
barrel compared to $8 million or $5.66 per barrel in 2000. The $1.25 per barrel
improvement in the 2001 depletion rates is due in large part to reserve
additions in the Corridor TAC.
Income tax expense in the first quarter of 2001 and 2000 was approximately 56
per cent of pre-tax earnings.
OFFSHORE OIL AND GAS OPERATIONS
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
2001 2000
------------------------------ ------------------------------
$million $/boe $million $/boe
------------ ------------ ------------ ------------
Gross oil and gas revenue 9 26.28 10 25.74
Government take (3) (7.47) (2) (5.95)
------------ ------------ ------------ ------------
Net oil and gas revenue 6 18.81 8 19.79
Operating expense (2) (5.18) (1) (3.95)
Depreciation, depletion and amortization expense (3) (9.36) (2) (6.24)
Income tax expense
Current -- (0.77) -- (0.79)
Future (1) (2.21) (2) (2.82)
------------ ------------ ------------ ------------
Earnings -- 1.29 3 5.99
Add back non cash items 4 11.57 3 9.06
------------ ------------ ------------ ------------
Cash generated from operations 4 12.86 6 15.05
------------ ------------ ------------ ------------
Gross volumes sold (mboe/d)
Natural gas 0.1 --
Crude oil and condensate 3.9 4.9
------------ ------------ ------------ ------------
4.0 4.9
Inventory build-up (mboe/d) (0.2) (0.8)
------------ ------------ ------------ ------------
Gross volumes sold (mboe/d) 3.8 4.1
------------ ------------ ------------ ------------
</Table>
Gross oil and gas revenue for the first three months of 2001 was $9 million
compared to $10 million in 2000 as slightly stronger prices were more than
offset by lower volumes.
Production volumes for the first quarter of 2001 were 4,000 boe/d compared to
4,900 boe/d in 2000. End users in Singapore commenced taking early gas
deliveries from the West Natuna Gas Project on March 8, 2001 and the company's
share of gas sales volumes for the first quarter was approximately 1
9
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GULF INDONESIA RESOURCES LIMITED
mmcf/d (100 boe/d). Year-to-date crude oil production volumes were 3,900 boe/d,
20 per cent lower than 2000 levels due to reservoir declines.
Operating expense for the first quarter of 2001 was $5.18 per barrel of oil
equivalent compared to $3.95 per barrel of oil equivalent in 2000. The per
barrel increase reflects relatively fixed expenses and declining production. As
the production from the West Natuna gas project increases over time to full
contract rates, operating expense on a per barrel of oil equivalent basis will
decline as these fixed costs will also support natural gas sales from the
project.
Depreciation, depletion and amortization was $3 million for the first three
months of 2001 compared to $2 million in 2000.
EXPLORATION
Exploration expense for the first quarter of 2001 was $11 million compared to $1
million for the same period in 2000. The $10 million increase in exploration
expense is due to the write-off of three unsuccessful exploration wells,
including a $7 million charge associated with the costs of the unsuccessful
Pangkat-1 well drilled in the non-producing Sebuku PSC. In the first quarter of
2000, no exploration wells were drilled.
NET CASH FLOW AND FINANCIAL POSITION
<Table>
<Caption>
MARCH 31, 2001 DECEMBER 31, 2000
--------------- -----------------
Cash and short-term investments $ 114 $ 107
Cash restricted in use 61 97
Less: Long-term debt (including current portion) (127) (142)
--------------- ---------------
Net cash position $ 48 $ 62
--------------- ---------------
</Table>
During the first quarter of 2001, the company's net cash position decreased by
$14 million to $48 million. Capital and exploration expenditures of $26 million
combined with a $25 million increase in non-cash working capital more than
offset the $37 million of cash generated from operations.
Cash balances in the first quarter of 2001 were also impacted by operational
issues at the Duri Steamflood which resulted in reduced gas takes by Caltex to
levels below contracted take or pay quantities. The company will receive the
cash equivalent on the first quarter contracted take or pay quantities shortfall
in the second quarter.
Long-term debt outstanding was $127 million at March 31, 2001. During the
quarter, the company made a $15 million repayment on the Corridor Loan, which
consisted of a $6 million scheduled repayment (2000 - $16 million) and a $9
million mandatory early repayment (2000 - $7 million). A further repayment of
approximately $11 million will be made on May 8, 2001, of which $5 million
relates to scheduled repayments and $6 million to mandatory early repayments.
Under the terms of the Corridor Loan, net cash flows from the Corridor PSC
contribute to certain cash reserve requirements which the company reports as
"cash restricted in use". Additionally, a specified percentage of the surplus
cash is used to fund mandatory early repayments with the remainder released
10
Page 12 of 19
GULF INDONESIA RESOURCES LIMITED
to the company. During the first quarter of 2001, $22 million was released to
the unrestricted cash category with a further $13 million to be released on May
8, 2001.
The company plans to spend approximately $140 million on capital and exploration
expenditures in 2001. Actual capital spending will depend partially on the
timing of expenditures on capital projects, the results of the company's
exploration activities and decisions regarding timing of delineation wells.
The company expects to be able to fund its currently planned exploration and
development programs with internally generated cash. When appropriate, the
company will use hedging to help ensure the predictability of internal cash
flows. Although, the company does not currently have any outstanding oil price
hedge positions it will continue to assess its capital requirements and the need
for price security in the future.
The company is actively looking at potential uses for its surplus cash. The cash
may be used in whole or in part for funding of development following potential
exploration successes, acquisitions, or debt repayments. The eventual use of the
company's surplus cash may be influenced by certain risk factors in Indonesia,
which are more fully described below.
RISKS AND UNCERTAINTIES
INDONESIAN ECONOMIC AND POLITICAL RISK
Substantially all of the company's assets, with the exception of cash and
short-term investments, are located in Indonesia. The company has not
historically experienced problems from civil unrest or disputes with the
Indonesian government. The Indonesian government has exercised and continues to
exercise significant influence over many aspects of the Indonesian economy,
including the oil and gas industry as demonstrated by the introduction of two
new laws (on revenue sharing and autonomy) and a proposed oil and gas law. The
company is attempting to mitigate its risk through building strong relationships
with the local communities and government in areas in which it operates.
However, it is unclear at the present time what impact, if any, Indonesia's
current economic and political environment will have on the company's financial
position, results of operations or potential for further growth.
An additional consequence of Indonesia's political and economic uncertainty is
fluctuation in the Rupiah/U.S. dollar exchange rate. The currency volatility is
not expected to have a material long-term impact on the company's financial
position as all current revenues are U.S. dollar-denominated, all major
contracts entered into are in U.S. dollars and Rupiah-denominated expenses are
limited to approximately 10-15 per cent of the company's overall expenditure
profile.
11
Page 13 of 19
CONSOLIDATED STATEMENTS OF EARNINGS AND
RETAINED EARNINGS (DEFICIT)
(Unaudited)
<Table>
<Caption>
THREE MONTHS
ENDED MARCH 31
--------------
(millions of United States dollars) 2001 2000
- ----------------------------------- ---- ----
EARNINGS
REVENUES
Gross oil and gas revenue $ 80 $ 95
Government take 16 16
------ ------
Net oil and gas revenue 64 79
Other 1 1
------ ------
65 80
------ ------
EXPENSES
Operating 7 8
Exploration 11 1
General and administration 1 1
Depreciation, depletion and amortization 14 17
Finance charges, net 2 6
------ ------
35 33
------ ------
Earnings before tax 30 47
Income tax expense 21 27
------ ------
EARNINGS FOR THE PERIOD $ 9 $ 20
====== ======
RETAINED EARNINGS (DEFICIT)
BALANCE, BEGINNING OF PERIOD $ 81 $ (3)
Earnings for the period 9 20
------ ------
BALANCE, END OF PERIOD $ 90 $ 17
====== ======
PER SHARE INFORMATION (dollars per share)
Cash generated from operations $ 0.42 $ 0.71
====== ======
Earnings $ 0.10 $ 0.23
====== ======
Average common shares outstanding (millions) 87.9 87.9
====== ======
</Table>
Page 14 of 19
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<Table>
<Caption>
THREE MONTHS
ENDED MARCH 31
----------------
(millions of United States dollars) 2001 2000
- ----------------------------------- ----- -----
OPERATING ACTIVITIES
EARNINGS FOR THE PERIOD $ 9 $ 20
NON-CASH ITEMS INCLUDED IN EARNINGS:
Depreciation, depletion and amortization 14 17
Exploration expense 11 1
Future income taxes 2 24
Other 1 1
----- -----
CASH GENERATED FROM OPERATIONS 37 63
Changes in non-cash working capital (5) (8)
----- -----
32 55
----- -----
INVESTING ACTIVITIES
Capital expenditures and exploration expenses (26) (14)
Decrease in cash restricted in use 36 12
Changes in non-cash working capital (20) 4
----- -----
(10) 2
----- -----
FINANCING ACTIVITIES
Long-term debt repayments (15) (23)
----- -----
INCREASE IN CASH 7 34
CASH AND SHORT-TERM INVESTMENTS, BEGINNING OF PERIOD 107 27
----- -----
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 114 $ 61
===== =====
</Table>
Page 15 of 19
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<Table>
<Caption>
MARCH 31, December 31,
(millions of United States dollars) 2001 2000
------------ ------------
(Unaudited)
ASSETS
CURRENT
Cash and short-term investments $ 114 $ 107
Cash restricted in use 61 97
Accounts receivable 64 56
Inventory and other current assets 35 38
------------ ------------
274 298
DEFERRED CHARGES 5 6
PROPERTY, PLANT AND EQUIPMENT 757 756
------------ ------------
$ 1,036 $ 1,060
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable $ 33 $ 53
Accounts payable-parent / affiliates 10 9
Current portion of long-term debt 26 31
Other current liabilities 18 19
------------ ------------
87 112
LONG-TERM DEBT 101 111
FUTURE INCOME TAXES 259 257
------------ ------------
447 480
------------ ------------
SHAREHOLDERS' EQUITY
Share Capital (Note 2) 499 499
Retained earnings 90 81
------------ ------------
589 580
------------ ------------
$ 1,036 $ 1,060
============ ============
</Table>
Page 16 of 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(amounts expressed in millions of United States dollars, except where otherwise
noted)
(Unaudited)
1. BASIS OF PRESENTATION
The interim consolidated financial statements of the company include the
accounts of all subsidiary companies, have been prepared by management in
accordance with accounting principles generally accepted in Canada and
conform in all material respects with International Accounting Standards.
These interim consolidated financial statements have been prepared
following the same accounting policies and methods of computation as the
consolidated financial statements for the year ended December 31, 2000.
These statements should be read in conjunction with the consolidated
financial statements and the notes thereto in the company's annual report
for the year ended December 31, 2000.
2. SHARE CAPITAL
AUTHORIZED:
COMMON SHARES - voting, unlimited number with a par value of U.S.$0.01.
PREFERRED SHARES - unlimited number. These preference shares rank in
priority to the common shares and may be issued from time to time in
series, and with the price, rights, preference, privileges and
restrictions, including voting and conversion rights, to be fixed by the
directors prior to their issue.
<Table>
<Caption>
ISSUED AND OUTSTANDING: NUMBER AMOUNT
- ----------------------- ------ ------
COMMON SHARES:
At March 31, 2001 and December 31, 2000 and 1999 87,901,350 $ 499
========== ======
</Table>
The company has a fixed option plan. Pursuant to the terms of the Gulf
Indonesia Resources Limited 1997 Stock Option and Incentive Plan, the
company may grant options to its employees at any time prior to December
31, 2007. Options outstanding are granted at prices determined at the time
the option is granted, provided that the exercise price is not less than
the fair market value of the common shares on the date of grant, and have a
maximum term of 10 years. A summary of the status of the company's stock
options as at March 31, 2001 is presented below:
<Table>
<Caption>
WEIGHTED AVERAGE
NUMBER EXERCISE PRICE
---------- ----------------
Outstanding, at December 31, 2000 6,097,625 $ 17.04
Granted 5,000 9.05
Forfeited (538,125) 18.85
---------- ---------
Outstanding, at March 31, 2001 5,564,500 $ 16.86
========== =========
Options exerciseable at March 31, 2001 4,233,875 $ 19.15
========== =========
</Table>
Page 17 of 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts expressed in
millions of United States dollars, except where otherwise noted)
(Unaudited)
3. SEGMENT INFORMATION
<Table>
<Caption>
ONSHORE - GAS ONSHORE - OIL OFFSHORE- OIL & GAS
------------------------- ------------------------- -------------------------
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31,
------------------------- ------------------------- -------------------------
2001 2000 2001 2000 2001 2000
---------- ---------- ---------- ---------- ---------- ----------
REVENUES
Gross oil and gas revenue $ 40 $ 51 $ 31 $ 34 $ 9 $ 10
Government take 2 3 11 11 3 2
---------- ---------- ---------- ---------- ---------- ----------
Net oil and gas revenue 38 48 20 23 6 8
Other -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
38 48 20 23 6 8
---------- ---------- ---------- ---------- ---------- ----------
EXPENSES
Operating 1 3 4 4 2 1
Exploration -- -- -- -- -- --
General and administrative -- -- -- -- -- --
Depreciation, depletion and amortization 6 7 5 8 3 2
Finance charges, net 2 6 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
9 16 9 12 5 3
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE TAX 29 32 11 11 1 5
Income tax expense (recovery)
Current 15 -- 4 3 -- --
Future 1 18 2 4 1 2
---------- ---------- ---------- ---------- ---------- ----------
16 18 6 7 1 2
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS (LOSS) FOR THE PERIOD $ 13 $ 14 $ 5 $ 4 $ -- $ 3
========== ========== ========== ========== ========== ==========
CASH GENERATION $ 21 $ 40 $ 12 $ 17 $ 4 $ 6
========== ========== ========== ========== ========== ==========
CAPITAL EXPENDITURES AND
EXPLORATION EXPENSES $ 5 $ 3 $ 4 $ 2 $ 2 $ 7
========== ========== ========== ========== ========== ==========
</Table>
<Table>
<Caption>
EXPLORATION CORPORATE TOTAL
------------------------- ------------------------- ------------------------
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31,
------------------------- ------------------------- ------------------------
2001 2000 2001 2000 2001 2000
---------- ---------- ---------- ---------- ---------- ----------
REVENUES
Gross oil and gas revenue $ -- $ -- $ -- $ -- $ 80 $ 95
Government take -- -- -- -- 16 16
---------- ---------- ---------- ---------- ---------- ----------
Net oil and gas revenue -- -- -- -- 64 79
Other -- -- 1 1 1 1
---------- ---------- ---------- ---------- ---------- ----------
-- -- 1 1 65 80
---------- ---------- ---------- ---------- ---------- ----------
EXPENSES
Operating -- -- -- -- 7 8
Exploration 11 1 -- -- 11 1
General and administrative -- -- 1 1 1 1
Depreciation, depletion and amortization -- -- -- -- 14 17
Finance charges, net -- -- -- -- 2 6
---------- ---------- ---------- ---------- ---------- ----------
11 1 1 1 35 33
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE TAX (11) (1) -- -- 30 47
Income tax expense (recovery)
Current -- -- -- -- 19 3
Future (1) -- (1) -- 2 24
---------- ---------- ---------- ---------- ---------- ----------
(1) -- (1) -- 21 27
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS (LOSS) FOR THE PERIOD $ (10) $ (1) $ 1 $ -- $ 9 $ 20
========== ========== ========== ========== ========== ==========
CASH GENERATION $ -- $ -- $ -- $ -- $ 37 $ 63
========== ========== ========== ========== ========== ==========
CAPITAL EXPENDITURES AND
EXPLORATION EXPENSES $ 15 $ 2 $ -- $ -- $ 26 $ 14
========== ========== ========== ========== ========== ==========
</Table>
Gulf Indonesia has four reportable segments: onshore gas operations, onshore oil
operations, offshore oil and gas operations, and exploration. The operations
segments are involved in the production and development of crude oil and natural
gas in Indonesia. The onshore operations are focused on the island of Sumatra
while the offshore operations are located in the west Natuna Sea. The
exploration segment is involved in the exploration for crude oil and natural gas
in Indonesia. Gulf Indonesia's reportable segments are strategic business units
that are managed separately as each has different operational requirements and
focuses. Due to the nature of the operations, there are no intersegment sales
and transfers.
The corporate segment is comprised principally of the impact of interest income
from unrestricted cash on hand, miscellaneous other revenue, crude oil hedging,
and general corporate expenditures.
Page 18 of 19
SUPPLEMENTARY INFORMATION
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
-------------------------------------------------
2001 2000
----------------------- -----------------------
VOLUMES SOLD (gross/net)(1)
Onshore natural gas (millions of cubic feet per day) 144/138 171/164
======================= =======================
Barrels of oil equivalent (thousands of boe per day)(2) 24.0/23.1 28.5/27.3
======================= =======================
Onshore crude oil and condensate (thousands of barrels per day) 13.9/9.4 14.5/10.3
======================= =======================
Offshore oil and gas
Natural gas (millions of cubic feet per day) 1/1 --/--
Crude oil and condensate (thousands of barrels per day) 3.7/2.5 4.1/2.9
======================= =======================
Barrels of oil equivalent (thousands of boe per day)(2) 3.8/2.6 4.1/2.9
----------------------- -----------------------
Total volumes sold (thousands of boe per day)(2) 41.7/35.1 47.1/40.5
======================= =======================
</Table>
(1) "Gross" sales reflect the Company's interest prior to deduction of
government take; "net" sales are after deduction of government take.
(2) Natural gas converted at 6:1
<Table>
GROSS AVERAGE PRICES
Onshore natural gas (dollars per thousands of cubic feet) 3.12 3.28
======== ========
Oil equivalent (dollars per barrel of oil equivalent) 18.71 19.66
======== ========
Onshore crude oil and condensate (dollars per barrel) 24.41 25.80
======== ========
Offshore oil and gas
Natural gas (dollars per thousands of cubic feet) 4.25 --
Crude oil and condensate (dollars per barrel) 26.31 25.74
-------- --------
Oil equivalent (dollars per barrel of oil equivalent) 26.28 25.74
======== ========
Combined (dollars per barrel of oil equivalent)
Average-unhedged 21.30 22.09
Hedging -- --
-------- --------
Average-hedged 21.30 22.09
======== ========
OIL AND GAS REVENUE (millions of dollars)
Onshore natural gas $ 40 $ 51
Onshore crude oil and condensate 31 34
Offshore
Natural gas -- --
Crude oil and condensate 9 10
Hedging -- --
-------- --------
GROSS OIL AND GAS REVENUE 80 95
Government take
Onshore natural gas (2) (3)
Onshore crude oil and condensate (11) (11)
Offshore
Natural gas -- --
Crude oil and condensate (3) (2)
-------- --------
NET OIL AND GAS REVENUE $ 64 $ 79
======== ========
</Table>
Page 19 of 19