The present study is undertaken to investigate the coals of East Kalimantan for their oil proneness and their suitability for hydrogenation. These coals are Sub-bituminous/Low rank A and per-hydrous in nature. They also have elevated sulphur content. Petrographically, they have high huminite (90.7-98.1%) and poor concentration of liptinite and inertinite. The study reveals that the coalification is characterized by loss of hydrogen and oxygen in this region. The richness of hydrogen, in relation to carbon, is probably responsible for vitrinite suppression and makes these coals per-hydrous and oil prone. The role of petrofactor has also been evaluated to predict reactivity of these coals during hydrogenation. There is a good correlation between petrofactor and conversion. These coals do possess favorable characteristics for hydrogenation and have a high conversion (similar to 95%) and oil yield (>65%).