Adelphi updates progress on E. Kalimantan PSC

The Following is an excerpt taken from a report released by Australian firm Adelphi Energy Limited on January 15, 2009 on South Bengara II PSC, onshore East Kalimantan. (ed)

South Bengara-II ? onshore East Kalimantan (Adelphi 50.002%)

Following the successful conclusion of a Joint Study with the Indonesian Government, Adelphi was advised of its winning bid for the South Bengara-II Block in onshore East Kalimantan.

Subsequently, on 14 November 2008 Adelphi announced that it had acquired a majority interest in an Indonesian Production Sharing Contract South Bengara-II (PSC).

The acquisition was in association with Continental Energy Corporation (Continental) and GeoPetro Resources Company (GeoPetro) via the group?s joint venture company, ACG(South Bengara-II) Pte. Ltd. (ACG). Adelphi owns a 50.002% interest in ACG and its new PSC.

ACG, in accordance with the terms of its bid and the PSC, is obliged to pay a signing bonus of US$1 million to the Indonesian Government and to complete a work program during the first three PSC contract years, including at least 100 line kilometres of 2D seismic, and drilling one exploration well for a total minimum expenditure of US$7,850,000.

In accordance with the terms of a Joint Bid Agreement with Continental and GeoPetro, Adelphi is to be fully carried through the first US$4 million of gross expenditure on this block including the initial US$1 million signing bonus.

Subsequent to the signing of the PSC, Continental and GeoPetro failed to pay the signing bonus on behalf of ACG in the required timeframe as they were contractually obliged to do. The Indonesian Government is currently considering a request for a deferral of this payment to a later date but unless granted, cancellation of the PSC is likely. Discussions with other potential farm-in partners are also ongoing. (end of excerpt)