China Wisdom farms-in E. Kalimantan Bengara exploration block
Thursday, March 6 2003 - 06:57 PM WIB
To earn its interest, China Wisdom is obliged under the farm-out agreement to pay the next US$720,000 of general and administrative and geological and geophysical expenditures made on the Bengara-II Block as a reimbursement of past costs. Additionally, China Wisdom shall pay for 100 percent of the costs of drilling, testing and completing five (5) exploration wells on the Bengara-II Block, three before end 2003 and two more by end 2004.
Continental's subsidiary, Apex (Bengara-II) Ltd., shall continue to own 100 percent of the Bengara-II Block PSC. Upon fulfilling its farm-out agreement obligations China Wisdom shall have earned and take up a 40 percent share holding interest in Apex (Bengara-II) Ltd. Continental shall keep a 36 percent stake and existing partner, GeoPetro Resources Company, a 24 percent share. The name of Apex (Bengara-II) Ltd. will be changed to 'Continental-Wisdom-GeoPetro (Bengara-II) Ltd.'(CWG-Bengara-II).
Once China Wisdom has invested the next US$720,000 cash and paid for and completed drilling the five exploration wells as per the farm-out agreement all further costs incurred under the Bengara-II PSC shall be paid for and shared by the three partners in proportion to their respective share holding interests.
China Wisdom is newly formed Hong Kong company for this investment. It is owned by a consortium of mainland Chinese oil companies and investors including Sinopec Star Petroleum Exploration &Production Company, an affiliate of SINOPEC, the Chinese Petroleum and Chemical Corporation, and Sichuan Petroleum Group Co. Ltd. an affiliate of state owned CNPC, China National Petroleum Company, group or PetroChina Company Ltd.as its international affiliate is known.
?Two of the five wells are located onshore and will be drilled with a land-drilling rig that China Wisdom plans to provide. The other three are located offshore but only in very shallow waters of depths of 10 to 30 feet in the delta of the Bulungan River. We would expect the cost of the onshore wells to total approximately US$4 Million each and the offshore wells about US$6 Million each,? said Continental's Chief Geophysicist, Jim Haebig,
President of China Wisdom, Wang Hong Jun said: ?We are planning to deliver two drilling rigs from China to the Bengara-II Block by mid summer to start drilling on our five exploration wells farm-in commitment. In addition to our five well exploration commitment we are eyeing a three well appraisal drilling program on the Bengara-II Block's Makapan gas discovery with a view to early commercial development of that known gas, condensate and LPG resource.? (alex)