Continental says E. Kalimantan exploration block joint bid terminated

Indonesia-focused explorer Continental Energy Corporation announced Tuesday that its unit has withdrawn from participation in its ACG joint venture, which earlier was awarded an exploration block East Kalimantan.

In late 2008, the AGC JV, which consisted of the company?s unit, Canadian firm GeoPetro Resources Company and ASX-listed firm Adelphi Energy Limited, was awarded onshore South Bengara-II PSC. Adelphi held 50.002% interest in the venture with Continental holding 24.999%.

ACG, in accordance with the terms of its bid and the PSC, was 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

The JV, however, was unable to pay the signing bonus within the required time frame.

?The consortium joint bid agreement which provided for the establishment of ACG and operations on the recently awarded South Bengara-II PSC, onshore Indonesia, has been terminated,? Continental said.

Continental President and COO, Andrew T. Eriksson, said of the withdrawal: "The current world oil price and financial situation increases the expected difficulty in farming out or otherwise raising exploration capital needed for the project. We view South Bengara-II Block as a high risk exploration property and combined with the substantial cash demands on needed exploration work we could not justify our continued participation in the project."(alex)