Continental threatens to annul farm out agreement with China Wisdom

Canadian junior oil explorer Continental energy Corp. announced on Wednesday it had given written notice to China Wisdom International (HK) Ltd. that the latter is in default of its obligations under a March 3, 2003 farm out agreement and must commence drilling the first of five obligation wells on the Bengara-II Block in East Kalimantan before November 30, 2003 or risk termination of the farm out agreement.

China Wisdom, which is owned by a consortium Chinese leading oil, gas companies including Sinopec CNPC and PetroChina, entered into farm in agreement on Bengara Block on March 3, 2003, in which China Wisdom would earn 40 percent working interest after paying for 100 percent of the costs of drilling, testing and completing five exploration wells on the Bengara-II Block, three before end 2003 and two more by end 2004.

?Continental and its partner in the Bengara-II Block, GeoPetro Resources Company of San Francisco, are reopening discussions with other parties who have expressed interest in farming into the Bengara-II Block in the event of China Wisdom's failure to perform and earn any interest in the block,? said Continental in a statement.

Continental Energy Corporation is a small exploration company focusing its efforts on discovering major reserves in Indonesia. Continental owns interests in three oil and gas concessions covering 3 million acres in Indonesia, the Bengara-II Block and the Bangkudulis Block and the Yapen Block. (alex)