Pertamina terminates Continental's Bangkudulis TAC

Dallas-based junior oil firm Continental Energy Corporation reported last week that the Bangkudulis Technical Assistance Contract (TAC) held by Continental's 70% majority owned subsidiary company GAT Bangkudulis Petroleum Company Ltd. (GATB) has been terminated by state oil and gas company Pertamina.

The TAC type contract is being discontinued in Indonesia, and the Bangkudulis TAC, which is located in East Kalimantan was one of several TACs not yet in oil production which were terminated by Pertamina.

Since the TAC was the only material asset of GATB, the Company decided to sell its 70% shareholding in GATB, and has completed the sale to an unrelated Indonesian investor for US $1,000. The Company had already written down its holding in GATB to a nominal value, and the termination and sale will result in a significant reduction of liabilities on Continental's consolidated balance sheet. The termination of the TAC also caused termination of a shareholders agreement between the Company and a local Indonesian company who is a 30% minority shareholder of GATB.

The Company also reported that its 60% owned subsidiary Continental-GeoPetro (Yapen) Ltd. has increased its interest in the 7,000 square kilometer offshore Yapen PSC from 10% to 85% and that Continental has resumed as Operator of the block. Indonesia's largest local oil company, PT Medco Energi, retains a 15% working interest in the block through its PT Medco Energi E&P Yapen Ltd. subsidiary. Last year Medco had farmed out a 75% interest in the block to another oil company who did not meet a drilling obligation. Consequently, the 75% interest in the Yapen Block has been returned to Continental-GeoPetro (Yapen) Ltd.(alex)