PRESS RELEASE - Purchase of interest in oil field development
Wednesday, September 27 2000 - 02:00 AM WIB
Continental Energy Corp. (OTCBB:CPPXF; Frankfurt:CNZ; CDNX:KK) announced today that it has purchased a 70 percent stake in GAT Bangkudulis Petroleum Co. Ltd. and its Bangkudulis Oil Field Development Project onshore East Kalimantan, Indonesia.
According to an independent engineers report by Chapman Engineering of Calgary the Bangkudulis Field contains proved, developed, non-producing oil reserves of 2,865,000 barrels plus an additional amount of 8,551,000 barrels classified as probable reserves.
At the present time the Bangkudulis Field is not producing and one existing production well is shut in. During a four-year period ending in 1989 the shut-in well flowed 540,000 barrels of sweet 41-degree gravity crude. Additional drilling of up to 18 new production wells is required to complete the full field development.
Bangkudulis Field lies mostly onshore Bangkudulis Island in the Sesayap River estuary of East Kalimantan, Indonesia. Geologically the field lies in the Tarakan Basin. More than 120 million barrels of oil and 96 billion cubic feet of gas have been produced from the Tarakan Basin from 349 wells in 15 recognized fields.
GAT Bangkudulis Petroleum Co. Ltd. (GATB), a private British Virgin Islands company, is engaged in the development of Bangkudulis Field pursuant to a Technical Assistance Contract (the TAC) with Pertamina the Indonesian state oil company, The Bangkudulis TAC covers an area of 18.6 square kilometers over the Bangkudulis Field, an oil and gas field originally discovered by Arco in 1980 at the Bangkudulis-No. 1 well which tested an accumulated 6,500 BOPD from four sand reservoir zones of accumulated 119 feet net thickness plus 4.5 MMCFD from a fifth sand reservoir zone of 60 feet thickness. GATB owns a 100 percent interest in the TAC and the underlying field development project. The seller, Dimensions West Energy Inc. of Vancouver acquired its 70 percent shareholding of GATB in 1998. GATB acts as field development operator and Continental shall exercise executive management control over GATB through its majority 70 percent shareholding.
The terms of the deal with the seller provide for Continental to 1) pay the seller a non-refundable US$ 15,000 cash deposit, 2) agree to permit the seller to recover its entire US$3.6 million investment from actual crude oil production proceeds derived from the Bangkudulis Field as, when and only if such production proceeds become available, 3) agree to assume all of the seller's funding responsibility (approximately US$4.4 million) with regard to GATB, the TAC and the field development project, retroactive to an effective date of 1 June 2000 and 4) agree to provide the seller a 10 percent net profits interest in Continental's 70 percent share of Bangkudulis Field production profits for the life of the field.
Continental estimates that it will be required to provide a total of US$4.4 million to meet its obligations to the seller with respect to item 3 above which includes sufficient funding to complete the drilling of two new development wells, work over the existing shut-in production well, fit out the balance of needed production infrastructure and bring the field into commercial production.
Production revenue from these first three wells, when brought on stream, is expected to carry the remaining costs of additional drilling. Successively higher production revenues as new wells are completed and placed on production should fund the full field development cost estimated to be US$28 million. An amount of US$3.6 million has already been invested in the Bangkudulis Field by the seller. Construction of four drill sites, some access roads, a 7-inch pipeline and installation of some production and logistics infrastructure have already been accomplished within the field as a result of this prior investment.
Bangkudulis Field production will be produced to a barge along existing surface production facilities and pipelines. Barges will periodically be towed and crude delivered and sold to Pertamina at a sales point on nearby Bunyu Island, a 10-hour barge voyage from the Bangkudulis Field. Bangkudulis Field crude historically demands a price equivalent to the Indonesian ``Minas Crude'' grade which approximates the same US$ world market price as Brent crude.
The seller and the company share a common director, Mr. Richard L. McAdoo, who is also president of both the seller and the company. Up until his resignation from the seller's board in January 2000 the company also shared a second director, Mr. Gary R. Schell with the seller. Neither Mr. McAdoo nor Mr. Schell have or expect to have any personal beneficial interest in the contemplated transaction other than that of being shareholders.
Interested parties are referred to a corresponding press release being made simultaneously by the seller, Dimensions West Energy Inc. (CDNX:DWM).
There are no finders fees involved with the acquisition nor are shares of either Continental or the seller involved in the transaction.
The acquisition is made subject to the approval of the Canadian Venture Exchange.
Continental is a small but aggressive oil and gas exploration company focusing its efforts on discovering major reserves in Indonesia. The company owns and operates two high potential exploration properties under Production Sharing Contracts covering some 3.7 million acres in Indonesia, the onshore Bengara-II Block and the offshore Yapen Block.
Contact:
Continental Energy Corp. R. Schell or Craig Doctor, 604/687-3434, toll free 888/556-3213, fax 604/687-3073, cenergy@istar.ca,
www.continentalenergy.com (*)