Release: Continental Energy continues due diligence for CNPC-HK deal

DALLAS, Aug. 1, 2006 -- Continental Energy Corporation today announced that it is continuing with the due diligence phase of its announced deal with CNPC (Hong Kong) Ltd. (CNPC-HK) and now expects the deal to close during August.

Continental and its partner, GeoPetro Resources Company, entered into a Letter of Intent (LOI) in July with CNPC-HK to farm-out a 70% stake in its Continental-GeoPetro (Bengara-II) Ltd. subsidiary and its Bengara-II Production Sharing Contract in East Kalimantan, Indonesia.

Closing is subject to a definitive farm-out agreement providing for the detailed commercial terms of the deal not already agreed in the LOI and also subject to a joint operating agreement to provide for joint petroleum operations in the Bengara-II PSC. Closing is also subject to completion of remaining legal and financial due diligence and to obtaining all necessary approvals. (end of release)