VANCOUVER, British Columbia, Sept. 28 /PRNewswire/ -- The following is
being issued by Gary R. Schell, President of Continental Energy Corporation,
on behalf of the Board of Directors:
Continental Energy Corporation ("Continental")(OTC Bulletin Board: CPPXF;
Vancouver: KK) is pleased to announce that its wholly owned Indonesia
operating unit Apex (Yapen) Ltd. ("Apex") has signed a new Production Sharing
Contract ("PSC") with Pertamina, the state oil company of Indonesia. The PSC
grants to Apex (Yapen) Ltd. exclusive oil and gas exploration and production
rights to the 2.5 million acre (9,500 km2) Yapen Block contract area located
offshore from the northeast coast of the island of New Guinea in the province
of Irian Jaya, Indonesia.
Under the terms of the PSC Apex is obliged to pay Pertamina US$200,000
compensation for data bonus within 30 days of signing the PSC and is further
obliged to expend a total of US$5 million in exploration work within the Yapen
Block during the first three PSC contract years. At the end of the third
contract year Apex may either return the Yapen Block to Pertamina or may
continue exploration on a year by year basis for any additional seven years
and in such case would annually accrue an additional work expenditure
obligation stipulated in the PSC totaling US$13 million if the entire seven
year period is realized. In the event of discovery of a commercially viable
oil or gas accumulation the term of the PSC automatically becomes 30 years
from the signature date.
The Yapen Block PSC is a special form of PSC known as a "frontier terms"
PSC and contains a substantially more favorable production sharing split
between the contractor and Pertamina than do "standard terms" PSCs. Frontier
terms are permitted by the Indonesian government to provide additional
incentive for oil and gas exploration in what it defines as "frontier areas"
which includes deep water offshore areas, remote and logistically difficult
onshore areas and for largely under-explored areas of the economically
under-developed eastern portion of Indonesia. It is this latter
qualification, being located in eastern Indonesia, that permitted the Yapen
PSC to be negotiated by Apex with frontier terms. The production share of oil
to which Apex is entitled for Yapen Block oil production under frontier terms
is 62.50% but under standard PSC terms the oil share entitlement would be
26.7857%. Gas share entitlement for Apex under Yapen's frontier terms is
71.4286% compared to a gas share of 62.50% under standard terms. These terms
are after cost recovery has been achieved.
The Yapen Block lies entirely offshore in mainly shallow water less than
600 feet deep. The area was last explored in the early 1970's by Tesoro
Petroleum who drilled a well in 399 feet of water named the R-#1 well on a
large dome identified on seismic and named the "R" structure. The well
encountered gas and oil shows in several sands between 5,356 to 6,372 feet
before reaching total depth of 7,568 feet in basement. Logs indicated the
presence of gas in four separate sands totaling 78 feet thickness in an
apparent hydrocarbon column of as much as 671 feet. A drill stem test in one
of these zones tested gas at a rate of 21.6 million cubic feet per day on a
5/8-inch choke together with an accumulated 5-10 barrels of 47 degrees API
black oil. Gas analysis indicates the gas to be 99% methane.
At the time the R-#1 well was drilled in 1973 there was little market for
the gas despite the fact the seismically mapped "R" structure is very large
and potentially contains a very major gas resource. The gas market situation
has changed dramatically in Irian Jaya since 1973 with Arco's Tangguh
Liquefied Natural Gas (LNG) project some 200 miles west of the Yapen Block and
also in Irian Jaya province. Arco is developing its 19 TCF Wiriegar Field and
plans to construct a LNG plant to liquefy the gas for sale in Japan, Korea or
Taiwan. As additional gas in the area is discovered and developed the LNG
plant will likely expand into a petrochemical complex with several plants
utilizing gas as a feedstock.
Apex has already purchased from Pertamina some 3,000 line kilometers of
seismic data within the Yapen Block which was previously acquired by Tesoro in
the early seventies. While this data has proved sufficient to evaluate the
potential of the block it is not sufficient to fully explore the block or to
properly exploit any of the currently recognized structures on the block. The
first planned exploration activity in the Yapen Block will be two seismic
surveys conducted successively in year 2000, the first consisting of a 3D
seismic survey shot over approximately 1,000 square kilometer site over the
"R" structure for the purposes of confirming locations for appraisal and
delineation drilling. The second survey will consist of 1,000 line kilometers
of 2D profiling of selected portions of the block for exploration purposes.
Appraisal drilling on the "R" structure to offset the R-#1 discovery well will
probably start in 2001.
Continental director and president of Apex (Yapen) Ltd.,
Richard L. McAdoo, said from Jakarta after the signing, "The Yapen Block
brings Continental its second high potential exploration property in
Indonesia. Together these PSCs make up a critical mass that should quickly
propel Continental into a position of being a substantial player in the
Indonesian oil and gas world. We are currently developing several other
property acquisitions including some with existing oil production and are
clearly focused on our goal of being the next large independent oil and gas
company to emerge in Indonesia. We are particularly proud of these first two
PSCs because both Yapen and Bengara-II were identified and evaluated as being
high potential petroleum exploration areas in-house by our own Jakarta
exploration staff. We targeted the areas, we secured direct negotiations
rights from Pertamina in return for an in-house conducted, year-long
geological evaluation and then we successfully negotiated PSCs with bonuses
and commitment terms very favorable compared to those negotiated in other
recently signed PSCs by other companies."
The signing of the Yapen Block PSC gives Continental its second major PSC
in Indonesia. Another wholly Continental owned unit, Apex (Bengara-II) Ltd.,
owns and operates a 100% interest in a standard terms PSC with oil and gas
exploration and production rights for the 1.2 million acre Bengara-II Block
contract area located mostly onshore but partially offshore, East Kalimantan,
Indonesia on the island of Borneo.
Continental is an oil and gas exploration and production company focused
on properties in Indonesia and the state of Texas.
Certain matters discussed within this press release are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Although Continental believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be attained. Factors that could cause
actual results to differ materially from expectations include financial
performance, oil and gas prices, drilling program results, regulatory changes,
changes in local or national economic conditions and other risks detailed from
time to time in the Company's Form 20-F reports filed with the S.E.C.
NOTE: The Vancouver Stock Exchange has neither approved nor disapproved
the contents of this news release.
CONTACT: Gary R. Schell or Craig Doctor, both of Continental Energy
Corporation, 604-687-3434 or 888-556-3213, or fax: 604-687-3073,
SOURCE Continental Energy Corporation