Bontan Announces Results of Independent Prospective Resource Evaluation for the Mira and Sarah Prospects, Offshore Israel

TORONTO, Feb. 1 /PRNewswire-FirstCall/ - Bontan Corporation Inc. (Bontan) (OTCBB:BNTNF) is pleased to announce today the results of the Evaluation Report prepared by Chapman Petroleum Engineering Ltd. on two prospects located on the Mira and Sarah Drilling Licenses, Offshore Israel. The Prospective Resource Evaluation Report, effective January 1, 2010, was prepared in accordance with National Instrument 51-101, Section 5.9 standards for review and assessment of prospective resources

For the Mira Prospect, the best estimate of gross prospective sales gas resources is 4.24 TCF and for the Sarah Prospect, the best estimate of gross prospective sales gas resources is 1.47 TCF. The following table provides best, low and high estimates of gross prospective sales gas resources for each prospect.

                       Gross Prospective Resources

                        Best       Low        High
                      Estimate   Estimate   Estimate

                        TCF        TCF        TCF

    Mira Prospect       4.24       3.03       5.45
    Sarah Prospect      1.47       1.05       1.89

                      TCF is a trillion cubic feet of natural gas

The low estimate is considered to be a conservative estimate of the quantity that will actually be recovered while the high estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. The best (or median) estimate is considered to be the most likely estimate of the quantity that will actually be recovered.

Bontan will have an indirect 71.625% indirect interest in these prospects via its 75% equity interest in the Israel Petroleum Company which has acquired a 95.5% interest in the drilling licenses as well as an adjoining exploration permit from the current operator subject to approval by the Government of Israel.

The Chapman report also provides an economic evaluation of Bontan's interest in both prospects assuming a successful ultimate recovery of these resources. For the Mira Prospect, using a discount rate of 10%, unrisked net present value ranges from $2.54 billion to $5.37 billion with an unrisked NPV of $3.96 billion as the most likely amount. For the Sarah Prospect, again using a discount rate of 10%, unrisked net present value ranges from $1.02 billion to $2.17 billion with an unrisked NPV of $1.59 billion as the most likely amount. A subsequent risk analysis of the economic evaluations using a probability of success calculated to be 30% for both prospects confirmed the feasibility of the drilling of these prospects.

All values presented do not necessarily infer the "fair market value" of these prospective resources. All monetary values presented are expressed in terms of US dollars.

In the cover letter of the Evaluation Report, Chapman Petroleum Engineering stated, "Based on our analysis, after consideration of risk, we have concluded that the potential of these prospects is of sufficient merit to justify the work program being proposed, and we therefore recommend and support the Company's participation."

The Mira Prospect is a large structure mapped with 2D seismic and targeting the same reservoir zone as the Tamar Field discovered in 2009. The Tamar Field is approximately 30 miles directly to the north of the Mira Prospect with reported reserves of 7.7 TCF. The Sarah Prospect is another structure mapped with 2D seismic. It is on the same trend and targeting the same reservoir zone as the recent Dalit discovery well drilled in 2009, approximately 10 miles due north. Reported reserves for the Dalit Field are 0.5 TCF.

The Mira and Sarah Drilling Licenses are adjoining blocks located 30 to 60 miles offshore Israel within the Eastern Mediterranean Sea. They are each 154 sq. mi. in size and to date no exploratory drilling has been done on either block. A 3D seismic program was completed on the entirety of both blocks in late 2009 and is currently being processed for interpretation.

Kam Shah, CEO of Bontan, commented, "The Company is very pleased with the results of the Evaluation Report on these offshore Israeli prospects. This independent technical assessment confirms that these exploration blocks are indeed world class assets and completely justify the Company's investment of time and capital in this highly significant project. A review of global exploration discoveries in 2009 just published by the American Association of Petroleum Geologists also reported that the recent offshore Israel natural gas discoveries were among the most significant in the world. This independent technical report places the Company's prospects in the same geological setting as the 2009 offshore Israel discoveries. Our next step is the completion of the processing and interpretation of the 3D geophysical survey acquired over the Mira and Sarah drilling licenses. Firm drilling locations can then be selected on both prospects and application made to the Government of Israel to commence an exploratory drilling program."

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Chapman Petroleum Engineering Ltd., a Calgary based consulting firm, are Qualified Reserves Evaluators and Auditors. They have previously acted as technical advisors to the Government of Israel and have conducted similar resource evaluations in many petroleum basins around the world.

Bontan Corporation Inc. is a Canadian public company based in Toronto, Ontario which invests in international oil and gas exploration prospects. Bontan Corporation Inc. trades in the United States on the OTC Bulletin Board under the symbol BNTNF.

    Forward-Looking Statements
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This news release includes forward-looking statements within the meaning of the U.S. federal and Canadian securities laws. Forward-looking statements are typically identified by words such as "anticipate," "believe," "expect," "plan," "intend," "project, "estimate" or similar words suggesting future outcomes or statements regarding an outlook. Information relating to resource estimates and future valuations are forward-looking statements and are based on assumptions, estimates and opinions of Chapman Petroleum Engineering as of the date the statements were made. Actual results will differ from those estimated by Chapman Petroleum Engineering and such differences may be material. By their nature, forward-looking statements involve numerous assumptions and known and unknown risks and uncertainties that contribute to the possibility that the projections, forecasts, estimates and other forward-looking information will not occur. The following factors, among others, could cause actual results or events to differ materially from those indicated in the forward-looking statements: the need to obtain approval of the transfer of the two licenses and permit to Israel Petroleum Company, Limited by the Israeli Petroleum Commissioner, reliance on our project manager well as third-party consultants and contractors to develop the offshore Israel project, the availability and terms of capital, the amount, nature and timing of capital expenditures, the results of exploration and development drilling and related activities, the cost and other effects of legal proceedings, settlements and claims, volatility in commodity prices for natural gas and crude oil, exploration and development risks, the presence or recoverability of estimated reserves, the availability of infrastructure, drilling rigs and equipment, drilling and operating risks, actions by governmental authorities, including increases in taxes, changes in environmental and other regulations, economic and political uncertainties in Israel, including potential disruption from terrorist activities and war, weather conditions, general economic conditions and other risks set forth from time to time in Bontan's filings with the U.S. Securities and Exchange Commission (SEC) and securities regulators in Canada. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions, expectations or assumptions upon which they are based will occur. Bontan assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by applicable securities laws.

    Cautionary Note to U.S. Investors
    ---------------------------------

This new release and the Chapman report contain references to "prospective resources" (as defined above), which do not qualify as, and should not be confused with, reserves. Under SEC rules, reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project. The SEC permits oil and gas companies, in their SEC filings, to disclose only "proved," "probable" and "possible" reserves. While Canadian securities regulators permit the use of the term "prospective resources" under National Instrument 51-101, the SEC does not recognize this term. Prospective resources have a great amount of uncertainty as to their existence and economic and legal feasibility. There is no assurance that prospective resources will ever convert into as possible, probable or proved reserves under SEC standards. U.S. investors are cautioned not to assume that all or any part of a resource exists, or is economically or legally recoverable.

SOURCE Bontan Corporation Inc.