"The POD is intended to justify and demonstrate the economic viability of commercial development and exploitation of natural gas, condensate and extractable Liquefied Petroleum Gas ('LPG') reserves in the Makapan Gas Field. It is required of all Indonesian oil and gas Production Sharing Contract (PSC) holders immediately prior to implementation of a field development program. We expect it to be completed within the next 3 to 4 months after which time we will present it to Indonesian oil and gas authorities. With the booming appetite of the East Asia gas markets we have been asked by Indonesian authorities to fast-track the Makapan Gas Field development," said Continental Energy's President & CEO, Richard L. McAdoo. He noted that the key goals of the POD are:
Continental's CGB2 subsidiary commenced petroleum exploration operations in the Bengara-II Block in 1998 pursuant to a PSC agreement with BPMIGAS, the state oil authority of the Republic of Indonesia, covering the 1,500,000 acre Bengara-II Block, which includes the Makapan Field and surrounding area.
"CGB2 owns a 100% interest in the Bengara-II PSC," noted B. Dorpi Parlindungan, CGB2's local director. "Continental owns a 60% stake in CGB2 and our partner GeoPetro Resources Inc. of San Francisco owns 40%. Under the terms of the Bengara-II PSC, CGB2 is entitled to recover 100% of its exploration, development and production costs 'off the top' from Makapan Field gas, condensate and LPG sales revenues. After recovery of costs the remaining revenue is shared with the Indonesian government on a 37.5% / 62.5% basis. We have specified that the POD study team consider local and regional gas markets including gas-fired electric power generation in the cities of Tarakan, Selor, Malinau and Redeb, Indonesia as well as Tawau, Malaysia. A nearby methanol plant requiring up to 65 MMCFD is also a principal market."
Continental's CFO, James D. Eger, pointed out, "The Makapan Gas Field was originally discovered in 1988 and at the time of its discovery low gas prices precluded its development. The discovery well tested an accumulated flow of more than 19.6 million cubic feet of gas per day plus 600 barrels of 54 degree API condensate from a 33 feet thick sandstone section near 6,000 feet. Several other gas zones indicated on logs were not tested. The Makapan Field gas is a 'Wet' gas with a high LPG fraction which will most likely be commercial to extract at the wellhead for a third revenue source in addition to the gas and condensate. The Makapan Field lies mostly offshore in very shallow water, less than 10 feet, amidst numerous islands of the Bulungan River delta."
The team of independent engineers and geologists from the highly regarded LAPI INSTITUTE at Indonesia's prestigious Bandung Institute of Technology is led by Ir. Doddy Abdassah, who received his masters and doctorate degrees in petroleum engineering from the University of Southern California, and has more than 27 years of oil industry experience. The same LAPI Team also prepared Continental's POD for its nearby Bangkudulis Oil Field which was accepted last year by Indonesian authorities without request for modification.
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