Fuel-X Acquires Staker in Pearl Energy's Sebuku PSC

PEARL Energy says that its wholly owned subsidiary, PEARLOIL (Sebuku) Limited (“PEARL Sebuku”), has entered into a farm-in arrangement with Fuel-X Sebuku Limited (“Fuel-X”) to transfer 50% of PEARL Sebuku’s participating interest in the Sebuku PSC offshore Kalimantan, Indonesia, to Fuel-X.

Under the terms of the transaction, Fuel-X will be responsible for 100% of the drilling costs for three (3) exploration/appraisal wells in the Sebuku PSC contract area, up to a maximum aggregate amount of US$12 million. In addition, the Transfer is conditional upon the written consents of the government of Indonesia and the Indonesian oil and gas regulator, Badan Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi.

“This transaction continues our strategy of securing partners at the exploration stage of a project to fund the drilling program in return for an interest in the block. This is how we mitigate risk to PEARL’s shareholders. With contingent gas resources of more than 320 billion cubic feet, Sebuku is a key element in our portfolio and we are putting every effort into examining ways of commercialising these resources, while at the same time beginning to evaluate the remaining exploration potential of the block,” said Chris Gibson-Robinson, PEARL’s Chief Technical Officer.

Under the terms of the transaction, PEARL’s effective interest in the Sebuku PSC will reduce to 50% from 100% and PEARL Sebuku will remain as operator of the Sebuku PSC.

Depending on rig availability, PEARL plans to commence a three well drilling program by the end of 2005.

Barring unforeseen circumstances, this transaction is expected to have a positive effect on the financial position of the PEARL group of companies as the cost of three (3) exploration/appraisal wells (up to US$12 million) will be borne by Fuel-X.

None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in this transaction.

The Sebuku PSC lies in the Makassar Straits to the east of Kalimantan and covers an area of approximately 8,773 sq km.