Continental will retain an 18% stake in Continental-GeoPetro (Bengara-II) Ltd. ("CGB2") and its 3,649 square kilometer Bengara-II Production Sharing Contract in East Kalimantan, Indonesia. CNPCHK (Indonesia) Limited, ("CNPC") is a wholly owned subsidiary of CNPC (Hong Kong) Limited who is party to the agreements as guarantor.
To earn its 70% stake in CGB2, CNPC will pay an Earning Obligation in cash in the amount of US$18,700,000 into a CGB2 account jointly controlled by Continental, which funds shall be used exclusively to pay for exploration drilling on the Bengara-II PSC area.
CNPC shall also provide development loans to CGB2 and carry all of Continental's share of Bengara-II development costs on any oil or gas discoveries made in the amount of US$41,300,000 over and above the Earning Obligation.
CNPC will also pay directly to Continental a cash bonus in the amount of US$3,000,000 contingent upon the first commercial oil or gas discovery within the Bengara-II PSC area.
The Company's President & CEO, Mr. Richard L. McAdoo, has resigned as CEO of CGB2 but shall remain as a director of CGB2 and as its Chief Exploration Officer or CXO.
CNPC (Hong Kong) Limited is a 52% owned subsidiary of the China National Petroleum Company based in Beijing, PRC. The remaining 48% is publicly held. CNPC (Hong Kong) Limited is based in Hong Kong and its shares trade on the Hong Kong Stock Exchange under the listing number 0135.HK.
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