"Apart from its (CNPC-HK) attractive valuation, we expect the results for its 70%-owned Bengara II project in Indonesia will be available before the exploration period expires on December 4, 2007 (then it will decide whether to apply for the development phase), which could be a positive catalyst. We note that the share price of its partner, Continental Energy (CPPXF, not covered) -- for which its 18% stake of the project represents the vast majority of its assets -- has risen > 80% ytd. We believe this may reflect increasingly optimistic prospects of this project. Continental Energy has disclosed that at this point the existing exploration work of Bengara II indicated good potential for prospective petroleum accumulations on the order of 50 - 200 million barrel reserves size and gas fields in the 0.3 - 1.2 trillion cubic feet range."
James D. Eger, Continental's CFO said, "Although Goldman Sachs does not cover Continental Energy, this report could engender considerable interest in Continental in the Asian investment community."
Richard L. McAdoo, Continental's CEO said, "Now that our drilling program is underway, a wider audience, especially in Asia, has become aware of our activities and of the potential increase in shareholder value that would follow drilling success in Bengara II. We are pleased that Goldman Sachs recognizes the potential impact that this project could have on our much larger partner CNPC (Hong Kong)."
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