Kencana Wins Fabrication Contract for Sarawak

The Board of Directors of Kencana Petroleum Berhad ("Kencana Petroleum" or "the Company") is pleased to announce that its wholly owned subsidiary, Kencana HL Sdn. Bhd. (“KHL”) has secured contracts from Sarawak Shell Berhad (“SSB”) for the fabrication of compression modules and tie-in modifications (“Contracts”).

Under the Contracts, KHL is to undertake the fabrication of E8K Compression Module and F13K Compression Module & E-11P-B Tie-in Modifications for SSB’s operated fields off the coast of Sarawak. The total contract value is approximately RM275 million. The Contracts are one-off construction contracts and expected to be delivered within the first quarter of year 2012.

The Contracts are expected to contribute positively to the earnings and net asset per share of Kencana Petroleum Group for the financial year ending 31 July 2011 and 2012.

Risk factors affecting the Contracts include but are not limited to execution risks such as availability of skilled manpower and materials, changes in prices of materials, and changes in political, economic and regulatory conditions. The Company has throughout the years established its track records and expertise to undertake such projects. As such, the management believes that the Company is able to mitigate the abovementioned risk factors.