Continental Energy Forms Texas Subsidiary for US Operations

Continental Energy Corporation has formed TXX Energy Corporation (TXX) to pursue oil and gas exploration and production projects and obtain new exploration leases in the USA. TXX Energy Corporation is incorporated in Texas and is a wholly owned subsidiary of Continental.

Mr. Richard L. McAdoo, Continental's Chairman and CEO said of the new company, "Although our main focus will remain in Indonesia, there is no doubt that the United States is and will remain the world's leading consumer of oil and gas. We have decided to diversify our asset base and establish a presence in oil and gas production in the USA. We are currently evaluating several opportunities in Texas which fit our risk/reward criteria and would provide revenues in calendar 2006."

Mr. James D. Eger, Continental's CFO said, "We have identified several interesting properties in the USA and are currently discussing acquisition funding with institutional sources. We intend to grow TXX through both acquisitions and exploration. We have engaged oil and gas professionals with long operating experience in Texas to assist us in this process."

Continental Energy Corporation is a small oil and gas exploration company, focused entirely on making a major oil or gas discovery in Indonesia.