CGB2 Kicks Off Bengara-II Campaign

Continental Energy Corp. said that its 18% owned Indonesian subisidary, Continental-GeoPetro (Bengara-II) Ltd. (CGB2), has spudded the first well of its four-well exploration drilling campaign planned for this year in the Bengara-II Block, onshore East Kalimantan, Indonesia.

Drilling of the 4,000 meters (13,124 feet) deep Seberaba-#1 is expected to take up to 70 days at a cost of over $6,000,000. The Seberaba-#1 will test a very large faulted structure ideally located to receive a hydrocarbon charge and trap hydrocarbons. It will test the oil production potential of four separate stratigraphic zones at depths between 1,500 to 4,000 meters.

The Company's President and CEO, Richard L. McAdoo and its Exploration Manager, Andrew T. Eriksson, will be on the rig-site to monitor formation evaluation and testing for the duration of the drilling.

CEO McAdoo said after the spudding ceremony, "The Continental team and its joint venture partners have worked long and hard to get these exciting prospects drilled. For Continental this has been a 10-year odyssey and I would like to complement and thank all our partners, management, staff, supporters, and shareholders for their patience and perseverance against long odds."

"Since we acquired the Bengara-II PSC in 1997 we have had to overcome many difficulties in addition to the routine technical and operational ones we originally expected. Raising the necessary drilling finances was delayed and complicated by the Asian financial crisis, $18 a barrel oil, investor flight after the meltdown, uncertainty over global terror events, and natural disasters in Indonesia including tsunamis, earthquakes and volcanic eruptions. Throughout, the one constant has been our confidence in the geological merits of the Bengara-II Block. "

James D. Eger, Continental's CFO, said, "This year we are going to take 4 world class shots at the 'Elephant' size oil discoveries we have dedicated our efforts to find. For Continental, a hit on any one of this year's 4 exploration wells is a company maker. "

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