Continental Encouraged by Seberaba-1 Wildcat Drilling

Continental Energy Corp. on Wednesday issued an update on the progress of the drilling of its Seberaba-1 exploration well in the Bengara-II Block onshore East Kalimantan, Indonesia.

Continental's Exploration Manager, Andrew T. Eriksson, said from the Seberaba-1 rig-site:

"Drilling operations have reached the halfway mark and we are currently drilling below 2,000 meters on our way to a planned total depth of 4,000 meters. We have already seen some promising oil shows in the drill cuttings which bode well as we approach the first of four reservoir target horizons in the Meliat, Taballar, Tempilan, and Sujau formations all below 2,400 meters.

"We expect to encounter and test sandstones of the Meliat Formation first. The Seberaba-1 well is positioned to test this reservoir interval on a 4-way dip closed dome on the northern end of a large growth fault structure. Meliat sandstones produce oil in fields 25 miles north of the Seberaba-1 well location. They also flowed 19 million cubic feet per day of high BTU content gas and 600 barrels per day of condensate at the Muara Makapan-1 discovery well, which was drilled in 1988 and is located in our Bengara-II Block some 9 miles north of Seberaba-1.

"Our second target is porous limestone reefs of the Taballar Formation which we can observe on seismic and are located in an ideal position to receive and trap oil generated from a nearby "kitchen area.

"Lastly, the Seberaba-1 will test for sandstone reservoirs in the Tempilan Formation and again in the Sujau Formation near total planned well depth. Continental geologists have observed both formations in outcrop to the west of the Bengara-II Block where each exhibits both organic rich shales conducive to hydrocarbon generation, and porous sandstones ideal as reservoirs. At the Seberaba-1 location our seismic indicates these formations will be penetrated in a fault closed rollover situation which should serve as an effective trap."

Continental's CEO, Richard L. McAdoo, said from Jakarta:

"The Tempilan and Sujau Formations prospects that we will test at Seberaba-1 are of a very similar, look-alike geology to the recent and nearby Tulip oil discovery and to the Aster Field. The Aster Field is located offshore about 40 miles northeast of our Seberaba-1. ENI reported last month that its Aster-4 appraisal well flowed 5,000 BOPD of 28 API gravity oil. ENI also reported last month a new oil discovery of "significant size" 10 miles north of Aster Field at their Tulip-1 wildcat. ENI holds 4 PSC blocks adjacent to and east of our Bengara-II Block. Exploration activity in the Tarakan Basin is heating up, driven by these successes and we hope Seberaba-1 will continue the trend. Just in case, we have already selected 3 appraisal drilling locations on the Seberaba structure so we are ready if and when Seberaba-1 hits."

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