Salamander Spuds South Sembakung-3 Appraisal Well

Salamander Energy has spudded an appraisal well on the South Sembakung gas-condensate discovery in the Simenggaris block, onshore Tarakan basin, East Kalimantan, Indonesia. Salamander announced the acquisition of a 21% interest in this block on June 27, 2007.

The appraisal well South Sembakung-3 ("SS-3") will be drilled to a depth of approximately 9,000 feet sub-sea. The primary objective is the Middle Miocene Meliat formation, from which the discovery well flow-tested 12.7 million standard cubic feet of gas and 115 barrels of condensate per day. SS-3 is located approximately 1.5 km south west of the discovery well.

The well is being drilled by the Apexindo-2 rig and is estimated to cost $6.2 million on a dry hole basis.

Pertamina - Medco Simenggaris Pty Ltd., operator of the Simenggaris block, carries a resource estimate of 125 billion cubic feet of gas and 3 million barrels of condensate for the South Sembakung structure, which is located approximately 7 km south west of the producing Sembakung oil and gas field.

James Menzies, Chief Executive of Salamander, commented:

"The drilling of the SS-3 well forms part of a drilling program that will see Salamander appraise five fields and discoveries in the remainder of 2007 ahead of six to eight high impact wells in our 2008 exploration program."