Salamander Energy Successfully Appraises South Sembakung Discovery

Salamander Energy report successful results of the recent appraisal of the South Sembakung gas-condensate discovery in the Simenggaris block, East Kalimantan, Indonesia.

The South Sembakung-2 (SS-2) and South Sembakung-3 (SS-3) appraisal wells were both drilled by the Apexindo-2 rig to appraise the South Sembakung gas-condensate discovery. Both wells encountered multiple gas-bearing sandstones and successfully flowed gas during testing. They have both been suspended as potential future producers.

The SS-2 well was drilled to a total depth of 2,588m and was tested at a maximum flow rate of 8.7 million standard cubic feet per day (mmscfd) from the Middle Miocene Tabul Formation at a depth of 712m. A second drill stem test ("DST") was conducted in the Middle Miocene Meliat Formation, which flow-tested at a rate of 4.9 mmscfd at a depth of 2,077m.

The SS-3 well was drilled to a total depth of 2,591m and encountered gas-bearing sandstones at depths between 2,000m and 2,320m. A DST conducted in the Middle Miocene Meliat Formation flowed at a rate of 0.5 mmscfd.

These well results, taken together with those from the original discovery well, South Sembakung-1 which tested at a rate of 12.7 mmscfd and 115 barrels of condensate per day, point to a commercially viable development.

Discussions with the Indonesian regulator BPMigas on development options have commenced and the Simenggaris partners intend to submit a formal plan of development in the first quarter of 2008. There is strong local demand for South Sembakung gas at the Bunyu Island methanol plant some 17 km. offshore of the Simenggaris block. Work toward defining the resource potential of South Sembakung is being carried out by the Simenggaris partners and is expected to be completed in early 2008.

James Menzies, Chief Executive of Salamander, commented:

"With gas demand and prices increasing across the region, returning to appraise undeveloped discoveries such as South Sembakung is an attractive and low risk means of generating value. We are following this up with the on-going appraisal of the Dong Mun discovery and will spud an appraisal well on the Tutung discovery in late December."