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Continental Enters Into Partnership For Indonesian CBM

Posted by AGORACOM-JC at 9:33 AM on Tuesday, May 15th, 2012

Continental Enters Into Partnership For Indonesian CBM

Continental Energy Corporation (OTCBB: CPPXF) an emerging international energy company, today announced that it has entered into a Joint Study and Bid Group agreement with CBM Asia Development Corp.

CBM Asia (TSX.V:TCF) ( ), a Canadian-listed coalbed methane (“CBM”) company focused solely on the Indonesian CBM industry and with interests in four CBM production sharing contracts (“PSC”) is pursuing new CBM opportunities in Indonesia. Under the agreement, Continental and CBM Asia will jointly and exclusively study selected areas in Indonesia with the objective of identifying geologically justified candidate areas to be jointly pursued as targets of opportunity for direct acquisition of CBM PSCs offered by the Indonesian government through public tenders or through direct proposal tenders conducted under joint study arrangements.

Successful CBM PSC acquisitions shall be shared by Continental and CBM Asia under a pre-agreed joint operating agreement (“JOA”) format in the participating interest proportions 75% CBM Asia and 25% Continental. CBM Asia shall act as operator under the JOA and any CBM PSC and shall pay 100% of the JOA’s CBM PSC general and administrative costs. All CBM PSC acquisition costs and other JOA exploration and drilling costs shall be borne by the parties in proportion to their respective JOA participating interests.

According to MIGAS, the oil and gas division of Indonesia’s Ministry of Energy, gas production from CBM is expected to contribute to the country’s efforts in boosting its declining gas output. Indonesia has the world’s second largest CBM reserves after China, with total potential reserves of 453 trillion cubic feet, twice that of its estimated conventional natural gas resources. In order to promote CBM development, the Indonesian Government has prepared some new incentives and streamlined CBM working area applications. Foremost among these incentives is a favorable production sharing split for the contractor of 45% for CBM gas as opposed to the 30% conventional PSC operators receive for gas. A tax holiday incentive is also being considered for CBM gas.

What is coalbed Methane? *source
The primary energy source of natural gas is a substance called methane (CH4). Coal bed methane (CBM) is simply methane found in coal seams. It is produced by non-traditional means, and therefore, while it is sold and used the same as traditional natural gas, its production is very different. CBM is generated either from a biological process as a result of microbial action or from a thermal process as a result of increasing heat with depth of the coal. Often a coal seam is saturated with water, with methane is held in the coal by water pressure. Currently, natural gas from coal beds accounts for approximately 7% of total natural gas production in the United States.

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