2009-04-14-2008-08-05

CANCELED plans to acquire 30% WI in Tungkal PSC onshore Sumatra, Indonesia.

Continental Energy Corp., Dallas, (OTCBB: CPPXF) has canceled its acquisition of a 30% working interest in the Tungkal production sharing contract (PSC) onshore in Sumatra, Indonesia, from Fuel-X International Ltd., Calgary, for US$27.3 million. Continental was to pay US$15 million in cash funded by Macquarie Bank Energy Group of London and US$12.3 million in stock. Continental president chief executive Richard L. McAdoo says, "Closing of this deal has been long delayed due to difficulties in satisfying certain contractual pre-conditions to closing, which were largely attributable to third party interests and were beyond our control. With these delays, the rigid structure of the Fuel-X insolvency process, and the world economic climate, we were unable to renegotiate our purchase agreement upon revised terms and conditions acceptable to us. Since the Aug. 1, 2008 signature of the deal, oil prices have fallen dramatically and the oil production rate from the Tungkal Block has also fallen by 50%." McAdoo says, the net result of these two factors means Continental Energy would not have been in a position to make the loan repayments to its bankers that closing this deal would require. The company remains interested in acquiring an interest in the Tungkal property. Tungkal PSC encompasses 2,285 square kilometers (approximately 565,500 acres) held by production until August 25, 2022. It is operated by Pearl Oil (Tungkal) Ltd., a subsidiary of Pearl Energy Ltd., an Abu Dhabi-owned company, which holds the remaining 70% interest. Total production is about 1,000 barrels of oil per day from Mengoepeh Field. Pearl plans to drill 16 new development wells in the fourth-quarter, bringing 2010 estimated gross production to 4,500 barrels per day.