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CBM exploration well in East Kalimantan, Indonesia, is spud

Oilfield Technology,

CBM Asia Development Corp. has been informed by the operator, Newton Energy Capital Ltd, that the first coalbed methane (CBM) exploration core well (CBM-KW-01) in the Kutai West Coalbed Methane Production Sharing Contract (Kutai West CBM PSC) block, East Kalimantan, Indonesia, was spud on December 12 2011. CBM Asia holds an 18% working interest in the Kutai West CBM PSC.

CBM Asia's chairman, Scott Stevens commented: "This well is a key first step towards delineating CBM resources and commercial potential of the highly promising Kutai West CBM PSC. The Balikpapan coal seams correlate with CBM reservoirs already commercially producing next door at VICO's Sanga-Sanga CBM PSC. In March 2011, VICO, a joint venture between BP and Eni, announced the first commercial CBM-to-LNG production at the Bontang LNG plant for export to Asia's high demand gas markets."

CBM-KW-01 will be a vertical well aimed at evaluating gas potential and reservoir properties of coal seams in the miocene-age Balikpapan formation. Historical data from this formation, including coal seam thickness and gas content, along with drilling in the area covered by the Kutai West CBM PSC, indicate that the coal seams are well developed with prolific shallow gas. Coring will begin beneath the surface casing and continue to a depth of approximately 1000 m. The CBM-KW-01 is the first in a series of four wells set out in a work programme delineating the southeastern part of the block, considered the most prospective and closest to potential gas markets.

CBM Asia Development Corp. is a Canadian-based unconventional gas company with significant CBM exploration and development opportunities in Indonesia. The company holds various participating interests in four PSCs for CBM in Indonesia. Indonesia has one of the largest CBM resources in the world with a potential 453 trillion ft3 in-place, more than double the country's natural gas reserves. Since 2008, a total of 39 CBM PSCs have been granted by the government, representing exploration commitments of over US$1 00 million during the next 3 years. In addition to CBM Asia, other companies active in CBM exploration in Indonesia include BP, Dart Energy, ENI, ExxonMobil, Medco, Santos, and TOTAL. BP, ENI and the Indonesian government have confirmed that commercial CBM production started in March 2011 from the Sanga-Sanga PSC and is being exported from the Bontang LNG facility.

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