November 12, 2009 14:04 ET

Circumpacific Energy Corporation: Joint Evaluation Agreement With Drillsearch

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2009) - Circumpacific Energy Corporation (TSX VENTURE:CER) ('Circumpacific') and Drillsearch Energy Limited (ASX: DLS) ('Drillsearch') are parties to a joint venture agreement for evaluation of eight blocks in the Cooper Eromanga Basin of South West Queensland, Australia ('the SWQ Blocks').

Under their agreement, Drillsearch must conduct an evaluation plan for the SWQ Blocks. Drillsearch does so as agent of Circumpacific in respect of the seven SWQ Blocks for which Circumpacific holds preferred tenderer status.

Circumpacific Notice of Dispute

On October 23, 2009, Circumpacific served a notice of dispute on Drillsearch. By that notice, Circumpacific sought disclosure by Drillsearch of information that Drillsearch is required to provide under their agreement. Circumpacific also requested that a meeting of the joint venture management committee take place to discuss current status of the evaluation tasks, budgets and other relevant matters in the mutual interests of both parties going forward.

Circumpacific served the notice of dispute as a last resort after its legitimate requests for information, and the convening of a management committee meeting, remained unfulfilled.

Circumpacific is pleased to advise that Drillsearch has, in response to that dispute notice, agreed now to provide the requested information and to participate in a meeting of the management committee in the spirit of co-operation.

Drillsearch has also tabled a joint operating agreement as a starting point, and has informed Circumpacific that the parties can move forward to negotiate in good faith and develop a model agreement that both parties are happy with. Circumpacific management is presently reviewing the draft joint operating agreement. A market update on the proposed operating agreement will be provided shortly.

Drillsearch Notice of Dispute

On October 28, 2009, Drillsearch served a notice of dispute on Circumpacific (see Drillsearch announcement of November 3, 2009). The three disputes asserted by Drillsearch were that Circumpacific had:

- attempted to farm-out its interests in the SWQ Blocks without the consent of Drillsearch;

- breached obligations of confidentiality, and

- failed to pay a cash call for evaluation costs under their agreement.

Drillsearch has raised the first and second disputes in legal proceedings filed in the Supreme Court of British Columbia on October 14, 2009 (see Circumpacific press release October 19, 2009).

Drillsearch has also notified Circumpacific that Drillsearch does not consent to the farm-out or disposal of any interest in the SWQ Blocks at this time until the native title clearance process and technical evaluation of the SWQ Blocks are complete.

On November 11, 2009, and as a result of the Drillsearch notice, Circumpacific:

- notified Drillsearch that Circumpacific would not farm out its pre-ATP participating interests in the SWQ Blocks without Drillsearch's consent;

- advised third parties that no farm-out is permissible without Drillsearch's consent and requested immediate return of any information relating to the SWQ Blocks;

- provided Drillsearch with details of parties contacted by Circumpacific, and all information disclosed by Circumpacific, in respect of Circumpacific's interests;

- paid to Drillsearch the amount of $25,783.33, being the corrected amount claimed by Drillsearch and agreed by Circumpacific to be payable for operating costs under their agreement.

Drillsearch's notice states that such actions by Circumpacific will settle the disputes set out in that notice.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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