CBM Asia Development Corp.
OTC Bulletin Board : CBMDF

CBM Asia Development Corp.

December 02, 2009 15:38 ET

CBM Asia Updates Results of Coalbed Methane Exploration Well in South Sumatra

VANCOUVER, BRITISH COLUMBIA--(Marketwire – Dec. 2, 2009) - CBM Asia Development Corp. ("CBM Asia" or the "Company") (TSX VENTURE:TCF)(US:CBMDF)(FRANKFURT:IY2) announces, together with Jakarta-based operator PT Medco Energi Internasional Tbk ("Medco") and PT Energi Pasir Hitam Indonesia ("Ephindo"), results of Indonesia's first commercially drilled coalbed methane test well ("CBM-SE-02") in the Sekayu Production Sharing Contract ("Sekayu PSC") block located in the South Sumatra Basin, Indonesia.

Medco drilled CBM-SE-02 exploration core well in September 2009 to a depth of 1,959 feet penetrating the upper Palembang B and C, and lower Pangadang A coal seams, within the Maura Enim Formation, recording a net coal thickness of approximately 90 feet. An injection/fall off test on the 40 foot Palembang B seam to determine in situ permeability was conducted by Medco. Permeability results for the Palembang B coal seam, per an analysis by Ancell Engineering of Houston, Texas, indicate very high permeability, greater than 500 millidarcies (md), consistent with the results calculated by the operator. Other seams indicated substantially similar characteristics on wireline logs and were not tested by the operator as the additional cost of doing so did not appear warranted on a cost/benefit analysis.

As reported earlier, core recoveries from the Palembang B and C and Pangadang A were low, averaging 15%, due primarily to the friable nature of the coals and the core catcher in the core barrel used. On-site gas content measurements were made and additional samples were stored in sealed canisters for analysis by the Centre for Geological Survey, Geological Agency of Indonesia in Bandung. Reported gas contents ranged from 10 to 23 standard cubic feet per ton. Medco has advised that they consider these results inconclusive. Brisbane-based Consolidated Seam Gas Services, independent auditors hired by CBM Asia to audit onsite core recovery and analysis of coal cores, cited several potential irregularities in the collection and analysis process including longer than recommended retrieval times for core recovery. The Company believes such retrieval times, in some cases in excess of 45 minutes according to the Company's calculations, coupled with the high permeability of the coal may have resulted in significant loss of gas before the samples were analyzed. Further, nitrogen content in the range of 24 to 35% in the sample canisters suggests potential air contamination. Isotherm analyses of two Pandagang A coal samples are pending from Core Lab Petroleum Service's Denver lab. Five coal samples from the Palembang C have also been sent to a lab in Australia for desorption isotherms and other tests. Desorption isotherms will establish gas capacity of the coals. Medco has set temporary plugs in CBM-SE-02 and may reenter the well to conduct flow tests on individual seams of as part of its 2010 drilling program. This will be contingent on the results of CBM-SE-01 well which Medco has indicated it plans to drill before the end of this year. Medco, in consultation with CBM Asia, is currently reviewing its drilling, coring and sample collection/preservation procedures with a view to ensuring improved confidence in the results for CBM-SE-01 which is located approximately 18 kilometers to the south, offsetting an old oil and gas exploration well, the Kalidua 1. CBM Asia intends to participate in this well.

As part of the PSC application, in 2007 Medco, PT Ephindo and Institut Teknologi Bandung completed a Joint Evaluation Study of the Sekayu block to determine a plan to evaluate coal properties and commercial development. The Joint Evaluation Study, submitted to the Government of Indonesia and the basis for the commercial terms embodied in the May 27, 2008 award of the Sekayu PSC, provides an estimated Gas-in-Place of 3.35-4.68 Tcf for the 58,349 hectare Sekayu block 1.

Under a revised letter of intent (the "Revised LOI") with, inter alia, Batavia Energy Inc. ("Batavia") CBM Asia has the right to acquire, indirectly, 24% of South Sumatra Energy Inc. ("SSE"), a private company jointly owned by PT Ephindo and Batavia, which, together with Medco, the operator, holds the PSC for coalbed methane on the Sekayu block. The Revised LOI also grants CBM Asia the sole and exclusive right to provide, financing for up to an additional 24% interest in SSE representing the remaining estimated 12% working interest in the Sekayu PSC. Closing of the Revised LOI has been extended to December 9, 2009 pending receipt of TSX Venture Exchange approval.


CBM Asia Development Corp. is a Canadian-based unconventional gas company with significant coalbed methane ("CBM") exploration and development opportunities in Indonesia. The Company has entered into a binding letter of intent to acquire a participating interest in a production sharing contract ("PSC") for CBM on a 58,349 hectare block located in the South Sumatra Basin where initial exploration drilling of a production test well commenced in the second half of 2009. The Company has committed to fund an initial US$3.25 million in exploration expenditures on the Sekayu PSC to prove reserves and submit a Plan of Development to the Government of Indonesia. The Company also has an 18% net working interest in a PSC for CBM on a 76,000 hectare block located in the Kutai Basin of East Kalimantan. As geotechnical lead, the Company is responsible for directing a US$5.6 million exploration and appraisal program to November 2011, to determine commercial feasibility of CBM production for the Kutai-West PSC and submit a Plan of Development. The Company has 40% net working interests in a second 56,500 hectare block also in the prolific Kutai Basin. Indonesia has one of the largest CBM resources in the world with a potential 453 trillion cubic feet in-place, more than double the country's natural gas reserves (Stevens and Hadiyanto, 2004). Between May 2008 and August 2009, 15 CBM PSCs were granted by the Government of Indonesia, representing exploration commitments of US$95.68 million over the next 3 years. The Company trades on the TSX Venture Exchange under the symbol "TCF".


Alan T. Charuk, President & CEO

1 These figures are not compliant with National Instrument 51-101. Standards of Disclosure for Oil and Gas Activities, Gas in place resource estimates make no allowance for recovery of the gas. The volumes of gas which may be recoverable will depend on the reservoir characteristics encountered and future economic conditions. These gas in place estimates are not compliant with volumes of oil and gas resources classified as "discovered petroleum initially-in-place" within the meaning of the Canadian Oil & Gas Evaluation Handbook (COGE Handbook). The term "discovered petroleum initially-in-place" is equivalent to discovered resources, and is defined in the COGE Handbook to mean that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production.

This news release contains forward-looking statements, which relate to future events or future performance and reflect management's current expectations and assumptions. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. These forward-looking statements are made as of the date hereof and, except as required under applicable securities legislation, the Company does not assume any obligation to update or revise them to reflect new events or circumstances.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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