CBM Asia Development Corp.
OTC Bulletin Board : CBMDF

CBM Asia Development Corp.

August 31, 2010 13:02 ET

CBM Asia's Partner Medco Energi Spuds First of Three Planned Coalbed Methane Exploration Wells in South Sumatra

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 31, 2010) - CBM Asia Development Corp. ("CBM Asia" or the "Company") (TSX VENTURE:TCF)(US:CBMDF)(FRANKFURT:IY2), announces that Jakarta-based PT Medco CBM Sekayu ("MedcoEnergi"), a wholly owned subsidiary of PT Medco Energi CBM Indonesia, its operating partner on the Sekayu coalbed methane production sharing contract ("PSC"), has notified the Company that the second coalbed methane exploration well ("CBM-SE-04") in the Sekayu Production Sharing Contract ("Sekayu PSC") block located in the South Sumatra Basin, Indonesia, was spud on Saturday, August 28, 2010.

CBM-SE-04 will be a vertical well with a 3350-foot planned total depth, aimed at evaluating gas potential and reservoir properties of the two main coal groups of the Middle Palembang Formation - the upper Palembang Group and lower Pangadang Group. Under the terms of the Sekayu PSC, the minimum work commitment requires a total of four wells to be drilled in the first three years. Indonesia's first commercial coalbed methane exploration well, MedcoEnergi's CBM-SE-02, was drilled in the Sekayu PSC block in the second half of 2009. MedcoEnergi has contracted two rigs for the sequential drilling and coring of the next three exploration wells in the Sekayu PSC block -- CBM-SE-04, CBM-SE-03, CBM-SE-01. As such, the minimum work commitment of four exploration wells required under the Sekayu PSC is expected to be met in one tender designed to achieve industry standard core recoveries and retrieval times, as well as potential cost savings associated with a single mobilization of each rig.

The three coalbed methane exploration wells - CBM-SE-04, CBM-SE-03, and CBM-SE-01, are planned to be drilled and cased (in that order), by the first rig; the second rig is scheduled to double back to conduct coring operations on CBM-SE-01, CBM-SE-03 and CBM-SE-04. Once coring operations have been completed, the first rig will be moved back for well testing of reservoir properties including gas composition, coal quality, adsorption and permeability to be conducted in each of the three main coal seams noted below. The three wells are geographically spaced such that coal thickness and gas content measures are anticipated to provide a strong indication of the overall potential of the block. The initial evaluation of CBM-SE-01 is proposed to be conducted in the Palembang B Seam at projected interval 1131-1179 feet, with estimated net coal thickness of 35 feet; the second in the Palembang C Seam at interval 1317-1431 feet, with estimated net coal thickness of 65 feet; and the final in the Pangadang A Seam at interval 2184-2293 feet, with estimated net coal thickness of 56 feet. Total anticipated thickness of the three coal seams to be cored and recovered in CBM-SE-01 is approximately 156 feet. Initial test results from these operations are not expected to be available until the fourth quarter of 2010.

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. Sekayu Block Interests of the Company, Ephindo and Batavia Energy are held in South Sumatra Energy, Inc. 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. 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". http://www.cbmasia.ca


Alan T. Charuk, President & CEO

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.

Contact Information