Continental Energy Reports Annual Results for 2006 Fiscal Year

DALLAS, Jan. 5, 2007 (PRIME NEWSWIRE) -- Continental Energy Corporation (OTCBB:CPPXF) announced today that it has released its Annual Report and audited financial statements for its year ended June 30, 2006, and filed the report with securities regulators on SEDAR.

At the Company's January 25, 2006 Annual General Meeting the shareholders approved a change in the date of the Company's fiscal year end from July 31 to June 30. Therefore the date of June 30, 2006 marks the new ending date of the Company's fiscal year, so Fiscal Year 2006 consisted of 11 months instead of 12.

Continental also set its annual general meeting for December 29, 2006. Notice of the meeting and the annual information circular for items to be dealt with at the meeting were filed on SEDAR and sent to shareholders as of the November 27, 2006 record date.

As at June 30, 2006, the Company's consolidated financial statements reflect a working capital position of $2,286,922. This represents an increase in the working capital of approximately $2,325,988 compared to the July 31, 2005 working capital deficit of $39,066. The increase was mainly due to the Company selling its Yapen subsidiary and receiving gross cash proceeds of $3,600,000. The increase was offset by general and administrative requirements during the period. The cash balance at June 30, 2006 was $2,395,727 compared to $98,898 as at July 31, 2005, an increase of $2,296,829.

The Company used $1,307,858 for operating activities during the eleven months ended June 30, 2006 compared with $889,816 in the year ended July 31, 2005.

The cash resources provided by investing activities during the eleven months ended June 30, 2006 was $3,515,074 compared with using $8,599 in the year ended July 31, 2005. The Company's property expenditures were reduced to a maintenance level until management decides to commence further exploration and development of its Indonesian properties. The current year amount includes the proceeds from the Yapen sale, net of closing costs in the amount of $3,506,834 as well as equipment purchases of $99,950. The closing costs included payment of cash bonuses totaling $90,000 to two executive officers in recognition of exceptional service to the Company and its shareholders in their respective capacity and influence in concluding the Yapen sale.

The cash resources provided by financing activities during the eleven months ended June 30, 2006 was $89,613 compared with $871,000 in the year ended July 31, 2005. During the current period the company received proceeds of $102,000 for share issuances compared with $883,735 in the prior year.

Cash on hand is sufficient to fund the Company's overhead costs and exploration objectives for the immediate future. The Company intends to continue to use various strategies to minimize its dependence on equity capital, including the securing of joint venture partners where appropriate.

The following table sets out selected annual financial information of Continental and is derived from the Company's audited consolidated financial statements for the eleven months ended June 30, 2006 and for the years ended July 31, 2005 and 2004.

                                  2006           2005             2004
Sales                    $           -  $           -  $             -
Income (Loss) for the
 Year                    $   1,923,117  $   2,180,617  $    (1,609,125)
Income (Loss) per
 Share - Basic           $        0.03  $        0.04  $         (0.03)
Income per Share
 - Diluted               $        0.03  $        0.03  $         (0.03)
Total Assets             $   2,517,015  $     297,101  $       488,758
Total Long-term
 Liabilities             $           -  $           -  $     3,467,972
Dividends Declared       $         Nil  $         Nil  $           Nil

For further information, please visit our web site at

 On behalf of the Company,

 "James D. Eger"


No securities regulatory authority has either approved or disapproved the contents of this news release.

Certain matters discussed within this press release may be forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Although Continental believes the expectations reflected in such forward-looking statements including reserves estimates, production forecasts, feasibility reports and economic evaluations are based on reasonable expectations and assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include financial performance, oil and gas prices, drilling program results, regulatory changes, political risk, terrorism, changes in local or national economic conditions and other risks detailed from time to time in Continental's periodic filings with the U.S. Securities Exchange Commission.

CONTACT: Continental Energy Corporation
         Jim Eger
         (877) 762-2366
         Suite 1200, 14001 Dallas Parkway
         Dallas, Texas 75240