Continental Energy Updated Bengara-II Drilling Progress

DALLAS, Nov. 6 /PRNewswire-FirstCall/ -- Continental Energy Corporation (OTC Bulletin Board: CPPXF) today updated progress of the drilling activity currently being conducted by its 18% owned Indonesian subsidiary Continental-GeoPetro (Bengara-II) Ltd. in the Bengara-II block East Kalimantan, Indonesia.

The Seberaba-1 was originally planned to reach a total depth of 4,000m. Drilling of the Seberaba-1 terminated at a depth of 2,914m in the third of three sidetracks made from the original wellbore. Each of the 3 sidetracks was made necessary by stuck drill pipe resulting in 3 sections of drill string or "fish" being lost in the original hole and the first two sidetracks. A 7" liner was set at TD of 2,914m in the third sidetrack and a drill stem testing program commenced.

Testing activity of the Seberaba-1 has been suspended. Approximately 150 barrels of crude oil has been recovered by swabbing. Flow test and pressure build up tests to date have proved inconclusive due to apparent formation damage. Analysis of core samples has indicated that a certain type of naturally occurring clay mineral in the reservoir intervals is sensitive to both pH and salinity changes in the fluids used during drilling. These clays expand when subjected to filtrate from fresh water based drilling fluids and occlude or choke off permeability in the reservoir near the wellbore hampering flow.

The Seberaba-1 wellbore has been suspended and preserved for possible re-entry and deviation away from the damaged reservoir interval. In such case the well would be re-drilled with a different drilling mud and testing fluid program to avoid damage to the target reservoir intervals. A decision to deviate and re-drill Seberaba-1 will be made at some time next year once other drilling results on nearby wells are complete.

Drilling activity on the Seberaba-3 well continues below a 9-5/8" casing shoe set at 1,101m. Currently an attempt is being made to sidetrack the Seberaba-3 after stuck drill pipe resulted in an 800m long fish being lost in the original hole before logs could be obtained. A cement plug has been set on top of the fish and preparations are being made to sidetrack the well and re-drill the lost hole from a depth of 1,600m. The Seberaba-3 is planned to a total depth of 2,800m to test possible reservoir zones below 2,400m.

Drilling activity on the Seberaba-4 has been terminated after logs were run and a 7" liner set at 2,572m. Seberaba-4 failed to encounter an expected reservoir sand expected at 2,450m probably because the wellbore penetrated a normal fault and the expected reservoir interval was faulted out. The Seberaba-4 wellbore has been suspended and preserved for possible re-entry and deviation away from the fault at some time next year once other drilling results on nearby wells are complete.

Drilling of the Punga-1 well continues below 1,700m to a planned total depth of 2,800 meters. No objective formations have been encountered yet.

About Continental Energy Corporation:

Continental Energy Corporation is a small oil and gas exploration company, focused entirely on making a major oil or gas discovery in Indonesia. For further information, please visit our web site at http://www.continentalenergy.com.

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 US Securities Exchange Commission.

SOURCE Continental Energy Corporation