CBM Asia Provides Review of Operations and Financing Update
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec 4, 2013) - CBM
Asia Development Corp. ("CBM Asia" or the "Company")
(TSX-VENTURE:TCF)(US:CBMDF)(FRANKFURT:IY2) provides a review of its
operations in Indonesia's emerging coalbed methane industry as well
as an update on the status of the Company's current financing
activities. The Company wishes to correct misperceptions about its
progress which may have arisen from recent media reports.
Review of Operations. To date the Company and its operating
partners have successfully drilled and tested a total of eight
coalbed methane exploration wells at two Production Sharing
Contract (PSC) areas in Indonesia. This resulted in 981 Bcf of
recoverable prospective resources net to the Company.1 Given the
Company has raised a total of $34 million to date, this equates to
overall finding costs of approximately $0.03/Mcf. The CBM gas sales
price in Indonesia ranges from $7.50 to nearly $20/Mcf.
The Company's first CBM test well, also Indonesia's first CBM
exploration well, was drilled in 2009 by operating partner Medco
Energi at the Sekayu PSC in South Sumatra. Core recovery was poor
due to mechanical problems. However, geophysical logs confirmed the
presence of thick coals with strong gas kicks. After the well was
drilled, coal seam permeability was successfully measured in-situ
at 500 mD. In 2011 contractor Weatherford re-entered the well to
conduct critical desorption tests, measuring methane saturation
levels of up to 95%. Apart from the early coring mishap, this well
provided a complete set of geologic data for resource
evaluation.
The following seven wells drilled by the Company and its
operating partners were operationally successful and provided
complete geologic data for resource evaluation. Core recovery rates
in the seven wells averaged over 90%. Gas content measured on the
core ranged from 75 to 359 ft3/ton (dry, ash-free basis), much
higher than at the analog Powder River Basin in the USA (current
CBM production 830 million ft3/day). Most recently, 5-millidarcy
permeability was measured in three coal seams at the KW-CBM-1 well,
comparable to that of the USA Central Appalachian Basin where
Consol Energy currently produces 240 million ft3/day.
Qualified Reserves Evaluator Netherland, Sewell and Associates,
Inc. (NSAI) has independently evaluated these data and estimated
981 Bcf of recoverable prospective gas resources, net to the
Company. NSAI has estimated the overall probability of
commerciality at 50%. Subsequently, gas flow and permeability tests
have been conducted further derisking the assets. The two blocks
evaluated by NSAI represent just 6% of the Company's total net
acreage in Indonesia.
CBM gas prices in Indonesia range from $7.50/Mcf for local power
generation at VICO's Sanga-Sanga PSC to nearly $20/Mcf for gas
exported from the Bontang LNG facility.2 If the company is
successful at producing and selling its 981 Bcf at these prices,
gross revenues could range from $7.5 to nearly $20 billion.
During 2013 the Company made significant progress towards
further expanding its resource base in Indonesia. After signing the
JV umbrella agreement with ExxonMobil to farm into four PSC's in
the Barito Basin, the Company and ExxonMobil have jointly developed
and submitted the detailed exploration plans required by regulator
SKK Migas. To implement the planned 10-well Barito drilling program
we increased our Jakarta staff to include local CBM-experienced
geologists, engineers, and environmental specialists. The General
Manager is our single expatriate employee. The increased staff and
consulting expenses were reasonable and necessary given the
magnitude of the Barito Basin, where CBM gas-in-place resources are
estimated at 102 Tcf.3 To minimize expenses management has returned
over CAD525,000 in salaries and travel expenses into the company
via the private placement. We employ two full-time staff at our
Vancouver home office, the CFO and an accountant, and our overhead
expenses remain low compared with peer E&P companies.
On the commercial side, the Company has been working towards
establishing gas offtake agreements with multinational companies.
We signed an agreement with Linde Group (market capitalization
EUR27 billion) to jointly conduct a CBM-to-LNG supply study of up
to 50 MMcf/d in the Barito Basin. We also signed a CBM-to-Power
agreement for up to 5 million ft3/day with Navigat Energy, a
leading Southeast Asia power project developer financed by General
Electric and Standard Chartered bank. The quality of our production
and offtake partners significantly enhances the Company's ability
to project finance future development and generate significant cash
flow.
1 NI 51-101 compliant
2 Jakarta Post, April 19, 2012 and ENI Upstream Seminar
Transcript, October 11, 2012.
3 Society of Petroleum Engineers, SPE 88630, 2004. Not compliant
with NI 51-101.
Barito Basin JV with ExxonMobil. CBM Asia has signed the
Umbrella Agreement with ExxonMobil to farm into four CBM PSC's in
the Barito Basin. Both companies are engaged in amending certain
terms of the agreement. The Company with approval from ExxonMobil
will announce details in the near future.
Financing. In light of the difficult market conditions
prevailing for most junior resources company the company reduced
its private placement requirements to CAD5.0 million in July as a
means to focus on a broader financial solution. As of today CBM
Asia has been offered financing facilities of USD25 million and
EUR60 million by two private institutions. The Company has been
engaged with the two institutions for several months. Recent
communications and exchange of term sheets indicate possible final
decision by the Company to determine which institution to work with
in December/January followed by immediate drawdown.
ABOUT CBM ASIA DEVELOPMENT CORP.
CBM Asia Development Corp. is a Canadian-based unconventional
gas company with significant coalbed methane ("CBM") exploration
and development opportunities in Indonesia. The Company holds
various participating interests in five production sharing
contracts (each a "PSC") for CBM in Indonesia, with the right to
farm-into 4 additional PSCs. Indonesia has one of the largest CBM
resources in the world with a potential 453 trillion feet3
in-place, more than double the country's natural gas reserves
(Stevens and Hadiyanto, 2004). Since 2008 a total of 54 CBM PSCs
have been granted by the Government of Indonesia, representing
exploration commitments of well over US$100 million during the next
3 years. In addition to CBM Asia, other companies active in CBM
exploration in Indonesia include BP, Dart Energy, ENI, ExxonMobil,
Medco, Santos, and TOTAL. BP, ENI, and the Indonesian government
have confirmed that commercial CBM production started in March 2011
from the Sanga-Sanga PSC and is being exported from the Bontang LNG
facility. The Company trades on the TSX Venture Exchange under the
symbol "TCF". www.cbmasia.ca
ON BEHALF OF CBM ASIA DEVELOPMENT CORP.
Alan T. Charuk, President & CEO
Neither the 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.
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. Readers 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. The economics of exploring,
developing and operating resource properties are affected by many
factors including, but not limited to, the cost of exploration and
development operations, conclusions of economic evaluations,
unexpected formations or pressures, premature declines in reserves,
potential environmental damage, blow‐outs, fires, variations in the
amount and saturation of CBM contained in individual coal seams and
the rate of production therefrom, fluctuations in gas prices and
the availability of capital. There are no assurances that the
Company's work programs will result in the discovery of
commercially viable or economically producible properties or that
the Company will be successful in completing the Offering in whole
or in part. Gas in place estimates referred to in this news release
are not NI 51-101 compliant and do not represent "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. There are no assurances that any portion of the
estimated gas in place resources referred to herein will be
discovered. Furthermore, such estimates make no allowance for the
recovery of the gas which will depend on, among other things, the
reservoir characteristics encountered and future economic
conditions. All of the forward-looking statements made in this news
release are qualified by these cautionary statements and those made
in our Canadian continuous disclosure filings available on SEDAR at
www.sedar.com including our December 31, 2012 year end annual
MD&A dated April 24, 2013 and June 30, 2013 interim MD&A
dated August 20, 2013. These forward-looking statements are made as
of the date hereof and the Company does not assume any obligation
to update or revise them to reflect new events or circumstances
save as required under applicable securities legislation.
THIS NEWS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT
FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES
AND THE COMPANY IS NOT SOLICITING AN OFFER TO BUY THE SECURITIES
DESCRIBED HEREIN. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT
THEREFROM.
CBM Asia Development Corp.Alan Charuk(604) 684-2340 or (866)
504-4755(604) 684-2474corpcom@cbmasia.cawww.cbmasia.caMicro Cap et
al1 877 642 7622info@microcapetal.com
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