CBM Asia Development Corp. announces that it has signed a Heads of Agreement ("Agreement") with PT Tranaco Utama ("Tranaco"), a private Indonesian company that holds the first rights to undertake a production sharing contract ("PSC") for a 1,500 square kilometre coalbed methane block in Kalimantan, Indonesia.
Under the terms of the Agreement, CBM Asia has the right to acquire 80% participation interest in the proposed coalbed methane PSC and be appointed operator (with Tranaco to hold the remaining 20% participation interest) in consideration for reimbursing Tranaco's sunk costs and paying any signing bonus to the Indonesian government upon the award of a PSC. On January 18, 2012, CBM Asia and Tranaco submitted a proposal to the Director General of Oil and Gas ("Migas") to approve the award of a coalbed methane PSC through the Direct Offer Mechanism under Ministerial Regulation of the Department of Energy and Mineral Resources. The proposal is based on a Joint Evaluation Study undertaken by Tranaco in 2011.
"This Agreement represents the advancement of our business strategy to materially expand our land position in Indonesia where, in 2011, we acquired a 70% participating interest and operatorship in the Bentian Besar CBM PSC and the Hulu CBM PSC", commented Mr. Alan T. Charuk, CBM Asia's CEO and President, "There are a number of coalbed methane PSCs in proximity to the block area operated by Exxon Mobil and BP".