Bontang

The Bontang PSC is located across 2,185 sq. km of transition zone in the Kutei basin, East Kalimantan. The Bontang LNG plant is contained within the block. As the industry's attention has moved to the deep water potential of the basin, the shallow water coastal strip has remained largely overlooked, despite the number of oil and gas discoveries providing good analogues for exploration prospects in the area. Those analogues relevant to Bontang PSC include the Serang and Santan oil and gas fields, both of which are commercial and located along strike of the acreage.

An initial 3D seismic survey completed in 2007 identified a number of prospects under a modern day shelf break. The Angklung-1 well was drilled by the Hakuryu-5 semi submersible rig to a total depth of approximately 2,850 metres true vertical depth sub-sea (TVDSS) and encountered 23 - 27 metres of net gas pay in a high quality Lower Pliocene sandstone unit at 1,850 metres TVDSS. Log evaluation indicates that the formation has porosity of up to 30% and permeability of around up to one Darcy. The well has been plugged and abandoned as a discovery. The Angklung discovery increased the chance of successfully finding gas bearing sandstones at the Pliocene level in nearby prospects such as Bedug and Kecapi.

Approximately 180 metres of oil bearing Upper Miocene sandstones were found by the Angklung-1 well, however they were not permeable at this location. Further work was undertaken during 2011 to improve the understanding of a potential Upper Miocene oil play.

The Group is planning an extensive drilling programme on multiple prospects across the Bontang and SE Sangatta licences in 2012.

Tutung

The Bontang PSC also contains the Tutung discovery which was made by Total in the early 1980's. Salamander drilled two appraisal wells on this structure in 2008, one of which demonstrated the potential commerciality of the accumulation. The Tutung Alpha-3 appraisal well is expected to be drilled in 1H 2012 as a final step pre-submission of a PoD.