CBM Asia Development Corp. has signed a Letter of Intent (LOI) with Batavia Energy Inc. to acquire 48 percent of South Sumatra Energy Inc. (SSE) which, together with PT Medco CBM Sekayu (PT Medco), holds a Production Sharing Contract (PSC) for coalbed methane on a 58,349 hectare block located in the South Sumatra Basin (the "Sekayu Block PSC"), Indonesia.

Awarded May 27, 2008, the Sekayu Block PSC marked the first time the Government of Indonesia awarded a PSC for the exploration and development of coalbed methane in Indonesia. PT Medco Energi Internasional Tbk ("Medco"), Indonesia's leading independent oil and gas company, and operator of the Sekayu Block PSC, has forecast that the first commercial coalbed methane production will begin in 2011 and peak in six years. Indonesia's estimated coalbed methane resource of 453 trillion cubic feet ("TCF") of gas in place is among the largest in the world after the United States and China. The South Sumatra Basin, the largest coalbed methane basin in Indonesia, is estimated to contain in-place resources of approximately 183 TCF (Society of Petroleum Engineers, 2004).

Under the LOI, the Company will earn a participation interest in Batavia's 31.5 percent working interest in the Sekayu Block PSC, and has committed to exploration and appraisal expenditures over the next three years to determine the commercial feasibility of coalbed methane production.

"We are happy to secure this rare capital acquisition opportunity in Indonesia's rapidly emerging coalbed methane industry. As Indonesia moves to develop its large prospective coalbed methane resources for delivery to domestic and global markets, we look forward to working with our new partners in the Sekayu Block PSC where initial exploration drilling is scheduled to commence by early September 2009. This acquisition will diversify our interests in the coalbed methane sector in Indonesia and complement our already outstanding prospects in the Kutai Basin," said Alan Charuk, the Company's President and Chief Executive Officer. Successful completion of the Sekayu Block PSC test well will mark the first government-approved commercial coalbed methane well drilled in Indonesia.

Tags: CBM Asia Development Corp.