CBM Asia Management Issues Update Letter to Shareholders
March 17 2014 - 7:00AM
Marketwired
CBM Asia Management Issues Update Letter to Shareholders
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Mar 17, 2014) - CBM
Asia Development Corp. ("CBM Asia" or the "Company")
(TSX-VENTURE:TCF)(US:CBMDF)(FRANKFURT:IY2) -
Fellow Shareholder;
CBM Asia has new management and a new direction - focused on
achieving commercial gas production this year and selling it into
the high-priced Asian markets. This letter is the first reflection
of the new management's policy of improved corporate
communications, updating our investors on a more regular basis as
we progress our assets towards commerciality.
Our new CEO Charles W. Bloomquist (B.S., Petroleum Engineering,
Colorado School of Mines) has 40 years of operating experience in
Indonesia and North America. Charlie knows our assets and is
single-mindedly focused on commercializing the Company's nearly 1
Tcf of audited resources this year. He and Chairman Scott Stevens
were among the first to recognize and promote the exploitation of
Indonesia's CBM beginning 20 years ago. Our Indonesia GM and VP
Operations, Keith Potter, with 10 years experience in the coalbed
methane and natural gas industries in Indonesia, is a key element
of our management team working closely with Charlie to realize this
objective.
CBM Asia has substantial CBM resources - nearly 1 Tcf of audited
net recoverable prospective resources in two well-positioned
blocks. The Company strongly believes that even small-scale levels
of commercial production will greatly enhance the already
substantial value of these assets.
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1) |
705 Bcf at Kutai West: CBM Asia holds an 18% working interest in
the Kutai West Production Sharing Contract (PSC), with 705 Bcf of
net recoverable prospective resources based on an independent audit
conducted by Netherland, Sewell & Associates, Inc.1 Kutai West
is regarded as one of the best and commercially most advanced of
the approximately 50 awarded CBM blocks in Indonesia. |
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Importantly, Kutai West borders the Sanga-Sanga PSC, where VICO (BP
and partners) is commercially producing and selling CBM for power
generation and gas export from the nearby Bontang LNG facility. As
VICO notes: "This is the first time in Indonesia that any CBM
facilities have produced and sold gas and represents a major
milestone in the exploration of CBM potential." |
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Kutai West will exploit the same coal seams as Sanga-Sanga. To
date, the Company and its partners have drilled four CBM test wells
on our block, recording thick coal seams with high gas content and
saturation, and good 5-mD permeability. The KWCBM-01 well is
currently being dewatered, venting a small but increasing volume of
produced gas from the flare, which is a key first step towards
larger scale production. |
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Management's main focus this year is to accelerate gas production
at Kutai West with a 5-well pilot, followed by a larger commercial
scale 30-well development. We have reached initial agreements to
sell the produced gas to Navigat Energy for on-site power
generation and later to VICO to feed the massive and gas-short
Bontang LNG export network. Anticipated gas prices are high, in the
range of $8-12/Mcf. Bontang exports LNG to Japan and other Asian
rim importers, who are critically short of natural gas due to
significant rollbacks of their nuclear power generation. |
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2) |
276 Bcf at Sekayu: CBM Asia also holds a 26% working interest in
the Sekayu PSC in South Sumatra, providing us with an additional
276 Bcf of net recoverable prospective resources (NI 51-101
compliant audit conducted by NSAI). Four CBM test wells have
verified thick coals with favorable coal properties. We are working
with operating partner Medco Energi to accelerate the
commercialization at Sekayu, initially through on-site power
generation, or by co-development with a nearby recently discovered
conventional gas field. |
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3) |
Cost Reductions. With the termination of the major ExxonMobil JV
late last year, the Company has significantly reduced overhead and
continues to look for ways to reduce costs. Our Vancouver head
office cost has been cut by half. The company's Jakarta office will
be sized and staffed to best match our requirements in
Indonesia. |
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4) |
Changes to Board of Directors. Former CEO and President Alan T.
Charuk resigned his management and board positions in late January,
while director James Charuk is stepping down at the Annual General
Meeting next month. The Company currently has two independent
directors continuing their service on the board (James Friberg and
Clint Sharples). The Board plans to further strengthen corporate
governance this year by adding a third independent director for a
total six board members. |
1 NI 51-101 compliant resource audit conducted by NSAI
This letter marks the start of more frequent and more
informative future communications from the Company to keep you
better apprised of our progress toward our new objectives. We
remain extremely optimistic about the commercial potential for CBM
production in Indonesia. The industry climate there is improving,
with high domestic and export gas prices and the increased
availability of drilling and completion equipment.
The Company's directors and officers own nearly 6% of CBM Asia's
shares, most acquired through private placements since 2009 along
with fellow shareholders. All of us are dedicated to increasing
shareholder value and are committed to providing you with further
updates as we take significant steps towards commercialization this
year.
ON BEHALF OF CBM ASIA DEVELOPMENT CORP.
|
Charles W. Bloomquist |
Scott
H. Stevens |
|
President and CEO |
Chairman |
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.
CBM Asia Development Corp.Charles BloomquistPresident and
CEO604.684.2340 or TF.
866.504.4755604.684.2474corpcom@cbmasia.cawww.cbmasia.ca
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