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CBM Asia Development Corp. – Exploring Coalbed Methane in Indonesia

CBM Asia Development Corp.

Overview

CBM Asia Development Corp. (TSXV:TCF) is a Canadian unconventional gas exploration company with significant coalbed methane (“CBM”) exploration and development projects in Indonesia. The Company holds various participating interests/rights in nine CBM production-sharing contracts (PSCs) and options to participate in a minimum of nine more. Indonesia has one of the largest CBM resources in the world with a potential 453 trillion cubic feet in-place, more than double the country’s natural gas reserves.

Investment highlights

  • Indonesia has one of the largest CBM resources with a potential 453tcf in place
  • Indonesia is uniquely positioned in close proximity to the major Asian markets
  • Multiple production sharing contracts in place
  • Options for additional acreage
  • Well-financed with strong institutional support
  • Assembled management team has a long history of global exploration, unconventional gas, and Indonesian experience
  • Favorable geology for coalbed methane
  • Strong energy demand and bullish outlook for domestic and export consumption and pricing

Key Properties

CBM Asia Sekayu

South Sumatra Basin

Sekayu
The Sekayu project is a stone’s throw from the Trans-Sumatra Pipeline, and where the first official CBM well in Indonesia was spud in 2009. At the Sekayu PSC, with a gross area of 580 km², three core wells have identified 1.06 Tcf of gross recoverable prospective resource at a finding cost of less than USD0.01/Mcf, versus a gas market price of USD5.50-9.50/Mcf.

CBM Asia Kutai Basin Properties

CBM Asia’s Kutai Basin Properties

Kutai West
Four exploration wells at the Kutai West PSC, gross area totaling 869 km², have identified thick coal seams and gas content levels exceeding 225 scf/ton. The PSC is adjacent to BP’s commercial CBM-to-LNG operation, which is utilizing the Bontang LNG export facility.

Kutai II
Also adjacent to the Bontang LNG trunk line, CBM Asia is awaiting the final decision on an arbitration proceeding that if successful will confirm a 40% interest in this 486 km² block.

Bentian Besar
CBM Asia holds a 70% interest and operatorship in the Bentian Besar PSC (gross area: 830 km²). Working with local partners, the Company is planning its exploration program for the block. Commercialization of CBM can be achieved through selling offtake to nearby coal mines or via a pipeline to the Bontang LNG facility.

ExxonMobil Option
CBM Asia has signed an agreement with ExxonMobil that gives the Company the right to farm into 50% of ExxonMobil’s future participating interest into three coalbed methane PSCs and three joint studies in which ExxonMobil may acquire an interest.

CBM Asia Barito Basin

CBM Asia’s Barito Basin Properties

The Barito Basin has deep coal deposits that are exceptionally thick, laterally continuous, gas-charged and have very simple structural conditions. Regional urban centers and the extensive coal mining industry provide near term gas monetization opportunities. CBM Asia considers the Barito Basin to be one of the world’s best undeveloped CBM basins.

Banjar I, Banjar II, Barito I and Tapin PSCs
CBM Asia has signed an agreement with ExxonMobil in which CBM Asia will farm into four existing CBM PSCs. CBM Asia will earn 50% of ExxonMobil’s working interest by drilling two 5-well pilot projects at sole cost and paying 50% of the remaining drilling commitment.

Kuala Kapus I
CBM Asia holds an 80% working interest in this 1,501 km2 PSC and late in 2012 was, seeing the company enter the Barito Basin.

CBM Asia Central Sumatra Properties

CBM Asia’s Central Sumatra Properties

Hulu PSC
The Company holds a 70% interest and operatorship in this 519 km² PSC. The block is adjacent to the Trans-Sumatra gas pipeline and close to the Chevron-operated Duri oil field steam flood operation, a major gas consumer which offers premium gas pricing.

Riau Joint Study Area
CBM Asia is currently in the process of conducting a joint study over this 1,362 km2 area which lays directly north of the Hulu PSC. The joint study provides CBM Asia the first right of refusal to acquire the area as a PSC.

Hulubalang Joint Study Area
CBM Asia has also applied for Joint Study in the 5,698 km2 area which after completion the company will have the rights of first refusal on the PSC.

Summary

CBM Asia’s strategy is to identify and acquire high-quality CBM acreage in Indonesia and derisk the projects to a 70-80% confidence level by drilling l low-cost exploratory wells and early stage production projects, there by limiting capital risk. They then develop the project insofar as it becomes an attractive target for friendly takeover or joint venture by a major CBM producer such as BP, Total or ExxonMobil, who are active in CBM Asia’s property region. Several joint production agreements are in place.

Management

Scott H. Stevens – Chairman
Mr. Stevens, Senior Vice President and Director of Advanced Resources International, Inc., is an internationally recognized coalbed methane expert and one of the principal founders of Indonesia’s rapidly emerging coalbed methane industry. Since 1995 he has worked with numerous multinational oil and gas companies, as well as the Government of Indonesia, to evaluate coalbed methane resources and develop current regulations for coalbed methane investment in that country. Mr. Stevens was the first to recognize and rigorously quantify Indonesia’s prospective 450 trillion cubic feet (“Tcf”) of coalbed methane resources, through extensive studies on behalf of PT Caltex Pacific International (Chevron Asia), the Asian Development Bank, and Indonesia’s Department of Energy and Mineral Resources. He was instrumental in assisting the Government of Indonesia in developing the country’s coalbed methane contract laws which saw the award of Indonesia’s first coalbed methane production sharing contract (“PSC”), the Sekayu PSC in the South Sumatra basin, on May 27, 2008. Internationally, Mr. Stevens has worked with companies such as Chevron, ConocoPhillips, and BHP Billiton to manage coalbed methane exploration and production programs in North America, China, and Australia, including the successful identification of prospects, geologic and reservoir evaluation of acquisition targets, and completion of high production wells. In 2004, the Society of Petroleum Engineers published his industry-acclaimed study entitled “Indonesia: Coalbed Methane Indicators and Basin Evaluation” which ranked Indonesia’s top onshore coalbed methane basins in terms of geology, inferred reservoir quality, proximity to gas markets, and drilling infrastructure.

Alan T. Charuk – President & Chief Executive Officer, Director
Mr. Charuk has over thirty-years experience in the resource industry during which time he has developed extensive knowledge and expertise in the financing and development of exploration and production stage companies operating in Canada and internationally. Mr. Charuk served as Executive Vice President of Norwood Resources, and has led several junior resource companies to international discoveries. Under Mr. Charuk’s direction, these companies were involved in a number of acquisitions, lease development and joint venture agreements and benefited from his expertise in securing financing.

Charles W. Bloomquist – Vice President Operations, Director
Mr. Bloomquist, a Registered Professional Engineer, has more than 30 years of experience in the oil and gas industry. After graduating from the Colorado School of Mines, he began his career with Tenneco Oil Company as a petroleum reservoir engineer working on projects in the Williston and Powder River Basins. Thereafter, he worked as a consultant for Energy Consulting Associates, then moving to Indonesia as Project Manager for Basic Earth Science Systems Indonesia, where he managed a team contracted to the national oil company of Indonesia. He subsequently joined Intercomp in Denver Colorado, responsible for building and managing a reserves and property evaluation business and Intercomp’s Rocky Mountain CO2 project. In 1984 Mr. Bloomquist started Resource Consulting International Inc. (RCI).

James Charuk, P. Geo. – Vice President Exploration, Director
A graduate of Mount Allison University, Mr. Charuk holds a science degree in Geology and has more than 25 years experience in oil and gas exploration and production. As Manager of Geoscience Services with Western Atlas International, Mr. Charuk managed multi-disciplinary teams of geoscientists responsible for reservoir identification, evaluation and exploitation on behalf of Western’s customers worldwide. These included all major multinationals, national, and large through small independent oil companies. Prior to Western, Mr. Charuk had a key technical management position at Chevron USA where he was responsible for the implementation of their worldwide drilling technology center’s monitoring and control systems. Jim served for three years as the Executive Vice President of Exploration with Norwood Resources an exploration company with properties in Nicaragua before joining CBM Asia Development.

Dr. James Friberg – Director (Independent)
Dr. Friberg was the former president of Black Gold Energy, an oil & gas exploration company focused on deepwater frontier Indonesia. The company was acquired by Niko Resource Ltd in 2009 for CAD300 million. Previous to his role at Black Gold Energy, Dr. Friberg held multiple position at Unocal including Chief Geologist Worldwide, Chief Exploration Advisor (Indonesia), General Manager (Far East Exploration) and Exploration Manager (Louisiana-Texas & UK).

Adam Clarke – VP Corporate Development, Director
Mr. Clarke has over 20 years of oil and gas investment and macro energy related experience in the Asia-Pacific region. Mr. Clarke’s oil and gas experience spans fund management, debt and equity research and consultancy with firms Bear Stearns (Senior Managing Director), Harbert Management Corp (Strategist – commodity fund), and Expedition Capital Ltd (Managing Partner).

Clint Sharples – Director (Independent)
Mr. Sharples is a partner in First Growth Management Inc., a small private equity company with share holdings in many different companies.Clint has been a board member of several public and private companies and contributes to the boards of some not-for-profit entities, including the Canadian Pallet Council and the Kelowna Food Bank. Clint’s education background is in Business Administration, Accounting and Transportation Logistics. Clint serves as the Chair of the Audit and Governance Committee for CBM Asia.

Keith Potter – General Manager Indonesia
Mr. Potter was the former President Director of PT Seamgas Indonesia (Westside Corporation/Bumi Resources JV company) – identified 3 Tcf of CBM resources. Has held senior project and corporate positions with oil and gas operating companies and EPC contractors in Indonesia, Australia, and UK. 29 years experience, 12 years in CBM and 12 years in Indonesia.