Continental Energy Corporation is a small and aggressive oil and gas exploration company focusing its efforts on making large commercial discoveries and establishing petroleum production in low to medium risk, but high potential reward, international properties.

Indonesian Focus

Indonesia is the third oldest oil producer in the world after the United States and Russia, with production having commenced more than a century ago. Currently, Indonesia is the second largest oil producer, after China, in the Asia Pacific region with over 27% of the region's oil production. Chevron's Caltex unit is the largest single independent Indonesian oil producer with over 700,000 barrels per day. Continental Energy Corporation is focusing its efforts in Indonesia because:

• There is a long and positive history of oil exploration success
• Economic terms allow a fair and lucrative return for producers of oil and gas
• Large tracts of prospective acreage can be accumulated
• Geological conditions are favorable for hydrocarbon accumulation
• Manpower and technical resources are already deployed there

Management has long experience in-country and solid relationships with both industry and government at all levels; there is a well established history of positive relationships between the international oil industry and the Government of Indonesia; there is strong and growing regional demand for both crude oil and natural gas provides expanding and near-by I-C-I (India-China-Indonesia) markets for any production Continental establishes.

Bengara II Block

Continental Energy Corporation announced that its 18% owned subsidiary Continental-GeoPetro (Bengara-II) Ltd. ("CGB2") has proposed a 2011 Bengara-II Block exploration budget to Indonesian oil and gas regulators in the total amount ofUS$ 89 Million.

The total proposed by CGB2 included the drilling of two wells in 2011 including one appraisal well and one exploratory and/or additional appraisal well at a combined budget ofUS$ 53.8 Million.

The total also included an amount of US$ 30.8 Million for 2D and 3D seismic acquisition, processing, and interpretation expenditures. Most of the 2011 seismic expenditure is a carry forward from the 2010 budget year for the ongoing field acquisition survey originally begun in 2010. However, the amount proposed for 2011 does include an increase in expected 2010 seismic acquisition costs to cover cost overruns expected as a result of delays to 2010 field acquisition efforts caused by surface damage claim issues.

The remainder of the proposed budget provides for technical studies intended to justify a plan of development and for administrative expenses. The budget is subject to the revision of and the approval of Indonesian oil and gas regulator BPMIGAS.