Continental Energy Acquires Indonesian Production

DALLAS, Aug. 5 /PRNewswire-FirstCall/ -- Continental Energy Corporation
(OTC Bulletin Board: CPPXF) today announced that it has entered into an
agreement to purchase a 30% working interest in the Tungkal Production Sharing
Contract, located onshore in Sumatra, Indonesia.
Continental will pay total consideration of US$27,320,000. The deal is
effective as of June 1, 2008 and will close subject to and after receipt of a
waiver or expiry of a right of first offer, an Alberta court order approving
the disposition by Ernst & Young as Receiver of Fuel-X International Ltd., and
approval of the assignment of PSC interest by Indonesian authorities.
Continental paid a cash deposit of $1,500,000 on signature of the
definitive sales and purchase agreement. At closing Continental shall pay an
additional $13,500,000 cash, adjusted for production income since June 1,
2008, plus issue 12,320,000 newly created Series-A preferred shares each
having face value $1.00.
The Series-A preferred shares are unlisted, restricted, non-voting, and do
not bear interest. On the first trading day after the first anniversary of
issue, the Series-A preferred shares will automatically be converted into
Continental common shares at a conversion rate of the lesser of $1.00 or the
weighted average trading price of Continental's common shares for the 30
calendar days prior to conversion.
Funding of the cash due at closing shall be led by Macquarie Bank Energy
Group of London under its August 2007 financing mandate with Continental.
The Tungkal PSC encompasses an area of 2,285 square kilometers
(approximately 565,500 acres) held by production until August 25, 2022. It is
operated by Pearl Oil (Tungkal) Ltd., a subsidiary of Pearl Energy Ltd., an
Abu Dhabi owned company, who holds the remaining 70% working interest.
The Tungkal PSC currently produces on average at a rate of about 1,000
BOPD from the Mengoepeh Field. The field was placed on production in December
2004 and a southern extension of the field was discovered in 2007. Pursuant to
a plan of development filed with Indonesian authorities in early 2008, the
operator plans to drill 16 new development wells on the southern extension,
starting in last quarter 2008, with the objective of completing it by early
2010 and increasing production to 4,500 BOPD.
Continental's Exploration Manager, Andrew T. Eriksson, said of the deal:
"We recognize the significant exploration upside in the Tungkal Block. Two
prospects in particular will most likely be drilled at the close of the 16
well development drilling program. The availability of 3D seismic coverage
over the Mengoepeh Field itself also bodes well for additional extensions of
the field."
Continental's President & CEO, Richard L. McAdoo, said: "Our new year's
resolution was to acquire two new properties before the end of 2008, one
giving us oil and gas production income and one giving us a high potential
exploration property. The Tungkal acquisition gives us the realization of the
first half of that goal and we have negotiations in the works that should
realize the second half on schedule." On behalf of the Company,
Richard L. McAdoo, President & CEO

About Continental Energy Corporation:
Continental Energy Corporation is a small oil and gas exploration company,
focused entirely on making a major oil or gas discovery in Indonesia. For
further information, please visit our web site at www.continentalenergy.com .
No securities regulatory authority has either approved or disapproved the
contents of this news release.
Certain matters discussed within this press release may be forward-looking
statements within the meaning of the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Although Continental believes the
expectations reflected in such forward-looking statements including reserves
estimates, production forecasts, feasibility reports and economic evaluations
are based on reasonable expectations and assumptions, it can give no assurance
that its expectations will be attained. Factors that could cause actual
results to differ materially from expectations include financial performance,
oil and gas prices, drilling program results, regulatory changes, political
risk, terrorism, changes in local or national economic conditions and other
risks detailed from time to time in Continental's periodic filings with the US
Securities Exchange Commission.
SOURCE Continental Energy Corporation

Jim Eger of Continental Energy Corporation, +1-877-762-2366,
info@continentalenergy.com