First CBM Exploration Core Well Spud in Indonesia

CBM Asia Development Corp. has been informed by the operator Newton Energy Capital Limited, that the first coalbed methane exploration core well ("CBM-KW-01") in the Kutai West Coalbed Methane Production Sharing Contract ("Kutai West CBM PSC") block, located in East Kalimantan, Indonesia, was spud on December 12, 2011. CBM Asia holds an 18% working interest in the Kutai West CBM PSC.

CBM Asia's Chairman, Mr. Scott Stevens commented "This well is a key first step towards delineating coalbed methane resources and commercial potential of the highly promising Kutai West PSC. The Balikpapan coal seams correlate with coalbed methane reservoirs already commercially producing next door at VICO's Sanga-Sanga CBM PSC. In March 2011, VICO, a joint venture between BP and Eni, announced the first commercial coalbed methane to LNG production at the Bontang LNG plant for export to Asia's high demand gas markets."

CBM-KW-01 will be a vertical well aimed at evaluating gas potential and reservoir properties of coal seams in the Miocene-age Balikpapan Formation. Historical data from this formation including coal seam thickness and gas content, along with drilling in the area covered by the Kutai West CBM PSC, indicate that the coal seams are well developed with prolific shallow gas. Coring will begin beneath the surface casing and continue to a depth of approximately 1,000 meters. The CBM-KW-01 is the first in a series of four wells set out in a work program delineating the southeastern part of the block, considered the most prospective and closest to potential gas markets.