The 880,000-acre Budong-Budong block located on the Indonesian island of West Sulawesi is one of our high-impact exploration opportunities. We hold a 64.4% interest in the Production Sharing Contract (PSC), which was originally held by BP in the 1970s. The prospect is located in the West Sulawesi Thrust Fold Belt, containing potential reservoir targets in multiple stacked Miocene and Eocene clastic reservoirs. Heavy forestation made it prohibitively expensive to explore and drill in areas away from the coast in years past. However, the development of palm oil plantations on the island increased accessibility and opened the way for oil exploration. After an extensive and thorough effort to analyze and interpret the 2-D seismic data we acquired in 2008, we identified drill sites for the first two exploration wells.

On January 6, 2011 we spud the first exploration well, the onshore Lariang LG-1. Our targets are anticipated oil reservoirs in multiple stacked Miocene and Eocene clastic pay zones, which are highly productive oil-prone Eocene terrestrial source rock that is the base for many productive plays throughout much of Indonesia. Active surface oil and gas seeps confirm the presence of a working petroleum system similar to the neighboring Barito and Makassar Straits Basins.

Down to a depth of 4,600 feet, the Lariang LG-1 well has encountered multiple oil and gas shows within the secondary Miocene objective. Well logs, fluid samples and pressure data have confirmed the presence of hydrocarbons and substantially reduced the risk of future exploration potential of the prospect. The primary Eocene targets lie below the Miocene down to a planned measured depth of 7,200 feet.