Sangatta West, Kalimantan.

The Sangatta West block covers 77 km² and is located in Kalimantan, Indonesia, approximately 50 kilometres north of the Bontang LNG plant.  There are a number of active coal mines in proximity to the PSC area.  The block is subject to a 30-year PSC under which Sangatta West CBM Inc ("SWCI") will explore the block for CBM.  Under the PSC, SWCI has a 48% participating interest in the block and is the operator with PT Pertamina (Persero) holding the remaining 52% participating interest.

Dart Energy farmed into the block by acquiring a 50% equity interest in SWCI, such that Dart has a 24% underlying interest in the Sangatta West project.  The balance is held by Ephindo-Ilthabi CBM Holding Inc ("Ephindo"), a privately held Indonesian CBM company.  Dart Energy and Ephindo are jointly operating the block through their joint technical ownership of SWCI, with Dart Energy having primary responsibility for technical and operating issues.

To date, three exploration wells and four pilot wells have been drilled and initial technical results have been encouraging.  Surface facilities and infrastructure are being deployed as part of a long-term production test and a pilot-to-power project to enable early gas commercialisation.  SWCI will sell gas to a local electricity generation company, for supply of power to the local township of Sangatta. First gas sales is anticipated in 2H 2012.  The longer term strategy is to transport gas to the Bontang LNG plant, which is currently operating under capacity, and achieve LNG export-linked gas prices.

As at 31 December 2011, NSAI estimated 37.7 Bcf of 3P reserves,  273 Bcf of 2C resources and 192 Bcf of prospective resources at Sangatta West.