GFB Resources will suspends Camar production

GFB Resources will suspends Camar production

CALGARY (Dow Jones): Carmanah Resources Ltd. said its GFB
Resources (Java) Ltd. unit will temporarily suspend production at
the Camar Field in the Java Sea offshore Indonesia, during the
first week of March.

GFB Resources owns 100 percent and is the operator of the
Bawean Production Sharing Contract, which contains the Camar
Field.

In a news release, the company said the decision, taken in
consultation with Indonesian state oil company Pertamina, is a
result of persistent low oil prices, the protracted Asian
economic crisis, lower production levels, and the inability to
generate positive cash flow given the extent of fixed costs as a
percentage of total operating costs at Camar.

It said that, because GFB Resources was unable to cut fixed
costs associated with the Camar Ayu storage and accommodation
tanker and related mooring system, the tanker is scheduled for
redelivery to its owners by March 6.

Carmanah Resources Ltd. said that, prior to returning the
tanker, about 125,000 barrels of crude oil will be lifted for
sale for Pertamina.

The company said the suspension could possibly be rescheduled
if crude oil prices rise in the short term or production levels,
currently at about 1,800 barrels of oil a day to 1,900 b/d, rise
upon completion of minor remedial work on surface facilities at
the MPA-1 well at Camar.

It said a notice has been sent to all GFB Resources (Java)
Ltd. national employees indicating they will remain in the
company's employ pending resolution of Carmanah's plans for the
Bawean Production Sharing Contract and Camar. The company noted
this is a minor cost within total operating costs.

Carmanah said GFB Resources continues negotiations with a
number of companies with respect to their possible participation
in the Bawean PSC and anticipates receiving one or a number of
proposals by the end of February.

The company noted its other subsidiaries, GFB Langsa and GFB
Natuna, are talking with prospective partners on a similar basis,
and proposals are also anticipated by the end of the month. It
said there is no guarantee such proposals will be forthcoming on
a timely basis nor that they will be acceptable to Carmanah and
GFB. But Carmanah noted it's satisfied the interested parties are
"companies with the financial wherewithal and operating
capability to be effective partners and/or acquirers of interests
up to 100 percent of currently-held participation."

Carmanah said its priority remains to reduce its interests in
some or all of its Indonesian properties in order to enhance
overall corporate liquidity. It said normal operations for the
company would be affected if either a sale, reduction in interest
or other form of transaction wasn't completed in Indonesia.

In the interim, the company said it's investigating certain
financing alternatives which would alleviate the identified
challenges arising from current industry conditions. It didn't
elaborate.