Carmanah Updates Indonesian Activity, Announces Financing.

CALGARY, Alberta--(BUSINESS WIRE)--Oct. 11, 1995--CARMANAH RESOURCES LTD (TSE: CKM) Carmanah Resources Ltd. announced today that recently a number of constructive developments have occurred which favorably position the Company to achieve improved operating and financial results for the balance of the current fiscal year and 1996.

Since August 1995, the Camar-1 and CS-2 wells on the south lobe of the Camar Field (Camar) offshore Indonesia have been subjected to temporary gas lift. As a result, Camar production has dramatically increased from around 2,300 BOPD to levels exceeding 5,000 BOPD, with Camar-1 reaching 3,600 BOPD and CS-2, which had not produced since 1993, exceeding levels of 1,000 BOPD.

Carmanah is presently in the midst of an extensive US $2.7 million workover program at Camar which started last August and should be completed around the end of October. The program included the installation of a jet pump on the north lobe of Camar field, the completion of a new zone in well CN-2, and the recommencement of oil production at both CN-2 and Camar-5, the two wells on the north lobe tied into the WPP production platform.

These wells have been shut in since Carmanah acquired Camar in August, 1994. This part of the program has been completed and incremental production of more than 500 BOPD is anticipated with an imminent startup.

The snubbing unit or service rig has now been moved to the southern lobe platform, CPP, and work is currently underway on the CS-4 well to conduct a sustained deliverability test of Kujung-I natural gas reserves with a view to confirming both a satisfactory gas supply for the permanent gas lift system which will be installed in the Camar-1 and CS-2 wells and to confirm the deliverability potential of this zone for purposes of formulating a gas development program aimed at producing approximately 20 MMcf/d of natural gas for sale to available markets by late 1996 - early 1997. Carmanah anticipates the gas development program will be financed either from cash flow or on a project basis.

Once the testing program at CS-4 is completed, a new tubing string will be run in this well and Carmanah anticipates its productivity could be enhanced to 250 BOPD, an increase of 50 percent. Work will then commence to install the permanent gas lift system in Camar-1 and CS-2, the two main producing wells in the field. This should be completed by the end of October and production levels should reach 5,500 BOPD by November, 1995.

In order to sustain productivity and enhance the recognized recoverable reserves at Camar, planning is already underway to drill three or four wells within the Field during 1996 to access compartmentalized reserves not presently being drained by the five producing wells within Camar's boundaries.

Also, one of the wells under consideration may simultaneously evaluate a significant new prospect located west of Camar which is judged to have significant reserve potential. Successful evaluation of this prospect by either a new vertical well or a long-reach horizontal well from an existing wellbore would have a material impact on Carmanah's reserve base and underlying value.

In early-September, 1995, a permanent mooring system for the storage and accommodation tanker (SAT) was installed at Camar. This is an important development for two reasons. Firstly, with permanent mooring the SAT will be better able to withstand the impact of any adverse weather conditions which might develop during the winter months, substantially reducing the likelihood of having to disconnect from production facilities during stormy periods, which are usually of short duration.

Secondly, and perhaps more importantly, with permanent mooring it is no longer necessary to shut in and disconnect producing wells during a lifting (sale) of the crude oil inventory stored in the SAT. The ability to continuously produce oil should enhance well performance and provide a more stable production profile.

In late-September, Carmanah completed its third lifting, disposing of 153,300 barrels of Camar crude at a price of US $15.90 per barrel to Caltex for the Australian market. Carmanah retained in excess of 30,000 barrels in inventory due to capacity constraints of the Caltex tanker. Oil in inventory now stands at over 75,000 barrels and a fourth lifting of 160,000 to 180,000 barrels is now scheduled for November 3 - 5. Similar regular monthly liftings are anticipated throughout 1995 and into 1996.

"The new higher level of production at Camar, in conjunction with the installation of permanent mooring, indicates Carmanah should experience a dramatic increase in revenue, cash flow and profitability during the balance of 1995 and 1996," said senior management. "We look forward to deploying this cash flow on our proposed capital program next year, which will also include further activity at Babat-Kukui onshore southern Sumatra and evaluation of new growth opportunities in Indonesia and elsewhere."

At Kampar Kanan onshore central Sumatra, the Pendalian-2 well has been abandoned after encountering non-commercial oil shows. Carmanah is currently assessing its continued involvement in the 1.8 million acre, 100 percent-owned production sharing contract.

Carmanah also announces it has reached agreements to raise $2.53 million through the private placement of 1.41 million common and flow-through shares, issued from treasury, at a price of $1.80 per share. Proceeds will be added to working capital to fund capital expenditure programs in Indonesia and Canada. Following completion of the financing, there will be 19.8 million common shares outstanding (21.9 million fully-diluted). The above financing was arranged through Carmanah's agent, Thomson Kernaghan of Toronto.

Carmanah is a public, Canadian oil company primarily engaged in oil and gas production and exploitation in Indonesia. Through its wholly-owned subsidiary, it operates and owns 84 percent of the Bawean PSC and Camar, situated 60 miles offshore in the Java Sea, Indonesia. Additionally, Carmanah produces approximately 450 BOPD of heavy oil in Canada. -0-

Note to Editors: The Toronto Stock Exchange has neither approved nor disapproved the information herein.

CONTACT: Carmanah Resources, Ltd.

R.A. Gusella / A.F. Badwi, 403/266-4975