Continental Energy Signs Agreement to Farm Out 40% Share of Its Indonesian Oil Field to Apex Oil & Gas Ltd. of Jakarta.

Business Editors

JAKARTA, Indonesia & VANCOUVER, British Columbia--(BUSINESS WIRE)--Nov. 5, 2001--

Continental Also Signs Private Placement Investment Agreements

With Two Financial Investment Firms Totaling US$ 1,050,000; Development Drilling Expected Soon to Place Field On-stream Early 2002

Continental Energy Corporation ("Continental") (OTCBB:CPPXF) announced today that it has entered into a part and parcel single agreement with three separate companies regarding a farm-out of a 40% portion of Continental's Bangkudulis Property onshore East Kalimantan, Indonesia, and related US$ 1,050,000 financing for Continental's remaining 30% share of property drilling and field development costs.

Richard L. McAdoo, President of Continental Energy said from Jakarta, after inking the agreements, "This is the moment we have been working towards all year. The financing represents a key initial long term investment by this group of investors. They have first-hand knowledge of Continental, its management's abilities and the potential of the Bangkudulis project. The funding will allow us to commence drilling as soon as a rig can be mobilized to the site and enable us to place Bangkudulis field on stream as early as possible in 2002."

Continental's 70% majority owned subsidiary, GAT Bangkudulis Petroleum Company Ltd. ("GATB") owns and operates a project to develop and place the Bangkudulis Oil Field on production pursuant to a Technical Assistance Contract ("TAC") concession with Pertamina the state oil company of Indonesia. The TAC grants GATB rights to develop, exploit and produce oil and gas from the Bangkudulis oil and gas field.

The Bangkudulis oil and gas field was discovered in 1980 by ARCO but was relinquished prior to commercial development of the field. During an ARCO 60 day extended production test the discovery well tested at rates up to 6,500 BOPD of 41 API (American Petroleum Institute) degrees gravity sweet crude from four sand zones with an accumulated thickness of 117 feet at a depth of 3,200 feet. A fifth sand zone of 60-feet thickness at 4,500 feet depth flowed gas at 7.5 MMCFD. Continental's shares of GATB, the TAC and the Bangkudulis oilfield are hereinafter collectively referred to as the "Bangkudulis Property."

Under the terms of the newly signed agreement, Continental shall farm-out a 40% interest in the Bangkudulis Property to Apex Oil & Gas Ltd. ("Apex") of Jakarta. Continental retains a 30% interest. Apex is to provide all necessary bridge funding to GATB from signature until Continental's related financing arrangements described below are closed and in place. Thereafter Apex shall also take up and pay a 57% share of Property drilling and development costs and Continental shall provide 43%. From the date of government approval to commence commercial production Continental's obligation to contribute to GATB costs reduces to 30% and Apex's obligation to 40%. At that time, PT Garis Astatunggal Bangkudulis, a local Indonesian company, must commence payment of its own 30% interest and begin repayment to Continental and Apex of the amounts of funding advanced on their behalf by Continental and Apex during the period during which such interest was "carried" by Continental and Apex.

For a period of 60 days commencing from the point in time of governmental approval to commence commercial production from the Bangkudulis Property, Continental has granted Apex a put option to sell some or all of its 40% Property interest back to Continental, in any number increments of at least 10% each, at an agreed price of US$ 500,000 per 10% increment to be paid by Continental in cash equivalent of common shares of Continental valued at market closing price for Continental's shares at the time the option is exercised.

Also as part and parcel of the same deal, two privately owned financial investors, B-First Holdings Ltd. and Worldrail Enterprise Ltd., both of Jakarta, have agreed to make private placement investments of US$ 525,000 each for a total investment of US$ 1,050,000 into "Units" of securities of Continental at a price of US$ 0.15 per Unit. Each Unit consists of one Class-A, Series-1 Preferred Share (the "Preferred Shares") and one non-transferable common share purchase warrant valid for a period of one year to purchase a common share at a price of US$ 0.15 (the "Warrants"). A total of 7,000,000 Preferred Shares and 7,000,000 Warrants will be issued.

The Preferred Shares are part of a new class and series to be created and issued by Continental solely with regard to this placement. The Preferred Shares shall have a par value of US$ 0.15 and yield a return of 8% simple interest per annum payable in additional Preferred Shares at par value. The Preferred Shares have a liquidation and right of first refusal preference on any liquidation or sale of the Bangkudulis Property by Continental. The Preferred Shares are convertible into common shares on a one for one basis at any time at the election of the holder. The Preferred Shares are redeemable and any time Continental's common shares trade above a market price of US$ 0.75 per share for a period of 30 days, Continental may redeem the Preferred Shares by converting them to common shares on a one for one basis. Each Preferred Share shall carry voting rights equivalent to one common share. Continental will not register the Preferred Shares or otherwise attempt to qualify or list them for trading on any public market.

The use of proceeds of the US$ 1,050,000 raised from the placement shall be devoted, at the bequest of the investors, substantially to the direct benefit of Continental's Bangkudulis field development project. The placement funding shall be delivered by the investors to CEC immediately upon GATB's receipt of approval from Pertamina of its recent submission for extension of the TAC concession as part of GATB's annual drilling and Bangkudulis field development work program, schedule and budget for calendar year 2002. In accordance with the expected budget of US$ 3,000,000 expenditure required to achieve first commercial production from the Bangkudulis Property, Continental must provide its 43% share of funds or US$ 1,260,000. The Preferred Share issue provides over 80% of the needed funds and Continental intends to raise the remaining US$ 210,000 over the next three months by private placement subscriptions of common shares.

Continental Energy is a small but aggressive oil and gas exploration company focusing its efforts on discovering major reserves in Indonesia. Continental owns and operates a 60% interest in two high potential exploration properties under Production Sharing Contracts covering some 3 million acres in Indonesia, the onshore Bengara-II Block and the offshore Yapen Block and a 30% interest in a third Indonesian property, a Technical Assistance Contract for the development of the Bangkudulis Oil Field.

On behalf of the Board,

"Original Signed by Gary R. Schell"

Gary R. Schell, Director

No securities regulatory authority has either approved or disapproved the contents of this news release.

Certain matters discussed within this press release are forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Although Continental believes the expectations reflected in such forward-looking statements including reserves estimates, production forecasts, feasibility reports and economic evaluations are based on reasonable expectations and assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include financial performance, oil and gas prices, drilling program results, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in Continental's periodic filings with the United States Securities Exchange Commission.

For more info please contact Craig Doctor, VP Investor Relations, 604/278-4656 or Advisors, Alex Tassos & Associates 760/737-7000 or Gary Schell, Director, at the Company's Headquarters, 21795 64th Avenue, Langley, BC, V2Y-2N, BC, 604/532-6066.