(AlbertaIndex, April 21, Monday) --- Calgary-based Husky Energy said it has reached agreement with China’s CNOOC Ltd. to jointly develop the Madura BD gas and natural gas liquids field located off the coast of Indonesia’s East Java. The agreement covers the development and further exploration of the Madura Straits production sharing contract (PSC).

    CNOOC Ltd will pay Husky $125 million to acquire a 50% equity interest in Husky Oil (Madura) Limited, which holds a 100% interest in the Madura Strait PSC. The Madura Strait PSC is located 40 km north of East Java and covers 2,794 sq km of exploration acreage.

Ten wells have been drilled in this block since 1984, resulting in two discoveries, the Madura BD and MDA fields. In 2007, Husky signed three gas sale and purchase agreements for the sale of 100 million cubic feet per day of natural gas from the Madura BD field to East Java buyers.

“CNOOC Ltd. brings extensive experience and strong technical skills in operating offshore Indonesia,” said John C.S. Lau, president and CEO of Husky Energy Inc.

“We are pleased to team up with a strong partner to ensure that the development of the Madura BD field proceeds expeditiously and efficiently.”

CNOOC Southeast Asia Limited, a subsidiary of CNOOC Ltd, has development and operating experience in Indonesia, and currently operates two blocks and holds interests in numerous other blocks in Indonesia.

Husky holds a 100% interest in the East Bawean II PSC, offshore Indonesia and will continue to focus on exploration and drilling activities in Indonesia.

Husky recently completed a 1,410 sq km 3-D seismic program over this block in preparation for a two-well exploration programme in 2009.

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