The city of Balikpapan lies on the southeast coast of Borneo Island, just south of Samarinda and north of Tanahgrogot. It was important due his oil fields and apart that it was also important ''oil'' harbor with big oil refineries.

Having secured the Tarakan Island, Balikpapan with its rich oilfields and strategically important airfields was the next target of the Japan's sweep southward. The 56th Mixed Infantry Group, the Sakaguchi Detachment under the command of Major-General Shizuo Sakaguchi, was ordered to take Balikpapan with its oilfields, oil installations and airfields with as little damage as possible.

Units under direct command of the Group Commander, Major-General Shizuo Sakaguchi were following:

Before the start of the operation, following pre-landing measures were to be carried out:
- it was decided that emissaries will be dispatched to prevent the destruction of the oil refinery installations
- native policemen will be dispatched to the area to be used as road guides by the Suprise Attack Unit
- the Suprise Attack Unit will receive training and instruction in the important points of secret movement up the river.

The Dutch East Indies Army had in Balikpapan City a reasonably strong garrison with approximately 1,100 troops, under the command of KNIL Lieutenant Colonel C. van den Hoogenband. The city itself was also very good protected with coast, anti-aircraft and field batteries. There were coastal guns at the harbor (2 x 120mm guns and 4 x 75mm guns), while the entrance in the harbor was protected by a minefield; last passage laid by auxiliary minelayer Soemenep (Lt. T. Jellema). At Balikpapan and the nearby oilfields in Samarinda were also stationed some well-trained destruction groups with a mission to destroy the important oil installations in case of the Japanese attack.

Meanwhile back at Tarakan Island, a former manager of the Tarakan Branch of the Borneo Petroleum Manufacture Company agreed to work for the Japanese Army on condition they would employ him in repairing the wrecked oilfields in Tarakan. The Group Commander, therefore, with the consent of the Navy's commander, dispatched this men, together with a captured Dutch officer and three Japanese soldiers-interpreters, to Balikpapan on a captured Dutch ship, the motor boat Parsifal. They carried a message to the Balikpapan Garrison Commander, Lieutenant Colonel C. van den Hoogenband, demanding that the oil refinery installations there be handed over to the Japanese Army without being damaged. These emissaries left Tarakan Island on 16 January 1942. On January 20th, 1942, the Dornier flying boat X-21 spotted a small vessel off the coast of Samboaja, heading for Balikpapan. The flying-boat landed near the vessel, the motor boat Parsifal, and took aboard two KNIL Captains, G.L. Reinderhoff and A.H. Colijn, and flown to Balikpapan to deliver the message to the Balikpapan Garrison Commander. Lieutenant Colonel C. van den Hoogenband refused their demands and three Japanese soldiers-interpreters were immediately returned back to their unit on 23 January, while both Dutch officers did not return back.

Two native policemen, who had moved from Balikpapan to Tarakan Island two months previously, were secretly landed near Balikpapan. It was planned to used them as guides for the Suprise Attack Unit. They were to change to a canoe near Samboaja and land on the coast south of that city. They were then to proceed to Balikpapan and reconnoiter the city. They were then to proceed to Balikpapan and reconnoiter in its vicinity. They landed as planned and later successfully guided the Suprise Attack Unit up the river by lightning lamps at all important points as signals. They were used also as road guides for the unit.

In order to test the possibility of proceeding up the river secretly, the Suprise Attack Unit placed mangrove tree branches on both sides of landing craft and had a destroyer direct a searchlight on them from distance of one kilometer. The test proved successfully and it was decided that the river near the Dutch fort could be successfully navigated in this manner. The planned date of departure was delayed from 16 January until the 20th, because of a lack of air support which was still needed in the Celebes Operation. On the 18th, the Dutch commander ordered the destruction of oil installations in Balikpapan. After that, the destruction teams were evacuated from Balikpapan to Samarinda II airfield, while the smaller group at Samarinda was transported by the flying boats of the MLD. The oilfields were, however, not badly damaged. The only serious damage was to tanks, pipes and special wharves in the harbor area.

At 2000 on the 22nd the convoy crossed the equator and advanced southward. From early morning to sunset of the 24th formations of Dutch bombers attacked the convoy every fifteen to twenty minutes. The convoy successfully reached the designated position, approximately three miles southeast of Balikpapan airfield, on the evening of the 24th. About 2000 on the 24th, the four USN destroyers - USS Paul Jones, USS Parrot, USS Pope and USS John D. Ford of the 59th USN Destroyer Division under the command of Commander Paul H. Talbot, under cover of darkness, slipped into the midst of the convoy, torpedoed the transports and sank six of them. As the Asault Unit had already transfered most of its men to the landing craft, only 29 men of the Sakaguchi Detachment were reported killed or missing in this raid.

The Assault Unit landed as scheduled without meeting enemy resistance and, by dawn, had occupied the airfield. Their advance southward, however, was slow as the bridges on the coastal road had been destroyed and the unit did not reach the northern outskirts of Balikpapan City until the night of the 25th. The Dutch garrison troops had been withdrawn and the unit entered the city without a fight. That night also the 56th Mixed Infantry Group Headquarters with Major-General S. Sakaguchi followed the main unit into the town.

After leaving the main body of the convoy, the Suprise Attack Unit, while proceeding southward was attacked by approximately 20 Dutch bombers, but none of the transport ships were hit. The ships arrived at the designated position after sunset and at 2200 hours, the unit began move up the river in landing craft. While passing Balikpapan Fort, the craft were compelled to pass through an area strongly illuminated by Dutch searchlight, but due to their camouflage and well-timed movement, they luckily escaped through. Guided by the lights placed by the native policemen, who had proceeded them, the Suprise Attack Unit landed just south of the reservoir at 0430 on the 25th. No Dutch troops were encountered and while part of the unit occupied the area around the reservoir, the main body proceeded to the village Banoeabaroe, arriving there at 1440 hours, thus cutting off the Dutch line of retreat. While the main body of the unit was advancing along the road to Balikpapan City, it ran into a Dutch military column, commanded by Lieutenant Colonel C. van den Hoogenband (garrison commander), attempting to escape from Balikpapan. After defeating this Dutch column, the Suprise Attack Unit proceeded to Balikpapan City. The city was completely occupied during the night of the 25th. Having completed mopping up the surrounding area on the 26th, the men of the 56th Mixed Infantry Group assisted the naval infantry units in repairing the airfield.

After the capture of Balikpapan City, a new unit - the Kume Detachment, was formed under the command of Lieutenant Colonel Kume, which was dispatched to secure and to protect the oilfields together with naval infantry units. The part of the detachment advanced from Balikpapan City through village of Banoeabaroe to Samarinda, while the main force moved forward along the Balikpapan City-Samboaja-Sangasanga-Samarinda-Road, mopping up the remained Dutch troops in the vicinity of Samarinda.

Immediately after the capture of Balikpapan City, the main elements of the Sakaguchi Detachment began to prepare for the invasion of Bandjermasin. On Japanese request, several employees of local administration, few patients in the town's hospital, several doctors, three priests and one parson stayed in the Balikpapan City. In captivity were also some military personnel, members of the Dutch East Indies Army. Few days later (on February 20th or 24th), all this prisoners, about 80 of them, were executed at the beach near the old fortress Klandasan, in front of the eyes of the native inhabitants who were forced to watch this execution.