Lion: AMT-1 discovery well plugged and abandoned

By Aldo Ferdyandri

ASX-listed Lion Energy Limited said Friday that the Amanah Timur discovery well (AMT-1) in South Block A PSC, Aceh, has been plugged and abandoned at a depth of 347m KB, as attempts to free the stuck drill pipe were unsuccessful. Thus it was not possible to drill to the planned total depth of 570m KB to assess the two deeper objectives.

?Lion is now working with Renco Elang Energy (REE), the operator, on forward plans to appraise this discovery,? the company said in a statement.

As previously reported, high gas and some oil shows were encountered in AMT- 1 with up to four gas zones and some potential oil zones interpreted from fluorescence shows and gas analysis. Of particular interest, during well control operations, gas was flared which is interpreted to be from the well-developed ?700? sandstone intersected from 336m KB to total depth at 347m KB. The decision to pump cement was based on the inability to free the stuck drill pipe and the importance of ensuring the various hydrocarbon zones were isolated. This has now been achieved, Lion said.

?While analysis is ongoing, the well represents a potential new field discovery and the Joint Venture will work with the Indonesian Regulator to explore commercialization options and accelerate appraisal,? Lion said. Any appraisal would also test the deeper ?800? and ?900? sandstone objectives not reached in AMT-1, which have been significantly upgraded by the results of this well.

Lion said the overall well cost is still being evaluated by the operator but is expected to be less than the budgeted well cost of US$1.3 million. This completes the remaining drilling commitment in the block at a cost significantly less that the US$3 millioin (gross) penalty stipulated in the PSC, which on its own represents a significant value enhancement for Lion.

Lion has a 40.7 percent interest in the South Block A PSC with the other participant being Renco Elang Energy Pte Ltd (59.3% interest and operator).

Lion CEO, Kim Morrison commented ?Whilst Lion is clearly disappointed that we were unable to evaluate and test all objective intervals in AMT-1, further appraisal and testing is planned. The decision to plug and abandon the well was a prudent one as it become apparent we would be unable to free the stuck pipe and it was important to ensure interpreted hydrocarbon zones were isolated. The results confirm the highly prospective nature of our South Block A PSC and we will ensure the issues encountered drilling AMT-1 are mitigated as we work on accelerating appraisal activities in this attractive block.?

Editing by Reiner Simanjuntak