Lion Energy: Seram development drilling boosts production, more wells planned

By Romel S. Gurky

ASX-listed Lion Energy Ltd said the Oseil-27 development well on the Oseil field in the Seram (Non-Bula) Block PSC in eastern Indonesia has reached total depth and is currently flowing oil at approximately 600 bpd.

Lion said in a statement Monday that the operator of the block, CITIC Seram Energy Ltd, has also advised that Phase 3 of the Oseil field development has now been approved by the Indonesia regulator, paving the way for up to six more development wells to be drilled.

The Phase 3 development wells target undrained oil within the Oseil-2 area of the Oseil field. Reserves to be accessed by each well are approximately 0.4?0.6 million bbls. The Phase 3 development is economically attractive at current oil prices, Lion explained.

Lion?s CEO Kim Morrison commented ?The result of Oseil-27 has exceeded expectations and highlights the potential of the Oseil field which is now producing at approximately 3100 bopd. With the formal approval of Phase 3, the joint venture is currently considering additional development drilling opportunities with potential to significantly increase field production.?

The Seram Joint Venture has secured all external approvals for a third phase of development drilling on the Oseil field (referred to by the Indonesian regulators as a Plan of Further Development or POFD), with up to 10 wells within the Oseil-2 field. The Phase 3 development plan includes the drilling of up to 10 additional horizontal wells, four of which have already been drilled under a negotiated

arrangement with the regulatory body prior to approval of Phase 3. The Phase 3 POFD was formally approved by the Indonesian regulatory body, SKK Migas, on 5 May 2015.

The estimated total cost of the remaining six Phase 3 wells and related facilities is US$67.97million (US$1.7mil net to Lion). Reserves to be addressed by each of the six wells is around 0.4-0.6million bbls each. It is expected that the operator will stage the drilling program such that these capital costs can be financed by the free cash flow from the existing production revenues. The drilling of all six remaining wells will be contingent upon positive outcomes of the earlier wells in the program. Oseil field overview Oseil-2 field area.

The recently completed Oseil-27 development well was the fourth well in the POFD. Oseil-28 is proposed as the next well to be drilled and is currently under review by the joint venture.

Lion, through its wholly owned subsidiary Lion International Investment Limited (LII), holds a 2.5 percent shareholding in the Seram (Non Bula) PSC joint venture. The major equity holder and operator of the joint venture is CITIC Seram Energy Ltd (51 percent). Other partners are KUFPEC (Indonesia) Ltd (30 percent) and Gulf Petroleum Investment (16.5 percent). The PSC is located onshore on the island of Seram, in Eastern Indonesia and has an area of 1,524 km2.

Editing by Reiner Simanjuntak