Lion Energy: Seram (Non Bula) PSC operations update

(March 17, 2015) -- Lion Energy Ltd is pleased to advise that Lofin-2 appraisal well is progressing well with a 7 inch liner run and cemented to 4619m MD. The top of the primary objective Manusela Formation limestone was encountered at 4165m MD/4508m SS some 345m deeper than the top Manusela Formation in the Lofin-1 discovery well. Some elevated gas peaks, along with some fhiorescence shows in rock cuttings, have been recorded.

The Manusela formation is described as predominantly limestone, with nil-to-poor visual porosity. From 4652m-4688m MD 5-20 % uniform dull yellow brown fluorescence with trace very slow weak streaming cut. Occasional trace 3% pin point bluish-white to greenish-white fluorescence, with slow-moderate streaming milky white cut. These shows in Lofin-2 are similar to shows encountered in the Lofin-1 discovery well.

The forward plan is to continue drilling to the planned TD of 5425m. However the well may TD shallower if there are no further indications of hydrocarbons and/or a water contact is penetrated.

Lion?s CEO Kim Morrison noted ?The presence of some gas and recorded oil fluorescence in Lofin 2 is of interest, especially as the well is approximately 345m down-dip from the Lofin-2 discovery well. However evaluation of a fractured reservoir is inherently challenging and further evaluation including wireline logging and possible formation testing is required to determine the fluid content in the Manusela objective. Hence it is still too early to reach a conclusion as to the eventual outcome of the well.?

Lofin-2 is located in the Seram (Non Bula) PSC in eastern Indonesia and spudded on 31 October 2014. It is being drilled to appraise the Lofin-1 discovery made in 2012, which flowed 15.7 mmscfgd and 171 bpd oil/condensate from the fractured ?Manusela Formation. The objective of the well is to investigate the extent of the hydrocarbon column below the 160m delineated in Lofin-1 which could not be drilled deeper due to engineering issues.

Lion has a 2.5% interest in the Seram (Non Bula) PSC which is operated by CITIC Seram Energy Ltd (51%) with other co-venturers being KUFPEC (Indonesia) Ltd (30%) and Gulf Petroleum Investment Company (16.5%). (ends)