Lion Energy: South Block A PSC operations update

(January 11, 2017)--Lion Energy Limited is pleased to announce that as of this morning?s report, the Amanah Timur well in South Block A PSC in Aceh Province is drilling ahead at 323m. The intersected formations continue to come in high to pre-drill prognosis and the well has encountered additional zones of interest. These zones will be evaluated with wireline logs and possible production testing.

Since the last announcement by Lion on 10 January 2017, the well has drilled from 154m to the current depth of 323m KB in an interbedded sandstone, siltstone and shale section. Additional zones of interest, to be evaluated with wireline logs and possible testing, have been intersected in the well. The section from 205-225m had elevated gas up to 2.52% recorded with the following composition (C1: 21374ppm, C2 365ppm, C3 977ppm, iC4 214ppm, nC4 75ppm, iC5 191ppm). Some oil fluorescence (<5%) and nil to weak oil odour is described from 210-212m. The top of the main ?500? sandstone was iprovisionally picked at 234m, 55 m high to prognosis with elevated gas with peak to 3.2% in the upper 10m section (C1: 30,575ppm, C2 1182ppm, C3 4ppm). From approximately 272m, a predicted shale and siltstone section has been penetrated which overlies the deeper objective targets in the well. High gas readings continue to be recorded through this section.

The well has an estimated cost of US$1.3mil (US$0.53mil net to Lion). This well cost includes provision for up to three production tests. Multiple sandstone reservoirs are being targeted including the shallow objective which had oil production in pre-1930 wells that are in close proximity.

Lion?s CEO, Kim Morrison, noted ?We continue to be encouraged with the Amanah Timur -1 results and now look forward to drilling the objective sandstone targets below the current shale dominated section, expected from approximately 375m. As we noted yesterday, wireline log evaluation and production testing is planned to determine fluid content and potential productivity of the zones of interest penetrated to date.? (ends)