Lion Energy: South Block A PSC operations update

(January 17, 2017)--Lion Energy Limited provides the following update of the Amanah Timur well (AMT-1) as at this mornings report. Since the last report on January 13th the operations have focused on controlling high gas encountered in the ?700? sandstone objective, which resulted in gas-cut mud and increased pressure with a shut-in casing pressure of approximately 80psi. This has now been successfully achieved although in the process the drill-pipe has become stuck.

Operations were initially successful yesterday in stabilising the well by circulating a 13.2ppg mud with some lost circulation material to control losses. After shutting off pumps to ensure there was no pressure influx, the drill-pipe became stuck. During attempts to free the pipe the well again started to flow with up to 1700 units of gas reported.

As of this morning?s report from the operator, circulation of 13.5ppg mud has been able to stabilise the well. The operator is currently attempting to free the pipe after which it is expected the current section will be logged before setting 7? casing and drilling ahead in 6 1/8? hole to the planned total depth 570m KB. Lion will keep the market informed on progress.

Lion has a 40.7% interest in the South Block A PSC where the AMT-1 is located. The remaining 59.3% is held by operator Renco Elang Energy Pte Ltd (REE).

Lion CEO, Kim Morrison commented ?While unwelcome, such challenges are fairly common in exploration drilling. Fortunately, the team of REE, Lion and Pertamina Drilling Services are well equipped to handle this. The gas and oil shows encountered to date are most encouraging and evaluating these, as well as the deeper, undrilled, objectives, in a safe and effective manner remain the key priority.? (ends)