Release: Lion Energy: Oseil operations update Seram (Non Bula) block jv

April 6, 2005 ? Lion Energy Limited, through its wholly owned subsidiary Kalrez Petroleum (Seram) Limited holds a 2.5% shareholding in the Seram (Non Bula) Block Production Sharing Contract. The major shareholder and Operator the Joint Venture, is KUFPEC (Indonesia) Limited with 97.5%.

The block contains the Oseil oilfield. which has produced in excess of 2 million barrels of crude oil since initial field startup in January 2003, from the three existing wells, Oseil #s 1. 2 & 4.

The Seram Joint Venture parties have agreed an aggressive Work Programmed and Budget (WP&B) for 2005 with the objectives of :

▪ Lifting oil production to ~ 17.000 barrels of crude oil per day during third quarter 2005.
▪ Increasing Block reserves by drilling up at east two satellite structures to the Oseil oilfield.
▪ High-grading existing exploration prospects in the Block to drillable category, with a seismic programme.

OSEIL-3 was the first of the Phase II development wells and as reported on 28th January 2005, was completed and turned to production.

OSEIL-5 was spudded on 27th January 2005 and temporarily suspended on 13th February 2005, after setting 7 inch casing at 6,913 feet MD RKB.

OSEIL-6 was spudded on the 15 February 2005 and temporarily suspended on March 12th 2005.

OSEIL-7 was spudded on April 5, 2005 and currently drilling ahead.

Oseil-7 like Oseil-5 and Oseil-6 will be suspended at the top of the Manusela formation, due to the shutdown of the Oseil Production Facility for maintenance.

During the period between the date Oseil-6 was suspended and Oseil-7 spudded, a work over on Osei-3 was carried out to remedy gas leaking from the top of the 5-liner section.

During the drilling of the under pressured Manusela reservoir formation, the under balanced drilling method is applied to ensure returns during drilling operations. The high flow rate from the wells during this under balanced drilling is diverted to the Oseil Production Facility.

During the period of maintenance work at the Oseil Production Facility a temporary production facility has been installed to receive production from completed wells OseiI-1, 2. 3 & 4; however this facility is not able to process the significant flow during under balanced drilling operations ? hence the suspension of wells Oseil-5 and Oseil-6 at the top of the Manusela formation. This strategy will be applied to Oseil-7 and subsequent wells until such time as the maintenance work on the Oseil Production Facility is completed. after which the drilling rig will skid back onto the suspended wells to complete them as producer. Once this completion process begins, we can anticipate the wells being on production in quick succession, enabling production to escalate to approximately 17000 BOPD.

MD RKB Measured Depth relaive to Rotary Kelly Bushing. (end of release)