Release: Lion Energy: Oseil phase II development

(Adelaide, November 22, 2004)Lion Energy Limited, through its wholly owned subsidiary Kalrez Petroleum (Seram) Limited holds a 2.5% shareholding in the Seram (Non Bula) Block PSC. The major shareholder and Operator of the Joint Venture, is KUFPEC (Indonesia) Limited with 97.5%.

The block contains the Oseil Oilfield, which has produced in excess of 2,000,000 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 Programme and Budget (WP&B) for 2005 with the objectives of: (1)lifting oil production to ~ 17,000 barrels of crude oil per day by mid 2005; (2)increasing Block reserves by drilling up at least two satellite structures to the Oseil oilfield; (3)high-grading existing exploration prospects in the Block to drillable category, with a seismic programme.

Commencement of Development Drilling

At 13:30 hours Eastern Indonesian time on Friday 19th November 2004, Oseil #3 was spudded. This is the first of up to 16 development wells to be drilled as part of the Phase II development programme. All development wells are engineered as directional wells from existing well sites and are intended to maximize horizontal section within the productive Manusela reservoir to increase production rate and reserves recovery per well.

The well is expected to take approximately 40 days to complete and will then be immediately tied into the existing production facilities as a new producing well.

Seven well slots are prepared on the current site. After completion of this well, Century Rig 24 will then be skidded to the next slot on the same location.

Drilling wells from existing sites minimizes rig moving time and cost, whilst eliminating very expensive road access and well site location preparation in the mountainous terrain in which the Oseil Oilfield is located.(end of release)