Release: Lion Energy: Sale of Bula oilfield

June 1, 2005 ? Late last year Lion Energy Limited ("Lion") announced it had contracted to sell the Bula oilfield and the associated heavy equipment to PT Ilham Treda Industri for US$4,350,000. This sale was subsequently approved by the shareholders of the company at a general meeting held on 7 January 2005. Settlement was to have occurred in late January 2005 however, after several extensions of time the purchaser was unable to finalise payment. As a consequence Lion advised the purchaser that the agreement to sell Bula to it was cancelled.

On 1 March 2005 Lion notified the market the sale would not proceed due to the purchaser's inability to finalise payment. This announcement also advised the Directors would review the assets and advise whether another purchaser would be sought or the assets would be retained and developed.

After review by the Directors, on 11 May 2005 Lion announced it had contracted to sell Bula and associated heavy equipment to Southern Petroleum Pte Ltd for US$4,850,000. Approval by shareholders for this sale is to occur at a general meeting to be held on 28 June 2005.

The Directors now advise that they have received correspondence on Monday 30 May 2005 from PT Ilham Treda Industri notifying Lion that US$5,000,000 had been sent to the Lion bank account as payment for the Bula assets. A copy of the correspondence received is enclosed. As yet these funds not been received by Lion.

The Directors will notify the market if the funds are received and they will then advise how the company intends to proceed.(end of release)