LION ENERGY LIMITED 
By 15 Rheola Street West Perth WA 6005 | Telephone +618 9213 4300 Facsimile +618 9213 4311 | |
ABN 51 000 753 640 | PO Box 512, West Perth Western Australia 6872 | Web: www.lionenergy.com.au ASX Code: LIO |
ASX RELEASE For immediate release 7 January 2013
SERAM PSC UPDATEThe LOFIN-1 exploration well within the Seram (Non Bula) PSC has been successfully suspended with the setting of four cement plugs to isolate the productive Manusela Formation, whilst evaluation work continues.
Sproule International Limited, an established and respected petroleum consulting firm has been commissioned to produce a reserve evaluation and the report is expected to be completed during February 2013.
The LOFIN-1 exploration well was successfully sidetracked and the LOFIN-1 ST wellbore reached Total Depth of 4,427 metres (14,525 feet) MD , with 522 feet of open-hole Manusela Formation below the 5 inch casing shoe. Electric logs were run over the entire open hole Manusela Formation.
A four rate flow test resulted in a final flow rate through a 2 stage test separator of:
o Gas rate 15.7 MMscfD with 171 BPD of 36.1 API oil/condensate
o Flowing Wellhead Pressure 4,750 psi on 24/64 inch choke
o Gas Specific Gravity 1.45
The drilling rig is being moved to the Oseil-1 well site for the drilling of development well
Oseil-1ST.
The LOFIN-1 exploration well was spudded on January 17th
2012.
The primary objective the Manusela Formation was encountered at a depth of
4,265.5 meters (13,995 feet) MD. Drilling continued to a depth of 4,427 metres (14,525 feet) MD, at which point drilling torque loads resulted in a decision to halt further drilling and evaluate the open hole section with flow testing.
5 inch casing had been set at 4,268 meters (14,003 feet) MD, with an open hole section of 522 feet of Manuela Formation below the 5 inch casing shoe.
Cont'd…/2
Lion Energy Limited ASX Release 7 January 2013, page 2 of 3
It was evident from electric logs and various open hole flow tests that the fractured Manusela Formation had suffered damage from excessive mud weights, particularly during the early stages of drilling the reservoir.
Acidizing proved beneficial and resulted in enhanced flow test results.
Following final testing, the testing packer could not be unseated and resulted in the test string being cut above the stuck packer. Despite various attempts to fish the packer, it remains stuck in the wellbore.
A decision was then made to suspend the well and four cement plugs were set inside the wellbore to isolate the open hole Manusela Formation.
All information obtained from the drilling, logging and testing is now being evaluated. Sproule International Limited, an established and respected petroleum consulting firm has been commissioned to produce a reserve evaluation with the report expected to be completed during February 2013.
Oseil 1ST well is a development, deviated well in the NE flank of the Oseil-1/4 structure and is intended to produce un-drained oil reserves within the NE of the Oseil-1/4 structure. Primary target is the Manusela Carbonate Formation.
The drilling rig is presently being moved from the Lofin-1 well site to the Oseil-1ST drill site. As soon as the rig move is completed, drilling operations on Oseil-1ST will commence.
Expected recovery from the well is 352,000 barrels of oil. The well is expected to take 75 days, including provision for electric logging and testing.
Following shareholder approval at an Extraordinary Meeting in February 2012 to restructure the
company, LION has moved quickly, yet conservatively, to acquire low risk positions in significant opportunities, specifically:
1. LION, through its wholly owned subsidiary Lion International Investment Limited, has retained a
2.5% shareholding in the Seram (Non Bula) Block Renewal Production Sharing Contract. The major shareholder and Operator of the Joint Venture is CITIC Seram Energy Limited (51%). Other partners include KUFPEC (Indonesia) Limited (30%) and Gulf Petroleum Investment (16.5%). This is an income generating interest with significant upside exploration opportunity, funded through cash flow from the producing Oseil oilfield.
2. LION has executed an agreement with KRX Energy Pte Ltd ("KRX"), a Singapore registered company, paving the way for LION to provide ongoing funding for KRX as it moves forward with acquisition and development of oil and gas interests in SE Asia.
2.1. LION currently has a 30.77% equity position in KRX following subscriptions of $1,000,000.
2.2. KRX, through wholly owned subsidiary (KRX Energy (SBA) Pte. Ltd.), has executed a Farm- in Agreement with PT Prosys Oil & Gas International for the SOUTH BLOCK "A" Production Sharing Contract in Indonesia and acquired a 35% non-operating participating interest, for certain funding commitments in the forward work program approved by the SOUTH BLOCK "A" joint venture. With an extensive prospect and lead inventory compiled for the
2,105 sq.km. SOUTH BLOCK "A" identified by KRX as an un-risked potential range of 87 -
475 MMBBL for the oil case and 370 - 1,994 BCF for the gas case (on a 100% basis), the farm-in represents a relatively low cost entry into a significant portfolio.
2.3. KRX has executed an Area of Mutual Interest Agreement (AMI Agreement) with two prominent Indonesian groups to jointly evaluate the onshore areas of Java, Kalimantan
Lion Energy Limited ASX Release 7 January 2013, page 3 of 3
and Sumatra for the purposes of forming a consortium to ultimately acquire prospective acreage.
2.3.1. KRX has a 35% Participating Interest in the AMI Agreement which participating
interest will apply to any application for prospective acreage except that it may be adjusted by mutual agreement between the parties.
2.3.2. KRX shall have responsibility to operate the technical component of the initial evaluation and provide ongoing technical support work during any joint study process, with all parties contributing to the cost in accordance with their participating interests.
2.3.3. The other parties to the Agreement are well established and well recognized operators in Indonesia and will provide operational and government liaison services on an as required basis, on behalf of all the AMI Agreement parties.
2.3.4. Applications for joint study areas have already been submitted to MIGAS by the AMI Agreement joint venture and negotiations have commenced on these applications with the Indonesian government.
In pursuit of the objectives to grow the Company as an oil and gas explorer and producer, the executive and Board of Directors of the company is and will continue to review new opportunities as they present.
BCF Billion cubic feet (of natural gas)
DST Drill Stem Test
MD Measured depth (from rig rotary table) MMBO US barrel of oil x 1,000,000
MMscf Standard cubic feet x 1,000,000
MMscfD Standard cubic feet per day x 1,000,000
MMSTBO Stock Tank Barrel of oil x 1,000,000
PPG Pounds per gallon
psig Gauge pressure in pounds per square inch
STOOIP Stock Tank Oil Originally In Place
TD Total Depth
Contact Jack Toby (Company Secretary)
Telephone: (08) 9213 4300
Email: info@lionenergy.com.au
Information in this report that relates to Hydrocarbon Reserves and or Resources is based on information compiled by Mr Russell Brimage, Director of Lion Energy Limited who has consented to the inclusion of that information in the form and context in which it appears.
Mr Brimage has over 30 years experience in the application of engineering to the petroleum industry in oil and gas exploration and production, both in Australia and internationally, as either an employee or consultant to oil companies operating in the upstream petroleum industry. Mr Brimage reviews the Company's operations with the help of various professional consultants, appropriately qualified and experienced in their respective fields within the upstream petroleum industry. He is also an Associate Member of the Society of Petroleum Engineers.
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