CITIC to Proceed with Oseil Field Development in Seram (Non-Bula) PSC

Australia's Lion Energy Ltd. reported Monday the Oseil-­27 development well on the Oseil field in the Seram (Non-­Bula) Block Production Sharing Contract (PSC) in eastern Indonesia has reached total depth and is currently flowing oil at approximately 600 barrels per day (bpd). The operator, CITIC Seram Energy Ltd., has also advised that Phase 3 of the Oseil field development has now been approved by the Indonesia regulator, paving the way for up to six more development wells to be drilled.

The Phase 3 development wells target undrained oil within the Oseil-­2 area of the Oseil field. Reserves to be accessed by each well are approximately 0.4 – 0.6 million barrels. The Phase 3 development is economically attractive at current oil prices.

Lion’s CEO Kim Morrison commented “The result of Oseil-­27 has exceeded expectations and highlights the potential of the Oseil field which is now producing at approximately 3,100 barrels oil oil per day (bopd). With the formal approval of Phase 3, the joint venture is currently considering additional development drilling opportunities with potential to significantly increase field production.”

Oseil Oil Field

Lion, via its wholly owned subsidiary Lion International Investment Ltd, holds a 2.5 percent participating interest in the Seram (Non-­Bula) Block PSC, located onshore Seram Island in eastern Indonesia. The operator of the joint venture is CITIC Seram Energy Ltd. (51 percent), and other partners are KUFPEC (Indonesia) Ltd. (30 percent) and Gulf Petroleum Investment (16.5 percent).

The block contains the Oseil oilfield and surrounding structures that have yielded cumulative crude oil production of 13,349,119 barrels since production started in January 2003 through to March 31.

Investment in the Oseil field Phase 1 Development commenced in January 2000 and Phase 2 in March 2004. The area of Phase 1 and Phase 2 Development covered the Oseil-­1/4 and Oseil-­2 areas and provided for the drilling of 18 wells, which have been drilled.

The field is currently producing approximately 3,100 bopd (78 bopd net to Lion) from 16 wells. Production is currently constrained by a faulty pump on the Oseil-‐26 well and planned remediation of this well, currently underway, should add approximately 200 bopd to production.


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