CITIC Drills Oseil-28 Development Well in Seram (Non-Bula) PSC in Indonesia

Lion Energy Ltd. reported Tuesday that the Oseil-22 development well in Seram (Non-Bula) Production Sharing Contract (PSC) in eastern Indonesia has spud and is drilling ahead in 26 inch hole at a current depth of 328 feet (100 meters) measured depth (MD).

The Oseil-22 well is a development well, targeting the Manusela limestone reservoir and intended to drain the northeast flank of the 4-way dip closure of the Oseil-2 fault block with estimated recoverable oil reserves of 590,000 barrels.

The well will be the 24th drilled in the Oseil oilfield and the 12th in the Oseil-2 fault block. It will be the 6th well drilled in the phase 3 Plan of Further Development (POFD), formally approved by the Indonesian regulatory body, SKK Migas, May 5.

The POFD has thus far been very successful, with 4 of 5 wells completed to date accounting for approximately 70 percent of the current daily production rate of approximately 4,100 barrels of oil per day (bopd). The most recent well Oseil-28 is currently producing at approximately 830 bopd.

The Oseil-22 well is projected to add around 500 bopd of production. Following this well, the rig is planned to drill the Oseil-23 location targeting an undrilled fault compartment in the west of the overall Oseil-2 structure.

Lion has a 2.5 percent interest in the Seram (Non Bula) PSC, which is operated by CITIC Resources.

Commenting on the outcome of the POFD program to date and the prospect of the remaining 5 wells to be drilled in the program, including Oseil-22, Lion CEO Kim Morrison commented: “The Oseil oilfield production has been significantly enhanced by the POFD drilling to date and we look forward to continuing success during the remainder of the program. Oseil-22 will be the last well in 2015 calendar year, with the remaining 4 development wells scheduled for the first half 2016.”

Crude Oil Lifting Schedule

A crude oil lifting of 400,119 barrels was completed Sept. 8 (Lion share 10,003 barrels). Lion’s share of revenue of $332,609 (before First Tranch Petroleum) was received Oct. 30. A final lifting for the year in excess of 400,000 barrels is expected to occur in December, with receipt of funds net to Lion approximately 35 days thereafter.

The Seram (Non Bula) PSC, located Seram Island in eastern Indonesia, is operated by CITIC Seram Energy Ltd (51 percent) with other coventurers being KUFPEC (Indonesia) Ltd. (30 percent) and Gulf Petroleum Investment Company (16.5 percent). Lion has a 2.5 percent interest in the PSC.

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