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

  • Well was spud Feb. 27
  • 30 inch surface casing was set at 285 feet (88.7 meters) measured depth (MD)
  • 20 inch casing was set and cemented at 1,194 feet (364 meters) MD
  • 13.375 inch casing was run and cemented at 5,266 feet (1,605 meters) MD
  • Manusela Formation encountered at 6,135 feet (1,870 meters) MD
  • 9.625 inch casing was run and cemented at 6,142 feet (1,872 meters) MD
  • 7 inch liner run and cemented to 6,896 feet (2,102 meters) MD
  • Total depth of 7,353 feet (2,241 meters) MD reached May 6
  • Ran electrical submersible pump (ESP) on 3.5 inch completion tubing
  • Rig released May 12

The primary objective Manusela Formation was encountered at 6,135 feet (1,870 meters) total vertical depth or TVD (4,948 feet or 1,508 meters total vertical depth referenced to sea level (ssTVD), with good gas and oil shows encountered in 8.5 inch hole. After setting the 7 inch liner, losses were encountered while drilling 6.125 inch hole through the Manusela Formation to total depth suggesting high fracture density. The well reached a total depth of 7,352 feet (2,241 meters) MD (5,476 feet 1,669 meters ssTVD).

Completion activities including running a pump were conducted smoothly and the well commenced producing May 10 with oil production increasing rapidly. The current rate is in excess of 600 bopd with less than 0.1 percent water cut on a 24/64 inch choke.

Reserves

As previously reported, the operator of the Seram (Non Bula) Block PSC, CITIC, commissioned a reserves report by US experts, DeGoyler & McNaughton (D&M), effective Dec. 31, 2014. Details are reflected in the table below.

D&M estimates Proven Developed reserves to be 2,409,000 barrels. It is anticipated that the success from Oseil-­27 will lead to an upgrade in this figure, before accounting for 2015 production. Lion uses Proven Developed reserves as the basis for its depreciation and amortization calculations.

Reserves and Contingent Resources *^

  • Reserves (in 1,000 barrels)
    • Gross: 1P - 4,746; 2P~ - 6,907; 3P~ - 9,641   
    • Net to Lion: 1P - 118.65; 2P~ - 172.675; 3P~ - 241.025
  • Contingent Resources** (in 1,000 barrels)
    • Gross: 1C - 1,442; 2P~ - 3,100; 3P~ - 39,146
    • Net to Lion: 1P - 36.1; 2P~ - 772.5; 3P~ - 978.7

Source: Degoyler & McNaughton, as at Dec. 31, 2014

* Hydrocarbon reserves and resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. This may result in alterations to development and production plans which may, in turn, adversely affect the company’s operations


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