Lion Energy Ltd. has cleared the final major regulatory hurdle needed for its upcoming exploration campaign on Seram Island, Indonesia.
The company confirmed that the Indonesian Minister of Energy and Mineral Resources has approved a 15 per cent participating interest transfer within the East Seram Production Sharing Contract (PSC).
The interest will transfer from Lion’s wholly owned subsidiary, Balam Energy Pte Ltd, to OPIC East Seram Corporation, a subsidiary of Taiwan’s CPC Corporation.
The approval satisfies the definitive condition required to finalise the farm-out agreement originally announced in January.
Under the completed deal, Balam will hold a 45 per cent stake in the East Seram PSC while OPIC takes a majority 55 per cent share. Balam is set to remain the project operator.
The completed deal alters the funding landscape for Lion’s highly anticipated Bula Karang-1 (BK-01) exploration well.
OPIC has agreed to fund 88 per cent of the drilling costs up to a gross cap of US$5.6 million (AU$8.4 million). Any expenditure exceeding the cap will be split in line with each partner’s respective equity.
Operational momentum is building rapidly on-site ahead of a scheduled August spud date. Civil works are already underway at the well location, all primary services have been locked in, and the drilling team is fully mobilised on-site.
The upcoming BK-01 well is a shallow, cost-effective target engineered as a deviated well.
It will be drilled from an onshore pad out to an offshore reservoir crest beneath Bula Bay, targeting a P50 unrisked prospective resource estimated at 12 million barrels of oil.
Lion Energy Executive Chairman Tom Soulsby said the government endorsement considerably fortifies the explorer’s balance sheet.
“The transaction materially improves Lion’s funding position ahead of the BK-01 exploration well, while allowing the company to retain a substantial 45 per cent interest in a highly attractive exploration opportunity,” Soulsby said.
