Perth-headquartered Lion Energy (ASX: LIO) has attracted well-regarded Asian company CPC Corporation to help fund a key well in the East Seram production sharing contract (PSC) offshore Indonesia.
Under a farm-out agreement between Lion subsidiary Balam Energy and CPC subsidiary OPIC East Seram, the joint venture will drill a shallow well at the Bula Karang target.
The well, which has an estimated prospective resource of 12 million barrels of oil, will be spudded from an onshore location into an offshore target, significantly reducing costs compared to a typical offshore well.
Fast-track opportunity
The Bula Karang prospect also benefits from being located close to the Bula oil field where more than 20 million barrels have been produced and the currently producing Oseil oil field.
Lion chairman, Tom Soulsby, said the proximity to established storage, processing and export facilities offers a potential opportunity to fast-track commercialisation of a discovery.
The company has also designed a well with relatively shallow vertical depth and deviated drilling allowing onshore production and potentially low capital cost development.
Great outcome
Mr Soulsby said the farm out represents a great outcome for his company.
"This well has the potential to be a game-changer for Lion, with numerous follow-up prospects high-graded in event of success.”
Under the farmout, Balam will transfer a 15% interest in the East Seram PSC to OPIC which in turn will fund 88% of the Bula Karang well subject to a cap of approximately $8.3 million. Any costs beyond that figure will be funded 45%-55% by Balam-OPIC.
Lion acquired the East Seram PSC in 2018 and subsequently acquired a 664 km offshore 2D survey leading to the 2020 delineation of a prospective shallow oil portfolio.
Further work is continuing on the design of the Bula Karang well, which is planned to spud in Q2 2026.
