Lion Energy Limited provided an update on the testing of the Lofin-2 gas well as part of the ongoing evaluation of the Lofin gas discovery. The test program is designed to enable the Seram (Non-Bula) Production Sharing Contract ("PSC") to move forward with numerous commercialization options currently under review. Lion has a 2.5% participating interest in the PSC.

Rig up of the drilling rig is completed and well re-entry began on 19th December 2022, testing to be undertaken in January 2023, with completion expected early February. The discovery well, Lofin-1, was drilled in 2012 and provided encouragement for further appraisal drilling following gas flow rates reaching 15.7 MMscfD. The well measured depth of 4,427m (4,410m TVD) was however constrained by mechanical issues and therefore an appraisal well was planned.

The appraisal well Lofin-2 was drilled in 2015 to a measured depth of 5,861m (5,791m TVD) and confirmed a significant gas discovery, with a reservoir section of up to 1,300m. On pulling out of the hole, drill pipe became stuck and despite a number of attempts to free the pipe, the lower section of the pipe string was left in the hole. Subsequent testing of the well was thus compromised, with a gas rate of up to 17.8 MMscfD limited by water influx of 2,634 barrels per day.

The Lofin Field is a thrust faulted four-way dip anticline located 50-km west of the producing Oseil oil field. The field is mapped on 1990 and 2008 vintage 2D seismic lines and is approximately 4km wide and 10km in length. While Lion has a 2.5% interest in the Seram (Non-Bula) PSC portion of the Lofin discovery, part of the field is mapped to extend into the East Seram PSC in which Lion has a 60% interest (Figure 1).

The reservoir is the fractured carbonate of the Jurassic/Triassic age Manusela formation which is the reservoir in the nearby producing Oseil oilfield. The overlying Jurassic marine Kola shale provides the regional seal with the main source rock interpreted to be the underlying mature Late Triassic Saman-SamanFormation. Lion notes that the process for the sale of 10% of the participating interest in the Seram (Non-Bula PSC) continues and is now expected to complete in early 2023.

At completion, Lion's participating interest in Seram (Non-Bula) PSC will reduce to 2.25% from 2.5% currently.