Australian junior Lion Energy has entered into a key farmout agreement with OPIC, a subsidiary of Taiwan's CPC Corporation, ahead of drilling the Bula Karang exploration well offshore Indonesia.

Deal Structure and Interests

Under the agreement, OPIC is acquiring an additional 15% interest in the East Seram production sharing contract (PSC) in exchange for funding 88% of the costs for the upcoming Bula Karang well. Upon completion, subject to government approval, Lion's subsidiary Balam Energy will hold a 45% operated interest, with OPIC holding 55%. OPIC retains the right to request operatorship at any time, provided it holds more than 50% equity. If the well cost exceeds $5.6 million, any overrun will be funded pro rata by the partners.

The Bula Karang Prospect

The Bula Karang prospect is a shallow, well-defined reefal carbonate buildup with an unrisked prospective resource of 12 million barrels of oil in its primary target, with an estimated chance of success of 38%. It also has secondary potential in overlying sandstone reservoirs. The prospect is located near the producing Bula and Oseil oilfields, which have collectively produced over 20 million barrels, offering proximity to existing storage, processing, and export facilities for early commercialization.

Drilling Plan and Future Potential

The deviated exploration well is planned to be drilled from land in the second quarter of the year to meet PSC commitments. This approach is designed to significantly reduce costs and allow for early production in the event of a discovery. Beyond Bula Karang, the PSC holds additional carbonate reef potential at nearby PP3 and PP10 prospects, with the play estimated to hold a combined prospective resource of over 30 million barrels of oil. Other prospects on the block include Bula Utara and PP8.