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Citic Finds Promising Results at Lofin-2 Well in Seram PSC

Source: www.gulfoilandgas.com 4/29/2015, Location: Asia

Indonesia-focused oil and gas exploration and production company Lion Energy Limited reported that CITIC Resources Holdings Limited (CITIC), the Operator of the Seram (Non-Bula) Production Sharing Contract (PSC) in eastern Indonesia, of which Lion has a 2.5 percent interest, has made an announcement on the Hong Kong Stock Exchange regarding the Lofin-2 appraisal well. The announcement by CITIC, which includes a commentary on the progress of the well, follows.

Drilling of Lofin-2 Appraisal Well:
This announcement is made pursuant to rule 13.09 of the Rules Governning the Listing of Securities on the Stock Exchange of Hong Kong Limited (the Listing Rules) and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The board of directors (the Board) of CITIC Resources Holdings Limited (the Company) wishes to advise shareholders of the Company (Shareholders) on developments resulting from the drilling of the Lofin-2 appraisal well (Lofin-2) in the Seram Island Non-Bula Block in Indonesia (the Seram Non-Bula Block).

Background:
In 2012, CITIC Seram Energy Limited (CITIC Seram) drilled the Lofin-2 exploration well (Lofin-1) to test oil and gas potential of the predominantly limestone Manusela Formation within the Seram Non-Bula Block. Lofin-1 was drilled to a total depth of 14,524 feet (4,427 meters) and results of the drilling showed the presence of oil/condensate and gas.

Lofin-2 Appraisal Well:
In October 2014, CITIC Seram commenced drilling Lofin-2 to appraise the Lofin-1 discovery and evaluate the potential oil/gas condensate and gas deposits within the Manusela Formation. Lofin-2 had a planned depth of 17,798 feet (5,425 meters).

CITIC Seram had drilled Lofin-2 to a current depth of 18,379 feet (5,602 meters) and is conducting tests. Results from testing of Lofin-2 so far are promising with results showing Lofin-2 continues to encounter oil/condensate and gas at its current depth. CITIC Seram, therefore, proposed to deepen Lofin-2 in order to continue its appraisal of the oil/condensate and gas potential within the Manusela Formation.

Appraisal Ongoing and Subject to Independent Reserves Report:
Shareholders and potential investors should note that the performance of limestone reservoirs can be uncertain and the presence and amounts of oil/condensate and gas in the Manusela Formation are still being appraised and evaluated by CITIC Seram.

Whilst the results from Lofin-2 so far are encouraging as to the presence of oil/condensate and gas in the Manusela Formation, CITIC Seram's appraisal of the oil/condensate and gas potential is still ongoing. In addition, the final results of CITIC Seram's appraisal will be subject to an independent reserves report before CITIC Seram is able to confirm details of amounts of oil/condensate and gas within the Manusela Formation. Also, under the terms of the production sharing contract which grants the right to explore, develop and produce from the Seram Non-Bula Block (the Seram Non-Bula Block PSC), Indonesian regulatory approval is required to the release of well results.

Shareholders and potential investors are therefore advised to exercise caution when dealing in the shares of the Company.

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