Lion Energy receives final approvals for Farm-In with Africa Oil Corp. &
announces independent resource estimate
TSX.V - LEO
VANCOUVER, March 15 /CNW/ - Lion Energy Corp. (the "Company" or "Lion Energy") (TSX.V - LEO) is pleased to announce that the TSX Venture Exchange has granted its final approval for the Farm-In agreement between the Company and Africa Oil Corp., which grants Lion Energy the right to earn an interest in five petroleum blocks located in the Republic of Kenya and in Puntland, Somalia. See also the Company's news release dated May 28, 2009.
An independent assessment of the Company's contingent and prospective resources has been completed by Gaffney, Cline & Associates. The independent assessment was completed January 21, 2010 and was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.
Lion Energy has the right to earn an interest from Africa Oil Corp. in five petroleum blocks located in the Republic of Kenya and in Puntland, Somalia. These blocks contain under-explored plays in basins that have proven and productive analogues, or where the petroleum system is calibrated by existing well and seismic data. Please see attached tables with numbers taken from the report of the in-place, contingent and prospective oil resources as summarized by Lion Energy.
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Gross Net
Lion's Working Acerage Acerage
Country Blocks Interest (%) (km(2)) (km(2))
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Block 09 10 27,778 2,777.80
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Kenya Block10A 25 14,747 3,686.80
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Block 10BB 20 12,491 2,498.20
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Nogal 15 49,436 7,415.40
Puntland -------------------------------------------------------
Dharoor 15 28,376 4,256.40
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KENYA: CONTINGENT RESOURCES
KENYA BLOCK 10BB SUMMARY OF GROSS IN-PLACE ESTIMATE
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Gross In-Place Estimate (MMBbl)
Licence Discovery ---------------------------------------
Low Best High
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Block 10BB Loperot-1 7 15 63
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KENYA BLOCK 10BB SUMMARY OF GROSS CONTINGENT RESOURCES
AS AT 1ST DECEMBER, 2009
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Gross Contingent Resource (MMBbl)
Licence Discovery ---------------------------------------
1C 2C 3C
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Block 10BB Loperot-1 2 5 25
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KENYA BLOCK 10BB SUMMARY OF NET CONTINGENT RESOURCES
AS AT 1ST DECEMBER, 2009
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Net Contingent Resource (MMBbl)
Licence Discovery ---------------------------------------
1C 2C 3C
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Block 10BB Loperot-1 0.4 1 5
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Loperot-1 Discovery and Contingent Resources
The Loperot-1 well was drilled in 1992 to test a fault closed structural trap. The discovery has Gross and Contingent Resources reported in the above tables. The Loperot-1 discovery is classified as Contingent Resources since oil has been proven to exist in the structure from the results of the well, which recovered oil on drill stem test. Re-classification of these contingent resources to reserves will require additional activity to identify the presence of a potentially economic volume of oil at the Loperot-1 discovery. This activity could comprise the acquisition of additional seismic data to confirm the area of closure and the drilling of a well or wells to appraise the extent of the discovery, demonstrate hydrocarbon quality and reservoir productivity. The minimum commercial field size will need to take into account the local economic, environmental, political and regulatory issues including the current lack an infrastructure in the area. These issues will need to be addressed in the field development plan for the discovery, which when sanctioned would allow the volumes to be classified as reserves.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.
- Low Estimate: This is considered to be a conservative estimate of the
quantity that will actually be recovered. It is likely that the
actual remaining quantities recovered will exceed the low estimate.
If probabilistic methods are used, there should be at least a 90
percent probability (P90) that the quantities actually recovered will
equal or exceed the low estimate.
- Best Estimate: This is considered to be the best estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less
than the best estimate. If probabilistic methods are used, there
should be at least a 50 percent probability (P50) that the quantities
actually recovered will equal or exceed the best estimate.
- High Estimate: This is considered to be an optimistic estimate of the
quantity that will actually be recovered. It is unlikely that the
actual remaining quantities recovered will exceed the high estimate.
If probabilistic methods are used, there should be at least a 10
percent probability (P10) that the quantities actually recovered will
equal or exceed the high estimate.
There are several contingencies that prevent the classification of the contingent resources as reserves. Lion Energy has no definitive plans to develop the oil resources in Block 10BB at this time and accordingly these are considered contingent resources. An evaluation has yet to be conducted in order to determine the economic viability of these contingent resources.
KENYA BLOCKS 9, 10A AND 10BB SUMMARY OF (UNDISCOVERED) OIL
PROSPECTIVE RESOURCES AS AT 1ST DECEMBER, 2009
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Gross
Best
Estimate Gross LEO Net
of Oil Best Working Best
Prospect/ P/L In Place Estimate Interest Estimate
Licence Lead (MMBbl) (MMBbl) (%) (MMBbl) GCoS
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Block 9 Bogal (Deep) P 1,334 206 10% 20.6 0.18
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Block 9 Bogal-2
Shallow P 378 95 10% 9.5 0.16
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Block 9 Ndovu W-1 L 257 64 10% 6.4 0.1
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Block 9 Ndovu W-2 L 191 48 10% 4.8 0.12
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Block 9 Ndovu W-3 L 106 27 10% 2.7 0.11
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Block 9 Duma East L 215 54 10% 5.4 0.125
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Block 9 Duma N-1 L 533 133 10% 13.3 0.11
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Block 9 Duma N-2 L 604 151 10% 15.1 0.12
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Block 9 Duma N-3 L 191 48 10% 4.8 0.11
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Block 9 Duma S-1 L 278 70 10% 7 0.12
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Block 9 Duma S-2 L 106 26 10% 2.6 0.11
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Block 9 Kaisut L 423 106 10% 10.6 0.1
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Block 10A Lead A L 442 103 25% 25.75 0.08
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Block 10A Lead B L 335 82 25% 20.5 0.09
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Block 10A Lead C L 48 12 25% 3 0.1
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Block 10A Lead D L 217 53 25% 13.25 0.08
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Block 10BB Kamba P 276 83 20% 16.6 0.14
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Block 10BB Kapunga P 248 74 20% 14.8 0.14
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Block 10BB Kamutai P 199 60 20% 12 0.14
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Block 10BB Kegilai P 54 16 20% 3.2 0.09
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Block 10BB Kalabata P 13 4 20% 0.8 0.14
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Block 10BB Ngiri L 974 292 20% 58.4 0.06
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Block 10BB Paa L 58 17 20% 3.4 0.04
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Block 10BB Pofu L 107 32 20% 6.4 0.05
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Block 10BB Mamba L 1056 317 20% 63.4 0.06
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Block 10BB Nyati L 111 33 20% 6.6 0.05
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Block 10BB Tumbili L 218 55 20% 11 0.04
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Block 10BB Kiboko L 50 15 20% 3 0.06
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Block 10BB Kuru L 186 56 20% 11.2 0.07
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Block 10BB Duma L 198 59 20% 11.8 0.05
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Block 10BB Heroe L 266 80 20% 16 0.06
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Block 10BB Fisi L 134 40 20% 8 0.06
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Block 10BB Twiga L 186 56 20% 11.2 0.05
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Block 10BB Chorea L 366 110 20% 22 0.07
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Block 10BB Tai L 273 82 20% 16.4 0.05
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Block 10BB Chura L 481 144 20% 28.8 0.04
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Block 10BB Chui L 271 81 20% 16.2 0.05
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Block 10BB Popo L 102 31 20% 6.2 0.04
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Notes:
1. Net Prospective Resources are stated herein in terms of LEO's net
Working Interest (WI) in the properties and, due to the very immature
nature of these Prospective Resources, have not been computed as net
entitlement volumes under the relevant PSC. In this regard these
volumes stated herein will exceed the volumes which would arise to
LEO under the terms of that PSC should a discovery of the size
indicated be made and subsequently developed.
2. It is inappropriate to report summed-up Prospective Resource volumes
or to otherwise focus upon those of other than the 'Best Estimate'.
3. The Geologic Chance of Success (GCoS) reported here represents an
indicative estimate of the probability that the drilling of this
prospect would result in a discovery which would warrant the re-
categorisation of that volume as a Contingent Resource, although the
volume of resource so categorized would reflect the results of the
discovery well and may be significantly different (higher ir lower)
from those reported here. These GCoS percentage values have not been
arithmetically applied within this assessment.
4. P/L = Prospect or Lead. A Lead is a geological feature
that is currently poorly defined and requires more data acquisition
and/or evaluation in order to be classified as a prospect for
drilling.
5. This table of information is a summary compiled by Lion Energy Corp.
based on information provided in the report.
(1) Bogal (Deep) is currently being tested by the Bogal-1 well that
spudded on 28th October 2009. This well has a pTD of 5,500 m and is
expected to take up to 6 months to complete.
PUNTLAND SUMMARY OF UNDISCOVERED OIL PROSPECTIVE RESOURCES
AS AT 1ST DECEMBER, 2009
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Gross
Best
Estimate Gross LEO Net
of Oil Best Working Best
In Place Estimate Interest Estimate
Licence Lead Reservoir (MMBbl) (MMBbl) (%) (MMBbl) GCoS
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Nogal Kalis Jesomma 1,830 457 15% 68.55 0.11
Block East -------------------------------------------------------
Gumbero 681 171 15% 25.65 0.09
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Gabredarre 1,663 416 15% 62.4 0.13
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Kalis Jesomma 207 52 15% 7.8 0.08
South -------------------------------------------------------
Gumbero 114 28 15% 4.2 0.07
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Gabredarre 278 70 15% 10.5 0.09
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Kalis Jesomma 1,079 268 15% 40.2 0.11
SE -------------------------------------------------------
Gumbero 611 154 15% 23.1 0.09
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Gabredarre 1,457 364 15% 54.6 0.13
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Kalis Jesomma 330 83 15% 12.45 0.1
SW -------------------------------------------------------
Gumbero 184 46 15% 6.9 0.08
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Gabredarre 453 113 15% 16.95 0.12
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Kalis Jesomma 319 80 15% 12 0.1
West -------------------------------------------------------
Gumbero 176 44 15% 6.6 0.08
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Gabredarre 421 105 15% 15.75 0.12
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Nogal Jesomma 378 95 15% 14.25 0.11
SE-A -------------------------------------------------------
Gumbero 210 53 15% 7.95 0.09
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Gabredarre 507 126 15% 18.9 0.13
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Nogal Jesomma 227 57 15% 8.55 0.11
SE-B -------------------------------------------------------
Gumbero 126 32 15% 4.8 0.09
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Gabredarre 308 77 15% 11.55 0.13
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Nogal Jesomma 293 73 15% 10.95 0.12
South -------------------------------------------------------
Gumbero 162 40 15% 6 0.1
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Gabredarre 391 98 15% 14.7 0.14
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Darin Dharoor Jesomma 1,196 299 15% 44.85 0.08
Block -------------------------------------------------------
Gumbero 664 166 15% 24.9 0.06
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Gabredarre 1,760 440 15% 66 0.09
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Lead 1 Jesomma 360 90 15% 13.5 0.06
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Gumbero 200 50 15% 7.5 0.05
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Gabredarre 520 130 15% 19.5 0.07
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Lead 2 Jesomma 220 55 15% 8.25 0.06
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Gumbero 120 30 15% 4.5 0.05
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Gabredarre 320 80 15% 12 0.07
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Lead 3 Jesomma 144 36 15% 5.4 0.06
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Gumbero 80 20 15% 3 0.05
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Gabredarre 220 55 15% 8.25 0.07
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Notes:
1. Net Prospective Resources are stated herein in terms of LEO's net
Working Interest (WI) in the properties and, due to the very immature
nature of these Prospective Resources, have not been computed as net
entitlement volumes under the PSA. In this regard these volumes
stated herein will exceed the volumes which will arise to LEO under
the terms of the PSA.
2. It is inappropriate to report summed-up Prospective Resource volumes
or to otherwise focus upon those of other than the 'Best Estimate'.
3. The Geologic Chance of Success (GCoS) reported here represents an
indicative estimate of the probability that the drilling of this
prospect would result in a discovery which would warrant the re-
categorisation of that volume as a Contingent Resource. These GCoS
percentage values have not been arithmetically applied within this
assessment.
4. This table of information is a summary compiled by Lion Energy Corp.
based on information provided in the report.
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity.
Prospective resources are undiscovered resources that indicate development potential in the event the discovery is made and is commercial, and they should not be construed as reserves or contingent resources.
WORK PROGRAM
Puntland (Somalia)
Under the terms of the PSAs for the Nugaal and Dharoor Blocks, the Company and its partners are required to drill one exploration well in each block during each exploration period. The first exploration period expires in January 2011 and the second optional three-year exploration period would be expected to expire in January 2014. During the exploration period on both the Dharoor and Nugaal Blocks, the Company and its partners are obligated to complete G&G operations (including geological fieldwork, geochemical surveys, reprocessing seismic). In addition, the Company and its partners are required to drill one exploration well during each of the two exploration periods, with a minimum expenditure of $5.0 million during each exploration period. As consideration for farming into the Dharoor and Nugaal Blocks, Lion has agreed to fund 30% (to a maximum of US$5,100,000) of the first US$17,000,000 of future JOA costs incurred in drilling one exploration well on each of the Dharoor and Nugaal Blocks. Lion will be responsible for funding its working interest share of all other joint operating expenses. The Company and its partners are currently in the planning stage for a two well drilling program expected to commence in 2010.
Kenya
Under the terms of the Block 9 PSA, with the drilling of the Bogal-1 well, which is currently ongoing, the Company and its partners have fulfilled and exceeded the minimum work and financial obligations of the initial exploration period. As consideration for farming into Block 9, Lion has agreed to fund 33.3333% (to a maximum of US$5,000,000) of JOA costs to be incurred by the Farmor, related to drilling the Bogal-1 well. Lion will be responsible for funding its working interest share of all other joint operating expenses.
Under the terms of the Block 10A PSC, the initial 4 year exploration period expires in October 2011, the Company and its partners are obligated to complete G&G operations (including acquisition of 750 kilometres of 2D seismic) with a minimum expenditure of $7.8 million. Additionally, Lion and its partners are required to drill one exploration well with a minimum expenditure of $8.5 million. As consideration for farming into Block 10A, Lion has agreed to fund 50% (to a maximum of US$4,000,000) of future joint operating expenses in the performance of a seismic program. Lion will be responsible for funding its working interest share of all other joint operating expenses. The Company and its partners are currently in the planning stage of a 750km 2D seismic program planned for 2010. An exploration well is planned for 2011.
In accordance with the terms of the Block 10BB PSC, the initial exploration period expires in January 2012, the Company and its partners are obligated to complete G&G operations (including acquisition of 200 kilometers of 2D seismic and 200 square kilometres of 3D seismic) with a minimum expenditure of $6.0 million gross. In addition, the Company is required to drill one exploration well with a minimum expenditure of $6.0 million. As consideration for farming into Block 10BB, Lion has agreed to fund 40% (to a maximum of US$6,000,000) of future joint operating expenses in the performance of a seismic program and drilling of one exploration well. Lion will be responsible for funding its working interest share of all other joint operating expenses. The Company and its partners are currently in the planning stage of a 600km seismic program planned for 2010. An exploration well is planned for 2011.
Definitions and Cautionary Statements
Significant Positive and Negative Factors Relevant to the Resources Estimates
This news release contains forward looking information including, but not limited to, estimated resources. The forward looking information is based on current expectations and is subject to a number of risks and uncertainties which could cause actual results to differ materially from those anticipated.
These risks include, but are not limited to the following:
Risks associated with ever making a discovery
The estimation of prospective resource volumes for high-risk and poorly calibrated basins can be subject to large variation from the introduction of new information. The estimates presented herein are based on all of the information available; however, new data or information is likely to have a material effect on the resource assessment values. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that the discovery will be commercially viable to produce any portion of the resources. Given that most of the resources in the portfolio are in leads that require additional data to fully define their potential it is likely that significant changes to the resource estimates will occur with the incorporation of additional data and information.
Risk Associated with the Estimates
In the event of a discovery, basic reservoir parameters, such as porosity, net hydrocarbon pay thickness, fluid composition and water saturation, may vary from those assumed (by GCA), affecting the volume of hydrocarbon estimated to be present. Other factors such as the reservoir pressure, density and viscosity of the oil and solution gas/oil ratio will affect the volume of oil that can be recovered. Additional reservoir parameters such as permeability, the presence or absence of water drive and the specific mineralogy of the reservoir rock may affect the efficiency of the recovery process. Recovery of the resources may also be affected by well performance, reliability of production and process facilities, the availability and quality of source water for enhanced recovery processes and availability of fuel gas. There is no certainty that certain mineral interests are not affected by ownership considerations that have not yet come to light.
Risk Associated with the Classifications
Substantial Capital Requirements
Lion Energy expects to make substantial capital expenditures for exploration, development and production of oil and gas reserves in the future. The Company's ability to access the equity or debt markets in the future may be affected by any prolonged market instability. The inability to access the equity or debt markets for sufficient capital, at acceptable terms and within required time frames, could have a material adverse effect on the Company's financial condition, results of operations and prospects.
Ability to Execute Exploration and Development Program
It may not always be possible for Lion Energy to execute its exploration and development strategies in the manner in which the Company considers optimal. Execution of exploration and development strategies is dependent upon the political and security climate in the host countries where the Company operates. The Company's exploration and development programs in Puntland, Ethiopia and Kenya may involve the need to obtain approvals from relevant authorities who may require conditions to be satisfied or the exercise of discretion by the relevant authorities. It may not be possible for such conditions to be satisfied.
Absence of a Formal Development Plan including Required Funding
There is no certainty the Company will prepare and approve a development plan for any portion of the contingent resources or that the Company will be successful in funding any development should such a plan be prepared. General market conditions, the sufficiency of such a development plan and the outlook regarding oil and gas prices are some factors that will influence the availability of funding.
Access to Infrastructure
Lion Energy's ability to produce and market hydrocarbons from any potential discoveries will depend on its ability to access suitable infrastructure. The Company may also be affected by deliverability uncertainties related to the proximity of its potential production to pipelines and processing facilities and operational problems affecting such pipelines and facilities as well as potential government regulation relating to price and the export of oil and gas. Currently there is limited local infrastructure and markets for oil, natural gas and condensate and export infrastructure to enable other markets to be accessed has not yet been developed. Lion Energy will work with its partners and government authorities to evaluate the commercial potential and technical feasibility of any discovery made.
Additional Risks
Additional risks associated with the estimate of the prospective and contingent resources include risks associated with the oil and gas industry generally (i.e. financing; operational risks in exploration, development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections related to production; costs and expenses; health, safety, security and environmental risks; and the uncertainty of resource estimates), drilling equipment availability and efficiency, the ability to attract and retain key personnel, the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with dealing with governments and obtaining regulatory approvals, and the risk associated with international activity.
About the Company:
The Company is a well-financed, Canadian exploration company with a vision to develop a significant presence in the developing oil and gas industry. The Company signed an agreement with Africa Oil Corp. that grants the Company the right to earn an interest in five petroleum blocks located in the Republic of Kenya and in Puntland, Somalia. The Company further holds a 27.6% interest in Encanto Potash Corp., a junior potash exploration company and a 20% interest in Sulphur Solutions Inc., an emerging fertilizer company developing state-of-the-art patented technology for the production of micronized sulphur fertilizer.
To find out more about the Company, please visit our website at www.lionenergycorp.com.
On behalf of the Board,
LION ENERGY CORP.
"Brian Thurston", President and CEO
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address exploration drilling, exploration activities and events or developments that the Company expects to occur, are forward-looking statements. Forward-looking statements in this news release include statements regarding the Company's intentions or plans, whether of a corporate or exploratory nature. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploration and exploration successes, and continued availability of capital and financing and general economic, political, market or business conditions. These statements are based on a number of assumptions, including, among others, assumptions regarding general business and economic conditions, the timing and receipt of regulatory and governmental approvals for the transactions described herein, the ability of the Company and other parties to satisfy stock exchange and other regulatory requirements in a timely manner, the availability of financing for the Company's proposed transactions and programs on reasonable terms, and the ability of third-party service providers to deliver services in a timely manner. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected on the forward-looking statements. The Company does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law or regulatory policies.
For further information: To find out more about the Company, please visit our website at www.lionenergycorp.com
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