Lion Energy's Africa Oil farm-in approved by TSX-V
2010-03-15 06:03 ET - News Release
Mr. Brian Thurston reports
LION ENERGY RECEIVES FINAL APPROVALS FOR FARM-IN WITH AFRICA OIL CORP. AND ANNOUNCES INDEPENDENT RESOURCE ESTIMATE
The TSX Venture Exchange has granted its final approval for the farm-in agreement between Lion Energy Corp. 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 in Stockwatch 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 Jan. 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 underexplored plays in basins that have proven and productive analogues, or where the petroleum system is calibrated by existing well and seismic data. Please see the tables with numbers taken from the report of the in-place, contingent and prospective oil resources as summarized by Lion Energy.
Gross Net
Lion's working acreage acreage
Country Blocks interest (%) (square (square
kilometres) kilometres)
Block 09 10 27,778 2,777.80
Kenya Block10A 25 14,747 3,686.80
Block 10BB 20 12,491 2,498.20
Puntland Nogal 15 49,436 7,415.40
Dharoor 15 28,376 4,256.40
KENYA: CONTINGENT RESOURCES
Licence Discovery Gross in-place estimate (MMbbl)
Low Best High
Block 10BB Loperot-1 7 15 63
KENYA BLOCK 10BB SUMMARY OF GROSS CONTINGENT RESOURCES
AS AT DEC. 1, 2009
Licence Discovery Gross contingent resource (MMbbl)
1C 2C 3C
Block 10BB Loperot-1 2 5 25
KENYA BLOCK 10BB SUMMARY OF NET CONTINGENT RESOURCES
AS AT DEC. 1, 2009
Licence Discovery Net contingent resource (MMbbl)
1C 2C 3C
Block 10BB Loperot-1 0.4 1 5
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 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. Reclassification 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-per-cent 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-per-cent 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-per-cent 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 DEC. 1, 2009
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
Block 9 Bogal (Deep) P 1,334 206 10% 20.6 0.18
Block 9 Bogal-2
Shallow P 378 95 10% 9.5 0.16
Block 9 Ndovu W-1 L 257 64 10% 6.4 0.1
Block 9 Ndovu W-2 L 191 48 10% 4.8 0.12
Block 9 Ndovu W-3 L 106 27 10% 2.7 0.11
Block 9 Duma East L 215 54 10% 5.4 0.125
Block 9 Duma N-1 L 533 133 10% 13.3 0.11
Block 9 Duma N-2 L 604 151 10% 15.1 0.12
Block 9 Duma N-3 L 191 48 10% 4.8 0.11
Block 9 Duma S-1 L 278 70 10% 7 0.12
Block 9 Duma S-2 L 106 26 10% 2.6 0.11
Block 9 Kaisut L 423 106 10% 10.6 0.1
Block 10A Lead A L 442 103 25% 25.75 0.08
Block 10A Lead B L 335 82 25% 20.5 0.09
Block 10A Lead C L 48 12 25% 3 0.1
Block 10A Lead D L 217 53 25% 13.25 0.08
Block 10BB Kamba P 276 83 20% 16.6 0.14
Block 10BB Kapunga P 248 74 20% 14.8 0.14
Block 10BB Kamutai P 199 60 20% 12 0.14
Block 10BB Kegilai P 54 16 20% 3.2 0.09
Block 10BB Kalabata P 13 4 20% 0.8 0.14
Block 10BB Ngiri L 974 292 20% 58.4 0.06
Block 10BB Paa L 58 17 20% 3.4 0.04
Block 10BB Pofu L 107 32 20% 6.4 0.05
Block 10BB Mamba L 1056 317 20% 63.4 0.06
Block 10BB Nyati L 111 33 20% 6.6 0.05
Block 10BB Tumbili L 218 55 20% 11 0.04
Block 10BB Kiboko L 50 15 20% 3 0.06
Block 10BB Kuru L 186 56 20% 11.2 0.07
Block 10BB Duma L 198 59 20% 11.8 0.05
Block 10BB Heroe L 266 80 20% 16 0.06
Block 10BB Fisi L 134 40 20% 8 0.06
Block 10BB Twiga L 186 56 20% 11.2 0.05
Block 10BB Chorea L 366 110 20% 22 0.07
Block 10BB Tai L 273 82 20% 16.4 0.05
Block 10BB Chura L 481 144 20% 28.8 0.04
Block 10BB Chui L 271 81 20% 16.2 0.05
Block 10BB Popo L 102 31 20% 6.2 0.04
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
recategorisation 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 or lower)
from those reported here. These GCoS percentage values have not been
arithmetically applied within this assessment.
4. P/L means 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 Oct. 28, 2009. This well has a pTD of 5,500 metres and is
expected to take up to six months to complete.
PUNTLAND SUMMARY OF UNDISCOVERED OIL PROSPECTIVE RESOURCES
AS AT DEC. 1, 2009
Gross
best
estimate Gross LEO Net
of oil best working best
in place estimate interest estimate
Licence Lead Reservoir (MMbbl) (MMbbl) (MMbbl) GCoS
Nogal Kalis Jesomma 1,830 457 15% 68.55 0.11
Gumbero 681 171 15% 25.65 0.09
Gabredarre 1,663 416 15% 62.4 0.13
Kalis Jesomma 207 52 15% 7.8 0.08
south
Gumbero 114 28 15% 4.2 0.07
Gabredarre 278 70 15% 10.5 0.09
Kalis Jesomma 1,079 268 15% 40.2 0.11
SE
Gumbero 611 154 15% 23.1 0.09
Gabredarre 1,457 364 15% 54.6 0.13
Kalis Jesomma 330 83 15% 12.45 0.1
SW
Gumbero 184 46 15% 6.9 0.08
Gabredarre 453 113 15% 16.95 0.12
Kalis Jesomma 319 80 15% 12 0.1
west
Gumbero 176 44 15% 6.6 0.08
Gabredarre 421 105 15% 15.75 0.12
Nogal Jesomma 378 95 15% 14.25 0.11
SE-A
Gumbero 210 53 15% 7.95 0.09
Gabredarre 507 126 15% 18.9 0.13
Nogal Jesomma 227 57 15% 8.55 0.11
SE-B
Gumbero 126 32 15% 4.8 0.09
Gabredarre 308 77 15% 11.55 0.13
Nogal Jesomma 293 73 15% 10.95 0.12
south
Gumbero 162 40 15% 6 0.1
Gabredarre 391 98 15% 14.7 0.14
Darin Dharoor Jesomma 1,196 299 15% 44.85 0.08
block
Gumbero 664 166 15% 24.9 0.06
Gabredarre 1,760 440 15% 66 0.09
Lead 1 Jesomma 360 90 15% 13.5 0.06
Gumbero 200 50 15% 7.5 0.05
Gabredarre 520 130 15% 19.5 0.07
Lead 2 Jesomma 220 55 15% 8.25 0.06
Gumbero 120 30 15% 4.5 0.05
Gabredarre 320 80 15% 12 0.07
Lead 3 Jesomma 144 36 15% 5.4 0.06
Gumbero 80 20 15% 3 0.05
Gabredarre 220 55 15% 8.25 0.07
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
recategorisation 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 or lower)
from those reported here. These GCoS percentage values have not been
arithmetically applied within this assessment.
4. P/L means 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.
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-million during each exploration period. As consideration for farming into the Dharoor and Nugaal blocks, Lion has agreed to finance 30 per cent (to a maximum of $5.1-million (U.S.)) of the first $17-million (U.S.) of future JOA costs incurred in drilling one exploration well on each of the Dharoor and Nugaal blocks. Lion will be responsible for financing 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 continuing, 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 finance 33.3333 per cent (to a maximum of $5-million (U.S.)) of JOA costs to be incurred by the farmor, related to drilling the Bogal-1 well. Lion will be responsible for financing its working interest share of all other joint operating expenses.
Under the terms of the block 10A PSC, the initial four-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 2-D 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 finance 50 per cent (to a maximum of $4-million (U.S.)) of future joint operating expenses in the performance of a seismic program. Lion will be responsible for financing its working interest share of all other joint operating expenses. The company and its partners are currently in the planning stage of a 750-kilometre 2-D 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 kilometres of 2-D seismic and 200 square kilometres of 3-D seismic) with a minimum expenditure of $6-million gross. In addition, the company is required to drill one exploration well with a minimum expenditure of $6-million. As consideration for farming into block 10BB, Lion has agreed to finance 40 per cent (to a maximum of $6-million (U.S.)) of future joint operating expenses in the performance of a seismic program and drilling of one exploration well. Lion will be responsible for financing its working interest share of all other joint operating expenses. The company and its partners are currently in the planning stage of a 600-kilometre seismic program planned for 2010. An exploration well is planned for 2011.
We seek Safe Harbor.
