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Lion Energy (ASX:LIO) has awarded a drilling contract to Australian oil and gas contractor Silver City Drilling for the Bula Karang-1 exploration well in Indonesia, which will be testing a 12 million barrel target in the East Seram production sharing contract (PSC).
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The contracted rig, SCD-20, is a specialised hydraulic 900HP unit, which is particularly suited for directional drilling tube to be utilised in the well. Bula Karang -1 is planned as a relatively shallow well spudding from an onshore location, Lion says, and deviating approximately 1,000 metres laterally offshore.
The company’s chairman, Tom Soulsby, said this will let Lion test the crest of a seismically defined carbonate reef target at approximately 550m below sea level.
“The chosen rig has a hydraulic top drive and key safety features including hands-free hydraulic pipe handling equipment, hydraulic weight on bit control and a rotation brake for directional drilling,” he explained.
“Other mechanical specifications that are well-suited for our planned deviated well design include the hook load and rotary torque.”
Mr Soulsby said securing the rig within budget is a key milestone as Lion moves towards drilling Bula Karang-1. “The prospect is a shallow carbonate reef structure with the potential to host material oil volumes and, importantly, provides exposure to a broader 50M barrel combined unrisked prospective resource in Bula Bay.”
With a partner covering the majority of the well cost, Lion retains a 45% interest, providing strong leverage to success while maintaining a low capital commitment.
“In a success case, nearby infrastructure provides a clear pathway to rapid, low-cost development and early cashflow,” Mr Soulsby explained today. “Bula Karang-1 is a high-impact, capital-efficient exploration opportunity and an important step in unlocking the potential of the East Seram PSC.”
Tendering processes are ongoing for other services, including directional drilling, cementing, and drilling fluids, as well as wireline services.
Mr Soulsby told shareholders the rig is currently working in East Java and has an impressive track record of reliability and safety in recent operations.
The well is on target to be spudded mid-year.
LIO is steady at 1.7¢ today.
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