Production increases 18% for the year

Highlights

Lion at a glance

• ASX listed oil and gas E&P company focused on Indonesia, with two conventional PSC's.

• Net production of around 100bopd from the Seram PSC which also contains the Lofin gas/condensate field.

• An early mover in Indonesia's fledgling unconventional oil & gas industry.

• Leveraging synergies in conventional assets and access to both infrastructure and markets.

• Executive team and strategic investors with impressive track records for value creation in Indonesia.

Contact

Lion Energy Limited ABN 51 000 753 640 ASX Code: LIO

7/295 Rokeby Road Subiaco WA 6008, Australia

Post Box 512 West Perth Business Centre WA 6872, Australia

Tel +61 8 9211 1500 | Fax +61 8 9211 1501

[email protected]

www.lionenergy.com.au

Directors & Officers

Russell Brimage Executive Chairman Kim Morrison Chief Executive Officer Stuart B. Smith Executive Director Tom Soulsby Non-Executive Director Chris Newton Non-Executive Director Zane Lewis Company Secretary

For more information contact

Kim Morrison

+61 404 490 964

[email protected]

Stuart Smith

+65 9820 3889

[email protected]

Zane Lewis

+61 400 007 900

[email protected]

Lion at a glance

• ASX listed oil and gas E&P company focused on Indonesia, with two conventional PSC's.

• Net production of around 100bopd from the Seram PSC which also contains the Lofin gas/condensate field.

• An early mover in Indonesia's fledgling unconventional oil & gas industry.

• Leveraging synergies in conventional assets and access to both infrastructure and markets.

• Executive team and strategic investors with impressive track records for value creation in Indonesia.

Contact

Lion Energy Limited ABN 51 000 753 640 ASX Code: LIO

7/295 Rokeby Road Subiaco WA 6008, Australia

Post Box 512 West Perth Business Centre WA 6872, Australia

Tel +61 8 9211 1500 | Fax +61 8 9211 1501

[email protected]

www.lionenergy.com.au

Directors & Officers

Russell Brimage Executive Chairman Kim Morrison Chief Executive Officer Stuart B. Smith Executive Director Tom Soulsby Non-Executive Director Chris Newton Non-Executive Director Zane Lewis Company Secretary

For more information contact

Kim Morrison

+61 404 490 964

[email protected]

Stuart Smith

+65 9820 3889

[email protected]

Zane Lewis

+61 400 007 900

[email protected]

• Production increase by 16% on the preceding quarter

• Continued development drilling with good progress on Oseil-22

• Advanced drilling plans for planned May spud in South Block A PSC

• Unconventional joint studies nearing completion

Lion Energy Limited ("Lion" or "Company") continues to make solid operational progress, particularly on the appraisal and development front. In response to market conditions Lion and its joint venture operators have implemented aggressive cost saving measures.

Average daily oil production from the Seram PSC increased 16% to 4042bopd (95bopd net to Lion) for the quarter, from 3488bopd the previous quarter, driven by successful drilling and completion of the past four development wells (Oseil- 21, 26, 27 and 28), which together contributed approx. 2915bopd during December of this reporting quarter. Gross crude oil production for the quarter was 371,891 barrels (8774bbl net to Lion). A crude oil lifting of 425,123bbl was completed on 22 December 2015 (Lion share 10,628bbl). Lion's share of gross lifting revenue, estimated at approximately US$0.3mil, is expected to be received in early February 2016.

The daily production rate at the close of the quarter of 4132bopd bodes well for further increment in the current quarter. This compares to 4053bopd at the end of the previous quarter. The completion of development well Oseil-22 and planned drilling of Oseil-23 in the first quarter 2016 is anticipated to further lift production. The operator continues to focus on tight cost control and combined with the rising oil rates the Seram PSC production is profitable at current oil prices.

On an annual basis, production averaged 3346bopd (84bopd net to Lion), up 18% year on year. Lion received sales revenues of US$1.38mil for the year.

In other activities, good progress has been made on the unconventional joint studies. The final meeting with the regulator, which marks the completion of the studies, are scheduled for early 2016. Planned drilling in the South Block A PSC remains on track for a May 2016 spud. During the quarter Lion CEO Kim Morrison and senior advisors travelled to Banda Aceh to meet with the Governor of Aceh, Mr. dr. H. Zaini Abdullah, and his staff to discuss growing Lion's involvement in the province.

Lion's CEO, Kim Morrison noted "Lion continues to make progress across our business despite the challenging industry environment. While reducing costs in response to continued weak oil prices continues to be a key objective across our assets, we are pleased with ongoing production increase from the Seram project. At the same time, we continue to pursue affordable, attractive new opportunities with a focus on production and appraisal assets in the region."

Operations update (4Q-CY15)

Seram (Non-Bula) Block PSC

Lion, via its wholly owned subsidiary Lion International Investment Ltd, holds a 2.5% participating interest in the Seram (Non-Bula) Block PSC, located onshore Seram Island in eastern Indonesia. The major equity holder and operator of the joint venture is CITIC Seram Energy Ltd (51%). Other partners are KUFPEC (Indonesia) Ltd (30%) and Gulf Petroleum Investment (16.5%).

The block contains the Oseil oilfield and surrounding structures that have yielded cumulative crude oil production of 14,313,453 barrels since production started in January 2003 through to 31 December 2015.

As previously reported by Lion, in 2015 the Lofin-2 appraisal well confirmed a highly material gas discovery in the PSC and work is ongoing on development options for this resource.

The PSC expires in October 2019 and the joint venture is currently in discussions on strategy for obtaining a renewal of the PSC over the area.

Production and revenue

During the quarter gross crude oil production from Oseil and surrounding oilfields was 371,891 barrels (8774bbl net to Lion). Daily production averaged 4042bopd (Lion's net working interest being 95bopd, post government entitlement).

The steady uptrend in production has been maintained throughout 2015 and a positive result from the development well drilling at Oseil-28 has lifted field daily production above 4000bopd at quarter end, with the contribution from Oseil-28 averaging 812bopd during December.

Crude oil available for lifting at 31 December was minimal at 28,614bbl, following completion of the final crude oil lifting for calendar year 2015 of 425,123bbl on 22 December.

Expenditures

Seram (Non Bula) Block PSC - Location Map

Seram (Non Bula) Block - Daily Production per Calendar Month (bopd)

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15

Nov-15

0

Oseil Oil Field

Phase 3 Development

The Seram joint venture has secured all external approvals for a third phase of development drilling on the Oseil Field (referred to by the regulators as a Plan of Further Development or POFD), with up to 10 wells within the Oseil-2 field. The Phase 3 POFD was formally approved by the Indonesian regulatory body, SKK Migas, on 5 May 2015. Six of the ten wells approved have now been drilled.

The estimated total cost of the remaining four Phase

3 wells and related facilities is approximately US$40mil (US$1.0mil net to Lion). The Oseil-23 will be the next well drilled and subsequent wells are contingent upon well results/performance and economics. Reserves to be addressed by each of the four wells is around 0.4-0.6 million barrels. It is expected that the operator will stage the drilling program such that these capital costs can be financed by the free cash flow from the existing production from the field.

The recently completed Oseil-22 development well was the sixth well in the POFD.

Oseil-22 Development Well

The Oseil-22 well was directionally drilled to target, the Manusela fractured carbonate in the central eastern part of the faulted 4-way dip closure of the Oseil-2 up-thrown fault block

The well spudded on 18 November 2015 and the rig was released, post quarter end, on 12 January 2016. Excluding mobilization and rig up time, the well was drilled, completed and tested in 55 days, 31 days less than the well program projection.

Oseil field overview

Oseil-2 field area

Oseil-22 reached TD of 2332mMD (1864m TVD) in the Manusela limestone objective on 7 January 2015 and was completed with an ESP. As at January 21 the

well was being tested through a 12/64" choke at 324bopd with 2% water cut.

The well was drilled approximately US$2.5mil under the budget projection of US$9.75mil and continues the efficiency drive by the operator that has resulted in drilling costs over the past six wells of the Phase 3 program being significantly below projections.

The next well is Oseil-23, which is planned to spud in February 2015, will test the undrilled western portion of the Oseil 2 area.

South Block A PSC

Lion has a 35% interest in the South Block A PSC with other participants being RENCO Elang Energy Pte Ltd (51% interest and Operator) and PT Prosys Oil & Gas International (14%).

The underexplored block is centrally located in the prolific North Sumatra Basin and contains large structures with attractive gas and oil plays. The region has a strong demand, high priced gas market and a new open access pipeline connected to Medan extends through the PSC acreage.

Exploration Drilling

The Joint venture is making good progress planning for the Amanah Timur well, testing the previously named Paya Bili Prospect. The spud date is planned for May 2016. The operator has sent bid documentation with bids received in early January 2016.

This is a shallow, low-cost well (estimated 100% cost approximately US$2mil) testing a well defined anticline which has existing shallow oil reservoirs that produced approximately 200,000 barrels of oil in a period prior to WWII. The planned well will test this sequence and deeper undrilled gas and oil prospective reservoirs within the objective late Miocene Keutapang section. It has near-term commercialisation potential with good infrastructure in close proximity.

1Prospective resources: the estimated quantities of petroleum that

may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

South Block A PSC - location map

Amanah Timur Prospect - seismic section

Expenditures

Cash calls paid during the quarter totalled $163,765 net to Lion.