Lion Energy Limited (ASX: LIO) is an Australian based oil and gas producing company. It is engaged in oil appraisal, gas development, oil production, and high impact exploration over the Seram Basin of East Indonesia. LIO has 2 long term gross split tax and royalty production sharing contracts (PSC).
LIO holds 2.5% shareholding interest in the Seram (Non-Bula) Block Renewal PSC (SNBB) through its subsidiary Lion International Investment Limited (LII). It is being operated by Citic located on the onshore Seram Island in Eastern Indonesia with a gas discovery of 2 TCF Lofin gas.
LIO also holds 100% interest in the East Seram PSC (ES) through its subsidiary, Balam. It is an extension of the Lofin Gas and Bula Oil fields with an area of 6,505 square km with a permit valid till 2030. It has a potential of more than 1 billion boe gas.
Today, the company has announced the quarterly updates for the 4th quarter ending 31 December 2018. During the quarter, LIO entered into a conditional sale and purchase agreement with Gulf Petroleum Investment Company KSCC (GPI) for US$32 million to acquire its 16.5% stake in SNBB, totalling to 19% stake in SNBB. Through this proposed acquisition, LIO will get additional 2C contingent resources of 333 billion cubic feet gas and 3.02 million boe’s condensate, and 70 K barrels of 2P oil reserve.
During the fourth quarter, gross crude oil production from SNBB was reported at 170,659 bbl (of which 4,026 bbl was LIO’s share) with an average daily production of 1,855 bopd. The crude oil price for December lifting was A$47.21 with LIO’s share of US$435,365. These proceeds are expected to be received in early February 2019.
LIO started hosting prospective farm-in partners during the quarter post the execution of the East Gross Split PSC in 3Q18. This farmout hosting is expected to conclude by mid-2019.
During the quarter, LIO reported net cash used in operating activities of A$0.475 million (as compared to the guidance of A$0.617 million as per 25 October 2018 report) arising from the payments for exploration and evaluation of A$36 K, staff costs of A$126 K, development cost of A$16 K, production cost of A$167 K, administration and corporate costs of A$127 K, and interest and other costs of finance of A$3 K. For FY18, it reported net cash used in operating activities of A$1.447 million. For the next quarter, LIO estimates a net cash outflow of A$0.302 million.
LIO reported cash used in investing activities of A$60 K during the quarter against the farmout cost, and cash used in investing activities of A$0.625 million for FY18. LIO did not report any cash flow from its financing activities during the quarter, but cash flow of A$2.325 million during FY18.
The effect of movement in exchange rates on cash held was also nil for the quarter and A$18 K for FY18. It reported a cash balance of A$1.030 million at the end of the period, i.e., 31 December 2018.
Looking at Lion Energy Limited’s stock performance and the return it has posted over the last few months, the stock has generated a negative return of 9.09% during the past six months. It is currently trading at A$0.030 (at the close of 29 January 2019) with no change in the price during the day’s performance. LIO has 207.4 million shares outstanding with a market cap of circa A$6.22 million.
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