Lion Energy has received formal approval from the Indonesian Ministry of Energy and Mineral Resources (MEMR) for the transfer of a 15% participating interest in the East Seram production sharing contract (PSC) from its subsidiary Balam Energy to OPIC East Seram.

The approval marks the last regulatory step required for the completion of the farmout agreement.

Once the farmout is completed, Balam Energy will retain a 45% interest in the East Seram PSC, while OPIC’s share will rise to 55%.

Under the terms of the agreement, OPIC will fund 88% of the costs for the upcoming Bula Karang-1 (BK-01) exploration well, up to a maximum of $5.6m.

Any expenses above this cap will be split between Balam Energy and OPIC in line with their respective interests.

The funding structure allows Lion Energy to maintain substantial exposure to potential exploration success, while notably reducing its future capital obligations.

The East Seram PSC holds the Bula Karang prospect, which is due to be drilled in August 2026. Current pre-drilling activities are progressing, with the drilling team in place, principal services secured and construction under way at the well site.

The BK-01 well will target a Plio-Pleistocene carbonate build-up located offshore Bula Bay, accessed by a deviated well drilled from an onshore site. This approach is expected to lower costs compared to offshore operations.

The prospect is estimated to contain a P50 prospective resource of 12 million barrels of oil equivalent (mboe).

Lion Energy chairman Tom Soulsby said: “We are pleased to receive formal approval from MEMR for the East Seram farmout. This completes the government approval process for the transaction and represents an important milestone for the East Seram project.

“The transaction materially improves Lion's funding position ahead of the BK-01 exploration well, while allowing the company to retain a substantial 45% interest in a highly attractive exploration opportunity targeting a 12mboe oilfield with access to existing production infrastructure.”

Since acquiring the East Seram PSC in 2018, Lion Energy has undertaken several exploration activities including a 664km offshore 2D seismic survey in 2020.

Nearby oil infrastructure and proximity to existing fields provide further commercialisation potential for any future discoveries.

In April 2026, Lion Energy entered into an agreement with Silver City Drilling for the use of the SCD-20 rig to drill the BK-01 exploration well in the East Seram PSC area.