How Will Lion Energy’s East Seram Drilling and Hydrogen Plans Shape Its Future?
Lion Energy Limited reports strategic progress on its East Seram drilling plans and limits spending on its Port of Brisbane Green Hydrogen Project pending government funding, while divesting a stake in the Seram Non-Bula PSC to reduce exposure.
- ARENA grant application to support Port of Brisbane Green Hydrogen Project
- Spending on hydrogen project limited until funding secured
- Bula Karang-1 drilling plans in East Seram PSC near funding finalisation
- Strategic sale of 2.5% interest in Seram Non-Bula PSC for US$1.2 million
- Retained exposure to 1.5 TCF Lofin Gas Field via East Seram PSC
Hydrogen Project Progress and Funding Strategy
Lion Energy Limited continues to develop its flagship Port of Brisbane Green Hydrogen Project, aiming to establish Southeast Queensland's first commercial-scale hydrogen hub. The project targets supplying hydrogen to heavy transport and industrial users, positioning itself as a cornerstone for Queensland’s emerging hydrogen economy. Despite achieving key milestones such as site leasing and equipment procurement, Lion has resolved to limit further capital expenditure until it secures grant funding from the Australian Renewable Energy Agency (ARENA). This cautious approach reflects the current challenging cost environment driven by construction inflation and regulatory demands, making public co-funding essential for competitive delivery.
East Seram PSC Drilling Plans Gain Momentum
On the conventional oil and gas front, Lion is advancing plans to drill the highly prospective Bula Karang-1 well in its operated East Seram Production Sharing Contract (PSC) in Indonesia. The company has finalised commercial terms for a farm-in to secure drilling funding and has hired key personnel to support operations. A recent field trip helped confirm the well location and logistics, while regulatory engagement with Indonesia’s SKK Migas has been positive. The Bula Karang prospect, featuring a reefal carbonate build-up with an estimated 12 million barrels of prospective oil resources, represents a significant exploration opportunity. Lion expects to execute a binding funding agreement in the coming quarter, setting the stage for a Q2 2026 drilling campaign.
Strategic Divestment Reduces Exposure
In a strategic move to manage risk and capital commitments, Lion announced the sale of its 2.5% interest in the Seram Non-Bula PSC for approximately US$1.2 million. This divestment removes the company’s exposure to substantial exploration and development obligations tied to declining oil production in the Oseil field. The transaction, pending Indonesian government approval, is expected to complete by the end of 2025. Importantly, Lion retains exposure to the 1.5 trillion cubic feet Lofin Gas Field through its East Seram PSC, preserving upside potential in the region.
Balancing Growth and Prudence
Chairman Tom Soulsby emphasised the company’s disciplined approach, advancing promising exploration while carefully managing capital in the hydrogen sector. The sale proceeds from the Seram Non-Bula PSC are earmarked to support the upcoming Bula Karang drilling, underscoring Lion’s focus on value-accretive projects. Meanwhile, the hydrogen business remains a long-term growth avenue, contingent on securing government support to navigate cost pressures and scale effectively.
Bottom Line?
Lion’s next moves hinge on securing ARENA funding and finalising drilling finance, shaping its dual-path growth in hydrogen and hydrocarbons.
Questions in the middle?
- Will Lion secure ARENA funding to unlock the Port of Brisbane hydrogen project’s next phase?
- What are the terms and partners involved in the Bula Karang-1 drilling funding arrangement?
- How will the Seram Non-Bula PSC divestment impact Lion’s near-term cash flow and exploration focus?
