the nighmare is over

OK, so I went through their quarterly, and talked to Tracey Muggleton at the company to clear up a couple of points.

In my opinion, the long nightmare is over.

Bula is still plugging away at 500 bopd. This might improve a little bit - possibly to the heady heights of 520 bopd. Remember that this is crappy Indonesian heavy oil, but from the numbers from the last lifting, it's still cash flow positive to the tune of about US$20 a barrel (gross of admin etc costs but net of production costs).

Oseil's latest cash call was US$400K. About half of this was paid by the last lifting ... leaving Lion with US$200K to pay in cash.

There is only an estimated US$350K further to pay for Oseil Phase 2 capex ... and there is a lifting of 350 000 bbl or so in August. Lion ends up netting about US 60 cents per barrel from their 2.5% share, so after the lifting thats about another US$200K to go and it's all paid for.

After that, barring over-runs and so on, thats it for Oseil 2 capex costs.

Right now, Lion has about A$2m in the bank, and owes Guiseppe about a cold mill.

Thus, if Kufpec sent the boys around for their next payment, Lion can smile sweetly, go to the bank and cut a cheque.

Kufpec is still estimating Oseil phase 2 to produce at 18000 bopd, and 2.5% of that is 450 bopd.

That puts Lion producing at about 900 bopd between Oseil and Bula.

Right now, this company is worth what the market is asking for, and then some.

It's still a day trader plaything, but it's well worth accumulating at 0.5 cents, as once Oseil 2 is announced as done, paid for and producing, then this share might get to the dizzying heights of a cent and a bit.

Laugh at me if you want, but I reckon Lion is a buy.

Ian Whitchurch