Australia-based Lion Energy has agreed to acquire 100% of the joint study rights of an area over 6,500 km2 area in Indonesia from Transform Exploration in exchange of 4.8 million shares.

Lion Energy previously had 50% stake in the rights and will issue the shares for the remainder 50% stake either to Transform Exploration or its nominee.

Under the terms signed by the parties, there is an option to increase the payable shares to a maximum of 8 million in case Lion raises more capital in the next one year at a price under 5c per share, on a pro rata basis with a floor of three cents per share.

Lion CEO Kim Morrison said: “Lion is pleased to acquire 100% of the rights to this exciting area which has significant oil and gas potential in proven play types. The deal is part of our growth strategy in becoming a significant participant in Indonesia’s oil and gas sector”.

The highly prospective area where Lion and Transform Exploration had completed their joint study is in the eastern part of Indonesia.

After completion of the joint study, the participants have been granted certain rights like the right to match the highest bid when the area is put up for formal bidding by the Indonesian government.

Issuance of the shares is subject to approval from Lion Energy’s shareholders which will be asked for this month end at its annual general meeting.

In late January, Lion Energy had secured a 4-year extension of the South Block A PSC exploration term from Indonesian regulator, Badan Pengelolaan Migas Aceh (BPMA). Lion Energy has a 40.7% stake in the block located in North Sumatra Basin.