15 Rheola Street

West Perth WA 6005

Telephone +618 9213 4300

Facsimile +618 9213 4311

ABN 51 000 753 640

PO Box 512, West Perth

Western Australia 6872

Web: www.lionenergy.com.au

ASX Code: LIO

ASX RELEASE For immediate release 31 October 2012

SOUTH BLOCK "A" FARM-IN APPROVED


On June 28th, Lion Energy Limited ("LION") announced that KRX Energy Pte. Ltd. ("KRX") (through its wholly owned subsidiary, KRX Energy (SBA) Pte. Ltd.) had executed a Farm-in Agreement for the SOUTH BLOCK "A" Production Sharing Contract in Indonesia and acquired a
35% non-operating participating interest in return for certain funding commitments in the forward work program approved by the SOUTH BLOCK "A" joint venture. The formal transfer of the interest to KRX was subject to Indonesian government approval.

The Operator has received written notification from the Indonesian Ministry of Energy and

Mineral Resources formally approving the transfer to KRX Energy (SBA) Pte. Ltd.

LION currently holds a 30.77% equity interest in KRX and retains the exclusive right, but not the obligation, to move to a 57.14% equity position through additional funding of A$2 million

to KRX.

1. ABOUT SOUTH BLOCK "A" 1.1. POTENTIAL


The SOUTH BLOCK "A" farm-in represents a relatively low cost entry into a significant inventory of prospects and leads in close proximity to existing production and infrastructure that will facilitate early exploitation
of discoveries.
The extensive prospect and lead inventory within the
2,105 sq.km. SOUTH BLOCK "A" area has un-risked potential ranges (on a 100% basis) of:
OIL CASE: 87 - 475 MMBBL GAS CASE: 370 - 1,994 BCF
A seismic survey is scheduled in Q4 2012 to delineate high ranked prospects with exploration
drilling programmed for 2013.
Cont'd…/2

Lion Energy Limited ASX Release 31 October 2012, page 2 of 3

1.2. SOUTH BLOCK "A" BACKGROUND

The SOUTH BLOCK "A" Production Sharing Contract was executed May 5th 2009 between PT Realto Energi Nusantara Corelasi ("RENCO"), PT Prosys Oil & Gas International ("POGI") and Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi ("BPMIGAS") representing the Government of the Republic of Indonesia.
RENCO (with a 51% participating interest) was the designated Operator at the outset, however
it subsequently transferred its interest in the Contract and Operatorship to RENCO Elang Energy Pte Ltd, a company incorporated under the laws of the Republic of Singapore ("REE") and received approval of the transfer from BPMIGAS.
Post the farm-in of KRX, participating interests in the SBA PSC are:
• 51% RENCO Elang Energy Pte Ltd
• 14% PT Prosys Oil & Gas International
• 35% KRX Energy (SBA) Pte Ltd

1.3. CONSIDERATION

KRX will pay 49% of the gross cash calls of US$8,000,000 made by the Operator, to a maximum of US$3,920,000 as consideration for KRX's 35% interest.
KRX Energy (SBA) Pte. Ltd.'s title to the 35% participating interest is delivered free and clear of all loans, liens, mortgages and any other encumbrances, specifically clear of any requirement to pay or reimburse POGI for any already paid signature bonus, or a part thereof.

2. ABOUT KRX

• LION announced on June 18th 2012 that it had executed an agreement with KRX, a Singapore registered company, paving the way for LION to provide ongoing funding for the company as it moves forward with acquisition and development of oil and gas interests in SE Asia.
• On June 25th 2012, LION lodged the first instalment of A$420,000 of the initial firm funding
of A$1 million by way of subscriptions for KRX shares at $0.05 per share.
• On October 26th 2012, LION announced it had lodged the final instalment of A$580,000 of the initial firm funding of A$1 million by way of subscriptions for shares in KRX at $0.05 per share and by this subscription LION has moved to a 30.77% shareholder position in KRX.
• KRX started in 2010 to build a dynamic, growth oriented, SE Asian focused, oil and gas exploration portfolio by: Leveraging existing knowledge base to delineate under- explored assets in proven areas
• Identifying win-win commercial solutions
• Appropriate partnering
• Use of best-in-class consultants/consulting companies
• Fast-tracking exploration and appraisal/ development
• Become leading unconventional (shale gas) acreage holder in region
KRX has a highly experienced, well respected management team with excellent technical and managerial skills and big company expertise as well as a network of expert consultants and advisors to ensure technically astute, thorough and cost effective operations. Within this

Lion Energy Limited ASX Release 31 October 2012, page 3 of 3

nimble, small company environment, management has demonstrated a prudently aggressive approach to developing and securing opportunities.
Roger Whyte, the Managing Director, is a geophysicist with extensive SE Asian experience and proven management skills as CEO of an ASX listed company.
Kim Morrison, the Technical Director, is a geologist with extensive operational and business development skills, with worldwide experience and a strong SE Asia focus.

3. ABOUT LION ENERGY 3.1. SERAM (NON BULA) BLOCK PSC

LION, through its wholly owned subsidiary Lion International Investment Limited, holds a 2.5% shareholding in the Seram (Non Bula) Block Renewal Production Sharing Contract (SNBB). The major shareholder and Operator of the Joint Venture is CITIC Seram Energy Limited (51%). Other partners include KUFPEC (Indonesia) Limited (30%) and Gulf Petroleum Investment (16.5%).
The SNBB contains the producing Oseil Oilfield which has cumulative production in excess of 10 million barrels and continues to produce approximately 2,500 BOPD.
An exploration well, LOFIN-1 was spudded within the SNBB on January 17th 2012 and has reached Total Depth of 4,427 meters (14,525 feet) MD and encountered a significant gross hydrocarbon column in excess of 500 feet. Testing currently underway will be evaluated to determine the significance and commercial potential of this discovery.

3.2. COMPANY RESTRUCTURE

Following a restructure of shareholding agreed to by shareholders in February 2012, LION has and continues to pursue upstream oil and gas opportunities. In addition to the KRX opportunity outlined herein, the Company is vigorously pursuing other low risk opportunities globally.

Nomenclature

BCF Billion cubic feet BOPD Barrels of oil per day MMBBL barrels of oil x 1,000,000

Enquiries:

Contact Jack Toby (Company Secretary) Telephone: (08) 9213 4300
Email: info@lionenergy.com.au

Competent Person's Statement:

Information in this report that relates to Hydrocarbon Reserves and or Resources is based on information compiled by Mr Russell Brimage, Director of Lion Energy Limited who has consented to the inclusion of that information in the form and context in which it appears.

Mr Brimage has over 30 years experience in the application of engineering to the petroleum industry in oil and gas exploration and production, both in Australia and internationally, as either an employee or consultant to oil companies operating in the upstream petroleum industry. Mr Brimage reviews the Company's operations with the help of various professional consultants, appropriately qualified and experienced in their respective fields within the upstream petroleum industry. He is also an Associate Member of the Society of Petroleum Engineers.

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