An increase in the rate of drilling progress from 7,298 to 7,305 feet seemed to indicae the hole had encountered good fracture development.

Operations have been suspended while modifications are made to processing facilities, the company said.

Once a sufficient horizontal section of six-inch hole has been drilled, the well will be completed and turned to production, Lion said.

This is the first of a multi-well drilling program that aims to boost reserves and lift production from the oil field, said Lion Energy.

The joint venture had agreed on an aggressive work program and budget with the aim of lifting oil production to about 17,000 barrels of crude oil per day by mid 2005 and of increasing Block reserves by drilling up at least two satellite structures to the Oseil oilfield.

The major shareholder and Operator of the Joint Venture is KUFPEC (Indonesia) Limited with 97.5%. Lion holds the remaining 2.5%.