Lion has agreed to issue private Perth-based oiler scrip for the remaining 50% of the 6500sq.km study area in eastern Indonesia that it does not own.
Transform was created by a group of Perth explorationists, including John Akehurst (the former head of Woodside Petroleum), Dr Agu Kanstler (Woodside's former exploration director and more recently a member of Oil Search's board) and financier Andrew Burt.
Transform had held interests in PRL 28, PPL 430 and PPL 574 in PNG that it recently sold to Horizon Oil, and the deal with Lion effectively ends the company's direct exposure to exploration.
The pair completed the joint study to give themselves preferential rights to match the highest bid when the area is gazetted by the Indonesian government.
The initial offer to Transform is for 4.8 million shares, but that could rise to eight million shares if Lion raises additional capital within the next year at a price below 5cps.
Lion CEO Kim Morrison said the area covered by the area had 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," he said.
Pertamina recently drilled Melucut-1 well, the first dedicated shale well in the nation.
Lion has invested in a range of joint studies across Indonesia looking for the areas it sees as being the most prospective for shale oil and gas in the nation.
They include one over the Bohorok PSC - jointly owned by NZOG, Canada's Bukit Energy and local firm Surya Buana Lestarijaya - which is immediately south of the just-drilled area where Pertamina has been assessing Indonesia's shale potential in the Sumbagut MNK PSC since 2013.
Based on geological data the potential of non-conventional oil and gas in Indonesia is estimated at 574Tcf.