Buccaneer to Commence Drilling 2nd Well at Kenai Loop

- Buccaneer to Commence Drilling 2nd Well at Kenai Loop

Thursday, August 18, 2011
Buccaneer Energy Ltd.

Buccaneer advised that it is on track to commence drilling of its second well at its 100% owned Kenai Loop project within the next 7 days.

The Company has contracted with Marathon Oil Company for the Glacier Drilling Rig # 1 to be on site for the second well at Kenai Loop, this being the same rig that successfully drilled KL # 1. The rig will mobilize to the location on August 22, 2011 (US time) with the well expecting to spud during that same week.

This second well will be a development well directionally drilled from the same drilling pad as KL # 1. The bottom hole location is expected to be approximately 1,800 feet from that of the KL # 1 well.

In May 2011 Buccaneer drilled the KL # 1 and intersected 26 separate gas pay zones. 2 of these zones were tested being the 9700' and 10000' sands. Due to restrictions on rig availability the Company was unable to test the remaining 24 identified pay zones.

The second Kenai Loop well will have the following primary objectives:

• a step out well to test and possibly extend the known aerial extent of the 9,700' and 10,000' sands;
• flow test additional pay zones (especially those at ~10,600') which were previously untested due to the then rig availability constraints;
• further define reservoir characteristics and reserve potential; and
• complete the well as a second producer in the Kenai Loop field.

The current independent assessment of 2P reserves at Kenai Loop of 38.3 BCF (4.8 MMBOE1) was based solely on the two tested pay zones in the 9,700' and 10,000' sands. The assessed 2P reserves covered an average of 340 acres of drainage area around the KL # 1 well. If the above objectives are successful, the 2P reserves are expected to increase.

The well is expected to take 30 days to reach its target depth of 11,000'. An additional 14 days of testing is anticipated.

Director of Buccaneer Energy, Dean Gallegos said, "The Company is very keen to take full advantage of the recently executed gas sales contract with ENSTAR, which allows for deliveries of up to 15.0 MMCFD.

"The sand in KL # 1 around the 10,600 feet depth look good on the logs and the second well will penetrate these sands in a slightly higher structural position than in KL # 1. These sands and the shallower 9700' and 10,000 foot sands are the most immediate way for us to increase booked reserves and future production capacity.

"In the last 12 months the Company has leased, technically assessed, permitted, execute a gas sales contract and drilled 2 wells. While there will always be delays due to unforeseen circumstances, I think this demonstrates management's capacity to deliver complex projects successfully."

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