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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Buccaneer's Kenai Loop Reserves Exceed Expectations

- Buccaneer's Kenai Loop Reserves Exceed Expectations

Wednesday, July 20, 2011
Buccaneer Energy Ltd.

Buccaneer announced an initial Proven and Probable Reserve of 38.3 BCF (4.8 MMBOE) at 100% owned Kenai Loop. These booked Reserves substantially exceed the Company's pre drill assessment of approximately 5.0 – 10.0 BCF.

Ralph E. Davis completed an independent reserve assessment of the Kenai Loop project. Ralph E. Davis is a respected consulting firm providing independent reservoir engineering, geological, technical and financial services to the domestic and international energy industry since 1924.

	Proven (1P)	Proven & Probable (2P)	Proven & Probable & Possible (3P)
Gas - BCF	31.5	38.3	51.6
Oil Equivalent- MMBOE	3.9	4.8	6.5

The above Reserves were calculated using subsurface mapping, pressure and flow rates data attained from KL #1 well. The current Reserves include only two sand packages at 9,700 feet and 10,000 feet. An average drainage area of 340 acres was used to calculate the Reserves and the Company expects that a second well will be required to drain the entire 340 acres. The Company's mapping indicates the two sand packages have a total closure area of 1,600-2,000 acres.

The Proven Reserves have a Future Net Income of US $127.9 million and a Net Present Value (NPV) of US $73.6 million. Assumptions used in the NPV calculation include:

• Two wells producing at 5.0 mmcfd;
• A gas price of US $5.71 / mcf;
• A pipeline tariff of $0.21 / mcf;
• Operating Costs of US $15,000 per month; and
• A discount rate of 10%.

The KL # 1 well was drilled to a depth of 10,680 feet and intersected 26 separate gas zones totaling 645 feet of gross pay. The Company elected to perforate and test only the 9,700 and 10,000 feet sands (which totaled 87 feet of gross pay) due to rig availability constraints. The remaining 24 zones totaling 558 feet of gross pay are yet to be tested and do not form part of the Reserves assessment.

Kenai Loop is 100% owned by Buccaneer with total acreage under lease of 8,988 acres.

Near Term Work Plan

The Company expects to spud the second well at Kenai Loop this quarter. The second well will be drilled from the same location as KL # 1 and will have two primary objectives:

• a step out well to test and possibly extend the known aerial extent of both the 9,700 and 10,000 feet sands. If successful this will effect an increase in the current Proven and Probable Reserves; and
• to test the sands below 10,000 feet and specifically those at approximately 10,600 feet intersected in KL # 1. These sands appear similar to the 9,700 and 10,000 sands. If this or other objectives are successful then it is expected Proven and Probable Reserves will be increased.

Further details on the commencement date of this well will be made once rig contracts have been executed.

Commentary

Director of Buccaneer Energy, Dean Gallegos said, "This is a very significant result. We expect that further drilling at Kenai Loop will yield additional increases to booked Reserves. These increases would be based on both the current two pay zones and zones below10,000 feet.

"Clearly, there is substantial upside from the remaining 24 zones (totaling 558 feet of gross pay), which are yet to be tested.”

"As part of the Buccaneer's 3 prong strategy, the Company has planned an aggressively drilling program for the development of the Kenai Loop field and expects to drill additional wells in the next 12 months.

"We anticipate placing the Kenai Loop field into production by the end of 2011."

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Buccaneer Wraps Up Ops at Kenai Loop Proj.

- Buccaneer Wraps Up Ops at Kenai Loop Proj.

Wednesday, June 01, 2011
Buccaneer Energy Ltd.

Buccaneer provided the following final flow testing results from its 100% owned Kenai Loop # 1 well.

Highlights

• Successfully completed 4 point flow test for 2 zones totaling 87';
• Absolute Open Flow Potential (AOFP) calculated as 33.2 million cubic feet per day (4,150 BOEPD)
• Long term production rate targeted at 6 - 8 MMCFD (750 - 1000 BOEPD)1; from 87' gross pay tested;
• Net revenue of US $1.05 million per month at 7.0 MMCFD, US $12.6 million per annum;
• 14 zones (423' gross pay) remain to be tested.

A flow test over 4 different choke sizes, a 4 point test, has been successfully completed. This test includes the measurement of pressures which allows for the calculation of the AOFP. The AOFP estimates the well's flow rate without a choke.

The AOFP was calculated as 33.2 million cubic feet per day (MMCFD) which is significantly higher than the expectations. The high AOFP demonstrates the excellent permeability and porosity of the 2 zones perforated and tested.

The long term deliverable production rate from the well has been estimated as 6 - 8 MMCFD (750 - 1000 BOEPD). This steady deliverable production rate is anticipated for approximately 2 years and will facilitate a favorable gas sales contract.

Based on the average production rate of 7.0 MMCFD and the expected floor price of gas in south central Alaska of US $7.00 / MCF this would result in net revenue to the Company of approximately US $1.05 million per month (US $12.6 million per annum). The gas price in
recent contracts has a floor of US $7.00 / MCF and cap of US $10.00 / MCF.

Net revenue is after all royalties, production taxes and expected normal operational costs and amount to ~US $2.00 / MCF. Fixed royalties account for approximately 65% of these costs. An upside potential exists in the area from the remaining 14 zones (423' of gross pay) that have not yet been tested. Buccaneer's contiguous block in the area is in excess of 8,900 acres. An internal estimate of recoverable reserves is currently being finalized after which the Company will engage a third party engineer to complete a reserve report.

Kenai Loop Development Program

The Company is in the process of finalizing a development program for the Kenai Loop project which will include:

• Drilling Kenai Loop # 2 well;
• Commencement of production;
• Acquisition of new seismic; and
• Additional drilling beyond Kenai Loop # 2 well.

Kenai Loop # 1 Previous Results

In the initial phase of the testing program, the Kenai Loop # 1 has successfully tested gas to the surface at a rate of 10 million cubic feet per day on a 20/64" choke with a FTP (flowing tubing pressure) of 3,495 psi.

The Company has up to 16 zones totaling 510' of gross pay identified by logs as test candidates in the Beluga and Upper Tyonek Formations. As the rig needed to be released back to Marathon on June 1, 2011, 2 of the 3 high graded zones in the Upper Tyonek
Formation were chosen to be perforated and tested.

The 2 zones total 87' of gross pay were described as follows:

Zone 1 has an upper sand of 37' of gross pay which logs have confirmed as being quality reservoir with high porosity and good permeability. This upper sand package had a "gas kick" during drilling operations. There is an additional 12' of lower sand which is a lesser quality sand, but remains attractive. Only the upper portion of this zone is included in the testing program.

Zone 2 is an additional massive sandstone zone of approximately 50' of gross pay which logs indicate has good porosity and permeability.

Depending on rig availability a second well is planned for the third quarter 2011. The Company is in the progress of formulating a development program for the field, including a production schedule, beyond the initially anticipated 2-3 wells.

Background

The closest wells to the Company's Kenai Loop # 1 well are the Cannery Loop #3 and #4 wells located in the Cannery Loop Field, which were drilled from the same surface location approximately 6,325 feet (1.2 miles) from the Kenai Loop # 1 well location. The Cannery Loop # 3 and # 4 wells have produced a combined 25.5 BCF (3.18 MMBOE) from pay zones whose equivalents are expected to be present in the Kenai Loop # 1 well, but separated from the Cannery Loop Field by geological deposition rather than fault. Drilling to date in the Kenai Loop # 1 well has confirmed that the formations encountered to date are likely separated from the Field.

There were 11 wells in the adjacent Cannery Loop Field which produced 175 BCF (21.9 MMBOE) One well produced from the Sterling Formation which is not one a target in Kenai Loop # 1 well, the other 10 wells produced from the Beluga and Upper Tyonek. The Upper
Tyonek is the primary target Formation of the Kenai Loop #1 well.

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Kenai Loop Flows Rates of 10 MMcfpd

- Kenai Loop Flows Rates of 10 MMcfpd

Thursday, May 26, 2011
Buccaneer Energy Ltd.

Buccaneer provided the following the initial results from flow testing operations at its 100% owned Kenai Loop # 1 well.

Highlights

• Successfully tested gas at a rate of 10 million cubic feet per day (1,250 BOEPD)1 on a 20/64" choke;
• Only 2 zones totaling 87' of pay perforated and tested in the Upper Tyonek;
• An additional 14 zones totaling 423' of gross pay in the Upper Tyonek and Beluga Formations to be tested at a later date;
• Results to date exceed expectations;
• Testing ongoing with additional results to be released.

1 Gas to Oil Ratio of 8:1

In the initial phase of the testing program, the Kenai Loop #1 has successfully tested gas to the surface at a rate of 10 million cubic feet per day on a 20/64" choke with a FTP (flowing tubing pressure) of 3,495 psi. Testing will continue to better predict long term deliverability.

Gas is being safely flared, smaller choke sizes were required causing some modifications to the testing program to limit the flare to approximately 100'.

The Company has up to 16 zones totaling 510' of gross pay identified by logs as test candidates in the Beluga and Upper Tyonek Formations. As the rig must be released back to Marathon on June 1, 2011, 2 of the 3 high graded zones in the Upper Tyonek Formation were chosen to be perforated and tested.

The 2 zones total 87' of gross pay were described as follows:

Zone 1 has an upper sand of 37' of gross pay which logs have confirmed as being quality reservoir with high porosity and good permeability. This upper sand package had a "gas kick" during drilling operations. There is an additional 12' of lower sand which is a lesser quality sand, but remains attractive. Only the upper portion of this zone is included in the testing program.

Zone 2 is an additional massive sandstone zone of approximately 50' of gross pay which logs indicate has good porosity and permeability.

Both zones were perforated simultaneously and resulted in an immediate build up of pressure. The testing program will continue over the next 48 hours to complete a 4 point test which has just been initiated. Additional details of the testing results will be made available after detailed analysis of the bottom hole pressure measurements.

Although testing is not yet complete, calculated Absolute Open Flow Potential (AOFP) is expected to exceed expectations, based on testing thus far.

Once testing is complete, these two zones will be completed and will be the initial producing interval for this well.

Depending on rig availability a second well is planned for the third quarter 2011. The Company is in the progress of formulating a development program for the field, including a production schedule, beyond the initially anticipated 2-3 wells.

Background

The closest wells to the Company's Kenai Loop # 1 well are the Cannery Loop # 3 and # 4 wells located in the Cannery Loop Field, which were drilled from the same surface location approximately 6,325 feet (1.2 miles) from the Kenai Loop # 1 well location.

The Cannery Loop # 3 and # 4 wells have produced a combined 25.5 BCF from pay zones whose equivalents are expected to be present in the Kenai Loop # 1 well, but separated from the Cannery Loop Field by geological deposition rather than fault. Drilling to date in the Kenai Loop # 1 well has confirmed that the formations encountered to date are likely separated from the Field.

There were 11 wells in the adjacent Cannery Loop Field which produced 175 BCF (21.9 MMBOE) One well produced from the Sterling Formation which is not one a target in Kenai Loop # 1 well, the other 10 wells produced from the Beluga and Upper Tyonek. The Upper Tyonek is the primary target Formation of the Kenai Loop #1 well.

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Buccaneer: Casing Ops to Commence at Kenai Loop

- Buccaneer: Casing Ops to Commence at Kenai Loop

Wednesday, May 18, 2011
Buccaneer Energy Ltd.

Buccaneer provided the following update on the progress of the Kenai Loop # 1 well:

• Time: 9.00am (Sydney) May 18, 2011 / 3.00pm (Anchorage) May 17, 2011.
• Depth: 10,680 feet Total Vertical Depth (“TVD”)
• Activity: Wire-line logging operations completed. Casing set and flow testing operations are expected to commence within the next 48 hours.
• Results: Wire-line logging has identified a total of up to 173' of gross pay in the Upper Tyonek Formation.

In the interval 9,421' to 10,680' a partial set of logs were obtained confirming a total of 137' of gross pay. Logs over the intervals that were high graded within the 9,421' to 10,680' interval as significant or very significant in an earlier release have been confirmed with wire-line logs and have been defined as Zone 1, Zone 2 and Zone 3.

Zone 1 has an upper sand of 37' of gross pay which logs have confirmed as being quality reservoir with high porosity and good permeability. This upper sand package is in the region where a "gas kick" was experienced during drilling operations. This sand is a high priority test target. There is an additional 12' of lower sand which is a lesser quality sand, but remains attractive.

Zone 2 is an additional massive sandstone zone of approximately 50' of gross pay which logs indicate has good porosity and permeability. This is a high priority test target.

Zone 3 has a confirmed 38' of gross pay which logs confirmed as having good porosity and permeability.

Further logging over the 9,421 to 10,680' interval will be completed now that casing has been set, these logging operations may reveal other promising targets not included in this update.

A full set of logs on the Upper Tyonek Formation down to 9,421' were successful. Those logs have confirmed 4 intervals totaling 36' of gross pay.

The drilling rig must be released June 1. Accordingly, all efforts are currently focused on logging, testing and completing the well within that time frame.

Massive sandstone indicates a relatively thick, uniform, not laminated, sandstone; possibly a channel type of sand with typically very good reservoir characteristics.

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