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Buccaneer Energy Limited (ASX: BCC) Kenai Loop Testing Exceeds Expectations

 ASX RELEASE – 26 MAY 2011
 
KENAI LOOP # 1 WELL – TESTING RESULTS EXCEED EXPECTATIONS
 
Buccaneer Energy Limited (“Buccaneer” or “the Company”) is pleased to provide 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

Only 2 zones totalling 87’ of pay perforated and tested in the Upper  Tyonek; on a 20/64” choke;

An additional 14 zones totalling 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.
 
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’ (Figure 1).
 
The Company has up to 16 zones totalling 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 1 June 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 1 G a s t o O il R a t io o f 8 : 1 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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