Buccaneer Energy Limited (ASX:BCC) Announce Alaskan Industrial Development And Export Authority Investment Approval For Jack Up Rig Acquisition

Sydney, April 6, 2011 AEST (ABN Newswire) - Buccaneer Energy Limited (ASX:BCC) (PINK:BCGYF) is pleased to advise that the board of the Alaskan Industrial Development and Export Authority ("AIDEA") voted unanimously at its board meeting on 1 April 2011 (US time) / 2 April 2011 (Australian time) to invest up to US$30.0 million, as a joint owner, in the acquisition of a jack-up rig.

A Joint Ownership Agreement ("JOA") is expected to soon be executed between the Company's subsidiary Kenai Offshore Ventures, LLC ("KOV") and AIDEA. The joint project has been named Project Endeavour.

The JOA contains 15 Conditions Precedent that must be finalised prior to draw down of the AIDEA investment. The Company considers 5 of the Condition Precedents to be Material Conditions Precedent and these are listed in Schedule 1. The Company is confident that all the Condition Precedents can be met in a timely manner.

AIDEA's involvement and investment is as a Preferred Owner of the jack-up rig with an initial 85.7% interest in the Joint Project. KOV will be the sole Common Owner with a 14.3% initial interest in the Joint Project.

The following are the main features of AIDEA's Preferred Ownership interest:

- AIDEA's 85.7% Preferred Ownership interest in the Joint Project will be repurchased over a period of 6 years using cash flow generated by contracting of the rig for drilling operations. AIDEA's Preferred Ownership interest will be cancelled as it is repurchased so that on conclusion of the repurchase program KOV will be the 100% owner of the jack-up rig;

- AIDEA will be paid a fixed annual dividend of 8.0%, paid semi-annually in arrears, on the Preferred Owner's outstanding balance of the Principal Repurchase;

- AIDEA's Preferred Ownership interest will be repurchased by way of an annual payment, in arrears. The repurchase schedule commences when the jack-up rig is delivered to the Cook Inlet ready for drilling operations; and

- Any dividend payment or Principal Repurchase that is not made in a 12 month period will accrue to the following 12 months.

The Company anticipates that the total cost of the acquisition, modification and mobilisation of the jack-up rig to the Cook Inlet from its current location will be approximately US$85.0 million.

It is anticipated that the US$85.0 million cost will be funded as follows:

- Alaskan Industrial Development and Export Authority US$30.0 million
- Senior Debt Facility US$50.0 million
- Kenai Offshore Ventures, LLC US$5.0 million

Exclusive Use Rights

Buccaneer will have the first right of refusal to utilise the rig until the conclusion of the 2013 drilling season i.e. November 2013. Under the terms of the JOA Buccaneer has committed to drilling a minimum of 4 wells in the Cook Inlet using the acquired jack-up rig.

Senior Debt Facility

KOV has received a Term Sheet for a US$50.0 million Senior Debt facility from a large Asian based bank. Further details of this facility will be released when it has been finalised.

Kenai Offshore Ventures, LLC - Joint Venture Agreement

The Company is pleased to advise that it has executed a Joint Venture Agreement ("JVA") with Singapore based Ezion Holdings Limited ("Ezion") (SIN:5ME). Ezion is a company listed on the Singapore Stock Exchange with a market capitalisation of approximately S$475 million (AUD$376 million).

Buccaneer and Ezion will both subscribed to a 50.0% interest in KOV by investing US$2.5 million each into KOV for a total of US$5.0 million. The subscription of an initial US$5.0 million will fund KOV's financial commitments under the JOA.

As part of the JVA terms a Buccaneer subsidiary will execute a 5 year, US$60,000 per day Bare Boat Charter of the jack-up rig with the Joint Project. The Bare Boat Charter does not commence until the jack-up rig is delivered to the Cook Inlet ready for drilling operations. The Bare Boat Charter will be an annual contracting obligation by Buccaneer of a gross US$21.9 million or approximately $8.0 million annually net of the anticipated ACES rebates.

The financial obligations of Buccaneer under the Bare Boat Charter can be reduced by utilisation of the jack-up rig by third party operators over this 5 year period. This Bare Boat Charter will be used, in part, to secure the Senior Debt facility.

For further information on KOV please visit http://www.KOValaska.com.

For the complete Buccaneer Energy Limited announcement including charts, please view the following link:
http://www.abnnewswire.net/media/en/docs/630439.pdf

Contact

Dean Gallegos Mob: +61-416-220-007 Tel: +61-2-9233-2520 http://www.buccenergy.com