Buccaneer Energy Limited (ASX:BCC) Commences Gas Production at Kenai Loop

Sydney, Jan 16, 2012 AEST (ABN Newswire) - Buccaneer Energy Limited (ASX:BCC) is pleased to advise that production from its Kenai Loop # 1 well commenced on 14 January 2012 (US time).

The Company anticipates producing the well at up to 5.0 million cubic feet per day ("MMCFD") for the first 2-3 months while reservoir performance is monitored. The Company will be selling gas into ENSTAR's winter daily auction. The daily auction is a system where gas producers are advised of ENSTAR's additional requirements for the next 24 hours and the producers bid the price and volume to sell gas to meet these requirements.

ENSTAR's additional winter demand requirement during this period is primarily based on weather conditions and so can fluctuate on a daily basis.

The Company also has the ability to sell gas to ConocoPhillips (NYSE:COP) under its gas sales agreement with the local LNG facility if the total daily production is not purchased by ENSTAR.

Buccaneer Director Dean Gallegos said:

"The commencement of gas production and sales from the Kenai Loop project is a significant milestone for Buccaneer and marks the first production from our substantial Alaska holdings. We are extremely proud of the speed and efficiency our team has displayed in going from discovery to permitting and production at Kenai Loop in less than 9 months - this includes the construction of a pipeline and the facilities necessary to drill, produce and transport a substantial amount of natural gas.Buccaneer is looking forward to an active 2012 with drilling at Kenai Loop likely to commence in 2nd quarter 2012, prior to the start of its offshore program"

Contact

Buccaneer Energy Limited T: +61-2-9233-2520 F: +61-2-9233-2530 http://www.buccenergy.com