BCC Beam Communications Holdings Limited

Buccaneer Energy Limited (“Buccaneer” or “the Company”) provides the following update in respect to the termination of Archer Drilling, LLC (“Archer Drilling”) as the project manager of the modifications and repairs of the “Endeavour – Spirit of Independence” (“Endeavour”) jack-up rig.

The Endeavour is owned by Kenai Offshore Ventures, LLC (“Kenai Offshore”), which is a joint venture between Buccaneer, Singapore based Ezion Holdings Limited and the Alaska Industrial Development and Export Authority (“AIDEA”). Buccaneer is the designated Manager of Kenai Offshore.

Archer Drilling was engaged by Kenai Offshore in October 2011 under a Master Services Agreement (“MSA”) to provide project management services for the modifications and repairs required to be undertaken to the Endeavour to allow it to operate in the Cook Inlet, Alaska.

Archer Drilling was chosen through a competitive tender process undertaken in 2011, where part of Archer Drilling’s claim was that they “set the standard in providing drilling maintenance and rig management services”. Additionally Archer Drilling personnel had worked on the Endeavour (then called the Adriatic XI) while undergoing shipyard work in 2008 through its subsidiary Rig Inspection Services (“RIS”).

Prior to the finalization of the acquisition of the Endeavour in November 2011 Archer Drilling and RIS inspected the Endeavour while cold stacked and were involved in the initial engineering surveys of the Endeavour. Additionally Archer Drilling and RIS compiled the detailed engineering scopes of work required to allow various contractors to submit quotes for the modification and repair work to be undertaken in Singapore. All of these early services provided by Archer Drilling were consistent with the terms of the MSA and for which Archer Drilling and RIS received full payment.

Kenai Offshore has been continually forced to undertake unanticipated work and to contribute unanticipated expenses. Archer Drilling’s failure to live up to its representations and contractual responsibilities under the MSA seriously undermined Buccaneer’s confidence in their ability to complete their work under the MSA and subsequently operate the Endeavour within the Cook Inlet while undertaking drilling operations, requiring the termination of Archer Drilling services and the identification of a replacement.

In connection with Archer Drilling’s termination, Buccaneer, as Manager of Kenai Offshore, has contacted each of those contractors hired by Archer Drilling to perform services on the Endeavour with the understanding that Kenai Offshore will review each of their cases and will step in and make payments for legitimate expenses associated with work performed by those contractors on the Endeavour.

Kenai Offshore is currently withholding payments to Archer Drilling for amounts that it has formally disputed with Archer Drilling as allowed under the terms of the MSA executed with Archer Drilling in October 2011. Kenai Offshore has paid all undisputed amounts owed to Archer Drilling and has done so within payment terms.

Dean Gallegos, Finance Director at Buccaneer Energy commented on the termination of Archer Drilling:

“We are disappointed to see it come to this, as initially we had hoped that Archer Drilling would be the Endeavour’s long-term operator. As the Manager of Kenai Offshore, and to act in the manner to protect the interests of our joint venture partners and shareholders, we were left with no choice other than to terminate Archer Drilling’s work on the Endeavour. Given the timing we did not make this decision lightly”

Mr. Gallegos continued:

“Buccaneer is currently reviewing the lawsuit lodged by Archer Drilling and believe that the allegations are entirely without merit. When served with the lawsuit, Buccaneer will respond fully, and such response will include its own claims for the damage caused by Archer Drilling’s actions and inaction.”

As previously reported, Spartan Drilling is in the process of being engaged to operate the Endeavour, and we are looking forward to benefit from their operational expertise and experience working in the Cook Inlet. We believe the Endeavour’s operations will be enhanced through Spartan’s oversight, and therefore de-risk our offshore projects.

About Buccaneer

Buccaneer Energy Limited is an Australian listed company focused on developing its 100% owned oil & gas assets in Alaska. The Company's flagship projects are a series of onshore and offshore developmental and exploration prospects in Alaska’s Cook Inlet.

Buccaneer Energy has a 3 pronged cash flow strategy:

• Developing the 100 % owned Kenai Loop onshore gas project with independently assessed 4.8 MMBOE1 in 2P Reserves;
• Operating a Offshore Jack Up rig for use by third parties in the Cook Inlet; and
• Developing its 100% owned offshore Cook Inlet projects that have independently assessed 73.3 MMBOE in 2P Reserves / P50 Resources using the acquired Jack Up rig.

Buccaneer Energy has a 50/50 joint venture with Singaporean based Ezion, a leader in the development, ownership and chartering of strategic offshore assets and the Alaskan Industrial Development and Export Authority (“AIDEA”). This joint venture has acquired the jack-up rig “Endeavour” which is capable of drilling in all areas of the Cook Inlet, the Beaufort Sea and the Chukchi Sea. Mobilisation of the Endeavour into the Cook Inlet is expected in 2Q 2012.

The Alaskan Government is supportive of oil and gas in the Cook Inlet. There are a number of fiscal incentive programs for exploration and development in the Cook Inlet.

Buccaneer Energy has drilled the onshore Kenai Loop #1 well. The well was tested to have a flow rate of 6 – 8 mmcfd (750 - 1,000 BOEPD1) and the Company constructed both the pipeline and facilities at Kenai Loop, the well started production and selling gas in early January 2012. The Company plans to drill Kenai Loop #2 in 2Q 2012. Full development of the onshore Kenai Loop field could exceed 10 producing wells.

Buccaneer Energy also has major working interests in two producing projects in Texas, USA. Pompano is an offshore gas project located in the Gulf of Mexico, drilled by the Company in 2008 and has an additional pipeline of ‘drill-ready’ gas prospects. Lee County is an onshore oil project, currently producing a small amount of oil.

1 Using a Gas to Oil conversion ratio of 8:1

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