Buccaneer Energy Limited (ASX:BCC) Operations Update At Lee County Project

Sydney, Oct 20, 2010 AEST (ABN Newswire) - Buccaneer Energy Limited (ASX:BCC) (PINK:BCGYF) is pleased to provide an update for the Lee County project, located approximately 120 miles west of Houston.

Austin Chalk - Reservoir Background

The reservoir drive mechanism in the Austin Chalk is solution gas drive. Fractures within the Austin Chalk typically contain oil with dissolved gas in solution. When a well is drilled through the fractured oil reservoir and then opened at the surface, initially the buoyancy of oil over water (gravity) pushes the oil into the well towards the lower pressure at the surface.

As the oil rises, the pressure is reduced and the dissolved gas bubbles out of the oil and expands - similar to opening a bottle of soda beverage. The expansion of the gas lifts the oil to the surface - again similar to opening a soda beverage where the bottle was shaken and the gas and liquid forcefully overflows. In this situation, the well is flowing.

Since the gas is released from the oil coming to the surface, the combined gas and oil flow is piped through a separator on the surface where the oil comes off the bottom and flows to the tanks, and the gas comes off the top and goes to flare. The amount of gas in the oil is referred to as the solution gas-oil ratio ("GOR"), measured in cubic feet per bbl. If the GOR is relatively low (about 100 cubic feet per bbl in this area) and the oil rate is low, there is too little gas to commercially sell, so it is used to fuel production equipment and the excess is flared. By definition, a solution gas drive reservoir has no water drive pressure support, so the pressure in the reservoir declines rapidly after initial production. The gas in solution with the oil rapidly depletes with the pressure in the reservoir, so the oil stops flowing to the surface; which then requires an artificial lift system, like pumping.

Once the well is pumping oil, the production rate is dictated by two main factors:

- the amount of oil feeding into the well from the intersected fractures in the surrounding chalk; and

- the capacity of the pumping equipment.

The extent of fracturing that can be encountered within a vertical well is usually far less than that in a horizontal well, therefore the quantity of oil to feed into the well is also less. Vertical wells can still contain commercial quantities of oil that can be extracted using pumping and the installation of pumping equipment is a common method of operating these types of wells.

The pumping equipment currently at Lee County has a pumping capacity of 200 - 260 BOPD however this can be upgraded with additional expense, if warranted.

Alexander # 1

Since the last report this well has been intermittently swabbed at commercial oil production rates; however it is currently shut-in for the installation of pumping equipment. A decision will be made on drilling a horizontal well to encounter additional fractures in either the middle Austin Chalk (941 BOPD flow rate over 72 hours) or Lower Austin Chalk will be made after assessing the oil production from pumping operations in the vertical well bore.

The Alexander #1 should be pumping on continuous production within a week.

Vick # A2

The 1700' horizontal in the Lower Austin Chalk fractures has been drilled with approximately 500' of oil pay being intersected. Oil accumulated on the mud pits while drilling at four different locations within this pay. The well successfully commenced flowing oil at increasing rates upon testing but flow ceased after a build up of drill water and formation water choking off the oil and solution gas.

The well is currently shut-in awaiting a coiled tubing unit to temporarily artificially lift this water build-up so as to re-establish oil production, and obtain an oil pumping rate.

If the above process is unsuccessful, it is the current intention to either extend the horizontal or drill a sidetrack lateral from the existing horizontal well bore.

The participants in the Lee County project are as follows:

Participant Working Interest

- Buccaneer Resources* 52.50% (* A wholly owned subsidiary of Buccaneer Energy Limited)

- Sandstone Energy 38.75%

- Megashine International Ltd 8.75%

Contact

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