Ann: Testing Operations Update - Ungani Far West 1, page-2

Testing Operations Update

- Ungani Far West 1 Buru Energy Limited (Buru Energy) provides the following update on the testing operations at the Ungani Far West 1 well. The well has been configured to allow testing of three zones, the uppermost zone which has tested oil, a middle zone which has calculated oil saturations from wireline logs, and the lower zone which has well developed vugular porosity in cores but ambiguous calculated oil saturations. Further to the last report, the middle zone has been opened to flow with no influx observed.

The pressure data obtained after the zone was opened suggests it is water bearing but this needs to be confirmed. The forward program will include a shut-in for approximately one week followed by further pressure surveys. The aim of this program is to obtain further data to allow a more definitive interpretation of the oil and water interfaces in the reservoir. At the conclusion of the shut-in and the data gathering phase the produced fluids will be reinjected into the formations they came from and the well will be suspended.

Buru Energy’s Executive Chairman said: “We are delighted with this result. The core through the dolomite reservoir has given us very valuable insights into the Ungani Dolomite reservoir characteristics. The actual rocks appear to have much better reservoir characteristics than originally inferred from logs, which of course has regional implications for how good the reservoir is – and once we have done a detailed analysis we will look to integrate this into our analysis of the Ungani wells. Preliminary interpretation of the pressure data also suggests that the Ungani Far West 1 well is “seeing” the aquifer from Ungani.

This implies that this good reservoir quality is present regionally (as was also seen at Praslin). This is a very encouraging result for the other Ungani Dolomite prospects in the area. The oil gravity at Ungani Far West is also very high and the oil quality appears to be excellent, and very similar to that recently recovered from the test of Ungani North. This is also encouraging for the value of these reservoirs. We also can’t forget that we have made a new field play opening discovery in the Anderson Formation in this well. Because of the well configuration we can’t test it in this well but it is a strong indication of the overall prospectivity of the area.
We will be remapping the horizons at the Anderson Formation level and preparing a suite of prospects for future drilling consideration. The other excellent thing about the Anderson targets are that they are relatively shallow (~1,500 metres) and will be able to be tested with small rigs that can drill cheap wells.

This has been an excellent end to our current drilling program and we are now fully assessing the results to generate the next set of drilling targets.” The well is located on an all weather drilling pad approximately one kilometer off the Ungani access road within Production License L21, 97 kms east of Broome and 3.3 kms southwest of Buru Energy’s Ungani Oilfield in the Canning Basin of northwestern Australia.

The well was drilled under the terms of the Ungani Development Funding agreement with Diamond Resources (Fitzroy) Pty Ltd. Equity and contributing interest for the well are as follow