Key Petroleum Ltd. : Cyrene-1 Daily Drilling Report for 24 January 2013

1.

Well Name/Permit:

Cyrene-1 EP438 - Western Australia

2.

The Report is for the Period:

0600 - 23 January 2013 to 0600 - 24 January 2013

3.

This ASX Release Time and Date:

1000 - 24 January 2012

4.

Report No:

Four

5.

Spud Date/DCA Rig #7:

21 January 2013

6.

Days since Spud:

Three

7.

Locations of the Well:

Latitude: 18° 16' 34.5"S

Longitude: 122° 24' 05.1"E

8.

13.

Hydrocarbon Indications:

Background gas has been established with C1 up to 160 ppm and

0.02 units of total gas.

14.

Operations since last Report:

Drilled to depth of 618 metres

15.

Current Operations:

Drill ahead through Grant Formation.

16.

Future Operations:

Drill ahead in 8 1/2" hole to coring point in Goldwyer

17.

Prospect Description:

The first reservoir target of the Cyrene 1 well is the Goldwyer unit, an argillaceous unit of some 135m thickness. This is regarded as an

'unconventional' reservoir with potential to establish prospectivity

over a very large area of the Broome Platform and beyond. The qualities of the Goldwyer which support this concept, apart from thickness and broad distribution, include organic contents frequently averaging 1.5-2% but ranging up to 4% or more, and a high calcareous content which implies favourable fracture characteristics.

The second reservoir target of the well, the 'cavernous' limestones of the Willara Formation, was confirmed by the substantial lost circulation zones encountered in Hedonia 1.

18.

Participants in the Well:

Key Petroleum Ltd (Gulliver Productions Pty Ltd) (Operator)

20.0%

Buru Energy Limited

37.5%

Mitsubishi Corporation (Diamond Resources (Canning) Pty

Ltd)

37.5%

Indigo Oil Pty Ltd

5.0%