Key Petroleum Ltd. : Cyrene-1 Operations Update

13 December 2012
The Manager
Australian Securities Exchange Company Announcements Office Level 4/20 Bridge Street
SYDNEY NSW 2000
Dear Sir

RE: CYRENE-1 OPERATIONS UPDATE

We attach herewith an ASX Announcement for Investors regarding activities on the drilling of commitment well Cyrene-1 on EP 438.

Regards

KANE MARSHALL

Managing Director

KEY PETROLEUM LIMITED

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61 (0)8 6389 0322 F: +61 (0)8 6389 0697 E: info@keypetroleum.com.au W: www.keypetroleum.com.au

ABN 50 120 580 618

ASX AND MEDIA ANNOUNCEMENT

13 December 2012

EP 438 - CYRENE-1 OPERATIONS UPDATE

Key Petroleum is pleased to provide the following update on operations at the Cyrene-1 Exploration Well within EP 438, Canning Basin, Western Australia.
Over the past fortnight, DCA Rig 7 and its associated equipment has arrived at the wellsite located approximately 100km south of Broome. A planned surface hole to a depth of 175 metres will be drilled, followed by the running and cementing of the 9 5/8" surface casing, then the BOP Stack will be nippled up and operations suspended prior to drilling to the primary target in January.
Upon commencement of drilling in January, all third party contractors and their subsequent equipment will be mobilised and rigged up on the Cyrene-1 location to drill ahead in the 8 ½" and 6" hole sections. This will ensure that operations are conducted in the safest possible manner and that the critical components of the Cyrene-1 project are fully resourced.
The third party services for Cyrene-1 include Baker Hughes who will conduct the mudlogging and coring of the lower Goldwyer, Schlumberger for wireline logging of the intermediate 8 ½" hole section including the cored Goldwyer section, Westlog for wireline operations including logging of the Willara Formation and swabbing during flow testing of the Willara and DST Australia for the flow testing of the Willara "lost circulation zone".
Cyrene-1 will be drilled to a total depth of 1060m targeting the Willara and Goldwyer Formations and has an estimated resource for conventional targets in the order of 5 million barrels of recoverable oil if hydrocarbons are present. Unconventional targets include a 135m section within the Goldwyer Formation shales.
Managing Director Kane Marshall said the commencement of drilling operations at Cyrene-1 in the Canning Basin fulfilled another promise to equity markets in the evolution of Key Petroleum as an emerging onshore explorer in Australia.
"Given that the wet season has started in the Canning and conditions are pretty tough we are very pleased with our progress to date. With the full support of the EP 438 joint venture we will now proceed to drill Cyrene-1 to assess the conventional and unconventional prospectivity of this part of the Canning Basin. This is an exciting time for our shareholders as we progress in this part of the Canning full steam ahead"
Key will provide weekly drilling reports until the surface hole section has been drilled and cased. For further information, please contact:

Kane Marshall

BSc (Geology), BCom (Inv & Corp Fin), Masters PetEng, SPE, AAPG Managing Director

Key Petroleum Ltd

Telephone: +61 8 6389 0322

Email: kmarshall@keypetroleum.com.au

Competent Persons Statement

Information in this ASX Release relates to information compiled by Mr Kane Marshall. Kane Marshall is a Practicing Petroleum Engineer and holds a BSc (Geology), a BCom (Inv & Corp Fin) and a Masters in Petroleum Engineering. He is a member of the Society of Petroleum Engineers (SPE) and the American Association of Petroleum Geologists (AAPG).

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61 (0)8 6389 0322 F: +61 (0)8 6389 0697 E: info@keypetroleum.com.au W: www.keypetroleum.com.au

ABN 50 120 580 618

DCA Rig 7 was mobilised and rigged up at the Cyrene-1Welllocation 100km south of Broome in late November

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61(0)8 6389 0322 F: +61(0)8 6389 0697 E:info@keypetroleum.com . au W: www.keypetroleum.com.au

ABN 50 120 580 618

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Site layout for DCA Rig 7 including the layout of surface casing a nd drill pipe (below)

Key Petroleum Ltd

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61(0)8 6389 0322 F: +61(0)8 6389 0697 E:info@keypetroleum.com . au W: www.keypetroleum.com.au

ABN 50 120 580 618

Geographical location of Cyrene-1

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61 (0)8 6389 0322 F: +61 (0)8 6389 0697 E: info@keypetroleum.com.au W: www.keypetroleum.com.au

ABN 50 120 580 618

The Cyrene Structural Map including marked A to A' cross section

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61 (0)8 6389 0322 F: +61 (0)8 6389 0697 E: info@keypetroleum.com.au W: www.keypetroleum.com.au

ABN 50 120 580 618

Seismic cross section A to A' through the Cyrene-1 Anticline

Ground Floor, 39 Stirling Highway, Nedlands, Western Australia 6009

T: +61 (0)8 6389 0322 F: +61 (0)8 6389 0697 E: info@keypetroleum.com.au W: www.keypetroleum.com.au

ABN 50 120 580 618

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