Key Petroleum Ltd. : Cyrene-1 Daily Drilling Report for 25 January 2013

1.

Well Name/Permit:

Cyrene-1 EP438 - Western Australia

2.

The Report is for the Period:

0600 - 24 January 2013 to 0600 - 25 January 2013

3.

This ASX Release Time and Date:

1000 - 25 January 2012

4.

Report No:

Five

5.

Spud Date/DCA Rig #7:

21 January 2013

6.

Days since Spud:

Four

7.

Locations of the Well:

Latitude: 18° 16' 34.5"S

Longitude: 122° 24' 05.1"E

8.

Elevation:

GL

47m

RT from GL (MSL)

3.1m

RT to GL

50.1m

9.

Proposed Total Depth:

1060 metres TVD

10.

Targets:

Primary: Goldwyer Formation

Secondary: Willara Formation

11.

Present Depth:

680metres RT as of 0600 hours 23 January 2013

12.

Geological Summary:

Formation Tops (m RT):

Prognosed

Actual

Difference

Wallal Sandstone

295m

295m

-

Grant Formation

490m

490m

-

Goldwyer Formation

900m

Willara Formation

1035m

13.

Hydrocarbon Indications:

Background gas has increased to 0.1 units.

14.

Operations since last Report:

Drilled 62 metres to depth of 680 metres RT

15.

Current Operations:

Drilling ahead through the Grant Formation in 8 ½" hole.

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%