Carnarvon Energy Limited ('Carnarvon') (ASX: CVN) is pleased to provide an update on the Buffalo-10 well.

Progress

Since the last report, the Conductor was installed and cemented in place, and the 17 1/2' hole was drilled down to section total depth of around 804 metres Measured Depth ('MD').

Forward Plan

Set and cement the 13 3 /8' casing and install wellhead, after which the rig will drill ahead in 12 1/4' hole to approximately 2,800 metres MD before setting the 9' casing. No hydrocarbons are anticipated to be intersected in this drilling section.

About Buffalo

The Buffalo project objective involves the redevelopment of the Buffalo oil field in the Timor Sea. The field resides in only 30 metres of water with a reservoir depth between 3,200 and 3,300 meters below the sea bed. The previous field proved the existence of very high deliverability reservoir containing high quality light oil that is expected to sell at a premium to Brent in today's market. Carnarvon, as the operator of the project, is preparing to drill a well that will penetrate the existing oil column (because the field was still producing when it was shut-in in 2004), and assess the extent of the revised mapped attic oil column as illustrated in the schematic diagram below: Carnarvon's mid case recoverable volume estimate is 31 million barrels (gross, 2C contingent resource). With the minimum economic field size estimated to be significantly lower than the mid case estimate, there is a strong likelihood the Buffalo-10 well will confirm an economic project.

Accordingly, Carnarvon's drilling plans provide for the Buffalo-10 well to be retained as the first production well in the redevelopment program. For the above reasons, Carnarvon is also working its project partner, Advance Energy Plc, on plans to compress the timeline to first production once the Buffalo-10 well confirms a commercial oil resource. These plans include engaging with industry for supply and installation of suitable equipment to produce the oil.

Contact:

Thomson Naude

Tel: (08) 9321 2665

Email: investor.relations@cvn.com.au

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