Key Petroleum Says Tanzanian Drilling Program to Start Shortly

Key Petroleum says the company's first well on the Nynuni Permit, Kiliwani #1, is scheduled to commence mid-June. The land rig Caroil #6 has been contracted for the two well drilling program. The rig is currently drilling a well at Songa Songa Island in the adjacent Songo Songo Gas Field so mobilization to the drill site should be short and cost effective. Preparation for the drill site is well underway.

Kiliwani #1 will be appraising a prospect identified near the southern flank of the Songo Songo Gas Field and will have an estimated drilling time of 40 days from commencement.

The operator of the Nyuni PSA, Aminex, recently announced that it had farmed out 25% of it stake in the permit to Rakgass. Rakgass currently holds the offshore permit to the east of the Nyuni permit. After the farm out Aminex will remain the largest stakeholder in the Nyuni PSA with a 39% stake. Key Petroleum's interest will remain at 20%. Other partners in the permit are East African Exploration with 10% and Bounty Oil with 6%.

Ken Russell, Managing Director of Key Petroleum said "We are pleased with the progress begin made on Kiliwanit #1 access and site preparations. We now look forward to the drilling rig being transferred to the Joint Venture and commencement of the drilling operations on Key Petroleum's first well.

We welcome the entry of the international company Rakgass to the Joint Venture which provides further confidence of the potential of the permit area and the forthcoming drilling program. We also believe the positioning of large companies such as Shell, Petrobras and Statoil in the deeper offshore waters of Tanzania supports the decision by Key Petroleum in 2006 to negotiate a strategic position in the Tanzanian petroleum sector when demand for access to petroleum exploration areas is increasing."