PetroBakken Provides Operational Update and 2013 Capital and

PetroBakken Provides Operational Update and 2013 Capital and
Production Guidance 
CALGARY, ALBERTA -- (Marketwire) -- 01/11/13 -- PetroBakken Energy
Ltd. ("PetroBakken" or the "Company") (TSX:PBN), is pleased to
announce that average production for the month of December 2012, was
53,200 barrels of oil equivalent a day ("boepd") based on field
estimates. We are also pleased to announce a $675 million capital
plan in 2013 that is expected to result in an 8 to 12 percent growth
in average annual production.  
Operational Update  
PetroBakken had a successful year in 2012. Early in the year we
completed certain initiatives to strengthen our financial position
and increase balance sheet liquidity. This included terming-out our
debt through the issuance of US$900 million of high yield notes and
disposing of approximately 4,200 boepd of non-core properties. The
asset dispositions allowed us to expand our capital program during
the second half of the year and more than replace the disposed
production. Our 2012 December average production of 53,200 boepd
represented a 6% increase over our 2011 December average (a 16%
increase post dispositions) and was comprised of over 21,500 boepd
from our Bakken business unit, over 22,500 boepd from our Cardium
business unit, and the remainder from our Saskatchewan Conventional
and AB/BC business units.  
In the fourth quarter, we drilled 79 net wells, completed 106 net
wells and brought 99 net wells on production, exiting the year with
21 net wells in inventory. We drilled a total of 217 net wells and
completed 234 net wells in 2012. Fourth quarter activity is broken
down by operating area as follows:  

Q4 2012 Drilling Activity                                                   
                            Drilled     Completed   Production  Inventory(1)
Business Unit             Gross   Net  Gross   Net  Gross   Net  Gross   Net
  Bakken                     37    28     48    40     50    43      4     1
  Conventional (SE SK)       20    14     17    12     18    13      9     4
  Cardium (central 
AB)       37    33     60    51     49    41     17    14
  Alberta/BC                  4     4      3     3      2     2      2     2
Total                        98    79    128   106    119    99     32    21
 (1)  Inventory refers to the number of wells pending completion and/or tie-
      in at December 31, 2012.                                              

Our inventory of 14 net wells in the Cardium, 1 well in the Bakken, 4
net wells in southeast Saskatchewan, and 2 net wells in our new plays
partly reflects the advancement of capital from 2013 into 2012 and
will contribute to production volumes in the first quarter of 2013.
We expect the first quarter of 2013 to be our busiest of the year,
and we currently have 16 drilling rigs operating: 6 in southeast
Saskatchewan, 7 in the Cardium and 3 in our Alberta/British Columbia
emerging plays.  
Of note, in our Swan Hills resource play we drilled 3 horizontal
wells at Deer Mountain. 2 of the 3 net wells at Deer Mountain were
completed and put on production and we are encouraged by initial
results. Our capital plan for 2013 includes 12 (10 net) horizontal
wells to be drilled on our Swan Hills play, of which 8 (8 net) will
be drilled at Deer Mountain and 4 (2 net) will be drilled on farm-in
2013 Capital Plan  
For 2013, our initial capital program is structured to build on the
success of 2012. The execution of this plan began in late 2012, when
we accelerated the spending of $100 million of capital from 2013 to
the end of 2012. The accelerated capital should allow us to minimize
field operation interruptions and make efficient use of oil field
services during the active winter drilling season in order to add new
production in the first quarter of 2013. This initial accelerated
capital, together with projected 2013 capital of $675 million, is
expected to allow us to grow our average annual production by 8% to
12% while targeting relatively flat year-over-year exit production.  
We anticipate 71% ($480 million) of our 2013 capital will be directed
to drilling, completion and tie-in activities with an additional $140
million being spent on facilities, optimization, workover capital and
sustaining capital. The 2013 capital plan is expected to deliver an
average daily production rate of 46,000 to 48,000 boepd and exit 2013
production of approximately 49,000 to 52,000 boepd, with an 85%
liquids weighting. Our initial capital plan (including the
acceleration of $100 million into 2012) is materially lower than
previous years, which we believe to be prudent given the current
price volatility and wider light oil differentials being experienced
by the industry. Our capital plan may be adjusted throughout the year
to take into account changes to realized prices and service costs.  
From a capital allocation standpoint, we will focus on continuing to
grow our production in the Cardium which, like our Bakken and
Conventional business units, should become cash flow positive in
2013. The Cardium development program will focus on pad-drilling in
Brazeau, Lochend and West Pembina, to shorten on-stream cycle times
and reduce capital costs for surface leases, drilling, completions,
equipping and tie-ins. We will also continue to invest in our cash
flow positive assets in the Bakken and Southeast Saskatchewan. The
Bakken program balances facilities and infrastructure spending with
cluster development drilling to maintain strong capital efficiencies
and a low operating cost structure. We have also allotted capital for
the commercial expansion of our EOR pilots to build upon the
encouraging results to date. Finally, we will invest in developing
our new plays in Alberta that will drive future growth.  
Our 2013 drilling activity will see a total of approximately 129
wells drilled, broken down by operating area as follows:  

                                               Capital             New Wells
Area                                     ($million)(1)              (Net)(1)
Bakken                                              85                    32
Cardium                                            290                    67
SE Saskatchewan Conventional                        27                    16
Alberta / BC (Emerging Plays)                       78                    14
Total                                              480                   129
(1) 2013 capital spending estimates and associated dril
l counts do not   
    include the acceleration of $100 million of 2013 into December 2012. 

It is expected that corporate declines for 2013 will be in the range
of 39% for the year. This is higher than the decline that we
experienced in 2012 primarily as a result of the late year production
additions from our expanded capital program in the second half of the
year. Due to the typical horizontal well production profile, our
corporate production in 2013 is expected to have higher initial
declines during the first half of the year followed by notably lower
declines during the second half of the year. With a balanced approach
to 2013 capital plans resulting in a more active Q1 drilling program,
followed by a load leveled Q3 and Q4 program, we anticipate that our
2014 corporate decline rate will be in the range of 30-35%.  
We remain focused on creating value for our shareholders by
developing long-life, accretive, light-oil resource plays that
support organic growth of production and reserves. We believe that we
are well positioned for the coming year with over 2,250 potential
drilling locations, over 1 million acres of undeveloped land and
balance sheet flexibility that allows us to actively develop our
resources and respond to changing industry conditions. 
2013 Guidance 

                                    Oil and NGL (bbls/d)    39,000 to 41,000
                                    Natural Gas (mmcf/d)            41 to 43
                                           Total (boe/d)    46,000 to 48,000
 Exit Production (boe/d)                                    49,000 to 52,000
 Funds Flow(1)                                                              
     Funds Flow from Operations ('000)                   $645,000 - $680,000
     Funds Flow per share(2)                                   $3.30 - $3.50
 Declared Dividends per share                                          $0.96
 Capital Expenditures(3)                                                    
     Drilling and Completions ('000)                                $480,000
     Facilities, Workovers, Optimization, Sustaining                        
      Capital ('000)                                                $140,000
     Land, Seismic and Other ('000)                                  $55,000
 Total ('000)                                                       $675,000
(1)  Commodity price assumptions include WTI US$90.00 /bbl, AECO CDN$3.50   
     /mcf, foreign exchange rate of US$/CDN$1.00, and corporate oil         
     differential of 10%.                                                   
(2)  Funds flow per share calculation based on 194 million shares           
     outstanding for 2013.                                                  
(3)  Projected capital expenditures exclude acquisitions, which are         
     evaluated separately.                                                  

$1.4 Billion Credit Facility and $300 Million Convertible Debentures  
In December 2012, holders of $293.4 million of Convertible Debentures
elected to put them back to PetroBakken. We have elected to repay
these debentures in cash on the settlement date of February 8, 2013.
We initially plan to repay the debentures using our $1.4 billion
credit facility, which was approximately $610 million drawn at the
end of 2012. The credit facility has a current maturity date of June
2015 and has the potential to be increased to $1.5 billion under an
accordion feature.  
2013 Hedging Strategy  
In order to provide greater cash flow security, we have expanded our
hedging program and are targeting to increase the net-hedged
production for 2013 from 12,000 bopd to 18,000 bopd. This is an
increase to our past practice of hedging approximately 25% of our net
production. The following table provides our current hedge position 

         Hedged Barrels (bbls/d)  Average Floor (US$)  Average Ceiling (US$)
2013 1H                   14,164               $78.50                $116.71
     2H                   14,000               $79.46                $114.37
2014 1H                    9,000               $80.42                $107.80
     2H                    5,750               $80.87                $107.59
2015 1H                    2,000               $80.00                $102.99
     2H                      500               $80.00                $102.55

Completion of Corporate Reorganization and Introduction of a Share
Dividend Program  
On December 31st, 2012 Petrobank Energy and Resources Ltd. and
PetroBakken completed a corporate reorganization which resulted in
Petrobank shareholders effectively receiving Petrobank's share
holdings in PetroBakken while maintaining their interest in the
remaining Petrobank assets. This transaction eliminated Petrobank's
56% ownership in PetroBakken through the distribution of the 107.8
million shares owned by Petrobank to the Petrobank shareholders. This
resulted in our market float increasing from approximately 83 million
shares to 191 million shares, providing investors with increased
trading liquidity.  
Concurrent with the reorganization, PetroBakken has adopted a Share
Dividend Program ("SDP"). PetroBakken currently has a dividend
reinvestment plan "(DRIP)" in place that is available only to
Canadian PetroBakken shareholders. The new SDP will be available to
Canadian shareholders and will also enable most Non-Canadian
shareholders to participate. The DRIP and the SDP will both allow
shareholders to effectively receive their monthly PetroBakken
dividends in additional PetroBakken shares at a 5% discount to the
market price at the date of the dividend payment. Further information
in respect of the DRIP and SDP, including additional tax information
and information on how to enrol your shares, will be available
through our website at   
Management Promotions  
We are pleased to announce the following internal management
appointments. Mr. Rene Laprade has been promoted to the position of
Senior Vice President and Chief Operating Officer. Rene has been with
PetroBakken since our inception as Senior Vice President, Operations.
Mr. Brad Malley has been promoted to Vice President, Drilling and
Completions. Mr. David Salahub has been promoted to Vice President,
Production. Ms. Doreen Scheidt has been promoted to Vice President
and Controller. Finally, Mr. Lars Glemser has been promoted to
PetroBakken Energy Ltd. is an oil and gas exploration and production
company combining light oil Bakken 
and Cardium resource plays with
conventional light oil assets, delivering industry leading operating
netbacks, strong cash flows and production growth. PetroBakken is
applying leading edge technology to a multi-year inventory of Bakken
and Cardium light oil development locations. Our strategy is to
deliver accretive production and reserves growth, along with an
attractive dividend yield. 
Non-GAAP Measures. This press release contains financial terms that
are not considered measures under IFRS, such as funds flow from
operations and funds flow per share. These measures are commonly
utilized in the oil and gas industry and are considered informative
for management and stakeholders. Specifically, funds flow from
operations reflects cash generated from operating activities before
changes in non-cash working capital. Management considers funds flow
from operations and funds flow per share important as it helps
evaluate performance and demonstrate the ability to generate
sufficient cash to fund future growth opportunities, pay dividends
and repay debt. Funds flow from operations and funds flow per share
may not be comparable to those reported by other companies nor should
they be viewed as an alternative to cash flow from operations or
other measures of financial performance calculated in accordance with
IFRS. Further information in respect of these non-GAAP measures is
set forth in our MD&A.  
Forward-Looking Statements. Certain information provided in this
press release constitutes forward-looking statements. Specifically,
this press release contains forward-looking statements relating to
future results from operations, projected financial results, future
capital costs, future production rates, proposed exploration and
development activities and capital spending levels. Forward-looking
statements are necessarily based upon assumptions and judgements with
respect to the future including, but not limited to, the success of
future drilling, completion, recompletion and development activities,
the outlook for commodity markets and capital markets, the
performance of producing wells and reservoirs, well development and
operating performance, general economic and business conditions,
weather and access to drilling locations, the availability and cost
of labour and services, the regulatory and legal environment and
other risks associated with oil and gas operations. Although we
believe that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because we can
give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These include, but
are not limited to, risks associated with the oil and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses, reliance on industry
partners, availability of equipment and personnel, uncertainty
surrounding timing for drilling and completion activities resulting
from weather and other factors, changes in applicable regulatory
regimes and health, safety and environmental risks), commodity price
and exchange rate fluctuations and general economic conditions.
Certain of these risks are set out in more detail in our Annual
Information Form which has been filed on SEDAR and can be accessed at Except as may be required by applicable securities
laws, PetroBakken assumes no obligation to publicly update or revise
any forward-looking statements made herein or otherwise, whether as a
result of new information, future events or otherwise. 
PetroBakken Energy Ltd.
John D. Wright
President and Chief Executive Officer
(403) 268.7800 
PetroBakken Energy Ltd.
Peter D. Scott
Senior Vice President and Chief Financial Officer
(403) 268.7800 
PetroBakken Energy Ltd.
Bill A. Kanters
Vice President Capital Markets
(403) 268.7800 
PetroBakken Energy Ltd.
Eighth Avenue Place, 2800, 525 - 8th Avenue S.W.
Calgary, Alberta, T2P 1G1
(403) 268.7800
(403) 218.6075 (FAX)
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