PetroBakken Exceeds Exit Guidance, Producing Over 50,000 Boepd in December 2011, and Provides Further Operational Update

CALGARY, ALBERTA--(Marketwire - Jan. 11, 2012) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSX:PBN), is pleased to announce that average production for the month of December, 2011 (based on field estimates) exceeded 50,000 barrels of oil equivalent per day ("boepd") (87% light oil and NGLs), a 23% increase over third quarter 2011 production and an 18% increase over December 2010 production.

We remained active in all business units into December, with field operations tailing off through the end of the year as we completed our capital program ahead of schedule. Our December average production of over 50,000 boepd was comprised of more than 23,400 boepd from our Bakken business unit, over 16,500 boepd from our Cardium business unit (with 1,450 boepd currently shut-in awaiting tie-in operations), and the remainder of the production generated by our Saskatchewan Conventional and AB/BC business units.

2011 was another very active year for us, during which we drilled 293 (205 net) wells. Fourth quarter activity saw a total of 82 (54 net) wells drilled, with 23 (16 net) wells drilled in the Bakken, 34 (22 net) wells drilled in the Cardium, 21 (12 net) wells drilled in our Saskatchewan Conventional business unit and 4 (4 net) wells in our AB/BC business unit. At the end of the year, we had an inventory of 15 net wells waiting to be completed or placed on production. Of these wells, one was in the Bakken and eight wells were in the Cardium, with the remainder in our Saskatchewan Conventional and AB/BC business units. Of particular note, two of our new prospect wells in Alberta have tested commercial quantities of light oil with the other two wells awaiting completion and testing operations.

We are pleased to reiterate our initial capital plan for 2012, which has been designed to allow us to build on our 2011 operational success. We anticipate capital development expenditures of approximately $700 million, primarily focused on horizontal drilling and completions, predominantly in the Bakken and Cardium light oil plays. We expect that this drilling-focused activity will generate a 2012 exit production rate of between 50,000 and 54,000 boepd. Our estimated year-over-year average production growth is expected to exceed 15%, on an absolute and per-share basis. We anticipate this initial 2012 program to be executed entirely from funds from operations, with surplus cash flow available to fund dividends and debt repayment.

We previously announced our intention to expand our hedging program for the first half of 2012 to provide further cash flow security and we have achieved our intended target, with 20,000 bopd of WTI hedged at an average floor price of approximately US$84 and a ceiling of US$112. We continue to add to our longer term hedge position and for the second half of 2012 we have 9,750 bopd of WTI hedged at an average floor of approximately US$77 and a ceiling of US$119. In 2013, we have 8,000 bopd of WTI hedged with an average floor of approximately US$77 and a ceiling of US$121.

At the end of December, PetroBakken had $1.2 billion drawn on our three year, $1.35 billion credit facility (essentially unchanged from the end of June), leaving us with over $150 million of credit capacity available on the current line, in addition to our significantly increased cash flow due to our record production levels. As previously disclosed we are continuing to pursue or evaluate various alternatives to increase our liquidity in 2012, in advance of the potential exercise of the put option on some or all of our US$750 million convertible debenture in February 2013, over and above what is expected to be generated from our operations and our implemented Dividend Reinvestment Program. These alternatives may include adjustments to our capital program and/or altering our dividend to provide additional free cash flow, issuing additional debt instruments or equity, renegotiating the terms of the existing convertible debentures or realizing value through asset sales. We look forward to updating our shareholders as we make progress on these alternatives and execute our 2012 capital program.

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, along with a significant inventory of opportunities in the Horn River and Montney gas resource plays in northeast BC. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.

BOEs. Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.

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, future capital costs, future production rates, proposed exploration and development activities, capital spending levels and anticipated sources of capital. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of debt and equity capital, the success of future drilling, completion, recompletion and development activities, the performance of new and existing wells, prevailing commodity prices and economic conditions, the availability and cost of labour and services, and weather and access to drilling locations. 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 www.sedar.com. 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.