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Press release from Marketwire

Crocotta Energy Announces Liquids-Rich Gas Success at Edson and Provides Guidance

Thursday, September 30, 2010

Crocotta Energy Announces Liquids-Rich Gas Success at Edson and Provides Guidance06:00 EDT Thursday, September 30, 2010CALGARY, ALBERTA--(Marketwire - Sept. 30, 2010) - Crocotta Energy Inc. ("Crocotta" or the "Company") (TSX:CTA) is pleased to announce drilling success at its two key growth projects (liquids-rich Bluesky gas at Edson and Montney / Doig gas at Dawson/Glacier) and its guidance.OPERATIONS UPDATECrocotta's two key growth core areas are at Edson and at Dawson/Glacier. Edson is in west-central Alberta and has multi-zone potential in particular for liquids-rich gas in the Bluesky, Notikewin and Wilrich zones and for oil in the Cardium. The Dawson/Glacier area is in the Peace River Arch (northeast British Columbia and northwest Alberta) and has multi-zone potential in particular for gas in the Montney and Doig. Crocotta's drilling success in 2010 in both of its key growth areas has set up a shift to development drilling at both Edson and Dawson/Glacier. Details of 2010 activities are outlined below:EdsonAt Edson, Crocotta's drilling focus in 2010 has been on the liquids-rich Bluesky gas zone, where the estimated combined oil and liquids cut is 80 to 100 bbls per 1 mmcf of gas. Crocotta has 11.2 net prospective drillings sections (an average 80% interest in 14 gross sections). There are four lower interest sections where Crocotta has working interests ranging from 20% to 45%, and ten higher interest sections where Crocotta has a 100% average interest. Crocotta's initial Bluesky gas horizontal drilling has been on the lower interest lands. Crocotta completed its first horizontal bluesky well (29% working interest) in late June 2010. The well has been on production since late June and, after three months production, is currently producing 600 boepd (175 boepd to Crocotta's 29% interest, 62% gas, 38% oil and natural gas liquids ("NGLs")). The current production rates are in line with management's expectations. Although natural gas prices have continued to be weak, the economics of the Bluesky liquids-rich gas are very strong due to the high ratio of liquids to gas and the eligibility for deep gas royalty relief. GLJ Petroleum Consultants Ltd. ("GLJ"), effective July 1, 2010, has assigned recoverable reserves to a future well location on a proved plus probable basis of 750 mboe (62% gas and 38% oil and NGLs) and a 10%PV of $13.8 million (post drill for 100% working interest and based on GLJ's July 1, 2010 price forecast). Using the actual gross onstream cost of $6.0 million (prior to drilling credits), for the well, the rate of return is 120%, is worth 2.3 times capital invested and adds production at less than $10,000 per boepd.Based on the results, Crocotta has internally developed two type curves for the Bluesky horizontal wells in the area (Type A and Type B). The Type A wells would be reasonably comparable to first well drilled and the Type B wells are estimated to have lower production and lower resources recovered. After normalizing for royalties and costs, an average Type A well will have a present value (post drill) of approximately $15 million and have estimated recoverable resources of 650 mboe while an average Type B well is projected to recover 350 mboe and have present value (post drill) of approximately $10 million. Type A wells are projected to yield a 130% rate of return while Type B wells are projected to yield a 40% rate of return. These estimates are effective July 1, 2010 using GLJ's July 1, 2010 price forecast.Crocotta has identified 20 net Type A horizontal Bluesky locations and 15 net Type B horizontal Bluesky locations on its lands. A large majority of these locations are geologically defined by vertical wells previously drilled.Crocotta has also recently drilled a horizontal Bluesky oil well (35% working interest) which will be completed in October and will be spudding an additional Bluesky horizontal gas well (20% working interest) in mid-October. Crocotta plans to start drilling 100% working interest lands in 2011.In Q1 2010, Crocotta recompleted a vertical Notikewin gas well (100% working interest) that produced an average of 264 boepd for the month of March and is currently producing 100 boepd. The Notikewin is also a liquids-rich gas well, with an estimated liquids cut of 25-30 bbls per mmcf of gas. Crocotta has identified up to eight additional recompletions for the Notikewin and numerous vertical and horizontal follow-up drilling locations pending further success.In the Cardium, Crocotta plans to recomplete four vertical wells targeting oil (average 73% Crocotta interest). If successful, Crocotta has an additional eight recompletion candidates and up to 15 additional net drilling locations targeting primarily light sweet oil. Although Crocotta is anticipating drilling verticals for Cardium, there are horizontal wells recently licensed in the area for Cardium which Crocotta intends to monitor.Dawson, Glacier and GroundbirchCrocotta's Montney and Doig gas growth area is in the Dawson/Glacier area in the Peace River Arch of northeast British Columbia and northwest Alberta, which is in the fairway of the major Montney and Doig gas development. Within this key growth area, Crocotta has four independent Montney projects located in the Dawson (two projects), Glacier and Groundbirch areas. In the first half of 2010, Crocotta participated in two vertical test wells that had encouraging results in both the upper Montney / Doig and lower Montney zones. Crocotta's 100% vertical well at Glacier stabilized at 900 mcf/d in the upper Montney / Doig after a four day test while the lower Montney stabilized at 400 mcf/d after a four day test. The vertical rates achieved are analagous to vertical tests in offsetting lands where commercially viable projects have already been established with horizontal wells. Crocotta estimates that by drilling horizontal wells and utilizing multi-frac technology, materially higher rates can be achieved to help prove up reserves and the commercial viability of the project areas.Crocotta is looking to vertically test its third project (West Dawson) in late 2010 and drill follow-up delineation wells in all projects during 2011 or 2012. Further delineation will provide enough data to assess the pace of drilling horizontal wells and constructing gas handling facilities.CAPITAL PROGRAM AND GUIDANCECrocotta has approved a flexible budget that entails spending between $50 and $70 million for Q4 2010 through 2011. The program, which will be spent primarily on liquids-rich natural gas and oil projects, is estimated to increase production to 4,000 to 5,000 boepd by the end of 2011 from current estimated production of 2,000 boepd. FINANCIAL UPDATEOn completion of the previously announced asset sales, Crocotta estimates it will have approximately $26 million of available capacity on its bank credit facilities. Net debt is estimated to be reduced to approximately $27 million from the $55 million reported as at June 30, 2010, while bank credit facilities are anticipated to be reduced from $65 million to approximately $53 million as a result of the asset sales and lower gas pricing. Crocotta's capital program as outlined above is projected to be funded by cash flow and current available bank credit facilities.SUMMARYCrocotta's improved financial position combined with successful results at Edson and in the Montney have provided a platform for adding material production, reserves and value on an accelerated basis.Forward-Looking InformationThis press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "should", "believe", "intends", "forecast", "plans", "guidance" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this document contains forward looking statements and information relating to the Company's oil, NGLs and natural gas production, oil and natural gas reserves, capital programs, and oil, NGLs, and natural gas commodity prices. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company, including expectations and assumptions relating to prevailing commodity prices and exchange rates, applicable royalty rates and tax laws, future well production rates, the performance of existing wells, the success of drilling new wells, the availability of capital to undertake planned activities and the availability and cost of labour and services.Although the Company believes that the expectations reflected in such forward-looking statements and information are reasonable, it can give no assurance that such expectations will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as 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 estimates and projections relating to production rates, costs and expenses, commodity price and exchange rate fluctuations, marketing and transportation, environmental risks, competition, the ability to access sufficient capital from internal and external sources and changes in tax, royalty and environmental legislation. The forward-looking statements and information contained in this document are made as of the date hereof for the purpose of providing the readers with the Company's expectations for the coming year. The forward-looking statements and information may not be appropriate for other purposes. The Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.BOE ConversionsBarrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Information Regarding Reserves and Reserves ValuesThis press release contains information on oil and natural gas reserves and reserve values which are estimates only. Present value refers to the estimated future net revenues calculated at the disclosed discount rate. These estimated values disclosed do not represent fair value. The estimates of reserves and future net revenue for individual wells or properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.Some drilling locations have been assigned proved plus probable reserves by GLJ. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. At December 31, 2009, Crocotta had a total of 13.2 million boe of proved plus probable reserves as evaluated by GLJ.The remaining Type A drilling locations recoverable volumes are prospective resources as defined in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") as those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. If discovered, they would be technically and economically viable to recover. There is no certainty that the prospective resources will be discovered.Type B drilling location recoverable volumes (estimated internally) are undiscovered resources as defined in the COGE Handbook as those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. There is no certainty that the undiscovered resources will be discovered, and if discovered, it may not be economically viable or technically feasible to produce.FOR FURTHER INFORMATION PLEASE CONTACT: Crocotta Energy Inc. Robert Zakresky President and Chief Executive Officer (403) 538-3736 or Crocotta Energy Inc. Nolan Chicoine Vice President, Finance and Chief Financial Officer (403) 538-3738 or Crocotta Energy Inc. 700, 639 ?5th Ave SW Calgary, Alberta T2P 0M9 (403) 538-3737 (403) 538-3735(FAX) www.crocotta.ca