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Press release from Marketwire

PetroBakken Announces 2011 Capital Plan and a Credit Facility Increase of $200 Million

Monday, January 10, 2011

PetroBakken Announces 2011 Capital Plan and a Credit Facility Increase of $200 Million19:57 EST Monday, January 10, 2011CALGARY, ALBERTA--(Marketwire - Jan. 10, 2011) - PetroBakken Energy Ltd. (TSX:PBN) is pleased to announce our capital plans for 2011 and a $200 million commitment increase to our credit facility. Current plans anticipate capital development expenditures of $680 million focused predominantly on horizontal drilling and completions in the Bakken and Cardium light oil plays. We also plan spending of $120 million for land, seismic, well recompletions and direct administration expenses that will bring our total 2011 capital expenditures to $800 million. We expect that this drilling-focused capital plan will generate a 2011 exit production rate between 46,000 and 49,000 boepd. Our funds flow from operations and our $1.2 billion credit facility are expected to fund this activity and maintain our $0.96/share per annum dividend.Capital plans for 2011 will focus primarily on our light oil resource plays in central Alberta for the Cardium and in southeast Saskatchewan for the Bakken as well as our Mississippian conventional light oil plays. The majority of our 2011 capital spending will be used to to drill, complete and equip over 200 net wells (due to bilateral wells this represents over 255 net horizontal well bores) for approximately $590 million. The plan also includes facilities investments of $70 million, primarily in southeast Saskatchewan, to handle new production as well as improve existing production efficiencies. A further $20 million will be spent on enhanced oil recovery (EOR) pilots within the Bakken.In central Alberta we plan on spending approximately $350 million to drill 95 net wells. Consistent with our acreage position, approximately 65% of the wells will be drilled in West Pembina, 25% in East Pembina and the balance in Garrington and Lochend. The majority of drilling will be limited to one well per section as we prove up our extensive acreage position. In addition, first quarter 2011 spending will also include carryover activity as we complete and add production from wells that were drilled in the fourth quarter of 2010.In southeast Saskatchewan we expect to drill 75 net wells (including approximately 55 net bilateral wells) in the Bakken and over 30 net conventional wells. Facilities expenditures of approximately $65 million in this area are expected to further optimize operations and bring on-stream Mississippian production that is currently constrained. We will continue to invest in EOR pilots to evaluate several injection configurations and fluids, including natural gas. Overall, in southeast Saskatchewan, we plan on spending $325 million, comprised of $250 million in the Bakken and $75 million on the conventional Mississippian plays.The remainder of our program is more exploratory in nature, and we expect to drill between four and seven net wells. Two net wells will be drilled in northeast British Columbia at Monias to preserve acreage, while the remaining wells will be drilled in other areas. The majority of our planned $45 million of capital spending for this program is for drilling and completions, with approximately 10% allocated to facility costs in northeast British Columbia. These capital investments are planned to enhance the long term value of our drilling inventory by preserving our extensive natural gas options in northeast British Columbia and evaluating new resource plays.Exit production for 2011 is expected to be between 46,000 and 49,000 boepd, up from 42,500 boepd for year-end 2010 (based on field estimates), including replacing 2011 base production decline of approximately 40 percent. Most of our production growth is expected to come from the Cardium area in central Alberta while our more mature assets in southeast Saskatchewan are expected to remain relatively flat. Approximately 85% of our production is light oil and NGLs.Our success in adding reserves in the first nine months of 2010 has enabled our bank syndicate to increase our credit facility by $200 million to $1.2 billion. Current maturity date for the facility remains June 2011. This increase maintains our financial flexibility as we look to execute our 2011 capital plan. We also maintain a hedging program to provide some protection for our capital program and dividend should oil prices fall below approximately $75/bbl. Currently we have 10,000 bopd of WTI oil collars in place for 2011 with a floor of US$76 per bbl and a ceiling of US$99 per barrel.Our team looks forward to driving our production growth through the execution of our 2011 capital plan with an active fleet of over 15 drilling rigs deployed, that will continue the development of our Bakken and Mississippian southeast Saskatchewan properties and further demonstrate the value of our assets within the Cardium play and our exploration opportunities.Forward Looking Statements. This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning potential exploration and development activities, anticipated sources of funding, future dividend payments, anticipated facilities construction and the resulting efficiencies, and expected production rates. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of capital, the success of future drilling, completion, recompletion and development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to market our production, 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 There is no representation by PetroBakken that actual results achieved during the forecast period will be the same in whole or in part as those forecast. 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.Meaning of Boe. When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe per day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.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.FOR FURTHER INFORMATION PLEASE CONTACT: John D. WrightPetroBakken Energy Ltd.Chairman of the Board and Chief Executive Officer403.750.4400ORR. Gregg SmithPetroBakken Energy Ltd.President and Chief Operating Officer403.750.4400ORPeter D. ScottPetroBakken Energy Ltd.Senior Vice President and Chief Financial Officer403.750.4400ORWilliam A. KantersPetroBakken Energy Ltd.Vice President Business Development and Corporate