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Press release from Marketwire

Celtic Provides Operations Update

Monday, September 12, 2011

Celtic Provides Operations Update20:07 EDT Monday, September 12, 2011CALGARY, ALBERTA--(Marketwire - Sept. 12, 2011) - Celtic Exploration Ltd. (TSX:CLT) ("Celtic" or the "Company") is pleased to provide an operations activity update.Operations UpdateResthaven MontneyIn the north-west portion of Celtic's Resthaven land block, the Company completed a horizontal well located at 01-29-064-04W6 (50% WI). This well was operated by Celtic on behalf of itself and its partner, Seven Generations Energy Ltd. The well was drilled as a re-entry to an existing wellbore and was completed with a 16-stage foam fracture technique. After a seven day test, the well was producing natural gas at a rate of 4.7 MMCF per day and field condensate at 1,209 barrels per day (1,986 BOE per day combined, before plant shrinkage and before NGL extraction), at a flowing wellhead pressure of 3,264 kPa (473 psi).In the central part of Celtic's Resthaven land block, the Company completed a horizontal well located at 15-31-060-02W6 (100% WI) in the Upper Middle Montney formation. The well was drilled to a measured depth of 5,066 metres and was completed with a 14 stage foam fracture technique. At the end of the test, the well was flowing natural gas at a rate of 14.3 MMCF per day and field condensate of 241 barrels per day (2,624 BOE per day combined, before plant shrinkage and before NGL extraction), at a flowing wellhead pressure of 12,285 kPa (1,782 psi).The Company currently has four rigs operating at Resthaven drilling horizontal wells located at 04-34-061-03W6, 04-11-062-27W5, 01-03-060-01W6 and at 12-20-058-27W5. Celtic has a 100% WI in all four of these wells. The wells at Resthaven are expected to produce associated liquids at a rate of 40 to 50 barrels per MMCF, including condensate production. However, these rates would be higher if the natural gas is processed at a deep-cut gas plant. The majority of wells drilled to date at Resthaven are expected to be tied-in to the Keyera operated Simonette Gas Plant by October 2011. The operator, Keyera, has indicated its intention to add a turbo expander to the plant giving it deep-cut capability.Celtic has increased its land holdings at Resthaven, recently adding lands from Crown sales in and around recent well successes. Currently, the Company owns Montney rights in 414,730 gross acres and 402,846 net acres (629 sections).Inga DoigAt Inga, in north-east British Columbia, the Company participated in the drilling and completion of a horizontal well located at 04-36-087-23W6 (40% WI), in the Doig formation. The well was drilled with a 665 metre horizontal lateral and was completed with a 7-stage hydrocarbon fracture technique. After a five day test, the well was producing oil at a rate of 1,070 barrels per day and natural gas at a rate of 3.5 MMCF per day (1,650 BOE per day combined), at a flowing wellhead pressure of 12,627 kPa (1,830 psi). This well was drilled as part of a third-party farm-in, earning Celtic and its partner three sections of land with the potential for follow-up drill locations.The Company is currently participating in the drilling of a horizontal well located at 01-33-087-23W6 (40% WI) and expects to follow-up with another horizontal well located at 10-34-087-23W6 (40% WI). In addition, Celtic participated in the recent acquisition of approximately 313 km² of 3-D seismic data to further expand the play. Capital ExpendituresCeltic's Board of Directors has approved a $30.0 million increase to the Company's 2011 capital expenditure budget. The budget has been increased from $240.0 million, after dispositions, to $270.0 million. The increases are $15.0 million for facilities, equipment and pipelines; $12.0 million for land and seismic; and $3.0 million for reduced proceeds from dispositions. The Company expects to spend $206.5 million on drilling and completing wells, $55.5 million on facilities, equipment and pipelines, and $25.0 million on land and seismic. In addition, proceeds from asset dispositions in the amount of $17.0 million will reduce gross capital expenditures.Celtic is excited about the growth prospects being generated in the Company and remains optimistic about the Company's ability to deliver continued per share growth in production, reserves, net asset value and funds from operations. Given the Company's strong inventory of drilling locations, we look forward to continued growth in 2011 and beyond.The information set out herein under the heading "Capital Expenditures" is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Celtic's reasonable expectations as to the anticipated results of its proposed business activities for 2011. Readers are cautioned that this financial outlook may not be appropriate for other purposes.Disclaimers and AdvisoriesForward-looking StatementsThis press release contains expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations or performance that constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements") under applicable securities laws. Undue reliance should not be placed on forward-looking statements. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements. We caution that the foregoing list of risks and uncertainties is not exhaustive. Events or circumstances could cause actual dates to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.The information set out herein with respect to forecasted 2011 results is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Celtic's reasonable expectations as to the anticipated results of its proposed business activities for 2011. Readers are cautioned that this financial outlook may not be appropriate for other purposes.Non-GAAP Financial MeasurementsThis press release contains the terms "funds from operations", "operating netback" and "production per share" which do not have a standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures by other companies. Funds from operations and operating netbacks are used by Celtic as key measures of performance. Funds from operations and operating netbacks are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, profit or other measures of financial performance calculated in accordance with GAAP. Operating netbacks are determined by deducting royalties, production expenses and transportation expenses from oil and gas revenue. Funds from operations are determined by adding back change in non-cash operating working capital to cash provided by operating activities. The Company calculates funds from operations per share using the same method and shares outstanding which are used in the determination of profit per share.Other MeasurementsAll dollar amounts are referenced in Canadian dollars, except when noted otherwise. Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel and sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids ("NGLs"). NGLs may include condensate, propane, butane and ethane. References to gas in this discussion include natural gas and sulphur.Critical Accounting EstimatesManagement is required to make judgments, assumptions and estimates in the application of GAAP that have a significant impact on the financial results of the Company. These estimates and assumptions are developed based on the best available information and are believed by management to be reasonable under the existing circumstances. New events or additional information may result in the revision of these estimates over time.FOR FURTHER INFORMATION PLEASE CONTACT: David J. WilsonCeltic Exploration Ltd.President and Chief Executive Officer(403) 201-5340ORSadiq H. LalaniCeltic Exploration Ltd.Vice President, Finance and Chief Financial Officer(403) 215-5310ORSuite 600, 321 - 6th Avenue SWCeltic Exploration Ltd.Calgary, Alberta, Canada T2P 3H3www.celticex.com