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Press release from Marketwire

Crocotta Energy Provides Operational Update

Monday, April 16, 2012

Crocotta Energy Provides Operational Update06:00 EDT Monday, April 16, 2012CALGARY, ALBERTA--(Marketwire - April 16, 2012) - Crocotta Energy Inc. ("Crocotta" or the "Company") (TSX:CTA) is pleased to provide an Operations Update.CAPITAL PROGRAMIn Q112 and early Q212, Crocotta has invested approximately $28 million primarily on drilling the Bluesky and Cardium at Edson and the Montney at Dawson / Sunrise.CardiumIn Q112, Crocotta participated in a second Cardium horizontal well at Edson (40% WI) that is currently producing approximately 560 boepd gross at 46% oil and liquids at the end of its first two weeks of production. This well is significantly above Crocotta's type curve for the area that forecasts an initial production rate of 300 boepd. Crocotta's first Cardium horizontal well at Edson (40% WI) is producing 410 boepd gross (41% oil and liquids) after almost 4 months of production.Crocotta has a contiguous block of 13.5 gross sections (8.8 net sections) that include the first 2 wells noted above and has plans to aggressively step-out drill to prove up the lands. During Q212 and Q312, Crocotta plans to drill 6 (3.3 net) wells to further prove up approximately 50 (32 net) unbooked Cardium locations on these 13.5 gross sections on the Edson block. In addition to these 13.5 gross sections around the first two high rate Cardium wells, Crocotta also has over 50 gross sections (38 net sections) of additional Cardium lands in the area of varying prospectivity. Crocotta will continue to drill and test the productivity of additional Cardium trends on its lands.BlueskyIn Q112, Crocotta completed an additional 3 (2.6 net) wells that continue to meet or exceed Crocotta's type curve for Bluesky wells (IP30 rate of 650 boepd). One (0.6 net) well is drilled and not completed and one (1.0 net) well is currently drilling. Crocotta expects to have both wells on production in Q312. Crocotta has a large inventory (over 40 net locations) that has been largely proved up over the last two years. The Bluesky wells average 80-100 bbls of natural gas liquids per mmcf of natural gas and, under current strip prices, have exceptional economics with IRRs estimated over 90% and a payback of approximately 1.2 years. However, due to the strong Cardium oil drilling results in Q112, Crocotta's drilling focus this summer will continue on the Cardium oil and it will resume Bluesky drilling in late Q312 or Q412.MontneyIn January 2012, Crocotta announced a Montney well at Dawson / Sunrise that tested approximately 14 mmcf/d plus 20 bbls/mmcf of natural gas liquids. Crocotta tied the well into the Westcoast system but has opted not to produce it at this time due to low natural gas prices in March/April. Crocotta plans to extend its pipeline system and tie the well into the Alliance pipeline in late fall pending better natural gas prices. This alternative will significantly reduce operating costs and allow Crocotta to benefit from some of the natural gas liquids that would otherwise not be extracted.Based on the GLJ type curve for the area and current strip pricing, a Montney horizontal well provides a rate of return of over 40% and a payback of approximately 2.3 years. Crocotta has over 75 (75.0 net) Montney locations in the Dawson / Sunrise area that it plans to further develop in 2013.Other projectsCrocotta has identified and assembled land (over 40 net sections) on three additional prospective "oil resource" projects that it anticipates to drill prior to year-end. Such concepts, if successful, will assist Crocotta in increasing its exposure to oil from both a production and reserve perspective and provide further diversity in its opportunity base for the future.PRODUCTION Production for Q112 is estimated to be approximately 6,700 boepd (67% gas; 33% light oil and natural gas liquids). As noted above, Crocotta has a number of high rate wells not yet completed or shut in such as the Montney high rate gas well. Crocotta's liquids composition includes approximately 47% light oil and condensate, 18% Butane, and 35% propane. With the recent increased differential between WTI and Edmonton par, Crocotta has tried to isolate as much of its condensate as possible to benefit from the higher condensate pricing. Previously, Crocotta had been blending a large portion of its condensate with light oil at Edson and receiving a premium price relative to Edmonton par. Crocotta estimates that its blend of oil and liquids will receive approximately 73% of WTI pricing for the rest of year after accounting for higher than historical differentials on light oil and propane. In 2011, Crocotta received approximately 80% of WTI for its blend of oil and liquids.FINANCIALCrocotta estimates net debt at the end of Q112 to be approximately $45 million. This compares to a bank credit facility of $80 million and estimated cash flow of approximately $50 million based on current strip pricing.Crocotta will closely monitor pricing and cash flow and adjust capital expenditures as necessary to ensure net debt does not exceed normal ratios and leave substantial undrawn credit. That said, current productive capacity is well ahead of budget expectations including our 2012 exit rate target of 8,500 boe/d. Crocotta's Q411 and Q112 drilling success in the new Cardium and Montney has significantly increased its development drilling inventory. The 2012 capital and drilling budget has a number of other strategic wells being drilled and Crocotta is comfortable that it will be able to continue on its current growth path by continuing to increase its development drilling inventory for the future.SUMMARYCrocotta is well positioned to show accelerated and material growth through the exploitation of its large proven resource base at Edson (for Cardium oil and Bluesky liquids rich natural gas) and in the Montney natural gas at Dawson/Sunrise and also have significant financial flexibility to react to opportunities as they arise.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 and capital programs. 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 Conversions Barrels 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.FOR FURTHER INFORMATION PLEASE CONTACT: Robert ZakreskyCrocotta Energy Inc.President and Chief Executive Officer(403) 538-3736ORNolan ChicoineCrocotta Energy Inc.Vice President, Finance and Chief Financial Officer(403) 538-3738OR700, 639 -5th Ave SWCrocotta Energy Inc.Calgary, Alberta T2P 0M9(403) 538-3737(403) 538-3735 (FAX)www.crocotta.ca