Magnum Energy Inc.

Magnum Energy Inc.

July 20, 2011 09:30 ET

Magnum Energy Inc. Provides Operations Update

CALGARY, ALBERTA--(Marketwire - July 20, 2011) - MAGNUM ENERGY INC. ("Magnum or the "Company") (TSX VENTURE:MEN) is pleased to announce an update of its recent operations at the Provost Viking Oil and Sedalia Natural Gas projects in Alberta.

Provost Development Update

In Provost, Magnum fracture stimulated one of the producing vertical oil wells on June 1, 2011. The well's production rate was 5 bopd prior to the stimulation. After thirty days, the well is producing at a stable rate of 29 bopd (14.5 bopd net to Magnum). At the current rate of production the operation will reach payout in approximately three months.

Our joint venture partner is required to pay 100% of the costs to drill and complete to tie-in two horizontal wells to earn a 50% working interest in certain lands in the Provost area. The first horizontal well spudded on June 28, 2011. The well, targeting the Viking "A" formation, has been drilled to a depth of 800 meters with a 1200 meter horizontal leg which passes entirely through an oil bearing Viking sand. The horizontal leg is being prepared for a multi-stage fracture stimulation scheduled for July 24, 2011. Under the terms of the joint venture agreement, the second horizontal well must be spudded within 30 days of the completion of the first horizontal well.

Magnum was also successful at a recent land sale in the Provost Viking "A" Oil Pool, acquiring a 50% working interest in all petroleum and natural gas rights in a section that falls within the Viking oil halo Magnum has identified. The section includes two cased well bores that the Company will recomplete using a similar fracture stimulation that was successfully used on the first vertical operation described above. Magnum has identified a second light oil play on the section below the Viking zone which will be developed utilizing existing 3D seismic.

With the addition of the section acquired at the recent land sale, Magnum has identified a total of 4 existing vertical Viking oil wells that can be fracture stimulated adding production at a very economic rate.

Sedalia Development Update

In June 2011, Magnum fracture stimulated two wells and re-entered two wells to complete operations from previous work programs in the Sedalia area.

The two wells that have been successfully fracture stimulated are still in the clean up phase and may require further coil clean outs before the Company can announce stabilized production rates. Work to date on the re-entries has added over 100 boed. The Company still has production of approximately 40 boed behind pipe on other zones that will be comingled once the clean out phase has been completed on the wells that have been fracture stimulated.

In the past six weeks, Magnum has added approximately 120 boe/d of production with several operations yet to be completed.

President Richard Nemeth comments, "We have had a very busy summer to date and the results thus far have exceeded our expectations. We look forward to the completion and tie-in of the first horizontal Viking oil well. With the addition of the recent land acquisition, Magnum will be focused on expanding our production and reserves in the Viking 'A' Oil Pool." The Company has an inventory of from 16 to 32 additional horizontal oil locations (depending upon the length of the horizontal legs) in the Provost area and 12 horizontal gas locations in the Sedalia area.

Forward looking statements:

This news release contains certain forward-looking statements, including management's assessment of future plans and operations and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond Magnum's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations, including the adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory bodies. Actual results could differ materially from those expressed in or implied by these forward-looking statements. No assurances can be given that any of the events anticipated by any forward-looking statements will transpire or occur, or if any of them do so, what benefits Magnum will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Magnum or persons acting on behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this news release and the documents referred to herein, are made as at the date of this news release, and Magnum does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Petroleum and natural gas volumes are converted to an equivalent measurement basis referred to as a "barrel of oil equivalent" (boe) on the basis of 6 thousand cubic feet of natural gas equaling 1 barrel of oil. This is based on an energy equivalency conversion method applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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