PetroBakken Announces Second Quarter 2011 Results and Reports Current Production of Over 39,000 Boepd

CALGARY, ALBERTA--(Marketwire - Aug. 8, 2011) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSX:PBN), a 59% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG), is pleased to announce second quarter 2011 financial and operating results. PetroBakken second quarter 2011 financial and operating results were highlighted by funds flow from operations of $153.4 million ($0.82 per basic share and $0.76 per diluted share), a top decile operating netback of $56.63 per barrel of oil equivalent ("boe") and average production of 35,300 barrels of oil equivalent per day ("boepd") (84% light oil and NGLs). Improved operating netbacks during the second quarter were offset by lower production caused by severe weather conditions that extended spring break-up and restricted field operations. Since July, we have successfully restarted the majority of our field operations and production in early August is over 39,000 boepd (based on field estimates). We are currently implementing our second half drilling program with 17 drilling rigs operating; 8 in southeast Saskatchewan, 8 in the Cardium, and 1 in central Alberta. We anticipate drilling approximately 124 net wells in the remainder of 2011, and we forecast exit production rates for the year of between 46,000 and 49,000 boepd.

FINANCIAL & OPERATING RESULTS

The following table provides a summary of PetroBakken's financial and operating results for the three months ended June 30, 2011 and 2010. Interim consolidated financial statements with Management's Discussion and Analysis ("MD&A") are available on the Company's website at www.petrobakken.com and will also be available on the SEDAR website at www.sedar.com.

Three months ended June 30,			Q2 2011		Q2 2010		% change
Financial ($000s, except where noted)
Oil and natural gas sales			274,952		245,954		12
Funds flow from operations (1)			153,353		155,687		(1	)
	Per share	- basic ($)(2)	0.82		0.83		(1	)
		- diluted ($)(2)	0.76		0.78		(3	)
Adjusted Net income (1) (3)			84,162		3,062		2,649
	Per share	- basic ($)(2)	0.45		0.02		2,150
		- diluted ($)(2)	0.45		0.02		2,150
Capital expenditures(4)			113,010		122,688		(8	)
Total assets			6,093,444		5,530,641		10
Net debt (1)			1,175,511		702,832		67
Dividends			44,947		45,265		(1	)
Per Share ($)			0.24		0.24		-
Common shares, end of period (000)
	Basic		187,230		188,504		(1	)
	Diluted (2)		215,958		214,849		1

Three months ended June 30,		Q2 2011		Q2 2010		% change
Operations
Operating netback ($/boe except where noted) (1) (5)
	Oil and NGL revenue ($/bbl)(6)	96.37		70.98		36
	Natural gas revenue ($/mcf)(6)	4.19		4.11		2
	Oil, NGL and natural gas revenue(6)	85.02		62.86		35
	Royalties	13.15		9.17		43
	Production expenses	15.24		7.59		101
	Operating netback (7)	56.63		46.10		23
Average daily production (5)
	Oil and NGL (bbls)	29,676		34,852		(15	)
	Natural gas (mcf)	33,746		44,469		(24	)
	Total (boe)	35,300		42,263		(16	)

(1)	Non-GAAP measure. See "Non-GAAP Measures" section within this press release.
(2)	Consists of common shares, stock options, deferred common shares, incentive shares and convertible debentures as at the period end date.
(3)	Net income has been adjusted for the IFRS accounting effects of changes in the gain on derivative financial liability. For the three months ended June 30, 2011, adjusted net income includes a $32.8 million reduction (2010 - $46.1 millio) for this gain. Management considers adjusted net income a better measure of the Company's economic performance period over period.
(4)	Prior to property dispositions.
(5)	Six mcf of natural gas is equivalent to one barrel of oil equivalent ("boe").
(6)	Net of transportation expenses.
(7)	Excludes hedging activities.

HIGHLIGHTS

(In this report, quarterly comparisons are second quarter 2011 compared to second quarter 2010 unless otherwise noted.)

• PetroBakken's production averaged 35,300 boepd in the second quarter of 2011, representing a 15% decrease compared to the first quarter of 2011, and a 16% decrease from the prior year period. Light oil production increases, primarily from our Cardium play, were more than offset by shut-in production of approximately 6,200 boepd for the quarter due to an extended spring break-up that prevented access to leases.

• Our operating netback (excluding hedging activities) of $56.63/boe increased 8% compared to the first quarter of 2011, and 23% over the prior year period, primarily as a result of higher pricing that more than offset increased royalty and production expenses.

• Our production and strong operating netback resulted in funds flow from operations of $153.4 million ($0.82 per basic share and $0.76 per diluted share), an 11% decrease from the first quarter of 2011, and a 1% reduction from the prior year, primarily due to lower overall production that was offset by higher operating netbacks.

• Capital expenditures were $113.0 million in the second quarter, down 63% from the first quarter of 2011, and down 8% from a year ago. The decrease from the prior quarter was expected due to the seasonal nature of expenditures in our core operating areas, and the decrease from prior year was due to an extended spring break-up this year.

• PetroBakken drilled 5 (4.0 net) wells with a 100% success rate early in the second quarter; all drilling activity was within the Cardium Business Unit. Following up on first quarter activity, 16 (11.9 net) Cardium wells were also put on production in April 2011.

• Our credit facility was extended and renewed in early June 2011. Total credit availability was increased by $150 million to $1.35 billion with a maturity date of June 2, 2014.

OPERATIONAL UPDATE

Average Daily Production
	Three months ended June 30, 2011						Three months ended March 31, 2011
Business Unit	Oil and NGL (bbl/d	)	Gas (Mcf/d	)	Total (boe/d	)	Oil and NGL (bbl/d	)	Gas (Mcf/d	)	Total (boe/d	)
Bakken	16,385		5,641		17,325		22,327		6,392		23,392
Conventional (SE SK)	5,093		1,304		5,310		6,046		1,531		6,301
Cardium (central AB)	7,040		13,715		9,326		6,718		12,148		8,743
BC/Other AB	1,158		13,086		3,339		1,049		12,463		3,126
	29,676		33,746		35,300		36,140		32,534		41,562

The second quarter of 2011 was an abnormal period for western Canada, as above average rainfall occurred in the southeast part of the Western Canadian Sedimentary basin, while in northern Alberta dry conditions resulted in significant wild fires. The natural disasters that occurred affected the life and livelihood of residents and businesses that live and operate in these areas. In southeast Saskatchewan, highly water saturated ground conditions leading into the winter season were followed by a longer than normal spring break-up in 2011 due to above average rainfall; the Estevan area saw precipitation in May and June equal to what the area normally receives in a calendar year, resulting in limited ground access throughout the region. To illustrate the severity of field conditions that existed in southeast Saskatchewan, the Saskatchewan Ministry of Energy and Resources granted an unprecedented automatic two-month extension to those Saskatchewan Crown mineral leases subject to well license continuance, moving the review date from June 30, 2011 to August 31, 2011, and then later extended this review period to December 31, 2011.

Production for the second quarter averaged 35,300 boepd, comprised of 29,676 bopd of light oil and natural gas liquids and 33,746 Mcf/d of natural gas. Liquids production decreased 18% in the second quarter 2011 from the first quarter of 2011 due primarily to shut-in production. The shut-in production for the quarter averaged 6,200 boepd. Since the end of the second quarter, the majority of this production has been restored. Gas production increased 4% from the first quarter primarily due to wells brought on in the BC/Other AB Business Unit.

Drilling and completion activity was less than expected during the quarter because of the unusually long spring break-up. For the quarter, we drilled only 5 (4.0 net) wells (100% success) and completed 13 (8.6 net) wells. All second quarter drilling took place in the Cardium Business Unit. An additional 3 (0.8 net) wells were completed in the Bakken and 10 (7.8 net) wells were completed in the Cardium. In total, for the first half of 2011, we have drilled 115 (81.4 net) wells across all Business Units.

At the end of the second quarter we had an inventory of 37 (24.1 net) wells that were in various stages of being completed or equipped but not yet on production. Of these wells, 12 (7.7 net) were in the Bakken and 17 (13.0 net) were in the Cardium.

Early in the third quarter, as conditions within our operating areas began to dry out, field activities resumed and production that was shut-in has largely been restored, resulting in early August production of over 39,000 boepd. Drilling activity has commenced, and currently we have 17 rigs operating – 8 in southeast Saskatchewan, 8 in the Cardium, and 1 in central Alberta. Completion activities have also resumed and since the end of the second quarter we have completed 13 (12.2 net) wells and brought 7 (4.6 net) wells on production.

Bakken Business Unit Update

Bakken production was lower in the second quarter of 2011 compared to the first quarter of 2011, declining 26%, due to an unusually long spring break-up that prevented field access throughout the quarter (in a typical year field activity resumes in mid-May). Shut-in production within the Bakken Business Unit averaged 4,000 boepd for the quarter and conditions prevented us from drilling any new wells or stimulating the 14 (13.7 net) Bakken wells that were on production but were unfrac'd. Since the end of the second quarter, we have drilled 7 (4.8 net) wells, frac'd 9 (8.5 net) wells, and brought 4 (2.0 net) wells on production. This activity, combined with well reactivations, has restored early August production to more than 18,000 boepd. With six rigs currently active in the Bakken, we target drilling an additional 38 net wells in 2011.

We continue to have success with the new CleanTech™ completion technique that has improved well performance in the northern areas of the fairway, resulting in lower water cuts and higher initial oil rates. As a result of our success, we have adopted the use of this technology in other parts of the Bakken and have further expanded the boundaries of our Bakken drilling fairway.

Our enhanced oil recovery ("EOR") projects utilizing natural gas flooding advanced in the quarter. Our first pilot project commenced injection in mid-March at rates between 250 and 500 Mcf/d resulting in over 13 MMcf of natural gas being injected to-date. This pilot is designed to determine optimal injection rates and reservoir permeability to natural gas. We expect to begin natural gas flooding in our next pilot by the end of September. This pilot is designed to test an injection configuration applicable to both single leg and bilateral horizontal wells. Our third injection well is currently drilling and we expect the next two wells to be drilled before year end. All of these wells will be placed on primary production prior to commencing injection.

Cardium Business Unit Update

Production for the Cardium Business Unit averaged 9,326 boepd in the second quarter, representing an increase of 7% over the first quarter of 2011, even though approximately 1,250 boepd of production was shut-in during the quarter. Activity levels were substantially reduced during the second quarter due to the annual spring break-up and, like Saskatchewan, were made worse due to an abnormally wet spring. We were able to drill a total of 5 (4.0 net) wells in the quarter, approximately 10% of the wells that we drilled during the first quarter. Completion crews frac'd 10 (7.8 net) wells in the quarter, leaving 11 (8.4 net) wells remaining to be frac'd at the end of the quarter, which represents an average operating backlog, given our high activity levels with 6 to 8 drilling rigs operating. Since the end of Q2, we have drilled an additional 8 (6.8 net) wells, completed 4 (3.7 net) wells and brought 3 (2.6 net) wells on production, resulting in production exceeding 12,000 boepd in early August.

Results from the Cardium play, particularly in West Pembina, continue to meet or exceed our expectations. Slick water frac completions continue to provide strong results at lower costs. All of our Cardium areas are generating excellent economic returns, however the thicker reservoir in West Pembina, where we have the majority of our Cardium acreage, is generally providing the best results. We have now drilled 132 (100.6 net) wells and maintained our inventory of over 650 net remaining locations as we continue to validate our acreage.

OTHER ACTIVITY

Our activity in the southeast Saskatchewan conventional Mississippian plays decreased significantly from the first quarter due to the same extreme weather conditions that we experienced in the Bakken Business Unit. Facility upgrades, including increased salt water disposal capacity, have been delayed slightly and now should be completed by the end of September. This will provide the opportunity to increase our production from existing wells as well as allow for increased drilling activity in both the Bakken and our conventional Mississippian plays.

In our BC/Other AB Business Unit, we continue to evaluate our lands in northeast British Columbia and Alberta. With more than 120,000 net acres in some of the emerging oil resource plays in Alberta, we are preparing to drill 4 wells during the third and fourth quarters to evaluate these lands. Earlier this year we drilled 2 (2.0 net) Montney wells at Monias in northeast British Columbia to retain our mineral rights and further develop this acreage. The first of these Montney wells has been producing since the beginning of the second quarter while the second well is currently being evaluated.

FINANCIAL UPDATE

PetroBakken's financial performance continued to be strong in the second quarter of 2011 with high operating netbacks due to our light oil focus, resulting in funds flow from operations of $153.4 million ($0.82 per basic and $0.76 per diluted share). Our operating netback of $56.63 increased 8% compared to the first quarter of 2011, driven primarily by higher WTI prices.

Adjusted net income of $84.2 million ($0.45 per basic and diluted share) increased 235% compared to the first quarter of 2011, primarily due to higher prices, a gain on risk management contracts, a gain on asset dispositions and lower depletion expense.

Capital expenditures for the quarter were $113.0 million, related to drilling and completions, land, and facilities. Partially offsetting capital expenditures were non-core dispositions of $21.3 million. Net debt decreased slightly from the first quarter, primarily due to lower activity levels. At June 30, 2011, our financial position continues to be within levels acceptable to management as our net debt to second quarter annualized funds flow from operations ratio was 1.9 to 1. Available bank credit at the end of the quarter was $207 million.

OUTLOOK AND SUMMARY

The first quarter of 2011 provided us with a hint of what is to come out of PetroBakken this year as we reached 43,000 boepd in March, before unusually wet conditions caused industry wide shut-in production during the second quarter. As we restart our field program, we are building on the momentum we experienced in Q1 and with an active second half of the year, production is expected to rise throughout Q3 and Q4 and reach exit rates of between 46,000 and 49,000 boepd.

The technical team at PetroBakken is focused on generating growth and yield for our shareholders by developing our extensive inventory of light oil drilling locations. Since 2010, our Bakken Business Unit has generated cash flow in excess of capital expenditures as our production base has developed and matured. Production in our Cardium Business Unit has grown rapidly, and we expect this growth to continue based on our current investment plans. Ultimately we expect the Cardium Business Unit to also generate significant surplus cash flow. Our conventional southeast Saskatchewan assets remain highly profitable and we continue to add to our inventory of drill-ready locations in this area. Our team has also assembled a land position on four additional oil-focused resource plays that are targeting future production growth and cash flow capacity similar to the Cardium and Bakken. When combined with our NE BC natural gas assets, we have an inventory of more than 2,150 net drilling locations.

INVESTOR CONFERENCE CALL

Management of PetroBakken will be holding a conference call for investors, financial analysts, media and any interested persons on Tuesday, August 9, 2011 at 9:00 am, MST (11:00 a.m., ET) to discuss PetroBakken's second quarter financial and operating results. The investor conference call details are as follows:

Live call dial-in numbers:	416-695-6617 / 800-952-6845
Replay dial-in numbers:	905-694-9451 / 800-408-3053
Replay pass code:	6853586

The live audio webcast link is: http://events.digitalmedia.telus.com/petrobakken/080911/index.php.

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.

Non-GAAP Measures. This press release contains financial terms that are not considered measures under International Financial Reporting Standards ("IFRS"), which are considered to be generally accepted accounting principles ("GAAP"), such as funds flow from operations, net debt and operating netback. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders. Specifically, funds flow from operations reflects cash generated from operating activities before changes in non-cash working capital. Management considers funds flow from operations important as it helps evaluate performance and demonstrate the ability to generate sufficient cash to fund future growth opportunities, pay dividends and repay debt. Net debt includes bank debt outstanding plus accounts payable less accounts receivable and prepaid expense and is used to evaluate PetroBakken's financial leverage. Profitability relative to commodity prices per unit of production is demonstrated by an operating netback. Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period. Funds flow from operations, net debt and operating netbacks may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations or other measures of financial performance calculated in accordance with IFRS.

BOEs. Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.

Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to financial results, results from operations, future capital costs, future production rates, proposed exploration and development activities, the potential for EOR projects, our drilling prospect inventory, the timing of certain projects, capital spending levels and anticipated sources of capital. 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 new and existing wells, prevailing commodity prices and economic conditions, the availability and cost of labour and services, weather and access to drilling locations and the geological nature of the formations targeted. 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 www.sedar.com. 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.