PetroBakken Generates Funds Flow from Operations of $646 Million and Net Income of $48 Million in 2010

CALGARY, ALBERTA--(Marketwire - March 8, 2011) - PetroBakken Energy Ltd. (the "Company" or "PetroBakken") (TSX:PBN), a 59% owned subsidiary of Petrobank Energy and Resources Ltd. ("Petrobank") (TSX:PBG), is pleased to announce our fourth quarter and year end 2010 financial and operating results. HIGHLIGHTS (In this press release, annual comparisons are 2010 compared to 2009 and quarterly comparisons are fourth quarter 2010 compared to fourth quarter 2009 unless otherwise noted. First quarter through to third quarter 2009 results refer to the former Petrobank Canadian Business Unit, and are prior to the acquisition of TriStar Oil & Gas Ltd. ("TriStar") in October 2009.) - Through acquisition and drilling activity in 2010, we created a new business unit focused on the Cardium light oil resource play that has over 650 drilling locations, 43 million barrels of oil equivalent ("MMboe") of proved plus probable ("2P") reserves and current production of 9,500 barrels of oil equivalent per day ("boepd"). - PetroBakken's production averaged 41,688 boepd in 2010, a 58% increase over the prior year, primarily driven by acquisition activity in 2009 and 2010. Compared to the prior year, fourth quarter production decreased 9% to 41,333 boepd due to delayed operational activity, natural production declines and dispositions. - Fourth quarter 2010 production of 41,333 boepd increased 3% compared to the third quarter of 2010 as field activity ramped up toward the end of the quarter. Average January production is estimated at approximately 41,400 boepd. - Our operating netback (excluding hedging gains) of $47.76/boe for 2010 increased 11% over the prior year primarily due to the increase in oil prices partially offset by increases in production and royalty expenses. Compared to the fourth quarter of 2009, our operating netback improved 3% due to higher oil prices partially offset by higher production expenses. - Our production and strong operating netback in 2010 resulted in funds flow from operations of $646 million ($3.51 per basic share), a 64% increase over 2009. Fourth quarter funds flow from operations of $161 million ($0.85 per basic share) decreased 7% compared to 2009 as production declines more than offset the increase in operating netback. - Net income of $48 million ($0.26 per basic share) for 2010 increased slightly compared to 2009, and decreased 55% to $15 million ($0.08 per basic share) in the fourth quarter of 2010. In 2010, PetroBakken paid $177 million in dividends compared to $41 million in 2009 as dividend payments commenced in the fourth quarter of 2009. - Capital expenditures, excluding corporate acquisitions and dispositions, totaled $812 million in 2010, approximately double the level in 2009. In the fourth quarter, capital expenditures were $263 million, 48% higher than the prior year period. The increase in capital expenditures was primarily the result of our higher drilling and completion activity, which represented $537 million or 66% of our total expenditures in 2010. - PetroBakken drilled 239 net wells in 2010 (117 net wells in 2009) with a 99% success rate, including 77 net wells in the fourth quarter (65 net wells in 2009). Drilling operations in 2009 and the majority of 2010 were primarily focused on our Bakken play in southeast Saskatchewan. Activity in the Cardium play began to pick up in the fourth quarter of 2010 as lease access conditions improved. - Net debt (bank debt plus working capital deficit) increased to $1.0 billion at the end of 2010, up from $913 million in 2009. PetroBakken currently has a $1.2 billion credit facility in place, with $370 million of available capacity at year-end. - Our capital structure diversified in January 2010 when we issued US$750 million of convertible debentures, which mature in February 2016. Proceeds from the debentures were used to repay bank debt outstanding at that time. FOURTH QUARTER AND YEAR-END FINANCIAL & OPERATING HIGHLIGHTS The following table provides a summary of PetroBakken's financial and operating results for the three and twelve month periods ended December 31, 2010 and 2009. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") is available on the Company's website at www.petrobakken.com and will be available on the SEDAR website at www.sedar.com. /T/ Three months ended Year ended December 31, December 31, ---------------------------------------------------------------------------- % % 2010 2009 change 2010 2009 change ---------------------------------------------------------------------------- Financial ($000s, except where noted) Oil and natural gas revenue 258,359 276,334 (7) 1,008,556 575,588 75 Funds flow from operations (1) 160,817 173,566 (7) 646,316 394,819 64 Per share - basic ($)(2) 0.85 1.01 (16) 3.51 3.15 11 - diluted ($)(2) 0.80 1.01 (21) 3.27 3.14 4 Net income 15,078 33,385 (55) 47,985 43,397 11 Per share - basic ($)(2) 0.08 0.19 (58) 0.26 0.35 (26) - diluted ($)(2) 0.08 0.19 (58) 0.26 0.34 (24) Capital expenditures(3) 262,758 177,278 48 811,871 394,023 106 Total assets 5,768,795 4,480,604 29 5,768,795 4,480,604 29 Net debt (1) 1,023,378 912,703 12 1,023,378 912,703 12 Dividends 45,076 41,246 9 177,205 41,246 330 Per share ($) 0.24 0.24 - 0.96 0.24 300 Common shares, end of period (000) Basic(2) 187,140 171,856 9 187,140 171,856 9 Diluted(2) 215,011 177,991 21 215,011 177,991 21 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operations Operating netback ($/boe except where noted) (1) (4) Oil and NGL revenue ($/bbl) (5) 75.19 71.63 5 72.77 64.27 13 Natural gas revenue ($/Mcf) (5) 3.96 4.61 (14) 4.22 4.40 (4) Oil, NGL and natural gas revenue (5) 67.00 65.05 3 65.28 58.97 11 Royalties 9.84 10.14 (3) 9.34 8.55 9 Production expenses 8.97 8.23 9 8.18 7.38 11 ---------------------------------------------------------------------------- Operating netback (6) 48.19 46.68 3 47.76 43.04 11 Average daily production (4) Oil and NGL (bbls) 34,754 38,796 (10) 35,109 22,648 55 Natural gas (Mcf) 39,474 40,951 (4) 39,473 22,110 79 ---------------------------------------------------------------------------- Total (boe) 41,333 45,621 (9) 41,688 26,333 58 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Non-GAAP measure. See "Non-GAAP Measures" section. (2) Consists of common shares, stock options, deferred common shares, incentive shares and convertible debentures as at the period end date. Assumes 109,800,001 common shares were outstanding for the first nine months of 2009. (3) Prior to property dispositions. (4) Six Mcf of natural gas is equivalent to one barrel of oil equivalent ("boe"). (5) Net of transportation expenses. (6) Excludes hedging activities. /T/ OPERATING & FINANCIAL RESULTS PetroBakken had a very active year in 2010, establishing a new core area in central Alberta with our light oil resource Cardium play and continuing our extensive drilling program in southeast Saskatchewan, primarily focused on the light oil Bakken resource play. Production for the year increased 58% to 41,688 boepd and, combined with an 11% increase in operating netback, resulted in funds flow from operations of $646.3 million ($3.51 per share) and net income of $48.0 million ($0.26 per share); all improvements over 2009. Capital expenditures for the year of $811.9 million (excluding dispositions and corporate acquisitions) were primarily directed to the drilling and completion of wells. Of the 325 (239 net) wells drilled in 2010, over 75% were in southeast Saskatchewan, with 177 (140 net) Bakken wells and 71 (42 net) conventional Mississippian wells. Activity in our Cardium play in central Alberta picked up in the second half of the year (particularly the fourth quarter) where we drilled 75 (55 net) wells. Facilities expenditures for the year totaled $91.2 million, including costs for equipping wells and expanding our infrastructure in the Bakken. We added to our inventory of opportunities by acquiring land for $94.8 million and completing property acquisitions for $30.3 million. Most of this activity added to our Cardium land position, but we also were successful in acquiring land in the Bakken and new emerging plays within western Canada. During 2010 we completed our non-core disposition program, selling 3,800 boepd of mainly gas weighted properties for net proceeds of $133.6 million. The majority of our production comes from southeast Saskatchewan; most of which is from our Bakken Business Unit. We established the Cardium Business Unit in 2010 through three corporate acquisitions and production from this area has grown steadily throughout the year. The following tables provide a breakdown of our production by business unit for each quarter and 2010. /T/ Average Daily Production(1) Three months ended Three months ended March 31, June 30, Business Unit Oil&NGL Gas Total Oil&NGL Gas Total (bbl/d) (Mcf/d) (boe/d) (bbl/d) (Mcf/d) (boe/d) ---------------------------------------------------------------------------- Bakken 27,823 5,406 28,724 24,584 7,566 25,845 Conventional (SE SK) 7,437 2,785 7,901 6,738 2,735 7,194 Cardium (central AB) 768 5,891 1,750 2,229 14,895 4,712 NE BC/Other AB 1,626 18,580 4,723 1,301 19,273 4,512 ---------------------------------------------------------------------------- 37,654 32,662 43,098 34,852 44,469 42,263 ---------------------------------------------------------------------------- Three months ended September 30, Business Unit Oil&NGL Gas Total (bbl/d) (Mcf/d) (boe/d) ---------------------------------------------------------------------------- Bakken 22,695 7,077 23,875 Conventional (SE SK) 6,611 2,717 7,064 Cardium (central AB) 2,640 15,380 5,203 NE BC/Other AB 1,284 16,019 3,953 ---------------------------------------------------------------------------- 33,230 41,193 40,095 ---------------------------------------------------------------------------- Three months ended Year ended December 31, December 31, Business Unit Oil&NGL Gas Total Oil&NGL Gas Total (bbl/d) (Mcf/d) (boe/d) (bbl/d) (Mcf/d) (boe/d) ---------------------------------------------------------------------------- Bakken 22,859 6,778 23,989 24,472 6,711 25,591 Conventional (SE SK) 6,595 1,854 6,904 6,842 2,521 7,262 Cardium (central AB) 4,175 14,752 6,634 2,463 12,761 4,590 NE BC/Other AB 1,125 16,090 3,806 1,332 17,480 4,245 ---------------------------------------------------------------------------- 34,754 39,474 41,333 35,109 39,473 41,688 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Business unit production numbers have changed from prior disclosures due to the realignment of the business unit for International Financial Reporting Standards purposes. The main impact of the realignment is to combine northeast BC and other Alberta as one business unit and to shift approximately 600 bopd from the Bakken Business Unit to the Conventional Business Unit. /T/ Operations in the Bakken in 2010 focused on the development of reserves through bilateral drilling as well as expansion of our facility infrastructure. We drilled 130 (121 net) bilateral horizontal wells and continued to see superior performance versus offset single lateral wells. Our 2010 reserve report began to reflect this performance with 2010 producing bilateral wells receiving 35,000 barrels of incremental reserves over undeveloped bilateral wells booked in 2009. While our 2010 undeveloped locations have yet to see this benefit, we expect they will receive increased reserve assignment with future performance in these areas. We have also continued to invest in Bakken infrastructure by expanding our Midale gas plant and adding new oil batteries. These investments will allow us to conserve and sell natural gas and NGLs, reduce trucking costs and increase reliability of our operations. Our enhanced infrastructure will allow us to satisfy Saskatchewan's new gas conservation rules as the majority of our production operations are already tied-in and conserving natural gas. The northern part of our Bakken acreage has had its challenges, with increased water cuts reducing well performance. These increased water cuts are associated with completions where our fracture stimulation had broken out of zone into overlying water bearing formations. To mitigate this issue we have experimented with various new completion fluids and techniques, including producing wells un-stimulated and purposely delaying fracture stimulation until a later date. Early results utilizing a new fracture stimulation ("frac") methodology suggest we can now contain the frac within the Bakken formation and substantially reduce the water cuts. We now are applying this new frac methodology in all Bakken completions and focusing on optimizing the production from our current inventory of 15 producing, but un-stimulated, Bakken bilateral wells. Our efforts in enhanced oil recovery ("EOR") in the Bakken moved from reservoir analysis to field experimentation in 2010 with a two day CO2 injection test into an existing horizontal well. The offsetting horizontal wells responded by more than doubling their production and after 10 months still produce at rates 50% higher than prior to CO2 injection. This very positive result encouraged us to proceed with our natural gas EOR pilot projects, and to date we have drilled two horizontal wells for purposes of injection. Those wells are currently producing oil until facilities are prepared for gas injection, and we anticipate commencing injection on the first pilot well prior to the end of this month. Our plan is to utilize natural gas for our EOR projects, which is less expensive and less corrosive than CO2. Success in these pilots will encourage us to implement as many as five pilot projects in 2011. EOR success has not been reflected in our reserves to-date. PetroBakken established a meaningful position in the light oil Cardium resource play in 2010 through three corporate acquisitions, land purchases and several asset transactions. We now have a new business unit with more than 43 MMboe of proved plus probable reserves, over 650 net development locations in inventory for Cardium potential and current production of 9,500 boepd. Our 2010 year-end reserves include 140 net undeveloped Cardium locations. Production increased steadily in the Cardium Business Unit throughout 2010; however operations were slower than expected, primarily due to wet weather which impeded lease access. Activity levels did increase in the fourth quarter, and for the year we drilled 75 (55 net) wells across our entire acreage position with a 100% success rate. Our experience from the Bakken play drilling horizontal multi-staged frac wells encouraged us to aggressively look for ways to improve on early industry practises in the Cardium play. Our latest generation wells now employ monobore drilling techniques in conjunction with slick-water fracs, rather than the typical industry practice of gelled-oil fracs. Our results to date indicate that this methodology creates improved productivity from the wells and generates an average cost savings of $400,000 per well. Our active drilling program has resulted in a large inventory of wells that are drilled but yet to be brought on production. As of March 4, 2011 we have 36 (27 net) wells that are drilled but not yet producing, as these wells are either being prepared for frac, waiting for frac, testing for productivity, shut-in for two week pressure build-up, or being equipped for production. The Company's increasing efficiency in field operations is now reducing the time to bring our wells on-stream and decreasing our inventory of non-producing Cardium wells. We expect that Cardium Business Unit production will continue to grow through 2011 as our activity progresses. During 2010 we diversified our capital structure by issuing US$750 million of convertible debentures that mature in February 2016. The proceeds from these debentures were used to repay bank indebtedness, which in turn allowed us to finance our corporate acquisitions and a larger capital expenditure program. The increase in our reserves in 2010 allowed us to increase our bank facility twice during the year resulting in our currently $1.2 billion facility which had $830 million drawn as at December 31, 2010. We have maintained our financial flexibility with $370 million of year-end credit capacity and have a year-end debt (excluding convertible debentures) to annualized fourth quarter funds from operations ratio of 1.6 to 1. Our light oil focused, high netback production base has generated funds flow from operations of $646.3 million. With these funds we paid out $177.2 million in dividends or approximately 27% of funds flow and purchased approximately 1.7 million shares for $36.4 million in a normal course issuer bid ("NCIB"). The NCIB allows us to purchase up to a maximum of 9,431,255 common shares and expires May 18, 2011, unless completed or terminated at PetroBakken's discretion. SUMMARY & OUTLOOK 2010 was a very active year for PetroBakken with the continued development of our southeast Saskatchewan Bakken assets, the establishment of a new Cardium focused business unit that had up to ten drilling rigs operating, the completion of our non-core disposition program and expansion of our financial resources. We have established a strong inventory of opportunity that includes approximately 2,000 light oil locations which will generate high operating netback production in the future. With our 2011 capital program, we expect to generate exit production rates of 46,000 to 49,000 boepd. INVESTOR CONFERENCE CALL Management of PetroBakken will be holding a conference call for investors, financial analysts, media and any interested persons on Tuesday, March 8, 2011 at 9:00 a.m. (MST) (11:00 a.m. EST) to discuss PetroBakken fourth quarter financial and operating results. /T/ The investor conference call details are as follows: Live call dial-in numbers: 416-695-6623 / 800-769-8320 Replay dial-in numbers: 905-694-9451 / 800-408-3053 Replay pass code: 5326283 The live audio webcast link will be available at: http://events.digitalmedia.telus.com/petrobakken/030811/index.php. /T/ 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 Canadian 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 shareholders. 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 is used to evaluate financial leverage and includes bank debt plus and accounts payable and accrued liabilities, less current assets. Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period. Management considers operating netback important as it is a measure of profitability per barrel of production. 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 net income or other measures of financial performance calculated in accordance with GAAP. 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 production rates, proposed exploration and development activities, the potential for EOR projects, our drilling prospect inventory and the timing of certain projects. 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 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. 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.

Contact Information: PetroBakken Energy Ltd. John D. Wright Chairman of the Board and Chief Executive Officer 403.750.4400 or PetroBakken Energy Ltd. R. Gregg Smith President and Chief Operating Officer 403.750.4400 or PetroBakken Energy Ltd. Peter D. Scott Senior Vice President and Chief Financial Officer 403.750.4400 or PetroBakken Energy Ltd. Bill A. Kanters Vice President Business Development and Corporate Planning 403.750.4400 ir@petrobakken.com www.petrobakken.com