PetroShale Inc.
TSX VENTURE : AQX

October 19, 2012 17:41 ET

PetroShale Announces Production Acquisition in Williston Bakken

CHATHAM, ONTARIO--(Marketwire - Oct. 19, 2012) - PetroShale Inc. ("PetroShale" or the "Company") (TSX VENTURE:AQX) is pleased to announce that PetroShale (US), Inc., a wholly owned subsidiary of PetroShale, has acquired production and proven developed reserves in Montrail County, North Dakota in the Williston Bakken. The $4.5 million purchase price is for "borehole only" production of 63 boepd, estimated proven net reserves of 172,526 boe and an IRR of 14% at $90 WTI and a $7 differential (according to an independent report by Ryder Scott dated July 11, 2012). Current differentials are running less than $5. The effective date for the transaction was August 1, 2012 and the production is 91% oil with approximately 80% of the gas being liquids.

The acquisition was funded with current cash and debt. PetroShale (US), Inc. borrowed an aggregate US$2.1 million from an individual that is both: (i) a principal with Slawson Exploration Company, Inc. ("Slawson Exploration"), PetroShale's strategic partner in the Williston Bakken; and (ii) a principal with Alameda Energy, Inc., a shareholder of the Company which owns 6.7 million non-voting shares of PetroShale. The loan will bear interest at a rate of 12% per annum, with a term ending October 12, 2013. As security for the payment of the indebtedness, PetroShale (US), Inc. has executed a mortgage, assignment of production, security agreement and financing statement covering these acquired oil and gas interests.

The majority of the production in this area is operated by Slawson Exploration. The balance of production not operated by Slawson Exploration is predominately operated by EOG and Whiting.

Reader Advisory

This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's registered filings which are available at www.sedar.com.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. PetroShale does not undertake any obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

BOE presentation:

Barrel ("bbl") of oil equivalent ("boe") amounts may be misleading particularly if used in isolation. All boe conversions in this report are calculated using a conversion of six thousand cubic feet of natural gas to one equivalent barrel of oil (6 mcf=1 bbl) and is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Trading in the securities of PetroShale Inc. should be considered highly speculative.

Neither the 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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