Progress Increases 2011 Capex Program to $350 Million, Increases 2011 Production Guidance and Announces Concurrent Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - Feb. 14, 2011) -

NOT FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.

Progress Energy Resources Corp. (TSX:PRQ) ("Progress" or the "Company") today announced that it is expanding the Company's 2011 capital program to $350 million. Progress expects the expanded capital program to result in production growth to an average of approximately 45,000 to 46,000 barrels of oil equivalent ("boe") per day in 2011 and 2011 exit production of 50,000 to 52,000 boe per day, an increase of approximately 15 percent.

On February 9, 2011, Progress announced that its reserve base had grown by 30 percent on a debt-adjusted, per-share basis in 2010, primarily driven by the success of the Company's Montney drilling program in northeast British Columbia. Progress has an inventory of over 7,500 drilling locations and, with an expanded capital program of $350 million for 2011, the Company intends to accelerate the number of Montney wells to be drilled in 2011 to approximately 30 to 35 horizontal wells. In addition, as previously announced, the Company is currently in negotiations to divest of a number of conventional properties and is actively pursuing joint venture arrangements. Discussions are on going with several parties in this regard.

In connection with the expansion of its capital program, Progress also announces that it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets, Scotia Capital Inc., CIBC World Markets Inc. and RBC Capital Markets and including Cormark Securities Inc., Peters & Co. Limited, FirstEnergy Capital Corp., National Bank Financial Inc., Canaccord Genuity Corp. and Macquarie Capital Markets Canada Ltd. (the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 14,400,000 Common Shares (the "Common Shares") at a price of $13.90 per Common Share for gross proceeds of $200,160,000 and $200,000,000 principal amount of Convertible Unsecured Subordinated Debentures (the "Convertible Debentures") for total combined gross proceeds of $400,160,000 (the "Offering"). BMO Capital Markets and Scotia Capital are acting as joint bookrunners on the Offering. The Offering is expected to close on or about March 7, 2011 and is subject to Progress receiving all necessary regulatory approvals, including the approval of the Toronto Stock Exchange (the "TSX").

The Convertible Debentures will bear interest at a rate 5.75% per annum, payable semi-annually on the last day of June and December, commencing on June 30, 2011. The Convertible Debentures will be convertible at the holder's option into Common Shares of the Company at a conversion price of $20.85 per Common Share (the "Conversion Price"), and have a maturity date of June 30, 2016 (the "Maturity Date"). The Convertible Debentures will not be redeemable prior to July 1, 2014. On and after July 1, 2014 and prior to the Maturity Date, the Convertible Debentures may be redeemed in whole or in part from time to time at the Company's option, at a price equal to their principal amount plus accrued and unpaid interest up to but not including the date of redemption, provided that the weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending five days prior to the date on which the notice of redemption is provided is at least 125% of the Conversion Price.

The Convertible Debentures will be direct, unsecured obligations of Progress, subordinated to other indebtedness of the Company for borrowed money and ranking equally with all other existing and future unsecured subordinated indebtedness.

Subject to specified conditions including TSX approval, Progress will have the right to repay the outstanding principal amount of the Convertible Debentures, on maturity or redemption, through the issuance of Common Shares of the Company. Progress will also have, subject to specified conditions including TSX approval, the option to satisfy its obligation to pay interest through the issuance and sale of Common Shares of the Company.

Pursuant to its existing subscription right, Canada Pension Plan Investment Board ("CPPIB"), which currently owns approximately 14.7 percent of the Company's outstanding common shares, has agreed to subscribe for 2,116,800 Common Shares of Progress at a price of $13.90 per Common Share, for gross proceeds of $29,423,520, which is included in the aggregate proceeds of the Offering. The closing of the Offering and the CPPIB subscription are contingent upon one another.

The net proceeds of the Offerings will be used to expand the Company's 2011 capital program to $350 million, reduce indebtedness and for general corporate purposes. 

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Not for dissemination in the United States.

Progress is a Calgary based, mid-size energy company primarily focused on natural gas exploration, development and production in northwest Alberta and northeast British Columbia. Common shares of Progress are listed on the TSX under the symbol PRQ.

Advisory Regarding Forward-Looking Statements

This 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", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking statements and information concerning the timing of completion of the Offerings; the use of the proceeds of the Offerings including the acceleration of its Montney drilling program; the terms of the Convertible Debentures; and the Company's expected 2011average and exit production rate.

The forward-looking statements and information are based on certain key expectations and assumptions made by Progress, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and service; the satisfaction of the conditions of closing of the offering; completion of the Offerings on the timing planned; and the receipt of applicable approvals. Although Progress believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Progress can give no assurance that they 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 could 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 reserve and resource estimates; the uncertainty of estimates and projections relating to reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations; failure to satisfy conditions to closing of the Offerings; failure to obtain the necessary regulatory and other approvals, including stock exchange approvals and on the timelines planned; risks that conditions to closing of the Offerings are not satisfied; and risk that the board of directors determines that it would be in the best interests of Progress to deploy the proceeds from the Offerings to some other purpose.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on the Corporation's future operations and such information may not be appropriate for other purposes. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that the Corporation will derive there from. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Progress are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Progress 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.

Oil and Gas Terms

The Company has adopted the standard of 6 mcf:1 boe when converting natural gas to boes. Boe's 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.