RedWater Announces Financial and Operating Results for the Three Months Ended March 31, 2012

OKOTOKS, ALBERTA--(Marketwire - May 31, 2012) - RedWater Energy Corp. ("RedWater") (TSX VENTURE:RED) is pleased to report record financial and operating results for the three months ended March 31, 2012. RedWater's interim condensed financial statements and related management's discussion and analysis for the three months ended March 31, 2012 have been filed and are available on the SEDAR website at www.sedar.com and may also be obtained on RedWater's website at www.redwaterenergy.com.

Highlights

• Increased average production to 98 barrels of oil equivalent per day ("boepd") or 29% percent higher than the first quarter of 2011
  
  
  • 65 bopd of oil in the first quarter vs. 57 bopd of oil in the first quarter of 2011
  • 200 Mcf per day of natural gas vs. 113 Mcf per day of natural gas in the first quarter of 2011
    
    
• Fund flows from operations was ($142,828) for the first quarter compared to $11,127 for first quarter of 2011
  
  
• Credit facility increased to $5.5 million with $2.5 million available immediately and additional expansion available upon tie-in of behind pipe tested production and projected drilling results
  
  
• Land holdings of 35,680 net undeveloped acres at December 31, 2011
  
  

		Three Months Ended
		March 31,
		2012				2011
Operations
Production
	Oil (bbls/d)		65				57
	Natural Gas (Mcf/d)		200				113
	BOEPD		98				76
Average Selling Price
	Oil ($/bbls)	$	75.77			$	74.90
	Natural Gas ($/Mcf)		2.68				3.71
	BOE ($/BOE)	$	55.48			$	61.44
Operating Netback ($/BOE)		$	9.95			$	32.24

		Three Months Ended
		March 31,
			2012				2011
Financial
Petroleum and Natural Gas		$	439,710			$	376,078
Revenues, net of royalties
Fund Flow from Operations			(142,828	)			(11,127	)
	Per Share, Basic & Diluted		(0.00	)			0.00
Income (loss)			(255,433	)			1,133,819
	Per Share, Basic & Diluted		(0.01	)			0.05
Capital Expenditures			740,060				1,133,819
Total Assets			12,001,104				8,489,520
Shareholders' Equity			7,855,076				8,110,509
Common Shares Outstanding
Basic			32,640,152				24,599,221
Diluted			32,640,152				24,832,993

Operational Review

On April 30, 2012, RedWater announced its $6.0 million 2012 capital expenditure program focusing on Mannville, Viking and Keg River light oil in the RedWater and Panny areas of Alberta. RedWater will continue to focus on light oil production through exploratory and development drilling, re-activations and targeted acquisitions. The 2012 capital program will be funded with working capital, operating cash flow and available drawings on its credit facility.

• Drill 3 (2.25 net) multi-stage fracs horizontal wells in the Redwater area targeting Viking and Leduc oil
• Drill 4 conventional vertical wells targeting Mannville and Viking light oil
• 4 well fracture programs, 2 well re-entries and several well evaluations and work-overs

RedWater will begin its workovers and reactivations post break-up with drilling to follow. An additional re-entry and a Keg River horizontal drill is planned for January 2013 in the Panny area.

Outlook

RedWater plans to continue to focus on developing its Mannville and Viking oil assets in Redwater and accordingly will dedicate the majority of its capital spending towards these assets. As previously mentioned, RedWater shut-in the majority of its natural gas production early in the first quarter due to lower natural gas prices. Management believes it prudent to focus available resources on light oil development. The shut-in wells will be evaluated for re- activation as natural gas prices increase.

Business of RedWater Energy Corp.

RedWater Energy Corp. is an emerging oil and gas exploration and development company. RedWater is engaged in the acquisition, enhancement and exploration of conventional oil and gas projects in Western Canada with a focus on developing high working interest light oil opportunities. RedWater's core properties are located in Redwater, Panny, Westlock, Fairydell-Bon Accord, and Long Coulee areas of Alberta. www.redwaterenergy.com.

Cautionary Statements

Forward-looking information and statements

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains forward-looking information and statements pertaining to the following; the timing for completion and equipping of wells; the volume and product mix of RedWater's oil and gas production and its ability to develop RedWater's oil resource properties, the use of the RedWater's cash flow from operations and expanded credit facilities; the number of wells to be drilled and potential development drilling and number of potential oil development locations.

In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of RedWater which have been used to develop such statements and information but which may prove to be incorrect. Although RedWater believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because RedWater can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: results from drilling and development activities consistent with past operations; the continued and timely development of infrastructure in areas of new production; continued availability of debt and equity financing and cash flow to fund RedWater's current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which RedWater operates; the timely receipt of any required regulatory approvals; the ability of RedWater to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which RedWater has an interest in to operate the field in a safe, efficient and effective manner; the ability of RedWater to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and expansion and the ability of RedWater to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which RedWater operates; the ability of RedWater to successfully market its oil and natural gas products that all necessary regulatory approvals will be obtained as and when required, that there will be no material adverse change in RedWater's affairs or laws, rules or regulations relating to RedWater, its securities or business, there will be no regulatory proceedings involving RedWater or any of its directors or officers, or any cease trade or other order prohibiting or restricting trading in RedWater's securities, no major national or international event will have occurred that has or would reasonably be expected to have a material adverse effect on financial markets or the business, operations or affairs of RedWater.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statement, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of RedWater's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of RedWater or by third party operators of RedWater's properties, increased debt levels or debt service requirements; inaccurate estimation of RedWater's oil and gas reserve and resource volumes; limited, unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in RedWater's public disclosure documents, (including, without limitation, those risks identified in this news release and RedWater's public company documents filed on SEDAR).

The forward-looking information and statements contained in this news release speak only as of the date of this news release, and RedWater does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

BOE Equivalent

Barrel of oil equivalents or BOEs 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.