RedWater Energy Corp.
TSX VENTURE : RED

RedWater Energy Corp.

February 15, 2012 09:28 ET

RedWater Announces Significant Light Oil Test Results

OKOTOKS, ALBERTA--(Marketwire - Feb. 15, 2012) - RedWater Energy Corp. ("RedWater") (TSX VENTURE:RED) is pleased to provide an operational update on two of its properties.

Panny Area

RedWater is pleased to announce the results of a Keg River oil well re-entry in the Panny area of Alberta. The well was completed on February 2 and placed on production February 12. The initial 7 hour swab test for the well was 117 barrels of 38 degree API oil (98% oil cut). Production for the 1st 24 hour period was 157 barrels. Currently the well is free flowing. In order to mitigate the risk of future water coning, production will be choked back to 100 boepd. RedWater has a 100% working interest before payout; after payout RedWater will own a 50% working interest in the well. RedWater will be acquiring seismic over adjacent optioned lands. Additional development drilling is planned for late 2012.

Redwater Area

RedWater continues to develop the Company's extensive land position in Redwater. A battery facility is being completed and management anticipates the two currently shut-in oil wells will begin production in late February. Based on test results, initial total production from these two wells is anticipated to be 30-50 boepd of light oil. Manville and Viking light oil opportunities will continue to be the primary focus of RedWater in the area.

RedWater drilled 4 wells in this area in the fourth quarter of 2011. Two of the four wells are on production and are scheduled to be fracture stimulated in second quarter of 2012. The third well is awaiting facility construction. The fourth well is programmed for a cement squeeze and recompletion.

Summary

RedWater exited 2011 at a production rate of 134 boepd. Production split is 50% oil/50% gas. The Company had targeted a 2011 exit rate of 300-400 boepd. Current production with the Panny well is estimated at 234 boepd. An additional 30-50 boepd is anticipated to be added by late February with the completion of the battery facility in Redwater, as described above. The tie-in of a Manville gas well at Redwater that production tested 1 mmcf/d (160 boepd), was delayed as a result of surface access and should be completed in the second or third quarter of this year. Note: The production rates indicated may vary from sales.

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.

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