Arsenal Energy Inc. Releases Operational Update

Marketwired

CALGARY, ALBERTA--(Marketwired - Sep 9, 2013) - Arsenal Energy Inc. ("Arsenal" or the "Company") (AEI.TO)(AEYID) is pleased to release this operations update. In the third quarter to date, Arsenal has drilled four (4 net) wells at Princess, one (1 net) well at Chauvin, one (0.5 net) well in the Alberta deep basin, and has completed four (0.25 net) Bakken wells at Lindahl in North Dakota.

At Princess, Arsenal has drilled four wells, resulting in two oil wells, one gas well and one suspended well. The Company drilled a vertical exploratory well testing a half section structural closure identified on seismic. The well has been on production for approximately two weeks at 90 bbls/d. The company has identified six follow-up locations. Three Glauconite horizontals have been drilled. One tested at 3mmcf/d of gas and the other two will be completed and tested prior to quarter end.

At Chauvin, Arsenal drilled and completed its first Leduc horizontal well. It swab tested at 110 bbls/d of oil. The well should be on production by the end of September. Arsenal has identified six follow-up locations. Arsenal drilled a similar prospect at Edgerton, Alberta in 2012. That well continues to produce at approximately 30 bbls/d. The Company has identified 10 follow-up locations on that property.

At Columbia in the Alberta deep basin, Arsenal has participated for a 50% working interest in a horizontal exploration test of the Falher formation. The well will be completed in the third quarter and is expected to be placed on production in the fourth quarter. Results will be released at that time.

In North Dakota four (.25 net) Bakken wells were fracked and placed on production at Lindahl. The wells are performing typically of other Bakken wells in that field. Arsenal has begun permitting work on two (1.7 net) Bakken wells at Stanley and one (0.65 net) Bakken well at Rennie Lake. It is anticipated that those wells will be drilled in Q1 2014.

Arsenal is maintaining 2013 exit rate guidance at 4,400 boe/d but is increasing cash flow guidance for 2013 to $44 million due to higher realized oil prices.

To receive Company news releases via e-mail, please advise info@arsenalenergy.com and specify "Arsenal Press Releases" in the subject line.

Advisory

Management uses certain industry benchmarks such as field netback to analyze financial and operating performance. Field netback has been calculated by taking oil and gas revenue less royalties, operating costs and transportation costs. This benchmark does not have a standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. Management considers field netback as an important measure to demonstrate profitability relative to commodity prices. (1) "Funds from operations", "funds from operations per share", "netbacks" and "netbacks per boe" are not defined by Generally Accepted Accounting Principles ("GAAP") in Canada and are regarded as non-GAAP measures. Funds from operations and funds from operations per share are calculated as cash provided by operating activities before changes in non-cash working capital and decommissioning obligations settled. Funds from operations is used to analyze the Company's operating performance, the ability of the business to generate the cash flow necessary to fund future growth through capital investment and to repay debt. Funds from operations does not have a standardized measure prescribed by GAAP and therefore may not be comparable with the calculations of similar measures for other companies. The Company also presents funds from operation per share whereby per share amounts are calculated using the weighted average number of common shares outstanding consistent with the calculation of net income or loss per share.

(2) The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Certain statements and information contained in this press release, including but not limited to management's assessment of Arsenal's future plans and operations, production, reserves, revenue, commodity prices, operating and administrative expenditures, funds from operations, capital expenditure programs and debt levels contain forward-looking statements. All statements other than statements of historical fact may be forward looking statements. These statements, by their nature, are subject to numerous risks and uncertainties, some of which are beyond Arsenal's control including the effect of general economic conditions, industry conditions, changes in regulatory and taxation regimes, volatility of commodity prices, escalation of operating and capital costs, currency fluctuations, the availability of services, imprecision of reserve estimates, geological, technical, drilling an processing problems, environmental risks, weather, the lack of availability of qualified personnel or management, stock market volatility, the ability to access sufficient capital from internal and external sources and competition from other industry participants for, among other things, capital, services, acquisitions of reserves, undeveloped lands and skilled personnel that may cause actual results or events to differ materially from those anticipated in the forward looking statements. Such forward-looking statements although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated in the statements made and should not unduly be relied on. These statements speak only as of the date of this press release. Arsenal does not intend and does not assume any obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Arsenal's business is subject to various risks that are discussed in its filings on the System for Electronic Document Analysis and Retrieval (SEDAR).

Contact:
Arsenal Energy Inc.
Tony van Winkoop
President and Chief Executive Officer
(403) 262-4854
(403) 265-6877
Arsenal Energy Inc.
J. Paul Lawrence
Vice President, Finance and CFO
(403) 262-4854
(403) 265-6877
Arsenal Energy Inc.
1900, 639 - 5th Avenue S.W.
Calgary, Alberta, T2P 0M9
(403) 262-4854
(403) 265-6877
info@arsenalenergy.com
www.arsenalenergy.com

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