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Artek Announces Second Quarter 2011 Financial Results and Updates Operations

CALGARY, ALBERTA--(Marketwire - Aug. 10, 2011) - Artek Exploration Ltd. (TSX:RTK - News; "Artek" or the "Company") is pleased to provide this summary of its financial and operating results for the three and six month periods ended June 30, 2011. A complete copy of the Company's comparative financial statements for the three and six months period ended June 30, 2011, along with management's discussion and analysis in respect thereof will be filed on SEDAR and on the Company's website at www.artekexploration.com.HIGHLIGHTS

Three Months Ended June 30, Six Months Ended June 30,
2011 2010 Change 2011 2010 Change
(000s, except
per share
amounts) ($) ($) (%) ($) ($) (%)
Petroleum and
natural gas
revenues 11,956 6,684 79 21,059 14,971 41
Funds flow from
operations (1) 5,490 2,356 133 9,363 5,402 73
Per share
- basic 0.14 0.09 56 0.25 0.21 19
- diluted 0.14 0.09 56 0.25 0.21 19
Net earnings
(loss) 2,175 (503) -- (2,662) (931) --
Per share
- basic 0.05 (0.02) -- (0.07) (0.04) --
- diluted 0.05 (0.02) -- (0.07) (0.04) --
expenditures 7,748 3,070 152 19,087 14,801 29
Working capital
deficiency (45,572) (51,034) (11) (45,572) (51,034) (11)
equity 98,911 78,185 27 98,911 78,185 27
(000s) (#) (#) (%) (#) (#) (%)
Share Data
At period-end
Basic 39,583 25,488 55 39,583 25,488 55
Options and
warrants 2,795 2,578 8 2,795 2,578 8
Basic 39,583 25,488 55 36,890 25,456 45
Diluted 39,914 25,523 56 37,200 25,625 45
(%) (%)
Natural gas
(mcf/d) 7,740 7,233 7 7,897 8,016 (1)
Crude oil
(bbls/d) 956 509 88 858 524 64
NGLs (bbls/d) 73 56 30 74 60 23
(boe/d)(2) 2,319 1,770 31 2,248 1,920 17
Natural gas
($/mcf)(3) 4.66 4.63 1 4.59 4.99 (8)
Crude oil
($/bbl)(3) 93.85 71.39 31 88.32 74.17 19
NGLs ($/bbl) 77.67 59.95 30 74.16 62.23 19
($/boe)(4) 56.90 41.50 37 52.60 43.08 22
($/boe) 12.36 4.91 151 10.26 6.33 62
Operating cost
($/boe) 11.21 13.30 (16) 11.48 12.76 (10)
cost ($/boe) 1.80 1.70 6 1.78 1.72 3
($/boe)(5) 31.54 21.59 46 29.08 22.28 31
activity -
gross (net)
(#) -- (--) -- (--) 2 (0.9) 1 (0.5)
(#) -- (--) -- (--) 1 (1.0) 2 (2.0)
Abandoned (#) -- (--) -- (--) -- (--) -- (--)
Total (#) -- (--) -- (--) 3 (1.9) 3 (2.5)
Average working
interest (%) -- -- 64 83
Success rate
(%) -- -- 100 100

(1) Funds flow from operations is calculated using cash flow from operating
activities, as presented in the statement of cash flows, before changes
in non-cash working capital and settlement of asset retirement costs.
Funds flow from operations is used to analyze the Company's operating
performance and leverage. Funds flow from operations does not have a
standardized measure prescribed by International Financial Reporting
Standards ("IFRS"), and therefore, may not be comparable with the
calculations of similar measures for other companies.
(2) For a description of the boe conversion ratio, refer to the advisories
contained herein.
(3) Product prices include realized gains/losses from financial derivative
(4) Oil equivalent price includes minor sulphur sales revenue.
(5) Operating netback equals revenue less royalties, transportation and
operating costs calculated on a per boe basis. Operating netback does
not have a standardized measure prescribed by IFRS, and therefore, may
not be comparable with the calculations of similar measures for other

Second Quarter Financial and Operating Highlights

-- Production averaged 2,319 boe/d, representing a 31% increase from the
same three-month period a year ago with approximately 400 boe/d of
production being shut-in during the period due to scheduled plant
-- Crude oil and NGLs average production of 1,029 boe/d rose to 44% of
total corporate production, which is up 82% from the second quarter of
2010 and 23% from the first quarter of 2011.
-- Operating netbacks totaled $31.54/boe, a 46% and 19% increase from the
same period last year and the first three months of 2011, respectively.
-- Funds flow from operations grew to $5.5 million, representing a 133%
increase from the second quarter of 2010 and a 42% improvement from the
first quarter of 2011.
-- Exited the period with a working capital deficiency of $45.6 million,
down 11% from year-end.
-- Increased our operating bank line to $60.0 million.
-- Capital expenditures totaled $7.7 million, the majority of which were
allocated to completion activities as no wells were drilled during the
second quarter.
-- Successfully completed our second horizontal Montney natural gas well in
the Sinclair/Glacier area, which tested at a restricted rate of 6.7

Operations Review - Liquids FocusDuring the second quarter of 2011, production averaged 2,319 boe/d despite approximately 400 boe/d shut-in during the period due to scheduled plant turnarounds. Crude oil and NGLs production increased to 1,029 boe/d, which represents 44% of total corporate production and is up 82% from the same period last year and 23% from the prior quarter, is a result of the Company's continued focus on increasing liquids production through its operations program. Operating costs were down 16% from the same period last year to $11.21/boe and operating netbacks of $31.54/boe were up $9.95/boe or 46% from the second quarter of 2010 as a result of cost reductions, higher liquids prices and the resulting higher netbacks associated with the increased liquids production. Production at the beginning of August was approximately 2,600 boe/d (41% oil and NGLs) with approximately 130 boe/d of natural gas production still shut-in at Sexsmith due to spring breakup turnarounds and a further 400 boe/d is behind pipe waiting on tie-in operations to be completed.In the Sinclair/Glacier area of Alberta and as a follow-up to our 2010 horizontal Montney gas discovery that tested at a restricted rate of approximately 8.0 mmcf/d, Artek successfully completed its second horizontal Montney gas well (50% production working interest). The well was drilled to a total measured depth of 4,400 metres in the first quarter of 2011 and subsequently completed following breakup with ten out of a planned 14-stage fracture stimulation program using nitrogen foam frac technology. After a 216-hour clean up test period and a 22-hour single point flow test, the well flowed at a restricted rate of 6.7 mmcf/d (10% nitrogen) at a flowing pressure of 1,065 PSI (7,342 kPaG). Tie-in operations have been delayed by wet weather, but are substantially complete, and the well is expected to be producing by mid-August. The two successful horizontal tests validate management's belief in the development potential for this play on Company lands where it has mapped up to 18 Upper Montney horizontal locations and more than 16 horizontal locations for the Lower Montney.Following up on our Company's success at Sinclair in the Montney and earlier success in the Upper Cretaceous gas and liquids plays where in 2010 Artek drilled a horizontal well that tested 5.3 mmcf/d of liquids rich gas, the Company recently closed an acquisition of 17 gross sections of land in British Columbia adjacent to Sinclair. We believe the lands are potentially prospective for Montney, Nikanassin, Bluesky and Upper Cretaceous gas and liquids. The lands are proximal (with-in two to twelve miles) to our three successful horizontal tests at Sinclair and include 11.5 gross (7.7 net) sections of Montney rights, 11 gross (2.5 net) sections of Upper Cretaceous rights and establish a beachhead for these British Columbia plays for Artek. Artek looks forward to reporting on our plans for these lands in future corporate communications.In the Inga area of British Columbia, the Company is drilling out the horizontal leg on the first of three consecutive horizontal wells following up on its liquids-rich Doig discoveries that tested approximately 1,895 boe/d (1,100 bbls/d condensate) and 2,040 boe/d (1,400 bbls/d condensate) in January and March of this year. Weather had delayed the operation approximately two weeks, and as a result, the well is now expected to be rig released on or about the middle of August with completion operations to commence late in the month. The well is testing a relatively smaller Doig feature on third party lands and is planned for a relatively shorter 700-metre horizontal lateral. The second and third horizontal wells of the summer program are expected to be drilled back-to-back with 1,100 to 1,400 metre laterals in late August and September and completed consecutively towards the latter part of October.Artek's two existing producing horizontal wells (60% working interest) at Inga, after being shut-in throughout June for a scheduled plant turnaround at the Spectra McMahon facility, are utilizing full capacity at our Company operated facility and currently producing at a total gross sales rate of between 1,500 to 1,600 boe/d (approximately 41% is condensate or 600 to 650 bbls/d, which is consistent with expectations). Facility expansion operations at Inga are anticipated to be completed by mid-October and we expect to be able to process up to 16 mmcf/d of gross natural gas volumes and the associated liquids through our operated facility. In the immediate area, Artek holds interests in approximately 25 gross (15 net) sections of land, the majority of which the Company operates with an additional three sections under option through the farm-in commitment well that we are currently drilling. We have mapped up to 39 gross (22 net) horizontal drilling locations on our acreage position in the area.We are pleased with the early results achieved from our 2011 liquids focused capital program. Despite extended spring breakup conditions, we still anticipate meeting our previously released 2011 annual production guidance of 2,400 to 2,550 boe/d and exiting the year at approximately 2,900 to 3,100 boe/d. We look forward to reporting the results of our ongoing activities in the next interim report.ADVISORIESForward Looking Statements: This document contains forward-looking statements. Management's assessment of future plans and operations, production estimates and forecasts for 2011 average and exit production, initial production rates, drilling plans, timing of drilling and tie-in of wells, periods in which certain wells may be shut-in, mapping of additional locations and prospectivity of newly acquired lands, the effect of plant turnarounds and outages, productive capacity of new wells, capital expenditures and the nature and timing of these expenditures, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, the inability to fully realize the benefits of the acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward looking statements. Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although Artek 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 the Company can give no assurance that such expectations will prove to be correct.In addition to other factors and assumptions which may be identified in this document and other documents filed by the Company, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which Artek operates; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; anticipated similiarities between wells drilled at Sinclair and our newly acquired lands adjacent thereto; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; Artek's ability 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 or exploration; the timing and costs of pipeline, storage and facility construction and expansion; the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and Artek's ability to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Company's website (www.artekexploration.com). Furthermore, the forward looking statements contained in this document are made as at the date of this document and the Company does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.BOE Conversions: Barrel of oil equivalent ("BOE") amounts may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of one tonne of sulphur to one barrel and six thousand cubic feet of natural gas to one barrel. This conversion ratio of six thousand cubic feet of natural gas to one barrel is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.Artek is a crude oil and natural gas exploration, development and production company headquartered in Calgary, Alberta, Canada. Artek's shares trade on the TSX under the symbol "RTK".