Arsenal Energy Inc. releases operational update

Tuesday, Jan 15, 2013

Arsenal Energy Inc. ("Arsenal" or the "Company") (TSX:AEI) (PINKSHEETS:AEYIF) is pleased to announce that during December 2012, field production averaged approximately 4,100 boe/d. In addition, approximately 500 boe/d of North Dakota Bakken production was behind pipe and is expected to be placed on production in Q1 2013. Bakken differentials have narrowed to approximately $2.50 per barrel compared to WTI. In North Dakota, Arsenal plans to drill 2 (.33 net) wells in Q1 2013, 2 (1.25 net) wells in Q2 2013, and 3 (.23 net) wells in Q3 2013.

Arsenal's initial well at Princess continues to produce in excess of 180 boe/d after 90 days. During Q4 2012 Arsenal shot additional 3D seismic and purchased additional acreage. The Company has now identified approximately 20 drilling locations on its Princess lands. Arsenal plans to drill 3 wells at Princess in Q1 2013, and 7 wells starting after spring breakup.

Arsenal expects its North Dakota properties to generate cash flow in excess of capital requirements starting in late 2013. In anticipation of that eventuality, the Company together with its advisors is analyzing efficient alternatives by which excess cash flow may be returned to shareholders.

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Source: Marketwire

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