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Artek Exploration Ltd.- Reports Significant 2012 Reserves Growth

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CALGARY, ALBERTA -- (Marketwire) -- 03/07/13 -- Artek Exploration Ltd. (TSX: RTK) of Calgary, Alberta ("Artek" or the "Company") is pleased to provide an operational update and announce the results of its independent reserve evaluation for the year ended December 31, 2012 (the "Sproule Report") as prepared by Sproule Associates Limited ("Sproule").

2012 HIGHLIGHTS

-- Increased Proved plus Probable reserves year over year by 30% to 29.6 million boe from 22.9 million boe or 34% after the sale of 0.7 million boe at Leduc Woodbend in January 2012, and Proved reserves increased by 33% to 17.1 million boe from 12.9 million boe.-- Increased Proved plus Probable Oil and NGLs reserves by 47% to 7.3 million boe from 5.0 million boe even after disposing of 0.7 million boe during the year. Oil and condensate comprise 65% of the oil and NGLs proved and probable reserves.-- Achieved all in finding, development and acquisition ("FD&A") costs of $10.96 per boe on Proved plus Probable reserves and $13.39 per boe on Proved reserves including future development costs ("FDC"). Finding and development ("F&D") costs including FDC but excluding acquisitions and dispositions were $12.37 per boe on a Proved plus Probable basis and $15.84 per boe on a Proved basis.-- Achieved a recycle ratio of 2.3 times based on Proved and Probable FD&A of $10.96 per boe and Artek's estimated fourth quarter 2012 operating netback of $25.47 per boe.-- Increased Proved plus Probable reserve value year over year by 17% to $257.4 million from $219.8 million using a 10% discount factor before tax, despite a decrease of 7% in Sproule's forecast oil pricing in the near three year period. The Proved plus probable reserve value increase is 28% when compared to the December 31, 2011 proved plus probable reserve value after the January 2012 Leduc Woodbend sale of 0.7 million boe.-- Replaced 2012 production of 1,013 mboe by 8.4 times with Proved plus Probable reserve additions and 5.6 times with Proved reserve additions.-- Specifically at Inga and Fireweed, proved plus probable reserves increased by 145% to 15.4 million boe as compared to the previous year and proved plus probable reserve value also increased 65% to $151.4 million using a 10% discount factor before tax.-- Estimated capital expenditures for the year ended December 31, 2012 were approximately $59.9 million, including approximately $6.7 million on undeveloped land acquisitions for new exploration plays in the Inga and Peace River Arch areas. Including a $19.4 million disposition of 218 boe/d at Leduc Woodbend, the Company's estimated net expenditures for the year were $40.5 million.-- Net asset value at December 31, 2012 increased to an estimated $251.0 million or $4.51 per diluted share.



The following are reserves and operational highlights, details of which are provided later in the press release.

Gross Reserves at December 31 2012 2011 % change--------------------------------------------------------------------------------------------------------------------------------------------------------Proved Developed Producing (mboe) 4,321 3,816 13Proved Reserves (mboe) 17,053 12,853 33Proved Plus Probable Reserves (mboe) 29,639 22,881 30--------------------------------------------------------------------------------------------------------------------------------------------------------Proved FD&A including change in FDC ($/boe) (1) (2) 13.39 18.14 (26)Proved Plus Probable FD&A including change in FDC ($/boe) (1) (2) 10.96 16.83 (35)Proved FD&A excluding change in FDC ($/boe) (1) (2) 7.77 10.04 (23)Proved Plus Probable FD&A excluding change in FDC ($/boe) (1) (2) 5.21 8.55 (39)--------------------------------------------------------------------------------------------------------------------------------------------------------Fourth quarter Operating Netback ($/boe) (1) 25.47 30.24 (16)Proved Plus Probable Recycle Ratio (1) 2.3 1.8 28----------------------------------------------------------------------------2012 Wells Drilled Gross Net % Total----------------------------------------------------------------------------Crude Oil 6 3.6 46Natural gas 7 4.2 54----------------------------------------------------------------------------Total 13 7.8 100----------------------------------------------------------------------------(1) Certain financial and operating information included in this press release for the quarter and year ended December 31, 2012, such as finding and development costs, production information, operating netbacks, recycle ratios and net asset value calculations are based on unaudited financial results for the year ended December 31, 2012 and are subject to the same limitations as discussed under forward-looking statements outlined at the end of this release. These estimate amounts may change upon completion of the audited financial statements for the year ended December 31, 2012 and those changes may be material.(2) Artek calculates finding, development and acquisition costs which incorporate the costs and associated reserve additions and changes in future development costs related to acquisitions and dispositions. Since acquisitions and divestitures have had a significant impact on Artek's annual reserve replacement costs, Artek believes that FD&A costs provide a meaningful portrayal of Artek's cost structure.



AREA UPDATE

At Inga/Fireweed, the Company increased proved plus probable reserves by 145% to 15.4 million boe as compared to the previous year and value on a NPV10 BT basis increased 65% to $151.4 million. The Sproule Report assigned 24 undeveloped horizontal locations in Inga and three at Fireweed. Company mapping supports an additional 34 unbooked potential horizontal locations at Inga and Fireweed assuming a drilling density of approximately three wells per mapped section, although it is possible given the significant percentage of liquids (condensate) in the reservoir that the Inga property will require a higher drilling density to increase the recoverable reserves net to the Company. Furthermore the Sproule Report assigned only one undeveloped location for the Montney formation. In addition, the Company continues to add to its land holdings investing approximately $6.3 million in 2012 to acquire an additional 34,958 gross (20,338 net) acres of exploratory lands in the area that it believes are prospective. Artek now holds over 70 sections (41 net) and 80 sections (48 net) of Doig and Montney mineral rights respectively in the Inga/Fireweed area.

The Company has begun its 2013 Inga horizontal well program that will see it drill up to 10 gross (6.1 net) wells targeting condensate and oil with associated natural gas. Six (3.6 net) of the ten wells planned will focus on Artek's condensate rich Doig play. Up to 4 (2.5 net) horizontal wells are considered to be exploratory, targeting new Doig pools and the Montney formation which the Company believes is liquids rich. Depending on weather, Artek anticipates that it will have 2 to 3 Doig and up to 2 Montney horizontal wells or a total of 4 to 5 wells drilled prior to spring break-up in the Inga area. The Company's first two Inga wells are at various stages of the completion operations and the third has reached total depth with a fourth well expected to spud imminently.

At the Company's producing oil property at Leduc Woodbend, the Sproule Report assigned proved plus probable reserves of approximately 1.5 million boe and a NPV10 BT value of approximately $44.7 million after the disposition of approximately 0.7 million boe for $19.4 million early in 2012. Artek has drilled three (1.2 net) vertical development wells targeting Glauconitic oil during the first quarter of the year and they are at various stages of completion. Artek assumed operatorship of the property on December 1, 2012.

In the Peace River Arch (PRA) area, the Sproule Report assigned proved plus probable reserves of 1.1 million boe with a NPV10 BT value of approximately $8.2 million. A 100% W.I. exploration horizontal well targeting shallow Triassic oil is planned at Mulligan in the PRA area of Alberta. Artek has over 55 sections of land in what it maps as the oil prone window for the Triassic.

In the Deep Basin area, the Sproule Report assigned proved plus probable reserves of approximately 11.6 million boe and a NPV10 BT value of $52.4 million.

For 2013, Artek is planning capital expenditures of $55 to $58 million based upon the drilling of approximately 14 to 15 gross (8 to 9 net) wells. The capital program will be weighted 100% to projects targeting oil and condensate with associated natural gas.

RESERVES

The reserves data set forth below is based upon an independent reserves assessment and evaluation prepared by Sproule with an effective date of December 31, 2012 (the "Sproule Report"). The following presentation summarizes the Company's crude oil, natural gas liquids and natural gas reserves and the net present values before income tax, of future net revenue for the Company's reserves using forecast prices and costs based on the Sproule Report. The Sproule Report has been prepared in accordance with the standards contained in the COGE Handbook and the reserve definitions contained in NI 51-101.

All evaluations and reviews of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.

See "Information Regarding Disclosure on Oil and Gas Reserves and Operational Information" for additional cautionary language, explanations and discussions and "Forward Looking Information and Statements" for a statement of principal assumptions and risks that may apply.

Reserves Summary

The Company's total gross proved reserves increased by 33% in 2012 to 17.1 million boe and proved plus probable reserves increased by 30% to 29.6 million boe.

The following table provides summary reserve information based upon the Sproule Report and using the published Sproule (2012-12-31) price forecast.

-------------------------------------------------------------------------------------------------------------------------------------------------------- Oil (1) Natural gas liquids---------------------------------------------------------------------------- Gross (2) Net (3) Gross (2) Net (3) (Mbbl) (Mbbl) (Mbbl) (Mbbl)Proved Producing 1,142 876 510 405 Non-producing 30 29 26 20 Undeveloped 1,339 1,080 1,448 1,153 ----------------------- -----------------------Total proved 2,511 1,984 1,983 1,578Probable 1,704 1,344 1,125 890 ----------------------- -----------------------Total proved plus probable 4,215 3,328 3,108 2,467---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Barrels of oil Natural gas equivalent---------------------------------------------------------------------------- Gross (2) Net(3) Gross (2) Net(3) (Mmcf) (Mmcf) (Mboe) (Mboe)Proved Producing 16,019 12,652 4,321 3,389 Non-producing 1,910 1,590 374 313 Undeveloped 57,430 45,809 12,358 9,867 ----------------------- -----------------------Total proved 75,359 60,052 17,053 13,569Probable 58,539 45,735 12,586 9,857 ----------------------- -----------------------Total proved plus probable 133,898 105,787 29,639 23,426--------------------------------------------------------------------------------------------------------------------------------------------------------Notes:(1) Reflects light and medium crude oil, other than 76 mbbl of proved and 230 mbbl of proved plus probable gross heavy oil reserves.(2) "Gross" reserves means Artek's working interest (operating and non- operating) share before deduction of royalties and without including any royalty interest of the Company.(3) "Net" reserves means Artek's working interest (operated and non- operated) share after deduction of royalty obligations, plus Artek's royalty interest in reserves.(4) Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil.(5) May not add due to rounding.



Reserves Values

The estimated before tax future net revenues associated with Artek's reserves effective December 31, 2012 and based on the published Sproule (2012-12-31) future price forecast are summarized in the following table:

-------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted At: ----------------------------------------------- -----------------------------------------------($ Thousands) Undiscounted 5% 10% 15% 20%----------------------------------------------------------------------------Proved Producing 93,385 81,147 71,489 64,033 58,200 Non-producing 6,151 4,313 3,098 2,271 1,691 Undeveloped 179,672 122,774 87,431 64,022 47,763 ------------ ----------- ----------- ----------- -----------Total proved 279,208 208,235 162,018 130,326 107,654Probable 252,658 147,851 95,339 65,533 47,047 ------------ ----------- ----------- ----------- -----------Total proved plus probable 531,866 356,085 257,357 195,859 154,702--------------------------------------------------------------------------------------------------------------------------------------------------------Notes:(1) The estimated future net revenues are stated before deducting future estimated site restoration costs and are reduced for estimated future abandonment costs and estimated capital for future development associated with the reserves.(2) Prior to provision of income taxes, interest, debt service charges and general and administrative expenses. It should not be assumed that the undiscounted and discounted future net revenues estimated by Sproule represent the fair market value of the reserves.(3) Net present value after income taxes for total proved reserves is $148.0 million and for total proved plus probable reserves is $218.0 million based on a discount factor of 10%.(4) May not add due to rounding.



Reserves Reconciliation

-- The following summary reconciliation of Artek's gross reserves compares changes in the Company's reserves as at December 31, 2012 to the reserves as at December 31, 2011 based on the Sproule (2012-12-31) future price forecast. Proved plus Probable reserves increased year over year by 30% to 29.6 million boe from 22.9 million boe, despite a prudent technical revision downward for mainly commodity price related reasons of approximately 1.4 million boe of Probable reserves from its predominantly dry natural gas projects. Proved reserves increased by 33% to 17.1 million boe from 12.9 million boe. The increases are net of a disposition of 420,000 boe Total Proved and 689,000 boe of Total Proved plus Probable reserves from its Leduc Woodbend property.-------------------------------------------------------------------------------------------------------------------------------------------------------- Total Proved Total Proved Probable plus Probable---------------------------------------------------------------------------- (Mboe) (Mboe) (Mboe)Balance December 31, 2011 12,853 10,029 22,881 Extensions and improved recoveries 120 3,025 3,145 Infill 5,450 1,267 6,717 Technical revisions 152 (1,443) (1,291) Discoveries - - - Acquisitions - - - Dispositions (420) (269) (689) Economic factors (88) (23) (111) Production (1,013) - (1,013)----------------------------------------------------------------------------Balance December 31, 2012 17,053 12,586 29,639--------------------------------------------------------------------------------------------------------------------------------------------------------Notes:(1) "Gross" reserves means Artek's working interest (operating and non- operating) share before deduction of royalties and without including any royalty interest of the Company.(2) May not add due to rounding.



Capital Efficiency Highlights - 2012

The efficiency of the Company's capital program for the year ended December 31, 2012 is summarized below. NI 51-101 specifies how finding and development ("F&D") costs should be calculated if they are reported. Essentially NI 51-101 requires that the exploration and development costs incurred in the year along with the change in estimated future development costs be aggregated and then divided by the applicable reserve additions. The calculations specifically exclude the effects of acquisitions and dispositions on both reserves and costs. By excluding the effects of acquisitions and dispositions, Artek believes that F&D costs do not fully reflect Artek's ongoing reserve replacement costs. Since acquisitions and dispositions can have a significant impact on Artek's annual reserve replacement costs, Artek believes that finding, development and acquisition ("FD&A") costs provide a meaningful portrayal of Artek's cost structure.

Artek achieved all in FD&A costs of $10.96 (2011 - $16.83) per boe on Proved plus Probable reserves and $13.39 (2011 - $18.14) per boe on Proved reserves including future development costs ("FDC"). FD&A costs for the last three years averaged $13.26 per boe on a Proved and Probable basis and $16.80 on Proved reserves including FDC. F&D costs including FDC but excluding acquisitions and dispositions were $12.37 (2011 - $16.83) per boe on a Proved plus Probable basis and $15.84 (2011 - $18.14) per boe on a Proved basis. F&D costs including FDC but excluding acquisitions and dispositions for the last three years averaged $12.70 per boe on a Proved and Probable basis and $16.15 on Proved reserves including FDC.

---------------------------------------------------------------------------- Proved plus Proved Probable----------------------------------------------------------------------------Exploration and Development expenditures ($000's) (note 2) 59,942 59,942Acquisitions, net of dispositions ($000's) (19,444) (19,444)Change in future development capital ($000's) - Exploration and Development 29,321 44,704 - Acquisitions, net of dispositions - - ------------------------- 69,819 85,202 -------------------------Reserve additions after revisions (Mboe) - Exploration and Development 5,634 8,460 - Acquisitions, net of dispositions (420) (689) ------------------------- 5,214 7,771 ------------------------- -------------------------Finding & Development Costs ($/boe) (note 1) 15.84 12.37 -------------------------Finding, Development & Acquisition Costs ($/boe) (note 2)Exploration and development 15.84 12.37Acquisitions, net of dispositions (46.30) (28.22) -------------------------Total FD&A 13.39 10.96 -------------------------Reserves Replacement Ratio (note 3) 5.6 8.4----------------------------------------------------------------------------Notes:(1) The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.(2) 2012 figures include information based on estimated unaudited financial results that may change on the completion of the audited financial statements.(3) Calculated by dividing the 2012 reserve additions by the 2012 total production.



NET ASSET VALUE

The following table provides management's calculation of Artek's estimated net asset value at December 31, 2012 based on the estimated future net revenues associated with Artek's proved plus probable reserves before income tax and discounted at 10% as presented in the Sproule Report and an independent third party evaluation of Artek's undeveloped land.

-------------------------------------------------------------------------------------------------------------------------------------------------------- ($ thousands)----------------------------------------------------------------------------Proved plus probable reserves - discounted at 10% 257,357Undeveloped Land (note 1) 35,559Estimated working capital deficiency as at December 31, 2012 (notes 2 & 3) (48,897)Proceeds from dilutive stock options 7,008----------------------------------------------------------------------------Net asset value 251,027Diluted Common shares outstanding (thousands) 55,608----------------------------------------------------------------------------Net asset value per share 4.51--------------------------------------------------------------------------------------------------------------------------------------------------------Notes:(1) Based on an independent land evaluation. See "Land Holdings".(2) Figures include information based on unaudited financial results that may change.(3) Working capital deficiency includes an estimate of the Company's accounts receivable less accounts payable and accrued liabilities and bank debt and derivative instruments as at December 31, 2012.



LAND HOLDINGS

The Company retained an independent third party to assess the fair market value of the Company's undeveloped land holdings as at December 31, 2012. The evaluation was completed by Seaton-Jordan & Associates Ltd. using industry activity levels, third party transactions and land acquisitions that occurred in proximity to Artek's undeveloped lands during the past year. The independent land evaluation report indicates a value of $35.6 million. Artek increased its net undeveloped land holdings by approximately 12 percent in 2012.

A summary of the Company's land holdings at December 31, 2012 is outlined below:

--------------------------------------------------------------------------------------------------------------------------------------------------------(acres) Developed Undeveloped Total Gross Net Gross Net Gross Net----------------------------------------------------------------------------Alberta 32,248 22,160 75,743 66,020 107,992 88,181British Columbia 27,980 14,681 93,997 54,826 121,977 69,507----------------------------------------------------------------------------Total 60,229 36,841 169,740 120,846 229,969 157,687--------------------------------------------------------------------------------------------------------------------------------------------------------



Artek anticipates releasing its 2012 year end audited financial statements on March 21, 2013.

CAUTIONARY STATEMENTS

Unaudited financial information

Certain financial and operating information included in this press release for the quarter and year ended December 31, 2012, such as finding and development costs, production information and net asset value, are based on estimated unaudited financial results for the quarter and year then ended, and are subject to the same limitations as discussed under Forward Looking Information set out below. These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2012 and changes could be material.

Information Regarding Disclosure on Oil and Gas Reserves and Operational Information

Our oil and gas reserves statement for the year ended December 31, 2012, which will include complete disclosure of our oil and gas reserves and other oil and gas information in accordance with NI 51-101, will be contained within our Annual Information Form which will be available on our SEDAR profile by March 31, 2013 at www.sedar.com. In relation to the disclosure of estimates of reserves and reserve values relating to individual properties that represent less than all of the Company's reserves, such estimates may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.

In relation to the disclosure of net asset value ("NAV"), the NAV table shows what is normally referred to as a "produce-out" NAV calculation under which the current value of the Company's reserves would be produced at forecast future prices and costs and do not necessarily represent a "going concern" value of the Company. The value is a snapshot in time and is based on various assumptions including commodity prices and foreign exchange rates that vary over time. It should not be assumed that the future net revenues estimated by Sproule represent the fair market value of the reserves, nor should it be assumed that Artek's estimated value of its undeveloped land holdings represent the fair market value of the lands.

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 recognition of significant additional reserves under the heading "Reserves"; the volumes and estimated value of Artek's oil and gas reserves; the life of Artek's reserves; the volume and product mix of Artek's oil and gas production; future oil and natural gas prices and Artek's commodity risk management programs; future liquidity and financial capacity; the Company's 2013 capital expenditure plans; management's assessment of future plans and results from operations and operating metrics; future costs, expenses and royalty rates; future interest costs; the exchange rate between the $US and $Cdn; future hedging activities; future development, exploration, acquisition and development activities and related capital expenditures; the number of wells to be drilled and completed and related production expectations; the amount and timing of drills, completions and capital projects; and the ability to adequately finance the same; operating costs; management's belief in the prospectivity of exploratory lands at Inga; and the total future capital associated with development of reserves and resources.

The recovery and reserve estimates of Artek's reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves or resources with be recovered. In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of Artek 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 Artek 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 and offsetting wells; the continued and timely development of infrastructure in areas of new production; continued availability of debt and equity financing and cash flow to fund Artek's current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which Artek operates; the timely receipt of any required regulatory approvals; the ability of Artek 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 Artek has an interest in to operate the field in a safe, efficient and effective manner; the ability of Artek 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 Artek 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 Artek operates; and the ability of Artek to successfully market its oil and natural gas products.

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 Artek'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 Artek or by third party operators of Artek's properties, increased debt levels or debt service requirements; inaccurate estimation of Artek's oil and gas reserve and resource volumes; limited, unfavourable 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 Artek's public disclosure documents, (including, without limitation, those risks identified in this news release and Artek's Annual Information Form).

The forward-looking information and statements contained in this news release speak only as of the date of this news release, and Artek 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 required by applicable securities laws.

BOE Conversions: Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be misleading as an indication of value.

Artek is a Calgary, Alberta based oil and gas exploration, development and production company whose shares are traded on The Toronto Stock Exchange under the trading symbol "RTK".



Contacts:
Artek Exploration Ltd.
Darryl Metcalfe
President and Chief Executive Officer
403.296.4799

Artek Exploration Ltd.
Darcy Anderson
Vice President, Finance and Chief Financial Officer
403.296.4775



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