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Painted Pony Petroleum Provides Operations Update on Montney Gas and Light Oil Projects

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CALGARY, ALBERTA -- (Marketwire) -- 03/27/13 -- Painted Pony Petroleum Ltd. ("Painted Pony" or the "Company") (TSX VENTURE: PPY) is pleased to provide the following operations update and activity outlook:

HIGHLIGHTS

Operating highlights to-date during the first quarter of 2013 include:

Townsend/Kobes:

-- the Company recently completed, and is currently production testing, two 100% working interest wells in the Townsend area on lands acquired in December 2012;-- Painted Pony's third Lower Montney horizontal well drilled on the Townsend block flowed at a peak and final 24-hour rate of 8.3 MMcf/d at an average flowing casing pressure of 1,915 psi. Gas analyses indicate a total liquids content of 109 bbl/MMcf, including ethane, which translates to an initial combined test rate on a boe-equivalent basis of 2,071 boe/d; and-- Painted Pony's first Upper Montney horizontal well drilled on the Townsend block flowed at a peak and final 24-hour rate of 6.6 MMcf/d at an average flowing casing pressure of 1,118 psi. Gas analyses indicate a total liquids content of 147 bbl/MMcf, including ethane, which translates into an initial combined test rate on a boe-equivalent basis of 1,843 boe/d.



Gundy/Cameron:

-- finished completion operations and commenced production testing on 2 (0.4 net) non-operated Montney wells at Gundy;-- the first Gundy well, also Painted Pony's first Middle Montney horizontal well drilled on this block, flowed at a peak and final 24- hour rate of 13.9 MMcf/d at an average flowing tubing pressure of 1,413 psi. This well is the best Middle Montney test to date within the Company's British Columbia Montney project; and-- the second Gundy well, an Upper Montney horizontal well, flowed at a peak 24-hour rate of 6.2 MMcf/d at an average flowing tubing pressure of 673 psi.



Blair/Cypress:

-- commenced drilling operations on the first of two 100% working interest Upper Montney horizontal wells situated on the 91-F development pad at Blair; this drill program is testing the potential for increased gas liquids content along the northeastern edge of the Blair block; and-- repairs to the Cypress pipeline have now been completed; production of approximately 3 MMcf/d from the Cypress area is expected to re-commence in April 2013.



Light Oil:

-- the first well drilled into Painted Pony's Viking light oil project at Corbett, Alberta tested 31 degree API oil; the Company recently acquired 12 (12 net) additional sections of undeveloped land on this play, bringing the Company's total to 18 (18 net) sections (11,520 acres) all at 100% working interest; and-- participated in the drilling and successful completion of the first 2- mile horizontal development well on the Company's Bakken light oil project at Flat Lake, Saskatchewan; this well has recently been placed on production.



Production:

-- as previously reported, field-estimated sales volumes during the first two months of 2013 averaged approximately 8,200 boe/d (78% weighted to gas).



MONTNEY GAS PROJECTS

Painted Pony continues to pursue the development and expansion of its Montney gas assets in northeastern British Columbia. To-date during the first quarter of 2013, the Company has drilled or is currently drilling a total of 5 (2.6 net) Montney horizontal wells. Eight (6.4 net) Montney wells have been or are in the process of being completed and placed on production test.

Townsend (Kobes):

Painted Pony has recently commenced production testing on 2 (2.0 net) horizontal wells (one Upper and one Lower Montney) on the A-11-J/94-B-09 pad, in-line to a third party gas processing facility. These wells were recently drilled on the Company's new Townsend acreage, which was acquired in December 2012 (please refer to press release dated December 21, 2012). The Upper Montney well represents the Company's first horizontal well into the Upper Montney at Townsend; the Lower Montney well is the third horizontal well into this horizon at Townsend. In addition, both wells have been completed using a ball-drop packer-style system, rather than perf-and-plug technology. Operating advantages of the ball-drop system include increased completion stages per well (typically 17 - 19 stages, as opposed to 8 - 10 stages in the perf-and-plug style), plus a potential cost reduction of up to $400,000 per well.

During a five day test, the Lower Montney well at Townsend 11-J flowed at a peak and final 24-hour rate of 8.3 MMcf/d at an average flowing casing pressure of 1,915 psi., and at an average wellhead rate of 7.2 MMcf/d at a flowing casing pressure of 2,116 psi. Gas analysis indicates a total liquid content (condensate plus natural gas liquids) from this zone of 109 bbl/MMcf. The C3-plus content is 50 bbl/MMcf. On a total boe combined basis, this well tested at a peak rate of 2,071 boe/d. Actual future production from the well may vary from this total boe volume, depending on facility restrictions, if any, and actual processing plant liquids yield.

During a four day test, the Upper Montney well at Townsend 11-J flowed at peak and final 24-hour rate of 6.6 MMcf/d at an average flowing casing pressure of 1,118 psi., and at an average wellhead rate of 6.3 MMcf/d at a flowing casing pressure of 1,270 psi. Gas analysis indicates a total liquid content (condensate plus natural gas liquids) from this zone of 147 bbl/MMcf. The C3-plus content is 74 bbl/MMcf. On a total boe combined basis, this well tested at a peak rate of 1,843 boe/d. Actual future production from the well may vary from this total boe volume, depending on facility restrictions, if any, and actual processing plant liquids yield.

Painted Pony is encouraged by initial well performance from a ball-drop system. Test rates from the recent Lower Montney well are higher than the observed rates from an adjacent Lower Montney horizontal well drilled from the same pad in late 2011, which was completed using the plug-and-perf system.

Gundy (Cameron):

Painted Pony is participating in the current production testing of 2 (0.4 net) wells (one Upper and one Middle Montney) on the C-68-J/94-B-09 pad. The Middle Montney well represents the Company's first horizontal well into the Middle Montney at Gundy.

During a four day test, the Middle Montney well flowed at a peak and final 24-hour rate of 13.9 MMcf/d at an average flowing tubing pressure of 1,413 psi., and at an average wellhead rate of 13.8 MMcf/d at a flowing tubing pressure of 1,540 psi. These results represent the best Middle Montney test across the Company's entire British Columbia Montney project area.

During a ten day test, the Upper Montney well flowed at a peak 24-hour rate of 6.2 MMcf/d at an average flowing tubing pressure of 673 psi., and at an average wellhead rate of 6.0 MMcf/d at a flowing tubing pressure of 685psi. The most recent 24-hour rate was 5.8 MMcf/d at an average flowing tubing pressure of 873 psi.

Blair:

At Blair, Painted Pony has commenced the drilling of the first of two Upper Montney horizontal wells located on the new A-91-F/94-B-16 pad. Both of these wells are targeting the Upper Montney zone to test the potential for increased liquids content along the northeastern section of the Company's Blair acreage. These two wells will be drilled sequentially and completed immediately thereafter. Production test results are expected in the second quarter.

Cypress:

At Cypress, repairs to the gas gathering pipeline in which the Company has an interest have now been completed. Accordingly, Painted Pony plans to reactivate the Cypress area in April. It is expected that six 100% working-interest gas wells will re-commence production, with an anticipated initial volume of approximately 3 MMcf/d net to Painted Pony.

LIGHT OIL PROJECTS

Painted Pony continues to maintain an inventory of light oil opportunities, focusing on projects in southeastern Saskatchewan and central Alberta. To-date during the first quarter of 2013, the Company has participated in drilling 2 (1.1 net) oil-directed wells in Saskatchewan, including the Company's first 2-mile horizontal well into the Bakken Formation at Flat Lake. This 30% working interest well was drilled to a total depth of 5,168 metres and fracture stimulated across 46 stages. The well has recently been placed on production.

During January, Painted Pony completed and commenced testing of the Company's first exploratory discovery well on its Viking light oil play at Corbett, Alberta. During initial testing the well produced 31 degree API oil. Painted Pony has equipped the well for a sustained production test - results of this test are expected during the third quarter of 2013. The Company believes that the Corbett play may represent an analogous extension to the Viking production trends which are currently being developed by industry players at Redwater and Provost. The Company has recently acquired an additional 12 (12.0 net) sections of Crown mineral rights at Corbett, bringing its total undeveloped landholdings on this project to 18 (18.0 net) sections (11,520 acres).

PRODUCTION

During the first two months of 2013, Painted Pony's field-estimated sales averaged 8,200 boe/d, (weighted 78% to gas), an increase of 12% from average fourth quarter 2012 volumes of 7,289 boe/d (76% gas weighted).

Advisory

This news release contains certain forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "potential", "intend", "objective", "continuous", "ongoing", "encouraging", "estimate", "expect", "may", "will", "project", "should", or similar words suggesting future outcomes.

These forward-looking statements are based on numerous assumptions including but not limited to (i) drilling success; (ii) production; (iii) future capital expenditures; and (iv) cash flow from operating activities. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.

Forward-looking statements are based upon the opinions and expectations of management of the Company as at the effective date of such statements and, in some cases, information supplied by third parties. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from third parties is reliable, it can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements.

With respect to forward-looking statements contained in this document, Painted Pony has made a number of assumptions. The key assumptions underlying the aforementioned forward-looking statements include assumptions that: (i) commodity prices will be volatile throughout 2013; (ii) capital, undeveloped lands and skilled personnel will continue to be available at the level Painted Pony has enjoyed to date; (iii) Painted Pony will be able to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; (iv) Painted Pony will have sufficient financial resources with which to conduct the capital program; (v) the accuracy of geological and geophysical data and Painted Pony's interpretation of that data; (vi) production rates in 2013 are expected to show growth from 2012; (vii) that production from new wells will be substantially similar to production rates associated with existing wells in the vicinity of the Company's properties; (viii) the continued ability of the Company to generate internal cash flow and the availability of capital on acceptable terms; and (ix) the current tax and regulatory regime will remain substantially unchanged. Certain or all of the forgoing assumptions may prove to be untrue.

Certain information regarding Painted Pony set forth in this document, including management's assessment of Painted Pony's future plans and operations, number, type, timing and location of wells to be drilled and the planning and development of certain prospects, may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Painted Pony's control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and globally, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. Readers are cautioned that the foregoing list of factors is not exhaustive. Painted Pony's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. All subsequent and forgoing forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.

Additional information on these and other factors that could affect Painted Pony'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 Painted Pony's website (www.paintedpony.ca).

The forward-looking statements contained in this document are made as at the date of this news release and Painted Pony 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.

Certain natural gas volumes have been converted to barrels of oil equivalent ("boe") on the basis of six thousand cubic feet ("Mcf") to one barrel ("bbl"). 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. Given 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 Mcf:1bbl, utilizing a conversion ratio at 6 Mcf:1bbl may be misleading as an indication of value.

The well test results disclosed in this news release represent short-term results, which may not necessarily be indicative of long-term well performance or ultimate hydrocarbon recovery therefrom.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.



Contacts:
Painted Pony Petroleum Ltd.
Patrick R. Ward
President & CEO
(403) 475-0440
(403) 238-1487 (FAX)

Painted Pony Petroleum Ltd.
Joan E. Dunne
Vice President, Finance & CFO
(403) 475-0440
(403) 238-1487 (FAX)

Painted Pony Petroleum Ltd.
300, 602 - 12 Ave SW
Calgary, AB T2R 1J3



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