Progress Energy Announces 2012 Budget

Oct 31, 2011

Capital investment focused on North Montney growth

CALGARY, Oct. 31, 2011 /CNW/ – (TSX – PRQ) – Progress Energy Resources Corp. (“Progress” or the “Company”)
announced, in advance of its Annual Investor Day, that it plans to
invest approximately $465 million in 2012 to continue the development
of its North Montney resource base, initiate the first phases of
development on its joint venture lands with PETRONAS, and pursue its
light oil opportunities in the Deep Basin.

“In 2011 we executed on a number of key initiatives that have
strengthened our balance sheet while attracting a strong joint venture
partner, PETRONAS, to accelerate development of our North Montney
assets and provide expertise in LNG development and market access,”
said Michael Culbert, President and Chief Executive Officer of
Progress.  “The focus of our 2012 capital program will continue to be
on our North Montney resource base and expansion of our light oil play
in the Deep Basin.”

2012 Capital Program

For 2012, Progress will have a capital investment program of
approximately $800 million including the North Montney Joint Venture
(“NMJV”) or $465 million net to the Company.  Approximately $380
million will be invested in Progress’ North Montney program, $50
million in the NMJV, including capital for the detailed feasibility
study of the LNG project, and $35 million in the Deep Basin targeting
the Company’s Dunvegan light oil play.  The Company anticipates
drilling approximately 35 to 40 horizontals on existing development
pods with another six to eight wells targeting delineation drilling on
its vast North Montney land holdings. Approximately 25 to 30 gross
wells are planned for the Company’s NMJV lands. In the Company’s
emerging Dunvegan light oil play, six to eight wells are expected to be
drilled.

Ten Montney Development Pods

  • Town South – The 50 million cubic feet per day (“mmcf”) facility is
    operating at capacity and enters into its maintenance phase heading
    into 2012.  The last of the Gundy area wells, which were feeding into
    this facility, will be directed to the new Gundy facility and a further
    seven to nine wells will be drilled in 2012 at Town South;
  • Kobes – An expansion of the Progress operated gas processing facility
    will be undertaken in 2012 to bring capacity to 50 mmcf per day.  Four
    to five wells are planned for 2012;
  • Town North – An additional two wells are planned for 2012 to fill the
    existing 25 mmcf per day processing facility;
  • Gundy – The gas processing facility is being expanded to 50 mmcf per day
    and eight to eleven wells are planned for 2012;
  • West Gundy – The Company’s newest pod development is on a 20 section,
    100 percent working interest block of land adjacent to Progress’ Kobes
    pod.  Plans for 2102 are to drill eight to twelve wells in this area
    and construct a 25 mmcf per day facility in the first quarter.;
  • Caribou – The third horizontal in this area will be completed with plans
    to move to full development in 2013;
  • Nig – This partner operated pod development is 25 kilometers to the east
    of Town and currently has one tested horizontal with three additional
    wells to be completed by the first quarter of 2012; and,
  • North Montney Joint Venture – 25 to 30 wells will be drilled at Altares,
    Lily and Kahta in 2012.

Production Targets

Progress expects to average 50,000 to 52,000 boe per day for 2012 and
exit at approximately 58,000 to 60,000 boe per day, implying growth of
approximately 15 to 20 percent on a per share basis.

Building Long-term Underlying Value

Over the past 10 years, we have established an enviable asset base in
two of the premier natural gas plays in North America. We have amassed
large contiguous land blocks in both the Foothills and Deep Basin
regions, both capable of generating strong returns on invested capital
in the current natural gas price environment.  As we have built our
asset position, we have concentrated on maintaining high working
interests and operatorship which allow us to control the cost and the
pace of development.  As well, our balance sheet has strengthened
substantially over the past year providing the flexibility to advance
our resource opportunities and add long-term value for shareholders.

Investor Day

Progress Energy will be hosting its Annual Investor Day  on Tuesday,
November 1, 2011 in Calgary and on Wednesday, November 2, 2011 in
Toronto.  The Calgary event will be webcast and interested investors
may listen in using the following link to the slides and
presentations.  Presentations will begin each day at 8:30 a.m. local
time.

Event URL: http://event.on24.com/r.htm?e=374091&s=1&k=B88CC7438A5C8FAC6E71B08D126B5923

Progress is a Calgary based, energy company primarily focused on natural
gas exploration, development and production in northwest Alberta and
northeast British Columbia. Common shares of Progress are listed on the
Toronto Stock Exchange under the symbol PRQ.

Forward Looking Statement Advisory

This press release and financial highlights table (collectively the
“press release”) contains forward-looking statements and
forward-looking information within the meaning of applicable securities
laws. The use of any of the words “expect”, “anticipate”, “continue”,
“estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”,
“believe”, “plans”, “intends”, “implies”, and similar expressions are
intended to identify forward-looking information or statements.  In
particular, forward looking statements in this press release include,
but are not limited to, statements with respect the effect of the
development pods on the Company’s natural gas production and reserve
base over the next five years; the pace of capital investment; the
focus of capital expenditures, the timing of capital spending and
the results therefrom; the focus of the Company’s exploration and
development efforts; expected capital spending program; potential
capital investment opportunities; potential drilling inventory; test
rates; expected sources of funding for capital program in the first
half of 2011; Progress’ planned asset disposition program including the
timing thereof and the use of proceeds received therefrom;
Prog2012,estimated 2011 exit production rate, 2012 average and exit
rate production; potential drilling credits and the advantages to be
received therefrom; effect of capital expenditures on production;
growth potential and rates of return of Progress’ assets; pace of
development; projections of future land holdings; and future drilling
plans and programs, the timing thereof and the results therefrom. 

The forward-looking statements and information are based on certain key
expectations and assumptions made by Progress, including expectations
and assumptions concerning prevailing commodity prices and exchange
rates, applicable credits, royalty rates and tax laws; future well
production rates; test rates and reserve and resource volumes; the
performance of existing wells; the success obtained in drilling new
wells; the sufficiency of budgeted capital expenditures in carrying out
planned activities; and the availability and cost of labour and
services and future operating costs.  Although Progress believes that
the expectations and assumptions on which such forward-looking
statements and information are based are reasonable, undue reliance
should not be placed on the forward looking statements and information
because Progress can give no assurance that they will prove to be
correct.

Since forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. These
include, but are not limited to, the risks associated with the oil and
gas industry in general such as operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the
uncertainty of reserve and resource estimates; the uncertainty of
estimates and projections relating to test rates, reserves, resources,
production, costs and expenses; health, safety and environmental risks;
commodity price and exchange rate fluctuations; marketing and
transportation; loss of markets; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to realize
the anticipated benefits of acquisitions; ability to access sufficient
capital from internal and external sources; changes in legislation,
including but not limited to tax laws, royalties and environmental
regulations.

Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release
in order to provide security holders with a more complete perspective
on the Company’s future operations and such information may not be
appropriate for other purposes.  The Company’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 that the Company will derive there from.  Readers
are cautioned that the foregoing lists of factors are not exhaustive. 
These forward-looking statements are made as of the date of this press
release and the company disclaims any intent or obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable securities laws.

Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that
could affect the operations or financial results of Progress are
included in reports on file with applicable securities regulatory
authorities and may be accessed through the SEDAR website (
www.sedar.com).  The forward-looking statements and information contained in this
press release are made as of the date hereof and Progress undertakes no
obligation to update publicly or revise any forward-looking statements
or information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.

Barrels of Oil Equivalent

“Boe” means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boe’s may be misleading, particularly if
used in isolation. A boe conversion ratio of 1 b
oe for 6,000 cubic feet of natural gas is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.