Passport Energy Ltd. Announces Hardy SE Saskatchewan Resource Assessment and Operational Update

Calgary, Alberta, October 4, 2012 - Passport Energy Ltd. [PPO: TSX.V] (“Passport” or the “Company”) is pleased to announce that a resource assessment of Passport’s land holdings in the Hardy Area of SE Saskatchewan by independent evaluators, GLJ Petroleum Consultants (“GLJ”), has been completed.
 
The study (effective April 30^th, 2012) covers 1,774 net hectares of the Company’s interests in the Hardy Area along with an additional 2,189 net hectares of lands subject to a farm-in agreement.  The resource estimates are summarized in the tables below (all numbers are net to the company):

Original Oil In Place (OOIP):

 
Original Oil In Place (OOIP) based on the HARDY S HZ 1A4-16-4B4-09-004-21W2 well performance along with existing well control over 259 gross hectares (58 net hectares) of land in the Hardy North Area.
 
Discovered Petroleum Initially In Place (DPIIP):

 
Discovered Petroleum Initially In Place (DPIIP) resources based on the HARDY S HZ 1A4-16-4B4-09-004-21W2 well performance along with existing well control encompassing over 1,490 gross hectares (252 net hectares) of land in the Hardy North Area.  There is no certainty that it will be commercially viable to produce any portion of the resources.
 
Undiscovered Petroleum Initially In Place (UPIIP):

 
The Undiscovered Petroleum Initially In Place (UPIIP) resource based on existing Bakken oil production and well control encompassing over 9,327 gross hectares of land in which the Company has earned a working interest in over 1,522 net hectares of land in the greater Hardy area.  Subject to the terms of a farm in agreement, the Company has the right to earn an additional 2,189 net hectares of land.  There is no certainty that any portion of the resources will be discovered.  If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
 
All GLJ estimates of DPIIP are as at April 30, 2012 have been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook.
 
RESOURCE AND RESERVE DEFINITIONS
 
Total Petroleum Initially-In-Place (“PIIP”) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered (equivalent to "total resources").
 
Discovered Petroleum Initially-In-Place (“DPIIP”) (equivalent to discovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially in place includes production, reserves, and contingent resources; the remainder is unrecoverable.
 
Undiscovered Petroleum Initially-In-Place (“UPIIP”) (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as "prospective resources," the remainder as "unrecoverable."
 
OPERATIONAL UPDATE:
 
Hardy North Area of SE Saskatchewan
 
The Company’s first development well in the Hardy Bakken pool, HARDY S HZ 1A4-16-4B4-09-004-21W2 has cumulative production of over 27,000 gross barrels of oil (bbls) in its first year of production.  The well continues to produce above expectations averaging over 60 barrels of oil per day (Gross) and 15 bopd (Net) of light sweet (38.5 degree API) oil for the month of August, 2012.
 
Hardy South Area of SE Saskatchewan
 
The Company recently completed and placed on production its first operated horizontal Bakken oil well, PASSPORT MINTON HZ 1C11-32-3A-16-33-3-21W2M (the “1C11-32 well”) .  The well was completed utilizing a 32 stage multi-fracture stimulation program and is currently in its initial cleanup and optimization phase of production.  The Company plans to announce the well’s performance once stabilized rates have been achieved.
 
The 1C11-32 well represents the first of a 2 well commitment program on the previously announced farm-in agreement with a large, independent, Canadian oil and gas producer which encompasses 32 contiguous sections of land.  With this well, the Company has earned a 32.5% working interest (APO) in 5 sections.
 
The agreement calls for Passport, as the operator (along with its 50% partner), to fund the drilling and completion of 2 horizontal Bakken commitment wells to earn 100% (50% net Passport) in the spacing unit until payout of the wells (subject to a convertible gross overriding royalty) and a 65% (32.5% net Passport) working interest after payout of the wells and 10 sections of land.
 
The Company plans to drill, complete and place on production the second horizontal commitment well on or before the end of the fourth quarter, surface conditions permitting.
 
Following the 2 wells, the companies have the option to drill 5 additional wells under the same terms and conditions to earn the balance of the 32 section block.
 
The Company is a junior natural resource exploration company focused on the acquisition, exploration, and development of economically viable natural resources, with a focus on Bakken oil projects.
 
The Company trades on the TSX Venture Exchange under the trading symbol “PPO”.
 
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
 
All amounts in this news release are stated in Canadian dollars unless otherwise specified.   For more information, please refer to the Company’s public documents available on SEDAR (www.sedar.com).
 
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”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends”, “strategy” and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: the Company’s intention to announce the 1C11-32 well’s performance and the Company’s plans to drill its second horizontal commitment well.
 
The forward-looking statements and information are based on certain key expectations and assumptions made by Passport, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable credits, royalty rates and tax laws; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; completion of definitive documentation; receipt of all required regulatory approvals; and the availability and cost of labour and services and future operating costs. There are a number of assumptions associated with the development of the lands and resources by Passport in the Hardy Area, including the quality of the reservoir, continued performance from existing wells, future drilling programs and performance from new wells, the growth of infrastructure, well density per section, recovery factors and development. Although Passport 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 Passport 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; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations.
 
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 therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Passport 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 Passport 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.
 
INFORMATION REGARDING DISCLOSURE ON OIL AND GAS RESOURCES
 
This news release contains references to estimates of petroleum classified as DPIIP in which are not, and should not be confused with, oil and gas reserves. DPIIP is defined in the Canadian Oil and Gas Evaluation Handbook as the quantity of hydrocarbons that are estimated to be in place within a known accumulation prior to production. DPIIP is divided into recoverable and unrecoverable portions, with the estimated future recoverable portion classified as reserves and contingent resources and the remainder as at evaluation date is by definition classified as unrecoverable. There is no certainty that it will be economically viable to produce any portion of the resources. 

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