Athabasca Oil Corporation Announces Regulatory Approval of the Hangingstone Oil Sands Project 1

CALGARY, Oct. 4, 2012 - Athabasca Oil Corporation (TSX: ATH) is pleased to announce that the Lieutenant Governor in Council has authorized the Energy Resources Conservation Board to grant Approval No. 11888 for the development of its 12,000 barrels per day (bbl/d) Hangingstone Project 1.

This regulatory approval represents a significant milestone in the development of Athabasca's substantial oil sands reserve base. In early November 2012, the Hangingstone Project 1 will be presented, for sanctioning, to the Company's Board of Directors.

Front-end engineering and design (FEED), for the Hangingstone Project 1, has been completed, and the procurement of long-lead equipment is well underway. The Company anticipates project start-up by the second half of 2014.

Located less than 20 kilometres southwest of Fort McMurray, the Hangingstone Project 1 will employ steam assisted gravity drainage (SAGD) technology. The Hangingstone project area is comprised of 213 sections of land which contain 0.1 billion barrels of Probable Reserves and 0.9 billion barrels of Contingent Resource (Best Estimate) which is based upon third party estimates, effective April 30, 2012.

Hangingstone Project 1 will be followed by additional SAGD projects, bringing the area's potential production to greater than 80,000 bbl/d. In 2013, the Company plans to file regulatory applications for development of the Hangingstone Projects 2 and 3.

Athabasca is a dynamic, Canadian company focused on the development of oil resource plays in Alberta, Canada. The company has accumulated an extensive, high quality resource base suitable for the extraction of thermal crude oil (bitumen) and light oil.  Well financed and endowed with quality assets and talented people, Athabasca is poised to become a major Canadian oil producer. It aspires to produce 220,000 boe/d by 2020, half thermal oil and half light oil. Athabasca is traded on the TSX under the symbol ATH.

Reader Advisory:

This News Release contains forward-looking information that involves various risks, uncertainties and other factors. All information other than statements of historical fact is forward-looking information. The use of any of the words "anticipate", "plan", "estimate", "expect" and "will" and similar expressions are intended to identify forward-looking information. The forward-looking information is not historical fact, but rather is based on the Company's current plans, objectives, goals, strategies, estimates, assumptions and projections about the Company's industry, business and future financial results. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. No assurance can be given that these expectations will prove to be correct and such forward-looking information included in this News Release should not be unduly relied upon. This information speaks only as of the date of this News Release. In particular, this News Release may contain forward-looking information pertaining to the following: the Company's capital expenditure programs; the estimated quantity of the Company's Contingent Resources and Probable Reserves; the Company's estimated future commitments; business plans; development of the Company's Hangingstone project and other projects;  timing of construction and production; the use Steam Assisted Gravity Drainage (SAGD) for production of recoverable bitumen, including the potential benefits of such methods; long term production goals; timing of submission of project regulatory applications; estimated timing of first steaming, selection of equipment manufactures and internal sanction, as applicable, of the Company's Hangingstone and other projects; and estimated initial and full production from the Company's thermal oil and light oil projects.

With respect to forward-looking information contained in this News Release, assumptions have been made regarding, among other things: the Company's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which the Company conducts and will conduct its business; the applicability of technologies for the recovery and production of the Company's reserves and resources; future capital expenditures to be made by the Company; future sources of funding for the Company's capital programs; the Company's future debt levels; geological and engineering estimates in respect of the Company's reserves and resources; the geography of the areas in which the Company is conducting exploration and development activities; the impact that the agreements relating to the PetroChina Transaction (the "PetroChina Transaction Agreements") will have on the Company, including on the Company's financial condition and results of operations; and the Company's ability to obtain financing on acceptable terms.

Actual results could differ materially from those anticipated in this forward-looking information as a result of the risk factors set forth in the Company's most recent Annual Information Form filed on March 27, 2012 which is available on SEDAR at www.sedar.com, including, but not limited to: fluctuations in market prices for crude oil, natural gas and bitumen blend; general economic, market and business conditions; variations in foreign exchange and interest rates; factors affecting potential profitability; factors affecting funding, including the development of new business opportunities, the availability of financing, the priorities of the Company and of its current and future joint venture partners and general economic conditions; uncertainties inherent in estimating quantities of reserves and resources; uncertainties inherent in SAGD; the potential impact of the exercise of the Dover put/call options on the Company; failure to meet the conditions precedent to the exercise by the Company of the Dover put option; failure to receive regulatory approval for the Company's other thermal oil projects when anticipated or at all; failure to meet development schedules and potential cost overruns; increases in operating costs making projects uneconomic; the effect of diluent and natural gas supply constraints and increases in the costs thereof; gas over bitumen issues affecting operational results; the potential for adverse consequences in the event that the Company defaults under certain of the PetroChina Transaction Agreements; environmental risks and hazards and the cost of compliance with environmental regulations; failure to obtain or retain key personnel; the substantial capital requirements of the Company's projects; the need to obtain regulatory approvals and maintain compliance with regulatory requirements; changes to royalty regimes; political risks; failure to accurately estimate abandonment and reclamation costs; risks inherent in the Company's operations, including those related to exploration, development and production of oil sands, crude oil and natural gas reserves and resources, the potential for management estimates and assumptions to be inaccurate; reliance on third party infrastructure for project facilities; failure by counterparties to comply with  contractual arrangements between the Company and such counterparties; the potential lack of available drilling equipment and limitations on access to the Company's assets; Aboriginal claims; seasonality; hedging risks; insurance risks; claims made in respect of the Company's operations, properties or assets; the potential for adverse consequences as a result of the change of control provisions in the PetroChina Transaction Agreements; competition for, among other things, capital,  export pipeline capacity; the failure of the Company or the holder of certain licenses or leases to meet specific requirements of such licenses or leases; risk of reassessments of the Company's tax filings by taxation authorities; risks arising from future acquisition and joint venture activities; and the volatility in the market price of the common shares.

In addition, information and statements in this News Release relating to "reserves" and "resources" are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and that the reserves and resources described can be profitably produced in the future. The assumptions relating to the Company's Hangingstone reserves and resources are contained in the report of DeGolyer and MacNaughton dated effective April 30, 2011 as described in the Company's News Release dated July 26, 2012 available on SEDAR.

The forward-looking statements included in this News Release are expressly qualified by this cautionary statement. Athabasca does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.

SOURCE: Athabasca Oil Corporation