Journey Energy Inc. Reports 2018 Reserves and Provides an Update on its Emerging Duvernay Resource Play

CALGARY, Feb. 27, 2019 /CNW/ - Journey Energy Inc. (JOY – TSX) ("Journey" or the "Company") is pleased to report its year-end 2018 oil and gas reserves evaluation.  During 2018, the Company invested approximately $27 million in capital projects net of acquisition and divestiture ("A&D") activities. Exploration and development ("E&D") activities accounted for approximately $32 million while A&D activities resulted in net proceeds of approximately $5 million. E&D activities included drilling and waterflood development at two of our core properties, spending on infrastructure and an investment for the future in our emerging Gilby Duvernay resource. A&D initiatives throughout the year included the disposition of certain non-core assets and consolidation of certain working interests in core areas.

After announcing the Duvernay joint venture on August 29, Journey and its partner have acquired additional Duvernay lands and now have an interest in over 165 gross sections of contiguous lands concentrated in the oil window.  Journey selected an experienced joint venture partner Kiwetinohk Resources Corp. ("KRC") to develop this resource and Journey will retain a 37.5% working interest in its commercial development.  The initial two commitment wells have been drilled and Fraced.  It is anticipated that these wells will be on test within the next few weeks.  KRC has Fraced the Duvernay in a standing horizontal well as the first option well and is set to spud a second option well during the week of February 25^th.  All costs associated with the drilling, completion and equipping of the commitment and option wells are borne by KRC. There have been no land values or reserves assigned to the Duvernay in this report.

 2018 Reserve Report Highlights:

• Proved reserves decreased by 5% over 2017, however the oil and NGL weighting increased from 45% to 47% in the same period.
  
  
• Proved plus probable net asset value of $9.11 per basic share outstanding represents a 10% increase from $8.28 per share in 2017.
  
  
• Proved developed producing reserves accounted for 44% of total proved plus probable reserves while proved reserves accounting for 62%.
  
  
• Achieved finding and development costs* ("F&D") costs, including changes in future development capital, of:
• $19.56 per boe for proved reserves.
• $19.58 per boe for proved plus probable reserves
  
  
  *Journey's 2018 F&D costs were negatively impacted by economic revisions associated with declining commodity prices and by the allocation of less capital to drilling and completions as a portion of the overall capital invested. Journey drilled 8 conventional wells in 2018 and this resulted in reserve additions for extensions and infill drilling. The results of these expenditures exceeded our expectations on a half cycle basis. Plans for 2019 include follow up programs to build on this success. In 2018, Journey also invested higher than normal capital in conventional infrastructure projects, land acquisition in our emerging Gilby Duvernay play, and a Duvernay strat well.  No reserves have been assigned to the Duvernay in this reserves report.
  
  
• Despite low FD&A recycle ratios for 2018, Journey has maintained attractive 3-year FD&A recycle ratios, which Journey management feels may be more indicative of the longer term potential within our asset base. For the year ended December 31, 2018, we achieved a 3-year ratio of:
• 1.5 times for FD&A costs with proved reserves.
• 1.8 times for FD&A costs with proved plus probable reserves.
  
  
• Proved plus probable reserve life index of 15.5 years, with only $3.61/boe of future development capital booked in the reserve report.
  
  
• Proved developed producing and proved plus probable developed producing reserve life index of 7.6 and 9.8 years respectively, are testaments to Journey's low decline asset base.

Duvernay Highlights:

• The first two Commitment wells were drilled in Q4/18 and recently Fraced in Q1/19 resulting in an average completion length of 3,390m with 60 completed Frac stages, 5,000 tonnes of total proppant and an average proppant intensity of 1.5 T/m. Journey expects flow-back testing to commence in March followed by the equipping of a single well oil battery and tie-in of the gas into Journey's existing gas gathering system to be processed at the Journey owned 1-4 Gilby Gas Plant. With an average of 3,500m drilled horizontal sections, these wells represent some of the longest horizontal sections drilled in the East Duvernay play to date.
  
  
• Journey and KRC have recently added approximately 20 gross sections of Duvernay lands, increasing the East Duvernay resource base to approximately 165 gross sections of contiguous lands.

COMPANY GROSS WORKING INTEREST OIL AND GAS RESERVES AND NET PRESENT VALUES

The following table provides summary information presented in the GLJ Petroleum Consultants Limited ("GLJ") independent reserves assessment and evaluation effective December 31, 2018, (the "GLJ Report").  GLJ evaluated 100% of Journey's crude oil, natural gas liquids and natural gas reserves.  The evaluation of all of its oil and gas properties was done in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101").  Detailed reserve information will be presented in the Company's upcoming Statement of Reserves Data and Other Oil and Gas Information section of the Company's Annual Information Form scheduled to be filed on SEDAR on or before March 31, 2019.

Company Gross Reserves
Based on Forecast Price and Costs as at December 31, 2018

	Light Medium Oil	Heavy Oil	Natural Gas	NGLs	Total^(2)
Reserves Category	(Mbbl)	(Mbbl)	(MMcf)	(Mbbl)	(Mboe)
Proved
Producing	5,717	2,963	84,302	2,357	25,087
Developed non-producing	118	5	6,170	245	1,396
Undeveloped	3,000	1,300	22,409	893	8,928
Total proved	8,835	4,268	112,881	3,495	35,412
Probable	7,062	3,045	61,175	1,670	21,972
Total proved plus probable	15,897	7,313	174,056	5,165	57,384
Included in Above
Proved plus probable producing	7,795	4,113	112,943	2,978	33,710

Notes:
^(1)	Company Gross Reserves consists of Journey's working interest (operated and non-operated) share of reserves before deduction of royalties payable and without including royalties receivable by the Company.
^(2)	In the case of natural gas volumes, boes are derived by converting natural gas to oil using the ratio of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf:1 bbl).
^(3)	Total values may not add due to rounding.

Net Present Values of Future Net Revenue (Based on Forecast Prices and Costs)

	Before Tax Net Present Value ($000's)
Reserves category	0%	5%	10%	15%	20%
Proved
Producing	322,420	257,867	212,664	180,749	157,424
Developed non-producing	15,233	10,560	8,073	6,491	5,376
Undeveloped	150,036	88,282	53,493	32,670	19,498
Total proved	487,690	356,709	274,230	219,910	182,299
Probable	541,035	326,489	217,642	155,407	116,446
Total proved plus probable	1,028,724	683,198	491,872	375,317	298,744
Included in Above
Proved plus probable producing	508,279	368,132	285,352	232,704	196,854

Notes:
^(1)	Total values may not add due to rounding
^(2)	Forecast pricing used is the average of the published price forecasts for GLJ Petroleum Consultants Ltd., Sproule Associates Ltd. and McDaniel & Associates Consultants Ltd. as at December 31, 2018.
^(3)	It should not be assumed that the net present values of future net revenues estimated by GLJ represent fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material.

The forecast prices and foreign exchange rates used in the GLJ Report are as follows:

	WTI Cushing Oklahoma ($US/bbl)	Edmonton 40 API ($CDN/bbl)	WCS Crude Oil Stream ($CDN/bbl)	Alberta AECO-spot ($CDN/Mmbtu)	NYMEX Henry Hub ($US/bbl)	Foreign Exchange ($US/$CDN)
2019	58.58	67.30	51.55	1.88	3.00	0.7567
2020	64.60	75.84	59.58	2.31	3.13	0.7817
2021	68.20	80.17	65.89	2.74	3.33	0.7967
2022	71.00	83.22	68.61	3.05	3.51	0.8033
2023	72.81	85.34	70.53	3.21	3.62	0.8067
2024	74.59	87.33	72.34	3.31	3.70	0.8083
2025	76.42	89.50	74.31	3.39	3.77	0.8083
2026	78.40	91.89	76.44	3.46	3.85	0.8083
2027	79.98	93.76	78.10	3.54	3.92	0.8083
2028	81.59	95.68	79.81	3.62	4.01	0.8083
2029	83.22	97.57	81.40	3.70	4.08	0.8083
2030	84.87	99.52	83.00	3.78	4.16	0.8083
2031	86.57	101.52	84.69	3.85	4.25	0.8083
2032	88.30	103.55	86.37	3.92	4.33	0.8083
2033	90.08	105.65	88.11	4.00	4.42	0.8083
Thereafter	+2.0%/yr	+2.0%/yr	+2.0%/yr	+2.0%/yr	+2.0%/yr	0.8083

FINDING, DEVELOPMENT AND ACQUISITION COSTS

Journey's finding and development ("F&D") and finding, development and acquisition ("FD&A") costs for 2018, 2017 and the three-year average are presented in the tables below.  The capital costs used in the calculations are those costs related to: land acquisition and retention, seismic, drilling, completions, tangible well site, tie-ins, and facilities, plus the change in estimated future development costs ("FDC") as per the independent evaluator's reserve report.  Net acquisition costs are the cash outlays in respect of acquisitions; minus the proceeds from the disposition of properties during the year.  Due to the timing of capital costs and the subjectivity in the estimation of future costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated FDC's generally will not necessarily reflect total FDC's related to reserve additions for that year.  The reserves used in this calculation are working interest reserve additions, including technical revisions and changes due to economic factors.  The 2018 and the three-year average capital expenditures are unaudited as the 2018 financial results are in the process of being finalized.

Proved Finding, Development & Acquisition Costs	2018	2017	3 Year
Capital expenditures (including A&D) ($000's)	26,608	65,543	99,095
Change in future capital ($000's)	11,507	20,073	44,257
Total capital for FD&A (000's)	38,115	85,616	143,352
Reserve additions, including A&D (Mboe)	1,783	10,834	16,820
Proved FD&A costs – including changes in future capital ($/boe)	21.38	7.90	8.52
Proved FD&A costs – excluding changes in future capital ($/boe)	14.92	6.05	5.89
Recycle ratio^(1)
Including changes in future capital	0.6	1.6	1.5
Proved plus Probable Finding, Development & Acquisition Costs	2018	2017	3 Year
Capital expenditures (including A&D) ($000's)	26,608	65,543	99,095
Change in future capital ($000's)	(1,712)	41,710	30,031
Total capital for FD&A (000's)	24,896	107,253	129,126
Reserve additions, including A&D (Mboe)	877	16,058	18,028
Proved plus Probable FD&A costs – including changes in future capital ($/boe)	28.39	6.68	7.16
Proved plus Probable FD&A costs – excluding changes in future capital ($/boe)	30.34	4.08	5.50
Recycle ratio ^(1)
Including changes in future capital	0.5	1.9	1.8
Proved Finding & Development Costs	2018	2017	3 Year
Capital expenditures (excluding A&D) ($000's)^(2)	31,738	30,406	77,640
Change in future capital ($000's)^(2)	14,567	(985)	32,205
Total capital for F&D ($000's)	46,305	29,421	109,845
Reserve additions, (excluding A&D) (Mboe)	2,367	1,007	7,510
Proved F&D costs – including changes in future capital ($/boe)	19.56	29.22	14.63
Proved F&D costs – excluding changes in future capital ($/boe)	13.41	30.19	10.34
Recycle ratio ^(1)
Including changes in future capital	0.7	0.4	0.9
Proved Plus Probable Finding & Development Costs	2018	2017	3 Year
Capital expenditures (excluding A&D) ($000's)^(2)	31,738	30,406	77,640
Change in future capital ($000's)^(2)	4,469	(1,860)	18,413
Total capital for F&D ($000's)	36,207	28,546	96,053
Reserve additions (excluding A&D) (Mboe)	1,850	1,203	6,098
Proved  plus Probable F&D costs – including changes in future capital ($/boe)	19.58	23.73	15.75
Proved plus Probable  F&D costs – excluding changes in future capital ($/boe)	17.16	25.28	12.73
Recycle ratio ^(1)
Including changes in future capital	0.7	0.5	0.8

Notes:
^(1)	Recycle ratio is calculated as the operating netback per boe divided by F&D or FD&A costs per boe as applicable. The operating netbacks used in the respective years are as follows: 2018 (unaudited) - $13.11/boe; 2017 - $12.56 and the three year average is $12.65.
^(2)	Development capital has been adjusted for the effects of reserves categorized as acquisitions and dispositions.

FUTURE DEVELOPMENT COSTS

The following table provides the breakdown of future development costs deducted in the estimation of the future net revenue attributable to the proved and proved plus probable reserve categories noted below:

Year	Proved ($000's)	Proved Plus Probable ($000's)
2019	22,673	24,753
2020	27,009	56,154
2021	33,762	71,953
2022	24,197	37,877
2023	8,551	8,551
Remaining	6,598	7,625
Total (Undiscounted)	122,790	206,913

RESERVE LIFE INDEX

The Company's reserve life index ("RLI") is calculated by taking the Company Gross Reserves from the GLJ Report and dividing them by the projected 2019 production as estimated in the GLJ report.

	Company Gross Reserves	2019 Company Gross Production	RLI
Reserves Category	(Mboe)	(Mboe)	(Years)
Proved, developed, producing	25,087	3,315	7.6
Total proved	35,412	3,545	10.0
Proved plus probable producing	33,710	3,432	9.8
Proved plus probable	57,384	3,696	15.5

NET ASSET VALUE

The following table provides a calculation of Journey's estimated net asset value ("NAV") and net asset value per share ("NAVPS") as at December 31 based on the estimated future net revenues associated with Journey's reserves as presented in the GLJ Report.  The following numbers were used in the NAV calculation and are pending finalization of the year-end audit: 1) net debt of approximately $135 million; and 2) funds flow of approximately $18 million, based on production of approximately 10,075 boe/d (47% oil and NGL's) for the year.

Reserves Category		Net Asset Value ($000's)				Net Asset Value Per share ($)
		2018^(1)	2017^(1)	%		2018^(2)	2017^(2)	%
Proved, developed, producing		77,886	148,726	(48)		1.99	2.90	(31)
Total proved		139,452	204,641	(32)		3.56	3.99	(11)
Proved plus probable producing		150,574	223,320	(33)		3.84	4.36	(12)
Total proved plus probable		357,094	424,145	(16)		9.11	8.28	10

Notes:
^(1)	Aggregate NAV is calculated by taking the future net revenues per the GLJ report, on a before tax basis, discounted at 10% and subtracting net debt at December 31, 2018 of approximately $134,800 thousand (unaudited);  (December 31, 2017 - $103,021 thousand).
^(2)	Year-end NAVPS is calculated by taking the NAV and dividing it by the basic shares outstanding as at December 31, 2018 of 39,218 thousand shares (December 31, 2017 – 51,241 thousand). All share counts have been rounded to the nearest 1,000 shares.

Duvernay Resource Play Update

Since entering into the joint venture arrangement on August 29^th, 2018, KRC has been actively drilling and completing the initial two well commitment phase, as well as re-entering an existing standing cased well as part of the Five Option Well Phase under the terms of the joint venture.

As previously indicated, the joint venture arrangement contemplates a two well commitment phase followed by a five well option phase.  KRC and Journey continue to work together in formulating the most effective drilling program to delineate the resource, mitigate land expiries and test potential development concepts.   Details and an operations update of each phase are as follows:

Two Well Commitment Phase Update

• For each well of the two well commitment phase, KRC will pay 100% of the capital costs to drill, complete, and equip and tie in and have a 100% working interest in such wellbore only before payout of 58.33% of its capital costs. Journey will retain a 3.75% gross over-riding royalty on the production from each well prior to payout. After payout, and conversion by Journey of its royalty, KRC will have a 70.83% working interest and Journey will have a 29.17% working interest in each of the commitment phase wellbores. After the earning obligations have been satisfied, the joint working interests in the balance of each block of earned lands outside of the two commitment wells, will be KRC 62.5% and Journey 37.5%. KRC will be the operator of all of the lands earned.
  
  
• KRC has drilled and completed the following two Commitment Phase wells:
  
  Test Well #1: HZ 102/16-15-042-03W5/00 (6,500m TMD; 3,590m horizontal length)
  
  Completed length:  3,530m
  Completed stages:  68
  Total proppant: 5,361 tonnes
  Proppant Intensity: 1.52 tonnes/m
  
  Test Well #2 HZ 102/15-31-042-03W5/00 (6,352 TMD; 3,413m horizontal length)
  Completed length:  3,248m
  Completed stages:  52
  Total proppant: 4,727 tonnes
  Proppant Intensity: 1.44 tonnes/m
  
  Journey expects flow-back testing on each of Test Well #1 & #2 to commence in March followed by the equipping of a single well oil battery and the tie-in of associated natural gas into Journey's existing Gilby gas gathering system to be processed at the Journey owned 1-4 Gilby gas plant.

Five Well Option Phase

• For the five well option phase, KRC will pay 100% of the capital costs, and have a 100% working interest, before payout of 33.33% of its costs to drill, complete, equip and tie in. Journey will receive no royalty prior to payout. After payout, KRC will have 70.83% working interest in the option wellbores while Journey will have a 29.17% working interest. After earning, the final working interests in the applicable earned Option blocks, outside of the five option wells, will be KRC 62.5% and Journey 37.5%. KRC will be the operator of all of the lands earned.
  
  
• KRC is currently active on the following two option phase wells:
  
  
  Option Well #1: HZ 100/12-09-044-03W5/00 (1,400m horizontal length)
  
  
  KRC re-entered the standing, cased well, extended the well 200m and performed two 100 tonne Frac's on the extended portion. KRC is currently completing the original 1,200m existing lateral section of the well and expects the flow-back testing operation to commence thereafter.
  
  
• Option Well #2: HZ 100/11-02-042-04W5/00 (6,590m TMD; 3,400m horizontal length)
  
  
  KRC has licensed this well and expects to spud the well during the week of February 25^th. The current well path anticipates a horizontal length similar in nature to the commitment wells. After drilling operations, Journey anticipates Fracing operations to occur early in the second quarter followed by the flow-back testing operation.

During the fourth quarter of 2018, Journey and KRC were successful in adding approximately 20 gross sections of Duvernay lands, thereby increasing the joint ventures' resource base to approximately 165 gross sections of contiguous lands.

Journey looks forward to updating our shareholders on future activities in the East Duvernay as further information becomes available.

Outlook

In future years, when Journey reflects upon 2018, it may turn out to be both the most challenging and the most transformational year in our corporate history.  Early in 2018, Journey repurchased and canceled 25% of our outstanding shares from its then majority shareholder.  It was challenging for the impact it had on our balance sheet, yet transformational for placing the control of our own destiny in the hands of all shareholders.  Also, early in 2018, Journey through a series of transactions made a strategic investment in our future by assembling over 100 sections of land in the heart of the East Duvernay oil fairway.  It was challenging for the impact this had on our F&D costs and balance sheet, yet transformational in terms of the potential the Company can realize over time from this investment.

Journey has decided to take a conservative approach to capital spending for 2019 in light of the historically wide differentials experienced in the fourth quarter of 2018. The Alberta Government announced a production curtailment initiative in December designed to improve the relative pricing for Canadian barrels.  Clearly any initiative such as this will have its detractors', however, the success of this initiative early in 2019 for a company like Journey is apparent, as the differentials have since contracted to the $5-7 USD/bbl level.   Journey has prudently decided to delay the initiation of our 2019 capital program until June, reduce our forecasted capital program from $40 million to $30 million, and carefully monitor volatility in commodity pricing to insure our debt levels are reduced from 2018 exit debt levels by year end 2019.

Journey's initial 2019 guidance is presented in the table below:

Annual average production	9,200 – 9,600 Boe/d (49% liquids)
Exploration and development capital	$30 million
Funds flow	$33-37 million
Year-end net debt	$128 - $132 million
Funds flow per basic weighted average share	$0.84 – $0.94 share
Corporate annual decline rate	16%

Journey's 2019 forecasted funds flow is based upon the following assumed annual, average prices: WTI of $58.50/bbl USD; Company differentials of $5.50/bbl USD for oil from Edmonton light sweet prices; realized natural gas price of CDN$1.90/mcf CDN; and a foreign exchange rate of $0.76 US$/CDN$.

In August of 2018 Journey entered into a joint venture relationship with KRC for the early stage development of its Duvernay resource play.  KRC's focus is to take this play from proof of concept to commercial success.  In the most likely scenario, by the end of 2019, KRC will have drilled six and completed and equipped seven horizontal Duvernay test wells on our joint venture block.  This project is not something Journey could have funded internally for 2019 on its own.  In 2019, Journey shareholders will have the opportunity to benefit from KRC's expertise and their capital investment to realize significant value on our go forward 37.5% working interest in a significant resource.

Over the course of 2019, we look forward to reporting to you on all of the challenges and transformations this year will hold for us. We thank you for both your patience and your support as we navigate through these volatile times.

About the Company 

Journey is a Canadian exploration and production company focused on oil-weighted operations in western Canada.  Journey's strategy is to grow its production base by drilling on its existing core lands, implementing waterflood projects, and by executing on accretive acquisitions.  Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods. Journey is also in the early phases of advancing development of an unconventional shale resource play in the oil window of the Duvernay, in the western shale basin of our central core area.

ADVISORIES

Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, which involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Journey, including, without limitation, those listed under "Risk Factors" and "Forward Looking Statements" in the Annual Information Form filed on www.SEDAR.com on March 23, 2018. Forward-looking information may relate to Journey's future outlook and anticipated events or results and may include statements regarding the business strategy and plans and objectives. Particularly, forward-looking information in this press release includes, but is not limited to, information concerning Journey's drilling and other operational plans, production rates, and long-term objectives. Journey cautions investors in Journey's securities about important factors that could cause Journey's actual results to differ materially from those projected in any forward-looking statements included in this press release. Information in this press release about Journey's prospective funds flows and financial position is based on assumptions about future events, including economic conditions and courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that information regarding Journey's financial outlook should not be used for purposes other than those disclosed herein. Forward-looking information contained in this press release is based on current estimates, expectations and projections, which Journey believes to be reasonable as of the current date. No assurance can be given that the expectations set out herein will prove to be correct and accordingly, you should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as required by applicable securities law.

Readers are cautioned that the above list of risks and factors are not intended to be exhaustive. Additional information on these and other factors that could affect operating and financial results are, or will be, included in reports filed with the applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

Non-IFRS Measures

The Company uses the following non-IFRS measures in evaluating corporate performance. These terms do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable with the calculation of similar measures by other companies.

1)	The Company considers funds flow from operations (also referred to as "funds flow") a key performance measure as it demonstrates the Company's ability to generate funds necessary to repay debt and to fund future growth through capital investment. Funds flow from operations is calculated as funds from operating activities before changes in non-funds working capital, transaction costs and decommissioning costs incurred. Funds flow from operations per share is calculated as funds flow from operations divided by the weighted-average number of shares outstanding in the period. Journey's determination of funds flow from operations may not be comparable to that reported by other companies. Journey also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of net earnings per share, which per share amount is calculated under IFRS and is more fully described in the notes to the financial statements.
2)	Net debt is a non-IFRS measure and represents current assets less current liabilities and bank debt (but excludes the future liability (or asset) related to the mark-to-market measurement of derivative contracts as well as decommissioning liabilities).
3)	Operating netback is a non-IFRS measure and equals total revenue less royalties, transportation and field operating costs calculated on a per boe basis. Funds flow netback equals the operating netback less funds finance costs, general and administrative costs, realized gains and losses on derivative contracts, plus any interest income.

Barrel of Oil Equivalents

Where amounts are expressed in a barrel of oil equivalent ("BOE"), or barrel of oil equivalent per day ("BOE/d"), natural gas volumes have been converted to barrels of oil equivalent at six (6) thousand cubic feet ("Mcf") to one (1) barrel. Use of the term BOE may be misleading particularly if used in isolation. The BOE conversion ratio of 6 Mcf to 1 barrel ("Bbl") of oil or natural gas liquids is based on an energy equivalency conversion methodology primarily applicable at the burner tip, and does not represent a value equivalency at the wellhead. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.

Oil and Gas Measures and Metrics

All reserve references in this press release are "Company Gross Reserves". Company gross reserves are the Company's total working interest share of reserves before deduction of any royalties and excluding any royalty interests of the Company.

All future net revenues are stated prior to provision of general and administrative expenses, interest, but after the deduction of royalties, operating costs, estimated abandonment and reclamation cost for wells with reserves attributed to them; and estimated future capital expenditures to book those reserves. Future net revenues have been presented on a before tax basis. Estimated values of future net revenue disclosed herein are not representative of fair market value.

The Company uses the following metrics in assessing its performance and comparing itself to other companies in the oil and gas industry. These terms do not have a standardized meaning and therefore may not be comparable with the calculation of similar measures.by other companies:

1)	Recycle ratio is calculated by taking the operating netback and dividing it by the finding and development or finding, development and acquisition costs (including changes in future development costs) per boe. The ratio gives an indication of how profitably the company is replacing its reserves. The higher the ratio the more profitably it is replacing reserves.
2)	The Company's reserve life index ("RLI") is calculated using the Company Gross Reserves and dividing them by the projected, next years' production from the independent reserve engineers' year end reserve report. The RLI is used by management to assess the longevity of the reserves being added which in turn gives information about the corporate decline rates of the Company.
3)	Corporate decline ("Decline") is the rate at which production from a grouping of assets falls from the beginning of a fiscal year to the end of that year.

Select Abbreviations and Definitions

bbl	barrel
bbls	barrels
m	meters
Mbbls	Thousand barrels
MMBtu	Million British thermal units
NGLs	Natural gas liquids
Mcf	thousand cubic feet
Mmcf	Million cubic feet
Mmcf/d	Million cubic feet per day
Boe	Barrel of oil equivalent
Mboe	Thousand boe
$M	Thousands of dollars
T	Metric tonnes
TMD	Total measured depth in meters

"Frac" means hydraulic fracturing, which is the process of creating fractures in rock formations by injecting sand and/or fluids at high pressures into their cracks to force them to open further and thereby allowing more oil and natural gas to flow out of the rock formations and into the wellbore.

No securities regulatory authority has either approved or disapproved of the contents of this press release.

SOURCE Journey Energy Inc.

Alex G. Verge, President and Chief Executive Officer, 403.303.3232, [email protected] or Gerry Gilewicz, Chief Financial Officer, 403.303.3238, [email protected]; Journey Energy Inc., 700, 517 - 10th Avenue SW, Calgary, AB T2R 0A8, 403.294.1635, www.journeyenergy.ca