Progress Announces 2011 Year-end Financial Information

Year-end results confirm balance sheet strength; Declares First Quarter 2012 Dividend

CALGARY, March 1, 2012 /CNW/ - (TSX-PRQ) - Progress Energy Resources Corp. ("Progress" or the "Company") today filed its audited Consolidated Financial Statements and Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2011 on SEDAR.  These may be viewed at www.sedar.com and on the Company's website at www.progressenergy.com.

Financial Strength
Progress' balance sheet remains strong in the current natural gas price environment.  As at December 31, 2011, the Company had debt-to-total capitalization of 11 percent and was undrawn on its $650 million revolving credit facility.  Additionally, as part of the joint venture with PETRONAS, Progress will receive $802.5 million over the next five years in the form of a capital carry whereby PETRONAS will pay 75 percent of Progress' share of future capital expenditures on the joint venture lands.  As at December 31, 2011, approximately $787.5 million remained on the capital carry.

Cash flow for the year ended December 31, 2011 was $226.7 million or $0.99 per share, diluted. Capital investment was $421.8 million before proceeds from the North Montney Joint Venture and non-core asset dispositions which combined, resulted in a net capital investment of $124.9 million. Progress' average gas price in 2011 was $3.73 per thousand cubic feet ("mcf"), including the impact of the Company's hedging program.  The Company's high-heat content natural gas production provides an uplift to AECO prices.  Royalty rates averaged 12 percent in 2011 as a result of lower natural gas prices and the impact of higher gas-cost-allowance recoveries in Alberta.  Operating costs averaged $5.51 per barrel of oil equivalent ("boe") in 2011 reflecting the Company's continued focus on operational efficiencies and maximization of volumes through existing facilities.

Progress announced on February 7, 2012, an adjusted net capital program for 2012 of approximately $365 million to continue to develop its North Montney resource base, initiate the first phase of development on its joint venture lands with PETRONAS and to pursue its Dunvegan light oil play in the Alberta Deep Basin. In addition to this net capital program, Progress also benefits from approximately $130 million of capital carry on the North Montney Joint Venture paid for by its joint venture partner.  In conjunction with the capital program adjustment, the Company also announced plans to shut in approximately 10 percent of its total natural gas production by April 2012 and delay the completion of selected wells.  With this adjusted capital investment program Progress expects to exit 2012 with production between 53,000 and 55,000 boe per day.

Growth in Underlying Asset Value
Progress' Montney land position is the largest in the industry.  The scope and scale of the Montney resource has continued to expand at a steady pace as the Company focuses on long-term resource confirmation.  Progress' reserve base has more than doubled from 155 million boe at the end of 2009 to over 323 million boe today, representing a 108 percent increase since the conversion from a trust to a corporation two years ago.

On February 7, 2012, Progress announced that its reserve base had grown by 29 percent on a debt-adjusted, per-share basis in 2011, driven by the success of the Company's North Montney drilling program in northeast British Columbia.  Over the past three years the Company has aggressively developed the North Montney resource play and now has over 1.1 Tcfe of proved plus probable reserves and an additional inventory of 5,000 to 10,000 drilling locations. With a gross capital investment program of approximately $705 million for 2012 ($365 million net), the Company intends to drill approximately 25 North Montney horizontals on its 100% acreage and a further 30 horizontals on its North Montney Joint Venture ("NMJV") acreage with PETRONAS.

The Company believes that the Montney resource represents a stable and secure long-term supply source that is ideally suited to supporting the development of liquefied natural gas ("LNG") projects on the northwest coast of British Columbia.  The LNG Export Joint Venture that Progress formed as part of its strategic partnership with PETRONAS is well into the detailed feasibility study ("DFS") phase, with targeted completion in the third quarter of 2012.

Dunvegan Light Oil Play
In the Deep Basin of northwest Alberta, the Company has recently completed 4 (3.5 net) additional Dunvegan Oil wells, bringing the total number of Dunvegan horizontal wells completed to seven.  Two of the recent wells tested at strong initial rates with low gas-oil ratios and are expected to have stabilized rates meeting or exceeding the Company's Dunvegan horizontal well performance average of 300 boe per day.  These wells are expected to come on production in the first quarter of 2012.  Two additional wells were drilled to extend the play 15 kilometers to the northeast and tested at higher gas-oil ratios. This liquids rich gas is being processed at the Wapiti Deep Cut facility, where liquids yields are over 100 bbls/mmcf. These wells are both now on production and are expected to have an average rate of 1 mmcf per day of gas with 140 barrels per day of oil and NGL's. The Company is participating in 4 (2.5 net) additional drills in the first quarter of 2012 and expects to exit the Quarter with approximately 1,800 boe per day of net production from the play.  With seven tested horizontals as well as various vertical tests, the Company has now delineated over 100 net Dunvegan locations.  Progress expects to drill an additional 6 net Dunvegan horizontals in the second half of 2012.

Progress holds a material land position covering approximately 415,000 net acres in the Deep Basin of northwest Alberta, including approximately 140,000 acres of Montney rights. Given the large and contiguous nature of the land base, the Company is able to test play concepts, including liquids-rich gas plays and light oil plays, and with success can quickly establish a meaningful position at lower cost than industry competitors.

First Quarter Dividend and Dividend Reinvestment Program
The Board of Directors of Progress today announced that the first quarter 2012 dividend will be maintained at $0.10 per share. The dividend will be payable on April 16, 2012 to holders of Common Shares of record as of March 31, 2012. The ex-dividend date is expected to be March 28, 2012.  Based on the March 1, 2012 closing share price on the Toronto Stock Exchange of $10.78, this represents an annualized yield of 3.7 percent.  The amount of future cash dividends, if any, is subject to the discretion of the Progress Board of Directors.

Progress has a dividend reinvestment plan (the "DRIP") that allows eligible shareholders of Progress to direct that their cash dividends be reinvested in additional common shares. Progress' current DRIP participation rate is approximately 45 percent.  A registered shareholder who wishes to enroll in the DRIP may do so by contacting Computershare Trust Company of Canada, the Plan Agent.  Beneficial shareholders who wish to participate in the DRIP should contact the broker or other nominee through which their common shares are held to provide appropriate enrollment instructions and to ensure any deadlines or other requirements that such broker or nominee may impose or be subject to are met. U.S. residents may not participate in the DRIP program.

Natural Gas Outlook
Natural gas prices remain under pressure as a result of continued mild temperatures across North America coupled with record production for the lower 48 states.  Progress has taken practical steps to protect the value of its gas stream for investors by reducing the number of wells that will be completed and brought on stream in 2012 and shutting in approximately 10 percent of production.  Other major North American gas producers have also begun to make supply side adjustments to correct the current imbalance in the form of both shut-ins and reduced capital programs.  Progress expects the supply side response to impact gas prices positively in the second half of 2012.

Annual Meeting of Shareholders
Progress' Annual Meeting of Shareholders is scheduled for Wednesday, May 2, 2012 at 3:30 p.m., Calgary time, at the Calgary Petroleum Club, 319-5th Avenue S.W. Calgary, Alberta.

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

Forward Looking Statement Advisory
This 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" 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; expected capital spending on the North Montney Joint Venture; potential drilling inventory; test rates; expected sources of funding for capital program in 2012; Progress' estimated 2011 exit production rate and forecast 2012 exit production rate; 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.

Statements relating to "reserves" or "resources" are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future.  The recovery and reserve estimates of Progress' reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.  As a consequence, actual results may differ materially from those anticipated in the forward looking statements.

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 boe 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.

Greg Kist, Vice President, Marketing, Government and Corporate Relations
403-539-1809 ([email protected]).

Kurtis Barrett, Analyst, Investor Relations and Marketing
403-539-1843 ([email protected]).