Painted Pony Petroleum Ltd. ("Painted Pony" or the "Company") (TSX
VENTURE:PPY.A) (TSX VENTURE:PPY.B) is pleased to report the financial results
for the three months ended June 30, 2011 and to provide an operational update.
During the second quarter of 2011, Painted Pony's operating and financial
highlights include the following significant changes: 




--  The Company commissioned a contingent resource assessment for its
    Montney assets in northeast British Columbia, with an effective date of
    June 30, 2011. This assessment, resulted in a best-estimate contingent
    resource of 2.1 trillion cubic feet of gas equivalent net to Painted
    Pony, which equates to 358.2 million boe ("mmboe"), including 40.2 mmboe
    of liquids, having a net present value, using a 10% discount rate
    ("NPV10") of $2.1 billion; 
--  Company total proved plus probable reserves grew to 85.6 mmboe (up 163%
    in 6 months) with a NPV10 of $797.9 million (up 126% in 6 months); 
--  Production averaged 3,593 boe per day (weighted 60% gas and 40% oil and
    liquids), an increase of 42% from the second quarter of 2010; 
--  Exited the second quarter of 2011 with no debt and a positive working
    capital position of $40.3 million and its credit facility was
    subsequently increased to $80 million; 
--  Generated funds flow from operations of $10.4 million ($0.17 per diluted
    share); and 
--  Realized second quarter 2011 field netbacks of $66.48 per boe for oil-
    weighted assets in Saskatchewan and $15.66 per boe for gas-weighted
    assets in British Columbia.



RESERVES 

Painted Pony completed a mid-year reserves update and a Montney contingent
resource assessment. GLJ Petroleum Consultants Ltd. and Sproule Associates
Limited were engaged to prepare independent evaluation reports of the reserves
and contingent resources on the Company's British Columbia properties and the
reserves on the Company's Saskatchewan assets, respectively. Both reports were
dated effective June 30, 2011 and were prepared in accordance with National
Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities). As
previously announced on July 27, 2011, the best estimate contingent resources
for the Company's Montney assets increased to 2.1 trillion cubic feet of gas
equivalent, equating to 358.2 million boe ("mmboe"), including 40.2 mmboe of
liquids, with a net present value using a 10% discount rate ("NPV10") of $2.1
billion. Total proved plus probable reserves totaled 85.6 mmboe, an increase of
163% since December 31, 2010. The NPV10 of the Company's proved plus probable
reserves was $797.9 million, an increase of 126% in the first six months of
2011.


LAND

At June 30, 2011, the Company had 81,896 net acres (128 net sections) of land in
Saskatchewan and 132,175 net acres (207 net sections) of land in British
Columbia, including over 127 net sections with Montney rights. As previously
announced on July 27, 2011, the Company's British Columbia landholdings have
been ascribed a value of $123.7 million by Seaton-Jordan & Associates Ltd. in an
updated independent valuation, effective June 30, 2011. Undeveloped Saskatchewan
acreage was not included in the Seaton-Jordan Report and was valued at $52.7
million, as at December 31, 2010. The fair value of the undeveloped acreage was
determined in accordance with NI 51-101. At the August British Columbia Crown
land sale the Company acquired an additional 4,200 net acres of land with
Montney rights.


PRODUCTION 

Painted Pony's sales volumes averaged 3,593 boe per day during the three months
ended June 30, 2011, an increase of 42% compared to the second quarter of 2010
and 11% less than the first quarter of 2011. These volumes were weighted 60%
towards gas compared to 38% in the comparable 2010 period. All of Painted Pony's
light oil sales originate from Saskatchewan operations while 94% of the sales of
gas, condensate and NGL's are from British Columbia. 


Second quarter production in Saskatchewan was adversely affected by extensive
flooding, which caused production curtailments and significant delays to
operational activity. In addition, a mid-stream gas processing facility
experienced an unscheduled plant inlet disruption midway through the second
quarter. Repairs to the facility are underway. Sales volumes of solution gas and
associated liquids from the Company's Midale Huntoon area are expected to resume
in late September. As a result of these disruptions, Saskatchewan sales in the
second quarter of 2011 averaged 1,422 boe per day. The Company currently has an
estimated 320 boe per day shut-in in Saskatchewan. During recent weeks the
excessive wet surface conditions have improved in many areas of Saskatchewan,
allowing Painted Pony to progress toward resuming normal production operations.


Sales from British Columbia assets averaged 2,171 boe per day in the second
quarter of 2011 compared to 1,945 boe per day in the first quarter. Late in the
second quarter of 2011, gas sales from the Cameron/Kobes area were temporarily
shut-in for 26 days for the scheduled McMahon gas processing plant turn-around.
Gas sales from the Cypress area of approximately 50 boe per day ceased in late
June 2011 after a third party pipeline was shut-in for repairs. 


Painted Pony is engaged in discussions with a midstream provider in the
Blair/Town area to increase gas plant capacity from 24 mmcf per day to 70 mmcf
per day, of which at least 32 mmcf per day is expected to be firm service to the
Company, by the second quarter of 2012. 


SASKATCHEWAN ACTIVITY

The Company's second quarter 2011 drilling program was also significantly
impacted by the extended wet conditions in Saskatchewan. Consequently the
forecast drilling schedule has been delayed by more than 10 weeks in comparison
to prior years. Recent drying weather has permitted the Company to resume its
drilling program in some areas. Painted Pony closed the previously announced
asset acquisition in the Flat Lake area of Saskatchewan in April. As at June 30,
2011, the Company has aggregated 21 net sections of land prospective for Bakken
oil in the area. In the third quarter of 2011, Painted Pony has drilled 1 (0.3
net) well in the area, with production testing over 200 boe per day. The Company
expects to drill 4 (1.8 net) additional wells in the Flat Lake area this year.


Painted Pony continues to pursue an active drilling program in Saskatchewan.
To-date in the third quarter the Company has drilled 8 (6.6 net) wells. In the
second half of 2011, the Company expects to drill a total of 28 (20.3 net) wells
in Saskatchewan. 


BRITISH COLUMBIA ACTIVITY

Painted Pony continued to delineate and develop its world-class Montney gas
project at Blair/Town and Cameron/Kobes in northeast British Columbia during the
second quarter of 2011. In the period, the Company completed and placed 5 (2.3
net) wells on production. Of these wells, 3 (1.5 net) were drilled on a single
pad, with each well targeting a different geological layer (upper, middle and
lower) of the Montney formation. Each of these three wells were successfully
completed, tested and tied into production during the second quarter. The middle
Montney well within this group represents the first horizontal completion in
this zone, on the Blair/Town block. It is located more than 15 miles north of
the nearest producing horizontal middle Montney well.


The two (1.2 net) Montney horizontal wells Painted Pony drilled in the second
quarter are currently being completed or tested. In the third quarter to date, 2
(0.7 net) wells have been drilled, of which 1 (0.2 net) is currently being
completed. There are 2 (1.2 net) wells currently drilling, targeting the
Montney. The Company plans to drill a total of 9 (5.6 net) Montney wells in the
second half of 2011.


FINANCIAL RESOURCES

Painted Pony continues to emphasize conservative financial management,
especially in periods of market and credit uncertainty. At June 30, 2011,
Painted Pony continued to have an undrawn credit facility and a positive working
capital position of $40.3 million. In August 2011, the demand revolving credit
facility was increased to $80.0 million, replacing the previous $75.0 million
facility, subject to review on or before March 31, 2012.


OUTLOOK

The Company continues to delineate and develop its two world class resource
plays; the Montney in northeast British Columbia and the Bakken in southeast
Saskatchewan. In addition Painted Pony plans to commence its first fracture
stimulations on the Buckinghorse formation in northeast British Columbia within
the next six months. If successful, these exploratory completions could begin to
unlock a vast new gas play, which would be vertically stacked over the
underlying Montney project. We look forward to a successful second half.


INVESTOR RELATIONS

Interested parties are invited to visit the Company's website on Thursday,
August 25, 2011 to view an updated presentation. 


Painted Pony's Class A Shares and Class B Shares trade on the TSX Venture
Exchange under the symbols "PPY.A" and "PPY.B", respectively. For further
information, please see www.paintedpony.ca or contact:




Financial and Operational Highlights                                        
(unaudited)                                                                 
----------------------------------------------------------------------------
                               Three months ended          Six months ended 
                                          June 30,                  June 30,
                                2011         2010         2011         2010 
----------------------------------------------------------------------------
Financial (000s, except                                                     
 per share)                                                                 
Petroleum and natural gas                                                   
 revenue (before                                                            
 royalties)              $    17,446  $    12,752  $    36,761  $    26,898 
Funds flow from                                                             
 operations(1)           $    10,376  $     7,704  $    22,474  $    16,860 
 Per share - basic(2)    $      0.17  $      0.17  $      0.39  $      0.38 
 Per share - diluted(3)  $      0.17  $      0.17  $      0.39  $      0.37 
Cash flow from operating                                                    
 activities              $    11,854  $     8,355  $    23,409  $    17,576 
Net income (loss)        $    (1,824) $       905  $       320  $     2,451 
 Per share - basic(2)    $     (0.03) $      0.02  $      0.01  $      0.06 
 Per share - diluted(3)  $     (0.03) $      0.02  $      0.01  $      0.05 
Capital expenditures(4)  $    37,407  $    32,127  $    62,492  $    67,505 
Net working capital      $    40,327  $    (8,592) $    40,327  $    (8,592)
Total assets             $   326,471  $   175,983  $   326,471  $   175,983 
Shares outstanding                                                          
 Class A                  59,532,673   44,136,700   59,532,673   44,136,700 
 Class B                   1,173,600    1,173,600    1,173,600    1,173,600 
Diluted weighted-average                                                    
 shares                   59,359,276   45,077,914   58,350,719   45,164,631 
Operational                                                                 
Daily sales volumes                                                         
 Oil (bbls per day)            1,274        1,518        1,541        1,620 
 Condensate (bbls per                                                       
  day)                            59           23           57           25 
 NGL's (bbls per day)             91           20          116           19 
 Gas (mcf per day)            13,012        5,826       12,572        4,581 
 Total (boe per day)           3,593        2,532        3,809        2,428 
Realized prices                                                             
 Oil (per bbl)           $    102.10  $     75.04  $     93.32  $     77.44 
 Gas (per mcf)           $      3.95  $      4.07  $      3.86  $      4.48 
Field operating netbacks                                                    
 British Columbia (per                                                      
  boe)                   $     15.66  $     12.34  $     14.99  $     12.42 
 Saskatchewan (per boe)  $     66.48  $     51.92  $     60.41  $     55.30 
 Company combined (per                                                      
  boe)                   $     35.76  $     36.36  $     35.85  $     41.43 
----------------------------------------------------------------------------
                                                                            

1.  This table contains the term "funds flow from operations", which should
    not be considered an alternative to, or more meaningful than "cash flow
    from operating activities" as determined in accordance with
    International Financial Reporting Standards ("IFRS") as an indicator of
    the Company's performance. Funds flow from operations and funds flow
    from operations per share (basic and diluted) does not have any
    standardized meaning prescribed by IFRS and may not be comparable with
    the calculation of similar measures for other entities. Management uses
    funds flow from operations to analyze operating performance and leverage
    and considers funds flow from operations to be a key measure as it
    demonstrates the Company's ability to generate the cash necessary to
    fund future capital investment. The reconciliation between funds flow
    from operations and cash flow from operating activities can be found in
    "Management's Discussion and Analysis". Funds flow from operations per
    share is calculated using the basic and diluted weighted average number
    of shares for the period, and after the deemed conversion of the Class B
    shares to Class A shares, consistent with the calculations of earnings
    per share. 
2.  Basic per share information is calculated on the basis of the weighted
    average number of Class A shares outstanding in the period. 
3.  Diluted per share information reflects the potential dilution effect of
    options and the convertible Class B shares, each of which may be anti-
    dilutive. Net income is adjusted for the amount of finance expense
    applicable to the Class B shares for the period. The conversion of Class
    B shares into Class A shares, if dilutive, is computed by dividing $10
    by the greater of $1.00 and the Current Trading Price, defined as the
    weighted average trading price of the Class A shares for the last 30
    consecutive trading days. 
4.  Including decommissioning obligations and share-based payments.



Advisory

This news release contains certain forward-looking statements, which are based
on numerous assumptions including but not limited to (i) drilling success; (ii)
production; (iii) future capital expenditures; and (iv) cash flow from operating
activities. The reader is cautioned that assumptions used in the preparation of
such information may prove to be incorrect.


With respect to forward-looking statements contained in this document, Painted
Pony has made a number of assumptions. The key assumptions underlying the
aforementioned forward-looking statements include assumptions that: (i)
commodity prices will be volatile throughout 2011; (ii) capital, undeveloped
lands and skilled personnel will continue to be available at the level Painted
Pony has enjoyed to date; (iii) Painted Pony will be able to obtain equipment in
a timely manner to carry out exploration, development and exploitation
activities; (iv) production rates in 2011 are expected to show growth from 2010;
(v) Painted Pony will have sufficient financial resources with which to conduct
the capital program; and (vi) the current tax and regulatory regime will remain
substantially unchanged. Certain or all of the forgoing assumptions may prove to
be untrue.


Certain information regarding Painted Pony set forth in this document, including
management's assessment of Painted Pony's future plans and operations, number,
type and timing of wells to be drilled, the planning and development of certain
prospects, production estimates, and expected production growth may constitute
forward-looking statements under applicable securities laws and necessarily
involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond Painted Pony's control, including without
limitation, risks associated with oil and gas exploration, development,
exploitation, production, marketing and transportation, loss of markets,
volatility of commodity prices, environmental risks, inability to obtain
drilling rigs or other services, capital expenditure costs, including drilling,
completion and facility costs, unexpected decline rates in wells, wells not
performing as expected, delays resulting from or inability to obtain required
regulatory approvals and ability to access sufficient capital from internal and
external sources, the impact of general economic conditions in Canada, the
United States and overseas, industry conditions, changes in laws and regulations
(including the adoption of new environmental laws and regulations) and changes
in how they are interpreted and enforced, increased competition, the lack of
availability of qualified personnel or management, fluctuations in foreign
exchange or interest rates, and stock market volatility and market valuations of
companies with respect to announced transactions and the final valuations
thereof. Readers are cautioned that the foregoing list of factors is not
exhaustive. Painted Pony'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, including the amount of proceeds, that the Company
will derive therefrom. All subsequent forward-looking statements, whether
written or oral, attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these cautionary statements.


Additional information on these and other factors that could affect Painted
Pony's operations and financial results are included in reports on file with
Canadian securities regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com) or Painted Pony's website (www.paintedpony.ca).


The forward-looking statements contained in this document are made as at the
date of this news release and Painted Pony does not undertake any obligation to
update publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required by applicable securities laws.


Special Note Regarding Disclosure of Reserves or Resources 

"Contingent Resources" is defined in the Canadian Oil and Gas Evaluation
Handbook as those quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations using established technology or
technology under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. Contingencies may
include factors such as economic, legal, environmental, political, and
regulatory matters, or a lack of markets. It is also appropriate to classify as
contingent resources the estimated discovered recoverable quantities associated
with a project in the early evaluation stage. Contingent resources are further
classified in accordance with the level of certainty associated with the
estimates and may be subclassified based on project maturity and/or
characterized by their economic status.


The contingent resources estimates, including the corresponding estimates of
before tax present value estimates, are estimates only and the actual results
may be greater than or less than the estimates provided herein. There is no
certainty that it will be commercially viable or technically feasible to produce
any portion of the resources.


BOEs may be misleading, particularly if used in isolation. A BOE conversion
ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.


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