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Equal Energy Announces Its Results for the First Quarter Ended March 31, 2012

May 10, 2012

CALGARY, Alberta, May 10, 2012 /PRNewswire/ – Equal Energy Ltd. (“Equal”, “the
Company”, “We” or “Our”) (TSX: EQU) (NYSE:EQU) is pleased to announce
its financial and operating results for the first quarter ended March
31, 2012.

Don Klapko, President and Chief Executive Officer commented, “We are
pleased to deliver excellent results in the first quarter of 2012.  It
has been a very busy start to the year and I want to highlight some of
the key achievements so far.”

Strong Operating Results

Equal generated $1.8 million in net income in Q1 whilst facing the
headwinds of the lowest natural gas prices seen in ten years. 
Production was up 20% year on year and averaged over 10,000 boe per
day.  Funds from operations were up 12% year on year. Operating
expenses, G&A and interest expenses were all lower on a unit basis as a
result of a continued focus on our cost structure.  Capital spending
was less than cash flow for the quarter.

Improved Balance Sheet

The Company successfully closed on $9.7 million in non-core property
dispositions undertaken to reduce overall debt.  This has been part of
an ongoing balance sheet re-structuring and a strategy of improving of
our financial flexibility that have been key goals since early 2011.  I
am pleased to also announce that subsequent to the end of Q1, our
banking syndicate has confirmed the continuation of our $200 million
credit facility.  At this time our draw on this facility is only US$103
million which includes proceeds from the Mississippian oil venture and
allows us significant latitude.

Mississippian Oil Venture

We announced on April 4th the terms under which Equal sold 50% of its
working interest in Mississippian undeveloped lands in Oklahoma to
Atlas Energy Partners LP.  This deal was closed on April 26(th) with proceeds to Equal of US$18 million.  As part of this transaction
Equal has agreed with Atlas to jointly develop this acreage with Atlas
operating the drilling and completion phases and Equal operating the
production.  The venture intends to drill a minimum of six horizontal
wells for the balance of 2012 starting in late Q2 or early Q3.  The
immediate realization of these proceeds and the securing of a quality
joint venture partner underpin strong future value growth for Equal.

Successful Drilling Programs

In Q1 Equal drilled six successful wells.  Four wells were put down in
our northern Oklahoma Hunton play.  Two of these were on production at
quarter end, and the other two will be on in Q2.  All four wells also
preserved substantial additional Mississippian acreage.  Two wells were
drilled in our core Twin Cities Central Dolomite (TCCD) play also in
Oklahoma.  One was on production by the end of Q1 and the second was
substantially drilled and is awaiting tie-in.  Subsequent to the
quarter end Equal was drilling its third TCCD well and had just
finished drilling its first Cardium oil well in Canada.

Strategic Review

On May 3(rd), Equal’s board of directors announced the initiation of a strategic
review process to be managed by a special committee of independent
board members with the assistance of Scotiabank as strategic advisors. 
The board and management are responding to a perceived significant gap
between the value of the Company’s underlying assets, and the value
being recognized in the Company’s stock price.  The objective of the
strategic review is to explore ways to potentially close this gap and
improve the valuation of the Company.

The following table is a summary of selected financial and operational
information for the three months ended March 31, 2012 with comparative
2011 figures.


     Financial and Operations Summary   Three months ended March 31
     (in thousands except for volumes,
     percentages and per share andboe
                 amounts)                  2012            2011     Change

    FINANCIAL                                                           

    Oil, NGL and natural gas revenues
    including realized hedging            33,062          35,078     (6%)

    Funds from operations                 12,973          11,580      12%

      Per share - basic ($)                0.37            0.42     (12%)

      Per share - diluted ($)              0.36            0.42     (14%)

    Net income / (loss)                    1,837         (3,382)        

      Per share - basic and diluted ($)    0.05           (0.12)        

    Total assets                         441,503         386,376        

    Working capital (deficit) including
    long-term debt                      (119,822)       (72,791)        

    Convertible debentures                41,534          80,336        

    Shareholders' equity                 217,865         165,337        

    SHARES OUTSTANDING                                                  

    Shares outstanding - basic (000s)     34,970          27,724        

    Shares outstanding - diluted (000s)   36,129          27,724        

    Shares outstanding at period end
    (000s)                                34,992          27,733        

    OPERATIONS                                                          

    Average daily production                                            

      Oil (bbls per day)                   1,353           2,567    (47%)

      NGL (bbls per day)                   3,908           2,324      68%

      Gas (mcf per day)                   30,729          22,545      36%

      Total (boe per day)                 10,383           8,649      20%

    Average sales price                                                 

      Oil ($ per bbl)                      88.76           75.40      18%

      NGL ($ per bbl)                      39.03           47.52    (18%)

      Gas ($ per mcf)                      2.95            3.80     (22%)

    Cash flow netback ($ per boe)                                       

      Revenue                              34.99           45.06    (22%)

      Royalties                            6.53            9.33     (30%)

      Production expenses                  9.74            11.37    (14%)

      Transportation expenses              0.31            0.56     (45%)

      Operating netback                    18.41           23.80    (23%)

      General and administrative           2.60            5.46     (52%)

      Cash interest expense                2.24            3.83     (42%)

      Other cash costs                    (0.16)          (0.37)    (57%)

      Cash flow netback                    13.73           14.88     (8%)

Equal Energy Ltd.’s complete unaudited, consolidated financial
statements, accompanying notes and Management’s Discussion and Analysis
for the quarter ended March 31, 2012 will be available on Equal’s
website at www.equalenergy.ca, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/degar.shtml.

About Equal Energy Ltd.

Equal is an exploration and production oil and gas company based in
Calgary, Alberta, Canada with its United States operations office
located in Oklahoma City, Oklahoma. Equal’s shares and debentures are
listed on the Toronto Stock Exchange under the symbols (EQU, EQU.DB.B)
and Equal’s shares are listed on the New York Stock Exchange under the
symbol (EQU). The portfolio of oil and gas properties is geographically
diversified with producing properties located in Alberta and Oklahoma.
Current production is comprised of approximately 13% crude oil, 38%
NGLs and 49 % natural gas. Equal has compiled a multi-year drilling
inventory for its properties including its new oil play opportunities
in the Cardium and Viking in central Alberta in addition to its
extensive inventory of drilling locations in the Hunton liquids-rich,
natural gas play and the Mississippian light oil play in Oklahoma.

Forward-Looking Statements

Certain information in this press release constitutes forward-looking
statements under applicable securities law including ongoing drilling
plans and cost of capital. Any statements that are contained in this
press release that are not statements of historical fact may be deemed
to be forward-looking statements. Forward-looking statements are often
identified by terms such as “may,” “should,” “anticipate,” “expects,”
“seeks” and similar expressions. Forward-looking statements necessarily
involve known and unknown risks, including the closing of the sale of
certain Mississippian interests, the commencement and continuation of
joint venture operations on the Mississippian play with Atlas, the
repayment of debt, the availability of funds under Equal’s credit
facility and the use of Equal; risks associated with oil and gas
production; marketing and transportation; loss of markets; volatility
of commodity prices; currency and interest rate fluctuations;
imprecision of reserve estimates; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to realize
the anticipated benefits of acquisitions or dispositions; inability to
access sufficient capital from internal and external sources; changes
in legislation, including but not limited to income tax, environmental
laws and regulatory matters. Readers are cautioned that the foregoing
list of factors is not exhaustive.

Readers are cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ
materially from those anticipated forward-looking statements contained
in this press release are expressly qualified by this cautionary
statement.

Natural gas volumes recorded in thousand cubic feet (“mcf”) are
converted to barrels of oil equivalent (“boe”) using the ratio of six
(6) thousand cubic feet to one (1) barrel of oil (“bbl”). Boe’s may be
misleading, particularly if used in isolation. A boe conversion ratio
of 6 mcf: 1 bbl is based on an energy equivalent conversion method
primarily applicable at the burner tip and does not represent a value
equivalent at the wellhead.

Additional information on these and other factors that could affect
Equal’s operations or financial results are included in Equal’s reports
on file with Canadian and U.S. securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com), the SEC’s
website (
www.sec.gov), Equal’s website (www.equalenergy.ca) or by contacting Equal.
Furthermore, the forward looking statements contained in this news
release are made as of the date of this news release, and Equal 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 expressly required
by securities law.

SOURCE Equal Energy Ltd.


Source: PR Newswire