Mr. Michael Greenwood reports

PRD ENERGY ANNOUNCES OPERATIONAL UPDATE

PRD Energy Inc. has filed its financial statements and operating results as at and for the nine months ended Sept. 30, 2014, and has provided an operational update on activities to date as well as an outlook for the remainder of 2014. The company's interim condensed consolidated financial statements and management's discussion and analysis for the reporting period will be available on SEDAR and posted on the company's website.

As a result of the recent decline in commodity prices, the company has conducted an internal evaluation of its three primary near-term projects: Boerger, Volkensen and Sittensen. All three projects remain economically viable in the current pricing environment based on the company's capital and reservoir assumptions. However, the company is revising its guidance on the expected timing of these activities as a result of regulatory delays and corporate planning initiatives to conserve cash and maximize asset values.

Boerger field

The company is in discussions with its joint venture partner to become the designated operator of the Boerger pool (through either acquisition of the partner's interest or by mutual agreement) in order to accelerate development time frames for the Boerger pool. The company plans to drill two to three deviated wells from the Boerger 7A well site in the second quarter of 2015, as the next stage of development for the Boerger pool, conditional on the company becoming the designated operator during 2014 or early 2015. The company believes that deviated wells are the optimal well design for drilling into the underlying reservoir structure and should reduce operational risk and capital exposures when compared with horizontal wells, as originally planned. The company's current cost estimate for its 50-per-cent working-interest share is $2.25-million for each deviated well, including drilling, completion and equipping the wells.

During the three months ended Sept. 30, 2014, the operator produced the Boerger 7A well intermittently in order to carry out pressure transient well testing, and produced a total of 3,091 barrels during 34 days of operation. Since being placed on production on Feb. 24, 2014, until Sept. 30, 2014, the Boerger 7A well has completed 136 operating days and has produced a total of 19,023 barrels of oil, or an average of 140 barrels per day, when operational. PRD is encouraged by the initial results of this well, but believes that the well is not producing to its full capability as a result of continuing reservoir testing and other operational issues, as well as failure to produce from the full horizontal length of the well. The company is evaluating various workover and stimulation possibilities to increase the performance of Boerger 7A well, in the event that the company obtains operatorship.

Regulatory affairs/Volkensen/Sittensen

The company is seeking regulatory approval for its Volkensen development plans and recently received regulatory approval for the Sittensen 3-D shoot. During November, 2014, the company met with its principal regulator to discuss concerns around the predictability of timing for permitting in relation to its current and future projects. The regulator has agreed to work with the company to provide clarity and predictability to permitting time frames. The company believes that enacting a more expeditious and streamlined regulatory process would enhance its prospects for 2015 and beyond.

The Volkensen development permit was submitted in August, 2014. As a result of additional data and information requests from the regulator, there have been a number of delays in the permitting process. The company does not believe that these delays are indicative of the likelihood to receive permits, as they are procedural in nature and are not in relation to public feedback or concerns about the project. The company has revised its expectations as to timing for field activities, and estimates site construction and drilling to start early in the second quarter of 2015. The company has been granted an extension until April 30, 2015, to commence site activities at Volkensen, with a further extension expected to be granted to accommodate the company's proposed drilling program. The company is now planning on drilling a vertical/deviated well off the proposed well site pad to evaluate the downhole drilling conditions and reservoir parameters in the Volkensen pool prior to horizontal development. The company is planning on cutting core, taking pressure measurements and evaluating the reservoirs with modern geophysical logs. These results, combined with the results of the Sittensen 3-D seismic program (which covers a portion of the Volkensen licences), will further reduce the operational and production risks for future pool developments in both the Volkensen and Sittensen licences.

The Sittensen 3-D seismic shoot permit was issued by the regulator on Nov. 19, 2014, and is subject to certain customary conditions. The company is very pleased by the shortened length of time for the issuance of this permit, being less than six months. The company anticipates starting the shoot in the first quarter of 2015, conditional on being granted land access by certain landowners. If seasonal surface access issues prevent the shoot from being commenced in the first quarter of 2015, the next earliest opportunity to conduct the seismic shoot will be in the second half of 2015. The company has reduced the seismic area to 70 square kilometres from 90 square kilometres to take into consideration community concerns. The reduction in size will reduce the total cost without compromising the development and exploration opportunity being targeted by the shoot. As a result, the shoot is expected to cost approximately $4.5-million, compared to the previously disclosed $5-million expected procurement cost.

Joint venture partner

The company is in the process of seeking a joint venture partner for the Volkensen and Sittensen licences. The company has executed several confidentiality agreements and held discussions; however, it has not entered into any definitive arrangements at this time.

Other licences

PRD is continuing to augment its understanding of its existing land base of 2,413,300 acres with improved access to data of Germany's major oil and gas companies. Management has completed a technical review of its existing licences and prospects, resulting in the high-grading of certain exploration and production licences, and the company expects to materially reduce the size of certain licences during 2015 as a result of these assessments. The company has also applied for certain new licences that have been identified as prospective during its internal review process. These licences are expected to be the focus of future development activity in late 2015 and throughout 2016.

We seek Safe Harbor.