Mr. Colin Witwer reports

VIRGINIA HILLS OIL CORP. ANNOUNCES THIRD QUARTER 2015 RESULTS

Virginia Hills Oil Corp. has released its operating and financial results for the three and nine months ended Sept. 30, 2015, and its unaudited interim financial statements and related management's discussion and analysis (MD&A) for the quarter ended Sept. 30, 2015, are available on the System for Electronic Document Analysis and Retrieval or on the company's website.

                        THIRD QUARTER 2015 FINANCIAL AND OPERATIONAL HIGHLIGHTS
                                (In thousands except per-share amounts)

                                             Three months ended Sept. 30,   Nine months ended Sept. 30,
                                                      2015           2014           2015           2014 

Petroleum and natural gas sales                     $8,302        $15,018        $23,738        $51,414
Funds flow from operations                           1,079          4,245          3,502         17,432
Per share -- basic                                   $0.05          $1.95          $0.29          $8.03
Per share -- diluted                                 $0.05          $1.92          $0.29          $7.87
Net income (loss)                                  (3,098)             51            340            748
Per share -- basic (loss)                          $(0.16)          $0.02          $0.03          $0.34
Per share -- diluted (loss)                        $(0.16)          $0.02          $0.03          $0.34
Capital expenditures                                 7,246          2,846         10,093          4,631
Net debt                                           110,949        113,519        110,949        113,519
Operating
Number of days                                          92             92            273            273
Production
Oil and NGL (bbl/d)                                  1,416          1,756          1,482          1,943
Natural gas (mcf/d)                                    325            316            304            379
Total production (boe/d)                             1,470          1,809          1,533          2,006
Average realized price   
Oil and NGL ($/bbl)                                  63.44          92.92          58.49          96.86
Natural gas ($/mcf)                                   1.18           0.10           0.89          0. 38
Netback per boe ($)
Petroleum and natural gas sales                      61.36          90.24          56.73          93.88
Royalties (loss)                                    (6.53)        (18.44)         (5.14)        (17.14)
Production and transportation
(expenses)                                         (29.85)        (32.06)        (26.86)        (28.10)
Field netback                                        24.98          39.74          24.73          48.64
Realized (loss) on derivative
financial instruments                                    -         (1.95)              -         (2.88)
Operating netback                                    24.98          37.79          24.73          45.76
Drilling
Gross wells                                            2.0              -            2.0              -
Net wells                                              2.0              -            2.0              -

Operations update and outlook

Low commodity prices throughout the first nine months of 2015 continue to present a challenging business environment for the Canadian oil and gas industry. The price of WTI (West Texas Intermediate) averaged $46.43 (U.S.) per barrel during the third quarter of 2015, down 52 per cent from $97.17 (U.S.) per barrel during the comparable period in 2014. Benchmark price decreases have been offset to some extent by the strong U.S dollar, which has resulted in an increase in the commodity prices realized in Canada. Virginia Hills' realized pricing for the third quarter of 2015 was $61.36 per boe compared with $90.24 per boe for the third quarter of 2014, and averaged $56.73 per boe for the first nine months of 2015 compared with $93.88 per boe for the same period in 2014. Virginia Hills' production in the third quarter was weighted 96 per cent to light oil and natural gas liquids, as a result the company's realized product pricing per unit has and will continue to track closely to oil pricing. Although the company anticipates that the oil supply and demand balance will stabilize in 2016, the return of 2014 pricing levels is not expected for a considerable amount of time. Consequently, Virginia Hills is anticipating average oil pricing for 2016 and 2017 at $50.00 (U.S.) per barrel (bbl) WTI and $55.00 (U.S.) per bbl WTI, respectively.

Production volumes for the three and nine months ending Sept. 30, 2015, averaged 1,470 boe/d and 1,533 boe/d, respectively, representing declines of 19 per cent and 24 per cent from 2014 levels. Production in the third quarter and year to date was negatively impacted by the sale of approximately 100 barrels of oil equivalent per day (boe/d) of production in the second quarter of 2015. In addition, the company shut in production of approximately 40 boe/d due to negative economics associated with the lower commodity price environment and no material production was added from new wells during the first nine months of 2015. Taking into account the disposition and the uneconomic shut-in production, the company's remaining light oil production base has declined at a rate that remains below 15 per cent annually over the prior year.

Management continues to focus on the operating cost structure of its Red Earth production and was successful in reducing production and transportation expenses in the third quarter and year to date from 2014 levels by 24 per cent and 27 per cent, respectively. Production expenses were down by 28 per cent to $3.5-million in the third quarter of 2015 from $4.8-million in the comparable 2014 quarter. Per-unit costs excluding transportation costs in the third quarter of 2015 were $25.73 per boe representing an 11-per-cent decrease from the third quarter of 2014.

Total operating expenses (production and transportation expense) were $11.2-million for the nine months ended Sept. 30, 2015, compared with $15.4-million in 2014, representing a decrease of 27 per cent year over year. The decrease in total operating expenses is due primarily to various operational cost-efficiency initiatives and a decline in base production rates. On a per-unit basis total operating expenses over the first nine months of 2015 dropped 4 per cent to $26.86 per boe from $28.10 per boe in 2014.

Year-to-date expense reductions were offset, in part, by non-recurring costs of approximately $700,000 associated with the cleanup of an emulsion pipeline break that occurred in the second quarter of 2015. Cleanup cost associated with the pipeline break had a negative impact on operating costs of approximately $1.79 per boe for the nine months ended Sept. 30, 2015, with costs incurred in the third quarter of approximately $100,000 representing a negative impact of 69 cents per boe for the third quarter.

Despite these cost savings initiatives, low commodity prices and lower average production volumes have directly impacted the company's field netback for the third quarter ended Sept. 30, 2015, which was $3.4-million ($24.98 per boe), compared with $8.2-million ($39.74 per boe) for the third quarter ended Sept. 30, 2014. During the third quarter of 2015, Virginia Hills' initiated its first capital program in the Red Earth area and spent approximately $7.2-million on capital activities drilling two gross (two net) horizontal light oil wells in addition to the purchase and installation of certain facilities and pipelines associated with the company's water flood projects.

In the third quarter of 2015, the company invested $2.6-million on optimizing its Slave Point water flood projects in the Red Earth area including certain pipelines and facility improvements and initiating the electrification of its water flood facilities and producing wells. It is anticipated that these projects will allow the company to increase its total water injection rates, under a lower cost structure, so that it can start to materially repressure the Slave Point reservoir. These projects did not provide any incremental production in the third quarter, however, the company anticipates significant production and reserves additions concurrent with lower overall per-unit operating costs within its water flood project areas over the next 12 to 24 months as these improvements take full effect.

The company completed the majority of its 2015 capital program as planned in the third quarter. Virginia Hills remained focused on maximizing the rate of return associated with these projects which lead to certain cycle time delays as the company actively pursued the lowest-cost solutions in a very volatile commodity and service price environment. As a result of the delays associated with the start-up of these projects Virginia Hills is expecting full-year production to average between 1,515 boe per day and 1,565 boe per day with exit production to range between 1,600 boe per day and 1,650 boe per day.

Through the optimization of its extensive Red Earth water flood project area, Virginia Hills believes it is positioned to add a substantial amount of production and reserves with very little incremental capital over the next 12-to-24-month period. These low-cost water flood additions are expected to allow the company to operate a capital program that is significantly below its free cash flow level over this time period which will provide the opportunity for meaningful debt reduction and value creation for its shareholders. The company maintains a risked and total unrisked undeveloped light oil horizontal drilling inventory in its Red Earth core area of 81 net wells and 176 net wells, respectively, representing over 15 years of potential drilling activity. With this undeveloped light oil drilling inventory and its substantial operated water flood infrastructure footprint in the Red Earth area, Virginia Hills remains uniquely positioned to enter a more meaningful drilling and production growth phase as commodity prices return to more historical levels in the next 24-month period.

We seek Safe Harbor.