INSIGNIA ENERGY LTD. ANNOUNCES OPERATIONAL UPDATE AND ACHIEVEMENT OF ITS 3,300 BOE/D 2010 EXIT PRODUCTION RATE GUIDANCE

CALGARY, Jan. 6 /CNW/ - Insignia Energy Ltd. ("Insignia" or the "Company") (TSX:ISN) is pleased to provide the following operational update and confirm the achievement of its 2010 exit production rate guidance of 3,300 boe/d.

PRODUCTION UPDATE

The Company averaged over 3,500 boe/d during the month of December 2010 based on field estimates, which included approximately 900 bbls/d of oil and natural gas liquids ("NGLs"). This compares to our previous market guidance established in May 2010, which provided for a 2010 exit rate of 3,300 boe/d.

Average Production:

    <<
                                     December      2010 Exit       December
                                      2010(1)       Guidance         2009
    -------------------------------------------------------------------------
    Oil & NGLs (Bbl/d)                     900            800            497
    Natural Gas (Mcf/d)                 15,720         15,000         10,130
    -------------------------------------------------------------------------
    Total (Boe/d)                        3,520          3,300          2,185

    (1) Based on field estimates
    >>

Based on the Company's average December 2010 production rate of 3,520 boe/d and the December 2009 production rate of 2,185 boe/d, the Company replaced natural declines and increased production 60% or approximately 1,300 boe/d over the course of the year. This also equates to a 60% increase on a per share basis.

The 60% increase in production was entirely a result of drilling activities. Total capital expenditures, including land and seismic, for the year were approximately $33 million (unaudited).

Over the course of 2010, the Company has increased its oil and NGLs production by 80% (approximately 400 bbls/d) from December 2009.

The Company's December 2010 oil and NGLs production was 26% of its total production.

OPERATIONAL UPDATE

Fourth Quarter 2010 highlights include:

    <<
    -   At Pouce Coupe, the Company successfully completed and brought on
        stream one (0.5 net) horizontal well located at 01-22-077-10W6M ("01-
        22 well") that was drilled in the previous quarter targeting the
        Lower Doig formation. The 01-22 well is subject to a confidential
        status and, therefore, no data is being released from this well at
        this time.

    -   Also at Pouce Coupe, the Company successfully drilled and completed
        one (0.5 net) horizontal well located at 13-20-077-10W6M ("13-20
        well") targeting the Lower Doig formation. The 13-20 well tested at
        rates, after a 90 hour test period, of approximately 7.5 mmcf/d at a
        flowing wellhead pressure of approximately 1,750 pounds per square
        inch. The 13-20 well was placed on production on December 19, 2010
        and is flowing at a restricted gross rate of approximately 3.5
        mmcf/d.

    -   At Pembina, the Company placed on production four (1.92 net) Cardium
        light oil wells and the December 2010 average net production from
        these wells was approximately 370 boe/d. See below for production
        details.

    2010 Major Property Highlights:

    Pouce Coupe

    -   During the year, the Company successfully drilled, completed and
        brought on stream four (3.0 net) horizontal wells targeting the Lower
        Doig formation.

    -   Current net production from Pouce Coupe is approximately 1,600 boe/d,
        which is a 68% increase from the 950 boe/d the Company produced from
        this property a year ago.

    -   The Pouce Coupe Lower Doig/Montney resource asset has been delineated
        by 16 vertical and 6 horizontal producers with long life production
        on Insignia's 38 (29 net) sections of land. In addition, there are
        over 28 industry operated Lower Doig/Montney wells within one to two
        miles of our land base. The Company has surplus processing capacity
        in the existing facilities in the area.

    -   Insignia has several years of drilling inventory with in excess of 80
        drilling locations identified on its land base targeting the resource
        potential in both the Lower Doig and Montney formations. The results
        to date indicate significant and sustainable growth potential for
        both reserves and production, in aggregate and on a per share basis,
        on Insignia's land base.
    >>

Pembina

    <<
    -   During the year, the Company successfully drilled, completed and
        brought on stream four (1.92 net) horizontal light oil wells
        targeting the Cardium formation. A summary of the completion
        characteristics and productivity of these four wells is as follows:

                                                             Average Gross
                                HZ                         Production (boe/d)
                              Length    No. of     Days    (field estimates)
       Well          WI         (m)      Fracs   Produced  ------------------
                                                           30 day     60 day
    -------------------------------------------------------------------------
    Card No. 1      100%       1,352      15        31       300        n/a
    Card No. 2       50%       1,404      10        77       260        205
    Card No. 3       21%       1,248      14        71       140        105
    Card No. 4       21%       1,245      12        66        60         50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -   Current net production from Pembina is approximately 370 boe/d. Prior
        to Insignia's recent 2010 drilling program the Company had no
        reserves and no production associated with the Cardium formation.

    -   Insignia has identified a drilling inventory of 29 (18 net)
        horizontal Cardium oil locations on its existing land base.
    >>

Caroline

    <<
    -   During the year, the Company successfully drilled, completed and
        brought on stream three (3 net) wells all targeting the liquids rich,
        multi zone potential in the Mannville formation (Glauconitic,
        Ostracod and Ellerslie).

    -   Current net production from Caroline is approximately 700 boe/d,
        which is a fivefold increase from the 130 boe/d the Company produced
        from this property a year ago.

    -   The Caroline property is characterized by a series of stacked gas and
        associated liquids charged tight sands. Vertical wellbores using
        limited entry perforating in combination with large conventional
        fracs have established a large resource potential on Insignia's land
        base. Insignia is evaluating the potential for horizontal wellbores
        with multi-stage fracturing to further enhance the value of this
        property. In addition to the resource potential in the Mannville
        section, up hole potential also exits and is producing in the
        immediate area from the oil bearing Cardium and liquids rich Viking
        formations.

    -   The area is approved for co-mingling and down spacing at up to four
        wells per section, Insignia has identified, on its existing land
        base, a drilling inventory of 23 (16.5 net) locations based on
        development at two wells per section.
    >>

2011 CAPITAL BUDGET AND GUIDANCE

    <<
    -   The Company expects to issue its 2011 capital budget and guidance for
        the first half of 2011 in the coming weeks. In the interim, and
        consistent with the shift to oil weighted projects completed in the
        second half of 2010, the Company expects to participate in the
        drilling of three (2 net) horizontal Cardium wells at Pembina in the
        first quarter of 2011.
    >>

Cautionary Statements

Disclosure provided herein in respect of BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf to 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. All BOE conversions in this press release are derived by converting gas to oil according to this 6 Mcf to 1 Bbl ratio.

Certain information set forth in this press release, including without limitation drilling plans and timing of release of 2011 capital budget and guidance contain forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Insignia's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise, and as such, undue reliance should not be placed on forward-looking statements. Insignia'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 statement will transpire or occur, or if any of them do so, what benefits that work and will derive therefrom. Insignia disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

SOURCE Insignia Energy Ltd.

For further information: Insignia Energy Ltd., 2300, 500-4th Avenue SW, Calgary, Alberta, T2P 2V6; Jeff Newcommon, President and CEO, (403) 536-8138, jeff.newcommon@insigniaenergy.ca, www.insigniaenergy.ca

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Insignia Energy Ltd.

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