TriOil Announces Drilling Results on First Operated Cardium Well at Lochend, Disposition of Non-Core Natural Gas Assets and a $60
Million 2011 Oil-Focused Capital Budget

CALGARY, Feb. 1 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company") (TSXV: TOL) is pleased to report the initial results of its first operated Cardium horizontal well in the Lochend area of Alberta, the disposition of approximately 300 boe per day of non-core central Alberta natural gas assets and our 2011 oil-focused capital budget.

TriOil drilled a 100 percent working interest Cardium horizontal well at Lochend late last year and completed the well in early January, 2011. The well was successfully stimulated with a 13 stage nitrified oil frac and flowed at an average rate of 500 barrels of oil per day (excluding associated solution gas volumes) over a 190 hour flow period. During the last 40 hours of flow, production from the well consisted primarily of formation oil at an average rate of approximately 275 barrels of oil per day (excluding associated natural gas production). Prior to shutting in the well for its mandatory 2 week pressure build up, the well had recovered 79 percent of its load oil volume. This well will be brought on production February 1, 2011.

This well is the northernmost Cardium horizontal well drilled by industry on the Lochend trend to date. The well is situated on a 7 section 100 per cent owned contiguous land block and also offsets TriOil's 75 per cent working interest land holdings in the northern Lochend Cardium fairway. We expect to spud a follow up horizontal well on our 100 percent land block from a multi-well surface pad during the first quarter. The well is situated in close proximity to TriOil's operated gas facilities allowing for a cost effective and timely tie-in of the associated natural gas production.

TriOil operated the drilling and completion of this horizontal well without experiencing any operational issues. Drilling and completion costs were below the costs of our non-operated 5 well Cardium Lochend horizontal program completed during the second half of 2010. We expect to achieve further cost reductions in our 2011 program with a larger scale operated program and ongoing refinement of drilling and completion techniques.

The Lochend Cardium trend is at an early stage of development with the majority of completions having taken place in the second half of 2010 and mainly limited to 10-12 stage gelled oil fracs. Based on the reservoir knowledge we have gained at Lochend to date and our technical assessment of evolving completion techniques in similar Cardium reservoirs in western Alberta, we believe that higher density fracture completions and a shift to more advanced slick water fracs, foamed water fracs, nitrified oil fracs and possibly gas fracs will improve productivity, recoveries and capital costs. 

TriOil has already made the move to more advanced multi-stage completions.  A nitrified oil frac was employed in TriOil's first operated horizontal well with encouraging early results and higher density slick water fracs are planned for the 5 Cardium horizontal wells we expect to drill (2 non-operated and 3 operated) at Lochend prior to breakup.

The first non-operated well of the first quarter program (TriOil 40 percent) has been drilled and is waiting on completion and the second non-operated well (TriOil 43.5 percent) is currently drilling in the horizontal section. The operator has successfully employed higher density slick water fracs in the Cardium in a number of areas, including Lochend. Both wells are expected to be completed in February utilizing slick water fracs and increased frac densities of up to 20 stages. A drilling rig has been secured for TriOil's 2011 operated program and we are currently planning to drill 3 horizontal Cardium wells prior to breakup, all of which will be completed using higher density slick water fracs. The first well is expected to spud in mid February. 

In addition to our 2011 grassroots horizontal drilling program, TriOil also plans to take advantage of the large number of existing vertical well bores the Company owns at Lochend. A number of these wellbores are prospective for uphole Cardium A sand completions and TriOil is currently planning 3 recompletions prior to breakup (2 slick water fracs and 1 foamed water frac). Recompletions in existing vertical wellbores offer attractive economic returns, provide the opportunity to assess the effectiveness of newer frac technologies and to de-risk areas of our land holdings prior to moving into a horizontal development phase. We are also evaluating the potential application of newer slim hole horizontal re-entry techniques.

NON-CORE NATURAL GAS DISPOSITION

Consistent with our ongoing program of non-core asset dispositions, we are pleased to report the disposition of approximately 300 boe per day of non-core natural gas production (the "Non-Core Disposition"). The sale price was $5.91 million (prior to closing adjustments) with the consideration comprised of $3.94 million in cash and 24.6 million freely tradeable common shares of Jomar Capital Corp ("Jomar") (TSXV:JOE.P) at a deemed price of $0.08 per share. Jomar shares are currently trading in the $0.13 per share range. The transaction closed on January 27, 2011 with an effective date of October 1, 2010. Disposition proceeds equate to approximately 5 times annual cash flow. This Non-Core Disposition further consolidates operations and provides additional financial flexibility to accelerate our light oil development programs.

The Company understands that its share ownership represents approximately 12.4 percent of the outstanding Class A shares of Jomar. The Company did not previously own or control any Jomar securities, does not have any current intention to acquire additional Jomar securities and does not act jointly or in concert with any other person in connection with ownership of Jomar securities. TriOil will review its holding of Jomar securities on an ongoing basis and may at any time dispose of all or any portion of the investment.

2011 OUTLOOK

TriOil plans to execute a capital budget of approximately $60 million during 2011. Our capital program is focused exclusively on light oil opportunities, with approximately 75 percent of our drilling capital being directed towards horizontal development of the Cardium light oil resource play at Lochend, Alberta. TriOil assembled a significant land position at Lochend in 2010 and currently owns high average working interests in over 80 (55 net) sections of prospective Cardium rights. TriOil operates approximately 70 percent of its Lochend land base and also operates the only natural gas processing facility in the area.

TriOil's current asset base and the 2011 capital program are expected to deliver average production of 1,900 to 2,050 boe per day and exit production of 2,300 to 2,500 boe per day for the year, net of the Non-Core Disposition.  TriOil recently completed and brought on production 2 oil wells at Sweeney and recently completed a 100% oil well at Lochend that were carried over from our 2010 drilling program. Current production is estimated at approximately 1,250 boe per day, excluding the recently completed Lochend Cardium well and net of the Non-Core Disposition.  TriOil's current oil weighting is anticipated to average approximately 70 percent in 2011 with an exit oil weighting of approximately 80 percent. This compares to the current oil weighting of approximately 45 percent.

TriOil expects to drill approximately 20 horizontal wells targeting oil at Lochend, Tableland and Sweeney, with the Lochend Cardium light oil resource play being our primary focus and accounting for 13 to 16 horizontal wells and 3 Cardium A completions in existing vertical wellbores.

The Company's $60 million 2011 capital expenditure program is expected to be funded by funds from operations, property dispositions and bank credit lines. TriOil's strong balance sheet provides both capacity and flexibility, with an estimated $5.5 million in positive working capital and an undrawn $25 million credit facility at December 31, 2010.  Our 2011 capital budget is based on an exchange rate of US$0.98 per Cdn$1.00 and commodity prices of US$85.00 per barrel WTI for light oil and Cdn$3.50 per gj at AECO which are below the current 2011 forward strip commodity prices. TriOil is unhedged at the current time, but is planning to initiate a hedging program in order to protect funds from operations and provide financial stability.

Based on the above noted commodity price assumptions, an overall royalty rate of approximately 15 per cent is expected. TriOil expects operating costs to average approximately $15.00 per boe, with production additions forecast at approximately $10.00 per boe and average operating costs trending lower over the next few years. This represents a significant improvement over the Company's operating costs in its initial year of operations in 2010 as we transition into a highly focused junior light oil resource Company.

2011 GUIDANCE SUMMARY

           
Capital Expenditures ($ millions)         $60.0
2011 annual average production (boe/d)         1,900 to 2,050
2011 exit production         2,300 to 2,500
WTI ($US/bbl)         $85.00
Exchange Rate (US/CND)         0.98
AECO ($/gj)         $3.50
Royalties (% of revenue)         15%
Operating Expenses ($ per boe)         $15.00

TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium oil trends in Alberta and the Bakken and Sanish oil trends in southeast Saskatchewan. TriOil has successfully executed its business plan in its first year of operations and has positioned the Company for solid growth in production, reserves and shareholder value.

TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of January 31, 2011, there were approximately 31.3 million shares issued and outstanding (34.6 million fully diluted).

Forward Looking Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "believe", "plans", "intends", "confident", "may", "objective", "ongoing", "will", "should", "project", and similar expressions are intended to identify forward-looking information. More particularly, this document contains forward looking statements which include, but are not limited to, expected future drilling and completion plans, expected production and reserves growth and the future operations of TriOil.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by TriOil, including with respect to the anticipated exploration and development opportunities and the outlook for the fiscal year ending December 31, 2010, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells, prevailing commodity prices and the availability of additional capital if and when required by the Corporation.

Any references in this news release to initial and/or final raw test or production rates and/or "flush" production rates or 30, 60 and 90 day production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.

Although TriOil believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriOil can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in TriOil's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com and TriOil's other public disclosure documents which have been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and TriOil undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Meaning of BOE

The term "boe" may be misleading, particularly if used in isolation. A boe conversion 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.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE TriOil Resources Ltd.

For further information:

Russell J. Tripp, President & CEO, TriOil Resources Ltd., Phone: (403) 265-4115

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