Buffalo Resources Announces Q2 2008 Results

Buffalo Resources Corp. ("Buffalo") (TSX VENTURE:BFR) is pleased to report
record financial results for the three and six months ended June 30, 2008.


HIGHLIGHTS

- Record Q2 2008 cash flow from operations of $11.9 million ($0.17 per share),
resulting in a total of $0.29 per share for the six months ended June 30, 2008.


- Net income for the six months of $6.9 million ($0.10 per share), up from a
loss of $0.9 million for 2007.


- Reduction in net debt from $63.6 million at December 31, 2007 to $34.8 million
at June 30, 2008, representing 0.7 times the Q2 annualized cash flow from
operations.


- Revenue was maximized during the period as selling prices remained unhedged.

- Buffalo completed the sale of its Killam oil property for $21.7 million or
$56,000 per flowing barrel while oil prices were at record levels.


- Completed a $30 million drilling joint venture and an $11 million equity
financing.




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FINANCIAL ($000s except shares and per share amounts)

                                     Three months ended    Six months ended
                                      June 30,   May 31,  June 30,   May 31,
                                         2008      2007      2008      2007
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Revenue                                24,540     8,398    45,166    16,756
Cash flow from operations              11,924     2,909    20,657     4,734
 Basic and diluted per share         $   0.17   $  0.07  $   0.29  $   0.12
Net earnings (loss)                     5,029       123     6,927      (898)
 Basic and diluted per share         $   0.07   $  0.00  $   0.10  $  (0.02)
Capital expenditures (dispositions)    (7,450)    3,145     1,313     9,878

                                                      December 31,  June 30,
As at                                                        2008      2007
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Working capital (deficit)                                 (34,757)  (63,628)
Shareholders' equity                                      111,406    94,461
Total assets                                              196,042   205,272
Common shares outstanding (000s)                           76,702    65,702
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OPERATIONS

                                     Three months ended    Six months ended
                                      June 30,   May 31,  June 30,   May 31,
                                         2008      2007      2008      2007
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Average daily production
 Oil and NGLs (bbls/d)                  1,430       407     1,698       353
 Natural gas (mcf/d)                   10,861     8,441    10,864     9,195
 Barrels of oil equivalent (boe/d)      3,241     1,814     3,509     1,886
Average realized prices
 Oil and NGLs ($/bbls)                 104.11     49.59     84.31     52.62
 Natural gas ($/mcf)                    10.94      8.26      9.52      7.65
 Barrels of oil equivalent ($/boe)      83.22     50.32     70.73     48.83
Field netback ($/boe)                   46.94     26.90     38.42     24.07
Cash flow ($/boe)                       40.43     17.43     32.35     13.80
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Q2 2008 OPERATIONS

Buffalo recorded production volumes of 3,241 boe/d for the second quarter of
2008, a 79% increase over the comparative quarter in 2007. The Q2 2008
production volume includes a negative adjustment of approximately 300 boe/d. The
adjustment is mainly related to volumes that were reported as sales in the prior
quarter where the wells have subsequently been determined to have "paid out" and
Buffalo's working interest has been adjusted retroactively to the payout date.
Revenue increased 192% to $24.5 million - the result of increased production
combined with record high oil prices. The price of Hardisty Heavy 12 degrees
oil, which approximates the commodity selling price for the majority of
Buffalo's oil, averaged $96.57 per barrel in Q2 2008, an increase of 119% over
the Q2 2007 price. Consequently, the Company's realized average selling price
for oil and NGLs increased 109% from $49.59 per barrel for Q2 2007 to $104.11
per barrel for the current quarter. Buffalo's Q2 2008 selling price for natural
gas averaged $10.94 per Mcf, a 32% increase over the Q2 2007 price, reflecting
the change in commodity prices. The Company did not hedge the selling prices of
its production during 2008. In the current period, Buffalo's production was
weighted 44% to oil and NGLs compared with 22% in 2007.


Field netback was $13.8 million for the three months ended June 30, 2008
compared with $4.4 million in 2007. This equates to $46.94 per boe compared with
$26.90 in 2007. Royalty expense remained relatively constant at 22% of revenue.
Operating costs increased to $18.10 per boe in Q2 2008 from $12.67 per boe in
2007. This increase mainly resulted from the increased production weighting
towards heavy oil in the current period, the timing of recording property taxes
and regulatory administration fees and an adjustment for gas processing fees
related to prior periods totalling $2.06 per boe.


General and administrative expense increased from $0.9 million for the quarter
ended May 31, 2007 to $1.2 million for the current period, mainly reflecting
increased staffing associated with the larger production and exploratory land
base. The Company generated cash flow from operations of $11.9 million or $0.17
per share for the current quarter compared with $2.9 million or $0.07 per share
for the comparative period. Depletion, depreciation and accretion expense
increased to $16.72 per boe from $14.99 in Q2 2007, reflecting the cost of
property acquisitions in the second half of 2007. Buffalo generated net income
before tax of $6.7 million for the quarter resulting in a future income tax
expense of $1.6 million. Buffalo does not expect to pay income taxes in 2008 and
had approximately $75 million available in unused income tax pool balances at
June 30, 2008. Net income for the quarter was $5 million or $0.07 per share, up
from $0.1 million or $0.00 per share in 2007.


EXPLORATION AND DEVELOPMENT

During the three months ended June 30, 2008, Buffalo sold its Killam, Alberta
oil property for $21.7 million or approximately $56,000 per flowing barrel,
acquired an additional minor interest in its Pincher Creek property for $0.5
million and directed $13.8 million towards exploration and development
activities. During the quarter, Buffalo finished drilling and tied-in a
horizontal Mississippian gas well at Pincher Creek, Alberta. This well initially
produced at a rate of 2 MMcf/d of natural gas and has subsequently stabilized in
the range of 1 MMcf/d. A Peace River Arch well was completed in the Montney
formation and placed on production at a rate of 3 MMcf/d with 25 barrels of
associated liquids. In June, Buffalo commenced a ten well drilling program at
Frog Lake of which five wells were drilled by the reporting date, and five wells
were drilled in July. Nine of these wells are currently producing heavy oil and
one was abandoned.


CORPORATE

On May 9, 2008, Buffalo completed a private placement of 11 million units priced
at $1.00 each. Each unit comprised one common share and one share purchase
warrant exercisable at $1.50. The cash proceeds from the private placement were
applied to reduce the balance owing under the bank credit facility and, together
with the strong cash flow from operations for the quarter and the proceeds from
the sale of the Killam property, had the effect of reducing the bank debt to
$26.1 million. At June 30, 2008 net indebtedness represented 0.7 times the
annualized cash flow for Q2 2008. 


OUTLOOK

During the third quarter of 2008 light oil selling prices have retreated from
the record levels established in the first half of the year but have still
averaged $130 per barrel for the period. The heavy oil price differential
between Edmonton par light oil and Lloydblend heavy oil has averaged less than
$20 over this period so Buffalo expects that it will again deliver strong cash
flow from operations in the third quarter. Buffalo's oil and gas selling prices
remain unhedged.


During the second quarter, Buffalo entered into a drilling joint venture with a
financial partner whereby the partner will pay 50% of Buffalo's drilling,
completion and equipping costs to a maximum of $15 million in all wells drilled
by Buffalo to earn 50% of Buffalo's working interest before payout in those
wells and 30% after payout. The joint venture funding will allow Buffalo to
substantially increase its drilling program with the likelihood of drilling as
many as 65 wells before year-end. A holding application has been submitted to
the Alberta Energy and Utilities Board, and once approved, will increase the
drilling density at Frog Lake, adding a further 160 locations. Buffalo expects
this application to be approved in September 2008 and plans to drill a further
40 or 50 wells at Frog Lake before year-end. Other drilling plans for the
remainder of the year include two horizontal wells targeting light oil in
southeast Saskatchewan, a horizontal oil well and two natural gas exploration
wells in the Peace River Arch of Alberta, including a follow up well to the
Company's recently drilled Montney gas discovery and eight wells targeting
natural gas at Whitecourt, Alberta.


In mid August 2008, following a scheduled shut-down of the Shell Waterton gas
plant for turnaround and facility upgrades, the Company's Pincher Creek field
was shut-in. Buffalo plans to use this down-time to modify its operations for
improved efficiency, to perform maintenance on all facilities and to reduce the
operational footprint by consolidating the liquids handling facilities into one
location. Buffalo expects the field to return to production in November 2008.


Buffalo is a Canadian junior oil and gas company engaged in the exploration,
development and production of oil and gas reserves in the provinces of Alberta
and Saskatchewan.


Buffalo's interim financial statements and Management's Discussion and Analysis
for the six months ended June 30, 2008 are available on SEDAR (www.sedar.com)
and on Buffalo's website at www.buffaloresources.com.


Certain information set forth in this press release contains forward looking
statements. 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, reliance should not be placed on
forward-looking statements. Buffalo's actual results, performance or
achievements 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 statements will transpire
or occur, or if any of them do so, what benefits Buffalo will derive therefrom.
Buffalo disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.


Barrels of oil equivalent (Boe's) may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf of gas = 1 Bbl of oil is based upon
an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. The terms "cash flow
from operations" and "field netback" are non-GAAP financial measures that do not
have any standardized meaning prescribed by Canadian Generally Accepted
Accounting Principles ("GAAP") and are therefore unlikely to be comparable to
similar measures presented by other issuers. Both "cash flow from operations"
and "field netback" provide useful information to investors and management since
they are an indicator of the Corporation's profitability and ability to fund
future capital expenditures which drives growth. Cash flow from operations is
calculated as earnings (loss) before charges for depletion, depreciation and
accretion, stock-based compensation and future income taxes and after deducting
asset retirement expenditures. The inclusion of changes in non-cash operating
working capital results in cash flow from operating activities. Field netback
represents the profit margin from the sale of oil, natural gas and natural gas
liquids and is calculated as revenues less royalties and operating expenses.