Buffalo Resources Announces Q3 2008 Results

Buffalo Resources Corp. (TSX VENTURE:BFR) is pleased to report record financial
results for the nine months ended September 30, 2008.


HIGHLIGHTS

- Cash flow of $28.7 million ($0.40 per share) for the nine months compared with
$5.1 million ($0.11 per share) for the prior period, a 462% increase. 


- Year to date net earnings of $9.5 million ($0.13 per share) compared with a
$3.2 million loss in 2007.


- Production of 3,338 boe/d for the nine months versus 2,139 boe/d for the same
period in 2007, a 56% increase.


- Net debt reduced to $43.5 million from $63.6 million at December 31, 2007.

- Purchased the remaining 25% working interest in the Pincher Creek field for
$6.40 per proved plus probable boe of reserves ($7.31 per proved boe).


- Sold the Killam oil property for proceeds of $22.7 million or $56,000 per
flowing barrel.




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

                                     Three months ended   Nine months ended
                                    September    August September    August
                                           30,       31,       30,       31,
                                         2008      2007      2008      2007
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Revenue                                20,919    10,146    66,085    26,902
Cash flow from operations               8,049       404    28,706     5,139
 Basic and diluted per share         $   0.11  $   0.01  $   0.40  $   0.11
Net earnings (loss)                     2,568    (2,264)    9,495    (3,161)
 Basic and diluted per share         $   0.03    ($0.05) $   0.13    ($0.07)
Capital expenditures (dispositions)    17,014    60,369    18,327    71,017

                                                September 30,   December 31,
As at                                                   2008           2007
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Working capital (deficit)                            (43,519)       (63,628)
Shareholders' equity                                 114,251         94,461
Total assets                                         206,689        205,272
Common shares outstanding (000s)                      76,702         65,702
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OPERATIONS

                                     Three months ended   Nine months ended
                                    September    August September    August
                                           30,       31,       30,       31,
                                         2008      2007      2008      2007
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Average daily production
 Oil and NGLs (bbls/d)                  1,524       933     1,640       548
 Natural gas (mcf/d)                    8,867    10,246    10,194     9,548
 Barrels of oil equivalent (boe/d)      3,002     2,641     3,338     2,139
Average realized prices
 Oil and NGLs ($/bbls)                  97.62     55.92     87.36     56.15
 Natural gas ($/mcf)                     8.38      5.67      9.19      6.84
 Barrels of oil equivalent ($/boe)      75.74     41.76     72.24     45.90
Field netback ($/boe)                   37.52     16.13     38.15     20.78
Cash flow ($/boe)                       29.14      1.68     31.38      8.77
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Q3 2008 OPERATIONS

Buffalo produced an average of 3,002 boe/d of oil, NGLs and natural gas for the
third quarter of 2008, a 14% increase over the comparative quarter in 2007. This
production volume includes a negative adjustment of approximately 166 boe/d in
respect of a well which has been determined to have "paid out" in a previous
period and Buffalo's working interest has been adjusted to the payout date. This
production level was also impacted by the sale of approximately 400 boe/d in
June 2008 and the shut-in of production on August 13, 2008 at the Pincher Creek
field which was producing approximately 500 boe/d, net to the Company, at that
time. This shut-in occurred in connection with the planned construction of a new
sour gas processing train at the Shell Waterton gas plant that processes all the
Pincher Creek production. Shell's new facilities are expected to be operational
in early 2009 and Buffalo expects to have its Pincher Creek field back on
production by March 2009.


Revenue of $20.9 million was generated for the three months ended September 30,
2008, reflecting the strong commodity oil selling prices in the quarter. The
price of Hardisty Heavy 12 degrees oil, which approximates the commodity selling
price for the majority of Buffalo's oil, averaged $98.02 per barrel in Q3 2008.
The Company realized an average selling price for oil and NGLs of $97.62 per
barrel. The average selling price for natural gas was $8.38 per Mcf. In the
current quarter, Buffalo's production was evenly weighted as between natural gas
and oil and NGLs with the result that the average price realized per boe of
production was $75.74. The Company did not hedge the selling prices of its
production during 2008 and benefitted to the full extent from the strong prices
realized during the spring and summer.


Royalty expense was only 19% of oil and gas sales revenue in the quarter. The
Company has been successful in claiming a reduction in the Alberta Crown royalty
rate on its Pincher Creek gas sales for the period since November 2007,
resulting in the recording of a $760,000 reduction of royalty expense in the
current quarter. This decreased royalty expense by $2.75 per boe or
approximately 4% of oil and gas sales for the current three month period.
Operating costs averaged $23.82 per boe for the period. The forced shut-in of
the Pincher Creek field has provided the Company with the opportunity of
completing a major maintenance turnaround of the battery and compression
facilities at that property. Buffalo also completed an overhaul of its
compressor at the Fort Saskatchewan property and a revamping of the battery at
the Jenner property. These one-time activities accounted for $3.33 per boe of
the operating costs in the current quarter. In addition, the reversal of
production volumes and operating costs since the payout date in respect of a
well which was determined to have "paid out" in a previous period had the effect
of increasing the operating cost per boe by $5.71 for the three months.
Excluding the impact of prior period and one time items, operating costs for the
current quarter would have been $14.78 per boe. Including these and other prior
period items that were reported in Q2 2008, operating costs for the nine months
ended September 30, 2008 would have been $15.82 per boe.


The Company generated cash flow from operations of $8.0 million or $29.14 per
boe for the three months ended September 30, 2008. DD&A decreased to $14.22 per
boe for the quarter. This decrease is the result of the cost effective purchase
of the remaining 25% interest in the Pincher Creek property which was acquired
at a price of $7.31 per barrel of proved reserves. Consequently, Buffalo enjoyed
net income of $2.6 million or $0.03 per share for the three months ended
September 30, 2008.


EXPLORATION AND DEVELOPMENT

During the quarter, Buffalo invested $3.7 million into drilling, completions and
equipping wells, $1.7 million into production facilities, $2.6 million into
seismic data and $1.3 million into land.


Buffalo purchased the remaining interest in the Pincher Creek assets at a cost
of $7.6 million. This will allow the Company to take full control of the
property and to pursue other potential partners who can provide technical
knowledge and experience to enhance the further development of this highly
technical play. The ten well drilling program at Frog Lake which had been
initiated in June, was completed during the quarter. Nine of the wells were
completed, equipped and placed on production as pumping oil wells and the tenth
well was abandoned. In September, a five well drilling program was commenced at
Whitecourt, Alberta. One of the wells has been completed, equipped and tied-in
as a producing gas well and is currently on production at a rate of
approximately 2 MMcf/d. The remaining four wells are scheduled to be tied-in
before year-end. A horizontal well was drilled for production from the Midale
zone at Alameda, Saskatchewan in September. The well has been placed on
production and is currently producing approximately 70 barrels of oil per day.
During the shut-in of Shell Canada's Waterton gas plant, new compression related
facilities were installed at the Company's Pincher Creek property at a cost of
$905,000.


CORPORATE

On July 4, 2008, Buffalo entered into a drilling joint venture with financial
partners. Buffalo and the JV partners will each contribute $15 million to drill
wells on certain of Buffalo's existing properties. The partners are farming-in
on Buffalo's interest and will pay 50% of the costs of the wells to earn a 50%
interest before payout in the wells and a 30% interest after payout.


OUTLOOK

Early in 2008 the Company forecast a 2008 production exit rate between 4,800 and
5,200 boe/d. Buffalo produced an average of 3,002 boe/d for the third quarter
and anticipates exiting 2008 with production between 3,200 and 3,500 boe/d.
Contrary to Buffalo's initial understanding, construction of a new sour gas
processing train at the Shell Waterton gas plant which processes the Company's
gas from the Pincher Creek property has been extended into 2009 and
approximately 500 boe/d of production will be shut-in. In December 2007, Buffalo
applied for downspacing of producing wells at Frog Lake. Approval of the
application has not yet been granted resulting in the majority of Buffalo's 2008
drilling at Frog Lake being deferred until 2009.


Before year-end, Buffalo plans to drill four development wells at Frog Lake,
three exploration wells in the Peace River Arch and another horizontal well at
Alameda, Saskatchewan. A further seismic acquisition program will be undertaken
at Expanse in the Peace River Arch before year-end.


Commodity prices, particularly oil, have retreated from the highs enjoyed in the
spring and summer of 2008. For the month of October 2008, Edmonton light oil
averaged $86.20 per barrel and the heavy oil differential was approximately
$18.00 per barrel. In November, oil prices have fallen further. This commodity
price environment will create challenges for oil and gas producers and will
require prudent fiscal management and utilization of resources. Amongst other
actions, Buffalo will manage its debt position by applying increased rigour in
the selection and conduct of capital projects.


Buffalo's interim financial statements and Management's Discussion and Analysis
for the nine months ended September 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. More particularly, this press release contains statements concerning
Buffalo's projected exit rates of production of oil and natural gas for the 2008
financial year and of anticipated capital expenditures and cash flow from
operations for 2009. The forward-looking statements are based on certain key
assumptions made by Buffalo, including expectations and assumptions concerning
prevailing commodity prices and exchange rates, availability of labour and cost
of labour and services, the timing of receipt of regulatory approvals, the
performance of existing wells the success in drilling new wells, the performance
of new wells and the sufficiency of budgeted capital expenditures in carrying
out Buffalo's planned activities.


Although Buffalo 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 Buffalo 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, the 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. These risks are set out in more detail in Buffalo's annual
information form for the year ended December 31, 2007, which can be accessed at
www.sedar.com.


The forward-looking statements contained in this press release are made as of
the date hereof and Buffalo 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.


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.