Cobalt Announces 1st Quarter 2009 Results and Updates Proposed Corporate Sale

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES FOR DISSEMINATION IN THE UNITED STATES.

Cobalt Energy Ltd. ("Cobalt" or the "Company") (TSX VENTURE:CB.A) (TSX
VENTURE:CB.B) is pleased to announce that it has filed with applicable Canadian
securities regulatory authorities its unaudited first quarter financial
statements and related Management Discussion and Analysis for the three months
ended March 31, 2009. These filings are available for review at www.sedar.com.


Highlights

- The Company's production averaged 105 boe/d (93% crude oil) for the quarter,
compared to 19 boe/d for the first quarter 2008. 


- The main activity for the quarter was the successful completion, equipping and
testing of the Pembina 1-25 horizontal oil well drilled in December, 2008. The
well had an initial production rate of approximately 250 boe/d and is currently
producing approximately 150 boe/d (43% working interest).


- Capital expenditures amounted to approximately $469,000, of which $22,000 was
spent on land, $126,000 on drilling and completions, $248,000 on equipment and
facilities, and $73,000 on capitalized general and administration costs. 


- Subsequent to the quarter, Cobalt purchased 320 acres of undeveloped land at
43% working interest at Pembina, immediately offsetting the successful 1-25
horizontal oil well. 


- Established a new credit facility with a Canadian chartered bank for an
authorized amount of $2,650,000 consisting of a revolving demand loan in the
amount of $1,500,000 and a development demand loan for $1,150,000.  


- The Company also announced subsequent to the quarter that it entered into an
Arrangement Agreement for the sale of Cobalt through a proposed plan of
arrangement ("Plan of Arrangement" or "Plan") with Bonterra Oil & Gas Ltd.
("Bonterra") and Bonterra Energy Corp. to acquire all of the issued and
outstanding shares of Cobalt. The Company also entered into an agreement for the
sale of its Woking property located in the Peace River Arch area of Alberta for
cash consideration. A brief update on these matters is provided below.


The first quarter continued to be a challenging period for all companies in the
oil and gas industry with crude oil prices falling to their lowest levels in a
year and debt and equity markets essentially standing on the sidelines. During
the quarter Cobalt and its partners evaluated a successful horizontal oil well
in Pembina. The results of the initial testing were encouraging; however, the
entire prospect requires significant capital for additional drilling and land
acquisitions to fully evaluate its potential. Cobalt announced that it would
pursue options to move the Pembina prospect forward including new equity, debt
instruments, and possible arrangements with industry peers in order to extract
shareholder value from the Pembina prospect. The end result of this process was
the announcement of the proposed acquisition of Cobalt by Bonterra in an all
share transaction. 


Update to the Proposed Corporate Sale

Cobalt announces that the Company has entered into a definitive Arrangement
Agreement for the acquisition of Cobalt through a Plan of Arrangement with
Bonterra. The Plan contemplates the acquisition of all of the issued and
outstanding shares of Cobalt by Bonterra, subject to certain conditions, on the
following revised basis:


i) Class A Cobalt shareholders will receive 0.011875 Bonterra share per Cobalt
Class A share; and


ii) Class B Cobalt shareholders will receive 0.11875 Bonterra share per Cobalt
Class B share. 


Currently, Bonterra shares are trading at approximately $20.50.

The total transaction value of the Plan is approximately $5.5 million, including
the assumption of Cobalt's net debt and other obligations. The Board of
Directors of Cobalt ("Board") and Bonterra have unanimously approved the Plan of
Arrangement. Cobalt's Board has unanimously concluded that the Plan is in the
best interests of its shareholders and allows shareholders to continue
participating in the upside of the Pembina prospect and in the expected industry
rebound through shares in Bonterra. Bonterra also distributes an attractive
monthly dividend to its shareholders. 


Cobalt's Board has received an independent fairness opinion from Ross Smith
Sousa Advisors Ltd., ("Ross Smith Sousa") and has resolved to recommend that
Cobalt shareholders vote their shares in favour of the Plan. All of the
directors and officers of Cobalt, who together own approximately 31% of the
Class A shares have agreed to vote their shares in favour of the Plan. In
addition, certain major shareholders of Cobalt have also agreed to vote their
shares in favour of the Plan, resulting in an aggregate of approximately 58.6%
of the Class A shares and 32.5% of the Class B shares to vote in favour of the
Plan. Cobalt has agreed to pay a non-completion fee not to exceed $400,000 to
Bonterra under certain circumstances. 


Shareholders of Cobalt will be asked to approve the Plan of Arrangement at a
special meeting of shareholders expected to be held on June 30, 2009. An
information circular detailing the Plan is anticipated to be mailed to Cobalt
shareholders in early June. The Plan will require the approval of 66 2/3% of the
votes cast by the shareholders, the approval of the Court of Queen's Bench of
Alberta and other regulatory approvals.


Sale of Cobalt's Woking Property

Cobalt announces that it has entered into a Purchase and Sale Agreement with an
arms length party for the sale of its assets in the Woking area of Alberta which
closed May 29, 2009. The Woking property is currently shut-in. Cobalt received
$150,000 in cash, subject to certain standard adjustments. Ross Smith Sousa
acted as exclusive financial advisor to Cobalt with respect to the transaction. 


Cobalt is a junior oil and gas exploration and production company operating in
western Canada with current production of approximately 65 boe/d. Cobalt's Class
A and B shares trade on the TSX Venture Exchange under the symbols "CB.A" and
"CB.B", respectively. At March 31, 2009, the Company had 12,309,598 Class A
shares outstanding; 768,500 Class A options; 465,344 Class B shares and
2,143,001 Class A Warrants.


Reader Advisory - This news release contains certain forward-looking statements,
which include assumptions with respect to availability of funds and use of
capital. The reader is cautioned that assumptions used in the preparation of
such information may prove to be incorrect. All such forward looking statements
involve substantial known and unknown risks and uncertainties, certain of which
are beyond the Company's control. Such risks and uncertainties include, without
limitation, risks associated with oil and gas exploration, development,
exploitation, production, marketing and transportation, loss of markets,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, tax treatment
(including royalties), inability to retain drilling rigs and other services,
delays resulting from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external sources, the
impact of general economic conditions in Canada, the United States and overseas,
industry conditions, changes in laws and regulations (including the adoption of
new environmental laws and regulations) and changes in how they are interpreted
and enforced, increased competition, the lack of availability of qualified
personnel or management, fluctuations in foreign exchange or interest rates,
stock market volatility and market valuations of companies with respect to
announced transactions and the final valuations thereof, and obtaining required
approvals of regulatory authorities. The Company's actual results, performance
or achievements could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurances 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, including the amount
of proceeds, that the Company will derive therefrom. Readers are cautioned that
the foregoing list of factors is not exhaustive. All subsequent forward-looking
statements, whether written or oral, attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by these
cautionary statements. Furthermore, the forward-looking statements contained in
this news release are made as at the date of this news release and the Company
does not undertake any obligation to update publicly or to revise any of the
included forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable securities
laws. BOE or boe/d may be misleading particularly if used in isolation. A BOE
conversion of 6mcf:1bbl is based as an energy equivalency conversion method
primarily applicable at the burner tip and does not necessarily represent a
value equivalency at the well head.