Online Energy Inc. Announces 2011 Year End Reserves and Provides Operations Update

Online Energy Inc. ("Online" or the "Company") (TSX VENTURE:ONL) is pleased to
provide information on the Company's 2011 year end reserves. Online's reserves
were evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") effective
December 31, 2011, in accordance with National Instrument 51- 101 ("NI 51-101")
- Standards for Disclosure for Oil and Gas Activities of the Canadian Securities
Administrators (the "McDaniel Report"). All of the Company's reserves were
evaluated in the McDaniel Report. 


2011 Year End Reserve Highlights 



--  Total Company Proved plus Probable ("P+P") reserves of 1,444 Mboe (44%
    crude oil and natural gas liquids); 
--  87% of P+P reserves are categorized as P+P producing; and 
--  Reserve net present value before tax 10% of P+P reserves of $13.6
    million. 



Reserves

In accordance with NI 51-101, McDaniel prepared the McDaniel Report. The
McDaniel Report evaluated the oil, NGL and natural gas reserves attributable to
the Company effective December 31, 2011. The McDaniel Report is dated February
2, 2012. The tables below are a summary of the oil, NGL and natural gas reserves
attributable to the Company and the net present value of future net revenue
attributable to such reserves as evaluated in the McDaniel Report. The tables
summarize the data contained in the McDaniel Report and, as a result, may
contain slightly different numbers than such report due to rounding. Also due to
rounding, certain columns may not add exactly.


The reserve data provided in this news release presents only a portion of the
disclosure required under NI 51-101. All of the required information will be
contained in the Company's Annual Information Form for the year ended December
31, 2011, which will be filed on SEDAR on or before April 30, 2012.


The net present value of future net revenue attributable to reserves is stated
without provision for interest costs and general and administrative costs, but
after providing for estimated royalties, production costs, development costs,
other income, future capital expenditures and well abandonment costs for only
those wells assigned reserves by McDaniel. It should not be assumed that the
undiscounted or discounted net present value of future net revenue attributable
to reserves estimated by McDaniel represent the fair market value of those
reserves. Other assumptions and qualifications relating to costs, prices for
future production and other matters are summarized herein. The recovery and
reserve estimates of oil, NGL and natural gas reserves provided herein are
estimates only. Actual reserves may be greater than or less than the estimates
provided herein.


The McDaniel Report is based on certain factual data supplied by the Company and
the Company's opinion of reasonable practice in the industry. The extent and
character of ownership and all factual data pertaining to petroleum properties
and contracts (except for certain information residing in the public domain)
were supplied by the Company to McDaniel. McDaniel accepted this data as
presented and neither title searches nor field inspections were conducted.




Summary of Oil and Gas Reserves - Forecast Prices and Costs                 
                                                                            
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                       Gross Reserves                  Net Reserves         
                 Light                          Light                       
                   and                            and                       
                Medium        Natural          Medium        Natural        
                 Crude  Heavy     Gas Natural   Crude  Heavy     Gas Natural
                   Oil    Oil Liquids     Gas     Oil    Oil Liquids     Gas
----------------------------------------------------------------------------
                 Mbbls  Mbbls   Mbbls    MMcf   Mbbls  Mbbls   Mbbls    MMcf
                                                                            
Proved                                                                      
 Developed                                                                  
  Producing       27.1   43.8   327.0 3,610.2    24.4   39.9   195.2 3,173.6
 Developed                                                                  
  Non-                                                                      
  Producing       88.7      -       -       -    72.3      -       -       -
 Undeveloped         -      -       -       -       -      -       -       -
----------------------------------------------------------------------------
Total Proved     115.8   43.8   327.0 3,610.2    96.7   39.9   195.2 3,173.6
Probable          50.1    7.3    94.5 1,223.1    38.7    6.9    56.2 1,075.8
----------------------------------------------------------------------------
Total Proved                                                                
 plus Probable   165.9   51.2   421.4 4,833.2   135.5   46.8   251.5 4,249.3
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Net Present Value of Future Net Revenue - Forecast Prices and Costs Before  
 Future Income Tax                                                          
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         Before Future Income Tax Expenses and Discounted at
                         ---------------------------------------------------
                                 0%        5%       10%       15%        20%
----------------------------------------------------------------------------
                               (M$)      (M$)      (M$)      (M$)       (M$)
Proved                                                                      
 Developed Producing       14,945.1  10,948.9   8,699.9   7,282.8    6,310.8
 Developed Non-Producing    3,110.5   2,670.7   2,348.1   2,104.7    1,915.7
 Undeveloped                      -         -         -         -          -
----------------------------------------------------------------------------
Total Proved               18,055.6  13,619.6  11,048.0   9,387.4    8,226.5
Probable                    7,200.2   3,959.8   2,538.6   1,801.7    1,370.3
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Total Proved plus                                                           
 Probable                  25,255.8  17,579.5  13,586.7  11,189.1    9,596.9
----------------------------------------------------------------------------
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Net Present Value of Future Net Revenue - Forecast Prices and Costs After   
 Future Income Tax                                                          
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          After Future Income Tax Expenses and Discounted at
                          --------------------------------------------------
                                  0%        5%       10%       15%       20%
----------------------------------------------------------------------------
                                (M$)      (M$)      (M$)      (M$)      (M$)
Proved                                                                      
 Developed Producing        14,945.1  10,948.9   8,699.9   7,282.8   6,310.8
 Developed Non-Producing     2,490.4   2,352.4   2,170.4   1,999.0   1,849.7
 Undeveloped                       -         -         -         -         -
----------------------------------------------------------------------------
Total Proved                17,435.5  13,301.3  10,870.2   9,281.7   8,160.5
Probable                     5,433.3   2,998.5   1,942.0   1,398.9   1,082.7
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Total Proved plus Probable  22,868.8  16,299.9  12,812.3  10,680.6   9,243.2
----------------------------------------------------------------------------
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Pricing Assumptions - Forecast Prices and Costs

McDaniel employed the following pricing, exchange rate and inflation rate
assumptions as of December 31, 2011 in the McDaniel Report in estimating
reserves data using forecast prices and costs. 




        Medium and Light Crude Oil       Natural Gas          NGL           
     -------------------------------------------------------------          
            WTI   Edmonton    Cromer                                        
        Cushing  Par Price    Medium   Alberta                              
       Oklahoma         40      29.3       Gas                              
     40 degrees    degrees   degrees   Average  AECO - C Edmonton   Exchange
            API        API       API Plantgate      Spot  NGL mix       Rate
Year  (US$/bbl)    ($/bbl)   ($/bbl) ($/MMBtu) ($/MMBtu)  ($/bbl) ($US/$Cdn)
----------------------------------------------------------------------------
            (1)        (2)       (3)                          (4)           
2012      97.50      99.00     91.00      3.30      3.50    72.40     0.9750
2013      97.50      99.00     91.00      4.00      4.20    74.10     0.9750
2014     100.00     101.50     93.30      4.50      4.70    76.10     0.9750
2015     100.80     102.30     94.10      4.90      5.10    77.10     0.9750
2016     101.70     103.20     94.90      5.35      5.55    78.30     0.9750
2017     102.70     104.20     95.80      5.70      5.90    79.40     0.9750
2018     103.60     105.10     96.60      6.00      6.25    80.40     0.9750
2019     104.50     106.00     97.50      6.20      6.45    81.30     0.9750
2020     105.40     106.90     98.30      6.45      6.70    82.20     0.9750
2021     107.60     109.20    100.30      6.60      6.85    84.00     0.9750
                                                                            
(1) West Texas Intermediate at Cushing Oklahoma 40 degrees API/0.5% sulphur 
(2) Edmonton Light Sweet 40 degrees API, 0.3% sulphur                       
(3) Midale Cromer crude oil 29 degrees API, 2.0% sulphur                    
(4) NGL Mix based on 45 percent propane, 35 percent butane and 20 percent   
natural gasolines.                                                          
(5) Escalated at 2%/yr. thereafter                                          



Outlook

As previously reported on December 15, 2011, the Online Hz Paddle River
8-31-55-7W5M Ostracod Oil well was shut-in in mid-December after extensive
testing. Prior to being shut-in, the well flowed over a three day period at an
average rate of 129 bopd (27.6 degree API) and 81 mcf/d of gas (total of 142
boe/d) with water cuts averaging 50%. Over the final eight hours the well flowed
at an average rate of 149 bopd and 94 mcf/d of gas (total of 164 boe/d) with
water cuts averaging 33%. The well appears to have continued to clean-up while
flowing and performance may improve further, particularly when the benefit of
pumping equipment is realized.


The Company expects the 8-31 well to commence production by mid-February at an
initial rate of 100 - 150 bopd. 


Online is planning to spud its second horizontal well (100% WI) targeting
Ostracod oil in the Paddle River area prior to the end of February. The Company
has 37.5 net sections of prospective lands on the Ostracod oil trend in this
area. 


Current corporate production is estimated to be approximately 450 boe/d and is
expected to increase significantly when the 8-31 horizontal Ostracod oil well
comes on-stream.


Online anticipates filing its audited financial statements and related MD&A for
the year ended December 31, 2011 on SEDAR prior to April 30, 2012.


Online Energy Inc. is a domestic junior oil and gas exploration and production
company with assets in Alberta. Online trades on the TSX Venture Exchange under
the symbol ONL. Basic corporate information and periodically updated
presentations are available on the Company's website at www.onln.ca.


Cautionary Statements:

This press release contains certain forward-looking statements (forecasts) under
applicable securities laws relating to future events or future performance.
Forward-looking statements are necessarily based upon assumptions and judgments
with respect to the future including, but not limited to, the outlook for
commodity markets and capital markets, the performance of producing wells and
reservoirs, well development and operating performance, general economic and
business conditions, weather, the regulatory and legal environment and other
risks associated with oil and gas operations. In some cases, forward-looking
statements can be identified by terminology such as "may", "will", "should",
"expect", "projects", "plans", "anticipates" and similar expressions. These
statements represent management's expectations or beliefs concerning, among
other things, future operating results and various components thereof affecting
the economic performance of Online. Undue reliance should not be placed on these
forward-looking statements which are based upon management's assumptions and are
subject to known and unknown risks and uncertainties, including the business
risks discussed above, which may cause actual performance and financial results
in future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking statements.
Accordingly, readers are cautioned that events or circumstances could cause
results to differ materially from those predicted.


In the interest of providing Online shareholders and potential investors with
information regarding the Company, including management's assessment of Online's
future plans and operation, certain statements throughout this press release
constitute forward looking statements. All forward-looking statements are based
on the Company's beliefs and assumptions based on information available at the
time the assumption was made. The use of any of the words "anticipate",
"continue", "estimate", "expect", "may", "will", "project", "should", "believe"
and similar expressions are intended to identify forward looking statements. By
its nature, such forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in such forward looking statements.
Online believes the expectations reflected in those forward looking statements
are reasonable but no assurance can be given that these expectations will prove
to be correct and such forward looking statements contained throughout this
press release should not be unduly relied upon. These statements speak only as
of the date specified in the statements.


In particular, this press release may contain forward looking statements
pertaining to the following:




--  the performance characteristics of the Company's oil and natural gas
    properties; 
--  oil and natural gas production levels; 
--  capital expenditure programs; 
--  the quantity of the Company's oil and natural gas reserves and
    anticipated future cash flows from such reserves; 
--  projections of commodity prices and costs; 
--  supply and demand for oil and natural gas; 
--  expectations regarding the ability to raise capital and to continually
    add to reserves through acquisitions and development; and 
--  treatment under governmental regulatory regimes. 



The material assumptions in making these forward-looking statements include
certain assumptions disclosed in the Company's most recent management's
discussion and analysis included in the material available on this press
release.


The Company's actual results could differ materially from those anticipated in
the forward looking statements contained throughout this press release as a
result of the material risk factors set forth below, and elsewhere in this press
release:




--  volatility in market prices for oil and natural gas; 
--  liabilities inherent in oil and natural gas operations; 
--  uncertainties associated with estimating oil and natural gas reserves; 
--  competition for, among other things, capital, acquisitions of reserves,
    undeveloped lands and skilled personnel; 
--  incorrect assessments of the value of acquisitions and exploration and
    development programs; 
--  geological, technical, drilling and processing problems; 
--  fluctuations in foreign exchange or interest rates and stock market
    volatility; 
--  failure to realize the anticipated benefits of acquisitions; 
--  general business and market conditions; and 
--  changes in income tax laws or changes in tax laws and incentive programs
    relating to the oil and gas industry. 



These factors should not be construed as exhaustive. Unless required by law,
Online does not undertake any obligation to publicly update or revise any
forward looking statements, whether as a result of new information, future
events or otherwise.


Barrels of oil equivalent (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural
gas to one barrel (bbl) of oil is based on an energy conversion method primarily
applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead. All boe conversions in this press release are
derived by converting natural gas to oil in the ratio of six thousand cubic feet
of natural gas to one barrel of oil. Certain financial amounts are presented on
a per boe basis, such measurements may not be consistent with those used by
other companies.


Estimated values contained in this press release do not represent fair market value.