Online Energy Inc. Announces First Quarter 2012 Financial Results

Online Energy Inc. ("Online" or the "Company") (TSX VENTURE:ONL) announces its
financial and operating results for the three months ended March 31, 2012 (the
"Quarter"). 


Selected financial and operational information is outlined below and should be
read in conjunction with the audited financial statements and related MD&A for
the year ended December 31, 2011, which are available on the SEDAR website at
www.sedar.com and on the Company's website at www.onln.ca.  


Q1 - 2012 Activities 



--  the 100% working interest Paddle River 8-31-055-07W5M Ostracod
    horizontal oil well went on-stream in mid-February. The well was on-
    stream for a total of 34 days during the Quarter due to down-time
    associated with start-up operations. Average production was 58 bopd
    based on the actual days the well was on-stream. The solution gas
    associated with the well was flared during the Quarter; however, in May,
    the solution gas was tied-in to existing Online facilities. 
    
    
--  a second 100% W.I. horizontal well on the Ostracod oil project, located
    at 1-5-056-07W5M, was drilled in March and reached a total depth of
    3,089 meters including a 1,254 meter horizontal trajectory. Completion
    operations, including a multi-stage frac program, are planned for the
    month of June;
    
    
--  established a $6 million credit facility with a Canadian chartered bank.
    The credit facility consists of a revolving operating demand loan to a
    maximum of $4.75 million and an acquisition / development demand loan to
    a maximum of $1.25 million; and 
    
    
--  re-acted to sharply declining natural gas prices by shutting-in three
    gas wells during the Quarter. A fourth well was shut-in early in the
    second quarter. The Company will continue to monitor the economics of
    its natural gas production and anticipates that additional wells may be
    shut-in. The Company's average production for the quarter was 428 Boe/d
    (38% oil and liquids).



FIRST QUARTER 2012 - FINANCIAL AND OPERATING HIGHLIGHTS



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                                                Three Months ended March 31 
                                                      2012             2011 
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Financial -Canadian $                                                       
Petroleum and natural gas sales                  1,287,363          712,521 
Net loss                                          (531,015)        (979,910)
Per share - basic and diluted                       (0. 01)           (0.04)
Capital expenditures                                                        
  Property, plant and equipment                    115,500        7,105,705 
  Exploration and evaluation                     2,681,172        1,113,121 
Working capital (deficiency)                      (777,907)       6,573,001 
                                                                            
Equity outstanding                                                          
Common shares                                   41,309,889       33,309,889 
Stock options                                    3,755,000          483,333 
Performance warrants                             3,166,316        3,166,316 
                                                                            
Operating                                                                   
Average Daily Production                                                    
  Crude oil - Bbls/d                                    83               18 
  Natural gas - Mcf/d                                1,598              816 
  Natural gas liquids - Bbls/d                          78               56 
  Total - Boe /d                                       428              210 
                                                                            
Average Sales Prices                                                        
  Crude oil - $/Bbl                                  76.40            83.03 
  Natural gas - $/Mcf                                 2.12             3.81 
  Natural gas liquids - $/Bbl                        56.57            59.32 
  Total - $/Boe                                      33.09            37.74 
                                                                            
Operating Netbacks(1)                                                       
  Oil - $/Boe                                        28.23            12.20 
  Gas - $/Mcfe                                        0.58             1.47 
  Total - $/Boe                                       8.22             9.12 
                                                                            
Wells Drilled                                                               
  Gross                                                1.0              1.0 
  Net                                                  1.0              1.0 
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(1) Refer to Cautionary Statements.                                         



Outlook 

In multiple closings in late April and early May, the Company raised
approximately $1.2 million with a syndicate of agents pursuant to which the
Company issued 2,916,700 common shares at a price of $0.26 per share and
1,541,500 common shares issued on a "flow-through" basis at a price of $0.30 per
share. 


Online's 2012 capital budget of $7.4 million, of which $2.8 million was spent
during the Quarter, will be funded from year-end working capital of $2.1
million, the proceeds of the recently completed equity financing, cash flow and
the utilization of the recently established credit facility. 


The Company has successfully assembled an extensive land position of 135 net
sections in the greater Paddle River area of west-central Alberta. This
concentrated acreage position supports a large inventory of horizontal
multi-frac well locations on a variety of resource plays including the
Notikewin, Wilrich, Ostracod, Rock Creek, Nordegg and Duvernay formations.
Online also maintains a growing inventory of low-risk vertical oil locations
targeting the Viking and Nordegg formations as well as a number of low-cost
re-entry opportunities. 


Interested parties are invited to view the Company's corporate presentation
which is periodically updated on its 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 judgements
with respect to the future. 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. 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 in 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. 


Natural gas reserves and volumes are converted to barrels of oil equivalent
(Boe) on the basis of six thousand cubic feet (Mcf) of gas to one barrel (Bbl)
of oil. Oil and natural gas liquid reserves and volumes are converted to a
thousand cubic feet of gas equivalent (Mcfe) on the basis of one barrel (Bbl) of
oil and natural gas liquids to six thousand cubic feet (Mcf) of gas. Boes and
Mcfes may be misleading, particularly if used in isolation. A Boe conversion
ratio of 6 Mcf to 1 Bbl and a Mcfe conversion ratio of 1 Bbl: 6 Mcf is based on
an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. 


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


This press release uses the term "netback" which is a term that does not have
standardized meanings under GAAP and this non-GAAP measurement may not be
comparable with the calculation of other entities. The Company uses this measure
to analyze operating performance. 


The term "netback", which is calculated as the average unit sales price, less
royalties and operating expenses, represents the cash margin for every barrel of
oil equivalent sold. The Company considers this a key measure as it demonstrates
its profitability relative to current commodity prices. This term does not have
any standardized meaning prescribed by GAAP and, therefore, might not be
comparable with the calculation of a similar measure for other companies.