Online Energy Inc. Announces Second Quarter 2011 Financial Results

Online Energy Inc. (the "Company or Online") (TSX VENTURE:ONL) announces the
filing of its unaudited interim financial statements and related MD&A for the
three and six months ended June 30, 2011 (collectively, the "Financial
Statements"). Selected financial and operational information is outlined below
and should be read in conjunction with the Financial Statements. The Financial
Statements are available on the SEDAR website at www.sedar.com and on the
Company's website at www.onln.ca.


Highlights



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                                   Three months                  Six months 
In Canadian Dollars,              ended June 30               ended June 30 
 except shares               2011          2010          2011          2010 
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Petroleum and                                                               
 natural gas sales      1,197,639             -     1,910,160               
Net loss                 (423,194)         (234)   (1,403,104)         (442)
 Per share - basic                                                          
  and diluted               (0.01)       (26.00)        (0.03)       (49.11)
Cash used in                                                                
 operating                                                                  
 activities              (402,441)         (245)      744,018          (434)
Capital expenditures    2,084,734       110,390    11,600,097       110,390 
Shares outstanding     41,309,890             9    41,309,890             9 
Working capital         8,545,447         1,868     8,545,447         1,868 
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Highlights of the second quarter included:

--  Production averaged 315 boe/d (37% oil and liquids); 
--  Closed a bought deal equity financing on May 5, 2011 with a syndicate of
    underwriters pursuant to which the Company issued an aggregate of
    8,000,000 common shares for gross proceeds of $4,245,700, consisting of
    4,490,000 common shares at a price of $0.50 per share and 3,510,000
    common shares issued on a flow-through basis at a price of $0.57 per
    share. 
--  Increased the 2011 capital budget to $17,500,000, which will be funded
    from existing working capital. The majority of these funds will be
    directed towards ongoing activities in the greater Paddle River area. 
--  Acquired producing oil and gas assets in the Paddle River area of west-
    central Alberta for cash consideration of approximately $1.0 million
    with an effective date of May 1, 2011 (the "Paddle River Acquisition").
    In accordance with National Instrument 51-101 - Standards of Disclosure
    for Oil and Gas Activities ("NI 51-101"), McDaniel & Associates
    Consultants Ltd. ("McDaniel") prepared a report dated August 23, 2011,
    and effective December 31, 2010, evaluating the crude oil, natural gas
    liquids and natural gas reserves attributable to the assets (the "Paddle
    River Report"). Based on the Paddle River Report, the total proven plus
    probable reserves associated with the assets were 119,700 boe with a net
    present value before tax of $1,578,700 discounted at 10% per annum. The
    Paddle River Acquisition included production of approximately 28 boe/d
    (46% oil and liquids), excluding production associated with two acquired
    gas wells which were considered non-economic at the time of the
    acquisition and anticipated to be shut-in. The operations have
    subsequently been optimized at the two well sites and current production
    associated with these two gas wells is approximately 30 boe/d (20% oil
    and liquids). The Paddle River Acquisition also included 12.25 sections
    of land with a 64% average working interest, 2,508 net acres of
    undeveloped land, a 20% working interest in the vertically developed
    Paddle River Ostracod A & C Oil Pools and 100% and 96.5% working
    interests, respectively, in 2 vertically developed Notikewin liquids-
    rich gas pools. 
--  Re-activated a Nordegg oil well (100% working interest) in the Paddle
    River area of central Alberta. This well went on-stream on May 21, 2011
    and is currently producing at a stabilized rate of approximately 20 to
    30 boe/d. This was the first of a series of re-activations, re-entries
    and re- completions that the Company plans to execute to supplement its
    current production base and reserves. 
--  Acquired 8,700 acres of undeveloped land at Crown land sales in the
    greater Paddle River area for $550,000 at an average cost of $63 per
    acre. 
--  Made significant progress assembling a solid platform for future growth
    in production focused in the greater Paddle River area. The Company
    controls approximately 37,000 net acres of undeveloped land in this area
    and continues to accumulate assets through Crown land sales and third-
    party acquisitions. 
--  Exited Q2 - 2011 with $8.5 million of working capital and no debt. 


Third Quarter Activities and Outlook


--  Increased the Company's working interests in certain operated producing
    natural gas assets in the Leaman and Niton areas of west-central Alberta
    for aggregate consideration of $520,000 plus a 5% gross overriding
    royalty on the properties acquired in the Niton area (the "Leaman and
    Niton Acquisitions"). The effective dates of the Leaman and Niton
    acquisitions were June 1, 2011 and July 1, 2011, respectively. In
    accordance with NI 51-101, McDaniel prepared separate reports dated
    August 23, 2011, and effective December 31, 2010, evaluating the crude
    oil, natural gas liquids and natural gas reserves attributable to the
    Leaman and Niton assets (the "Leaman and Niton Reports"). Based on the
    Leaman and Niton Reports, the total proven plus probable reserves
    associated with the assets are 100,000 boe with a net present value
    before tax of $911,200 discounted at 10% per annum. The Leaman and Niton
    Acquisitions included production of 26 boe/d (20% liquids), 7.25
    sections of land with a 42.5% average working interest, 968 net acres of
    undeveloped land, an average 35.8% working interest in three Online
    operated vertical producing Notikewin liquids-rich gas wells at Niton
    and a 49.2% working interest in an Online operated producing Glauconitic
    liquids-rich gas well at Leaman. 
--  Continuing to prepare for the drilling of horizontal multi-frac wells at
    Paddle River and Niton, targeting Ostracod oil and Notikewin liquids-
    rich gas, respectively. Drilling of the initial well at Paddle River is
    expected to commence subsequent to ground conditions drying-out to allow
    for the construction of the drilling pad. 
--  In early August corporate production had increased to approximately 400
    boe/d. Subsequently, all of Online's Niton production of approximately
    60 boe/d was shut-in due to pipeline maintenance work. This curtailment
    is expected to last until the end of September. As a result, the Company
    estimates third quarter production to average 350 boe/d. 



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 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.