RedWater Announces Financial and Operating Results for the Six Months Ended June 30, 2012

RedWater Energy Corp. ("RedWater") (TSX VENTURE:RED) is pleased to report record
financial and operating results for the three and six month periods ended June
30, 2012. RedWater's interim condensed financial statements and related
management's discussion and analysis for the three and six months ended June 30,
2012 have been filed and are available on the SEDAR website at www.sedar.com and
may also be obtained on RedWater's website at www.redwaterenergy.com.


Summary



--  Increased average production to 89 barrels of oil equivalent per day
    ("boepd") 
    
    --  74 barrels of oil in the second quarter vs. 34 barrels of oil in the
        first quarter of 2011 
        
    --  83% oil/17% natural gas 
        
--  Fund flows from operations was ($112,828) for the second quarter
    compared to ($256,507) for second quarter of 2011 
    
--  Credit facility was increased to $2.9 million from $2.5 million. 
    
--  Completed battery construction and re-activated two (2) Mannville light
    oil wells at Redwater. The wells began producing in late June and are
    currently producing at a restricted rate of 42 boepd (78% oil/22%
    natural gas) 
    
    --  Acquired farm-in rights on 1,240 acres of development lands directly
        offsetting these wells and two surface leases have been negotiated
        for adjacent development drilling locations on two (2) identified
        light oil pools. 
        
--  RedWater total production at July 31, 2012 was 132 boepd (83% oil/17%
    natural gas) 

Financial Highlights                                                        
                                                                            
                         Three Months Ended           Six Months Ended     
                              June 30,                    June 30,         
                             2012          2011          2012          2011
                     ------------  ------------  ------------  ------------
Operations                                                                 
Production                                                                 
  Oil (bbls/d)                 74            34            69            45
  Natural Gas (Mcf/d)          91           232           160           173
                     ------------  ------------  ------------  ------------
  BOEPD                        89            73            96            74
                                                                           
Average Selling Price                                                      
  Oil ($/bbls)        $     67.61   $     79.21   $     71.40   $     76.52
  Natural Gas ($/Mcf)        1.40          3.64          2.08          3.67
                     ------------  ------------  ------------  ------------
  BOE ($/BOE)         $     57.65   $     48.70   $     55.10   $     55.33
                                                                           
Operating Netback                                                          
 ($/BOE)              $     14.12   $      7.77   $     11.64   $     20.28
                                                                            
                         Three Months Ended           Six Months Ended      
                              June 30,                    June 30,          
                             2012          2011          2012          2011 
                     ------------  ------------  ------------  ------------ 
Financial                                                                   
                                                                            
Petroleum and Natural                                                       
 Gas Revenues, net of                                                       
 royalties            $   432,700   $   312,462   $   872,411   $   688,540 
                                                                            
Fund Flow from                                                              
 Operations              (112,233)     (256,507)     (255,060)     (245,380)
  Per Share, Basic &                                                        
   Diluted                      -         (0.01)        (0.01)        (0.01)
                                                                            
Income (loss)            (209,639)     (348,070)     (465,071)      785,749 
   Per Share, Basic &                                                       
   Diluted                  (0.01)        (0.01)        (0.01)         0.03 
                                                                            
Capital Expenditures                                1,162,355       538,655 
Total Assets                                       12,421,900     8,138,515 
Shareholders' Equity                                7,645,438     6,247,938 
                                                                            
                                                                            
Common Shares                                                               
 Outstanding                                                                
Basic                  32,640,152    24,599,221    32,640,152    24,599,221 
Diluted                32,640,152    24,975,961    32,640,152    24,731,990 
                                                                            
Share Trading                                                               
  High                       0.26          0.55         0.315          0.55 
  Low                        0.18          0.39          0.18          0.36 
  Close                      0.18          0.48          0.18          0.48 
Trading Volume            596,540     1,186,305     1,531,358     3,394,857 



Operational Review

RedWater is currently producing 132 boepd with (83% oil/17% gas) at July 31,
2012. The Corporation completed battery construction and re-activated two (2)
Mannville light oil wells in late June. The wells began producing in late June
and are currently producing at a restricted rate of 42 boepd (78% oil/22%
natural gas). RedWater was successful in acquiring farm-in rights on 1,240 acres
of development lands directly offsetting these wells and two surface leases have
been negotiated for adjacent development drilling. 


RedWater also completed a farm-out agreement with an industry partner to
re-enter two (2) light oil wells on the Corporation's 6,480 net acres in Long
Coulee. Work is scheduled for September 2012. 


Year to date, the Company has taken significant steps to improve cash flow by
focusing on light oil production and shutting in lower margin natural gas.
RedWater has shut-in approximately 200 mcf/d of natural gas since the fourth
quarter of 2011 and has an additional 1,000 mcf/d of tested production awaiting
tie-in. Management continues to monitor the economics of each well to determine
whether or not to re-activate or tie-in these wells. As a result, the Company's
operating net back has increased to $14.12 per boe vs. $5.03 per boe in the
fourth quarter 2011. Please refer to Management's Discussion and Analysis for a
definition of Non-GAAP measures.


RedWater is positioned for growth with improving cash flow and extensive
inventory of light oil initial drilling locations and re-entry candidates in
Redwater. The Company is also exploring light oil opportunities in its other
locations in Panny and Central Alberta and looks forward to continued progress
in the remaining half of 2012.


Business of RedWater Energy Corp.

RedWater Energy Corp. is an emerging oil and gas exploration and development
company. RedWater is engaged in the acquisition, enhancement and exploration of
conventional oil and gas projects in Western Canada with a focus on developing
high working interest light oil opportunities. RedWater's core properties are
located in Redwater, Westlock, Fairydell-Bon Accord and Long Coulee areas of
Alberta. www.redwaterenergy.com.


Cautionary Statements

Forward-looking information and statements

This news release contains certain forward-looking information and statements
within the meaning of applicable securities laws. The use of any of the words
"expect", "anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are intended to
identify forward-looking information or statements. In particular, but without
limiting the forgoing, this news release contains forward-looking information
and statements pertaining to the following; the timing for completion and
equipping of wells; the volume and product mix of RedWater's oil and gas
production and its ability to develop RedWater's oil resource properties, the
use of RedWater's cash flow from operations and expanded credit facilities; the
number of wells to be drilled and potential development drilling and number of
potential oil development locations. 


In addition, forward-looking statements or information are based on a number of
material factors, expectations or assumptions of RedWater which have been used
to develop such statements and information but which may prove to be incorrect.
Although RedWater believes that the expectations reflected in such
forward-looking statements or information are reasonable, undue reliance should
not be placed on forward-looking statements because RedWater can give no
assurance that such expectations will prove to be correct. In addition to other
factors and assumptions which may be identified herein, assumptions have been
made regarding, among other things: results from drilling and development
activities consistent with past operations; the continued and timely development
of infrastructure in areas of new production; continued availability of debt and
equity financing and cash flow to fund RedWater's current and future plans and
expenditures; the impact of increasing competition; the general stability of the
economic and political environment in which RedWater operates; the timely
receipt of any required regulatory approvals; the ability of RedWater to obtain
qualified staff, equipment and services in a timely and cost efficient manner;
drilling results; the ability of the operator of the projects in which RedWater
has an interest in to operate the field in a safe, efficient and effective
manner; the ability of RedWater to obtain financing on acceptable terms; field
production rates and decline rates; the ability to replace and expand oil and
natural gas reserves through acquisition, development and exploration; the
timing and cost of pipeline, storage and facility construction and expansion and
the ability of RedWater to secure adequate product transportation; future
commodity prices; currency, exchange and interest rates; regulatory framework
regarding royalties, taxes and environmental matters in the jurisdictions in
which RedWater operates; the ability of RedWater to successfully market its oil
and natural gas products that all necessary regulatory approvals will be
obtained as and when required, that there will be no material adverse change in
RedWater's affairs or laws, rules or regulations relating to RedWater, its
securities or business, there will be no regulatory proceedings involving
RedWater or any of its directors or officers, or any cease trade or other order
prohibiting or restricting trading in RedWater's securities, no major national
or international event will have occurred that has or would reasonably be
expected to have a material adverse effect on financial markets or the business,
operations or affairs of RedWater. 


The forward-looking information and statements included in this news release are
not guarantees of future performance and should not be unduly relied upon. Such
information and statements, including the assumptions made in respect thereof,
involve known and unknown risks, uncertainties and other factors that may cause
actual results or events to defer materially from those anticipated in such
forward-looking information or statements including, without limitation: changes
in commodity prices; changes in the demand for or supply of RedWater's products;
unanticipated operating results or production declines; changes in tax or
environmental laws, royalty rates or other regulatory matters; changes in
development plans of RedWater or by third party operators of RedWater's
properties, increased debt levels or debt service requirements; inaccurate
estimation of RedWater's oil and gas reserve and resource volumes; limited,
unfavorable or a lack of access to capital markets; increased costs; a lack of
adequate insurance coverage; the impact of competitors; and certain other risks
detailed from time-to-time in RedWater's public disclosure documents,
(including, without limitation, those risks identified in this news release and
RedWater's public company documents filed on SEDAR).


The forward-looking information and statements contained in this news release
speak only as of the date of this news release, and RedWater does not assume any
obligation to publicly update or revise any of the included forward-looking
statements or information, whether as a result of new information, future events
or otherwise, except as may be expressly required by applicable securities laws.



Funds flow from operations are not measures that have any standardized meaning
prescribed by IFRS or Canadian GAAP and accordingly are referred to as non -
GAAP measures. Therefore, these measures may not be comparable to similar
measures presented by other issuers. These measures have been described and
presented here and in our MD&A in order to provide shareholders and potential
investors with additional information regarding the Corporation's liquidity and
its ability to generate funds to finance its operations. Management utilizes
"Funds flow from operations" as a key measure to assess the ability of the
Corporation to finance operating activities and capital activities. All
references to funds flow from operations throughout this report are calculated
based on cash flows from operating activities before changes in non-cash working
capital. Cash flows from operating activities are the closest comparable figure
which is calculated in accordance with IFRS and Canadian GAAP.


BOE Equivalent 

Barrel of oil equivalents or BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.