WestFire Announces Financial and Operating Results for the Six Months Ended June 30, 2011 (ccnm)

CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) - WestFire Energy Ltd. ("WestFire" or the "Company") (TSX:WFE) is pleased to announce its financial and operating results for the three and six month period ended June 30, 2011.

Highlights

• Produced a quarterly record of 3,308 barrels of oil equivalent per day (boepd) for Q2 2011, compared to 2,374 boepd during Q2 2010, an increase of 39%. This also represents an increase of 19% over the Q1 2011 average volumes of 2,773 boepd. Production per share increased 14% from Q2 2010 and 10% from Q1 2011 in spite of abnormally wet weather during the quarter;
• Oil production averaged 2,243 barrels of oil per day ("bopd") during Q2 2011 (an increase of 121% from Q2 2010 and an increase of 34% from Q1 2011. Oil production per share in Q2 2011 increased 81% over Q2 2010 and 23% over Q1 2011;
• Generated a record quarterly funds flow from operations ("FFO") of $10.6 million ($0.24 per share basic) in Q2 2011, despite $3.3 million of one-time general and administration and finance charges associated with the merger with Orion and the new bank facilities. Excluding these one-time items, FFO would have been $13.9 million or $0.31 per share basic;
• Reduced operating and transportation costs from $16.69 per boe in Q2 2010 to $15.04 per boe in Q2 2011, a 10% decrease. Operating and transportation costs in Q2 2011 were $13.89 per boe and $1.15 per boe respectively;
• Increased bank line to $200 million; and
• Drilled 17 (16.5 net) wells in the second quarter of 2011, all successful oil wells.

On June 30, 2011, the Company closed the strategic merger with Orion Oil & Gas Corporation ("Orion"). The merger was transformational for WestFire as it significantly enhances and accelerates the Company's ability to develop its Viking light oil resource play at Redwater and Provost in Alberta and at Dodsland and Plato in west central Saskatchewan. Orion adds an important attribute of low decline, liquids rich natural gas and light oil production that provides a strategic fit at Redwater and significant free cash flow to deploy toward WestFire's large Viking drilling inventory.

Financial Results

In addition to the "Financial and Operating Highlights" table below, the financial statements and related management's discussion and analysis (MD&A) for the period ended June 30, 2011 will be available on the company's website and on the SEDAR website.

1. Non-GAAP (generally accepted accounting principles) measure. See "Non-GAAP Measurements" in WestFire's MD&A.
2. Working capital deficiency does not include the current portion of the risk management contracts or the current portion of bank debt.
3. Net debt includes bank indebtedness and working capital deficiency.
4. Includes $350,773 attributed to the merger with Orion completed on June 30, 2011.
5. Includes 22,527,938 voting and 15,613,689 convertible non-voting shares issued pursuant to the merger with Orion on June 30, 2011.
6. Six thousand cubic feet of natural gas is equivalent to one barrel of oil.
7. The average selling prices reported are before realized derivatives gains (losses) and transportation charges.

Orion Oil & Gas Corporation

Through the merger with Orion, WestFire added a significant operating interest in the giant Kaybob South Beaverhill Lake pool which contained 3.7 trillion cubic feet of original gas-in-place ("OGIP") with associated liquids of 1.1 billion barrels (both figures from published ERCB estimates). The field was discovered in 1961 and was developed through vertical drilling in the 1960's and 1970's. In the early life of the pool, it was operated as a gas cycling project to recover natural gas liquids before being placed into concurrent natural gas and liquids production. Over the last fifteen years, the pool has exhibited a low and stable production decline rate of approximately 10% per annum. WestFire believes that employing modern reservoir management techniques could lead to higher recovery factors from this substantial resource.

Orion's other core area is the Redwater Viking and Ellerslie light oil property. This asset is synergistic to the Company's existing production and further solidifies WestFire's Redwater position. WestFire estimates that there are upwards of 60 light oil drilling locations on the Orion Redwater lands.

Operational Review

WestFire continued its aggressive drilling program focusing entirely on oil projects. This resulted in record oil volumes in the second quarter which will continue to grow as only 11 (11.0 net) wells of the 17 (16.5 net) wells drilled in the quarter commenced production in June 2011.

On the Viking play, 13 (12.5 net) horizontal wells were drilled in the second quarter. Twelve (12.0 net) of these wells were drilled at Redwater while one (0.5 net) well was drilled in the Lucky Hills area of west central Saskatchewan. A total of 24 (24.0 net) wells have been drilled at Redwater since the start of 2011. Initial 30 day production rates have averaged 76 boepd (91% oil) on 19 wells, with 60 day rates averaging 64 boepd (92% oil) on 16 wells and 90 day rates averaging 62 boepd (92% oil) on 14 wells. These production results are exceeding the type curve utilized by our independent engineers.

At Lloydminster, four (4.0 net) Lloydminster horizontal oil wells were drilled. These wells were placed on stream near the end of June.

Drilling activities continued in July with six rigs operating. Five rigs are drilling Viking horizontal wells and one rig is operating at Kaybob.

Outlook

WestFire has increased its 2011 capital expenditure budget to $133 million as a result of the merger with Orion. As a result of the increased capital, WestFire now expects to drill 99 (87.7 net) wells of which 80 (69.0 net) wells will be on the Viking light oil resource play. The Company is uniquely positioned as an intermediate oil focused company with the free funds flow from operations and expanded credit facilities that allow for the acceleration of drilling activities on its large Viking drilling inventory.

The strategy going forward will be to target annual production growth at 15 to 20% per share, based on capital expenditures within free funds flow. We look forward to reporting on our progress.