Petro One Farms Out Property to Senior Oil Company

August 28, 2012 – Petro One Energy Corp. (POP.V) is pleased to report that it has entered a Farmout and Royalty Agreement with a senior oil company on its 100% controlled J10 property at Bromhead, Saskatchewan. The agreement calls for the farmee to drill an earning horizontal well in the Frobisher or Midale formation by March 31, 2013. By paying 100% of the drilling and completion costs, the farmee will earn a 100% interest in the Test Well Spacing Unit to the base of the lowest formation penetrated, both before and after Payout, subject to a 10% gross overriding royalty (the “GORR”) in favor of Petro One. The GORR may be converted at the option of Petro One into a 30% working interest in the initial test well within 30 days of receiving notice of Payout, and a 40% working interest in all subsequent wells after receiving notice of Payout.

If the farmee drills the Test Well to the contract depth, it will have 90 days from the rig release date to elect to drill a second well, to be spudded within 90 days after that election, by paying 100% to earn a 100% interest in the Option Well Spacing Unit to the base of the lowest formation penetrated, both before and after Payout, also subject to a 10% gross overriding royalty (the “GORR”) in favor of Petro One. The GORR on the second well may be converted into a 40% working interest at the option of Petro One within 30 days after receiving notice of Payout. Third and subsequent wells may be elected by the farmee under the same terms as the second well.

Under Saskatchewan regulations, the Bromhead property (259 hectares - 1 section) could accommodate up to 10 horizontal Frobisher wells spaced a minimum of 150 m apart, with a 100 m offset from the property boundaries. Petro One believes that its Bromhead property has strong Midale and Frobisher potential. Seven wells in the immediate area have produced oil from the underlying Frobisher beds, including a vertical well 200 metres south of the property that produced more than 100,000 bbl of oil from the Frobisher with a 3 month IP of 95.6 bopd, as well as more than 407,000 bbl of oil from the Midale with an IP of 146 bopd (Source: IHS Accumap). In addition to holding Frobisher rights to the entire section, Petro One owns Midale rights to the east half of the section, which could accommodate up to five Midale horizontal wells and is also covered by the farmout agreement. The west half of the section, where Midale rights are held by a third party, covers part of the Bromhead Midale field, where the best well has yielded 734,500 bbl of oil. This well had a 3 month IP of 209 bopd and is still pumping 12.5 bopd after 44 years on production (Source: IHS Accumap).

Several other senior oil companies have expressed interest in other Petro One properties, and discussions are ongoing. The Company’s assets currently include rights to 14 properties totaling 15.86 sections (4,108 hectares/10,152 acres). The Company plans to continue to build production and develop its assets with the drill bit, both with its own capital, and in collaboration with farm-in partners.

J5 Milton Property

Production from all wells on the Company’s J5 property at Milton, Saskatchewan between July 27, 2011 and July 31, 2012 was 6,231.39 bbl. During July, 2012 two wells (10A-15 and 11-15) were in steady production at a combined rate of approximately 30 bopd. Another oil well (6A-15) averaged 7.3 bopd in May, 2012, but was suspended in May 2012, due to a high gas-oil ratio combined with a high water cut that make it uneconomic to produce at current gas and oil prices, in the absence of a gas tie-in or water disposal facilities on the property. The remaining three wells have been suspended due to high water cuts, based on test production that ended in May and June. There has been no change to the status of the Company’s other properties since the Company’s news release issued on April 3, 2012.

In its news release of November 14, 2011, Petro One announced that, in addition to the proven, probable and possible reserves described in that release, J5 had been credited with a best estimate NI 51-101 prospective resource of 798,000 barrels of oil in the shallow Middle Bakken sand located approximately 140 m below the Viking, in an NI 51-101 Report (the (2011 Report”) with an effective date of November 14, 2011. A total of 9 undeveloped Bakken drilling locations were identified in the 2011 Report. The NI 51-101 Report (the “2012 Report”) recently prepared in respect of the Company’s financial year ended April 30, 2012 includes only “reserves data” for all Company properties (proven and probable light/medium oil reserves) and, accordingly, does not cover possible reserves for properties other than J5, and does not cover prospective resources for any of the properties. The Company’s total proved developed producing net light/medium oil reserves estimate for J5 has been revised from NI 51-101 25,000 bbl (as at November 14, 2011) to NI 51-101 9,600 bbl (as at April 30, 2012) as set out in the 2012 Report. According to reports issued by the Company’s independent contractors, between July 27, 2011 and July 31, 2012, Petro One’s J5 Milton oil wells produced 6,231.39 bbl of oil. 10A-15 has been in production for over a year and has yielded over 4,000 bbl of oil. During the last month of the production testing phase (May 1, 2012 – July 31, 2012), well 10A-15 produced an average of 23 bbl per day and well 11-15 produced an average of 6 bbl per day.

Having proven the viability of the Viking formation at J5, the Company intends that future exploration and development of that formation will be financed through farm-outs so that the Company may focus on formations with potential for greater production. The Company has carried out considerable research on other formations at J5 and, based on its drilling and seismic work at J5 and results seen on adjacent properties, Petro One believes that J5 has excellent potential for success in the Bakken and Mississippian formations. It has therefore entered into an agreement to earn a 100% interest in two more sections (subject to a total 10% GORR), thereby expanding its land base at Milton to 5 sections (total 1,295 hectares). The additional two sections (the “HQ Sections”) can be earned by Petro One purchasing or shooting 6 km of seismic on or before October 30, 2012, electing to drill a 750 m test well on or before November 30, 2012, and spudding a test well on or before January 25, 2013. Permitting is under way to shoot the required seismic and, subject to receiving the anticipated results; Petro One intends to drill an earning well to test both the Jurassic/Mississippian unconformity and the Bakken sand. A former producer 600 metres north of Petro One land well produced 950 ft oil (14.69 API) on drill stem test and 140 bbl on initial production testing, from a 12 metre zone of highly porous oil stained vuggy dolomite (Source: IHS Accumap). The oil is interpreted to be stratigraphically trapped in an erosional remnant of Mississippian dolomite against a Mannville channel that cuts down through the pre-Cretaceous unconformity, and the existing seismic indicates that the trap extends across Petro One’s property to the southeast, where a similar oil show was found 650 metres south of the property in a 17 metre zone of previously untested porous dolomite. Bakken oil in the area is structurally controlled, and the nearest production is only 500 m from the property. The best Bakken well in the area had a 3 month IP rate of 303 bopd and cumulative production of 272,200 bbl, and is still producing over 30 bopd (Source: IHS Accumap).

J3 Kirkella property

Also based on recommendations from its geologists, geophysicists and engineers, Petro One intends to drill a minimum of one hole on it Kirkella J3 property.

Interpretation by an independent geophysical company indicates favorable structure and porosity development in the Cruickshank Crinoidal beds, updip of a vertical 250 bpd analog well in the Kirkella field (Source: IHS Accumap). Two vertical wells in the same area with commingled Lodgepole-Bakken production have demonstrated that the Bakken is a potential secondary target. Petro One’s independent consultants have selected a location for a vertical drill hole to test both the Lodgepole and the Bakken, and surveying and permitting are planned to commence in the immediate future.

“The Company is pleased to have completed its first farmout with a well-respected company, and plans to continue building oil production through the drill bit, both with its own capital, and with farm-in partners”, said Petro One’s President, Peter Bryant. “This agreement with a company of the farmee’s calibre is a strong endorsement of the Company’s assets. We look forward to building long term relationships with a number of farm-in partners to exploit the full potential of the Company’s 3,600 hectares.”

To facilitate the farm-out, Petro One has negotiated an amendment to the underlying production royalty (the “Original GORR”) on properties J1-J10. The Original GORR was a sliding scale royalty on all production from a well after the first 8,500 barrels of oil equivalent (“BOE”) production from a vertical well drilled within four years after July 26, 2010 or on the first 25,000 BOE production from a horizontal well drilled within four years after July 26, 2010. The Original GORR started at 20% and was subject to a reduction of 1% for each 1% by which the aggregate of all royalties payable to any governmental authority exceeded 5%, subject to a minimum Original GORR of 5%.

The amended GORR is also a sliding scale royalty that starts at 15% (instead of 20%) and reduces as above to a minimum of 10%, but it applies to all properties in which Petro One acquires an interest and which lie within 5 kilometers of the external boundary of any property currently held by Petro One, (the “Area of Interest”) except for properties that are subject to royalties payable to third parties other than the government.

The amended GORR will not apply to:

- the first 10,000 BOE from any vertical well drilled on any Property to a depth not more than 1,500 metres;

- the first 20,000 BOE from any vertical well drilled on any Property to a depth more than 1,500 metres, but not more than 2,000 metres;

- the first 30,000 BOE from any vertical well drilled on any Property to a depth more than 2,000 metres, but not more than 2,500 metres;

- the first 40,000 BOE from any vertical well drilled on any Property to a depth more than 2,500 metres.

3. The Royalty will not apply to:

- the first 38,000 BOE from any horizontal well drilled on any Property to a depth not more than 2,500 metres;

- the first 40,000 BOE from any horizontal well drilled on any Property to a depth more than 2,500 metres.

In no event will the Company be obligated to pay to the Royalty Holders, in the aggregate, in respect of any calendar month, any amount greater than the amount of money actually received by the Company in respect of that calendar month, so that, for example, if the Royalty otherwise payable in respect of a calendar month is $10,000 and the Company receives only $7,000 as its share of net revenue in respect of that month, then the Royalty for that month will be reduced from $10,000 to $7,000.

The same arrangement has been made in respect of J11-13 with the unanimous agreement of the holders of the Royalty on those properties.

One Original GORR holder (“IBSA”) holding a 1% Original GORR (i.e. 5% of 20%) (the “IBSA GORR”) has not agreed to the amendment. Accordingly, the sliding scale and GORR holiday applicable to the IBSA GORR will not change and IBSA will not have any interest in production from the Area of Interest. The remaining Original GORR holders have agreed to amendments to accommodate payment of the IBSA GORR.

NATIONAL INSTRUMENT 51-101 DISCLOSURE

BOE means barrels of oil equivalent. It 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.

Oil production during a period is generally expressed in terms of “barrels per day”, which indicates the total oil produced during a period divided by the number of hours that the well was in production during that period. “Barrels per day” is indicative of flow rate while a well is in production and does not mean that such well was in constant production during such period.

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved + probable reserves.

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

The estimates in this release have been prepared by independent qualified reserves evaluators in the 2011 Report and the 2012 Report (together the “Reports”) – each a “Statement of Reserves Data and Other Oil and Gas Information” - under National Instrument 51-101 (“NI 51-101”) in accordance with the Canadian Oil and Gas Evaluation Handbook. The effective date of the estimate of reserves data and prospective resources in the 2011 Report was November 14, 2011. The effective date of the estimate of reserves data in the 2012 Report was April 30, 2012. The 2012 Report has been filed on SEDAR concurrently with the dissemination of this news release in accordance with section 2.1 of NI 51-101 and may be viewed under the Company’s profile at www.sedar.com as required by section 2.2 of NI 51-101. The reserves evaluators having prepared the Reports have consented in writing to the disclosure of information derived from the Reports. Pursuant to s. 5.2 of NI 51-101, the Company advises that the estimates have been made assuming the development of the J5 Milton property will occur, without regard to the likely availability to the Company of funding required for that development.

The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for individual properties, due to the effects of aggregation.

The prospective resource described in the 2011 Report and this news release are "undiscovered resources" as defined in the Canadian Oil and Gas Evaluation Handbook. Undiscovered resources are defined as those quantities of oil and gas estimates on a given date to be contained in accumulations yet to be discovered. The estimates of the potentially recoverable portions of undiscovered resources are classified as prospective resources.

Prospective resources are defined as those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. They are technically viable and economic to recover. Pursuant to s. 5.9(d)(v) of NI 51-101, the Company cautions that that there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resource.

OTHER MATTERS

The Company’s audited financial statements and MD&A for its financial year ended April 30, 2012 will be issued on August 28, 2012, and will be available for viewing under the Company’s profile at www.sedar.com. The private placement announced by the Company on March 29, 2012 was reduced slightly, from $2,450,000 to $2,307,476, due to non-payment by certain subscribers outside British Columbia.

ON BEHALF OF THE BOARD

“Peter Bryant”

President & Director

For further information, please visit the company’s website at PetroOneEnergy.com or contact Jeff Stuart of King James Capital Corporation, handling Investor Relations for the Company, by telephone at (604) 805 0375 or by email at [email protected].

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release