Daylight Energy Provides Operational Update and Declares Q3 2011 Dividends -Liquids Rich Montney Results Exceed Expecations

Daylight Energy Ltd. ("Daylight" or the "Corporation") (TSX:DAY) is pleased to
provide an operational update and declare Q3 2011 dividends.


OPERATIONAL UPDATE 

Daylight's Wapiti asset is located in a region of the Deep Basin that has
recently attracted significant attention from industry. Driven by the
consistently strong drilling results announced in the liquids rich Montney zone,
industry players have aggressively bid for Montney rights at recent Crown land
sales. Daylight's first Wapiti Montney well (0.5 net well) produced at a
previously announced initial production rate of 7 million cubic feet ("MMcf")
per day. Daylight's second well (0.5 net well) came on production in late May
2011 with a peak rate of over 10 MMcf per day. For the month of June this well
attained an average production rate of 9.1 MMcf per day, which is the highest
publicly reported Montney well production rate at Wapiti to date. This well
exited June at a rate of over 8 MMcf per day. Natural Gas Liquids ("NGLs") yield
has been consistent at approximately 50 Bbls per MMcf of natural gas, yielding
initial liquids production rates of 350 to 450 Bbls per day from the above noted
wells. On July 13, 2011, Daylight participated in the Alberta Crown land sale
and acquired an additional 26 net sections (16,640 acres) of land on this trend,
with Daylight now owning over 60 net sections of prospective Montney lands in
the Wapiti area. With the opportunity to downspace this play to three wells per
section, Daylight's unrisked drilling inventory in this play is 180 locations.
Daylight's commitment to this exciting play continues with the Corporation
planning an additional four wells during 2011. We have mobilized two drilling
rigs to the Wapiti area to initiate this follow-up drilling program.


Daylight's Pembina Cardium program resumption was delayed due to adverse wet
weather conditions following spring break-up. However, we are pleased to report
that drilling and completion operations are proceeding as of mid-July, with two
rigs currently drilling and an additional three rigs preparing to spud our next
series of wells. The play continues to mature with Daylight and other industry
participants optimizing drilling and completion operations. Daylight has now
delineated our 100 net section land base and we are proceeding into downspacing
operations, focusing on areas where we have had superior results. During early
Q3 2011, Daylight completed our first Cardium oil well using water based frac
fluids, reducing total well cost by approximately $0.5 million compared to
similar wells utilizing oil based frac fluids. While we only have preliminary
data at this point, completion operations on the well indicate that the well is
flowing back load fluid at similar, if not superior, rates to comparable wells
completed with oil based fluids. Daylight is also testing a new downhole packer
system, with results that look promising in terms of optimizing frac
effectiveness. The company intends to drill our first four well per pad
configuration later in 2011 which we expect to provide additional per well cost
savings and efficiencies.


For the remainder of Q3 2011, Daylight will be executing a focused and impactful
program that, in addition to the above noted activity, will include results of
our second horizontal Nikanassin well in Elmworth and our first horizontal Belly
River oil well at Pembina.


Daylight is pleased to announce that our Q2 2011 production volumes were
approximately 36,800 boe/d which is above the production guidance stated in our
press release dated May 18, 2011.


CASH DIVIDENDS 

Daylight maintains a Q3 2011 cash dividend to shareholders of Cdn$0.05 per share
per month as follows:




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Record Date     Ex-Dividend Date   Dividend Payment Date  Dividend Per Share
----------------------------------------------------------------------------
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July 29, 2011   July 27, 2011      August 15, 2011        Cdn$0.05          
August 31, 2011 August 29, 2011    September 15, 2011     Cdn$0.05          
September 30,   September 28, 2011 October 17, 2011       Cdn$0.05          
 2011                                                                       
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(i) The dividend is considered an "eligible dividend" for tax purposes.

Daylight expects to pay a sustainable dividend on a monthly basis, provided
however that any decision to pay dividends on the common shares will be made by
the Board of Directors on the basis of Daylight's cash flow from operating
activities, earnings, financial requirements, commodity price levels, legal
requirements and other conditions existing at such future times. Daylight
currently intends to designate all dividends to be "eligible dividends" for the
purposes of the Income Tax Act (Canada) such that shareholders who are
individuals will benefit from the enhanced gross-up and dividend tax credit
mechanism under the Income Tax Act (Canada).


Daylight is a growing intermediate oil and natural gas producing company with a
high quality suite of resource play assets in Western Canada. Our highly focused
team utilizes our technical expertise in exploitation, development and
acquisitions to create long-term value for our shareholders. Our team has
developed a multi-year inventory of repeatable, low risk exploitation resource
play projects with substantial potential reserve additions on assets we
currently own and control in the premier Pembina Cardium light oil fairway and
in the premier Deep Basin area of Alberta and British Columbia.


Daylight has approximately 213 million common shares outstanding which trade on
the TSX under the symbol DAY. Daylight Series C and D convertible debentures
trade on the TSX under the symbols DAY.DB.C and DAY.DB.D, respectively.


An updated corporate presentation is available on Daylight's website at
www.daylightenergy.com.


ADVISORY:

Forward-Looking Information and Statements

This press release contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and
similar expressions are intended to identify forward-looking statements or
information. More particularly and without limitation, this press release
contains forward-looking statements and information concerning: Daylight's 2011
capital program, including expectations regarding cost savings associated with
pad drilling operations and utilizing water based frac technologies; anticipated
timing of drilling, completion and tie-in of additional wells; estimated initial
production rates; and estimated liquids volumes associated with Daylight's
natural gas resource play drilling opportunities, and specifically the
Corporation's Wapiti Montney wells; payment of Q3 2011 dividends and future
dividends declared and payable on the common shares; the anticipated record date
and payment date in respect of Q3 2011 dividends.


The forward-looking statements and information in this press release are based
on certain key expectations and assumptions made by Daylight, including but not
limited to expectations and assumptions concerning: prevailing and future
commodity prices and exchange rates; applicable royalty rates and tax laws;
future production rates; the performance of existing and future wells;
application of existing technologies and future advancements in technology to
Daylight's operations and drilling activities; the success obtained in drilling
new wells; the inventory of new drilling locations; the sufficiency of budgeted
capital expenditures in carrying out planned activities; the availability and
cost of labor and services, including but not limited to completion equipment
and services; adequate weather and environmental conditions for drilling,
completion and tie-in activities, including transportation of associated
equipment; the receipt, in a timely manner, of regulatory and third party
approvals.


Although Daylight believes that the expectations and assumptions on which such
forward-looking statements and information are based are reasonable, undue
reliance should not be placed on the forward-looking statements and information
because Daylight can give no assurance that they will prove to be correct. There
is no representation by Daylight that actual results achieved during the periods
identified in this press release will be the same in whole or in part as those
forecast.


Since forward-looking statements and information address future events and
conditions, by their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors and risks. These include, but are not limited to the risks
associated with the oil and gas industry in general such as: operational risks
in development, exploration and production; delays or changes in plans with
respect to exploration or development projects or capital expenditures; the
uncertainty of reserve and resource (including original oil in place) estimates;
the uncertainty of estimates and projections relating to production, costs and
expenses; health, safety and environmental risks; risks associated with weather
and the impact on drilling and completion activities and the transportation of
associated equipment; commodity price and exchange rate fluctuations; marketing
and transportation of petroleum and natural gas and loss of markets;
environmental risks; competition; risks associated with utilizing existing
technologies and future technological advancements in Daylight's operations and
drilling activities; failure to realize the anticipated benefits of
acquisitions; risks regarding the integration of acquired entities and assets;
incorrect assessment of the values of acquisitions; Daylight's ability to
negotiate acceptable terms for disposition of non-core assets; Daylight's
ability to obtain all third party and regulatory approvals necessary to dispose
of non-core assets; ability to access sufficient capital from internal and
external sources; failure to obtain required regulatory and other third party
approvals; and changes in legislation, including but not limited to tax laws,
royalty rates and environmental regulations. Readers are cautioned that the
foregoing list of risk factors is not exhaustive. Additional information on the
factors that could affect the business, operations or financial results of
Daylight are included in reports on file with applicable securities regulatory
authorities, including but not limited to Daylight's Annual Information Form for
the year ended December 31, 2010 and Management's Discussion and Analysis for
the year ended December 31, 2010, each of which may be accessed on Daylight's
SEDAR profile at www.sedar.com or on our website at www.daylightenergy.com.


The forward-looking statements contained in this press release are made as of
the date hereof and Daylight undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.


Barrels of Oil Equivalent

"Boe" or "barrel of oil equivalent" means barrel of oil equivalent on the basis
of 1 boe to 6,000 cubic feet of natural gas. Boe's may be misleading,
particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000
cubic feet of natural gas is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
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