SKW Skywest Energy Corp

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICESOR DISSEMINATION IN THE
UNITED STATES


SkyWest Energy Corp. (TSX VENTURE:SKW) ("SkyWest or the "Company") is pleased to
announce that it has entered into an arm's length agreement pursuant to which
SkyWest will acquire a key strategic operated Cardium asset and operated
facility at Willesden Green (the "Asset Acquisition") and a letter of intent
with a private company ("PrivateCo") to acquire all of the common shares of
PrivateCo (the "PrivateCo Acquisition") (collectively the "Acquisitions").
SkyWest is also pleased to announce a $20 million equity financing ("Financing")
and an $8 million credit facility. The Acquisitions and Financing position the
Company as a premier Cardium light oil resource company with outstanding growth
prospects and financial flexibility.


ASSET ACQUISITION 

Under the terms of the Asset Acquisition, SkyWest will acquire the assets for
approximately $8 million cash. The properties to be acquired pursuant to the
Asset Acquisition are primarily comprised of a contiguous Cardium land block in
the Willesden Green area offsetting SkyWest's recent Willesden Green horizontal
well which had an initial test rate of 948 boepd. The contiguous land block also
offsets significant Cardium horizontal activity which includes 21 recently
licensed Cardium horizontal wells within 2 miles of the acreage. Also included
is a key strategic operated compression facility at Willesden Green which has
capacity of up to 30 Mmcf/day. The lands include 6 gross (2.175 net) operated
Cardium sections on which SkyWest management has identified more than 20 gross
(7 net) Cardium light oil locations. The assets being acquired are currently
producing over 120 net boepd. The Asset Acquisition is expected to close on or
before November 19, 2010 and is not conditional on any financing and can be
completed by SkyWest with current cash on hand and available credit facilities.


PRIVATE COMPANY ACQUISITION 

Pursuant to the terms of the PrivateCo Acquisition, SkyWest has agreed to
acquire all of the outstanding common shares of PrivateCo for total
consideration of $23 million. The PrivateCo lands include a contiguous block of
more than 7 gross sections (5 net) in south Pembina where SkyWest had previously
entered into a farm-in arrangement with PrivateCo. SkyWest has identified 33
gross (21 net) horizontal Cardium light oil locations. PrivateCo is currently
producing approximately 400 boepd with an additional Cardium horizontal well
having been drilled and awaiting completion.


The Board of Directors of PrivateCo have unanimously approved the transaction
and the transaction is anticipated to close on or about December 31, 2010, and
completion is subject to certain conditions and the receipt of all regulatory
approvals, including approval of the TSXV.


The Chief Financial Officer and a Director of SkyWest are shareholders of
PrivateCo. 


TRANSACTION RATIONALE AND METRICS 

The Acquisitions are a continuation of SkyWest's business plan to grow a top
tier Cardium focused company organically with complementary acquisitions that
fit the Company's asset base. With the Acquisitions, the Company increases its
existing production base to over 1,000 boepd, grows its land position in the
heart of its oil focused Cardium play to more than 30 net sections, increases
the number of horizontal Cardium drilling locations to more than 90 locations
and obtains a working interest and operatorship of key infrastructure in the
area which will ensure that SkyWest is able to put its production online and
will not be restricted due to facility constraints in the area. 


The key highlights of the Acquisitions are as follows: 



Current production                                                520 boepd
Proved plus probable reserves(1)                                 1,558 mboe
Land - Cardium                                     13.25 (7.2 net) sections

(1) Proved plus probable reserves for the Asset Acquisition are effective as
    of July 1, 2010 and have been prepared by McDaniel & Associates 
    Consultants Ltd. and proved plus probable reserves for the PrivateCo 
    Acquisition are effective as of March 31, 2010 and have been prepared by
    GLJ Petroleum Consultants Ltd. 



Based on total consideration for the Acquisitions of $31 million and adjusted
for the estimated undeveloped land value of $2.3 million, the expected
acquisition metrics are as follows:




Production                                        $55,185 per producing boe
Reserves                                $18.42 per proved plus probable boe



In addition, the acquisition provides SkyWest with operatorship of key Cardium
infrastructure in its core Willesden Green area and will result in future
capital savings as a result of acquiring additional working interest in lands
which are currently subject to farm-in agreement.


The Company expects to complete the Acquisitions with current cash on hand,
available credit facilities and the net proceeds of the Offering (as described
herein in the section entitled "Equity Financing").


INCREASED GUIDANCE AND OPERATIONS UPDATE 

SkyWest had previously issued guidance indicating that it would exit 2010 in the
range of 900 - 1100 boepd. SkyWest is pleased to announce that, upon completing
the Acquisitions on the currently anticipated closing dates, the Company
anticipates exiting 2010 with production of 1400 - 1600 boepd.


After giving effect to the Acquisitions, SkyWest has over 30 net sections of
Cardium lands in inventory, which positions the Company for strong growth into
2011. In the next two weeks, SkyWest plans to complete its 2 most recent Cardium
horizontal wells and plans to commence drilling operations on its next 2 Cardium
horizontal wells.


EQUITY FINANCING 

SkyWest has entered into an engagement agreement with a syndicate of investment
dealers led by Wellington West Capital Markets Inc. and including Haywood
Securities Inc., FirstEnergy Capital Corp. and Desjardins Securities Inc.
(collectively, the "Agents") pursuant to which the Agents have agreed to use
their commercially reasonable efforts to complete a private placement offering
(the "Offering") of subscription receipts ("Subscription Receipts") to raise
proceeds of $20 million. 


The offering price of the Subscription Receipts will be determined in the
context of the market. Each Subscription Receipt will entitle the holder to
receive, without payment of additional consideration, one common share of
SkyWest (a "Share") on the exercise or deemed exercise of the Subscription
Receipt. 


All unexercised Subscription Receipts will be deemed to be exercised on the
later of: (i) the fifth business day after the date a receipt is issued by the
securities regulatory authorities for a final short form prospectus qualifying
the Shares issuable upon the exercise of the Subscription Receipts (the
"Qualification"); and (ii) the closing by the Company of the Acquisitions. The
gross proceeds from the Offering will be held in escrow with an escrow agent and
will not be released to the Company until the Qualification has been met and
concurrently with the closing of the Acquisitions. If the gross proceeds and
interest have not been released to the Company on or before 11:59 p.m. on
January 31, 2011, the gross proceeds and interest thereon will be returned by
the escrow agent to the holders of the Subscription Receipts. The Company has
agreed to use its commercially reasonable efforts to file and obtain a receipt
for a final prospectus qualifying the distribution of the Shares issuable upon
the exercise or deemed exercise of the Subscription Receipts in each of the
provinces of Canada, other than Quebec, within 60 days hereof. 


Completion of the Offering will subject to the successful marketing of the
Offering, satisfactory due diligence by the Agents and other customary closing
conditions including the receipt of all necessary regulatory approvals and the
approval of the TSX Venture Exchange. The Offering is expected to close on or
about December 7, 2010. 


These securities have not been and will not be registered under the United
States Securities Act of 1933, as amended, or the securities laws of any state,
and may not be offered or sold in the United States unless an exemption from
registration is available. This press release does not constitute an offer to
sell or the solicitation of an offer to buy these securities in the United
States. 


CREDIT FACILITY 

The Company has entered into a revolving operating demand loan in the amount of
$2,250,000 whereby interest will be floating at the Canadian chartered bank's
prime lending rate plus one-half percent. In addition, the Company has entered
into a non-revolving acquisition/development demand loan in the amount of
$6,000,000 whereby interest will be floating at the Canadian chartered bank's
prime lending rate plus three quarters of one percent. The facility is secured
by a floating charge debenture of $25 million and a general security interest in
all of the present and future acquired property of the Company. The facility
will be available for general corporate purposes.


SkyWest Energy Corp. is a Cardium focused exploration and production Company
based in Calgary, Alberta, Canada.


An updated corporation presentation for SkyWest will be available for review at
www.skywestenergy.com.


SAFE HARBOUR 

This news release contains certain "forward-looking information" within the
meaning of such statements under applicable securities law including estimates
as to: future production, operations, operating costs, commodity prices,
administrative costs, commodity price risk management activity, acquisitions and
dispositions, capital spending, access to credit facilities, income and oil
taxes, regulatory changes, other components of cash flow and earnings, the
timeline for the achievement of anticipated exploration, anticipated results
from any current or projected drilling program and, subject to regulatory
approval and commercial factor. 


Forward-looking information is frequently characterized by words such as "plan",
"expect", "project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or statements that
certain events or conditions "may" or "will" occur. These statements are only
predictions. Forward-looking information is based on the opinions and estimates
of management at the date the statements are made, and are subject to a variety
of risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. These factors include, but are not limited to, the completion of the
transactions contemplated by the Acquisitions, the Financing and the credit
facility, the inherent risks involved in the exploration and development of
conventional oil and gas properties, and the assets to be acquired pursuant to
the Acquisitions, difficulties or delays in start-up and continuing operations,
the uncertainties involved in interpreting drilling results and other geological
data, fluctuating oil prices, the possibility of unanticipated costs and
expenses, uncertainties relating to the availability and costs of financing
needed in the future and other factors including unforeseen delays. The Company
faces risks including those associated with exploration, development, approvals
and the continuing ability to access sufficient capital from external sources if
required. Actual timelines associated may vary from those anticipated in this
news release and such variations may be material. Industry related risks could
include, but are not limited to, operational risks in exploration, development
and production, delays or changes in plans, risks associated to the uncertainty
of reserve estimates including those relating to the Acquisitions, health and
safety risks and the uncertainty of estimates and projections of production,
costs and expenses. SkyWest undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions should change,
unless required by law. 


The reader is cautioned not to place undue reliance on this forward-looking
information.


BOEs 

Disclosure provided herein in respect of barrels of oil equivalent (boe) 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.

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