ARET Arete Industries Inc (CE)

Arete Industries, Inc. (OTCQB:ARET), announces record oil and gas revenue for the third quarter ended September 30, 2011. During the quarter ended September 30, 2011, Arete reported revenues of $2,916,698, which represents an increase of 6,830% from $42,088 in the second quarter ending June 30, 2011 and an increase of 8,328% from $34,606 in the quarter ended September 30, 2010. The increases were primarily attributable to the Company's acquisitions that closed during the quarter.

The Company's revenues included $436,764 of oil and natural gas revenue and a $2,479,934 gain on the sale of oil & natural gas assets during the quarter ended September 30, 2011. The oil and natural gas production has an average price $74.65 BOE for the three months ended September 30, 2011.

The Company reported net income from operations for the quarter ended September 30, 2011 of $2,299,684 as compared to a net loss from operations of ($245,890) for the quarter ended September 30, 2010. The Company reported net income of $2,150,944 or $0.28 per share for the quarter ended September 30, 2011, compared to a net loss of ($257,688) or $0.05 per share loss for the quarter ended September 30, 2010.

Private Placement

During the quarter, Arete issued a private placement of its Preferred Stock Series A1 for the sale of 750 shares at $10,000 per share, on a "best efforts" basis with a minimum offering of 520 shares and maximum offering of 750 shares at $10,000 per share. On September 29, 2011 the Company closed on the minimum by issuing 522.5 shares and received $5,225,000 in gross proceeds.

Liquidity and Capital Resources

The Company had a stockholder's equity at September 30, 2011 of $7,339,645. This is compared to stockholder's deficit at December 31, 2010 of ($1,832,847). The stockholder's equity increased due the Company's operating income and increased by the sale of common and preferred stock.

Donald Prosser, Arete's Chief Executive Officer, commented, "We are pleased to announce a record quarter to our shareholders. We continue to be strategic and aggressive with respect to purchasing and selling acreage in the Rocky Mountain Region, as evidenced by our approximate $2.5 million gain on sale of oil and natural gas assets reported during the quarter."

Make sure you are first to receive timely information on Arete when it hits the newswire. Sign up for Arete's email news alert system today at: http://ir.stockpr.com/areteindustries/email-alerts

About Arete Industries

The Company holds oil and gas properties in the Rocky Mountain Region of the United States and operates a small natural gas gathering system. For additional information on the Company visit our website at http://www.areteindustries.com/

For additional information on Arete Industries visit the Company's new website at: http://www.AreteIndustries.com/

SAFE HARBOR

This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this report, such as statements regarding our future expectations to increase our production are forward-looking statements (often, but not always, using words such as "expects", "anticipates", "plans", "estimates", "potential", "possible", "probable", or "intends", or stating that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved). Forward-looking statements are based on our current expectations and assumptions about future events and involve inherent risks and uncertainties. These risks include, but are not limited to, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition and government regulation or other actions. Additional information on these and other factors which could affect Arete's operations or financial results are included in Arete's reports on file with the Securities and Exchange Commission. Such factors (many of which are beyond our control) could cause actual results to differ materially from those set forth in the forward-looking statements.. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. Arete undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in Arete's expectations.

ARETE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	December 31,	September 30,
ASSETS	2010	2011
Current assets
Cash and cash equivalents	$ 15,990	$ 498,886
Prepaid expenses	85,139	326,736
Revenue receivable	12,625	981,997
Total current assets	113,754	1,807,619
Property and equipment
Oil and natural gas properties, at cost, successful efforts method:
net of accumulated depletion, depreciation, and accretion of $78,066(2011)	--	8,734,162
Furniture and equipment, at cost net of accumulated
depreciation of $173,076(2010) and $217,296(2011)	277,736	247,421
Total property and equipment	277,736	8,981,583
TOTAL ASSETS	$ 391,490	$ 10,789,202
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$ 604,271	$ 1,287,440
Accrued expenses	267,373	250,246
Accrued payroll taxes	111,690	111,690
Notes payable	--	1,050,000
Current portion of ARO	--	1,934
Contracts payable	536,528	18,750
Notes payable & advances related parties	704,475	108,069
Total current liabilities	2,224,337	2,828,129
Long-term portion of ARO	--	621,428
Total current liabilities	2,224,337	3,449,557
Stockholders' equity
Convertible Class A preferred stock; $10,000 face value,
10,000 shares authorized
Series 1, 750 shares authorized, 0 (2010)
and 523 (2011) shares issued and outstanding	--	5,023,371
Series 2, 2,500 shares authorized, 0 (2010)
and 0 (2011) shares issued and outstanding	--	--
Common stock, no par value; 499,000,000 shares
authorized, 4,972,635 (2010) and 7,764,476 (2011)	13,611,903	16,904,154
shares issued and outstanding
Accumulated deficit	(15,444,750)	(14,587,880)
Total stockholders' (deficit) equity	(1,832,847)	7,339,645
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 391,490	$ 10,789,202

ARETE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months,
(UNAUDITED)
	Three Months	Three Months	Nine Months	Nine Months
	Ended September 30,	Ended September 30,	Ended September 30,	Ended September 30,
	2010	2011	2010	2011
Revenues
Oil & natural gas revenue	$ 34,606	$ 436,764	$ 135,086	$ 482,403
Other income	--	--	--	--
Gain of sale of oil & natural gas assets	--	2,479,934	--	2,479,934
Total revenues	34,606	2,916,698	135,086	2,962,337
Operating expenses
Lease operating expenses including
production taxes	79,629	226,095	247,278	337,468
Acquisition costs	--	11,821	--	469,322
Depreciation, depletion, and accretion	11,065	89,121	33,174	111,231
Rent	1,009	887	2,679	3,030
General and administrative	188,793	289,090	528,602	1,001,513
Total operating expenses	280,496	617,014	811,733	1,922,564
Net loss from operations	(245,890)	2,299,684	(676,647)	1,039,773
Other income (expense):
Interest expense	(11,798)	(148,936)	(35,393)	(183,378)
Interest income	--	196	--	475
Total other income (expense)	(11,798)	(148,740)	(35,393)	(182,903)
Net income (loss)	$ (257,688)	$ 2,150,944	$ (712,040)	$ 856,870
Basic and diluted loss per share	$ (0.05)	$ 0.28	$ (0.14)	$ 0.13

ARETE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
For the nine months ended, September 30,
(UNAUDITED)
	2010	2011
Cash flows from operating activities:
Net (loss) income	$ (712,040)	$ 856,870
Adjustments to reconcile net inome (loss) to net
cash used in operating activities:
Depreciation and amortization	33,174	111,240
Stock issued for services, notes payable, and
interest on notes	24,500	469,500
Non cash compensation for services	331,599	426,876
Sale of oil & gas assets gain	--	(2,479,934)
Changes in assets and liabilities:
Accounts receivable	10,916	(969,372)
Accounts payable	177,730	683,169
Accrued expenses	121,089	179,143
Total adjustments	699,008	(1,579,378)
Net cash (used in) operating activities	(13,032)	(722,508)
Cash flows from investing activities:
Purchase of furniture and equipment	--	(2,850)
Purchase of oil and gas properties	--	(5,682,211)
Net cash (used in) investing activities	--	(5,685,061)
Cash flows from financing activities:
Notes payable receipts	--	2,060,000
Payments made on notes payable	--	(390,000)
Proceeds from sale of common stock	--	203,500
Proceeds from sale of preferred stock	--	5,023,371
Receipt of advances - related parties	--	2,850
Payment of advances - related parties	--	(9,256)
Net cash provided by financing activities	--	6,890,465
Net increase (decrease) in cash and cash equivalents	(13,032)	482,896
Cash and cash equivalents at beginning of period	16,764	15,990
Cash and cash equivalents at end of period	$ 3,732	$ 498,886
Supplemental disclosure of cash flow information:
	2010	2011
Interest paid during the period	$ --	$ 266,996
Income taxes paid during the period	$ --	$ --
Supplemental disclosure of non-cash investing and financing activities:
During the nine months ended September 30, 2011 non-cash expenses for contracts with consultants amounted to $426,876.
During the nine months ended September 30, 2011 wages to officers and directors and fees to
consultants of $1,284,251 were paid by the issuance of common stock
During the nine months ended September 30, 2010 non-cash expenses for contracts with consultants amounted to $211,805.
During the nine months ended September 30, 2011, notes payable of $1,335,000 were converted into common stock.
During the nine months ended September 30, 2010 wages to officers and directors and fees to
consultants of $24,500 were paid by the issuance of common stock

CONTACT: Gerald Kieft
         The WSR Group
         772-219-7525
         Info@theWSRgroup.com