ProspEx Resources Ltd. reports its financial and operating results for the three and nine months ended September 30, 2010 and the adoption of a shareholder rights plan (the "Rights Plan").

"ProspEx is pleased to announce that our first horizontal well in the Pembina area of West Central Alberta tested at a rate of 19 million cubic feet per day at the conclusion of a 50 hour flow test", said John Rossall, President and Chief Executive Officer. "In addition, ongoing drilling success in Kakwa has increased current corporate production to approximately 3,400 barrels of oil equivalent per day, with substantial incremental production expected to come on stream by year end."

Highlights • ProspEx recently completed its first horizontal well at Pembina in West Central Alberta (100% working interest). This well targeted the liquids rich Falher formation, and produced at a final rate of 19 million cubic feet ("mmcf") per day at a flowing wellhead pressure of 1,887 pounds per square inch ("psi") at the conclusion of a 50 hour flow test. • ProspEx also resumed horizontal drilling activity in the Falher play at Kakwa in early July. Three Kakwa wells were drilled during the third quarter: the first well is now onstream at a gross raw gas rate of 11.8 mmcf per day, the second well recorded a final test rate of 6.6 mmcf per day, and the third well has been cased and is currently awaiting completion. • Production for the third quarter decreased to 2,685 barrels of oil equivalent ("boe") per day, compared to 3,086 boe per day in the second quarter of 2010. However, with the recent tie-in of the latest Kakwa well, current corporate production is estimated to be approximately 3,400 boe per day. In addition to this production, the Company has three (1.9 net) horizontal wells that have been drilled but are not yet on production, including the Pembina well. • Total capital expenditures were $7.7 million during the third quarter of 2010. • Third quarter cash flow (before changes in non-cash working capital items) was $3.3 million, compared to $2.0 million in the prior year's quarter, reflecting increases in production and commodity prices. • Total net debt (excluding the fair value of commodity contracts, the current loss on office sublease and associated future taxes) at September 30, 2010 was $28.1 million. Subsequent to quarter end, ProspEx completed an equity financing for net proceeds of approximately $5 million.

Operational Review

Capital Program Subsequent to quarter end, ProspEx drilled its first horizontal well (100% working interest) at Pembina in West Central Alberta. This well targeted the liquids rich Falher formation, and was ProspEx's first well in this new operating area. Following a multi-stage fracture stimulation, this well was produced up 4½' casing for a period of 50 hours, with a final rate of 19 mmcf per day at a flowing wellhead pressure of 1,887 psi. This well is expected to be on production in early December, 2010. ProspEx has identified seven additional 100% working interest locations on its existing lands in Pembina offsetting this well.

Total capital expenditures were $7.7 million during the third quarter of 2010. ProspEx's drilling activity continued to focus on horizontal drilling of liquids rich, Cretaceous age, natural gas targets. During the third quarter, the Company participated in three (1.5 net) horizontal wells targeting the Falher formation at Kakwa in the Deep Basin. The first of these wells at 13-8-64-4W6 (the "13-8 well") was brought on to production at the end of October at a gross raw gas rate of 11.8 mmcf per day. ProspEx has a 59% working interest in the 13-8 well.

The second well in this program, located at 13-16-64-4W6 (the "13-16 well") was drilled and confirmed the location of the eastern boundary of the pool inferred from the Company's seismic interpretation. The 13-16 well was tested at a final rate of 6.6 mmcf per day at a flowing wellhead pressure of 552 psi at the end of a 24 hour test. This well is expected to be on stream in December, 2010. ProspEx has a 59% working interest in the 13-16 well.

The third well of the Kakwa program, located at 2-30-64-4W6 (the "2-30 well") has been drilled and is currently awaiting completion. Completion of this well is scheduled for late November, 2010. The 2-30 well was drilled to a bottom hole location immediately north of ProspEx's 15-19-64-4W6 well (the "15-19 well"), which has produced for nine months with an average gross raw gas rate of 5.9 mmcf per day over the nine month period. ProspEx has a 30% working interest in the 2-30 well.

ProspEx currently has one additional Kakwa horizontal well scheduled to commence drilling prior to year end 2010. This well is intended to confirm the extension of the Falher trend to the south of the Company's existing wells. ProspEx has an inventory of 21 (10.5 net) undrilled horizontal well locations in Kakwa.

Third quarter 2010 production averaged 2,685 boe per day. Production increased by 36% compared to the third quarter of 2009, but declined modestly compared to the second quarter of 2010, as no material new production was brought on stream during the quarter. However, with the new Kakwa 13-8 well coming on stream recently, current production is now estimated to be 3,400 boe per day. ProspEx has incremental production from the Pembina horizontal well discussed above, and incremental production from both the Kakwa 13-16 and 2-30 wells still to come on stream. In addition, approximately 500 boe per day of production from previously drilled Kakwa wells has been temporarily curtailed due to the high initial production rates from the 13-8 well. This curtailed production is expected to resume as the initial production rates from the 13-8 well subside.

In light of lower natural gas prices, the Company elected not to spend additional capital to maintain the pace of its capital spending program in the face of wet weather conditions. Accordingly, ProspEx now expects annual average production to be approximately 3,000 boe per day, down from the previous forecast of 3,100 to 3,300 boe per day. However, the Company believes that it is on track to meet its previously issued 4,000 boe per day production guidance for late December.

Guidance regarding production may constitute a "financial outlook" as contemplated by National Instrument 51-102 of the Canadian Securities Administrators entitled Disclosure Obligations. The purpose of such guidance is to forecast the anticipated production for the Company as at the end of December 2010 and for the full year 2010 and such information may not be appropriate for other purposes.

ProspEx has three horizontal wells in Kakwa with longer term production histories. The Company's first horizontal well (the "2-33 well") has been on stream for 12 months, and has produced an estimated 1.9 billion cubic feet ("bcf") of raw gas over this time period, equivalent to a production rate of 5.1 mmcf per day. ProspEx's second well, the 15-19 well has produced for nine months and has a production profile similar to the 2-33 well, with an average raw gas rate of 5.9 mmcf per day over the nine month period. The third well (the "1-6 well") has produced at an average rate of 2.7 mmcf per day over an eight month period.

Based on well test data and initial production rates, ProspEx believes that the production profile of the new 13-8 well will resemble that of the 2-33 and 15-19 wells. The 13-16 well was intended to evaluate the eastern boundary of the pool, and as such is interpreted to have encountered a thinner reservoir as it approached the edge of the pool, resulting in lower expected productivity than wells drilled in the centre of the pool. Based on test rates, the Company believes the 13-16 production profile will resemble the 1-6 well. As the 2-30 well has yet to be completed, it is difficult to estimate the potential productivity of this well. However, ProspEx notes that this well was drilled to a bottom hole location immediately north of the 15-19 well.

The Kakwa Falher play continues to generate very strong results. The Company believes that the high production rates of liquids rich gas generate robust economics, even at lower gas prices.

Financial Third quarter cash flow (before changes in non-cash working capital items) was $3.3 million, compared to $3.5 million in the second quarter, as declines in production were offset by lower royalties and operating costs. Total capital spending was $7.7 million.

Total net debt (excluding the fair value of commodity contracts, the current loss on office sublease and associated future taxes) at September 30, 2010 was $28.1 million which is equivalent to 1.9 years net debt to annualized trailing cash flow. Subsequent to quarter end, ProspEx completed an equity financing for net proceeds of approximately $5 million.

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