EQU: TSX, NYSE

CALGARY, AB, April 26, 2011 /PRNewswire-FirstCall/ – Equal Energy Ltd. (“Equal” or the
“Company”) announces that it has entered into a purchase and sale
agreement (the “Purchase and Sale Agreement”) with Petroflow Energy
Ltd. and its subsidiaries, North American Petroleum Corporation USA
(“NAPCUS”) and Prize Petroleum LLC (collectively “Petroflow”) and a
settlement agreement (the “Settlement Agreement”) with Petroflow,
Compass Bank (“Compass”) and Texas Capital Bank, N.A. (“Texas Capital”)
(collectively the “Agreements”) pursuant to which the Company will
acquire Petroflow’s interests in assets developed pursuant to the now
terminated farmout agreement (the “Farmout”) between the Company and
NAPCUS, (the “Acquisition”) and concomitantly settle all outstanding
legal matters and other claims between the Company and Petroflow,
Compass and Texas Capital. The Agreements are subject to the approval
of the US Bankruptcy Court in Delaware (“Bankruptcy Court”) and a
hearing requesting such approval is expected to occur on May 17, 2011.

“We are very pleased to have come to agreement with the parties involved
in the Petroflow bankruptcy process through the negotiation of this
acquisition and settlement. The acquisition is beneficial for our
shareholders and removes a significant distraction for the Equal
management team,” said Don Klapko, President and CEO of Equal.

ACQUISITION HIGHLIGHTS & STRATEGIC RATIONALE
Pursuant to the Purchase and Sale Agreement, Equal will acquire
Petroflow’s interests in the Oklahoma Hunton play which were developed
under the Farmout for consideration of US$93.5 million. The effective
date of the transaction will be July 1, 2011 with adjustments to the
consideration if the transaction closes before or after July 1, 2011.
Equal and Petroflow will equalize, on a 50/50 basis, the interests in
zones above the Hunton in sections of land that were earned during the
Farmout, and Petroflow will operate a development program over these
uphole assets.

Equal expects to fund the Acquisition through proceeds from its
previously announced offering of common shares and its available credit
facilities. In addition, Equal will receive from Petroflow US$5.8
million in outstanding pre-petition joint interest billings and expects
future recovery of US$1.4 million of production tax rebates. Under the
terms of the Agreements, all outstanding legal matters previously
disclosed on January 19, 2011 related to the capital recovery agreement
and salt water disposal disputes, as well as a dispute related to lien
priority scheduled for a future trial will be settled and resolved. As
a result of the Agreements, Equal will record a reversal in a
previously booked liability in the amount of US$9.8 million related to
a ruling of the Bankruptcy Court related to the outstanding legal
matters.

The acquired interests have the following characteristics:

Production1										3,100 boe/d (approximately 42% liquids)
Proved reserves2										8.7 mmboe (approximately 98% proved developed producing)
Operating netback per boe3										US$17.80 per boe
Proved RLI										7.7 years

1. Internal estimate of average production for July 1 to December 31, 2011
   period.
2. Equal internal estimate
3. Based on US$80.00 / bbl oil price and US$4.25 / mmbtu gas price

Based on a purchase price of US$93.5 million, and adjusting for the
receipt of US$5.8 million in joint interest billing receivable, the
transaction metrics are as follows:

Production

US$28,290 per boe/d

Proved reserves

US$10.08 per boe

Cash flow

Approximately 4.4x annualized cash flow

The Acquisition is expected to be accretive to Equal in 2011 in terms of
cash flow, production, reserves and net asset value, all on a per share
basis. Combined with the proceeds of the previously announced
offering, Equal’s debt ratios are also expected to improve. Upon the
acquisition, Equal’s bank line is expected to be increased to $175
million with an estimated draw on the bank line of $120 million,
providing the Company with strong financial flexibility.

On closing, the Acquisition will significantly increase the scale of the
Company’s operations in its key Hunton liquids-rich natural gas play in
Oklahoma. The addition of approximately 3,100 boe/d represents an
increase in the working interest of existing wellbores in which Equal
already holds an interest and acts as operator. The Acquisition also
eliminates the distraction and uncertainty of current legal disputes
related to the assets being acquired and allows the Company to better
control the pace and nature of its development activities on the
assets.

About Equal Energy Ltd.
Equal is an exploration and production oil and gas company based in
Calgary, Alberta, Canada with its United States operations office
located in Oklahoma City, Oklahoma. Equal’s shares and debentures are
listed on the Toronto Stock Exchange under the symbols (EQU, EQU.DB.A,
EQU.DB.B) and Equal’s shares are listed on the New York Stock Exchange
under the symbol (EQU). The portfolio of oil and gas properties is
geographically diversified with producing properties located in
Alberta, British Columbia, Saskatchewan and Oklahoma. Current
production is comprised of approximately 56 percent crude oil and
natural gas liquids and 44 percent natural gas. Equal has compiled a
multi-year drilling inventory for its properties including its new oil
play opportunities in the Cardium and Viking in central Alberta in
addition to its extensive inventory of drilling locations in the Hunton
liquids-rich, natural gas play in Oklahoma.

Forward-Looking Statements
Certain information in this press release constitutes forward-looking
statements under applicable securities law. Any statements that are
contained in this press release that are not statements of historical
fact may be deemed to be forward-looking statements. Forward-looking
statements are often identified by terms such as “may,” “should,”
“anticipate,” “expects,” “seeks” and similar expressions. Specific
forward-looking statements included in this press release include
comments related to the expected benefits and closing date of the
Acquisition, the expected accretive nature of the Acquisition on Equal
and Equal’s 2011 expected operational and financial performance.

Forward-looking statements necessarily involve known and unknown risks,
including, without limitation, uncertainty regarding approval by the
Bankruptcy Court, risks associated with oil and gas production;
marketing and transportation; loss of markets; volatility of commodity
prices; currency and interest rate fluctuations; imprecision of reserve
estimates; environmental risks; competition; incorrect assessment of
the value of acquisitions; failure to realize the anticipated benefits
of acquisitions or dispositions; inability to access sufficient capital
from internal and external sources; changes in legislation, including
but not limited to income tax, environmental laws and regulatory
matters. Readers are cautioned that the foregoing list of factors is
not exhaustive.

Readers are cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ
materially from those anticipated Forward-looking statements contained
in this press release are expressly qualified by this cautionary
statement. Financial outlook information contained in this press
release about prospective cash flows is based on assumptions about
future events, including economic conditions and proposed courses of
action, based on management’s assessment of the relevant information
currently available. Readers are cautioned that any such financial
outlook information contained herein should not be used for purposes
other than for which it is disclosed herein.

Additional information on these and other factors that could affect
Equal’s operations or financial results are included in Equal’s reports
on file with Canadian and U.S. securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com), the SEC’s website (www.sec.gov), Equal’s website (www.equalenergy.ca) or by contacting Equal. Furthermore, the forward looking statements
contained in this news release are made as of the date of this news
release, and Equal does not undertake any obligation to update publicly
or to revise any of the included forward-looking statements, whether as
a result of new information, future events or otherwise, except as
expressly required by securities law.

CONVERSION: Natural gas volumes recorded in thousand cubic feet (“mcf”)
are converted to barrels of oil equivalent (“boe”) using the ratio of
six (6) mcf to one (1) barrel of oil (“bbl”). Boe’s may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 mcf:1
bbl is based on an energy equivalent conversion method primarily
applicable at the burner tip and does not represent a value equivalent
at the wellhead.

SOURCE Equal Energy Ltd.