FORESTAR PETROLEUM CORP 
By FOR IMMEDIATE RELEASE
CREDO RELEASES THE TEXT OF THE REPORT TO SHAREHOLDERS CONTAINED IN ITS 2011 ANNUAL REPORT
DENVER, COLORADO, February 21, 2012 - Credo Petroleum Corporation (NASDAQ: CRED), today released the text of the Report to Shareholders that is included in the company's Annual Report for fiscal 2011. The Annual Report will be mailed to shareholders of record on or about March 1, 2011. It will also be available on-line through the Company's website (www.credopetroleum.com). The 2012 Annual Meeting of Shareholders will be held at the Brown Palace Hotel, 321 Seventeenth Street, Denver, Colorado, 80202, on April 5, 2012 at 2:30 p.m. MDT.
The table below is included on the inside front cover of the 2011 Annual Report. In the Report to Shareholders which follows the table there are references to the information on the inside front cover of the Annual Report which, for purposes of this press release, is included in the table below.
Highlights
| 4th Quarter 2011 Fiscal Year 2011 | ||
| Revenue | Up 94% | Up 45% |
| Net Income | Up 242% | Up 60% |
| EBITDA | Up 116% | Up55% |
| Production | Up 32% | Up 12% |
| Proved Reserves | * | Up 25% |
| Proved Oil Reserves | * | Up 106% |
| PV 10 Reserve Value | * | Up 61% |
* Quarterly calculation is not applicable because year-end and fourth quarter reserves are the same.
Fellow Shareholders:
We continued to achieve major transition milestones in 2011 which generated the excellent financial and operational results shown on the inside front cover. For the past three years our business strategy has been to rapidly transform Credo from almost exclusively a natural gas producer into primarily an oil producer. We began executing on that strategy by entering then emerging drilling plays in the North Dakota Bakken and Three Forks and the Tonkawa and Cleveland in the Texas Panhandle. We also entered a vertical oil drilling play in Kansas and Nebraska. While major transitions like this require a rebuilding period, we are pleased to report that a majority of our revenues and production now come from oil, and that all of our performance metrics are on the threshold of becoming oil weighted.
Successful drilling in 2011 drove significantly improved operating results and achieved the milestone of relative equilibrium in our oil and gas production and reserves.
In 2011, we almost doubled capital spending to $15.5 million and drilled a record 49 gross (20 net) oil wells, a 92% increase in net wells over last year. As a result we added significant oil production and reserves, bringing the oil and gas mix for both categories into relative balance.
Successful drilling results drove a 12% year over year increase in total production volumes to 301,000 BOE. The following table shows comparative year production volume percentages by region.
| 2011 | 2010 | |
| North Dakota Bakken and Three Forks 12% | 12% | 2% |
| Kansas and Nebraska Lansing Kansas City | 20% | 16% |
| Texas Panhandle Tonkawa and Cleveland | 8% | 4% |
| Other (primarily Oklahoma natural gas) | 60% | 78% |
Our oil production increased 53% compared to last year. We suspended gas drilling in 2009 because of low natural gas prices. As a result, mostly normal declines reduced gas production by 12% in 2011. The decline in gas production substantially offset the larger increase in oil production because (as the table below shows) at the beginning of 2011 gas represented almost two-thirds of our production volume. That situation will significantly improve in 2012 as we enter the year with oil and gas production quantities about equal. The following table shows comparative year production percentages by product.
| 2011 | 2010 | |
| Crude Oil amd NGLs | 49% | 36% |
| Natural Gas | 51% | 64% |
Total reserve additions for 2011 were 1.1 million barrels of oil equivalent ("MMBOE"), replacing 372% of the year's production. At year end, proved reserves totaled 4.1 MMBOE, up 25% over last year. Oil represented 48% of year-end reserve quantities compared to 29% last year. We expect to achieve the milestone of oil becoming the largest component of reserve quantities in early 2012. The following table shows the percentage of our year-end proved reserve quantities by region.
| 2011 | 2010 | |
| North Dakota Bakken and Three Forks | 32% | 8% |
| Kansas and Nebraska Lansing Kansas City | 8% | 7% |
| Texas Panhandle Tonkawa and Cleveland | 7% | 10% |
| Other (primarily Oklahoma natural gas) | 53% | 75% |
At year end 2011, the Company's proved reserves had a PV-10 value (SEC basis) of $62.3 million, up 61% over last year. Oil represented 74% of reserve values compared to only 48% of reserve quantities due to the significant price differential between oil and natural gas. Proved undeveloped reserves represented 51% of total 2011 reserves. The percentage of proved undeveloped reserves increased primarily because a significant amount of drilling occurred around our Bakken acreage which proved
