First Calgary Petroleums Reports Third Quarter Results

FCP concluded a review of strategic options to maximize the value of the Company. Based upon a number of considerations articulated in the Company's second quarter report to shareholders, it was decided the long term value of the Company's assets would be maximized by FCP continuing on a stand alone basis to further explore, appraise and develop its Algerian holdings. Accordingly, the third quarter marked the beginning of a new phase for the Company with its focus locked on two principal initiatives:

- Generating production and cash flow; and
- Increasing the proved and probable oil and gas reserves.

To generate production and cash flow, the Company is working with Sonatrach, Algeria's national oil company and FCP's partner, to commercialize and develop Ledjmet Block 405b. FCP's current plan is to develop the Block in stages once each discovery is appraised, with first production from the MLE field targeted for 2008.

The Company is actively finalizing the MLE appraisal and reserves information and evaluating a number of possible development scenarios which will be reviewed with Sonatrach. Based on this review, the actual development and engineering plan will be formulated. Once the MLE development plan has been agreed to, FCP and Sonatrach will jointly seek markets for the planned production.

Algeria has export capacity of approximately 67 billion cubic metres (BCM) per year of natural gas and plans to increase this capacity to 85 BCM per year by 2010. Accordingly, the staged development of Block 405b coincides with Algeria's export goals.

Along with the Block 405b commercialization initiative, FCP plans to increase its proved and probable reserves over the next 12 months through drilling and completions activities. Current plans include drilling up to seven wells to offset and extend existing discoveries to the west of the MLE field. In addition, the Company's remaining exploration commitment well, ZER-1, will be drilled on the north west part of the Block. Drilling locations have been selected and site preparations are nearing completion for the next three wells: LES-3, MZLN-2 and ZER-1. To accelerate the drilling activity, FCP has contracted a second drilling rig and is negotiating for a third, which, if contracted, will give the Company three drilling rigs operational in the first quarter of 2006.

FCP's second block in Algeria's Berkine Basin is Yacoub Block 406a. With the five year exploration period for this Block ending on November 10th of this year, much of the Company's focus and attention during the third quarter was on drilling exploration prospects and completing the drilling commitments pursuant to the Block 406a contract.

During the third quarter, the RTN-1 exploration well was drilled on an independent structure north of the ZCH-1 discovery well. The RTN-1 wireline logs indicated limited hydrocarbons and the well was abandoned, as announced on September 8, 2005.

Following RTN-1, FCP drilled the ZCH-2 appraisal well which has been logged and cased as a potential oil and gas well. The Company has been granted a three month extension beyond the end of the exploration period to complete its appraisal and delineation of the ZCH reserves and to submit a development plan. Given the complexity of the ZCH reservoirs as they are currently understood, the three month extension may not allow sufficient time to fully appraise the discovery and assess its commercial viability. Accordingly, FCP will request additional time to complete the ZCH assessment. In the event additional time is not granted, the Company may decide to cease further activity on the ZCH discovery and focus its resources entirely on Block 405b.

Going forward, the commercialization and development of Block 405b is a major undertaking that will transform FCP into an exploration and production company. FCP is excited to pursue the MLE development as the initial stage in this transformation and the value it will create for shareholders.

Management's Discussion and Analysis

Management's discussion and analysis (MD&A) should be read in conjunction with the unaudited interim financial statements for the three and nine month periods ended September 30, 2005 and 2004 and the audited financial statements and MD&A for the year ended December 31, 2004. In this discussion and analysis $ refers to the U.S. dollar and C$ refers to the Canadian dollar.

FCP operates in Algeria where it has rights to explore and appraise two acreage blocks, Ledjmet Block 405b and Yacoub Block 406a. The Company's rights and obligations are set out in hydrocarbon agreements with Sonatrach, the national oil company of Algeria, which represents the interest of the state.

Hydrocarbon Agreements

The agreements with Sonatrach govern the exploration, appraisal and exploitation of hydrocarbons for each Block. The exploration period of the agreements extend for five years and require FCP to conduct certain drilling and seismic activities. In return, FCP will earn an interest in commercial discoveries. Each discovery is subject to an appraisal work programme that may extend beyond the exploration period of the agreements. Following the appraisal of each discovery, the Company and Sonatrach will obtain exploitation permits for any reserves determined to be commercial and all lands not subject to an exploitation permit will be returned to the government.

Ledjmet Block 405b

On Block 405b, FCP is party to a Production Sharing Contract (PSC) with Sonatrach. The Company is in the fourth year of the exploration period of the PSC. The remaining work commitment is to drill one exploration well (ZER-1) prior to December 2006, estimated to cost $9 million. If the Company fails to satisfy this work obligation, the rights, other than for which an exploitation permit has been granted or requested, will be returned and the Company will be liable to pay Sonatrach a penalty of $6.25 million.

During the exploitation period, the PSC allocates hydrocarbon production between FCP and Sonatrach in accordance with a sliding scale formula based on such factors as production levels, product prices and project investment. Pursuant to the formula, the Company's annual share of production may range from 27.72 to 8.16 percent. All Algerian state royalties and income taxes are paid by Sonatrach from its share of hydrocarbon production. Exploitation periods for each commercial oil and natural gas discovery are 25 and 30 years, respectively.

Yacoub Block 406a

On Block 406a, FCP is party to a Joint Venture Agreement (JVA) with Sonatrach. The five year exploration period ended on November 10, 2005 at which time all of the Block acreage, excluding the acreage surrounding the ZCH discovery, was returned to the Algerian government. All of the exploration work commitments on this Block have been satisfied. The Company has been granted a three month extension beyond the end of the exploration period to complete its appraisal and delineation of the ZCH reserves and to submit a development plan (see Business Risks and Uncertainties).

Pursuant to the JVA, exploitation periods for each commercial oil and natural gas discovery are 15 and 20 years, respectively, plus a five year extension option. During the exploitation period, the JVA allocates 49 percent of the hydrocarbon production or equivalent volume thereof to the Company. FCP is responsible for paying Algerian state royalties and income taxes on its share of production. A portion of the total recoverable natural gas reserves above a certain threshold will be considered strategic reserves and excluded by Algerian law from the JVA.

Capital Expenditures

Capital expenditures for the nine months ended September 30, 2005 totaled $36.4 million compared to $69.1 million in the first nine months of 2004. Of the 2005 expenditures:

- $30.4 million related to completion and production testing the LES-2 well, drilling the MLE-6, ZCHW-1, RTN-1, and ZCH-2 wells and site preparation costs for future drilling locations; - $1.2 million was spent completing the 2004 Block 406a 3D seismic programme and other geological interpretation activities; - $0.3 million was spent on MLE field development activities; - $0.3 million was paid to Sonatrach for annual training bonuses; and - $4.2 million related to administrative and support services for the Algerian operations.

Capital expenditures for the three months ended September 30, 2005 totaled $13.3 million compared to $30.6 million in 2004. Of the third quarter 2005 expenditures, $11.8 million related to drilling, completion and testing activities, $0.1 million was spent on MLE field development activities, $0.1 million was spent on seismic and $1.3 million related to administrative and support services for the Algerian operations.

Liquidity and Capital Resources

FCP continues to rely on equity to fund its operations and capital programmes. In June 2005, FCP raised $104.6 million, net of issue costs, from the sale of 16,925,000 common shares through an equity financing (10,577,100 shares at C$8.10 and 6,347,900 shares at pnds stlg 3.59). During the nine months ended September 30, 2005 the Company received $1.5 million for the issuance of 1,842,253 common shares from the exercise of stock options and warrants (three months ended September 30, 2005 - $0.8 million in proceeds from the issuance of 1,143,468 common shares).

The fully-diluted number of shares outstanding at the following dates were:

	                                          November    September     December
	    FULLY-DILUTED SHARES OUTSTANDING      10, 2005     30, 2005     31, 2004
	    Common shares                      201,986,928  201,853,928  183,086,675
	    Employee stock options               6,478,033    6,664,366    7,629,501
	    Common share purchase warrants               -            -       68,785
	    Non-employee stock options                   -            -      900,000
	    Fully-diluted shares outstanding   208,464,961  208,518,294  191,684,961