Wrangler West Reports 2008 Operating, Financial Results

In 2008, Wrangler West achieved total revenue of $31.4 million and $12.9 million in funds flow from operations, produced 1,394 barrels of oil equivalent (boe) per day and directed $10.4 million in capital expenditures primarily to upgrade facilities and optimize production. Wrangler West's production is 75 percent natural gas and the Riviere properties produce 76 percent of total daily production. In the last half of 2008, we reduced budgeted annual capital expenditures by approximately 30 percent to respond to economic uncertainty and deteriorating commodity prices.

Wrangler West navigated through 2008 by addressing many different challenges. High commodity prices throughout the first half of the year spurred industry exploration activity to record levels and heightened competition for access to land, services and equipment. In 2008, Wrangler West delivered strong funds flow from operations due to strong commodity prices which offset the 16 percent drop in daily production year over year. Although Wrangler West captured most of the benefit from the 2008 strength in oil and natural gas prices, commodity price contracts in place from April until October limited some of the upside.

Wrangler West drilled only three wells in 2008, resulting in one natural gas well and two dry and abandoned wells. We directed most of the capital budget toward infrastructure and facilities to improve production performance. Exploitation of the Riviere Wabamun A oil pool continues to challenge us. Recompletion operations, including fracturing and acidizing the horizontal legs of the producing zone, did not achieve the anticipated results. We decided to suspend the horizontal well stimulation project until commodity prices improve and we are satisfied with our technical approach.

Wrangler West's 2008 operational activities resulted in an increase of 290 mboe (proved plus probable) to our reserves base. Reserves, as evaluated by Sproule Associates Limited effective December 31, 2008, are 1.7 mboe in the proved category and 2.9 mboe in the proved plus probable category, resulting in a net present value of $59 million, discounted at 10 percent.

2009 Wrangler West Outlook

Following the strong commodity prices during the first half of 2008, Wrangler West is prepared for the next phase of the oil and natural gas business cycle which we expect will be characterised by soft commodity prices. Currently, Wrangler West has no production hedged and is fully exposed to weaker oil and natural gas prices. We have reviewed our inventory of projects and remain committed only to those that can add value in a weaker price environment. We are expanding our drilling inventory by purchasing land at lower cost and by creating new prospects. Where possible, we will work with industry partners to capture opportunities to acquire lands and petroleum and natural gas rights and be ready to act when commodity prices strengthen.