Revenues:

For the three months ended March 31, 2009, Alberta Clipper Energy recorded CAD4.2 million in crude oil and natural gas liquids sales and CAD6.1 million in natural gas sales, as compared to CAD10 million in crude oil and natural gas liquids sales and CAD7.5 million in natural gas sales for the three months ended March 31, 2008. Alberta Clipper Energy’s decrease in revenues for the three months ended March 31, 2009, as compared to three months ended March 31, 2008, can be attributed to the 47% decrease in realized prices per boe, offset by a 12% increase in production.

Royalties:

For the three months ended March 31, 2009, total royalties were CAD2.3 million or CAD8.22 per boe resulting in an average royalty rate of 22.8% compared to CAD4 million or CAD15.32 per boe, resulting in an average royalty rate of 22.6% for the three months ended March 31, 2008. Royalties are calculated and paid based on commodity revenue net of associated transportation costs. The decrease year-over-year in royalty per boe can be primarily attributed to the 47% decrease in realized commodity prices in the first quarter of 2009 as compared to the first quarter of 2008.

Operating Expenses:

For the three months ended March 31, 2009 and March 31, 2008 operating expenses were CAD3.5 million or CAD12.26 per boe and CAD2.6 million or CAD10.18 per boe, respectively. Operating expenses include all costs associated with the production of oil and natural gas. The major components of operating expenses include labor, equipment maintenance, property taxes, workovers, fuel and power.

The increase year-over-year for the three months ended related primarily to the increase in third party gathering and processing fees at Trutch, Bigstone and Kakwa. As a result of the consolidation of its sour oil processing facilities in the Sylvan Lake area of Western Alberta in December of 2008 and the installation of a heat exchanger in January of 2009 the company has seen an overall decrease in operating expenses per boe of over CAD3/boe from the fourth quarter 2008 rate of CAD15.44/boe.

Transportation Expenses:

Transportation expenses were CAD0.2 million or CAD0.81 per boe for the three months ended March 31, 2009, compared to CAD0.2 million or CAD0.67 per boe for the three months ended March 31, 2008. Alberta Clipper Energy’s transportation expenses relate primarily to the cost of transporting natural gas on the main natural gas pipelines. Therefore, the increase in per unit transportation expenses can be attributed to the increase of natural gas in the company’s production mix as compared to oil and natural gas liquids.

General and Administrative Expenses:

During the first quarter of 2009, net general and administrative expenses (G&A) were CAD0.9 million or CAD3.20 per boe. The three month period ended March 31, 2008 expenses were CAD0.9 million or CAD3.66 per boe. The decrease in net G&A costs per boe for the first quarter of 2009 compared to the first quarter of 2008 was related to the 12% increase in production over the same period.

Interest Expense:

During the three months ended March 31, 2009, Alberta Clipper Energy expensed, net of interest income, CAD0.4 million or CAD1.53 per boe, as compared to interest expense of CAD0.6 million or CAD2.16 per boe for the same period a year ago. The decrease year-over-year relates to a rate decrease, slightly offset by the company utilizing more of its credit facility in the current period.

Stock Based Compensation:

During the three months ended March 31, 2009, the company expensed CAD0.1 million or CAD0.50 per boe as compared to CAD0.2 million or CAD0.75 per boe for the three months ended March 31, 2008, in stock based compensation expense related to outstanding stock options and performance shares. The decrease in per boe stock based compensation was related to the increase in production volumes year-over-year.

Depletion, Depreciation, and Accretion:

For the three months ended March 31, 2009, depletion and depreciation of capital assets and the accretion of the asset retirement obligations was CAD117.2 million, including a CAD107 million impairment of the assets. This was an increase over the three months ended March 31, 2008 rate of CAD30.62 per boe or CAD7.9 million. The increases related to the impairment of the assets recorded in the current period.

Total costs subject to depletion and depreciation include CAD12.6 million relating to future development costs estimated to complete oil and gas wells for which proved reserves have been assigned. Salvage value of CAD10.2 million and undeveloped properties with a value of CAD45.7 million have been excluded from the costs subject to depletion and depreciation. Undeveloped properties are included in the depletion number only if they are considered impaired.

Income Taxes:

Future income tax was a recovery for the three months ended March 31, 2009 of CAD31.7 million as compared to a recovery of CAD0.6 million for the three months ended March 31, 2008 due to the company booking impairment to the assets of CAD107 million in the current quarter.

Capital Expenditures:

The company’s capital activity for the first quarter of 2009 focused on drilling 1 gross well (0.2 net) compared to 5 gross wells (1.7 net) during the three months ended March 31, 2008 and incurred capital expenditures of CAD2.7 million (CAD11.7 million for the three months ended March 31, 2008) including CAD0.4 million (CAD0.6 million for the three months ended March 31, 2008) of capitalized G&A expenditures and CAD0.1 million (CAD0.1 million for the three months ended March 31, 2008) of capitalized stock based compensation expense directly related to the petroleum and natural gas properties.

The company has committed to spend CAD7.5 million by the end of 2009 in relation to the flow-through issue on December 4, 2008, of which CAD1.2 million was spent by March 31, 2009. The expenditures are expected to be made out of future cash flow.

Property, Plant and Equipment:

The depletion and depreciation in the period includes impairment on the assets of CAD107 million.

Derivative Instruments:

Alberta Clipper Energy enters into commodity price derivative contracts from time to time that provide downside protection, in order to provide some stability of cash flows for capital spending planning purposes. Commodity prices can fluctuate due to political events, meteorological conditions, disruptions in supply and changes in demand.

For the three months ended March 31, 2009 the company realized a CAD0.1 million gain (0.2 million loss – 2008) and also recorded a CAD0.4 million unrealized gain on the contracts (1.8 million loss – 2008), as a result of fair value calculations at March 31, 2009.