North West Alberta:

Hythe:

At Hythe, the company drilled, cased and completed two net wells consisting of one vertical multi-zone completion and one horizontal single zone completion during the first quarter. The vertical well was successful in applying existing exploitation techniques, downspacing and multi-zone completions, which maximizes reserve recovery and capital efficiency. The horizontal well was successful in applying two emerging technologies, multi-stage fracture stimulation and liquefied petroleum gas fracturing, to achieve economic success from an interval that historically had only been marginally economic in the area.

Current production from the Hythe property is about 2,100 boe/d, a significant increase from the 400 boe/d the property was producing when acquired in September 2007. The success of the first quarter program has not only generated direct offset locations, but more importantly, has validated exploitation concepts and technologies that can be applied to Delphi Energy’s 95 sections of undeveloped lands which will generate a multi-year program of repeatable and predictable low risk development opportunities.

The company anticipates drilling up to six wells in the area in the second half of 2009 and the results of this program will be utilized to generate the capital program for winter 2009/10. At Hythe, a typical vertical well would receive a drilling royalty credit of about CAD460,000, a typical horizontal well would receive a drilling royalty credit of about CAD600,000 and both wells would receive a further royalty reduction of up to CAD300,000 from the New Well Royalty Reduction program.

Delphi Energy continues to take advantage of attractive opportunities resulting from the current business environment through the acquisition of strategic undeveloped land and farming in on low risk development projects in the company’s core areas that other joint venture partners have chosen not to fund. During the first quarter, the company successfully participated in several Crown land sales acquiring 6,788 gross acres, at a working interest of 100%. In addition, two of the most prolific wells Delphi Energy completed in the first quarter were associated with farm-ins that increased Delphi Energy’s average working interest per well from 22.5% to 75%.

Bigstone

At Bigstone, Delphi Energy drilled, cased and completed one well (0.75 net) in the first quarter and completed one well (0.5 net) that was drilled and cased in the fourth quarter of 2008. Both wells targeted liquids rich, natural gas in the Cretaceous aged formations at depths ranging from 2,200 to 2,600 meters. The success of these wells continues to demonstrate the consistent and repeatable development nature of this asset. Recent drilling activity has increased current production at Bigstone to about 3,000 boe/d (80% natural gas).

The company anticipates drilling up to two wells in this area in the second half of 2009 which will be followed up with increased drilling activity next winter to take advantage of the recently announced royalty credit programs by the government of Alberta. A typical well at Bigstone would receive a drilling royalty credit of about CAD540,000 and a further royalty reduction of up to CAD300,000 from the New Well Royalty Reduction program.

Outlook:

Natural gas prices have continued to weaken throughout the first part of the year and are at risk of further reduction as a result of natural gas supply in excess of demand, particularly due to reduced industrial demand from the lower economic activity in North America. Delphi Energy will manage its capital spending prudently in light of the fact that potential lower natural gas prices may prevail for the remainder of 2009. As in prior years, the company’s risk management program provides stability to the company’s cash flow for the remainder of the year allowing a minimum level of capital to be incurred.

During the second quarter, two of the company’s gas processing facilities have scheduled maintenance downtime which will impact production for the quarter.

Assuming the downtime goes as planned, the company is optimistic that second quarter production will result in a ninth consecutive quarter of production growth based on the strong performance of the winter capital program and field production to date. Delphi Energy expects production to be between 6,750 and 6,850 boe/d for the second quarter. As in the prior year, capital for the second quarter is expected to be considerably less than cash flow for the quarter resulting in an expected reduction in net debt levels over the first six months of the year while potentially growing production volumes in a very low commodity environment.

Delphi Energy is now in the planning phase for the third and fourth quarter capital program following minimal activity scheduled during the second quarter spring break-up. The company will continue to be disciplined in its capital spending, focusing on the lowest risk development projects in its core areas of Bigstone and Hythe. Drilling to develop the resource potential in the Bluesky, Dunvegan and/or Nikanassin formations from its Hythe property will be considered as part of the second half capital program. Operational risk, capital required and overall capital efficiencies will be the driving factors in pursuing the resource plays in the current and expected low natural gas price environment. The Board of Directors has approved a second half capital program of CAD18 to CAD23 million for a total capital program of CAD35 to CAD40 million in 2009.

Cash flow for 2009 is forecast to be between CAD38 million to CAD43 million on an average natural gas price for AECO of about CAD4.25 per mcf. The company has hedged about 52% of its natural gas production at CAD7.35 per mcf for the remainder of 2009 to achieve this forecasted cash flow. Over the year, Delphi Energy expects an overall reduction in net debt of about CAD2 million to CAD4 million from the amount outstanding at December 31, 2008.

Delphi Energy remains confident in its ability to achieve continued per share growth during these challenging times and is excited about the 2009 drilling program. The expanding inventory of drilling locations and growth prospects being generated gives rise to continued optimism for growth well beyond 2009.

Operational and Financial Highlights:

Delphi Energy delivered another record quarterly production average of 6,762 barrels of oil equivalent per day (boe/d), representing the eighth consecutive quarter of production growth and a 12% increase from the comparable period in 2008. This consistent production growth in varying economic conditions speaks to the quality of the company’s core assets, management and staff and inventory of opportunities. Natural gas production comprised 86% of the company’s average production.

Funds flow from operations in the first quarter of 2009 was CAD10 million or CAD0.13 per basic share, compared to CAD17.1 million or CAD0.25 per basic share in 2008, primarily as a result of lower average oil and natural gas prices for the quarter offset by the growth in production volumes and a 5% reduction in cash operating costs per boe to the comparative quarter. Delphi Energy’s risk management program continued to contribute to funds from operations providing the company with CAD4 million in realized gains in the quarter. Delphi Energy’s financial position continues to remain strong in the first quarter of 2009, providing financial flexibility to execute the remainder of its 2009 capital program and reduce debt from current levels. At March 31, 2009, the company had net debt of CAD113.2 million on total credit facilities of CAD140 million, providing excess financial capacity of about CAD26.8 million.