Highlights Include:

— increased cash flow from operations by 429.1%

— Average production for the year increased by 73.6% while average production for the fourth quarter increased by 112%

— raised CAD19.5 million in additional share capital

— increased Reece Energy’s credit facility by CAD19 million to CAD39 million

— entered into a joint venture agreement to gain access to the Lower Shaunavon play in south west Saskatchewan.

The difference is primarily due to the high prices for oil and gas received during the first half of 2008 and was accompanied by a significant addition to production which rose to 1,870 BOE/d for the fourth quarter of 2008 as compared to 998 BOE/d for the same period in 2007. Reece Energy is currently achieving cash flow from operations of between CAD1 million and CAD1.5 million per month and current production as of the date of this MD&A is about 2,100 BOE/d.

Reece Energy has reported that the revenue from seismic operations, which is the company’s only other operating segment, raised to CAD1 million from almost CAD0.4 million in the previous year. The operations of Reece Energy wholly owned subsidiary, Reece Energy Geophysical Ltd., provides further strategic integrated services to the corporation whilst providing some diversification to the products offered by Reece Energy.

The company has made major raises to its total reserves mainly through horizontal drilling projects in its core Dodsland area in West Central Saskatchewan. Reece Energy also added reserves through drilling and discoveries at its properties in Bemersyde, Rapdan, Stoughton and Forget. In addition to this the company’s net present value (10% discount rate, before tax using forecast prices and costs) increased considerably in spite of a sharp decrease in pricing forecasts due to the increased reserves.

Highlights:

— Total proved plus probable reserves rose to 51.3% from 4,256 MBOE as at December 31, 2007 to 6,441 MBOE. Reece Energy’s proved plus probable reserves are 33.6% natural gas

— Total proved reserves increased 60.2% from 2,425 MBOE to 3,884 MBOE, with 20.7% of Reece Energy’s proved reserves being natural gas.

— Reece Energy’s net present value of proved plus probable reserves at a 10% discount rate, before taxes using forecast prices rose by 113.9% from CAD71.7 million to CAD153.4 million

— The company has total of 145,045 gross acres (89,863 net) of undeveloped land holdings

— It has drilled 66 wells (51.9 net) for the year-end 2008 with a 97% success rate.