The Cypress farmout has the potential to provide Trafalgar Energy with material additional northeast British Columbia natural gas exposure at no capital cost. Discussions with the operator are ongoing with respect to timing and scope of potential additional earning activity. Trafalgar Energy owns about 33,600 gross acres (14,800 net) of undeveloped Montney rights at Cypress with an average 44% working interest. Subsequent to the potential completion of a multi-well drilling program, Trafalgar Energy will retain an 8% to 10% working interest in the Montney rights at Cypress.

During the fourth quarter of 2008, Trafalgar Energy established a new light oil producing area at House Mountain Alberta. Trafalgar Energy significantly expanded its 100% working interest land position at House Mountain to about 16,000 net undeveloped acres during the first four months of 2009. The company now has 10 light oil drilling locations in inventory at House Mountain. The majority of these locations are drillready, accessible all year and have the potential to be highly economic at today’s prices, particularly in light of the recently announced Alberta royalty incentives.

Trafalgar Energy’s first House Mountain well was brought on production in November 2008 at rates exceeding 250 bbls per day of light oil with less than 10% water cut. During the first quarter of 2009, the 3-36 well stabilized at about 140 bbls per day with water cuts remaining at less than 10%. Current production from the 3-36 well is rate restricted to about 80 bbls per day in compliance with government rate limitations. Trafalgar Energy is planning to commence development drilling at House Mountain in the third quarter of 2009.

The company continues to build land positions on oil focused projects in Alberta and Saskatchewan. Low land prices are providing an excellent opportunity to acquire strategic positions at a substantially lower cost than recent years. Trafalgar Energy views this as an opportunity to grow drilling inventory and position the company for the next upswing in energy prices.

Production for the first quarter 2009 is estimated to have averaged 1,025 to 1,050 boe per day.