Financial Review:

While attention turned to the commodity prices declines and the resulting drop in oil and gas equities, Vero Energy was undeterred. Prudent management dictated that the company adjusts its planned capital spending and therefore focused on high-grade drilling prospects. As a result, Vero Energy delivered excellent operational successes during the quarter. These successes were highlighted by a 27% increase in daily production volumes to 7,352 boe/d as well as a 100% success rate in its drilling program. Operational results translated into cash flow for the first quarter of 2009 of CAD8,201 or CAD0.22 per basic and diluted share.

Comparatively, cash flow for the first quarter of 2008 was CAD17,842 and resulted in per share amounts of CAD0.60 per basic share and CAD0.59 per diluted share. Successful drilling results in the first quarter have kept Vero Energy’s depletion rate stable with the latter part of 2008.

Vero Energy invested CAD28.3 million (excluding dispositions) in capital projects during the quarter with a focus on continued development of the company’s key resource play in Edson. Vero Energy directed 71% of its first quarter capital expenditures towards drilling and completing seven wells, of which four were horizontal wells. Facilities and tie-ins expenditures of CAD6.3 million comprised 22% of the first quarter’s capital as five new wells were brought into production. In addition, CAD832,000 was spent on Crown land acquisitions primarily in the Edson area. At the end of the first quarter of 2009, the company had net debt of about CAD124 million which included bank debt of CAD102 million on a currently available bank line of CAD115 million.

Attributable to the significant increase in reserves from a combination of four acquisitions and a successful drilling program in 2008, Vero Energy’s bank line of credit was increased to CAD115 million in March of this year. This represented a 28% increase from the previous bank line of CAD90 million. The increase was achieved in the face of declining price decks used by the banks. This credit enhancement, plus the previously announced equity financing (estimated net proceeds of CAD14 million), puts the company in a solid financial position going into the uncertain summer months. Vero Energy’s capital program will be scaled back over the summer months to include mainly optimization projects as the company lets cash flow catch up to Vero Energy’s first quarter spending. Vero Energy’s capital budget remains flexible and is under continual review given the current economic environment.

Operations Review:

Edson, Alberta

Edson continues to be Vero Energy’s largest producing property with production of 5,005 boe/d (81% natural gas) in the first quarter of 2009. This area accounted for 68% of total corporate production. The expansion of Vero Energy’s gas processing facility to 35 mmcfd was completed during the quarter and became operational in January. The completion of this project will provide increased potential throughput of 24.5 mmcfd, reduce down time, allow for continued control of the infrastructure in Vero Energy primary core area and support development and extension of the company’s drilling. An element of reduced production occurred during the quarter as the Vero Energy operated gas processing facility had extra delays during startup in January and again in March. The main compressor experienced a severe mechanical failure resulting in a full replacement. This failure resulted in cumulative downtime of about two weeks. In addition, it is anticipated that Vero Energy will experience reduced production of about 2,500 boe/d for about two weeks at the end of May as a third party gas processing facility will be undergoing a scheduled turnaround.

Vero Energy’s primary geological targets in Edson are the Rock Creek and Mannville zones, which range in depth from 2,000 to 2,500 meters and are characterized by gas with a high liquid content, capable of generating liquid volumes of up to 30 bbls/mmcf.

During the quarter, the company drilled 5 (5 net) wells in the area with a success rate of 100%. Vero Energy’s focus continues to be in horizontal drilling as four of the five wells drilled were horizontal wells. In addition to these drilling operations a total of two wells were recompletions pursuant to farm-in commitments. Plans for the second half of the year will be focused on drilling in the Edson area with seven wells planned for later in the year and includes five horizontal wells.

Vero Energy’s acreage in the area consists of 68,640 gross (38,640 net) developed acres and 67,200 (52,744 net) undeveloped acres. A majority of the acreage in Edson has potential for at least two wells per section and the company has an ongoing program of making applications to the regulator for down spacing approvals. Notwithstanding Vero Energy’s acreage in Edson is a significant part of Vero Energy’s total acreage, the company continues to stress that the reserve potential in this area is an even more important part of the area development plan.

With Vero Energy’s relatively low costs at Edson, in both capital and operating, it has the flexibility to respond quickly and efficiently to prevailing commodity prices. Coupling facility and operational control to a high quality inventory, characterized by short on-stream cycle time, will allow Vero Energy the opportunity to create significant value as commodity prices recover. The company is also in a position to prudently take advantage of the Alberta drilling and royalty incentive programs announced in March.

Whitecourt

Whitecourt is Vero Energy’s second largest producing area primarily as a result of the three acquisitions completed in 2008. Production averaged 971 boe/d (86% natural gas) in the first quarter representing a 54% increase from fourth quarter volumes. The company drilled one well during the quarter.

Notwithstanding that no additional wells are planned in the area for the remainder of this year Vero Energy has numerous opportunities in the company’s land base that can be executed upon once commodity prices improve. The company’s focus during the remainder of the year will be on operating efficiencies and continuing to augment its portfolio with drilling and enhancement projects. Vero Energy currently controls 42,238 (22,403 net) developed acres and 60,320 (49,657 net) undeveloped acres in this area.

Corbett:

Corbett contributed about 8% to Vero Energy’s daily production average in the first quarter while averaging 609 boe/d (73 % natural gas).

Vero Energy currently controls 10,238 (5,885 net) developed acres and 28,480 (22,195 net) undeveloped acres in this area.

Other Areas:

Total production for non-core areas in the third quarter was 767 boe/d (65 % natural gas). The largest of Vero Energy’s non-core areas is Wilson Creek. During the quarter one (0.43 net) well was drilled. This well was brought on production in April to take advantage of the royalty relief incentives offered by the Province of Alberta.

Vero Energy has 56,169 (24,678 net) developed acres and 62,636 (42,680 net) undeveloped acres in the Other Areas, non-core category.