Angle Announces 2008 Second Quarter Results



    /NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
    THE UNITED STATES./

    CALGARY, July 29 /CNW/ - Angle Energy Inc. ("Angle" or the "Company")
(TSX : NGL) is pleased to announce its financial and operating results for the
three and six months ended June 30, 2008.

    
    HIGHLIGHTS

    -------------------------------------------------------------------------
                    Three Months Ended June 30,     Six Months Ended June 30,
                      2008      2007    Change      2008      2007    Change
    -------------------------------------------------------------------------
    (000s, except
     per share data)    ($)       ($)       (%)       ($)       ($)       (%)

    Financial
    Oil and gas
     revenues       33,896    15,013       126    56,380    30,042        88
    Funds from
     operations(1)  18,970     7,300       160    33,096    15,430       114
      Per share
       - basic        0.55      0.22       150      0.95      0.47       102
      Per share
       - diluted      0.53      0.22       141      0.93      0.46       102
    Net income       7,527     2,721       177    10,511     5,493        91
      Per share
       - basic        0.22      0.08       175      0.30      0.17        76
      Per share
       - diluted      0.21      0.08       163      0.30      0.16        88
    Capital
     expenditures   21,712     4,653       367    38,748    22,628        71
    Net debt(2)      8,576    17,236       (50)    8,576    17,236       (50)
    Shareholders'
     equity        122,108    69,356        76   122,108    69,356        76
    Shares
     outstanding
     (No.)
      At end of
       period       38,594    32,528        19    38,594    32,528        19
      Weighted
       average
       - basic      34,721    32,528         7    34,656    32,526         7
      Weighted
       average
       - diluted    35,601    33,787         5    35,471    33,785         5
    -------------------------------------------------------------------------
                                            (%)                           (%)
    Operating
    Sales
      Crude oil
       (bbls/d)         27         -       100        23         1        96
      Natural gas
       liquids
       (bbls/d)      2,417     1,334        81     2,391     1,392        72
      Natural gas
       (mcf/d)      21,128    11,900        78    19,764    12,100        63
      Total oil
       equivalent
       (boe/d)       5,965     3,326        79     5,708     3,409        67
    Average wellhead
     prices(3)
      Crude oil
       ($/bbl)      132.46     67.90        95    121.27     64.05        89
      Natural gas
       liquids
       ($/bbl)       71.88     48.62        48     63.00     48.86        29
      Natural gas
       ($/mcf)        9.81      7.82        25      8.93      7.80        14
      Total oil
       equivalent
       ($/boe)       64.49     47.61        35     57.80     47.63        21
    Gross (net)
     wells drilled
     (No.)
      Oil                -         -         -    2 (1.5)        -  100 (100)
      Gas           5 (4.7)        -  100 (100)   8 (6.6)   5 (4.6)   60 (43)
      Dry and
       abandoned    1 (1.0)        -  100 (100)   2 (2.0)   2 (1.5)    - (33)
    -------------------------------------------------------------------------
      Total         6 (5.7)        -  100 (100) 12 (10.1)   7 (6.1)   71 (66)
    -------------------------------------------------------------------------
    Average working
     interest (%)       95         -       100        84        87        (3)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Funds from operations and funds from operations per share are not
        recognized measures under Canadian generally accepted accounting
        principles. Refer to the Management's Discussion and Analysis for
        further discussion.
    (2) Excluding derivative instrument and related future tax asset.
    (3) Product prices include realized gains or losses from derivative
        instruments.


    Highlights

    -   We completed our initial public offering on June 30, 2008 and issued
        3,875,000 common shares at a price of $8.00 per share, raising
        $31 million ($28.3 million net of share issue expenses). As a result,
        our common shares are listed for trading on the Toronto Stock
        Exchange under the symbol "NGL."

    -   We drilled 6 gross (5.7 net) wells during the quarter with an 83%
        success rate at an average working interest of 95% displaying
        continued success in both the Harmattan and Ferrier core areas.
        During the first half of the year, we drilled 12 gross (10.1 net)
        wells with an 80% success rate and at an average working interest of
        84%.

    -   We realized average sales of 5,965 boe/d for the second quarter of
        2008, representing a 79% increase over the same three-month period in
        2007. For the first six months of 2008, we averaged 5,708 boe/d, a
        67% improvement over the same period a year ago.

    -   We generated cash flow of $18,970,000 or $0.53 per diluted share
        during the second quarter, a 160% gain over the comparable quarter in
        2007. For the six-month period, we recorded cash flow of $33,096,000
        or $0.93 per diluted share, a 114% year-over-year increase.

    -   We recorded net income of $7,527,000 or $0.21 per diluted share for
        the second quarter of 2008, a 163% increase over the same three-month
        period a year ago. For the six months, we recorded net income of
        $10,511,000 or $0.30 per diluted share, a 91% improvement over the
        first half of 2007.

    -   We exited June 30, 2008 with no bank debt and $8.6 million in working
        capital deficiency on a $70 million credit facility that was
        increased from $50 million in June 2008.

    -   We expanded our planned drilling activity for fiscal 2008 to 26 to
        29 gross wells, up from 23 to 26 wells forecast previously.
        Additionally, the Company's capital budget has been increased by 24%
        to $83 million for the year from the prior forecast of $67 million.
    

    Operations

    Harmattan

    At Harmattan, production averaged 4,481 boe/d during the three months
ended June 30, 2008, which was comprised of 14.5 mmcf/d of sales gas
production and 2,064 boe/d of NGLs and light crude oil. As discussed in our
first quarter 2008 report, Angle experienced a production outage at Harmattan
related to turnaround activities at the AltaGas (Taylor) complex during late
April and early May. Approximately 1,500 boe/d of production was shut-in
during a three-week period. Post turnaround, the Company experienced flush
production from shut-in wells being brought back on-stream. As well, in-line
production testing conducted in June contributed to a higher than anticipated
overall production rate for Harmattan during the second quarter. Angle brought
three area wells on production during the period: one Elkton gas well (100%
working interest), one Mannville oil well (100% working interest) and one
non-operated Viking oil well (50% working interest). During the second
quarter, three wells were drilled in the Harmattan area: 1 gross (1.0 net)
exploratory location and 2 gross (2.0 net) successful gas development
locations. The exploratory target was a step out extension of an existing
Elkton pool and did not encounter sufficient reservoir quality to complete the
well, and as a result, was dry and abandoned. The development locations
targeted a number of gas bearing sands in the Viking and Ellerslie, and have
been successfully production tested with tie-ins to occur in the third quarter
of 2008. At quarter-end, Angle had five total wells in the Harmattan area to
tie-in, which are anticipated to add a stabilized 350 boe/d to the Company's
total production. In late July, the AltaGas (Taylor) complex experienced a
fire, damaging a contained area of the plant and the facility was subsequently
taken off line. Consequently, Angle is expected to be impacted by a production
outage of approximately 2,800 boe/d for five days in July with additional
production in the Harmattan area continuing through alternate processing
facilities. This outage has been accounted for in the production guidance
provided and does not represent a material change to the Company's
expectations for production in the area over the second half of 2008. During
the third quarter, production rates for Harmattan are expected to average
4,800 boe/d. We anticipate drilling an additional nine wells at Harmattan
during the third and fourth quarters of 2008, an increase of three wells over
previous guidance.

    Ferrier

    Production in the Ferrier area averaged 1,484 boe/d during the second
quarter of 2008 (comprised of 6.2 mmcf/d of sales gas and 451 boe/d of NGLs)
compared to average production of 1,000 boe/d recorded during the first three
months of the year. During the second quarter, Angle tied in 4 gross (2.7 net)
Ellerslie gas wells and drilled 3 gross (2.7 net) development wells with a
100% success rate, targeting gas in the Ellerslie, Glauconitic and Ostracod
formations. As at the date of this report, production has increased to
2,200 boe/d from ten Ellerslie gas wells. A major compression project has been
designed to service three of these wells that are currently producing at high
pipeline pressures. During the second quarter, Angle was in the process of
constructing this compression facility, which will be operational by mid-third
quarter. As a result, it is expected that production will remain in the
2,200 boe/d range during the third quarter of 2008. During the balance of the
year, we expect to drill up to an additional five development wells at
Ferrier, an increase of four wells over previous guidance.

    Lone Pine Creek

    The Company has successfully established a significant land position in
the Lone Pine Creek area that totals 26.25 sections (16,800 acres). Crown land
at 100% working interest comprises 11 sections (7,040 acres) with the
remainder of the land controlled via two freehold farm-ins on Exxon Mobil
Canada Energy (Exxon Mobil) lands. The second farm-in for eight sections was
signed during the second quarter of 2008. Currently, Angle has two commitment
wells to Exxon Mobil on these lands, which are anticipated to be drilled by
year-end, subject to surface access.
    The drilling target in the Lone Pine Creek area is an internally
generated prospect targeting the Devonian Wabamun, extending a 500 bcf Wabamun
gas pool. The play is targeting a liquids rich, 5% hydrogen sulphide content
gas and, due to the sour gas status, regulatory issues may affect the
anticipated drilling schedule. We plan to drill a minimum of two wells in this
area during the second half of 2008.

    Deanne/Rough

    Since 2005, the Company has acquired 5,400 net acres of contiguous Crown
land (100% working interest) at Deanne. The prospect is an internally
generated, high impact Glauconitic sand prospect that offsets an existing gas
pool that has produced over 45 bcf to date. An exploratory well is planned for
the fourth quarter of 2008 that will be targeting a similar sized prospect.
The Glauconitic zone is at a depth of 3,500 metres and will involve drilling
capital of $4 million at 100% working interest. The initial drilling location
on these lands was selected during the second quarter and we are currently in
the process of acquiring a surface lease.

    Outlook

    Angle continues to expand its successful development projects at both
Harmattan and Ferrier, and as a result, our production base has doubled from
this time last year. The Harmattan light oil development will be of particular
focus during the second half of 2008, which is currently in the delineation
phase. The formation contains both light oil and natural gas, and the
delineation is critical in order to identify the respective saturations (oil
or gas) in the accumulation.
    We currently have over 50 drill ready locations on Company controlled
lands with over half of these locations targeting light oil development. In
addition, the exposure to high impact and growth potential areas at Lone Pine
Creek and Deanne/Rough could provide material increases to Angle's value.
    Subsequent to our successful equity placement through an initial public
offering completed in June, the Company enjoys an exceptionally strong
financial position to move forward into 2009.
    More details on Angle's outlook and assumptions and uncertainties
associated with the outlook can be found in the Company's Management's
Discussion and Analysis, and shareholders are encouraged to read the Second
Quarter Interim Report in its entirety.
    We are pleased with the achievements of our professional staff, the
guidance from our Board and the ongoing support of our shareholders. We look
forward to reporting the results of our efforts throughout the remainder of
the year.

    On behalf of the Board of Directors,

    (signed)

    Gregg Fischbuch
    President & Chief Executive Officer

    July 28, 2008


    MANAGEMENT'S DISCUSSION AND ANALYSIS

    The following Management's Discussion and Analysis ("MD&A") reports on
the financial condition and the results of operations of Angle Energy Inc.
("Angle" or the "Company") for the three and six months ended June 30, 2008
and 2007 and should be read with the accompanying June 30, 2008 unaudited
interim financial statements and notes as well as the audited financial
statements for the year ended December 31, 2007. All financial measures are
expressed in Canadian dollars unless otherwise indicated. This commentary is
based on the information available as at, and is dated July 28, 2008.
    Production information is commonly reported in units of barrel of oil
equivalent ("boe"). For purposes of computing such units, natural gas is
converted to equivalent barrels of crude oil using a conversion factor of six
thousand cubic feet of gas to one barrel of oil. This conversion ratio of 6:1
is based on an energy equivalent conversion for the individual products,
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. Such disclosure of boes may be misleading,
particularly if used in isolation. Readers should be aware that historical
results are not necessarily indicative of future performance.

    Non-GAAP Measurements

    This MD&A contains the terms "funds from operations" and "funds from
operations per share," which should not be considered an alternative to or
more meaningful than net earnings or cash flow from operating activities as
determined in accordance with Canadian generally accepted accounting
principles ("GAAP") as an indicator of the Company's performance. These terms
do not have any standardized meaning as prescribed by GAAP. Angle's
determination of funds from operations and funds from operations per share may
not be comparable to that reported by other companies. Management uses funds
from operations to analyze operating performance and leverage, and considers
funds from operations to be a key measure as it demonstrates the Company's
ability to generate cash necessary to fund future capital investments and to
repay debt. Funds from operations is calculated using cash flow from operating
activities as presented in the statement of cash flows before changes in
non-cash working capital and settlement of retirement costs. Angle presents
funds from operations per share, which is prohibited under GAAP. Per share
amounts are calculated using weighted average shares outstanding consistent
with the calculation of earnings per share. The following table reconciles
funds from operations to cash flow from operating activities, which is the
most directly comparable measure calculated in accordance with GAAP:

    
    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s)                               ($)        ($)        ($)        ($)

    Cash flow from operating
     activities                      16,172      4,154     27,655      7,553
    Changes in non-cash working
     capital                          2,798      3,146      5,441      7,877
    -------------------------------------------------------------------------
    Funds from operations            18,970      7,300     33,096     15,430
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Future Outlook and Forward-Looking Information

    Certain statements contained in this MD&A constitute forward-looking
statements. Forward-looking information is often, but not always, identified
by the use of words such as "anticipate," "believe," "could," "estimate,"
"expect," "forecast," "guidance," "intend," "may," "plan," "predict,"
"project," "should," "target," "will," or similar words suggesting future
outcomes or language suggesting an outlook. These statements involve known and
unknown risks, uncertainties and other factors that may cause actual results
or events to differ materially from those anticipated in such forward-looking
statements. Management believes the expectations reflected in those
forward-looking statements are reasonable but no assurance can be given that
these expectations will prove to be correct and such forward-looking
statements included in this MD&A should not be unduly relied upon.

    Production and Sales Rates

    For the second quarter ended June 30, 2008, we had expected to average
5,500 boe/d but recorded 5,965 boe/d in sales volumes primarily due to flush
production post facility turnaround as well as in-line production testing in
the Harmattan area. For the 2008 fiscal period, Angle expects production and
sales of crude oil, natural gas liquids ("NGLs") and natural gas will average
between 5,900 boe/d to 6,100 boe/d, which is unchanged from our previous
guidance. We expect to exit 2008 between 6,700 boe/d to 6,900 boe/d. There are
many factors that could result in production levels being less than
anticipated including: greater than anticipated declines in existing
production due to poor reservoir performance, mechanical failures or inability
to access production facilities; the unanticipated encroachment of water or
other fluids into the producing formation; and the inability to drill,
complete and tie-in wells on schedule due to a lack of oilfield services being
available on a cost efficient basis, poor weather, the inability to negotiate
surface access with the landowners, or regulatory delays in obtaining all
necessary drilling and production approvals.

    Production Mix

    The Company anticipates that its mix of light oil production as a
percentage of total production will begin to increase beginning later in 2008.
This is based on the assumption that production commences as expected from two
oil pools, one at Harmattan and one at Ferrier. This expectation will not be
met if the wells are not drilled when expected (see "Drilling Program" below)
or if the wells do not produce as expected (see "Production Rates" above). At
present, netbacks from light and medium crude oil (combined) are superior to
those from NGLs or natural gas, and should the Company not achieve a higher
mix of light oil, then the financial performance will fall short of
expectations.

    Commodity Prices

    For purposes of its remaining forecast for 2008, the Company has assumed
that the Edmonton Par crude oil price will average $115/bbl (increased from
$93/bbl) and that the average natural gas price at AECO for spot delivery will
average $9.15/mcf (increased from $7.75/mcf). There are many risks that may
result in commodity price assumptions being less than expected. The price of
crude oil is set in U.S. dollars on the world market and is influenced by
global supply and demand factors as well as exogenous events, such as
terrorist activity in oil exporting countries. While global demand for crude
oil has been growing strongly over the past several years, a slowdown in
economic growth in one or more of the world's major economies could reduce
both the demand and price for crude oil.
    The price of natural gas in North America is primarily related to the
domestic supply and demand equation. Demand is primarily affected by heating
requirements in winter and cooling requirements in summer, with warm winters
and/or cool summers having a negative demand influence. Supplies are generally
domestic and respond to prices, but an increase in the deliverability of
global NGLs into the North American market can also influence the supply
situation at times.
    Canadian producers realize a Canadian dollar price for crude oil, NGLs
and natural gas, all of which are determined in large part by the U.S. dollar
price for such products adjusted for the U.S. to Canadian dollar exchange
rate. The exchange rate is influenced by many factors, which results in high
volatility.

    Royalty Rates

    Angle expects that royalty rates for 2008 will average approximately 33%
(increased from 30%) of gross revenue before any unrealized derivative gains
or losses. This increased royalty rate expectation has resulted from the
anticipated increase in commodity prices and increased sales from Crown lands.
Total royalties are the combination of Crown royalties paid on Crown lands and
freehold royalties paid on freehold lands. In addition, gross overriding
royalties are payable on lands in which the Company has earned an interest by
way of farm-in, whether the lands are Crown or freehold. Total royalties
payable are a function of the mix between Crown and freehold lands as the
rates are different.
    Generally, our freehold royalty rates are higher than the Crown royalty
rate that would be applicable currently had the lands been Crown lands.
However, under the proposed new Alberta royalty rate program scheduled to come
into effect in 2009, the Company's freehold royalty rates will, in certain
cases, be less than the Crown royalty rates that would have applied had the
lands been Crown-owned.
    In the first half of 2008, the royalty mix was 62% Crown royalties and
38% freehold and gross overriding royalties, and the combined royalty rate was
32%. The actual combined royalty rate in any period will be a function of the
mix between Crown and freehold production. Crown royalty rates are determined
by the depth of the well, production rates and the price of crude oil or
natural gas. As both Crown and freehold royalties are calculated as a
percentage of revenue, royalties will vary directly with revenue and tend to
mitigate the risk of declining revenues from lower production levels and/or
lower commodity prices.
    The Company has determined that the effect of the proposed changes to the
Alberta Crown royalty rates effective in 2009 on the operating income for that
year as calculated in the 2007 GLJ Petroleum Consultants Ltd. ("GLJ") Report
would be a reduction of less than 3%.

    Operating Costs

    The Company expects operating and transportation costs to average
$4.75/boe for 2008, up slightly from previous guidance of $4.50/boe.
Generally, operating costs in the Harmattan area are slightly lower than in
the Ferrier area, and as Ferrier production grows in proportion to the
Company's total, the blended operating costs are expected to increase
marginally.
    Risks to operating cost increases relate to general oilfield service
costs, which tend to increase in periods of high industry activity and
decrease as activity levels decline. With the recent improvement in natural
gas prices and continuing strong crude oil prices, industry activity is on the
upswing and operating cost pressure may develop, as was the case in the
2004/2005 period.

    General and Administrative ("G&A") Costs

    Angle anticipates that G&A expenses for 2008 will be approximately
$3.5 million (up from $3.3 million), net of capitalized amounts, and reflects
the assumption that the Company will hire up to three additional full time
employees in the remainder of 2008. Risks that G&A costs will exceed this
amount relate to higher than expected employee costs necessarily incurred by
the Company to retain key employees in a competitive market, the need to hire
more staff than originally anticipated and general cost inflation, which is a
growing problem in the Calgary market where Angle maintains its head office.

    Funds From Operations

    The Company expects that funds from operations will be in the range of
approximately $75 to $78 million in fiscal 2008 based on the assumptions as to
production, commodity prices, royalty rates, operating costs and G&A costs
discussed above. The risk that funds from operations are less than expected is
the aggregate of all risks affecting the individual components thereof.

    Capital Expenditures

    Angle has budgeted $83 million (increased from $67 million) for capital
expenditures in 2008, consisting of expenditures on drilling, completions,
equipment, tie-ins, land and seismic. This is based on the revised key
assumption that the Company drills in the range of 26 to 29 wells during 2008
(increased from 23 to 26 wells). Increases in capital costs from budgeted
amounts can occur for the following reasons: general cost inflation in the
industry, resulting from high utilization rates; poor weather that can delay
activity and subject the Company to stand-by charges; and problems encountered
in drilling a well that can result in additional drilling time or, in some
cases, losing the well entirely.

    Drilling Program

    The Company now expects to drill 26 to 29 wells in 2008, which is a key
assumption in the production estimates for the year discussed above. The risk
that Angle will not meet its drilling targets are attributable to the
following: lack of access to drilling rigs and related equipment at reasonable
prices due to high industry demand; poor weather preventing access to the
drill sites; delays in obtaining landowner consent for surface access; and
delays in obtaining well licenses and drilling permits.

    Drilling Success

    The Company expects to add reserves in 2008 from its drilling activities
at Harmattan, Ferrier, Lone Pine and Deanne. In arriving at such expectations,
Angle undertakes a risking process where each well is assigned a probability
of success and the expected reserves that would be added in a success case.
The basis for such assessment is a combination of geological, geophysical and
reservoir engineering analysis, including reviewing analog reserves in the
area of interest. There are many risks that a well may not add the reserves
anticipated including: poor reservoir rock due to low permeability and/or low
porosity that inhibits production; the non-existence of the targeted zone due
to erosion; the lack of an effective reservoir seal preventing the migration
of hydrocarbons; presence of water in the zone; damage to the zone from the
drilling process; and competitive drainage from offsetting acreage not owned
by the Company.

    Developing Future Prospects

    The Company intends to continue generating and developing its own
prospects and acquiring lands directly and through farm-ins as part of its
business strategy. To do so requires that appealing opportunities become
available within the timeframe suitable to the Company, that Angle has the
necessary human and financial resources to pursue and capture such
opportunities, and that the Company is able to prevail over its competitors
pursuing the same projects. Risks in achieving such growth plans relate to a
lack of adequate staffing or capital, or to an overly competitive market where
other industry participants are prepared to pay more for a prospect than what
Angle would consider prudent.

    Year-End Debt

    The Company anticipates that its combined bank debt and working capital
deficit position at year-end 2008 will be in the range of approximately
$8 million to $11 million. This assumes that capital expenditures are
$83 million and that funds from operations are in the range of approximately
$75 to $78 million in fiscal 2008. The risk that debt levels are higher than
expected would result from capital expenditures exceeding budget and/or funds
from operations being less than budget, both of which have been addressed
above.

    Tax Horizon

    Angle may become marginally taxable in 2008 based on the assumption the
Company generates funds from operations in the range of approximately $75 to
$78 million and incurs capital expenditures of $83 million. Liability for
current income tax is a function of the amount of revenues and expenses
recognized for tax purposes, including deductions for capital expenditures. As
such, taxable income is affected by many factors, including production levels
and commodity prices, as well as the level and classification for tax purposes
of capital spending into one of several categories with each being deductible
at different rates. The liability for current income tax could be higher than
expected if revenues exceed Angle's budget, if capital spending is lower than
expected, or if a greater proportion of capital spending is allocated to a
lower deduction category.

    General

    Statements relating to "reserves" are also deemed to be forward-looking
statements, as they involve the implied assessment, based on certain estimates
and assumptions, that the reserves described can be profitably produced in the
future.
    The actual results could differ materially from those anticipated in
these forward-looking statements as a result of the risk factors and
assumptions set forth above and elsewhere in this MD&A.
    These factors should not be considered as exhaustive. The reader is
cautioned that these factors and risks are difficult to predict and that the
assumptions used in the preparation of such information, although considered
reasonably accurate at the time of preparation, may prove to be incorrect.
Accordingly, readers are cautioned that the actual results achieved will vary
from the information provided herein and the variations may be material.
Readers are also cautioned that the foregoing list of factors is not
exhaustive. Consequently, there are no representations by the Company that
actual results achieved will be the same in whole or in part as those set out
in the forward-looking information. Furthermore, the forward-looking
statements contained in this MD&A are made as of the date hereof, and the
Company undertakes no obligation, except as required by applicable securities
legislation, to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise. The forward-looking statements contained herein are
expressly qualified by this cautionary statement.

    Basis of Presentation

    Angle is a public company that was incorporated under the laws of Alberta
on January 23, 2004 and commenced active oil and gas operations in 2005. This
MD&A focuses on the Company's operations for the three and six months ended
June 30, 2008 and 2007.

    
    Operating Results

    Drilling Activity

    -------------------------------------------------------------------------
                                 Exploration     Development        Total
                                Gross    Net    Gross    Net    Gross    Net
    -------------------------------------------------------------------------
    January 1 to June 30, 2008
    Crude oil and NGLs           1.0     0.5     1.0     1.0     2.0     1.5
    Natural gas                    -       -     8.0     6.6     8.0     6.6
    Dry and abandoned            2.0     2.0       -       -     2.0     2.0
    -------------------------------------------------------------------------
    Total wells                  3.0     2.5     9.0     7.6    12.0    10.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Success rate (%)                      20             100              80
    Average working interest (%)          83              84              84
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    January 1 to June 30, 2007
    Crude oil and NGLs             -       -       -       -       -       -
    Natural gas                  2.0     2.0     3.0     2.6     5.0     4.6
    Dry and abandoned            2.0     1.5       -       -     2.0     1.5
    -------------------------------------------------------------------------
    Total wells                  4.0     3.5     3.0     2.6     7.0     6.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Success rate (%)                      57             100              75
    Average working interest (%)          88              87              87
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    To June 30, 2008, we drilled 12 gross (10.1 net) wells of which 6 gross
(5.5 net) wells were in the Harmattan core area and 6 gross (4.6 net) wells
were in the Ferrier area. Our success rate is calculated on a net working
interest completion basis.

    Capital Expenditures

    Capital expenditures for the three and six months ended June 30, 2008 and
2007 are summarized in the following table:

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s)                               ($)        ($)        ($)        ($)

    Drilling and completions         14,825      2,095     25,807     13,222
    Equipment and facilities          5,962      1,864     10,943      6,215
    Geological and geophysical            4         37        332        230
    Land and lease retention            833        572      1,295      2,808
    Head office                          20         20         42         23
    Capitalized G&A and other            68         65        329        130
    -------------------------------------------------------------------------
    Total                            21,712      4,653     38,748     22,628
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the second quarter of 2008, drilling and completions expenditures
totaled $14,825,000 (2007 - $2,095,000) that involved the drilling of 6 gross
(5.7 net) wells of which 5 gross (4.7 net) wells were successful and 1 gross
(1.0 net) well was dry for a 82% net success rate. In the comparative
three-month period of 2007, the Company was not able to complete drilling
operations of any wells as a result of wet surface conditions.
    Drilling and completions expenditures totaled $25,807,000 for the six
months ended June 30, 2008 (2007 - $13,222,000), which involved the
participation in 12 gross (10.1 net) wells. Of the 12 wells, 10 gross
(8.1 net) wells were cased while the remaining 2 gross (2.0 net) wells were
not successful. In the comparative period of 2007, the Company drilled 7 gross
(6.1 net) wells of which 5 gross (4.6 net) wells were successful and 2 gross
(1.5 net) wells were dry.
    For the three months ended June 30, 2008, the Company's expenditures on
facilities totaled $5,962,000 (2007 - $1,864,000) primarily for wellsite
facilities and related gathering pipelines. For the six months ended June 30,
2008, the Company's expenditures on facilities totaled $10,943,000 (2007 -
$6,215,000) primarily for wellsite facilities and related gathering pipelines.
    Land purchases and lease retention costs incurred in the second quarter
of 2008 totaled $833,000 (2007 - $572,000). We expended $1,295,000 in land
purchases and lease retention costs for the six months ended June 30, 2008
(2007 - $2,808,000).

    
    Financial and Operating Results of Oil and Gas Activities

    Sales, Revenue and Price

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Sales
    Natural gas sales (mcf/d)        21,128     11,900     19,764     12,100
    NGLs sales (bbls/d)               2,417      1,334      2,391      1,392
    Light crude oil sales (bbls/d)       27          -         23          1
    -------------------------------------------------------------------------
    Total sales (boe/d)               5,965      3,326      5,708      3,409
    Total sales (boe)               542,859    302,625  1,038,840    617,061
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (000s)                               ($)        ($)        ($)        ($)

    Revenue
    Natural gas                      20,833      8,193     33,831     16,760
    Realized derivative (loss) gain  (1,962)       312     (1,697)       312
    -------------------------------------------------------------------------
    Total natural gas                18,871      8,505     32,134     17,072
    NGLs                             15,809      5,903     27,416     12,312
    Light crude oil                     330          1        501          7
    -------------------------------------------------------------------------
    Total revenue before unrealized
     derivative (loss) gain          35,010     14,409     60,051     29,391
    Unrealized derivative
     (loss) gain                     (1,114)       604     (3,671)       651
    -------------------------------------------------------------------------
    Total revenue                    33,896     15,013     56,380     30,042
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Prices
    Natural gas sales price ($/mcf)   10.83       7.53       9.40       7.66
    Realized derivative gain
     (loss) ($/mcf)                   (1.02)      0.29      (0.47)      0.14
    -------------------------------------------------------------------------
    Total natural gas price ($/mcf)    9.81       7.82       8.93       7.80
    NGLs sales price ($/bbl)          71.88      48.62      63.00      48.86
    Light crude oil sales price
     ($/bbl)                         132.46      67.90     121.27      64.05
    -------------------------------------------------------------------------
    Total sales price ($/boe)         64.49      47.61      57.80      47.63
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the second quarter of 2008, revenue was $35,010,000 (before
unrealized derivative loss) on average sales volumes of 5,965 boe/d compared
to $14,409,000 and 3,326 boe/d for the same period in 2007. The 143% revenue
gain resulted from a 79% increase in sales volumes while our prices
contributed the balance of the increase.
    For the first half of 2008, revenue was $60,051,000 (before unrealized
derivative loss) on average sales volume of 5,708 boe/d compared to
$29,391,000 and 3,409 boe/d for the same period in 2007. The 104% revenue gain
resulted from a 67% increase in sales volumes while our prices contributed the
balance of the increase.
    We continue to have success in our drilling program with significant
volumes being tied-in from our new Ferrier core area. Ferrier contributed
approximately 25% of our total sales volumes in the second quarter of 2008, up
from 18% in the first quarter, while the balance of sales volumes were from
Harmattan. In the comparative periods of 2007, Ferrier sales were less than 1%
of the total sales volumes.
    Our product volume mix is 58% natural gas, 42% NGLs with less than 1% in
light crude oil.
    Our drilling operations primarily target natural gas that is rich in
associated NGLs. Our NGLs are comprised of approximately 46% propane, 29%
ethane and 25% condensate. The price received for our NGLs is based on this
mix, with the condensate having the highest value of the NGLs stream.
    Our production is sold within Canada and we are sensitive to world crude
oil and North American natural gas price variations in addition to the
Canada/U.S. currency exchange rate changes. All of the Company's production is
sold through two purchasers.
    The Company had fixed the price applicable to future sales through the
following contracts, from which we had recorded $1,697,000 in realized price
losses and $3,671,000 in unrealized price losses to June 30, 2008:

    
    -------------------------------------------------------------------------
    Natural Gas              Volume   Pricing Point    Strike     Price Term
    -------------------------------------------------------------------------
    Fixed Price/Physical   1,600 GJ/d      AECO     CDN$6.44/GJ     Nov.1/07
                                                                 - Mar.31/08
    Collar/Physical        1,500 GJ/d      AECO     CDN$6.00/GJ     Nov.1/07
                                                         (floor) - Mar.31/08
    Fixed Price/Physical   4,700 GJ/d      AECO     CDN$6.89/GJ     Apr.1/08
                                                                 - Oct.31/08
    Fixed Price/Physical     500 GJ/d      AECO     CDN$7.68/GJ     Apr.1/08
                                                                  - Jun.1/08
    Fixed Price/Physical   2,500 GJ/d      AECO     CDN$7.90/GJ     Jun.1/08
                                                                 - Oct.31/08
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Our hedged volume is 14% of our total natural gas sales for the 2008
forecast period of July 1 to December 31, 2008.

    Royalties

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s)                               ($)        ($)        ($)        ($)

    Total revenue before unrealized
     derivative (loss) gain          35,010     14,409     60,051     29,391
    Royalties
      Crown                           7,151      1,421     11,831      3,185
      Other                           4,499      3,171      7,422      6,377
    -------------------------------------------------------------------------
      Total royalties                11,650      4,592     19,253      9,562
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         (%)        (%)        (%)        (%)
    % of Revenue
      Crown                              20         10         20         11
      Other                              13         22         12         22
    -------------------------------------------------------------------------
      Total                              33         32         32         33
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the second quarter of 2008, we recorded total royalties of
$11,650,000 or 33% of revenue versus $4,592,000 or 32% of revenue for the same
period in 2007. Our commodity prices have increased over the comparative
period, which has resulted in a slightly higher royalty rate.
    During the first half of 2008, total royalties were $19,253,000 or 32% of
revenue compared to $9,562,000 or 33% of revenue a year ago. Our Crown
royalties have increased relative to the mix of total royalties reflective of
the increase of production from Crown leases primarily in the Ferrier core
area.
    On October 25, 2007, The Government of Alberta released the New Royalty
Framework ("NRF"). The NRF is the government's response to a report issued
September 18, 2007 by the Alberta Royalty Review Panel, which was commissioned
by the provincial government to perform a review of the province's royalty
system. The NRF addresses royalty changes on oil, natural gas and NGLs, which
primarily affects Angle in relation to natural gas and NGLs. Our Company's
production is solely within the Province of Alberta.
    Based on the information available regarding the impact of the NRF on
estimated operating income and the Company's January 1, 2008 reserves
information, the NRF is not expected to have a material impact on the Angle's
net asset value. As more information becomes available and the mix of Crown to
freehold and gross overriding royalties changes, the Company will report any
expected material impact on operating income and/or net asset value.

    
    Operating Expenses

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s)                               ($)        ($)        ($)        ($)

    Operating expense                 2,663      1,435      4,861      2,953
    Transportation expense              185         54        342        159
    -------------------------------------------------------------------------
    Total operating expense           2,848      1,489      5,203      3,112
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating expense ($/boe)          5.25       4.92       5.01       5.04
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total operating expenses were $2,848,000 or $5.25/boe for the three months
ended June 30, 2008 versus $1,489,000 or $4.92/boe a year ago. The per unit
rate for the current quarter was higher than the same period in 2007 and for
the first quarter of 2008 ($4.75/boe). In the second quarter of 2008, we
directed our production in Harmattan to a more expensive processing facility
due to a scheduled plant shutdown for approximately four weeks during April
and May. We also had a higher proportion of sales volumes from the Ferrier
area in the second quarter, which has a slightly higher operating cost profile
than Harmattan.
    For the six-month period ended June 30, 2008, we incurred operating
expenses of $5,203,000 or $5.01/boe compared to $3,112,000 or $5.04/boe in the
2007 period. We expect our per unit operating expense to be $4.75/boe for
fiscal 2008.

    G&A Expenses and Stock-Based Compensation

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s)                               ($)        ($)        ($)        ($)

    G&A expenses                      1,538        959      2,506      1,433
    G&A capitalized (direct)            (68)       (65)      (329)      (130)
    G&A recoveries via operations      (236)       (69)      (362)      (271)
    -------------------------------------------------------------------------
    G&A expenses (net)                1,234        825      1,815      1,032
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    G&A net expenses totaled $1,234,000 for the three months ended June 30,
2008 versus $825,000 in the same period a year ago. We had 18 professional
staff during the three-month period compared to 10 staff a year ago. During
the second quarter of 2008, we capitalized $68,000 (2007 - $65,000) in direct
costs relating to our exploration and development efforts and $236,000 (2007 -
$69,000) relating to operator recoveries on capital expenditures.
    We recorded non-cash stock-based compensation expense of $373,000 (2007 -
$497,000) and capitalized $87,000 (2007 - $34,000) for total stock-based
compensation of $460,000 (2007 - $531,000) during the second quarter of 2008.
During the second quarter of 2007, our stock-based compensation expense was
negatively impacted by staff restructuring costs.
    G&A net expenses totaled $1,815,000 for the first half of 2008 compared
to $1,032,000 in the same period a year ago. During the six months ended
June 30, 2008, we capitalized $329,000 (2007 - $130,000) in direct costs
relating to our exploration and development efforts and $362,000 (2007 -
$271,000) relating to operator recoveries on capital expenditures.
    During the first six months of 2008, we recorded non-cash stock-based
compensation expense of $575,000 (2007 - $705,000) and capitalized $179,000
(2007 - $67,000) for total stock-based compensation of $754,000 (2007 -
$772,000). Our year-over-year G&A expenses have risen substantially as a
result of our increase in staffing to properly manage increased activities and
production growth.

    Interest Expense

    Interest expense incurred for the period ended June 30, 2008 totaled
$689,000 (2007 - $255,000), resulting from increased use of our credit
facilities in 2008 to partially fund our capital expenditures. On June 30
2008, we closed an equity placement of $31,000,000 (prior to share issue
expenses), which eliminated our debt and left us in a cash position.

    
    Netbacks (per unit)

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
                                     ($/boe)    ($/boe)    ($/boe)    ($/boe)

    Sales prices                      64.49      47.61      57.80      47.63
      Royalties                      (21.46)    (15.18)    (18.53)    (15.50)
      Operating                       (5.25)     (4.92)     (5.01)     (5.04)
    -------------------------------------------------------------------------
    Operating netback                 37.78      27.51      34.26      27.09
      G&A and other (excludes
       non-cash items)                (2.27)     (2.72)     (1.75)     (1.67)
      Interest expense                (0.57)     (0.67)     (0.66)     (0.41)
    -------------------------------------------------------------------------
    Funds flow netback(1)             34.94      24.12      31.85      25.01
      Depletion, depreciation
       and accretion                 (13.12)    (11.32)    (13.28)    (12.01)
      Stock-based compensation        (0.69)     (1.64)     (0.55)     (1.14)
      Unrealized (loss) gain on
       derivative instrument          (2.05)      2.00      (3.53)      1.05
      Future tax expense              (5.22)     (4.17)     (4.37)     (4.01)
    -------------------------------------------------------------------------
    Net income netback                13.86       8.99      10.12       8.90
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Non-GAAP measure: refer to disclosure on non-GAAP measure. Funds flow
        netback is calculated by dividing funds flow by the sales volume per
        boe for the period then ended.
    

    Although we have a higher royalty per unit than our industry peers, it is
offset by higher sales prices for our natural gas due to the heat content of
the gas stream and by lower operating expenses. This resulted in an operating
netback of $34.26/boe for the first six months of 2008 compared to $27.09/boe
for the same period in 2007.

    Funds from Operations and Cash Flow from Operating Activities

    For the second quarter of 2008, we recorded funds from operations of
$18,970,000 or $0.55 per basic and $0.53 per diluted share compared to
$7,300,000 or $0.22 per basic and diluted share in the comparable period of
2007. For the six months ended June 30, 2008, we recorded funds from
operations of $33,096,000 or $0.95 per basic and $0.93 per diluted share
compared to $15,430,000 or $0.47 per basic and $0.46 per diluted share in the
comparable period of 2007. Refer to the beginning of this MD&A section for
discussion and reconciliation of funds from operations to cash flow from
operating activities, which is the most directly comparable measure calculated
in accordance with GAAP.

    
    Depletion, Depreciation and Accretion ("DD&A")

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    DD&A provision ($000s)            7,125      3,425     13,797      7,408
    -------------------------------------------------------------------------
    DD&A provision ($/boe)            13.12      11.32      13.28      12.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The DD&A provision for the three-month period ended June 30, 2008 was
$7,125,000 or $13.12/boe compared to $3,425,000 or $11.32/boe recorded in the
same period of 2007. For the six months ended June 30, 2008, the DD&A
provision was $13,797,000 or $13.28/boe compared to $7,408,000 or $12.01/boe
recorded in the same period of 2007. The provision for the six months has
increased 86% over the same period in 2007, of which 68% results from the
increase in production volumes and the balance due to the change in per unit
rate.

    Income Taxes

    Future tax expense provision totaled $2,831,000 during the second quarter
of 2008 compared to $1,261,000 recorded in the same period of 2007. Future tax
expense provision totaled $4,542,000 during the first six months of 2008
compared to $2,475,000 recorded in the same period of 2007.

    Net Income

    For the three-month period ended June 30, 2008, we recorded net income of
$7,527,000 or $0.22 per basic and $0.21 per diluted share compared to
$2,721,000 or $0.08 per basic and diluted share in the same period of 2007.
For the six months ended June 30, 2008, we recorded net income of $10,511,000
or $0.30 per basic and diluted share compared to $5,493,000 or $0.17 per basic
and $0.16 per diluted share in the comparative period of 2007.

    Liquidity and Capital Resources

    The following table summarizes the change in working capital during the
six months ended June 30, 2008 and the year ended December 31, 2007:

    
    -------------------------------------------------------------------------
                                                     Six Months
                                                          Ended   Year Ended
                                                        June 30, December 31,
                                                           2008         2007
    -------------------------------------------------------------------------
    (000s)                                                   ($)          ($)

    Working capital (deficiency)
     - beginning of period                              (31,819)     (10,772)
    Funds from operations                                33,096       29,663
    Issue of capital stock for cash
     (net of share issue expense)                        28,906        8,389
    Derivative instruments                               (3,671)          11
    Future tax asset                                      1,080            -
    Capital expenditures                                (38,748)     (59,110)
    -------------------------------------------------------------------------
    Working capital (deficiency) - end of period        (11,156)     (31,819)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Since inception on January 23, 2004 to June 30, 2008, we have raised
funds through treasury equity issues in the amount of $103,258,000 (net of
share issue expenses) at share prices ranging from $0.60 to $8.00 per common
share.
    We exited the period with working capital deficiency of $11,156,000
($8,576,000 excluding the unrealized derivative liability and related future
tax asset) compared to available credit lines of $70,000,000. Our annual
review was completed in June 2008 and our credit line was increased by
$20,000,000 from the previous credit line of $50,000,000.
    Included in working capital deficiency is bank debt of $nil at June 30,
2008 and $25.8 million at December 31, 2007, which is recorded as a current
liability as the bank loan has been structured as a revolving term facility.
However, as the amount drawn on the facility is less than the amount of credit
available, and as the Company is in full compliance with all bank debt
covenants, management has no reason to believe that the lender will require
any principal payment prior to the next annual review expected to occur in May
2009.
    Other liabilities included in working capital deficiency consist
primarily of trade payables. Management expects to be able to fully meet all
current obligations when due with funding provided by a combination of
accounts receivable collections, funds from operations and available credit
under the bank line.
    In order to protect a portion of our revenue stream, during 2008 we
entered into forward sales contracts. Our forward sales contracts have been
described in this MD&A section under the heading "Sales, Revenue and Price."
    As at July 28, 2008, we had 38,594,074 common shares, 3,188,334 stock
options and 838,000 share appreciation rights issued and outstanding.

    
    Selected Quarterly Information

    -------------------------------------------------------------------------
    Three Months Ended                  Jun.30,   Mar.31,   Dec.31,   Sep.30,
                                          2008      2008      2007      2007
    -------------------------------------------------------------------------
    (000s, except per share data)           ($)       ($)       ($)       ($)

    Total assets                       173,188   148,891   134,371   115,490
    Total sales (boe/d)                  5,965     5,450     3,532     2,989
    Revenue                             33,896    22,484    13,952    12,351
    Funds from operations               18,970    14,126     7,672     6,561
      Per share - basic                   0.55      0.41      0.23      0.20
    Net income                           7,527     2,984     2,932     1,225
      Per share - basic                   0.22      0.09      0.09      0.04
    Capital expenditures                21,712    17,036    18,563    17,919
    Working capital (deficiency)       (11,156)  (36,393)  (31,819)  (29,013)
    Shareholders' equity               122,108    84,626    82,461    70,838
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Three Months Ended                  Jun.30,   Mar.31,   Dec.31,   Sep.30,
                                          2007      2007      2006      2006
    -------------------------------------------------------------------------
    (000s, except per share data)           ($)       ($)       ($)       ($)

    Total assets                       101,459   100,636    87,072    66,207
    Total sales (boe/d)                  3,326     3,494     2,469     1,218
    Revenue                             14,409    15,029     9,757     4,388
    Funds from operations                7,300     8,130     4,565     1,516
      Per share - basic                   0.22      0.25      0.15      0.05
    Net income                           2,721     2,772     1,177        61
      Per share - basic                   0.08      0.09      0.04      0.00
    Capital expenditures                 4,653    17,975    19,137    19,192
    Working capital (deficiency)       (17,236)  (20,481)  (10,772)   (7,756)
    Shareholders' equity                69,356    66,107    65,344    52,445
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Note: The selected quarterly information has been prepared in accordance
          with the accounting principles as contained in the notes to the
          financial statements for the six months ended June 30, 2008 and for
          the years ended December 31, 2007 and 2006.
    

    Factors That Have Caused Variations Over the Quarters

    The sales volume growth has been a result of the Company's successful
exploration and development drilling activities over these quarterly periods.
The Company's growth in revenue, funds from operations and earnings have been
driven from its sales volume growth in combination with increases in commodity
prices over these comparative periods.

    Contractual Obligations

    We have a committed term facility with a Canadian bank. The authorized
borrowing amount under this facility as at June 30, 2008 was $70,000,000 of
which $nil was outstanding. Additional disclosure relating to bank debt is
provided in the notes to the financial statements. Our commitments are
summarized below:

    
    -------------------------------------------------------------------------
                                                      2008     2009     2010
    -------------------------------------------------------------------------
    (000s)                                              ($)      ($)      ($)

    Operating lease - office                           191      381      286
    Operating lease - compressor                        87        -        -
    Exploration expenditures (flow-through)            955        -        -
    Bank debt                                            -        -        -
    -------------------------------------------------------------------------
    Total                                            1,233      381      286
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Related Party and Off-Balance Sheet Transactions

    We have retained the law firm of Osler, Hoskin and Harcourt LLP ("Osler")
to provide legal services. Ms. Noralee Bradley, a Director and Chairman of
Angle, is a partner of this firm. During the first six months of 2008, we
incurred $350,000 in costs with Osler. These services were billed at rates
consistent with those charged to third parties. We expect to continue using
their services throughout 2008.
    We were not involved in any off-balance sheet transactions during the six
months ended June 30, 2008 or the year ended December 31, 2007.

    Changes in Accounting Disclosures

    Except as discussed in this section, please refer to our accounting
disclosures as described in our MD&A as at December 31, 2007. The following
disclosures to the financial statements are in effect as of January 1, 2008:

    Derivative Instruments

    The Canadian Institute of Chartered Accountants' ("CICA") Handbook
Section 3862 requires the Company to increase the disclosure on the nature,
extent and risk arising from financial instruments and how the Company manages
those risks. Refer to note 8 of the financial statements for further
discussion.

    Capital Disclosures

    CICA Handbook Section 1535 requires the Company to disclose the Company's
objectives, policies and processes for managing its capital structure. Refer
to note 6 of the financial statements for further discussion.

    Future Accounting Policy Changes

    CICA Handbook Section 3064 "Goodwill and Intangible Assets" will be in
effect beginning January 1, 2009. This new section applies to goodwill
subsequent to initial recognition and establishes standards for the
recognition, measurement and disclosure of goodwill and intangible assets. The
new disclosure requirement is not expected to have an impact on the Company's
financial statements.

    Transition to International Financial Reporting Standards ("IFRS")

    In February 2008, the CICA Accounting Standards Board ("AcSB") confirmed
the changeover to IFRS from Canadian GAAP will be required for publicly
accountable enterprises effective for interim and annual financial statements
relating to fiscal years beginning on or after January 1, 2011. The AcSB
issued the "omnibus" exposure drafts of IFRS with comments due by July 31,
2008, wherein early adoption by Canadian entities is also permitted. The
Canadian Securities Administrators ("CSA") has also issued Concept Paper
52-402, which requested feedback on the early adoption of IFRS as well as the
(continued) use of U.S. GAAP by domestic issuers. The eventual changeover to
IFRS represents changes due to new accounting standards. The transition from
current Canadian GAAP to IFRS is a significant undertaking that may materially
affect the Company's reported financial position and results of operations.
    The Company has not completed development of its IFRS changeover plan,
which will include project structure and governance, resourcing and training,
analysis of key GAAP differences and a phased plan to assess accounting
policies under IFRS as well as potential IFRS 1 exemptions. The Company plans
to complete its project scoping, which will include a timetable for assessing
the impact on data systems, internal controls over financial reporting and
business activities, such as financing and compensation arrangements, by
December 31, 2008.
    The International Accounting Standards Board has stated that it plans to
issue an exposure draft relating to certain amendments to IFRS 1 in order to
make it more useful to Canadian entities adopting IFRS for the first time. One
such exemption relating to full cost oil and gas accounting is expected to
result in a reduced administrative transition from the current Canadian AcG-16
to IFRS. It is anticipated that this exposure draft will not result in an
amended IFRS 1 standard until late in 2009. The amendment will potentially
permit the Company to apply IFRS prospectively to its full cost pool, rather
than the retrospective assessment of capitalized exploration and development
expenses, with the proviso that a ceiling test, under IFRS standards, be
conducted at the transition date.

    Controls and Procedures

    Disclosure Controls and Procedures

    Disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company is accumulated and
communicated to management, including the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO"), to allow timely decisions regarding required
disclosure. The Company's CEO and CFO have concluded, based on their
evaluation as of the end of the period covered by the interim filing, that the
Company's disclosure controls and procedures are effective to provide
reasonable assurance that material information related to the issuer is made
known to them by others within the Company. It should be noted that while
Angle's CEO and CFO believe that the Company's disclosure controls and
procedures provide a reasonable level of assurance and that they are
effective, they do not expect that the disclosure controls and procedures or
internal control over financial reporting will prevent all errors and fraud. A
control system, no matter how well conceived or operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met.

    Internal Controls over Financial Reporting

    Internal controls over financial reporting are designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
Canadian GAAP as at June 30, 2008. Management has evaluated the design
effectiveness of internal controls over financial reporting and has concluded
that such internal controls over financial reporting are properly designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with Canadian GAAP.
    Management is aware that given the Company's smaller size, adequate
segregation of duties may not always be achievable, in which case the Company
relies on compensating controls. The Company's internal controls over
financial reporting may not prevent or detect all errors, misstatements and
fraud. The design of internal controls must also take into account resource
constraints. A control system, including the Company's internal controls over
financial reporting, no matter how well conceived or operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met.

    (signed)

    STUART C. SYMON, CMA
    Vice President Finance & Chief Financial Officer
    July 28, 2008



    
    BALANCE SHEETS

    -------------------------------------------------------------------------
    As at                                                 June 30,  December
                                                             2008   31, 2007
    -------------------------------------------------------------------------
    (000s) (unaudited)                                         ($)        ($)

    Assets
    Current
      Cash and cash equivalents                             3,017          -
      Accounts receivable                                  18,806     10,270
      Prepaid expenses and other                            1,245      1,120
      Derivative instruments (note 8)                           -         11
      Future tax asset                                      1,080          -
    -------------------------------------------------------------------------
                                                           24,148     11,401

    Property and equipment (note 3)                       149,040    122,970
    -------------------------------------------------------------------------
                                                          173,188    134,371
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current
      Bank debt (note 4)                                        -     25,770
      Accounts payable and accrued liabilities             31,644     17,450
      Derivative instruments (note 8)                       3,660          -
    -------------------------------------------------------------------------
                                                           35,304     43,220

    Future tax liability                                   13,507      7,287
    Asset retirement obligations (note 5)                   2,269      1,403
    -------------------------------------------------------------------------
                                                           51,080     51,910

    Shareholders' Equity
    Share capital (note 6)                                 98,403     69,922
    Contributed surplus (note 6)                            3,036      2,381
    Retained earnings                                      20,669     10,158
    -------------------------------------------------------------------------
                                                          122,108     82,461
    -------------------------------------------------------------------------
                                                          173,188    134,371
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments (note 10)

    See accompanying notes to the financial statements.



    STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s, except per share data)
    (unaudited)                          ($)        ($)        ($)        ($)

    Revenue
      Oil and gas revenues           36,972     14,097     61,748     29,079
      Realized derivative
       instrument (loss) gain        (1,962)       312     (1,697)       312
      Unrealized derivative
       instrument (loss) gain        (1,114)       604     (3,671)       651
    -------------------------------------------------------------------------
                                     33,896     15,013     56,380     30,042
      Royalty expense               (11,650)    (4,592)   (19,253)    (9,562)
      Interest revenue                    -          -          5          -
    -------------------------------------------------------------------------
                                     22,246     10,421     37,132     20,480
    -------------------------------------------------------------------------
    Expenses
      Operating                       2,848      1,489      5,203      3,112
      General and administrative      1,234        825      1,815      1,032
      Interest                          308        203        689        255
      Stock-based compensation
       (note 6)                         373        497        575        705
      Depletion, depreciation and
       accretion                      7,125      3,425     13,797      7,408
    -------------------------------------------------------------------------
                                     11,888      6,439     22,079     12,512
    -------------------------------------------------------------------------
    Income before income taxes       10,358      3,982     15,053      7,968
    Income taxes
      Future tax expense              2,831      1,261      4,542      2,475
    -------------------------------------------------------------------------
    Net income for the period         7,527      2,721     10,511      5,493
    Retained earnings -
     beginning of period             13,142      3,280     10,158        508
    -------------------------------------------------------------------------
    Retained earnings -
     end of period                   20,669      6,001     20,669      6,001
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income per share (note 6)
      Basic                            0.22       0.08       0.30       0.17
      Diluted                          0.21       0.08       0.30       0.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the financial statements.



    STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s) (unaudited)                   ($)        ($)        ($)        ($)

    Cash provided by (used in):
    Operating activities
      Net income for the period       7,527      2,721     10,511      5,493
      Add back non-cash items:
        Depletion, depreciation
         and accretion                7,125      3,425     13,797      7,408
        Stock-based compensation        373        497        575        705
        Unrealized loss (gain) on
         derivative instruments
         (note 8)                     1,114       (604)     3,671       (651)
        Future income tax             2,831      1,261      4,542      2,475
    -------------------------------------------------------------------------
                                     18,970      7,300     33,096     15,430
      Change in non-cash working
       capital (note 7)              (2,798)    (3,146)    (5,441)    (7,877)
    -------------------------------------------------------------------------
                                     16,172      4,154     27,655      7,553
    -------------------------------------------------------------------------
    Financing activities
      Issue of common shares, net
       of share issue expenses       28,764         (6)    28,906         83
      Increase (decrease) in bank
       debt                         (22,588)       247    (25,770)    11,842
      Changes in non-cash working
       capital (note 7)                 556          -        556          -
    -------------------------------------------------------------------------
                                      6,732        241      3,692     11,925
    -------------------------------------------------------------------------
    Investing activities
      Property and equipment
       additions                    (21,712)    (4,653)   (38,748)   (22,628)
      Change in non-cash working
       capital (note 7)               1,825        258     10,418      3,150
    -------------------------------------------------------------------------
                                    (19,887)    (4,395)   (28,330)   (19,478)
    -------------------------------------------------------------------------
    Net increase (decrease) in
     cash and cash equivalents        3,017          -      3,017          -
    Cash and cash equivalents -
     beginning of period                  -          -          -          -
    -------------------------------------------------------------------------
    Cash and cash equivalents -
     end of period                    3,017          -      3,017          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the financial statements.



    NOTES TO THE FINANCIAL STATEMENTS

    June 30, 2008
    (unaudited)

    1.  Nature of Operations

        Angle Energy Inc. (the "Company") is a publicly traded company
        incorporated under the laws of Alberta.

    2.  Accounting Policies

        These financial statements are stated in Canadian dollars and have
        been prepared in accordance with Canadian generally accepted
        accounting principles. The disclosures provided below are incremental
        to those included with the annual financial statements. These interim
        financial statements should be read in conjunction with the financial
        statements and notes disclosed in the Company's annual report for the
        year ended December 31, 2007. The interim financial statements have
        been prepared following the same accounting policies and methods of
        computation as the financial statements for the Company for the year
        ended December 31, 2007, except for the following changes in
        accounting disclosures:

        (a) Financial Instruments - Disclosure and Presentation

            Effective January 1, 2008, the Company adopted new Canadian
            financial instrument disclosure standards, which outline the
            disclosure requirements for financial instruments and
            non-financial derivatives. The guidance prescribes an increased
            importance on risk disclosures associated with recognized and
            unrecognized financial instruments and how such risks are managed
            and disclosure of the significance of financial instruments on
            the Company's financial position. In addition, the guidance
            outlines revised requirements for the disclosure of quantitative
            information regarding exposure to risks arising from financial
            instruments.

        (b) Capital Disclosures

            Effective January 1, 2008, the Company adopted new Canadian
            capital disclosure standards. This new guidance requires
            disclosure about the Company's objectives, policies and process
            for managing capital. These disclosures include a description of
            what the Company manages as capital, the nature of externally
            imposed capital requirements, how the requirements are
            incorporated into the Company's management of capital, whether
            the requirements have been compiled with, or consequences of
            non-compliance and an explanation of how the Company is meeting
            its objectives for managing capital. In addition, quantitative
            disclosures regarding capital are required.

    3.  Property and Equipment

        ---------------------------------------------------------------------
                                                  Accumulated
                                                Depletion and       Net Book
                                          Cost   Amortization          Value
        ---------------------------------------------------------------------
        (000s)                              ($)            ($)            ($)

        June 30, 2008
        Petroleum and natural
         gas properties                184,039         35,230        148,809
        Office equipment                   330             99            231
        ---------------------------------------------------------------------
                                       184,369         35,329        149,040
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        December 31, 2007
        Petroleum and natural
         gas properties                144,278         21,524        122,754
        Office equipment                   288             72            216
        ---------------------------------------------------------------------
                                       144,566         21,596        122,970
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company capitalized $329,000 (2007 - $130,000) of direct general
        and administrative costs, $179,000 (2007 - $67,000) of stock-based
        compensation expense and $362,000 (2007 - $271,000) of operator
        overhead as related to its exploration and development activity for
        the period ended June 30, 2008.

        Unevaluated and undeveloped properties with a cost of $11,220,000
        (2007 - $12,041,000), included in petroleum and natural gas
        properties, have not been subject to depletion as reserves related to
        these costs had not been evaluated or assigned for the period ended
        June 30, 2008. As at period-end, future development costs totaling
        $11,444,000 (2007 - $8,016,000) were included in amounts subject to
        depletion.

    4.  Bank Debt

        The Company established a revolving term credit facility with a bank
        with a borrowing base of $70,000,000 on June 14, 2008. The credit
        facility provides that advances may be made by way of direct advances
        or guaranteed notes. Direct advances bear interest at the bank's
        prime rate unless the net debt to trailing cash flow exceeds 1.5 to
        1.0 and then the interest rate is the bank's prime rate plus 0.4%.
        The interest rate rises incrementally with increases in the net debt
        to trailing cash flow ratio to a maximum of the bank's prime rate
        plus 1% at 3.0 to 1.0. Under the terms of the facility, certain
        financial covenants must be maintained. A general security agreement
        over all present and after acquired personal property and a floating
        charge on all lands has been provided as security.

    5.  Asset Retirement Obligations

        The Company recorded an asset retirement obligation calculated as the
        present value of the estimated future cost to abandon its petroleum
        and natural gas properties. To determine the value of this
        obligation, the Company utilized an inflation rate of 2% (2007 - 2%)
        and a credit adjusted risk-free interest rate of 8% (2007 - 8%) to
        discount the future estimated cash flows of $4,027,000, of which the
        majority of costs are expected to be incurred over a period of one to
        ten years. At June 30, 2008, the obligation was as follows:

        ---------------------------------------------------------------------
        Six Months Ended June 30,                            2008       2007
        ---------------------------------------------------------------------
        (000s)                                                 ($)        ($)

        Balance - beginning of period                       1,403        746
        Liabilities incurred                                  802        589
        Change in estimates                                     -        (36)
        Accretion of asset retirement obligation               64        104
        ---------------------------------------------------------------------
        Balance - end of period                             2,269      1,403
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    6.  Share Capital

        (a) Authorized

            Unlimited number of common voting shares, no par value.
            Unlimited number of preferred shares, no par value, issuable in
            series.

        (b) Issued

            -----------------------------------------------------------------
                                         Six Months Ended      Year Ended
                                           June 30, 2008   December 31, 2007
                                      ---------------------------------------
                                          Shares  Amount      Shares  Amount
            -----------------------------------------------------------------
                                            (No.) ($000s)       (No.) ($000s)
            Common Shares
            Balance - beginning
             of period                34,522,908  69,922  32,497,941  63,700
            Common shares issued (i)   3,875,000  31,000           -       -
            Common shares issued (ii)    196,166     676   1,069,500   4,289
            Flow-through shares
             issued (ii)                       -       -     955,467   4,586
            Tax effect of flow-through
             shares (ii)                       -  (1,255)          -  (2,338)
            Share issue costs (i)              -  (2,671)          -    (445)
            Tax benefit of share
             issue costs                       -     731           -     130
            -----------------------------------------------------------------
            Balance - end of period   38,594,074  98,403  34,522,908  69,922
            -----------------------------------------------------------------
            -----------------------------------------------------------------

            (i)  Initial Public Offering

                 On June 30, 2008, the Company completed its initial public
                 offering and issued 3,875,000 common shares at $8.00 per
                 share for gross proceeds of $31,000,000 ($28,329,000 net of
                 issue costs).

            (ii) Private Placements

                 In June 2008, the Company issued 20,000 common shares,
                 resulting from the exercise of stock options, for cash
                 proceeds of $75,000 and previously recognized stock-based
                 compensation expense of $34,000. The Company also issued
                 17,000 common shares at $5.30 per share to employees for
                 total proceeds of $90,100.

                 In April 2008, the Company issued 67,500 common shares at
                 $4.00 per share to employees for total proceeds of $270,000.

                 In January 2008, the Company issued 91,666 common shares,
                 resulting from the exercise of stock options, for cash
                 proceeds of $141,666 and previously recognized stock-based
                 compensation expense of $65,000.

                 In December 2007, the Company issued 1,039,500 common shares
                 at $4.00 per share and 955,467 flow-through common shares at
                 $4.80 per share for total proceeds of $8,744,000. Under the
                 terms of the flow-through agreement, the Company is
                 committed to spend $4,586,000 on qualified exploration and
                 development expenditures by December 31, 2008. As at
                 June 30, 2008, there was $955,000 remaining to be expended
                 on this commitment.

                 In January 2007, the Company issued 30,000 common shares,
                 resulting from the exercise of stock options, for cash
                 proceeds of $90,000 and previously recognized stock-based
                 compensation expense of $41,000.

        (c) Contributed Surplus

            -----------------------------------------------------------------
                                                    Six Months    Year Ended
                                                       June 30,  December 31,
                                                          2008          2007
            -----------------------------------------------------------------
            (000s)                                          ($)           ($)

            Contributed Surplus
            Balance - beginning of period                2,381         1,136
            Stock-based compensation expense - options     601         1,286
            Reduction due to exercise of options           (99)          (41)
            Stock-based compensation expense - share
             appreciation rights                           153             -
            -----------------------------------------------------------------
            Balance - end of period                      3,036         2,381
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (d) Per Share Amounts

            The net income per common share is calculated using the weighted
            average number of shares outstanding during the six-month period
            ended June 30, 2008 of 34,655,960 (basic) and 35,470,866
            (diluted) (June 30, 2007 - 32,525,455 basic and 33,784,644
            diluted).

            The net income per common share is calculated using the weighted
            average number of shares outstanding during the three months
            ended June 30, 2008 of 34,720,514 (basic) and 35,600,543
            (diluted) (June 30, 2007 - 32,527,941 basic and 33,787,130
            diluted).

        (e) Options Outstanding

            The Company has a stock option plan, administered by the Board of
            Directors, in which up to 10% of the issued and outstanding
            common shares are reserved for issuance for officers, employees
            and directors. Under the plan, options vest equally one-third on
            the first, second and third anniversary dates from the option
            grants and expire in five years or immediately from the date from
            which the optionee ceases to be a director, officer, employee or
            consultant of the Company or six months after the involuntary
            withdrawal of the optionee.

            The following summarizes information about stock options
            outstanding as at June 30, 2008:

            -----------------------------------------------------------------
                                                                    Weighted
                                                                     Average
                                                                    Exercise
                                                           Options     Price
            -----------------------------------------------------------------
                                                              (No.)       ($)

            Outstanding at December 31, 2007             3,120,000      2.08
            Granted in the period                          405,000      4.24
            Exercised in the period                       (111,666)    (1.94)
            Forfeited in the period                       (195,000)    (1.71)
            -----------------------------------------------------------------
            Outstanding at June 30, 2008                 3,218,334      2.38
            -----------------------------------------------------------------
            -----------------------------------------------------------------


            -----------------------------------------------------------------
                                     Weighted
                                      Average  Weighted             Weighted
                                    Remaining   Average              Average
            Exercise              Contractual  Exercise             Exercise
            Price     Outstanding        Life     Price  Exercisable   Price
            -----------------------------------------------------------------
            ($)              (No.)     (years)       ($)        (No.)     ($)

            As at June
             30, 2008
            1.00        1,005,000         1.3      1.00    1,005,000    1.00
            3.00          983,334         2.5      3.00      666,667    3.00
            3.75          390,000         3.1      3.75      156,667    3.75
            3.90          435,000         4.3      3.90            -    3.90
            4.00          330,000         4.7      4.00            -    4.00
            5.30           75,000         4.9      5.30            -    5.30
            -----------------------------------------------------------------
                        3,218,334         2.7      2.38    1,828,334    1.96
            -----------------------------------------------------------------
            -----------------------------------------------------------------

            The fair value of common share options granted during the period
            ended June 30, 2008 was estimated to be $793,000 or $1.96 per
            weighted average option (2007 - $nil) as at the date of grant
            using the Black Scholes option pricing model and the following
            average assumptions:

            -----------------------------------------------------------------
            Six Months Ended June 30,                           2008    2007
            -----------------------------------------------------------------
            Risk-free interest rate (%)                         4.18    4.50
            Expected life (years)                               5.00    5.00
            Expected volatility (%)                            47.00   45.00
            Expected dividend yield (%)                         0.00    0.00
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (f) Share Appreciation Rights Outstanding

            The Company has a share appreciation rights plan, administered by
            the Board of Directors, which provides for the granting of share
            appreciation rights ("SARs") to employees, officers and directors
            of the Company. Under the plan, SARs vest equally one-third on
            the first, second and third anniversary dates from the SARs
            grants and expire in five years or immediately from the date from
            which the rightsholder ceases to be a director, officer or
            employee of the Company or six months after the involuntary
            withdrawal of the rightsholder. Proceeds from the exercise of
            SARs can be paid in either common shares or cash, at the
            discretion of the Company.

            The following summarizes information about SARs outstanding as at
            June 30, 2008:

            -----------------------------------------------------------------
                                                                    Weighted
                                                                     Average
                                                                    Exercise
                                                             SARs      Price
            -----------------------------------------------------------------
                                                             (No.)        ($)

            Outstanding at December 31, 2007                    -          -
            Granted in the period                         838,000       5.16
            -----------------------------------------------------------------
            Outstanding at June 30, 2008                  838,000       5.16
            -----------------------------------------------------------------
            -----------------------------------------------------------------



            -----------------------------------------------------------------
                                     Weighted
                                      Average  Weighted             Weighted
                                    Remaining   Average              Average
            Exercise              Contractual  Exercise             Exercise
            Price     Outstanding        Life     Price  Exercisable   Price
            -----------------------------------------------------------------
            ($)              (No.)     (years)       ($)        (No.)     ($)

            As at June
             30, 2008
            4.00          242,000         4.8      4.00            -    4.00
            5.30          423,000         4.9      5.30            -    5.30
            6.44          173,000         5.0      6.44            -    6.44
            -----------------------------------------------------------------
                          838,000         4.9      5.16            -    5.16
            -----------------------------------------------------------------
            -----------------------------------------------------------------

            The fair value of SARs granted during the period ended June 30,
            2008 was estimated to be $2,066,000 or $2.47 per weighted average
            SARs (2007 - $nil) as at the date of grant using the Black
            Scholes pricing model and the following assumptions:

            -----------------------------------------------------------------
            Six Months Ended June 30,                           2008    2007
            -----------------------------------------------------------------
            Risk-free interest rate (%)                         3.25       -
            Expected life (years)                               5.00       -
            Expected volatility (%)                            51.00       -
            Expected dividend yield (%)                         0.00       -
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (g) Management of Capital Structure

            The Company's objective when managing capital is to maintain a
            flexible capital structure that will allow it to execute on its
            capital expenditures program, which includes expenditures in oil
            and gas activities that may or may not be successful. Therefore,
            the Company endeavours to balance the proportion of the debt and
            equity in its capital structure to take into account the level or
            risk being incurred in its capital expenditures.

            In the management of capital, the Company includes share capital
            and net debt (defined as the sum of current assets, current
            liabilities and bank debt, excluding derivative instruments and
            the related future tax asset) in the definition of capital.

            The key measures that the Company utilizes in evaluating its
            capital structure are net debt to funds from operations (which is
            cash flow from operations before changes in non-cash working
            capital and settlement of retirement costs) and the current
            credit available from its creditors in relation to the Company's
            budgeted capital expenditures program. Net debt to funds from
            operations is determined as net debt divided by funds from
            operations and represents the time period it would take to pay
            off the debt if no further capital expenditures were incurred and
            if funds from operations stayed constant. Annualized funds from
            operations for the first six months of 2008 were $66,192,000
            (2007 - $30,860,000), resulting in a net debt to funds from
            operations ratio of 0.13 (2007 - 0.56). This ratio is within an
            acceptable range for the Company of 2.0 or less.

            The Company is required to maintain a minimum working capital
            ratio of 1:1 to remain in compliance with its credit facility
            agreement. For purposes of this calculation, working capital
            ratio is defined as the ratio of current assets plus any undrawn
            availability under the credit facility to current liabilities
            less any amount drawn under the credit facility. At June 30,
            2008, the Company had a working capital ratio of 2.67:1, which is
            greater than the minimum ratio required.

            The Company manages its capital structure and makes adjustments
            by continually monitoring its business conditions, including the
            current economic conditions, the risk characteristics of the
            underlying assets, the depth of its investment opportunities,
            forecasted investment levels, the past efficiencies of the
            Company's investments, the efficiencies of forecasted investments
            and the desired pace of investment, current and forecasted total
            debt levels' current and forecasted energy commodity prices, and
            other factors that influence commodity prices and funds from
            operations, such as foreign exchange and quality basis
            differential.

            In order to maintain or adjust the capital structure, the Company
            will consider its forecasted net debt to forecasted funds from
            operations ratio while attempting to finance an acceptable
            capital expenditures program, including incremental capital
            spending and acquisition opportunities, the current level of bank
            credit available from the commercial bank, the level of bank
            credit that may be attainable from its commercial bank as a
            result of oil and gas reserves growth, the availability of other
            sources of debt with different characteristics than the existing
            bank debt, the sale of assets limiting the size of its capital
            spending program, and new common equity if available on
            favourable terms.

            During the first six months of 2008, the Company's strategy in
            managing its capital was unchanged.

    7.  Changes in Non-Cash Working Capital

        ---------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
        ---------------------------------------------------------------------
        (000s)                           ($)        ($)        ($)        ($)

        Accounts receivable          (5,600)     1,204     (8,536)     1,830
        Prepaid expenses and other     (136)      (130)      (125)       100
        Accounts payable and
         accrued liabilities          5,319     (3,962)    14,194     (6,657)
        ---------------------------------------------------------------------
                                       (417)    (2,888)     5,533     (4,727)
        ---------------------------------------------------------------------

        The change in non-cash working capital has been allocated to the
        following activities:

        ---------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
        ---------------------------------------------------------------------
        (000s)                           ($)        ($)        ($)        ($)

        Operating                    (2,798)    (3,146)    (5,441)    (7,877)
        Financing                       556          -        556          -
        Investing                     1,825        258     10,418      3,150
        ---------------------------------------------------------------------
                                       (417)    (2,888)     5,533     (4,727)
        ---------------------------------------------------------------------

    8.  Derivative Instruments

        The Company has exposure to credit, liquidity and market risk.

        Angle's risk management policies are established to identify and
        analyze the risks faced by the Company, set appropriate limits and
        controls, and to monitor risks and adherence to market conditions and
        the Company's activities.

        (a) Credit Risk

            Substantially all of the Company's petroleum and natural gas
            production is marketed under standard industry terms. The
            industry has a pre-arranged monthly settlement day for payment of
            revenues from all buyers of crude oil and natural gas. This
            occurs on the 25th day following the month in which the
            production is sold. As a result, Angle collects sales revenues in
            an organized manner. Management monitors purchaser credit
            positions to mitigate any potential credit losses. To the extent
            Angle has joint interest activities with industry partners, the
            Company must collect, on a monthly basis, partners' share of
            capital and operating expenses. These collections are subject to
            normal industry credit risk. Angle attempts to mitigate risk from
            joint venture receivables by obtaining partner approval of
            capital projects prior to expenditure and collects in advance for
            significant amounts related to partners' share of capital
            expenditures in accordance with the industry operating
            procedures. The Company does not typically obtain collateral from
            petroleum and natural gas marketers or joint venture partners;
            however, Angle does have the ability to withhold production from
            joint venture partners in the event of non-payment. At June 30,
            2008, Angle had no material accounts receivable deemed
            uncollectible. The Company's credit risk is limited to the
            carrying amount of its accounts receivable, which are due
            primarily from other entities involved in the oil and gas
            industry. These amounts are subject to the same risks as the
            industry as a whole.

        (b) Liquidity Risk

            Liquidity risk relates to the risk the Company will encounter
            should it have difficulty in meeting obligations associated with
            the financial liabilities. The financial liabilities on its
            balance sheet consist of accounts payable and bank debt. Accounts
            payable consists of invoices payable to trade suppliers relating
            to the office and field operating activities and its capital
            spending program. Angle processes invoices within a normal
            payment period. Angle anticipates it will continue to have
            adequate liquidity to fund its financial liabilities through its
            future funds from operations and available bank debt. The Company
            had no defaults or breaches on its bank debt or any of its
            financial liabilities.

        (c) Market Risk

            Market risk is the risk of changes in market prices, such as
            commodity prices, foreign currency exchange rates and interest
            rates that will affect the net earnings or value of financial
            instruments. The objective of managing market risk is to control
            market risk exposures within acceptable limits, while maximizing
            returns.

            The Company utilizes financial derivative contracts to manage
            market risk. All such transactions are conducted in accordance
            with the risk management policy that has been approved by the
            Board of Directors.

            (i)   Commodity Price Risk

                  Commodity price risk is the risk that the fair value of
                  future cash flows will fluctuate as a result of changes in
                  the commodity prices. Commodity prices for petroleum and
                  natural gas are impacted by not only the relationship
                  between the Canadian and United States dollar, as outlined
                  below, but also global economic events that dictate the
                  levels of supply and demand. The Company has attempted to
                  mitigate commodity price risk through the use of financial
                  derivative contracts as indicated below. With regards to
                  commodity prices, a $0.10/mcf change in the sales price of
                  natural gas would impact net earnings by approximately
                  $564,000 annually.

                  As at June 30, 2008, the Company had fixed the price
                  applicable to future production through the following
                  contracts:

                  -----------------------------------------------------------
                                           Pricing
                  Natural Gas       Volume   Point  Strike Price        Term
                  -----------------------------------------------------------
                  Fixed Price/                                    Apr.1/08 -
                   Physical     4,700 GJ/d    AECO   CDN$6.89/GJ   Oct.31/08
                  Fixed Price/                                    Apr.1/08 -
                   Physical       500 GJ/d    AECO   CDN$7.68/GJ    Jun.1/08
                  Fixed Price/                                    Jun.1/08 -
                   Physical     2,500 GJ/d    AECO   CDN$7.90/GJ   Oct.31/08
                  -----------------------------------------------------------
                  -----------------------------------------------------------

                  The fair value of these contracts as at June 30, 2008 was a
                  liability of $3,660,000.

            (ii)  Foreign Currency Exchange Rate Risk

                  Foreign currency exchange rate risk is the risk that the
                  fair value of future cash flows will fluctuate as a result
                  of changes in foreign exchange rates. The Company does not
                  sell or transact in any foreign currency; however, the
                  United States dollar influences the price of petroleum and
                  natural gas sold in Canada. The Company's financial assets
                  and liabilities are not affected by a change in currency
                  rates. The Company had no foreign exchange contracts in
                  place at June 30, 2008.

            (iii) Interest Rate Risk

                  Interest rate risk is the risk that future cash flows will
                  fluctuate as a result of changes in market interest rates.
                  The Company is exposed to interest rate risk to the extent
                  the changes in market interest rates will impact the
                  Company's debts that have a floating interest rate. The
                  Company had no interest rate swaps or hedges at June 30,
                  2008. With regards to interest rate risk, a change of 1% in
                  the effective interest rate would impact net earnings by
                  approximately $246,000 annually.

        (d) Fair Value of Financial Assets and Liabilities

            Financial instruments of the Company consist primarily of cash
            and cash equivalents, accounts receivable, accounts payable and
            bank debt. As at June 30, 2008, there were no significant
            differences between the carrying amounts reported on the balance
            sheet and their estimated fair values due to the short-term
            nature of these instruments.

    9.  Related Parties

        During 2008, expenses and share issue costs were recorded totaling
        $350,000 (2007 - $12,000) that were charged to the Company by a legal
        firm of which a Director of the Company is a partner, and $129,000
        (2007 - $nil) remained in accounts payable at June 30, 2008. These
        amounts are billed and recorded at rates consistent with those
        charged to third parties.

    10. Commitments

        The Company has lease commitments for office premises that expire in
        2010 and a compressor that expires at the end of 2008. Future minimum
        lease payments under the leases are as follows:

        ---------------------------------------------------------------------
        (000s)                                                            ($)

        2008                                                             278
        2009                                                             381
        2010                                                             286
        ---------------------------------------------------------------------
                                                                         945
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company is committed to spend $4,586,000 on qualified exploration
        and development expenditures by December 31, 2008. As at June 30,
        2008, there was $955,000 remaining to be expended on this commitment.
    

    Angle Energy Inc. is a Calgary based public oil and gas exploration and
development company that was incorporated in 2004 and commenced active oil and
gas operations in 2005. Angle's proven and dedicated team of industry
specialists are focused on identifying and developing high quality assets in
the Western Canadian Sedimentary Basin, with an emphasis in west central
Alberta. Common shares of Angle are listed for trading on the Toronto Stock
Exchange under the symbol NGL.

    NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE
A VIOLATION OF U.S. SECURITIES LAW. THESE SECURITIES HAVE NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES UNLESS AN EXEMPTION FROM THE REGISTRATION IS AVAILABLE.





For further information:

For further information: D. Gregg Fischbuch, President & Chief Executive
Officer, Heather Christie-Burns, Vice President Engineering & Chief Operating
Officer, Stuart C. Symon, Vice President Finance & Chief Financial Officer,
Suite 700, 324 Eighth Avenue S.W., Calgary, Alberta, T2P 2Z2, Phone: (403)
263-4534, Fax: (403) 263-4179, Website: www.angleenergy.com

Organization Profile

Angle Energy Inc.

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