Bellamont Exploration Ltd. announces December 31, 2006 year end results, filing of Annual Information Form and provides first quarter 2007 update



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

    CALGARY, April 27 /CNW/ - Bellamont Exploration Ltd. (the "Corporation"
or "Bellamont") (TSXV:BMX.A) (TSXV:BMX.B) advises today that it has filed its
audited financial statements and related Management's Discussion and Analysis
("MD&A") and Annual Information Form ("AIF") for the year ended December 31,
2006 with Canadian securities regulatory authorities on the System for
Electronic Document Analysis and Retrieval ("SEDAR"). Copies of these
documents may be accessed electronically on SEDAR at www.sedar.com or at
www.bellamont.com.
    Bellamont is pleased to report to our shareholders that in our short
history as a public company, we have assembled a large inventory of quality
drilling opportunities and undertaken a successful winter drilling program,
resulting in excellent finding and development costs.

    
    2006 ACCOMPLISHMENTS

    -   On September 22, 2006, Bellamont closed two separate transactions
        wherein it acquired all of the outstanding shares of 1256800 Alberta
        Ltd. and Big Echo Resources Ltd.
    -   On December 7, 2006, Bellamont closed its initial public offering
        raising gross proceeds of $11.0 million.
    -   On December 13, 2006, the Corporation announced a strategic multi-
        well farmin and an $11.1 mm 2006/2007 capital budget.
    -   In the eighteen day period from December 13, 2006 to December 31,
        2006 the company drilled and cased six oil wells in the Valhalla area
        pursuant to the aforementioned strategic multi-well farmin.
    -   Underpinned by our drilling success at Valhalla, the Corporation
        achieved exceptional proved plus probable finding and development
        costs for 2006 of $8.93/boe, when excluding the effect of
        acquisitions ($12.85/boe when including the effect of acquisitions).
    -   Although there was no change in future development capital as this
        was the first year-end in which the Corporation reported reserves,
        when including the capital contained in the Corporation's
        December 31, 2006 reserve report, Bellamont's proved plus probable
        finding and development costs for 2006 was $14.32/boe, when excluding
        the effect of acquisitions ($18.46/boe when including the effect of
        acquisitions).
    -   Ended the year with a high average working interest of 79.0% in
        22,796 gross acres of land, including an average working interest of
        86.0% in 16,556 gross acres of undeveloped land.
    -   At the end of 2006, compiled a drilling inventory of 43 locations on
        company land, located primarily in the Peace River Arch area of
        Alberta, the Corporations' primary exploration focus area. The vast
        majority of these locations would be company operated.
    -   As of December 31, 2006 had a positive working capital balance of
        approximately $7,000,000.00.
    -   Assembled an experienced, committed and aligned management team and
        board of directors with a combined ownership of greater than 40% of
        the Class A common shares of the Corporation and 10.0% in the Class B
        shares of the Corporation.

    FIRST QUARTER 2007 OPERATIONAL HIGHLIGHTS

    -   Successfully completed, tested and equipped all 6 wells drilled at
        Valhalla as producing oil wells.
    -   Equipped and tied in an existing cased gas well.
    -   Drilled 5 new wells and re-entered a 6th well, resulting in 1
        completed oil well, 1 cased potential oil well, 2 cased potential gas
        wells and 2 dry holes.
    -   Increased the Corporation's prospect inventory to a total of 49 well
        locations.
    -   All of the Corporation's operations were operated by Bellamont and,
        with the exception of one operation, were located in the Peace River
        Arch area of Alberta, the Corporation's primary exploration focus
        area.
    

    VALHALLA DRILLING PROGRAM HIGHLIGHTS

    At Valhalla, Bellamont drilled, completed and equipped 6 producing oil
wells at an estimated average cost of $465,000 per well. The Corporation's
average working interest in these wells is 94%. Following spring break-up, the
Corporation expects to produce an average of approximately 90 barrels per day
of light oil (37 degrees API) (83 bbl/d net) from these wells. The initial
6 well drilling program was delineative in nature as the wells were located on
lands directly offsetting an existing Doe Creek oil field which is currently
being optimized under water flood. The results from the drilling program
confirmed Bellamont's interpretation of a large amount of oil in place on the
lands evaluated. The Corporation's excellent finding costs in 2006 directly
reflect the success of the Valhalla drilling program. In total, Bellamont
estimates the potential for an additional 24 gross drilling locations at
Valhalla. Accordingly, the Corporation is planning an 8 well drilling program
at Valhalla for later in 2007, comprised of a combination of in-fill
development wells and additional delineation wells. Furthermore, the
Corporation is reviewing the drilling results for the feasibility of
implementing a water flood program in order to optimize production rates and
maximize recovery factors.

    OIL & GAS RESERVES

    The Corporation's December 31, 2006 reserves were independently evaluated
by GLJ Petroleum Consultants ("GLJ") in accordance with National Instrument
51-101 ("NI 51-101"). The reserve information presented herein includes the
Corporation's working interest reserves before the deduction of royalties and
utilizes GLJ's December 31, 2006 price forecast and cost assumptions.
    The reserve data provided in this release represents only a portion of
the disclosure required under NI 51-101. All of the required disclosure
information is contained in the Corporation's AIF filed with SEDAR and which
can be accessed electronically at www.sedar.com.

    
                       Summary of Oil and Gas Reserves
    -------------------------------------------------------------------------
                              Light and      Natural Natural Gas     Company
                              Medium Oil         Gas     Liquids       Gross
                                   (Mbbl)      (MMcf)      (Mbbl)       Mbbl
    PROVED
      Producing                        0         232           5          43
      Developed Non-Producing        157          75           2         171
      Undeveloped                      0           0           0           0
    -------------------------------------------------------------------------
    TOTAL PROVED                     157         308           6         215

    TOTAL PROBABLE                    97         587           9         203
    -------------------------------------------------------------------------
    TOTAL PROVED PLUS
    PROBABLE                         254         895          15         418
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


       Net Present Value of Future Net Revenue of Oil and Gas Reserves

    -------------------------------------------------------------------------
                                   Net Present Value of Future Revenue Before
                                            Income Tax Discounted At
                                                     (%/yr)
                                      0%       5%      10%      15%      20%
    Reserves Category                (M$)     (M$)     (M$)     (M$)     (M$)
    -------------------------------------------------------------------------

    PROVED
      Producing                    1,224    1,046      911      807      725
      Developed Non-Producing      4,545    3,393    2,654    2,144    1,774
      Undeveloped                      0        0        0        0        0
    -------------------------------------------------------------------------
    TOTAL PROVED                   5,769    4,439    3,565    2,951    2,499

    TOTAL PROBABLE                 5,650    3,856    2,865    2,245    1,824
    -------------------------------------------------------------------------
    TOTAL PROVED PLUS
    PROBABLE                      11,419    8,295    6,430    5,197    4,323
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FINDING AND DEVELPOMENT COSTS

    NI 51-101 specifies how finding and development ("F&D") costs should be
calculated if they are to be reported. NI 51-101 requires that the total of
the exploration and development costs incurred in the most recent financial
year together with the change in future development costs during the most
recent financial year be divided by the reserve additions for such year. The
costs are to be reported on both a proved and a proved plus probable basis,
after eliminating the effects of acquisitions and dispositions. Bellamont has
chosen to report its F&D cost using the two following methods: 1) after
eliminating the effects of acquisitions and disposition; and 2) including the
effect of acquisitions and dispositions.

    Finding and Development Costs - eliminating the effect of acquisitions
    ----------------------------------------------------------------------
    and dispositions
    ----------------

    Capital Expenditures -                                            Proved
     From May 29, 2006 to                                               Plus
     December 31, 2006                                   Proved     Probable
    -------------------------------------------------------------------------
    Exploration, development and other costs
     (thousands)                                          1,783        1,783
    Land and seismic (thousands)                            484          484
    -------------------------------------------------------------------------
    Total capital expenditures (thousands)(1)(2)          2,267        2,267
    Total Reserve Additions (mboe)(3)                       157          254
    -------------------------------------------------------------------------
    Finding and Development Costs ($ per boe)             14.45         8.93


    Finding and Development Costs - including the effect of acquisitions and
    ------------------------------------------------------------------------
    dispositions
    ------------

    Capital Expenditures -                                            Proved
     From May 29, 2006 to                                               Plus
     December 31, 2006                                   Proved     Probable
    -------------------------------------------------------------------------
    Acquisition Expenditures (thousands)(4)               3,104        3,104
    Exploration, development and other costs
     (thousands)                                          1,783        1,783
    Land and seismic (thousands)                            484          484
    -------------------------------------------------------------------------
    Total capital expenditures (thousands)(2)(5)          5,371        5,371
    Total Reserve Additions (mboe)(3)                       215          418
    -------------------------------------------------------------------------
    Finding and Development Costs ($ per boe)             24.99        12.85

    (1) As the December 31, 2006 reserve report was Bellamont's first
        financial year-end report, there was no change in future development
        costs from the financial year prior. Notwithstanding, there was a
        total of $1,368,000 of future capital related to both the Proved and
        the Proved plus Probable reserves. When including future development
        costs, the F&D costs for the Proved plus Probable reserves calculates
        to $14.32/boe ($23.16 Proved only).
    (2) The aggregate of the exploration and development costs incurred in
        the most recent financial year and the change during that year in
        estimated future development costs generally will not reflect total
        finding and development costs related to reserve additions for that
        year.
    (3) Bellamont has adopted the standard of converting 6 mcf of natural gas
        to 1 barrel of oil. BOEs may be misleading, particularly if used in
        isolation. A BOE conversion ratio of 6 mcf:1 barrel of oil is based
        on an energy equivalency conversion method primarily applicable at
        the burner tip and does not represent a value equivalency at the
        wellhead.
    (4) The acquisition cost reflected is the sum of the carrying value of
        the shares of 1256800 Alberta Ltd. and Big Echo Resources Ltd. and
        working capital deficiencies associated with same, as acquired by
        Bellamont effective September 22, 2006 accounted for in the
        Corporation's December 31, 2006 audited financial statements.
    (5) As the December 31, 2006 reserve report was Bellamont's first
        financial year-end report, there was no change in future development
        costs from the financial year prior. Notwithstanding, there was a
        total of $1,368,000 of future capital related to the Proved reserves
        and $2,345,000 related to the Proved plus Probable reserves. When
        including future development costs, the F&D&A costs for the Proved
        plus Probable reserves calculates to $18.46/boe ($31.35 Proved only).
    

    OUTLOOK

    Bellamont is encouraged with its early drilling success to date and is
looking forward to the year ahead. The Corporation expects to exit the 2nd
quarter of 2007 with daily production of 175 boe net to the company. We
believe the Corporation's 49 well prospect inventory offers a good mix of low,
medium and higher risk/reward projects and should provide us with a solid
foundation to build upon. The Corporation is encouraged that land, service and
opportunity costs in the industry have moderated since the highs experienced
in 2006. The change in the taxation for the income trust sector has created a
ripple effect in the Canadian Oil and Gas industry, the results of which have
created opportunities for emerging companies such as Bellamont. The
Corporation is actively pursuing acquisition opportunities as the cost to
acquire assets has become much more attractive over the past six months. The
Corporation will be opportunistic, yet disciplined, in its acquisition
approach. We intend to focus on transactions that offer growth potential and
are accretive on a per share basis on cash flow, production and reserves.

    ANNUAL MEETING

    Bellamont's annual meeting will be held at 3:00 p.m. on June 21, 2007 in
the Royal Room at the Metropolitan Centre, 333 Fourth Avenue S.W., Calgary,
Alberta.

    MANAGEMENT'S DISCUSSION AND ANALYSIS

    This Management's Discussion and Analysis ("MD&A") should be read in
conjunction with the audited consolidated financial statements and notes
thereto of Bellamont Exploration Ltd. (the "Company" or "Bellamont") for the
year ended December 31, 2006.
    This MD&A was written on April 19, 2007.
    Bellamont was incorporated on May 29, 2006, pursuant to the Business
Corporations Act of Alberta and commenced commercial operations on
September 22, 2006.
    Basis of Presentation - Pursuant to an agreement dated effective
September 22, 2006, the Company acquired all of the issued and outstanding
shares of 1256800 Alberta Ltd. in exchange for 1,800,000 Class A shares of the
Company issued at a deemed price of $2.50 per share (the "1256800
Acquisition"). The 1256800 Acquisition was negotiated at non-arms length and
was measured at the carrying value with any difference between the
consideration received or paid and the carrying value charged to Shareholders'
equity. Pursuant to a General Conveyance and Assumption of Liabilities
Agreement dated effective July 31, 2006, 1256800 Alberta Ltd. assumed all of
the assets and liabilities of Big Echo Limited Partnership ("BELP") in
exchange for 4,950,000 common shares of 1256800 Alberta Ltd. issued at a
deemed price of $1.00 per share. This was a non-arm's length transaction
between entities under common control with no substantive change in ownership;
the transaction was accounted for using continuity of interest accounting.
Pursuant to continuity of interest accounting, the assets transferred and
liabilities assumed were recorded by 1256800 Alberta Ltd. at their respective
carrying values as reported by BELP prior to the transaction.
    The Company also entered into a separate agreement dated effective
September 22, 2006 to acquire all of the issued and outstanding shares of Big
Echo Resources Ltd. ("BERL") in exchange for nominal consideration of $600
(the "BERL Acquisition"). The BERL Acquisition was negotiated at non-arms
length and was measured at the carrying value with any difference between the
consideration received and the carrying value charged to Shareholders' equity.
    Effective September 26, 2006, Bellamont amalgamated with 1256800 Alberta
Ltd. and BERL. As the transfer of the business assets, liabilities, and
operations to the Company represented a transaction between entities under
common control, with no substantive change in shareholder ownership the
transaction has been accounted for using continuity of interest accounting.
Pursuant to continuity of interest accounting, the assets transferred and
liabilities assumed have been recorded at their respective carrying values as
reported by 1256800 Alberta Ltd. and BERL prior to the transaction.
    For the year ended December 31, 2006, the financial statements combine
the financial results for the business carried on in 1256800 Alberta Ltd. from
August 1, 2006 to September 26, 2006, BERL from January 1, 2006 to
September 26, 2006, and BELP from January 1, 2006 to July 31, 2006 with those
of the Company from May 29, 2006 to December 31, 2006 as the Company
represents a continuation of the business and operations primarily carried on
in 1256800 Alberta Ltd., BERL, and BELP. References herein to the Company's
business and operations that pre-date the September 26, 2006 amalgamation are
references to the business and operations of 1256800 Alberta Ltd., BERL, and
BELP.
    For the year ended December 31, 2005, the financial statements combine
the financial results for the business carried on in BERL from January 1, 2005
to December 31, 2005, and BELP from January 1, 2005 to December 31, 2005.
    Non-GAAP Measures - The Management's Discussion and Analysis contains the
term funds generated by operations, which should not be considered an
alternative to, or more meaningful than cash flow from operating activities as
determined in accordance with Canadian generally accepted accounting
principles ("GAAP") as an indicator of the Company's performance. Bellamont's
determination of funds generated by operations may not be comparable to that
reported by other companies. The Company also presents funds generated by
operations per share whereby per share amounts are calculated using weighted
average shares outstanding consistent with the calculation of earnings per
share.
    Boe Presentation - Barrels of oil equivalent ("Boe") may be misleading,
particularly if used in isolation. A Boe conversion rate of 6 Mcf: 1 Bbl is
based on an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead. All Boe
conversions in the report are derived by converting gas to oil at the ratio of
six thousand cubic feet of gas to one barrel of oil.
    Forward-Looking Information - Certain information regarding the Company
presented in this document, including management's assessment of the Company's
future plans and operations, may constitute forward-looking statements under
applicable securities law and necessarily involve risk associated with oil and
gas exploration, production, marketing, and transportation such as loss of
market, volatility of commodity prices, currency fluctuations, imprecision of
reserve estimates, environmental risk, competition from other producers and
ability to access sufficient capital from internal and external sources; as a
consequence, actual results may differ materially from those anticipated in
the forward-looking statements.

    
    PRODUCTION
                                    2006       Q4       Q3       Q2       Q1
                                 Average     2006     2006     2006     2006
    -------------------------------------------------------------------------
    Daily Production
    Natural gas (Mcf per day)         81      130       84       96       15
    Natural gas liquids
     (Bbls per day)                    -        1        1        -        -
    -------------------------------------------------------------------------
    Total (Boe per day)               14       23       15       16        2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the year ended December 31, 2006, Bellamont's production averaged
14 Boe per day. The production was comprised of approximately 81 Mcf per day
of natural gas and marginal sales of natural gas liquids.
    For the three months ended December 31, 2006, Bellamont's production
average 23 Boe per day. The production was comprised of approximately 130 Mcf
per day of natural gas and 1 Bbbls per day of natural gas liquids.
    During 2006, the Company has drilled and completed 6 (5.7 net) oil wells,
and 3 (1.2 net) gas wells with a 83 per cent success rate and worked over 1
(0.5 net) gas well.

    REVENUES

    For the year ended December 31, 2006, Bellamont recorded $192,602 in
natural gas sales and $12,257 in natural gas liquids sales. For the quarter
ended December 31, 2006, Bellamont recorded $86,382 in natural gas sales and
$6,846 in natural gas liquids sales.
    Revenues for 2006 increased 166 per cent to $204,859 compared to 2005 of
$77,017. Increased production, due to successful drilling, during 2006
compared to 2005 resulted in the revenue growth.
    Revenues for the fourth quarter of 2006 increased 81 per cent to $93,228
compared to the third quarter of 2006 of $51,387. Increased production during
the fourth quarter compared to the third quarter resulted in the revenue
growth.
    The Company realized the following commodity prices for the three month
period and the year ended December 31, 2006 respectively.

    
                                             Three Months Ended   Year Ended
                                                    December 31, December 31,
                                                           2006         2006
    -------------------------------------------------------------------------
    Bellamont average realized prices
    Natural gas ($ per Mcf)                                7.24         6.48
    Natural gas liquids ($ per Bbl)                       57.24        60.45

    ($ thousands)
    -------------------------------------------------------------------------
    Revenues by product
    Natural gas                                          86,382      192,602
    Natural gas liquids                                   6,846       12,257
    -------------------------------------------------------------------------
    Total revenues                                       93,228      204,859
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    ROYALTIES

    For the year ended December 31, 2006, total royalties were $35,222
resulting in an average royalty rate for the year to date of 17 per cent. For
the year ended December 31, 2005, total royalties were $8,127 resulting in an
average royalty rate for the year to date of 11 per cent.
    For the quarter ended December 31, 2006, total royalties were $12,978
resulting in an average royalty rate of 13.9 per cent.

    OPERATING EXPENSES

    For the year ended December 31, 2006, operating expenses were $83,700.
For the year ended December 31, 2005, operating expenses were $18,462.
    Operating expenses were $43,750 ($20.76 per Boe) for the three months
ended December 31, 2006, an increase of 36 per cent over the third quarter of
2006 rate of $15.55 per Boe. The increase in operating expenses in the fourth
quarter are due to salt water disposal cost incurred in the latter part of the
year.

    TRANSPORTATION EXPENSES

    Transportation expenses were $6,347 ($1.23 per Boe) for the year ended
December 31, 2006.
    Transportation expenses were $2,624 ($1.25 per Boe) during the fourth
quarter compared to third quarter expense of $1,697 ($1.23 per Boe). The
slight increase in expenses during the fourth quarter is due to an increase in
production volumes realized by Bellamont.

    GENERAL AND ADMINISTRATIVE EXPENSES

    Net general & administrative expense ("G&A") for the year ended
December 31, 2006, was $290,418 comprised of $360,469 in general and
administrative expenses less $28,384 in recoveries and $41,667 in capitalized
G&A. Net G&A for the year ended December 31, 2005, was $109,000. The
significant change is due to salaries beginning to be paid in November 2006,
costs related to setting up the company, moving to its facilities, and various
initial filings.
    During the fourth quarter of 2006, net general and administrative expense
("G&A") was $188,669 comprised of $258,256 in direct general and
administrative expenses less $27,920 in recoveries and $41,667 in capitalized
G&A. During the third quarter of 2006, net general and administrative expense
was $47,386 comprised of $47,851 in direct general and administrative expenses
and $465 in recoveries. One time start up costs related to setting up the
company, moving to its facilities, and various initial filings played a
significant role in high G&A costs. G&A costs per Boe are expected to decrease
in subsequent quarters with a combination of higher volumes and lower start up
costs.

    
                                             Three Months Ended   Year Ended
                                                    December 31, December 31,
                                                           2006         2006
    -------------------------------------------------------------------------

    General and Administrative Expenses
    General and administrative expenses                 258,256      360,469
    Recoveries                                          (27,920)     (28,384)
    Capitalized general and administrative
     expenses                                           (41,667)     (41,667)
    -------------------------------------------------------------------------
    Total net general and administrative
     expenses                                           188,669      290,418
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    STOCK BASED COMPENSATION

    Bellamont expensed $4,303 in stock based compensation expense for the
year ended December 31, 2006 and for three month period ended December 31,
2006. The stock based compensation expense related to outstanding stock
options granted during the fourth quarter of 2006. There were no outstanding
options prior to the fourth quarter.

    INCOME TAXES

    Future income tax expense for the year ended December 31, 2006 was
$359,686 for an effective tax rate of 102 per cent. The high effective rate
was due to an internal restructuring to facilitate the September 22, 2006
acquisitions.
    Based on current commodity prices no current income taxes are expected in
2007.

    DEPLETION, DEPRECIATION, AND ACCRETION

    For the year ended December 31, 2005, depletion, depreciation, and
accretion expense was $117,273 compared to $8,112 in 2005. The increase is due
to an increase in production. For the three month period ended December 31,
2006, depletion and depreciation of capital assets and the accretion of the
asset retirement obligations was $66,215 which reflected adjustments for
reserves and the associated future development cost.

    NET LOSS AND FUNDS USED IN OPERATIONS

    For the year ended December 31, 2006, net loss after taxes was $713,287.
Basic and diluted net loss per share for the year ended December 31, 2006 was
$0.18 per share, respectively. During 2006 the funds used in operations were
$232,025 and basic and diluted funds used in operations per share for the year
to date was $0.06 per basic share and per fully diluted share.
    For the three month period ended December 31, 2006, net loss after taxes
was $123,764 equating to basic and diluted net loss of $0.01 per share,
respectively. For the fourth quarter, funds used in operations were $165,978
and basic and diluted funds used in operations per share for the quarter was
$0.02 per share.

    QUARTERLY FINANCIAL SUMMARY

    The following table highlights Bellamont's performance for the quarterly
reporting periods from January 1, 2006 to December 31, 2006.

    
                          December 31, September 30,    June 30,    March 31,
                                 2006         2006         2006         2006
    -------------------------------------------------------------------------
    Petroleum, natural
     gas, and natural gas
     liquids revenues,
     before royalties          93,228       51,387       51,215        9,029
    Funds used in
     operations              (165,978)     (35,779)      (9,029)     (21,239)
      - Per share basic         (0.02)       (0.02)       (0.01)       (0.01)
      - Per share diluted       (0.02)       (0.02)       (0.01)       (0.01)
    Net Loss                 (123,764)    (531,163)     (31,517)     (26,843)
      - Per share basic         (0.01)       (0.24)       (0.02)       (0.01)
      - Per share diluted       (0.01)       (0.24)       (0.02)       (0.01)
    Total Assets           14,287,273    3,866,556    2,006,374    1,996,087
    Working capital
     surplus                7,032,567      303,073       43,742      269,227
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CAPITAL EXPENDITURES

    During 2006, the Company spent $3.7 million on capital expenditures. For
the three months ended December 31, 2006, the Company spent $2.3 million on
capital expenditures.

                                             Three Months Ended   Year Ended
                                                    December 31, December 31,
    ($)                                                    2006         2006
    -------------------------------------------------------------------------
    Land acquisitions and retention                     393,587    1,355,642
    Geological and geophysical                           90,469      153,790
    Drilling and completions                          1,527,252    1,552,269
    Equipping and facilities                            165,555      538,825
    Other                                                90,535       95,844
    -------------------------------------------------------------------------
    Total capital expenditures                        2,267,398    3,696,370
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CAPITALIZATION AND CAPITAL RE

SOURCES Share Capital Three Months Ended Year Ended December 31, December 31, 2006 2006 ------------------------------------------------------------------------- Outstanding Common Shares Weighted Average Outstanding Common Shares(1) - Basic 9,945,994 3,884,723 - Diluted 10,136,649 3,932,779 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Outstanding Securities at December 31, 2006 - Class A Common Shares 11,349,821 - Class B Common Shares 1,012,000 - Class A Common Share options 880,000 ------------------------------------------------------------------------- (1) Per share information is calculated on the basis of the weighted average number of Common Shares outstanding during the fiscal year. Diluted per share information reflects the potential dilution that could occur if securities or other contracts to issue Common Shares were exercised or converted to Common Shares. Diluted per share information is calculated using the treasury stock method which assumes that any proceeds received by the Company upon exercise of in-the-money stock options plus the unamortized stock compensation expense would be used to buy back Common Shares at the average market price for the period. Total Market Capitalization The Company's market capitalization at December 31, 2006 was $20.6 million. ($) December 31, 2006 ------------------------------------------------------------------------- Class A Common Shares Outstanding 11,349,821 Class A Share Price(1) $1.50 ------------------------------------------------------------------------- Class A Market Capitalization $17,024,732 ------------------------------------------------------------------------- Class B Common Shares Outstanding 1,012,000 Class B Share Price(1) $3.55 ------------------------------------------------------------------------- Class B Market Capitalization $3,592,600 ------------------------------------------------------------------------- Total Market Capitalization $20,617,332 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Represents the last price traded on the TSXV December 31, 2006. Capital Resources At December 31, 2006, the Company had a working capital surplus of $7.0 million. The Company's investing activities consisted of expenditures on the capital program. The activities have been funded by cash generated by financing activities and cash on hand. The current planned 2007 capital expenditure program will be funded by cash on hand and cash generated from operations. Working Capital The capital intensive nature of the Company's activities may create a negative working capital position in quarters with high levels of capital investment. The industry has a pre-arranged monthly clearing day for payment of revenues from all buyers of crude oil and natural gas. This occurs on the 25th day following the month of sale. As a result, the Company's production revenues are collected in an orderly fashion. For 2007, the receivables related to revenues will be collected by Bellamont and the Company will continue to monitor its revenue counterparty credit positions to mitigate any potential credit losses. To the extent that the Company has joint venture partners in its activities it will collect, on a monthly basis, its partner's share of capital and operating expenses. These are subject to normal collection risk. At December 31, 2006 the Company had no material accounts receivable it deemed uncollectible. Accounts payable consist of amounts payable to suppliers relating to head office, field operating activities and capital spending activities. These invoices are processed within the Company's normal payment period. The Company continuously manages the pace of its capital spending program by monitoring forecasted production and commodity prices and resulting cash flows. Should circumstances affect cash flow in a detrimental way, the Company is capable of reducing its capital expenditures. 2007 Outlook Bellamont has undertaken an in depth review of its strategy and the current environment in which it operates and has set up an organization to pursue a longer-term strategy of growth in terms of reserves, production and cash flow per share. Bellamont will continue to monitor its capital expenditures and will endeavor to achieve reductions to operating and general and administrative costs on a per boe basis. The Company has a full technical team in place and has the dedicated personnel and resources to review strategic acquisitions in the western Canadian basin. CONTRACTUAL COMMITMENTS Flow-Through Share Commitments In the fourth quarter of 2006, the Company committed to renounce $11 million of exploration and development expenditures pursuant to its initial public offering which closed on December 7, 2006. Bellamont has until December 31, 2007 to incur these exploration expenditures. The Company will be subject to Part XII.6 tax based on the prescribed rate and the balance of exploration and development expenditures not yet incurred at the end of each month subsequent to January 31, 2007. To December 31, 2006 the costs incurred with respect to the $11 million flow though share obligation totaled $1 million. Operating Leases The Company is committed under an operating lease for its current office premises which expires January 31, 2012. The Company is committed to the following aggregate minimum lease payments: $ ------------------------------------------------------------------------- 2007 153,600 2008 169,000 2009 169,000 2010 169,000 2011 169,000 other 15,400 ------------------------------------------------------------------------- OUTSTANDING SHARE DATA Common Shares Bellamont is authorized to issue an unlimited number of common shares. Holders of common shares are entitled to one vote per share at meetings of shareholders of Bellamont, to receive dividends if, as and when declared by the board of directors and to receive pro rata the remaining property and assets of Bellamont upon its dissolution or winding-up, subject to the rights of shares having priority over the common shares. As at April 19, 2007, a total of 11,349,821 Class A common shares and 1,012,000 Class B common shares were issued and outstanding. In addition, a total of 880,000 options to acquire common shares were outstanding under the Company's stock option plan. ADDITIONAL INFORMATION Additional information relating to Bellamont is filed on SEDAR and can be viewed at www.sedar.com. Information can also be obtained by contacting the Company at Bellamont Exploration Ltd., Suite 200, 1324 - 17th Avenue, SW, Calgary, Alberta, Canada T2T 5S8. Information is also accessible on the Company's website at www.bellamont.com. BELLAMONT EXPLORATION LTD. Balance Sheets December 31, 2006, with comparative figures for 2005 ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 8,469,981 $ 29,667 Accounts receivable 267,063 21,065 Prepaid expenses and deposits 113,653 36,231 ----------------------------------------------------------------------- 8,850,697 86,963 Property and equipment (Note 3) 5,436,576 1,662,228 Future income tax asset (Note 6) - 745 ------------------------------------------------------------------------- $14,287,273 $ 1,749,936 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 1,818,128 $ 67,542 Due to non-arms length parties - 14,000 ----------------------------------------------------------------------- 1,818,128 81,452 Asset retirement obligations (Note 4) 227,457 18,493 Future income tax liability (Note 6) 29,706 - Shareholders' equity: Share capital (Note 7) 12,290,650 1,764,175 Contributed surplus (Note 7) 4,303 - Deficit (82,971) (114,183) ----------------------------------------------------------------------- 12,211,982 1,649,992 Commitment (note 9) ------------------------------------------------------------------------- $14,287,273 $ 1,749,936 ------------------------------------------------------------------------- ------------------------------------------------------------------------- See accompanying notes to financial statements. BELLAMONT EXPLORATION LTD. Statements of Operations and Deficit Year ended December 31, 2006, with comparative figures for 2005 ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Revenue: Petroleum and natural gas sales $ 204,859 $ 77,017 Royalties (35,222) (8,127) Other income 21,709 13,866 ----------------------------------------------------------------------- 191,346 82,756 Expenses: Operating 83,700 18,462 Transportation 6,347 - General and administrative 290,418 108,962 Stock based compensation 4,303 - Interest and financing 42,906 - Depletion, depreciation and accretion 117,273 8,112 ----------------------------------------------------------------------- 544,947 135,536 ------------------------------------------------------------------------- Net loss before tax (353,601) (52,780) Income tax expense: Current - 776 Future 359,686 3,509 ----------------------------------------------------------------------- 359,686 4,285 ------------------------------------------------------------------------- Net loss $ (713,287) $ (57,065) ------------------------------------------------------------------------- Deficit, beginning of year $ (114,183) $ (57,118) Adjustment to equity on non-a-length transaction (Notes 1 & 8) (13,712) - ------------------------------------------------------------------------- Pre-amalgamation deficit (841,182) (114,183) Reduction in deficit on amalgamation (Notes 1 & 7) 758,211 - ------------------------------------------------------------------------- Deficit, end of year $ (82,971) $ (114,183) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per share: Basic and diluted $ (0.18) $ (0.03) ------------------------------------------------------------------------- ------------------------------------------------------------------------- See accompanying notes to financial statements. BELLAMONT EXPLORATION LTD. Statements of Cash Flows Year ended December 31, 2006, with comparative figures for 2005 ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Cash provided by (used in): Operations: Net loss $ (713,287) $ (57,065) Item not affecting cash: Depletion, depreciation and accretion 117,273 8,112 Stock based compensation 4,303 - Future income taxes 359,686 3,509 ----------------------------------------------------------------------- (232,025) (45,444) Changes in non-cash working capital (89,081) (17,490) ----------------------------------------------------------------------- (321,106) (62,934) Financing: Advances from non-arms length parties (14,000) - Pre-amalgamation capital withdrawals (29,360) - Issue of shares (net of share issue cost) 10,984,811 - ------------------------------------------------------------------------- 10,941,451 - Investments: Capital expenditures (3,696,370) (1,148,114) Changes in non-cash working capital 1,516,339 - ----------------------------------------------------------------------- (2,180,031) (1,148,114) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 8,440,314 (1,211,048) Cash and cash equivalents, beginning of year 29,667 1,240,715 ------------------------------------------------------------------------- Cash and cash equivalents, end of year $ 8,469,981 $ 29,667 ------------------------------------------------------------------------- ------------------------------------------------------------------------- See accompanying notes to financial statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended December 31, 2006, with comparative figures for 2005 1. Nature of business and basis of presentation: Bellamont Exploration Ltd. ("Bellamont" or "the Company") was incorporated on May 29, 2006, pursuant to the Business Corporations Act of Alberta and commenced commercial operations on September 22, 2006. Pursuant to an agreement dated effective September 22, 2006, the Company acquired all of the issued and outstanding shares of 1256800 Alberta Ltd. in exchange for 1,800,000 Class A shares of the Company issued at a deemed price of $2.50 per share (the "1256800 Acquisition"). The 1256800 Acquisition was negotiated at non-arms length and was measured at the carrying value with any difference between the consideration received and the carrying value charged to Shareholders' equity. Pursuant to a General Conveyance and Assumption of Liabilities Agreement dated effective July 31, 2006, 1256800 Alberta Ltd. assumed all of the assets and liabilities of Big Echo Limited Partnership ("BELP") in exchange for 4,950,000 common shares of 1256800 Alberta Ltd. issued at a deemed price of $1.00 per share. This was a non-arm's length transaction between entities under common control with no substantive change in ownership, although the September 22, 2006 transaction was approved by only the independent members of the board of Bellamont; the transaction was accounted for using continuity of interest accounting. Pursuant to continuity of interest accounting, the assets transferred and liabilities assumed were recorded by 1256800 Alberta Ltd. at their respective carrying values as reported by BELP prior to the transaction. The Company also entered into a separate agreement dated effective September 22, 2006 to acquire all of the issued and outstanding shares of Big Echo Resources Ltd. ("BERL") in exchange for nominal consideration of $600 (the "BERL Acquisition"). The BERL Acquisition was negotiated at non-arms length and was measured at the carrying value with any difference between the consideration received and the carrying value charged to Shareholders' equity. Effective September 26, 2006, Bellamont amalgamated with 1256800 Alberta Ltd. and BERL. As the transfer of the business assets, liabilities, and operations to the Company represented a transaction between entities under common control, with no substantive change in shareholder ownership the transaction has been accounted for using continuity of interest accounting. Pursuant to continuity of interest accounting, the assets transferred and liabilities assumed have been recorded at their respective carrying values as reported by 1256800 Alberta Ltd. and BERL prior to the transaction. The reduction to deficit on amalgamation was accounted for as follows: --------------------------------------------------------------------- Reclassification of opening retained earnings to share capital $ 114,183 Reclassification of current period non-arms length transaction to share capital (Note 8) 13,712 Reclassification of pre-amalgamation operating losses to share capital 630,316 --------------------------------------------------------------------- Reduction to deficit on amalgamation $ 758,211 --------------------------------------------------------------------- --------------------------------------------------------------------- For the year ended December 31, 2006, the financial statements combine the financial results for the business carried on in 1256800 Alberta Ltd. from incorporation to September 26, 2006, BERL from January 1, 2006 to September 26, 2006, and BELP from January 1, 2006 to July 31, 2006 with those of the Company from May 29, 2006 to December 31, 2006 as the Company represents a continuation of the business and operations primarily carried on in 1256800 Alberta Ltd., BERL, and BELP. References herein to the Company's business and operations that pre-date the September 26, 2006 amalgamation are references to the business and operations of 1256800 Alberta Ltd., BERL, and BELP. For the year ended December 31, 2005, the financial statements combine the financial results for the business carried on in BERL from January 1, 2005 to December 31, 2005, and BELP from January 1, 2005 to December 31, 2005. Bellamont is engaged in the exploration for, and acquisition, development, and production of petroleum and natural gas in Alberta. The financial statements are stated in Canadian dollars and have been prepared in accordance with Canadian generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates. 2. Summary of significant accounting policies: (a) Joint Operations: Exploration, development, and production activities may be conducted jointly with others and accordingly, the Company only reflects its proportionate interest in such activities. (b) Measurement Uncertainty: The amounts recorded for depletion and depreciation of petroleum and natural gas property, plant, and equipment and the provision for asset retirement obligations are based on estimates. The cost recovery ceiling test is based on estimates of proved reserves, production rates, petroleum and natural gas prices, future costs, and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. (c) Cash and cash equivalents: Cash and cash equivalents consist of cash in the bank, less outstanding cheques and short-term deposits with a maturity of less than three months. (d) Oil and Gas Operations: The Company follows the full cost method of accounting for petroleum and natural gas operations. All costs related to the acquisition of, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition costs, geological and geophysical expenses, carrying charges of non-producing property, costs of drilling both productive and non-productive wells, petroleum and natural gas production equipment and overhead charges related to exploration and development activities. Oil and gas assets are evaluated on an annual basis to determine that the costs are recoverable and do not exceed the fair value of the properties. The costs are assessed to be recoverable if the sum of the undiscounted cash flows expected from the production of proved reserves and the lower of costs and market of unproved properties exceed the carrying value of the oil and gas assets. If the carrying value of the oil and gas assets is not assessed to be recoverable, an impairment loss is recognized to the extent that the carrying value exceeds the sum of the discounted cash flows expected from the production of proved and probable reserves and the lower of costs and market of unproved properties. The cash flows are estimated using the future product prices and costs and are discounted using the risk-free rate. Proceeds from the disposition of oil and gas properties are credited to the capitalized costs except for dispositions that would change the rate of depletion and depreciation by 20% or more, in which case a gain or loss would be recorded. (e) Depletion and Depreciation: Capitalized costs, together with estimated future capital costs associated with proven reserves, are depleted and depreciated using the unit-of-production method based on estimated gross proved reserves of petroleum and natural gas as determined by qualified independent engineers. For purposes of this calculation, reserves and production are converted to equivalent units of oil based on relative energy content of six thousand cubic feet of gas to one barrel of oil. Costs of significant unproved properties, net of impairment, are excluded from the depletion and depreciation calculation. Other assets are recorded at cost and depreciated over their useful life on a declining balance basis using the following rates: --------------------------------------------------------------- Computer software 100 percent Computer hardware 50 percent Office furniture and fixtures 20 percent Other assets 20 percent --------------------------------------------------------------- (f) Asset Retirement Obligations: The Company records a liability for the fair value of legal obligations associated with the retirement of long-lived tangible assets in the period in which they are incurred, normally when the asset is purchased or developed. On recognition of the liability, there is a corresponding increase in the carrying amount of the related assets known as the asset retirement cost, which is depleted on a unit-of-production basis over the life of the reserves. The liability is adjusted each reporting period to reflect the passage of time, with the accretion charged to earnings, and for revisions to the estimated future cash flows. Actual costs incurred upon settlement of the obligations are charged against the liability. (h) Revenue Recognition: Revenues from the sale of petroleum and natural gas are recorded when title passes to an external party. (i) Income Taxes: The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes that date of enactment or substantive enactment. (j) Flow-through Shares: The Company may finance a portion of its exploration and development activities through the issuance of flow-through common shares. Under the terms of the flow-through share agreements, the resource expenditure deductions for income tax purposes are renounced to investors in accordance with the appropriate income tax legislation. The Company provides for the future effect on income taxes related to flow-through shares as a charge to share capital and future income tax liability when the renouncement is made to shareholders. (k) Stock Based Compensation Plan: The Company follows the fair value method of valuing stock option grants. Under this method, compensation cost, attributable to share options granted to employees, consultants, officers and directors of Bellamont is measured at fair value at the date of grant and expensed over the vesting period with a corresponding increase to contributed surplus. Upon the exercise of the stock options, consideration paid together with the amount previously recognized in contributed surplus is recorded as an increase to share capital. The Company has not incorporated an estimated forfeiture rate for stock options that will not vest, rather, the Company will account for actual forfeitures as they occur. (l) Per Share Information: Per share information is calculated on the basis of the weighted average number of Class A and Class B Common Shares outstanding during the fiscal year. Diluted per share information reflects the potential dilution effect of options. Diluted per share information is calculated using the treasury stock method which assumes that any proceeds received by the Company upon exercise of in-the-money stock options plus the unamortized stock compensation expense would be used to buy back Common Shares at the average market price for the period. In addition, Class B shares are converted into Class A shares at $10 divided by the last trading price of the Class A shares. 3. Property, plant and equipment: --------------------------------------------------------------------- 2006 2005 --------------------------------------------------------------------- Petroleum and natural gas properties $ 5,542,964 $ 1,669,161 Accumulated depletion and depreciation 106,388 6,933 --------------------------------------------------------------------- $ 5,436,576 $ 1,662,228 --------------------------------------------------------------------- --------------------------------------------------------------------- During the year, the Company capitalized $41,667 of general and administrative costs related to development activities. As at December 31, 2006, the depletion calculation excluded unproved properties of $1.9 million. The prices used in the impairment test evaluation of the Company's crude oil, natural gas, and natural gas liquids reserves were: --------------------------------------------------------------------- Crude Oil Natural Gas Edmonton AECO Gas Par Price Price (Cdn$/bbl) (Cdn$/Mcf) --------------------------------------------------------------------- 2007 70.25 7.20 2008 68.00 7.45 2009 65.75 7.75 2010 64.50 7.80 2011 65.00 7.85 Thereafter(1) 2% 2% --------------------------------------------------------------------- (1) Percentage change of 2% represents the change in future prices each year after 2011 to the end of the reserve life. 4. Asset retirement obligations: The total future asset retirement obligation was estimated based on the Company's net ownership interest in all wells and facilities, the estimated cost to abandon and reclaim the wells and facilities and the estimated timing of the cost to be incurred in future periods. The total undiscounted amount of the estimated cash flows required to settle the retirement obligation is approximately $0.7 million which will be incurred over the next 14 years with the majority of costs incurred between 2017 and 2020. A credit adjusted risk-free rate of eight and one-half percent and an inflation rate of two percent was used to calculate the present value of the asset retirement obligation. The following table reconciles the Company's asset retirement obligations: --------------------------------------------------------------------- 2006 2005 --------------------------------------------------------------------- Carrying amount, beginning of year $ 18,493 $ - Liabilities incurred 191,145 17,125 Accretion expense 17,819 1,368 --------------------------------------------------------------------- Balance, end of year $ 227,457 $ 18,493 --------------------------------------------------------------------- --------------------------------------------------------------------- 5. Financial Instruments: Financial instruments of the Company carried on the balance sheet consist mainly of cash and short-term investments, accounts receivable, current liabilities, and asset retirement obligations. The estimated fair value of the financial instruments approximates their carrying values due to their short terms to maturity. Substantially all the Company's accounts receivable are due from customers in the oil and gas industry and are subject to normal industry credit risk. The Company is exposed to interest rate risk to the extent that changes in market interest rates will impact any Company investments that have a floating interest rate. The Company has no bank debt and no interest rate hedges at December 31, 2006. 6. Taxes: The combined provision for taxes in the statement of operations and deficit reflects an effective tax rate which differs from the expected statutory tax rate. Differences were accounted for as follows: --------------------------------------------------------------------- 2006 2005 --------------------------------------------------------------------- Loss before income taxes $ (353,601) $ (52,779) Statutory income tax rate 34.50% 34.87% --------------------------------------------------------------------- --------------------------------------------------------------------- Expected income tax recovery (121,992) (18,404) Increase (decrease) resulting from: Resource allowance 7,329 8,191 Non deductible crown charges 4,254 5,283 Stock based compensation 1,485 - Tax effect of restructuring 472,419 - Rate reduction (321) - Other (3,488) 9,215 --------------------------------------------------------------------- Income tax expense $ 359,686 $ 4,285 --------------------------------------------------------------------- --------------------------------------------------------------------- Future income tax asset (liabilities): --------------------------------------------------------------------- 2006 2005 --------------------------------------------------------------------- Property and equipment $ (536,603) $ (5,195) Share issue costs 246,665 Asset retirement obligations 67,100 5,940 Non-capital losses carried forward 193,132 - --------------------------------------------------------------------- $ (29,706) $ 745 --------------------------------------------------------------------- --------------------------------------------------------------------- As at December 31, 2006, the Company has non-capital losses of $650,000 that expire in 2027. For the year ended December 31, 2006, the Company paid no taxes. 7. Share Capital: (a) Authorized: Unlimited Class A Common voting shares Unlimited Class B Convertible voting shares. Class B Shares are convertible at the option of the Corporation, at any time after March 1, 2010 and before the close of business on March 1, 2012, into Class A shares upon five days prior notice to holders of Class B Shares. The number of Class A Shares obtained upon conversion of each Class B Share will be equal to $10.00 divided by the greater of $1.00 and the then current market price (see below) of the Class A Shares (the "conversion formula"). If the Corporation fails to exercise the conversion option by the close of business on March 1, 2012, then the Class B Shares shall be convertible at the option of the shareholder, at any time after March 1, 2012, and before April 2, 2012 into Class A Shares pursuant to the conversion formula described above. Any Class B Shares not converted by the close of business on April 2, 2012 will be automatically converted into Class A Shares pursuant to the conversion formula. (b) Issued: --------------------------------------------------------------- Number of Shares Amount --------------------------------------------------------------- Class A shares: Balance, December 31, 2004 - $ - Incorporation of BERL - 175 Partner contributions of BELP - 1,764,000 ------------------------------------------------------------- Balance, December 31, 2005 - 1,764,175 Incorporation of Bellamont 1 1 Incorporation of 1256800 Alberta Ltd. - 1 Return of Capital - (29,360) Issued on acquisition of 1256800 (note 1) 1,800,000 - Cancelled on acquisition of BERL (note 1) (180) - Issued for cash 2,353,500 470,700 Issued pursuant to a prospectus 4,400,000 880,000 Issued for non-cash promissory note assignment 2,796,500 559,300 Share issue costs, net of tax of $329,235 - (715,956) Reduction in share capital on amalgamation (note 1) - (758,211) --------------------------------------------------------------- Balance, December 31, 2006 11,349,821 2,170,650 --------------------------------------------------------------- Class B shares: Balance, December 31, 2004 and 2005 - - Issued pursuant to a prospectus 1,012,000 10,120,000 --------------------------------------------------------------- Balance, December 31, 2006 1,012,000 $ 10,120,000 --------------------------------------------------------------- --------------------------------------------------------------- Total share capital on December 31, 2006 $ 12,290,650 --------------------------------------------------------------- --------------------------------------------------------------- (c) Issue of Common Shares: On September 22, 2006, the Company issued 3,831,155 Class A common shares for gross proceeds of $206,931 and the non-cash promissory note assignment of $559,300. On September 22, 2006, pursuant to the 1256800 Acquisition, the Company issued 1,800,000 Class A common shares. On November 23, 2006 the Company issued 1,318,845 Class A common shares for gross proceeds of $263,769. The Company entered into an agency agreement dated November 30, 2006 whereby the agent sold 11,000 units of the Company at a price of $1,000 per unit (the "Offering") for gross proceeds of $11 million. Each unit was comprised of 400 Class A common shares at $0.20 per share and 92 Class B shares at $10 per share, both share classes issued on a flow through basis under the Income Tax Act (Canada). In accordance with the terms of the Offering the Company has agreed to renounce for income tax purpose to subscribers of the Class A shares and Class B shares, effective in 2006, exploration and development expenditures incurred by the Company. (d) Loss per share: The following table summarizes the Common Shares used in calculating the net earnings (loss) per Common Share: --------------------------------------------------------------- 2006 2005 --------------------------------------------------------------- Weighted Average Common Shares: Basic 3,884,723 1,800,000 Diluted 3,932,779 1,800,000 --------------------------------------------------------------- The reconciling items between the basic and diluted average Common Shares outstanding is stock options. The weighted average number of shares outstanding presented for comparative periods has been calculated after giving effect to the amalgamation of Bellamont, 1256800 Alberta Ltd. and BERL on September 26, 2006 per Note 1. (e) Stock Options: The following table sets forth a reconciliation of stock option plan activity through to December 31, 2006 and 2005. --------------------------------------------------------------- 2006 2005 ------------------------ ------------------------ Weighted Weighted Average Average Number of Exercise Number of Exercise Options Price Options Price --------------------------------------------------------------- Balance, beginning of year - $ - - $ - Granted 930,000 0.30 - - Forfeited (50,000) 0.30 - - Exercised - - - - --------------------------------------------------------------- Balance, end of year 880,000 $ 0.30 - $ - --------------------------------------------------------------- --------------------------------------------------------------- There were no options exercisable as at December 31, 2006. (f) Stock Based Compensation: The Company accounts for its stock based compensation plan using the fair value method. Under this method, a compensation cost is charged over the vesting period for options granted to employees, consultants, officers, and directors with a corresponding increase to contributed surplus. The following table reconciles the Company's contributed surplus balance: --------------------------------------------------------------- 2006 2005 --------------------------------------------------------------- Balance, beginning of year $ - - Stock based compensation expense 4,303 - --------------------------------------------------------------- Balance, end of year $ 4,303 - --------------------------------------------------------------- --------------------------------------------------------------- The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with weighted average assumptions and resulting values for grants as follows: --------------------------------------------------------------- 2006 2005 --------------------------------------------------------------- Risk free interest rate (%) 3.9% - Expected life (years) 3.0 - Expected volatility (%) 60.0% - --------------------------------------------------------------- Results Fair value of options granted $ 0.13 - --------------------------------------------------------------- --------------------------------------------------------------- 8. Non-arms length transactions: In addition to the transactions described in Note 1, the Company had the following non-arms length transactions during the year: (a) On July 30, 2006 BELP sold certain petroleum and natural gas rights to the partners of BELP for cash consideration of $45,000, the amount agreed upon by the related parties. This transaction was measured at the carrying amount of the assets to BELP with the loss on disposition charged to equity. During the year $13,712 was charged to equity for this transaction. (b) On September 22, 2006 Bellamont issued 2,796,500 Class A common shares for non-cash consideration in the form of the assignment to Bellamont of promissory notes having an aggregate principal amount of $559,300. Promissory notes having an aggregate principal amount of $451,000 were assigned by non-arms length parties. 9. Commitments: (a) The Company is committed under an operating lease for its current office premises which expires January 31, 2012 at an annual cost of approximately $169,000. (b) In the fourth quarter of 2006, the Company committed to renounce $11 million of exploration and development expenditures pursuant to its initial public offering which closed on December 7, 2006. Bellamont has until December 31, 2007 to incur these exploration expenditures. The Company will be subject to Part XII.6 tax based on the prescribed rate and the balance of exploration and development expenditures not yet incurred at the end of each month subsequent to January 31, 2007. To December 31, 2006 the costs incurred with respect to the $11 million flow though share obligation totaled $1 million. FORWARD LOOKING STATEMENTS This press release may contain forward-looking statements including expectations of future production, cash flow and earnings. More particularly, this press release contains statements concerning Bellamont's future production estimates, expansion of oil and gas property interests, exploration and development drilling, payout estimates, capital expenditures, number and drilling locations to be drilled in 2007 and facilities upgrades. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect Bellamont's operations or financial results are included in Bellamont's reports on file with Canadian securities regulatory authorities. The forward-looking statements or information contained in this news release are made as of the date hereof and Bellamont undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws Oil and Gas Advisory This press release contains disclosure expressed as "Boe/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. 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. %SEDAR: 00024373E

For further information:

For further information: Steve Moran, President and Chief Executive
Officer, (403) 802-1355; or Danny Geremia, Vice President and Chief Financial
Officer, (403) 802-0160

Organization Profile

BELLAMONT EXPLORATION LTD.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890