First Calgary Petroleums Ltd. Announces 2008 Third Quarter Results



    
    TSX: FCP AIM: FPL

    Note: $ refers to the U.S. dollar and C$ refers to the Canadian dollar.
    

    CALGARY, Oct. 29 /CNW/ - First Calgary Petroleums Ltd. (FCP or the
Company) announces its results for the three and nine months ended September
30, 2008.

    President's Report

    We are pleased to update our shareholders on the Company's activities in
the last quarter. The quarter was highlighted by the announcement on September
8, 2008 of the proposed sale of the Company to Eni S.p.A. The proposed
transaction involves Eni acquiring all the common shares of FCP for C$3.60 per
share and FCP redeeming the convertible bonds at 108 percent of par value plus
accrued interest to the date of redemption. The transaction was unanimously
recommended by the Board of FCP. An extraordinary meeting of bondholders of
FCP was held in London, United Kingdom on October 14, 2008 and all of the
votes represented at the meeting in person or by proxy voted in favour of the
proposed transaction. The shareholders of FCP will meet today in Calgary,
Alberta to consider and vote on the proposed transaction.
    The board of directors of the Company has unanimously determined that the
arrangement is in the best interests of the Company, is fair to the
securityholders and has unanimously recommended that securityholders of the
Company vote in favour of the arrangement. The recommendation of the board of
directors is based on the factors and considerations set out in detail in the
information circular of the Company, a copy of which is available on
www.sedar.com.
    This proposed transaction is anticipated to close before year end. We are
continuing to move the MLE project forward with the key focus now on
integration activities with Eni to ensure that synergies with Eni's existing
operations can be factored into development planning activities for the
project.

    
    Shane P. O'Leary
    President and CEO
    

    Management's Discussion and Analysis

    Management's discussion and analysis (MD&A) is a review of operations,
current financial position and outlook for First Calgary Petroleums Ltd.
(First Calgary, FCP or the Company). It should be read in conjunction with the
unaudited interim financial statements for the nine months ended September 30,
2008 and 2007 and the audited financial statements and MD&A for the year ended
December 31, 2007. In this discussion and analysis $ refers to the U.S. dollar
and C$ refers to the Canadian dollar.


    THE COMPANY

    Readers are referred to the map which is available on the Company's
website at www.fcpl.ca.

    First Calgary Petroleums Ltd. is an international oil and gas exploration
and development company with assets located in the prolific Berkine Basin of
Algeria. FCP's interest in Block 405b focuses on two areas for development -
Menzel Ledjmet East (MLE) and the Central Area Field Complex (CAFC).
    In February 2007, FCP received approval from the Algerian regulatory
authority (ALNAFT) for the development of the MLE oil and gas field on Block
405b. The development plan design includes the first phase construction of a
gas plant and field gathering system and facilities designed to produce up to
260 million cubic feet of sales gas per day (MMCF/d) and 20 thousand barrels
per day (Mb/d) of associated natural gas liquids and oil, on a gross basis.
Three product pipelines are required to transport sales gas, condensate and
LPG products to the national grid system located 140 km west of the Block. In
addition, a fourth pipeline to transport oil will tie into existing
infrastructure within the Berkine Basin.
    FCP was granted an extension to December 2008 to further appraise and
evaluate the CAFC and ZER areas. FCP and Sonatrach have agreed to modify the
design of the product pipelines to accommodate increased volumes from the
development of the CAFC as part of an integrated block development strategy.
As a result, the current block development plans (MLE plus CAFC) are targeting
up to 300 MMCF/d sales gas with up to 40 Mb/d of liquids, based on the CAFC
development plan recently submitted to Sonatrach.

    PROPOSED TRANSACTION WITH ENI

    On September 7, 2008, FCP entered into an arrangement agreement with Eni
S.p.A and its indirect wholly-owned subsidiary, Eni Canada Holding Ltd.
(collectively, Eni) which was subsequently amended on September 17, 2008.
Under the arrangement:

    
    -   Shareholders will receive C$3.60 cash for each share held by them;

    -   Optionholders will receive cash equal to the difference between
        C$3.60 and the exercise price for each option held by them (options
        with an exercise price greater than C$3.60 will be terminated without
        payment); and

    -   Bondholders will receive $1,080 cash for each $1,000 in aggregate
        principal amount of the outstanding bonds held plus accrued interest
        to but excluding the date the bonds are redeemed.
    

    The transaction values FCP's fully diluted share capital at approximately
C$923 million. The board of directors of the Company has unanimously
determined that the arrangement is in the best interests of the Company, is
fair to the securityholders and has unanimously recommended that
securityholders vote in favour of the transaction.
    The definitive agreement prohibits FCP from soliciting or initiating any
discussions concerning any other business combination but allows the Board of
Directors of FCP to accept and recommend a Superior Proposal (as defined in
the definitive agreement, subject to any such competing proposal not having
been matched by Eni under the terms of the agreement) if it is required to do
so to avoid breaching its fiduciary duties and upon payment of a break fee of
C$28.2 million.
    The proposed transaction is expected to be completed by way of a
statutory plan of arrangement.  A meeting of bondholders of FCP was held in
London, United Kingdom on October 14, 2008 to consider and approve the
proposed transaction and other related matters.  All of the votes represented
at that meeting in person or by proxy voted in favour of the proposed
transaction.  The approvals required under the Investment Canada Act (Canada)
in connection with the transaction have been obtained as well.
    In addition to the receipt of all required court and Algerian and other
governmental approvals, completion of the transaction will require the
approval of 66 2/3 percent of the votes cast at a meeting of FCP shareholders
and optionholders.  The shareholders and optionholders of FCP are expected to
meet today in Calgary, Alberta to consider and vote upon the proposed
transaction.  If the transaction is approved at that meeting, the Company is
expected to apply for the approval of the Court of Queen's Bench of Alberta to
the plan of arrangement.  Assuming all such approvals are obtained, and
subject to the satisfaction of other customary closing conditions, the
transaction is expected to be completed before the end of the fourth quarter
of 2008.

    
    OPERATIONAL UPDATE

    Menzel Ledjmet East (MLE) Activities and Outlook

    Engineering, Procurement and Construction (EPC)
    -----------------------------------------------
    

    In the first quarter of 2008, four pre-qualified bidders were requested
to submit technical bids for the large EPC contract on the basis of a detailed
Invitation to Tender (ITT) document developed during the Front End Engineering
and Design (FEED) phase. The ITT scope included central processing facilities,
associated infrastructure and all related gathering and export pipelines. The
technical bids were received on the due date of July 16 and a rigorous
validation and analysis of each is under way by a joint Sonatrach-FCP
evaluation team based in Hassi Messaoud. Based on the technical bids received
from EPC contractors, FCP re-evaluated the MLE development timetable and
believe first production from MLE will be achieved in second quarter of 2011.
Current industry activity levels are prolonging developments on a world wide
basis as evidenced by the EPC technical bids.
    The second phase of the tender process requires qualified bidders to
submit the commercial portion of their bids at the end of the technical
evaluation. The process of awarding the EPC contract will involve significant
exercises in due diligence. All potential EPC contractors must be able to
deliver the completed facility for a lump sum price with a guaranteed end date
and performance at the specified level. One of the EPC contractors has since
indicated that they will not be bidding, citing work load issues around the
world. Three EPC contractors are expected to submit commercial bids.

    
    Long Lead Items
    ---------------
    

    In order to maintain the aggressive schedule needed to achieve first gas
in the second quarter of 2011, it is necessary to secure long lead items such
as line pipe. Tendering packages for the gas gathering system and export
system line pipe were issued and ten bids were received. These bids have been
evaluated based on technical merit and commercial tender has been received.
After careful evaluation of the commercial bids, the two successful bidders
were selected and work is ongoing to finalize the terms and conditions of this
order.
    During the FEED process, other key equipment, such as turbo expanders and
compressors, had been identified as potential long lead items. Subsequent
market evaluation resulted in this equipment being rated 'non-schedule
critical' and included within the EPC contract noted above.

    
    Civil Engineering Works
    -----------------------
    

    To support the aggressive EPC schedule demanded from potential EPC
contractors, it is necessary to commence early civil engineering preparatory
works to enable the successful EPC contractor to commence work onsite shortly
after contract award.
    The contract for early civil works comprising the preparation of working
'platforms' for all temporary and permanent works including road
infrastructure was awarded to ENGCB (a local Algerian company) in early July
2008. ENGCB commenced work in August 2008 and work is progressing. ENGCB
completed mobilization at the site during August 2008 and work has now
progressed to 10 percent completion. Sonatrach and FCP are providing Health,
Safety and Environment, Quality and Management surveillance in the field to
ensure all project objectives and specifications are strictly followed by
ENGCB.

    
    Joint Venture Organization
    --------------------------
    

    The Block 405b Base de Vie in Hassi Messaoud will provide housing and
offices for approximately 160 joint venture staff required to manage and
perform the day-to-day operations of the development organization. The Hassi
base staff will include management, contract administration, logistics, human
resources, IT and telecommunications, etc.
    Working with Sonatrach, the base construction contract has been awarded
to Red Sea Housing, a specialist company resident in Dubai, United Arab
Emirates (UAE), and work has commenced. Manufacturing of high quality,
prefabricated building units is nearing completion and the first units are in
sea-transit from UAE. It is expected that building erection will commence in
December 2008 and phased occupation of the new base will commence in the first
quarter of 2009.

    
    Drilling Activities
    -------------------
    

    Development drilling continued in the MLE area utilizing one rig. The
development wells drilled to date have been successful in further delineating
the key zones that will make up production for first gas.
    MLE-9 was spudded and drilled to total depth of 4388 metres in the Lower
Devonian, and the rig was released from the location on July 30, 2008. The
MLE-11 well was spudded in August and drilled to an approximate total depth of
4500 metres into the Lower Devonian (MLE-10 was drilled prior to MLE-9, during
the first and second quarters' of 2008). MLE-11 was rig-released in
mid-October. Testing of development wells is slated to start in the fourth
quarter of 2008 or the first quarter of 2009.
    In 2007, FCP contracted a high-resolution seismic program (to be
completed by Western-Geco) to cover all of the MLE and a portion of the CAFC
development areas. The data processing requirements of the seismic program are
six months longer than originally scheduled as a result of the complex field
acquisition design and the demanding surface (sand dunes) conditions.
    The seismic will aid in the optimized locating of future development
wells within the MLE field and will require detailed and careful analysis. As
a result, a six month drilling suspension has been instituted in the MLE
development drilling program. After the rig release of MLE -11 in mid-October,
FCP suspended drilling operations until April 2009. This will allow the
geoscientists and engineers to fully utilize the new high-resolution seismic
to better exploit the MLE field. During this period, careful consideration of
the future subsurface work programs for the MLE and CAFC fields, as well as
plans for future development drilling on both fields will occur.
    The planned suspension is not expected to affect first gas plans for the
MLE field.

    
    MLE Access and Training Fee Commitments
    ---------------------------------------
    

    In addition to satisfying its exploration work obligations, FCP has an
obligation to pay a MLE Access Fee of $45 million. This fee was calculated on
the basis of existing and future reserves discovered on Block 405b at the time
the contract was awarded to FCP. FCP will carry the first $45 million of
Sonatrach's costs relating to MLE's development. An annual training bonus of
$150 thousand, indexed for inflation, will also be paid, for the duration of
the PSC. The PSC's duration is 25 years for oil discoveries, and 30 years for
gas.

    Central Area Field Complex (CAFC) Activities and Outlook

    FCP submitted to Sonatrach for discussion and approval a draft of the
Final Discovery Report (FDR) for the CAFC field in July 2008. The FDR document
outlines the commercialization plans for the CAFC with details relating to
reservoir management, surface facilities design and economics.
    During the quarter, technical teams from FCP, Eni and Sonatrach have been
discussing and modifying the development plan and will continue with these
discussions up to the point of approval of the document. Under the CAFC
development plan schedule, approval of the FDR document by the Algerian
Competent Authorities is anticipated by the end of the fourth quarter of 2008.
The ZER area has been relinquished.

    Financing and Commercial Activities and Outlook

    Following the announcement of the proposed transaction between FCP and
Eni, ongoing discussions with banks to finance the MLE and CAFC development
were suspended. As well, discussions with legal advisors and other due
diligence experts who had been engaged by the Company in relation to the
previously ongoing process related to securing funding for FCP's share of
Block 405b development costs were also suspended. This decision was taken
following discussions held with senior management of Eni on various topics
including financing issues.
    As previously disclosed, FCP is in negotiations with Sonatrach regarding
a Gas Agreement, that will be based on the gas terms agreed with Sonatrach in
November 2006. The proposed transaction with Eni has postponed the completion
of these negotiations. If the proposed transaction is not completed, then
negotiations will recommence whereafter the Company expects to finalize the
Gas Agreement within two months of such recommencement.

    
    FINANCIAL REVIEW

                                    Three months ended     Nine months ended
                                          September 30          September 30
    -------------------------------------------------------------------------
    ($ thousands)                      2008       2007       2008       2007
    -------------------------------------------------------------------------
    Net loss                      $   6,713  $   1,745  $  33,327  $   5,755

    The net loss for the quarter was $6.7 million, compared to $1.7 million in
2007, primarily due to higher G&A costs as outlined below.

                                    Three months ended     Nine months ended
                                          September 30          September 30
    -------------------------------------------------------------------------
    ($ thousands)                      2008       2007       2008       2007
    -------------------------------------------------------------------------
    Interest Income               $   1,246  $   1,511  $   5,031  $   4,004
    

    Interest income for the quarter is slightly lower than the equivalent
period in 2007. Although cash and cash equivalent balances were higher in the
current quarter, interest rates were lower in 2008. Interest income has
increased for the nine month period over 2007 due to higher average cash and
cash equivalent balances on hand during comparable periods.

    
                                    Three months ended     Nine months ended
                                          September 30          September 30
    -------------------------------------------------------------------------
    ($ thousands)                      2008       2007       2008       2007
    -------------------------------------------------------------------------
    Interest Expense              $       -  $       -  $  16,139  $       -
    

    Interest expense to June 30 represents interest incurred on the
$267 million convertible debentures which were issued in December 2007. During
the three and nine months ended September 30, 2008, interest and the related
accretion expense of $8.1 million was capitalized as proceeds from the
debenture offering are being used to fund development of the Block. The
debentures bear interest at 9 percent, payable semi-annually, with the first
interest payment made May 29, 2008.

    
                                    Three months ended     Nine months ended
                                          September 30          September 30
    -------------------------------------------------------------------------
    ($ thousands)                      2008       2007       2008       2007
    -------------------------------------------------------------------------
    General and administrative    $   9,116  $   4,259  $  28,551  $  12,875

    Less capitalized amount          (2,246)    (1,148)    (9,424)    (3,514)
    -------------------------------------------------------------------------
    Expensed                      $   6,870  $   3,111  $  19,127  $   9,361
    

    General and administrative expenses for the three month period increased
by $4.9 million year over year, primarily due to increased operational
staffing and corresponding office costs of $2.3 million. Additional increases
include $1.7 million of non-recurring costs associated with the evaluation of
strategic and other options, including the proposed Eni transaction,
non-recurring costs associated with pursuing project debt financing of
$0.7 million, and $0.2 million associated with the April 2008 shareholder
action (non-recurring).
    General and administrative expenses for the 9 months ended September 30,
2008 increased by $15.7 million over the same period in 2007. This increase is
due to operational staffing and corresponding office cost increases of
$6.2 million, non-recurring proxy solicitation costs of $5.0 million,
non-recurring costs associated with the evaluation of strategic and other
options, including the proposed Eni transaction of $2.8 million, and
non-recurring costs associated with pursuing project debt financing of $1.7
million.

    
                                    Three months ended     Nine months ended
                                          September 30          September 30
    -------------------------------------------------------------------------
    ($ thousands)                      2008       2007       2008       2007
    -------------------------------------------------------------------------
    Stock-based compensation      $   1,799  $   2,189  $   5,837  $   5,343

    Less capitalized amount          (1,072)    (1,218)    (3,850)    (3,298)
    -------------------------------------------------------------------------
    Expensed                      $     727  $     971  $   1,987  $   2,045
    

    Stock-based compensation was lower in Q3 since no new grants were issued
and more than 1.3 million options were forfeited in 2008, versus 1.1 million
granted and 0.5 million forfeited in 2007. There were fewer grants
(2.8 million in 2008, 5.1 million in 2007) and more forfeitures (4.0 million
in 2008, 0.9 million in 2007) for the nine month period.

    
                                    Three months ended     Nine months ended
                                          September 30          September 30
    -------------------------------------------------------------------------
    ($ thousands)                      2008       2007       2008       2007
    -------------------------------------------------------------------------
    Capital Expenditures

    Exploration & Appraisal
    -----------------------
    Geological and geophysical    $     835  $   5,035  $   2,664  $   6,704
    Drilling, completion and
     testing                           (399)    28,107        459     97,969
    CAFC commercialization              342          -      1,065          -

    Development
    -----------
    Geological and geophysical    $      92  $   5,178  $     803  $   5,331
    Drilling, completion and
     testing                         16,616        786     51,272      3,712
    MLE commercialization             7,301      8,090     21,916     15,760
                                  -------------------------------------------
                                  $  24,787  $  47,196  $  78,179  $ 129,476
    Block management,
     administration and corporate    10,926      4,760     17,712     11,891
                                  -------------------------------------------
    Total capital expenditures    $  35,713  $  51,956  $  95,891  $ 141,367

    Less non-cash expenditures
     (stock-based compensation,
     asset retirement provisions)     1,202      1,310      3,983      3,578
                                  -------------------------------------------

    Net capital expenditures      $  34,511  $  50,646  $  91,908  $ 137,789
    -------------------------------------------------------------------------
    

    Overall, capital expenditures are lower in 2008 over 2007 due to the
greater level of drilling activity of the appraisal drilling program in the
first half of 2007. We direct the reader to the Operational Update section
above for detailed discussion of activities related to these expenditures in
the quarter. Capital expenditures in the following areas have changed from the
prior period as follows:

    
    -   Exploration & Appraisal - In 2007, FCP focused on drilling and
        completing exploration wells in the CAFC and ZER areas. In 2008, no
        exploration wells were completed. Approximately $2.7 million was
        spent during the nine months ended September 30, 2008 on geological
        and geophysical work as FCP continued to investigate the potential of
        the CAFC area and finalize development plans for submission to the
        Algerian authorities.

    -   Development - For 2008, FCP used one drilling rig to complete
        development wells compared to two rigs for the exploration and
        appraisal activity in the same period in 2007. During the three
        months ended September 30, 2008, FCP commenced drilling well MLE-11,
        and rig-released in mid-October. No further drilling is expected to
        occur in 2008. Testing of development wells is slated to start in the
        fourth quarter of 2008 or the first quarter of 2009. MLE
        commercialization costs are higher over prior period and prior year
        largely as a result of the increased volume of development activity,
        including costs associated with the finalization of the FEED study.
        The costs incurred in 2008 for the MLE commercialization relate
        predominately to personnel, legal, advisory and other third party
        costs to execute the development plan.
    

    Liquidity and Capital Resources

    First Calgary had $158.8 million of working capital on hand as at
September 30, 2008 compared with $274.1 million at the end of 2007. Cash
balances and short-term investments were $191.5 million at the end of
September. FCP's short term investments consist of term deposits with a
Canadian bank in U.S. dollars, in order to provide secure cash management and
to minimize foreign exchange risk.
    Development of the Ledjmet Block 405b reserves through to commercial
production will require significant funding, with 75 percent being FCP's
share. The gross development cost of the MLE Field is currently estimated at
approximately $1.3 billion, and will be incurred over the 2008 to 2011 period.
Of this, capital expenditures in the first nine months of 2008 were directed
mainly to the development of Block 405b and principally related to continued
development drilling to further delineate the acreage.
    The Company is listed on the Toronto Stock Exchange and the AIM market of
the London Stock Exchange. The diluted numbers of shares outstanding at the
following dates were:

    
                                           October    September     December
                                          14, 2008     30, 2008     31, 2007
    -------------------------------------------------------------------------
    Common shares                      254,939,030  254,939,030  254,619,030
    Issuable on conversion of
     debentures                         63,571,428   63,571,428   63,571,428
    Employee stock options              15,278,079   15,278,079   16,806,747
    -------------------------------------------------------------------------
    Diluted shares outstanding         333,788,537  333,788,537  334,997,205
    -------------------------------------------------------------------------

    Summary of Quarterly Results
                                                   2008                 2007
    -------------------------------------------------------------------------
                                         Q3         Q2         Q1         Q4
    -------------------------------------------------------------------------
    Interest income               $   1,246  $   1,553  $   2,232  $   1,372

    Income (loss)                    (6,713)   (14,636)   (11,978)    (5,940)
    Income (loss) per share           (0.03)     (0.06)     (0.05)     (0.02)

    Total assets                  1,031,456  1,022,233  1,034,599  1,031,916
    -------------------------------------------------------------------------

                                                   2007                 2006
    -------------------------------------------------------------------------
                                         Q3         Q2         Q1         Q4
    -------------------------------------------------------------------------
    Interest income               $   1,511  $   1,502  $     991  $   1,633

    Income (loss)                    (1,745)    (1,613)    (2,397)   (19,706)
    Income (loss) per share           (0.01)     (0.01)     (0.01)     (0.09)

    Total assets                    788,554    775,867    643,642    650,053
    -------------------------------------------------------------------------
    

    The net loss in the fourth quarter of 2006 relates to the recognition of
an $18.2 million future income tax provision that arose as a result of the
relinquishment of Block 406a in Algeria. The increase in the quarterly net
loss in 2008 relates mainly to interest on the convertible debt issued in
December 2007 (approximately $8.1 million per quarter), and general and
administrative expenses for non-recurring costs related to the shareholder
motions and resulting proxy contest that occurred in the first and second
quarter of 2008 and costs related to the potential disposition of the Company
to Eni. Total assets increased significantly in the fourth quarter of 2007 as
a result of the proceeds from the $267 million convertible debenture offering.

    
    CHANGE IN ACCOUNTING POLICIES

    Financial Instruments - Recognition and Measurement and Capital
    Disclosures
    

    New Canadian accounting standards have been issued which required
additional disclosure in the Company's financial statements commencing January
1, 2008, pertaining to the Company's use of financial instruments as well as
its capital and how it is managed. These standards have been adopted in the
Company's unaudited statements.

    International Financial Reporting Standards (IFRS)

    Canadian publicly accountable entities will be required to convert to
IFRS on January 1, 2011. FCP is currently in the diagnostic phase of the IFRS
convergence project which includes the assessment of differences between
Canadian GAAP and IFRS; determination of options available under IFRS; and
identification of potential information system and process change
requirements. Based on this information FCP will develop a full IFRS
conversion project plan. FCP has currently suspended its IFRS conversion
efforts pending completion of the Eni transaction.

    BUSINESS RISKS AND UNCERTAINTIES

    The MD&A and Annual Information Form (AIF) for the year ended December
31, 2007 includes an overview of certain business risks and uncertainties
facing the Company. Those risks remain in effect as at September 30, 2008.

    ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

    This MD&A contains certain forward-looking statements and forward-looking
information (collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities laws. All statements
other than statements of present or historical fact are forward-looking
statements. Forward-looking statements are often, but not always, identified
by the use of words such as "anticipate", "believe", "plan", "intend",
"objective", "continuous", "ongoing", "estimate", "expect", "may", "will",
"project", "should", or similar words suggesting future outcomes. In
particular, this MD&A contains forward-looking statements relating to:

    
    -   the benefits of the proposed transaction with Eni;
    -   the timing of the meeting of shareholders and optionholders;
    -   the anticipated closing date of the proposed transaction;
    -   the development of a full IFRS conversion project plan;
    -   execution of a long-form Gas Agreement, the terms and conditions
        thereof and pricing terms for the sale of liquids;
    -   the future development, operations and growth opportunities of the
        Company, including:

        1. the timing of achieving first production from the MLE Field;
        2. obtaining financing for the development of the project;
        3. the transport of hydrocarbons from the Berkine Basin;
        4. testing of development wells;
        5. projected expenditures related the development of the MLE Field;
        6. the completion and occupation of the Block 405b base de Vie in
           Hassi Messaoud; and
        7. the use of seismic information to better exploit the MLE field.

    Forward looking statements respecting:

    -   the perceived benefits of the proposed transaction with Eni is based
        upon a number of factors including the board of director's knowledge
        of the proposals and expressions of interest received from and
        discussions with third parties with respect to possible joint
        ventures or acquisitions of FCP or all or part of its assets, the
        board of director's judgment concerning whether any of the proposals
        and expressions of interest that were received by FCP and the other
        strategic options for FCP were likely to provide the best value
        reasonably available to the Securityholders in the circumstances, the
        board of director's assessment of the current and future state of the
        credit, debt and equity markets that could be available to FCP to
        provide FCP with the full amount of funding it requires to develop
        and bring the project into production on a timely basis, including
        the risk that such funding could not be obtained in a reasonable time
        or in full or on terms satisfactory to FCP, the likelihood that any
        potential transaction involving the acquisition of FCP or all or a
        substantial portion of its assets would receive the required
        approvals under any applicable laws and regulations of Algeria and on
        terms and conditions satisfactory to FCP and any third party; the
        value of the consideration payable by Eni to the bondholders,
        shareholders and optionholders of FCP, the opportunities and risks
        associated with continuing as a stand-alone entity to develop and
        bring the project into production on a timely basis in order to
        create value for the bondholders, shareholders and optionholders of
        FCP, the general knowledge of the long standing and favourable
        relationship between Eni and Sonatrach and other governmental and
        regulatory authorities in Algeria, a fairness opinion delivered by
        JPMorgan Cazenove Limited, the terms and conditions of the proposed
        transaction with Eni and current industry, economic and market
        conditions and the facts that commodity prices for oil have been at
        relatively high levels in a historic context and the capital, credit
        and debt markets have contracted considerably over the recent months;

    -   the consideration to be received by securityholders as a result of
        the proposed transaction is based upon the terms of the definitive
        agreement and related plan of arrangement;

    -   certain steps in, and timing of, the proposed transaction is based
        upon the terms of the definitive agreement and advice received from
        counsel to the Company relating to timing expectations;

    -   the development of a full IFRS conversion project plan is based upon:
        1) the Canadian Accounting Standards Board (AcSB) will maintain its
        stated IFRS conversion deadline of January 1 2011 for Canadian
        publicly accountable entities; 2) information system requirements for
        IFRS conversion will be available to FCP, as required; and
        3) the Company does not complete the proposed transaction with Eni;

    -   if the proposed transaction with Eni is not completed, the planned
        execution of a Gas Agreement assumes that the most significant issues
        therein have been settled;

    -   the future development, operations and growth opportunities of the
        Company is based upon a number of factors, including the following
        factors: 1) development drilling results, availability of staff in
        the ares of reservoir engineering, facilities engineering, drilling
        engineering, geology and geophysics, and production engineering;
        2) political stability in the country and the ability to provide
        adequate security for staff working in country; 3) ongoing economics
        of the project; and 4) access to new acreage and resources through
        bid rounds or direct negotiations with the State; and

    -   the use of seismic information to better exploit the MLE field is
        based upon the data providing a more detailed structural
        interpretation of the field.
    

    By their very nature, forward-looking statements involve inherent risks
and uncertainties (both general and specific) that forward-looking statements
will not be achieved. Undue reliance should not be placed on forward-looking
statements, as a number of important factors could cause the actual results to
differ materially from the beliefs, plans, objectives, expectations and
anticipations, estimates and intentions expressed in the forward-looking
statements, including those set out below and those detailed elsewhere in this
MD&A:

    
    -   inability to obtain required consents, permits or approvals,
        including Court approval of the proposed transaction with Eni,
        shareholder and optionholder approval of the proposed transaction
        with Eni and required approvals under applicable laws and regulations
        of Algeria;and

    -   the timing and receipt of joint venture and governmental approvals,
        ability to obtain competitive procurement contracts, availability of
        contractors and a work force to complete construction, political
        stability in Algeria, continued cooperation of Sonatrach and ALNAFT,
        volatility of European commodity prices (particularly the price of
        oil in Europe), currency exchange rate fluctuations, environmental
        risks, competition from other explorers, stock market volatility and
        the current contraction of credit liquidity and its affect on the
        Company's ability to access sufficient capital.
    

    Readers are cautioned that the foregoing list of factors that may affect
future results is not exhaustive.

    The forward-looking statements contained in this MD&A are made as of the
date hereof and FCP does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, except as required by
applicable law. The forward-looking statements contained herein are expressly
qualified by this cautionary statement.

    Company Information

    Additional information related to FCP, including the Company's Annual
Information Form, is available on FCP's website at www.fcpl.ca or on SEDAR's
website at www.sedar.com.

    October 29, 2008


    
    Consolidated Balance Sheets

    (in thousands of U.S. dollars)               As at                 As at
    (unaudited)                     September 30, 2008     December 31, 2007
    -------------------------------------------------------------------------
    Assets
      Current assets
        Cash and cash equivalents           $  191,499            $  275,270
        Accounts receivable                        704                 1,222
        Deposits and prepaid expenses              848                 1,333
        Other assets (note 3)                   12,016                23,048
    -------------------------------------------------------------------------
                                               205,067               300,873
      Property, plant and equipment            826,389               731,043
    -------------------------------------------------------------------------

                                            $1,031,456            $1,031,916
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
      Current liabilities
        Accounts payable and accrued
         liabilities                        $   46,301            $   26,763
      Convertible debentures (note 4)          228,856               222,589
      Asset retirement obligations               3,637                 3,225
      Future income taxes                       18,548                18,548
    -------------------------------------------------------------------------

    Shareholders' equity
        Capital stock (note 5)                 764,678               763,257
        Contributed surplus (note 5)            31,184                25,955
        Equity portion of convertible
         debentures (note 4)                    30,453                30,453
        Accumulated other comprehensive
         income                                  6,502                 6,502
        Deficit                                (98,703)              (65,376)
    -------------------------------------------------------------------------
                                               734,114               760,791

    Proposed transaction (note 1)
    Operations and commitments (note 2
     and 8)
    -------------------------------------------------------------------------

                                            $1,031,456            $1,031,916
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.


    Consolidated Statements of Operations and Deficit

    (in thousands of U.S. dollars)  Three months ended     Nine months ended
                                          September 30,         September 30,
    (unaudited)                        2008       2007       2008       2007
    -------------------------------------------------------------------------
    Revenue
      Interest                    $   1,246  $   1,511  $   5,031  $   4,004
    Expenses
      Interest expense                    -          -     16,139          -
      General and administrative      6,870      3,111     19,127      9,361
      Stock-based compensation
       (note 5)                         727        971      1,987      2,045
      Foreign exchange loss (gain)       77       (963)       282     (2,071)
      Depreciation and accretion        285        173        823        460
      Capital taxes (recovery)            -        (36)         -        (36)

    -------------------------------------------------------------------------
                                      7,959      3,256     38,358      9,759
    Net loss and comprehensive
     loss for the period             (6,713)    (1,745)   (33,327)    (5,755)
    Deficit, beginning of period    (91,990)   (57,691)   (65,376)   (53,681)

    -------------------------------------------------------------------------

    Deficit, end of period        $ (98,703) $ (59,436) $ (98,703) $ (59,436)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share (note 5)
      Basic and diluted           $   (0.03) $   (0.01) $   (0.13) $   (0.02)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.


    Consolidated Statements of Cash Flows

    (in thousands of U.S. dollars)  Three months ended     Nine months ended
                                          September 30,         September 30,
    (unaudited)                        2008       2007       2008       2007
    -------------------------------------------------------------------------

    Operating activities
      Net loss for the period     $  (6,713) $  (1,745) $ (33,327) $  (5,755)
      Items not involving cash
        Accretion on convertible
         debentures                   2,110          -      6,267          -
        Stock-based compensation        727        971      1,987      2,045
        Foreign exchange gain           287         96       (366)    (1,452)
        Depreciation and accretion      285        173        823        460
    -------------------------------------------------------------------------
                                     (3,304)      (505)   (24,616)    (4,702)
      Change in non-cash working
       capital                        4,935        551     17,615       (692)
    -------------------------------------------------------------------------
                                      1,631         46     (7,001)    (5,394)
    Financing activities
    Proceeds from issuance
     of shares                            -          -          -    135,671
    Proceeds from exercise of options     -        234        816      1,515
    Issue costs                           -          -          -     (6,549)
    -------------------------------------------------------------------------
                                          -        234        816    130,637
    Investing activities
      Expenditures on property,
        plant and equipment         (34,511)   (50,646)   (91,908)  (137,789)
      Change in non-cash working
       capital                        6,866     12,167     14,069      8,128
    -------------------------------------------------------------------------
                                    (27,645)   (38,479)   (77,839)  (129,661)
    -------------------------------------------------------------------------

    Change in cash and cash
     equivalents                    (26,014)   (38,199)   (84,024)    (4,418)
      Exchange rate fluctuations
       on cash and cash equivalents     (62)      (204)       253      1,314
      Cash and cash equivalents,
       beginning of period          217,575    143,788    275,270    108,489
    -------------------------------------------------------------------------

    Cash and cash equivalents,
     end of period                $ 191,499  $ 105,385  $ 191,499  $ 105,385
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Cash interest paid on
       convertible debentures             -          -     11,014          -

    See accompanying notes to consolidated financial statements



    Notes to the Consolidated Financial Statements

    Nine months ended September 30, 2008 (unaudited)
    (in thousands of U.S. dollars unless otherwise indicated)

    These interim consolidated financial statements of First Calgary
    Petroleums Ltd. (First Calgary, FCP or the Company) have been prepared by
    management in accordance with accounting principles generally accepted in
    Canada following the same accounting policies as the consolidated
    financial statements for the year ended December 31, 2007. The
    disclosures included below are incremental to those included with the
    annual consolidated financial statements. The interim consolidated
    financial statements should be read in conjunction with the consolidated
    financial statements and the notes thereto for the year ended
    December 31, 2007.

    1. Proposed transaction:

    On September 7, 2008, FCP entered into an arrangement agreement with Eni
    S.p.A and its indirect wholly-owned subsidiary, Eni Canada Holding Ltd.
    (collectively, Eni) which was subsequently amended on September 17, 2008.
    Under the arrangement:

    -   Shareholders will receive C$3.60 cash for each share held by them;

    -   Optionholders will receive cash equal to the difference between
        C$3.60 and the exercise price for each option held by them (options
        with an exercise price greater than C$3.60 will be terminated without
        payment); and

    -   Bondholders will receive $1,080 cash for each $1,000 in aggregate
        principal amount of the outstanding bonds held plus accrued interest
        to but excluding the date the bonds are redeemed.

    The transaction values FCP's fully diluted share capital at approximately
    C$923 million. The board of directors of the Company has unanimously
    determined that the arrangement is in the best interests of the Company,
    is fair to the securityholders and has unanimously recommended that
    securityholders vote in favour of the transaction.

    The definitive agreement prohibits FCP from soliciting or initiating any
    discussions concerning any other business combination but allows the
    Board of Directors of FCP to accept and recommend a Superior Proposal (as
    defined in the definitive agreement, subject to any such competing
    proposal not having been matched by Eni under the terms of the agreement)
    if it is required to do so to avoid breaching its fiduciary duties and
    upon payment of a break fee of C$28.2 million.

    The proposed transaction is expected to be completed by way of a
    statutory plan of arrangement. A meeting of bondholders of FCP was held
    in London, United Kingdom on October 14, 2008 to consider and approve the
    proposed transaction and other related matters. All of the votes
    represented at that meeting in person or by proxy voted in favour of the
    proposed transaction. The approvals required under the Investment Canada
    Act (Canada) in connection with the transaction have been obtained as
    well.

    In addition to the receipt of all required court and Algerian and other
    governmental approvals, completion of the transaction will require the
    approval of 66 2/3 percent of the votes cast at a meeting of FCP
    shareholders and optionholders. The shareholders and optionholders of FCP
    are expected to meet today in Calgary, Alberta to consider and vote upon
    the proposed transaction. If the transaction is approved at that meeting,
    the Company is expected to apply for the approval of the Court of Queen's
    Bench of Alberta to the plan of arrangement. Assuming all such approvals
    are obtained, and subject to the satisfaction of other customary closing
    conditions, the transaction is expected to be completed before the end of
    the fourth quarter of 2008.

    2. Operations and commitments:

    First Calgary currently has the rights to appraise and develop Ledjmet
    Block 405b (Block 405b) in Algeria. The Company's rights and obligations
    on Block 405b are set out in a Production Sharing Contract (PSC) with
    Sonatrach, the national oil company of Algeria. The nature of current
    operations and the terms or commitments under the PSC are summarized
    below.

    The five year exploration period of the PSC ended on December 29, 2006.
    All exploration work commitments under the PSC were completed. FCP has
    retained two areas: 1) the MLE field, which is held under an exploitation
    license and 2) the Central Area Field Complex (CAFC) which is held under
    a 2 year extension of the exploration phase. Under the PSC, FCP is
    entitled to a production interest in oil and liquids production and a
    revenue interest in gas production from Block 405b pursuant to a sliding
    scale formula whereby FCP's share of production ranges from 8.16 percent
    to 27.72 percent, based on capital investment, production levels, and
    product prices. All recoverable costs under the PSC are subject to
    approval and audit by Sonatrach. All Algerian state royalties and income
    taxes, excluding the applicable Windfall Profits Tax, are paid by
    Sonatrach from its share of hydrocarbon production. Exploitation periods
    for each commercial oil and natural gas discovery are 25 and 30 years,
    respectively. FCP received approval in February 2007 from the Algerian
    regulatory authority ALNAFT for the development plan for the MLE oil and
    gas field on Block 405b. The submission of a development plan for the
    CAFC appraisal was made early in the third quarter 2008. Approval for
    this development plan is expected prior to the end of 2008. It is the
    Company's understanding that the Algerian Windfall Profits Tax is
    applicable only to liquids sales and not gas.

    The MLE development design includes construction of a gas plant and field
    gathering system and facilities designed to produce up to 260 million
    cubic feet of sales gas per day (MMCF/D) and 20 thousand barrels per day
    (MB/D) of associated natural gas liquids and oil, on a gross basis. The
    initial gas sales volume agreed with Sonatrach is for 200 million cubic
    feet per day of sales gas. Three product pipelines are required to
    transport sales gas, condensate and LPG products to the national grid
    system that lies 140 km to the west of the block. A fourth product
    pipeline to transport an oil stream is anticipated to tie into existing
    infrastructure within the Berkine Basin. FCP and Sonatrach subsequently
    agreed to modify the design of the product pipelines to accommodate
    increased volumes from the planned development in the CAFC as part of an
    integrated block development strategy. Current development plans are
    targeting up to 300 MMCF/D sales of gas with up to 40 MB/D of liquids.

    Gas marketing terms were agreed with Sonatrach in November 2006 and were
    attached to the MLE development plan. The gas terms specify and clarify
    the provisions of the PSC relating to the long-term marketing of
    quantities of dry gas from Block 405b. It is proposed that the gas terms
    will be incorporated into a Gas Agreement to be entered into
    between the Company and Sonatrach. FCP has entrusted the marketing of all
    gas from the 405b block to Sonatrach and in return will receive a well
    head price net of transportation costs based on a southern European gas
    pricing formula. FCP is in discussions with Sonatrach for all liquids
    production from Block 405b to be marketed by Sonatrach. Liquids are
    also anticipated to be sold at international product prices less a
    marketing fee. The Gas Agreement will be subject to certain conditions
    precedent, including the arrangement by Sonatrach of firm pipeline
    capacity downstream of the point of transmission and the execution of
    certain collateral agreements such as project contracts and liquids and
    condensate sales agreements. Given the proposed transaction with Eni,
    completion of negotiations with Sonatrach on the Gas Agreement have been
    postponed. If the proposed transaction is not completed, then
    negotiations will recommence where after the Company expects to finalize
    the Gas Agreement within two months of such recommencement.

    The Front End Engineering and Design (FEED) work for the MLE gas plant,
    pipeline and gathering systems was completed in December 2007. One of the
    key deliverables of the FEED was to establish a cost estimate for the
    plant facility and pipelines, currently estimated at about $1.0 billion
    gross (the addition of development drilling costs brings total gross
    estimated development costs to $1.3 billion). The development costs will
    be funded 75 percent by FCP and 25 percent by Sonatrach. In addition, FCP
    is required to pay the first $45 million of Sonatrach's MLE development
    costs as the MLE Access Fee and an annual training bonus of
    $150 thousand, indexed for inflation, for the duration of the PSC
    (25 years for oil discoveries, 30 years for gas).

    3.  Other assets

    Cash equal to the first year's interest payments on the convertible
    debentures was initially place in an escrow account at closing. The funds
    are released to the convertible debenture holders for 2008 interest
    payments. The Company will use the remaining balance for the second
    interest payment in November 2008.

    4. Convertible debentures:

    The following table sets forth a reconciliation of the convertible
    debentures activity:

                                       Liability Component  Equity Component
    -------------------------------------------------------------------------
    Balance, December 31, 2007                $    222,589      $     30,453
    Accretion of non cash interest expense           6,267                 -
    -------------------------------------------------------------------------
    Balance, September 30, 2008               $    228,856      $     30,453
    -------------------------------------------------------------------------
    During the three and nine months ended September 30, 2008, interest and
    the related accretion expense of $8.1 million was capitalized.

    5.  Capital stock:

    (a) Issued share capital:

                                          Number of Shares            Amount

    Balance, December 31, 2007                 254,619,030      $    763,257
      Issued on exercise of
       employee stock options                      320,000               816
      Transfer from contributed surplus
       on exercise of stock options                      -               605
    -------------------------------------------------------------------------
    Balance, September 30, 2008                254,939,030      $    764,678
    -------------------------------------------------------------------------

    (b) Employee stock options:

    The Company has up to 10 percent of its issued and outstanding common
    shares available for issuance pursuant to its Stock Option Plan. Stock
    options granted under the plan have a term of five years and vesting
    terms are determined at the discretion of the Board, ranging between two
    and three years. The exercise price of each option is equal to or greater
    than the closing market price of the shares on the date preceding the
    date of the grant. The following table summarizes the changes in stock
    options outstanding during the period ended September 30, 2008:

                                                               Weighted Avg.
                                         Number of Options    Exercise Price
    -------------------------------------------------------------------------
    Outstanding, December 31, 2007              16,806,747            C$4.90
      Granted                                    2,770,000              2.79
      Exercised                                   (320,000)             2.60
      Forfeited                                 (3,978,668)             4.76
    -------------------------------------------------------------------------
    Outstanding, September 30, 2008             15,278,079            C$4.61
    -------------------------------------------------------------------------

    The following table summarizes information about the options outstanding
    and exercisable at September 30, 2008:

                             Options Outstanding         Options Exercisable
                    ---------------------------------------------------------
                                    Weighted
                                     Average   Weighted             Weighted
                                   Remaining    Average              Average
          Range of               Contractual   Exercise             Exercise
    Exercise Price      Options         Life      Price    Options     Price
    ------------------------------------------------------------------------
    C$ 2.78 - 2.98    6,546,666    4.4 years     C$2.78     276,666   C$2.78
    C$ 4.72 - 4.72    1,567,500    0.1 years       4.72   1,567,500     4.72
    C$ 5.08 - 6.39    5,623,248    3.0 years       5.52   3,395,471     5.76
    C$ 7.22 - 8.59      650,000    2.2 years       7.58     465,002     7.66
    C$ 8.65- 10.50      716,665    2.4 years       9.30     556,668     9.37
    C$11.10- 15.77      174,000    0.8 years      12.17     174,000    12.17
    ------------------------------------------------------------------------
                     15,278,079    3.2 years     C$4.61   6,435,307   C$6.03
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    For the nine months ended September 30, 2008, the Company recorded
    $5.8 million (2007 - $5.3 million) of stock-based compensation expense
    with a corresponding increase in contributed surplus (three months ended
    September 30, 2008 - $1.8 million; 2007 - $2.2 million). Of the total
    stock-based compensation expense, the Company has capitalized
    $1.1 million and $3.8 million for the three and nine month periods ended
    September 30, 2008 (2007 - $1.2 million and $3.3 million respectively).

    No options were granted in the three months ended September 30, 2008.

    The fair value of the options granted in the nine months ended
    September 30, 2008 was estimated to be C$1.28 (2007 - C$2.46) per option,
    and was determined using the Black-Scholes option pricing model with the
    following assumptions: expected volatility of 64 percent (2007 -
    59 percent), risk-free interest rate of 3 percent (2007 - 3 percent), and
    expected lives of 4 years (2007 - 4 years).

    (c) Contributed surplus:

    The changes in the contributed surplus balance for the nine months ended
    September 30 are as follows:

    ($ thousands)                                     2008              2007
    -------------------------------------------------------------------------
    Balance, beginning of period              $     25,955      $     19,186
      Stock based compensation                       5,834             5,345

      Options exercised                               (605)             (687)
    -------------------------------------------------------------------------
    Balance, end of period                    $     31,184      $     23,844
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (d) Per share amounts:

    The loss per share is based on the weighted average shares outstanding
    for the period. The basic and diluted weighted average shares outstanding
    for the three and nine months ended September 30, 2008 were 254,939,030
    and 254,819,906 respectively (2007 - 254,499,465 and 241,723,608).

    6. Financial instruments and capital

    Fair Value

    At September 30, 2008 and December 31, 2007 the carrying values of cash
    and cash equivalents, accounts receivable, other assets, accounts payable
    and accrued liabilities approximate their fair values due to their short
    terms to maturity. The fair value of the convertible debentures at
    September 30, 2008 was approximately $267 million. The fair value of the
    convertible debenture was estimated based on a discounted cash flow
    analysis using an estimated market rate of interest for a similar
    instrument at the end of the period.

    Foreign Currency Risk

    The Company is exposed to foreign currency fluctuations as it holds
    Canadian dollar, British pound, Euro and Algerian Dinar cash and
    short-term deposits and accounts payable. In addition, a portion of the
    Company's operating activities are conducted in Canadian dollars and the
    Algerian Dinar. There are no exchange rate contracts in place.

    FCP's objective is to minimize its exposure to foreign currencies by not
    holding cash and cash equivalents in foreign currencies in excess of
    forecasted spending in these currencies. FCP's exposure to foreign
    currencies is monitored by senior management and reviewed at least
    quarterly with the Board of Directors. FCP's exposure to foreign
    currencies at September 30, 2008 is limited as the majority of its
    financial instruments are denominated in US dollars. The amounts of
    foreign currencies held are not significant therefore the impact of
    foreign exchange changes are minimal.

    The following balances are denoted in foreign currencies:

                                   Canadian   Algerian                Pounds
    (thousands)                      dollar      dinar       Euro   sterling
    -------------------------------------------------------------------------
    September 30, 2008

    Cash and cash equivalents           684     35,782         58      1,005
    Less: Accounts payable               65    153,822         25         24
                                   ------------------------------------------
    Net foreign exchange exposure       619   (118,040)        33        981

    December 31, 2007

    Cash and cash equivalents        10,365    238,389        145        310
    Less: Accounts payable              539    367,921          5        123
                                   ------------------------------------------
    Net foreign exchange exposure     9,826   (129,532)       140        187

    Commodity Risk

    FCP's net loss is not currently exposed to commodity risk, as the Company
    is in the pre-production phase. The overall development of Block 405b is
    exposed to oil, gas and liquids price risks as a significant decrease in
    prices would affect the economic returns of the Company in the long run.

    Interest Rate Risk

    A significant portion of cash and cash equivalents is held in interest
    bearing investments; a 100 basis point drop in interest rates would
    decrease interest income in the quarter by approximately $190,000.
    The convertible debentures bear fixed interest and therefore earnings are
    not exposed to interest risk.

    Credit Risk

    Cash and cash equivalents, other assets, and accounts receivable, which
    is predominantly interest earned on cash and cash equivalents, are held
    in credit rated institutions. FCP's objective is to reduce credit risk by
    monitoring the financial institutions that hold the cash and cash
    equivalents. Currently, credit risk is assessed to be low given the
    financial institutions that hold the funds.

    Liquidity Risk

    FCP maintains sufficient cash on hand to fund the outstanding accounts
    payable and accrued liabilities as at September 30, 2008 and to meet
    current capital commitments. FCP's financial liabilities consist of short
    term accounts payable and accrued liabilities and the convertible
    debentures that mature in 2012. Spending is increased or decreased to
    match available funds. Additional capital will be required upon maturity
    of the convertible debentures in 2012, should the holders not convert the
    debentures to common shares prior thereto.

    Capital Management

    FCP's capital consists of common shares and the convertible debentures.
    The Company manages its capital by monitoring forecasted capital and
    operating spending and matches this with funds raised through the
    issuance of common shares and convertible debentures. FCP will raise
    additional capital as required to ensure sufficient funds are on hand to
    continue development of Block 405b and fund FCP's ongoing operating
    requirements. In addition, FCP will need to continue to seek project debt
    financing, joint venture partners, or other sources of capital for the
    development of Block 405b should the transaction with Eni not be
    completed.

    FCP is not subject to externally imposed restrictions on its capital.
    There have been no changes to what FCP considers as capital or its
    process in managing capital.

    7. Segmented Information

    The Company's activities are conducted in two geographic segments: Canada
    and Algeria. All activities relate to exploration and development of
    petroleum and natural gas in Algeria.

    Three months ended September 30, 2008
    ($ thousands)                           Canada      Algeria        Total
    -------------------------------------------------------------------------
    Capital Expenditures
    -------------------------------------------------------------------------
      2008                              $      185   $   34,326   $   34,511
      2007                              $      436   $   50,210   $   50,646

    -------------------------------------------------------------------------

    Nine months ended September 30, 2008
    ($ thousands)                           Canada      Algeria        Total
    -------------------------------------------------------------------------
    Capital Expenditures
    -------------------------------------------------------------------------
      2008                              $      396   $   91,512   $   91,908
      2007                              $    1,009   $  136,780   $  137,789

    -------------------------------------------------------------------------
    Total Assets
    -------------------------------------------------------------------------
      2008                              $  206,575   $  824,881   $1,031,456
      2007                              $  108,861   $  679,693   $  788,554

    8. Commitments

    In October, the Company signed an agreement with a supplier committing to
    a line pipe order in the amount of $64.5 million gross ($48.4 million net
    to the Company), which requires a 20 percent down payment due in the
    fourth quarter of 2008, and the balance to be paid over the completion of
    the order. Agreements have been entered into with parties to construct
    housing and office space in Hassi Messaoud and complete civil
    engineering works on the site of the proposed gas facility. The total
    obligations under the agreements are approximately $51 million gross
    ($36 million net) to the Company. The Company has incurred approximately
    $4 million net of the expenditures pertaining to these commitments at
    September 30, 2008.
    





For further information:

For further information: Contact Information: Shane O'Leary, President
and CEO, Tel: (403) 264-6697; Other Contacts: James Henderson, Alisdair
Haythomthwaite, Pelham Public Relations, Tel: +44 (0)20 7743 6673; Nominated
Advisers: David Nabarro, Marc Cramsie, Nabarro Wells & Co. Limited, Tel: +44
(0)20 7634 4700

Organization Profile

FIRST CALGARY PETROLEUMS LTD.

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