Pegasus Oil & Gas Inc. Announces Financial and Operating Results for the Quarter Ended June 30, 2009



    (Stock Symbol "POG.A & POG.B" - TSX Venture Exchange)

    CALGARY, Aug. 11 /CNW/ - Pegasus Oil & Gas Inc. ("Pegasus" or the
"Company") advises today that it has filed its unaudited financial statements
and related management's discussion and analysis ("MD&A") for the quarter
ended June 30, 2009 on www.pegasusoilgas.com and www.sedar.com. Certain
selected financial and operational information for the three and six month
periods ended June 30, 2009 and the three and six month periods ended June 30,
2008 comparatives are set out below and should be read in conjunction with
Pegasus' unaudited financial statements and related MD&A.

    
    FINANCIAL AND OPERATIONAL SUMMARY

    -------------------------------------------------------------------------
                                       Three months ended   Six months ended
                                            June 30             June 30
    -------------------------------------------------------------------------
                                         2009      2008      2009      2008
    -------------------------------------------------------------------------
    Financial ($000s except per
     share amount)
    Petroleum and natural gas sales      1,390     3,899     3,623     7,018
    Funds generated from (used by)
     operations (Note 1)                  (620)    2,111      (392)    3,595
      Per basic share                    (0.01)     0.05     (0.01)     0.10
      Per diluted share                  (0.01)     0.05     (0.01)     0.10
    Cash flows generated
     from operating activities            (148)    1,654        73     3,874
    Net earnings (loss)                 (2,174)      114    (3,890)     (276)
      Per basic share                    (0.05)     0.00     (0.09)    (0.01)
      Per diluted share                  (0.05)     0.00     (0.09)    (0.01)
    Net capital expenditures               437     5,165     1,111    13,659
    Working capital (deficiency)       (14,697)     (445)  (14,697)     (445)
    Shareholders' equity                54,747    62,673    54,747    62,673
    Shares outstanding
      Class A                           34,566    34,500    34,566    34,500
      Class B                            1,012     1,012     1,012     1,012
      Options                            2,683     2,843     2,683     2,843
    Basic shares (weighted) (Note 2)    44,686    39,690    44,686    37,457
    Diluted shares (weighted) (Note 2)  44,686    39,937    44,686    37,457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Operating
    Average daily production
      Natural gas (mcf/d)                3,311     2,965     3,402     3,136
      Crude oil (bbls/d)                     6         9         6         6
      NGLs (bbls/d)                         71       106        93        95
      Barrels of oil equivalent
       (boe/d)(Note 4)                     628       609       666       623
    Average selling price
      Natural gas ($/mcf)                 3.50     10.52      4.54      9.35
      Crude oil ($/bbl)                  45.89    104.63     39.82     97.64
      NGLs ($/bbl)                       46.31    101.17     44.75     91.17
      BOE ($/bbl)                        24.13     70.35     30.07     61.85
    Netback per BOE (6:1) ($)
      Petroleum and natural gas sales    24.13     70.35     30.07     61.85
      Royalties                          (4.00)   (11.03)    (5.17)    (9.25)
      Operating costs                   (13.50)   (12.74)   (14.41)   (12.77)
      Prior year equalization
       costs (note 3)                    (4.76)        -     (2.26)        -
      Transportation costs               (0.82)    (1.06)    (0.91)    (1.02)
      Operating netback                   1.05     45.52      7.31     38.81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Note 1: Management uses cash flow from operations (comprised of cash flow
            from operating activities before changes in non-cash working
            capital) to analyze operating performance and leverage. Cash flow
            from operations as presented does not have any standardized
            meaning prescribed by Canadian GAAP and therefore it may not be
            comparable with the calculation of similar measures for other
            entities.
    Note 2: Class B share conversion: June 30, 2009 @ $1.00/share;
            June 30, 2008 @ $1.95/share
    Note 3: The 2008 equalization costs relate to the Balzac gas plant at
            Crossfield.
    Note 4: References in this report to boe refer to barrel of oil
            equivalent whereby natural gas volumes have been converted at a
            rate of 6 thousand cubic feet of natural gas to 1 barrel of oil.
    


    REPORT TO SHAREHOLDERS

    On June 15, 2009 Pegasus announced it entered into a pre-acquisition
agreement with Harvest Energy Trust, through its indirect wholly owned
subsidiary, Harvest Pegasus Inc. (the "HPI"), pursuant to which the wholly
owned subsidiary agreed to acquire all of Pegasus' Class A and Class B shares
for consideration consisting of 0.015 Harvest trust units for each Pegasus
Class A share and 0.15 Harvest trust units for every Pegasus Class B share.
    The board of directors of Pegasus unanimously approved the Proposed
Transaction and has concluded that the transaction is in the best interests of
Pegasus and its shareholders and has recommended that its shareholders accept
the offer. The Proposed Transaction was subject to certain conditions,
including the deposit of at least 90% of Pegasus' outstanding Class A (on a
diluted basis) and Class B shares to the offer and the receipt of all required
regulatory approvals and other customary conditions.
    On July 30, 2009 Pegasus announced that HPI extended its offer to acquire
all of the issued and outstanding Class A and B shares pursuant to its
original offer and the accompanying take-over bid circular, as extended by a
notice of variation dated July 31, 2009. At the expiry time, approximately 89%
of the outstanding Pegasus Class A Shares and 85% of the outstanding Pegasus
Class B Shares had been deposited to the Offer. HPI has extended the time in
which Pegasus shareholders may deposit their Pegasus Shares under the Offer to
5:00 p.m. (Calgary time) on August 11, 2009.

    Outlook

    Pegasus fully anticipates the conditions of the proposed transaction will
be satisfied.
    The Board of Directors and management would like to thank all Pegasus
shareholders for their support of the Company.

    As referred to above, to view Pegasus' audited financial statements and
related MD&A for the three and six month periods ended June 30, 2009 please
visit our web site at www.pegasusoilgas.com or www.sedar.com. To the extent
investors do not have access to the internet, copies of the audited financials
and related MD&A can be obtained on request without charge by contacting
Pegasus at (403)521-5282 or at 101 10th Street NW Calgary, Alberta, T2N1V4.
    The Company currently has 34.566 million Class A and 1.012 million Class
B Shares outstanding.

    Forward-looking statements - This document contains forward-looking
statements. More particularly, this document contains statements concerning
the proposed transaction and the completion of the proposed transaction.
    The forward-looking statements are based on certain key expectations and
assumptions made by Pegasus, including expectations and assumptions concerning
receipt of required regulatory approvals and third party consents and the
satisfaction of other conditions.
    Although Pegasus believes that the expectations and assumptions on which
the forward-looking statements are based are reasonable, undue reliance should
not be placed on the forward-looking statements because Pegasus can give no
assurance that they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks. These
include, but are not limited to, risks that regulatory and third party
approvals and consents are not obtained on terms satisfactory to the parties
and risks that other conditions to the mailing and completion of the offer are
not satisfied on the timelines set forth herein or at all.
    The forward-looking statements contained in this press release are made
as of the date hereof and Pegasus 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.

    Note: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boe's may be misleading, particularly if used in
isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas
is based on an energy equivalency conversion method primarily applicable at
the burner.

    
    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.
    

    %SEDAR: 00005637E




For further information:

For further information: Patrick Mills, President and Chief Executive
Officer, (403) 521-6307; Darcy Anderson, Chief Financial Officer, (403)
521-6302; Kevin Angus, Executive Vice President, (403) 521-6306

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Pegasus Oil & Gas Inc.

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