Pine Cliff Energy Ltd. Announces Second Quarter Results



    CALGARY, Aug. 26 /CNW/ - Pine Cliff Energy Ltd. (www.pinecliffenergy.com)
(TSX-V:PNE) is pleased to announce its financial and operational results for
the three months and six months ended June 30, 2009.

    
    Highlights

                                  Three Months Ended        Six Months Ended
                                 June 30     June 30     June 30     June 30
    For the periods ended           2009        2008        2009        2008
    -------------------------------------------------------------------------
    FINANCIAL ($)
    Revenue - Oil and Gas        111,773     138,415     305,498     281,531
    Cash Flow from Operations   (294,455)   (224,141)   (523,762)   (523,762)
      Per Share Basic and
       Diluted                     (0.01)      (0.00)      (0.01)      (0.01)
    Net Loss                    (325,010)   (295,111)   (823,542)   (612,224)
      Per Share Basic and
       Diluted                     (0.01)      (0.01)      (0.02)      (0.01)
    Capital Expenditures and
     Acquisitions                  9,581   2,516,214     129,367   2,797,602
    Total Assets                                       4,558,217  12,043,617
    Working Capital                                    1,738,974   5,278,074
    Shareholders' Equity                               4,341,385  11,799,266
    -------------------------------------------------------------------------
    OPERATIONS
    Oil and NGLs
      - Barrels Per Day                2           -           2           1
      - Average Price
         ($ per barrel)            62.14           -       55.74      104.38
    Natural Gas
      - MCF Per Day                  312         142         352         155
      - Average Price
         ($ per MCF)                3.62       10.84        4.56        9.40
    Total Barrels of Oil
     Equivalent (BOE)
     Per Day(1)                       51          24          57          27
    -------------------------------------------------------------------------
    (1) Barrels of oil equivalent (BOE) are calculated using a conversion
        ratio of 6 MCF to 1 barrel of oil. The conversion is based on an
        energy equivalency conversion method primarily applicable at the
        burner tip and does not represent a value equivalency at the wellhead
        and as such may be misleading if used in isolation.
    

    Report to Shareholders

    Pine Cliff Energy Ltd. ("Pine Cliff" or "the Company") is pleased to
report its operating and financial results for the three months and six months
ended June 30, 2009.
    The Board of Directors and Management recognize that there is a need to
evaluate the overall direction for the Company and are presently assessing
various options and opportunities available to add value on behalf of
shareholders.
    As a result of its unsuccessful completion of the three-well drill
program on the Canadon Ramirez Concession in Argentina and the country's
difficult political and business environment, the Company is reviewing its
involvement in that region. In addition, positive changes in the Canadian
energy sector and an increased availability in assets for sale have provided
the impetus for Pine Cliff to once again focus its efforts domestically rather
than internationally. The Company intends to increase its activities in Canada
by aggressively pursuing acquisition opportunities and to participate in more
drilling.

    Operations

    During the fourth quarter of 2008, Pine Cliff participated in drilling
one natural gas well (15 percent working interest) in the Sundance area of
Alberta. Production for this well for the first six months of 2009 has
averaged approximately 225 MCF per day net to the company and total company
production for the first six months of 2009 averaged 57 BOE per day (352 MCF
per day of natural gas and 2 barrels per day of crude oil and NGLs).
    Pine Cliff is considering participating in one gross exploration well
(0.25 net) in the Laguna de Piedra concession, a property in Argentina which
the Company has deemed highly prospective. Drilling is expected to take place
in late 2009 or early 2010. Should the Company elect to participate in the
well, its share of the costs will be approximately $500,000.

    Financial:

    The Company is currently focused on decreasing general and administrative
(G&A) expenses and has reduced its consulting services and other international
expenses in the second quarter of 2009. G&A expenditures decreased by
approximately 23 percent quarter over quarter due to reduced contractor fees
for services provided to the Company's South American activities and reduced
management fees.
    As of June 30, 2009, Pine Cliff had positive working capital of
$1,738,974. These funds may be used to cover the Company's budgeted 2009
capital expenditures of $900,000 in relation to the drilling of its Laguna de
Piedra Concession ($500,000) as well as miscellaneous capital costs in respect
to its Canadian oil and gas operations.

    Outlook

    The Board of Directors and management feel confident that there will be
investment opportunities in Canada in the near term and are continuing to
pursue the available options.

    FORWARD-LOOKING INFORMATION

    Certain statements contained in this release include statements which
contain words such as "anticipate", "could", "should", "expect", "seek",
"may", "intend", "likely", "will", "believe" and similar expressions,
statements relating to matters that are not historical facts, and such
statements of our beliefs, intentions and expectations about development,
results and events which will or may occur in the future, constitute
"forward-looking information" within the meaning of applicable Canadian
securities legislation and are based on certain assumptions and analysis made
by us derived from our experience and perceptions. Forward-looking information
in this release includes, but is not limited to: expected cash provided by
continuing operations; future capital expenditures, including the amount and
nature thereof; oil and natural gas prices and demand; expansion and other
development trends of the oil and natural gas industry; business strategy and
outlook; expansion and growth of our business and operations; and maintenance
of existing customer, supplier and partner relationships; supply channels;
accounting policies; credit risks; and other such matters.
    All such forward-looking information is based on certain assumptions and
analyses made by us in light of our experience and perception of historical
trends, current conditions and expected future developments, as well as other
factors we believe are appropriate in the circumstances. The risks,
uncertainties, and assumptions are difficult to predict and may affect
operations, and may include, without limitation: the risks of foreign
operations; foreign exchange fluctuations; equipment and labour shortages and
inflationary costs; general economic conditions; industry conditions; changes
in applicable environmental, taxation and other laws and regulations as well
as how such laws and regulations are interpreted and enforced; the ability of
oil and natural gas companies to raise capital; the effect of weather
conditions on operations and facilities; the existence of operating risks;
volatility of oil and natural gas prices; oil and gas product supply and
demand; risks inherent in the ability to generate sufficient cash flow from
operations to meet current and future obligations; increased competition;
stock market volatility; opportunities available to or pursued by us; and
other factors, many of which are beyond our control. The foregoing factors are
not exhaustive.
    Actual results, performance or achievements could differ materially from
those expressed in, or implied by, this forward-looking information and,
accordingly, no assurance can be given that any of the events anticipated by
the forward-looking information will transpire or occur, or if any of them do,
what benefits will be derived therefrom. Except as required by law, Pine Cliff
disclaims any intention or obligation to update or revise any forward-looking
information, whether as a result of new information, future events or
otherwise.
    The forward-looking information contained herein is expressly qualified
by this cautionary statement.

    
    Quarterly Financial and Operational Highlights

                                           2009                    2008
    -------------------------------------------------------------------------
                                     2nd         1st         4th         3rd
    Financial ($)
    Revenue - Oil and Gas        111,773     193,725     295,944     129,537
    Cash Flow from Operations   (294,455)   (229,307)    (68,211)   (305,368)
      Per Share Basic and
       Diluted                     (0.01)      (0.01)       0.00       (0.01)
    Net Loss                    (325,010)   (498,532) (6,423,691)   (505,953)
      Per Share Basic and
       Diluted                     (0.01)      (0.01)      (0.14)      (0.01)
    Capital Expenditures
     and Acquisitions              9,581     119,786   1,067,843   1,511,745
    Total Assets               4,558,217   4,966,907   5,570,015  11,621,915
    Working Capital            1,738,974   1,903,038   2,316,982   3,440,165
    Shareholders' Equity       4,341,385   4,644,004   5,044,701  11,400,311
    -------------------------------------------------------------------------
    Operations
    Oil and NGLs (barrels
     per day)                          2           1           2           1
    Natural Gas (MCF per day)        312         392         453         146
    -------------------------------------------------------------------------

                                           2008
    -------------------------------------------------
                                     2nd         1st
    Financial ($)
    Revenue - Oil and Gas        138,415     143,116
    Cash Flow from Operations   (224,141)   (204,923)
      Per Share Basic and
       Diluted                      0.00        0.00
    Net Loss                    (295,111)   (317,113)
      Per Share Basic and
       Diluted                     (0.01)      (0.01)
    Capital Expenditures
     and Acquisitions          2,516,214     281,388
    Total Assets              12,043,617  12,221,650
    Working Capital            5,278,074   7,937,179
    Shareholders' Equity      12,043,617  12,003,398
    -------------------------------------------------
    Operations
    Oil and NGLs (barrels
     per day)                          -           4
    Natural Gas (MCF per day)        142         168
    -------------------------------------------------


                                                       2007
    -------------------------------------------------------------------------
                                     4th         3rd         2nd         1st

    Financial ($)
    Revenue - Oil and Gas        112,685      95,160     176,590     198,515
    Cash Flow from Operations   (234,653)   (172,281)   (262,144)   (115,860)
      Per Share Basic and
       Diluted                     (0.01)      (0.01)      (0.01)       0.00
    Net Loss                    (381,561)   (383,540)   (346,274)   (270,109)
      Per Share Basic and
       Diluted                     (0.01)      (0.01)      (0.01)      (0.01)
    Capital Expenditures
     and Acquisitions            193,350     174,289     233,648   2,196,476
    Total Assets              12,445,994   4,173,333   3,946,888   4,211,984
    Working Capital            8,378,110    (314,684)    182,319     602,650
    Shareholders' Equity      12,205,066   3,371,089   3,749,025   4,008,304
    -------------------------------------------------------------------------
    Operations
    Oil and NGLs (barrels
     per day)                          2           1           5           7
    Natural Gas (MCF per day)        182         163         226         226
    -------------------------------------------------------------------------


    Production

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
                                2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Crude oil and NGLs
     (barrels per day)             2         1         -         2         1
    Natural gas (MCF per day)    312       392       142       352       155
    Total BOE per day(1)          51        64        24        57        27
    -------------------------------------------------------------------------
    (1) Barrels of oil equivalent (BOE) are calculated using a conversion
        ratio of 6 MCF to 1 barrel of oil. The conversion is based on an
        energy equivalency conversion method primarily applicable at the
        burner tip and does not represent a value equivalency at the wellhead
        and as such may be misleading if used in isolation.


    During the fourth quarter of 2008, a natural gas well that is not operated
by Pine Cliff was completed and placed on production (0.15 net) by the
operator. Production for the first six months of 2009 from this well is 225
MCF per day net to the Company. The Company has an expected annual decline
rate of approximately 20 percent on its overall production.

    Revenue

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Revenue:
      Oil and gas sales      111,773   193,725   138,415   305,498   281,531
    Average Realized Prices
      Crude oil and NGLs
       (per barrel)            62.14     48.06         -     55.74    104.38
      Natural gas (per MCF)     3.62      5.32     10.84      4.56      9.40
    -------------------------------------------------------------------------
    

    Revenue from petroleum and natural gas sales for the first half of 2009
increased by $23,967 from the first half of 2008 due to increased production
volumes, partially offsetting a 51 percent decrease in commodity prices for
natural gas. A decrease in revenue from Q2 2009 to Q1 2009 was due to lower
production volumes and reduced commodity prices for natural gas. The Company
did not have hedging agreements in either 2009 or 2008 and presently does not
have any future hedging agreements.

    
    Royalties

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Crown royalties          (49,052)   44,556    21,864    (4,496)   55,994
    Gross overriding
     royalties                 2,533     4,796    10,049     7,329    12,787
    -------------------------------------------------------------------------
    Total royalty expense    (46,519)   49,352    31,913     2,833    68,781
    -------------------------------------------------------------------------
    

    Crown royalties are lower in the first six months of 2009 compared to the
first six months of 2008 due to a $58,000 crown royalty holiday adjustment
received in the second quarter of 2009 related to 2008 crown royalty payments
made on the new natural gas well. Gross overriding royalties were also lower
due to the significant decrease in the commodity prices for natural gas. Crown
and gross overriding royalties were lower for Q2 2009 compared to Q1 2009 for
the same reasons.

    
    Interest Income

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Interest income              284     5,781    26,162     6,065    94,330
    -------------------------------------------------------------------------

    The Company maintains both Canadian and U.S. investment accounts that pay
interest at prime less various percentages as long as the Company maintains
certain minimum account balances. The Company was earning interest at higher
rates and on an increased cash balance throughout the first half of 2008.
Interest income for Q2 2009 and Q1 2009 decreased significantly due to the
lower cash balance on hand.

    Production Costs

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Production costs          24,680    57,809    13,273    82,489    39,522
    $ per BOE                   5.30     10.08      7.25      7.94      8.51
    -------------------------------------------------------------------------

    Production costs were higher in the first six months of 2009 versus the
first six months of 2008 due to higher production volumes. The decrease in
production costs in the second quarter of 2009 compared to the first quarter
of 2009 was due to decreased production volumes and adjustments to prior
period charges.

    General and Administrative

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    G&A expense              249,238   324,997   359,043   574,235   641,172
    -------------------------------------------------------------------------
    

    General and administrative (G&A) expenditures decreased by $66,937 from
the first half of 2009 compared to the first half of 2008. The decrease in G&A
expenses is due to reduced contractor fees for services provided to the
Company's South American activities and reduced management fees. The decrease
in G&A expenditures in Q2 2009 compared to Q1 2009 is for the same reasons.
The majority of the G&A expenses pertain to the Company's operations in
Argentina. With the unsuccessful completion of the three-well drill program on
the Canadon Ramirez Concession, the Company's Board of Directors and
management are reviewing the Company's involvement in Argentina and have
reduced its consulting services and other international expenses in Q2 2009.
    Pine Cliff does not have any employees at the present time but has
engaged Bonterra Energy Corp. (Bonterra Corp) a related party (see Related
Party section), to provide management services and engage the services of
consultants on a contract or temporary basis. Pine Cliff's subsidiary
CanAmericas Energy Ltd. (CanAmericas) has also engaged the consulting services
of an individual professional as senior management and officer of CanAmericas.

    
    Foreign Exchange Loss (Gain)

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Foreign exchange loss
     (gain)                   16,432     7,043  (101,624)   23,475  (103,934)
    -------------------------------------------------------------------------

    The Company maintains foreign denominated bank accounts to facilitate its
foreign operations. The loss on foreign exchange in the first half of 2009
relates to the appreciation of the Canadian dollar with the Argentine peso and
U.S. dollar versus a depreciation in 2008.

    Stock-Based Compensation

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Stock-based compensation  22,392    97,834    90,979   120,226   206,424
    -------------------------------------------------------------------------
    

    The Company has a stock-based compensation plan. The Company records a
compensation expense over the vesting period based on the fair value of
options granted to employees of the management company (see section "Related
Party Transactions"), directors and service providers in respect of the
Company. The decrease in stock-based compensation in 2009 is due to the
amortization in 2008 of most of the stock-based compensation, on the 1,108,000
options issued in the fourth quarter of 2007. The Company issued 40,000 stock
options in Pine Cliff during the first six months of 2009. The Company
estimated the 2009 stock options fair value at $3,350 ($0.08 per option) using
the Black-Scholes option pricing model, assuming a weighted average risk free
interest rate of 1.24 percent, weighted average expected volatility of 96.0
percent, weighted average expected life of 2.5 years and no annual dividend
rate. Of the options outstanding as of June 30, 2009, $23,400 of stock-based
compensation is remaining to be expensed in 2009 and 2010.

    Depletion, Depreciation, and Accretion and Dry Hole Exploration Costs

    During the first six months of 2009, the Company expensed $194,639 (2008
- $128,544) for depletion, depreciation and accretion of its property and
equipment. The increase is related to increased production volumes in the
first half of 2009. The second quarter of 2009 had a slightly lower depletion,
depreciation and accretion amount of $88,099 compared to Q1 2009 of $106,540
due to slightly lower production. The Company incurred $60,036 of capital
costs in the second quarter of 2009 related to the three wells drilled in the
Canadon Ramirez Concession in Argentina. These costs were written off as dry
hole costs as the 2008 three-well exploration program was unsuccessful. No
amounts were expensed to dry hole costs in the first half of 2008.

    Income Taxes

    The Company follows the liability method of accounting for income taxes
under which the income tax provision is based on the temporary differences in
the accounts calculated using income tax rates expected to apply in the year
in which the temporary differences will reverse. The Company has sufficient
tax pools such that it is not liable for current income tax. However the
Company is subject to a one percent Argentina capital tax on assets in
Argentina. These amounts are deductible from future income earned in
Argentina.
    The Company has the following tax pools which can be used to reduce
future taxable income:

    
                                                       Rate of
                                                 Utilization %        Amount
    -------------------------------------------------------------------------
    Undepreciated capital costs                             25  $    356,778
    Foreign exploration expenditures                        10     5,295,915
    Share issue costs                                       20        58,320
    Canadian exploration expenditures                      100       392,110
    Canadian development expenditures                       30       499,820
    Canadian oil and gas expenditures                       10       560,482
    Non-capital loss carry forward(*)                      100     4,556,066
    -------------------------------------------------------------------------
                                                                $ 11,719,491
    -------------------------------------------------------------------------
    (*) $620,121 expires 2026, $1,523,672 expires 2027, $1,684,143 expires
        in 2028 and $728,130 expires in 2029


    Non-Controlling Interest

    A private foreign company (Foreign Corp.) owns seven percent of
CanAmericas Energy Ltd. (CanAmericas), a 93 percent owned subsidiary of Pine
Cliff. In 2008, losses in CanAmericas exceeded the non-controlling interest
investment and therefore none of CanAmericas' loss in 2009 was allocated to
the non-controlling interest.

    Loss

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Loss                    (325,010) (498,532) (295,111) (823,542) (612,224)
    Loss per share             (0.01)    (0.01)    (0.01)    (0.01)    (0.01)
    -------------------------------------------------------------------------
    

    The increase in loss for the first six months of 2009 compared to the
first six months of 2008 was predominantly due to decreased interest income,
increased depletion and dry hole costs and a foreign exchange loss versus a
foreign exchange gain in 2008 partially offset by reduced G&A costs in 2009.
The decrease in the Q2 2009 loss compared to Q1 2009 loss was predominantly
due to the crown royalty recovery, reduced G&A costs and lower stock-based
compensation.

    
    Cash Flow from Operations

                                      Three months ended    Six months ended
                             June 30, March 31,  June 30,  June 30,  June 30,
    ($)                         2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Cash flow from
     operations             (294,455) (229,307) (224,141) (523,762) (429,064)
    Cash flow from
     operations per share      (0.01)    (0.01)    (0.00)    (0.01)    (0.01)
    -------------------------------------------------------------------------
    

    Cash flow deficiency increased in the first half of 2009 compared to the
first half of 2008 as the Company had decreased interest income, increased
production costs and increased taxes and a decrease in non-cash working
capital adjustments, which were partially offset by higher oil and gas sales,
a crown royalty recovery and decreased G&A costs. The reduction in cash flow
from Q2 2009 compared to Q1 2009 was primarily due to a decrease in non-cash
working capital adjustments, which was partially offset by lower G&A and
production costs.

    Related Party Transactions

    Pine Cliff has a management agreement with Bonterra Corp, a wholly owned
subsidiary of Bonterra Oil & Gas Ltd. (a company with common directors and
management with Pine Cliff), to have Bonterra Corp provide executive services
(President and CEO, CFO and COO), accounting services, oil and gas
administration and office administration. The management fee consists of a
monthly fee of $10,000 (2008 - $19,800), three percent of net earnings before
income taxes plus minor general and administrative expenses incurred by
Bonterra that were specifically attributable to Pine Cliff. Total fees for
2009 were $60,000 (2008 - $118,800). As at June 30, 2009, amounts owing to
Bonterra Corp were $779 (December 31, 2008 - $592).

    Commitments

    The Company has a related party management agreement with Bonterra Corp
that can be cancelled by giving 90 days notice.

    Liquidity and Capital Resources

    As of June 30, 2009, Pine Cliff had positive working capital of
$1,738,974 (December 31, 2008 - $2,316,982). These funds may be used to cover
the Company's budgeted 2009 capital expenditures of $900,000 in relation to
the drilling of its Laguna de Piedra Concession if it is drilled in 2009 (see
below) as well as miscellaneous capital costs in respect of its Canadian oil
and gas operations. The Company is currently focusing on reducing general and
administrative expenses related to its Argentina operations.

    
          The following consolidated financial statements and notes
         to the consolidated financial statements have been provided
                            for further details.


    Consolidated Balance Sheets

    As at June 30, 2009 and December 31, 2008
    (unaudited)

                                                          2009          2008
    -------------------------------------------------------------------------
    Assets
    Current
      Cash                                          $1,718,511    $2,624,556
      Accounts receivable                              121,767       107,200
      Prepaid expenditures                              32,567        29,602
    -------------------------------------------------------------------------
                                                     1,872,845     2,761,358
    -------------------------------------------------------------------------
    Property and Equipment (Note 6)
      Property and equipment                         3,947,881     3,878,550
      Accumulated depletion and depreciation        (1,262,509)   (1,069,893)
    -------------------------------------------------------------------------
    Net Property and Equipment                       2,685,372     2,808,657
    -------------------------------------------------------------------------
                                                    $4,558,217    $5,570,015
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current
      Accounts payable and accrued liabilities        $133,871      $444,376

    Asset Retirement Obligations                        82,961        80,938
    Non-Controlling Interests (Note 5)                       -             -
    -------------------------------------------------------------------------
                                                       216,832       525,314
    -------------------------------------------------------------------------
    Commitments
    Shareholders' Equity
      Share capital (Note 8)                        14,588,722    14,588,722
      Contributed surplus                              843,194       722,968
      Deficit                                      (11,090,531)  (10,266,989)
      Accumulated other comprehensive income                 -             -
    -------------------------------------------------------------------------
                                                     4,341,385     5,044,701
    -------------------------------------------------------------------------
                                                    $4,558,217    $5,570,015
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Loss, Comprehensive Loss and Deficit

    For the periods ended June 30 (unaudited)

                                 Three Months                 Six Months
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    Revenue
      Oil and gas sales   $111,773      $138,415      $305,498      $281,531
      Royalties             46,519       (31,913)       (2,833)      (68,781)
      Interest income          284        26,162         6,065        94,330
    -------------------------------------------------------------------------
                           158,576       132,664       308,730       307,080
    -------------------------------------------------------------------------
    Expenses
      Production costs      24,680        13,273        82,489        39,522
      General and
       administrative      249,238       359,043       574,235       641,172
      Foreign exchange
       loss (gain)          16,432      (101,624)       23,475      (103,934)
      Stock-based
       compensation         22,392        90,979       120,226       206,424
      Dry hole costs
       (Note 6)             60,036             -        60,036             -
      Depletion,
       depreciation
       and accretion        88,099        63,075       194,639       128,544
    -------------------------------------------------------------------------
                           460,877       424,746     1,055,100       911,728
    -------------------------------------------------------------------------
    Loss Before Taxes
     and Non-Controlling
     Interests            (302,301)     (292,082)     (746,370)     (604,648)
    -------------------------------------------------------------------------
    Taxes (Note 7)
      Current               22,709         4,866        77,172        32,755
      Future                     -             -             -             -
    -------------------------------------------------------------------------
                            22,709         4,866        77,172        32,755
    -------------------------------------------------------------------------
    Loss before
     Non-Controlling
     Interests            (325,010)     (296,948)     (823,542)     (637,403)
    Loss applicable to
     non-controlling
     interests (Note 5)          -         1,837             -        25,179
    -------------------------------------------------------------------------
    Loss and Comprehensive
     Income for the
     Period               (325,010)     (295,111)     (823,542)     (612,224)
    Deficit, Beginning
     of Period         (10,765,521)   (3,042,234)  (10,266,989)   (2,725,121)
    -------------------------------------------------------------------------
    Deficit, End of
     Period           ($11,090,531)  ($3,337,345) ($11,090,531)  ($3,337,345)
    -------------------------------------------------------------------------
    Loss Per Share -
     Basic and Diluted      ($0.01)       ($0.01)       ($0.02)       ($0.01)
    -------------------------------------------------------------------------

    Weighted Average
     Common Shares
      Basic and
      diluted           45,275,695    45,275,695    45,275,695    45,275,695
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flow

    For the periods ended June 30 (unaudited)

                                 Three Months                 Six Months
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    Operating Activities
      Loss for the
       period            ($325,010)    ($295,111)    ($823,542)    ($612,224)
      Items not
       affecting cash
        Stock-based
         compensation       22,392        90,979       120,226       206,424
        Dry hole costs      60,036             -        60,036             -
        Depletion,
         depreciation
         and accretion      88,099        63,075       194,639       128,544
        Unrealized foreign
         exchange gain           -      (101,624)            -      (103,934)
        Loss applicable to
         non-controlling
         interests               -        (1,837)            -       (25,179)
    -------------------------------------------------------------------------
                          (154,483)     (244,518)     (448,641)     (406,369)
    -------------------------------------------------------------------------
      Change in non-cash
       working capital
        Accounts
         receivable        (28,788)       (6,341)      (14,567)      (40,884)
        Prepaid
         expenditures        4,547        (4,494)       (2,965)       (9,553)
        Accounts payable
         and accrued
         liabilities      (115,731)       31,212       (57,589)       27,742
    -------------------------------------------------------------------------
                          (139,972)       20,377       (75,121)      (22,695)
    -------------------------------------------------------------------------
    Cash Used in
     Operating Activities (294,455)     (224,141)     (523,762)     (429,064)
    -------------------------------------------------------------------------
    Financing Activities         -             -             -             -
    -------------------------------------------------------------------------
    Cash Provided by
     Financing Activities        -             -             -             -
    -------------------------------------------------------------------------
    Investing Activities
      Property and
       equipment
       expenditures         (9,581)   (2,516,214)     (129,367)   (2,797,602)
      Proceeds on
       disposal of
       restricted term
       investments               -             -             -     2,689,601
      Change in non-cash
       working capital
        Accounts payable
         and accrued
         liabilities         8,649        (3,704)     (252,916)            -
    -------------------------------------------------------------------------
    Cash used in
     Investing Activities     (932)   (2,519,918)     (382,283)     (108,001)
    -------------------------------------------------------------------------
    Unrealized Foreign
     Exchange Gain on
     Cash Held in
       Foreign Currency          -       101,624             -       103,934
    -------------------------------------------------------------------------
    Net Cash Outflow      (295,387)   (2,642,435)     (906,045)     (433,131)
    Cash, Beginning
     of Period           2,013,898     7,978,752     2,624,556     5,769,448
    -------------------------------------------------------------------------
    Cash, End of Period  1,718,511     5,336,317     1,718,511     5,336,317
    -------------------------------------------------------------------------

    Cash interest paid  $        -    $        -    $        -    $        -
    Cash taxes paid     $   47,986    $        -    $   55,703    $        -
    -------------------------------------------------------------------------


    Notes to the Consolidated Financial Statements
    Periods ended June 30, 2009 and 2008 (unaudited)

    1.  SIGNIFICANT ACCOUNTING POLICIES

        The interim consolidated financial statements for Pine Cliff Energy
        Ltd. ("Pine Cliff" or the "Company") as at and for the three and six
        months ended June 30, 2009 should be read in conjunction with the
        audited consolidated financial statements as at and for the year
        ended December 31, 2008. The notes to these interim consolidated
        financial statements do not conform in all respects to the note
        disclosure requirements of generally accepted accounting policies
        ("GAAP") for annual consolidated financial statements. These interim
        consolidated financial statements are prepared using the same
        accounting policies and methods of computation as disclosed in the
        annual consolidated financial statements as at and for the year ended
        December 31, 2008, except for those disclosed in Note 2 below. The
        disclosures provided within are incremental to those included with
        the annual financial statements.

    2.  CHANGE IN ACCOUNTING POLICIES

        On January 1, 2009, the Company adopted the Canadian Institute of
        Chartered Accountants (CICA) Handbook Section 3064, "Goodwill and
        Intangible Assets". The new section replaces the previous goodwill
        and intangible asset standard and revises the requirement for
        recognition, measurement, presentation and disclosure of intangible
        assets. The adoption of this standard had no impact on the Company's
        consolidated financial statements.

        On January 1, 2009, the Company adopted the CICA's EIC-173, "Credit
        Risk and the Fair Value of Financial Assets and Financial
        Liabilities". The EIC provides guidance on how to take into account
        credit risk of an entity and counterparty when determining the fair
        value of financial assets and financial liabilities, including
        derivative instruments. The adoption of this EIC had no impact on the
        Company's consolidated financial statements.

        Recent and Pending Accounting Pronouncements

        In June 2009, the CICA issued amendments to CICA Handbook Section
        3862, "Financial Instruments - Disclosures". The amendments include
        enhanced disclosures related to the fair value of financial
        instruments and the liquidity risk associated with financial
        instruments. The amendments will be effective for annual financial
        statements for fiscal years ending after September 30, 2009. The
        amendments are consistent with recent amendments to financial
        instrument disclosure standards in International Financial Reporting
        Standards ("IFRS"). The Company will include these additional
        disclosures in its annual consolidated financial statements for the
        year ending December 31, 2009.

        Effective January 1, 2009, the Company prospectively adopted the CICA
        issued Section 1582, "Business Combinations", which will replace the
        former guidance on business combinations. Under the new standard, the
        purchase price used in a business combination is based on the fair
        value of consideration exchanged at the date of exchange. Currently
        the purchase price used is based on the fair value of the
        consideration for a reasonable period before and after the date of
        acquisition is agreed upon and announced. The new standard generally
        requires all acquisition costs be expensed, which are currently
        capitalized as part of the purchase price. In addition, the new
        standard modified the accounting for contingent consideration and
        negative goodwill.

        Effective January 1, 2009, the Company prospectively adopted the CICA
        issued Sections 1601, "Consolidated Financial Statements", and 1602,
        "Non-controlling Interests", which replace existing guidance. Section
        1601 establishes standards for the preparation of consolidated
        financial statements and Section 1602 provides guidance on accounting
        for a non-controlling interest in a subsidiary subsequent to a
        business combination.

        The Canadian Accounting Standards Board has confirmed that IFRS will
        replace Canadian GAAP effective January 1, 2011, including
        comparatives for 2010, for Canadian publicly accountable enterprises.
        The Company has completed its high-level IFRS impact study and
        established a preliminary timeline for the execution and completion
        of the conversion project. The impact of IFRS on the Company's
        consolidated financial statements is not reasonably determinable at
        this time.

    3.  BANKING AGREEMENT

        The Company has a line of credit through its subsidiary CanAmericas
        to the lower of its available amount of cash or U.S. $3,690,000,
        which can be drawn by means of letters of guarantee and letters of
        credit. The line of credit may be cancelled without notice. No
        letters of guarantee or credit are currently outstanding.

    4.  RELATED PARTY TRANSACTIONS

        Bonterra Oil & Gas Ltd. (Bonterra O&G) an oil and gas corporation
        publicly traded on the Toronto Stock Exchange with common directors
        and management with Pine Cliff and a former parent of the Company,
        through its wholly owned subsidiary Bonterra Energy Corp. (Bonterra
        Corp) provides management services and office administration to the
        Company. Total fees for the six month period were $60,000 (2008 -
        $118,800) plus minimal administrative costs. As of June 30, 2009 Pine
        Cliff owed Bonterra Corp $779 (December 31, 2008 - $592).

        These transactions are in the normal course of operations and are
        measured at the exchange amount, which is the amount of consideration
        established and agreed to by the related parties.

    5.  NON-CONTROLLING INTERESTS

        The Company has incorporated a subsidiary company, CanAmericas Energy
        Ltd. (CanAmericas) to explore and develop oil and gas properties
        primarily in South America. CanAmericas is owned 93 percent by the
        Company and seven percent by a foreign private corporation (Foreign
        Corp.). CanAmericas was initially financed by investments of
        $1,400,000 U.S. for 5,600,000 common shares from the Company and
        $100,000 U.S. for 400,000 common shares from Foreign Corp.

        Changes to non-controlling interest were as follows:

                                                       June 30,  December 31,
                                                          2009          2008
        ---------------------------------------------------------------------
        Non-controlling interest, January 1        $         -   $    25,179
        Loss applicable to non-controlling
         interest                                 ($         -)      (25,179)
        ---------------------------------------------------------------------
        Non-controlling interest, end of period    $         -   $         -
        ---------------------------------------------------------------------

        Foreign Corp. has been granted an option to acquire an additional
        1,000,000 common shares of CanAmericas at U.S. $0.25 per common
        share. Fifty percent of the options vested on January 13, 2007, and
        the remaining 50 percent vested on January 13, 2008, and all of the
        options will expire on January 13, 2011.

    6.  PROPERTY AND EQUIPMENT

                                   June 30, 2009           December 31, 2008
        ---------------------------------------------------------------------
                                     Accumulated                 Accumulated
                                       Depletion                   Depletion
                                             and                         and
                              Cost  Depreciation          Cost  Depreciation
        ---------------------------------------------------------------------
        Petroleum and
         natural gas
         properties
         and related
         equipment      $3,894,369    $1,229,667    $3,825,038    $1,041,902
        Furniture,
         equipment
         and other          53,512        32,842        53,512        27,991
        ---------------------------------------------------------------------
                        $3,947,881    $1,262,509    $3,878,550    $1,069,893
        ---------------------------------------------------------------------

        In 2009, the exploration costs related to the Canadon Ramirez
        Concession of $60,036 (2008 - $6,171,140) were written-off to dry
        hole costs as the three-well program was unsuccessful. Exploration
        costs of $1,426,639 included in petroleum and natural gas properties
        and related equipment presently have been excluded from costs subject
        to depletion and depreciation.

    7.  TAXES

        The Company has expensed $77,172 current tax expense related to
        Argentina capital tax. A one percent Argentina capital tax is payable
        in respect of the exploration costs for the Canadon Ramirez and the
        Laguna de Piedra Concessions.

        The Company continues to record a full valuation allowance for its
        future income tax assets as the recoverability is uncertain.

    8.  SHARE CAPITAL

        Authorized

        Unlimited number of Common Shares without nominal or par value.

        Unlimited number of Class B Preferred Shares without nominal or par
        value which may be issued in one or more series.

        Issued                                          Number        Amount
        ---------------------------------------------------------------------
        Common Shares
        Balance, January 1, 2009                    45,275,695   $14,588,722
        ---------------------------------------------------------------------
        Balance, June 30, 2009                      45,275,695   $14,588,722
        ---------------------------------------------------------------------

        A summary of the changes to the Company's contributed surplus is
        presented below:

        Contributed surplus

        ($)                                               2009          2008
        ---------------------------------------------------------------------
        Balance, January 1                             722,968       341,465
        Stock-based compensation expensed (non-cash)   120,226       206,424
        ---------------------------------------------------------------------
        Balance, June 30                               843,194       547,889
        ---------------------------------------------------------------------

        The deficit balance is composed of accumulated earnings.

        A summary of the status of the Company's stock option plan as of
        June 30, 2009 and December 31, 2008, and changes during the three
        month and twelve month periods ending on those dates is presented as
        follows:

                                       June 30, 2009       December 31, 2008
        ---------------------------------------------------------------------
                                            Weighted-               Weighted-
                                             Average                 Average
                                            Exercise                Exercise
                                 Options       Price     Options       Price
        ---------------------------------------------------------------------
        Outstanding at
         beginning of period   3,118,000       $0.63   3,053,000       $0.62
        Options granted           40,000        0.15      65,000        1.15
        Options exercised              -           -           -           -
        Options cancelled        (12,000)       1.15           -           -
        ---------------------------------------------------------------------
        Outstanding at end
         of period             3,146,000       $0.62   3,118,000       $0.63
        ---------------------------------------------------------------------
        Options exercisable
         at end of period      2,838,000       $0.58   2,003,500       $0.33
        ---------------------------------------------------------------------

        The following table summarizes information about stock options
        outstanding at June 30, 2009:

                      Options Outstanding                Options Exercisable
    -------------------------------------------------------------------------
                                 Weighted-
                                  Average   Weighted-               Weighted-
    Range of          Number    Remaining    Average       Number    Average
    Exercise     Outstanding  Contractual   Exercise  Exercisable   Exercise
    Prices        at 6/30/09         Life      Price   at 6/30/09      Price
    -------------------------------------------------------------------------
    $0.15          1,130,000    0.5 years      $0.15    1,090,000      $0.15
     0.50 - 0.60     825,000    0.5 years       0.51      825,000       0.51
     0.70 - 0.75      80,000    0.5 years       0.72       80,000       0.72
     1.10 - 1.20   1,071,000    0.9 years       1.18      823,000       1.18
     1.40 - 1.50      40,000    1.5 years       1.49       20,000       1.49
    -------------------------------------------------------------------------
    $0.15 - $1.50  3,146,000    0.7 years      $0.62    2,838,000      $0.58
    -------------------------------------------------------------------------

        The Company records a compensation expense over the vesting period
        based on the fair value of options granted to employees, directors
        and consultants. Unvested options as of June 30, 2009 vest 210,500 in
        2009, 77,500 in 2010 and 20,000 in 2011.

        The Company issued 40,000 (December 31, 2008 - 65,000) stock options
        with an estimated fair value of $3,350 (December 31, 2008 - $33,761)
        ($0.08 per option (December 31, 2008 - $0.52 per option)) using the
        Black-Scholes option pricing model with the following key
        assumptions:

                                                       June 30,  December 31,
                                                          2009          2008
        ---------------------------------------------------------------------
        Weighted-average risk free interest rate (%)      1.24          2.89
        Dividend yield (%)                                   -             -
        Expected life (years)                              2.5           2.5
        Weighted-average volatility (%)                   96.0          72.0
        ---------------------------------------------------------------------

    9.  SEGMENTED INFORMATION

        The Company has operations in Canada and in South America. All
        operating activities are related to exploration, development and
        production of petroleum and natural gas:

                                                           South
        ($)                                   Canada     America       Total
        ---------------------------------------------------------------------
        Three Months Ended June 30, 2009
        Revenue, gross                       112,042          15     112,057
        Loss before non-controlling
         interest                             62,662     262,348     325,010
        Capital expenditures                      68       9,513       9,581

        Six Months Ended June 30, 2009
        Revenue, gross                       309,790       1,773     311,563
        Loss before non-controlling
         interest                            245,542     578,000     823,542
        Capital expenditures                   1,516     127,851     129,367
        Property and equipment             1,230,444   1,454,928   2,685,372
        Total assets                       2,977,890   1,580,328   4,558,218

        Three Months Ended June 30, 2008
        Revenue, gross                       163,880         697     164,577
        Loss before non-controlling
         interest                            149,674     147,274     296,948
        Capital expenditures                   2,796   2,513,418   2,516,214

        Six Months Ended June 30, 2008
        Revenue, gross                       355,106      20,755     375,861
        Loss before non-controlling
         interest                            303,876     333,527     637,403
        Capital expenditures                  10,222   2,787,380   2,797,602

        December 31, 2008
        Property and equipment             1,416,693   1,391,964   2,808,657
        Total assets                       3,884,908   1,685,107   5,570,015
        ---------------------------------------------------------------------

    10. FINANCIAL AND CAPITAL RISK MANAGEMENT

        Financial Risk Factors
        ----------------------

        The Company undertakes transactions in a range of financial
        instruments including:

        -   Cash deposits;
        -   Receivables;
        -   Payables;

        The Company's activities result in exposure to a number of financial
        risks including market risk (commodity price risk, interest rate
        risk, foreign exchange risk, credit risk, and liquidity risk).
        Financial risk management is carried out by senior management under
        the direction of the Board of Directors.

        The Company does not enter into risk management contracts. The
        Company sells its oil and gas commodities at market prices at the
        date of sale in accordance with the Board directive.

        Capital Risk Management
        -----------------------

        The Company's objectives when managing capital are to safeguard the
        Company's ability to continue as a going concern, to continue
        providing returns to its Shareholders and benefits for other
        stakeholders, and to maintain an optimal capital structure to reduce
        the cost of capital. In order to maintain or adjust the capital
        structure, the Company may issue debt or new shares.

        The Company monitors capital on the basis of the ratio of budgeted
        exploration capital requirements to current working capital. This
        ratio is calculated using the projected cash requirements for a year
        in advance and maintaining a working capital balance of at least six
        months to satisfy this requirement on a continuous basis.

        The Company believes that maintaining approximately a six month
        current working capital balance to the exploration capital budget
        requirement is an appropriate basis to allow it to continue its
        future development of the Company's assets.

        The following section (a) of this note provides a summary of our
        underlying economic positions as represented by the carrying values,
        fair values and contractual face values of our financial assets and
        financial liabilities. The Company's working capital to capital
        expenditure requirement ratio is also provided.

        The following section (b) addresses in more detail the key financial
        risk factors that arise from the Company's activities including its
        policies for managing these risks.

    a)  Financial assets, financial liabilities

        The carrying amounts, fair value and face values of the Company's
        financial assets and liabilities other than cash are shown in
        Table 1.

        Table 1

                              As at June 30, 2009    As at December 31, 2008
        ---------------------------------------------------------------------
                        Carrying    Fair     Face  Carrying    Fair     Face
        ($000)            Value    Value    Value    Value    Value    Value
        ---------------------------------------------------------------------
        Financial assets
        Accounts
         receivable         122      122      184      107      107      142
        Financial
         liabilities
        Accounts payable
         and accrued
         liabilities        134      134      134      444      444      444
        ---------------------------------------------------------------------

        The budgeted capital expenditure to working capital base figures for
        June 30, 2009 is presented below:

        ($000)                                                 June 30, 2009
        ---------------------------------------------------------------------
        Budgeted capital expenditure(1)                                  900
        ---------------------------------------------------------------------
        Current assets                                                 1,873
        Current liabilities                                             (134)
        ---------------------------------------------------------------------
        Working capital                                                1,739
        ---------------------------------------------------------------------
        Working capital to budgeted capital expenditure
         (in months)                                                    23.2
        ---------------------------------------------------------------------
        (1) Budgeted capital expenditure represents the Company's estimated
            future twelve month capital expenditures.


    b)  Risks and mitigations

        Market risk is the risk that the fair value or future cash flow of
        the Company's financial instruments will fluctuate because of changes
        in market prices. Components of market risk to which Pine Cliff is
        exposed are discussed below.

        Commodity price risk
        --------------------

        The Company's principal operation is the exploration and possible
        development of its oil and gas properties. The Company also engages
        in the exploration and development of oil and natural gas properties
        in Canada. Fluctuations in prices of these commodities may directly
        impact the Company's performance and ability to continue with its
        operations.

        The Company's management currently does not use risk management
        contracts to set price parameters for its production.

        Sensitivity Analysis
        --------------------

        The Company is still in the exploration stage of development of its
        exploration properties and as such generates nominal cash flow or
        earnings from these properties. In addition, the Company's petroleum
        and natural gas operations provide only moderate cash flow and as
        such changes in commodity would have no material impact on the
        Company.

        Interest rate risk
        ------------------

        Interest rate risk refers to the risk that the value of a financial
        instrument or cash flow associated with the instrument will fluctuate
        due to changes in market interest rates. Interest rate risk arises
        from interest bearing financial assets and liabilities that Pine
        Cliff uses. The principal exposure to the Company is on its cash
        balances which have a variable interest rate which gives rise to a
        cash flow interest rate risk.

        Pine Cliff's cash consists of Canadian dollar, U.S. dollar and
        Argentinean peso investment chequing accounts. Since these funds need
        to be accessible for the development of the Company's capital
        projects, management does not reduce its exposure to interest rate
        risk through entering into term contracts of various lengths. As
        discussed above, the Company generally manages its capital such that
        its budgeted capital requirements to current working capital ratio
        are at least six months.

        Foreign exchange risk
        ---------------------

        The Company has foreign operations, but no revenue from production
        from the foreign properties and currently sells all of its Canadian
        product sales in Canadian currency. The Company has a U.S. cash and
        Argentina peso cash balance and earns an insignificant amount of
        interest on its U.S. and Argentinean peso bank accounts. Funds held
        in foreign denominated accounts are generally held for short periods
        of time, as the Company transfers and converts Canadian funds to
        foreign currency as payments for foreign currency denominated
        payables come due. As such, Pine Cliff does not mitigate exchange
        rate risk by using risk management contracts.

        Credit risk
        -----------

        Credit risk is the risk that a contracting party will not complete
        its obligations under a financial instrument and cause the Company to
        incur a financial loss. Pine Cliff is exposed to credit risk on all
        financial assets included on the balance sheet. To help mitigate this
        risk, the Company maintains the majority of its cash balances with a
        major Canadian chartered bank and invests in secure financial
        instruments.

        Substantially all of the accounts receivable balance at June 30, 2009
        ($122,000) and December 31, 2008 ($107,000) relates to product sales
        with Canadian oil and gas companies and crown royalty credits with
        the province of Alberta, all of which have consistently been received
        within 30 to 60 days. The Company through its subsidiary CanAmericas
        also has a receivable of $62,000 for Argentina Value Added Tax on
        non-capital expenditures. The Company has taken a full allowance on
        the V.A.T., as the Company has no Argentina income subject to V.A.T.
        to claim it against.

        The Company assesses quarterly if there has been any impairment of
        the financial assets of the Company. The Company does not have any
        significant credit risk exposure to any single counterparty or any
        group of counterparties having similar characteristics.

        The carrying value of accounts receivable approximates their fair
        value due to the relatively short periods to maturity on this
        instrument. Currently no accounts receivable is greater than 90 days.
        The maximum exposure to credit risk is represented by the carrying
        amount on the balance sheet. There are no material financial assets
        that the Company considers past due.

        Liquidity risk
        --------------

        Liquidity risk includes the risk that, as a result of Pine Cliff's
        operational liquidity requirements:

        -   The Company will not have sufficient funds to settle a
            transaction on the due date,

        -   Pine Cliff will not have sufficient funds to continue with its
            financing of its major exploration projects,

        -   The Company will be forced to sell assets at a value which is
            less than what they are worth, or

        -   Pine Cliff may be unable to settle or recover a financial asset
            at all.

        To help reduce these liquidity risks, the Company:

        -   Has a general capital policy of maintaining at least six months
            of budgeted capital requirements as its working capital base.

        -   Maintains a continuous evaluation approach as to the requirements
            for its largest exploration programs; the Canadon Ramirez
            Concession and Laguna de Piedra Concession.


    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.
    

    %SEDAR: 00021536E




For further information:

For further information: Further information relating to the Company may
be found on www.sedar.com as well as on the Company's website at
www.pinecliffenergy.com or by contacting: George F. Fink, President and CEO,
Randy M. Jarock, COO, or Kirsten Kulyk, Manager, Investor Relations,
Telephone: (403) 269-2289, Fax: (403) 265-7488, Email:
info@pinecliffenergy.com

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