TriStar Oil & Gas Ltd. - Announces Results for First Quarter 2009, Increase in Credit Facility, Reiterates Guidance



    CALGARY, May 11 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the
"Company") is pleased to announce its financial and operating results for the
three month period ended March 31, 2009.
    In this report, all references to barrels of oil equivalent ("Boe") are
calculated converting natural gas to oil at a ratio of six thousand cubic feet
of natural gas to one barrel of oil.

    
    Highlights

                                       Three months  Three months
    ($ thousands except per share             ended         ended          %
     and Boepd amounts)                Mar 31, 2009  Mar 31, 2008     Change
    -------------------------------------------------------------------------

    Financial (CDN$)
      Production revenue (prior to
       hedging)                             81,918      135,167         -39%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Cash flow from operations(1)          56,950       73,500         -23%
        Per share basic                      $0.50        $0.74         -32%
        Per share diluted                    $0.50        $0.74         -32%
      Net loss(2)                          (13,826)      (6,058)         NMF
        Per share basic                     ($0.12)      ($0.06)         NMF
        Per share diluted                   ($0.12)      ($0.06)         NMF
      Total net debt(3)                    356,773      317,315          12%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Common shares (000's)
        Shares outstanding, end of
         period (basic)                    116,008      110,110           5%
        Weighted average shares (basic)    114,320       99,068          15%
        Weighted average shares (fully
         diluted)(4)                       114,320       99,068          15%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Operations
      Production
        Crude oil and NGL (Bbls per day)    16,784       13,609          23%
        Natural gas (Mcf per day)           24,596       34,936         -30%
        Barrels of oil equivalent
         (Boepd, 6:1)                       20,883       19,431           7%
      Average realized price
        Crude oil and NGL ($ per Bbl)        45.97        89.25         -48%
        Natural gas ($ per Mcf)               5.64         7.75         -27%
        Barrels of oil equivalent
         ($ per Boe, 6:1)                    43.58        76.44         -43%
      Netback per Boe (6:1) ($)
        Operating netback(1)                 33.06        45.62         -28%
        Operating netback (prior to
         hedging)(1)                         24.18        49.89         -52%
        Cash flow netback(1)                 30.30        41.56         -27%
        Cash flow netback (prior to
         hedging)(1)                         21.42        45.83         -53%
      Wells drilled
        Gross                                   31           52
        Net                                   24.1         34.9
        Success (%)                             94           90
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    "NMF" No Meaningful Figure
    (1) Management uses cash flow from operations (before changes in non-
        cash working capital and incurred asset retirement expenditures), and
        operating and cash flow netback to analyze operating performance and
        leverage. Cash flow as presented, and operating and cash flow netback
        do not have any standardized meaning prescribed by Canadian Generally
        Accepted Accounting Principles and therefore may not be comparable
        with the calculation of similar measures for other entities.
    (2) The net income in the quarter ended March 31, 2009 includes the
        unrealized loss on the Company's financial derivative contracts of
        $12.2 million recognized in the period.
    (3) Total net debt is calculated as long-term debt and current
        liabilities less current assets, excluding the current fair value of
        financial instruments and related current future income taxes.
    (4) Due to the antidilutive effect of TriStar's net loss for the three
        months ended March 31, 2009 and 2008, the diluted number of shares is
        equivalent to the basic number of shares. Therefore, diluted per
        share amounts for net loss and cash flow from operations are
        equivalent to basic per share amounts.
    

    President's Letter to Shareholders

    The first quarter of 2009 saw the continued collapse of commodity prices
which accelerated as a result of the global financial crisis in the second
half of 2008.
    In the current market environment, TriStar management has been diligent
in aggressively managing the Company's financial position by cutting planned
capital expenditures in both the fourth quarter of 2008, and the first quarter
of 2009. Together with Management's disciplined hedging strategy and TriStar's
high quality asset base, the Company has maintained strong financial
flexibility during these uncertain times - thereby protecting the upside
inherent in the Company's significant resource base.

    The Company's achievements during the first quarter of 2009 include the
following:

    
    -  During the first quarter, TriStar entered into an agreement to acquire
       4,000 Boepd of legacy, long life, high netback light oil assets in its
       Southeast Saskatchewan core area. The acquisition is scheduled to
       close on June 1, 2009 (the "Talisman Acquisition");
    -  In conjunction with the Talisman Acquisition, TriStar raised $287.5
       million through the issuance of 39,937,500 subscription receipts. The
       subscription receipts will automatically convert to common shares on
       the close of the Talisman Acquisition;
    -  First quarter production averaged 20,883 Boepd, an increase of
       7 percent over the first quarter of 2008 when production averaged
       19,431 Boepd;
    -  Cash flow totaled $57.0 million in the first quarter;
    -  Cash flow per share was $0.50 in the first quarter;
    -  Drilled 31 (24.1 net) wells in the first quarter and achieved a
       94 percent success rate;
    -  Additionally, in the first quarter, the Company announced the closing
       of a private southeast Saskatchewan company acquisition with
       2.0 Mmboe of proved plus probable reserves and 10 net sections of
       prospective Bakken lands;
    -  In the first quarter, TriStar continued its ongoing rationalization
       process with the sale of approximately $9 million of non-core assets;
       and
    -  Subsequent to quarter end, the Company's current credit facility was
       extended to the close of the Talisman Acquisition at which time the
       facility will be increased to $525 million.
    

    As a result of the aggressive management of the Company's balance sheet,
TriStar's ongoing hedging program, the Company's deep inventory of high
quality, light oil and long life natural gas drilling opportunities, TriStar
remains very well positioned to take advantage of the upside in the Company's
asset base and opportunities that exist in the current market to grow its
reserves, production and cash flow per share.

    Operational Review

    Production in the first quarter of 2009 averaged 20,883 Boepd. The
Company participated in the drilling of 31 (24.1 net) wells resulting in 27
(20.1 net) oil wells, 1 (1.0 net) natural gas well, 1 (1.0 net) stratigraphic
and service well, and 2 (2.0 net) D&A wells, for an overall success rate of 94
percent.

    
    Southeast Saskatchewan - Bakken
    -------------------------------
    
    Development and exploration activity in the first quarter continued in
TriStar's Southeast Saskatchewan Bakken area with the drilling of 24 (17.1
net) Bakken horizontal wells with 100 percent success.
    Improving potential primary recovery factors in the Bakken play through
the optimization of fracture stimulation efficiency has been a key focus at
TriStar. TriStar has now drilled 52 (39 net) shorter horizontal length wells
(approximately 600 metres in length relative to 1,400 metre full length
horizontals) while continuing to fracture stimulate the wells using as many as
nine fractures and similar tonnage per fracture as used in full length wells.
This technique reduces the inter-fracture distance and increases effective
reservoir contact per metre of a horizontal well bore. Production results from
these shorter length horizontals are encouraging, with initial production
profiles similar to offsetting longer horizontal length wells. While ultimate
recoverable reserves may be less per well over the longer term, recovery
factors per section appear to be greater. Based on the initial production
profiles of these shorter length horizontals, TriStar believes that this
development plan will result in an increased primary recovery factor in this
play than what is currently being projected by third party engineers. Of the
24 (17.1 net) Bakken wells drilled in the first quarter, 19 (14.2 net) were
short length horizontals, with an additional 5 (2.9 net) longer length
horizontal wells.
    During the remainder of 2009, TriStar has plans to drill an additional 43
(29 net) Bakken wells. Total 2009 risked capital expenditures on the Bakken
play of approximately $90 million, including facilities and land acquisitions,
now represents approximately 45 percent of TriStar's $200 million capital
budget.
    Pro forma the acquisitions announced in the first quarter of 2009,
TriStar's current oil reserve booking represents a recovery factor of
approximately 4 percent of the estimated net total Original Oil In Place
("OOIP") of the more than 750 Mmboe on the Company's land base. A 12.5 percent
"primary" recovery factor, consisting of 4 long length horizontal wells per
section, would yield up to 65 million barrels of additional recoverable oil
net to TriStar in addition to what is currently booked in TriStar's reserve
report. Furthermore, the achievement of a higher primary recovery factor based
on the improvement of the effective frac length described above would be in
addition to this unbooked upside. Based on the limited number of short length
horizontals that have been drilled and the corresponding short production
histories, the implied recovery factor for these wells based on third party
bookings is approximately 15 percent, as compared to 12.5 percent for average
long length horizontals. TriStar believes that additional production history
is required on these short length horizontals before a revised recovery factor
can be accurately estimated.
    Pro forma the acquisitions announced in the first quarter, TriStar's land
holdings exceed 193 net sections. TriStar has identified over 600 net future
Bakken development drilling locations on its land base. Of these development
locations, only 213 net remaining wells are currently booked in TriStar's
year-end 2008 reserve report (including acquisitions announced in the first
quarter).

    
    Southeast Saskatchewan - Conventional
    -------------------------------------
    
    Plans in southeast Saskatchewan for conventional oil wells include the
drilling of 36 (26.7 net) conventional oil wells into a number of the
Company's high quality, light oil pools at Fertile, Hastings, Bellegarde and
Wauchope. No conventional wells were drilled in the first quarter of 2009.
    Concurrent with the Company's conventional development drilling program,
TriStar will carry out an active production optimization program through the
remainder of 2009.

    
    Alberta
    -------
    
    In the first quarter of 2009, TriStar drilled a total of 6 wells (6.0
net) in Alberta including 2 (2.0 net) successful wells at Ante Creek. With the
implementation of the Alberta New Royalty Framework ("NRF") on January 1,
2009, TriStar had initially shifted the vast majority of its 2009 capital
program to its Southeast Saskatchewan core area. However, TriStar has recently
completed an internal review of all of its Alberta projects that qualify for
the newly announced Alberta royalty incentives. The review of these drilling
incentives as they relate to TriStar's large inventory of Alberta prospects
has resulted in increased returns on projects relative to what had been
projected under the NRF. TriStar has identified a number of development
opportunities across all three of its core areas in Alberta, many of which
will be drilled using horizontal well technology and multi stage fracs to
maximize economic returns. As a result of the improved economics of these
projects, TriStar intends to drill an additional 12 to 15 wells in Alberta in
the remainder of 2009, including up to 5 (5.0 net) wells at Ante Creek. These
additional wells will result in capital expenditures in Alberta of
approximately $45 million for the remainder of 2009. TriStar will continue to
monitor the changes in the Alberta royalty regime before determining the
amount of capital it will allocate to these projects in 2010.

    Risk Management

    As a key component to management's strategy, TriStar maintains an ongoing
risk management program to reduce volatility of revenues in order to maintain
balance sheet strength, protect acquisition economics and fund capital
expenditures.
    Although management considers the risk management contracts that TriStar
enters into to be effective economic hedges, these contracts do not meet the
accounting definition of an effective hedge. Therefore, gains and losses on
such contracts are shown as a separate category in the statement of
operations.
    As the price of crude oil increased from US$44.60 per barrel at the end
of the fourth quarter of 2008 to US$49.66 per barrel at the end of the first
quarter of 2009, TriStar recorded an unrealized loss of $12.2 million in its
first quarter 2009 financial statements and at March 31, 2009 had an
unrealized asset of $24.0 million based on market values. TriStar actually
realized a cash gain of $16.7 million during the quarter relating to the
Company's hedge portfolio.
    The period-end mark-to-market values represent the market price to buy-
out or sell the hedge contracts as at March 31, 2009. The mark-to-market value
at March 31, 2009 may be different from what will eventually be realized.
    TriStar's management team continues to be disciplined in using what it
believes to be effective economic hedges when making acquisitions to protect
the economics of transactions despite the accounting impact.

    Outlook

    The Company continues to be successful in achieving its goal of cost
effective per share growth in reserves, production and cash flow through
management's integrated strategy of acquiring, exploiting and exploring.
During the first quarter, TriStar successfully executed strategic acquisitions
in the Company's Southeast Saskatchewan core area which further enhances the
Company's opportunity base. These acquisitions provide the Company with a
combination of legacy conventional light oil assets with high netbacks and a
low decline profile while also significantly adding to the Company's drilling
inventory and undeveloped land base on the Bakken resource play.
    The Company now has more than 1,500 gross development, step-out and
exploratory locations on its land base throughout western Canada. This large
internal suite of strategically focused drilling opportunities represents a
greater than four year drilling inventory on TriStar's land base. In addition
to building an internal inventory of prospects, TriStar continues to evaluate
potential farm out opportunities on its large undeveloped land base of more
than 900,000 net acres in order to maximize value.
    As a result of significantly reduced realized commodity prices and
continued economic uncertainty, TriStar continues to closely monitor the 2009
capital spending program. Management continues to be disciplined in its
philosophy to spend approximately cash flow on exploration and development
projects. TriStar is very well positioned, and management's focus is to
maintain flexibility to position the Company to take advantage of
opportunities that will present themselves during this volatile market.
TriStar is currently planning a capital program of $200 million for 2009,
however, management will continually review the commodity price environment
through each quarter of 2009 with the expectation that TriStar's ultimate 2009
capital expenditure budget will be approximately equivalent to cash flow.

    As a result of the successful execution of management's strategy, TriStar
is well positioned to continue to grow its reserves, production and cash flow
per share and has the following key attributes (pro forma the Talisman
Acquisition and associated financing):

    
    -   High Quality Assets:       Top decile netbacks with light oil and
                                   natural gas reserves and production
                                   focused in four core operating areas.

    -   Operatorship / High        Approximately 90 percent operated assets,
        Working Interest:          and more than a 70 percent average working
                                   interest.

    -   Long Life Reserves:        Greater than 108.5 Mmboe (P+P); RLI
                                   approximately 12 years.

    -   High Netback Production:   25,000 Boepd (2009E Exit Guidance).

    -   Extensive Drilling         Greater than 1,500 development drilling
        Inventory:                 locations.
                                   Greater than 900,000 net acres of
                                   undeveloped land.
                                   Greater than four year drilling
                                   inventory.

    -   Significant Bakken         Greater than 600 development drilling
        Upside:                    locations (greater than 420 not booked
                                   in current reserve report).
                                   193 net sections of prospective Bakken
                                   acreage.

    -   Estimated Net Debt:        Approximately $400 million (pro forma
                                   Talisman acquisitions and associated
                                   financing).
                                   Increased bank line to $525 million.

    -   Shares Outstanding:        151.9 million (Basic)
                                   158.3 million (Fully Diluted)


    On behalf of the Board of Directors,

    (signed)

    Brett Herman
    President and Chief Executive Officer
    May 11, 2009
    

    Forward-Looking Statements

    This document contains forward-looking statements. More particularly,
this document contains statements concerning the anticipated closing date of
the Talisman Acquisition, anticipated exploration and development activities,
anticipated recovery rates, planned capital expenditures and TriStar's
projected exit rates of production for 2009.
    The forward-looking statements contained in this document are based on
certain key expectations and assumptions made by TriStar, including
expectations and assumptions concerning the application of regulatory and
royalty regimes, prevailing commodity prices and exchange rates, availability
and cost of labour and services, the timing of receipt of regulatory
approvals, the performance of existing wells, the success obtained in drilling
new wells, the performance of new wells, the sufficiency of budgeted capital
expenditures in carrying out planned activities and the satisfaction of
conditions to the closing of the Talisman Acquisition.
    Although TriStar 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 TriStar 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, the risks associated with the oil
and gas industry in general (e.g., operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty
of reserve estimates; the uncertainty of estimates and projections relating to
production, costs and expenses, and health, safety and environmental risks),
commodity price and exchange rate fluctuations, uncertainties resulting from
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures and the failure to satisfy the
conditions to closing the Talisman Acquisition. Certain of these risks are set
out in more detail in TriStar's Annual Information Form which has been filed
on SEDAR and can be accessed at www.sedar.com.
    The forward-looking statements contained in this document are made as of
the date hereof and TriStar 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.
    Where amounts are expressed on a barrel of oil equivalent ("Boe") basis,
natural gas volumes have been converted to Boe using a ratio of 6,000 cubic
feet of natural gas to one barrel of oil equivalent. This conversion ratio is
based upon an industry standard energy equivalent conversion method primarily
applicable at the burner tip and does not represent value equivalence at the
wellhead. Boe figures may be misleading, particularly if used in isolation.

    Management's Discussion and Analysis

    Management's Discussion and Analysis ("the MD&A") is dated May 11, 2009.
The MD&A should be read in conjunction with TriStar Oil & Gas Ltd.'s
("TriStar" or the "Company") unaudited interim consolidated financial
statements as at and for the three months ended March 31, 2009 and audited
consolidated financial statements as at and for the year ended December 31,
2008. The reader should be aware that historical results are not necessarily
indicative of future performance. Additional information relating to TriStar
can be found at www.sedar.com.
    TriStar commenced commercial operations on January 6, 2006 after the
completion of a plan of arrangement pursuant to which TriStar acquired certain
oil and gas properties from StarPoint Energy Trust and Acclaim Energy Trust.
    The financial data presented below has been prepared in accordance with
Canadian Generally Accepted Accounting Principles ("GAAP"), unless otherwise
indicated.

    Non-GAAP Measurements

    The MD&A contains the terms "cash flow from operations" and "operating
netback" which are not Canadian GAAP standards and therefore may not be
comparable to performance measures presented by others. Cash flow from
operations represents cash flow from operating activities prior to changes in
non-cash working capital and incurred asset retirement expenditures. Operating
netback represents revenue less royalties, realized hedging gains and losses,
operating expenses and transportation expenses. Management believes that in
addition to net income, cash flow from operations and operating netback are
useful supplemental measures as they provide an indication of TriStar's
operating performance, leverage and liquidity. Investors should be cautioned,
however, that these measures should not be construed as an alternative to both
net income and cash flow from operating activities, which are determined in
accordance with GAAP, as indicators of TriStar's performance.

    The reconciliation between cash flow from operations, as defined above,
and cash flow from operating activities, as defined by GAAP, is as follows:

    
                                                  Three Months  Three Months
                                                         ended         ended
    ($ thousands)                                 Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------
    Cash flow from operations (as defined above)        56,950        73,500
    Incurred asset retirement expenditures                (272)            -
    Changes in non-cash working capital                 (8,339)       (1,077)
    -------------------------------------------------------------------------
    Cash flow from operating activities (as
     defined by GAAP)                                   48,339        72,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    TriStar's reporting and measurement currency is the Canadian dollar.
Amounts in this MD&A are in Canadian dollars unless otherwise stated.
    Where amounts are expressed on a barrel of oil equivalent ("Boe") basis,
natural gas volumes have been converted to Boe using a ratio of 6,000 cubic
feet of natural gas to one barrel of oil equivalent. This conversion ratio is
based upon an energy equivalent conversion method primarily applicable at the
burner tip and does not represent value equivalence at the wellhead. Boe
figures may be misleading, particularly if used in isolation.

    Forward-Looking Statements

    This MD&A contains forward-looking statements. More particularly, this
MD&A contains statements concerning the anticipated closing date of the
acquisition by the Company of certain assets from Talisman Energy Inc.,
anticipated continuing volatility in crude and natural gas pricing, planned
infrastructure changes in Southeast Saskatchewan, anticipated changes to the
Company's credity facility and interest rate spreads and the effects of
implementing International Financial Reporting Standards.
    The forward-looking statements are based on certain key expectations and
assumptions made by the Company, including expectations and assumptions
concerning the application of regulatory, accounting and royalty regimes,
anticipated economic conditions, anticipated operating conditions and the
satisfaction of conditions to closing the proposed acquisition of assets from
Talisman Energy Inc.
    Although the Company 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 the Company 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
associated with the oil and gas industry in general (e.g., operational risks
in development, exploration and production; delays or changes in plans with
respect to exploration or development projects or capital expenditures; the
uncertainty of reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses, and environmental, health, and
safety risks), commodity price and exchange rate fluctuations, changes in
applicable laws and policies, failure to satisfy conditions to the closing of
the acquisition of assets from Talisman Energy Inc. and uncertainties
resulting from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures. Certain of these
risks are set out in more detail in this MD&A and in the Company's Annual
Information Form ("AIF") which has been filed on SEDAR and can be accessed at
www.sedar.com.
    The forward-looking statements contained in this MD&A are made as of the
date hereof and the Company 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.

    Significant Transactions

    Talisman Properties Acquisition

    On March 4, 2009, TriStar announced that together with Crescent Point
Resources Limited Partnership ("Crescent Point"), it had entered into an
agreement to acquire certain properties in southeast Saskatchewan from
Talisman Energy Inc. ("Talisman") for $720.0 million. Concurrently with the
close of the transaction with Talisman, TriStar and Crescent Point will sell
certain of the properties to Shelter Bay Energy Inc. for $71.0 million. The
remaining properties will be divided equally by TriStar and Crescent Point who
will each have a resultant fifty percent interest in them with a net cost to
TriStar of $324.5 million. The acquisition is expected to close on or about
June 1, 2009. Together these transactions are described as the "Talisman
Properties Acquisition".
    Concurrently with this announcement, TriStar entered into an agreement to
issue 35,937,500 subscription receipts at a price of $8.00 per subscription
receipt, for gross proceeds of $287.5 million. If the Talisman Properties
Acquisition is completed on or before August 1, 2009, the proceeds will be
released to TriStar and each subscription receipt will be exchanged for one
common share of TriStar for no additional consideration. If the Talisman
Properties Acquisition is not completed on or before August 1, 2009 or is
terminated at an earlier time, holders of subscription receipts will receive a
cash payment equal to the offering price of the subscription receipts and any
interest that was earned thereon during the term of the escrow.

    Results of Operations

    
    Production
                                                  Three Months  Three Months
                                                         ended         ended
                                                  Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------

    Daily Production
    Crude oil and natural gas liquids (Bbls
     per day)                                           16,784        13,609
    Natural gas (Mcf per day)                           24,596        34,936
    -------------------------------------------------------------------------
    Total (Boepd)                                       20,883        19,431
    % Natural Gas                                          20%           30%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the three months ended March 31, 2009, TriStar averaged 20,883 Boepd
as compared to 19,431 Boepd in the first quarter of 2008, a 7 percent
increase. Production was comprised of 16,784 Bbls per day of crude oil and
natural gas liquids ("NGL") and 24,596 Mcf per day of natural gas.
    Production from acquisitions is only included from the date of closing.
Similarly, production from the divestiture of non-core assets is included only
until the date of close of these transactions.

    
    Production for the quarter was divided between the following areas:

                                                  Three Months
                                                         ended
                                                  Mar 31, 2009
    -------------------------------------------------------------------------
                         Crude Oil
                           and NGL   Natural Gas         Total
    Area              Bbls per day   Mcf per day         Boepd             %
    -------------------------------------------------------------------------

    Alberta                  4,237        22,575         7,999            38
    Saskatchewan
     / Manitoba             12,547         2,021        12,884            62
    -------------------------------------------------------------------------
    Total                   16,784        24,596        20,883           100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    During the quarter, the Company drilled 31 (24.1 net) wells, achieving a
94 percent success rate.

    Pricing

    Crude oil prices continued to fall in the first quarter of 2009 as WTI
reached a low of US$33.98 per Bbl during the quarter. WTI averaged US$43.08
per Bbl in the first quarter of 2009 after averaging US$97.70 per Bbl in the
first quarter of 2008, a 56 percent decrease. The Canadian dollar averaged
$0.80 per US dollar in the first quarter of 2009 relative to $1.00 per US
dollar in the first quarter of 2008. Edmonton Par averaged $49.65 per Bbl in
the first quarter of 2009, as compared to $98.61 per Bbl in the first quarter
of 2008, a 50 percent decrease.
    The decline in the price of crude oil has continued as a result of market
reaction to a global economic slowdown. Although US$ WTI has dropped, the
Canadian dollar has also fallen substantially reaching US$0.77 in March,
somewhat mitigating the drop in the price of crude oil in Canadian dollar
terms. However, the impact of the strengthening of the US$ was tempered in the
fourth quarter of 2008 and January of 2009 as the sales price differentials
between WTI and Edmonton par increased considerably due to supply and demand
imbalances, reaching a high of $10.97 per Bbl in December, representing a 21
percent differential between C$WTI and Edmonton Par, after averaging $1.32 per
Bbl in the first eleven months of 2008, or a 1 percent differential. These
supply/demand imbalances continued into January but appear to have resolved
themselves in February and March of 2009. It is expected that the price of
crude oil and the Canadian dollar will remain volatile in the near term.
    Natural gas prices averaged $4.71 per Mcf for AECO daily spot, $5.63 per
Mcf for AECO monthly, and US$4.58 per Mmbtu for NYMEX daily gas in the first
quarter of 2009. In the first quarter of 2008, natural gas prices averaged
$7.86 per Mcf for AECO daily spot, $7.88 per Mcf for AECO monthly, and US$7.16
per Mmbtu for NYMEX daily gas. Fluctuating North American supply/demand
forecasts along with volatile international natural gas prices, which affect
the global flow of liquefied natural gas, continue to cause significant price
volatility in North American natural gas prices. More recently, significant
declines in North American industrial demand have resulted in a negative price
trend for North American natural gas.
    TriStar's average realized price for its crude oil and NGL was $45.97 per
Bbl in the first quarter while its realized natural gas price was $5.64 per
Mcf.

    
                                                  Three Months  Three Months
                                                         ended         ended
                                                  Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------
    Average Benchmark Prices
    Crude oil - WTI (US$ per Bbl)                        43.08         97.70
    Crude oil - Edmonton Par Price ($ per Bbl)           49.65         98.61
    Natural gas - AECO-C Daily Spot ($ per Mcf)           4.71          7.86
    Natural gas - AECO-C Monthly ($ per Mcf)              5.63          7.88
    Exchange rate - (CDN$/US$)                            0.80          1.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                  Three Months  Three Months
                                                         ended         ended
                                                  Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------
    TriStar Average Realized Prices Prior to
     Hedging
    Crude oil and NGL - ($ per Bbl)                      45.97         89.25
    Natural gas - ($ per Mcf)                             5.64          7.75
    Boe - ($ per Boe)                                    43.58         76.44
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Revenues
    For the three months ended March 31, 2009, TriStar recorded $69.4 million
in crude oil and NGL sales and $12.5 million in natural gas sales, a 37
percent decrease and 49 percent decrease, respectively, over the first quarter
of 2008 when TriStar recorded $110.5 million of crude oil and NGL sales and
$24.7 million of natural gas sales. These amounts exclude the effects of
hedging.

    
                                                  Three Months  Three Months
                                                         ended         ended
    ($ thousands)                                 Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------

    Revenues by Product
    Crude oil and NGL                                   69,436       110,523
    Realized hedging gains (losses) on crude
     oil and NGL                                        16,698        (7,678)
    Natural gas                                         12,482        24,644
    Realized hedging gains (losses) on
     natural gas                                             -           135
    -------------------------------------------------------------------------

    Total revenues (net of hedging)                     98,616       127,624
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Royalty Expenses

    Royalties for the quarter ended March 31, 2009 were $13.2 million or 16.1
percent of revenue (before effects of hedging) as compared to $26.4 million or
19.5 percent for the corresponding quarter in 2008. Royalties are calculated
and paid based on oil and natural gas revenues before any realized hedging
gains or losses. Accordingly, royalty expense is directly correlated to
changes in revenue (before the effects of hedging).
    Commencing in January 2009, the Company has been subject to Alberta's New
Royalty Framework ("NRF"). In addition to the NRF, the Alberta provincial
government has implemented a number of incentive measures intended to
stimulate drilling-related spending in the near term. Overall, these
additional incentive measures generally have positive economic impacts on the
wells that they apply to. As a result of the lower commodity price environment
in the quarter ended March 31, 2009, and the fact that the royalties paid
under the NRF are sensitive to commodity prices, the overall royalty burden
associated with wells affected by the NRF were generally less in the first
quarter of 2009 than what they would have been under the royalty framework
that was in place prior to 2009. In the event of rising commodity prices, the
royalty burden associated with wells affected by the NRF will be generally
greater than they would have been under the old royalty framework.
    TriStar has significant production in the province of Saskatchewan and
production in Alberta that is not subject to crown royalties, mitigating the
effect of the NRF on TriStar's corporate royalty rates.

    Operating Expenses

    Operating expenses were $21.4 million or $11.39 per Boe in the quarter
ended March 31, 2009 as compared to $18.6 million or $10.51 per Boe in the
first quarter of 2008. Growing production volumes in southeast Saskatchewan
during 2008 and into 2009 have resulted in above average oil emulsion and
other trucking costs in the quarter. In 2008, TriStar completed the
construction of several oil processing facilities in the Bakken play which has
helped reduce costs of trucking emulsion from single well batteries as wells
are tied in directly to the facilities. TriStar has plans to further implement
infrastructure changes in the area in the remainder of 2009 to further reduce
operating expenses relating to oil emulsion trucking.

    Transportation Expenses

    Transportation expenses were $1.9 million or $1.01 per Boe in the quarter
ended March 31, 2009 as compared to $2.0 million or $1.10 per Boe in the first
quarter of 2008. The initial expansion of the major oil gathering system,
Enbridge Pipelines (Saskatchewan), was completed in June 2008 and was expected
to alleviate clean oil trucking costs in the near term. However, the continued
expansion of the Bakken play led to this additional pipeline capacity being
entirely utilized faster than expected. More recently, this situation has been
somewhat alleviated due to diminishing new production coming on line as a
result of reduced drilling activity in the area because of lower realized oil
prices.

    Operating Netbacks

    Operating netbacks were $33.06 per Boe for the quarter ended March 31,
2009 as compared to $45.62 per Boe for the quarter ended March 31, 2008.

    Netbacks

    
                                                  Three Months  Three Months
                                                         ended         ended
    ($ per Boe, unless otherwise noted)           Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------

    Total production (Boepd)                            20,883        19,431
    -------------------------------------------------------------------------

    Crude oil and natural gas liquids ($ per Bbl)        45.97         89.25
    Realized hedging gains/(losses) ($ per Bbl)          11.61         (6.20)
    -------------------------------------------------------------------------

    Natural gas ($ per Mcf)                               5.64          7.75
    Realized hedging gains ($ per Mcf)                       -          0.04
    -------------------------------------------------------------------------

    Average Price Prior to Hedging                       43.58         76.44
    -------------------------------------------------------------------------

    Realized gain/(loss) on financial
     instruments (hedging)                                8.88         (4.27)
    Royalties, net                                       (7.00)       (14.94)
    Operating                                           (11.39)       (10.51)
    Transportation                                       (1.01)        (1.10)
    -------------------------------------------------------------------------

    Operating Netback                                    33.06         45.62
    Operating Netback (prior to hedging)                 24.18         49.89
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    General and Administrative Expenses

    During the first quarter of 2009, general and administrative ("G&A")
expenses, net of recoveries and capitalized amounts, were $2.4 million or
$1.30 per Boe as compared to the quarter ended March 31, 2008 where G&A
expenses were $2.7 million or $1.53 per Boe. Gross G&A expenses prior to the
effects of recoveries and capitalized amounts were $7.2 million or $2.60 per
Boe as compared to the quarter ended March 31, 2008 where gross G&A expenses
were $5.8 million or $2.54 per Boe. This absolute increase in gross G&A
expenses reflects the growth of TriStar. However, increased drilling activity
has led to an increase in the G&A that was recovered from partners.

    
                                                  Three Months  Three Months
                                                         ended         ended
    ($ thousands)                                 Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------

    General and administrative expenses                  7,218         5,836
    Recoveries                                          (2,323)       (1,340)
    Capitalized general and administrative
     expenses                                           (2,447)       (1,788)
    -------------------------------------------------------------------------

    Total net general and administrative expenses        2,448         2,708
    G&A per Boe - ($ per Boe)                             1.30          1.53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Interest and Bank Expenses

    Interest and bank expenses were $2.3 million or $1.20 per Boe in the
current quarter as compared to $3.6 million or $2.03 per Boe in the quarter
ended March 31, 2008. The absolute amount of interest and bank expenses, for
the current quarter, relative to the same quarter in 2008, decreased primarily
because of reduced prime and Bankers Acceptance interest rates. It is expected
that the Company will pay increased interest rate spreads to its bank
syndicate on the renewal of its credit facility.
    The Company's effective interest rates for the quarters ended March 31,
2009 and 2008 were 2.5 percent and 5.3 percent, respectively.

    Stock-Based Compensation Expenses

    The Company's stock-based compensation expenses for the quarter ended
March 31, 2009 were $2.3 million or $1.22 per Boe as compared to the quarter
ended March 31, 2008 of $1.3 million or $0.73 per Boe. The stock-based
compensation expenses reflect the value ascribed to the non-cash compensation
provided by TriStar, and were calculated utilizing a fair value assessment
methodology. These amounts are net of the portion of stock-based compensation
costs capitalized to property and equipment when they are related to drilling,
production and acquisitions, which amounted to $1.6 million for the quarter
ended March 31, 2009 or $0.85 per Boe (2008 - $0.9 million or $0.51 per Boe).

    Depletion, Depreciation and Accretion Expenses

    Depletion of oil and natural gas properties, including the capitalized
portion of the asset retirement obligations, is provided for on a unit-of-
production basis using estimated proven reserves volumes.
    Depletion, depreciation and accretion expenses in the quarter ended March
31, 2009 were $60.4 million or $32.14 per Boe as compared to the quarter ended
March 31, 2008 which were $57.7 million or $32.61 per Boe.
    At March 31, 2009, the calculation of the depletion expense excluded
unproved property and undeveloped land cost of $387.2 million (March 31, 2008:
$327.6 million). Unused seismic costs of $27.5 million (March 31, 2008: $32.6
million) were also excluded. Future development costs of $372.1 million (March
31, 2008: $171.9 million) were included in the depletion calculation. The
excluded amounts, which represent costs incurred for unproved properties, will
be brought into the depletion pool at varying rates over the next five years.

    Taxes

    For the quarter ended March 31, 2009, TriStar recorded capital and
current tax expense of $0.5 million, comprised of capital tax expenses of $1.1
million offset by current tax reductions of $0.6 million, and future income
tax reductions of $4.2 million as compared to the quarter ended March 31, 2008
when the Company recorded $0.9 million of capital and current tax expenses and
future income tax reductions of $0.8 million. Capital tax expenses are
comprised of the Saskatchewan Capital Tax and Resource Surcharge.
    As at March 31, 2009, TriStar had approximately $670 million of tax pools
available to offset future taxable income.

    Net Loss and Comprehensive Income

    The net loss for the quarter ended March 31, 2009 was $13.8 million
compared to a net loss of $6.1 million during the same period in 2008. The net
loss in the quarter includes the unrealized loss of $12.2 million (before tax)
on the Company's financial derivative contracts recognized in the quarter.
    Basic and diluted net loss per share for the quarter ended March 31, 2009
were $0.12 per share. This is compared to basic and diluted net loss per share
of $0.06 per share for the same period in 2008.

    Risk Management - Financial Instruments

    TriStar enters into commodity price derivative contracts that provide
downside price protection in order to protect acquisition economics and
provide some stability of cash flows for capital spending planning purposes.
Commodity prices fluctuate due to political events, meteorological conditions,
disruptions in supply and changes in demand. The Company's risk management
activities are conducted pursuant to the Company's risk management policies
approved by the Board of Directors.
    At March 31, 2009, the fair value of the financial derivative contracts
was an asset of $24.0 million. The fair values represent the market price to
buy out TriStar's contracts at March 31, 2009 and may be different from what
will eventually be realized.
    WTI averaged US$43.08 per Bbl in the first quarter of 2009 down from
US$58.18 per Bbl in the fourth quarter of 2008 and was US$49.66 as at March
31, 2009 as compared to US$44.60 as at December 31, 2008. Although this
decrease had an overall negative impact on TriStar's revenue, this has
resulted in hedge contracts being significantly "in the money" during the
first quarter of 2009 and a realized gain on financial instruments of $16.7
million.
    For the quarter ended March 31, 2009, the Company had a net unrealized
loss on its financial derivative contracts of $12.2 million before taxes. This
is a result of the Company's overall contract position as measured at March
31, 2009 being less "in the money" during the remaining term of these
contracts than it was at the previous measurement date of December 31, 2008
and because a portion of the benefit that was accrued as at December 31, 2008
was actually realized during the first three months of 2009.

    The following tables summarize TriStar's commodity risk management
positions as at March 31, 2009:

    
    Oil Contracts
    -------------
                                          Volume
    Term                      Type        (Bbl/d)        Price         Index
    -------------------------------------------------------------------------
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     500      65.00 - 76.30       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     500      65.00 - 76.15       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     500      65.00 - 73.25       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     500      67.00 - 76.70       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     500      70.00 - 75.52       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     250      75.00 - 96.05       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     250     75.00 - 102.00       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     250     75.00 - 100.00       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     250     75.00 - 100.00       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     250     80.00 - 100.00       WTI
    Jan. 1, 2008
     - Dec. 31, 2009    Costless Collar     250     80.00 - 100.00       WTI
    Feb. 1, 2008
     - Dec. 31, 2009            Oil Put     500              75.00       WTI
    Mar. 1, 2008
     - Dec. 31, 2009            Oil Put     500              80.00       WTI
    Apr. 1, 2007
     - Dec. 31, 2009           Oil Swap     250            C$76.60     C$WTI
    Jan. 1, 2008
     - Dec. 31, 2009           Oil Swap     250            C$78.20     C$WTI
    Feb. 1, 2009
     - Jun. 30, 2009           Oil Swap     500            C$61.70     C$WTI
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The fair value of the oil costless collars, puts and swap contracts at
March 31, 2009 was a net asset of $28.7 million.

    
    Fixed Strike, Foreign Exchange Contracts
    ----------------------------------------
    
    The Company is exposed to fluctuations in the exchange rate between the
Canadian dollar and the US dollar. Crude oil, and to a certain extent, natural
gas prices are based upon reference prices denominated in US dollars, while
the majority of the Company's expenses are denominated in Canadian dollars.
When appropriate, the Company enters into agreements to fix the exchange rate
of Canadian dollars to US dollars in order to manage exchange rate risks.

    
                                                        Strike
    Term                             Type   Amount USD   Price    Amount CDN
    -------------------------------------------------------------------------
    May 1, 2008 - Dec. 31, 2009       Put   $1,250,000   $1.00    $1,250,000
    May 1, 2008 - Dec. 31, 2009      Call   $2,500,000   $1.00    $2,500,000
    Dec. 1, 2008 - Dec. 31, 2009  Forward   $2,500,000   $1.28    $3,200,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The fair value of the foreign exchange contracts as at March 31, 2009 was
a net liability of $2.4 million.

    Bankers' Acceptance Fixed Interest Rate Swap Contracts
    ------------------------------------------------------

    Term                                            Fixed Rate    Amount CDN
    -------------------------------------------------------------------------
    Jan. 29, 2009 - Jan. 30, 2012                       1.620%   $50,000,000
    Jan. 29, 2009 - Jan. 30, 2012                       1.653%   $50,000,000
    Feb. 17, 2009 - Feb. 10, 2012                       1.540%   $25,000,000
    Feb. 17, 2009 - Feb. 12, 2012                       1.510%   $25,000,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The fair value of the fixed interest rate swap contracts as at March 31,
2009 was a net liability of $2.3 million.

    Subsequent to March 31, 2009, TriStar entered into the following
contracts:

    Oil Contracts
    -------------
                                          Volume
    Term                      Type        (Bbl/d)        Price         Index
    -------------------------------------------------------------------------
    May 1, 2009
     - Jun. 30, 2009       Oil Swap         500      C$65.40           C$WTI
    Jun 1, 2009
     - Jun. 30, 2009       Oil Swap         500      C$66.40           C$WTI
    Jul. 1, 2009
     - Dec. 31, 2009    Costless Collar     500   C$65.00 - C$76.15    C$WTI
    Jul. 1, 2009
     - Dec. 31, 2009    Costless Collar     500   C$65.00 - C$75.65    C$WTI
    Jan. 1, 2010
     - Dec. 31, 2010    Costless Collar     500   C$65.00 - C$87.25    C$WTI
    Jan. 1, 2010
     - Dec. 31, 2010    Costless Collar     500   C$65.00 - C$90.00    C$WTI
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Natural Gas Contracts
    ---------------------
                                          Volume
    Term                      Type        (GJ/d)       Price          Index
    -------------------------------------------------------------------------
    Jun. 1, 2009
     - Sep. 30, 2009    Costless Collar   2,500     3.75 - 4.40  AECO monthly
    Nov. 1, 2009
     - Nov. 30, 2010    Costless Collar   2,500     5.00 - 7.20  AECO monthly
    -------------------------------------------------------------------------
    

    Liquidity and Capital Resources

    In order to support TriStar's growth-oriented business plan, TriStar's
strategy is to fund its capital expenditure program with cash flows from
operations and bank debt.
    As at March 31, 2009, the Company had available a $450.0 million credit
facility. The Company's credit facility is with a syndicate of four banks and
is open for review semi-annually. On April 30, 2009, TriStar's current credit
facility was extended until the close of the Talisman Properties Acquisition,
which is currently scheduled for June 1, 2009. On close of the Talisman
Properties Acquisition, the credit facility will be increased to $525.0
million with a syndicate of eight banks. There are no significant changes to
the requirements under this increased credit facility except for increases to
certain fees and applicable interest rate spreads. The Company's next credit
facility review is due to be completed by October 31, 2009. The facility is a
borrowing base facility that is determined based on, among other things, the
Company's current reserve report, results of operations, current and
forecasted commodity prices and the current economic environment.
    The credit facility provides that advances may be made by way of direct
advances, bankers acceptances, or standby letters of credit/guarantees. Direct
advances bear interest at the bank's prime lending rate plus an applicable
margin for Canadian dollar advances, and at the bank's U.S. base rate plus an
applicable margin for U.S. dollar advances. The applicable margin charged by
the bank is dependent on the Company's debt to trailing cash flow ratio. The
banker's acceptances bear interest at the applicable banker's acceptance rate
plus a stamping fee, based on the Company's debt to trailing cash flow ratio.
The credit facility is secured by a fixed and floating charge debenture on the
assets of the Company.
    As at March 31, 2009, TriStar had $347.6 million drawn on its credit
facility and a net working capital deficit of $9.2 million (excluding the fair
value of financial instruments and related current future income taxes) for a
total net debt of $356.8 million. As at that date, TriStar had met all of its
requirements pertaining to this loan agreement and was not required to make
any repayments.

    Capital Expenditures

    During the quarter, the Company incurred $85.2 million of capital
expenditures, net of $9.1 million of disposition proceeds, as compared to
$602.4 million spent for the three months ended March 31, 2008. The following
table details additions and dispositions relating to the Company's property
and equipment for these periods:

    
                                                  Three Months  Three Months
                                                         ended         ended
    ($ thousands)                                 Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------

    Drilling, development and production equipment      60,315        61,554
    Land and seismic                                       920        40,999
    Acquisitions(1)                                     29,077       499,901
    Dispositions                                        (9,144)       (2,912)
    Other - cash items(2)                                2,409         1,946
    Other - non-cash items(3)                            1,590           896
    -------------------------------------------------------------------------

    Total                                               85,167       602,384
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Acquisitions include the amount allocated to property and equipment
        for corporate and property acquisitions. This differs from the
        purchase price where there are allocations made to goodwill and other
        assets and liabilities, including asset retirement obligations. For
        these corporate and property acquisitions, TriStar paid total
        consideration, including assumed net working capital and related
        transaction costs, of $29.1 million in the first quarter of 2009
        (Q1 2008: $513.1 million).
    (2) Includes administrative assets and capitalized G&A.
    (3) Includes capitalized stock-based compensation expense.
    

    The Company's current exploration and development budgeted capital
programs for 2009 (excluding acquisitions and dispositions) are expected to be
financed primarily through the Company's cash flow and credit facility. The
Company does not set a budget for acquisitions. The Company searches for
opportunities that align with strategic parameters and evaluates each prospect
on a case by case basis. The Company's acquisitions are expected to be
financed through the Company's cash flow, credit facility and new equity
issuances.

    Goodwill

    As a result of the adjustment of certain purchase price equations for
acquisitions that occurred in prior periods, goodwill was increased by $3.9
million during the quarter ended March 31, 2009. Goodwill as at March 31, 2009
was $249.6 million.

    Shareholders' Equity

    
    Share Capital
    -------------
                                                  Three Months  Three Months
                                                         ended         ended
                                                  Mar 31, 2009  Mar 31, 2008
    -------------------------------------------------------------------------
    Outstanding Common shares
    Weighted average outstanding Common shares
    Basic(1)                                       114,319,618    99,068,068
    Diluted(1)                                     114,319,618    99,068,068
    -------------------------------------------------------------------------
    Outstanding Securities:
    Common shares                                  116,008,247   110,109,657
    Common share options                             4,231,200     3,155,050
    Incentive shares                                 2,141,022     2,130,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Due to the antidilutive effect of TriStar's net loss for the three
        months ended March 31, 2009 and 2008, the diluted number of shares is
        equivalent to the basic number of shares. Therefore, diluted per
        share amounts for net loss and cash flow from operations are
        equivalent to basic per share amounts.
    

    Contractual Obligations

    
    Bank Facility
    -------------
    
    As at March 31, 2009, the Company had available a $450.0 million credit
facility. The Company's credit facility is with a syndicate of four banks and
is open for review semi-annually. On April 30, 2009, TriStar's current credit
facility was extended until the close of the Talisman Properties Acquisition,
which is currently scheduled for June 1, 2009. On close of the Talisman
Properties Acquisition, the credit facility will be increased to $525.0
million with a syndicate of eight banks. There are no significant changes to
the requirements under this increased credit facility except for increases to
certain fees and applicable interest rate spreads. The Company's next credit
facility review is due to be completed by October 31, 2009. The facility is a
borrowing base facility that is determined based on, among other things, the
Company's current reserve report, results of operations, current and
forecasted commodity prices and the current economic environment.

    
    Flow-through shares
    -------------------
    
    On December 18, 2008, TriStar issued 1,025,000 flow-through Common Shares
at a price of $14.70 per share for gross proceeds of $15.1 million. As a
result, the Company must incur qualifying resource expenditures amounting to
$15.1 million before December 31, 2009. The related tax impact was recorded in
the current quarter. The qualifying expenditures were renounced to
shareholders as at December 31, 2008. The obligation remaining for this flow-
through share issue was $9.4 million as at March 31, 2009.

    
    Operating commitments
    ---------------------
    
    TriStar is obligated to pay various costs associated with operations
incurred in the normal course of business. These costs include royalties paid
to the Alberta and Saskatchewan governments, surface and mineral lease rentals
to various landowners, and abandonment and reclamation costs. These costs are
highly dependent on the future operating environment and are subject to
changes in commodity prices, ownership, production volumes and government
policies.

    
    Working Capital
    ---------------
    
    The capital intensive nature of the Company's activities may create a
negative working capital position in periods with high levels of capital
investment. The Company will limit the total negative working capital plus the
outstanding bank debt to the amount of the Company's credit line.
    The industry has a pre-arranged monthly clearing day for payment of
revenues from all buyers of crude oil, NGL and natural gas. This occurs on the
25th day following the month of sale. As a result, the Company's production
revenues are collected in an orderly fashion. To the extent that the Company
has joint venture partners in its activities it will collect on a monthly
basis the partners' share of capital and operating expenses. These are subject
to normal collection risk.
    On July 22, 2008, SemCanada Crude Company, a petroleum marketer for the
Company, filed for creditor protection. As a result, it did not make payment
on the July 25, 2008 settlement date for the June crude oil volumes marketed
on behalf of its clients nor for July crude volumes shipped up to July 21,
2008. TriStar had an irrevocable standby letter of credit for $1.5 million
which was fully collected subsequent to July 21, 2008. The remaining amount
owed to TriStar as a result of this matter is $7.1 million. Although the
eventual loss is not known at this time, as at March 31, 2009, the Company has
a reduction of accounts receivable totaling $3.6 million of the amount owed
and an off-setting reduction of 2008 revenue. The Company continues to monitor
the matter and once it has further information, it will make necessary
adjustments for impairment. There are no other material accounts receivable at
March 31, 2009 that TriStar deemed uncollectible.
    During the fourth quarter of 2008, TriStar entered into a credit
insurance policy to provide coverage over the collectability of production
revenues from certain buyers. The Company believes that this policy, in
conjunction with continued prudent credit-granting practices, should reduce
the non-collectability of bad debts from these buyers.
    Accounts payable consist of amounts payable to suppliers relating to head
office expenses, field operating activities and capital spending activities.
These invoices are processed within the Company's normal payment period.
    The Company continuously manages the pace of its capital spending program
by monitoring forecasted production and commodity prices and resulting cash
flows. Should circumstances affect cash flow in a detrimental way, the Company
is capable of reducing its capital spending levels.

    Forthcoming and Newly Adopted Accounting Policies

    International Financial Reporting Standards

    On February 13, 2008, the Canadian Accounting Standards Board ("AcSB")
confirmed the mandatory changeover date to International Financial Reporting
Standards ("IFRS") for Canadian profit-oriented publicly accountable entities
("PAEs") such as TriStar.
    The AcSB requires that IFRS compliant financial statements be prepared
for annual and interim financial statements commencing on or after January 1,
2011. For PAEs with a December 31 year-end, the first unaudited interim
financial statements under IFRS will be for the quarter ending March 31, 2011,
with comparative financial information for the quarter ending March 31, 2010.
The first audited annual financial statements will be for the year ending
December 31, 2011, with comparative financial information for the year ending
December 31, 2010. This also means that all opening balance sheet adjustments
relating to the adoption of IFRS must be reflected in the January 1, 2010
opening balance sheet which will be issued as part of the comparative
financial information in the March 31, 2011 unaudited interim financial
statements.
    TriStar intends to adopt these requirements as set out by the AcSB and
other regulatory bodies. While at this time the impact of adopting IFRS cannot
be reasonably quantified, TriStar has developed and commenced implementing its
plan for the changeover to IFRS. The IFRS changeover plan ensures that TriStar
addresses matters such as accounting policies, information technology systems,
internal controls, disclosure controls and procedures, staffing requirements,
and business activities impacted by accounting processes and measures.
    The plan is comprised of three stages. The first stage is to obtain an
understanding of the impact that the conversion to IFRS will have on the
elements described above. This commenced in 2008 and will continue in 2009.
This stage will be significantly impacted by an exposure draft awaiting final
approval from the International Accounting Standards Board relating to the
first time adoption of IFRS in Canada by the oil and gas industry. The second
stage will be to develop and test solutions to the issues identified in stage
one. It is anticipated that this will also largely take place in 2009. The
third and final stage will see the implementation of the solutions developed
in stage two. While the third stage will commence in some cases in 2009, it
will also occur in 2010.
    The impact of converting to IFRS may be material. Significant impacts
will be on accounting for property and equipment: "full cost" accounting under
current GAAP differs in significant ways from IFRS, with IFRS generally
requiring analysis and computation at a greater level of detail than current
GAAP. Further differences are anticipated to be in disclosures, which are more
onerous under IFRS than current GAAP.

    Business Conditions and Risks

    The Company is engaged in the exploration, development, production and
acquisition of crude oil and natural gas. TriStar's business is inherently
risky and there is no assurance that hydrocarbon reserves will be discovered
and economically produced. Financial risks associated with the petroleum
industry include fluctuations in commodity prices, interest rates, and
currency exchange rates. Operational risks include competition, environmental
factors, reservoir performance uncertainties, a complex regulatory environment
and safety concerns.
    The Company minimizes its business risks by operating a large number of
its properties. This enables TriStar to control the timing, direction and
costs related to exploration and development opportunities. TriStar's
geological focus is on areas in which the prospects are well understood by
management. Technological tools are regularly used to reduce risk and increase
the probability of success. The Company closely follows all government
regulations and has an up-to-date emergency response plan that has been
communicated to field operations by management. The Company also carries
insurance coverage to protect itself against potential losses. Maintaining a
highly motivated and talented staff of petroleum and natural gas professionals
further minimizes the business risk.

    TriStar relies on various sources of funding to support its growing
capital expenditure program:

    
    -   Internally-generated cash flow provides a minimum level of funding on
        which the Company's annual capital expenditure program is based;
    -   Debt may be utilized to expand capital programs when appropriate; and
    -   New equity, if available on favorable terms, may be utilized to
        expand capital programs.
    

    The Company is exposed to commodity price and market risk for its
principal products of petroleum and natural gas. Commodity prices are
influenced by a wide variety of factors, most of which are beyond TriStar's
control. To manage this risk, the Company has entered into a number of
financial derivative contracts for hedging purposes. These derivative
contracts included contracts related to oil and gas prices, as well as foreign
exchange and interest rates. The Company may also, from time to time, enter
into fixed physical contracts. The Company continues to monitor the cost and
associated benefit of these instruments and contracts as well as debt levels
and utilization rates on bank lines and will utilize these derivatives and
contracts when warranted.
    Inflation risks subject the Company to potential erosion of product
netbacks. For example, increasing domestic prices for oil and natural gas
production equipment and services can inflate the costs of operations.
    The supply of service and production equipment at competitive prices is
critical to the ability to add reserves at a competitive cost and produce them
in an economic and timely fashion. In periods of increased activity, these
services and supplies can become difficult to obtain. The Company attempts to
mitigate this risk by developing strong long-term relationships with suppliers
and contractors and maintaining an appropriate inventory of production
equipment.

    Demand for crude oil and natural gas produced by the Company exists
within Canada and the United States; however, crude oil prices are affected by
worldwide supply and demand fundamentals while natural gas prices are
primarily affected by North American supply and demand fundamentals. Demand
for natural gas liquids is influenced mainly by the demand for petrochemicals
in North American and off-shore markets. TriStar mitigates these risks as
follows:

    
    -   Crude oil production is of a high quality mitigating its exposure to
        adverse quality differentials;
    -   Natural gas production is generally connected to a mature pipeline
        infrastructure that operates with minimal interruptions;
    -   Exploration efforts target high-quality oil and liquids-rich natural
        gas reserves;
    -   Sale arrangements vary in term and pricing structure creating a
        diverse portfolio that minimizes risk of exposure to any one market;
        and
    -   Financial instruments may be used where appropriate to manage
        commodity price volatility.
    

    Environmental Regulation and Risk

    The oil and gas industry has various environmental risks subject to
regulation by various governmental bodies. Environmental legislation includes,
but is not limited to, operational controls, site restoration and abandonment
requirements and restrictions on emissions of various substances related to
the production of oil and natural gas. Compliance with this legislation may
require additional costs and a failure to comply may result in fines and
penalties.
    TriStar is committed to minimizing the environmental impact from its
operations through its environmental program which includes stakeholder
communication, resource conservation and site restoration.

    Critical Accounting Estimates

    The preparation of the Company's financial statements requires management
to adopt accounting policies that involve the use of significant estimates and
assumptions. These estimates and assumptions are developed based on the best
available information and are believed by management to be reasonable under
the existing circumstances. New events or additional information may result in
the revision of these estimates over time. The critical estimates are
discussed below:

    Full cost accounting and ceiling test

    The Company follows the full cost method of accounting for petroleum and
natural gas operations. All costs related to the acquisition of, exploration
for and development of petroleum and natural gas reserves are capitalized.
These capitalized costs are evaluated on an annual basis to determine that the
costs are recoverable and do not exceed the fair value of the properties (the
"ceiling test"). These costs are also depleted on a unit-of-production basis.
The ceiling test and depletion expense require estimates of reserve volumes
and discounted cash flows, which are calculated by independent reserve
engineers using assumptions including, but not limited to, future commodity
prices, government policy, royalty rates, capital spending and operating
costs.

    Goodwill

    The Company records goodwill relating to a corporate acquisition when the
purchase price exceeds the fair value for accounting purposes of the net
identifiable assets and liabilities acquired by the Company. The goodwill
balance is assessed for impairment annually at year-end or as events occur
that could result in an impairment. The Company compares the fair value of the
entity to its carrying value, including goodwill. If the carrying value
exceeds the fair value, a goodwill impairment loss is charged to income. The
fair value is largely determined using estimates of reserve volumes and
discounted cash flows, which are calculated by independent reserve engineers
using assumptions including, but not limited to, future commodity prices,
government policy, royalty rates, capital spending and operating costs.

    Hedges

    The Company uses derivative financial instruments from time to time to
hedge its exposure to commodity price, foreign exchange and interest rate
fluctuations. The mark to market valuations of these hedge contracts are
presented in the Company's Consolidated Financial Statements as at March 31,
2009. These valuations are based on forward looking estimates including, but
not limited to, volatility, interest rates and commodity prices.

    Asset retirement obligations

    The Company records a liability for the fair value of legal obligations
associated with the retirement of long-lived tangible assets in the period in
which they are incurred, normally when the asset is purchased or developed. On
recognition of the liability, there is a corresponding increase in the
carrying amount of the related assets, known as the asset retirement cost,
which is depleted on a unit-of-production basis over the life of the reserves.
The liability for these future legal obligations is discounted using estimates
of interest rates, inflation rates and the length of time to actual
settlement.
    A summary of the significant accounting policies used by TriStar can be
found in note 5 to the Consolidated Financial Statements as at and for the
year ended December 31, 2008.

    Additional Information

    Additional information relating to TriStar, including TriStar's AIF and
financial statements, can be found on SEDAR at www.sedar.com.

    
    Summary of Quarterly Results


    ($ thousands
     except per       Three months  Three months  Three months  Three months
     share and        ended Mar 31, ended Dec 31, ended Sep 30, ended Jun 30,
     Boepd amounts)         2009(5)     2008           2008        2008(5)
    -------------------------------------------------------------------------

    Production revenue
     (prior to hedging)     81,918       111,493       183,394       183,107
    Net income (loss)      (13,826)       60,655       105,261       (55,212)
      Per share
       - basic               (0.12)         0.54          0.94         (0.50)
      Per share
       - diluted             (0.12)         0.52          0.91         (0.50)
    Production (Boepd)      20,883        22,072        20,553        20,332
    Cash flow from
     operations(1)          56,950        69,597        97,042        96,848
      Per share
       - basic                0.50          0.62          0.87          0.88
      Per share
       - diluted              0.50          0.60          0.84          0.88
    Cash flow from
     operating
     activities(2)          48,339        77,453       113,929        88,246
      Per share
       - basic                0.42          0.69          1.02          0.80
      Per share
       - diluted              0.42          0.67          0.99          0.80
    Total assets         2,107,074     2,056,841     2,014,043     1,938,167
    Total net debt(3)      356,773       347,724       335,038       303,585
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ($ thousands
     except per       Three months  Three months  Three months  Three months
     share and        ended Mar 31, ended Dec 31, ended Sep 30, ended Jun 30,
     Boepd amounts)         2008(5)       2007(5)       2007(5)         2007
    -------------------------------------------------------------------------

    Production revenue
     (prior to hedging)    135,167        85,419        53,578        25,965
    Net income (loss)       (6,058)      (11,414)       (5,419)        2,023
      Per share
       - basic(4)            (0.06)        (0.17)        (0.11)         0.07
      Per share
       - diluted(4)          (0.06)        (0.17)        (0.11)         0.07
    Production (Boepd)      19,431        14,769        10,120         4,941
    Cash flow from
     operations(1)          73,500        43,503        26,735        13,931
      Per share
       - basic(4)             0.74          0.64          0.56          0.49
      Per share
       - diluted(4)           0.74          0.64          0.56          0.48
    Cash flow from
     operating
     activities(2)          72,423        40,007        25,004        13,536
      Per share
       - basic(4)             0.73          0.58          0.52          0.49
      Per share
       - diluted(4)           0.73          0.58          0.52          0.48
    Total assets         1,892,336     1,169,530     1,160,068       453,337
    Total net debt(3)      317,315       223,398       246,690        77,665
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) "Cash flow from operations" should not be considered an alternative
        to, or more meaningful than, cash flow from operating activities as
        determined in accordance with Canadian Generally Accepted Accounting
        Principles ("GAAP") as an indicator of TriStar's performance. "Cash
        flow from operations" represents cash flow from operating activities
        prior to changes in non-cash working capital and incurred asset
        retirement expenditures. TriStar's determination of cash flow from
        operations may not be comparable to that found in the consolidated
        statement of cash flows in the audited financial statements. TriStar
        also presents cash flow from operations per share whereby per share
        amounts are calculated using weighted average shares outstanding
        consistent with the calculation of earnings per share.
    (2) "Cash flow from operating activities" is determined in accordance
        with GAAP and includes changes in non-cash working capital and
        incurred asset retirement expenditures.
    (3) "Total net debt" is calculated as long-term debt and current
        liabilities less current assets, excluding the current fair value of
        financial instruments and related current future income taxes.
    (4) Pursuant to the acquisition of Real Resources Inc., the shares
        outstanding for each quarter prior to the one ended September 30,
        2007 have been converted on a 0.4762 to 1 basis to reflect the
        exchange of each share of TriStar.
    (5) Due to the antidilutive effect of TriStar's net loss for these
        periods, the diluted number of shares is equivalent to the basic
        number of shares. Therefore, diluted per share amounts for net loss,
        cash flow from operations and cash flow from operating activities are
        equivalent to basic per share amounts.




                           TriStar Oil & Gas Ltd.

                      Consolidated Financial Statements

                              As at and for the

                      three months ended March 31, 2009

                                 (unaudited)



    TriStar Oil & Gas Ltd.
    Consolidated Balance Sheets

    (unaudited)

    -------------------------------------------------------------------------
                                                      March 31,  December 31,
    ($ thousands)                                         2009          2008
    -------------------------------------------------------------------------

    Assets

    Current assets
      Accounts receivable                               67,227        75,493
      Taxes receivable                                   5,173         5,673
      Other current assets (note 4)                     40,814         4,435
      Fair value of financial instruments (note 11)     31,724        45,941
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       144,938       131,542

    Property and equipment (note 5)                  1,712,554     1,679,611
    Goodwill                                           249,582       245,688
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total assets                                     2,107,074     2,056,841
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities
      Accounts payable and accrued liabilities         122,375       152,423
      Fair value of financial instruments (note 11)      6,268         9,714
      Future income taxes                                6,909         9,832
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       135,552       171,969

    Long-term debt (note 6)                            347,612       280,902
    Asset retirement obligations (note 7)               31,630        30,765
    Fair value of financial instruments (note 11)        1,469             -
    Future income taxes                                273,306       263,403
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total liabilities                                  789,569       747,039
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Shareholders' Equity

    Share capital (note 8)                           1,221,025     1,201,831
    Contributed surplus (note 8)                        16,352        14,017
    Retained earnings                                   80,128        93,954
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total shareholders' equity                       1,317,505     1,309,802
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total liabilities and shareholders' equity       2,107,074     2,056,841
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments (note 12)
    Contingencies (note 13)

    See accompanying notes to consolidated financial statements.

    Approved on behalf of the Board

    (signed)                        (signed)

    Paul Colborne                   Brett Herman
    Director                        Director



    TriStar Oil & Gas Ltd.
    Consolidated Statements of Operations, Comprehensive Loss and Retained
    Earnings (Deficit)

    (unaudited)

    -------------------------------------------------------------------------
                                                  Three Months  Three Months
                                                   ended March   ended March
    ($ thousands, except per share amounts)           31, 2009      31, 2008
    -------------------------------------------------------------------------

    Revenues
      Petroleum and natural gas sales                   81,918       135,167
      Royalties                                        (13,171)      (26,422)
    -------------------------------------------------------------------------
                                                        68,747       108,745

    Realized gain (loss) on financial instruments       16,698        (7,543)
    Unrealized loss on financial instruments           (12,240)      (21,394)
    -------------------------------------------------------------------------
                                                        73,205        79,808
    Expenses
      Operating                                         21,405        18,580
      Transportation                                     1,897         1,951
      General and administration                         2,448         2,708
      Depletion, depreciation and accretion             60,411        57,661
      Stock-based compensation                           2,288         1,289
      Interest and bank                                  2,251         3,582
    -------------------------------------------------------------------------
                                                        90,700        85,771

    Loss before taxes                                  (17,495)       (5,963)
    -------------------------------------------------------------------------

    Taxes
      Capital tax expense                                  495           881
      Future income tax expense (reduction)             (4,164)         (786)
    -------------------------------------------------------------------------
                                                        (3,669)           95

    -------------------------------------------------------------------------
    Net loss                                           (13,826)       (6,058)

    Other comprehensive loss
      Amortization of fair value of financial
       instruments                                           -           (45)
    -------------------------------------------------------------------------

    Comprehensive loss                                 (13,826)       (6,103)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Retained earnings (deficit)
      Retained earnings (deficit), beginning of
       period                                           93,954       (10,692)
    -------------------------------------------------------------------------

    Retained earnings (deficit), end of period          80,128       (16,750)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share
      Basic                                              (0.12)        (0.06)
      Diluted                                            (0.12)        (0.06)
    -------------------------------------------------------------------------

    Weighted average number of shares
      Basic                                        114,319,618    99,068,068
      Diluted                                      114,319,618    99,068,068
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to consolidated financial statements.



    TriStar Oil & Gas Ltd.
    Consolidated Statements of Cash Flows

    (unaudited)

    -------------------------------------------------------------------------
                                                  Three Months  Three Months
                                                   ended March   ended March
    ($ thousands)                                     31, 2009      31, 2008
    -------------------------------------------------------------------------

    Operating activities
      Net loss                                         (13,826)       (6,058)
      Unrealized loss on financial instruments          12,241        21,394
      Depletion, depreciation and accretion             60,411        57,661
      Stock-based compensation                           2,288         1,289
      Future income taxes                               (4,164)         (786)
      Incurred asset retirement expenditures (note 7)     (272)            -
      Change in non-cash working capital                (8,339)       (1,077)
    -------------------------------------------------------------------------

                                                        48,339        72,423
    -------------------------------------------------------------------------

    Financing activities
      Issuance of share capital                            113       205,031
      Share issue costs                                 (7,476)      (10,297)
      Increase in long-term debt                        66,710        53,335
    -------------------------------------------------------------------------

                                                        59,347       248,069
    -------------------------------------------------------------------------

    Investing activities
      Capital expenditures                             (63,644)     (104,499)
      Acquisitions, net of cash acquired (note 4)      (36,271)     (176,641)
      Proceeds from dispositions                         9,144         2,912
      Change in non-cash working capital               (16,915)      (42,264)
    -------------------------------------------------------------------------

                                                      (107,686)     (320,492)
    -------------------------------------------------------------------------

    Change in cash and cash equivalents                      -             -
    Cash and cash equivalents, beginning of period           -             -
    -------------------------------------------------------------------------

    Cash and cash equivalents, end of period                 -             -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow information (note 9)

    See accompanying notes to consolidated financial statements.




    TriStar Oil & Gas Ltd.
    Notes to the Consolidated Financial Statements
    As at and for the three months ended March 31, 2009

    1.  Business and basis of presentation

        TriStar Oil & Gas Ltd. ("TriStar" or the "Company") was incorporated
        pursuant to the Business Corporations Act (Alberta) on September 30,
        2005.

        These consolidated financial statements are stated in Canadian
        dollars and have been prepared in accordance with Canadian Generally
        Accepted Accounting Principles ("GAAP"). The preparation of financial
        statements in conformity with GAAP requires the Company's management
        to make estimates and assumptions that affect the reported amounts of
        assets and liabilities and disclosure of contingent assets and
        liabilities at the date of the financial statements and reported
        amounts of revenues and expenses during the period. Actual results
        could differ from those estimates and assumptions. In the opinion of
        management, these financial statements have been prepared within
        reasonable limits of materiality and within the framework of the
        significant accounting policies summarized below.

        These financial statements and the notes thereto should be read in
        conjunction with TriStar's audited consolidated financial statements
        as at and for the year ended December 31, 2008.

    2.  Principles of consolidation

        As at March 31, 2009, the consolidated financial statements include
        the accounts of TriStar, TOG Partnership, Vortex Energy Corporation
        and TriStar AP Partnership.

    3.  Changes in accounting policy

        On February 13, 2008, the Canadian Accounting Standards Board
        ("AcSB") confirmed the mandatory changeover date to International
        Financial Reporting Standards ("IFRS") for Canadian profit-oriented
        publicly accountable entities ("PAEs") such as TriStar.

        The AcSB requires that IFRS compliant financial statements be
        prepared for annual and interim financial statements commencing on or
        after January 1, 2011. For PAEs with a December 31 year-end, the
        first unaudited interim financial statements under IFRS will be for
        the quarter ending March 31, 2011, with comparative financial
        information for the quarter ending March 31, 2010. The first audited
        annual financial statements will be for the year ending December 31,
        2011, with comparative financial information for the year ending
        December 31, 2010. This also means that all opening balance sheet
        adjustments relating to the adoption of IFRS must be reflected in the
        January 1, 2010 opening balance sheet which will be issued as part of
        the comparative financial information in the March 31, 2011 unaudited
        interim financial statements.

        TriStar intends to adopt these requirements as set out by the AcSB
        and other regulatory bodies. While at this time the impact of
        adopting IFRS cannot be reasonably quantified, TriStar has developed
        and commenced implementing its plan for the changeover to IFRS. The
        IFRS changeover plan ensures that TriStar addresses matters such as
        accounting policies, information technology systems, internal
        controls, disclosure controls and procedures, staffing requirements,
        and business activities impacted by accounting processes and
        measures.

        The plan is comprised of three stages. The first stage is to obtain
        an understanding of the impact that the conversion to IFRS will have
        on the elements described above. This commenced in 2008 and will
        continue in 2009. The second stage will be to develop and test
        solutions to the issues identified in stage one. It is anticipated
        that this will also take place in 2009. The third and final stage
        will see the implementation of the solutions developed in stage two.
        While the third stage will commence in some cases in 2009, it will
        also occur in 2010.

        The impact of converting to IFRS may be material. Significant impacts
        will be on accounting for property and equipment: current "full
        cost" accounting under current GAAP differs in significant ways from
        IFRS, with IFRS generally requiring analysis and computation at a
        greater level of detail than current GAAP. Further differences are
        anticipated to be in disclosures, which are more onerous under IFRS
        than current GAAP.

    4. Business combinations

        On March 4, 2009, TriStar announced that together with Crescent Point
        Resources Limited Partnership ("Crescent Point"), it had entered into
        an agreement to acquire certain properties in southeast Saskatchewan
        from Talisman Energy Inc. ("Talisman") for $720.0 million.
        Concurrently with the close of the transaction with Talisman, TriStar
        and Crescent Point will sell certain of the properties to Shelter Bay
        Energy Inc. for $71.0 million. The remaining properties will be
        divided equally by TriStar and Crescent Point who will each have a
        resultant fifty percent interest in them with a net cost to TriStar
        of $324.5 million. The acquisition is expected to close on or about
        June 1, 2009. Together these transactions are described as the
        "Talisman Properties Acquisition".

        Concurrently with this announcement, TriStar entered into an
        agreement to issue 35,937,500 subscription receipts at a price of
        $8.00 per subscription receipt, for gross proceeds of $287.5 million.
        If the Talisman Properties Acquisition is completed on or before
        August 1, 2009, the proceeds will be released to TriStar and each
        subscription receipt will be exchanged for one common share of
        TriStar for no additional consideration. If the Talisman Properties
        Acquisition is not completed on or before August 1, 2009 or is
        terminated at an earlier time, holders of subscription receipts will
        receive a cash payment equal to the offering price of the
        subscription receipts and any interest that was earned thereon during
        the term of the escrow.

        TriStar has provided a deposit of $28.9 million to Talisman under the
        terms of the Talisman Property Acquisition. As well, the Company has
        paid $7.2 million of the underwriters' commissions arising from the
        related subscription receipts financing. These prepayments have been
        included in other current assets as at March 31, 2009.

    5.  Property and equipment

        ($ thousands)
        ---------------------------------------------------------------------
                                                      March 31,  December 31,
                                                          2009          2008
        ---------------------------------------------------------------------
        Petroleum and natural gas assets             2,132,652     2,039,953
        Administrative assets                            1,844         1,887
        ---------------------------------------------------------------------
                                                     2,134,496     2,041,840

        Less accumulated depletion and depreciation   (421,942)     (362,229)
        ---------------------------------------------------------------------

                                                     1,712,554     1,679,611
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        At March 31, 2009, the calculation of the depletion expense excluded
        unproved property and undeveloped land cost of $387.2 million
        (March 31,  2008: $327.6 million). Unused seismic costs of $27.5
        million (March 31,  2008: $32.6 million) were also excluded. Future
        development costs of $372.1 million (March 31,  2008: $171.9 million)
        were included in the depletion calculation.

        During the quarter ended March 31, 2009, the Company capitalized
        $2.4 million (Q1 2008: $1.8 million) of general and administrative
        expenses and $1.6 million (Q1 2008: $1.2 million) of stock-based
        compensation expenses, including a tax effect of $0.6 million
        (Q1 2008: $0.3 million), relating to exploration, development and
        acquisition activities.

    6.  Long-term debt

        As at March 31, 2009, the Company had available a $450.0 million
        credit facility. The Company's credit facility is with a syndicate of
        four banks and is open for review semi-annually. On April 30, 2009,
        TriStar's current credit facility was extended until the close of the
        Talisman Properties Acquisition, which is currently scheduled for
        June 1, 2009. On close of the Talisman Properties Acquisition, the
        credit facility will be increased to $525.0 million with a syndicate
        of eight banks. There are no significant changes to the requirements
        under this increased credit facility except for increases to certain
        fees and applicable interest rate spreads. The Company's next credit
        facility review is due to be completed by October 31, 2009. The
        facility is a borrowing base facility that is determined based on,
        among other things, the Company's current reserve report, results of
        operations, current and forecasted commodity prices and the current
        economic environment. The credit facility is secured by a fixed and
        floating charge debenture on the assets of the Company.

        The Company's effective interest rate for the quarters ended
        March 31, 2009 and 2008 was 2.5 percent and 5.3 percent,
        respectively.

    7.  Asset retirement obligations

        The total future asset retirement obligations ("ARO") were estimated
        based on the Company's net ownership interest in all of its wells and
        facilities, estimated costs to reclaim and abandon the wells and
        facilities, and the estimated timing of the costs to be incurred in
        future periods. The Company has estimated an undiscounted total
        future liability of $96.2 million as at March 31, 2009. The Company's
        credit adjusted risk-free rate of 8.5 percent and an inflation rate
        of 2.0 percent per annum were used to calculate the net present value
        of the asset retirement obligations.

        The following table reconciles the Company's total asset retirement
        obligations:

        ($ thousands)
        ---------------------------------------------------------------------
                                                      March 31,  December 31,
                                                          2009          2008
        ---------------------------------------------------------------------
        Balance, beginning of period                    30,765        22,650
        Liabilities acquired (net of dispositions)         (11)        4,147
        Liabilities incurred                               448         3,035
        Incurred asset retirement expenditures            (272)       (1,547)
        Accretion expense                                  700         2,480
        ---------------------------------------------------------------------

        Balance, end of period                          31,630        30,765
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8.  Shareholders' equity

        a) Share capital - authorized

              i)    An unlimited number of voting common shares of TriStar
                    ("Common Shares").

              ii)   The Company is authorized to issue four classes of
                    preferred shares designated as First Preferred Shares,
                    Second Preferred Shares, Third Preferred Shares and
                    Fourth Preferred Shares, each class issuable in series
                    (collectively, the "Preferred Shares"). There were no
                    Preferred Shares outstanding during the period.

        b) Share capital - issued and outstanding

           The following table reconciles the Company's share capital
           movements:

                                           Three months ended March 31, 2008
                                          -----------------------------------
                 ($ thousands, except                Number of
                  share amounts)                        shares        Amount
                 ------------------------------------------------------------

                  Balance, beginning of period      68,462,492       694,934
                 ------------------------------------------------------------

                  Issued for cash                   16,875,000       205,031
                  Issued on acquisitions            24,772,165       267,214
                  Tax effect on flow-through
                   expenses renounced                        -        (2,720)
                  Share issue costs (net of tax
                   effect)                                   -       (11,244)
                 ------------------------------------------------------------

                  Total share capital, end of
                   period                          110,109,657     1,153,215
                 ------------------------------------------------------------



                                           Three months ended March 31, 2009
                                          -----------------------------------
                 ($ thousands, except                Number of
                  share amounts)                        shares        Amount
                 ------------------------------------------------------------

                  Balance, beginning of period     113,475,423     1,201,831
                 ------------------------------------------------------------

                  Issued on acquisitions             2,407,992        21,636
                  Tax effect on flow-through
                   expenses renounced                        -        (4,097)
                  Issued on option exercise             15,500           113
                  Issued on vesting of incentive
                   shares                              109,332             -
                  Transfer from contributed surplus
                   on exercise of stock options
                   and vesting of incentive shares           -         1,542
                 ------------------------------------------------------------

                  Balance, end of period           116,008,247     1,221,025
                 ------------------------------------------------------------
                 ------------------------------------------------------------

        c) Stock-based compensation

           The Company has an employee stock option plan under which
           employees and directors are eligible to receive option grants
           ("Stock Options") and Common Share incentives ("Incentive
           Shares"). The total aggregate amount of Stock Options and
           Incentive Shares that can be issued cannot exceed ten percent of
           the outstanding Common Shares. The Company accounts for its
           stock-based compensation using the fair value method. The fair
           value of the Stock Options and Incentive Shares is charged to
           earnings over three years on a straight-line basis.

           Stock Options granted under the plan have a term of five years to
           expiry and vest over three years. The fair value of each Stock
           Option granted was estimated on the date of the grant using the
           Black-Scholes option pricing model with weighted average
           assumptions. The average expected life for the Stock Options is
           three years. The risk-free interest rate used to fair value the
           Stock Options is between 3.3 and 4.25 percent (2008: 4.25 percent)
           and the expected volatility used is between 35 and 37.5 percent
           (2008: 35 percent).

           The following table reconciles Stock Option activity:


    -------------------------------------------------------------------------
                              Three months ended          Three months ended
                                    Mar 31, 2009                Mar 31, 2008
    -------------------------------------------------------------------------
                                        Weighted                    Weighted
                                         average                     average
                         Number of      exercise     Number of      exercise
                           Options         price       Options         price
    -------------------------------------------------------------------------
    Balance, beginning
     of period           4,240,593         11.30     2,695,800          7.40
      Granted               15,300          9.42       460,250         13.61
      Cancelled             (9,193)         8.69        (1,000)         7.29
      Exercised            (15,500)         7.29             -             -
    -------------------------------------------------------------------------

    Balance, end of
     period              4,231,200         11.32     3,155,050          8.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable, end
     of period             872,624          8.52             -             -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


           The following table reconciles Incentive Share activity:

                 ------------------------------------------------------------
                                                  Three months  Three months
                                                         ended         ended
                                                  Mar 31, 2009  Mar 31, 2008
                 ------------------------------------------------------------
                 Balance, beginning of period        2,282,354     2,695,800
                   Granted                                   -       460,250
                   Cancelled                           (32,000)       (1,000)
                   Common shares issued upon
                    vesting                           (109,332)            -
                 ------------------------------------------------------------
                 ------------------------------------------------------------

                 Balance, end of period              2,141,022     3,155,050
                 ------------------------------------------------------------
                 ------------------------------------------------------------

           Incentive Shares are earned over three years from the date of
           grant. Upon being earned, the Incentive Shares are converted into
           Common Shares and issued from treasury at no cost to the Incentive
           Shareholder. The fair value of Incentive Shares is deemed to equal
           the stock price on the date of grant. As at March 31, 2009, there
           were 2,141,022 Incentive Shares outstanding and none were
           convertible to Common Shares.

        d) Contributed surplus

           The following table reconciles the Company's contributed surplus
           balance:

                 ($ thousands)
                 ------------------------------------------------------------
                                                      March 31,  December 31,
                                                          2009          2008
                 ------------------------------------------------------------
                 Balance, beginning of period           14,017         6,414
                 Stock-based compensation expense
                  arising from:
                   Stock Options                         1,173         3,651
                   Incentive Shares                      2,704         8,688
                 Reclass to share capital upon
                  conversion:
                   Exercised stock options                 (33)         (270)
                   Incentive Shares                     (1,509)       (4,466)
                 ------------------------------------------------------------

                 Balance, end of period                 16,352        14,017
                 ------------------------------------------------------------
                 ------------------------------------------------------------

        e) Flow-through shares

           On December 18, 2008, TriStar issued 1,025,000 flow-through Common
           Shares at a price of $14.70 per share for gross proceeds of
           $15.1 million. As a result, the Company must incur qualifying
           resource expenditures amounting to $15.1 million before
           December 31, 2009. The related tax impact was recorded in the
           current quarter. The qualifying expenditures were renounced to
           shareholders as at December 31, 2008. The obligation remaining for
           this flow-through share issue was $9.4 million as at March 31,
           2009.

    9.  Supplemental cash flow information

                 ($ thousands)
                 ------------------------------------------------------------
                                                  Three months  Three months
                                                         ended         ended
                                                  Mar 31, 2009  Mar 31, 2008
                 ------------------------------------------------------------
                 Income taxes, installments and
                  other taxes paid                         248           695
                 Interest paid, net of interest
                  income                                 2,394         4,412
                 ------------------------------------------------------------
                 ------------------------------------------------------------

    10. Financial risk management

        a) Credit risk

           Credit risk is the risk of financial loss to the Company if a
           counterparty to a financial instrument fails to meet its
           contractual obligations, and arises principally from the Company's
           receivables from joint venture partners and from petroleum and
           natural gas marketers. At March 31, 2009 the Company's receivables
           consisted of 62% of revenue from petroleum and natural gas
           marketers and 38% from joint venture and other receivables.

           Receivables from petroleum and natural gas marketers are collected
           on the 25th day of each month following production. The Company's
           policy to mitigate credit risk associated with these balances is
           to establish relationships with credit-worthy marketers, as well
           as to carefully assess the extent of credit granted to these
           parties.

           Joint venture receivables are normally collected within one to
           three months of the joint venture bill being issued to the
           partner. The Company attempts to mitigate the risk from joint
           venture receivables by obtaining partner approval of significant
           capital expenditures prior to expenditure. However, the
           receivables are from participants in the petroleum and natural gas
           sector and collection of the outstanding balances is dependent on
           industry factors such as commodity price fluctuations, escalating
           costs and the risk of unsuccessful drilling. Further risks exist
           with joint venture partners as disagreements occasionally arise,
           increasing the risk of non-collection. The Company does not
           typically obtain collateral from petroleum and natural gas
           marketers or joint venture partners. However, the Company does
           have the ability to withhold production from joint venture
           partners in the event of non-payment, as well as requiring
           prepayment (cash calls) for significant expenditures.

           On July 22, 2008, SemCanada Crude Company, a petroleum marketer
           for the Company, filed for creditor protection. As a result, it
           did not make payment on the July 25, 2008 settlement date for the
           June crude oil volumes marketed on behalf of its clients nor for
           July crude volumes shipped up to July 21, 2008. TriStar had an
           irrevocable standby letter of credit for $1.5 million which was
           fully collected subsequent to July 21, 2008. The remaining amount
           owed to TriStar as a result of this matter is $7.1 million.
           Although the eventual loss is not known at this time, as at March
           31, 2009, the Company has a reduction of accounts receivable
           totaling $3.6 million of the amount owed and an off-setting
           reduction of 2008 revenue. The Company continues to monitor the
           matter and once it has further information, it will make necessary
           adjustments for impairment. There are no other material accounts
           receivable at March 31, 2009 that TriStar deemed uncollectible.

           During the fourth quarter of 2008, TriStar entered into a credit
           insurance policy to provide coverage over the collectability of
           production revenues from certain buyers. The Company believes that
           this policy, in conjunction with continued prudent credit-granting
           practices, is expected to reduce the non-collectability of bad
           debts from these buyers.

        b) Liquidity risk

           Liquidity risk relates to the risk that the Company will encounter
           difficulty in meeting its obligations associated with financial
           liabilities. The financial liabilities on the balance sheet
           consist mainly of accounts payable and bank debt. The Company
           anticipates it will continue to have adequate liquidity to fund
           its financial liabilities through its future cash flows and
           available credit facility (see note 6). The Company has had no
           defaults or breaches on its bank debt or on any of its financial
           liabilities.

        c) Market risk

           Market risk is the risk that changes in market prices, such as
           currency risk, commodity price risk and interest rate risk will
           affect the Company's net earnings, future cash flows, the value of
           financial instruments, or the fair value of its assets and
           liabilities.

           Although the Company generally does not sell or transact in
           foreign currency, the United States dollar influences the price of
           petroleum and natural gas sold in Canada. Furthermore, exchange
           rate fluctuations can affect the fair value of future cash flow
           from derivative petroleum and natural gas contracts. In 2008, the
           Company entered into certain foreign exchange rate hedges to
           mitigate a portion of this risk as described in note 11.

           Commodity prices for crude oil, natural gas liquids ("NGL") and
           natural gas are also impacted by political events, meteorological
           conditions, disruptions in supply and changes in demand. TriStar
           enters into commodity derivative contracts that provide downside
           price protection in order to provide some stability of cash flows
           for capital spending planning purposes, as described in note 11.
           The Company's risk management activities are conducted pursuant to
           the Company's risk management policies approved by the Board of
           Directors.

           The Company's other assets and liabilities are generally not
           affected by changes in currency rates.

           The Company is exposed to interest rate risk on its outstanding
           bank debt, which has a floating and fixed interest rate,
           potentially affecting future cash flows. At March 31, 2009 the
           Company had four interest rate swaps as disclosed in note 11.

           The Company uses a non-GAAP measure, cash flow from operations, as
           a measure of current operating efficiency. Cash flow from
           operations represents cash flow from operating activities prior to
           changes in non-cash working capital and incurred asset retirement
           expenditures.

           For the quarter ended March 31, 2009, the sensitivity of cash flow
           from operations to changes in TriStar's realized crude oil and NGL
           prices, natural gas prices, and bank interest rate would have been
           as follows. An increase by $1.00 per barrel in the realized price
           for crude oil and NGL would have resulted in approximately
           $0.8 million additional cash flow from operations. An increase by
           $0.10 per thousand cubic feet in the realized price for natural
           gas would have resulted in approximately $0.2 million additional
           cash flow from operations. An increase by 0.1% to the bank
           interest rate would have resulted in approximately $0.1 million
           less cash flow from operations. However, the above sensitivity
           results for crude oil and NGL, for natural gas, and for bank
           interest should not be extrapolated further without considering
           TriStar's hedge portfolio, royalty parameters and potential
           price-related effects on the results of the period.

        d) Capital management

           The Company's policy is to maintain a strong capital base in order
           to maintain financial flexibility and to sustain the future
           development of the business. The Company manages its capital
           structure and makes adjustments relative to changes in economic
           conditions and the Company's risk profile. In order to maintain
           the capital structure, the Company may from time to time issue
           shares and adjust its capital spending to manage current and
           projected debt levels. The Company monitors its bank debt level
           and working capital in order to assess capital and operating
           efficiency.

           The Company considers its capital structure to include
           shareholders' equity, working capital and long-term debt. The
           Company's share capital is not subject to external restrictions,
           however its credit facility is based on its petroleum and natural
           gas reserves.

    11. Financial instruments

        The Company's financial instruments recognized on the balance sheet
        consist of accounts receivable, accounts payable and accrued
        liabilities, long-term debt and derivative commodity contracts. The
        fair value of these instruments, excluding derivative commodity
        contracts, approximate their carrying value due to their short terms
        to maturity or the indexed rate of interest on the bank debt. The
        fair value of the derivative commodity contracts ("financial
        derivatives") is recognized on the balance sheet as described below.

        Financial derivatives

        At March 31, 2009, the following table presents a reconciliation of
        the change in the unrealized amounts from January 1, 2009 to
        March 31, 2009:


        ($ thousands)
        ---------------------------------------------------------------------
                                                                  Fair Value
        ---------------------------------------------------------------------
        Balance, December 31, 2008                                    36,227
        Unrealized loss on financial instruments                     (12,240)
        Additions                                                          -
        ---------------------------------------------------------------------

        Balance, March 31, 2009                                       23,987
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        During the quarter ended March 31, 2009, the Company actually
        realized a portion of the amount accrued as at December 31, 2008 with
        a cash gain on financial instruments of $16.7 million.

        Commodity contracts
        -------------------

        Commodity contracts outstanding as at March 31, 2009 are as follows:

        Oil contracts
        ---------------------------------------------------------------------
                                                            Price
        Term                     Type         Volume     ($US$/Bbl)    Index
        ---------------------------------------------------------------------
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      500     65.00 - 76.30    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      500     65.00 - 76.15    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      500     65.00 - 73.25    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      500     67.00 - 76.70    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      500     70.00 - 75.52    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      250     75.00 - 96.05    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      250    75.00 - 102.00    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      250    75.00 - 100.00    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      250    75.00 - 100.00    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      250    80.00 - 100.00    WTI
        Jan. 1, 2008
         - Dec. 31, 2009   Costless Collar      250    80.00 - 100.00    WTI
        Feb. 1, 2008
         - Dec. 31, 2009           Oil Put      500             75.00    WTI
        Mar. 1, 2008
         - Dec. 31, 2009           Oil Put      500             80.00    WTI
        Apr. 1, 2007
         - Dec. 31, 2009          Oil Swap      250           C$76.60  C$WTI
        Jan. 1, 2008
         - Dec. 31, 2009          Oil Swap      250           C$78.20  C$WTI
        Feb. 1, 2009
         - Jun. 30, 2009          Oil Swap      500           C$61.70  C$WTI
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The fair value of the oil costless collar, put and swap contracts at
        March 31, 2009 was an asset of $28.7 million.

        Fixed strike, foreign exchange contracts
        ---------------------------------------------------------------------
                                                        Strike
        Term                         Type   Amount USD   Price    Amount CDN
        ---------------------------------------------------------------------
        May 1, 2008
         - Dec. 31, 2009              Put   $1,250,000   $1.00    $1,250,000
        May 1, 2008
         - Dec. 31, 2009             Call   $2,500,000   $1.00    $2,500,000
        Dec. 1, 2008
         - Dec. 31, 2009          Forward   $2,500,000   $1.28    $3,200,000
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The fair value of the foreign exchange contracts as at March 31, 2009
        was a liability of $2.4 million.


        Bankers' Acceptance Fixed Interest Rate Swap Contracts
        ---------------------------------------------------------------------
        Term                                        Fixed Rate    Amount CDN
        ---------------------------------------------------------------------
        Jan. 29, 2009 - Jan. 30, 2012                   1.620%   $50,000,000
        Jan. 29, 2009 - Jan. 30, 2012                   1.653%   $50,000,000
        Feb. 17, 2009 - Feb. 10, 2012                   1.540%   $25,000,000
        Feb. 17, 2009 - Feb. 12, 2012                   1.510%   $25,000,000
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The fair value of the fixed interest rate swap contracts as at
        March 31, 2009 was a net liability of $2.3 million.

    12. Commitments

        At March 31, 2009, the Company had the following base lease
        commitments for office space:

        ($ thousands)
        ---------------------------------------------------------------------
        2009                                                           1,946
        2010                                                           2,494
        2011                                                           2,417
        2012                                                           2,389
        2013                                                           2,584
        Thereafter                                                     4,728
        ---------------------------------------------------------------------

        In addition, TriStar is obligated to pay various costs associated
        with operations incurred in the normal course of business. These
        costs include royalties paid to the Alberta and Saskatchewan
        governments, surface lease rentals and mineral rights to various
        landowners and abandonment and reclamation costs. These costs are
        highly dependent on the future operating environment and are subject
        to changes in commodity prices, ownership, production volumes and
        government policies.

    13. Contingencies

        The Company is involved in litigation and claims arising in the
        normal course of operations and believes that such claims will not
        materially affect the Company's financial position or reported
        results of operations.
    


    %SEDAR: 00025796E




For further information:

For further information: Brett Herman, President & Chief Executive
Officer, TriStar Oil & Gas Ltd., (403) 268-7800; or Jason Zabinsky, Vice
President, Finance & Chief Financial Officer, TriStar Oil & Gas Ltd., (403)
268-7800

Organization Profile

TriStar Oil & Gas Ltd.

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