RSX announces second quarter results and provides operations update



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

    CALGARY, Aug. 29 /CNW/ - RSX Energy Inc. ("RSX" or the "Company") is
pleased to announce second quarter results and to provide an operations
update.

    Second Quarter 2007 Drilling
    ----------------------------
    RSX participated in the drilling of 14 gross wells (7.7 net) in the
6 months ending June, 2007. Thirteen wells were drilled in the first quarter
and one exploration well at Hinton (0.4 net) was drilled in May, 2007. The
well Cabot RSX Hinton 9-20-51-25 W5M was drilled and cased during the second
quarter and completed and onstream in the third quarter of 2007.

    Second Quarter 2007 Capital Expenditures
    ----------------------------------------
    RSX spent $5.81 million in the second quarter consisting of $2.64 million
for drilling and completion, $2.74 million for facilities and pipelining,
$0.17 million for land and $0.26 million for seismic acquisition.
Approximately 50% of the capital was spent at Hinton for drilling and
completion of the 9-20 well.

    Second Quarter Land Acquisition
    -------------------------------
    RSX exits the second quarter of 2007 with 70,671 net undeveloped acres
with an estimated value of $23 million. The land evaluation was performed by
Seaton-Jordan Associates Ltd. as at March 31, 2007 and has been updated with
actual purchases in the second quarter.
    RSX made minor land purchases during the quarter totaling $172,000 net.

    Second Quarter Production
    -------------------------
    During the second quarter of 2007 production was up 77% over the second
quarter of 2006. Production averaged 1,720 Boepd in the second quarter despite
considerable downtime due to spring break-up, plant turn-arounds and pipeline
shut down at Gold Creek and Bezanson. In addition, RSX estimates that
approximately 250-300 Bopd of production is shut-in as G.P.P. (good production
practice) approvals have not yet been received from the AEUB for production at
Gold Creek and Boundary Lake.
    Production during the quarter was comprised of 44% oil and natural gas
liquids and 56% natural gas. As RSX continues to focus on the development of
the Hinton Field, there is potential for continued movement toward a more
natural gas weighting over oil and natural gas liquids.
    RSX maintains its previous production forecast and expects to average
2,500 Boepd in 2007. The forecast assumes that G.P.P. approvals are received
for Gold Creek and Boundary Lake in the next month.

    Hinton
    ------
    The expanded Hinton pipeline began service on February 5, 2007. Currently
the 11-16 (RSX 25%) and 6-21 (RSX 40%) are producing into the system with a
remedial workover planned for the 12-15 well (RSX 25%). The system has current
capacity of 60 Mmcf/d but can be expanded with additional compression. RSX has
reserved 13.35 Mmcf/d of firm service in the pipeline.
    During the second quarter, the Company participated in the drilling of
the well Cabot RSX Hinton 9-20-51-25 W5M (RSX 40%) which spudded on April 2,
2007 and reached a total depth of 3,603 m after 41 days drilling.
    This is the first location drilled by RSX based solely on the 3D seismic
survey shot in the summer of 2006.
    Log and drilling information indicated 2 significant hydrocarbon zones in
the Upper Spirit River Formation. Both zones are approximately 8-10 meters
thick with sand qualities similar to those encountered in the 11-16 discovery
well.
    The lower zone was perforated over a 6 meter interval and flow tested at
a flow rate of 12.5 Mmcf/d at 3,900 psig flowing pressure. Bottom hole
pressure was measured at 8,558 psig. The completed zone was tied-in and on
production on August 4, 2007. Production rates have varied between 4-12 Mmcf/d
during the month of August as facilities are still being optimized.
    RSX and its partner have begun commingling discussions with the AEUB
prior to completing the upper zone. Once commingling approvals have been
received, RSX expects to complete and put on production the Upper Spirit River
zone. The Company anticipates completing the upper zone sometime in October.
    Downspacing applications were submitted in June and July of 2007. RSX
expects to have approvals for downspacing in sections 15 and 16-51-25 W5M in
December of this year with additional downspacing approvals for 11 sections in
January 2008.
    RSX (25%) will participate in the drilling of the well Cabot RSX Hinton
9- 16-51-25 W5M which will spud in the first week of September. The well
offsets the discovery well at 11-16-51-25 W5M and is expected to take 45 days
to drill. From the same surface lease, RSX (25%) may spud the well Cabot RSX
Hinton 4-15-51-25 W5M immediately after the 9-16 well is completed.
    Partners have acquired a new single stage 1480 horsepower compressor
which can be converted to a 2 stage operation if necessary. The compressor has
a maximum throughput of 15 Mmcf/d at 500 Psig. The compressor will be
installed at the 9-20 wellsite and will assist in increasing production from
downstream wells.
    RSX has an average working interest of 70% in 32 sections of land in the
Hinton area of which 16 sections are 100% interest lands.

    Boundary Lake
    -------------
    Using its proprietary 30 square mile 3D seismic survey, RSX made a
significant oil discovery in the Boundary Lake area in February 2007. The well
RSX Boundary Lake 13-29-85-12 W6M flowed light sweet crude at rates of 350-400
Boepd from the Kiskatinaw formation during an extended flow test conducted in
February 2007. RSX has a 100% interest in the well which came on stream in
late May once battery construction was completed. Rates on the well are
currently restricted and the Company expects to receive G.P.P. approval for
the well in the next 2 weeks.
    In the third quarter of 2007, the Company drilled its first development
well in the pool at 16-30-85-12 W6M (RSX 90%). The well was completed in early
August and flowed clean light sweet crude at rates of 350-400 Bopd. RSX
expects to have the well on production by the end of August and will produce
the well at 125 Bopd restricted rate until further G.P.P. approvals are
received.
    RSX will continue to delineate the Boundary Lake Kiskatinaw Pool with a
third well to spud in late September. If successful, the Company plans to
initiate a detailed reservoir study which would provide the information
necessary to begin water flood applications.

    Third and Fourth Quarter Outlook
    --------------------------------
    RSX expects to drill 4 wells at Boundary Lake (2.9 net), 1 well at Hinton
(0.4 net) and 1 well at Rigel (0.21 net) during the third quarter of 2007. In
the fourth quarter, the Company has planned an additional 4 wells at Boundary
Lake, Hinton and Gold Creek.

    
    OPERATING AND FINANCIAL SUMMARY

    2007 Six Month and Q2 HIGHLIGHTS
    --------------------------------
    -   Six month drilling included 14 gross wells (7.70 net).
    -   Six month petroleum and natural gas sales up 57% over same period
        2006.
    -   Q2 petroleum and natural gas sales up 73% over 2006 Q2.
    -   Six month production up 62% over same period 2006.
    -   Q2 production up 77% over 2006 Q2.
    -   Q2 production up 15% over 2007 Q1.
    -   Six month operating netback of $31.66/boe (before G&A and interest
        cost).
    -   Q2 operating netback of $31.82/boe (before G&A and interest cost).
    -   Six month cash flow from operations up 61% over same period 2006.
    -   Q2 cash flow from operations up 85% over 2006 Q2.
    -   Q2 cash flow from operations up 10% over 2007 Q1.
    -   Six month cash flow from operations of $0.14 per share basic and
        diluted as compared to $0.11 per share basic and $0.10 per share
        diluted in same period 2006.
    -   Q2 cash flow from operations of $0.07 per share basic and diluted as
        compared to $0.05 per share basic and $0.04 per share diluted in 2006
        Q2.
    -   Six month net loss of $2,850k as compared to net income of $621k in
        same period 2006.
    -   Six month capital expenditures of $24,436k, up 5% over same period
        2006 capital expenditures of $23,328k.

                               Three     Three       Six       Six
                               Month     Month     Month     Month
                              Period    Period    Period    Period  % Change
                               Ended     Ended     Ended     Ended    Period
                             June 30,  June 30,  June 30,  June 30,     Over
      Highlights                2007      2006      2007      2006    Period
    -------------------------------------------------------------------------
    Financial ($000's except
     per share data)
      Petroleum and natural
       gas sales               8,469     4,898    15,639     9,966       57%
      Cash flow from
       operations              3,996     2,156     7,643     4,756       61%
        Per share -  basic      0.07      0.05      0.14      0.11       27%
        Per share - diluted     0.07      0.04      0.14      0.10       40%
      Net income (loss)       (1,833)      258    (2,850)      621     -559%
        Per share - basic
         and diluted           (0.03)     0.00     (0.05)     0.01     -600%
      General &
       administrative            787       845     1,210     1,234       -2%
      Capital expenditures     5,809    11,695    24,436    23,328        5%
      Working capital
       deficiency                                (26,514)  (12,600)     110%
      Property
       divestitures(*)             -       254         -    11,223         -
      Shareholders' equity                        60,897    43,734       39%
      Total assets                                99,952    66,817       50%

    Operating (average
     daily production)
      Oil (bopd)                 752       456       694       486       43%
      Natural gas (mcfd)       5,808     3,091     5,474     3,029       81%
      Equivalent barrels
       (boepd)                 1,720       971     1,607       991       62%

    (*) Property divestitures
    Effective January 1, 2006, RSX divested its 0.44792% interest in the
    Weyburn oil unit to a Calgary-based royalty trust for $11 million. At the
    time of sale, RSX's net share of production from the Weyburn unit was
    approximately 130 boepd with total Proved reserves of 646 mstboe as
    evaluated by GLJ Petroleum Consultants Ltd. effective December 31, 2005.
    During 2006 Q2, RSX continued its divestiture program. RSX sold non-core
    properties for $254k. The approximate production from these non-core
    properties was 20 boepd. Proceeds from the divestitures have been used to
    partially fund RSX's drilling program including lands, seismic and
    drilling costs in the Hinton area.


                                             Six Month   Six Month
                                                Period      Period  % Change
                                                 Ended       Ended    Period
                                               June 30,    June 30,     Over
                 Highlights                       2007        2006    Period
    -------------------------------------------------------------------------
    Land Position
      Net acres                                 84,831      80,381        6%
    Wells Drilled
      Gross                                         14           4      250%
      Net                                          7.7         1.7      353%
    Common Share Information
      Shares outstanding - basic            55,228,574  48,153,574       15%
      Shares outstanding - diluted          58,188,574  51,193,574       14%
      Weighted average during the period
        Basic                               54,335,425  44,204,229       23%
        Diluted                             54,335,425  45,711,178       19%
      Closing share price, period end ($)         2.88        3.21      -10%
      Weighted average share price ($)            2.99        3.15       -5%
      Trading volume                         9,409,762  14,975,354      -37%
      Daily average trading volume              74,093     118,852      -38%


    SUMMARY OF QUARTERLY RESULTS FOR 2007, 2006 AND 2005

                                               2007                2006
                                            Q2        Q1        Q4        Q3
                                     ----------------------------------------
    Financial ($000's except
     per share data)
      Petroleum and natural
       gas sales                         8,469     7,170     4,704     4,696
      Cash flow from operations          3,996     3,647     2,238     2,536
        Per share - basic                 0.07      0.07      0.05      0.05
        Per share - diluted               0.07      0.07      0.05      0.05
      Net income (loss)                 (1,833)   (1,017)     (502)      413
        Per share - basic
         and diluted                     (0.03)    (0.02)    (0.01)     0.01
      Capital expenditures               5,809    18,627    15,908     7,960
      Working capital deficiency       (26,514)  (24,699)  (19,993)  (17,971)
      Total shareholders' equity        60,897    61,793    55,761    44,307
      Total assets                      99,952    99,941    86,270    72,016

    Operating (average daily
     production)
      Equivalent barrels (boepd)         1,720     1,492     1,035       972

    Common Share Information (000's)
      Shares outstanding - basic        55,229    55,229    52,489    48,339
      Shares outstanding - diluted      58,189    56,934    54,194    51,194
      Weighted average during
       the period
        Basic                           54,335    53,432    46,814    45,553
        Diluted                         54,732    53,432    46,814    47,130


                                              2006                2005
                                            Q2        Q1        Q4        Q3
                                     ----------------------------------------
    Financial ($000's except
     per share data)
      Petroleum and natural
       gas sales                         4,898     5,068     7,102     6,484
      Cash flow from operations          2,156     2,600     4,646     3,800
        Per share - basic                 0.05      0.06      0.11      0.09
        Per share - diluted               0.04      0.06      0.11      0.09
      Net income (loss)                    258       363     1,934       681
        Per share - basic
         and diluted                      0.00      0.01      0.04      0.02
      Capital expenditures              11,695    11,633     6,571     7,101
      Working capital deficiency       (12,600)  (19,305)  (17,971)  (21,241)
      Total shareholders' equity        43,734    26,432    25,302    26,041
      Total assets                      66,817    56,856    54,923    58,505

    Operating (average daily
     production)
      Equivalent barrels (boepd)           971     1,011     1,146     1,058

    Common Share Information (000's)
      Shares outstanding - basic        48,154    43,202    43,102    43,202
      Shares outstanding - diluted      51,194    45,781    45,781    45,781
      Weighted average during
       the period
        Basic                           44,204    43,202    42,885    42,945
        Diluted                         45,711    45,293    44,639    44,581


    OPERATING

    Operating results for the three and six months ended June 30, 2006 and
2007 and for the year ended December 31, 2006 are:

    -------------------------------------------------------------------------
    Operating Results                             Three Months Ended
    -------------------------------------------------------------------------
    Production Netbacks                     June 30, 2007     June 30, 2006
    -------------------------------------------------------------------------

    Average daily natural gas (mcfd)        5,808              3,091
    Average daily oil & ngl's (bopd)          752                456
    Average daily oil equivalent
     (boepd at 6:1)                         1,720                971
    Average natural gas price (mcf)         $7.35              $6.49
    Average oil and ngl's price (bbl)      $67.04             $74.10

    Netbacks                               $000's     Boe    $000's     Boe
    --------                               ------     ---    ------     ---
    Revenue                                $8,469   $54.11   $4,898   $55.44
    Royalties                               1,505     9.61      682     7.72
    Production                              1,333     8.52      913    10.33
    Transportation                            650     4.16       96     1.09
                                          -----------------------------------
                                           $4,981   $31.82   $3,207   $36.30
    Administrative costs                      787     5.03      845     9.56
    Interest expense                          198     1.26      177     2.00
                                          -----------------------------------
                                           $3,996   $25.53   $2,185   $24.74
    Current income tax expense                  0     0.00       29     0.33
    -------------------------------------------------------------------------
    Cash flow from operations              $3,996   $25.53   $2,156   $24.41
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Operating Results            Six Months Ended              Year Ended
    -------------------------------------------------------------------------
    Production Netbacks   June 30, 2007     June 30, 2006     Dec. 31, 2006
    -------------------------------------------------------------------------

    Average daily
     natural gas (mcfd)   5,475             3,029             3,159
    Average daily
     oil & ngl's (bopd)     694               486               471
    Average daily oil
     equivalent
     (boepd at 6:1)       1,607               991               997
    Average natural
     gas price (mcf)      $7.52             $7.17             $6.79
    Average oil and
     ngl's price (bbl)   $65.18            $68.63            $67.15

    Netbacks             $000's     Boe    $000's     Boe    $000's     Boe
    --------             ------     ---    ------     ---    ------     ---
    Revenue             $15,639   $53.78   $9,966   $55.58  $19,366   $53.21
    Royalties             2,957    10.17    1,522     8.49    2,941     8.08
    Production            2,407     8.28    1,933    10.79    3,744    10.29
    Transportation        1,068     3.67      166     0.92      354     0.97
                        -----------------------------------------------------
                         $9,207   $31.66   $6,345   $35.38  $12,327   $33.87
    Administrative costs  1,210     4.16    1,234     6.88    2,137     5.88
    Interest expense        354     1.22      326     1.82      631     1.73
                        -----------------------------------------------------
                         $7,643   $26.28   $4,785   $26.68   $9,559   $26.26
    Current income
     tax expense              0     0.00       29     0.16       29     0.08
    -------------------------------------------------------------------------
    Cash flow from
     operations          $7,643   $26.28   $4,756   $26.52   $9,530   $26.18
    -------------------------------------------------------------------------
    

    Production and pricing

    During 2007 Q2, production averaged 1,720 boepd, up 77% over 2006 Q2
daily production of 971 boepd. RSX completed a very active 2007 Q1/Q2 winter
drilling program. For 2007 Q2, oil & natural gas liquids (ngl's) production
was up 65% and natural gas production was up 88% over the same period last
year. Some production additions from Gold Creek and Boundary Lake were
achieved in late May and have not been fully weighted on average production
for the quarter. As well, the Company had temporary production shut-in due to
plant, compressor and pipeline maintenance in several areas. Production was
15% higher than 2007 Q1 production of 1,492 boepd.
    For 2007 Q2, production was comprised of 44% oil and natural gas liquids
and 56% natural gas. During 2006 Q2, the production mix was 47% oil and
natural gas liquids and 53% natural gas. This production change is a result of
the commencement of natural gas production from the Hinton area. For the year
ended December 31, 2006 the production mix was 47% oil and natural gas liquids
and 53% natural gas. As RSX continues to focus on the Hinton gas discovery,
there is potential for continued movement to a more natural gas weighting over
oil and natural gas liquids.
    The blended average selling price for crude oil and natural gas liquids
in 2007 Q2 was $67.04/bbl, with natural gas at $7.35/mcf, as compared to
2006 Q2 pricing of $74.10/bbl for crude oil and natural gas liquids and
$6.49/mcf for natural gas. Crude oil had a 10% price decrease while natural
gas pricing had a 13% increase.
    For the six months ended June 30, 2007, production averaged 1,607 boepd,
up 62% over daily production of 991 boepd for the same period last year. For
the six months ended June 30, 2007, production was comprised of 43% oil and
natural gas liquids and 57% natural gas. The blended average selling price for
crude oil and natural gas liquids for the six months ended June 30, 2007, was
$65.18/bbl, with natural gas at $7.52/mcf, as compared to pricing of
$68.63/bbl for crude oil and natural gas liquids and $7.17/mcf for natural gas
for the same period last year. Crude oil had a 5% price decrease while natural
gas pricing had a 5% increase. For the six months ended June 30, 2007, overall
operating netbacks (before G&A and interest expense) were $31.66/boe, down 11%
from $35.38/boe during the same period last year.

    Petroleum and natural gas sales

    For 2007 Q2, revenue from oil and gas sales before royalties was $8,469k
($54.11/boe), a 73% increase over 2006 Q2 oil and gas revenues of $4,898k
($55.44/boe), a 18% increase over 2007 Q1 oil and gas revenues of $7,170k
($53.39/boe). The revenue increase is due to the production increase. The
blended commodity price decreased 2% over 2006 Q2 and increased 1% over
2007 Q1. RSX has not entered into any hedging or forward contracts to lock-in
commodity prices.
    For the six months ended June 30, 2007, revenue from oil and gas sales
before royalties was $15,639k ($53.78/boe), a 57% increase over oil and gas
revenues of $9,966k ($55.58/boe) over the same period last year. The revenue
increase is related to the production increase partially offset by a
3% decrease in blended commodity price.

    Royalties

    For 2007 Q2, royalties were $1,505k ($9.61/boe) as compared to $682k
($7.72/boe) for the same period in 2006 Q2. Overall, royalties increased 121%
period over period mostly attributable to increased production volumes. The
increase per unit boe was up 24% period over period as a result of RSX fully
utilizing the Deep Gas Royalty Holiday Program on the discovery well in the
Hinton area during the same period last year. Royalties were 4% higher than
2007 Q1 royalties of $1,452k ($10.81/boe), with a unit per boe decrease of
11%. The decrease in royalties is due to taking advantage of eligible royalty
holiday programs in the Randell, Boundary Lake and Gold Creek areas.
    For the six months ended June 30, 2007, royalties were $2,957k
($10.17/boe) as compared to $1,522k ($8.49/boe) for the same period in 2006.
RSX has been advantaged by a Deep Gas Royalty Holiday Program in the Hinton
area; as the exemption has been fully utilized, RSX is seeing an expected
increase in royalties in 2007.

    Production expenses

    Production expenses totaled $1,333k ($8.52/boe) in 2007 Q2 as compared to
$913k ($10.33/boe) during the same period in 2006 Q2. Total production
expenses period over period were up 46% along with production increases of
77%. Per unit costs period over period decreased 18% due to the efficiencies
of additional volumes within existing infrastructure. Production expenses were
24% higher than 2007 Q1 production expenses of $1,074k ($8.00/boe), with a
unit per boe increase of 7%. The Company is advantaged in the Hinton area
where the natural gas is dry and sweet, and meets pipeline specifications with
minimal production expenses. The Hinton natural gas is subject to firm
pipeline commitments.
    For the six months ended June 30, 2007, production expenses totaled
$2,407k ($8.28/boe) as compared to $1,933k ($10.79/boe) during the same period
in 2006. The decrease in per unit production costs is a result of increased
production volumes, especially in the Hinton area.

    Transportation

    In 2007 Q2, transportation costs were $650k ($4.16/boe) as compared to
$96k ($1.09/boe) in 2006 Q2. Transportation costs were up 575%, with a unit
per boe increase of 282% due to the natural gas pipeline commitment in the
Hinton area. RSX and its partners committed to a regional pipeline expansion
in the Hinton area that will transport approximately 40 mmcf/d on a firm
service basis from joint interest lands. The project was completed in early
February 2007. RSX has committed to 13,000 GJ/d of firm service at a cost of
approximately $0.34389/GJ ($136k per month) for a three year term expiring
February 2, 2010.
    For the six months ended June 30, 2007, transportation costs were $1,068k
($3.67/boe) as compared to $166k ($0.92/boe) in the same period last year. The
increase in costs is due to the natural gas pipeline commitment at Hinton
(described above) along with increased production of oil and ngl's at Boundary
Lake.

    General and administrative costs

    General and administrative costs for 2007 Q2 were $787k ($5.03/boe) as
compared to $845k ($9.56/boe) for the same period last year. The 7% decrease
is due to production growth within an existing administrative infrastructure.
The 47% decrease in general and administrative costs per boe is a result of
increasing production volumes. The capitalized administrative costs in 2007 Q2
general and administrative costs were $83k as compared to $78k in 2006 Q2.
With the ability to add increased production volume with modest infrastructure
changes, RSX expects to continue to lower G&A per boe. At June 30, 2007, RSX
had nine employees and three part-time consultants, no change since October
2004.
    General and administrative costs for the six months ended June 30, 2007
were $1,210k ($4.16/boe) as compared to $1,234k ($6.88/boe) for the same
period last year. Capitalized administrative costs for the six months ended
June 30, 2007 were $161k as compared to $148k in the same period last year.
During 2007, RSX expects to lower G&A per boe with the ability to add
increased production volume with modest infrastructure changes.

    Interest on bank debt

    Interest expense for 2007 Q2 was $198k ($1.26/boe) as compared to $177k
($2.00/boe) in 2006 Q2. The Company has chosen to utilize debt financing to
partially fund its development and exploration capital expenditure program.
Additional interest expense is also due to an increase in the prime rate of
interest. Interest expense for the six months ended June 30, 2007 was $354k
($1.22/boe) as compared to $326k ($1.82/boe) in the same period last year.

    Current income tax expense

    For the six months ended June 30, 2007, current income tax expense was
$Nil ($0.00/boe), as compared to $29k ($0.16/boe) during the same period in
2006. In 2006, the current tax expense related to the final payment of
Saskatchewan Capital Tax in regards to the Weyburn Unit.

    Cash flow from operations

    Cash flow from operations for 2007 Q2 was $3,996k ($25.53/boe), an 85%
increase over $2,156k ($24.41/boe) in 2006 Q2. Cash flow from operations for
2007 Q2 was up 10% over 2007 Q1 cash flow from operations of $3,647k
($27.16/boe) due to increased production volume offset by a lower per boe cash
flow netback. Cash flow from operations for 2007 Q2 was $0.07 per share basic
and diluted as compared to $0.05 per share basic and $0.04 per share diluted
in 2006 Q2. The cash flow netback for 2007 Q2 was $25.53/boe, an increase of
5% over the $24.41/boe netback in the same period last year.
    For the six months ended June 30, 2007, cash flow from operations was
$7,643k ($26.28/boe), up 61% as compared to $4,756k ($26.52/boe) during the
same period in 2006. Cumulative six months ended June 30, 2007 cash flow from
operations was $0.14 per share basic and per share diluted as compared to
$0.11 per share basic and $0.10 per share diluted in the same period in 2006.
Cash flow netbacks for the six months ended June 30, 2007 were $26.28/boe, a
decrease of 1% over the $26.52/boe cash flow netback in the same period last
year. Netbacks have been affected by an increasing percentage of natural gas
production (due to the Hinton gas discovery) as compared to oil and ngl's. For
the six months ended June 30, 2007, production was 43% oil & ngl's and 57%
natural gas.

    Stock-based compensation

    For 2007 Q2, stock-based compensation was $939k as compared to $712k for
the same period last year. An aggregate of 1,255,000 options to purchase
common shares at a price of $2.59 per share were granted to officers,
directors and employees of RSX on May 22, 2007. Vesting for directors is
immediate. Vesting for employees is 1/3 on issuance, 1/3 on the first year
anniversary date, and the remaining 1/3 on the second year anniversary date.
These options have an expiry date of May 21, 2012.
    The 2007 Q2 charge includes the recognition of an expense for the May 22,
2007 options granted using the Black-Scholes option pricing model where the
fair value of these options granted was calculated at $1.20 per option.
    For the six months ended June 30, 2007, stock-based compensation was
$1,017k as compared to $740k for the same period last year.

    Depletion, depreciation and accretion

    For 2007 Q2, depletion, depreciation and accretion expenses were $5,273k
as compared to the $1,829k recorded in 2006 Q2, up 188%. The 2007 Q2 depletion
unit rate on petroleum and natural gas properties was $35.63 per boe, up 69%
as compared to a $21.10 per boe depletion unit rate during 2006 Q2. During
2007 Q1, the depletion rate on petroleum and natural gas properties was $38.94
per boe based on the GLJ Petroleum Consultants Ltd. reserve evaluation report
at March 31, 2007. Depletion rates are based on the Proved category. The
independent reserve evaluation restricts full assignment of Proved reserves
for late period additions with no production history. If, and as, production
history is attained, the Company expects to move Probable reserves to the
Proved category; thus, lowering the per unit depletion rate. The increase is
due to increasing costs related to rigs, services and equipment. During
2007 Q2, the Company has made reasonable internal adjustments based on new
wells and production history. The 2007 Q2 depletion rate is 9% lower than 2007
Q1 rate.
    For the six months ended June 30, 2007, depletion, depreciation and
accretion expenses were $10,241k as compared to the $3,838k recorded in the
same period last year. The increase is driven by production volume increase
and depletion cost per unit increases. As the Company continues to establish
production history, add reserves from its drilling program and convert
probable reserves into proved reserves, the depletion and depreciation rate is
expected to be maintained and lowered.

    Income taxes

    Future income tax expense in 2007 Q2 was a recovery of $382k due to the
net loss for the period, as compared to a recovery of $643k in 2006 Q2. In
2006 Q2, the recovery was largely attributable to the recognition of the
decreasing tax rate from 37.62% to 34.12%. Future income tax expense for the
six months ended June 30, 2007 was a recovery of $764k as compared to a
recovery of $443k in the same period last year.
    During November 2006, the Company issued 3,000,000 flow-through common
shares at a price of $4.05 per common share for gross proceeds of $12.15
million. Income tax deductions of $12.15 million were renounced to subscribers
effective December 31, 2006. The Company had spent $3.1 million eligible
expenditures to December 31, 2006 and during 2007 Q1 fulfilled the balance of
the obligation. The related income tax impact was recorded in 2007 Q1. The
approximate resource tax pool balances, after the $12.15 million renouncement,
remaining at June 30, 2007 are as follows:

    
    -------------------------------------------------------------------------
    Approximate Tax Pool Balances ($000's)                     June 30, 2007
    -------------------------------------------------------------------------
    Undepreciated Capital Cost                                      $ 19,380
    Canadian Exploration Expense                                      22,080
    Canadian Development Expense                                      12,737
    Canadian Oil and Gas Property Expense                             12,991
    Share Issue Costs                                                  2,702
    Non-Capital Losses                                                   306
    ACRI                                                                 901
    -------------------------------------------------------------------------
    Tax Pool Balances                                               $ 71,097
    -------------------------------------------------------------------------
    

    On March 1, 2007, the Company issued an additional 1,560,000 common
shares on a "flow-through" basis at $4.50 per common share, for total gross
proceeds of $7,020,000. Income tax deductions on this issue will be renounced
to subscribers of the "flow-through" common shares effective December 31,
2007. The $7,020,000 "flow-through" commitment will have to be incurred on
qualifying expenditures by December 31, 2008.

    Net income

    Net income for 2007 Q2 was a loss of $1,833k compared to net income of
$258k during 2006 Q2. Income for 2007 Q2 was a loss of $0.03 per share basic
and diluted. The decrease in net income is attributable to increased depletion
costs. Depletion rates are based on the Proved reserve category. As production
history is attained, the Company expects to move Probable reserves to the
Proved category; thus, lowering the per unit depletion rate. The increase is
due to increasing costs related to rigs, services and equipment.
    Net income for the six months ended June 30, 2007 was a loss of $2,850k
compared to net income of $621k during the same period last year. Income for
the six months ended June 30, 2007 was a loss of $0.05 per share basic and
diluted. The decrease in net income is attributable to increased depletion and
stock-based compensation costs as well as increased production and
transportation costs.

    CAPITAL EXPENDITURES

    Capital expenditures in 2007 Q2 were $5,809k, down 50% as compared to the
$11,695k in 2006 Q2. For the six months ended June 30, 2007, capital
expenditures were $24,436k, up 5% as compared to $23,328k for the same period
last year. The details of capital expenditures by type are:

    
    -------------------------------------------------------------------------
                     Three     Three       Six       Six
                     Month     Month     Month     Month
    Capital         Period    Period    Period    Period                Year
     Expenditures    Ended     Ended     Ended     Ended               Ended
     By Type       June 30,  June 30,  June 30,  June 30,    % of   December
     ($000's)         2007      2006      2007      2006    Total   31, 2006
    -------------------------------------------------------------------------
    Land              $172    $4,633      $875    $9,733       4%    $11,775
    -------------------------------------------------------------------------
    Geological &
     geophysical       261     1,182     1,202     2,101       5%      2,742
    -------------------------------------------------------------------------
    Drilling &
     completion      2,637     2,600    13,783     5,320      56%     24,309
    -------------------------------------------------------------------------
    Production
     equipment       2,738     3,271     8,575     6,162      35%      8,353
    -------------------------------------------------------------------------
    Office assets        1         9         1        12       0%         17
    -------------------------------------------------------------------------
      TOTAL         $5,809   $11,695   $24,436   $23,328     100%    $47,196
    -------------------------------------------------------------------------
    

    RSX exits 2007 Q2 with 70,671 net undeveloped acres at an estimated value
of approximately $23 million, based on a Seaton-Jordan independent evaluation
as at March 31, 2007 and updated with 2007 Q2 actuals. The focus of 2007 Q2
capital expenditures was in drilling and completion (45% of total), along with
related production equipment (47% of total). For the six months ended June 30,
2007, drilling and completion costs were $13,783k, a 159% increase over the
$5,320k in the same period last year. During 2007 Q2, the Company drilled one
gross well (0.40 net). For the six months ended June 30, 2007, RSX has
participated in drilling 14 gross wells (7.70 net) as compared to 4 gross
wells (1.70 net) during the same period last year. Production equipment costs
were up 39% over the same period last year as a successful drilling program
resulted in the requirement for flow line and battery/facility construction in
the Hinton, Boundary Lake, Randell and Gold Creek areas.
    Of the total capital expenditures of $24,436k for the six months ended
June 30, 2007, RSX spent $8,519k (35%) in Randell, $4,574k (19%) in the Hinton
area and $4,145k (17%) in Gold Creek. Randell is a winter only area. During
the balance of 2007, the Company will focus its capital expenditures on the
Hinton and Boundary Lake areas.

    
    -------------------------------------------------------------------------
                                  Six Month
                                     Period                  Year
                                      Ended                 Ended
    Capital Expenditures            June 30,         %    Dec. 31,         %
     By Area ($'000)                   2007   Of Total       2006   Of Total
    -------------------------------------------------------------------------
    Hinton                           $4,574        19%    $16,022        34%
    -------------------------------------------------------------------------
    Randell                           8,519        35%      8,603        18%
    -------------------------------------------------------------------------
    Gold Creek                        4,145        17%      8,164        17%
    -------------------------------------------------------------------------
    Boundary Lake                     2,728        11%      3,937         8%
    -------------------------------------------------------------------------
    Willesden Green                   1,328         5%      2,436         5%
    -------------------------------------------------------------------------
    Karr                                418         2%      1,784         4%
    -------------------------------------------------------------------------
    Other                             2,723        11%      6,233        13%
    -------------------------------------------------------------------------
    Office assets                         1         0%         17         0%
    -------------------------------------------------------------------------
      TOTALS                        $24,436       100%    $47,196       100%
    -------------------------------------------------------------------------
    

    Drilling results

    During 2007 Q2, the Company participated in drilling one gross well
(0.40 net) - a successful gas well in the Hinton area.
    During the six months ended June 30, 2007, the Company participated in
the drilling of 14 gross wells (7.70 net). Wells drilled in 2007 Q1 were 5 oil
wells in Randell (2.50 net), 1 oil well in Boundary Lake (1.00 net), 1 gas
well in Willesden Green (0.30 net) and 6 dry holes - 3 in Gold Creek
(1.50 net), 2 in Randell (1.00 net) and 1 in Bezanson (1.00 net).

    
    -------------------------------------------------------------------------
                       Three Month     Six Month     Six Month
                      Period Ended  Period Ended  Period Ended    Year Ended
                           June 30,      June 30,      June 30,  December 31,
    Drilling Activity         2007          2007          2006          2006
    -------------------------------------------------------------------------
                      Gross    Net  Gross    Net  Gross    Net  Gross    Net
    -------------------------------------------------------------------------
    Oil                   0   0.00      6   3.50      3    1.3     10   5.59
    -------------------------------------------------------------------------
    Gas                   1   0.40      2   0.70      1    0.4      9   5.01
    -------------------------------------------------------------------------
    Dry                   0   0.00      6   3.50      0    0.0      2   1.16
    -------------------------------------------------------------------------
    TOTALS                1   0.40     14   7.70      4    1.7     21  11.76
    -------------------------------------------------------------------------


                       Period Ended    Year Ended
                            June 30,  December 31,
                               2007          2006
    ----------------------------------------------
                       Gross    Net  Gross    Net
    ----------------------------------------------
    Success rate         57%    55%    90%    90%
    Cumulative wells
     drilled             104  47.47     90  39.77
    

    Liquidity

    At June 30, 2007, the Company had a negative working capital position of
$26,514k, as compared to a negative working capital position of $24,699k at
March 31, 2007 (December 31, 2006 - $19,993k). At June 30, 2007, the Company
had a demand credit facility with a borrowing base of $22 million (March 31,
2007 - $22 million). Under the terms of this facility, the Company is required
to meet certain reporting requirements and financial covenants. As at June 30,
2007, the financial covenants were not met. A waiver has been issued by the
lender and, conditional on the Company being in compliance with all covenants
as of September 30, 2007, a renewal of the credit facility is currently
underway. At June 30, 2007, RSX had drawn $17.3 million on the facility.

    Capital resources

    RSX relies on various sources of funding to support its growing capital
expenditure program including, but not limited to, the following:

    
    -   internally generated cash flow provides the minimum level of funding
        on which the Company's annual capital expenditure program is based;
    -   debt may be utilized to expand capital programs when it is deemed
        appropriate;
    -   new equity, if available and if on favorable terms, may be utilized
        to expand exploration programs; and
    -   potential sale of capital assets.
    

    Equity

    As at June 30, 2007, total common shares outstanding were 55,228,574.
    On March 1, 2007, the Company issued 1,180,000 common shares at a price
of $3.40 per share and 1,560,000 common shares on a "flow-through" basis at
$4.50 per common share, for total gross proceeds of $11,032,000. A commission
of 6% was paid to underwriters. RSX used the proceeds for its drilling program
and to partially repay its credit facility. Income tax deductions will be
renounced to subscribers of the "flow-through" common shares effective
December 31, 2007. The $7,020,000 "flow-through" commitment will have to be
incurred on qualifying expenditures by December 31, 2008.
    An aggregate of 1,255,000 options to purchase common shares at a price of
$2.59 per share were granted to officers, directors and employees of RSX on
May 22, 2007. Vesting for directors is immediate. Vesting for employees is 1/3
on issuance, 1/3 on the first year anniversary date, and the remaining 1/3 on
the second year anniversary date. These options have an expiry date of May 21,
2012.

    Commitments

    RSX and its partners have committed to a regional pipeline expansion in
the Hinton area that will transport approximately 40 mmcf/d on a firm service
basis from joint interest lands. The project was completed in early February
2007. RSX has committed to 13,000 GJ/d of firm service at a cost of
approximately $0.34389/GJ for a 3 year term expiring February 2, 2010.

    
    --------------------------------
    Year         Commitment ($000's)
    --------------------------------
    2007                       $816
    --------------------------------
    2008                      1,632
    --------------------------------
    2009                      1,632
    --------------------------------
    2010                        143
    --------------------------------
    Total                    $4,223
    --------------------------------
    

    The Company has a rental commitment of approximately $88k in 2007 and
$165k in 2008 on its office premises, which expires on November 30, 2008.

    Financial instruments

    There have been no changes in the Company's financial instruments since
December 31, 2006.

    Off-balance sheet arrangements

    RSX does not have any special purposes entities, nor is it a party to any
arrangements that would be excluded from the balance sheet.

    Related party transactions

    A director of the Company (James H. Coleman) is a partner of a law firm
(Macleod Dixon LLP) that provides legal services to the Company. During the
six month period ended June 30, 2007, the Company incurred costs of $45k
(June 30, 2006 - $55k), of which $Nil is included in accounts payable and
accrued liabilities at June 30, 2007. Of the total amount, $8k (June 30, 2006
- $21k) has been included in general and administrative expenses and $37k
(June 30, 2006 - $34k) included in share issuance costs.
    These transactions are measured at the exchange amount, which is the
amount of consideration established, agreed to and paid by the related parties
based on standard commercial terms.

    FORWARD-LOOKING STATEMENTS

    The reader should be aware that historical results are not necessarily
indicative of future performance. This Management's Discussion & Analysis
(MD&A) contains forward-looking statements. Forward-looking statements are
based on current expectations that involve a number of risks and uncertainties
which could cause actual events or results to differ materially from those
reflected in the MD&A. These risks and uncertainties include, but are not
limited to, risks associated with the oil and gas industry (e.g. operational
risks in development, exploration and production; delays or changes in plans
with respect to exploration or development projects or capital expenditures;
the uncertainty of reserves estimates; the uncertainty of estimates and
projections in relation to production, costs and expenses and health, safety
and environmental risks), financial risks such as the risk of commodity price
and foreign exchange rate fluctuations, the risk that equity or debt financing
will not be available to RSX on satisfactory terms and regulatory risks. Due
to the risks, uncertainties and assumptions inherent in forward-looking
statements, prospective investors in the Company's securities should not place
undue reliance on these forward-looking statements.

    NON-GAAP MEASURES

    The MD&A contains the term "cash flow from operations" which should not
be considered an alternative to or more meaningful than cash flow from
operating activities as determined in accordance with Canadian GAAP as an
indicator of RSX's performance. RSX's determination of cash flow from
operations may not be comparable to that reported by other companies. RSX
calculates cash flow from operations prior to the change in non-cash working
capital related to operating activities. RSX also presents cash flow from
operations per share whereby per share amounts are calculated using weighted
average shares outstanding, consistent with the calculation of net income per
share. Management uses this term to compare with other companies that also
report this measure and to readily provide this information to investors that
routinely request this measure. Operating netback is not a measure that is
readily apparent in the GAAP prepared financial statements. It is an energy
industry measure which measures funds flows at the field level by determining
all field-related revenues less expenses. The Company uses this measure to
compare its field operations with its peers and reports this measure to the
investment community which either requests it or is calculating the measure
themselves.

    BOE PRESENTATION

    Per barrel of oil equivalent ("boe") amounts may be misleading,
particularly if used in isolation. A boe conversion ratio has been calculated
using a conversion rate of six thousand cubic feet of natural gas to one
barrel of oil ("6:1") and is based on an energy equivalency conversion method
applicable at the burner tip and does not represent a value equivalency at the
wellhead.
    June 30, 2007 and December 31, 2006 Financial Statements and Notes, as
well as Management's Discussion and Analysis (MD&A), can be found on SEDAR at
www.sedar.com or on RSX's website at www.rsxenergy.com

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





For further information:

For further information: RSX Energy Inc., Lee Baker, President, (403)
266-0600, (403) 266-0604 (Fax), Email: lbaker@rsxenergy.com

Organization Profile

RSX ENERGY INC.

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