TriStar Oil & Gas Ltd. - Q2 For the three and six months ended June 30, 2007



    CALGARY, Aug. 13 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the
"Company") is pleased to announce its financial and operating results for the
three and six month periods ended June 30, 2007.
    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
to one barrel of oil.

    
    Highlights                        Three      Three                   Six
                                     Months     Months                Months
                                      Ended      Ended                 Ended
                                    June 30,   June 30,              June 30,
                                       2007       2006    % Change      2007
    -------------------------------------------------------------------------
    ($ thousands except per share
     and Boepd amounts)
    (unaudited)
    -------------------------------------------------------------------------
    Financial (CDN$)
      Production Revenue (prior to
       hedging)                      25,965     12,673        105     46,881
    -------------------------------------------------------------------------
      Cash flow from operations(1)   13,931      7,426         88     25,342
        Per share basic                0.23       0.19         21       0.47
        Per share diluted              0.23       0.19         21       0.47
      Net earnings                    2,023      2,996        (32)       (78)
        Per share basic                0.03       0.08        (58)     (0.00)
        Per share diluted              0.03       0.08        (58)     (0.00)
      Total Net Debt(2)              77,665     48,361         61     77,665
    -------------------------------------------------------------------------

    Common shares (000's)
        Shares outstanding, end
         of period (basic)           59,541     45,030         32     59,541
        Weighted average
         shares (basic)              59,537     38,326         55     54,396
        Weighted average shares
         (fully diluted)             60,487     39,857         52     54,396
    -------------------------------------------------------------------------

    Operations
      Production
        Crude oil (Bbls per day)      3,371      1,621        108      3,195
        Natural gas (Mcf per day)     9,419      4,014        135      8,033
        Barrels of oil equivalent
         (Boepd, 6:1)                 4,941      2,290        116      4,534
      Average realized price
        Crude oil ($ per Bbl)         64.45      70.19         (8)     62.58
        Natural gas ($ per Mcf)        7.23       6.35         14       7.36
        Barrels of oil equivalent
         ($ per Boe, 6:1)             57.75      60.82         (5)     57.13
      Netback per Boe (6:1) ($)
        Operating netback             36.52      41.04        (11)     36.30
        Cashflow netback              30.99      35.64        (11)     30.89
      Wells Drilled
        Gross                            21         19                    33
        Net                            15.3        8.7                  24.8
        Success (%)                      95         97                    97
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Management uses cash flow (before changes in non-cash working
        capital), and operating and cashflow netback to analyze operating
        performance and leverage. Cash flow as presented, and operating and
        cashflow netback do not have any standardized meaning prescribed by
        Canadian GAAP and therefore may not be comparable with the
        calculation of similar measures for other entities.
    (2) Calculated as current liabilities less current assets, excluding
        Financial Derivatives Contracts.


    President's Letter to Shareholders

    The Company's achievements in its second quarter of 2007 include the
following:

    -   Production grew to 4,941 Boepd in the second quarter of 2007 from
        2,290 Boepd in the second quarter of 2006, representing a year over
        year increase of 116 percent;

    -   Production per share increased by 39 percent over the second quarter
        of 2006;

    -   Cash flow increased to $13.9 million in the second quarter of 2007
        from $7.4 million in the second quarter of 2006, a year over year
        increase of 88 percent;

    -   Cash flow per share increased from $0.19 per share in the second
        quarter of 2006 to $0.23 per share in the current year, a year over
        year increase of 21 percent;

    -   Drilled 21 (15.3 net) wells in the second quarter of 2007 with a
        95 percent success rate; and

    -   Announced a business combination with Real Resources Inc. ("Real") to
        create a new, growth focused intermediate exploration and development
        company which will continue under the name TriStar ("New TriStar").
    

    Operational Review

    During the second quarter of 2007, TriStar drilled a total of 21
(15.3 net) wells, resulting in 19 (13.8 net) oil wells, 1 (1.0 net)
stratigraphic test well, and 1 (0.5 net) dry and abandoned well, for an
overall success rate of 95 percent.
    At Star Valley in southeast Saskatchewan (40 - 100% WI), TriStar drilled
2 (1.4 net) successful horizontal Alida oil wells. These wells produce high
netback, light oil (33 degrees API) at initial rates between 100 to 300 Boepd.
The remainder of 2007 will see the drilling of an additional 2 (1.2 net)
development oil wells into this large, 49 million barrel original oil in place
("OOIP") reservoir.
    Additional drilling results in southeast Saskatchewan in the second
quarter of 2007 included the drilling of 7 (4.5 net) successful horizontal oil
wells into TriStar's Hastings and Clarilaw light oil pools. Both of these
pools are high quality, light oil accumulations with over 15 million barrels
of cumulative OOIP. For the remainder of 2007, drilling activity for southeast
Saskatchewan will see TriStar drill an additional 35 (22.1 net) development
oil wells at Antler, Crystal Hills, Hastings, Rocanville, Wauchope and Star
Valley.
    In southern Alberta, TriStar was active in the second quarter of 2007,
drilling a 5 (3.5 net) oil well program at Countess resulting in 4 (3.0 net)
oil wells and 1 (0.5 net) dry and abandoned well. This program has
successfully extended an additional two of the 24 new pool discoveries that
were originally rolled into TriStar. TriStar has now successfully offset eight
of the 24 new pool discoveries. TriStar continues to achieve excellent results
at Countess and has plans to drill an additional 13 (6.5 net) low royalty,
high netback development and delineation oil wells throughout the remainder of
2007.
    At Redwater, in central Alberta, second quarter activity included the
drilling of a successful 4 (3.3 net) development oil well program in to this
high quality, 34 degrees API, 30 million barrel OOIP light oil pool. In
addition, TriStar successfully recompleted an uphole Mannville gas zone in the
second quarter which had initial productivity of 2 mmcf/d net to TriStar.
Activity for the balance of 2007 will include the drilling of 2 (2.0 net)
development oil wells and 2 (2.0 net) exploration wells.
    In west central Alberta, at TriStar's Ante Creek Montney Pool, the
Company successfully drilled 2 (2.0 net) horizontal wells during the first
quarter of 2007 into this long life, light oil pool. These wells encountered
good oil and gas shows during the open hole drilling portion of the horizontal
leg. TriStar successfully fracture stimulated the first of the these two wells
early in the third quarter and will monitor production results over the next
few months to evaluate further fracture treatments and drilling for the second
half of 2007.
    Exploration activity for TriStar in the second quarter was focused in
southeast Saskatchewan and included a new pool discovery in the Mississippian
Frobisher beds with the drilling of a 1 (1.0 net) horizontal oil well that has
tested at rates of up to 100 Boepd. Delineation of this discovery will
commence in late 2007. In addition, TriStar has begun to accelerate its Bakken
play. TriStar's total land exposure to this play now exceeds 59 (34.0 net)
sections. This results in more than 118 (42.0 net) Bakken development oil
wells situated within two miles of existing Bakken producers. Thus far,
TriStar has participated in the drilling of 8 (4.9 net) Bakken wells with
100 percent success. Seven of these oil wells remain unstimulated as the
Company evaluates the results of the first packer-fracture stimulation which
was completed early in the third quarter.
    TriStar continues to add to its large drilling inventory. The company now
has more than 400 gross development and step-out locations on its land base
throughout western Canada. This large internal suite of strategically focused
drilling opportunities represents more than a four year drilling inventory on
TriStar's land base. TriStar continues to evaluate additional opportunities to
expand its inventory of locations on its large undeveloped land base of more
than 225,000 net acres.

    Outlook; Guidance

    On May 22, 2007, TriStar announced a business combination with Real to
form a new growth focused intermediate oil and gas exploration and development
company which will continue under the name TriStar.
    On August 2, 2007, shareholders of both TriStar and Real voted
overwhelmingly in favour of the proposed combination. It is anticipated that
on August 16, 2007, the combination will be effective. New TriStar will be led
by TriStar's current management team including Brett Herman, President and
Chief Executive Officer, Jason Zabinsky, Vice President, Finance and Chief
Financial Officer, Graham Kidd, Vice President, Engineering, Eric Strachan,
Vice President, Exploration and Jeremy Wallis, Vice President, Land. New
TriStar's board of directors (the "Board") will be comprised of 10 members
including Paul Colborne, Chairman of the Board, James Bertram, Fred Coles,
Dallas Droppo, Richard Edgar, Brett Herman, Martin Hislop, Robert Michaleski,
Jim Pasieka and Robert Peters.
    With the anticipation of an August 16th closing date, TriStar's
management team began the integration with Real immediately following the
announcement of the transaction. We are pleased to report that as of today we
are positioned to execute our strategic and operational plans going forward.
We would like to personally welcome the staff of New TriStar to this exciting
new company.
    New TriStar is very well positioned to continue growing the Company's
reserves, production and cash flow per share through the management team's
integrated strategy of acquiring, exploiting and exploring. With an enterprise
value of approximately $900 million, a flexible balance sheet, a weighting to
high netback light crude oil, and an experienced management team, New TriStar
is well positioned to execute strategic, accretive acquisitions in the current
environment.
    The Company has assembled a high quality development portfolio with over
1,400 identified drilling locations with the potential to more than double our
currently booked reserves over the next five to six years. In addition, New
TriStar will have access to over 700,000 net undeveloped acres covered by over
840 square miles of 3-D seismic in highly prospective areas. This land and
seismic position provides New TriStar with an exciting inventory of high
impact exploration prospects with targets that include the Bakken and Torquay
plays in southeast Saskatchewan, deeper Nisku oil targets in west central
Alberta and testing the Company's extensive Mannville CBM land position, all
of which will be pursued over the next number of years.

    
    New TriStar will have the following key attributes:

    -  Long Life Reserves(1):         49 Mmboe proven plus probable

    -  High Netback Production:       More than 15,250 Boepd (2007 Estimated
                                      Exit Rate)
                                      (60% light oil / 40% natural gas)

    -  Long Reserve Life Index:       More than 9 years proven plus probable

    -  Shares Outstanding(2):         69 mm (Basic)

    -  Solid Balance Sheet:           Q2 Combined Net Debt(3): less than
                                      $225 million (Credit facility of
                                      $300 million)

    -  Extensive Drilling Inventory:  More than 1,400 development locations

    -  Large Land Base:               More than 700,000 Net Undeveloped Acres

    (1) TriStar proforma 2007 acquisitions plus TriStar's internal evaluation
        of Real's reserves.
    (2) Stock incentive plans are yet to be established, therefore no fully
        diluted calculation.
    (3) Does not include transaction costs.
    

    We are excited about how New TriStar is positioned in the current market
and we look forward to delivering on our growth estimate over the rest of 2007
and 2008.


    On behalf of the Board of Directors,


    (signed)

    Brett Herman
    President and Chief Executive Officer

    August 13, 2007

    Forward-Looking Statements

    This document contains forward-looking statements. More particularly,
this document contains statements concerning the anticipated closing date of
the business combination with Real, New TriStar's potential for reserves
growth, New TriStar's projected annual exit rate of production of oil and
natural gas and New TriStar's anticipated bank line.
    The forward-looking statements are based on certain key expectations and
assumptions made by TriStar, including expectations and assumptions concerning
the satisfaction of the conditions necessary to close the business combination
with Real, the 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 New TriStar's
planned activities, the value of New TriStar's borrowing base and the
willingness of New TriStar's lenders to grant certain credit facilities.
    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 risk that the business combination with
Real will not close in the time anticipated or at all, 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 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 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 press release 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 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 ("MD&A") is dated August 13, 2007.
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 and six month periods ended June 30, 2007
and audited financial statements as at and for the periods ended December 31,
2006 and 2005. 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 involving StarPoint Energy Trust
("StarPoint") and Acclaim Energy Trust ("Acclaim"), which resulted in the
creation of Canetic Resources Trust ("Canetic") and TriStar. Under this plan
of arrangement, TriStar acquired certain oil and gas properties from StarPoint
and Acclaim.
    The financial data presented below has been prepared in accordance with
Canadian Generally Accepted Accounting Principles ("GAAP"), unless otherwise
indicated.

    Non-GAAP Measurements

    Management's Discussion and Analysis 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. Operating netback represents revenue
less royalties, hedging losses (gains), 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 this measure should
not be construed as an alternative to net income determined in accordance with
GAAP as an indication of TriStar's performance.
    The reconciliation between cash flow from operations, as defined above,
and cash flow from operations after changes in working capital for the periods
ended June 30, 2007 and 2006 is as follows:

    
    ($ thousands)               Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash flow from
     operating activities      13,536        6,994       20,496       10,137
    Changes in non-cash
     working capital              395          432        4,846        1,744
    -------------------------------------------------------------------------
    Cash flow from operations
     (as defined above)        13,931        7,426       25,342       11,881
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The 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, which may include
statements relating to management's approach to the number of wells, amount
and timing of capital projects, interest rates, worldwide and industry
production, prices of oil and natural gas, Company production, cash flow and
debt levels. These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. See under "Business Conditions and Risks" in this
MD&A and under "Risk Factors" in the Company's Annual Information Form ("AIF")
which has been filed on SEDAR and can be accessed at www.sedar.com. The reader
is cautioned that assumptions used in the preparation of such information,
although considered reasonable by TriStar at the time of preparation, may
prove to be incorrect.

    Significant Transactions

    Plan of Arrangement with Real Resources Inc.

    On August 2, 2007, the shareholders of TriStar and Real Resources Inc.
("Real") approved a plan of arrangement to form an intermediate oil and gas
exploration and development company (hereinafter the "Arrangement"). Under the
terms of the Arrangement, each TriStar shareholder will receive 0.4762 shares
of the combined entities (hereinafter referred to as "New TriStar") for each
share of TriStar held and each Real shareholder will receive one share of New
TriStar for each share of Real held. TriStar shareholders will own
approximately 42 percent of New TriStar and Real shareholders will own
approximately 58 percent of New TriStar. The transaction is expected to close
on August 16, 2007. The combined entities will continue under the name
TriStar.
    Senior management of the combined entity will be the current officers of
TriStar, and the board of directors will be comprised of seven of TriStar's
current directors and three of Real's current directors. Accordingly, the
transaction will be accounted for as a reverse takeover whereby TriStar is
deemed to be the acquirer of Real, using the purchase method of accounting.

    Acquisitions of Assets and Common Share Financing

    During March 2007, TriStar completed two acquisitions of certain assets
in its core areas of Ante Creek and Countess, Alberta and in southeast
Saskatchewan for total cash consideration of approximately $55.9 million, net
of certain closing adjustments.
    In conjunction with the acquisitions, the Company issued, on a private
placement basis, 8.6 million common shares of TriStar ("Common Shares") for
gross aggregate proceeds of approximately $40.4 million and 1.7 million
flow-through Common Shares for gross aggregate proceeds of approximately
$10.2 million.

    
    Results of Operations

    Production
                                Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Daily Production
    Crude oil (Bbls per day)    3,371        1,621        3,195        1,442
    Natural gas (Mcf per day)   9,419        4,014        8,033        3,022
    -------------------------------------------------------------------------

    Total (Boepd)               4,941        2,290        4,534        1,945
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the three months ended June 30, 2007, TriStar averaged 4,941 Boepd as
compared to 2,290 Boepd in the second quarter of 2006, a 116 percent increase.
Production was comprised of approximately 3,371 Bbls per day of crude oil and
NGLs and 9,419 Mcf per day of natural gas.
    For the six months ended June 30, 2007, TriStar averaged 4,534 Boepd as
compared to 1,945 Boepd in the first half of 2006, a 133 percent increase.
Production was comprised of approximately 3,195 Bbls per day of crude oil and
NGLs and 8,033 Mcf per day of natural gas.

    
    Production for the quarter was divided between the following areas:
    -------------------------------------------------------------------


                                                          Three Months Ended
                                                               June 30, 2007
    -------------------------------------------------------------------------
                                         Crude Oil  Natural Gas        Total
    Area                              Bbls per day  Mcf per day        Boepd
    -------------------------------------------------------------------------
    Alberta                                  1,430        9,031        2,935
    Saskatchewan                             1,941          388        2,006
    -------------------------------------------------------------------------

    Total                                    3,371        9,419        4,941
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    During the quarter, the Company drilled 21 (15.3 net) oil wells,
achieving a 95 percent success rate.

    Pricing

    Crude oil prices recovered in the second quarter as compared to the first
quarter of 2007 as WTI reached a high of US$70.68 per Bbl as compared to a low
of US$50.48 per Bbl in the first quarter. Tight supply/demand fundamentals
continue to drive the world crude markets with WTI averaging of US$64.94 in
the second quarter after averaging US$58.25 in the first quarter of 2007.
Edmonton mixed sweet averaged $73.75 per Bbl in the second quarter as compared
to $67.86 per Bbl in the first quarter.
    Natural gas prices averaged $7.09 per Mcf for AECO daily spot and
US$7.53/Mmbtu for NYMEX daily gas in the quarter. Natural gas storage levels
continue to be consistent with last year's level at this same time but above
the five year average. Fluctuating supply/demand forecasts continue to cause
significant price volatility and weather will be a key component of natural
gas pricing in the next few months.
    TriStar's average realized price for its crude oil and NGLs averaged
$64.45 per Bbl in the quarter while its realized natural gas price was $7.23
per Mcf.

    
                                Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Average Benchmark Prices
    Crude oil - WTI (US$
     per Bbl)                   64.94        70.51        61.53        66.93
    Crude oil - Edmonton
     Par Price ($ per Bbl)      73.75        80.59        70.81        74.76
    Natural gas - AECO-C
     Daily Spot ($ per Mcf)      7.09         5.98         7.24         6.72
    Exchange rate - (US$/CDN$)   0.91         0.89         0.88         0.88
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Revenues

    For the three months ended June 30, 2007, TriStar recorded $19.8 million
in crude oil sales and $6.2 million in natural gas sales, a 91 percent and
167 percent increase respectively over the second quarter of 2006 when TriStar
recorded $10.4 million of crude oil sales and $2.3 million of natural gas
sales.
    For the six months ended June 30, 2007, TriStar recorded $36.2 million in
crude oil sales and $10.7 million in natural gas sales, a 117 percent and
205 percent increase respectively over the six months ended June 30, 2006 when
TriStar recorded $16.6 million of crude oil sales and $3.5 million of natural
gas sales.
    The Company realized the following commodity prices for the three and six
months ended June 30, 2007 and June 30, 2006.

    
                                Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    TriStar Average
     Realized Prices
     Prior to Hedging
    Crude oil - ($ per Bbl)     64.45        70.19        62.58        65.80
    Natural gas - ($ per Mcf)    7.23         6.35         7.36         6.62
    Boe - ($ per Boe)           57.75        60.82        57.13        59.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
    ($ thousands)                2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues by Product
    Crude oil                  19,771       10,353       36,185       16,697
      Hedging gains (losses)      266            -        1,474            -
    Natural gas                 6,195        2,320       10,696        3,522
      Hedging gains (losses)      106           42          182           42
    -------------------------------------------------------------------------

    Total revenues             26,338       12,715       48,537       20,261

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

    Royalty Expenses

    Royalties in the quarter ended June 30, 2007 were $4.9 million or
18.8 percent of revenue as compared to $2.0 million or 15.7 percent in the
first quarter of 2006. Royalties in the six months ended June 30, 2007 were
$9.0 million or 19.1 percent of revenue as compared to $3.3 million or
16.3 percent in the six months ended June 30, 2006. 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 (prior to the effect of hedging).

    Operating Expenses

    Operating expenses were $4.8 million or $10.57 per Boe in the quarter
ended June 30, 2007 as compared to $2.1 million or $10.17 per Boe in the
second quarter of 2006. Operating costs in the second quarter of 2007 moved
towards a more normalized level relative to the first quarter of 2007 when
costs were $4.4 million or $11.81 per Boe as the Company experienced a reduced
effect from the pipeline capacity issues in southeast Saskatchewan. Operating
expenses were $9.1 million or $11.13 per Boe in the six months ended June 30,
2007 as compared to $3.2 million or $9.48 per Boe in the six months ended June
30, 2006.

    Transportation Expenses

    Transportation expenses were $0.29 million or $0.65 per Boe in the
quarter ended June 30, 2007 as compared to $0.05 million or $0.26 per Boe in
the second quarter of 2006. Transportation expenses were $0.65 million or
$0.79 per Boe in the six months ended June 30, 2007 as compared to
$0.12 million or $0.35 per Boe in the six months ended June 30, 2006.
Transportation expenses are reflective of the location of TriStar's
properties, transportation rates and the location where the product is sold.
Transportation costs in the second quarter of 2007 moved towards a more
normalized level relative to the first quarter of 2007 when costs were
$0.4 million or $0.97 per Boe as the Company experienced a reduced effect from
the pipeline capacity issues in southeast Saskatchewan that had created
additional trucking costs in that quarter.

    Operating Netbacks

    Operating netbacks were $36.52 per Boe for the quarter ended June 30,
2007 as compared to $41.04 per Boe for the quarter ended June 30, 2006 and
$36.30 for the six months ended June 30, 2007 as compared to $39.59 for the
six months ended June 30, 2006.

    
    Netbacks
    --------
                                Three Months Ended          Six Months Ended
                                      June 30                    June 30
    ($ per Boe, unless          -------------------       -------------------
     otherwise noted)            2007         2006         2007         2006
    -------------------------------------------------------------------------
    Total production (Boepd)    4,941        2,290        4,534        1,945
    -------------------------------------------------------------------------

    Crude oil and natural gas
     liquids ($/Bbl)            64.45        70.19        62.58        65.80
      Hedging gains/(losses)
       ($/Bbl)                   0.59            -         1.80            -
    -------------------------------------------------------------------------

    Natural gas ($/Mcf)          7.23         6.35         7.36         6.62
      Hedging gains/(losses)
       ($/Mcf)                   0.24         0.11         0.22         0.11
    -------------------------------------------------------------------------

    Average Price Prior to
     Hedging                    57.75        60.82        57.13        58.93
    -------------------------------------------------------------------------

      Realized gain/(loss)
       on financial
       instruments               0.83         0.20         2.02         0.12
      Royalties, net           (10.84)       (9.55)      (10.93)       (9.63)
      Operating                (10.57)      (10.17)      (11.13)       (9.48)
      Transportation            (0.65)       (0.26)       (0.79)       (0.35)
    -------------------------------------------------------------------------

    Operating Netback           36.52        41.04        36.30        39.59
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    General and Administrative Expenses

    During the second quarter of 2007, general and administrative expenses
("G&A"), net of recoveries, was $1.2 million ($2.67 per Boe) as compared to
the quarter ended June 30, 2006 where G&A was $0.6 million or $2.85 per Boe.
G&A, net of recoveries, for the six months ended June 30, 2007 was
$2.1 million ($2.55 per Boe) as compared to $1.0 million or $2.78 per Boe for
the six months ended June 30, 2006.

    
                                 Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
    ($ thousands)                2007         2006         2007         2006
    -------------------------------------------------------------------------
    General and
     administrative expenses    2,409        1,222        4,257        2,090
    Recoveries                   (433)        (219)        (811)        (417)
    Capitalized general and
     administrative expenses     (777)        (410)      (1,353)        (719)
    -------------------------------------------------------------------------

    Total net general and
     administrative expenses    1,199          593        2,093          953
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Interest Expense

    Interest expense was $1.0 million or $2.31 per Boe in the quarter as
compared to $0.4 million or $1.95 per Boe in the quarter ended June 30, 2006.
Interest expense was $1.9 million or $2.32 per Boe in the six months ended
June 30, 2007 as compared to $0.4 million or $1.31 per Boe in the six months
ended June 30, 2006. Interest costs increased primarily as a result of an
increased level of bank debt held by the Company in the quarter as well as
rising interest rates.

    Stock-based Compensation

    The Company stock-based compensation expense for the quarter ended
June 30, 2007 was $0.3 million or $0.69 per Boe as compared to the quarter
ended June 30, 2006 of $0.09 million or $0.43 per Boe. The Company stock-based
compensation expense for the six months ended June 30, 2007 was $0.7 million
or $0.87 per Boe as compared to the six months ended June 30, 2006 of
$0.3 million or $0.82 per Boe. The stock-based compensation expense was
calculated utilizing a fair value assessment methodology.

    Depletion, Depreciation and Accretion

    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 expense in the quarter ended
June 30, 2007 was $13.3 million or $29.59 per Boe as compared to the quarter
ended June 30, 2006 which was $6.2 million or $29.52 per Boe. Depletion,
depreciation and accretion expense in the six months ended June 30, 2007 was
$24.3 million or $29.63 per Boe as compared to the six months ended June 30,
2006 which was $9.8 million or $28.59 per Boe.

    Taxes

    For the quarter ended June 30, 2007, TriStar recorded a capital tax
expense of $0.3 million, and a future income tax reduction of $1.0 million as
compared to the quarter ended June 30, 2006 when the Company recorded
$0.1 million of capital tax expense and a future income tax reduction of
$1.8 million. For the six months ended June 30, 2007, TriStar recorded a
capital tax expense of $0.4 million, and a future income tax reduction of
$1.3 million as compared to the six months ended June 30, 2006 when the
Company recorded $0.3 million of capital tax expense and a future income tax
reduction of $1.5 million. The future income tax reduction is mainly a result
of reduced federal and provincial corporate tax rates. The capital tax expense
is comprised of the Saskatchewan Capital Tax and Resource Surcharge.
    As at June 30, 2007, TriStar had approximately $172 million of tax pools
available to offset future taxable income.

    Net Income (Loss) and Comprehensive Income

    Net income for the quarter ended June 30, 2007 was $2.0 million compared
to net income of $3.0 million during the same period in 2006. Net loss for the
six months ended June 30, 2007 was $0.08 million compared to net income of
$3.3 million during the same period in 2006 due primarily to the unrealized
loss on financial derivatives recognized in 2007.
    Basic and diluted net income per share for the quarter ended June 30,
2007 was $0.03 per share. This is compared to net income of $0.08 per share
basic and diluted for the same period in 2006. Basic and diluted net loss per
share for the six months ended June 30, 2007 was $nil. This is compared to net
income of $0.10 per share basic and diluted for the same period in 2006.
    Other comprehensive income for the quarter ended June 30, 2007 included a
charge of $0.5 million, net of tax, (2006 - nil) relating to the amortization
of the amount recognized in accumulated other comprehensive income on
January 1, 2007 for the fair value of financial derivatives on adoption of the
new accounting standards for financial instruments. This resulted in total
comprehensive income of $1.6 million for the quarter ended June 30, 2007 (2006
- nil), and a total comprehensive loss of $1.2 million for six months ended
June 30, 2007 (2006 - nil).

    Risk Management - Financial Instruments

    TriStar enters into commodity price derivative contracts that provide
downside price protection, in order to 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 Policy approved by the Board of Directors.
    At June 30, 2007, the fair value of the financial derivative contracts
was a liability of $0.3 million. Included in these contracts at June 30, 2007
are contracts TriStar has entered into related to the proposed business
combination with Real ("Real Hedges").  The fair value of these financial
derivative contracts at June 30, 2007 was a liability of $0.8 million.
    For the quarter ended June 30, 2007, the Company had a net unrealized
gain on its financial derivative contracts of pre-tax $0.3 million, in
addition to the after-tax $0.4 million (pre-tax: $0.6 million) amortized gain
from the adoption of the standards on January 1, 2007, for a net pre-tax
unrealized gain of $1.2 million.
    The following tables summarize TriStar's commodity risk management
positions as at June 30, 2007:

    
    Oil Costless Collar Contracts
    -----------------------------

                                       Volume         Price
                                      (Bbl/d)       ($US/Bbl)       Index
    -------------------------------------------------------------------------
    Apr. 1, 2006 - Jun. 30, 2007        250       60.00 - 77.20      WTI
    Apr. 1, 2006 - Dec. 31, 2007        250       60.00 - 76.10      WTI
    Jan. 1, 2007 - Dec. 31, 2007        500       70.00 - 78.10      WTI
    Jan. 1, 2007 - Dec. 31, 2008        250       60.00 - 75.00      WTI
    Jul. 1, 2007 - Dec. 31, 2007        250       70.00 - 78.00      WTI
    Jan. 1, 2008 - Dec. 31, 2009(1)     500       65.00 - 76.30      WTI
    Jan. 1, 2008 - Dec. 31, 2009(1)     500       65.00 - 76.15      WTI
    Jan. 1, 2008 - Dec. 31, 2009(1)     500       67.00 - 76.70      WTI
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Real Hedges

    Oil Swap Contracts
    ------------------
                                       Volume         Price
                                      (Bbl/d)       ($US/Bbl)       Index
    -------------------------------------------------------------------------
    Jan. 1, 2007 - Dec. 31, 2008        250            68.35          WTI
    Apr. 1, 2007 - Dec. 31, 2009        250          C$76.60        C$WTI
    Jan. 1, 2008 - Dec. 31, 2009        250          C$78.20        C$WTI
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The fair value of the oil costless collars and the swap contracts at
June 30, 2007 was a loss of US$1.0 million ($0.8 million related to the Real
Hedges).

    Natural Gas Costless Collar Contracts
    -------------------------------------

                                      Volume          Price
                                      (GJ/d)         ($/GJ)         Index
    -------------------------------------------------------------------------
    Apr. 1, 2007 - Oct. 31, 2007       1,000       6.50 - 9.00  AECO Monthly
    Apr. 1, 2007 - Oct. 31, 2007       1,000       7.50 - 8.75  AECO Monthly
    Nov. 1, 2007 - Mar. 31, 2008       2,000      7.50 - 10.32  AECO Monthly
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Natural Gas Swap Contract
    -------------------------

                                       Volume         Price
                                       (GJ/d)         ($/GJ)        Index
    -------------------------------------------------------------------------
    Apr. 1, 2007 - Oct. 31, 2007       1,000           7.64     AECO Monthly
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The fair value of the natural gas costless collars and the swap contract
as at June 30, 2007 was a gain of $0.8 million.
    Subsequent to the quarter end, TriStar entered into the following
contract:

    Oil Costless Collar Contract
    ----------------------------
                                       Volume         Price
                                       (Bbl/d)      ($US/Bbl)       Index
    -------------------------------------------------------------------------
    Jan. 1, 2008 - Dec. 31, 2009(1)     500       70.00 - 75.52      WTI
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Real Hedge
    

    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 June 30, 2007, TriStar had $71.2 million drawn
on its $115.0 million demand loan facility with a major Canadian chartered
bank. TriStar had a net working capital deficit of $77.4 million (excluding
the fair value of financial instruments). As at that date, TriStar had met all
of its covenants pertaining to this loan agreement and is not required to make
any repayments.

    Capital Expenditures

    During the quarter, the Company incurred $14.7 million of capital
expenditures as compared to $100.9 million spent for the three months ended
June 30, 2006. The Company incurred $101.0 million of capital expenditures
during the six months ended June 30, 2007 as compared to $270.0 million in the
six months ended June 30, 2006. The following table details capital
expenditures for the three and six months ended June 30, 2007 and June 30,
2006.

    
    Capital Expenditures
    --------------------

                                Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
    ($ thousands)                2007         2006         2007         2006
    -------------------------------------------------------------------------
    Drilling, development
     and production
     equipment                 12,798        9,676       28,029       18,121
    Land and seismic            1,862          514        2,335        1,155
    Acquisitions
     (divestitures)(1)         (1,031)      89,207       68,668      248,574
    Other(2)                    1,043        1,491        1,994        1,983
    -------------------------------------------------------------------------

    Total                      14,672      100,888      101,026      269,833
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes total consideration (cash, stock, working capital, debt and
        transaction costs) paid/received for acquisitions/divestitures.
    (2) Includes capitalized G&A and administrative assets.

    Goodwill

    TriStar did not record additional goodwill during the quarter ended
June 30, 2007. Goodwill as at June 30, 2007 was $55.5 million.

    Shareholders' Equity

    Share Capital
    -------------
                                Three Months Ended         Six Months Ended
                                      June 30                   June 30
                                -------------------       -------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Outstanding Common Shares
    Weighted Average
     Outstanding Common
     Shares
      Basic                59,536,687   38,326,369   54,396,475   32,776,421
      Diluted              60,487,361   39,856,718   54,396,475   34,306,770
    -------------------------------------------------------------------------
    Outstanding Securities
      Common Shares        59,540,859   45,029,972   59,540,859   45,029,972
      Common Share
       options              2,240,000      798,500    2,240,000      798,500
      Performance Shares    2,227,484    2,272,484    2,227,484    2,272,484
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Contractual Obligations

    Bank Facility

    As at June 30, 2007 the Company had available a $115.0 million demand
credit facility. The Company's credit facility is with a Canadian chartered
bank and is open for review semi-annually. 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.

    Working Capital

    The capital intensive nature of the Company's activities may create a
negative working capital position in quarters 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 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. At June 30, 2007 the Company had no material
accounts receivable it deemed uncollectible.
    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.

    
    Summary of Quarterly Results

                                          Three Months Ended
                        -----------------------------------------------------
    ($ thousands except
     per share and      Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
     Boepd amounts)        2007     2007     2006     2006     2006   2006(1)
    -------------------------------------------------------------------------
    Production revenue
     (prior to hedging)  25,965   20,916   18,846   18,084   12,673    7,504
    Net income (loss)     2,024   (2,101)   1,786    1,126    2,996      311
      Per share - basic    0.03    (0.04)    0.04     0.02     0.08     0.01
      Per share -
       diluted             0.03    (0.04)    0.04     0.02     0.08     0.01
    Production (Boepd)    4,941    4,121    3,919    3,424    2,290    1,489
    Cash flow from
     operations(2)       13,931   11,410   10,725   11,021    7,426    4,455
      Per share - basic    0.23     0.23     0.23     0.24     0.19     0.17
      Per share - diluted  0.23     0.23     0.22     0.23     0.19     0.16
    Cash flow from
     operating
     activities(3)       13,537    6,960   12,626   12,371    8,314    3,144
      Per share - basic    0.23     0.14     0.27     0.27     0.22     0.12
      Per share - diluted  0.22     0.14     0.26     0.26     0.21     0.11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) TriStar began active operations on January 6, 2006.

    (2) "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. TriStar's determination
        of cash flow from operations may not be comparable to that found in
        the consolidated statement of cash flows in the unaudited interim
        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.

    (3) "Cash flow from operating activities" is determined in accordance
        with GAAP and includes changes in non-cash working capital.
    

    Newly Adopted Accounting Policies

    Financial Instruments

    The following standards regarding financial instruments are effective for
January 1, 2007; 3855 "Financial Instruments - Recognition and Measurement",
3861 "Financial Instruments - Disclosure and Presentation", 1530
"Comprehensive Income", and 3865 "Hedges". The standards require all financial
instruments other than held-to-maturity investments, loans and receivables to
be included on a company's balance sheet at their fair value. Held-to-maturity
investments, loans and receivables are to be measured at their amortized cost.
The standards create a new statement for comprehensive income that includes
changes in the fair value of certain financial instruments.
    The effect of adopting these new accounting standards is presented in the
section "Risk Management - Financial Instruments" elsewhere in this MD&A.

    Business Conditions and Risks

    The business of exploration, development and acquisition of oil and
natural gas reserves involves a number of uncertainties and as a result,
TriStar is exposed to a number of risks inherent in the oil and natural gas
industry. Operationally, TriStar faces risks that are associated with finding,
developing and producing oil and natural gas reserves. These include risks
associated with drilling, economic risk, environmental and safety concerns and
access to processing facilities. The financial risks that are not within
TriStar's control include the fluctuations in national and international
commodity prices, exchange rates and interest rates. TriStar mitigates risk
through the competence of its management team, adequate insurance coverage and
safety and environmental programs that meet or exceed regulations.

    Disclosure Control Risks
    ------------------------
    Disclosure controls and procedures have been designed to ensure that
information required to be disclosed by the Company is accumulated and
communicated to its management as appropriate to allow timely decisions
regarding required disclosure. The Company's Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO") have concluded, based on their evaluation
of the effectiveness of TriStar's disclosure controls and procedures as of the
date of this MD&A, that the Company's disclosure controls and procedures
provide reasonable assurance that material information is made known to them
by others within the Company. However, the Company's CEO and CFO do not expect
that the disclosure controls and procedures can prevent all errors and fraud.
A control system, no matter how well conceived or operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met.

    Internal Controls over Financial Reporting
    ------------------------------------------
    The CEO and CFO of the Company are responsible for designing internal
controls over financial reporting ("ICFR") or causing them to be designed
under their supervision in order to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with Canadian GAAP. The CEO and CFO have
evaluated whether there were changes to ICFR during the interim period ended
June 30, 2007 that have materially affected, or are reasonably likely to
materially affect, the Company's ICFR. No such changes were identified through
their evaluation.

    Additional Information

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



    

    TriStar Oil & Gas Ltd.
    Consolidated Balance Sheets
    (unaudited)

    ($ thousands)
    -------------------------------------------------------------------------
                                                        June 30, December 31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Assets

    Current assets
      Accounts receivable                                16,783       15,907
      Inventory                                               -        1,788
      Fair value of financial instruments (notes 3, 10)   1,052            -
      Other current assets                                2,235        2,445
    -------------------------------------------------------------------------
                                                         20,070       20,140

    Property and equipment (notes 4, 5)                 371,054      293,187
    Goodwill (note 4)                                    55,451       38,647
    Fair value of financial instruments (notes 3, 10)     6,762            -
    -------------------------------------------------------------------------

    Total assets                                        453,337      351,974
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities
      Accounts payable and accrued liabilities           25,470       28,975
      Bank loan (note 6)                                 71,213       54,411
      Fair value of financial instruments (notes 3, 10)     309            -
    -------------------------------------------------------------------------
                                                         96,992       83,386

    Asset retirement obligations (note 7)                 8,171        6,089
    Future income taxes                                  54,825       35,018
    Fair value of financial instruments (notes 3, 10)     7,789            -
    -------------------------------------------------------------------------

    Total liabilities                                   167,777      124,493
    -------------------------------------------------------------------------

    Shareholders' Equity

    Share capital (notes 4, 8)                          275,613      219,652
    Contributed surplus (note 8)                          2,812        1,611
    Accumulated other comprehensive income (notes 3, 8)     995            -
    Retained earnings                                     6,140        6,218
    -------------------------------------------------------------------------

    Total shareholders' equity                          285,560      227,481
    -------------------------------------------------------------------------

    Total liabilities and shareholders' equity          453,337      351,974
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



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

    ($ thousands, except per share amounts)
    -------------------------------------------------------------------------
                        Three Months Ended June 30  Six Months Ended June 30
                        --------------------------- -------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
                                                                     (note 1)
    Revenues
      Petroleum and
       natural gas sales       25,965       12,715       46,881       20,219
      Royalties                (4,875)      (1,991)      (8,968)      (3,296)
    -------------------------------------------------------------------------
                               21,090       10,724       37,913       16,923

      Realized gain on
       financial
       instruments
       (note 3)                   372            -        1,656            -
      Unrealized gain
       (loss) on
       financial
       instruments
       (notes 3, 10)              733            -       (1,695)           -
    -------------------------------------------------------------------------
                               22,195       10,724       37,874       16,923

    Expenses
      Operating                 4,752        2,120        9,135        3,246
      Transportation              292           54          652          118
      General and
       administration           1,200          593        2,093          953
      Depletion,
       depreciation
       and accretion           13,304        6,151       24,316        9,791
      Stock-based
       compensation               311           89          711          281
      Interest                  1,037          406        1,904          447
    -------------------------------------------------------------------------
                               20,896        9,413       38,811       14,836

    Income (loss) before
     taxes                      1,299        1,311         (937)       2,087
    -------------------------------------------------------------------------

    Taxes
      Capital taxes               250          125          443          278
      Future income taxes        (974)      (1,810)      (1,302)      (1,498)
    -------------------------------------------------------------------------
                                 (724)      (1,685)        (859)      (1,220)
    -------------------------------------------------------------------------

    Net income (loss)           2,023        2,996          (78)       3,307

    Other comprehensive
     income
      Amortization of fair
       value of financial
       instruments
       (notes 3, 8, 10)          (451)           -       (1,092)           -
    -------------------------------------------------------------------------
    Comprehensive income
     (loss)                     1,572        2,996       (1,170)       3,307

    Retained earnings
      Retained earnings,
       beginning of period      4,117          311        6,218            -
    -------------------------------------------------------------------------

    Retained earnings,
     end of period              6,140        3,307        6,140        3,307
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
     (note 8)
      Basic                      0.03         0.08         0.00         0.10
      Diluted                    0.03         0.08         0.00         0.10
    -------------------------------------------------------------------------

    Weighted average
     number of shares
     (note 8)
      Basic                59,536,687   38,326,369   54,396,475   32,776,421
      Diluted              60,487,361   39,856,718   54,396,475   34,306,770
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



    TriStar Oil & Gas Ltd.
    Consolidated Statements of Cash Flows
    (unaudited)

    ($ thousands)
    -------------------------------------------------------------------------
                        Three Months Ended June 30  Six Months Ended June 30
                        --------------------------- -------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
                                                                     (note 1)

    Operating activities
      Net income (loss)         2,023        2,998          (78)       3,307
      Unrealized loss
       (gain) on
       financial
       instruments               (733)           -        1,695            -
      Depletion,
       depreciation
       and accretion           13,304        6,151       24,316        9,791
      Stock-based
       compensation               311           89          711          281
      Future income
       tax recovery              (974)      (1,810)      (1,302)      (1,498)
    -------------------------------------------------------------------------
                               13,931        7,426       25,342       11,881

      Change in non-cash
       working capital           (395)        (432)      (4,845)      (1,744)
    -------------------------------------------------------------------------

                               13,536        6,994       20,497       10,137
    -------------------------------------------------------------------------

    Financing activities
      Issuance of share
       capital                      -            -       50,620       62,196
      Share issue costs          (101)      (1,004)      (2,781)      (2,580)
      Increase (decrease)
       in bank loan            (1,515)      27,801       14,627       40,203
    -------------------------------------------------------------------------

                               (1,616)      26,797       62,466       99,819
    -------------------------------------------------------------------------

    Investing activities
      Capital expenditures    (15,468)     (11,681)     (31,842)     (21,259)
      Acquisitions, net
       of cash acquired             -      (22,927)     (56,197)     (72,482)
      Proceeds from
       dispositions             1,031            -        1,031            -
      Change in non-cash
       working capital          2,517          817        4,045      (16,215)
    -------------------------------------------------------------------------

                              (11,920)     (33,791)     (82,963)    (109,956)
    -------------------------------------------------------------------------

    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 and six months ended June 30, 2007
    (unaudited)

    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. The Company commenced active operations on January 6, 2006,
        following the completion of a plan of arrangement involving StarPoint
        Energy Trust, StarPoint Energy Ltd., Acclaim Energy Trust and Acclaim
        Energy Ltd. to form Canetic Resources Trust and TriStar (the "Canetic
        Transaction"). Accordingly, the six month period ended June 30, 2006
        includes only results from operations for 176 days, from January 6,
        2006 to June 30, 2006.

    2.  Principles of consolidation

        The interim consolidated financial statements include the accounts of
        TriStar, TriStar Oil & Gas Partnership, Vortex Energy Corporation and
        3249271 Canada Limited. The interim consolidated financial statements
        of the Company have been prepared following the same accounting
        policies and methods of computation utilized in the financial
        statements of the Company for the year ended December 31, 2006,
        except for the changes described in note 3. The disclosures provided
        below are incremental to those included in the Company's annual
        audited financial statements and certain disclosures, which are
        normally required to be included in the notes to the annual
        consolidated financial statements, have been condensed or omitted.
        These interim consolidated financial statements should be read in
        conjunction with the consolidated financial statements and notes
        thereto in the Company's annual report for the year ended
        December 31, 2006.

        The interim 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 Canadian 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.

    3.  Change in accounting policy

        On January 1, 2007, the Company adopted the new accounting standards
        regarding the recognition, measurement, disclosure and presentation
        of financial instruments. In conjunction with the adoption of these
        new standards, the Company elected not to use hedge accounting for
        its crude oil and natural gas derivative contracts under its risk
        management program. As a result, the fair value of the commodity
        contracts is recognized at each reporting period with the change in
        the fair value being classified as an unrealized gain or loss on the
        statement of operations. Also, in accordance with the transitional
        provisions of the standards, the accounting for hedging relationships
        for prior periods is not retroactively adjusted; therefore, there has
        been no restatement of the prior period.

        On adoption, the Company recognized an asset of $3.0 million for the
        fair value of its financial derivative contracts and an increase to
        the future income tax liability and accumulated other comprehensive
        income of $0.9 million and $2.1 million, respectively. The
        $2.1 million in accumulated other comprehensive income is amortized
        through other comprehensive income and unrealized gain or loss on
        financial derivatives in the statement of operations and other
        comprehensive income over the term of the contracts. As a result,
        $1.1 million, net of tax, was charged to other comprehensive income
        with a corresponding unrealized gain on financial derivatives of
        $1.5 million and a charge to future income tax expense of
        $0.4 million for the six months ended June 30, 2007. The impact of
        the change in fair value from January 1, 2007 to June 30, 2007 is
        disclosed in note 10. Certain comparative amounts have been
        reclassified to conform to the presentation adopted in 2007.

        a) Financial Instruments - Recognition and Measurement

           The standards require that all financial assets and liabilities,
           within its scope, be carried at fair value in the consolidated
           balance sheets, except for: loans and receivables, securities
           designated as held-to-maturity and non-trading financial
           liabilities which are carried at amortized cost unless designated
           as held-for-trading upon initial recognition. Fair values are
           based on quoted market prices where available from active markets,
           otherwise fair values are estimated using other valuation
           techniques and models.

           Held-for-trading financial assets are purchased for resale,
           generally within a short period of time. They are measured at fair
           value at the balance sheet date. Gains and losses realized on
           disposal and unrealized gains and losses from market fluctuations
           are reported in earnings.

           Designated fair value financial assets and financial liabilities
           are those that were designated on initial recognition as
           instruments that will be measured at fair value through the
           consolidated statements of earnings and deficit. These are
           accounted for in the same manner as held-for-trading financial
           assets.

           Held-to-maturity financial assets are non-derivative financial
           assets with fixed or determinable payments and a fixed maturity,
           other than loans and receivables that an entity has the positive
           intention and ability to hold to maturity. These are accounted for
           at amortized cost. The Company has not designated any financial
           assets as held-to-maturity.

           Available for sale financial assets are non-derivative financial
           assets that are designated as available for sale and include debt
           and equity securities, including investments with no significant
           influence that have quoted market values in an active market.
           These are carried at fair value and any unrealized gains and
           losses are included in accumulated other comprehensive income
           until sale or permanent impairment. Equities that do not have a
           quoted market value in an active market are carried at cost. The
           Company has not designated any financial assets as available for
           sale.

           Loans and receivables continue to be accounted for at amortized
           cost.

           Financial liabilities are recorded at amortized cost and include
           all liabilities, other than derivatives or liabilities to which
           the fair value option has been applied or those held for trading.

           Derivatives are carried at fair value and are reported as assets
           when they have a positive fair value and as liabilities when they
           have a negative fair value. Derivatives may be embedded in other
           financial instruments, in which case they may be required to be
           separated and fair valued as separate derivatives. The Company has
           not identified any material embedded derivatives in any of its
           financial instruments.

           As required, these standards have been applied as an adjustment to
           either the opening deficit or opening accumulated other
           comprehensive income and prior periods have not been restated.

        b) Derivatives

           The Company has elected to account for its commodity sales
           contracts and other non-financial contracts, which were entered
           into and continue to be held for the purpose of receipt or
           delivery of non-financial items in accordance with its expected
           purchase, sale or usage requirements, on an accrual basis rather
           than as non-financial derivatives. Prior to adoption of the new
           standards, physical receipt and delivery contracts did not fall
           within the scope of the definition of a financial instrument and
           were also accounted for on an accrual basis.

        c) Other Comprehensive Income

           The new standards require a new statement of comprehensive income,
           which is comprised of net earnings and other comprehensive income
           which, for the Company, relates to changes in gains or losses on
           derivatives that previously qualified for hedge accounting.

    4.  Business combinations

        Corporate Acquisition
        ---------------------

        On March 31, 2007, TriStar acquired a company with assets in core
        areas in Alberta and southeast Saskatchewan for total cash
        consideration of $47.7 million, after certain closing adjustments.
        The results of operations include net revenue from this transaction
        effective April 1, 2007.

        This acquisition has been accounted for using the purchase method of
        accounting as follows:

        ($ thousands)
        ---------------------------------------------------------------------
        Consideration
        ---------------------------------------------------------------------
          Cash                                                        47,394
          Transaction costs                                              350
        ---------------------------------------------------------------------
                                                                      47,744
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Net assets received, at estimated fair value
        ---------------------------------------------------------------------
          Property and equipment                                      48,587
          Goodwill                                                    11,134
          Asset retirement obligations                                  (843)
          Future income taxes                                        (11,134)
        ---------------------------------------------------------------------
                                                                      47,744
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The above amounts are estimates, which were made by management at the
        time of the preparation of these interim financial statements based
        on information then available. Amendments may be made to these
        amounts as values subject to estimate are finalized.

        Saskatchewan Private Company Acquisition
        ----------------------------------------

        On January 11, 2007, TriStar acquired, through a series of
        transactions with another public company, all of the issued and
        outstanding common shares of a privately owned Saskatchewan oil and
        gas company (the "Saskatchewan Private Company"). The results of
        operations include net revenue from this transaction effective
        January 12, 2007.

        This acquisition has been accounted for using the purchase method of
        accounting, as follows:

        ($ thousands)
        ---------------------------------------------------------------------
        Consideration
        ---------------------------------------------------------------------
          Common Shares issued                                        11,700
          Transaction costs                                              200
        ---------------------------------------------------------------------
                                                                      11,900
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Net assets received, at estimated fair value
        ---------------------------------------------------------------------
          Property and equipment                                      12,741
          Working capital                                              1,582
          Goodwill                                                     5,670
          Bank loan                                                   (2,174)
          Asset retirement obligations                                  (249)
          Future income taxes                                         (5,670)
        ---------------------------------------------------------------------
                                                                      11,900
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The above amounts are estimates, which were made by management at the
        time of the preparation of these interim financial statements based
        on information then available. Amendments may be made to these
        amounts as values subject to estimate are finalized.

    5.  Property and equipment

        ($ thousands)
        ---------------------------------------------------------------------
                                                        June 30, December 31,
                                                           2007         2006
        ---------------------------------------------------------------------
        Petroleum and natural gas                       423,512      321,500
        Administrative assets                               851          826
        ---------------------------------------------------------------------
                                                        424,363      322,326

        Less accumulated depletion and depreciation     (53,309)     (29,139)
        ---------------------------------------------------------------------
                                                        371,054      293,187
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        At June 30, 2007 the calculation of the depletion and depreciation
        expense excludes unproved property cost of $54.5 million (2006:
        $36.0 million). Future development costs of $24.0 million were
        included in the depletion calculation for the three months ended
        June 30, 2007.

        During the three months ended June 30, 2007, the Company capitalized
        $0.8 million (2006: $0.4 million) of general and administrative costs
        and $0.2 million (2006: $0.2 million) of stock-based compensation
        expense, including a tax effect of $0.1 million (2006: nil), relating
        to exploration and development activities. During the six months
        ended June 30, 2007, the Company capitalized $1.4 million (2006:
        $0.7 million) of general and administrative costs and $0.5 million
        (2006: $0.2 million) of stock-based compensation expense, including a
        tax effect of $0.3 million (2006: nil), relating to exploration and
        development activities.

    6.  Bank loan

        The Company has a $115.0 million revolving demand operating credit
        facility. 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. The
        borrowing base is subject to semi-annual review by the bank.

        The Company's effective interest rate for the three and six months
        ended June 30, 2007 was 5.5 percent and 5.4 percent, respectively.

    7.  Asset retirement obligations

        The total future asset retirement obligations 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 $36.0 million as at June 30, 2007. These payments
        are expected to be made over the foreseeable future with the majority
        of costs incurred between 2018 and 2037. 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)
        ---------------------------------------------------------------------
                                                        June 30, December 31,
                                                           2007         2006
        ---------------------------------------------------------------------
        Asset retirement obligations, beginning of
         period                                           6,089            -
        Liabilities acquired                              1,210        5,090
        Liabilities incurred                                725          731
        Accretion expense                                   147          268
        ---------------------------------------------------------------------
                                                          8,171        6,089
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8.  Shareholders' equity

        (a) Share capital - authorized

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

              (ii) 2,227,484 of non-voting performance shares of TriStar
                   ("Performance Shares"), without nominal or par value.

        (b) Share capital - issued and outstanding

            The following table reconciles the Company's share capital
            movements between January 1, 2007 and June 30, 2007:

            ($ thousands, except share amounts)

                                               Number of shares       Amount
            -----------------------------------------------------------------
            Common Shares
              Balance, beginning of period           46,719,972      219,629
            -----------------------------------------------------------------
              Issued on acquisitions                  2,500,000       11,700
              Issued for cash: flow-through shares    1,700,000       10,200
              Issued for cash                         8,600,000       40,420
              Tax effect on flow-through shares
               renounced                                      -       (4,425)
              Conversion of performance shares           20,887           28
              Share issue costs (net of $820 tax
               effect)                                        -       (1,961)
            -----------------------------------------------------------------
              Balance, end of period                 59,540,859      275,591
            -----------------------------------------------------------------
            Performance Shares
              Balance, beginning of period            2,272,484           23
              Exercised for Common Shares               (45,000)          (1)
            -----------------------------------------------------------------
              Balance, end of period                  2,227,484           22
            -----------------------------------------------------------------
            Total share capital, end of period       61,768,343      275,613
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (c) Per share amounts

            The reconciling items between the basic and diluted average
            Common Shares outstanding are stock options and Performance
            Shares.

        (d) Stock options

            The Company has an employee stock option plan and a stock
            incentive plan under which employees and directors are eligible
            to receive option grants ("Stock Options") and Common Share
            incentives ("Incentive Shares"), respectively. The total
            aggregate amount of Stock Options and Incentive Shares that can
            be issued cannot exceed ten percent of the outstanding Common
            Shares when the total Performance Shares are added to the total
            Stock Options and Incentive Shares issued. Stock Options granted
            under the plan have a term of five years to expiry and vest over
            three years.

            There were no Incentive Shares issued as at June 30, 2007.

            The Company accounts for its stock-based compensation using the
            fair value method. The fair value of each Stock Option and
            Performance Share 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 both the Stock
            Options and the Performance Shares is two years. The risk-free
            interest rates are 4.10 percent and 3.75 percent, respectively,
            and the expected volatility is 35 percent.

            The weighted average exercise price for the options granted in
            the three and six months ended June 30, 2007 was $5.15 and $5.25,
            respectively.

            The following table reconciles Stock Option plan activity:

            -----------------------------------------------------------------
                        Three Months Ended June 30  Six Months Ended June 30
                        --------------------------- -------------------------
                                 2007         2006         2007         2006
            -----------------------------------------------------------------
            Balance,
             beginning
             of period      2,160,000            -    2,090,000            -
              Granted          80,000      668,500      150,000      798,500
            -----------------------------------------------------------------
            Balance, end
             of period      2,240,000      668,500    2,240,000      798,500
            -----------------------------------------------------------------
            -----------------------------------------------------------------
            Weighted
            average exercise
            price ($)            6.84         6.89         6.84         6.89
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (e) Contributed surplus

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

            ($ thousands)
            -----------------------------------------------------------------
                                                        June 30, December 31,
                                                           2007         2006
            -----------------------------------------------------------------
            Balance, beginning of period                  1,611            -
            Stock-based compensation expense arising
             from:
              Stock options                                  86          755
              Performance Shares                            216          856
              Escrowed shares                               149            -
              Conversion of Performance Shares              (28)           -
            -----------------------------------------------------------------
            Balance, end of period                        2,812        1,611
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (f) Accumulated other comprehensive income

            As described in note 3, the adoption of the new accounting
            policies regarding financial instruments resulted in an amount
            being recognized in accumulated other comprehensive income for
            the fair value of the Company's commodity derivative contracts at
            January 1, 2007. The amount recognized in accumulated other
            comprehensive income is as follows:

            ($ thousands)
            -----------------------------------------------------------------
                        Three Months Ended June 30  Six Months Ended June 30
                        --------------------------- -------------------------
                                 2007         2006         2007         2006
            -----------------------------------------------------------------
            Balance,
             beginning
             of period          1,445            -            -            -
            Change in
             accounting
             policy, net of
             tax of $874            -            -        2,086            -
            Amortization
             of fair value
             of financial
             instruments,
             net of tax of
             $189 and $457
             for the three
             and six months
             ended June 30,
             2007,
             respectively)       (450)           -       (1,091)           -
            -----------------------------------------------------------------
            Balance, end of
             period               995            -          995            -
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (g) Flow-through shares

            On March 16, 2007, TriStar issued 1,700,000 flow-through Common
            Shares at a price of $6.00 per share for gross proceeds of
            $10.2 million. As a result, the Company must incur certain
            qualifying resource expenditures before December 31, 2008. The
            related tax impact will be recorded when the qualifying
            expenditures are renounced to shareholders in 2008. No qualifying
            expenditures related to this flow-through share obligation were
            renounced as at June 30, 2007. The obligation remaining for this
            flow-through share issue was $10.2 million at June 30, 2007.

            On August 10, 2006, TriStar issued 1,690,000 flow-through Common
            Shares at a price of $8.90 per share for gross proceeds of
            $15.0 million. As a result, the Company must incur certain
            qualifying resource expenditures before December 31, 2007. The
            related tax impact was recorded when the qualifying expenditures
            were renounced to shareholders in January 2007. The obligation
            remaining for this flow-through share issue was approximately
            $2.6 million at June 30, 2007.

    9.  Supplemental cash flow information

        ($ thousands)

        ---------------------------------------------------------------------
                        Three Months Ended June 30  Six Months Ended June 30
                        --------------------------- -------------------------
                                 2007         2006         2007         2006
        ---------------------------------------------------------------------
        Income and other
         taxes paid               175           31          175           93
        Interest paid, net
         of interest income       973          394        1,840          434
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    10. Financial instruments

        The Company's financial instruments recognized on the balance sheet
        consist of accounts receivable, accounts payable and accrued
        liabilities, bank loan 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
        ---------------------

        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. 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 June 30, 2007, the following table presents a reconciliation of
        the change in the unrealized amounts from January 1, 2007 to June 30,
        2007:

        ($ thousands)
                                                                       Total
                                                                  unrealized
                                                     Fair value   gain/(loss)
        ---------------------------------------------------------------------

        Balance, beginning of period                    $ 2,960      $     -
        Unrealized loss on financial instruments         (3,244)      (3,244)
        Amortization of fair value of financial
         instruments                                          -        1,549
        ---------------------------------------------------------------------
        Balance, end of period                          $  (284)     $(1,695)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        In conjunction with the plan of arrangement described in Note 11,
        TriStar entered into three US dollar WTI oil costless collar
        contracts prior to June 30, 2007 each for 500 Bbl/d for January 1,
        2008 to December 31, 2009 at prices of US$65.00 to US$76.30, US$65.00
        to US$76.15 and US$67.00 to US$76.70, respectively (collectively, the
        "Real Hedges"). The resulting unrealized loss on these financial
        instruments for the six months ended June 30, 2007 was $0.8 million.

        Commodity contracts outstanding are as follows:

        Oil Costless Collars Contracts

                                        Volume         Price
                                        (Bbl/d)      ($US/Bbl)        Index
        ---------------------------------------------------------------------
        Apr. 1, 2006 - Jun. 30, 2007       250      60.00 - 77.20       WTI
        Apr. 1, 2006 - Dec. 31, 2007       250      60.00 - 76.10       WTI
        Jan. 1, 2007 - Dec. 31, 2007       500      70.00 - 78.10       WTI
        Jan. 1, 2007 - Dec. 31, 2008       250      60.00 - 75.00       WTI
        Jul. 1, 2007 - Dec. 31, 2007       250      70.00 - 78.00       WTI
        Jan. 1, 2008 - Dec. 31, 2009(1)    500      65.00 - 76.30       WTI
        Jan. 1, 2008 - Dec. 31, 2009(1)    500      65.00 - 76.15       WTI
        Jan. 1, 2008 - Dec. 31, 2009(1)    500      67.00 - 76.70       WTI
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (1) Real Hedges

        In addition, in relation to the plan of arrangement described in
        Note 11, TriStar entered into one US dollar WTI oil costless collar
        contract subsequent to June 30, 2007 for 500 Bbl/d for January 1,
        2008 to December 31, 2009 at a price of US$70.00 to US$75.52.

        Oil Swap Contracts

                                        Volume         Price
                                        (Bbl/d)      (per Bbl)        Index
        ---------------------------------------------------------------------
        Jan. 1, 2007 - Dec. 31, 2008       250        US$68.35          WTI
        Apr. 1, 2007 - Dec. 31, 2009       250         C$76.60        C$WTI
        Jan. 1, 2008 - Dec. 31, 2009       250         C$78.20        C$WTI
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Natural Gas Costless Collars Contracts

                                        Volume         Price
                                        (GJ/d)         ($/GJ)         Index
        ---------------------------------------------------------------------
        Apr. 1, 2007 - Oct. 31, 2007     1,000   6.50 - 9.00    AECO Monthly
        Apr. 1, 2007 - Oct. 31, 2007     1,000   7.50 - 8.75    AECO Monthly
        Nov. 1, 2007 - Mar. 31, 2008     2,000  7.50 - 10.32    AECO Monthly
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Natural Gas Swap Contract

                                        Volume         Price
                                        (GJ/d)         ($/GJ)         Index
        ---------------------------------------------------------------------
        Apr. 1, 2007 - Oct. 31, 2007     1,000          7.64    AECO Monthly
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


    11. Subsequent Event

        On August 2, 2007, the shareholders of TriStar and Real Resources
        Inc. ("Real") approved a plan of arrangement to form an intermediate
        oil and gas exploration and development company (hereinafter the
        "Arrangement"). Under the terms of the Arrangement, each TriStar
        shareholder will receive 0.4762 shares of the combined entities
        (hereinafter referred to as "New TriStar") for each share of TriStar
        held and each Real shareholder will receive one share of New TriStar
        for each share of Real held. TriStar shareholders will own
        approximately 42 percent of New TriStar and Real shareholders will
        own approximately 58 percent of New TriStar. The transaction is
        expected to close on August 16, 2007. The combined entities will
        continue under the name TriStar.

        Senior management of the combined entity will be the current officers
        of TriStar, and the board of directors will be comprised of seven of
        TriStar's current directors and three of Real's current directors.
        Accordingly, the transaction will be accounted for as a reverse
        takeover whereby TriStar is deemed to be the acquirer of Real, using
        the purchase method of accounting.
    

    %SEDAR: 00023171E




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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