Wrangler West Reports 2009 Nine Month Results

CALGARY, Nov. 26 /CNW/ - Wrangler West Energy Corp. ("Wrangler West", the "Company") (TSX-V "WX") announces operating and financial results for the three and nine months ended September 30, 2009, together with comparative data for the same periods in 2008 and the year ended December 31, 2008.

    
    Nine Month Highlights

    -   $10.6 million in revenue
    -   $4.1 million in funds flow from operations
    -   $1.5 million in capital expenditures
    -   closed acquisition of Grand Forks oil property post 2009 third
        quarter
    

2009 Production Update

For the nine months ended September 30, 2009, Wrangler West produced 1,156 barrels of oil equivalent (boe) per day, lower by approximately 20 percent compared to the same period one year ago. At the close of 2009 third quarter, we shut in the Wabamun A oil pool at Riviere to undertake a pressure transient study to capture information required for our engineering review of the pool. We shut in approximately 200 bbls of oil per day and 1.5 Mmcf of natural gas production for the last week of September. At the time of this release, we have collected most of the data required to complete the engineering study. Currently, Wrangler West's production is approximately 1,150 boe per day.

Capital Expenditures Program

Throughout 2009, Wrangler West has restricted expenditures to preserve capital and focus on managing bank indebtedness. We have expanded our inventory of drillable prospects during the weak land sales environment within the Province of Alberta. We will continue to expand our prospect inventory and prepare to resume drilling when commodity prices improve sufficiently to increase funds flow from operations which supports our exploration budget.

Commodity Prices

Throughout 2009, the volatility in commodity prices has challenged our industry. In 2009 third quarter, prices for natural gas tested the lows of the year. Overall, natural gas prices are projecting a seven year low as storage levels continue to build across the North American market. Drilling for natural gas has increased modestly but remains more than 50 percent lower than peak activity levels experienced in September 2008. Unexpectedly warm weather on the cusp of the winter heating season, combined with the soft United States economy, has dampened the draw on natural gas supplies creating downward pressure on price for this commodity. Crude oil prices have remained fairly stable throughout the slow down and US $75-80 WTI per barrel may become a floor price as the more bullish forecasters suggest the possibility of triple digit crude oil prices in the not-too-distant future.

Wrangler West's production is 75 percent natural gas. Corporately, we evaluated all our natural gas assets and shut-in assets that were cash flow negative during the low pricing environment of the past summer. We are focusing on activities intended to increase our exposure to oil projects. During 2009 fourth quarter, we closed an acquisition of three shut-in wells adjacent to Wrangler West's Grand Forks oil pool. The wells have been reactivated and are currently producing approximately 50 bbls of oil per day. We are trucking produced water from these wells to our central battery for disposal. To address these transportation expenses, we are licensing a pipeline with the expectation it will be constructed and tied-in before 2009 year-end.

Industry Conditions

Drilling activity in the Western Canada Sedimentary Basin ("WCSB") continues to be extremely curtailed. Alberta land sales, a leading industry indicator, suggest the slower pace will persist throughout most of 2010. Saskatchewan and British Columbia show signs of increased activity levels as capital moves to capture the economic upside tied to more favourable royalty programs instituted by those two provinces. Equity markets have been active in the past several weeks. Most financings have been directed toward the large-cap segment of the oil and natural gas industry and toward companies with resource plays tied to new technology horizontal drilling and multi-leg stimulation programs. We anticipate equity markets will continue to favour opportunities offered by large-cap companies.

Staying Focused in the Downturn

Management has undertaken an initiative to increase Wrangler West's exposure to crude oil projects. We expanded our Grand Forks oil portfolio with the acquisition of three additional wells. We have also acquired trade 3D seismic data which covers our existing pool including the acquired assets. Our technical team has identified new drilling locations to support ongoing activity within the Grand Forks area. Wrangler West is evaluating the potential to monetize certain non-operated assets that will allow us to capitalize on acquisition and development opportunities identified within our core areas.

    
                Selected Operational and Financial Highlights

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    OPERATIONAL HIGHLIGHTS
    Production
    Crude oil and NGL (bbls/d)   288     277       4     292     348     (16)
    Natural gas (mcf/d)        4,888   5,960     (18)  5,184   6,635     (22)
    Total (boe/d)              1,103   1,270     (13)  1,156   1,454     (20)
    -----------------------------------------         ---------------
    Prices
    Crude oil and NGL ($/bbl)  65.06  107.59     (40)  54.74   98.98     (45)
    Natural gas ($/mcf)         3.29    9.71     (66)   4.43    9.29     (52)
    -----------------------------------------         ---------------
    Per boe ($)
    Petroleum and natural gas
     revenues                  31.55   69.04     (54)  33.67   66.08     (49)
    Royalties                  (5.27) (15.36)    (66)  (4.59) (13.62)    (66)
    Operating expenses        (12.36) (15.87)    (22) (14.15) (14.00)      1
    -----------------------------------------         ---------------
    Field netback              13.91   37.81     (63)  14.93   38.47     (61)
    General and
     administrative            (2.86)  (2.88)     (1)  (2.82)  (2.33)     21
    Interest                   (1.45)  (0.98)     48   (1.21)  (1.11)      9
    Current income tax          6.57    0.45   1,360    2.11   (3.38)   (162)
    Realized loss on
     commodity contracts           -   (6.35)   (100)      -   (3.88)   (100)
    -----------------------------------------         ---------------
    Funds flow from
     operations                16.17   28.06     (42)  13.02   27.78     (53)
    Unrealized gain (loss)
     on commodity contracts        -   20.62    (100)      -   (0.40)   (100)
    Depletion, depreciation,
     and accretion            (22.44) (25.55)    (12) (23.72) (24.65)     (4)
    Stock-based compensation   (2.15)  (0.66)    226   (1.06)  (0.53)    100
    Future income tax              -   (7.21)   (100)   2.10    1.45      45
    -----------------------------------------         ---------------
    Net earnings (loss)        (8.42)  15.26    (155)  (9.66)   3.64    (365)
    -----------------------------------------         ---------------
    FINANCIAL HIGHLIGHTS
     ($ thousand)
    Petroleum and natural gas
     revenues                  3,200   8,071     (60) 10,624  26,328     (60)
    Royalties                   (535) (1,795)    (70) (1,447) (5,425)    (73)
    Operating expenses        (1,254) (1,855)    (32) (4,466) (5,577)    (20)
    General and
     administrative             (290)   (336)    (14)   (890)   (927)     (4)
    Interest                    (147)   (114)     28    (381)   (441)    (14)
    Current income tax           667      52   1,174     667  (1,346)   (150)
    Realized loss on
     commodity contracts           -    (742)   (100)      -  (1,546)   (100)
    -----------------------------------------         ---------------
    Funds flow from
     operations                1,640   3,280     (50)  4,108  11,066     (63)
    Unrealized gain (loss) on
     commodity contracts           -   2,411    (100)      -    (158)   (100)
    Depletion, depreciation,
     and accretion            (2,276) (2,987)    (24) (7,484) (9,822)    (24)
    Stock-based compensation    (218)    (77)    182    (336)   (213)     58
    Future income tax              -    (843)   (100)    664     577      15
    -----------------------------------------         ---------------
    Net earnings (loss)         (854)  1,785    (148) (3,049)  1,451    (310)
    -----------------------------------------         ---------------
    Outstanding shares
     (thousand, except where
     indicated)
    Weighted average - basic   6,391   6,391       -   6,391   6,373       -
    Weighted average -
     diluted                   6,631   6,810      (3)  6,569   6,792      (3)
    -----------------------------------------         ---------------
    Funds flow from
     operations - basic
     ($/share)                  0.26    0.51     (49)   0.64    1.74     (63)
    Funds flow from
     operations - diluted
     ($/share)                  0.25    0.48     (48)   0.63    1.63     (61)
    Net earnings (loss) -
     basic ($/share)           (0.13)   0.28    (146)  (0.48)   0.23    (309)
    Net earnings (loss) -
     diluted ($/share)         (0.13)   0.26    (150)  (0.48)   0.21    (329)
    -----------------------------------------         ---------------
    Total assets ($ thousand)                         40,447  47,455     (15)
    -------------------------------------------------------------------------


                     MANAGEMENT'S DISCUSSION AND ANALYSIS
           for the three and nine months ended September 30, 2009
    

Management of Wrangler West Energy Corp. ("Wrangler West" or the "Company") prepared the following information as of November 25, 2009 and recommends reading it in conjunction with the Company's audited financial statements for the years ended December 31, 2008 and 2007 and the Company's unaudited interim financial statements for the three and nine months ended September 30, 2009 and 2008. The comparative interim financial statements were not reviewed by the Company's auditor.

Management's Discussion and Analysis contains the terms 'funds flow from operations' and 'netbacks', which are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Management believes, in addition to net earnings, funds flow from operations is a useful supplemental measure to evaluate performance. Management views funds flow from operating activities to be a key measure as it demonstrates the Company's ability to generate cash necessary to fund the capital expenditure program and to repay debt. Investors are cautioned, however, that this measure should not be construed as an alternative to net earnings determined in accordance with GAAP, as an indication of the Company's performance.

Wrangler West's determination of funds flow from operations may not be comparable to that reported by other companies. Funds flow from operations is equal to cash flow from operations before changes in non-cash operating working capital as presented in the statement of cash flows. Wrangler West presents funds flow from operations per share calculated on a basis consistent with the calculation of earnings per share. Netbacks are calculated using total revenue minus royalties and operating expenses.

The table below illustrates the reconciliation between cash flow from operations and funds flow from operations, as defined above, after changes in non-cash operating working capital for the periods ended September 30, 2009 and 2008.

    
                                              Three months       Nine months
                                              ended Sep 30      ended Sep 30
    -------------------------------------------------------------------------
    ($ thousands)                            2009     2008     2009     2008
    -------------------------------------------------------------------------
    Cash flow from operations               1,508    3,686    2,321    7,788
    Change in non-cash operating working
     capital                                  132     (406)   1,787    3,278
    -------------------------------------------------------------------------
    Funds flow from operations              1,640    3,280    4,108   11,066
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

BASIS OF PRESENTATION

Wrangler West converts petroleum and natural gas reserves and volumes to a common unit of measure on a basis of six thousand cubic feet ("mcf") of natural gas equals one barrel ("bbl") of oil. Disclosure using barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. The basis for the boe conversion ratio of 6 mcf equals one bbl is an energy equivalency conversion method, primarily applicable at the burner tip, and it does not represent a value equivalency at the wellhead. The Company calculates boe per day based on total production for the period divided by the number of days during the period.

REVIEW OF INTERIM FINANCIAL STATEMENTS

Wrangler West continues to curtail capital expenditures in 2009 as commodity prices continued their decline which started in 2008 fourth quarter. Third quarter production volumes were consistent with 2009 second quarter production volumes. Late in 2009 third quarter, we shut-in production to conduct a reservoir pressure transient study of the Wabamun A pool at Riviere and completed our annual battery turnaround.

    
    SELECTED QUARTERLY INFORMATION

    Three months ended                     Sep 30   Jun 30   Mar 31   Dec 31
    ($ thousand, except where indicated)     2009     2009     2009     2008
    -------------------------------------------------------------------------
    Total revenue(1)                        3,200    3,315    4,110    5,094

    Funds flow from operations              1,640    1,034    1,433    1,878
    Funds flow from operations
     - basic ($/share)                       0.26     0.16     0.22     0.29
    Funds flow from operations
     - diluted ($/share)                     0.25     0.15     0.19     0.28

    Cash flow from operations               1,508      546      267    7,518

    Net earnings (loss)                      (854)  (1,009)  (1,186)    (582)
    Earnings (loss) - basic ($/share)       (0.13)   (0.16)   (0.19)   (0.09)
    Earnings (loss) - diluted ($/share)     (0.13)   (0.16)   (0.19)   (0.09)

    Total production (boe/d)                1,103    1,117    1,249    1,216
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Three months ended                     Sep 30   Jun 30   Mar 31   Dec 31
    ($ thousand, except where indicated)     2008     2008     2008     2007
    -------------------------------------------------------------------------
    Total revenue                           8,071   10,262    7,995    7,089

    Funds flow from operations              3,280    4,102    3,683    3,269
    Funds flow from operations
     - basic ($/share)                       0.51     0.64     0.58     0.51
    Funds flow from operations
     - diluted ($/share)                     0.48     0.60     0.54     0.46

    Cash flow from operations               3,686    4,709     (607)   1,672

    Net earnings (loss)                     1,785     (167)    (167)     211
    Earnings (loss) - basic ($/share)        0.28    (0.03)   (0.03)    0.03
    Earnings (loss) - diluted ($/share)      0.26    (0.03)   (0.03)    0.03

    Total production (boe/d)                1,270    1,535    1,558    1,642
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) In 2008, petroleum and natural gas revenue is before
        realized/unrealized gain (loss) on commodity price contracts.
    

Wrangler West's production profile has declined over the last eight quarters reflecting inherent decline in our existing production base. Curtailment of exploration activity due to soft commodity prices has resulted in no new production additions. Improved well performance in 2009 resulted in reserves write-ups which may offset the daily production volumes delivered as sales during the year.

Volatility in commodity prices continues to cause significant fluctuations in revenue and funds flow from operating activities. In mid 2008, commodity prices were at a historical high which had a positive impact on both revenue and funds flow for that period. Fourth quarter 2008 commodity prices retreated, resulting in a significant decrease in revenue and funds flow. Funds flow from operations for the three months ended September 30, 2009, was positively affected by the reversal of a prior year's over-accrual of current income taxes payable in the amount of $277,000. Wrangler West anticipates that it will incur a loss for income tax purposes in 2009 and has also recorded an estimated recovery of $390,000 of prior years' income taxes as a result of carrying back losses to previous cash taxable years.

During the third quarter of 2009, management discovered that certain changes in non-cash working capital were not correctly classified between operating and investing in the first and second quarters of 2009. The net change in non-cash working capital remained unchanged. Cash flow from operations in the table above represents the corrected amounts.

Management has reduced exploration and development activity in 2009 and redirected available funds flow to reducing bank indebtedness.

In addition to commodity price fluctuations, operational issues and seasonal access limitations affect results from quarter to quarter.

Management recommends readers refer to the appropriate interim period MD&A for analysis of variances between individual quarters.

    
    PRODUCTION

    Daily Production
                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($ thousand)                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Oil and NGL (bbls/d)         288     277       4     292     348     (16)
    Natural gas (mcf/d)        4,888   5,960     (18)  5,184   6,635     (22)
    Total (boe/d)              1,103   1,270     (13)  1,156   1,454     (20)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total production for the three and nine months ended September 30, 2009
was lower, a result of no production additions to offset natural decline.
Wrangler West has curtailed drilling activity until improved commodity prices
provide stronger funds flow from operating activities.
    Total production for 2009 third quarter decreased one percent from 2009
second quarter.

    REVENUES

    Production Revenues
                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($ thousand)                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Oil and NGL                1,722   2,746     (37)  4,360   9,445     (54)
    Natural gas                1,477   5,325     (72)  6,265  16,883     (63)
    Realized loss on
     commodity contracts           -    (742)   (100)      -  (1,546)   (100)
    -------------------------------------------------------------------------
    Petroleum and natural gas
     revenues after realized
     loss on commodity
     contracts                 3,200   7,329     (56) 10,624  24,782     (57)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Prices after realized loss on commodity contracts

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Oil and NGL ($/bbl)        65.06   91.50     (29)  54.74   89.96     (39)
    Natural gas ($/mcf)         3.29    9.11     (64)   4.43    8.91     (50)
    Total production ($/boe)   31.55   62.69     (50)  33.67   62.20     (46)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the nine months ended September 30, 2009, Wrangler West recognized a
57 percent decrease in total production revenue as the result of a 46 percent
decrease in overall commodity prices and a 20 percent decrease in total
production volumes.
    Production revenues for 2009 third quarter decreased three percent from
2009 second quarter, reflecting the further decline in natural gas prices and
production volumes.

    ROYALTIES

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($ thousand)                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Crown                        134     843     (84)    255   2,665     (90)
    Other                        401     952     (58)  1,192   2,759     (57)
    -------------------------------------------------------------------------
    Total royalties              535   1,795     (70)  1,447   5,425     (73)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($/boe)                     2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Crown                       1.32    7.21     (82)   0.81    6.69     (88)
    Other                       3.95    8.14     (51)   3.78    6.93     (45)
    -------------------------------------------------------------------------
    Total royalties             5.27   15.36     (66)   4.59   13.62     (66)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the three and nine months ended September 30, 2009, total royalties
decreased, a reflection of lower commodity prices and lower current production
volumes. Royalties, as a percentage of revenue, for the nine months ended
September 30, 2009 were 14 percent, a reflection of the weakness in commodity
prices and lower production. Lower production volumes and lower prices
resulted in lower royalty rates for the 2009 third quarter compared to 2008
third quarter.
    In 2009 second quarter, a capital cost allowance credit, captured on 2008
prices, resulted in a credit for the period.

    OPERATING EXPENSES

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Operating expenses
     ($ thousand)              1,254   1,855     (32)  4,466   5,577     (20)
    Operating expenses
     ($/boe)                   12.36   15.87     (22)  14.15   14.00       1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

For the three and nine months ended September 30, 2009, total operating expenses decreased. In the prior period, workover expenditures contributed to higher operating costs. Operating expenses for the nine months ended September 30 remained consistent year-over-year on a per boe basis.

For 2009 third quarter, Wrangler West included crude oil trucking expenses of $3.32 per bbl (2008 - $4.05 per bbl) in operating expenses. For 2009 second quarter, operating expenses included crude oil trucking expenses of $3.93 per bbl.

In 2009 third quarter, operating expenses decreased 21 percent, in total and on a boe basis, from 2009 second quarter which included annual property taxes.

    
    NETBACKS

    Field netbacks(1)
                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($/boe)                     2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Light and medium crude
     oil ($/bbl)               35.44   44.58     (21)  25.07   51.07     (51)
    Natural gas ($/mcf)         1.06    4.57     (77)   1.92    4.89     (61)
    NGL ($/bbl)                30.31   67.62     (55)  23.01   56.72     (59)
    Combined netback ($/boe)   13.91   31.46     (56)  14.93   34.59     (57)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) In 2008, field netback is after realized loss on commodity price
        contracts.

    Wrangler West's combined netbacks reflect the weighting of total
production towards natural gas. For the three and nine months ended September
30, 2009, netbacks decreased due to the decline in commodity prices received.
    Combined netback for 2009 third quarter decreased two percent from 2009
second quarter ($14.13 per boe).

    GENERAL AND ADMINISTRATIVE (G&A)

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    G&A ($ thousand)             290     336     (14)    890     927      (4)
    G&A ($/boe)                 2.86    2.88      (1)   2.82    2.33      21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

For the nine months ended September 30, 2009, total G&A declined slightly from the comparative period. For 2009 third quarter, total G&A decreased as a result of cost-cutting measures.

At September 30, 2009, Wrangler West capitalized G&A of $416,000 (2008 - $580,000) associated with exploration activities for the nine months. Capitalized G&A for 2009 third quarter was $126,000 (2008 - $232,000).

G&A for 2009 third quarter increased five percent in total and on a per boe basis from 2009 second quarter.

    
    INTEREST EXPENSE

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Interest ($ thousand)        147     114      28     381     441     (14)
    Interest ($/boe)            1.45    0.98      48    1.21    1.11       9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Interest expense for the nine months ended September 30, 2009 represented interest charges for the use of Wrangler West's demand revolving operating credit facility ("credit facility"). The Company uses the credit facility to fund the capital expenditures program and working capital deficiency.

Interest expense in 2009 third quarter increased 17 percent (18 percent on a per boe basis) from 2009 second quarter due to increases in the cost of borrowing. The credit facility bears interest based on the Corporation's debt to cash flow ratio determined at the most recently completed fiscal quarter. Credit facility utilization up to $11.5 million bears interest at the bank's prime rate plus 225 basis points for a debt to cash flow ratio less than, or equal to, 1 : 1. As the Corporation's debt to cash flow ratio increases, the interest rate increases to a maximum of prime plus 400 basis points for a debt to cash flow ratio greater than 3 : 1. The Corporation paid interest at a rate of prime plus 350 basis points for the three months ended September 30, 2009.

    
    STOCK-BASED COMPENSATION

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Stock-based compensation
     ($ thousand)                218      77     183     336     213      58
    Stock-based compensation
     ($/boe)                    2.15    0.66     226    1.06    0.53     100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

At September 30, 2009, Wrangler West had outstanding options to purchase 1,187,000 common shares. During 2009 third quarter options to purchase 600,000 common shares were granted and options were exercised to purchase 25,000 common shares.

For the nine months ended September 30, 2009, total stock-based compensation expense was $470,000 (2008 - $390,000) of which Wrangler West capitalized $135,000 (2008 - $177,000) relating to exploration and development activities.

In 2009 third quarter, stock-based compensation increased from 2009 second quarter due to a grant of options to purchase 600,000 common shares on September 16, 2009. Fifty percent of the options to purchase 600,000 common shares vested immediately upon grant and 50 percent will vest on September 16, 2010. All other outstanding options to purchase common shares are fully vested.

    
    DEPLETION, DEPRECIATION AND ACCRETION ("DD&A")

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Depletion, depreciation
     and accretion
     ($ thousand)              2,276   2,987     (24)  7,484   9,822     (24)
    Depletion, depreciation
     and accretion ($/boe)     22.44   25.55     (12)  23.72   24.65      (4)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The decrease in DD&A on a per boe basis for 2009 third quarter reflects
increased reserves at Riviere as a result of better well performance.
    DD&A for 2009 second quarter was $22.05 on a per boe basis. Throughout
2009, weak commodity prices caused Wrangler West to defer oil and natural gas
exploration and development activities. Thus, there were no additions to
reserves from exploration.

    INCOME TAX

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($ thousand)                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Current income tax
     expense (recovery)         (667)    (52)  1,174    (667)  1,346    (150)
    Future income tax expense
     (recovery)                    -     843    (100)   (664)   (577)     15
    -------------------------------------------------------------------------
    Total                       (667)    791    (184) (1,330)    770    (273)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($/boe)                     2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Current income tax         (6.57)  (0.45)  1,360   (2.11)   3.38    (162)
    Future income tax expense
     (recovery)                    -    7.21    (100)  (2.10)  (1.45)     45
    -------------------------------------------------------------------------
    Total                      (6.57)   6.76    (197)  (4.22)   1.93    (319)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Tax pools sheltered approximately $3.4 million of income for tax purposes for the nine months ended September 30, 2009. Wrangler West is currently not in a taxable position and will apply any tax losses available to prior tax years. An estimated current income tax recovery of $390,000 was recorded as a result of carrying back losses to previous cash taxable years. Wrangler West also reversed a prior year's over-accrual of current income taxes in the amount of $277,000 in the fourth quarter. Wrangler West recognized a future income tax recovery of $664,000 for the nine months ended September 30, 2009.

    
    NET EARNINGS (LOSS)

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Net earnings (loss)
     ($ thousand)               (854)  1,785    (148) (3,049)  1,451    (310)
    Net earnings (loss)
     ($/boe)                   (8.42)  15.26    (155)  (9.66)   3.64    (365)

    Net earnings (loss)
     - basic ($/share)         (0.13)   0.28    (146)  (0.48)   0.23    (309)
    Net earnings (loss)
     - diluted ($/share)       (0.13)   0.26    (150)  (0.48)   0.21    (329)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the three and nine months ended September 30, 2009, Wrangler West's
earnings reflected continued low commodity prices for natural gas.
    Wrangler West recorded a loss of $1.0 million for 2009 second quarter
(loss of $0.16 on a per share basis).

    FUNDS FLOW AND LIQUIDITY

                                 Three months ended       Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
                                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Funds flow from
     operations ($ thousand)   1,640   3,280     (50)  4,108  11,066     (63)
    Funds flow from
     operations ($/boe)        16.17   28.06     (42)  13.02   27.78     (53)

    Funds flow from
     operations - basic
     ($/share)                  0.26    0.51     (49)   0.64    1.74     (63)
    Funds flow from
     operations - diluted
     ($/share)                  0.25    0.48     (48)   0.63    1.63     (61)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

For the three and nine months ended September 30, 2009, Wrangler West's funds flow from operating activities decreased as a result of the continued downward trend in commodity prices and a reduced production base which requires exploration expenditures and activity to maintain a growth profile.

Improvements to funds flow from operating activities and net income will depend on improvements in crude oil and natural gas prices while managing production levels. A shortfall in funds flow from operating activities resulting from weaker commodity prices would require review and prioritization of Wrangler West's exploration budget. As new business opportunities arise, Wrangler West may pursue an increase in the credit facility or seek alternate funding in the equity markets to capture new opportunities.

Wrangler West had a working capital deficiency of $10.2 million at September 30, 2009 ($12.9 million - December 31, 2008). As at September 30, 2009, Wrangler West had drawn $10.7 million on its credit facility ($10.3 million drawn at December 31, 2008).

The Corporation's authorized demand revolving credit facility (the "credit facility") decreased to $15 million from $20 million in May 2009. The $15 million credit facility initially included a base lending value of $12.5 million which declined to $11.5 million on July 15, 2009. Any amount drawn above the base lending value requires consent of the lender. The borrowing base is reviewed at least semi-annually with the latest review completed on October 31, 2009. There were no changes to the amount or terms of the credit facility. The next review is scheduled to be completed prior to April 30, 2010. The Corporation will continue to fund the capital program for the remainder of 2009 with funds generated from operating activities.

The Corporation has no material commitments.

Management prepared these financial statements on a going concern basis which assumes the Corporation will be able to discharge its obligations and realize its assets in the normal course of business at the values for which they are carried in these financial statements and the Corporation will be able to continue business activities. In light of the factors described herein, should the going concern assumption not be appropriate, certain asset and liability amounts would require adjustment and reclassification and such adjustments and reclassifications may be material.

    
    TOTAL CAPITALIZATION

    ($ thousand except where noted)                        As at 2009 Sep 30
    -------------------------------------------------------------------------
    Common shares outstanding (thousand)                               6,416
    Closing market price at September 30 ($/share)                      2.25

    Market value of common shares                                     14,436
    Net debt                                                          10,215
    Total capitalization                                              24,651
    -------------------------------------------------------------------------

    As at November 25, 2009, Wrangler West had 6,415,827 common shares
outstanding.

    CAPITAL EXPENDITURES

                                 Three months ended      Nine months ended
                                       Sep 30                  Sep 30
    -------------------------------------------------------------------------
                                                 %                       %
    ($ thousand)                2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Land                         380      78     386     523     438      19
    Seismic                      (13)     96    (113)    113     371     (70)
    Capitalized general and
     administrative expenses     126     232     (46)    416     580     (28)
    Drilling and completions       1   2,711    (100)    502   3,825     (87)
    Production equipment
     and gathering systems       (15)    357    (104)    (36)  2,698    (101)
    -----------------------------------------         ---------------
    Total capital expenditures   480   3,474     (86)  1,518   7,912     (81)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

In the nine months ended September 30, 2009, Wrangler West did not drill any wells (2008 - three; one standing natural gas well, two D&A). In September 2009, Wrangler West purchased three non-producing wells. Two of the wells were placed on production on October 1, 2009. The third well commenced production in November. The wells have added an estimated 50 bbls of oil per day to production.

During the nine months ended September 30, 2009 Wrangler West invested $1.5 million, reflecting the conservative use of capital. During 2009 third quarter, Wrangler West continued to accumulate wellbore data for the third party engineering analysis of the Ellerslie natural gas pools and the Riviere Wabamun A oil pool. Capital expenditures to September 30, 2009 were directed to reservoir engineering, exploitation programs, recompletions, workovers and a property acquisition.

OUTLOOK

Capital expenditures for 2009 third quarter were $0.5 million and totalled $1.5 million for the nine months ended September 30, 2009 as we continued to dedicate funds flow from operating activities to reducing bank indebtedness. We will maintain this strategy until an improvement in natural gas price warrants investment in new projects.

Wrangler West's objective is to maintain operations and to expand our inventory of opportunities. We have launched a corporate initiative to increase Wrangler West's exposure to crude oil. We are reviewing operations and may consider rationalizing certain assets to improve our inventory of drillable prospects in an effort to acquire new reserves. We will consider business combinations, acquisitions or mergers and pursue opportunities that have the most potential to enhance shareholder value.

FORWARD-LOOKING STATEMENTS

This MD&A contains certain forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of Canadian securities laws. These statements may relate to management's outlook, anticipated events or expected results specific to: Wrangler West's future financial position and business strategy; projected operating expenses; capital expenditures; financial and operating results; taxes, tax horizons and tax treatment; plans and objectives involving financing; commodity prices; number, type, timing and tie-in of wells drilled or recompleted; commencement of production and related expenses; the magnitude of crude oil and natural gas reserves; the ultimate value of operated and non-operated assets. Information relating to reserves is deemed forward-looking, as it involves the implied assessment, based on certain estimates and assumptions that reserves described can be profitably produced in the future. In some cases, readers can identify forward-looking statements by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts.

Certain factors and assumptions are the basis for management's forward-looking statements regarding: the outcome of future business prospects and transactions; results of operations; supply and demand for commodities produced, their prices and volatility; and royalty rates or any related incentives. Specifically, in projecting future activities, Wrangler West may make certain assumptions about the Company's ability to: discover and develop economic crude oil and natural gas reserves; produce discovered reserves; manage expenses for material and services; access to production and transportation facilities; access, recruit and retain qualified and experienced staff; respond to changes in government and other regulations. While management considers the assumptions made are reasonable, based on information currently available, they may prove incorrect. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted.

Wrangler West's business risks arise from uncertainties involving, but not limited to: crude oil and natural gas commodity prices; interest and currency exchange rates; environmental and safety issues; unanticipated interruption of operations; surface access timing and costs; and financial and liquidity considerations. Additional risk arises from, among other factors, the production performance of existing properties, changes in regulatory standards and uncertain results from the investment of capital.

Financial outlook information contained in this MD&A about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, from management's assessment of relevant information currently available. Readers are cautioned that: a) such financial outlook information contained in this MD&A should not be used for purposes other than for which it is disclosed herein; and b) the list of risk factors cited is not exhaustive.

Wrangler West provides this MD&A as of November 25, 2009 for the purpose of reporting financial and operational results for the three and nine months ended September 30, 2009. Other than as required under securities laws, Wrangler West disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ADDITIONAL INFORMATION

Additional information relating to Wrangler West Energy Corp. is filed on SEDAR and accessible at www.sedar.com. To obtain copies of published corporate information, contact JoAnne Dorval-Dronyk, Chief Financial Officer at Wrangler West Energy Corp. 1950, 444 Fifth Avenue SW, Calgary, Alberta, Canada T2P 2T8 or e-mail JoAnne@wranglerwest.ca.

    
                           Interim Balance Sheets
                                 (unaudited)

                                                    2009 Sep 30  2008 Dec 31
    -------------------------------------------------------------------------
    Assets
    Current assets
      Accounts receivable                           $ 1,056,121  $ 1,824,809
      Income tax receivable                             389,567            -
      Prepaid expenses                                  362,191      517,242
    -------------------------------------------------------------------------
                                                      1,807,879    2,342,051

    Property and equipment (note 3)                  38,638,918   44,297,308
    -------------------------------------------------------------------------
                                                    $40,446,797  $46,639,359
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
    Current liabilities
      Bank indebtedness (note 5)                    $10,690,020  $10,272,953
      Accounts payable and accrued liabilities        1,332,982    3,933,928
      Income tax payable                                      -      996,727
    -------------------------------------------------------------------------
                                                     12,023,002   15,203,608

    Asset retirement obligation                       2,173,971    2,058,195

    Future income tax                                 4,580,655    5,199,419
    -------------------------------------------------------------------------
                                                     18,777,628   22,461,222

    Shareholders' equity
      Share capital (note 4)                         11,390,557   11,309,057
      Contributed surplus (note 4)                    4,005,070    3,546,955
      Retained earnings                               6,273,542    9,322,125
    -------------------------------------------------------------------------
                                                     21,669,169   24,178,137

    Basis of presentation (note 1)
    -------------------------------------------------------------------------
                                                    $40,446,797  $46,639,359
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the interim financial statements



                      Interim Statements of Operations,
                  Comprehensive Loss and Retained Earnings
                                 (unaudited)

                         Three months ended Sep 30  Nine months ended Sep 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Revenue
      Petroleum and
       natural gas        $ 3,199,673  $ 8,071,478  $10,624,410  $26,328,321
      Royalties              (534,750)  (1,795,291)  (1,446,985)  (5,424,802)
      Realized loss on
       commodity contracts          -     (742,401)           -   (1,546,354)
      Unrealized gain (loss)
       on commodity
       contracts                    -    2,411,377            -     (157,623)
    -------------------------------------------------------------------------
                            2,664,923    7,945,163    9,177,425   19,199,542

    Expenses
      Operating             1,253,690    1,855,050    4,465,710    5,576,680
      General and
       administrative         290,444      336,411      889,625      927,094
      Interest                146,910      114,342      380,574      440,843
      Stock-based
       compensation
       (note 4)               218,106       77,086      336,025      212,642
      Depletion,
       depreciation
       and accretion        2,276,030    2,987,048    7,484,090    9,821,844
    -------------------------------------------------------------------------
                            4,185,180    5,369,937   13,556,024   16,979,103
    -------------------------------------------------------------------------
    Earnings (loss)
     before income tax     (1,520,257)   2,575,226   (4,378,599)   2,220,439

    Current income tax
     (recovery)              (666,514)     (52,316)    (666,514)   1,346,464
    Future income tax
     (recovery)                     -      842,988     (663,502)    (576,539)
    -------------------------------------------------------------------------
                             (666,514)     790,672   (1,330,016)     769,925
    -------------------------------------------------------------------------

    Net earnings (loss)
     and comprehensive
     income (loss) for
     the period              (853,743)   1,784,554   (3,048,583)   1,450,514

    Retained earnings,
     beginning of period    7,127,285    8,119,608    9,322,125    8,453,648
    -------------------------------------------------------------------------

    Retained earnings,
     end of period        $ 6,273,542  $ 9,904,162  $ 6,273,542  $ 9,904,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per
     share - basic        $     (0.13) $      0.28  $     (0.48) $      0.23
    Earnings (loss) per
     share - diluted      $     (0.13) $      0.26  $     (0.48) $      0.21
    -------------------------------------------------------------------------
    See accompanying notes to the interim financial statements



                      Interim Statements of Cash Flows
                                 (unaudited)

                         Three months ended Sep 30  Nine months ended Sep 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Cash provided by
     (used in):

    Operating
      Net earnings (loss)
       for the period     $  (853,743) $ 1,784,554  $(3,048,583) $ 1,450,514
      Items not
       involving cash
        Depletion,
         depreciation
         and accretion      2,276,030    2,987,048    7,484,090    9,821,844
        Stock-based
         compensation         218,106       77,086      336,025      212,642
        Future income
         tax (recovery)             -      842,988     (663,502)    (576,539)
        Unrealized loss
         (gain) on
         commodity
         contracts                  -   (2,411,377)           -      157,623
    -------------------------------------------------------------------------
                            1,640,393    3,280,299    4,108,030   11,066,084
        Change in non-cash
         operating working
         capital (note 7)    (132,751)     405,798   (1,787,001)  (3,277,857)
    -------------------------------------------------------------------------
                            1,507,642    3,686,097    2,321,029    7,788,227

    Financing
      Increase (decrease)
       in bank
       indebtedness          (496,213)  (1,908,552)     417,067   (2,279,384)
      Issuance of common
       shares                  56,250            -       56,250      165,000
    -------------------------------------------------------------------------
                             (439,963)  (1,908,552)     473,317   (2,114,384)
    Investing
      Additions to
       petroleum and
       natural gas
       properties            (479,504)  (3,473,959)  (1,517,847)  (7,912,191)
      Change in non-cash
       investing working
       capital (note 7)      (588,175)   1,696,414   (1,276,499)   2,238,348
    -------------------------------------------------------------------------
                           (1,067,679)  (1,777,545)  (2,794,346)  (5,673,843)

    Cash and cash
     equivalents,
     beginning and end
     of period                      -            -            -            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary cash
     flow information
      Interest paid       $   149,782  $   130,608  $   369,133  $   460,944
      Income tax paid     $         -  $         -  $   685,000  $ 1,240,000

    See accompanying notes to the interim financial statements



                  Notes to the Interim Financial Statements
           Three and nine months ended September 30, 2009 and 2008
                                 (unaudited)


    Wrangler West Energy Corp. (the "Corporation") was incorporated on
    March 17, 2000 under the Business Corporations Act (Alberta). The
    Corporation's primary business activity is the exploration for,
    development and production of, petroleum and natural gas in the Province
    of Alberta, Canada.

    1.  Basis of presentation

    The preparation of the financial statements in conformity with Canadian
    generally accepted accounting principles requires management to make
    estimates and assumptions that affect the reported amounts of assets and
    liabilities and disclosure of contingent assets and liabilities at the
    dates of the financial statements and the reported amounts of revenue and
    expenses during the reporting periods. Actual results could differ from
    those estimates.

    The comparative interim financial statements for the three and nine
    months ended September 30, 2008 were not reviewed by the Corporation's
    auditor.

    The Corporation's future operations are dependent on its ability to: a)
    successfully acquire, explore for, develop and produce economically
    viable reserves; b) access capital as required to support the
    Corporation's activities; and, c) maintain the financial support of its
    lenders. Future operations are also dependent on oil and natural gas
    prices, the latter of which has continued to deteriorate during 2009. The
    Corporation currently has no derivative contracts and is therefore fully
    exposed to any commodity price deterioration.

    For the nine months ended September 30, 2009, the Corporation had cash
    flow from operations of $2.3 million after utilizing net cash of
    $1.8 million to reduce the non-bank indebtedness portion of working
    capital deficiency, and a net loss of $3.0 million. At September 30,
    2009, there was a working capital deficiency (which includes bank
    indebtedness) of $10.2 million, an improvement over the deficiency of
    $11.4 million at June 30, 2009 and $12.9 million at December 31, 2008.

    The Corporation's authorized demand revolving credit facility (the
    "credit facility") decreased to $15 million from $20 million on May 20,
    2009. The $15 million credit facility initially included a base lending
    value of $12.5 million which declined to $11.5 million on July 15, 2009.
    Any amount drawn above the base lending value requires consent of the
    lender. The borrowing base is reviewed at least semi-annually with the
    most recent review completed on October 31, 2009. There were no changes
    to the amount or terms of the credit facility. The next review is
    scheduled to be completed prior to April 30, 2010. The Corporation's
    capital program for the remainder of 2009 will continue to be funded by
    funds generated from operating activities.

    Management prepared these financial statements on a going concern basis
    which assumes the Corporation will be able to discharge its obligations
    and realize its assets in the normal course of business at the values for
    which they are carried in these financial statements and the Corporation
    will be able to continue business activities. In light of the factors
    described herein, should the going concern assumption not be appropriate,
    certain asset and liability amounts would require adjustment and
    reclassification and such adjustments and reclassifications may be
    material.

    2.  Significant accounting policies

    Management prepared the interim financial statements of the Corporation
    in accordance with generally accepted accounting principles ("GAAP") in
    Canada. The interim financial statements have been prepared following the
    same accounting policies and methods of computation as the financial
    statements for the year ended December 31, 2008. Management has omitted
    or condensed certain information and disclosures normally required as
    inclusions in the notes to the annual financial statements. These interim
    financial statements and the notes thereto should be read in conjunction
    with the annual financial statements in the Corporation's 2008 annual
    report.

    3.  Property and equipment

                                                   2009 Sep 30   2008 Dec 31
    -------------------------------------------------------------------------
    Petroleum and natural gas interests
     and equipment                                $ 89,223,408  $ 87,513,484
    Accumulated depletion and depreciation         (50,584,490)  (43,216,176)
    -------------------------------------------------------------------------
                                                  $ 38,638,918  $ 44,297,308
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    At September 30, 2009 the cost of unproved interests of $264,000 (2008
    Dec 31 - $472,000) were excluded from costs subject to depletion and
    depreciation. At September 30, 2009, the future costs of developing
    proved reserves of $3,418,000 (2008 Dec 31 - $3,228,000) were included in
    costs subject to depletion and depreciation.

    For the three and nine months ended September 30, 2009, the Corporation
    capitalized general and administrative expenses of $126,000 and $416,000
    respectively (2008 - $232,000 and $580,000) and stock-based compensation
    of $122,000 and $192,000 (2008 - $55,000 and $233,000) relating to
    exploration and development activities.

    4.  Share capital

        (a) Common shares issued

                                                        Number        Amount
            -----------------------------------------------------------------
            Balance, beginning of period             6,390,827  $ 11,309,057
            Stock options exercised                     25,000        81,500
            -----------------------------------------------------------------
            Balance, end of period                   6,415,827  $ 11,390,557
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (b) Stock options

            The table below provides a reconciliation of common share options
             outstanding at September 30, 2009.

                                                                 2009 Sep 30
            -----------------------------------------------------------------
            Balance, beginning of period                           1,232,000
            Expired May 28, 2009                                    (590,000)
            Expired June 25, 2009                                    (30,000)
            Granted September 16, 2009                               600,000
            Exercised September 28, 2009                             (25,000)
            -----------------------------------------------------------------
            Balance, end of period                                 1,187,000
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (c) Stock-based compensation

            On September 16, 2009, the Corporation granted options to
            purchase 600,000 common shares at $2.25 per common share. These
            options vested one-half immediately. The remaining one-half will
            vest on September 16, 2010.

            The Corporation estimated the fair value of each option grant on
            the grant date using the Black-Scholes option-pricing model with
            the following weighted average assumptions and results.

            -----------------------------------------------------------------
                                                                        2009
            -----------------------------------------------------------------
            Assumptions
              Risk free interest rate                                     4%
              Volatility                                                 45%
              Dividend yield                                               -
              Expected life (in years)                                     5
            -----------------------------------------------------------------
            Resulting weighted average fair value per option          $ 1.01
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (d) Contributed surplus

            The table below provides a reconciliation of contributed surplus
            for the nine months ended September 30, 2009.

                                                                 2009 Sep 30
            -----------------------------------------------------------------
            Balance, beginning of period                        $  3,546,955
            Stock-based compensation                                 483,365
            Options exercised                                        (25,250)
            -----------------------------------------------------------------
            Balance, end of period                              $  4,005,070
            -----------------------------------------------------------------
            -----------------------------------------------------------------

        (e) Per share amounts

            For the three and nine months ended September 30, 2009, the
            weighted average common shares outstanding used in calculating
            net loss per share were 6,391,370 and 6,391,010 respectively,
            basic and diluted (three months ended September 30, 2008 -
            6,390,827 basic and 6,810,083 diluted; nine months ended
            September 30, 2008 - 6,372,575 basic and 6,791,831 diluted).

    5.  Financial instruments

        (a) Fair value

            The Corporation's financial instruments recognized in the balance
            sheet consist of accounts receivable, bank indebtedness and
            accounts payable and accrued liabilities. The fair values of
            these financial instruments approximate their carrying amounts
            due to their short terms to maturity or the market interest rate
            on the bank indebtedness.

        (b) Liquidity risk

            Liquidity risk addresses whether the Corporation will meet its
            financial obligations as they are due. The Corporation's approach
            to managing liquidity is to ensure, as far as possible, it will
            have sufficient liquidity to meet its liabilities when due, under
            both normal and stressed conditions, without incurring
            unacceptable losses or risking harm to the Corporation's
            reputation.

            The Corporation prepares an annual capital expenditures budget,
            which is regularly monitored and updated as considered necessary.
            Further, the Corporation requires authorizations for expenditures
            for both operated and non-operated projects to further manage
            capital expenditures. The Corporation matches its payment cycle
            to the collection of petroleum and natural gas revenues on the
            25th of each month.

            To support the capital expenditures program, the Corporation has
            a credit facility subject to annual review by the lender. In May
            2009, Wrangler West negotiated a renewal of its credit facility.
            The $15 million credit facility initially included a base lending
            value of $12.5 million which declined to $11.5 million on
            July 15, 2009. Any amount drawn above the base lending value
            requires consent of the lender. The borrowing base is reviewed at
            least semi-annually with the most recent review completed at
            October 31, 2009. There were no changes to the amount or terms of
            the credit facility at October 31, 2009. The next review is
            scheduled to be completed prior to April 30, 2010.

            The credit facility bears interest based on the Corporation's
            debt to cash flow ratio determined at the most recently completed
            fiscal quarter. Credit facility utilization up to $11.5 million
            bears interest at the bank's prime rate plus 225 basis points for
            a debt to cash flow ratio less than, or equal to, 1 : 1. As the
            Corporation's debt to cash flow ratio increases, the interest
            rate increases to a maximum of prime plus 400 basis points for a
            debt to cash flow ratio greater than 3 : 1. The Corporation paid
            interest at a rate of prime plus 350 basis points for the three
            months ended September 30, 2009.

            At September 30, 2009, the Corporation had drawn $10.7 million on
            the credit facility. Working capital deficit (net debt) at
            September 30, 2009 was $10.2 million (see note 1).

    6.  Capital management

    Wrangler West's objectives when managing capital are to: (1) deploy
    capital to provide an appropriate return on investment to shareholders;
    (2) maintain financial flexibility to preserve the Corporation's ability
    to meet financial obligations; and (3) maintain a capital structure that
    provides financial flexibility to manage the Corporation's ongoing
    exploration program.

    The Corporation's strategy is to maintain a flexible capital structure
    consistent with its business objectives and to respond to changes in
    economic conditions while managing the risk characteristics of the
    underlying petroleum and natural gas assets. Capital structure is
    considered to include share capital, bank debt and working capital. To
    maintain or adjust capital structure, the Corporation may issue common
    shares, increase debt, or adjust capital expenditures.

    A key measure Wrangler West utilizes in evaluating capital structure is
    the ratio of net debt to annualized funds flow from operations. The ratio
    is calculated as net debt, defined as outstanding bank debt plus or minus
    working capital, divided by annualized funds flow from operations before
    asset retirement obligations and changes in non-cash working capital for
    the most recent quarter, annualized (multiplied by four).

    Wrangler West's objective is to maintain a ratio of net debt to
    annualized funds flow from operations of 1.5 : 1 or less. During periods
    of depressed commodity prices, the Corporation may not meet this
    objective. Remedies include reductions in capital expenditures, operating
    expenses and other measures. At September 30, 2009, Wrangler West's ratio
    of net debt to annualized funds flow from operations was 1.6 : 1.

    Wrangler West's share capital is not subject to external restrictions.
    However the credit facility available is based on the lender's annual
    review of the Corporation's petroleum and natural gas reserves.

    There were no changes to the Corporation's approach to capital management
    during the nine months ended September 30, 2009.

    7.  Other

    During the third quarter of 2009, management discovered that certain
    changes in non-cash working capital were not correctly classified between
    operating and investing in the first and second quarters of 2009. The net
    change in non-cash working capital remained unchanged. The following
    table summarizes the corrected and reported amounts for those periods.

                Six months ended    Three months ended   Three months ended
                   2009 Jun 30          2009 Jun 30          2009 Mar 31
    -------------------------------------------------------------------------
    ($
    thousand)  Corrected  Reported  Corrected  Reported  Corrected  Reported
    -------------------------------------------------------------------------

    Change in
     non-cash
     operating
     working
     capital      (1,654)     (407)      (489)      351     (1,166)     (759)
    Change in
     non-cash
    investing
     working
     capital        (688)   (1,935)       484      (356)    (1,172)   (1,579)
    -------------------------------------------------------------------------
    Net change
     in non-cash
     working
     capital      (2,342)   (2,342)        (5)       (5)    (2,338)   (2,338)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash
     provided by
     operations      813     2,060        546     1,386        267       674
    -------------------------------------------------------------------------
    Cash
     provided by
     (used in)
     investing    (1,727)   (2,973)       (61)     (901)    (1,666)   (2,073)
    -------------------------------------------------------------------------

    Comparative amounts in 2010 will reflect the corrected amounts.
    

Reader Advisory

Financial outlook information contained in the MD&A of this news release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, from management's assessment of relevant information currently available. Readers are cautioned that: a) such financial outlook information should not be used for purposes other than for which it is disclosed herein; and b) the list of risk factors cited in the forward-looking statements disclosure in the MD&A is not exhaustive.

Wrangler West provides this information as of November 25, 2009 for the purpose of reporting financial and operational results for the three and nine months ended September 30, 2009. Other than as required under securities laws, Wrangler West disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Corporate Profile

Wrangler West is a Canadian junior oil and natural gas producer which has been building production and assets through exploration in Alberta. Since inception, our mandate has been to use the drill bit to add shareholder value. We expect disciplined management of our operations and production portfolio will create sufficient funds flow to support ongoing operations. Wrangler West will continue to reinvest funds flow from operations and other available capital to protect and add future value. Wrangler West trades on the TSX Venture Exchange under the symbol "WX".

    
    The TSX Venture Exchange has not reviewed, and does not accept
    responsibility for, the adequacy or accuracy of this press release.
    

SOURCE Wrangler West Energy Corp.

For further information: For further information: To obtain copies of published corporate information, contact JoAnne Dorval-Dronyk, Chief Financial Officer at Wrangler West Energy Corp. 1950, 444 Fifth Avenue SW, Calgary, Alberta, Canada, T2P 2T8 or e-mail JoAnne@wranglerwest.ca

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Wrangler West Energy Corp.

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