Bulldog Resources Inc.
TSX : BD

Bulldog Resources Inc.

November 08, 2007 16:05 ET

Bulldog Resources Announces Fertile Pool Reduced Well Spacing Approval, Updated Reserves Evaluation and Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 8, 2007) - BULLDOG RESOURCES INC. (TSX:BD)

HIGHLIGHTS

- Fertile Pool - reduced well spacing approved

- September 30, 2007 GLJ reserve update - 60% increase in proven plus probable reserve to 5.194 million BOE from 3.240 million BOE as at December, 31, 2006

- Drilled 14 oil wells (6.75 net) in Q3 (100% success rate )

- Increased Q3 production volumes 23% to 2,031 BOE/day from 1,648 BOE/day in Q2

- Increased Q3 cash flow per share 33% to $0.36 per share from $0.27 per share in Q2

- Achieved Q3 "top decile" field netback and cash flow of $56.98 and $53.93 per BOE.

- Continued operational efficiencies resulted in low production and transportation expenses in Q3 of $3.55 per BOE.



QUARTERLY SUMMARY

2007 2006
------------------------------ ------------------
Nine Nine
months months
ended ended
Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
FINANCIAL (Cdn$000's
except per share
amounts)
Revenue $ 13,841 $ 10,286 $ 9,652 $ 33,779 $ 7,235 $ 12,700
Cash flow $ 10,079 $ 7,461 $ 7,306 $ 24,846 $ 5,567 $ 9,455
Per share - basic $ 0.36 $ 0.27 $ 0.27 $ 0.90 $ 0.23 $ 0.40
- diluted $ 0.34 $ 0.26 $ 0.25 $ 0.85 $ 0.22 $ 0.38
Net earnings $ 4,237 $ 2,989 $ 3,041 $ 10,267 $ 3,012 $ 4,974
Per share - basic $ 0.15 $ 0.11 $ 0.11 $ 0.37 $ 0.13 $ 0.21
- diluted $ 0.14 $ 0.10 $ 0.11 $ 0.35 $ 0.13 $ 0.20
Capital expenditures $ 11,452 $ 6,322 $ 6,468 $ 24,242 $ 5,720 $ 12,197
Working capital
(deficiency) $ (5,534)$ (6,555)$ (7,130) $ 6,830
----------------------------------------------------------------------------
OPERATIONAL (units as
noted)
Average daily
production
Oil & NGL's
(barrels/day) 1,995 1,639 1,691 1,776 1,060 642
Gas (mcf/day ) 221 50 39 104 28 31
Combined (BOE/day) 2,031 1,648 1,697 1,793 1,064 647
Average realization
Oil /barrel ($Cdn.) $ 75.12 $ 68.79 $ 63.30 $ 69.42 $ 74.12 $ 72.24
Gas /mcf ($Cdn.) $ 5.95 $ 7.64 $ 5.70 $ 6.19 $ 3.58 $ 4.90
Combined /BOE
($Cdn.) $ 74.06 $ 68.60 $ 63.19 $ 69.00 $ 73.89 $ 71.90
Production expenses
(per BOE) $ 3.16 $ 3.95 $ 2.12 $ 3.08 $ 1.78 $ 2.22
Transporation
expenses (per BOE) $ 0.39 $ 0.37 $ 0.38 $ 0.38 $ 1.29 $ 1.43
Field netback (per
BOE) $ 56.98 $ 53.54 $ 51.17 $ 54.11 $ 59.58 $ 58.13
Cash flow (per BOE) $ 53.93 $ 49.76 $ 47.83 $ 50.75 $ 56.86 $ 53.53
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Report to Shareholders

FERTILE POOL - REDUCED WELL SPACING APPROVED

The Fertile pool has initially been developed on 150 meter inter-well spacing. However, considering the thickness of this high quality reservoir, Bulldog requested and received Saskatchewan Industry & Resources approval to conduct a reduced spacing pilot project. It was our opinion that reduced spacing was required to increase recovery factors and efficiently produce the 36 degree API oil reserves. Based on the successful results of this pilot project, the Saskatchewan Industry & Resources have now approved reduced 75 m inter well spacing for the Fertile pool. A total of 40 horizontal oil wells have been drilled at Fertile to September 30, 2007.

In a reserve update dated September 30, 2007, GLJ Petroleum Consultants has estimated the petroleum initially in place (PIIP) for the leases in which Bulldog has a working interest in the Fertile pool. GLJ has estimated PIIP of a most likely case of 58 million barrels and a high case of 83 million barrels. Bulldog has a 50% working interest and is the operator of the pool. GLJ's current estimate of Bulldog's working interest PIIP in the Fertile pool is 29 to 41.5 million barrels.

GLJ estimated Bulldog's remaining recoverable proven and probable reserves at Fertile to be 3.995 million barrels using a conservative recovery factor of 15.8%. This represents a 47% increase from the April 1, 2007 estimate of 2.725 million barrels.

The Fertile pool is a large accumulation of petroleum initially in place. It is a high quality oil pool with consistent, repeatable drilling results. Fertile has a short production history relative to its reserve life. Longer production history and more producing wells drilled into the pool will provide increased confidence in estimating oil recovery factors. A positive upward revision in recovery factor, which is common with large oil accumulations, would result in higher estimates of reserves.

GLJ PETROLEUM CONSULTANTS CORPORATE RESERVES UPDATE

In a reserve update dated September 30, 2007, GLJ independently estimated Bulldog's proven and proven + probable reserves using their October 1, 2007 price forecast.



BOE NPV@5% NPV@10%
(million BOE) ($ million) ($ million)
----------------------------------------------------------------------------
Proved 2.832 $110.2 $99.2
Proved + Probable 5.194 $184.6 $157.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The September 30, 2007 GLJ estimate of 5.194 million BOE for Bulldog's proven and probable reserves is a 60% increase from GLJ's December 31, 2006 evaluation.

SUCCESSFUL DRILLING AND LAND ACQUISITION CONTINUED IN Q3, 2007

In the third quarter, Bulldog drilled 14 gross (6.75 net) oil wells. We drilled 8 gross (3.75 net) horizontal oil wells at Fertile.

Bulldog's net undeveloped land as at October 2, 2007 has increased to 58,828 acres. This represents an 83% increase from Bulldog's December 31, 2006 undeveloped acreage totaling 32,200 net acres.

STRONG PRODUCTION AND CASH FLOW GROWTH PER SHARE

Bulldog's third quarter average daily production volumes increased 23% to 2,031 BOE/day from 1,648 BOE/day in Q2, 2007 as a result of our successful drilling programs.

Bulldog's Q3, 2007 cash flow increased to $10.1 million from $7.5 million in Q2, 2007. Bulldog's Q3, 2007 cash flow per share was $0.36 per share which was an increase of 33% from the previous quarter.

HIGH CASH FLOW PER BOE

Our Q3 cash flow per BOE continues to be among the highest in our industry at $53.93 per BOE due to Bulldog's high realized oil price ($75.12 CDN. per bbl) and our low cost structure (production and transportation expenses of $3.55 per BOE, and average royalty rates of approximately 18%).

2007 CAPITAL EXPENDITURES

Our 2007 capital expenditure budget is estimated to be $35 million which will include the drilling of approximately 47 gross (26.1 net) wells. In the first nine months of 2007, we have spent $24.2 million on exploration and development. The remaining 2007 budget will include the drilling of approximately14 gross (8.75 net wells).

2007 AVERAGE PRODUCTION TARGET

We are on track to exceed our previously projected 2007 average production volume of 1,800 BOE per day (99% light oil). Using a 2007 average production of 1,880 BOE per day and a projected benchmark WTI oil price of $70 per barrel for 2007 (resulting in an estimated realized oil price of CDN $70 per barrel), Bulldog's projected cash flow from operations approximates $35 million or $1.28 per share basic ($1.21 per share diluted).

FINANCIAL STRENGTH

Bulldog has a $25 million bank credit facility and the ability to increase the line if we wish. $2.7 million was drawn as of September 30, 2007. As at September 30, 2007 Bulldog had a net debt of $5.8 million (excluding the Fertile pipeline net liabilities of $2.1 million which are included in the GLJ September 30, 2007 reserve evaluation). Our net debt to 2007 projected cash flow is less than two months.

We look forward to up-dating our shareholders on our progress.

Kenneth D. McKay, P.Geol.

President and Chief Executive Officer

November 7, 2007


Management's Discussion & Analysis

ADVISORIES

The intention of Bulldog Resources Inc. ("Bulldog") management's discussion and analysis (MD&A) is to present management's analysis of operational results, current financial position and future prospects. The date of this MD&A is November 7, 2007. This interim MD&A is an update to Bulldog's annual MD&A for the year ended December 31, 2006 that is included in the 2006 Annual Report. Bulldog's 2006 Annual Report is available on SEDAR at www.sedar.com and our website (www.bulldogresources.ca).

Certain statements included in this MD&A constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", ", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this MD&A include but are not limited to capital expenditures, business strategy and objectives, net revenue, future production levels, developments plans and the timing thereof, operating and other costs, royalty rates, etc.

Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although Bulldog believes that the expectations reflected in such forward-looking statements or information are reasonable, undo reliance should not be placed on forward-looking statements because Bulldog can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Bulldog and described in the forward-looking statements or information.

Finally, in the presentation of the MD&A, Bulldog uses three terms that are universally applied in analyzing corporate performance within the oil and gas industry as explained below.

- Barrel of Oil Equivalent (BOE) - Our industry commonly expresses production volumes and reserves on a "barrel of oil equivalent" basis (BOE) whereby natural gas volumes are converted at the ratio of six thousand cubic feet to one barrel of oil. The intention is to sum oil and natural gas measurement units into one basis for improved analysis of results and comparisons with other industry participants.

Throughout this MD&A Bulldog has used the 6:1 BOE measure which is the approximate energy equivalency of the two commodities at the burner tip. BOE does not represent a value equivalency at the plant gate which is where Bulldog sells its production volumes and therefore may be a misleading measure if used in isolation.

- Operating Income and Field Netback - Operating income is defined as revenues less royalties, transportation costs and production expenses. Field netback is the term used when these items are expressed on a BOE of production basis.

- Funds Flow from Operations - This measure is commonly referred to as cash flow and is considered critical within our industry both in terms of measuring success in our historical operations and being an indicator of funding sources for on-going efforts to replace production volumes and increase reserve volumes. Canadian generally accepted accounting principles ("GAAP") requires that "cash flow from operating activities" be the measurement focus. This latter term is derived from "funds flow from operations" as defined by Bulldog adjusted for asset retirement expenditures and the change in non-cash working capital. Bulldog believes "funds flow from operations" and "funds flow from operations per share" to be more meaningful measures of our performance and therefore have used these terms throughout this MD&A. Accordingly, Bulldog is required to advise the reader that: (a) these are non-GAAP measures for purposes of Canadian accounting standards; and (b) our determinations may not be comparable to those reported by other companies.

CORPORATE ORIGIN

Bulldog is a Calgary based company engaged in the exploration, acquisition, development and production of oil and natural gas reserves in the Western Canadian Sedimentary Basin. Bulldog commenced operations on November 30, 2005 as a result of the Plan of Arrangement between Bulldog Energy Inc. and Crescent Point Energy Trust. The Plan of Arrangement, through a series of transactions resulted in Bulldog Energy shareholders exchanging their shares in exchange for units of Crescent Point and common shares of Bulldog.

BASIS OF PREPARATION

The interim consolidated financial statements include the accounts of Bulldog; its wholly owned subsidiary Bulldog Ventures Ltd., and in conjunction with Bulldog Ventures Ltd., its 100% owned Bulldog Partnership. The interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.



EXPLORATION AND DEVELOPMENT CAPITAL EXPENDITURES
2007 2006
------------------------------ ------------------
Nine Nine
months months
ended ended
($000's) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Land acquisitions $ 563 $ 378 $ 186 $ 1,127 $ 464 $ 918
Seismic 1,079 235 738 2,052 246 621
Drilling & completions 7,906 4,662 3,436 16,004 3,755 7,621
Equipping, and
facilities 1,902 1,043 2,106 5,051 1,251 2,996
Head office 2 4 2 8 4 41
----------------------------------------------------------------------------
Total $ 11,452 $ 6,322 $ 6,468 $ 24,242 $ 5,720 $ 12,197
----------------------------------------------------------------------------
----------------------------------------------------------------------------


In the third quarter of 2007, Bulldog drilled 14 oil wells (6.75 net). Ten of the 14 drilled wells were operated by Bulldog. In the nine month period ended September 30, 2007, Bulldog drilled 33 gross (17.3 net) wells resulting in 28 oil wells (13.60 net), two wells waiting on completion (1.45 net), and three dry and abandoned wells (2.25 net).

Equipping, tie-ins and facilities capital expenditures in the nine months ended September 30, 2007 included $1.4 million related to a natural gas pipeline at Fertile. The gross cost of the natural gas pipeline was $2.8 million (Bulldog's 50% net share is $1.4 million). The natural gas pipeline was completed and commenced operations in May 2007 (See Contractual Obligations).

Bulldog's undeveloped land inventory was 76,866 gross acres (53,787 net) as at September 30, 2007. This represents a 67% increase from Bulldog's December 31, 2006 undeveloped acreage totaling 32,200 net acres.

RESULTS OF OPERATIONS

The following tables summarize Bulldog's operating income, funds flow from operations and net earnings for the third quarter and the nine month period in 2007 with comparatives for the 2006.



OPERATING INCOME
2007 2006
------------------------------ ------------------
Nine Nine
months months
ended ended
($000's) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Oil and gas
revenue $ 13,841 $ 10,286 $ 9,652 $ 33,779 $ 7,235 $ 12,700
Royalties (2,529) (1,611) (1,454) (5,594) (1,101) (1,787)
Transportation
expenses (73) (55) (58) (186) (126) (253)
Production
expenses (590) (592) (324) (1,506) (174) (392)
----------------------------------------------------------------------------
Operating income $ 10,649 $ 8,028 $ 7,816 $ 26,493 $ 5,834 $ 10,268
----------------------------------------------------------------------------
----------------------------------------------------------------------------

2007 2006
------------------------------ ------------------
Nine Nine
months months
ended ended
(Per BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Oil and gas
revenue $ 74.06 $ 68.60 $ 63.19 $ 69.00 $ 73.89 $ 71.90
Royalties (13.53) (10.74) (9.52) (11.43) (11.24) (10.12)
Transportation
expenses (0.39) (0.37) (0.38) (0.38) (1.29) (1.43)
Production
expenses (3.16) (3.95) (2.12) (3.08) (1.78) (2.22)
----------------------------------------------------------------------------
Operating income $ 56.98 $ 53.54 $ 51.17 $ 54.11 $ 59.58 $ 58.13
----------------------------------------------------------------------------
----------------------------------------------------------------------------

FUNDS FLOW FROM OPERATIONS

2007 2006
------------------------------ ------------------
Nine Nine
($000's except per months months
BOE and per share ended ended
amount) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Funds flow from
operations $ 10,079 $ 7,461 $ 7,306 $ 24,846 $ 5,567 $ 9,455
Per BOE $ 53.93 $ 49.76 $ 47.83 $ 50.75 $ 56.86 $ 53.53
Per common share
Basic $ 0.36 $ 0.27 $ 0.27 $ 0.90 $ 0.23 $ 0.40
Diluted $ 0.34 $ 0.26 $ 0.25 $ 0.85 $ 0.22 $ 0.38
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Bulldog's 2007 third quarter funds flow from operations increased 35% from the second quarter mainly as a result of the increase in production volumes and realized oil prices.

Bulldog's 2007 third quarter funds flow from operations increased 81% from the third quarter of 2006 as a result of the significant increase in production volumes.

The following table reconciles "funds flow from operations" used above and "cash provided by operating activities" per the consolidated statement of cash flows.




2007 2006
------------------- -----------------
Nine Nine
months months
ended ended
($000's) Q3 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Cash provided by operating activities $ 10,188 $ 24,412 $ 4,704 $ 8,053
Asset retirement expenditures 15 15 - -
Change in non cash working capital (124) 419 863 1,402
----------------------------------------------------------------------------
Funds flow from operations $ 10,079 $ 24,846 $ 5,567 $ 9,455
----------------------------------------------------------------------------
----------------------------------------------------------------------------


NET EARNINGS

2007 2006
-------------------------------------- -----------------
Nine Nine
($000's except per months months
BOE and per share ended ended
amounts) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Net earnings $ 4,237 $ 2,989 $ 3,041 $ 10,267 $ 3,012 $ 4,974
Per BOE $ 22.67 $ 19.93 $ 19.91 $ 20.97 $ 30.76 $ 28.16
Per common
share
Basic $ 0.15 $ 0.11 $ 0.11 $ 0.37 $ 0.13 $ 0.21
Diluted $ 0.14 $ 0.10 $ 0.11 $ 0.35 $ 0.13 $ 0.20
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----------------------------------------------------------------------------


Bulldog's 2007 third quarter net earnings increased 42% from the second quarter primarily as a result of Bulldog's higher production volumes and a 6% increase in the third quarter's operating income per BOE. Bulldog's 2007 third quarter net earnings increased 41% from the comparable 2006 period as a result of significant volume growth offset by a 4% reduction in operating income per BOE.

Bulldog's 2007 nine months net earnings represented a 50 percent annualized rate of return on average shareholders equity. Bulldog expects that its rate of return will continue to rank "top decile" in relation to its peer group.



PRODUCTION VOLUMES

2007 2006
-------------------------------------- -----------------
Nine Nine
months months
ended ended
Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Total Volumes
Oil and NGL's
(bbl) 183,500 149,188 152,162 484,850 97,493 175,230
Natural gas
(mcf ) 20,340 4,553 3,510 28,403 2,542 8,392
----------------------------------------------------------------------------
BOE 186,890 149,947 152,747 489,584 97,916 176,628
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Daily averages
Oil and NGL's
(Bopd) 1,995 1,639 1,691 1,776 1,060 642
Natural gas
(mcf per day) 221 50 39 104 28 31
----------------------------------------------------------------------------
BOE per day 2,031 1,648 1,697 1,793 1,064 647
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Bulldog's 2007 third quarter average daily production volumes increased 25% from the second quarter as a result of the successful drilling programs. Approximately 80% of Bulldog's 2007 third quarter production is derived from its Fertile property. Bulldog's 2007 third quarter average daily production volumes increased 91% from the comparable quarter of 2006 as a result of Bulldog's successful drilling programs and the January 2007 property acquisitions.



OIL PRICES

2007 2006
-------------------------------------- -----------------
Nine Nine
months months
ended ended
Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
WTI benchmark
price ($US per
barrel) $ 75.38 $ 65.02 $ 58.25 $ 66.22 $ 70.48 $ 68.22
Oil price
differential
($US per barrel) 3.19 2.17 (0.35) 1.42 0.03 (1.53)
Exchange - $US
/$Cdn 0.957 0.911 0.853 0.907 0.892 0.883
----------------------------------------------------------------------------
Edmonton light
($Cdn per
barrel) $ 82.06 $ 73.75 $ 67.86 $ 74.56 $ 79.05 $ 75.53
Cromer and
quality
adjustments (6.94) (4.96) (4.56) (5.14) (4.96) (3.29)
----------------------------------------------------------------------------
Bulldog average
oil price ($Cdn) $ 75.12 $ 68.79 $ 63.30 $ 69.42 $ 74.12 $ 72.24
----------------------------------------------------------------------------
----------------------------------------------------------------------------


REVENUE

Bulldog's oil and gas revenue in the third quarter of 2007 was comprised of $13,508,000 of oil sales, $121,000 of natural gas sales and $212,000 of natural gas liquids. Bulldog's third quarter realized oil price increased 9% or $6.33 per barrel from the second quarter as a result of a 15% increase in WTI benchmark average oil prices which was partially offset by a stronger Canadian dollar and a higher Cromer oil pricing differential.

Bulldog's oil production is 36 degree API light oil and is priced based on the Cromer benchmark light crude price subject to quality adjustments specific to Bulldog's volumes.



ROYALTIES

2007 2006
-------------------------------------- -----------------
Nine Nine
months months
($000s except ended ended
per BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Royalties $ 2,529 $ 1,611 $ 1,454 $ 5,594 $ 1,101 $ 1,787
Per BOE $ 13.53 $ 10.74 $ 9.52 $ 11.43 $ 11.24 $ 10.12
Percentage of
revenue 18% 16% 15% 17% 15% 14%
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Bulldog's horizontal wells at Fertile drilled on Crown lands are eligible for the reduced Crown royalty rate of 2.5 % on the first 37,500 barrels of gross cumulative oil production. After this reduced royalty period, the eligible wells are subject to sliding scale Crown royalties with rates dependent on production volumes. Approximately 34% of Bulldog's third quarter oil production benefited from the reduced crown royalty program (45% for the nine month period ended September 30, 2007). Bulldog's 2007 third quarter royalties as a percentage of revenue increased two and three percentage points in comparison to the second quarter of 2007 and the third quarter of 2006. These royalty increases resulted mainly from a higher portion of Fertile's production being derived from wells which have completed their reduced royalty periods.

Bulldog's revenue is derived from Saskatchewan properties and is subject to a 1.9% Saskatchewan resource revenue surcharge, which is included in the above royalties. Bulldog does not have any Alberta oil production and as a result the Company is not impacted by the recently announced significant increases in conventional oil Alberta crown royalties commencing in 2009.



TRANSPORTATION EXPENSES

2007 2006
-------------------------------------- -----------------
Nine Nine
months months
($000s except ended ended
per BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Transportation $ 73 $ 55 $ 58 $ 186 $ 126 $ 253
Per BOE $ 0.39 $ 0.37 $ 0.38 $ 0.38 $ 1.29 $ 1.43
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Bulldog's transportation expenses on a per BOE basis decreased substantially in 2007 in comparison to 2006 as a result of an oil pipeline constructed in December 2006 to transport oil from Bulldog's Fertile battery to a central facility at Alida. The Fertile oil production is subject to an oil pipeline tariff, with the tariff payments reducing Bulldog's oil pipeline liability resulting from the pipeline construction. The oil pipeline also reduced the impact of oil production interruptions which normally occur during the annual spring break up period. Approximately 83% of Fertile's oil production was transported on the oil pipeline in the third quarter (87% for the nine months ended September 30, 2007 (see Contractual Obligations).



PRODUCTION EXPENSES

2007 2006
-------------------------------------- -----------------
Nine Nine
months months
($000s except ended ended
per BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Production $ 590 $ 592 $ 324 $ 1,506 $ 174 $ 392
Per BOE $ 3.16 $ 3.95 $ 2.12 $ 3.08 $ 1.78 $ 2.22
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Operating expenses on a per BOE basis increased in 2007 as a result of anticipated routine maintenance expenses and higher per BOE operating expenses on the properties acquired in January 2007. Bulldog's concentrated and highly efficient operations have continued to result in very low per BOE operating expenses in relation to its peer group.



GENERAL AND ADMINISTRATIVE

2007 2006
-------------------------------------- -----------------
Nine Nine
months months
ended ended
($000's) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Gross expenses $ 1,011 $ 790 $ 757 $ 2,558 $ 639 $ 1,745
Operator
recoveries (240) (81) (91) (412) (89) (190)
Capitalized
overhead (247) (235) (223) (705) (208) (588)
----------------------------------------------------------------------------
Net expenses $ 524 $ 474 $ 443 $ 1,441 $ 342 $ 967
----------------------------------------------------------------------------
----------------------------------------------------------------------------


2007 2006
-------------------------------------- -----------------
Nine Nine
months months
ended ended
(per BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Gross expenses $ 5.41 $ 5.27 $ 4.95 $ 5.22 $ 6.53 $ 9.88
Operator
recoveries (1.28) (0.54) (0.60) (0.84) (0.91) (1.08)
Capitalized
overhead (1.33) (1.57) (1.45) (1.44) (2.13) (3.33)
----------------------------------------------------------------------------
Net expenses $ 2.80 $ 3.16 $ 2.90 $ 2.94 $ 3.49 $ 5.47
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The increase in Bulldog's general and administrative expenses in 2007 in comparison to 2006 relates mainly to employee costs, reserve reporting and office rent. In order to maintain strict cost control during Bulldog's initial start up, Bulldog's four officers accepted reduced salaries throughout 2006 as a result of the smaller initial production base. Bulldog has nine employees who have efficiently managed significant levels of growth.

General and administrative expenses directly related to exploration and development activities are capitalized and represented 33 percent of general and administrative expenses (net of third party recoveries) in 2007. The portion of administrative expenses capitalized in 2007 decreased from the 38 percent capitalization rate used throughout 2006. The growth in Bulldog's production volumes has resulted in a lower portion of administrative expenses being capitalized.



INTEREST AND FINANCING EXPENSE (INCOME)

2007 2006
------------------------------------ -------------------
Nine months Nine months
($000's except per ended ended
BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Interest expense
(income) $ 46 $ 93 $ 67 $ 206 $ (75) $ (154)
Per BOE $ 0.25 $ 0.62 $ 0.44 $ 0.42 $(0.77) $ (0.87)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Interest expense for the nine months ended September 30, 2007 is comprised of bank financing expenses of $149,000 and $57,000 of imputed interest on Bulldog's oil pipeline liabilities. In the comparative periods of 2006 Bulldog invested its cash balances in short term bankers acceptances and received interest income.



NON-CASH EXPENSES

STOCK BASED COMPENSATION

2007 2006
------------------------------------ -------------------
Nine months Nine months
($000's except per ended ended
BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Expenses $ 89 $ 140 $ 77 $ 306 $ 91 $ 316
Per BOE $ 0.48 $ 0.93 $ 0.50 $ 0.63 $ 0.93 $ 1.79
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Bulldog has a stock-based compensation plan consisting of performance warrants and stock options. Performance warrants and stock options granted to directors, officers and employees are accounted for in accordance with the fair value method of accounting for stock-based compensation. The fair value of the performance warrants and options granted was based on the Black-Scholes option pricing model and assumptions regarding interest rates, volatility of Bulldog's common shares, and expected life of the performance warrants. Compensation expenses are recognized over the vesting period. For purposes of calculating stock-based compensation expense it was assumed that 100 percent of Bulldog's stock options and performance warrants would vest.

The increase in the 2007 expense resulted from additional stock options issued in March 28, 2007. In the three and nine month periods ended September 30, 2007 Bulldog capitalized $106,000 and $269,000 of stock based compensation consistent with its practice of capitalizing a portion of its general and administrative expenses ($60,000 for the three and nine months ended September 30, 2006).

In August 2007 Bulldog issued 30,000 share appreciation rights to a director of the Company. The share appreciation rights vest one third per year over a three year period and upon exercise entitle the holder to a cash payment equal to the fair market value of the equivalent number of Bulldog common shares in excess of the exercise price of $4.89 per right.



DEPLETION, DEPRECIATION AND ACCRETION

2007 2006
------------------------------------ -------------------
Nine months Nine months
($000's except per ended ended
BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Expenses $ 3,865 $ 2,963 $ 2,824 $ 9,652 $ 1,011 $ 1,868
Per BOE $ 20.68 $ 19.76 $ 18.49 $ 19.71 $ 10.33 $ 10.58
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Depletion and depreciation expense is calculated using the unit-of-production method which is based on BOE production volumes in relation to the BOE proven reserves.

Bulldog's depletion, depreciation and accretion expense per BOE has increased in 2007 as a result of the January 2007 property acquisitions. The cost of these property acquisitions per BOE of proven reserves was higher then Bulldog's inception to date reserve finding and development costs from its drilling activities.

Bulldog's September 30, 2007 property plant and equipment balance includes a total of $24.1 million related to January 2007 property acquisitions. Of this total $6.3 million has been allocated to unproven reserves and therefore excluded from Bulldog's 2007 third quarter depletable cost base.

As at September 30, 2007 additional land and seismic costs associated with unproven properties that were excluded from costs subject to depletion and depreciation were $5.9 million. The estimated salvage values of $3.6 million as at September 30, 2007 reduced the costs of equipment subject to depreciation. Estimated future development costs on proved reserves of $12.1 million as at September 30, 2007 are included in the calculation of depletion and depreciation.



INCOME TAXES

2007 2006
------------------------------------ -------------------
Nine months Nine months
($000's except per ended ended
BOE) Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Earnings before
income taxes $ 6,125 $ 4,358 $ 4,405 $ 14,888 $ 4,465 $ 7,271
Current income
taxes $ - $ - $ - $ - $ - $ -
Future income
taxes $ 1,888 $ 1,369 $ 1,364 $ 4,621 $ 1,453 $ 2,297
Effective tax rate 31% 31% 31% 31% 33% 32%
Future income taxes
per boe $ 10.10 $ 9.13 $ 8.93 $ 9.44 $ 14.84 $ 13.00
----------------------------------------------------------------------------
----------------------------------------------------------------------------


In 2006 both federal and provincial income tax rates were reduced. These income tax rate reductions resulted in a lower effective tax rate in 2007.

Bulldog does not expect to incur current income taxes in 2007. Bulldog's current income tax horizon after 2007 will be affected by future production volumes, capital expenditures, and the oil price environment at that time.

LIQUIDITY AND CAPITAL RESOURCES

Bulldog continues to have considerable financial strength and a significant undrawn balance in bank debt capacity. The Company's Q4 2007 projected exploration and development capital expenditures program of $10.8 million is expected to be financed by funds flow from operations. Bulldog also has available a $25.0 million bank credit facility with a balance of $2.7 million drawn as at September 30, 2007.

Bulldog's credit facility bears interest at the bank's prime rate plus 0.25 percent or bankers acceptances plus 1.25 percent per annum. Borrowings under Bulldog's bank credit facility are payable on demand. The facility is limited to a borrowing base as determined by the bank and subject to periodic reviews. The next review is scheduled on or before May 31, 2008.

Bulldog's net debt as at September 30, 2007 was $5.8 million (defined as working capital deficiency of $7.1 million excluding the current pipeline liabilities of $2.3 million and current joint interest pipeline receivable of $1.0 million). Bulldog's net debt is less then two months of Bulldog's projected funds from operations.

The oil and gas industry operates within several parameters affecting its liquidity and capital resources:

- It is capital intensive requiring cash infusions on a regular basis as it seeks to grow its business.

- Its inventory of product for sale - its reserves - needs to be constantly replenished and augmented.

- It is a price taker when selling its inventory of oil and natural gas reserves.

Given these constraints, Bulldog plans to finance its capital expenditures primarily through funds flow from operations supplemented as required by bank credit facilities and equity financings. The Company will maintain bank credit facilities to finance incremental exploration and development activities, and acquisitions.

2007 UPDATED GUIDANCE

Bulldog's updated projected 2007 total acquisitions, exploration and development capital expenditure program is $59.1 million- comprised of $24.1 million in property acquisitions that were completed in January 2007 and projected exploration and development capital of $35 million. Bulldog's projected 2007 average production volumes is 1,880 BOE per day (99% oil). Using a projected 2007 average WTI oil price of U.S. $70.00 per barrel (resulting in an estimated Bulldog realized oil price of CDN $70.00 per barrel), Bulldog's 2007 projected funds flow from operations is $35.2 million or $1.28 per share basic ($1.21 per share diluted). Bulldog's projected net debt as at December 31, 2007 is $6.1 million (defined as working capital deficiency excluding the current pipeline liabilities and current joint interest pipeline receivable). The following table summarizes the sensitivity to Bulldog's projected 2007 funds flow from operations resulting from changes in production volumes, oil prices and exchange for the fourth quarter of 2007:



($000's except per share) Amount Per share
----------------------------------------------------------------------------
50 BOE per day change in average production volumes $ 323 $ 0.012
U.S $1.00 per barrel change in WTI oil price $ 146 $ 0.005
U.S. $ to Cdn. $1.00 exchange rate of $0.01 $ 127 $ 0.005
----------------------------------------------------------------------------
----------------------------------------------------------------------------

ADDITIONAL DISCLOSURES

SHARE CAPITAL
2007 2006
----------------------------------------------------
Nine months Nine months
Q3 ended Sept. 30 Q3 ended Sept. 30
----------------------------------------------------------------------------
Weighted average shares
outstanding
Basic 27,809,202 24,959,202 27,560,814 23,796,081
Performance warrants 1,263,319 1,045,354 1,263,319 1,045,354
Stock options 294,548 15,310 294,548 15,310
----------------------------------------------------------------------------
Diluted 29,367,069 26,019,866 29,118,681 24,856,745
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Outstanding securities
at September 30
Common shares 27,809,202 24,959,202
Performance warrants 1,535,000 1,875,000
Stock options 754,500 432,500
----------------------------------------------------------------------------
Total 30,098,702 27,266,702
----------------------------------------------------------------------------
----------------------------------------------------------------------------

From the period September 30, 2007 to November 7, 2007 there are no changes
in the number of common shares, performance warrants and stock options
outstanding.

COMMON SHARE TRADING SUMMARY

2007 2006
------------------------------ --------------------
Nine months Nine months
ended ended
Q3 Q2 Q1 Sept. 30 Q3 Sept. 30
----------------------------------------------------------------------------
Share prices
High $ 7.49 $ 6.70 $ 5.35 $ 7.49 $ 3.35 $ 3.35
Low $ 5.40 $ 4.76 $ 4.10 $ 4.10 $ 2.21 $ 1.53
Close $ 6.11 $ 6.41 $ 5.29 $ 6.11 $ 3.30 $ 3.30
Trading volume
(000's) 3,834 6,391 4,563 14,788 4,283 13,023
----------------------------------------------------------------------------
----------------------------------------------------------------------------


CRITICAL ACCOUNTING ESTIMATES

In the preparation of the consolidated financial statements, it was necessary for Bulldog to make certain estimates that were critical to determining our assets, liabilities and net earnings. None of these estimates affect the determination of cash flow but do have a significant impact in the determination of earnings. The most critical of these estimates is the reserves estimations and the resulting effect on various income statement and balance sheet measures.

The estimation of the reserve volumes and future net revenues is complex and subject to uncertainties and interpretations. Judgments are based upon engineering data, projected future rates of production, forecasts of commodity prices, and the timing of future expenditures. Inevitably the estimates of reserve volumes and future net revenues will vary over time as new data becomes available. Changes in estimated proved reserves or future development costs have a direct impact on depletion and depreciation expense.

CONTRACTUAL OBLIGATIONS

Bulldog enters into various contractual obligations in the normal course of its operations, including the purchase of various operational services, operating agreements, lease obligations for office space and office equipment. These contractual obligations were entered into in the ordinary course of business and the terms reflect market conditions.

Both an oil and natural gas pipeline have been constructed at Bulldog's Fertile property resulting in net pipeline liabilities totaling $2,090,000 as at September 30, 2007. This balance is comprised of an oil pipeline liability of $1,050,000 and gas pipeline liability of $2,081,000 offset by joint interest pipeline receivable of $1,041,000.

The oil pipeline liability will be settled by an oil volume tariff, with a required minimum payment of 20 percent per annum of the original liability. In the three and nine month period ended September 30, 2007 Bulldog's oil pipeline tariff payments of $125,000 and $349,000 were applied to and reduced the oil pipeline liability. After the third party who constructed the oil pipeline recovers its capital investment, Bulldog has the option to either continue to use the oil pipeline at a prescribed oil volume tariff or truck its' oil.

The natural gas pipeline liability is being settled by the delivery of natural gas and liquids production "in kind" from the Fertile property over a period not exceeding 18 months. The natural gas and liquids production is being recorded as revenue at the prevailing prices when delivered. During the three and nine months periods ended September 30, 2007 the natural gas pipeline liability was reduced by $628,000 and $756,000 and Bulldog recorded $314,000 and $378,000 of "in kind" natural gas and liquids revenue with a corresponding reduction in the joint interest receivable. Any remaining gas pipeline liability after the 18 months period will be settled by a cash payment.



Bulldog contractual obligations and associated future payments are
summarized by fiscal year as follows:

($000's) 2007 2008 2009 2010 2011 Total
----------------------------------------------------------------------------
Office lease $ 33 $ 134 $ 141 $ 145 $ 72 $ 525
Fertile oil pipeline $ 125 $ 359 $ 252 $ 193 $ 121 $ 1,050
Fertile natural gas pipeline (1) $ 300 $ 740 - - - $ 1,040
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The gas pipeline liability represent Bulldog's 50% share of this
contractual obligation.


Other than operating lease commitments relating to its office premises Bulldog has no off balance sheet arrangements.

RELATED PARTY TRANSACTIONS

A director of Bulldog is a partner in a law firm that provides legal services to Bulldog related to administrative activities, property acquisitions and share issue costs which totaled $13,000 and $176,000 for the three and nine month periods ended September 30, 2007 respectively ($37,000 and $140,000 for the three and nine month periods ended September 30, 2006).

On January 11, 2007 Bulldog acquired, though a series of transactions with another public company, oil and gas assets of a privately held oil and gas company whose President is the Chairman of the Board of Bulldog. The total purchase consideration consisted of 2.5 million Bulldog shares at an ascribed value of $4.47 per share and cash of $8.3 million resulting in a total purchase price of $ 19.4 million.

On January 26, 2007 Bulldog purchased additional working interests in a portion of the above noted oil and gas assets for cash consideration totaling $4.7 million. Of this total $0.7 million was paid to a company controlled by the Chairman of the Board of Bulldog.

Both of the January 11 and January 26 oil and gas asset purchases above were approved by Bulldog's board of directors with the Chairman of the Board abstaining from the vote.

FINANCIAL RISKS

Financial risks that are not within Bulldog's control include the fluctuation in commodity prices and foreign exchange rates, provincial and federal regulations, royalties, taxes and interest rates. Bulldog is exposed to foreign currency fluctuations as crude oil prices received are referenced to U.S. dollar denominated prices. Bulldog is also exposed to floating interest rates on bank borrowings. Bulldog continually monitors its exposure to financial risks. To date, Bulldog has not employed financial instruments to mitigate these risks and presently does not contemplate doing so.

Bulldog endeavors to manage certain risks by focusing on controlling its cost structure and implementing the strategy of focusing on core areas and specific geological targets to control capital exposure risk.

NEW ACCOUNTING PRONOUNCEMENTS

Financial Instruments

The CICA issued new accounting standards, CICA Accounting Standard Handbook Section 3855, "Financial Instruments Recognition and Measurement", Section 3861 "Financial Instruments- Presentation and Disclosure", Section 3865 "Hedges" and Section 1530 "Comprehensive Income" effective for fiscal years beginning on or after October 1, 2006. These standards prescribe how and at what amount financial assets, financial liabilities and non-financial derivatives are to be recognized on the balance sheet.

The standards prescribe fair value in some cases while cost-based measures are prescribed in other cases. It also specifies how financial instrument gains and losses are to be presented.

Bulldog has not, and currently does not contemplate doing so, entered into financial and non-financial derivative instrument contracts to hedge potential exposures to changes in commodity prices, foreign exchange rates or interest rates. Bulldog's management is not aware of any embedded derivatives. Bulldog has no other comprehensive income. As a result, the adoption of these new accounting standards had no effect on Bulldog's 2007 interim consolidated financial statements for the nine months ended September 30, 2007.

Accounting Changes

CICA Handbook Section 1506 provides expanded disclosures for changes in accounting policies, accounting estimates and corrections of errors. The recommendations permit voluntary changes in accounting policies only if they result in financial statements which provide more reliable and relevant information. Accounting policy changes are applied retrospectively unless otherwise permitted or where impractical to determine. Corrections of prior period errors are applied retrospectively and changes in accounting estimates are applied prospectively in the period of change. There is no material impact to Bulldog's consolidated financial statements as a result of implementing this standard.

Capital Disclosures

As of January 1, 2008 Bulldog will be required to adopt the CICA Handbook Section 1535 "Capital Disclosures" which will require entities to disclose their objectives, policies and processes for managing capital. In addition, disclosures are to include whether entities have complied with externally imposed requirements. Bulldog will comply with any additional financial statement disclosure requirements resulting from this new standard.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management has established and maintains disclosure controls and procedures to provide reasonable assurance that material information relating to the Company is identified and disclosed in a timely manner. Management is also responsible for the design of internal controls over financial reporting in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

There are no changes to disclosure controls and procedures and internal controls over financial reporting from those disclosed in Bulldog's Management Discussion and Analysis for the year ended December 31, 2006. Due to their inherent limitations, disclosure controls and procedures and internal controls over financial reporting may not prevent or detect misstatement or errors. Control systems, no matter how well conceived or operated, can only provide reasonable assurance and not absolute assurance that the objectives of the control systems are meet. Additional information on Bulldog's disclosure controls and internal controls over financial reporting can be obtained in Bulldog's annual MD&A for the year ended December 31, 2006 which is available on SEDAR at www.sedar.com.



SELECTED QUARTERLY INFORMATION

($ in thousands except production volumes and per share amounts)

2007 2006
-------------------------- ----------------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1
----------------------------------------------------------------------------
Production
volumes per day
Oil/NGL's
(barrels) 1,995 1,639 1,691 1,256 1,060 549 309
Gas (mcf ) 221 50 39 30 28 36 29
BOE 2,031 1,648 1,697 1,261 1,064 555 314
Capital
expenditures $ 11,452 $ 6,322 $ 6,468 $ 7,966 $ 5,720 $ 3,901 $ 2,576
Revenue $ 13,841 $10,286 $ 9,652 $ 7,123 $ 7,235 $ 3,733 $ 1,732
Funds flow
from
operations $ 10,079 $ 7,461 $ 7,306 $ 5,281 $ 5,567 $ 2,829 $ 1,059
Per BOE $ 53.93 $ 49.76 $ 47.83 $ 45.53 $ 56.86 $ 56.06 $ 37.49
Per share
Basic $ 0.36 $ 0.27 $ 0.27 $ 0.21 $ 0.23 $ 0.12 $ 0.05
Diluted $ 0.34 $ 0.26 $ 0.25 $ 0.20 $ 0.22 $ 0.11 $ 0.05
Net earnings $ 4,237 $ 2,989 $ 3,041 $ 2,296 $ 3,012 $ 1,635 $ 327
Per BOE $ 22.67 $ 19.93 $ 19.91 $ 19.79 $ 30.76 $ 32.40 $ 11.58
Per share
Basic $ 0.15 $ 0.11 $ 0.11 $ 0.09 $ 0.13 $ 0.06 $ 0.02
Diluted $ 0.14 $ 0.10 $ 0.11 $ 0.09 $ 0.13 $ 0.06 $ 0.01
Working
capital
(deficiency) $ (7,130)$(5,534) $(6,555) $ 5,035 $ 6,830 $ 6,983 $ 2,434
Total assets $ 70,978 $61,427 $57,732 $36,347 $27,984 $22,038 $12,602
Total
liabilities $ 27,113 $21,994 $21,874 $14,861 $ 8,945 $ 6,162 $ 4,270
Shareholder's
equity $ 43,865 $39,433 $35,858 $21,486 $19,039 $15,876 $ 8,332
Shares
outstanding 27,809 27,809 27,474 24,959 24,959 24,959 21,581
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS
(Cdn. $ in thousands)(unaudited)
September 30 December 31
As at 2007 2006
----------------------------------------------------------------------------

ASSETS
Current assets
Cash and term deposits $ - $ 8,604
Accounts receivable 7,551 3,817
Joint interest pipeline receivable (note 6) 961 450
Prepaid expenses 83 185
----------------------------------------------------------------------------
8,595 13,056
Joint interest pipeline receivable (note 6) 80 890
Property , plant and equipment (note 4) 62,303 22,401
----------------------------------------------------------------------------
$ 70,978 $ 36,347
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 10,706 $ 7,121
Pipeline liabilities (note 6) 2,322 900
Bank debt (note 5) 2,697 -
----------------------------------------------------------------------------
15,725 8,021
Pipeline liabilities (note 6) 809 1,780
Asset retirement obligations (note 7) 1,755 705
Future income taxes 8,824 4,355
Shareholders' equity
Share capital (note 9) 25,395 13,684
Contributed surplus (note 10) 966 565
Retained earnings 17,504 7,237
----------------------------------------------------------------------------
43,865 21,486
----------------------------------------------------------------------------
$ 70,978 $ 36,347
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Commitments (notes 6 and 15)

See accompanying notes to the consolidated financial statements.


Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(Cdn. $ in thousands except per share amounts)(unaudited)

Three months ended Nine months ended
September 30 September 30
2007 2006 2007 2006
----------------------------------------------------------------------------
Oil and gas revenue $ 13,841 $ 7,235 $ 33,779 $ 12,700
Royalties (2,529) (1,101) (5,594) (1,787)
Transportation expenses (73) (126) (186) (253)
Production expenses (590) (174) (1,506) (392)
----------------------------------------------------------------------------
10,649 5,834 26,493 10,268
Other expenses
General and administrative 524 342 1,441 967
Stock-based compensation (note 10) 89 91 306 316
Interest and financing (income) 46 (75) 206 (154)
Depletion, depreciation and
accretion 3,865 1,011 9,652 1,868
----------------------------------------------------------------------------
4,524 1,369 11,605 2,997
Earnings before income taxes 6,125 4,465 14,888 7,271
Income taxes (note 8)
Future income taxes 1,888 1,453 4,621 2,297
----------------------------------------------------------------------------
Net earnings for the period 4,237 3,012 10,267 4,974
Retained earnings (deficit),
beginning of period 13,267 1,929 7,237 (33)
----------------------------------------------------------------------------
Retained earnings, end of period $ 17,504 $ 4,941 $ 17,504 $ 4,941
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings per share (note 11)
Basic $ 0.15 $ 0.13 $ 0.37 $ 0.21
Diluted $ 0.14 $ 0.13 $ 0.35 $ 0.20
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes to the consolidated financial statements.


Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Cdn. $ in thousands)(unaudited)

Three months ended Nine months ended
September 30 September 30
2007 2006 2007 2006
----------------------------------------------------------------------------
Cash provided by (used in):
Operations activities
Net earnings for the period $ 4,237 $ 3,012 $ 10,267 $ 4,974
Items not involving cash:
Depletion, depreciation and
accretion 3,865 1,011 9,652 1,868
Future income taxes 1,888 1,453 4,621 2,297
Stock-based compensation 89 91 306 316
Asset retirement expenditures (15) - (15) -
Change in non-cash working capital
(note 14) 124 (863) (419) (1,402)
----------------------------------------------------------------------------
10,188 4,704 24,412 8,053
Financing activities
Increase in bank debt 1,981 - 2,697 -
Issue of common shares, net of
issue costs - - - 5,621
Proceeds on exercise of warrants
and options - - 362 -
Change in non cash working capital
(note 14) (123) (29) (347) -
----------------------------------------------------------------------------
1,858 (29) 2,712 5,621
----------------------------------------------------------------------------
Investing activities
Expenditures on property, plant
and equipment (11,532) (5,720) (22,824) (12,197)
Property acquisitions (note 3) 135 - (12,955) -
Change in non-cash working capital
(note 14) (649) 852 51 3,024
----------------------------------------------------------------------------
(12,046) (4,868) (35,728) (9,173)
----------------------------------------------------------------------------
Increase (decrease) in cash and
term deposits - (193) (8,604) 4,501
Cash and term deposits, beginning
of period - 8,983 8,604 4,289
----------------------------------------------------------------------------
Cash and term deposits, end of
period $ - $ 8,790 $ - $ 8,790
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes to the consolidated financial statements.

Supplementary cash flow information (note 14)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2007 and 2006

(Tabular amounts in Cdn. in $ thousands except share and per share amounts)

(unaudited)

1. BASIS OF PRESENTATION

Bulldog Resources Inc. ("Bulldog") was incorporated under the Business Corporations Act (Alberta) on October 24, 2005 and commenced operations on November 30, 2005 upon completion of the Plan of Arrangement ("Arrangement") involving Bulldog Energy Inc. ("Bulldog Energy") and its subsidiaries and Crescent Point Energy Trust. Under the Plan of Arrangement, through a series of transactions, shareholders of Bulldog Energy received units of Crescent Point Energy Trust and common shares of Bulldog.

Bulldog's principal business activity is the exploration, exploitation, development and production of petroleum and natural gas reserves in the Western Canadian Sedimentary Basin.

The consolidated financial statements include the accounts of Bulldog; it's wholly owned subsidiary Bulldog Ventures Ltd. and Bulldog Partnership. These consolidated financial statements have not been audited, have been prepared by management in accordance with Canadian generally accepted accounting principles and follow the same accounting principles and methods as used in the annual audited financials for the year ended December 31, 2006. These interim financials should be read in conjunction with Bulldog's audited financial statements included in Bulldog's 2006 annual report.

Management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The amounts recorded for depletion, depreciation and accretion, stock based compensation and the provision for asset retirement obligations are based on estimates. The calculation of future income taxes is based on various assumptions, which are subject to uncertainty as to timing and tax rates which apply to temporary differences. By there nature, these estimates are subject to measurement uncertainty and the effect on the consolidated financial statements of changes of such estimates in future periods could be significant.

2. CHANGE IN ACCOUNTING POLICIES

a) Financial Instruments and Hedging Activities

On January 1, 2007 Bulldog adopted the four new Canadian accounting standards for financial instruments referred to as CICA Handbook Section 3855 "Financial Instruments-Recognition and Measurement", Section 3861 "Financial Instruments- Presentation and Disclosure", Section 3865 "Hedges" and Section 1530 "Comprehensive Income". Section 3855 requires that all financial assets be classified as "held-for-trading", "available- for-sale", "held-to-maturity" or "loans and receivables". Financial liabilities must be classified as "held-for-trading" or "Other". In accordance with the new standards, all financial instruments including both financial derivatives and non financial derivatives and certain imbedded derivatives qualify as assets or liabilities and need to be recorded on the balance sheet. Embedded derivatives are components within a host contract that have features that are similar to a derivative. Comprehensive income is comprised of net earnings and other comprehensive income.

All of Bulldog's balance sheet assets excluding property plant and equipment are classified as financial assets. All of Bulldog's balance sheet liabilities excluding future income taxes are classified as financial liabilities. The financial assets and financial liabilities recognized on Bulldog's balance sheet approximate their estimated fair value; therefore no adjustments were required upon adoption of the new accounting standards.

Bulldog has not engaged in any hedging activities, derivative instruments or fixed price contracts related to commodity prices, foreign exchange rates or interest rates. Bulldog's management is not aware of any embedded derivatives. Bulldog has no other comprehensive income. As a result the adoption of the above noted January 1, 2007 accounting standards noted above did not impact the consolidated financial statements.

Effective January 1, 2008 Bulldog will be required to adopt two new accounting standards referred to as CICA Handbook Section 3862 "Financial Instruments- Disclosures" and Section 3863 "Financial Instruments- Presentation" which will replace Section 3861 "Financial Instruments- Presentation and Disclosure". The new disclosure standards carry forward the former presentation requirements and also increase the emphasis on the risks associated with both recognized and unrecognized financial instruments and how those risks are managed. Bulldog currently expects no impact from these additional accounting standards on its consolidated financial statements.

b) Accounting Changes

CICA Handbook Section 1506 provides expanded disclosures for changes in accounting policies, accounting estimates and corrections of errors. The recommendations permit voluntary changes in accounting policies only if they result in financial statements which provide more reliable and relevant information. Accounting policy changes are applied retrospectively unless otherwise permitted or where impractical to determine. Corrections of prior period errors are applied retrospectively and changes in accounting estimates are applied prospectively in the period of change. There was no material impact to Bulldog's consolidated financial statements as a result of implementing this standard.

c) Capital Disclosures

As of January 1, 2008 Bulldog will be required to adopt the CICA Handbook Section 1535 "Capital Disclosures" which will require entities to disclose their objectives, policies and processes for managing capital. In addition, disclosures are to include whether entities have complied with externally imposed requirements. Bulldog will comply with any additional financial statement disclosure requirements resulting from this new standard.

d) Share Appreciation Rights

In August 2007 Bulldog issued share appreciation rights to a director of the Company. The share appreciation rights have a five year term, vest one third per year over a three year period and upon exercise entitle the holder to a cash payment equal to the fair market value of the equivalent number of Bulldog common shares in excess of the exercise price per right. Changes, either increases or decreases, in the value of the share appreciation rights between measurement dates are recorded as compensation expense over the vesting period with the offsetting liability recorded in accrued liabilities.

3. PROPERTY ACQUISITIONS

On January 11, 2007 Bulldog acquired, though a series of transactions with another public company, oil and gas assets of a privately held oil and gas company whose President is the Chairman of the Board of Bulldog.

The acquisition is accounted for under the purchase method with the operations included from the closing date of the acquisition on January 11, 2007. The estimated fair value of Bulldog's share of the assets acquired and the liabilities assumed is summarized in the table below.



----------------------------------------------------------------------------
Property , plant and equipment $ 19,351
Future income tax asset 289
Asset retirement obligations (194)
----------------------------------------------------------------------------
Net assets acquired $ 19,446
----------------------------------------------------------------------------
Purchase consideration:
Issue of 2,500,000 common shares (ascribed value of $4.47 per
share) $ 11,175
Cash payment 7,000
Cash payment related to income tax pools and other adjustments 1,094
Acquisition costs 177
----------------------------------------------------------------------------
Total purchase consideration $ 19,446
----------------------------------------------------------------------------


The Letter of Intent, an agreement detailing the agreed upon business terms of the purchase transaction, was executed on November 24, 2006. Bulldog's common share closing price on November 23, 2006 was $4.00 per share resulting in the implied market value of the 2.5 million common shares to be issued totaling $10.0 million at that time. The ascribed value of Bulldog's common shares of $4.47 per share used in the final calculation of the purchase consideration represents the estimated fair value of these shares as at the December 7, 2006 which was the date of the Definitive Agreement. This ascribed share value was based on Bulldog's weighted average common share trading prices.

On January 26, 2007 Bulldog purchased additional working interests in a portion of the above noted oil and gas assets for $4,730,000 consisting of $4,684,000 cash and the assumption of $46,000 of asset retirement obligations. Of this total $681,410 was paid to a company controlled by the Chairman of the Board of Bulldog.

Both of the January 11 and January 26, 2007 oil and gas asset purchases were approved by Bulldog's board of directors with the Chairman of the Board having abstained from the vote.



4. PROPERTY, PLANT AND EQUIPMENT
September 30, December 31,
2007 2006
----------------------------------------------------------------------------
Property, plant and equipment $ 75,456 $ 25,973
Accumulated depletion and depreciation (13,153) (3,572)
----------------------------------------------------------------------------
Net book value $ 62,303 $ 22,401
----------------------------------------------------------------------------
----------------------------------------------------------------------------


As at September 30, 2007 a total of $6,321,000 of property acquisition costs allocated to unproven properties acquired in January 2007 were excluded from capitalized costs subject to depletion and depreciation expense (see note 3).

As at September 30, 2007 an additional $5,946,000 related to land and seismic expenditures associated with unproven properties were excluded from capitalized costs subject to depletion and depreciation expense ($2,437,000 as at September 30, 2006). Estimated future development costs on proved reserves of $12,095,000 as at September 30, 2007 are included in the calculation of depletion and depreciation ($2,025,000 as at September 30, 2006). Estimated salvage values of $3,573,000 reduced the costs of equipment subject to depreciation ($1,163,000 as at September 30, 2006).

During the three and nine month periods ended September 30, 2007, Bulldog capitalized general and administrative costs of $247,000 and $705,000 respectively which is included in property, plant and equipment ($208,000 and $588,000 for the three and nine month periods ended September 30, 2006). During the three and nine month periods ended September 30, 2007 Bulldog capitalized to property, plant and equipment a total of $159,000 and $406,000 respectively which is comprised of $106,000 and $269,000 of stock based compensation and the related future income taxes of $53,000 and $137,000.

During the three and nine month periods ended September 30, 2006 Bulldog capitalized to property, plant and equipment a total of $95,000 which is comprised of $60,000 of stock based compensation and the related future income taxes of $35,000.

5. BANK CREDIT FACILITIES

Bulldog's has a $25 million revolving operating loan facility which bears interest at the bank's prime rate plus 0.25 percent or bankers acceptances plus 1.25 percent per annum. Borrowings under these facilities are payable on demand. The assets of Bulldog are pledged as security for these credit facilities pursuant to a general security agreement and a floating charge debenture.

The credit facilities are limited to a borrowing base as determined by the bank and are subject to periodic reviews by the bank. The next review is scheduled on or before May 31, 2008. As at September 30, 2007 $ 2.7 million was drawn on the revolving operating loan facility.

6. PIPELINE LIABILITIES AND JOINT INTEREST PIPELINE RECEIVABLE

(a) Oil pipeline

In the fourth quarter of 2006 a third party constructed for Bulldog and its joint interest partner a pipeline to transport oil from the Fertile battery located in Southeast Saskatchewan. Bulldog recorded in the fourth quarter of 2006 an oil pipeline liability of $ 2,680,000 with a corresponding addition of 50% thereof to joint interest pipeline receivable and the balance was an addition to property plant and equipment. The oil pipeline commenced operations in January 2007. In the second quarter of 2007 Bulldog, its joint interest partner in the oil pipeline and third party pipeline owner entered into an assignment agreement whereby Bulldog's joint interest partner agreed to be directly responsible for its 50% share of all obligations under the third party oil pipeline agreement. As a result of this assignment in the second quarter of 2007 Bulldog's joint interest oil pipeline receivable was eliminated and the receivable balance reduced Bulldog's oil pipeline liability. The oil pipeline liability is being settled by an oil volume tariff, with the tariff rate resulting in a minimum annual reduction of 20 percent of the original oil pipeline liability. During the three and nine months period ended September 30, 2007 Bulldog paid $125,000 and $349,000 in oil pipeline tariffs.



The following summarizes the estimated remaining reductions by year in
Bulldog's oil pipeline liability over the remaining fiscal years ended
December 31:
----------------------------------------------------------------------------
2007 $ 125
2008 380
2009 299
2010 243
2011 163
----------------------------------------------------------------------------
Total 1,210
Imputed interest (6.5 % per annum) (160)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil pipeline liability $ 1,050
----------------------------------------------------------------------------
----------------------------------------------------------------------------


(b) Natural gas pipeline

In August 2006 Bulldog, as operator of the Fertile property, entered into an agreement for the construction of a natural gas pipeline required to transport and market natural gas from its Fertile property located in Southeast Saskatchewan. Bulldog's joint interest partner in the property agreed to be responsible for all terms and conditions of the natural gas pipeline agreement related to their 50 % working interest in this property.

The natural gas pipeline was completed in May 2007 with gross costs totaling $2,837,000. The gross cost of the natural gas pipeline has been recorded by Bulldog as a pipeline liability with a corresponding addition of $1,418,500 to joint interest pipeline receivable and an addition of $1,418,500 to property, plant and equipment.

The natural gas pipeline liability is being settled by the delivery of natural gas and liquids production "in kind" from the Fertile property over a period not exceeding 18 months. Any remaining liability after the 18 months period will be settled by a cash payment. Bulldog's share of the production "in kind" is recorded as revenue at the prevailing prices when delivered. The joint interest partner's share of production "in kind" is recorded as a reduction in the joint interest pipeline receivable. During the three and nine months periods ended September 30, 2007 the natural gas pipeline liability was reduced by $628,000 and $756,000 and Bulldog recorded $314,000 and $378,000 of "in kind" natural gas and liquids revenue with a corresponding reduction in the joint interest receivable.

After the third party recovers its' costs of the pipeline, the third party will retain 20% of all future natural gas production and 50% of all the future liquids production. The remaining 80% balance of the natural gas production and 50% percent of the liquids production will be shared by Bulldog and its' joint interest partner according to their respective working interest in the production.



(c) Pipeline liabilities and joint interest pipeline receivable

The following summarizes Bulldog's pipeline liabilities and the related
joint interest pipeline receivable:
December 31,
September 30, 2007 2006
-----------------------------
Oil Gas Oil
Pipeline liabilities pipeline pipeline Total pipeline
----------------------------------------------------------------------------
Third party commitment $ 1,050 $ 2,081 $ 3,131 $ 2,680
Less: current portion (401) (1,921) (2,322) (900)
----------------------------------------------------------------------------
Non-current portion $ 649 $ 160 $ 809 $ 1,780
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Joint interest receivable
Third party commitment $ - $ 1,041 $ 1,041 $ 1,340
Less: current portion - (961) (961) (450)
----------------------------------------------------------------------------
Non-current portion $ - $ 80 $ 80 $ 890
----------------------------------------------------------------------------
----------------------------------------------------------------------------


7. ASSET RETIREMENT OBLIGATIONS

The future asset retirement obligations were estimated based on Bulldog's net ownership in all wells and facilities, the estimated costs to abandon and reclaim the wells and facilities and the estimated timing of the costs to be incurred in future periods. As at September 30, 2007, the total undiscounted amount of the estimated cash flows required to settle the asset retirement obligations is approximately $2.8 million which will be incurred over the next 15 years, with the majority of the expenditures to be incurred by 2018. A credit adjusted risk-free rate of eight percent and an inflation rate of two percent was used to calculate the fair value of the asset retirement obligations.



Changes to asset retirement obligations were as follows:

2007 2006
--------------------------
Three months Nine months
ended ended Year ended
Sept. 30 Sept. 30 December 31
----------------------------------------------------------------------------
Balance, beginning of period $ 1,373 $ 705 $ 367
Property acquisitions (note 3) - 240 -
Increase in liabilities 212 386 315
Change in estimates 155 368 (18)
Asset retirement payments (15) (15) -
Accretion expense 30 71 41
----------------------------------------------------------------------------
Balance, end of period $ 1,755 $ 1,755 $ 705
----------------------------------------------------------------------------
----------------------------------------------------------------------------

8. FUTURE INCOME TAXES

The provision for income taxes differs from the amount which would be
obtained by applying the combined federal and provincial statutory income
tax rate to the earnings as follows:

Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Earnings before income taxes $ 6,125 $ 4,465 $ 14,888 $ 7,271
Statutory income tax rate 33.87% 37.06% 33.87% 37.06%
----------------------------------------------------------------------------
Expected income tax 2,075 1,655 5,043 2,695
Increase (decrease) resulting from:
Non-deductible crown payments - 105 - 182
Resource allowance - (196) - (331)
Stock based compensation 31 33 104 116
Change in statutory income tax
rates (218) (144) (526) (365)
----------------------------------------------------------------------------
Future income tax provision $ 1,888 $ 1,453 $ 4,621 2,297
----------------------------------------------------------------------------
----------------------------------------------------------------------------


SHARE CAPITAL

Authorized:
Unlimited number of Class A preferred shares
Unlimited number of common voting shares
Issued common shares:
Nine months ended September 30,
----------------------------------------------
2007 2006
----------------------- ----------------------
(Cdn$ in thousands except
share amounts) Number Amount Number Amount
----------------------------------------------------------------------------
Balance, beginning of
period 24,959,202 $ 13,684 21,581,202 $ 8,655
Changes during the period:
Property acquisitions
(note 3) 2,500,000 11,175 - -
Private placement, net of
issue costs - - 3,378,000 5,770
Exercise of performance
warrants 340,000 503 - -
Exercise of stock options 10,000 33
Tax effect of 2005
flow-through share issue - - - (741)
----------------------------------------------------------------------------
Balance, end of period 27,809,202 $ 25,395 24,959,202 $ 13,684
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Common shares reserved for issue:

Performance Warrants

On November 29, 2005 Bulldog issued 1,875,000 performance warrants which have a two year vesting period, an exercise price of $1.00, and an expiry date of November 29, 2010. In 2007 a total of 340,000 performance warrants were exercised and exchanged for 340,000 common shares. As at September 30, 2007 a total of 660,000 unexercised performance warrants were vested and exercisable. The remaining balance of 875,000 performance warrants shall vest and become exercisable if the holder continues to be a director, officer or employee as at December 1, 2007.

Stock Options

Bulldog has a rolling stock option plan whereby options can be granted for up to 10% of the outstanding common shares. The 10% maximum stock options cap is reduced by the 1,535,000 common shares issuable on the exercise of the outstanding performance warrants. The stock options granted have a term of five years from the date of grant and vest as to one-third on each of the first, second and third anniversaries from the date of grant. The following tables summarize stock options outstanding and additional stock option details as at September 30, 2007:



Weighted Weighted
Number Average Average
of stock Exercise Price Remaining
options per share Life (years)
----------------------------------------------------------------------------
Balance December 31, 2006 432,500 $ 2.19 3.75
Granted March 28, 2007 352,000 $ 4.89 4.50
Exercised (10,000) $ 2.19
Cancelled (20,000) $ 2.19
----------------------------------------------------------------------------
Balance September 30, 2007 754,500 $ 3.44 4.15
----------------------------------------------------------------------------
----------------------------------------------------------------------------


As at September 30, 2007 a total of 134,167 of the $2.19 stock options are vested and exercisable and none of the stock options issued on March 28, 2007 are vested and exercisable.

Share Appreciation Rights

In August 2007 Bulldog issued 30,000 share appreciation rights to a director of the Company. The share appreciation rights vest one third per year over a three year period and upon exercise entitle the holder to a cash payment equal to the fair market value of the equivalent number of Bulldog common shares in excess of the exercise price of $4.89 per right.

10. STOCK BASED COMPENSATION

Bulldog has recorded stock-based compensation for the performance warrants and stock options granted. For purposes of calculating stock-based compensation expense it was assumed that 100 percent of the stock options and performance warrants would vest. The compensation expense is recognized over the vesting period of the performance warrants and stock options.

The per share fair value of the stock options granted on March 28, 2007 was estimated using the Black-Scholes option pricing model with the following assumptions as at the date of the grant:



----------------------------------------------------------------------------
Risk free interest rate (%) 4.28
Expected life (years) 5
Expected volatility (%) 50%
Expected dividends (%) -
Grant-date fair value $ 2.37
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Contributed Surplus
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Balance, beginning of period $ 771 $ 263 $ 565 $ 38
Stock-based compensation expensed 89 91 306 316
Stock-based compensation
capitalized 106 60 269 60
Exercise of performance warrants
and options - - (174) -
----------------------------------------------------------------------------
Balance, end of period $ 966 $ 414 $ 966 $ 414
----------------------------------------------------------------------------
----------------------------------------------------------------------------


11. NET EARNINGS PER SHARE

The following table summarizes the weighted average number of common shares
outstanding used in calculating basic and diluted net earnings per share:

Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Weighted average shares
outstanding
Basic 27,809,202 24,959,202 27,560,814 23,796,081
Stock options 294,548 15,310 294,548 15,310
Performance warrants 1,263,319 1,045,354 1,263,319 1,045,354
----------------------------------------------------------------------------
Diluted 29,367,069 26,019,866 29,118,681 24,856,745
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Equity instruments outstanding
at end of period
Common shares 27,809,202 24,959,202
Stock options 754,500 432,500
Performance warrants 1,535,000 1,875,000
----------------------------------------------------------------------------
Diluted common shares 30,098,702 27,266,702
----------------------------------------------------------------------------
----------------------------------------------------------------------------


12. RELATED PARTY TRANSACTIONS

A director of Bulldog is a partner in a law firm that provides legal services to Bulldog related to administrative activities, property acquisitions and share issue costs which totaled $13,000 and $176,000 for the three and nine month periods ended September 30, 2007 respectively ($37,000 and $140,000 for the three and nine month periods ended September 30, 2006).

13. FINANCIAL INSTRUMENTS

(a) Commodity price risk

Bulldog is exposed to fluctuations in crude oil and natural gas prices.

(b) Foreign currency exchange risk

Bulldog is exposed to fluctuations in foreign currency as crude oil prices received are referenced to U.S. dollar denominated prices.

(c) Interest Rate Risk

Bulldog is exposed to fluctuations in interest rates with respect to its bank debt that bears interest at floating rates.

There were no financial instruments in place to manage commodity prices, foreign exchange or interest rates during the nine months ended September 30, 2007 and 2006.

(d) Credit Risk

Bulldog's accounts receivable and joint interest pipeline receivable are with customers and joint interest partners in the petroleum and natural gas industry and are subject to normal credit risks. Bulldog sells substantially all of its production to one credit-worthy purchaser under normal industry sale and payment terms. Amounts receivable from joint interest partners are recoverable from production and, accordingly, Bulldog views credit risks on these amounts as minimal.



14. SUPPLEMENTAL CASH FLOW INFORMATION
Changes in non-cash working capital were comprised of the following:

Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Accounts receivable $ (2,203) $ (1,309) $ (3,734) $ (2,650)
Prepaid expenses 68 58 102 (46)
Accounts payable and accrued
liabilities 1,910 1,211 3,585 4,318
Pipeline liabilities (423) - (668) -
----------------------------------------------------------------------------
Net change $ (648) $ (40) $ (715) $ 1,622
----------------------------------------------------------------------------
Net change by activity:
Operating $ 124 (863) $ (419) (1,402)
Financing (123) (29) (347) -
Investing (649) 852 51 3,024
----------------------------------------------------------------------------
Net change $ (648) $ (40) $ (715) $ 1,622
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Bulldog paid on a cash basis interest expense totaling $29,000 and $149,000
during the three and nine month periods ended September 30,2007 respectively
($71,000 and $150,000 of interest income for the three and nine month
periods ended September 30, 2006).


15. COMMITMENT

At September 30, 2007 Bulldog had an office space lease commitment through to September 2011 totaling $525,000 (2007- $33,000, 2008- $134,000, 2009- $141,000, 2010 -$145,000 and 2011- $72,000).

Advisories

FORWARD LOOKING INFORMATION

Certain statements included in this interim report and press release constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information include but are not limited to capital expenditures, business strategy and objectives, net revenue, future production levels, developments plans and the timing thereof, operating and other costs, royalty rates etc. Such forward looking information involves substantial known and unknown risks and uncertainties. Most of these are beyond Bulldog's control and include: the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, and the availability of qualified personnel and services, stock market volatility, and the access to sufficient capital from internal and external sources.

Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although Bulldog believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Bulldog can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Bulldog and described in the forward-looking statements or information.

Finally, in the presentation Bulldog uses three terms that are universally applied in analyzing corporate performance within the oil and gas industry as explained below.

- Meaning of BOE and BOE/day - When used in this interim report and press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe/day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

- Operating Income and Field Netback - Operating income is defined as revenues less royalties, transportation costs and production expenses. Field netback is the term used when these items are expressed on a BOE of production basis.

- Cash Flow - This measure is considered critical within our industry both in terms of measuring success in our historical operations and being an indicator of funding sources for on-going efforts to replace production volumes and increase reserve volumes. Canadian generally accepted accounting principles ("GAAP") requires that "funds flow from operating activities" be the measurement focus. This latter term is derived from "cash flow from operations" as defined by Bulldog adjusted for asset retirement expenditures and the change in non-cash working capital. Bulldog believes "cash flow", "cash flow per boe" and "cash flow per share" to be more meaningful measures of our performance and therefore have used these terms throughout this interim report and press release. Accordingly, Bulldog is required to advise the reader that: (a) these are non-GAAP measures for purposes of Canadian accounting standards; and (b) our determinations may not be comparable to those reported by other companies.



Shareholder Information


BOARD OF DIRECTORS OFFICERS BANKERS

E. CRAIG LOTHIAN,LL.B. (1)(3) KENNETH D. MCKAY, P. GEOL. NATIONAL BANK
Chairman of the Board President & Chief Calgary, Alberta
Regina, Saskatchewan Executive Officer

STEVE BJORNSON, C.A. (1) S. BRUCE MCKAY, C.E.T. AUDITORS
Calgary, Alberta Vice President Production KPMG LLP
& Chief Operating Officer Chartered
Accountants
Calgary, Alberta

CLAUDIO A. GHERSINICH, MICHAEL H. FLANAGAN, P.LAND SOLICITORS
P. ENG. (1)(2) Executive Vice HEENAN BLAIKIE LLP
Calgary, Alberta President Land Barristers &
Solicitors
Calgary, Alberta

S. BRUCE MCKAY, C.E.T. ROBERT E. KRAFT, C.A. STOCK EXCHANGE
Calgary, Alberta Chief Financial Officer THE TSX EXCHANGE
Symbol: BD

KENNETH D. MCKAY, P. GEOL. EVALUATION ENGINEERS TRANSFER AGENT
Calgary, Alberta GLJ Petroleum OLYMPIA TRUST COMPANY
Consultants Ltd. Telephone (403) 261-0900
Calgary, Alberta

JAMES M. PASIEKA, LL.B. (2)(3)
Calgary, Alberta



(1) Members of the Audit Committee
(2) Members of the Reserve Committee
(3) Members of the Governance
& Compensation Committee

Contact Information

  • Bulldog Resources Inc.
    Ken McKay
    President & CEO
    (403) 266-6902
    or
    Bulldog Resources Inc.
    Rob Kraft
    Chief Financial Officer
    (403) 266-6902
    or
    Bulldog Resources Inc.
    Suite 805, 734 - 7th Avenue S.W.
    Calgary, AB, T2P 3P8
    (403) 266-6902
    (403) 264-7470 (FAX)
    Email: info@bulldogresources.ca
    Website: www.bulldogresources.ca