Antrim Energy Inc.
LSE : AEY

Antrim Energy Inc.

May 13, 2009 02:00 ET

Antrim Energy Inc.: Interim Financial Report -First Quarter 2009

CALGARY, ALBERTA--(Marketwire - May 13, 2009) -

Three Months Ended March 31, 2009

All financial figures are unaudited and in US dollars unless otherwise noted

HIGHLIGHTS:

- Increased production in Argentina to 1,590 boepd

- New well tie-ins and additional pipeline capacity in Argentina completed on target

- Average gas price in Argentina increased 78% to $1.44 per mcf over Q1 2008

- Financial flexibility with strong cash position of US$ 31.2 million and no debt

In the first quarter 2009, average production in Argentina increased to 1,590 barrels of oil equivalent per day ("boepd") compared to 1,503 boepd in the first quarter 2008. Oil and gas revenue decreased to $3.2 million for the three months ended March 31, 2009 compared to $3.7 million for the same period in 2008. Revenues decreased as a result of lower oil production and lower oil prices partially offset by higher gas production and higher gas prices. Cash flow from operations was $0.3 million for the three months ended March 31, 2009 compared to $1.4 million for the same three month period in 2008. Current production from Argentina exceeds 1,800 boepd.

United Kingdom

Work continues on Antrim's two major North Sea properties Fyne (Antrim operated, 75% working interest) and Causeway (Antrim operated, 65.5% working interest). A Field Development Plan ("FDP") for the 20 million barrel (gross) Fyne Field is being constructed. The FDP envisages oil production from three producing wells two of which were drilled in 2008. Production systems and an export route are currently under evaluation including production through existing infrastructure located between 7 and 21 km from the Fyne Field and the deployment of an independent floating production storage and offloading system ("FPSO"). The Fyne Field forms the core of a group of Antrim owned and operated licences in the Central North Sea including several licences awarded in the recent UK 25th Bid Round (blocks 21/24c, 21/28b and 21/29c).

Progress has been made on Antrim's Causeway FDP (submitted to the UK Department of Energy and Climate Change ("DECC") in December 2008) and work continues with the Dunlin platform operator to incorporate significant cost and time savings into the subsea completion and tie-in of the production and injection wells to the Dunlin processing facilities. Antrim plans to include these changes into an updated FDP. Geological and geophysical work including reprocessing and interpretation of Causeway 3D seismic data has been completed and will be also incorporated into the FDP.

On April 22, 2009, the United Kingdom government announced a package of reforms to its North Sea fiscal regime as part of the 2009 budget. Although details of the reforms have not been provided, it appears that both the Causeway and Fyne projects will receive an economic benefit from these measures.

Argentina

Commissioning of the pipeline linking the Company's gas producing fields in Tierra del Fuego with the San Martin gas sales line across the Straits of Magellan was completed in mid September 2008 and has enabled Antrim to deliver gas to the Argentine mainland at higher prices. The system is currently delivering 20 (net 5.2) million cubic feet per day ("mmcf/d") to mainland markets. Antrim's focus in the first quarter 2009 has been on increasing production through well tie-ins. Antrim anticipates production in 2009 to average approximately 2,300 boepd.


Financial and Operating Results (unaudited)

                                                         Three Months Ended
                                                                   March 31
                                                        2009           2008
----------------------------------------------------------------------------

Financial Results ($000's except per share amounts)
Revenue                                                3,225          3,724
Cash flow from operations                                283          1,439
Cash flow from operations per share                     0.00           0.01
Net (loss)                                            (1,850)          (808)
Net (loss) per share - basic                           (0.01)         (0.01)
Total assets                                         259,066        304,551
Working capital                                       32,431         70,350
Expenditures on petroleum and natural gas
 properties                                            2,467         16,647
Debt                                                       -              -

Common Shares Outstanding (000's)
End of period                                        135,322        117,599
Weighted average - basic                             135,322        117,581
Weighted average - diluted                           135,322        121,999

Production
Oil , natural gas and NGL production
 (boe per day)(1)                                      1,590           1503

(1) The boe conversion ratio of 6 mcf:1 bbl is based on an energy
    equivalency conversion method primarily applicable at the burner tip
    and does not represent a value equivalency at the wellhead.

OVERVIEW OF OPERATIONS

United Kingdom - Block 21/28a ("Fyne")

A FDP for the 20 million barrel (gross) Fyne Field is being constructed. The FDP envisages oil production from three producing wells two of which were drilled in 2008. Production systems and an export route are currently under evaluation including production through existing infrastructure located between 7 and 21km from the Fyne Field and the deployment of an independent FPSO. The Fyne Field forms the core of a group of Antrim owned and operated licences in the Central North Sea including several licences awarded in the recent UK 25th Bid Round (blocks 21/24c, 21/28b and 21/29c).

The 21/28a-2 discovery well tested up to 3,600 bopd. In August 2008, the 21/28a-10z well tested on natural flow at rates up to 4,000 bopd.

United Kingdom - Block 211/22a South East and Block 211/23d ("Causeway")

As previously announced, Antrim signed a Heads of Terms agreement in 2008 for the provision of platform hosting services on the Dunlin Alpha platform. Work continues with the Dunlin platform operator to incorporate significant cost and time savings into the subsea completion and tie-in. Antrim plans to include these changes into an updated FDP which is expected to be submitted to DECC in late 2009. Geological and geophysical work and interpretation of Causeway 3D seismic data has been completed and will also be incorporated into the FDP.

There are no additional wells planned before oil is produced under the proposed first phase of the development which will involve production from the 2006 discovery well 211/23d-17z supported by the pressure maintenance well 211/23d-18 drilled in 2008. An initial production rate of 15,000 bopd is expected (net 9,800 bopd) with a first year average rate of 7,000 bopd (net 4,600 bopd). Facility construction commitments will not be undertaken pending stabilization of commodity prices and the recovery of the capital markets.

Argentina - Tierra del Fuego, Austral Basin

Net production to Antrim from the Tierra del Fuego licences in the three months ended March 31, 2009 was 1,337 boepd compared to 1,162 boepd for the comparable period in 2008. Gas and natural gas liquids ("NGL") production in the first quarter 2009 was 6.2 mmcf/d and 42 barrels per day, respectively, compared to 4.7 mmcf/d and 67 barrels per day in the same period in 2008.

Commissioning of the pipeline linking the Company's gas producing fields with the San Martin gas sales line across the Straits of Magellan in mid September 2008 has enabled Antrim to redirect and deliver gas to the continent where higher prices are available. The system is currently delivering 20 (net 5.2) million cubic feet per day (mmcf/d) to mainland markets. By mid 2009, this delivery rate is expected to increase to 32 mmcf/d (net 8.2) under the terms of new sales contracts which will allow for Antrim's previous gas discoveries to be placed on production.

Net oil production in the first quarter 2009 was 267 bopd compared to 316 bopd for the comparable period in 2008. Oil production decreased due to a shippers strike in December 2008 resulting in the need to shut-in production in early January as the oil storage tanks were full. Full production was restored on January 19, 2009.

The drilling program in Tierra del Fuego was successful in adding reserves, future production potential and significant value. Current economic conditions dictated a shift in strategy away from drilling, which was discontinued in December 2008, towards increasing production through existing well tie-ins. Antrim plans to add new locations to the drilling inventory as drilling is expected to recommence in early 2010, subject to favourable commodity prices.

Argentina - Medianera and Tres Nidos Sur, Neuquen Basin

Net production to Antrim from the Medianera licence in the three month period ending March 31, 2009 was 14 bopd compared to 61 bopd for the comparable period in 2008. The Medianera licence was determined uneconomic at current oil prices and in February 2009, Antrim shut-in all production from the field. Under the terms of the Tres Nidos Sur licence, Antrim must acquire a minimum of 50 km2 of 3D seismic and drill an exploration well by end 2009. Required permitting and environmental studies for the 3D seismic acquisition are underway. Antrim has a 70.0% working interest in the Tres Nidos Sur licence.

Argentina - North West Basin

Net production to Antrim from the Puesto Guardian licence in the first quarter of 2009 averaged 239 bopd compared to 280 bopd for the same period in 2008. The reduction in production volumes was the result of natural production declines. Antrim has a 40% working interest in the Puesto Guardian licence.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following management's discussion and analysis ("MD&A") of Antrim Energy Inc. ("Antrim" or the "Company"), dated May 11, 2009, should be read in conjunction with Antrim's unaudited consolidated financial statements for the three months ended March 31, 2009 and Antrim's MD&A and audited consolidated financial statements for the year ended December 31, 2008. The calculations of barrels of oil equivalent (boe) are based on a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. The boe conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Unless otherwise stated, all dollar amounts are expressed in US dollars.

Forward-Looking Statements

This MD&A and any documents incorporated by reference herein contain certain forward-looking statements and forward-looking information which are based on Antrim's current internal expectations, estimates, projections, assumptions and beliefs. Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward- looking statements or information. Antrim believes that the expectations reflected in those forward-looking statements and information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information included in this MD&A and any documents incorporated by reference herein should not be unduly relied upon. Such forward-looking statements and information speak only as of the date of this MD&A or the particular document incorporated by reference herein and Antrim does not undertake any obligation to publicly update or revise any forward-looking statements or information, except as required by applicable laws.

In particular, this MD&A and any documents incorporated by reference herein, contain specific forward-looking statements and information pertaining to the following:

- the quality of and future net revenues from Antrim's reserves;

- oil, natural gas liquids ("NGL") and natural gas production levels;

- commodity prices, foreign currency exchange rates and interest rates;

- capital expenditure programs and other expenditures;

- supply and demand for oil, NGL and natural gas;

- expectations regarding Antrim's ability to raise capital and to continually add to reserves through acquisitions and development;

- schedules and timing of certain projects and Antrim's strategy for growth;

- Antrim's future operating and financial results; and

- treatment under governmental and other regulatory regimes and tax, environmental and other laws.

With respect to forward-looking statements contained in this MD&A and any documents incorporated by reference herein, Antrim has made assumptions regarding, among other things:

- Antrim's ability to obtain additional drilling rigs and other equipment in a timely manner, as required;

- future oil and natural gas production levels from Antrim's properties;

- the level of future capital expenditure required to exploit and develop reserves; and

- Antrim's ability to obtain financing on acceptable terms, as required.

Antrim's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of both known and unknown risks, including the risk factors in this MD&A and those set forth under "Risk Factors" in Antrim's Annual Information Form ("AIF") for the year ended December 31, 2008 and those set forth below:

- volatility in market prices for oil, NGL and natural gas;

- changes or fluctuations in oil, NGL and natural gas production levels;

- changes in foreign currency exchange rates and interest rates;

- changes in capital and other expenditure requirements and debt service requirements;

- liabilities and unexpected events inherent in oil and gas operations, including geological, technical, drilling and processing problems;

- uncertainties associated with estimating reserves;

- competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

- incorrect assessments of the value of acquisitions;

- Antrim's success at acquisition, exploitation and development of reserves;

- changes in general economic, market and business conditions in Canada, North America, the United Kingdom, Europe and worldwide, including the recent global economic downturn;

- actions by governmental or regulatory authorities including changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; and

- changes in environmental or other legislation applicable to Antrim's operations, and Antrim's ability to comply with current and future environmental and other laws.

Statements relating to "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Many of these risk factors, other specific risks, uncertainties and material assumptions are discussed in further detail throughout the AIF and in the MD&A. Readers are specifically referred to the risk factors described in the AIF under "Risk Factors" and in other documents Antrim files from time to time with securities regulatory authorities. Copies of these documents are available without charge from Antrim or electronically on the internet on Antrim's SEDAR profile at www.sedar.com.

In accordance with AIM guidelines, Mr. Kerry Fulton, P. Eng and Vice President, Operations for Antrim, is the qualified person that has reviewed the technical information contained in this MD&A.

Non-GAAP Measures

Cash flow from operations, cash flow from operations per share and netback do not have a standard meaning under generally accepted accounting principles ("GAAP") and may not be comparable to those reported by other companies. Management believes that cash flow from operations is a useful supplementary measure that may assist investors. Cash flow from operations is defined as cash flow from operating activities before changes in working capital. Reconciliation of cash flow from operations to its nearest measure prescribed by GAAP is provided below.


Calculation of Cash Flow from Operations
                                                         Three Months Ended
                                                                   March 31
                                                        2009           2008
----------------------------------------------------------------------------
$
Cash flow from (used in) operating activities       (275,868)     1,306,326
Increase in non-cash working capital                 559,312        132,579
----------------------------------------------------------------------------
Cash flow from operations                            283,444      1,438,905
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Financial and Operating Review

Oil, Gas and NGL Revenue

Oil and gas revenue decreased to $3.2 million for the three months ended March 31, 2009 compared to $3.7 million for the same period in 2008. Revenues decreased as a result of lower oil production and prices, partially offset by higher gas production and prices received. In the first quarter 2009, production in Argentina increased to 1,590 barrels of oil equivalent per day ("boepd") compared to 1,503 boepd in the first quarter 2008. Gas production increased due to the successful drilling program in Tierra del Fuego and tie-ins into the San Martin pipeline. The decrease in oil production was due to the shut-in of Medianera production in February 2009 combined with natural reservoir decline. NGL production was curtailed in the first quarter 2009 due to unscheduled repairs to the refrigeration unit at the San Luis gas plant in Tierra del Fuego. The majority of the gas production was shipped via the San Martin pipeline to the mainland to be sold at higher prices.

Net revenues after royalties and export taxes decreased to $2.9 million for the three months ended March 31, 2009 compared to $3.2 million for the same period in 2008. This decrease in net revenues is a result of lower oil production and prices partially offset by higher gas production and gas sales prices.

Average net oil production in the three month periods ended March 31, 2009 declined to 520 bopd compared to 657 bopd for the same period in 2008. Oil prices averaged $35.45 per barrel in the three month period ended March 31, 2009 compared to $44.42 per barrel in 2008.

Oil production from both the Puesto Guardian and Tierra del Fuego concessions is sold with reference to the price of West Texas Intermediate ("WTI") crude oil less a quality discount. Domestic oil sales are subject to a mandated discount which increases as the price of WTI crude oil increases. In November 2007, changes to the export tax effectively limited the maximum price that producers could receive for crude oil exports to $42 per barrel, regardless of the price of WTI. The application of the mandated discount on domestic oil sales results in a similar ceiling, after quality adjustments, within the domestic market. Oil production from the Tierra del Fuego concessions is stored and periodically transported by ship to a refinery on the mainland.

Average net gas production in the three month period ended March 31, 2009 was 6.2 mmcf/d compared to 4.7 mmcf/d for the comparable period in 2008. Antrim's sales gas prices in Argentina averaged $1.44 per mcf in the three months ended March 31, 2009 compared to $0.81 per mcf for the same period in 2008. A higher portion of gas volumes sold in 2008, as compared to 2009, were delivered to the Tierra del Fuego residential market at $0.36 per mcf due to a lack of access to industrial markets on the mainland. The price received for gas increased following commissioning of the tie-in to the San Martin pipeline giving Antrim physical access to higher priced mainland markets.

Average net NGL production in the three month period ended March 31, 2009 was 42 barrels per day compared to 67 barrels per day for the comparable period in 2008. NGL prices, before export taxes, averaged $17.67 per barrel in the three months ended March 31, 2009 compared to $48.78 per barrel for the comparable period in 2008. NGL prices decreased as exports to higher priced markets in Chile were curtailed in March as the Secretary of Energy did not issue export permits. Exports to Chile resumed in early April.

Netbacks

The following table provides a comparative analysis of field netbacks for the three month periods ended March 31, 2009 and 2008.


                                                         Three Months Ended
                                                                   March 31
                                                        2009           2008
----------------------------------------------------------------------------

$/boe
Wellhead price                                         20.15          25.76
Royalties                                              (2.21)         (3.03)
Export tax                                             (0.06)         (0.34)
Operating expenses                                    (10.85)         (7.23)
----------------------------------------------------------------------------
Netback                                                 7.03          15.16
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Oil, natural gas and NGL sales (boe)                 160,050        144,551
Oil , natural gas and NGL sales (boe per day)          1,778          1,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The decrease in netbacks for the three month period ended March 31, 2009 compared to the corresponding period in 2008 is primarily due to lower oil and NGL prices and higher operating expenses. In 2009 Antrim changed the classification of administrative costs charged from field operators. In the first quarter 2009 $0.2 million was recorded as operating expenses. For the comparable period in 2008 $0.2 million was recorded as general and administrative expense.

While 2008 also benefited from the reduction in export tax, the export tax reduction was more than offset by lower wellhead prices and increased operating costs attributed to higher personnel and land rental costs.

General and Administrative

General and administrative ("G&A") costs decreased in the first three months of 2009 to $1.3 compared to $2.0 million for the comparable period in 2008. During the period, Antrim capitalized $0.2 million (2008 - $0.7 million) of G&A costs related to exploration and development activity in Argentina and the United Kingdom.

Depletion and Depreciation

Depletion and depreciation expense was unchanged for the first three months of 2009 of $1.2 million compared to $1.2 million in 2008. The consolidated per unit charge for the first quarter 2009 was $8.68 per boe compared to $8.76 per boe in the same period of 2008. No depletion was recorded with respect to the $191.0 million of United Kingdom assets as they are classified as unproven properties. Depletion of these assets will commence with production.

Foreign Exchange Loss and Comprehensive (Loss) Income

A significant portion of the Company's activities are transacted in or referenced to US dollars, Canadian dollars, British pound sterling or Argentine pesos. The Company's operating costs and certain of the Company's payments in order to maintain property interests are to be in the local currency of the jurisdiction where the applicable property is located. As a result, fluctuations in the Canadian dollar, British pound sterling and Argentine peso against the US dollar, and each of those currencies against any other local currencies in jurisdictions where properties of the Company are located, could result in unanticipated fluctuations in the Company's financial results which are denominated in US dollars. The Canadian dollar, British pound sterling and Argentine peso exchange rates all weakened relative to the US dollar during the first quarter 2009.

The Company incurred a foreign exchange loss of $24,007 for the three months ended March 31, 2009 compared to a gain of $505,246 in the comparable period in 2008 due to a change in functional currency.

Effective January 1, 2009, the Company changed the functional currency for its operations in Argentina from Canadian dollars to Argentine pesos. Recent operational events in Argentina, with the tie-in of gas production in Tierra del Fuego resulted in the business becoming a self sustaining entity. On a prospective basis, the Company has adopted the current rate method for foreign exchange translation for its Argentina operations. Under the current rate method all balance sheet items are translated at the balance sheet date exchange rate and revenue and expense items at the exchange rate in effect at the date of the transaction. The resulting foreign exchange gain or loss is reported as an unrealized gain (loss) in comprehensive income (loss). The remaining operations of Antrim have the Canadian dollar as the functional currency. Assets and liabilities are translated into the reporting currency at the period end exchange rates and the results of changes in these rates are recorded as an unrealized gain (loss) in comprehensive income (loss).

The exchange rate for the Canadian dollar relative to the United States dollar declined from US $0.82 at December 31, 2008 to US $0.80 at March 31, 2009 resulting in an unrealized loss on translation of the consolidated assets and liabilities of $5.4 million. The remaining $4.5 million unrealized loss on translation resulted from the exchange rate for the Argentine peso relative to the United States dollar weakening from US $0.29 at December 31, 2008 to US $0.27 at March 31, 2009.

Cash Flow and Net Income (Loss)

Antrim generated cash flow from operations of $0.3 million ($0.01 per share) in the first three months of 2009 compared to $1.4 million ($0.01 per share) for the comparable period in 2008. For the three months ended March 31, 2009 and 2008, the Company incurred net losses of $1.3 million and $0.8 million, respectively. Cash flow decreased and the net loss increased due to lower revenue and higher operating costs offset by lower G&A expenses.

Financial Resources and Liquidity

As at March 31, 2009, Antrim had working capital of $32.4 million and no debt. There were no restrictions on the use of cash and cash equivalents at March 31, 2009. Accounts payable and accrued liabilities decreased to $4.6 million at March 31, 2009 from $6.2 million as of December 31, 2008 primarily due to reduced capital expenditures in the first quarter of 2009.

Antrim invests cash which is not required for immediate operational needs in Canadian denominated short-term bankers' acceptances and money market instruments. Antrim has no exposure to asset backed commercial paper.

The current economic deterioration and restriction on availability of credit may limit Antrim's ability to access debt or equity financing for its development projects. Antrim forecasts cash flows against a range of macroeconomic and financing market scenarios in an effort to identify future liabilities and arrange financing, if necessary. The Company has reduced the time frame in projecting its future expenditures from an annual budget to a quarterly and, where applicable, monthly forecast process to enable Antrim to better adapt to changing market conditions. Although Antrim may need to raise additional funds from internal or external sources, if available, in order to develop its UK properties, the Company maintains flexibility to minimize financial commitments on these assets.

In July 2008, Antrim entered into an agreement with the Bank of Scotland plc for a $50 million working capital facility. The working capital facility is available, subject to certain conditions, for pre-development costs associated with Antrim's Causeway property and for the appraisal of the Fyne and Dandy fields. The amount available under the facility may increase as Antrim prepares, submits and receives final approval of a FDP for the Causeway Field. Availability under this working capital facility is presently $10 million. The Company is required to maintain two financial covenants being a semi-annual interest coverage ratio of 2:1 and an ongoing requirement that cash plus available borrowings under the facility are at least equal to its planned capital expenditures for the forthcoming three month period. The Company is in compliance with all terms, conditions and covenants. To date, no amounts have been drawn on this bank facility. The working capital facility matures on January 18, 2010.

Antrim has various commitments which are described more fully in Note 14 to the consolidated financial statements. During the third quarter 2008, Antrim made a commitment of $902,300 related to the building and commissioning of a second gas sales pipeline across the Straits of Magellan linking gas production from the island of Tierra del Fuego with the mainland. Due to the deterioration of economic conditions, Antrim believes that the planned construction of this pipeline will be deferred.

2009 Outlook

Antrim is in a strong financial position with unrestricted cash available of $31.2 million and no debt as at March 31, 2009, providing Antrim with financial and operational flexibility during a period of uncertain economic conditions. The Company will continue to minimize its cash utilization on its existing properties during 2009 by reducing capital expenditures, operating expenses and general and administrative costs. Antrim plans to use its financial strength and operating experience to make additional strategic acquisitions in its areas of operation.

Antrim maintains a high working interest and operational control of its two major UK properties. Antrim plans continued development of its Causeway and Fyne fields and will minimize further significant capital expenditures or financial commitments pending stabilization of commodity prices and the recovery of the financial markets.

Antrim will continue to work towards preparing an FDP for the Fyne field in 2009. The Company plans to phase-in these two UK developments. This approach will minimize the initial capital commitment required by Antrim and will provide funding for subsequent production phases from cash flow generated by previous phases. The Company will continue to assess market conditions to ensure that we execute our strategy in a fiscally prudent manner.

Total capital expenditures for 2009, before capitalized G&A, are planned to be $6 million, which will be funded out of existing working capital and cash flow from operations. As gas delivery rates increase in Tierra del Fuego, Antrim anticipates production in 2009 to average approximately 2,300 boepd.


Summary of Quarterly Results

                    Oil, Gas and NGL
($000's, except per          Revenue,   Cash Flow
 share                        Net of         from                (Loss) Per
 amounts)                  Royalties   Operations      (Loss) Share - Basic
----------------------------------------------------------------------------
2009
First quarter                  2,861          283     (1,850)         (0.01)
----------------------------------------------------------------------------
Total                          2,861          283     (1,850)         (0.01)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

2008
Fourth quarter                 2,313       (1,032)    (7,152)         (0.05)
Third quarter                  2,875          886     (1,507)         (0.01)
Second quarter                 1,849         (986)    (3,564)         (0.03)
First quarter                  3,236        1,439       (808)         (0.01)
----------------------------------------------------------------------------
Total                         10,273          307    (13,031)         (0.10)
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2007
Fourth quarter                 3,297        1,060     (1,754)         (0.02)
Third quarter                  2,601          882     (2,260)         (0.02)
Second quarter                 2,830        1,720     (3,330)         (0.03)
First quarter                  2,422          795     (1,084)         (0.01)
----------------------------------------------------------------------------
Total                         11,150        4,457     (8,428)         (0.08)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Changes in Accounting Policies

Effective January 1, 2009, the Company changed the functional currency for its operations in Argentina from Canadian dollars to Argentine pesos. Recent operational events in Argentina, with the tie-in of gas production in Tierra del Fuego and the deferment of additional drilling for 2009, resulted in the business becoming a self sustaining entity. On a prospective basis, the Company has adopted the current rate method for foreign exchange translation for the Argentina business. Under the current rate method all balance sheet items are translated at the balance sheet date exchange rate and revenue and expense items at the exchange rate in effect at the date of the transaction. The resulting foreign exchange gain or loss is reported as an unrealized gain (loss) in comprehensive income (loss).

On January 1, 2009, the Company adopted new Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3064 prospectively. "Goodwill and Intangible Assets" clarifying the criteria for the recognition of assets, intangible assets and internally developed intangible assets. Adoption of this new accounting standard had no material effect on Antrim's consolidated financial statements.

Conversion to International Financial Reporting Standards

In February 2008, the Canadian Accounting Standards Board ("AcSB") confirmed that the mandatory changeover from existing Canadian GAAP to International Financial Reporting Standards ("IFRS") is to take effect for financial years beginning on or after January 1, 2011. The key elements of the Company's conversion plan include determining appropriate changes to accounting policies and disclosures, identifying and implementing associated changes to processes and information systems, ensuring compliance to internal controls and educating and training staff and other stakeholders. The Company has completed a diagnostic analysis of the differences between Canadian GAAP and IFRS and is assessing the effects on its conversion plan. At this time, the impact on the Company's financial position and results of operations is not reasonably determinable for the accounting standards differences identified.

Related Party and Off-Balance Sheet Transactions

Antrim may from time to time enter into arrangements with related parties. In the first quarter of 2009, Antrim incurred fees of $4,654 (2008 - $18,887) payable to Burstall Winger LLP, a law firm in which Mr. Jay Zammit, a director of the Company, is a partner. The Company had no off-balance sheet transactions in the first three months of 2008.

Disclosure Controls and Procedures and Internal Controls Over Financial Reporting

Antrim has established disclosure controls, procedures and corporate policies so that its consolidated financial results are presented accurately, fairly and on a timely basis. The Chief Executive Officer and Chief Financial Officer have designed or have caused such internal controls over financial reporting to be designed under their supervision to provide reasonable assurance regarding the reliability of financial reporting and preparation of the Company's financial statements in accordance with Canadian GAAP. There were no changes in the Company's internal controls over financial reporting that occurred during the first quarter of 2009 that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, these systems provide reasonable but not absolute assurance that financial information is accurate and complete.

Risks and Uncertainties

The oil and gas industry involves a wide range of risks which include but are not limited to the uncertainty of finding new commercial fields, securing markets for existing reserves, commodity price fluctuations, exchange and interest rate costs and changes to government regulations, including regulations relating to prices, taxes, royalties, land tenure, allowable production and environmental protection. The oil and natural gas industry is intensely competitive and the Company competes with a large number of companies that have greater resources.

The availability of equity or debt financing is affected by many factors, many of which are outside the control of the Company. Recent world financial market events and the resultant negative impact on economic conditions have increased the risk and uncertainty of the availability of equity or debt financing.

Further discussion regarding the Company's risks and uncertainties, can be found in the December 31, 2008 Management's Discussion and Analysis and the Annual Information Form dated March 30, 2009 which are filed on SEDAR at www.sedar.com.


Stephen Greer
President and Chief Executive Officer
May 11, 2009


Antrim Energy Inc.
Consolidated Balance Sheets
As at March 31, 2009 and December 31, 2008 (unaudited)
----------------------------------------------------------------------------

                                                    March 31    December 31
                                                        2009           2008
                                                           $              $
                                                ----------------------------
Assets

Current assets
Cash and cash equivalents                         31,239,554     35,337,007
Accounts receivable                                5,188,464      5,186,806
Inventory and prepaid expenses (note 4)              592,421        945,363
                                                ----------------------------
                                                  37,020,439     41,469,176

Petroleum and natural gas properties (note 5)    219,206,094    226,968,744
Office equipment (note 6)                            508,660        556,826
Future income taxes (note 11)                        409,651        348,006
Investments and other non-current assets           1,921,586      2,018,697
                                                ----------------------------

                                                 259,066,430    271,361,449
                                                ----------------------------
                                                ----------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities           4,589,641      6,201,849
                                                ----------------------------
                                                   4,589,641      6,201,849
                                                ----------------------------

Asset retirement obligation (note 7)               9,853,728      9,913,898
                                                ----------------------------

                                                  14,443,369     16,115,747
                                                ----------------------------

Commitments and contingencies (note 14)

Shareholders' Equity
Capital Stock (note 8)                           311,927,578    311,927,578
Contributed surplus (note 9)                      12,829,633     11,664,179
Deficit                                          (38,877,193)   (37,027,268)
Accumulated other comprehensive income (loss)
 (note 10)                                       (41,256,957)   (31,318,787)
                                                ----------------------------
                                                ----------------------------
                                                 244,623,061    255,245,702
                                                ----------------------------
                                                ----------------------------
                                                 259,066,430    271,361,449
                                                ----------------------------
                                                ----------------------------


Antrim Energy Inc.
Consolidated Statements of Income (Loss) and Deficit
For the three months ended March 31, 2009 and 2008 (unaudited)
----------------------------------------------------------------------------

                                                        2009           2008
                                                           $              $
                                                ----------------------------
Revenue
Oil and gas                                        3,225,083      3,723,949
Royalties                                           (353,205)      (438,545)
Export tax                                           (10,397)       (49,732)
                                                ----------------------------
                                                   2,861,481      3,235,672
Interest and other income                            580,809      1,187,013
                                                ----------------------------
                                                   3,442,290      4,422,685
                                                ----------------------------

Expenses
Operating                                          1,736,275      1,254,692
General and administrative                         1,308,521      1,788,748
Stock-based compensation                             856,532      1,157,789
Depletion and depreciation                         1,241,936      1,230,113
Accretion of asset retirement obligations            130,797        235,911
Foreign exchange (gain) loss                          24,007       (505,246)
                                                ----------------------------
                                                   5,370,068      5,162,007
                                                ----------------------------

Loss for the period before income taxes           (1,927,778)      (739,322)

Income tax expense (recovery)
Current                                                2,937            164
Future                                               (80,790)        68,234
                                                ----------------------------
                                                     (77,853)        68,398
                                                ----------------------------
Net Loss for the period                           (1,849,925)      (807,720)

Deficit - Beginning of period                    (37,027,268)   (23,996,226)
                                                ----------------------------
Deficit - End of year                            (38,877,193)   (24,803,946)
                                                ----------------------------
                                                ----------------------------

Net loss per common share:
 Basic                                                 (0.01)         (0.01)
 Diluted                                               (0.01)         (0.01)


Antrim Energy Inc.
Consolidated Statements of Comprehensive Income (Loss) and Accumulated Other
Comprehensive Income (Loss)
For the three months ended March 31, 2009 and 2008 (unaudited)

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

                                                        2009           2008
                                                           $              $
                                                ----------------------------

Net loss for the period                           (1,849,925)      (807,720)

Comprehensive income (loss)
Unrealized (loss) gain on translation of
 consolidated financial
 statements (note 10)                             (9,938,170)   (11,103,162)
                                                ----------------------------
Comprehensive income (loss)                      (11,788,095)   (11,910,882)
                                                ----------------------------

Accumulated other comprehensive income (loss) -
 Beginning of period                             (31,318,787)    29,894,135

Other comprehensive (loss) income (note 10)       (9,938,170)   (11,103,162)
                                                ----------------------------
Accumulated other comprehensive income (loss) -
 End of period                                   (41,256,957)    18,790,973
                                                ----------------------------
                                                ----------------------------


Antrim Energy Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2009 and 2008

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

                                                        2009           2008
                                                           $              $
                                                ----------------------------

Cash Provided by (used in)

Operating Activities
Net loss for the period                           (1,849,925)      (807,720)
Items not involving cash:
 Depletion and depreciation                        1,241,936      1,230,113
 Accretion of asset retirement obligations           130,797        235,911
 Stock-based compensation expense                    856,532      1,157,789
 Foreign exchange (gain) loss                        (15,106)      (445,422)
 Future income taxes                                 (80,790)        68,234
                                                ----------------------------
                                                     283,444      1,438,905
Change in non-cash working capital items
 (note 12)                                          (559,312)      (132,579)
                                                ----------------------------
                                                    (275,868)     1,306,326
                                                ----------------------------

Financing Activities
Issue of common shares                                     -         37,772
Share issue expenses                                       -         (5,098)
                                                ----------------------------
                                                           -         32,624
                                                ----------------------------

Investing Activities
Office equipment                                      (5,859)      (233,110)
Petroleum and natural gas properties              (2,467,303)   (16,647,063)
Restricted cash                                            -    (15,632,242)
Other non-current assets                               1,644       (336,481)
Change in non-cash working capital items
 (note 12)                                          (721,339)     6,560,948
                                                ----------------------------
                                                  (3,192,857)   (26,287,948)
                                                ----------------------------
Effect of foreign exchange translation on cash
 flows                                              (628,728)    (2,661,249)

Net (decrease) increase in cash and cash
 equivalents                                      (4,097,453)   (27,610,247)
Cash and cash equivalents - Beginning of period   35,337,007     98,794,077
                                                ----------------------------
Cash and cash equivalents - End of period         31,239,554     71,183,830
                                                ----------------------------
                                                ----------------------------


Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2009 and 2008 (unaudited)

1. BASIS OF PRESENTATION

These unaudited financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). The unaudited interim financial statements were prepared using the same accounting policies and should be read in conjunction with the audited financial statements as at and for the year ended December 31, 2008. The Company changed its reporting currency from Canadian dollars (Cdn $) to United States dollars (US $ or $) effective January 1, 2008 and all amounts are reported in US $, except as otherwise noted.

Certain comparative figures have been reclassified to conform to the presentation adopted in the current period.

2. CHANGES IN ACCOUNTING POLICIES

Change in functional currency

Effective January 1, 2009, the Company changed its functional currency from Canadian dollars (Cdn $) to Argentine pesos (ARS) for its Argentina subsidiary, as the Company considers the subsidiary self sustaining and anticipates that the majority of its future income stream and expenditures will be denominated in ARS. The Company has made this change in accordance with Canadian GAAP by following the recommendations of International Accounting Standards (IAS) 21 "The Effects of Changes in Foreign Exchange Rates". The change was made on a prospective basis and as a result of the change, the Company recorded an adjustment to other comprehensive income (loss) on the balance sheet at March 31, 2009 of $(4,478,475).

The functional currency of the parent company and all of its other subsidiaries continues to be Canadian dollars.

Other Changes

Effective January 1, 2009 the Company adopted CICA Section 3064 "Goodwill and Intangible Assets" clarifying the criteria for the recognition of assets, intangible assets and internally developed intangible assets. Adoption of this new accounting standard had no material effect on Antrim's consolidated financial statements.

3. UPCOMING ACCOUNTING PRONOUNCEMENTS

In February 2008, the Canadian Accounting Standards Board ("AcSB") confirmed that the mandatory changeover from existing Canadian GAAP to International Financial Reporting Standards ("IFRS") is to take effect for financial years beginning on or after January 1, 2011. The key elements of the Company's conversion plan include determining appropriate changes to accounting policies and disclosures, indentifying and implementing associated changes to processes and information systems, ensuring compliance to internal controls and educating and training staff and other stakeholders. The Company has completed a diagnostic analysis of the differences between Canadian GAAP and IFRS and is assessing the effects on its conversion plan. At this time, the impact on the Company's financial position and results of operations is not reasonably determinable for the accounting standards differences indentified.

4. INVENTORY AND PREPAID EXPENSES

Inventory and prepaid expenses at March 31, 2009 include $204,632 (2008 - $177,063) of crude oil that has been produced but not yet sold. Inventories of crude oil are valued at the lower of average cost and net realizable value.


5. PETROLEUM AND NATURAL GAS PROPERTIES

                                                             March 31, 2009
                   ---------------------------------------------------------
                                  Accumulated depletion
                           Cost        and depreciation      Net book value
                              $                       $                   $
                   ---------------------------------------------------------
Argentina            48,651,277              20,477,157          28,174,120
United Kingdom      193,961,842               2,929,870         191,031,974
                   ---------------------------------------------------------
                    242,613,119              23,407,027         219,206,094
                   ---------------------------------------------------------
                   ---------------------------------------------------------

                                                          December 31, 2008
                   ---------------------------------------------------------
                                            Accumulated
                                          depletion and
                           Cost            depreciation      Net book value
                              $                       $                   $
                   ---------------------------------------------------------

Argentina            52,735,538              19,276,107          33,459,431
United Kingdom      196,439,183               2,929,870         193,509,313
                   ---------------------------------------------------------
                    249,174,721              22,205,977         226,968,744
                   ---------------------------------------------------------
                   ---------------------------------------------------------

During the period, the Company capitalized $500,065 (2008 - $668,896) of general and administrative and stock- based compensation costs related to exploration and development activity. At March 31, 2009, petroleum and natural gas properties include $191,031,974 (2008 - $169,376,656) relating to unproven properties that have been excluded from the depletion calculation.

6. OFFICE EQUIPMENT

Office equipment of $508,660 (2008 - $556,826) is net of accumulated depreciation of $1,124,151 (2008 - $1,090,513).

7. ASSET RETIREMENT OBLIGATIONS

At March 31, 2009, the estimated undiscounted asset retirement obligations are $2,654,588 (2008 -$2,798,412) and $24,231,110 (2008 - $24,775,519) for Argentina and United Kingdom, respectively. The Company expects the undiscounted obligations to become payable over the next 15 years with the majority occurring after 2023. The present value of the asset retirement obligations has been calculated using credit adjusted risk free rates of between 7.9% and 11.0% (2008 - 7.9% and 9.0%) and an inflation rate of 2.0% (2008 - 2.0%).


Changes to asset retirement obligations were as follows:

                                                    March 31,   December 31,
                                                        2009           2008
                                                           $              $
                                                  --------------------------

Asset retirement obligations, beginning of period  9,913,898      9,650,649
Accretion expense                                    130,797        870,856
Increase in liabilities                                    -      2,893,189
Change in estimated future cash flows                      -       (976,725)
Foreign currency translation                        (190,967)    (2,524,071)
                                                  --------------------------
Asset retirement obligations, end of period        9,853,728      9,913,898
                                                  --------------------------
                                                  --------------------------

8. CAPITAL STOCK

Authorized

Unlimited number of common voting shares

Unlimited number of preferred shares


Common shares issued                               Number of         Amount
                                                      Shares              $
                                                ----------------------------

Balance - December 31, 2007                      117,581,389    262,600,117
Bought deal financing                             17,130,000     51,093,584
Employee share ownership plan                        396,727        346,261
Exercise of stock options                            214,000        332,955
Contributed surplus on exercise of stock options           -        150,708
Share issue costs                                          -     (2,596,047)
                                                ----------------------------

Balance - December 31, 2008                      135,322,116    311,927,578
                                                ----------------------------
Balance - March 31, 2009                         135,322,116    311,927,578
                                                ----------------------------
                                                ----------------------------

In July 2008, the Company issued 16,130,000 common shares at a price of Cdn $3.10 per common share for gross proceeds of Cdn $50,003,000. In August 2008, an over-allotment option was partially exercised for an additional 1,000,000 common shares at a price of Cdn $3.10. Total gross proceeds from the financing, including over-allotment option, were Cdn $53,103,000.

Stock options

The Company has established a stock option plan whereby the Company may grant options to its directors, officers, employees and consultants for up to 10% of the issued and outstanding number of common shares. The exercise price of each option is no less than the market price of the Company's stock on the date of grant. Stock option terms are determined by the Company's Board of Directors but typically vest evenly over a period of three years from the date of grant and expire five years after the date of grant.

Pursuant to the Company's stock option plan, as at March 31, 2009 there were 12,158,398 options outstanding to purchase Common share at prices ranging from $0.31 Cdn to $6.95 Cdn.

Stock-Based Compensation Costs

The Company measures all stock-based compensation using the fair value method of accounting and recognizes the result as compensation expense in the financial statements. Stock-based compensation costs are recognized over the vesting period of the stock options granted. Stock-based compensation costs for the periods ended March 31, 2009 and 2008 were $856,532 and $1,157,789, respectively.

There were no options granted during the three month period ended March 31, 2009. The fair value of each stock option granted during the period is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Risk free interest rate - 2.1% (2008 - 3.2%); expected life - 4.5 years (2008 - 4.5 years); expected volatility - 158.0% (2008 - 67.0%); expected dividend yield - nil (2008 - nil).

Per Share Information

In calculating basic and diluted net loss per common share amounts, the following weighted average shares were used:


                                                  March 31,        March 31,
                                                      2009             2008
                                          Number of shares Number of shares
                                         -----------------------------------

Weighted average number of shares
 outstanding                                   135,322,116      117,581,389
Exercisable stock options                                -        4,417,748
                                         -----------------------------------
Diluted average number of shares
 outstanding                                   135,322,116      121,999,137
                                         -----------------------------------
                                         -----------------------------------

Exercisable stock options of 4,423,752 at March 31, 2009 have been excluded
from the diluted average number of shares outstanding as they are
anti-dilutive.

9. CONTRIBUTED SURPLUS


                                                  March 31,     December 31,
                                                      2009             2008
                                                         $                $
                                         -----------------------------------
Balance beginning of period                     11,664,179        6,706,403
Stock-based compensation expense                 1,165,454        5,108,484
Transfer to share capital on exercise of stock
 options                                                 -         (150,708)
                                         -----------------------------------
Balance - end of period                         12,829,633       11,664,179
                                         -----------------------------------
                                         -----------------------------------

10. OTHER COMPREHENSIVE INCOME

The consolidated assets and liabilities are translated from their functional currencies to the United States dollar reporting currency at the period end exchange rates and the results of changes in these rates are recorded as an unrealized gain (loss) in comprehensive income (loss) and accumulated comprehensive income (loss).

The exchange rate for the Canadian dollar relative to the United States dollar declined from US $0.82 at December 31, 2008 to US $0.80 at March 31, 2009 resulting in an unrealized loss on translation of the consolidated assets and liabilities of $(5,459,695).

Effective January 1, 2009 the Company changed its functional currency to the Argentine peso from Canadian dollar. As a result of this change, Antrim recorded an unrealized loss of $(4,478,475) due to the weakening of the Argentine peso relative to the value of the Canadian dollar.

The exchange rate for the Canadian dollar relative to the United States Dollar declined from US $1.02 at December 31, 2007 to US $0.98 at March 31, 2008 resulting in an unrealized loss on translation of the consolidated assets and liabilities of $(11,103,162).

11. INCOME TAXES

The components of the Company's net future income tax asset are as follows:


                                                    March 31,   December 31,
                                                        2009           2008
                                                           $              $
                                                   -------------------------
Future income tax asset:
Tax basis of liabilities below carrying value        409,651        348,006
                                                   -------------------------
Net future income tax asset                          409,651        348,006
                                                   -------------------------
                                                   -------------------------

The Company incurred losses in several of the countries that it operates in. No accounting recognition has been given to the losses as there is uncertainty with respect to the ability to generate sufficient taxable income to utilize the losses.


12. SUPPLEMENTAL CASH FLOW INFORMATION

                                                        2009           2008
                                                           $              $
                                                   -------------------------
Operating activities:
(Increase) decrease in current assets:
 Accounts receivable                                     (17)      (408,640)
  Inventory and prepaid expenses                     320,296         54,050

Increase (decrease) in current liabilities:
  Accounts payable and accrued liabilities          (879,591)       184,288

Employee share ownership plan contribution                 -         37,723
                                                   -------------------------
                                                    (559,312)      (132,579)
                                                   -------------------------
                                                   -------------------------

Investing activities:
(Increase) in current assets:
  Accounts receivable                               (585,309)       (13,598)

Increase (decrease) in current liabilities:
 Accounts payable and accrued liabilities           (136,030)     6,574,546
                                                   -------------------------
                                                    (721,339)     6,560,948
                                                   -------------------------
                                                   -------------------------

Interest received                                     93,914        844,660
Income taxes paid                                      2,937            164

13. SEGMENTED INFORMATION

                                                             March 31, 2009
                        ----------------------------------------------------
                           Revenue   Earnings (Loss)    Identifiable assets
                                 $                 $                      $
                        ----------------------------------------------------

Canada                           -        (1,536,133)            26,219,039
Argentina                3,225,083            60,907             36,873,919
United Kingdom                   -          (374,699)           195,973,472
                        ----------------------------------------------------
Total                    3,225,083        (1,849,925)           259,066,430
                        ----------------------------------------------------
                        ----------------------------------------------------

                                                             March 31, 2008
                        ----------------------------------------------------
                           Revenue            (Loss)    Identifiable assets
                                 $                 $                      $
                        ----------------------------------------------------
Canada                           -          (337,220)            76,167,301
Argentina                3,723,949           (87,903)            40,343,135
United Kingdom                   -          (382,597)           188,040,725
                        ----------------------------------------------------
Total                    3,723,949          (807,720)           304,551,161
                        ----------------------------------------------------
                        ----------------------------------------------------

14. COMMITMENTS AND CONTINGENCIES

The Company has the following commitments in respect of its oil and gas properties:

In August 2008, the Company signed a rig contract for a drilling rig in the UK for a 60 day period during 2009 at $425,000 per day. Based on announcements by the prospective rig owner, it appears that this rig is no longer available for contract and the Company does not anticipate utilizing the rig in 2009. The Company is awaiting written confirmation from the prospective rig owner and the drilling management company engaged by the Company that the rig is no longer available for contract.

United Kingdom - Causeway

The Company has signed a contract for the front-end engineering design (FEED) study of the modifications required on the Dunlin platform for Causeway. The Company's commitment is approximately $250,000. The Company expects to fulfill the commitment in 2009.

United Kingdom - Fyne and Dandy

The Company acquired a 75% working interest in Block 21/28a in 2006 for $8 million. On approval of a field development plan, the Company has agreed to pay an additional $10 million as part of the acquisition cost of the block.

United Kingdom - South Larne

Under the terms of the Petroleum Prospecting Licence, the Company was required to complete geoscience surveys by October 2008 at a cost of $75,000, and commit to drilling an exploration well by mid October 2009 or relinquish the licence. Under the terms of the Minerals Prospecting Licence, Antrim was required to complete geoscience surveys by December 31, 2008 at a cost of $75,000. A decision to drill or drop the licence was required by December 31, 2008. One common work program of geophysical surveys and drilling one well would satisfy the conditions of both licences. The geoscience survey work has been completed. The Company has requested a one year extension to the licences on the drill or drop date from the Northern Ireland Department of Enterprise, Trade & Investment and has not received a response to date.

Argentina - Tres Nidos Sur

The Company acquired a 70% working interest in the Tres Nidos Sur Block in October 2007. Under the terms of the licence, the joint venture is required to acquire a minimum of 50 km2 of 3D seismic and drill an exploration well by December 2009. Required permitting and environmental studies for the 3D seismic acquisition are underway.

Argentina - Tierra del Fuego

The company made a commitment of $902,300 related to the building and commissioning of a second gas sales pipeline across the Straits of Magellan linking gas production from the island of Tierra del Fuego with the Argentina mainland. Due to recent economic conditions, the Company believes that the planned construction of the pipeline will be deferred.

In addition to commitments in respect of its oil and gas properties, the Company is committed to payments under operating leases for office space, net of sub-lease arrangements, for the next five years as follows:


Year                            $
----------------------------------
2009                      193,635
2010                      122,070
2011                      102,646
2012                      102,646
2013                      102,646
                         ---------
                          623,643
                         ---------
                         ---------

15. FINANCIAL AND CAPITAL MANAGEMENT

The Company's objective when managing its capital is to maintain adequate levels of funding to support its exploration and development program and provide flexibility in the future development of its business. Historically the Company raised all of its capital requirements from internally generated cash flow and by the issuance of common shares and securities exchangeable for common shares. The Company's capital structure at March 31, 2009 consists entirely of common share capital. The Company had no bank debt at March 31, 2009.

The recent economic deterioration and restriction on availability of credit may limit the Company's ability to access debt or equity financing for its development projects. The Company forecasts cash flows against a range of macroeconomic and financing market scenarios in an effort to identify future liabilities and arrange financing, if necessary. The Company has reduced the time frame in projecting its future expenditures from an annual budget to a quarterly and, where applicable, monthly forecast process. This reduction in the time horizon will allow the Company to better adapt to changing market conditions. Although the Company may need to raise additional funds from outside sources, if available, in order to develop its UK properties, the Company maintains flexibility to minimize financial commitments on these assets.

In July 2008, Antrim entered into an agreement with the Bank of Scotland plc for a $50 million working capital facility. The working capital facility is available, subject to certain conditions, for pre-development costs associated with the Company's Causeway property and for the appraisal of the Fyne and Dandy fields. The amount available under the facility may increase as the Company prepares, submits and receives final approval of a field development plan for the Causeway Field. Availability under this working capital facility is presently $10 million. The Company is required to maintain two financial covenants being a semi-annual interest coverage ratio of 2:1 and an ongoing requirement that cash plus available borrowings under the facility are at least equal to its planned capital expenditures for the forthcoming three month period. The Company is in compliance with all terms, conditions and covenants. To date, no amounts have been drawn on this bank facility. The working capital facility matures on January 18, 2010.

16. FINANCIAL INSTRUMENTS AND FINANCIAL RISKS

Financial instruments

Financial assets and financial liabilities are initially recognized at fair value and are subsequently accounted for based on their classification. The classification categories, which depend on the purpose for which the financial instruments were acquired and their characteristics, include held-for-trading, available-for-sale, held- to-maturity, loans and receivables, investments, and other liabilities. Except in very limited circumstances, the classification is not changed subsequent to initial recognition.

The Company's financial instruments consist of cash, short-term deposits, accounts receivable, other non-current assets and accounts payable. Cash, and short-term deposits are categorized as held-for-trading and are accounted for at fair value with the change in fair value recognized in net income during the period. Accounts receivable and other non-current assets are classified as loans and receivables and are accounted for at amortized cost. Accounts payable are classified as other liabilities and are accounted for at amortized cost. Due to the short- term maturity of the Company's financial instruments, fair values approximate carrying amounts.

Financial risks

The Company is exposed to financial risks encountered during the normal course of its business. These financial risks are composed of credit risk, liquidity risk, and market risk including commodity price and foreign currency exchange risks.

(a) Credit risk

The Company is exposed to the risk that its counterparties will fail to discharge their obligations to the Company on its cash, cash equivalents and accounts receivable.

Cash, cash equivalents and restricted cash are on deposit with reputable Canadian and international banks, and therefore the Company does not believe these financial instruments are subject to material credit risk. The majority of oil and gas production is from two properties in Argentina and each property's production is sold to a single purchaser. Factors included in the assessment of accounts receivable for impairment are the relationship between the purchaser and the Company and the age of the receivable. As at December 31, 2008, the Company has provided for an allowance for doubtful accounts which is not material.

The Company's maximum exposure to credit risk at March 31, 2009 is equal to the carrying amount of cash, cash equivalents, restricted cash and accounts receivable on the Company's balance sheet on that date.

(b) Liquidity risk

The Company is exposed to liquidity risk from the possibility that it will encounter difficulty meeting its financial obligations. The Company manages this risk by forecasting cash flows in an effort to identify future liabilities and arrange financing, if necessary. It may take many years and substantial cash expenditures to pursue exploration and development activities on all of the Company's existing undeveloped properties. Accordingly, the Company may need to raise additional funds from outside sources in order to explore and develop its properties. There is no assurance that adequate funds from debt and equity markets will be available to the Company in a timely manner.

At March 31 2009, the Company had working capital of $32,430,798 compared to $35,267,327 at December 31, 2008. The contractual maturities of the Company's financial liabilities at March 31, 2009 are less than one year.

(c) Market Risk

Market risk consists of commodity price risk and foreign currency exchange risk.

Commodity price risk

Currently all of the Company's oil and gas revenue is from oil and gas properties in Argentina. Oil and gas prices in Argentina are subject to mandated domestic market discounts which result in prices significantly below benchmark prices such as WTI. Oil and gas exports from Argentina are subject to export taxes which effectively limit the maximum price that producers could receive for crude oil exports to $42 per barrel, regardless of the price of WTI. The mandated discount on domestic sales results in a similar ceiling, after quality adjustments, within the domestic market. Further regulatory changes to the domestic market prices or export tax regime may have an adverse impact on the Company's net revenues, cash flow and earnings.

Foreign currency exchange risk

The Company is exposed to fluctuations in foreign currency exchange rates as many of the Company's financial instruments are denominated in United States dollars, British pound sterling, or Argentine pesos (ARS), while the functional currency of the Company is Canadian dollars. As a result, fluctuations in the United States dollar, British pound sterling, and Argentine peso against the Canadian dollar could result in unanticipated fluctuations in the Company's financial results which are denominated in Canadian dollars. The Company seeks to minimize foreign exchange risk by holding cash and cash equivalents in Canadian dollars when not required in support of current operations.

17. RELATED PARTY TRANSACTIONS

The Company may from time to time enter into arrangements with related parties which are accounted for at the exchange amount. In the first quarter of 2009, the Company incurred fees of $4,654 (2008 - $18,887) payable to Burstall Winger LLP, a law firm in which a director of the Company is a partner.


DIRECTORS                                             LONDON OFFICE

Stephen Greer                                         Ashbourne House, The Guildway
President and Chief Executive Officer,                Old Portsmouth Road, Artington
Antrim Energy Inc.                                    Guildford, Surrey
                                                      United Kingdom GU3 1LR
Colin Maclean (2) (3)                                 Main: +44(0)1483-307 530
Independent Director                                  Fax: +44(0)1483-307 531

Dr. Brian Moss                                        BUENOS AIRES OFFICE
Executive Vice President, Latin America
Antrim Energy Inc.                                    Luis Maria Campos 1061 - Piso 8
                                                      CP (C1426BOI), Capital Federal
Dr. Gerry Orbell (1) (3)                              Buenos Aires, Argentina
Chairman and Chief Executive Officer,                 tel: +54 11 4779 1030
Sound Oil plc                                         fax: +54 11 4779 1040

Jim Perry (1) (3)                                     INTERNATIONAL SUBSIDIARIES
President, Chief Executive Officer and 
Director, Alternative Fuel Systems (2004) Inc.        Antrim Argentina S.A.
                                                      Antrim Energy Ltd.
James Smith (1) (2)                                   Antrim Resources (N.I.) Limited
Independent Director                                  Netherfield Corporation

Jay Zammit (2)                                        LEGAL COUNSEL
Partner,
Burstall Winger LLP                                   Burstall Winger LLP
                                                      Calgary, Alberta
(1) Member of the Audit Committee
(2) Member of the Compensation Committee              BANKERS
(3) Member of Reserves Committee
                                                      Bank of Scotland
OFFICERS                                              Toronto-Dominion Bank of Canada

Stephen Greer                                         AUDITORS
President and Chief Executive Officer
                                                      PricewaterhouseCoopers LLP
Brian Moss                                            Calgary, Alberta
Executive Vice President, Latin America
                                                      INDEPENDENT ENGINEERS
Douglas Olson
Chief Financial Officer                               McDaniel & Associates Consultants Ltd.

Kerry Fulton                                          REGISTRAR AND TRANSFER AGENT
Vice President, Operations
                                                      Inquiries regarding change of address, 
                                                      shareholdings, stock transfers or lost 
Godfrey Stowe                                         certificates registered should be 
Vice President, United Kingdom                        directed to:
                                                      
Tim Haney                                             CIBC Mellon Trust Company
Corporate Secretary                                   Calgary, Alberta
HEAD OFFICE                                           
                                                      STOCK EXCHANGE LISTINGS
Suite 4050 Bankers Hall West                          Toronto Stock Exchange: Trading Symbol 
888 - Third Street SW,                                "AEN" London Stock Exchange (AIM): 
Calgary, Alberta,                                     Trading Symbol "AEY"
Canada T2P 5C5
tel: +1 403 264 511
fax: +1 403 264 5113

info@antrimenergy.com
www.antrimenergy.com
The Company's website is not incorporated by
reference in and does not form a part of this Interim
Report.

Contact Information

  • Stephen Greer
    President & CEO
    Antrim Energy Inc.
    Telephone: (403) 264-5111
    Fax: (403) 264-5113
    E-mail: greer@antrimenergy.com

    Douglas B. Olson
    Chief Financial Officer
    Antrim Energy Inc.
    Telephone: (403) 264-5111
    Fax: (403) 264-5113
    E-mail: olson@antrimenergy.com


    Jeff Dunphy
    Manager, Corporate & Investor Relations
    Antrim Energy Inc.
    Telephone: (403) 264-5111
    Fax: (403) 264-5113
    Email: dunphy@antrimenergy.com

    Nominated Adviser
    Royal Bank of Canada Europe Limited
    Sarah Wharry
    +44 20 7653 4667