Bear Ridge Resources Ltd.
TSX : BER

Bear Ridge Resources Ltd.

August 11, 2005 23:59 ET

Bear Ridge Resources Ltd. Announces Second Quarter Results

TORONTO--(CCNMatthews - Aug. 11) - Bear Ridge Resources Ltd. is pleased to report results of the Company's second quarter of operations.



HIGHLIGHTS

- Production averaged 808 boe per day, up 182 percent from 287 boe per
day in the prior period, and was slightly ahead of our forecast
despite significant delays in executing our capital program due to
wet field conditions.
- Cash flow from operations climbed over 600 percent to $2.9 million
and was up 500% on a unit basis at $0.12 per share from $0.02 per
share in the first quarter.
- Earnings improved to $0.05 per share from the net loss of $0.01 per
share posted in the first quarter.
- Operating netback jumped 70 percent from the first quarter to $44.80
per boe largely due to reduced royalties and higher commodity prices.
- Commodity prices averaged Cdn $65.03 per barrel and $8.03 per mcf.
- Undeveloped land grew 29 percent to 42,000 net acres.
- Bear Ridge completed a strategic 200 boe per day acquisition in
Central Alberta with a strong undeveloped land base and an
inventory of drilling opportunities.
- The Company closed 2 private placements totaling $12.6 million at an
average $3.79 per share.
- Mr. Vincent Chahley was appointed to the Company's board of
directors.


OPERATIONS

Operations in the second quarter were significantly impaired by wet field conditions in our two main operating areas in the Peace River Arch and Central Alberta. Our drilling and completion program during the quarter was limited to 6 (5.5 net) completions at Sinclair, Pembina, Edson and Gunn, 1 (0.25 net) well that was drilled and cased at Ferrier and 1 (1.0 net) well that was drilling at Sinclair in the Peace River Arch over the end of the quarter.

Despite the reduced activity and delays we experienced due to record rainfall, Bear Ridge still delivered strong operational and financial growth in the quarter. Production averaged 808 boe per day during the quarter, up 182 percent from the prior period and slightly ahead of our production forecast for the quarter. Cash flow from operations was up over 600 percent at $2.9 million ($0.12 per share) compared to $0.4 million ($0.02 per share) in the first quarter. Net income for the period improved to $0.05 per share from the prior period loss of $0.01 per share.

Bear Ridge posted a record operating netback of $44.80 per boe, up 71 percent from the $26.84 recorded in the first quarter. This gain was largely driven by the extremely low average royalty of 6.9 percent we realized in the quarter. With the benefit of GPP on our 11-16 Sakwatmau oil well for the entire quarter this well produced a royalty free 35,980 barrels (395 boe per day) net to Bear Ridge at an average price of $64.52 per boe during the quarter. The one year royalty holiday on our 11-16 well is expected to expire in the third quarter of 2005 at which time we anticipate our average royalties will return to a more normal range of approximately 23 percent.

Our 11-16 Sakwatamau well also had a significant impact on our operating costs during the quarter. Trucking and road maintenance costs at Sakwatamau of $220,000 for the quarter drove our average operating costs up to $7.55 per boe from $6.45 in the prior quarter. Excluding our Sakwatamau production, operating costs for the balance of our production averaged $5.99 per boe for the quarter. The Sakwatamau property is mainly winter access only and we are currently evaluating facility and pipeline construction options for this winter in an effort to reduce operating costs. Additional development drilling offsetting 11- 16 is also under review for Q1 2006.

Drilling and completion costs amounted to $5.6 million of which $2.3 million was expended on the 5.5 net well completions conducted during the quarter and $850,000 was expended on 1 (0.25 net) well drilled during the quarter and 1 (1.0 net) well drilled over the end of the quarter. The remaining costs were comprised mainly of costs incurred prior to the Plan of Arrangement that accrued to Bear Ridge.

Bear Ridge completed its previously announced corporate and property acquisitions in the Sounding and Nelson areas of Central Alberta during the quarter. Total acquisition costs amounted to $10.3 million and included approximately 200 boe per day plus a strong undeveloped land position with identified drilling upside. An active drilling program has already commenced at both Sounding and Nelson. Bear Ridge also completed two private placements totaling $12.6 during the quarter to ensure the company is in a strong position to execute its capital program, build its undeveloped land base and capture additional acquisition opportunities. At the end of the quarter we had $0.5 million drawn on our $8.5 million credit facility.

THIRD QUARTER UPDATE

Although we continue to experience delays due to wet weather, the majority of our planned capital program for the third quarter is well underway. At Sinclair in the Peace River Arch we drilled and cased 1 (0.6 net) well and have just commenced completion operations on the well. At Mica in N.E. British Columbia we drilled and cased 1 (0.6 net) well and have a service rig lined up to complete 2 potential zones in the well within the next few weeks. We drilled and cased 2 (1.85 net) wells at Sounding in Central Alberta and 2 (1.0 net) wells at Nelson in Central Alberta during the quarter and have a service rig scheduled to commence completion operations on all 4 wells in succession.

In addition to the above new drills, we have been able to conduct a number of completion operations on wells drilled in prior quarters that we had not been able to complete until the third quarter due to wet field conditions. At Ferrier in West Central Alberta we successfully completed and tied in 1 (0.25 net) well that we had drilled and cased in the second quarter. At Carrot Creek we have finally been able to access a well (0.75 net) that we had drilled and cased in the first quarter. One zone in this well has just been successfully completed and completion operations on a second zone are under way. The Carrot Creek well is expected to come on stream late in the third quarter. At Goodwin in Central Alberta 1 (0.5 net) well has recently been completed and is scheduled to commence production during the quarter.

Current production is approximately 925 boe per day and, based on the number of successful completions and planned tie-ins during the third quarter and the number of promising drilling results that we plan to evaluate this quarter, our growth prospects look very promising over the balance of the year. Although competition for undeveloped land has intensified due to high commodity prices we have also managed to increase our undeveloped land base and prospect inventory during the quarter.

TERMINATION OF TECHNICAL SERVICES AGREEMENT AND

APPOINTMENT OF CEO

As a result of our increasing production and activity levels Bear Ridge and Ketch Resources have agreed to terminate the Technical Services Agreement effective September 30, 2005. The agreement was put in place to provide support to Bear Ridge during its initial startup period and has allowed Bear Ridge to grow to a sufficient size to warrant a full management and technical team. This is a very positive development for Bear Ridge and we would like to thank the management, employees and board of Ketch for their strong support during Bear Ridge's early development.

Russell Tripp has been appointed to the Bear Ridge management team as CEO effective September 30, 2005 and will also continue in his capacity as Chairman and a director of Bear Ridge. He joins Douglas Hibbs, who continues as President, and Cal Jaycock, our Vice President Exploration. Additional appointments to fill out the management and technical team are expected over the next few months. Bear Ridge will be moving into new office space by October 1, 2005 and will provide new contact information in due course.

OUTLOOK

During the quarter Bear Ridge announced that Vincent Chahley had been appointed to the company's board of directors. Mr. Chahley brings a strong corporate finance and business transaction skillset to Bear Ridge and we are very pleased to welcome him to the Bear Ridge team.

High commodity prices are providing tremendous returns for successful exploration efforts but at the same time are driving intense competition for growth opportunities and increased costs across the entire sector. Bear Ridge has been able to capture a number of solid growth projects in our Central Alberta and Peace River Arch focus areas. These projects have delivered strong growth during our initial months of operations and have positioned Bear Ridge for continued growth for the remainder of the year and into 2006.

Bear Ridge will continue to execute a drillbit growth strategy complemented by strategic acquisitions and we maintain a risk balanced approach within our exploration programs. Although the acquisition market is extremely competitive we believe our high quality tax pool base of approximately $90 million will continue to provide an advantage on strategic acquisition opportunities.



Financial Review and Operating Highlights

Six months
Three months ended ended
FINANCIAL June 30 March 31 % June 30
(000s, except share amounts) 2005 2005 Change 2005
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Gross oil and natural gas revenue 4,175 1,191 251 5,366
Cash flow from operations 2,927 406 621 3,334
Per share - basic ($) 0.12 0.02 500 0.15
Per share - diluted ($) 0.11 0.02 450 0.14
Net Earnings 1,255 (208) - 1,048
Per share - basic ($) 0.05 (0.01) - 0.05
Per share - diluted ($) 0.05 (0.01) - 0.04
Capital Expenditures 19,958 26,422 (24) 46,380
Related to the Arrangement - 21,436 - 21,436
Related to current operations 19,958 4,986 300 24,944
Working capital surplus
(deficiency) (560) 4,520 - (560)
Shares outstanding (000s)
At period end 27,928 24,622 13 27,928
Weighted average during period,
basic 24,913 19,184 30 22,064
Weighted average during period,
diluted 26,619 21,000 27 24,254
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OPERATING
Production
Natural gas (mcf/d) 2,365 1,381 71 1,876
Oil and NGL's (bbls/d) 413 57 625 236
Oil and equivalent
(boe/d) (6:1) 808 287 182 549
Average wellhead prices
Natural gas ($/mcf) 8.03 7.26 11 7.75
Oil and NGL's ($/bbl) 65.03 56.23 9 63.98
Operating Netback ($/boe) 44.80 26.24 71 39.98

Wells Drilled
Gross 1 7 (86) 8
Net 0.25 6.25 (96) 6.50
Net success rate 100% 86% 16 88%

Undeveloped land (net acres) 42,000 32,600 29 42,000
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Management's Discussion and Analysis

This management's discussion and analysis ("MD&A") should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2004. The Management Discussions and Analysis was prepared as of August 8, 2005.

Basis of Presentation - Bear Ridge Resources Ltd. ("Bear Ridge" or the "Company") was incorporated as 1142356 Alberta Ltd. on December 14, 2004 under the Business Corporations Act (Alberta). The Company participated in the Plan of Arrangement (the "Arrangement") entered into by Ketch Resources Trust, Ketch Resources Ltd, Bear Creek Energy Ltd., Bear Ridge Resources Ltd. and Kereco Energy Ltd. which resulted in Bear Ridge acquiring certain oil and gas asset formerly owned by Bear Creek Energy Ltd. As a result of the Arrangement there are no historical comparisons presented.

Non-GAAP Measurements - The Management's Discussion and Analysis contains the term cash flow from operations, which should not be considered an alternative to, or more meaningful than cash flow from operating activities as determined in accordance with Canadian generally accepted accounting principles as an indicator of the Company's performance. Bear Ridge's determination of cash flow from operations may not be particularly comparable to that reported by other companies, especially those in other industries. The reconciliation between net earnings and cash flow from operations can be found in the consolidated statement of cash flows in the unaudited consolidated financial statements. The Company also presents cash flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. The Company will also use operating netback as an indicator of operating performance. Operating netback is calculated on a per boe basis taking the sales price and deducting off royalties and operating expenses.

BOE Presentation - The term barrels of oil equivalents (BOE) may be misleading, particularly if used in isolation. A 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. All BOE conversions in the report are derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.

PETROLEUM AND NATURAL GAS SALES

Petroleum and natural gas revenues increased 250 percent to $4.2 million for the three months ended June 30, 2005 compared to $1.2 million for the first three months of 2005. The increase was the result of receiving Good Production Practice ("GPP") on the Sakwatamau 11-16 Viking oil well and additional volumes from the properties acquired in the corporate acquisition. Total daily volumes in the second quarter averaged 808 boe/d which was a 182 percent increase over the 287 boe/d recorded in the first quarter. Gas volumes increased by 71 percent to 2.4 mmcf per day from 1.4 mmcf per day in the first quarter. Oil and NGL volumes increased 632% to 413 bbl per day from 57 bbl per day in the previous quarter. For the six month period ended June 30, 2005 gas volumes were 1,876 mcf per day, oil was 228 bbl per day while NGL's were 8 bbl per day.

The per boe calculation for the first quarter is based on the 90 day average in the quarter, however the Company did not account for the production until January 18, 2005.


Six months
Three months ended ended
Average daily June 30 March 31 % June 30
production volumes 2005 2005 Change 2005
-------------------------------------------------------------------------
Natural gas (mcf/d) 2,365 1,381 71 1,876
Oil & NGL's (bbl/d) 413 57 625 236
Total (boe/d) 808 287 182 549
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The Company sells all of its gas into the spot market based on the Alberta AECO reference price. AECO averaged Cdn $6.99 per GJ for the quarter. Oil prices are derived from the WTI average price adjusted for the U.S. $ exchange rate and quality differentials. For the three months ended June 30, 2005, WTI oil averaged $U.S. 53.17 per bbl and the exchange rate was 1.2439. The Company currently produces gas with a high heating value and as such the values expressed on a on a $/mcf basis are higher than the AECO per GJ average.



Six months
Three months ended ended
Average prices per June 30 March 31 % June 30
unit of production 2005 2005 Change 2005
-------------------------------------------------------------------------
Natural gas - $/mcf 8.03 7.26 11 7.75
Crude oil - $/bbl 65.03 56.23 9 63.98
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ROYALTIES

Royalties decreased 13 percent in the second quarter of 2005 to $287,280 as compared to $329,970 in the first quarter of 2005. The decrease in royalties is a result of the recognition of ARTC and the recovery of overriding royalties as a result of the NGL production adjustment. Average royalty rates as a percentage of sales decreased by 75 percent to 6.9 percent in the second quarter from 27.7 percent due to the increased production from the Sakwatamau 11-16 well that is in a royalty holiday position and recognition of ARTC. The royalty holiday on the 11-16 well is expected to expire in the third quarter and we therefore expect royalty rates to come in line with industry standard of 23 - 27 percent at this time. For the six months ended June 30, 2005 net royalties of $617,249 represents 11.5 percent of revenues.



Six months
Three months ended ended
June 30 March 31 % June 30
2005 2005 Change 2005
-------------------------------------------------------------------------
Royalty Category
Crown 419,697 243,042 73 662,739
Override (5,794) 86,927 (107) 81,133
Freehold 38,635 - - 38,635
ARTC (165,258) - - (165,258)
Total Royalty 287,280 329,969 (13) 617,249
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Six months
Three months ended ended
Average royalty rates June 30 March 31 % June 30
(% of sales) 2005 2005 Change 2005
-------------------------------------------------------------------------
Royalty Category
Crown 10.1 20.4 (50) 12.4
Override - 7.3 - 1.5
Freehold 0.9 - - 0.7
ARTC (4.0) - - (3.1)
Total Royalty 7.0 27.7 (75) 11.5
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OPERATING EXPENSES

Operating costs totaled $554,610 or $7.55 per boe for the three month period ending June 30, 2005 as compared to $166,526 or $6.45 per boe for the three month period ended March 31, 2005. The increase in operating costs are a result of the shift of production to Sakwatamau which is a higher operating cost area. Additional road maintenance, and higher emulsion trucking and processing charges increase the average per boe cost. For the six month period ending June 30, 2005 operating costs were $721,136 or $7.26 per boe. The completion of a oil pipeline for the Sakwatamau area that is planned for the winter of 2005 will provide operating costs savings for future periods.

TRANSPORTATION EXPENSES

Transportation expenses for the second quarter of 2005 were $40,812 or $0.56 on a per unit basis as compared to $16,161 or $0.63 per boe for the first quarter of 2005. For the six month period ending June 30, 2005 transportation costs were $56,973 or $0.57 per boe.

OPERATING NETBACK

The operating netback increased 71 percent in the second quarter of 2005 to $44.80 per boe from $26.24 per boe in the first quarter primarily as result of increased commodity prices and the reduced royalties on a per boe basis as a result of the royalty holiday on the increased production from the Sakwatamau 11-16 well. For the six month period ending June 30, 2005 the operating netback was $39.98 per boe.



Six months
Three months ended ended
June 30 March 31 % June 30
Operating Netback ($/boe) 2005 2005 Change 2005
-------------------------------------------------------------------------
Sales price 56.81 46.09 23 54.02
Royalties (3.91) (12.77) (69) (6.21)
Operating expense (7.55) (6.45) 17 (7.26)
Transportation expense (0.56) (0.63) (11) (0.57)
Operating Netback 44.79 26.24 71 39.98
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GENERAL AND ADMINISTRATIVE EXPENSES ("G&A")

For the three month period ended June 30, 2005, the Company incurred G&A expenses of $333,487 compared to $270,592 for the three month period ended March 31, 2005. On a per unit basis the costs in the second quarter of 2005 decreased by 57 percent to $4.54 per boe compared to the first quarter of $10.48 per boe. The decrease in G&A on a per unit basis is a result of the increased production realized in the second quarter and the recognition of capitalizing costs associated with the exploration activities. G&A expenses consist of the monthly management fee charged by Ketch based on the technical services agreement and any other direct costs charged. For the six month period ended June 30, 2005 G&A expenses were $604,079 or $6.08 per boe. Increasing volumes through the year will push down G&A costs on a per boe basis.



Six months
Three months ended ended
June 30 March 31 % June 30
G & A Expense $ 2005 2005 Change 2005
-------------------------------------------------------------------------
G&A expense (gross) 334,225 270,592 123 604,817
Overhead recoveries (738) - - (738)
G&A expense (net) 333,487 270,592 23 604,079
G&A expense $/boe (net) 4.54 10.48 (57) 6.08
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Technical services agreement

In conjunction with the Plan of Arrangement, Bear Ridge and Ketch Resources Ltd. entered into a Technical Service Agreement which provides for the shared services required to manage Bear Ridge's activities and govern the allocation of general and administrative expenses between the entities. Under the Technical Services Agreement, Bear Ridge is charged a technical services fee by Ketch Resources Ltd., on a cost recovery basis, in respect of management, development, exploitation, operations and marketing activities. The allocation uses production and capital expenditures, for the period as the basis for determining how costs are allocated. For the three month ended June 30, 2005 the technical services fee was $314,633 and $518,889 for the six month period ended June 30, 2005. The technical services agreement will be terminated effective September 30, 2005 with a period of transition to allow the transfer of operations.

STOCK BASED COMPENSATION

The Company accounts for stock based compensation using the fair value method for stock options and special performance units. Under the fair value method the Black-Scholes option pricing model was used to calculate the first quarter expense and is recorded in the earnings statement over the vesting period of the options. The fair value of the special performance units are based on the fair value of a Bear Ridge common share less the nominal exercise price of $0.01. At period end the number of common shares issuable under the plan is calculated and year to date compensation expense is determined based on the initial grant date fair value and percentage of special performance units vested. There is no significant impact resulting from this change.

For the three month period ended June 30, 2005, the Company had stock based compensation expenses of $298,241 or $4.06 per boe as compared to $187,998 or $7.28 per boe for the three month period ended March 31, 2005. For the six month period ended June 30, 2005 stock based compensation expense of $486,239 or $4.90 per boe was recognized.



Six months
Three months ended ended
Stock Based Compensation June 30 March 31 % June 30
Expense 2005 2005 Change 2005
-------------------------------------------------------------------------
$
Expense 298,241 187,998 59 486,239
Expense $/boe 4.06 7.28 (44) 4.90
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INTEREST EXPENSE

In the three month period ended June 30, 2005, the Company recorded interest expense of $32,048 compared to $832 recognized the three month period ended March 31, 2005. The increase in interest is a result of the utilization of the operating line of credit to fund the capital expenditure program. For the six month period ended June 30, 2005 the interest expense was $32,880. As at June 30, 2005 the Company did not have any outstanding debt.

DEPLETION, DEPRECIATION AND ACCRETION

Depletion and depreciation in the second quarter of 2005 was $1,591,455 as compared to $422,000 for the first quarter of 2005. Accretion of the asset retirement obligation for the second quarter was $5,858 compared to $4,061 in the first quarter of 2005. On a per boe basis depletion and depreciation was $21.65 per boe and $0.08 per boe for accretion expense for the second quarter of 2005 compared to $16.34 per boe and $0.16. The DD&A rate is impacted by the costs to acquire, explore and develop reserves of crude oil and natural gas, known as finding and development costs. In the early stages of drilling, capital costs may be recognized before proven reserves are fully booked leading to higher initial DD&A rates.



Six months
Three months ended ended
June 30 March 31 % June 30
$ 2005 2005 Change 2005
-------------------------------------------------------------------------
Depletion and depreciation 1,591,455 422,000 277 2,013,455
Accretion 5,858 4,061 44 9,919

Cost per boe
Depletion and depreciation 21.65 16.34 32 20.27
Accretion 0.08 0.16 (50) 0.10
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TAXES

During the second quarter of 2005, Bear Ridge reexamined its unrecognized future income tax assets and was concluded that it was more likely than not that an amount of the unrecognized future income tax assets will be realized. Accordingly a net future tax asset of $638,000 has been recognized. The asset has been partially offset by a future tax liability of $2.5 million resulting from the acquisition of a partnership at a cost in excess of it tax basis. In conjunction with the recognition of the future income tax asset a $223,600 future income tax recovery was recorded in the second quarter.

Bear Ridge is committed to incur $7.2 million in qualifying expenditures related to flow through arrangements by December 31, 2006. At June 30, 2005 $7.0 million of the commitment remains.

CASH FLOW AND NET INCOME

Cash flow from operations increased 621 percent to $2,927,289 ($0.12 per share) in the second quarter of 2005 from $406,447 ($0.02 per share) for first quarter of 2005 primarily as a result of increased production and commodity prices. For the six months ended June 30, 2005 cash flow from operations was $3,333,736 ($0.15 per share).

The Company recorded net income of $1,255,335 ($0.05 per share) in the second quarter of 2005 compared to a net loss of ($207,612) (($0.01) per share) generated in the first quarter of 2005. For the six months ended June 30, 2005 net income was $1,047,723 ($0.05 per share).



Six months
Three months ended ended
June 30 March 31 % June 30
2005 2005 Change 2005
-------------------------------------------------------------------------
Cash flow from operations -
per share
Basic 0.12 0.02 500 0.15
Diluted 0.11 0.02 450 0.14
Net income (loss) - per share
Basic 0.05 (0.01) - 0.05
Diluted 0.05 (0.01) - 0.04
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CAPITAL EXPENDITURES

During the second quarter of 2005, the Company drilled 1 (0.25 net) wells resulting in 1 (0.25 net) gas wells, for a 100 percent success rate. Capital expenditures during the second quarter of 2005 were $20 million which included $2.3 million of costs to complete wells drilled in the first quarter and $8.3 million related to the acquisition of a partnership. Capital expenditures for 2005 are as follows:



Six months
Three months ended ended
June 30 March 31 % June 30
Capital Expenditures $ 2005 2005 Change 2005
-------------------------------------------------------------------------
Land 2,504,736 582,789 330 3,087,525
Property acquisitions 2,000,000 21,636,121 (91) 23,636,121
Geological & geophysical 471,344 88,000 436 559,344
Drilling & completions 5,639,750 3,717,669 52 9,357,419
Equipment & facilities 904,722 - - 904,722
Office and furniture 5,635 - - 5,635
Asset retirement obligation 87,253 397,684 (78) 484,937
Corporate acquisition 8,344,050 - - 8,344,050
Total Capital Expenditures 19,957,490 26,422,263 (24) 46,379,753
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The Company records the fair value of future obligations associated with the retirement of long-lived tangible assets, such as well sites and facilities. Accounting for the recognition of this obligation results in an increase to the carrying values of these assets. This amount has been shown as the Company's Asset Retirement obligation.

LIQUIDITY AND CAPITAL RESOURCES

The Company had a revolving demand loan facility for up to a maximum of $8.5 million with a Canadian financial institution at June 30, 2005. The Company had working capital deficiency of $0.6 million including a cash balance of $3.6 million.

In the second quarter the Company closed two private placements of 3,327,385 common shares at an average price of $3.79 per share for a total of $12,600,163 (total net proceeds of $11,888,375).

On an ongoing basis, the Company will typically utilize three sources of funding to finance its capital expenditure program; internally generated cash flow from operations, debt where deemed appropriate and new equity issues if available on favorable terms. When financing corporate acquisitions the Company may also assume certain future liabilities. In addition, the Company may adjust its capital expenditure program depending on the commodity price outlook, and further opportunities that are identified.



ACTIVITY SUBSEQUENT TO THE END OF THE QUARTER

Subsequent to the end of the quarter, the Company entered into two
costless-collar oil hedges with the following terms:

Hedged
Term Product volumes Floor Ceiling
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August 2005 - December 2005 Oil WTI 200 bbl/d $US 55.00 $US 71.60
January 2006 - December 2006 Oil WTI 200 bbl/d $US 55.00 $US 73.00
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CRITICAL ACCOUNTING ESTIMATES

Bear Ridge's financial and operating results incorporate certain estimates including:

Estimated revenues, royalties, and operating costs on production as at a specific reporting date for which actual revenues and costs have not yet been received;

Estimated capital expenditures on projects that are in progress;

Estimated depletion, depreciation and accretion that are based on estimates of oil and gas reserves which Bear Ridge expects to recover in the future; and

Estimated value of asset retirement obligations that are dependent upon estimates of future costs and timing of expenditures;

Bear Ridge has hired individuals and consultants who have the skill set to make such estimates and ensures individuals or departments with the most knowledge of the activity are responsible for the estimates. Further, past estimates are reviewed and compared with actual results in order to make more informed decisions on future estimates.



Bear Ridge Resources Ltd.

CONSOLIDATED BALANCE SHEET (note 1)
(unaudited)

As at June 30 2005
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ASSETS
Current
Cash and cash equivalents $ 3,579,406
Accounts receivable 3,373,326
Prepaids and deposits 148,205
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7,100,937

Future income tax asset (note 9) 638,000

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Property and equipment (note 3) 44,366,298
-------------------------------------------------------------------------
$ 52,105,235
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LIABILITIES AND SHAREHOLDERS' EQUITY

Current
Accounts payable and accrued liabilities $ 7,660,474
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Asset retirement obligations (note 8) 494,856
-------------------------------------------------------------------------
8,155,330
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Shareholders' equity
Share capital (note 7) 43,653,700
Warrants (note 7) 711,354
Contributed surplus 486,239
Deficit (901,388)
-------------------------------------------------------------------------
43,949,905
-------------------------------------------------------------------------
$ 52,105,235
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See accompanying notes

On behalf of the Board:


David Ambedian Russell J. Tripp
Director Director



Bear Ridge Resources Ltd.

CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT (note 1)
(unaudited)

Three Months Six Months
Ended Ended
June 30 June 30
2005 2005
-------------------------------------------------------------------------
REVENUE
Petroleum and natural gas $ 4,175,526 $ 5,366,053
Royalties, net of Alberta Royalty
Tax Credit (287,280) (617,249)
-------------------------------------------------------------------------
3,888,246 4,748,804
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EXPENSES
Operating 554,610 721,136
Transportation 40,812 56,973
General and administrative 333,487 604,079
Stock based compensation (note 7) 298,241 486,239
Interest (note 6) 32,048 32,880
Depletion, depreciation and accretion 1,597,313 2,023,374
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2,856,511 3,924,681
Taxes
Future income tax recovery (note 9) 223,600 223,600
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Net Income 1,255,335 1,047,723
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Deficit beginning of period (3,189,201) (2,981,589)
Settlement of debt (note 10) 1,032,478 1,032,478
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Deficit, end of period $ (901,388) $ (901,388)
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Net income per share (note 7)
Basic $ 0.05 $ 0.05
Diluted $ 0.05 $ 0.04
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See accompanying notes



Bear Ridge Resources Ltd.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three Months Six Months
Ended Ended
June 30 June 30
2005 2005
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OPERATING ACTIVITIES
Net income $ 1,255,335 $ 1,047,723
Items not involving cash:
Depletion, depreciation and accretion 1,597,313 2,023,374
Future income tax recovery (223,600) (223,600)
Stock based compensation expense 298,241 486,239
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Funds provided by operations 2,927,289 3,333,736
Change in non-cash working capital 2,899,122 (1,227,639)
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Cash provided by operating activities 5,826,411 2,106,097
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FINANCING ACTIVITIES
Issue of common shares for cash,
net of costs 11,888,375 19,191,421
Issue of preferred shares for cash - 6,200,000
Repurchase of preferred shares (24,999) (24,999)
Repayment of debt (note 4) - (2,000,000)
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Cash provided by financing activities 11,863,376 23,366,422
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INVESTING ACTIVITIES
Acquisition of properties (2,000,000) (3,051,889)
Expenditures on property and equipment (9,526,187) (13,914,645)
Acquisition of an oil and gas
partnership (note 5) (8,344,050) (8,344,050)
Change in non-cash working capital (245,931) 2,937,069
-------------------------------------------------------------------------
Cash used in investing activities (20,116,168) (22,373,515)
-------------------------------------------------------------------------

Change in cash during the period (2,426,381) 3,099,004
-------------------------------------------------------------------------

Cash and cash equivalents, beginning
of period 6,005,787 480,402
-------------------------------------------------------------------------

Cash and cash equivalents, end of period $ 3,579,406 $ 3,579,406
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Supplementary disclosure
Cash interest paid $ 32,048 $ 32,880
Capital taxes paid - -

See accompanying notes



Notes to the Consolidated Financial Statements
June 30, 2005
(unaudited)

1. BASIS OF PRESENTATION

Bear Ridge Resources Ltd. ("Bear Ridge" or the "Company") was
incorporated as 1142356 Alberta Ltd. on December 14, 2004 under the
Business Corporations Act (Alberta) as a wholly-owned subsidiary of
Ceyba Inc. (the "Parent"). On December 16, 2004 the Parent and Ceyba
Corp.("Ceyba") entered into the Bear Ridge Come-Along Agreement with
Bear Creek Energy Ltd. (Bear Creek") and Ketch Resources Ltd.
("Ketch") to participate in the Plan of Arrangement involving the two
companies.

Pre Plan of Arrangement Transactions

On January 5, 2005 the Company acquired Ceyba from the Parent. Prior
to August 1, 2003, Ceyba developed and marketed optical technology
for the telecommunications industry. On August 1, 2003 Ceyba made an
assignment in bankruptcy under the Bankruptcy and Insolvency Act
(Canada). Ceyba subsequently disposed of substantially all of its
intellectual property asset to an arm's length third party. The
trustee in bankruptcy for Ceyba entered into an agreement with a
third party investor wherein the investor agreed to fund the amounts
necessary to satisfy the creditor proposal in consideration for an
exchangeable debenture convertible into preferred shares of Bear
Ridge. Bear Ridge acquired all the shares of Ceyba and all
inter-company debt between the Parent and Ceyba by the issuance of
Class A common shares of the Company.

As Ceyba and the Company were under common control of the Parent, the
accompanying consolidated financial statements of the Company have
been accounted for on a "continuity of interests' basis" with all
assets and liabilities of Ceyba consolidated with the Company at
their former carrying values. The financial statements assume the
Company and subsidiary have been combined since inception. No
comparative information has been presented due to loss of financial
information. All inter-company accounts have been eliminated. At
December 31, 2004, prior to the acquisition of Ceyba the Company had
cash and issued capital of $1 each.

On January 14, 2005 there was an Initial Private Placement ("Private
Placement") of 3,404,256 Bear Creek Finance Ltd. ("Finco") common
shares at $1.175 per share to employees, contractors, officers and
directors of Bear Ridge. Attached to each share is 0.84 of a share
purchaser warrant with an exercise price of $1.41 per whole warrant.
On January 18, 2005 each Finco common share and corresponding warrant
was exchanged for one Bear Ridge preferred share, Series 1 on a one
for one basis. Each warrant will entitle the holder to purchase one
Bear Ridge preferred share. The Private Placement is subject to a
contractual holding period whereby a third of the shares can be sold
on the first, second and third anniversary dates of the Private
Placement. The warrants vest evenly on the second and third
anniversary date of the Private Placement and expire one year after
vesting. Subsequent to the Plan of Arrangement as described below,
Finco was wound up into Bear Ridge on January 18, 2005.

On January 15, 2005, the Company issued for cash, a $2.2 million
convertible debenture to an unrelated third party which was
immediately converted to 2,800,000 preferred shares of the Company.
The cash proceeds received were used to satisfy all the terms of a
creditors proposal under the Bankruptcy and Insolvency Act (Canada)
related to Ceyba.

On January 17, 2005, the articles of incorporation of the Company
were amended and the previously issued 700,000 issued Class A shares
were converted into 723,404 new Class A common shares of the Company
and the previously issued 2,800,000 preferred shares were converted
into 2,893,617 new preferred shares of the Company. On January 17,
2005 Ceyba amended its articles of incorporation to change its name
to Bear Ridge Exploration Ltd.

Plan of Arrangement

On October 27, 2004, Ketch and Bear Creek jointly announced that
their respective Boards of Directors had unanimously approved a
proposal to combine the two entities pursuant to a Plan of
Arrangement ("Arrangement") which resulted in the creation of Ketch
Resources Trust, the creation of Kereco Energy Ltd. ("Kereco") as a
public oil and gas exploration and development company which
initially owns certain oil and gas assets of Ketch and the creation
of Bear Ridge as a public oil and gas exploration and development
company which initially owned certain oil and gas assets of Bear
Creek. The Arrangement was completed on January 18, 2005 and
shareholders of Ketch received: (i) 1.0 trust unit of the Trust,
(ii) 0.4 of a Kereco common share or $1.06 in cash, and (iii) 0.4 of
a Bear Ridge common share or $0.48 in cash for each Ketch common
share owned. Shareholders of Bear Creek received: (i) 0.5 of a trust
unit of the Trust, (ii) 0.2 of a Kereco common share or $0.54 in
cash, and (iii) 0.2 of a Bear Ridge common share or $0.245 in cash
for each Bear Creek common share owned.

Pursuant to the Arrangement, Bear Ridge received petroleum and
natural gas assets valued at approximately $21.4 million and assumed
$2 million of debt from Ketch. Bear Ridge will engage in the
exploration for and the acquisition, development and production of
oil and natural gas reserves. Bear Ridge assumed all liabilities,
including future environmental liabilities, relating to the
transferred assets.

2. SIGNIFICANT ACCOUNTING POLICIES

These interim consolidated financial statements of the Company have
been prepared by management in accordance with Canadian generally
accepted accounting principles, the significant accounting policies
of which are set out below. Certain information and footnotes
normally included in financial statements have been condensed or
eliminated. The interim financial statements should be read in
conjunction with the most recent annual financial statements as at
and for the period ended December 31, 2004 as the interim financial
statements do not conform in all respects to the note disclosure
requirements of Canadian generally accepted accounting principals in
respect of annual financial statements. Because a precise
determination of many assets and liabilities is dependant upon future
events, the preparation of financial statements involves the use of
estimates and approximations, which have been made using careful
judgment. The interim consolidated financial statements have, in
management's opinion, been properly prepared within reasonable limits
of materiality and within the framework of the significant accounting
policies summarized below.

Principles of consolidation

The consolidated financial statements include the Company and its
subsidiary. All inter-company balances and transactions have been
eliminated.

Measurement uncertainty

The amounts recorded for depletion and depreciation of property and
equipment and asset retirement obligations and the ceiling test
calculation are based on estimates of proved reserves, production
rates, oil and natural gas prices, future costs and other relevant
assumptions. By their nature, these estimates are subject to
measurement uncertainty and the effect on the financial statements of
changes in such estimates in future years could be significant.

Joint operations

Substantially all of the Company's exploration and development
activities are conducted jointly with others and, accordingly, these
financial statements reflect only the Company's proportionate
interest in such activities.

Cash and cash equivalents

Cash and cash equivalents include cash and short term investments
with a maturity of less than 90 days.

Property and equipment

Petroleum and natural gas properties and production equipment

The Company follows the full cost method of accounting for its
petroleum and natural gas properties and related facilities in
accordance with the guideline issued by The Canadian Institute of
Chartered Accountants whereby all costs related to the acquisition
of, exploration for and development of petroleum and natural gas
reserves, whether productive or unproductive, are capitalized in a
Canadian cost centre and charged to income as set out below. Such
costs include lease acquisition, drilling, geological and geophysical
expenditures, lease rentals on non producing properties, equipment
costs and overhead expenses directly related to exploration and
development activities. No indirect general and administrative costs
have been capitalized.

Proceeds from disposal of properties will normally be applied as a
reduction of the cost of the remaining assets, except when such a
disposal would alter the depletion and depreciation rate by more than
20 percent, in which case a gain or loss will be recorded.

Depletion and depreciation

Depletion of petroleum and natural gas properties and depreciation of
production equipment is provided using the unit of production method
based on estimated proved petroleum and natural gas reserves (gross,
before royalties) as determined by independent engineers. The
relative amounts of oil and gas production are converted at a ratio
of six thousand cubic feet of gas to one barrel of oil. In
determining its depletion base the Company excludes costs of
acquiring and evaluating unproved properties until it is determined
whether or not proven reserves are attributable to the properties or
impairment occurs and includes an estimate of future costs to be
incurred in developing proven reserves.

Office furniture and fixtures

Office furniture and fixtures are carried at cost and depreciated
over the estimated useful lives of the assets at a rate of 20% per
annum calculated on a declining balance basis. Depreciation is
charged at half rates in the year of acquisition.

Ceiling Test

The net book value of the Company's petroleum and natural gas
properties and equipment is subject to a cost recovery test (the
"ceiling test"). Impairment is recognized if the carrying amount of
the property and equipment less undeveloped land exceeds the sum of
the undiscounted cash flows expected to result from the Company's
proved reserves. If the carrying value is not fully recoverable, the
amount of impairment is measured by comparing the carrying amounts of
the property and equipment less undeveloped land to an amount equal
to the estimated net present value of future cash flows from proved
plus probable reserves. This calculation incorporates risks and
uncertainties in the expected future cash flows that are discounted
using a risk-free rate. Any excess carrying value above the net
present value of the future cash flows would be recorded as a
permanent impairment.

Asset retirement obligation

The Company records the fair value of an asset retirement obligation
as a liability in the period in which it incurs a legal obligation
associated with the retirement of tangible long-lived assets that
result from the acquisition, construction, development and/or normal
use of assets. The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset and depleted
and depreciated using a unit of production method over gross proved
reserves. Subsequent to the initial measurement of the asset
retirement obligations, the obligations are adjusted at the end of
each period to reflect the passage of time (accretion) and changes in
the estimated future cash flows underlying the obligation.

Income taxes

The Company follows the liability method of accounting for income
taxes. Under this method, future income tax assets and liabilities
are determined based on differences between the financial reporting
and tax bases of assets and liabilities, and measured using the
substantively enacted tax rates and laws that will be in effect when
the differences are expected to reverse. The effect on future tax
assets and liabilities of a change in tax rates is recognized in
earnings in the period in which the change becomes substantively
enacted. A valuation allowance is recorded against any future income
tax asset if the Company is not "more likely than not" to be able to
utilize the tax deductions associated with the future income tax
asset.

Revenue Recognition

Revenues from the sale of crude oil, natural gas and natural gas
liquids are recognized when title transfers to the purchaser.

Financial Instruments

The Company's financial instruments recognized in the Consolidated
Balance Sheet consist of accounts receivable, deposits, accounts
payable and accrued liabilities. The carrying value of these accounts
approximates their fair value.

A substantial portion of the Company's accounts receivable are with
joint-venture partners in the oil and gas industry and are subject to
normal industry risks.

The Company may enter into commodity price derivative instruments to
reduce the Company's exposure to adverse fluctuations in commodity
prices. No contracts are entered into for trading or speculative
purposes. Gains and losses relating to commodity swaps that meet
hedge criteria are recognized as part of petroleum and natural gas
revenue concurrently with the hedged transaction. At June 30, 2005 no
commodity contracts were in place.

The Company's most significant market risk exposure relates to crude
oil price fluctuations. Crude oil prices and quality differentials
are influenced by worldwide factors such as OPEC actions, political
events and supply and demand fundamentals. To a lesser extent the
Company is also exposed to natural gas price movements. Natural gas
prices are generally influenced by North American supply and demand,
and to a lesser extent local market conditions.

Stock based compensation

The Company follows the fair-value method of accounting for stock
options and special performance units granted to employees and
directors. Fair value is determined at the grant date using the
Black-Scholes option pricing model and recognized over the vesting
period of the options and special performance units granted as stock
based compensation expense with a corresponding credit to contributed
surplus. The contributed surplus balance is reduced as the options or
special performance units are exercised with the amount initially
recorded being credited to share capital.

Per share amounts

The Company utilizes the treasury stock method in the determination
of diluted per share amounts. Under this method, the diluted weighted
average number of shares is calculated assuming the proceeds that
arise from the exercise of outstanding, in-the-money options are used
to purchase common shares of the Company at their average market
price for the period.

3. PROPERTY AND EQUIPMENT

2005
---------------------------------------------------------------------
Accumulated
Depletion
and Net Book
Cost Depreciation Value
$ $ $
---------------------------------------------------------------------

Petroleum and natural gas
properties and production
equipment 46,379,753 (2,013,455) 44,366,298
---------------------------------------------------------------------
46,379,753 (2,013,455) 44,366,298
---------------------------------------------------------------------
---------------------------------------------------------------------

At June 30, 2005, costs of $7.7 million related to unproven
properties have been excluded from the depletion calculation.

4. TRANSFER OF ASSETS

Under the Arrangement, Bear Creek transferred to Bear Ridge certain
producing and exploratory petroleum and natural gas properties and a
portion of its bank debt. As the former Ketch shareholder group was
the controlling shareholder group resulting from the Arrangement the
properties have been transferred and accounted for at their fair
market value as follows:

Amount
Assets Received:
---------------------------------------------------------------------
Petroleum and natural gas properties $21,700,009
Bank debt assumed (2,000,000)
Asset retirement liability assumed (263,888)
---------------------------------------------------------------------
$19,436,121
---------------------------------------------------------------------
---------------------------------------------------------------------

Consideration given:
Common Shares issued (15,400,375 shares) $18,584,232
Cash 851,889
---------------------------------------------------------------------
$19,436,121
---------------------------------------------------------------------
---------------------------------------------------------------------

Relationship with Ketch Resources Ltd.

In conjunction with the Arrangement, Bear Ridge and Ketch (a wholly
owned subsidiary of Ketch Resources Trust) entered into a Technical
Service Agreement which provides for the shared services required to
manage Bear Ridge's activities and govern the allocation of general
and administrative expenses between the entities. Under the Technical
Services Agreement, Bear Ridge is charged a technical services fee by
Ketch, on a cost recovery basis, in respect of management,
development, exploitation, operations and marketing activities using
production and capital expenditures as the basis for determining the
allocation. For 2005 the technical services fee charged to date was
$518,919, made up of $204,256 for the first quarter and $314,633 in
the second quarter.

5. BUSINESS COMBINATION

On April 20, 2005 the Company acquired all of the issued and
outstanding partnership units pursuant to an agreement dated
April 20, 2005. As consideration for the transaction the partners
were paid a total of $8.3 million in cash. The Partnership was wound
up immediately after the last partners units were acquired in the
transaction.

The following summarizes the allocation of the aggregate
consideration:

Amount

---------------------------------------------------------------------
Petroleum and natural gas properties $ 8,431,303
Asset retirement liability assumed (87,253)
---------------------------------------------------------------------
$ 8,344,050
---------------------------------------------------------------------
---------------------------------------------------------------------

On acquisition, a future income tax liability resulted for the
difference between the book basis and the tax basis of the
partnership assets, this was offset as the Company was able to
utilize $2.5 million of previously unrecognized tax loss
carryforwards. (see note 9)


6. BANK OPERATING LOAN

At June 30, 2005, the Company had a $8.5 million revolving production
loan facility with a Canadian financial institution that bears
interest at its prime. As security, the financial institution has a
general security agreement in place constituting a first ranking
floating charge on all real property of the Company.

The terms of the banking arrangement allow for the financial
institution to apply all cash balances against the outstanding line
of credit at any time, and as such the Company nets any cash balances
at a reporting period against the bank operating loan.

7. SHARE CAPITAL

Authorized
An unlimited number of voting common shares.
An unlimited number of voting Class A
common shares.
An unlimited number of non-voting Class B
common shares.
An unlimited amount of preferred shares,
issuable in series.
An unlimited number of preferred shares,
Series 1.

Issued shares:

Number $
---------------------------------------------------------------------
Common Shares
Bear Ridge Resources Ltd. (previously
1142356) (a) 1 1
Bear Ridge Exploration Ltd.(previously
Ceyba) (a) 4 6
---------------------------------------------------------------------
Balance, December 31, 2004 5 7
Issued on acquisition of shares and debt
of Bear Ridge Exploration (a) 699,999 56,561,972
Amendment to articles of incorporation (c) 23,404 -
Issued pursuant to the Arrangement (d) 15,400,375 18,584,232
Issued for cash (f) 2,200,000 7,810,000
Share issue costs (f) - (506,955)
Elimination on consolidation (a) (4) (56,561,978)
---------------------------------------------------------------------
Balance, March 31, 2005 18,323,779 25,887,278
---------------------------------------------------------------------
Issued for cash (g)(h) 3,327,385 12,600,163
Share issue costs (h) (net of tax
benefits of $414,400) - (297,388)
---------------------------------------------------------------------
Balance, June 30, 2005 21,651,164 38,190,053
---------------------------------------------------------------------

---------------------------------------------------------------------
Preferred Shares (i)
Conversion of convertible debenture to
preferred shares (b) 2,800,000 2,200,000
Amendment to articles of incorporation (c) 93,617 -
Issued for cash (e) 3,404,256 3,288,646
---------------------------------------------------------------------
Balance, March 31, 2005 6,297,873 5,488,646
---------------------------------------------------------------------
Re-purchase of shares (21,276) (24,999)
---------------------------------------------------------------------
Balance, June 30, 2005 6,276,597 5,463,647
---------------------------------------------------------------------

---------------------------------------------------------------------
Common and Preferred Share Balance,
June 30, 2005 27,927,761 43,653,700
---------------------------------------------------------------------
---------------------------------------------------------------------



Number $
---------------------------------------------------------------------
Warrants
Issued pursuant to private placement (e) 2,857,143 711,354
---------------------------------------------------------------------
Balance, June 30, 2005 2,857,143 711,354
---------------------------------------------------------------------
---------------------------------------------------------------------

(a) On January 5, 2005, the Company acquired from Ceyba Inc, all
outstanding inter-company debt and all the shares of Ceyba Corp. in
consideration for the issuance of 699,999 Class A common shares of
the Company. This share transaction eliminated upon consolidation. At
the time of the transaction, Ceyba Corp. was involved in bankruptcy
proceedings.

(b) On January 15, 2005, the Company issued for cash, a $2.2 million
convertible debenture to an unrelated third party which was
immediately converted to 2,800,000 preferred shares of the Company.
The cash proceeds received were used to satisfy all the terms of a
creditor's proposal under the Bankruptcy and Insolvency Act (Canada)
related to Ceyba Corp.

(c) On January 17, 2005, the articles of incorporation of the Company
were amended and the previously issued 700,000 Class A shares were
converted into 723,404 new Class A common shares of the Company and
the previously issued 2,800,000 preferred shares were converted into
2,893,617 new preferred shares of the Company.

(d) On January 18, 2005, pursuant to the Plan of Arrangement 15,404,375
common shares were issued to former shareholders of Ketch and Bear
Creek. A cash payment of $851,889 was made to shareholders taking the
cash option for not participating in the Arrangement.

(e) On January 14, 2005 there was an Initial Private Placement ("Private
Placement") of 3,404,256 Bear Creek Finance Ltd. ("Finco") common
shares at $1.175 per share to employees, contractors, officers and
directors of Bear Ridge. Attached to each share is 0.84 of a share
purchaser warrant with an exercise price of $1.41 per warrant. Each
Finco common share and corresponding warrant was exchanged for one
Bear Ridge preferred share, Series 1 on a one for one basis on
January 18, 2005. Each warrant will entitle the holder to purchase
one Bear Ridge preferred share. The Private Placement is subject to a
contractual holding period whereby a third of the shares can be sold
on the first, second and third anniversary dates of the Private
Placement. The warrants vest evenly on the second and third
anniversary date of the Private Placement and expire one year after
vesting.

(f) On February 16, 2005, the Company closed a private placement of
2,200,000 common shares at $3.55 per share for $7,810,000 (net
proceeds of $7,303,045).

(g) On May 31, 2005, the Company closed a private placement to a newly
appointed director of 149,250 common shares at $2.68 per share for
$399,990 and 57,635 of flow-through eligible shares at $3.47 per
share for $199,993.

(h) On June 23, 2005, the Company closed a private placement of 1,492,600
common shares at $3.35 per share for $5,000,210 and 1,627,900 of
flow-through eligible shares at $4.30 per share for $6,999,970 (total
net proceeds of $11,288,392).

(i) Interest payable on the outstanding preferred shares will begin to
accumulate effective July 18, 2005 at an annual rate of 8%.

Stock Based Compensation

Pursuant to the Arrangement the Company established a Stock Option
Plan and Special Performance Unit Plan (collectively, the "Plan").
Under the Plan, options and Special Performance Units ("SPUs") may be
granted to directors, officers, employees, consultants and services
providers of the Company. The options vest evenly over 3 years,
starting on the first anniversary of the grant date and expire after
5 years. The options are exercisable into Bear Ridge common shares on
a one-for-one basis as per the following table.

The following is a continuity of stock options outstanding for which
shares have been reserved:

Weighted
Average
Exercise
Stock Options Options Price ($)
---------------------------------------------------------------------
Balance, December 31, 2004 - -
---------------------------------------------------------------------
Granted 691,670 3.53
---------------------------------------------------------------------
Balance, June 30, 2005 691,670 3.53
---------------------------------------------------------------------
---------------------------------------------------------------------

The following summarizes information about stock options outstanding
at June 30, 2005:

Weighted
Average Weighted
Remaining Average
Number Contractual Exercise
Grant Date Grant Price Outstanding Life Price
---------------------------------------------------------------------
February 2005 3.65 451,670 4.5 3.65
May 2005 3.26 - 3.35 240,000 4.9 3.30
---------------------------------------------------------------------
691,670 4.7 3.53
---------------------------------------------------------------------
---------------------------------------------------------------------

The Company has not incorporated an estimated forfeiture rate for
stock options that will not vest, rather the Company accounts for
actual forfeitures as they occur. The fair value of each common share
option granted was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted
average assumptions. The Company used a risk free interest rate of
3.0 percent, an expected life of 3.5 years expected volatility of
36 percent. These assumptions resulted in a weighted average fair
value for options granted in 2005 of $1.30 per option.

The SPUs will be exercisable for a price of $0.01 per share and will
be convertible into the percentage of a Bear Ridge Common Share equal
to the closing trading price of the Bear Ridge Common Shares on the
Toronto Stock Exchange on which Bear Ridge Common Shares are listed
on the trading day prior to conversion less $1.175, divided by the
Bear Ridge Closing Price. The SPU's were granted on a one-time basis
on the effective date of the Arrangement. The SPU's vest evenly over
3 years, starting on the first anniversary date of their grant, and
expire 30 days after vesting.

Weighted
Average
Exercise
Special Performance Units Number Price ($)
---------------------------------------------------------------------
Balance, December 31, 2004 - -
---------------------------------------------------------------------
Granted 1,345,275 0.01
---------------------------------------------------------------------
Balance, June 30, 2005 1,345,275 0.01
---------------------------------------------------------------------

During the second quarter the Company changed to the fair value
method of accounting for the special performance units. The fair
value is now calculated based on the fair value of a Bear Ridge
common share at the grant date less the nominal exercise price of
$0.01. At period end the number of common shares issuable under the
plan is calculated and year to date compensation expense is
determined based on the initial grant date fair value and percentage
of special performance units vested. There was no significant impact
resulting from this change.

The Company recognized $298,241 of stock based compensation expense
for the three months ended June 30, 2005 and $486,239 for the six
months ended June 30, 2005.

Per share amounts

The following table summarizes the common shares used in calculating
net loss per share.

Three month Six month
period period
ended ended
June 30 June 30
Weighted Average Common and Preferred shares 2005 2005
---------------------------------------------------------------------
Basic 24,912,827 22,064,327
Diluted 26,619,384 24,254,039
---------------------------------------------------------------------
---------------------------------------------------------------------

8. ASSET RETIREMENT OBLIGATIONS

The total future asset retirement obligations were estimated based on
the Company's net ownership in all wells and facilities at estimated
costs to reclaim and abandon the wells based on the estimated timing
of costs to be incurred in future periods. The Company has estimated
the net present value of its asset retirement obligations to be
$484,937 as at June 30, 2005 based on a total future liability of
$1,262,877 which will be incurred between 2009 and 2027. A credit
adjusted risk free rate of 7 percent and an inflation rate of
2 percent was used to calculate the fair value of the asset
retirement obligation.

A reconciliation of the asset retirement obligation is provided
below:

Three month Six month
period period
ended ended
June 30 June 30
2005 2005
---------------------------------------------------------------------
Balance, beginning of period 401,745 -
---------------------------------------------------------------------
Liabilities incurred in the period
(including acquisitions) 87,253 484,937
---------------------------------------------------------------------
Liabilities settled in the period - -
Accretion expense 5,858 9,919
---------------------------------------------------------------------
Balance, end of period 494,856 494,856
---------------------------------------------------------------------
---------------------------------------------------------------------

9. INCOME TAXES

The Company has accumulated non-capital losses for income tax
purposes of approximately $18.4 million which can be used to offset
income in future periods for seven years after they arise. These
losses expire as follows:

Year of expiry
---------------------------------------------------------------------
2010 $12,390,870
2011 6,024,102
---------------------------------------------------------------------
$18,414,972
---------------------------------------------------------------------

The company also has approximately $8.0 million of unclaimed
investment tax credits, $50.5 million federal ($28.1 million
provincial) of Scientific Research and Experimental Development
Expenses available to reduce future years' income tax payable.

A net future tax asset of $638,000 has been recognized. The asset was
partially offset by a future tax liability of $2.5 million resulting
from the acquisition of a partnership at a cost in excess of its tax
basis.

10. SETTLEMENT OF DEBTS

On August 1, 2003 Ceyba made an assignment in bankruptcy under the
Bankruptcy and Insolvency Act (Canada). Ceyba subsequently disposed
of substantially all of its intellectual property asset to an arm's
length third party. The trustee in bankruptcy for Ceyba entered into
an agreement with a third party investor wherein the investor agreed
to fund the amounts necessary to satisfy the creditor proposal and in
consideration for an exchangeable debenture convertible into shares
of Bear Ridge., all debts were settled under the agreement at less
than the book value which resulted in an adjustment to the Company's
deficit of $1,032,478.

11. COMMITMENTS

Following a flow-through share offering which closed in the second
quarter of 2005, Bear Ridge is committed to incur $7.2 million in
qualifying expenditures related to flow through arrangements by
December 31, 2006. At June 30, 2005 $7.0 million of the commitment
remains.

12. SUBSEQUENT EVENTS

On July 29, 2005 the Company entered into two costless-collar oil
hedges with the following terms:

Hedged
Term Product Volumes Floor Ceiling
---------------------------------------------------------------------
August 2005
- December 2005 Oil WTI 200 bbl/d $US 55.00 $US 71.60
January 2006
- December 2006 Oil WTI 200 bbl/d $US 55.00 $US 73.00
---------------------------------------------------------------------

OUTLOOK

Bear Ridge expects to be an active driller over the balance of the
year with additional 9-10 wells to be drilled, along with completions
and tie-ins of wells drilled in the first half. With commodity prices
continuing to rise we are seeing increased costs for services which
is impacting both drilling and operational costs. With anticipated
production growth to the end of the year we we will see some decrease
in per unit cost on G&A and operating costs.

Our focus will continue to be towards natural gas reserve and
production growth through drilling and optimization activity in the
Peace River Arch and west central Alberta areas on the recently
acquired assets and our existing assets. The Company also intends to
pursue complimentary property and corporate acquisitions that will
enhance the value of the Company.

Bear Ridge and Ketch Resources Trust have agreed to terminate the
technical services agreement at the end of the third quarter with
transition coverage as required. Bear Ridge which will be headed up
by Russell Tripp and Doug Hibbs will relocate to new office space by
the end of September.

ADDITIONAL INFORMATION

Additional information regarding Bear Ridge and its business and
operations, including the annual information for Bear Ridge
Resources Ltd. for the period ended December 31, 2004, is available
on Bear Ridge's website www.bearridgeresources.com and Bear Ridge's
SEDAR profile at www.sedar.com

Forward Looking Statements - Certain information regarding Bear Ridge
Resources Ltd. set forth in this document, including management's
assessment of Bear Ridge Resources Ltd.'s future plans and
operations, contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-
looking statements are subject to numerous risks and uncertainties,
certain of which are beyond Bear Ridge Resources Ltd.'s control,
including the impact of general economic conditions, industry
conditions, volatility of commodity prices, current fluctuations,
imprecision of reserve estimates, environmental risks, competition
from other producers, the lack of availability of qualified personnel
or management, stock market volatility and ability to access
sufficient capital from internal and external sources. Bear Ridge
Reosurces Ltd.'s actual results, performance or achievement could
differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits that Bear Ridge Resources Ltd. will derive there from.

Contact Information

  • Bear Ridge Resources Ltd.
    Russell J. Tripp
    Chairman and Chief Executive Officer
    (403) 537-8440
    or
    Bear Ridge Resources Ltd.
    Douglas C. Hibbs
    President
    (403) 537-8440
    or
    Bear Ridge Resources Ltd.
    Brian A. Baker
    Vice President, Finance and Chief Financial Officer
    (403) 537-8440
    (403) 537-8450 (FAX)
    or
    Bear Ridge Resources Ltd.
    2200, 330 - 5th Avenue S.W.
    Calgary, Alberta T2P 0L4