Caribou Resources Corp.
TSX VENTURE : CBU

Caribou Resources Corp.

November 24, 2006 08:00 ET

Caribou Resources Corp. Q3 2006 Financial and Operating Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 24, 2006) - Caribou Resources Corp. ("Caribou") (TSX VENTURE:CBU)



Summary Highlights

Three months ended Nine months ended % change
September 30 September 30 (nine
2006 2005 2006 2005 months)
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Financial
($000's, except
shares and per
share amounts)
Oil and natural
gas revenues 6,512 8,618 20,354 21,894 (7)
Funds flow from
operations (1) 1,245 4,329 6,633 10,382 (36)
Per share - basic (1) 0.03 0.15 0.18 0.36 (50)
Net loss (3,899) (363) (5,921) (2,569) 130
Per share - basic (0.10) (0.01) (0.16) (0.09) 78
Per share - diluted (0.10) (0.01) (0.16) (0.09) 78
Total assets 139,590 110,341 139,590 110,341 27
Bank debt 15,860 5,506 15,860 5,506 188
Short-term bridge
facility 14,500 - 14,500 - n/a
Shareholders'
equity 68,779 68,536 68,779 68,536 -
Common shares
outstanding 38,529,540 34,811,424 38,529,540 34,811,424 11
Weighted average
- basic 38,529,540 29,817,509 36,386,467 28,715,911 27
Weighted average
- diluted 38,529,540 30,122,052 36,386,467 28,799,539 26
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Operating (boe -
6:1 basis)

Sales volumes
Crude oil and
NGL's (bbls/day) 582 700 503 715 (30)
Natural gas
(mcf/day) 5,009 4,672 6,490 4,332 50
Total oil
equivalent
(boe/day) 1,417 1,479 1,584 1,437 10

Product prices ($)
Crude oil and
NGL's per bbl 70.83 70.37 68.00 62.90 8
Natural gas per mcf 5.90 9.47 6.38 8.12 (21)
Operating expense
per boe ($) 26.14 11.42 19.24 13.17 46
Netback per boe ($) 20.10 40.49 26.40 33.35 (21)
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(1) Funds flow from operations and funds flow from operations per share are
non-GAAP terms that represent net loss adjusted for non-cash items. The
Company evaluates its performance based on these measures. These
measures may not be comparable to other companies. The Company
considers funds flow from operations a key measure as it demonstrates
the Company's ability to generate cash flow necessary to fund future
growth through capital investment and to repay debt.


Message to Shareholders

Caribou Resources Corp. ("Caribou") (TSX VENTURE:CBU) presents its quarterly report for the three and nine months ended September 30, 2006:

The past quarter has been a particularly challenging time for the energy industry in light of the extreme volatility in commodity prices and overall uncertainty created in the energy markets. This has followed on the heels of a period of unprecedented increases in the overall costs of doing business and a significant market correction over this past year.

On June 22, 2006, Caribou announced that it had retained Scotia Waterous to act as its financial advisor to consider strategic alternatives of the Company. A formal data room process began in August which unfortunately coincided with a significant drop in gas prices and resulted in a number of companies announcing budget cuts and reduction of their acquisition activity. This was followed in September and October by a drop in oil prices to a 17 month low and the announcement of changes to the taxation of energy trusts on October 31, 2006. Given the extreme change in overall market and commodity conditions from the time of our announcement of the strategic alternatives process, the Board of Directors determined that it would terminate the process and that management should focus on steps necessary to ensure the viability and growth of the Company into the future.

During Q3, management's efforts focused on strengthening the Company's financial position. In November 2006, the Company signed a letter of intent with a US financial institution for a $40 million loan facility with a five year term to be secured by first ranking security interests in respect of the assets of the Company. Closing and advancement of funds under the facility are pending execution of the definitive documentation and other standard conditions precedent. Closing of the arrangement is expected to occur by December 15, 2006, and is dependent on the Company reaching agreement with the financial institution on a satisfactory strategy for the Company to access capital markets in the near term. We believe that this debt and equity infusion is necessary to provide financial strength and flexibility, given the Company's debt levels, market and commodity price volatility, and to better position the Company to move forward.

Drawings on the facility will be used to repay in full all indebtedness to the Company's existing bank as well as the outstanding bridge facility, to reduce accounts payable and for general corporate purposes. The new arrangement increases the Company's available credit line, and is more cost effective than our current combined banking facilities (senior lender and bridge facility).

In addition, Caribou has also implemented a risk management program consisting of both fixed price contracts as well as costless collars which will help to mitigate commodity price volatility, provide both downside protection and the opportunity to share in the upside if energy prices move upwards. These contracts are as follows:



Product Volume Period Contract Price
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Nov 1/06 -
Natural gas 1,200 GJ/day Oct 31/07 Fixed $7.14/GJ AECO

Jan 1/07 -
Natural gas 1,280 GJ/day Dec 31/07 Fixed $7.70/GJ AECO

Jan 1/08 - $7.00/GJ to
Natural gas 1,758 GJ/day Dec 31/08 Costless collar $9.60/GJ AECO

Jan 1/09 - $7.00/GJ to
Natural gas 1,177 GJ/day Dec 31/09 Costless collar $8.35/GJ AECO

Jan 1/07 -
Oil 123 bbls/day Dec 31/07 Fixed US$64.43/bbl WTI

Jan 1/07 -
Oil 123 bbls/day Dec 31/07 Fixed US$64.80/bbl WTI

Jan 1/08 - US$65.00/bbl to
Oil 81 bbls/day Dec 31/08 Costless collar US$70.50/bbl WTI

Jan 1/09 - US$65.00/bbl to
Oil 58 bbls/day Dec 31/09 Costless collar US$70.35/bbl WTI
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Also, effective September 1, 2006, the non-core Westlock property (approximately 30 boe/d) was sold for $1.12 million, representing a significant premium to the McDaniel Associates December 31, 2005 10% NPV.

Caribou's Q3 production of 1,417 boe/d was approximately 318 boe/d less than Q2 due to a combination of production declines and downtime losses primarily due to a TCPL pipeline rupture and two unscheduled maintenence periods by TCPL. Please see the operations discussion in the MD&A for more details.

Caribou Resources Corp. continues to be an opportunity rich company with a balanced portfolio of oil and gas production and prospect inventory over a highly focused, high working interest land base of over 200,000 net acres of undeveloped land. Caribou operates over 80% of its production and has over $90 million of tax pools.



On behalf of the Board of Directors,

Christina M. Fehr, BA, MSc Ross G. Robertson, P.Eng
Vice Chairman and CEO President and COO
November 21, 2006


Management's Discussion and Analysis

Management's Discussion & Analysis ("MD&A") is intended to assist in the understanding of the trends and significant changes in the financial condition and results of operations of Caribou. The following information has been prepared by management and should be read in conjunction with the unaudited interim financial statements for the three and nine month periods ended September 30, 2006, as well as the audited financial statements and MD&A for the years ended December 31, 2005 and 2004 together with the notes related thereto. All data is presented in Canadian dollars. The calculation of barrels of oil equivalent ("boe") is based on a conversion ratio of six thousand cubic feet of natural gas to one barrel of oil to estimate relative energy content and does not represent a value equivalency at the wellhead. Boes may be misleading, particularly if used in isolation. Additional information relating to Caribou is available at www.sedar.com.

Non-GAAP measurements

The MD&A contains the term funds flow from operations which should not be considered an alternative to, or more meaningful than, cash flow from operating activities or net earnings as determined in accordance with Canadian Generally Accepted Accounting Principles ("GAAP") as an indicator of Caribou's performance. Caribou's determination of funds flow from operations may not be comparable to that reported by other companies. The reconciliation between net earnings and cash flow from operations, (which is also called "funds flow from operations") can be found in the statements of cash flows. The Company also presents funds flow per share, whereby funds flow from operations is divided by the weighted average number of shares outstanding to determine per share amounts. This measure does not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies.

Forward looking statements

Statements throughout this interim report that are not historical facts may be considered "forward looking statements." These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals or future plans are forward looking statements. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to any number of factors, including such variables as new information regarding recoverable reserves, changes in demand for, and commodity prices of crude oil and natural gas, legislative, environmental and other regulatory or political changes, competition in areas where the Company operates and other factors discussed in this interim report.

The Company

Caribou Resources Corp. ("Caribou" or the "Company") is a full cycle exploration and development company primarily focused on exploring for oil and natural gas in Northern and Central Alberta. The following discussion and analysis is dated November 21, 2006, and is management's assessment of Caribou's three and nine months ended September 30, 2006 operating and financial results, compared to the corresponding periods for 2005.

Operations

Caribou's Q3 production of 1,417 boe/d was approximately 318 boe/d less than Q2. Approximately 155 boe/d of this production decrease is due to flush production declines following bringing winter program wells on production in May of 2006. Of this 155 boe/d decline, approximately 60 boe/d of production was the result of premature depletion of a Tate 50% WI gas well that did not produce after Q2. Caribou experienced significant production downtime during Q3 principally due to third party issues outside its control. In total, approximately 163 boe/d of production downtime was realized. The most significant contribution to this downtime was an extraordinary TCPL pipeline rupture in Caribou's Northern area and two separate unscheduled seven to ten day TCPL pipeline curtailments related to downstream pipeline and compressor maintenance. One of the wells impacted still has not been brought back on production and has resulted in a loss of approximately 80 boe/d. Efforts to bring the well on may occur during the upcoming winter.

Caribou continues to see strong production performance from the 11-18 Keg River light oil step out well (100% WI) drilled last winter at Steen River. The well was initially brought on production in May at 150 boe/d. Recent optimization efforts have increased production to approximately 180 boe/d. Development plans are underway for the potential drilling of up to four wells on the structure which is defined by 3D seismic. Caribou has recently received EUB approval for the development as a result of a successful special spacing application. Pipeline infrastructure constructed last winter will allow continuing development of the project in addition to the tie-in of an existing completed Slave Point gas well within 400 meters of the line.

During Q3, Caribou was successful in completing the tie-in to its central battery of three Ellerslie Green Sand wells which were recompleted and hydraulic fracture stimulated during Q2. Favorable ongoing performance of the Ellerslie Green Sand wells will provide further performance data for the drilling of up to six offsetting Ellerslie multiple sand locations on the structure which is defined by 3D seismic. The pipeline tie-in required for these three wells provides the required infrastructure to support further future development drilling of the structure. Vertical development drilling of the play will also enable delineation evaluation of the Basal Quartz Sand where Caribou sees potential for a horizontal oil development project similar to that carried out two miles to the south, where the Company has ten horizontal wells producing from an analogous pool.

During Q3, Caribou commenced tie-in efforts on an Ellerslie gas well at Legal in Central Alberta. The well, drilled in Q2, encountered approximately three meters of net pay and tested in excess of 1mmcf/d. Caribou has a 15% WI BPO as well as a 15% GORR BPO and is 65% WI APO. The well has been tied in and will be on production during the third week of November. Caribou's net cost in this well is expected to be approximately $155,000 as a result of a successful farmout effort on the project.

Caribou experienced an increase in operating costs during the quarter. For the nine month period, $0.98/boe of this increase was due to prior period disputed costs related to an acquisition completed in 2004. In addition, increased service industry rates, field equipment costs, and increases in third party transportation and processing were contributing factors. In the absence of the prior period disputed costs, operating costs are $18.26/boe for the nine months ended September 30, 2006. Ongoing initiatives are underway to implement cost savings. The recently announced spending cutbacks of some larger exploration and production companies are anticipated to result in a more reasonable service industry cost structure.



Net loss and funds flow

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
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Net loss (3,899,213) (363,242) (5,921,326) (2,569,394)
Per share - basic (0.10) (0.01) (0.16) (0.09)
Per share - diluted (0.10) (0.01) (0.16) (0.09)
Funds flow from operations 1,244,961 4,329,349 6,632,722 10,381,975
Per share - basic 0.03 0.15 0.18 0.36
Per share - diluted 0.03 0.15 0.18 0.36
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The Company has recorded a loss for the nine months ended September 30, 2006. Higher costs in the field, higher depletion, interest, and G&A costs have all contributed to the loss in 2006.

Higher production levels of natural gas and marginally higher prices for oil and liquids were offset by higher costs in all areas of operation. Considerably lower oil and gas production as a result of the TCPL downtime, normal declines, and significantly lower gas prices have contributed to the reduced cash flows, on a per share basis and in absolute terms.



Oil and natural gas revenues

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
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Oil and liquids 3,794,291 4,478,933 9,882,762 12,285,253
Per barrel 70.83 69.53 68.00 62.90
Natural gas 2,717,788 4,138,782 10,471,208 9,608,892
Per mcf 5.90 9.63 6.38 8.12
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For the nine months ended September 30, 2006, oil and liquids revenue decreased 20%, reflecting a 30% decline in oil and liquids production volume, when compared to the corresponding period in 2005. Total revenue decreased 7% largely due to a 50% increase in natural gas production at a 21% lower price.



Royalties

Three months ended Nine months ended
September 30 September 30
$ (except %) 2006 2005 2006 2005
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Royalties,
net of GCA and ARTC 483,829 1,554,248 1,245,606 3,638,741
Per boe 3.71 11.42 2.97 9.27
% of revenue 7.4% 18.0% 6.1% 16.6%
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For the three and nine months ended September 30, 2006, royalties decreased due mainly to the application of increased gas cost allowances associated with strategic infrastructure acquisitions completed in the fall of 2005. Caribou estimates the total value of these recoveries over 10 years to be approximately $12 million at a 10% NPV discount rate.



Operating and transportation

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
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Operating 3,214,365 1,350,283 7,465,536 4,665,057
Per boe 24.66 9.92 17.83 11.89
Transportation 193,943 203,871 591,569 502,198
Per boe 1.48 1.50 1.41 1.28
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Total 3,408,308 1,554,154 8,057,105 5,167,255
Per boe 26.14 11.42 19.24 13.17
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Total operating costs for the nine months ended September 30, 2006 increased 56% on a dollar basis, largely due to increased service rates and field equipment costs. Transportation costs increased 18%, reflecting increased rates as well as increased production. In addition, operating costs were negatively impacted in Q3 by approximately $409,000 of prior period disputed costs related to an acquisition completed in 2004, equivalent to $3.14/boe on a three month basis.

As a result of the strategic infrastructure acquisitions made in the fall of 2005, Caribou is entitled to unusually high credits for processing and transporting the Crown's share of gas production. The substance of these credits are similar to processing fee recoveries from joint venture partners. However, they are recorded as a reduction of Crown royalties instead of a reduction of operating costs. If credits were recorded against operating costs, the total nine month operating and transportation costs would be $12.03/boe. Caribou estimates the total value of these recoveries over 10 years to be approximately $12 million at a 10% NPV discount rate.



Netbacks

Three months ended Nine months ended
September 30 September 30
$/boe 2006 2005 2006 2005
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Revenue 49.95 63.34 48.61 55.79
Royalty, net of ARTC 3.71 11.42 2.97 9.27
Operating and transportation 26.14 11.42 19.24 13.17
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Operating netback 20.10 40.49 26.40 33.35
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General and administrative 4.60 4.55 5.81 4.83
Interest 5.94 3.96 4.74 1.95
Taxes - 0.16 - 0.12
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Cash netback 9.56 31.82 15.85 26.45
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Operating netbacks decreased due to lower revenue per boe caused by a shift in product mix, lower gas prices, increased operating costs, and were somewhat offset by lower royalties.

Cash netbacks were further impacted by higher interest costs associated with increased bank indebtedness, and an increased short-term bridge facility.



General and administrative ("G&A")

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
---------------------------------------------------------------------------
General and administrative 600,331 619,436 2,432,994 1,893,811
Per boe 4.60 4.55 5.81 4.83
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For the three months ended September 30, 2006, G&A remained relatively consistent compared to the same period in the prior year. On a nine month basis, G&A increased 28% largely due to bonuses of $484,000 paid to staff in Q2. During the quarter, Caribou capitalized approximately $257,000 (2005 - $265,000) of G&A expenses directly related to exploration and development activities.



Stock-based compensation

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
---------------------------------------------------------------------------
Stock-based compensation 27,258 302,007 443,318 580,541
Per boe 0.21 2.22 1.06 1.48
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For the three and nine month periods ended September 30, 2006, stock-based compensation decreased, reflecting the expiration of options related to staff turnover.



Interest and other financing charges

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
---------------------------------------------------------------------------
Interest and other financing
charges 774,650 538,254 1,985,543 764,744
Per boe 5.94 3.96 4.74 2.29
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The increased loan carrying costs reflect higher levels of principal and subordinated debt carried by the Company, higher interest rates, and one-time financing charges associated with the bridge facility.



Depletion, depreciation and accretion ("DD&A")

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
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Depletion and depreciation 5,306,681 4,423,793 14,807,459 12,987,924
Per boe 40.70 32.52 35.36 38.84
Accretion 101,665 66,718 298,718 194,186
Per boe 0.78 0.49 0.71 0.58
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Year to date, DD&A increased 14% in total, and decreased 9% on a per boe basis. DD&A rates during Q3 were unfavorably impacted by the expenditures on infrastructure, with no immediate increase in reserves. This infrastructure will serve to bring on new production and revenues in the future as the Company continues to develop its land base. Q3 DD&A rate also increased due to expiration of undeveloped lands. Caribou currently has 279,850 total net acres of which 222,545 acres is undeveloped.



Taxes

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
---------------------------------------------------------------------------
Capital taxes - 22,274 - 48,844
Future income tax expense
(recovery) (291,430) (99,927) (2,995,447) (811,282)
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Caribou follows the liability method of accounting for income taxes whereby future income taxes are calculated based on temporary differences arising from the variance between the tax basis of an asset or liability and its property, plant and equipment carrying value.

The Company has estimated that available tax pools to reduce future taxable income are approximately $90.7 million. The Company has a further $5.3 million CEE to incur by December 31, 2007 in order to honor the commitments of the June 2006 flow-through share issue.

Liquidity and capital resources

For the three months ended September 30, 2006, the Company experienced liquidity difficulties resulting in current liabilities of $54.1 million, offset by $8.3 million of current assets. This working capital deficiency primarily results from accounts payable and accrued liabilities incurred during the Company's winter and summer capital expenditure program. In addition, increased operating costs, as explained above, also negatively impacted the Company's liquidity.

The Company has a revolving credit facility in the amount of $18,500,000 with a Canadian chartered bank, bearing interest at prime plus 0.25% per annum. The facilities are secured by a $35,000,000 demand debenture with a first floating charge (with a right to fix) over all the present and future property acquisitions. At September 30, 2006 the amount drawn against the existing senior revolving credit facility was $15.9 million. A short-term development bridge facility was obtained during the fourth quarter of 2005 from an independent Canadian lending company. The effective interest rate is at bank prime plus three percent and the maturity date is December 31, 2006. At September 30, 2006, the outstanding balance of this bridge facility was $14.5 million. The bridge facility is subordinated to the above revolving credit facility.

In November 2006, the Company signed a letter of intent with a US financial institution for a $40 million loan facility with a five year term to be secured by first ranking security interests in respect of the assets of the Company. Closing and advancement of funds under the facility are pending execution of the definitive documentation and other standard conditions precedent. Closing of the arrangement is expected to occur by December 15th, 2006, and is dependent on the Company reaching agreement with the financial institution on a satisfactory strategy for the Company to access capital markets in the near term. We believe that this debt and equity infusion is necessary to provide financial strength and flexibility, given the Company's debt levels, market and commodity price volatility, and to better position the Company to move forward.

Drawings on the facility will be used to repay in full all indebtedness to the Company's existing bank as well as the outstanding bridge facility, to reduce accounts payable and for general corporate purposes. The new arrangement increases the Company's available credit line, and is more cost effective than our current combined banking facilities (senior lender and bridge facility). Proceeds from the equity financing will be primarily used to finance the Company's winter drilling program.



Capital expenditures

Three months ended Nine months ended
September 30 September 30
$ 2006 2005 2006 2005
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Seismic and geological
evaluation - - 779,000 121,862
Land acquisition and
retention 38,088 691,554 4,170,543 1,155,283
Well drilling, completion,
equipping and pipelining 3,459,038 17,368,876 35,781,040 32,655,565
Disposition (1,120,000) (2,750,000) (1,120,000) (2,750,000)
Office equipment - 6,000 18,257 72,687
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Total 2,377,126 15,316,430 39,628,840 31,255,397
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Related party transactions

The following transactions with related parties were done on a fair value basis defined as the amounts that would be agreed upon in an arm's length transaction between knowledgeable, willing parties, who are under no compulsion to act.

During the nine months ended September 30, 2006, the Company's legal counsel invoiced $192,685 (2005 - $319,841) for legal work charged. The Company's Corporate Secretary is a partner in the legal firm. Included in accounts payable at September 30, 2006 is $40,859 (2005 - $112,063) due to the Company's legal counsel.

Off-Balance Sheet obligations

The Company has no off-balance sheet obligations.

Business risks

The oil and natural gas industry inherently has many risks associated with it. The risks can be summarized in terms of economic, financial, cost of capital, environmental and human resource risk. Economic risk is the risk of finding and producing reserves at a cost which produces an economic return. Financial risk consists of marketing production at a reasonable price given market conditions. Cost of capital is the risk associated with Caribou's ability to obtain capital to fund its activities at a reasonable cost. Environmental risk is the risk of carrying out operations with potential for adverse impact upon the environment. Finally, human resource risk is the risk of having access to expertise which will allow Caribou to grow and prosper.

Critical accounting estimates

The preparation of the financial statements under Canadian GAAP requires management personnel to make estimates and assumptions for many financial statement items based on their estimate and judgment. The amounts recorded for depletion, depreciation of property and equipment, stock-based compensation, and the provision for asset retirement obligations are based on estimates. The ceiling test is based on estimates of oil and natural gas reserves, production rates, oil and gas prices, future costs and other relevant assumptions. The calculation of future income tax is based on assumptions, which are subject to uncertainty as to timing and which tax rates temporary differences are expected to reverse. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant.

The Company follows the full cost method of accounting for oil and natural gas properties as prescribed by the Canadian Institute of Chartered Accountants (CICA) in Accounting Guideline 16. Under this method all costs associated with the acquisition of, exploration for and the development of oil and natural gas reserves are capitalized. These capitalized costs are depleted or depreciated on the unit-of-production method based on the estimated proved reserves. A revision to the estimate for proved reserves can have a significant impact on earnings as proved reserves are a key component in the calculation of depreciation, depletion and amortization. Costs related to unproved properties are excluded from capitalized costs being amortized through depletion and depreciation expense. These costs are excluded from the depletion and depreciation calculation until proved reserves are found or until it is determined that the costs are impaired. Including these costs in the calculation could have a significant impact on depletion and depreciation expense for the year. Proceeds on disposal of properties are generally deducted from capitalized costs without recognition of gain or loss except where such disposal constitutes a significant portion of the Company's reserves.

Under the full cost accounting method, a ceiling test is performed at least annually to ensure that the net capitalized costs do not exceed the undiscounted future net revenues from proved plus probable reserves, plus the cost of unproved properties. Any excess capitalized costs will be written off as an expense and charged to earnings; however, future depletion and depreciation expense would be reduced.

The Company retains McDaniel & Associates Consultants Ltd., an independent petroleum engineering firm, to evaluate the Company's proved plus probable oil and gas reserves. The estimation of reserves is subjective. Forecasts are based on engineering data, future prices, expected future rates of production and the timing of capital expenditures, all of which are subject to uncertainties and interpretations. Reserve estimates will be revised upward or downward based on the results of future drilling, testing and production levels.

The Company recognizes a liability for the future retirement obligations associated with its oil and natural gas properties. The retirement obligation is initially measured at fair value, which is the discounted future value of the liability. This fair value is capitalized as part of the cost of the related asset and amortized to expense over its useful life. The liability accretes until the date of expected settlement of the retirement obligation. Factors that can affect this estimate include the number of wells drilled, well depths and area-specific environmental legislation.

Changes in accounting policies and practices

Details outlining Caribou's accounting policies are contained in the notes to the financial statements. There were no changes in the Company's accounting policies and practices in 2006, compared to the previous year.

Outstanding share data

The Company's authorized share capital consists of an unlimited number of common shares without nominal or par value and an unlimited number of preferred shares issued in series. There were 38,529,540 common shares outstanding at September 30, 2006, and the same amount of common shares outstanding as at the date of this report. As at September 30, 2006 there were 109,973 share purchase warrants outstanding.

The Company's stock option plan provides for granting of options to directors, employees and consultants. At September 30, 2006 a total of 3,177,500 options were outstanding.



Summary of quarterly operating and financial results
2006
-------------------------
Third Second First
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Operating
Natural gas (mcf/day) 5,009 7,323 5,704
Price ($/mcf) 5.90 5.93 7.40
Oil and NGL's (bbls/day) 582 514 499
Price ($/bbl) 70.83 69.15 63.45
Barrels of oil equivalent (per day) 1,417 1,735 1,450

Financial ($000's, except per share amounts)
---------------------------------------------------------------------------
Oil and natural gas revenues 6,512 7,190 6,652
Royalties, net of ARTC (484) (322) (440)
Interest and other revenue - - -
---------------------------------------------------------------------------
Net revenues 6,028 6,868 6,212
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Operating expenses 3,214 2,660 1,467
Transportation, gathering and processing (1) 194 251 272
General and administrative 600 1,185 648
Stock-based compensation 27 186 230
Depletion and depreciation 5,307 5,394 4,106
Interest 775 771 440
Accretion 102 100 97
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Total expenses 10,219 10,546 7,260
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Income (loss) before income taxes (4,191) (3,678) (1,048)
Capital taxes - 19 (18)
Future income taxes 291 2,413 291
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Net income (loss) for the period (3,900) (1,246) (775)
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Income (loss) per share (basic and diluted) (0.10) (0.03) (0.02)
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Funds flow ($000's) 1,245 2,020 3,367
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Funds flow per share (basic) 0.03 0.06 0.10
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Netbacks ($/boe)
---------------------------------------------------------------------------
Oil and natural gas revenues 49.95 45.54 50.97
Royalties, net of ARTC 3.71 2.04 8.29
Operating expenses 26.14 18.44 8.40
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Operating netback 20.10 25.06 34.28
General and administrative 4.60 7.50 4.97
Interest 5.94 4.88 3.37
Capital taxes - (0.12) 0.14
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Cash netback 9.56 12.80 25.80
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Total assets ($000's) 139,590 144,433 138,511
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2005 2004
-----------------------------------------
Fourth Third Second First Fourth
---------------------------------------------------------------------------
Operating
Natural gas (mcf/day) 6,391 4,672 4,814 3,569 4,032
Price ($/mcf) 11.36 9.47 7.18 7.23 6.39
Oil and NGL's (bbls/day) 638 700 671 778 449
Price ($/bbl) 63.44 70.37 61.51 57.90 55.03
Barrels of oil equivalent (per
day) 1,703 1,479 1,473 1,373 1,120

Financial ($000's, except per
share amounts)
---------------------------------------------------------------------------
Oil and natural gas revenues 10,590 8,618 6,900 6,376 4,680
Royalties, net of ARTC (1,831) (1,554) (941) (1,144) (885)
Interest and other revenue - - - - -
---------------------------------------------------------------------------
Net revenues 8,759 7,064 5,959 5,232 3,795
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Operating expenses 1,809 1,201 1,386 1,316 1,476
Transportation, gathering and
processing (1) 424 353 459 452 -
General and administrative 469 619 593 681 888
Stock-based compensation 298 302 141 137 369
Depletion and depreciation 4,417 4,424 4,511 4,053 2,773
Interest 367 538 123 104 527
Accretion 93 67 65 62 23
---------------------------------------------------------------------------
Total expenses 7,877 7,504 7,278 6,805 6,056
---------------------------------------------------------------------------
Income (loss) before income taxes 882 (440) (1,319) (1,573) (2,261)
Capital taxes (49) (22) (14) (12) (35)
Future income taxes 443 100 362 349 587
---------------------------------------------------------------------------
Net income (loss) for the period 1,276 (362) (971) (1,236) (1,709)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Income (loss) per share (basic
and diluted) 0.04 (0.01) (0.03) (0.04) (0.07)
---------------------------------------------------------------------------
Funds flow ($000's) 5,642 4,329 3,386 2,667 939
---------------------------------------------------------------------------
Funds flow per share (basic) 0.16 0.15 0.12 0.09 0.04
---------------------------------------------------------------------------
Netbacks ($/boe)
---------------------------------------------------------------------------
Oil and natural gas revenues 67.59 63.34 51.48 51.62 45.02
Royalties, net of ARTC 15.04 11.42 7.02 9.26 8.58
Operating expenses 10.89 11.42 13.77 14.31 13.64
---------------------------------------------------------------------------
Operating netback 41.66 40.49 30.69 28.05 22.80
General and administrative 2.99 4.55 4.42 5.52 8.62
Interest 2.34 3.96 0.92 0.83 5.11
Capital taxes 0.31 0.16 0.10 0.11 0.34
---------------------------------------------------------------------------
Cash netback 36.02 31.82 25.25 21.59 8.73
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total assets ($000's) 119,683 110,341 94,180 98,003 85,879
---------------------------------------------------------------------------
---------------------------------------------------------------------------

(1) Prior to Q1 2005, transportation, gathering and processing charges were
included in operating expenses.



Caribou Resources Corp.

Balance Sheets

As at September 30, 2006 and December 31, 2005

(unaudited)

2006 2005
---------------------------------------------------------------------------
ASSETS
Current assets
Accounts receivable $ 7,498,972 $ 12,499,328
Prepaid expenses 797,650 810,548
---------------------------------------------------------------------------
8,296,622 13,309,876
Property, plant and equipment(note 2) 128,686,066 103,765,670
Goodwill 2,607,407 2,607,407
---------------------------------------------------------------------------
$ 139,590,095 $ 119,682,953
---------------------------------------------------------------------------
---------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness(note 3) $ 15,859,943 $ 10,545,177
Short-term bridge facility(note 3) 14,500,000 13,500,000
Accounts payable and accrued liabilities 23,771,330 11,422,696
---------------------------------------------------------------------------
54,131,273 35,467,873

Asset retirement obligations(note 4) 4,857,319 4,459,585
Future income taxes 11,822,205 9,581,922
---------------------------------------------------------------------------
70,810,797 49,509,380
---------------------------------------------------------------------------


SHAREHOLDERS' EQUITY
Share capital(note 5) 75,298,317 71,214,584
Warrants(note 5c) 208,767 1,111,527
Contributed surplus(note 6) 2,764,406 1,418,328
Deficit (9,492,192) (3,570,866)
---------------------------------------------------------------------------
68,779,298 70,173,573
---------------------------------------------------------------------------
$ 139,590,095 $ 119,682,953
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Commitments (note 9). Going concern(note 1).

See accompanying notes to Financial Statements.

Approved by the Board of Directors:

(signed) (signed)
Christina M. Fehr Stephen J.A. Fagan
Director Director


Caribou Resources Corp.

Statements of Operations and Deficit

For the periods ended September 30, 2006 and 2005

(unaudited)

Three months ended Nine months ended
September 30 September 30
2006 2005 2006 2005
---------------------------------------------------------------------------
REVENUES
Oil and natural gas $ 6,512,079 $ 8,617,715 $ 20,353,970 $ 21,894,145
Interest and other
revenue - - - 1,225
Less: Royalties, net
of ARTC (483,829) (1,554,248) (1,245,606) (3,638,741)
---------------------------------------------------------------------------
6,028,250 7,063,467 19,108,364 18,256,629
---------------------------------------------------------------------------
EXPENSES
Operating 3,214,365 1,350,283 7,465,536 4,665,057
Transportation 193,943 203,871 591,569 502,198
General and
administrative 600,331 619,436 2,432,994 1,893,811
Stock-based
compensation(note 5f) 27,258 302,007 443,318 580,541
Interest and other
financing charges 774,650 538,254 1,985,543 764,744
Accretion(note 4) 101,665 66,718 298,718 194,186
Depletion and
depreciation 5,306,681 4,423,793 14,807,459 12,987,924
---------------------------------------------------------------------------
10,218,893 7,504,362 28,025,137 21,588,461
---------------------------------------------------------------------------
(4,190,643) (440,895) (8,916,773) (3,331,832)
---------------------------------------------------------------------------
Capital taxes - (22,274) - (48,844)
Future income tax
recovery 291,430 99,927 2,995,447 811,282
---------------------------------------------------------------------------
291,430 77,653 2,995,447 762,438
---------------------------------------------------------------------------

NET LOSS FOR THE
PERIOD (3,899,213) (363,242) (5,921,326) (2,569,394)
Deficit, beginning
of period (5,592,979) (4,484,076) (3,570,866) (2,277,924)
---------------------------------------------------------------------------
Deficit, end of
period $ (9,492,192) $ (4,847,318) $(9,492,192) $(4,847,318)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Net loss per
share(note 5e)
Basic $ (0.10) $ (0.01) $ (0.16) $ (0.09)
Diluted $ (0.10) $ (0.01) $ (0.16) $ (0.09)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted average
common shares
outstanding
Basic 38,529,540 29,817,509 36,386,467 28,715,911
Diluted 38,529,540 30,122,052 36,386,467 28,799,539
Outstanding shares 38,529,540 34,811,424 38,529,540 34,811,424
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Going Concern (note 1).

See accompanying notes to Financial Statements.


Caribou Resources Corp.

Statements of Cash Flows

For the periods ended September 30, 2006 and 2005

(unaudited)

Three months ended Nine months ended
September 30 September 30
2006 2005 2006 2005
---------------------------------------------------------------------------
Cash provided by (used in):

OPERATING
Net loss for
the period $ (3,899,213) $ (363,242) $(5,921,326) $(2,569,394)
Add (deduct) items
not affecting cash:
Depletion and
depreciation 5,306,681 4,423,793 14,807,459 12,987,924
Stock-based
compensation 27,258 302,007 443,318 580,541
Accretion 101,665 66,718 298,718 194,186
Future income taxes (291,430) (99,927) (2,995,447) (811,282)
---------------------------------------------------------------------------
Funds flow from
operations 1,244,961 4,329,349 6,632,722 10,381,975
Change in non-cash
working capital (1,269,635) 4,784,465 17,552,943 8,145,204
---------------------------------------------------------------------------
(24,674) 9,113,814 24,185,665 18,527,179
---------------------------------------------------------------------------

FINANCING
Bank debt 3,117,592 (10,371,248) 5,314,766 (3,699,954)
Proceeds from
bridge financing - 10,000,000 1,500,000 10,000,000
Repayment of bridge
financing (500,000) (10,000,000) (500,000) (10,000,000)
Share issue costs (30,536) 17,131,836 9,319,464 17,250,895
---------------------------------------------------------------------------
2,587,056 6,760,588 15,634,230 13,550,941
---------------------------------------------------------------------------

INVESTING
Property, plant and
equipment (2,377,126) (15,316,430) (39,628,840) (31,255,397)
Change in non-cash
working capital (185,256) (557,972) (191,055) (822,723)
---------------------------------------------------------------------------
(2,562,382) (15,874,402) (39,819,895) (32,078,120)
---------------------------------------------------------------------------
Decrease in cash - - - -
Cash, beginning of
period - - - -
---------------------------------------------------------------------------
Cash, end of period $ - $ - $ - $ -
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Supplementary disclosure
Cash interest paid $ 560,900 $ 538,254 $1,903,777 $ 764,744
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Cash is defined as cash and cash equivalents.

See accompanying notes to Financial Statements.


Caribou Resources Corp.

Notes to the Financial Statements

For the nine months ended September 30, 2006 and 2005


(unaudited)

Note 1: Going concern

These interim financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles consistent with those used in preparation of the audited financial statements at December 31, 2005. Accordingly, these interim financial statements should be read in conjunction with the notes contained in the Company's audited December 31, 2005 financial statements.

As at September 30, 2006, the Company had a working capital deficiency, excluding bank indebtedness and short-term bridge facility (see Note 3), of $15,474,707 and a deficit of $9,492,192. The working capital deficiency primarily results from accounts payable and accrued liabilities incurred during the Company's winter and summer capital expenditure program. Management is proposing to repay this working capital deficiency through a combination of cash flow, proceeds from potential asset sales and future bank financing and equity issues. The actual outcome of future events may differ from these plans. In particular, there can be no assurance that the Company will be able to successfully access debt or equity financing objectives. These financial statements have been prepared on the basis that the Company will continue to realize its assets and discharge its obligations in the ordinary course of business and do not reflect adjustments that would be necessary if the going concern assumption was not valid. Such adjustments, if necessary, may be material.



Note 2: Property, plant and equipment


September 30, December 31,
$ 2006 2005
---------------------------------------------------------------------------
Oil and natural gas properties,
plant and equipment 165,550,618 125,841,020
Office equipment and computers 134,651 116,394
---------------------------------------------------------------------------
165,685,269 125,957,414
Less accumulated depletion
and depreciation (36,999,203) (22,191,744)
---------------------------------------------------------------------------
128,686,066 103,765,670
---------------------------------------------------------------------------


Unproved oil and gas properties amounting to $18.0 million (2005 - $21.4 million) were excluded from the depletion and depreciation calculation. Future development costs on proved undeveloped reserves of $3.9 million (2005 - $2.8 million) are included in the depletion calculation. No ceiling test write-down was required as at September 30, 2006.

During the quarter, Caribou capitalized approximately $257,000 (2005 - $265,000) of general and administrative expenses directly related to exploration and development activities.



Note 3: Loans

September 30, December 31,
2006 2005
---------------------------------------------------------------------------
Bank indebtedness 15,859,943 10,545,177
Short-term bridge facility 14,500,000 13,500,000
---------------------------------------------------------------------------


The Company has a revolving credit facility in the amount of $18,500,000 with a Canadian chartered bank, bearing interest at prime plus 0.25% per annum. The facilities are secured by a $35,000,000 demand debenture with a first floating charge (with a right to fix) over all the present and future property acquisitions.

The short-term development bridge facility was obtained during the fourth quarter of 2005 from an independent Canadian lending company. The effective interest rate is at bank prime plus three percent and the maturity date is December 31, 2006. The bridge facility is subordinated to the above revolving credit facility. As at September 30, 2006, the Company was in breach of the bridge facility covenants. The lender has issued a waiver on this breach.



Note 4: Asset retirement obligations

September 30, December 31,
$ 2006 2005
---------------------------------------------------------------------------
Balance - beginning of period 4,459,585 2,918,925
Liabilities incurred 99,016 1,253,572
Accretion 298,718 287,088
---------------------------------------------------------------------------
Balance - end of period 4,857,319 4,459,585
---------------------------------------------------------------------------
---------------------------------------------------------------------------


The Company's asset retirement obligations result from net ownerships in petroleum and natural gas assets including well sites, gathering systems and processing facilities. The Company estimates the total undiscounted amount of cash flows required to settle its asset retirement obligations is $7.3 million, (2005 - $6.6 million) which will be incurred between 2006 and 2019. The majority of the costs will be incurred between 2010 and 2016. An inflation rate of 2% was used to inflate the costs, and a credit-adjusted risk-free rate of 8.5% was used to calculate the fair value of the asset retirement obligations.

Note 5: Share capital

(a) Authorized

Unlimited number of common shares without nominal or par value and an unlimited number of preferred shares issued in series.

(b) Common shares issued and outstanding



Number of shares Amount
---------------------------------------------------------------------------
Balance, at December 31, 2005 34,849,924 $ 71,214,584
Issued pursuant to private placement
of flow-through shares 3,679,616 10,000,002
Tax effect on renunciation of
flow-through shares (September 2005 issue) - (3,575,152)
Tax effect on renunciation of
flow-through shares (June 2006 issue) - (1,889,376)
Share issue expenses, net of tax - (451,741)
---------------------------------------------------------------------------
Balance, at September 30, 2006 38,529,540 $ 75,298,317
---------------------------------------------------------------------------
---------------------------------------------------------------------------


(c) Warrants

On February 28, 2003, the Company issued 152,786 share purchase warrants. Each warrant is exercisable into one common share at an exercise price of $1.75 per share until February 28, 2005, $2.00 per share until February 28, 2006, $2.50 per share until February 28, 2007, and $3.00 per share until February 28, 2008. As at December 31, 2005, 38,813 of these warrants had been exercised at $1.75 per share, and another 4,000 warrants at $2.00 per share, leaving a balance of 109,973 warrants outstanding.

On September 8, 2005, the Company issued 3,009,200 units in connection with a private placement. Each unit was issued for $2.45 and consisted of one common share and one-half of one common share purchase warrant with each full warrant entitling the holder thereof to acquire an additional common share at an exercise price of $3.00 at any time prior to September 8, 2006.



Balance, December Exercise price
31, 2005 ($) Fair value ($) Expired
---------------------------------------------------------------------------
109,973 2.50 208,767 -
1,504,600 3.00 - 1,504,600
---------------------------------------------------------------------------
1,614,573 208,767 -
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Balance,
September 30,
Issued Exercised Expiry Date 2006
---------------------------------------------------------------------------
- - February 28, 2008 109,973
- - September 8, 2006 -
---------------------------------------------------------------------------
- - 109,973
---------------------------------------------------------------------------
---------------------------------------------------------------------------


The fair value of the above warrants was calculated using the Black-Scholes option pricing model with the following assumptions: dividend yield - nil; expected volatility - 77%; risk-free interest rate - 3.5%; weighted average expected life - 1.26 years; and weighted average estimated value of underlying shares - $2.47. Each warrant entitles the holder to one common share of the Company.

(d) Flow-through shares

Under the terms of the Company's flow-through share agreements, the Company has committed to incur approximately $6.25 million (2005 - $11.2 million) of qualifying oil and natural gas Canadian Exploration Expenses ("CEE") between June 8, 2006 and December 31, 2007. Caribou has renounced the income tax benefits of these expenditures to the flow-through shareholders.

(e) Per share amounts

The following table summarizes the basis for the determination of basic and diluted per share amounts:



Nine months ended September 30
2006 2005
---------------------------------------------------------------------------
Weighted average common shares
outstanding - basic 36,386,467 28,715,911
Weighted average common shares
outstanding - diluted 36,386,467 28,799,539
---------------------------------------------------------------------------

Net loss per share:
Net loss for the period($) (5,921,326) (2,569,394)
Basic($/share) (0.16) (0.09)
Diluted($/share) (0.16) (0.09)


(f) Stock-based compensation

The Company has a stock option plan that is described below. Compensation costs attributable to share options granted to employees or directors are measured at fair value at the grant date and expensed over the expected vesting time frame with a corresponding increase to contributed surplus. The fair value of each option granted is estimated on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:



Nine months ended September 30
2006 2005
---------------------------------------------------------------------------
Fair value of options granted($/option) 1.02 1.03
Expected life of options(years) 3.5 3.5
Expected volatility(%) 85 74
Risk free rate of return(%) 3.5 3.5
Expected dividend yield(%) Nil Nil
---------------------------------------------------------------------------


(g) Stock options

The Company's stock option plan provides for granting of options to directors, employees and consultants to a maximum of ten percent of the total issued and outstanding common shares of the Company. These options have a term of five years to expiry and vest 30% as of the date of grant, 20% on each of the first two anniversary dates and 15% on the third and fourth anniversary dates. The Company has reserved common shares for issuance under the stock option plan in the amount of the stock options outstanding from time to time. The following tables summarize the information about options to purchase common shares as at September 30, 2006 and 2005.



2006 2005
------------------------------------------------
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
---------------------------------------------------------------------------
($/share) ($/share)
Balance, beginning of period 2,937,500 2.17 2,092,791 2.12
Granted 487,500 2.01 1,407,500 2.24
Terminated (247,500) 2.12 (192,201) 2.15
Exercised for cash - - (148,500) 2.06
---------------------------------------------------------------------------
Balance, end of period 3,177,500 2.16 3,159,590 2.17
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Exercisable, end of period 1,317,860 2.16 1,147,190 2.18
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Outstanding options Exercisable options
-------------------------------------------------------------
Weighted
average
Number of remaining Number of Weighted
Exercise options contractual options average
price outstanding life exercisable exercise price
---------------------------------------------------------------------------
($/share) (years) ($/share)
1.80 50,000 3.34 15,000 1.80
1.95 120,000 4.48 36,000 1.95
2.00 30,000 3.60 9,000 2.00
2.02 35,000 4.53 10,500 2.02
2.03 320,000 4.35 96,000 2.03
2.04 5,000 4.84 1,500 2.04
2.05 840,000 3.14 400,000 2.05
2.06 100,000 3.61 30,000 2.06
2.10 120,000 3.56 36,000 2.10
2.12 7,500 4.87 2,250 2.12
2.20 120,000 4.03 36,000 2.20
2.25 541,300 2.72 358,910 2.25
2.31 28,700 2.10 28,700 2.31
2.33 820,000 3.96 246,000 2.33
2.50 40,000 3.46 12,000 2.50
---------------------------------------------------------------------------
2.16 3,177,500 3.54 1,317,860 2.16
---------------------------------------------------------------------------
---------------------------------------------------------------------------



Note 6: Contributed surplus

September 30, December 31,
$ 2006 2005
---------------------------------------------------------------------------

Opening balance 1,418,328 603,997
Expiration of warrants 902,760 -
Stock-based compensation 443,318 878,328
Exercise of stock options - (63,997)
---------------------------------------------------------------------------
2,764,406 1,418,328
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Note 7: Related party transactions

The following transactions with related parties were done on a fair value basis defined as the amounts that would be agreed upon in an arm's length transaction between knowledgeable, willing parties, who are under no compulsion to act.

During the nine months ended September 30, 2006, the Company's legal counsel invoiced $192,685 (2005 - $319,841) for legal work charged. The Company's Corporate Secretary is a partner in the legal firm. Included in accounts payable at September 30, 2006 is $40,859 (2005 - $112,063) due to the Company's legal counsel.

Note 8: Financial instruments

The Company's financial instruments recognized in the balance sheet consist of prepaid expenses, accounts receivable, accounts payable and accrued liabilities, bank indebtedness, and short-term bridge facility.

The estimated fair values of the financial instruments have been determined based on the Company's assessment of available market information and appropriate valuation methodologies; however, these estimates may not be necessarily indicative of the amounts that could be realized or settled in a current market transaction.

The carrying value of the Company's financial instruments approximate their fair market value due to their demand nature or relatively short periods to maturity. A substantial portion of the Company's accounts receivable are with customers and joint venture partners in the oil and natural gas industry and are subject to normal industry credit risks. The Company's bank indebtedness and short-term bridge facility are subject to floating interest rates.

Note 9: Commitments

Under the terms of the Company's flow-through share agreements, the Company has committed to incur approximately $6.25 million (2005 - $10.6 million) of qualifying oil and natural gas Canadian Exploration Expenses ("CEE") between June 8, 2006 and December 31, 2007. Of this amount approximately $5.3 million is still to be incurred.

At September 30, 2006 the Company has 18 months remaining on the lease of the office premises at $11.50 per square foot (plus costs), or approximately $21,000 per month.

Note 10: Subsequent events

In November 2006, the Company entered into the following hedging contracts:



Product Volume Period Contract Price
---------------------------------------------------------------------------
Natural gas 1,200 GJ/day Nov 1/06 - Oct 31/07 Fixed $7.14/GJ AECO
Natural gas 1,280 GJ/day Jan 1/07 - Dec 31/07 Fixed $7.70/GJ AECO
Costless $7.00/GJ to
Natural gas 1,758 GJ/day Jan 1/08 - Dec 31/08 collar $9.60/GJ AECO
Costless $7.00/GJ to
Natural gas 1,177 GJ/day Jan 1/09 - Dec 31/09 collar $8.35/GJ AECO
Oil 123 bbls/day Jan 1/07 - Dec 31/07 Fixed US$64.43/bbl WTI
Oil 123 bbls/day Jan 1/07 - Dec 31/07 Fixed US$64.80/bbl WTI
Costless US$65.00/bbl to
Oil 81 bbls/day Jan 1/08 - Dec 31/08 collar US$70.50/bbl WTI
Costless US$65.00/bbl to
Oil 58 bbls/day Jan 1/09 - Dec 31/09 collar US$70.35/bbl WTI
---------------------------------------------------------------------------
---------------------------------------------------------------------------


In November 2006, the Company signed a letter of intent with a US financial institution for a $40 million loan facility with a five year term to be secured by first ranking security interests in respect of the assets of the Company. Closing and advancement of funds under the facility are pending execution o the definitive documentation and other standard conditions precedent. Closing of the arrangement is expected to occur by December 15th, 2006, and is dependent on the Company reaching agreement with the financial institution on a satisfactory strategy for the Company to access capital markets in the near term.

Note 11: Comparative information

Certain information provided for the previous period has been restated to conform to the current period presentation.



Caribou Resources Corp.
Corporate Information


Directors Officers
Stephen J.A. Fagan, MBA, Chairman Christina M. Fehr, BA, MSc
Calgary, Alberta Vice Chairman and CEO

Christina M. Fehr, BA, MSc Ross G. Robertson, P.Eng
Calgary, Alberta President and COO

Gordon A. Robertson, P.Geol (2) Giles Twogood, CA (SA)
Calgary, Alberta Vice President and CFO

Ross G. Robertson, P.Eng (1) Douglas Patterson, P.Land
Calgary, Alberta Vice President, Land

Donald J. Rowden, CA (1) (2) Daniel P.E. Fournier, LLB
Bend, Oregon Corporate Secretary

Gerald D. Sutton (1) (2) Corporate Office
Oakville, Ontario 1545, 101 - 6th Avenue S.W.
Calgary, Alberta T2P 3P4
(1) Member of the Audit Committee Phone: (403) 269-5218
(2) Member of the Compensation Committee Fax: (403) 269-5221
Website: www.cariboures.com
Registrar and transfer agent Contact: Christina M. Fehr
Valiant Trust Company Email: cmfehr@cariboures.com
Calgary, Alberta
Stock Exchange Listing
Auditors TSX Venture Exchange
PricewaterhouseCoopers LLP Symbol: CBU
Calgary, Alberta
Legal Counsel
Evaluation Engineers Blake, Cassels & Graydon LLP
McDaniel & Associates Consultants Ltd.

Banker
Canadian Imperial Bank of Commerce


Certain information regarding Caribou in this news release including management's assessment of future plans and operations, production estimates, drilling inventory and wells to be drilled, timing of drilling and tie in of wells, productive capacity of new wells, capital expenditures and the timing thereof, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence Caribou's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward looking statements and, accordingly no assurance can be given that any events anticipated by the forward looking statements will transpire or occur, or, if any of them do so, what benefits Caribou will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhausted. Furthermore, the forward looking statements contained in this news release are made as at the date of this news release and Caribou does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Natural gas reserves and volumes are converted to barrels of oil equivalent (boe) on the basis of six thousand cubic feet (mcf) per one barrel (bbl) of oil. Boes may be misleading, particularly if used in isolation. The 6:1 boe conversion ratio is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Caribou Resources Corp.
    Christina M. Fehr
    Vice Chairman and CEO
    (403)539-4322
    or
    Caribou Resources Corp.
    Ross G. Robertson, P.Eng
    President and COO
    (403)539-4316
    Website: www.cariboures.com