Cruiser Oil & Gas Ltd.
TSX VENTURE : COG

Cruiser Oil & Gas Ltd.

May 30, 2006 18:06 ET

Cruiser Announces Results for Three Months Ended March 31, 2006

CALGARY, ALBERTA--(CCNMatthews - May 30, 2006) - Cruiser Oil & Gas Ltd. ("Cruiser" or the "Company") (TSX VENTURE:COG) is pleased to announce its financial and operating results for the three months ended March 31, 2006 and 2005.



Three months ended March 31
2006 2005
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Financial Highlights ($)

Petroleum and natural gas sales 201,005 172,377
Funds(used in) from operations 44,409 67,753
Loss for the period (118,089) (876)
Net capital expenditures 2,205,046 (7,960)
Operational Highlights

Daily production boe/d (6:1) 45 51
Prices - Oil - $/bbl 49.72 42.73
Operating Netback - $/boe 35.41 24.58


OPERATIONS UPDATE:

The Company's working interest current production is estimated to be 58 boe/day with approximately 100 boe/day waiting to be tied in.

One of the three completed wells under the Tango Joint Venture is now tied in and the installation of the compressor has been completed. The other two completed wells will be tied-in this summer.

The Rosetta operated Karr deep exploration well commenced drilling but is suspended pending the resumption of the final drilling in Q4 2006 or Q1 2007.

Cruiser has re-entered, perforated, acidized and swab tested its 15-26 horizontal well at Swan Hills. Currently the Company is in the process of re-activating the associated oil pipeline.

The Company is also preparing drilling locations to earn lands in its W5 focus area at Willesden Green pursuant to a farm-in with a major oil and gas corporation.

Cruiser is evaluating additional prospects and completing plans for the operated component of its 2006 capital program.

BOEs derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf:1 bbl). BOEs 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.



Douglas L. Meiklejohn Kurt D. Miles
President & Chief Executive Officer Executive Vice President


CRUISER OIL & GAS LTD.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This MD&A is dated as of May 30, 2006.

This Management's Discussion and Analysis ("MD&A") of financial results and related data is reported in Canadian dollars and has been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"), and should be read in conjunction with the unaudited interim financial statements for the three months ended March 31, 2006, and the audited consolidated financial statements for the year ended December 31, 2005.

Information contained herein includes estimates and assumptions which management is required to make concerning future events, and may constitute forward-looking statements under applicable securities laws. Forward-looking statements include plans, expectations, estimates, forecasts and other comments that are not statements of fact. Although Cruiser Oil & Gas Ltd. ("Cruiser" or "the Company") views such expectations as reasonable, no assurance can be given that such expectations will be realized. Such forward-looking statements are subject to risks and uncertainties and may be based on assumption that may cause actual results to differ materially from those implied herein, and therefore are expressly qualified in their entirety by this cautionary statement.

This MD&A presents and discusses results on a BOE (barrels of oil or equivalent) basis. This presentation may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf:1 bbl (barrel) 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 this report are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil.

Cruiser Oil & Gas Ltd. changed its name from Hoodoo Hydrocarbons Ltd. in July 2005. Cruiser re-commenced trading on the TSX Venture Exchange on July 28, 2005 under the symbol COG. Cruiser Oil and Gas Ltd. and its subsidiary, Terra Rica Resources Ltd., were amalgamated effective January 1, 2006.

FINANCIAL RESULTS



Three months ended
March 31
--------------------------------------------------------------------
Financial Highlights ($) 2006 2005
--------------------------------------------------------------------
Petroleum and natural gas sales 201,005 172,377
Funds from operations 44,409 67,753
Loss for the period (118,089) (876)
Net capital expenditures (proceeds) 2,205,046 (7,960)
Weighted average shares
outstanding - basic 80,827,362 12,939,862
Common shares outstanding -
end of period 80,964,862 12,939,862
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SUMMARY OF QUARTERLY RESULTS



--------------------------------------------------------------------
2006 2005
--------------------------------------------------------------------
Q1 Q4 Q3 Q2 Q1
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Revenue
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Total $ 201,005 199,621 196,902 151,111 172,377
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Loss before extraordinary items
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Total $ (118,089) (293,680) (269,914) (157,345) (876)
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Per Share $ (0.00) (0.01) (0.00) (0.01) (0.00)
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Net income (loss)
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Total $ (118,089) (293,680) (269,914) (157,345) (876)
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Per Share $ (0.00) (0.01) (0.00) (0.01) (0.00)
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2004
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Q4 Q3 Q2
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Revenue
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Total $ - - -
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Loss before extraordinary items
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Total $ (98,148) (111,899) (35,233)
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Per Share $ (0.02) (0.02) (0.01)
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Net income (loss)
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Total $ 77,159 341,454 (35,233)
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Per Share $ 0.01 0.06 (0.01)
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PETROLEUM AND NATURAL GAS SALES

For the three months ended March 31, 2006, there were oil and gas revenues of $201,005 compared to $172,377 for the same period in 2005. Prices for the Company's production averaged $49.72 per barrel of oil and liquids and $8.32 per mcf of natural gas in 2006, as compared to $42.73 and $5.88 respectively for the same period in 2005.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Petroleum and Natural Gas Sales ($) 201,005 172,377
$/BOE 49.84 37.72
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PRODUCTION

For the three months ended March 31, 2006, production of natural gas averaged 170 mcf/day and oil and NGLs averaged 17 bbls/day for a total of 45 boe/day, as compared 199 mcf/day for gas and 18 bbl/day of oil and NGLs for a total of 51 boe/day for the same period in 2005. The first quarter of 2005 included an adjustment from an operator of one of Terra Rica's properties. This adjustment increased the first quarter production from 40 boe/day to 50 boe/day.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Natural gas (mcf/d) 170 199
Crude oil and NGLs (bbls/d) 17 18
Total (boe/d) 45 51
Percentage natural gas (%) 63 65


ROYALTIES



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Net royalties ($) 24,872 21,130
Net royalties as a % of revenue 12 12
$/BOE 6.17 4.62
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OPERATING EXPENSES

During the three months ended March 31, 2006, the Company incurred operating expenses of $33,299 as compared to the same period in 2005 of $36,146.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Operating expenses ($) 33,299 38,902
$/BOE 8.26 8.51
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GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased to $120,722 for the three months ended March 31, 2006 from $34,887 for the comparative period in 2005. The increase was a result of Cruiser now being fully operational and having settled the majority of the prior debts.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
General and administrative expense ($) 120,722 34,887
$/BOE 29.93 7.63
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INTEREST INCOME AND EXPENSE

Interest expense for the three months ended March 31, 2006 decreased to $15,282 from $25,131 for the comparative period in 2005. The 2006 interest expense is a result of the unspent portion of flow-through expenditures from the 2005 flow-through monies. The interest expense will be required to be paid at the end of February 2007. At the end of 2004, the Company had loan obligations of $1.2 million, all of which were paid out during 2005.

Interest income for the three months ended March 31, 2006 was $31,329 as compared to nil in 2005. Proceeds from private placements during 2005 earned interest on its deposits in 2006.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Interest expense ($) 15,282 25,131
Interest income ($) 31,329 -
Net interest (income) expense ($/BOE) (3.98) 5.50
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DEPLETION AND DEPRECIATION

During the three months ended March 31, 2006, there was an increase of depletion and depreciation to $118,354 as compared to $47,262 during the same period in 2005. The increase in the 2006 period was a result of increased expenditures for which full reserves have not been assigned.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Depletion and depreciation ($) 118,354 47,262
$/BOE 29.34 10.34
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ASSET RETIREMENT OBLIGATIONS

The obligation at the end of March 31, 2006 is estimated to be $177,570 based on the total undiscounted obligation of $459,500 adjusted for a discount rate of 8% and inflation of 2% over an average reserve life of 11.5 years. Accretion of $3,334 for the quarter ended March 31, 2006 and $2,772 for the same period of 2005 was recorded.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Accretion expense ($) 3,334 2,772
$/BOE 0.83 0.61
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FUNDS FROM OPERATIONS

For the first quarter ending March 31, 2006 there were funds from operations of $44,409 as compared to funds from operations of $67,753 during the same period of 2005.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Funds from operations ($) 44,409 67,753
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Funds from operations is a non-GAAP measure that represents funds generated from operating activities before changes in non-cash working capital. This is considered a key measure as it demonstrates the Company's ability to generate the funds necessary to fund future growth through capital investment. Funds from operations may not be comparable to similar measures used by other companies.

NET LOSS

The net loss for the three months ended March 31, 2006 was $118,089 compared to $876 over the same period in 2005. The increase in net loss was due to the increase in depletion, general and administrative expenses and stock-based compensation.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Net loss ($) (118,089) (876)
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CAPITAL EXPENDITURES

During the three months ended March 31, 2006, the Company incurred a total of $2,465,073 on capital expenditures. A total of $2,205,046 was recorded as cash expenditures and $260,027 was transferred from the escrow account to the operator. The Company continued various projects started in 2005, such as the completion of one well, and completion, equipping, and tieing in of another well, under the Master Participation Agreement dated June 3, 2005 between the Company and Tango Energy Inc. (the "Participation Agreement"). The Company has a balance of $1,537 in escrowed funds remaining as at March 31, 2006. The Company also participated in the drilling of two wells and the workover of two wells during this period. During the three months ended March 31, 2005, the Company sold some excess tubing for proceeds of $7,960.



Three months ended March 31
------------------------------
2006 2005
--------------------------------------------------------------------
Capital expenditures, net ($) 2,205,046 (7,960)
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LIQUIDITY AND CAPITAL RESOURCES

The Company commenced the 2006 year with working capital of $4,547,901, which included a convertible debenture for $285,417.

In February 2006, 375,000 stock options were exercised for cash proceeds of $37,500.

The Company continues to be obligated pursuant to the Cavendish debenture and has accrued interest payable in the amount of $6,250. Pursuant to the terms of the Cavendish debenture the Company is required to make semi-annual interest payments.

The working capital position as at March 31, 2006 is $2,417,754.

The Company has no off-balance sheet arrangements.

Financial instruments consist of those shown on the Balance Sheet.

SHARE CAPITAL

Options

At the beginning of 2006 there were 6,645,000 options outstanding. In February 2006, a total of 375,000 options were exercised and 650,000 were cancelled. This reduces the total options outstanding as at March 31, 2006 and May 30, 2006 to 5,620,000 outstanding.

Warrants

There were 400,000 warrants outstanding at the commencement of 2006, and no change to May 30, 2006.

RELATED PARTY TRANSACTIONS

The Company had the following related party transactions:

1. During the three months ended March 31, 2006, the Company was charged $60,000 (2005 - $nil) in management fees by officers and directors of the company.

2. During the three months ended March 31, 2006, the Company was charged $5,900 (2005 - $5,218) for administrative fees by a corporation controlled by an officer of the Company.

All related party transactions are in the normal course of operations and have been measured at the exchange amount that is the amount of consideration established and agreed to by the related parties under terms similar to those negotiated with third parties.

OUTLOOK FOR 2006

The Company's working interest current production is estimated to be 58 boe/day with approximately 100 boe/day waiting to be tied in.

One of the three completed wells under the Tango Joint Venture is now tied in and the installation of the compressor has been completed. The other two completed wells will be tied-in this summer.

The Rosetta operated Karr deep exploration well commenced drilling but is suspended pending the resumption of the final drilling in Q4 2006 or Q1 2007.

Cruiser has re-entered, perforated, acidized and swab tested its 15-26 horizontal well at Swan Hills. Currently the Company is in the process of re-activating the associated oil pipeline.

The Company is also preparing drilling locations to earn lands in its W5 focus area at Willesden Green pursuant to a farm-in with a major oil and gas corporation.

Cruiser is evaluating additional prospects and completing plans for the operated component of its 2006 capital program.

Business Risks and Uncertainties

The Company is exposed to several operational risks inherent in exploring, developing, producing and marketing crude oil and natural gas. These inherent risks include: economic risk of finding and producing reserves at a reasonable cost; financial risk of marketing reserves at an acceptable price given current market conditions; cost of capital risk associated with securing the needed capital to carry out the Company's operations; risk of environment impact and credit risk of non-payment for sales contracts and joint venture partners.

The Company maintains a comprehensive insurance program to reduce risk to an acceptable level and to protect it against significant losses. The Company's risk in regards to financial instruments is detailed in note 16 to the December 31, 2005 audited consolidated financial statements.

ADDITIONAL INFORMATION

Additional information relating to the Company can also be found on SEDAR at www.sedar.com.

Cruiser Oil & Gas Ltd. is a public junior oil and gas company engaged in the exploration, exploitation, acquisition and production of petroleum and natural gas in Western Canada. Cruiser is focused on re-entry and new drilling of multi-zone gas and oil prospects west of the fifth meridian.

Cautionary Statements

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward-looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward-looking statements. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. The Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.


The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.

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