Endev Energy Inc.
TSX : ENE

Endev Energy Inc.

November 11, 2005 18:32 ET

Endev Energy Inc. Announces 2005 Third Quarter Results and Expanded Drilling Program

CALGARY, ALBERTA--(CCNMatthews - Nov. 11, 2005) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

(All amounts are in Canadian dollars unless stated otherwise)

Endev Energy Inc. (TSX:ENE) is pleased to announce financial and operating results for the three and nine months ending September 30, 2005 and an expanded drilling program.

Based on strong drilling performance to date and our extensive drilling opportunity inventory the Board of Directors has authorized a fifty well expansion of the 2005 drilling program. The Company recorded a significant increase in its key performance factors in the third quarter of 2005 relative to the same period in 2004. Highlights of this performance include a:

- 97 percent increase in funds from operations to $11.2 million;

- 57 percent increase in gross revenue to $17.6 million;

- 12 percent increase in production to 3,376 boe per day;

- positive net income of $3.7 million or $0.04 per share;

- 98% success rate on the drilling program of 50 gross (46.2 net) wells; the nine month total wells as of September 30 is 96 gross ( 84.6 net).



HIGHLIGHTS

Three months ended Nine months ended
Sept. 30 Sept. 30 % Sept. 30 Sept. 30 %
2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Financial
($000's, except
per share amounts)
Gross revenue 17,644 11,224 57 50,015 34,734 44
Funds from
operations 11,231 5,697 97 30,613 17,480 75
Basic per share 0.13 0.07 86 0.35 0.20 75
Diluted per share 0.12 0.06 100 0.34 0.20 70
Net income 3,693 (140) - 6,913 621 1,013
Basic per share 0.04 - - 0.08 0.01 700
Diluted per share 0.04 - - 0.08 0.01 700
Capital
expenditures, net 10,398 15,285 (32) 22,432 26,335 (15)
Net debt 23,832 35,218 (32) 23,832 35,218 (32)

Operations
Daily production
Crude oil (bbl) 519 759 (32) 576 851 (32)
Natural gas
liquids (bbl) 31 90 (66) 103 106 (3)
Natural gas (mcf) 16,957 13,013 30 18,852 13,210 43
Total production
(boe @ 6:1) 3,376 3,018 12 3,820 3,158 21
Average sales price
Crude oil ($/bbl) 65.50 46.73 40 57.26 42.76 34
Natural gas
liquids ($/bbl) 81.09 42.39 91 42.38 39.16 8
Natural gas ($/mcf) 9.15 6.35 44 7.73 6.52 19
Netback per
boe (6:1) ($)
Petroleum and natural
gas revenues 56.82 40.42 41 47.96 40.14 19
Royalties,
net of ARTC 8.77 7.93 11 7.97 7.58 5
Operating expenses 5.95 8.88 (33) 6.12 7.57 (19)
Transportation 1.03 0.99 4 0.94 0.92 2
Operating netback 41.07 22.63 82 32.93 24.07 37


Daily production for the third quarter of 2005 before adjustments averaged 3,475 boe per day compared to 3,018 boe per day in the same period in 2004. Natural gas accounted for 82 percent of production on a boe basis. During the third quarter of 2005 accounting adjustments were made to reflect the payout of a group of oil wells in the Kerrobert area of Saskatchewan. Current production from these wells is modest at 30 boe per day, however, the payout adjustment resulted in a reduction in production for the quarter of approximately 80 boe per day. Production during the third quarter was also impacted by a delayed start up of Endev's compression facility at Majorville. In anticipation of adding additional compression in Majorville and to reduce operating costs we redirected some production away from third party facilities. As a result, production declined temporarily until the compression facility went on stream in late October. The combined effect of the payout, facility delay and the delayed onset of new production resulted in production of 3,376 boe per day for the third quarter of 2005 and represents the approximate 10 percent production decline expected before adjustments and 12 percent after adjustments compared to the second quarter of 2005.


Funds from operations were $11.2 million or $0.13 per share in the third quarter of 2005 compared to $10.4 million or $0.12 per share in the second quarter of 2005 and $5.7 million or $0.07 per share in the third quarter of 2004. The increase in funds from operations from the second quarter of 2005 was primarily attributable to an increase in natural gas prices offset by $0.7 million spent on site reclamation and a reduction in revenues due to lower production.

Operational Activities

The abnormally wet conditions experienced during the second quarter continued through the third quarter and into the fourth quarter. Consequently our completion and tie-ins have fallen behind schedule.

During the third quarter of 2005, Endev was able to drill and case 47 gross (44.2 net) wells in the Majorville area. This brought the total to 90 gross (79.6 net) wells drilled in the Majorville shallow gas program during 2005. An additional 13 gross (11.5 net) wells have been drilled and cased as of November 11, 2005. Endev also initiated drilling a well into the Mannville formation during the third quarter. While this well was abandoned, subsequent seismic work has further defined this prospect and provided valuable information for further drilling activity.

While all wells drilled in this program are in various stages of completion and pipeline installation is underway, no significant new production was added by the end of the third quarter. We expect to see significant tie in activity during the fourth quarter of 2005 and the first quarter of 2006.

Endev's new compression facility in the Majorville area went on stream on October 25, 2005 with incremental gas production of approximately 2.3 mmcf per day gross (1.7 mmcf per day net to Endev). Production from seven wells at Majorville has been redirected to company-owned facilities, which is expected to result in a reduction of operating costs. Endev also initiated the tie-in of a standing Mannville gas well, which went on production in early October.

During the third quarter of 2005, Endev also expanded its shallow gas drilling program in the Drumheller area where the Company drilled and cased 2 gross (1.5 net) wells for a total of 4 gross (3.5 net) Endev wells by the end of the third quarter. Both wells have been successfully completed in the Second White Specks formation. An additional 2 gross (1.6 net) wells were drilled in October 2005.

Endev initiated a minor property acquisition of a partner's interest in the Majorville area during the third quarter. This acquisition is complementary to our existing assets and will add approximately 85 boe per day of production from wells which Endev operates. Endev anticipates this transaction will close by the end of November 2005.

In Saskatchewan, Endev participated in drilling its first horizontal oil well. The well was successful and has recently been placed on production. Endev has a 50 percent working interest in this well.

Outlook

We set out this year with a number of goals in mind: to grow our base gas production with our shallow gas drilling at normal well spacing; to proceed with a pilot infill program at eight wells per section; to develop an opportunity inventory of deeper Mannville drilling prospects and drill three to five Mannville wells; and lastly, to evaluate the CBM potential in the Belly River coals at Majorville and the Horseshoe Canyon coals at Drumheller.

We are very pleased with success in drilling the shallow gas well program with 102 gross (90.1 net) wells drilled to date. Endev will be focusing in the fourth quarter on completing and tying in wells from this highly successful drilling program. An early freeze up will expedite operations and accelerate well tie-ins. We expect this work will begin to impact production by late in the fourth quarter and production will continue to grow in the first quarter of 2006. While average volumes for the 2005 year will be below our expected 4,200 boe per day, the positive production impact has been shifted towards the first quarter of 2006. As we monitor the pace of the well tie-ins we will be better able to determine the amount and impact of the shift in production additions on the average production for 2005.

The pilot infill drilling program is currently underway with the first four wells being directionally drilled from one surface location.

We are also pleased with our progress in growing our opportunity inventory of deeper (Mannville) drilling prospects at Majorville and Drumheller. Drilling to date together with 3D seismic has confirmed the prospectivity of the Mannville play in both areas. While our first well was abandoned, the second well was successful and encountered multiple stacked pay zones. We are presently completing the well and anticipate production in the fourth quarter of 2005 .We are encouraged by our work and will drill several more Mannville wells before year end.

We have made progress in CBM evaluation and recompleted a well in the Belly River coals at Majorville in the third quarter. The CBM well flowed gas sufficiently to encourage us to continue with the program at Majorville and follow up on the potential of the Horseshoe Canyon coals at Drumheller. Endev's preferred approach to the CBM evaluation in both areas is to joint venture with experienced industry partners and those discussions are ongoing. Endev management sees the CBM properties having the potential to add significant value at relatively low cost, given the existing, Company-owned infrastructure in the area.

We expect that significant increases in production will be realized late in the fourth quarter of 2005 and the first quarter of 2006. Endev participated in drilling 113 gross (98.2 net) wells to date in 2005. Our activity during 2005 has resulted in a 94 percent success rate. We have several hundred shallow gas drilling locations and a substantial number of new venture drilling locations in various stages of readiness in our opportunity inventory. Given this success and the opportunities available, Endev has increased its capital commitments for 2005 by close to 30 per cent. The Company has committed to drill another 50 wells and allocated $10 million to this program. This expanded program is expected to result in significant production additions by the second quarter of 2006.


I would like to thank all of our employees for their continuing contributions, the Board of Directors for their stewardship and our shareholders for their investment in us.



On behalf of the Board of Directors,

Cameron MacGillivray
President and CEO
November 11, 2005


MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's Discussion and Analysis (MD&A), as provided by the management of Endev Energy Inc. (Endev or the Company), of Endev's operating and financial results for the three and nine month periods ended September 30, 2005 compared with the corresponding periods in the prior year is based on currently available information. This commentary should be read in conjunction with the 2004 annual report, the 2004 MD&A contained therein and the audited consolidated financial statements for the years ended December 31, 2004 and 2003 and the unaudited interim consolidated financial statements for the three and nine months ended September 30, 2005. This commentary is based on information available to November 11, 2005.

The Company's audited consolidated financial statements, current annual information form and other documents are filed on SEDAR at www.sedar.com.

PRESENTATION OF FUNDS FROM OPERATIONS

The financial data presented has been prepared in accordance with Canadian generally accepted accounting principles (GAAP) except for the term funds from operations. Funds from operations has been presented for information purposes only and should not be considered an alternative to, or more meaningful than cash flow from operating activities as determined in accordance with GAAP. The determination of Endev's funds from operations may not be comparable to the same reported by other companies. The reconciliation of net income and funds from operations can be found in the statements of cash flows in the financial statements. The Company calculates funds from operations as funds from operations prior to the change in non-cash working capital related to operating activities. Funds from operations per share was calculated using the same weighted average shares outstanding used in calculating net income per share.

BASIS OF BARREL OF OIL EQUIVALENT

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

Significant accounting policies used by Endev Energy Inc. are disclosed in note 2 to the December 31, 2004 consolidated financial statements. Certain accounting policies require that management make appropriate decisions with respect to the formulation of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in these judgments and estimates may have a material impact on the Company's financial results and condition. The following discusses such accounting policies and is included in Management's Discussion and Analysis to aid the reader in assessing the critical accounting policies and practices of the Company and the likelihood of materially different results being reported. Endev's management reviews its estimates regularly. The emergence of new information and changed circumstances may result in actual results or changes to estimated amounts, that differ materially from current estimates.

The following assessment of significant accounting policies is not meant to be exhaustive. The Company might realize different results from the application of new accounting standards promulgated, from time to time, by various rule-making bodies.

Oil and Gas Reserves

Under NI 51-101, "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable (it is likely that the actual remaining quantities recovered will exceed the estimated Proved reserves). In accordance with this definition, the level of certainty targeted by the reporting company should result in at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated reserves. In the case of "Probable" reserves, which are less certain to be recovered than Proved reserves, NI 51-101 states that it must be equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable reserves. With respect to the consideration of certainty, in order to report reserves as Proved plus Probable, the reporting company must believe that there is at least a 50 percent probability that quantities actually recovered will equal or exceed the sum of the estimated Proved plus Probable reserves. Proved plus Probable reserves as defined in NI 51-101 are viewed by many industry participants as being comparable to the "Established" reserves definition that was used historically. Under the previous rules, the Established reserves category was generally calculated on the basis that Proved plus half of Probable reserves (as those terms were defined in NP 2B) represented the best estimate at the time.

Oil and gas reserves estimates are made using all available geological and reservoir data as well as historical production data. Estimates are reviewed and revised as appropriate. Revisions occur as a result of changes in prices, costs, fiscal regimes, reservoir performance or a change in the Company's plans. The reserve estimates are also used in determining the Company's borrowing base for its credit facilities and may impact the same upon revisions or changes to the reserves estimates. The effect of changes in Proved oil and gas reserves on the financial results and position of the Company is described under the heading "Full Cost Accounting for Oil and Gas Activities".

FULL COST ACCOUNTING FOR OIL AND GAS ACTIVITIES

Depletion Expense

The Company uses the full cost method of accounting for exploration and development activities. In accordance with this method of accounting, all costs associated with exploration and development are capitalized whether successful or not. The aggregate of net capitalized costs and estimated future development costs less estimated salvage values is amortized using the unit-of-production method based on estimated proved oil and gas reserves.

An increase in estimated proved oil and gas reserves would result in a corresponding reduction in depletion expense. A decrease in estimated future development costs would result in a corresponding reduction in depletion expense.

Withheld Costs

Certain costs related to unproved properties may be excluded from costs subject to depletion until proved reserves have been determined or their value is impaired. These properties are reviewed quarterly and any impairment is transferred to the costs being depleted or, if the properties are located in a cost centre where there is no reserve base, the impairment is charged directly to income.

Full Cost Accounting Ceiling Test

The Company is required to review the carrying value of all property, plant and equipment, including the carrying value of oil and gas assets, for potential impairment. Impairment is indicated if the carrying value of the long-lived asset or oil and gas cost centre is not recoverable by the future undiscounted cash flows. If impairment is indicated, the amount by which the carrying value exceeds the estimated fair value of the long-lived asset is charged to earnings.

The ceiling test is based on estimates of reserves, production rate, petroleum and natural gas prices, future costs and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the impact on the financial statements could be material.

Asset Retirement Obligations

The Company, under the current policy, is required to provide for future removal and site restoration costs. The Company must estimate these costs in accordance with existing laws, contracts or other policies. These estimated costs are charged to income and the appropriate liability account over the expected service life of the asset. When future removal and site restoration costs cannot be reasonably determined, a contingent liability may exist. Contingent liabilities are charged to earnings when management is able to determine the amount and the likelihood of the future obligation.

Income Tax Accounting

The determination of the Company's income and other tax liabilities requires interpretation of complex laws and regulations often involving multiple jurisdictions. All tax filings are subject to audit and potential reassessment after the lapse of considerable time. Accordingly, the actual income tax liability may differ significantly from that estimated and recorded by management.

Goodwill

The process of accounting for the purchase of a company results in recognizing the fair value of the acquired company's assets on the balance sheet of the acquiring company. Any excess of the purchase price over fair value is recorded as goodwill. Since goodwill results from the culmination of a process that is inherently imprecise the determination of goodwill is also imprecise. In accordance with the issuance of CICA section 3062, "Goodwill and Other Intangible Assets" goodwill is not amortized but assessed periodically for impairment. The process of assessing goodwill for impairment necessarily requires Endev to determine the fair value of its assets and liabilities. Such a process involves considerable judgment.

Legal, Environmental Remediation and Other Contingent Matters

The Company is required to both determine whether a loss is probable based on judgment and interpretation of laws and regulations and determine that the loss can reasonably be estimated. When the loss is determined it is charged to earnings. The Company's management must continually monitor known and potential contingent matters and make appropriate provisions by charges to earnings when warranted by circumstance.

RESULTS OF OPERATIONS

Production

Endev achieved the following daily production rates:



Three months ended Nine months ended
September 30 September 30
% %
Daily production 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Crude oil (bbl/d) 519 759 (32) 576 851 (32)
Natural gas liquids
(bbl/d) 31 90 (66) 103 106 (3)
Natural gas (mcf/d) 16,957 13,013 30 18,852 13,210 43
------------------------------------------------------------------------
Total production
(boe/d) 3,376 3,018 12 3,820 3,158 21
------------------------------------------------------------------------
------------------------------------------------------------------------


Production increased 12 percent to 3,376 boe/d for the three months ended September 30, 2005 compared to 3,018 boe/d for the same period in 2004. Natural gas accounted for 82 percent of the Company's production in the third quarter of 2005 compared to 72 percent in 2004. Crude oil and natural gas liquids (NGLs) production for the third quarter decreased 35 percent to 550 bbl/d, compared to 849 bbl/d for the same period in 2004. The decrease was due to expected production declines, the payout of a group of oil wells in Kerrobert Saskatchewan and an Elmworth property that is no longer having liquids extracted from the gas stream. At Elmworth we receive a higher price for the liquids rich gas but no longer have the liquids volumes to report. Natural gas production increased 30 percent to 16,957 mcf/d compared to 13,013 mcf/d for the same period in 2004. The decline in natural gas production from the second quarter is marginally higher than anticipated due to redirecting some gas to our facilities from third parties to reduce operating costs and in anticipation of additional Endev owned and operated compression facilities that came on in October after being delayed by weather.

Production increased 21 percent to 3,820 boe/d for the nine months ended September 30, 2005 compared to 3,158 boe/d for the same period in 2004. Natural gas accounted for 82 percent of the Company's production in the nine month period compared to 70 percent in 2004. Crude oil and NGL production for the nine months ended September 30, 2005 decreased 29 percent to 679 bbl/d, compared to 957 bbl/d for the same period in 2004. The decrease was due to expected production declines and the changes at Kerrobert and Elmworth referred to above. Natural gas production increased 43 percent to 18,852 mcf/d compared to 13,210 mcf/d for the same period in 2004. The increase in natural gas production was the result of a very successful drilling program in the Majorville area in the latter part of 2004. No significant production has been tied in from the 2005 drilling program as wet weather has delayed these tie-ins.

Commodity Markets

Natural Gas

Canadian spot gas prices at AECO for the third quarter rose by $1.94/mcf or nearly 27 percent over the prior quarter to average $9.30/mcf. AECO prices were up $3.11/mcf (50 percent) year-over-year while NYMEX prices increased by $2.41 US/mcf over the same period (41 percent). This was an extremely bullish quarter for gas prices both around the US and in Canada.

Crude Oil

International crude prices established new record levels in the quarter based on strong demand for refined products in the US and international markets. The US market was significantly impacted by Hurricanes Katrina and Rita which reduced both regional supply and demand. West Texas Intermediate (WTI) reached record levels in the third quarter averaging $63.19 US/bbl, up $10.02 US/bbl over the prior quarter, and $19.31 US/bbl (44 percent) over the third quarter of 2004. WTI prices rose steadily until Hurricane Katrina, reaching nearly $70 US/bbl in late August. September WTI prices were off from the peak but still averaged slightly in excess of August average prices. The Canadian par price for light sweet crude rose 49% year-over-year (exceeding the increase in WTI itself) and overcoming the drag from the appreciation in the Canadian dollar.

Average Prices Received

Endev realized the following commodity prices:



Three months ended Nine months ended
September 30 September 30
Average sales % %
prices realized 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Crude oil ($/bbl) 65.50 46.73 40 57.26 42.76 34
Natural gas liquids
($/bbl) 81.09 42.39 91 42.38 39.16 8
Natural gas ($/mcf) 9.15 6.35 44 7.73 6.52 19
Weighted Average
($/boe) (6:1) 56.82 40.42 41 47.96 40.14 19

Operating Netbacks

Endev realized the following operating netbacks from oil and gas
operations:

Three months ended Nine months ended
September 30 September 30
Netback per % %
boe (6:1) ($) 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Petroleum and natural
gas revenues 56.82 40.42 41 47.96 40.14 19
Royalties,
net of ARTC 8.77 7.93 11 7.97 7.58 5
Operating expenses 5.95 8.88 (33) 6.12 7.57 (19)
Transportation 1.03 0.99 4 0.94 0.92 2
------------------------------------------------------------------------
Operating netback 41.07 22.63 82 32.93 24.07 37
------------------------------------------------------------------------
------------------------------------------------------------------------

Production Revenue

Endev realized the following gross revenues:

Three months ended Nine months ended
September 30 September 30
% %
($000s) 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Crude oil 3,125 3,264 (4) 8,999 9,971 (10)
Natural gas liquids 230 352 (35) 1,188 1,134 5
Natural gas 14,269 7,597 88 39,796 23,613 69
Sulphur 20 10 100 32 17 92
------------------------------------------------------------------------
Total 17,644 11,224 57 50,015 34,734 44
------------------------------------------------------------------------
------------------------------------------------------------------------


For the third quarter, gross revenues increased 57 percent to $17.6 million from $11.2 million for the same period in 2004 due to significant increases in commodity prices received and the increase in natural gas production volume. The average price received for natural gas increased 44 percent to $9.15 per mcf in the third quarter of 2005 compared to $6.35 per mcf in 2004. Natural gas production increased 30 percent in the third quarter of 2005 compared to the same period in 2004.

Crude oil and NGL production for the third quarter decreased 35 percent compared to the same period in 2004. The average price received for crude oil increased 40 percent to $65.50 per bbl in the third quarter of 2005 compared to $46.73 in 2004.

For the first nine months, gross revenues increased 44 percent to $50.0 million from $34.7 million for the same period in 2004 due to the increase in commodity prices received and the increase in natural gas production volume. Natural gas production increased 43 percent to 18,852 mcf/d in the first nine months of 2005 compared to 13,210 mcf/d for the same period in 2004. The average price received for natural gas increased 19 percent to $7.73 per mcf in the first nine months of 2005 compared to $6.52 per mcf in 2004.

Crude oil and NGL production for the first nine months decreased 29 percent compared to the same period in 2004. The average price received for crude oil increased 34 percent to $57.26 per bbl in the first nine months of 2005 compared to $42.76 in 2004.



Royalties
Three months ended Nine months ended
September 30 September 30
% %
2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Royalties ($000s) 2,723 2,201 24 8,310 6,558 27
Average royalty
rate (%) 15 20 (25) 17 19 (12)
$/boe 8.77 7.93 11 7.97 7.58 5
------------------------------------------------------------------------
------------------------------------------------------------------------


Royalties, net of the Alberta Royalty Tax Credit (ARTC), were $2.7 million in the third quarter of 2005 and $2.2 million in the third quarter of 2004, and averaged $8.77 per boe or 15 percent of revenue compared to $7.93 per boe or 20 percent of revenue for the same period in 2004. The Company benefited from a recovery of Crown royalties as a result of higher Gas Cost Allowance for prior periods and from the recovery of royalties on the payout of wells from prior periods.

Royalties, net of the Alberta Royalty Tax Credit (ARTC), were $8.3 million in the first nine months of 2005 and $6.6 million in 2004, and averaged $7.97 per boe or 17 percent of revenue compared to $7.58 per boe or 19 percent of revenue for the same period in 2004.



Expenses

Three months ended Nine months ended
September 30 September 30
% %
($000s) 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Operating 1,847 2,465 (25) 6,380 6,551 (3)
Transportation 319 275 16 982 795 24
General and
administrative 578 967 (40) 1,978 2,732 (28)
Interest 257 195 31 922 701 31


Three months ended Nine months ended
September 30 September 30
Expenses % %
per boe $ 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Operating 5.95 8.88 (33) 6.12 7.57 (19)
Transportation 1.03 0.99 4 0.94 0.92 2
General and
administrative 1.86 3.48 (47) 1.90 3.16 (40)
Interest 0.82 0.70 17 0.88 0.81 9


Operating

During the third quarter of 2005, operating expenses decreased 25 percent to $1.8 million compared to $2.5 million in the same period for 2004. On a per unit basis, operating costs decreased to $5.95 per producing boe during the quarter compared to $8.88 per producing boe in the same period for 2004. As a result of increased gas production and by redirecting gas from third-party facilities to Company owned and operated facilities the Company is processing higher volumes of gas resulting in lower per unit costs. The Company also benefited from the recovery of operating costs on the payout of oil wells with high operating costs per unit from prior periods.

During the first nine months of 2005, operating expenses decreased 3 percent to $6.4 million compared to $6.6 million in the same period for 2004. On a per unit basis, operating costs decreased 19 percent to $6.12 per producing boe during the first nine months of 2005 compared to $7.57 per producing boe in the same period for 2004. The Company is processing higher volumes of gas through Company owned and operated facilities resulting in lower per unit costs.

Transportation

Transportation costs averaged $1.03 per boe in the third quarter of 2005 compared to $0.99 per boe in the third quarter of 2004.

Transportation costs averaged $0.94 per boe for the first nine months of 2005 compared to $0.92 per boe in 2004.

General and Administrative

General and administrative costs decreased to $0.6 million in the third quarter of 2005 compared to $1.0 million for the same period in 2004. On a barrel of oil equivalent basis, general and administrative costs decreased 47 percent to $1.86 per boe from $3.48 per boe. The higher costs in 2004 were a direct result of severance obligations and executive search firm fees. The Company capitalizes the salaries and associated direct costs of professional staff directly associated with the Company's exploration and development activities. The Company capitalized $0.2 million of general and administrative costs in the third quarter of 2005 and $0.2 million in the third quarter of 2004.

General and administrative costs decreased to $2.0 million in the first nine months of 2005 compared to $2.7 million for the same period in 2004. On a barrel of oil equivalent basis general and administrative costs decreased 40 percent to $1.90 per boe from $3.16 per boe. The Company capitalized $0.6 million of general and administrative costs in the first nine months of 2005 and $0.6 million in 2004.

Interest and Financing Charges

Interest and financing charges for the third quarter of 2005 were $0.3 million or $0.82 per producing boe compared to $0.2 million or $0.70 per producing boe for the comparable period in 2004. The increase in interest and financing charges is a direct result of higher debt levels.

Interest and financing charges for the first nine months of 2005 were $0.9 million or $0.88 per producing boe compared to $0.7 million or $0.81 per producing boe for the comparable period in 2004. The increase in interest and financing charges is the result of higher average debt.

Stock-Based Compensation

Stock-based compensation costs were $0.3 million in the third quarter of 2005 compared to $0.1 million for the same period of 2004, reflecting the options issued in the latter part of 2004 and in 2005.

Stock-based compensation costs were $1.0 million for the first nine months of 2005 compared to $0.2 million in 2004.

Income and Capital Taxes

Current taxes consists of Federal Large Corporations Tax (LCT), which is calculated based on the debt and equity balances of each legal entity comprising Endev Energy Inc. as the consolidated entity, and the Saskatchewan Capital Tax and Resource Surcharge, which is based on Saskatchewan oil and gas revenues and Manitoba Capital Tax. The 2003 Federal budget proposed that the LCT rate be reduced over a period of five years so that by 2008, the tax will be eliminated. The Company has no current income tax provision and does not anticipate a current income tax provision in the remainder of 2005.

Current taxes were $0.1 million for the third quarter of 2005 compared to a recovery of $0.1 million in 2004. For the first nine months of 2005 current taxes are $0.1 million compared to $0.3 million in 2004.

Future income tax liabilities arise due to the difference between the tax basis of assets and their respective accounting carrying cost. For the three months ended September 30, the provision for future taxes was $1.7 million in 2005 and $0.1 million in 2004. On a year-to-date basis, provision for future income taxes was $2.8 million compared to a reduction of $1.2 million for 2004.

Depletion and Depreciation

Depletion is calculated using the unit-of-production method based on total estimated proved reserves. Depletion and depreciation expense for the third quarter was $6.0 million or $19.29 per boe, compared to $5.1 million or $18.26 per boe for the same period in 2004. The increase in depletion during the third quarter of 2005 compared to 2004 was due to higher production volume.

Depletion and depreciation expense for the first nine months of 2005 was $20.2 million or $19.32 per boe compared to $17.1 million or $19.72 per boe in 2004.

Asset Retirement Obligation Accretion

The provision for accretion of asset retirement costs for the third quarter was $0.2 million or $0.51 per boe, compared to $0.1 million or $0.51 per boe for the same period in 2004.

For the nine months ended September 30, 2005, accretion of asset retirement obligation was $0.5 million or $0.44 per boe compared to $0.4 million or $0.48 per boe in 2004.



Net Income and Funds from Operations

Three months ended Nine months ended
September 30 September 30
($thousands, except % %
per share amounts) 2005 2004 change 2005 2004 change
------------------------------------------------------------------------
Net income (loss) 3,693 (140) - 6,913 621 1,013
Basic per share 0.04 - - 0.08 0.01 700
Diluted per share 0.04 - - 0.08 0.01 700

Funds from operations 11,231 5,697 97 30,613 17,480 75
Basic per share 0.13 0.07 86 0.35 0.20 75
Diluted per share 0.12 0.06 100 0.34 0.20 70


The Company realized net income of $3.7 million for the third quarter, with earnings of $0.04 per share on a basic and diluted basis compared to a loss of $0.1 million for the same period in 2004, with no earnings per share on a basic and diluted basis. The increase in net income was due to the increase in commodity prices, natural gas production volumes and revenues and a reduction in operating and general administrative costs. Funds from operations in the third quarter, before adjusting for the change in non-cash working capital, increased 97 percent to $11.2 million in 2005 compared to $5.7 million for the same period in 2004. On a per share basis funds from operations increased 86 percent to $0.13 per basic share compared to $0.07 per basic share for the same period in 2004. The increase in funds from operations is a result of the increases in net income partially offset by a cash outflow related to actual abandonment costs incurred. The abandonment charges were $0.6 million in the third quarter and $0.7 million for the nine months ending September 30, 2005. This represents a reduction in funds from operations of $0.01 per share on a basic and diluted basis for the three and nine months ending September 30, 2005.



SUMMARY OF QUARTERLY FINANCIAL INFORMATION

($000s, except per share Sept. 30 June 30 March 31 Dec. 31
amounts) 2005 2005 2005 2004
------------------------------------------------------------------------

Total daily production
(boe/d) 3,376 3,850 4,245 4,518
Gross revenue 17,644 15,724 16,647 17,616
Funds from operations 11,231 10,426 8,956 10,210
Basic per share 0.13 0.12 0.10 0.12
Diluted per share 0.12 0.12 0.10 0.12
Net income (loss) 3,693 2,497 723 305
Basic per share 0.04 0.03 0.01 -
Diluted per share 0.04 0.03 0.01 -
Capital expenditures, net 10,398 8,420 3,614 7,677
Net debt 23,831 24,665 26,780 32,234


($000s, except per share Sept. 30 June 30 March 31 Dec. 31
amounts) 2004 2004 2004 2003
------------------------------------------------------------------------

Total daily production
(boe/d) 3,018 3,029 3,428 2,830
Gross revenue 11,224 11,794 11,715 8,871
Funds from operations 5,697 5,520 6,263 4,047
Basic per share 0.07 0.06 0.07 0.05
Diluted per share 0.06 0.06 0.07 0.05
Net income (loss) (140) 488 273 (231)
Basic per share - 0.01 - -
Diluted per share - 0.01 - -
Capital expenditures, net 15,285 7,962 3,088 14,717
Net debt 35,218 25,649 23,495 26,680


CAPITAL EXPENDITURES

The following table outlines Endev's capital expenditures:

Three months ended Nine months ended
September 30 September 30
($000s) 2005 2004 2005 2004
------------------------------------------------------------------------
Acquisitions - - 1,419 -
Dispositions - - - -
------------------------------------------------------------------------
- - 1,419 -
------------------------------------------------------------------------
Land and seismic 379 269 1,243 724
Drilling and completions 9,194 9,357 17,172 18,261
Tie-ins and facilities 786 5,648 2,495 7,336
Other 39 11 103 14
------------------------------------------------------------------------
Net property 10,398 15,285 21,013 26,335
------------------------------------------------------------------------
Total net capital expenditures 10,398 15,285 22,432 26,335
------------------------------------------------------------------------
------------------------------------------------------------------------


During the three months ended September 30, 2005, the Company incurred capital expenditures of $10.4 million. Endev spent $0.4 million for land and seismic primarily in the Majorville area. During the period, the Company spent $9.2 million on drilling and completions while drilling 50 gross (46.2 net) wells. The Company also spent $0.8 million for tie-ins and facilities.



THIRD QUARTER 2005 DRILLING RESULTS

Gross Net
Gas Oil Dry Total Gas Oil Dry Total
------------------------------------------------------------------------
Drumheller 2 - - 2 1.5 - - 1.5
Majorville 47 - 1 48 44.2 - 0.5 44.7
Other - - - - - - - -
------------------------------------------------------------------------
Total 49 - 1 50 45.7 - 0.5 46.2
------------------------------------------------------------------------


YEAR-TO-DATE 2005 DRILLING RESULTS

Gross Net
Gas Oil Dry Total Gas Oil Dry Total
------------------------------------------------------------------------
Drumheller 3 - 1 4 2.5 - 1.0 3.5
Majorville 87 - 3 90 77.1 - 2.5 79.6
Other - - 2 2 - - 1.5 1.5
------------------------------------------------------------------------
Total 90 - 6 96 79.6 - 5.0 84.6
------------------------------------------------------------------------


UNDEVELOPED LAND SUMMARY

As at September 30, 2005 (acres) Gross Net
------------------------------------------------------------------------
Alberta 125,163 75,872
Saskatchewan 824 281
British Columbia 316 43
------------------------------------------------------------------------
Total undeveloped 126,303 76,196
------------------------------------------------------------------------
------------------------------------------------------------------------


LIQUIDITY AND CAPITAL RESOURCES

Endev has a revolving credit facility with the National Bank of Canada for $38 million and an acquisition/development facility of $10 million. At September 30, 2005, the Company had approximately $21.1 million outstanding on its revolving credit facility and a working capital deficiency of $2.7 million for total net debt of approximately $23.8 million.

Total net capital expenditures of $10.4 million for the three months ended September 30, 2005 and $22.4 million for the nine months ended September 30, 2005 were funded from operations. It is anticipated that future capital expenditures and operations will be funded with funds from operations and additional debt as required.

SHARE INFORMATION

The Company had 88,059,223 shares and 4,826,500 options to purchase shares outstanding as at September 30, 2005.

The Company issued a total of 256,669 shares pursuant to the exercise of stock options during the nine months ended September 30, 2005.



Three months ended Nine months ended
September 30 September 30
(000s) 2005 2004 2005 2004
------------------------------------------------------------------------

Shares outstanding
- Basic 88,059 87,000 88,059 87,000
- Diluted 92,886 91,226 92,886 91,226
Weighted average shares
outstanding
- Basic 88,059 86,749 87,963 86,407
- Diluted 89,564 86,749 89,435 88,215



At November 11, 2005, the Company had 88,059,223 shares and 4,976,500 options to purchase shares outstanding.

BUSINESS RISKS

The oil and gas exploration and development sector has inherent risks that begin with the exploration process, which is capital intensive and may or may not encounter economic reserves of crude oil or natural gas, in addition to unforeseen production declines and as a consequence reduced reserves. Increasingly, readily available technology helps to mitigate the risk. Endev employs the most appropriate technology in all areas of its business. The intrinsic business and financial risks within the industry include volatility of commodity prices, fluctuation in supplier costs, inflation, changes in exchange rates, the cost of capital and other macro economic factors. Endev focuses on managing costs within its control and pursuing geographic areas and geologic targets that result in manageable capital risk. By focusing on core areas, Endev reduces risk by utilizing its experience in the area and reducing the administrative and logistical costs of its field activity. In order to minimize the risks to the community and to its field staff and suppliers, Endev demands the highest standards of safety on its leases.

CONTRACTUAL OBLIGATIONS

The Company entered into a lease for office premises commencing January 1, 2004 and terminating on March 29, 2007. The estimated annual obligation, including operating costs at current levels, is $182,000 or $20,100 per month for approximately 13,600 square feet of office space.

PROPOSED TRANSACTION

On September 19, 2005 the Company entered into a purchase agreement with respect to certain producing properties in the Majorville area of Alberta for $2.85 million payable in cash subject to certain adjustments. This acquisition is complementary to our existing assets and will add approximately 85 boe per day of production from wells which Endev operates. The transaction is subject to the vendor obtaining shareholder and regulatory approval and is expected to close in late November 2005.

CHANGES IN ACCOUNTING POLICIES

The Company did not adopt any new accounting policies during the first nine months of 2005.


FORWARD-LOOKING STATEMENTS

Certain information regarding Endev Energy Inc. set forth in this entire document, including management's assessment of the Company'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, some of which are beyond the Company's and management's control including, but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, imperfection of reserve estimates, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility, and timely and cost-effective access to sufficient capital from internal and external sources. Endev'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 to occur or transpire from the forward-looking statements will provide what, if any, benefits to Endev Energy Inc.



ENDEV ENERGY INC.
Consolidated Balance Sheets
September 30 December 31
($000s) 2005 2004
------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Accounts receivable $ 11,165 $ 7,385
Prepaid expenses and deposits 116 226
------------------------------------------------------------------------
11,281 7,611
Property, plant and equipment (notes 2 and 3) 128,023 125,482
Goodwill 7,800 7,800
------------------------------------------------------------------------
$ 147,104 $ 140,893
------------------------------------------------------------------------
------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness (note 5) $ 21,130 $ 29,419
Accounts payable and accrued liabilities 13,983 10,402
Current taxes payable - 24
------------------------------------------------------------------------
35,113 39,845
Asset retirement obligations (note 4) 7,547 7,517
Future income taxes 19,730 16,923
------------------------------------------------------------------------
62,390 64,285
------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital (note 6) 67,727 67,425
Contributed surplus (note 6) 1,518 627
Retained earnings 15,469 8,556
------------------------------------------------------------------------

84,714 76,608
------------------------------------------------------------------------

$ 147,104 $ 140,893
------------------------------------------------------------------------
------------------------------------------------------------------------
Subsequent event (note 9)
The accompanying notes are integral to these consolidated financial
statements

Signed on behalf of the Board:


John F. Driscoll, Director William D. Robertson, F.C.A., Director


ENDEV ENERGY INC.
Consolidated Statements of Operations and Retained Earnings

Three months ended Nine months ended
($000s except Sept. 30 Sept. 30 Sept. 30 Sept. 30
per share amounts)(Unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------

REVENUES
Petroleum and natural gas $ 17,644 $ 11,224 $ 50,015 $ 34,734
Royalties (net of Alberta
Royalty Tax Credit) (2,723) (2,201) (8,310) (6,558)
------------------------------------------------------------------------
14,921 9,023 41,705 28,176
------------------------------------------------------------------------

EXPENSES
Operating 1,847 2,465 6,380 6,551
Transportation 319 275 982 795
General and administrative 578 967 1,978 2,732
Stock-based compensation 273 81 972 178
Interest 257 195 922 701
Depletion and depreciation 5,990 5,069 20,154 17,062
Accretion of asset
retirement obligations 157 142 462 413
------------------------------------------------------------------------
9,421 9,194 31,850 28,432
------------------------------------------------------------------------
Income (loss) before taxes 5,500 (171) 9,855 (256)
------------------------------------------------------------------------
TAXES
Current 74 (139) 135 337
Future income (reduction) 1,733 108 2,807 (1,214)
------------------------------------------------------------------------
1,807 (31) 2,942 (877)
------------------------------------------------------------------------
NET INCOME (LOSS) 3,693 (140) 6,913 621
Retained earnings ,
beginning of period 11,776 8,391 8,556 7,630
------------------------------------------------------------------------
Retained earnings,
end of period $ 15,469 $ 8,251 $ 15,469 $ 8,251
------------------------------------------------------------------------
------------------------------------------------------------------------


NET INCOME (LOSS)
PER SHARE (note 6)
Basic $ 0.04 $ - $ 0.08 $ 0.01
Diluted $ 0.04 $ - $ 0.08 $ 0.01
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes are integral to these consolidated financial
statements


ENDEV ENERGY INC.
Consolidated Statements Of Cash Flows

Three months ended Nine months ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
($000s)(Unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------

Cash provided by (used in)
OPERATIONS
Net income (loss) $ 3,693 $ (140) $ 6,913 $ 621
Depletion and depreciation 5,990 5,069 20,154 17,062
Accretion of asset
retirement obligations 157 142 462 413
Future income taxes (reduction) 1,733 108 2,807 (1,214)
Actual abandonment costs (615) (13) (695) (30)
Stock-based compensation 273 81 972 178
Shares issued for
severance obligations - 450 - 450
------------------------------------------------------------------------
Funds from operations 11,231 5,697 30,613 17,480
Changes in non-cash working
capital (note 7) 5,143 4,811 1,611 1,589
------------------------------------------------------------------------
16,374 10,508 32,224 19,069
------------------------------------------------------------------------

FINANCING
Issue of common shares,
net of issue costs - 19 221 317
Bank indebtedness (2,142) 7,722 (8,289) 10,248
------------------------------------------------------------------------
(2,142) 7,741 (8,068) 10,565
------------------------------------------------------------------------

INVESTING
Property, plant and
equipment additions (10,398) (15,285) (21,013) (26,335)
Acquisitions - - (1,419) -
Changes in non-cash working
capital (note 7) (3,834) (2,964) (1,724) (5,720)
------------------------------------------------------------------------
(14,232) (18,249) (24,156) (32,055)
------------------------------------------------------------------------
Decrease in cash - - - (2,421)
Cash, beginning of period - - - 2,421
Cash, end of period $ - $ - $ - $ -
------------------------------------------------------------------------
------------------------------------------------------------------------

Interest paid $ 256 $ 195 $ 922 $ 701
------------------------------------------------------------------------
Taxes paid $ 29 $ 71 $ 164 $ 195
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes are integral to these consolidated financial
statements



Notes to consolidated financial statements
September 30, 2005
(Unaudited) (all tabular amounts in $000s, except per share amounts)


1. BASIS OF PRESENTATION

Endev Energy Inc. (the "Company") is a Calgary-based company involved in the exploration, development and production of petroleum and natural gas in Alberta, Saskatchewan and Manitoba. These interim consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. The interim consolidated financial statements have been prepared following the same accounting policies and methods of computation as the financial statements for the year ended December 31, 2004. The financial statements should be read in conjunction with the financial statements and notes thereto in the Company's annual report for the year ended December 31, 2004.

2. ACQUISITIONS

On March 4, 2005, Endev completed a property acquisition in the Majorville area for a total purchase price of $1.4 million, subject to adjustments. The purchase was effective February 1, 2005 and operating results were included in the accounts of the Company from March 4, 2005.



3. PROPERTY, PLANT AND EQUIPMENT

September 30 December 31
2005 2004
------------------------------------------------------------------------
Oil and gas properties $ 191,006 $ 168,414
Other assets 322 219
------------------------------------------------------------------------
191,328 168,633
Accumulated depletion and depreciation (63,305) (43,151)
------------------------------------------------------------------------
Net book value $ 128,023 $ 125,482
------------------------------------------------------------------------
------------------------------------------------------------------------


During the nine months ended September 30, 2005, the Company capitalized $0.6 million (2004 - $0.6 million), of general and administrative expenses related to exploration and development activities. As at September 30, 2005, the depletion calculation excluded unproved properties of $7.6 million (2004 - $11.1 million).

4. ASSET RETIREMENT OBLIGATIONS

The Company's asset retirement obligations result from net ownership interests in petroleum and natural gas assets including well sites, gathering systems and processing facilities. As at September 30, 2005, the Company estimates the total undiscounted amount of cash flows required to settle its asset retirement obligations is approximately $14.8 million which will be incurred from 2005 to 2030. The majority of the costs will be incurred between 2012 and 2030. A credit-adjusted risk-free rate of eight percent was used to calculate the fair value of the asset retirement obligations.



A reconciliation of the asset retirement obligations is provided below:

September 30 December 31
2005 2004
------------------------------------------------------------------------
Balance, beginning of period $ 7,517 $ 6,587
Accretion expense 462 563
Obligations incurred 263 422
Actual abandonment cost (695) (55)
------------------------------------------------------------------------
Balance, end of period $ 7,547 $ 7,517
------------------------------------------------------------------------
------------------------------------------------------------------------


5. BANK INDEBTEDNESS

As at September 30, 2005, the Company has a revolving demand credit facility with a maximum availability of $38.0 million and an acquisition/development facility for $10.0 million. The interest rate at September 30, 2005, was prime (4.50 percent) and subject to quarterly adjustment from time to time based on certain debt to cash flow ratios. The limit of the credit facility is subject to adjustments from time to time to reflect changes in Endev's asset base. There are no principal repayments required on the loan. The credit facility is secured by a $75.0 million fixed and floating charge over all the assets of the Company.

6. SHARE CAPITAL

The authorized share capital of the Company consists of an unlimited number of common shares without nominal or par value.



Common shares Amount
Issued and outstanding
Balance, December 31, 2003 86,481,525 $ 66,617
Options exercised 1,417,501 768
Shares issued in satisfaction
of severance obligations 500,000 450
Contributed surplus associated
with options exercised - 49
Cancelled (596,472) (459)
------------------------------------------------------------------------
Balance, December 31, 2004 87,802,554 $ 67,425
Options exercised 256,669 221
Contributed surplus associated
with options exercised - 81
------------------------------------------------------------------------
Balance, September 30, 2005 88,059,223 $ 67,727
------------------------------------------------------------------------
------------------------------------------------------------------------


The weighted average number of shares outstanding is as follows:

Three months ended Nine months ended
September 30 September 30
2005 2004 2005 2004
------------------------------------------------------------------------
Basic 88,059,223 86,748,803 87,962,904 86,407,046
Diluted 89,564,071 86,748,803 89,434,715 88,214,886
------------------------------------------------------------------------
------------------------------------------------------------------------


The reconciling items between the basic and diluted weighted average common shares are outstanding stock options.

The Company has a stock option plan where the Company may grant options to its directors, officers, employees and consultants, for up to 10 percent of the issued common stock. The following table summarizes information about the stock option transactions for the period.



Nine months ended Year ended
September 30, 2005 December 31, 2004
------------------------------------------------------------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Options Price Options Price
------------------------------------------------------------------------
Stock options outstanding,
beginning of period 3,771,500 $0.89 3,414,000 $0.69
Granted 1,705,000 1.45 2,610,000 1.06
Exercised (256,669) 0.86 (1,417,501) 0.54
Cancelled or expired (393,331) 1.45 (834,999) 1.22
------------------------------------------
Stock options outstanding,
end of period 4,826,500 $1.05 3,771,500 $0.89
------------------------------------------
------------------------------------------

------------------------------------------
Exercisable, end of period 2,733,170 $0.86 2,231,505 $0.75
------------------------------------------
------------------------------------------


The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with weighted average assumptions and resulting values for options granted during the nine months ended September 30, 2005 as shown in the table below.



Assumptions 2005
------------------------------------------------------------------------
Risk free interest rate (%) 4.00
Expected life (years) 5.00
Expected volatility (%) 58
Weighted average fair value of each option granted ($) 0.77
Dividend yield (%) -


Prior to January 1, 2003, the Company did not record compensation expense when stock options were issued to employees, officers or directors. Had the fair-value method been used for stock options issued prior to January 1, 2003 the Company's net income (loss) would approximate the following pro forma amounts:



Three months ended Nine months ended
September 30 September 30
2005 2004 2005 2004
------------------------------------------------------------------------
Net income (loss)
As reported 3,693 (140) 6,913 $ 621
Pro forma $ 3,682 $ (157) $ 6,880 $ 571

There was no impact on basic and diluted net income (loss) per share
figures.

September 30 December 31
2005 2004
------------------------------------------------------------------------
Contributed Surplus
Balance, beginning of period $ 627 $ 139
Stock-based compensation expense 972 537
Options exercised (81) (49)
------------------------------------------------------------------------
Balance, end of period $ 1,518 $ 627
------------------------------------------------------------------------

7. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in non-cash working capital

Three months ended Nine months ended
September 30 September 30
2005 2004 2005 2004
------------------------------------------------------------------------
Accounts receivable $ (819) $ 3,528 $(3,780) $ 1,027
Prepaid expenses and deposits (1) (190) 110 (49)
Accounts payable and accrued
liabilities 2,129 (1,294) 3,581 (5,210)
Current taxes payable - (197) (24) 101
------------------------------------------------------------------------
Change in non-cash working
capital $ 1,309 $ 1,847 $ (113) $(4,131)
------------------------------------------------------------------------
------------------------------------------------------------------------
Relating to:
Operating activities 5,143 4,811 1,611 1,589
Investing activities (3,834) (2,964) (1,724) (5,720)
------------------------------------------------------------------------
------------------------------------------------------------------------


8. COMPARATIVE FINANCIAL STATEMENTS

Certain prior year's comparative figures have been restated to conform to the current year's presentation.

9. SUBSEQUENT EVENT

On September 19, 2005 the Company entered into a purchase agreement with respect to certain producing properties in the Majorville area of Alberta for $2.85 million payable in cash subject to certain adjustments. The transaction is subject to the vendor obtaining shareholder and regulatory approval and is expected to close in late November 2005.

Endev Energy Inc. is a Canadian oil and gas exploration and production company based in Calgary, Alberta. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol ENE.

The Toronto Stock Exchange has neither approved nor disapproved of the contents of this release.

Contact Information

  • Endev Energy Inc.
    Cameron MacGillivray
    President and CEO
    (403) 750-2600 or 1-888-750-2677
    or
    Endev Energy Inc.
    Scott Bonli, C.A.
    Vice President, Finance and CFO
    (403) 750-2600 or 1-888-750-2677
    Email: info@endevenergy.com