EXALTA ENERGY INC.
TSX : EXA

EXALTA ENERGY INC.

November 14, 2005 09:00 ET

ExAlta Energy Inc. Releases 2005 Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 14, 2005) -

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

ExAlta Energy Inc. (TSX:EXA) ("ExAlta") is pleased to announce its financial and operating results for the nine months ended September 30, 2005. The following Interim Financial Statements and MD&A, and Third Quarter Report to Shareholders have been filed today via SEDAR and are accessible at www.sedar.com and on ExAlta's website at www.exalta.ca.

PRESIDENT'S REPORT

Q3 REPORT TO SHAREHOLDERS

During the third quarter of 2005, average daily production increased by 15 percent over second-quarter volumes, while funds from operations increased by 57 percent as a result of higher volumes and increased oil and natural gas prices. ExAlta's capital expenditures increased in the third quarter as the Corporation's major development program commenced at Alexis, setting the stage for substantial production growth in the fourth quarter of 2005.

2006 BUDGET

The board of directors of the Corporation has approved a 2006 capital expenditure program of $52.1 million, an increase of 32 percent over the 2005 capital program, estimated at $39.5 million. The budget includes the drilling of 67 gross (37.1 net) wells in 2006, which will be comprised of 33 gross exploration wells and 34 gross development wells. ExAlta's exit rate target for 2006 is 5,000 boe per day, an increase of 67 percent over the 2005 exit rate target of 3,000 boe per day.

Q3 PRODUCTION

ExAlta's production during the third quarter of 2005 averaged 1,845 boe per day. This was 245 boe per day over second-quarter volumes, primarily due to increased natural gas production following installation of a compressor at Hill. With the startup of four new ExAlta-operated wells at Alexis, production has increased in October to just over 2,100 boe per day. During November, production from these wells will be optimized and the West Cove extension project will be brought on-stream, allowing production to increase to approximately 2,500 boe per day.

Seven additional Alexis non-unit wells (five standing, two to drill) and the tie-in of new discoveries in the Peace River Arch should allow ExAlta to reach the 3,000 boe per day target by year-end. The start-up of the new battery at Alexis to handle the non-unit production, completion of the West Cove extension, an expansion of the Clear River natural gas plant at Hill and the completion of new well tie-in facilities will be key to achieving timely addition of the new production capacity.

Q3 DRILLING

Sixteen wells were drilled in the third quarter, resulting in 11 oil wells, three natural gas wells and two dry holes. The 11 oil wells were made up of six wells drilled at the Alexis unit and five non-unit wells. Two of the three natural gas wells were at Hill, where the 9-28 (60 percent) well had a show in the Baldonnel and the 2-10 well (25 percent) tested gas from the Baldonnel and Cadomin. The third natural gas well was a new pool wildcat discovery in the Northwest Arch which currently remains under tight hole status. During the first nine months of 2005, ExAlta has drilled 31 gross wells (14.1 net) including 20 (7.6 net) oil wells, five (2.6 net) natural gas wells and six (4.0 net) dry holes, for an overall drilling success rate of 81 percent.

LAND AND SEISMIC

Ongoing growth in ExAlta's land and 3-D seismic position is key to the expansion of ExAlta's capital expenditures in 2006.

In late October, ExAlta entered into a letter agreement setting out the terms of a regional farm-in and joint venture with a senior producer on lands located in the Eaglesham/Tangent area in the North Central Arch area. ExAlta has committed to drill and complete six Wabamun tests on the farmor's lands to earn a 50 percent interest in six sections. As part of the joint venture, ExAlta will have access to more than 100 square miles of contiguous 3-D seismic data in the area and will operate a regional exploration program.

ExAlta has also recently farmed in on nine sections held by the farmor at Clayhurst. The agreement includes a one-well commitment and rolling options. The first well will test the Charlie Lake zone. Seismic data and geological mapping show a number of prospects on these lands.

ExAlta's land position continued to grow in the third quarter with the acquisition of eight sections contiguous to land acquired in the first quarter at Worsley in the North West Arch area. The new lands were acquired 50-50 with a partner and offset recent drilling success by the partner.

3-D seismic programs comprising 20 sections shot at Howard, Worsley, Clear Hills and the Alexis First Nations lands during the third quarter are now being interpreted and are showing several promising targets on each block.

OPERATIONS OUTLOOK

At the beginning of October, ExAlta commenced drilling five additional non-unit wells at Alexis. These will be followed by two Belly River development wells at Cherhill, a Notikewin well at St. Anne, and a Notikewin/Nordegg test on the Alexis First Nations lands. In late October, ExAlta commenced a drilling program in the Grande Prairie area with a deep test at Howard, a Halfway, Baldonnel, and Charlie Lake success at North Boundary, and a Gething success at Siphon. Six further prospects are planned during the fourth quarter. The Eaglesham/Tangent program will commence as soon as the well licenses are completed.

The ExAlta team mission, to conduct balanced exploration and development programs in two focus areas, continues as planned. The Corporation's development programs are expected to provide substantial production growth in the fourth quarter of 2005, creating a strong foundation from which ExAlta can pursue an increased number of high-quality exploration and development opportunities in 2006. The expanded 2006 capital program demonstrates the confidence of the ExAlta team in continuing to enhance shareholder value with increasing production and reserves per share. ExAlta's 2006 business plan will maintain the Corporation's strong balance sheet, allowing the Corporation to take advantage of new opportunities as they develop.



"signed"

James S. Blair
President and Chief Executive Officer

November 10, 2005


MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

The following management's discussion and analysis (MD&A) has been prepared as of November 10, 2005 by management and should be read in conjunction with the unaudited interim financial statements of ExAlta for the three and nine month periods ended September 30, 2005 and the audited financial statements and the MD&A for the year ended December 31, 2004.

This MD&A refers to funds from operations and operating netback, which are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Management believes that in addition to net income, funds from operations and operating netback are useful supplemental measures as they demonstrate the Corporation's ability to generate the cash necessary to repay debt or fund future growth through capital investment. The reconciliation between net income and funds flow from operations can be found on the statements of cash flow in the interim financial statements and the audited financial statements. ExAlta defines operating netback as revenue less royalties and operating expenses. Investors are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with GAAP as an indication of ExAlta's performance. ExAlta's method of calculating these measures may differ from the method used by other companies and accordingly, may not be comparable to measures used by other companies.

SELECTED FINANCIAL INFORMATION

Annual and Quarterly Financial Information

The following tables summarize selected financial information of ExAlta as at
and for the periods indicated:



------------------------------------------------------------------------
($ thousands, 2005 2005 2005 2004
except per share amounts) Q3 Q2 Q1 Q4
------------------------------------------------------------------------
Revenue net of royalties
and transportation expenses $ 7,257 $ 5,124 $ 4,770 $ 4,422
Operating expenses 922 716 620 734
Funds from operations 6,092 3,879 3,741 3,366
Per common share (basic) 0.20 0.14 0.16 0.15
Per common share (diluted) 0.19 0.13 0.15 0.14
Net income (loss) 1,824 535 662 (65)
Per common share (basic) 0.06 0.02 0.03 0.00
Per common share (diluted) 0.06 0.02 0.03 0.00
Total assets 72,571 62,834 46,492 44,231
Working capital (deficiency) 2,676 8,785 (13,548) (11,590)
Capital lease obligation 1,019 1,331 - -
Shareholders' equity 53,770 51,278 24,697 23,960
Weighted average number of shares
Basic 31,057 27,159 22,924 22,924
Diluted 32,706 29,592 24,990 24,052
------------------------------------------------------------------------



------------------------------------------------------------------------
($ thousands, 2004 2004 2004 2003
except per share amounts) Q3 Q2 Q1 Q4
------------------------------------------------------------------------
Revenue net of royalties
and transportation expenses $ 3,358 $ 3,204 $ 1,835 $ 1,604
Operating expenses 551 437 229 345
Funds from operations 2,504 2,601 1,503 1,061
Per common share (basic) 0.11 0.11 0.07 0.07
Per common share (diluted) 0.10 0.11 0.06 0.07
Net income (loss) 299 628 345 173
Per common share (basic) 0.01 0.03 0.02 0.01
Per common share (diluted) 0.01 0.03 0.01 0.01
Total assets 34,716 31,929 30,554 27,500
Working capital (deficiency) (5,617) (3,812) (2,237) 2,004
Capital lease obligation - - - -
Shareholders' equity 23,137 22,757 22,068 21,703
Weighted average number of shares
Basic 22,924 22,904 22,894 15,438
Diluted 23,917 23,244 23,235 15,692
------------------------------------------------------------------------
------------------------------------------------------------------------


Revenues have increased in each of the eight quarters and funds from operations have increased in seven of the eight quarters as a result of increasing production volumes, commodity prices or a combination thereof. In the three months ended September 30, 2005, the production volume averaged 1,845 boe per day, a 15 percent increase from the average production in the three months ended June 30, 2005. Price increases have had a positive impact on revenues for each of the last eight quarters with the exception of the first quarter of 2004. The Corporation's target exit rate for 2006 is 5,000 boe per day, an increase of 67 percent over the expected 2005 exit rate of 3,000 boe per day.

Net income has increased quarter over quarter in each of the eight quarters except for the third and fourth quarter of 2004 and the second quarter of 2005 in which increased stock compensation expense in each of these quarters had a negative impact. Increased depletion and depreciation expense reduced the net income in the third and fourth quarters of 2004 relative to the prior quarter.

Revenue and Production

Gross revenue, net of transportation expense, for the nine months ended September 30, 2005 was $22.2 million, an increase of 97 percent over the same period in 2004. Sixty-three percent of the increase in revenue was due to increased production volumes while increased commodity prices accounted for the balance.

Production averaged 1,721 boe per day for the first nine months of 2005, a 61 percent increase from the average of 1,069 boe per day for the same period in 2004.

Gross revenue, net of transportation expense, for the three months ended September 30, 2005 was $9.4 million, an increase of 107 percent over the same period in 2004 due to increased production volumes and commodity prices.

Production averaged 1,845 boe per day for the three months ended September 30, 2005, a 41 percent increase over the same period in 2004.



Production volumes for each year were:

Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------------------------
2005 2004 % Change 2005 2004 % Change
------------------------------------------------------------------------
Production
Natural gas
(mcf/d) 8,642 6,636 30 8,059 5,326 51
Oil and NGL
(bbls/d) 405 200 103 378 181 109
------------------------------------------------------------------------
Combined (boe/d) 1,845 1,306 41 1,721 1,069 61
------------------------------------------------------------------------

The following tables set out the components of revenue net of
transportation and royalties for the periods indicated:

Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------------------------
2005 2004 % Change 2005 2004 % Change
------------------------------------------------------------------------
Revenue
(net of
transportation)
($ thousands)
Natural gas 7,173 3,671 95 16,935 9,197 84
Oil 2,089 818 155 5,038 2,007 151
NGL 17 19 (11) 136 47 189

Royalty income,
processing,
facilities and
gathering
revenue 105 23 357 124 36 242
Royalties (2,142) (1,178) 82 (5,082) (2,896) 75
------------------------------------------------------------------------
Total revenue
net of
royalties 7,242 3,353 116 17,150 8,391 104
------------------------------------------------------------------------

Revenue contribution
(% of total)
Natural gas 78 81 77 82
Oil 22 18 23 18
NGL - 1 1 0
------------------------------------------------------------------------
------------------------------------------------------------------------


Royalties

Higher production volumes and prices in the first nine months of 2005 compared to the same period in the prior year resulted in royalties of $5.1 million ($10.82 per boe) compared to $2.9 million ($9.93 per boe). Higher production volumes and prices in the quarter ended September 30, 2005 resulted in royalties of $2.1 million ($12.62 per boe) compared to $1.2 million ($9.80 per boe) in the same quarter of 2004. The reason for the increase in the per boe amounts for the 2005 periods compared to the 2004 periods were increased prices which result in higher amounts per boe. Royalties averaged 23 percent of revenue in the three month and nine month periods ended September 30, 2005, respectively, compared to 26 percent in the three and nine month periods of 2004. The reduction in the royalty rates results from a larger Alberta Royalty Tax Credit claim and higher gas processing allowance in the 2005 periods.

Operating Costs

Operating costs were $2.3 million for the nine months ended September 30, 2005 compared to $1.2 million for the same period in the prior year, an increase of 92 percent. However, as production volumes also increased over the period, operating costs per boe increased only 15 percent to $4.78 per boe in the nine months ended September 30, 2005 from $4.17 per boe in the same period in 2004. Similarly, operating costs totaled $0.9 million for the three months ended September 30, 2005 compared to $0.6 million for the same quarter in the prior year, an increase of 50 percent, while operating costs per boe increased by 18 percent to $5.41 per boe in the quarter ended September 30, 2005 from $4.59 per boe in the quarter ended September 30, 2004. These increases in per boe amounts result from normal operating fluctuations such as the timing of workovers, as well as increased gas processing and compression costs. The costs per boe continue to be below the Corporation's target of $5.00 per boe for the nine month period and operating costs are expected to average less than $5.00 per boe for the year.

Operating Netback

The average operating netback increased by 29 percent to $31.73 per boe for the nine months ended September 30, 2005 from $24.60 per boe for the same period in 2005, as a result of increased prices offset in part by higher royalties and operating costs. The average operating netback increased by 60 percent to $37.24 per boe for the three months ended September 30, 2005 from $23.32 per boe for the same period in 2004. This was also due to increased prices offset in part by higher royalties and operating costs.



The following table summarizes operating netbacks:


Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------------------------
2005 2004 % Change 2005 2004 % Change
------------------------------------------------------------------------
($/boe)
Sales price
(net of
transportation
costs) 55.27 37.71 47 47.33 38.70 22
Net royalties (12.62) (9.80) 29 (10.82) (9.93) 9
Operating costs (5.41) (4.59) 18 (4.78) (4.17) 15
------------------------------------------------------------------------
Operating netback 37.24 23.32 60 31.73 24.60 29
------------------------------------------------------------------------
------------------------------------------------------------------------


General and Administrative Expenses

General and administrative expenses increased by 75 percent in the nine months ended September 30, 2005 compared to the same period of 2004. This is mainly due to the addition of five employees and $75,000 of additional investor relations costs incurred as a result of being a public company in 2005. When calculated on a unit-of-production basis, general and administrative expenses for the first nine months of 2005 increased by 27 percent compared to the same period of 2004.

General and administrative expenses decreased by 14 percent in the three months ended September 30, 2005 compared to the same period of 2004. When calculated on a unit-of-production basis, general and administrative expenses for the three months ended September 30, 2005 decreased by 24 percent compared to the same period of 2004. The decrease reflects overhead recoveries for the three months ended September 30, 2005 exceeding recoveries for the same period in the prior year, in addition engineering consulting costs were higher in the three months ended September 30, 2004 compared to the same period in 2005. These favourable variances were offset in part by higher investor relations costs in the 2005 quarter.

With the growth in production volumes anticipated in the fourth quarter of 2005, it is expected that the general and administrative expenses will decline on a unit-of-production basis falling below $2.00 per boe for the full 2005 year.



The following table sets out general and administrative expenses:

Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------------------------
2005 2004 % Change 2005 2004 % Change
------------------------------------------------------------------------
($ thousands,
except as noted)
Gross expenses 397 461 (14) 1,537 880 75
Capitalized (133) (173) (23) (487) (363) 34
------------------------------------------------------------------------
Net expenses 264 288 (8) 1,050 517 103
------------------------------------------------------------------------
$/boe 1.55 2.04 (24) 2.24 1.77 27
Percent capitalized 34 38 32 20
------------------------------------------------------------------------
------------------------------------------------------------------------


Financing Costs and Interest Income

Interest costs increased to $0.2 million for the nine months ended September 30, 2005 compared to $0.1 million for the same period of 2004. The interest expense results from exploration and development costs in excess of cash flow being financed with debt from April 2004 through to May 10, 2005 when the debt was repaid with the proceeds of the initial public offering. Interest costs were $23,748 for the three months ended September 30, 2005 compared to $31,214 for the same period of 2004. The interest expense in the three months ended September 30, 2005 relates to the capital lease entered into with respect to natural gas compressors. The interest expense in the three months ended September 30, 2004 relates to bank debt financing.

Interest income of $87,168 for the nine months ended September 30, 2005 and $51,449 for the three months ended September 30, 2005 is earned on cash resulting from the proceeds of the initial public offering in excess of exploration and development expenditures.

Depletion and Depreciation (D&D) Expense

D&D expense increased to $8.3 million for the nine months ended September 30, 2005 compared to $4.3 million for the same period of 2004. On a unit-of-production basis, D&D increased by 20 percent to $17.76 per boe in the first nine months of 2005 from $14.82 per boe in the same period of 2004. D&D expense increased to $3.1 million for the three monthsended September 30, 2005 compared to $1.9 million for the same period of 2004. On a unit-of-production basis, D&D increased by 16 percent to $18.18 per boe in the three months ended September 30, 2005 from $15.61 per boe in the same period of 2004. The increase in D&D per boe was due to exploration, development, and facility expenditures made in 2005 which had a higher cost per unit of proved reserves added than in 2004 due mainly to a higher proportion of capital expenditures allocated to land, seismic and facilities. The D&D provision is based on a reserve report prepared by independent engineers at December 31, 2004 with adjustments made for production and the Corporation's estimate of 2005 reserve additions and revisions.

Asset Accretion Expense

The asset retirement liability of $1.5 million at September 30, 2005 is the estimated discounted cost of future abandonment and site restoration costs. This liability was increased by $225,000 in the nine months ended September 30, 2005 to reflect these costs related to wells drilled and equipment placed in service during the period. ExAlta estimated this liability based on an inflation factor of 2 percent and discounted the expected future costs back to the balance sheet date at a credit adjusted risk free discount rate of 8 percent. Asset retirement accretion of $74,457 for the nine months ended September 30, 2005 and $24,819 for the three months ended September 30, 2005 represent the increase in the amount of the asset retirement liability reflected on the balance sheet at September 30, 2005 resulting from the passage of time. These amounts are higher than the asset retirement accretion of $39,474 for the nine months ended September 30, 2004 and $13,158 for the three months ended September 30, 2004 as a result of the Corporation's growth.

Stock-based Compensation

The increase in stock-based compensation during the first nine months of 2005 was due to additional options and performance warrants granted in 2005 and the cumulative impact of options issued in the prior two years. This resulted in costs of $392,155 in the nine months ended September 30, 2005 compared to $123,234 in the same period of 2004 and costs of $79,635 in the three months ended September 30, 2005 compared to $81,102 in the same period of 2004.

Income Taxes

A cash payment of $12,919 will be required to pay Large Corporations Tax accrued during the first nine months of 2005 which is based on the capital of the Corporation. No cash income taxes are payable, as a result of prior-year tax pools and expenditures incurred during the year being sufficient to reduce taxable income to nil. Although current income tax horizons depend on product prices, production levels and the nature, magnitude and timing of capital expenditures, management currently believes no cash income tax will be payable for 2005 or 2006.

The effective income tax rates of 39 percent for the nine months ended September 30, 2005 and 37 percent for the three months ended September 30, 2005 were in line with the combined federal and provincial statutory rate of 37.62 percent.

Funds from Operations and Net Income

Funds from operations increased to $13.7 million ($0.51 per share (basic) and $0.47 per share (diluted)) for the nine months ended September 30, 2005 from $6.6 million ($0.29 per share (basic) and $0.28 per share (diluted)) for the same period of 2004, reflecting increased production volumes and commodity prices. Net income increased to $3.0 million ($0.11 per share (basic) and $0.10 per share (diluted) for the nine months ended September 30, 2005 from $1.3 million ($0.06 per share (basic) and $0.05 per share (diluted)) for the same period of 2004.

Funds from operations increased to $6.1 million ($0.20 per share (basic) and $0.19 per share (diluted)) for the three months ended September 30, 2005 from $2.5 million ($0.11 per share (basic) and $0.10 per share (diluted)) for the same period of 2004, reflecting increased production volumes and commodity prices. Net income increased to $1.8 million ($0.06 per share (basic and diluted)) for the three months ended September 30, 2005 from $0.3 million ($0.01 per share (basic and diluted)) for the same period of 2004.

Capital Expenditures

Capital expenditures were $25.1 million for the nine months ended September 30, 2005, compared to $14.4 million for the same period in 2004.

Drilling and completion expenses of $12.8 million in the first nine months of 2005 are $1.0 million higher than the comparative period in 2004. ExAlta participated in the drilling of 31 wells in the first nine months of 2005, resulting in 20 gross (7.6 net) oil wells, five gross (2.6 net) gas wells, and six gross (4.0 net) dry holes.

The increase in facility and equipment costs in 2005 relate to the completion of the West Cove gathering system and the work done to the end of the quarter on the new battery at Alexis.

Land and seismic expenditures of $6.5 million in the nine months ended September 30, 2005 are $4.9 million higher than the comparative period in 2004 mainly due to successful growth in the Grande Prairie Focus Area. These expenditures have resulted in an increased prospect inventory of exploration and development drilling locations which provide a strong foundation for an expanded 2006 program.



The following table sets out ExAlta's capital expenditures:

Nine Months Ended Sept. 30, 2005 Sept. 30, 2004
------------------------------------------------------------------------
Land $ 4.1 $ 1.2
Seismic 2.4 0.4
Drilling and completions 12.8 11.8
Facilities and equipment 5.5 0.6
Property acquisitions and dispositions - 0.4
Capitalized stock compensation expense 0.3 -
------------------------------------------------------------------------
Total $ 25.1 $ 14.4
------------------------------------------------------------------------
------------------------------------------------------------------------


LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2005, the Corporation had cash on hand of $7.4 million resulting from the May 10, 2005 initial public offering of seven million common shares at a price of $3.85 per common share for net proceeds after issue costs and tax benefits of approximately $25 million. The balance of the net proceeds was used to reduce bank indebtedness to zero and to fund subsequent capital expenditures.

ExAlta's bank credit facility is $20 million and it has swap facility of US $3
million. No amount has been drawn against either facility at September 30, 2005. In June ExAlta entered into a capital lease equipment financing facility of $1.7 million in order to reduce equipment lease costs. This facility bears interest at 2.2 percent above the 30 day Bankers Acceptance Rate which resulted in an interest rate of 4.76 percent at September 30, 2005. Monthly payments of $29,474 are due over the 48 month term of this facility. At the end of the 48 month term, the Corporation has the obligation to purchase the equipment at a cost of $142,000 or to negotiate a continuing lease.

Interest expense of $19,950 (2004 - nil) was incurred on the capital lease
during the nine months ended September 30, 2005.

ExAlta's capital program for 2005 is expected to be approximately $39.5 million of which approximately $26.0 million has been allocated to drilling, completions and tie-in of 52 gross (29.4 net) wells with the balance to acquisitions, facilities, land and seismic. The 2005 capital program will be funded through a combination of existing cash and bank credit facility drawdowns.



Capital Program for the 2005 Year
($ thousands) Total
------------------------------------------------------------------------
Summary
Land 4,057
Seismic 2,960
Facilities 6,263
Drilling 25,773
G&A capitalized 481
------------------------------------------------------------------------
Total 39,534
------------------------------------------------------------------------
------------------------------------------------------------------------


Commitments

In addition to the capital lease commitment referred to above, ExAlta is committed to operating leases for office space, office equipment and field equipment as summarized in the following table:



2005 2006 2007
------------------------------------------------------------------------
Total operating leases $ 60,000 $ 161,000 $ 87,000
------------------------------------------------------------------------
------------------------------------------------------------------------

Share Information
Nov. 10, Sept. 30, Dec. 31, Sept. 30,
2005 2005 2004 2004
------------------------------------------------------------------------
Common shares 31,149,401 31,149,401 22,923,900 22,923,900
Employee stock options 2,715,000 2,715,000 2,155,000 2,155,000
Warrants 50,000 50,000 50,000 50,000
Founders' warrants - - 848,000 848,000
Performance warrants 100,000 100,000 - -
Weighted average number
of shares outstanding
for the nine or twelve
month periods
Basic 27,076,539 22,913,900 22,910,542
Diluted 29,143,569 24,019,007 23,878,566
------------------------------------------------------------------------
------------------------------------------------------------------------


Related Party Transactions

From time to time, the Corporation has entered into service contracts with an oil and gas service company whose directors include an individual who is also a director and officer of ExAlta. In aggregate this company was paid $120,000 for the nine months ended September 30, 2005 (2004 - nil). The services and supplies were invoiced to ExAlta at standard market prices and have been included in operating expenses.

A director of the Corporation is a partner of a law firm that was paid $185,000 for legal services for the nine months ended September 30, 2005 (2004 - $8,100). The fees were based on standard rates and time spent on Corporation matters and have been included in general and administrative expense and share issue costs.

These transactions were recorded at their exchange amounts.

Sensitivities

Commodity prices and production volumes are significant factors that affect ExAlta's financial performance. The following sensitivities are calculated based on the Corporation's 2006 budgeted operations:



Annual Funds from Operations
------------------------------------------------------------------------
Price change
Cdn $3 per barrel in oil price $ 800,000
Cdn $0.50 per mcf in the price of natural gas $ 1,400,000
Production rates
Change in light oil production of 100 bbls/d $ 1,000,000
Change in natural gas production of 600 mcf/d (100 boe) $ 900,000
------------------------------------------------------------------------
------------------------------------------------------------------------


New Canadian Accounting Pronouncements and Critical Accounting Estimates

OIL AND NATURAL GAS RESERVES

There have been no changes to ExAlta's accounting principles and practices in 2005, nor have there been any material changes to ExAlta's critical accounting estimates. Reference was made in ExAlta's Q1 2005 report to the Canadian Institute of Chartered Accountants accounting pronouncement on Comprehensive Income, Financial Instruments and Hedges which may impact the Corporation's reported results in future periods. ExAlta does not expect that this pronouncement will have any impact based on the current positions.

BUSINESS RISKS AND UNCERTAINTIES

ExAlta is exposed to numerous risks and uncertainties associated with the exploration for and development and acquisition of crude oil, natural gas and NGL. Primary risks include the uncertainty associated with exploration drilling, changes in production practices, product pricing, industry competition and government regulation.

Drilling activities are subject to numerous technical risks and uncertainties. ExAlta attempts to minimize exploration risk by utilizing trained professional staff and conducting extensive geological and geophysical analysis prior to drilling wells.

ExAlta utilizes sound marketing practices in an attempt to partially offset the cyclical nature of commodity prices, which are subject to external influences beyond ExAlta's control. Fluctuations in commodity prices and foreign exchange rates may significantly impact ExAlta's revenue. The oil and natural gas industry is extremely competitive and ExAlta must compete with numerous larger, well-established organizations in all phases of the exploration business.

ExAlta monitors and complies with current government regulations that affect its activities, although operations may be adversely affected by changes in government policy, regulations or taxation. In addition, ExAlta maintains a level of liability, property and business interruption insurance which is believed to be adequate for ExAlta's size and activities, but is unable to obtain insurance to cover all risks within the business or in amounts to cover all possible claims.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein, including, without limitation, information as to ExAlta's future financial and business prospects and financial outlooks, may be forward-looking statements which reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. Words such as "may", "will", "should", "could", "anticipate", "contemplate", "schedule", "budget", "believe", "expect", "intend", "plan", "potential", "continue", "estimate" and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Although the forward-looking statements contained within this report are based upon what management currently believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements as they are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors are cautioned not to place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Corporation disclaims any obligation or intent to update them, whether as a result of new information, future events or results or otherwise.



BALANCE SHEET

(Unaudited) September 30, December 31,
As at 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
$ $
ASSETS (notes 5 and 6)
Current
Cash 7,406,820 -
Accounts receivable 7,795,361 4,741,653
------------------------------------------------------------------------
15,202,181 4,741,653
------------------------------------------------------------------------

Property and equipment (note 3) 57,368,535 39,489,471
------------------------------------------------------------------------
72,570,716 44,231,124
------------------------------------------------------------------------
------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness (note 5) - 9,607,008
Current portion of capital
lease obligation (note 6) 301,226 -
Accounts payable and accrued liabilities 12,224,901 6,724,532
------------------------------------------------------------------------
12,526,127 16,331,540
------------------------------------------------------------------------

Capital lease obligation (note 6) 1,018,580 -
Asset retirement obligations (note 4) 1,540,457 1,241,000
Future income taxes (note 8) 3,801,000 2,698,300
------------------------------------------------------------------------
18,801,164 20,270,840
------------------------------------------------------------------------

Commitments (notes 6 and 7)

Shareholders' equity
Share capital (note 9) 48,690,051 21,755,471
Contributed surplus (note 9) 842,386 1,073,422
Retained earnings 4,152,115 1,131,391
------------------------------------------------------------------------
53,769,552 23,960,284
------------------------------------------------------------------------
72,570,716 44,231,124
------------------------------------------------------------------------
------------------------------------------------------------------------

See accompanying notes.


STATEMENTS OF INCOME AND RETAINED EARNINGS

Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
(Unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
$ $ $ $
REVENUE
Oil and gas
revenues (note 10) 9,399,380 4,531,260 22,232,566 11,287,891
Royalties,
net of ARTC (2,142,342) (1,173,160) (5,081,740) (2,891,480)
------------------------------------------------------------------------
7,257,038 3,358,100 17,150,826 8,396,411
------------------------------------------------------------------------

EXPENSES
Operating (note 12) 922,340 551,497 2,258,046 1,217,137
General and
administrative
(note 12) 263,518 287,865 1,050,164 516,784
Stock-based
compensation (note 9) 79,635 81,102 392,155 123,234
Interest (note 6) 23,748 31,214 205,719 68,065
Interest income (51,443) - (87,168) (12,677)
Asset retirement
accretion (note 4) 24,819 13,158 74,457 39,474
Depreciation and
depletion (note 3) 3,086,040 1,875,434 8,341,810 4,322,302
------------------------------------------------------------------------
4,348,657 2,840,270 12,235,183 6,274,319
------------------------------------------------------------------------

Income before
income taxes 2,908,381 517,830 4,915,643 2,122,092
------------------------------------------------------------------------

Income taxes (note 8)
Current 7,000 (16,000) 12,919 -
Future 1,077,000 235,000 1,882,000 850,000
------------------------------------------------------------------------
1,084,000 219,000 1,894,919 850,000
------------------------------------------------------------------------

Net income 1,824,381 298,830 3,020,724 1,272,092
Retained earnings
(deficit) at
beginning of period 2,327,734 897,892 1,131,391 (75,370)
------------------------------------------------------------------------
Retained earnings
at end of period 4,152,115 1,196,722 4,152,115 1,196,722
------------------------------------------------------------------------
------------------------------------------------------------------------

Net income per share
(note 11)
Basic 0.06 0.02 0.11 0.06
Diluted 0.06 0.01 0.10 0.05
------------------------------------------------------------------------
------------------------------------------------------------------------

See accompanying notes.


STATEMENTS OF CASH FLOWS

Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
(Unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net income 1,824,381 298,830 3,020,724 1,272,092
Add items not
requiring cash:
Depreciation and
depletion 3,086,040 1,875,434 8,341,810 4,322,302
Future income taxes 1,077,000 235,000 1,882,000 850,000
Stock-based
compensation 79,635 81,102 392,155 123,234
Asset retirement
accretion 24,819 13,158 74,457 39,474
------------------------------------------------------------------------
Funds from
operations 6,091,875 2,503,524 13,711,146 6,607,102
Changes in non-cash
working capital
related to
operating activities 111,476 465,614 (389,440) 659,865
------------------------------------------------------------------------
Cash provided
from operating
activities 6,203,351 2,969,138 13,321,706 7,266,967
------------------------------------------------------------------------

FINANCING ACTIVITIES
Issue of common
shares, net of costs 222,635 - 25,263,160 37,058
Increase in capital
lease obligation - - 523,600 -
Repayment of capital
lease obligation (372,948) - (409,160) -
Increase in bank
indebtedness - 1,327,777 4,306,230 3,833,189
Repayment of bank
indebtedness - - (13,913,238) -
Changes in non-cash
working capital
related to financing
activities 60,547 - (301,226) -
------------------------------------------------------------------------
Cash provided by
(used in) financing
activities (89,766) 1,327,777 15,469,366 3,870,247
------------------------------------------------------------------------

INVESTING ACTIVITIES
Oil and gas assets (12,310,227) (4,295,887) (24,745,720) (14,430,711)
Sale of oil and
gas assets 208,786 - 253,786 -
Administrative
equipment (9,941) (1,028) (29,646) (9,458)
Changes in non-cash
working capital
related to investing
activities 3,783,389 - 3,137,328 -
------------------------------------------------------------------------
Cash used
in investing
activities (8,327,993) (4,296,915) (21,384,252) (14,440,169)
------------------------------------------------------------------------

Net change in cash (2,214,408) - 7,406,820 (3,302,955)

Cash, beginning
of period 9,621,228 - - 3,302,955
------------------------------------------------------------------------
Cash, end of period 7,406,820 - 7,406,820 -
------------------------------------------------------------------------
------------------------------------------------------------------------

See supplementary information in Note 13.
See accompanying notes.


NOTES TO THE INTERIM FINANCIAL STATEMENTS

Unaudited

September 30, 2005

1. NATURE OF OPERATIONS

ExAlta Energy Inc. (the "Corporation") was incorporated under the laws of the Province of Alberta on March 15, 2002 and commenced operations in May 2002. The Corporation's primary business is the acquisition of, exploration for, and the development and production of crude oil and natural gas in Western Canada.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These unaudited interim financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles (GAAP) and follow the same accounting policies as the financial statements of the Corporation for the fiscal year ended December 31, 2004. Certain information and disclosures required to be included in notes to annual financial statements have been condensed or omitted although the Corporation believes that the disclosures are adequate to make the information presented not misleading. These notes are incremental to and should be read in conjunction with the audited financial statements for the year ended December 31, 2004. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period involves the use of estimates and approximations, which have been made using judgment.

Certain comparative figures have been reclassified to conform with the current period's financial statement presentation.

3. PROPERTY AND EQUIPMENT



Property and equipment at September 30, 2005:

Accumulated
Depletion and Net Book
Cost Depreciation Value
------------------------------------------------------------------------
Oil and gas assets $ 73,009,602 $ 16,971,700 $ 56,037,902
Equipment under capital lease 1,422,714 163,317 1,259,397
Administrative equipment 133,507 62,271 71,236
------------------------------------------------------------------------
$ 74,565,823 $ 17,197,288 $ 57,368,535
------------------------------------------------------------------------
------------------------------------------------------------------------


During the three and nine months ended September 30, 2005, exploration overhead of $0.4 million and $0.8 million, respectively, was capitalized. At September 30, 2005, $6.3 million of unproved property and seismic costs were excluded from the depletion calculation. Future development costs of $1.2 million were included in the September 30, 2005 depletion calculation related to proved and undeveloped properties.

An impairment test calculation was performed on the Corporation's petroleum and natural gas properties and equipment at September 30, 2005 in which the estimated undiscounted future net cash flows associated with the proved reserves exceeded the carrying amount of the Corporation's petroleum and natural gas properties and equipment.

4. ASSET RETIREMENT OBLIGATIONS

The Corporation's asset retirement obligations result from net ownership interests in petroleum and natural gas assets including well sites, gathering systems and processing facilities.

The future asset retirement obligation is estimated by management based on the Corporation's working interest in all wells and facilities, estimated costs to reclaim and abandon wells and facilities and the estimated timing of the costs to be incurred in future periods. These estimates can be affected by factors such as the number of wells drilled, well depth and specific environmental legislation. The Corporation estimates the total undiscounted amount of cash flows required to settle its asset retirement obligations to be approximately $2.6 million. The Corporation estimates the net present value of this total asset retirement obligation to be $1.5 million as at September 30, 2005. These expenditures are expected to be made over the next 21 years with the majority of the costs being incurred prior to 2012. The Corporation used a credit adjusted risk-free rate of 8 percent and an inflation rate of 2 percent to calculate the present value of the asset retirement obligations.



The following table reconciles the Corporation's asset retirement
obligations for the nine month period ended September 30, 2005:

------------------------------------------------------------------------
Balance, beginning of period $ 1,241,000
Asset retirement accretion expense 74,457
Liabilities incurred 225,000
------------------------------------------------------------------------
Balance, end of period $ 1,540,457
------------------------------------------------------------------------
------------------------------------------------------------------------


5. CREDIT FACILITY

At September 30, 2005, the Corporation had an extendible revolving credit facility totaling $20 million bearing interest at the bank's prime rate and a swap facility of US $3 million. At September 30, 2005, no amount was drawn against either facility. The credit and swap facilities revolve until May 31, 2006 at which time the facilities are extendable at the request of the Corporation subject to terms to be negotiated. The facilities are collateralized with a first floating charge demand debenture of $40 million over all assets of the Corporation.

6. CAPITAL LEASE OBLIGATION

In June 2005 the Corporation entered into an Equipment Lease Financing arrangement. Under this arrangement, the Corporation is committed to annual minimum lease payments as follows:



Years Ending December 31,
------------------------------------------------------------------------
2005 $ 89,383
2006 357,534
2007 357,534
2008 357,534
2009 291,244
------------------------------------------------------------------------

Total minimum lease payments $ 1,453,228
Less interest included in payments at 4.76% 133,422
------------------------------------------------------------------------
Discounted value of minimum lease payments $ 1,319,806
Less current portion 301,226
------------------------------------------------------------------------
Capital lease obligation at September 30, 2005 $ 1,018,580
------------------------------------------------------------------------
------------------------------------------------------------------------


Interest expense was incurred on the capital lease during the nine months ended September 30, 2005 of $19,950 (2004 - nil). No interest expense was incurred in the period ended September 30, 2004.

The interest rate is a floating rate 2.2 percent above the 30 day Bankers Acceptance Rate. The interest rate was 4.76 percent at September 30, 2005. At the end of the 48-month term, the Corporation has the obligation to purchase the equipment at a cost of $142,000 or to negotiate a continuing lease. A general security agreement and a first charge against the leased assets and certain other tangible equipment has been provided as security.

In October 2005, an additional Equipment Lease Financing was entered into with respect to equipment valued at $978,644. The interest rate on this lease is 2.1 percent above the 30-day Bankers Acceptance Rate. Payments of $22,445 per month will be due. At the end of the 48-month term the Corporation has the obligation to acquire the equipment at a cost of $1.00.

7. COMMITMENTS

In addition to the capital lease commitment described in note 6, the Corporation is committed to future payments for operating leases for office space, office equipment and field equipment of $308,000 in aggregate as follows: 2005 - $60,000; 2006 - $161,000; 2007 - $87,000.

8. INCOME TAXES

Income taxes recorded in the statements of income and retained earnings differ from the tax provision calculated by applying the combined Canadian corporate federal and provincial income tax rate to income before taxes for the three and nine month periods ended September 30 as follows:



Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
------------------------------------------------------------------------
2005 2004 2005 2004
------------------------------------------------------------------------
Income before income taxes 2,908,381 517,830 4,915,643 2,122,092
------------------------------------------------------------------------
Expected income tax at
37.62% (2004 - 38.87%) 1,094,133 201,423 1,849,265 825,000
Add (deduct) income tax
effect of:
Non-deductible Crown
charges 381,461 287,113 894,213 723,000
Resource allowance (421,808) (214,978) (998,149) (592,000)
Rate adjustments (130,303) (25,181) (135,314) (109,000)
Stock-based compensation 153,517 31,623 271,985 48,000
Other 7,000 (61,000) 12,919 (45,000)
------------------------------------------------------------------------
1,084,000 219,000 1,894,919 850,000
------------------------------------------------------------------------
------------------------------------------------------------------------

The future income tax balance is comprised of:

------------------------------------------------------------------------
Difference between tax basis and reported amounts for
depreciable assets $ 5,387,926
Benefit of non-capital losses (106,915)
Share issue costs carry forward (775,511)
Alberta Royalty Tax deduction (144,570)
Asset retirement obligation (517,902)
Liability under gas contracts (42,028)
------------------------------------------------------------------------
Balance, end of period $ 3,801,000
------------------------------------------------------------------------
------------------------------------------------------------------------

As at September 30, 2005, the Corporation had recognized the benefit of
non-capital losses available for deduction against future income
amounting to $318,000, expiring in 2010.

9. SHARE CAPITAL

Number
Common Shares Issued: of Shares Amount
------------------------------------------------------------------------
At December 31, 2004 and March 31, 2005 22,923,900 $ 21,755,471

Issue of common shares (a) 7,000,000 25,674,942
Exercise of founders' warrants (b) 848,000 848,008
Exercise of stock options (c) 127,500 149,064
------------------------------------------------------------------------
Balance at June 30, 2005 30,899,400 48,427,485

Costs related to the issuance
of common shares (d) - (19,366)
Exercise of stock options (e) 240,001 281,932
------------------------------------------------------------------------
At September 30, 2005 31,139,401 $ 48,690,051
------------------------------------------------------------------------
------------------------------------------------------------------------


(a) May 10, 2005, the Corporation completed an initial public offering of 7,000,000 common shares at a price of $3.85 per common share for gross proceeds of $26,950,000. Costs related to this issue were $2,043,358 which resulted in a tax benefit of $768,300.

(b) In May and June 2005, 848,000 common shares were issued on the exercise of 848,000 founders' warrants for cash consideration of $8.00. An amount related to stock-based compensation expensed in prior years of $848,000 was reclassified from contributed surplus to share capital as a result of the exercise of these warrants.

(c) In June 2005, 127,500 common shares were issued on the exercise of 127,500 share options for cash consideration of $133,875. An amount related to stock-based compensation expensed in prior periods of $15,189 was reclassified from contributed surplus to share capital as a result of the exercise of these options.

(d) In July and August additional expenses were paid related to the issuance of common shares on May 10, 2005. These costs were $30,366 which resulted in a tax benefit of $11,000.

(e) In July and August 2005, 240,001 common shares were issued on the exercise of 240,001 share options for cash consideration of $253,001. An amount related to stock-based compensation expensed in prior periods of $28,931 was reclassified from contributed surplus to share capital as a result of the exercise of these options.



Contributed Surplus

2005
------------------------------------------------------------------------
Balance, December 31 $ 1,073,422

Stock-based compensation expense 392,155
Stock-based compensation capitalized 268,929
Options and warrants exercised (892,120)
------------------------------------------------------------------------
Balance, September 30 842,386
------------------------------------------------------------------------
------------------------------------------------------------------------


Stock-based Compensation

Options

A summary of the status of the share option plan as at September
30, 2005 is as follows:

Weighted-Average
Options Exercise Price
------------------------------------------------------------------------
Opening balance, December 31, 2004 2,155,000 $ 1.10
Granted 970,000 3.77
Exercised (367,501) 1.05
Forfeited (42,499) 2.50
------------------------------------------------------------------------
2,715,000 $ 2.04
------------------------------------------------------------------------
------------------------------------------------------------------------


At September 30, 2005, options to purchase 2,715,000 common shares were
outstanding as follows:

Range of Number of Number Exercisable Weighted-Average
Exercise Price Options at September 30, 2005 Life (Years)
------------------------------------------------------------------------
$1.00 - $1.30 1,765,000 1,590,000 2.8
$3.84 - $5.04 95,000 323,333 4.6
------------------------------------------------------------------------
2,715,000 1,913,333 3.4
------------------------------------------------------------------------
------------------------------------------------------------------------


The aggregate cost associated with all of the outstanding options is estimated at $1,409,472 of which $862,482 has been recognized. During the three and nine month periods ended September 30, 2005 compensation expense of $79,635 and $392,155 (2004 - $81,102 and $123,234), respectively, was expensed based on the estimated fair value of the options on the grant date in accordance with the fair value method of accounting for stock-based compensation.

The estimated fair value of share options issued during the period of $1.17 per share (2004 - $0.27 per share) was determined using the Black-Scholes model, based on the following assumptions for the nine month periods ended September 30:



2005 2004
------------------------------------------------------------------------
Risk-free interest rate 3.25% 4.25%
Expected hold period to exercise 3 years 2 years
Volatility in the price of the Corporation's shares 40% 30%
Dividend yield 0.00% 0.00%
------------------------------------------------------------------------
------------------------------------------------------------------------


Founders' Warrants

During 2003, the Corporation issued 848,000 founders' warrants with a nominal strike price to the four founding members of the Corporation's management team. In the nine month period ended September 30, 2005 the conditions were met for the exercise of all of the founders' warrants and all founders' warrants were exercised.

Warrants

During 2003, the Corporation issued 50,000 warrants with an exercise price of $1.05 per share for no cash consideration. The warrants are exercisable on or before May 15, 2006 and are included in the computation of diluted earnings per share.

Performance Warrants

In 2005 the Corporation issued 100,000 performance warrants to an employee to purchase in aggregate 100,000 common shares at strike price of $2.25 per share. The performance warrants are exercisable upon satisfaction of certain conditions which have been met.

An amount of $25,000 has been included in the stock-based compensation expense for the nine months ended September 30, 2005 based on the fair market value of the warrants at the date of grant using the Black-Scholes model using assumptions of a risk-free rate of 3.25 percent with an expected hold period of five months, 40 percent volatility and a zero percent dividend yield.

10.TRANSPORTATION EXPENSES

Transportation and trucking charges related to the delivery of natural gas are deducted from gross prices received for these products. For the three and nine month periods ended September 30, 2005 these charges were $396,054 and $1,002,647 (2003 - $278,348 and $650,566), respectively.

11. PER SHARE AMOUNTS

Per share amounts have been calculated using the weighted average number of common shares outstanding during the period. The weighted number of common shares outstanding for each period is as follows:



Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
------------------------------------------------------------------------
2005 2004 2005 2004
------------------------------------------------------------------------
Basic 31,057,154 22,923,900 27,076,539 22,910,542
Diluted 32,705,820 23,917,088 29,143,569 23,878,566
------------------------------------------------------------------------
------------------------------------------------------------------------


For the nine month period ended September 30, 2005, 2,700,000 options are considered in-the-money as the estimated market price exceeds aggregate of the exercise price of the options and the future compensation cost of the employee stock options. The balance of the options is not in-the-money and have been excluded from the diluted earnings per share calculation. As the exercise conditions for the performance warrants had been met at September 30, 2005, the warrants were included in the earnings per share computation. The weighted average diluted shares outstanding for the nine months ended September 30, 2005 includes the weighted number of shares outstanding of 27,076,539 plus 2,067,030 shares related to the dilutive effect of the employee stock options and warrants.

12.RELATED PARTY TRANSACTIONS

From time to time, the Corporation enters into service contracts with an oil and gas service company whose directors include an individual who is also a director and officer of ExAlta. In aggregate this company was paid $30,000 for the nine months ended September 30, 2005 (2004 -nil). The services and supplies were invoiced to ExAlta at standard market prices and have been included in operating expenses.

A director of the Corporation is a partner of a law firm that was paid $161,000 for legal services for the nine months ended September 30, 2005 (2004 - $8,100). The fees were based on standard rates and time spent on Corporation matters and have been included in general and administrative expense and share issue costs.



13. SUPPLEMENTAL CASH FLOW INFORMATION

2005 2004
------------------------------------------------------------------------
Cash interest paid $ 205,719 $ 68,065
Cash taxes paid $ 1,919 -
------------------------------------------------------------------------
------------------------------------------------------------------------


CORPORATE INFORMATION

BOARD OF DIRECTORS (1)

Martin A. Lambert (4)
Chairman,
Partner, Bennett Jones LLP
Calgary, Alberta

James S. Blair
President and Chief Executive Officer,
ExAlta Energy Inc.
Calgary, Alberta

Fred C. Coles (2)(3)
Executive Chairman, JOG Capital Inc.
Calgary, Alberta

Dennis G. Miller (2)(3)(4)
Principal, D.G. Miller Investments
Edmonton, Alberta

Marcel J. Tremblay (4)
Chairman and
Chief Executive Officer, Overlord Financial Inc.
Cochrane, Alberta

Roderick V.W. Wilmer (2)(3)
Managing Director, Capital Markets, BMO Nesbitt Burns Inc.
Toronto, Ontario

(1) All of the directors of ExAlta have been
appointed to hold office until the next annual
general meeting of shareholders or until their
successors are duly elected or appointed,
unless their office is earlier vacated.
(2) Member of the Audit Committee.
(3) Member of the Reserves Committee.
(4) Member of the Compensation and
Governance Committee.

ExAlta does not have an Executive
Committee.

OFFICERS

James S. Blair
President and
Chief Executive Officer

Ian R. Robinson
Vice President and
Chief Financial Officer

Brian E. Avery
Vice President,
Engineering and Production

Allan J. Baxter
Vice President,
Exploration and Development

Carol E. Goodwin
Office Manager and
Corporate Secretary

LEGAL COUNSEL

Bennett Jones LLP
Calgary, Alberta

BANKER

Canadian Imperial Bank
of Commerce
Calgary, Alberta

AUDITORS

Ernst & Young LLP
Chartered Accountants
Calgary, Alberta

INDEPENDENT ENGINEERS

Gilbert Laustsen Jung
Associates Ltd.
Calgary, Alberta

REGISTRAR AND TRANSFER AGENT

Valiant Trust Company
Calgary, Alberta

EXCHANGE LISTING

Toronto Stock Exchange
Stock symbol: EXA

EXECUTIVE OFFICE

1900, 520 - 5th Avenue SW
Calgary, Alberta T2P 3R7
Tel: (403) 206-2400
Fax: (403) 206-2409
www.exalta.ca

ABBREVIATIONS

Crude Oil and Natural Gas Liquids
bbls barrels
mbbls thousands of barrels
mmbbls millions of barrels
bbls/d barrels per day
boe(a) barrels of oil equivalent
mboe thousands of barrels of oil equivalent
(6 mcf: 1 boe for gas; 1 bbl: 1 boe for liquids)
boe/d barrels of oil equivalent per day
NGL natural gas liquids

Natural Gas
mcf thousand cubic feet
mmcf million cubic feet
mmbtu millions of British thermal units
bcf billion cubic feet
mcf/d thousand cubic feet per day

Other
$m thousands of dollars
$mm millions of dollars


(a) Measurements expressed in 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. This is an industry accepted conversion
ratio and it is not based on energy content or current prices.



Contact Information

  • ExAlta Energy Inc.
    James S. Blair
    President & Chief Executive Officer
    (403) 206-2404
    or
    ExAlta Energy Inc.
    Ian R. Robinson
    Vice President & Chief Financial Officer
    (403) 206-2410