Flagship Energy Inc.
TSX VENTURE : FG.A
TSX VENTURE : FG.B

Flagship Energy Inc.

June 30, 2008 20:17 ET

Flagship Energy Inc. Announces Filing of Revised Financial Statements

CALGARY, ALBERTA--(Marketwire - June 30, 2008) - Flagship Energy Inc. ("Flagship") (TSX VENTURE:FG.A)(TSX VENTURE:FG.B) today announced that it had identified accounting errors with respect to previous calculations of its ceiling tests during June 2008. In the formula used to calculate the estimated recoverable amount of property, plant and equipment, future development costs were inadvertently deducted twice. This had the effect of overstating reported write-downs of property plant and equipment and affected the calculation of loss on sale of oil and gas properties under full cost accounting.

The net effect of the errors, which commenced in the fourth quarter of 2006, was to increase property, plant and equipment by $13.9 million to December 31, 2007, with an offsetting decrease to deficit. At the end of the quarter ending March 31, 2008 the increase in property, plant and equipment was $12.6 million, again with an offsetting decrease in the reported deficit. The revisions had no effect on reported cash flows from operating activities in any period.

Revised audited financial statements for the years ended December 31, 2006 and 2007, with revised management's discussion and analysis ("MD&A") for the two years then ended, have been filed on the SEDAR website. Revised unaudited interim financial statements for the three months ended March 31, 2008 and revised MD&A were also filed on the SEDAR website.

Copies of the revised documents may be obtained at www.sedar.com or by contacting Flagship.

Flagship is a Calgary, Alberta, Canada based crude oil and natural gas exploration, development and production company. The class A and class B shares of Flagship are traded on the TSX Venture Exchange under the symbols FG.A and FG.B, respectively.

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