NuLoch Resources Inc.
TSX VENTURE : NLR.A
TSX VENTURE : NLR.B

NuLoch Resources Inc.

November 20, 2006 16:47 ET

NuLoch Resources Announces Third Quarter 2006 Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 20, 2006) - NuLoch Resources Inc. (TSX VENTURE:NLR.A)(TSX VENTURE:NLR.B) was incorporated on May 13, 2005 and commenced operations on July 1, 2005. Production averaged 276 boe/d in the third quarter of 2006 and currently is 260 boe/d with approximately 115 boe/d behind pipe.



HIGHLIGHTS
-----------------------------------------------------------------------
Periods ended September 30,
Three Nine
months months
------------------- -------
2006 2005 2006
------- ------- -------
Production - daily average
Oil and NGL (bbls/d) 11 1 4
Natural gas (mcf/d) 1,590 76 1,689
------- ------- -------
Total oil equivalent (boe/d)(1) 276 14 286

Average sales prices
Oil and NGL (per bbl) $ 65.25 $ 53.87 $ 64.06
Natural gas (per mcf) $ 5.53 $ 8.84 $ 6.15

Petroleum and natural gas revenue $ 874,633 $ 66,401 $ 2,906,800

Funds flow from operations(2) 287,660 (133,457) 856,363
Per share - basic 0.02 (0.01) 0.06
Per share - diluted 0.02 (0.01) 0.06

Net earnings (loss) (156,340) (1,318,457) (202,637)
Per share - basic (0.01) (0.12) (0.01)
Per share - diluted (0.01) (0.12) (0.01)

Working capital (deficiency) (4,344,714) 5,974,666 (4,344,714)

Capital expenditures $ 4,780,264 $ 1,173,412 $11,043,156

Common shares
Class A, end of period 13,466,195 7,712,695 13,466,195
Class B, end of period 652,500 652,500 652,500
Options, end of period 822,500 822,500 822,500
-----------------------------------------------------------------------
(1) Six mcf of natural gas is considered equivalent to 1 barrel of oil.
(2) Changes in cash flow from operations before changes in non-cash
operating working capital.
-----------------------------------------------------------------------


MANAGEMENT'S DISCUSSION AND ANALYSIS

This interim management's discussion and analysis (MD&A) for the three and nine months ended September 30, 2006, prepared as at November 20, 2006, is an update to the MD&A provided for the period from inception on May 13, 2005 to December 31, 2005. This MD&A should be read in conjunction with the unaudited interim financial statements for the three and nine months ended September 30, 2006 and with the 2005 annual report which contains the audited financial statements for the period ended December 31, 2005.
The financial statements, and extracts of those statements provided within this MD&A, were prepared in Canadian dollars using Canadian generally accepted accounting principles (GAAP). Certain other information with respect to the Company is available on SEDAR at www.sedar.com.

NuLoch Resources Inc. (NuLoch or the Company) was incorporated under the laws of the Province of Alberta on May 13, 2005. No operations were undertaken in the period from incorporation until the end of the second quarter on June 30, 2005 and, consequently, no discussion or analysis can be presented with respect to that period.

Plan of Arrangement

On July 1, 2005 a plan of arrangement (the Plan) involving Enerplus Resources Fund, TriLoch Resources Inc. and NuLoch became effective and marked the commencement of operations for the Company. Pursuant to the Plan, Enerplus acquired TriLoch and virtually all of its assets in exchange for units of Enerplus. TriLoch received shares in NuLoch that were distributed to Class A shareholders of TriLoch and NuLoch received certain property and equipment previously held by TriLoch.



Q3 2006 Overview

Selected Financial Information
($ thousands, except per share information)

Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005
--------- --------- --------- --------- ---------
Net revenue, including
interest income $ 712 $ 728 $ 863 $ 282 $ 83
Net earnings (loss) (156) $ (39) (7) 421 (1,318)
Per share,
basic $ (0.01) $ - $ - $ 0.04 $ (0.12)
diluted $ (0.01) $ - $ - $ 0.03 $ (0.12)


During the fourth quarter of 2005, the Company drilled 42 shallow gas wells at Enchant, Alberta and nine of them produced during December. Completion operations and tie-ins continued through the first quarter of 2006 and all 38 wells capable of production were on-stream at March 31, 2006. These wells accounted for virtually all of the Company's production during the first nine months of 2006. During the third quarter, two (1.3 net) wells at Enchant and two (0.8 net) wells at Balsam were placed on-stream.

Capital Expenditures

A total of $4.8 million was expended in the third quarter of 2006 bringing the nine-month total at September 30, 2006 to $11.0 million. Three (1.8 net) wells were spud in the quarter.



Capital Expenditures
Periods ended September 30, 2006 and 2005
-----------------------------------------------------------------------
Three months Nine months
-------------------------- ------------
2006 2005 2006
------------ ------------ ------------

Land $ (119,823) $ - $ 551,166
Drilling and completions 3,957,272 824,021 7,834,877
Equipment 584,012 224,242 1,605,312
Geoscience 211,079 - 508,434
Acquisition of petroleum and
natural gas properties - 324,993 -
Capitalized G&A 147,009 113,441 527,815
Administrative assets 715 119,952 15,552
------------ ------------ ------------
$ 4,780,264 $ 1,606,649 $11,043,156
------------ ------------ ------------
------------ ------------ ------------

Wells Drilled
Nine months ended September 30, 2006
-----------------------------------------------------------------------
Natural Success
Oil gas Suspended Dry Total Ratio
------- ------- ------- ------- ------- -------

Gross 1 4 1 2 8
Net 0.3 2.4 0.5 1.3 4.5 60%


Revenue

The Company's production averaged 276 boe/d in the third quarter and 286
boe/d for the nine months ended September 30, 2006. Virtually all of this
production was natural gas.

Production, Prices and Revenue
-----------------------------------------------------------------------
2006 2005 2006
Q3 Q3 YTD
------- ------- -------
Production - daily average
Oil and NGL (bbls/d) 11 1 4
Natural gas (mcf/d) 1,590 76 1,689
------- ------- -------
Total oil equivalent (boe/d) 276 14 286

Average sales prices
Oil and NGL (per bbl) $65.25 $53.87 $64.06
Natural gas (per mcf) $ 5.53 $ 8.84 $ 6.15

Petroleum and natural
gas revenue (thousands) $ 875 $ 66 $2,907


The Company's production operations commenced on July 1, 2005. In 2005, production consisted of two (1.4 net) natural gas wells at Shouldice, Alberta and, starting in early December, the first nine wells of the Company's 42-well shallow gas program at Enchant, Alberta. Rates from Shouldice have declined to nominal amounts while the Enchant shallow gas property achieved a peak production rate of approximately 500 boe/d (3 mmcf/d) when all 38 successful wells were tied-in during the first quarter of 2006. In the third quarter, the combined net production rate from these 38 wells was 253 boe/d.

During the third quarter, two (1.3 net) wells at Enchant and two (0.8 net) wells at Balsam were placed on-stream. The Enchant wells are currently producing natural gas and associated liquids at a combined net rate of approximately 35 boe/d. Both Kiskatinaw wells at Balsam are currently shut-in after flowing oil and solution natural gas in late September and early October. Pressure information indicates that one well (0.5 net) has a limited reservoir and is not expected to be re-activated. The other well (0.3 net) has a low gas-to-oil ratio that limits its ability to flow naturally. The required oil pumping equipment has now been installed but the well will remain shut-in until the tie-in of the solution gas is completed. Production is expected to resume in December with an anticipated initial net rate of approximately 40 boe/d.

The Company also completed two (1.1 net) Mannville channel wells in the third quarter. Tie-in operations have commenced and natural gas production is expected in December at combined net rates of approximately 75 boe/d.

The Company anticipates continuing strength in the markets for oil and natural gas through 2006 and into 2007. Natural gas is expected to be the primary focus of the Company's development program in 2007. Natural gas pricing has been under pressure throughout 2006 as the market considers the historically high levels of product in storage. The Company's net realized price in September was $4.61 per mcf compared to the nine-month average of $6.15 per mcf. With the new "gas year" commencing on November 1, daily spot prices at AECO have improved to more than $7.00 per mcf.

Royalties

NuLoch's SWS natural gas program at Enchant is a farm-in project on Crown mineral leases that provides for the payment of overriding royalties to the farmors based on 15 percent of gross revenue. The average combined Crown and other royalty rate for the Company, net of ARTC, was 19 percent in the third quarter of 2006. This net rate is lower than the 22 percent recorded in the second quarter of 2006 due to the effect of lower natural gas prices and unchanged levels of deductible transportation and processing expenses in Q3. The government of Alberta recently announced that ARTC benefits will not continue after 2006. ARTC totalled $86,307 in the nine months ended September 30, 2006, being 25 percent of eligible Crown royalties payable. The effective royalty rate before including ARTC was 24.4 percent during that period.



Royalties
Periods ended September 30, 2006 and 2005
(thousands)
-----------------------------------------------------------------------
Three months Nine months
-------------------------- ------------
2006 2005 2006
------------ ------------ ------------
Amount % Amount % Amount %
------- ---- ------- ---- ------- ----
Petroleum and natural
gas revenue $ 875 100 $ 66 100 $2,907 100

Crown royalties $ 91 10 $ - - $ 345 12
ARTC (23) (2) - - (86) (3)
Freehold royalties 4 - 10 14 15 1
Overriding royalties 97 11 - - 349 12
------- ---- ------- ---- ------- ----
Royalties, net of ARTC $ 169 19 $ 10 14 $ 623 22
------- ---- ------- ---- ------- ----
------- ---- ------- ---- ------- ----


Operating Expenses

Operating expenses can vary significantly depending on such factors as production rates, reservoir quality, water content and available infrastructure. The Company's target is to maintain average operating expenses below $10.00 per boe of production. In the third quarter of 2006, operating expenses averaged $9.82 per boe, compared to $8.79 per boe for the year-to-date period. Annual surface lease renewals on the Enchant shallow gas properties were payable in the third quarter and contributed $1.28 per boe to the $9.82 per boe in operating expenses.

Interest Expense

Interest expense was not incurred in 2005. In 2006 the Company has incurred Federal Part XII.6 tax totalling approximately $73,000 - characterized as interest - with respect to $4.9 million of renouncements pursuant to flow-through common shares issued in 2005. Expenditure commitments in respect of those renouncements were met in full during the nine months ended September 30, 2006. During the third quarter of 2006 the Company drew upon its credit facility with a Canadian chartered bank. The balance outstanding at September 30, 2006 totalled $2,160,511 with interest payable at the bank's prime rate + 0.5 percent per annum.

General and Administrative (G&A) Expense

The Company has seven employees at its leased head office in Calgary and uses external consultants on an as-needed basis to assist with the regular operation of the business.



G&A
Periods ended September 30, 2006 and 2005
-----------------------------------------------------------------------
Three months Nine months
-------------------------- ------------
2006 2005 2006
------------ ------------ ------------

Gross overhead costs $ 313,883 $ 317,632 $ 1,185,112
Stock-based compensation 13,000 13,000 39,000
Amounts capitalized (147,009) (113,441) (527,815)
------------ ------------ ------------
$ 179,874 $ 217,191 $ 696,297
------------ ------------ ------------
------------ ------------ ------------


The average net rate for G&A in the third quarter of 2006 was $7.09 per boe. The Company may see significant increases in gross G&A in 2007 as the scope of operations expands, but achieve a decrease in G&A costs per unit of production as production continues to increase as planned.

Depletion and depreciation

In the third quarter of 2006, the rate of depletion and depreciation with respect to petroleum and natural gas properties was $19.03 per boe and the average rate was $17.02 per boe for the nine months ended September 30, 2006.

Income Taxes

The Company does not expect to incur any current income or capital taxes in 2006. In the first quarter of 2006, the Company renounced $7,250,000 in eligible Canadian Exploration Expense with respect to flow-through shares issued in 2005. The income tax effect of the renouncement, being $2,440,000, was recorded in the first quarter of 2006 as a reduction in share capital and increase in future income tax liability. Additional flow-through shares totalling $5,001,475 were issued in the second quarter with renouncement of Canadian Exploration Expense planned for the first quarter of 2007. The income tax effect of the renouncement will be recorded at that time.

Reductions in federal and provincial income tax rates in respect of 2006 through 2010 were substantively enacted during the three months ended June 30, 2006. Accordingly, a reduction in the Company's future tax liability in the amount of $187,000 was recorded in that period.

Funds Flow and Net Loss

In 2005, the Company was in the early stages of developing its oil and natural gas production business. As such, funds flow from operations was negative for the six months ended December 31, 2005 primarily because the limited amount of net production revenue did not cover G&A expenses.

Funds flow from operations was positive in the first nine months of 2006 as production from the Enchant SWS shallow natural gas project contributed substantial revenue. Funds flow from operations totalled $856,363 in the nine months and $287,660 in the quarter ended September 30, 2006.

The Company incurred a net loss in the third quarter totalling $156,340 on net revenues of $711,595.

Liquidity and Capital Resources

The amount of credit available under the Company's demand revolving operating facility with a Canadian chartered bank was increased to $5.5 million in October, 2006. The borrowing base is expected to be re-evaluated by the bank in the second quarter of 2007 based on forecasts of the Company's reserves, production and cash flows.

On February 22, 2006 the Company issued, pursuant to a private placement, 3,050,000 Class A common shares at $1.65 per share for gross proceeds of $5,032,500.

On June 29, 2006 the Company issued 2,703,500 flow-through Class A common shares at $1.85 per share for gross proceeds of $5,001,475. The Company plans to renounce this amount of tax deductions in the form of Canadian Exploration Expense to shareholders effective December 31, 2006 and has a commitment to incur these qualifying resource expenditures prior to December 31, 2007. As at September 30, 2006, approximately $2,200,000 of qualifying expenditures have been incurred.

The balance of the Company's expenditure commitment with respect to $7,250,000 of flow-through shares issued in 2005 was satisfied during the third quarter of 2006.

The Company's capital program was established at $13.7 million for 2006. Of this total, $11.0 million had been incurred to September 30, 2006, and the Company has firm plans to invest $0.4 million in the fourth quarter. In light of weaker natural gas prices during the third quarter, certain projects were postponed by the Company. Cash provided by operating activities is budgeted to provide a significant portion of the funding for the capital program. The Company is encouraged by the recent strengthening in Canadian natural gas markets and will proceed with its capital program as financial resources allow. A shortfall in available funds may be satisfied with bank borrowings or further equity issues if appropriate. If these or other sources of funding are insufficient, or cannot be obtained with acceptable terms, then prudent reductions in the capital program may be warranted.

Outstanding Share Data

The Class A and Class B common shares of the Company trade on the TSX Venture Exchange under the symbol NLR.A and NLR.B, respectively. As of the date of this MD&A there are 13,466,195 Class A common shares and 652,500 Class B common shares outstanding. There are 822,500 options to purchase Class A common shares outstanding.

Risk Factors

The activities of the Company are inherently risky due to the nature of its involvement in the exploration, development and production of oil and natural gas and its present stage of development. A discussion of these risks can be found on pages 14 through 17 of the Company's annual report for the period ended December 31, 2005.

Advisories

Use of Barrels of Oil Equivalent (boe)

Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf of natural gas to 1 bbl of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and may not represent a value equivalency at the wellhead.

Non-GAAP Measurement - Funds Flow

Funds flow from operations, calculated as cash flow from operating activities before changes in non-cash working capital, is used by the Company as a key measure of performance. Funds flow from operations does not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable with the calculation of similar measures for other companies. Funds flow from operations as presented is not intended to represent operating profits for the period, nor should it be viewed as an alternative to cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP. Many of the Company's peers in the oil and natural gas industry use the same definition and, therefore, disclosure herein enhances comparability with those peers. Funds flow from operations per share is calculated using the same share bases which are used in the determination of earnings per share.

Forward-Looking Statements

Certain statements in this document or incorporated herein by reference constitute "forward-looking statements". These forward-looking statements can generally be identified as such because of the context of the statements, including words indicating that the Company "believes", "anticipates", "expects", "plans" or words of a similar nature. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's products; industry capacity; the ability of the Company to implement its business strategy, including exploration and development activities; the ability of the Company to complete its capital programs; successful negotiations with bankers and other third parties; the success of exploration and development activities; production levels; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations); asset retirement obligations; and other circumstances affecting revenues and expenses.



---------------------------------------------------------------------------

INTERIM FINANCIAL STATEMENTS

NULOCH RESOURCES INC.
Balance Sheets
(unaudited)

As at September 30, December 31,
2006 2005
------------- -------------
Assets

Current assets:
Cash and cash equivalents $ - $ 2,705,240
Accounts receivable 707,970 737,968
Prepaid expenses and other assets 155,004 2,847
------------- -------------
862,974 3,446,055

Property and equipment (note 3) 20,022,262 10,232,106
Future income tax asset - 555,000
------------- -------------
$ 20,885,236 $ 14,233,161
------------- -------------
------------- -------------

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities $ 3,047,177 $ 6,853,529
Bank loan (note 4) 2,160,511 -
------------- -------------
5,207,688 6,853,529

Future income tax liability (note 5) 1,276,000 -
Asset retirement obligations 522,000 396,000

Shareholders' equity:
Share capital (note 6) 14,914,325 7,854,772
Contributed surplus (note 6(d)) 65,000 26,000
Deficit (1,099,777) (897,140)
------------- -------------
13,879,548 6,983,632

Commitment (note 7)
------------- -------------
$ 20,885,236 $ 14,233,161
------------- -------------
------------- -------------

See accompanying notes to financial statements



NULOCH RESOURCES INC.
Statements of Operations and Deficit
For the periods ended September 30, 2006 and 2005
(unaudited)


Three months Nine months
ended ended
September 30, September 30,
2006 2005 2006
------------- ------------- -------------
Revenue:
Petroleum and natural gas $ 874,633 $ 66,401 $ 2,906,800
Royalties, net of
Alberta Royalty Tax Credit (168,874) (9,646) (622,805)
Interest 5,836 26,293 19,435
------------- ------------- -------------
711,595 83,048 2,303,430

Expenses:
Operating 249,317 12,314 685,504
General and administrative 179,874 217,191 696,297
Interest 7,744 - 104,266
Depletion and depreciation 489,000 1,171,000 1,354,000
Asset retirement accretion 9,000 1,000 25,000
------------- ------------- -------------
934,935 1,401,505 2,865,067

------------- ------------- -------------
Loss before income taxes (223,340) (1,318,457) (561,637)

Future income tax reduction 67,000 - 359,000
------------- ------------- -------------
Net loss (156,340) (1,318,457) (202,637)

Deficit, beginning of period (943,437) - (897,140)
------------- ------------- -------------
Deficit, end of period $ (1,099,777) $ (1,318,457) $ (1,099,777)
------------- ------------- -------------
------------- ------------- -------------

Net loss per share (note 6(e)):

Basic and diluted $ (0.01) $ (0.12) $ (0.01)

------------- ------------- -------------
------------- ------------- -------------

See accompanying notes to financial statements


NULOCH RESOURCES INC.
Statements of Cash Flows
For the periods ended September 30, 2006 and 2005
(unaudited)

Three months Nine months
ended ended
September 30, September 30,
2006 2005 2006
------------- ------------- -------------

Cash provided by (used in):

Operating:
Net loss $ (156,340) $ (1,318,457) $ (202,637)
Items not involving cash:
Future income tax reduction (67,000) - (359,000)
Depletion and depreciation 489,000 1,171,000 1,354,000
Asset retirement accretion 9,000 1,000 25,000
Stock-based compensation 13,000 13,000 39,000
------------- ------------- -------------
287,660 (133,457) 856,363
Change in non-cash
operating working capital 52,828 (71,982) 94,739
------------- ------------- -------------
340,488 (205,439) 951,102

Financing:
Issue of share capital,
net of issue costs - 7,281,534 9,249,553
Increase in bank loan 2,160,511 - 2,160,511
Change in non-cash
financing working capital (22,974) - -
------------- ------------- -------------
2,137,537 7,281,534 11,410,064

Investing:
Property and equipment (4,780,264) (1,173,412) (11,043,156)
Change in non-cash
investing working capital 191,296 149,985 (4,023,250)
------------- ------------- -------------
(4,588,968) (1,023,427) (15,066,406)

------------- ------------- -------------
Increase (decrease) in cash and
cash equivalents (2,110,943) 6,052,668 (2,705,240)

Cash and cash equivalents,
beginning of period 2,110,943 1 2,705,240
------------- ------------- -------------
Cash and cash equivalents,
end of period $ - $ 6,052,669 $ -
------------- ------------- -------------
------------- ------------- -------------

Supplemental cash flow information (note 8)

See accompanying notes to financial statements


NULOCH RESOURCES INC.
Notes to Financial Statements
As at and for the three and nine months ended September 30, 2006
(unaudited)


1. Basis of presentation

These interim financial statements have been prepared by management of NuLoch Resources Inc. (the Company) in accordance with Canadian generally accepted accounting principles using the same accounting policies as the financial statements for the period ended December 31, 2005. The disclosures contained herein are incremental to, and should be read in conjunction with, those annual financial statements.

2. Nature of business

The Company is incorporated under the laws of the Province of Alberta. The Company's activities are related to exploration for and development of petroleum and natural gas. The Company was incorporated on May 13, 2005 and commercial operations commenced on July 1, 2005.



3. Property and equipment

Accumulated
depletion and Net book
September 30, 2006 Cost depreciation value
-----------------------------------------------------------------------
Petroleum and natural
gas properties $ 22,490,758 2,559,000 $ 19,931,758
Administrative assets 135,504 45,000 90,504
------------- ------------- -------------
$ 22,626,262 2,604,000 $ 20,022,262
------------- ------------- -------------
------------- ------------- -------------


During the nine months ended September 30, 2006, general and administrative costs of $527,815 directly related to the acquisition, exploration and development of petroleum and natural gas reserves were capitalized.

At September 30, 2006, costs associated with unproved petroleum and natural gas properties totalling $400,000 have been excluded from the calculation of depletion and depreciation (December 31, 2005 - nil).

Future development and asset retirement costs in the amount of $8,787,000 associated with proved reserves have been included in the calculation of depletion and depreciation (December 31, 2005 - $10,616,000).

4. Bank loan

The Company maintains a demand revolving operating credit facility with a Canadian chartered bank. Borrowings under the facility bear interest at the bank's prime rate plus 0.5 percent and are secured by a demand fixed and floating charge debenture conveying a first charge on all of the assets of the Company. The facility is subject to regular review by the bank. Subsequent to September 30, 2006 the amount of credit available under the facility was increased to $5,500,000.

5. Income taxes

Reductions in federal and provincial income tax rates in respect of 2006 through 2010 were substantively enacted during the three months ended June 30, 2006. Accordingly, a reduction in the Company's future tax liability in the amount of $187,000 was recorded in that period.

In February 2006 the Company renounced tax deductions to shareholders that totalled $7,250,000. The income tax effect of the renouncement, being $2,440,000, was recorded as a reduction in share capital and increase in future income tax liability.

6. Share capital

(a) Authorized

An unlimited number of Class A, Class B and Class C shares have been authorized.

Class B shares are exchangeable for Class A shares. The number of Class A shares obtained upon conversion of each Class B share will be equal to $10.00 divided by the greater of $1.00 and the 30-day average closing price for Class A common shares immediately prior to the effective date of conversion. Conversion may be effected by the Company in 2009 or 2010 or, if not converted before 2011, then at the option of the Class B shareholder in January 2011 or otherwise automatically on February 1, 2011.



(b) Issued and outstanding
Common
shares Amount
------------- -------------
Class A common shares
Balance, December 31, 2005 7,712,695 $ 1,728,892

Issued pursuant to private placement 3,050,000 5,032,500
Issued pursuant to flow-through
private placement 2,703,500 5,001,475
Share issue costs (784,422)
Tax effect of share issue costs 250,000
Tax effect of flow-through
renunciation (note 5) (244,000)
------------- -------------
Balance, September 30, 2006 13,466,195 10,984,445
------------- -------------

Class B common shares
Balance, December 31, 2005 652,500 6,125,880

Tax effect of flow-through
renunciation (note 5) (2,196,000)
------------- -------------
Balance, September 30, 2006 652,500 3,929,880
------------- -------------


Total share capital, September 30, 2006 $ 14,914,325
-------------
-------------


(c) Stock option plan

The Company maintains a stock option plan that authorizes the board of directors to issue stock options to directors, officers, employees or other service-providers of the Company. The options vest at the rate of one-third annually over three years and expire after five years. Options are issued at strike prices equal to or greater than the market price of the Company's Class A shares on the date of grant.



Weighted
average
exercise
Options price
---------- --------
Balance, December 31, 2005 822,500 $0.35
Granted - -
---------- --------
Balance, September 30, 2006 822,500 $0.35
---------- --------
---------- --------
Exercisable, September 30, 2006 274,165 $0.35
---------- --------
---------- --------

At September 30, 2006 the outstanding options have a remaining life of
3.8 years.


(d) Contributed surplus

Balance, December 31, 2005 $ 26,000
Stock-based compensation expense 39,000
-------------
Balance, September 30, 2006 $ 65,000
-------------
-------------


(e) Per share amounts

Per share amounts have been calculated on the weighted average number of shares outstanding after giving effect to the potential conversion of Class B shares into Class A shares at 1:6.5 based on the average closing price of Class A shares of $1.53 in the 30 trading days prior to September 30, 2006. Options, when the exercise price is less than the average market price of the underlying security, are dilutive to net earnings per share and notionally increase the weighted average number of Class A common shares outstanding.

The weighted average numbers of shares for the three and nine months ended September 30, 2006 are as follows:



Three Nine
months months
------------- -------------

Class A common shares 13,466,195 11,112,618
Class B common shares 652,500 652,500
Additional Class B assumed converted 3,588,750 3,588,750
------------- -------------
Basic and diluted shares outstanding 17,707,445 15,353,868
------------- -------------
------------- -------------


Stock options are anti-dilutive to net loss per share and their effect, being 589,241 shares and 592,879 shares in the three months and nine months ended September 30, 2006, respectively, are excluded from that calculation.


7. Commitment

In June 2006 the Company issued flow-through Class A common shares in the amount of $5,001,475. The Company plans to renounce this amount of tax deductions to shareholders effective December 31, 2006 and has a commitment to incur these qualifying resource expenditures prior to December 31, 2007. As at September 30, 2006, approximately $2,200,000 of qualifying expenditures have been incurred.

8. Supplemental cash flow information

Cash payments of $24,152 have been made in respect of interest during the nine months ended September 30, 2006. No cash payments for taxes have been made by the Company.

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

Contact Information

  • NuLoch Resources Inc.
    James N. McIndoe
    President and CEO
    (403) 920-0455
    (403) 920-0457 (FAX)
    Email: nuloch@nuloch.ca
    or
    NuLoch Resources Inc.
    2200, 444 - 5th Avenue SW
    Calgary, Alberta T2P 2T8