Vaquero Energy Ltd.

Vaquero Energy Ltd.

March 28, 2005 09:15 ET

Vaquero Energy Announces 2004 Year-end Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: VAQUERO ENERGY LTD.

TSX SYMBOL: VAQ

MARCH 28, 2005 - 09:15 ET

Vaquero Energy Announces 2004 Year-end Results

CALGARY, ALBERTA--(CCNMatthews - March 28, 2005) - Vaquero Energy
(TSX:VAQ) is pleased to announce its financial and operating results for
2004. During the year Vaquero continued to dramatically grow its
reserves, production, cash flow, earnings and undeveloped land holdings.
Successful exploration and development drilling programs in west central
Alberta continue to be the key to the Company's growth.

2004 Highlights

- 125% increase in production to 2,993 boe/d from 1,328 boe/d in 2003

- Cash flow up 146% to $26.6 million from 2003

- Net earnings increased by 124% to $9.8 million

- Increased proved plus probable reserves by 50% to 10 million boe

- Proved reserves grew by 37% to 6.1 million boe

- Proved plus probable reserves added at an average cost of $10.21/boe
for the three year period 2002 through 2004

- Increased undeveloped land holdings by 86% to 66,200 net acres

During 2004 Vaquero continued to execute its balanced growth strategy,
dedicating its resources to its high impact Pembina Nisku oil play and
its high working interest natural gas opportunities. In 2004, Vaquero
drilled eight successful Nisku wells in the Pembina area discovering
five Nisku pools as well as increasing its undeveloped land position to
over 14,000 net acres. In addition to the Pembina Nisku activity the
Company drilled nine gas wells and three oil wells in the in Windfall,
Chip Lake, McLeod/Goodwin and Pembina areas.

In December 2004, Vaquero completed a $15 million equity financing,
which allowed the Company to acquire highly prospective undeveloped land
in the Pembina area in late 2004 and early 2005, significantly
increasing the Company's exploration prospects in the Pembina area.

Vaquero will continue its balanced plan for growth in 2005. The Pembina
area is expected to be an increasing source of reserve and production
additions in 2005 based upon the Company's drilling success and its
aggressive seismic and land acquisition programs. During the year the
Company expects to spend up to $28 million in the Pembina area drilling
up to 16 (6.5 net) wells.

While continuing to pursue high-impact success in Pembina, the Company
will also devote substantial resources to its high working interest,
natural gas areas of Windfall, McLeod/Goodwin and Chip Lake where it
expects to drill 24 (19.5 net) wells.

During 2005 the Company will continue acquiring seismic and undeveloped
land as well as participating in the construction of facilities and
pipelines in its core areas providing an inventory of drilling
opportunities and production handling capacity for future growth.

Based upon the addition of light oil production from Pembina and natural
gas from the Windfall, McLeod/Goodwin and Chip Lake areas, Vaquero
expects production in 2005 to average 4,600 to 4,800 boe/d, with an
anticipated exit of 5,700 boe/d achieving an overall cash flow for the
year of approximately $36 to $38 million.

Vaquero Energy Ltd. is a Canadian company adding value through
exploration, development and production of oil and natural gas primarily
in west central Alberta. Vaquero's common shares are listed on the
Toronto Stock Exchange under the trading symbol "VAQ".

Vaquero's news releases can be accessed electronically through its
website at www.vaquero.ca and the website of CCNMatthews at
www.ccnmatthews.com.

Forward Looking Statements

This press release may contain forward-looking statements including
expectations of future operational results, production, cash flow and
earnings. These statements are based on current expectations that
involve a number of risks and uncertainties that could cause actual
results to differ materially from those anticipated. These risks
include, but are not limited to: the risks associated with the oil and
gas industry (e.g. operational risks in development, exploration and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve
estimates; the uncertainty of estimates and projections relating to
production, costs and expenses; and health, safety and environmental
risks), commodity price, price and exchange rate fluctuation and
uncertainties resulting from the potential delays or changes in plans
with respect to exploration or development projects or capital
expenditures. Additional information on these and other factors that
could affect Vaquero's operations or financial results are included in
Vaquero's reports on file with Canadian securities regulatory
authorities and may be accessed through the SEDAR website
(www.sedar.com), at Vaquero's website (www.vaquero.ca) or by contacting
Vaquero.



VAQUERO ENERGY LTD.
YEAR END 2004 HIGHLIGHTS

Three Months Ended Year Ended
December 31 December 31
% %
2004 2003 change 2004 2003 change
------------------------------------------------------------------------

FINANCIAL ($)
------------------------------------------------------------------------

Petroleum
and natural
gas sales 13,580,427 6,595,633 106 48,651,501 19,876,626 145

Cash flow
from
operations 7,403,743 3,587,341 106 26,627,471 10,835,702 146
Per share
(basic) 0.17 0.09 89 0.61 0.29 110
Per share
(diluted) 0.16 0.08 100 0.59 0.28 111

Net earnings 2,730,913 1,631,374 67 9,804,041 4,381,670 124
Per share
(basic) 0.06 0.04 50 0.22 0.12 83
Per share
(diluted) 0.06 0.04 50 0.22 0.11 100

Capital
expenditures,
net 21,131,929 8,613,533 145 60,382,548 31,850,647 90

Debt,
including
working
capital
deficit 24,425,820 4,955,640 393

Total assets 105,096,204 51,356,646 105

Shareholders'
equity 57,344,632 32,541,849 76

Weighted
average
common
shares
outstanding 43,687,452 37,332,811 17

OPERATING
------------------------------------------------------------------------
AVERAGE DAILY PRODUCTION
------------------------------------------------------------------------
Crude oil
& NGLs
(bbls/d) 1,797 1,307 37 1,619 896 81
Natural
gas
(mmcf/d) 7.9 4.0 98 8.2 2.6 215
Barrels of oil
equivalent
(boe/d) (6:1) 3,119 1,977 58 2,993 1,328 125

AVERAGE PRODUCT PRICES
------------------------------------------------------------------------
Crude oil
& NGLs
($/bbl) 47.51 37.73 26 47.01 40.57 16
Natural gas
($/mcf) 7.85 5.60 40 6.89 6.73 2
------------------------------------------------------------------------
------------------------------------------------------------------------


Message to Shareholders

Management's Discussion and Analysis of Financial Results

Management's discussion and analysis (MD&A) of financial results should
be read in conjunction with the unaudited financial statements for the
three months ended September 30, June 30 and March 31, 2004 and with the
audited financial statements and notes for the years ended December 31,
2004 and 2003. This discussion offers management's opinion of Vaquero
Energy Ltd's (Vaquero or the Company) historical financial and operating
results and is dated and based on information available at March 23,
2005. All comparisons refer to the year ended 2004 with the year ended
2003, unless otherwise indicated.

The MD&A uses the terms "cash flow from operations", "cash flow", "cash
flow per share", "cash flow netbacks" and "debt to annualized fourth
quarter cash flow from operations ratio" which are not recognized
measures under Canadian generally accepted accounting principles (GAAP).
Management believes that in addition to net earnings, cash flow is a
useful supplemental measure as it provides an indication of the results
generated by the Company's principal business activities before the
consideration of how those activities are financed or how the results
are taxed. Investors are cautioned, however, that this measure should
not be construed as an alternative to net earnings determined in
accordance with GAAP, as an indication of Vaquero's performance.
Vaquero's method of calculating cash flow may differ from other
companies, and accordingly it may not be comparable to measures used by
other companies. Vaquero calculates cash flow from operations as "funds
from operations" before the change in non-cash working capital related
to operating activities. In addition, the terms "cash flow" and "funds
from" are used interchangeably.

Where amounts are expressed on a barrel of oil equivalent (boe) basis,
natural gas volumes have been converted to barrel of oil equivalent
(boe) at a ratio of 6,000 cubic feet of natural gas to one barrel of oil
equivalent. This conversion ratio is based upon an energy equivalent
conversion method primarily applicable at the burner tip and does not
represent value equivalence at the wellhead. Boe figures may be
misleading, particularly if used in isolation.

All references to dollar values refer to Canadian dollars unless
otherwise stated.

Production

Production for the three months ended December 31, 2004 decreased by 2%
to 3,119 boe/d from 3,190 boe/d in the third quarter of 2004. During
December 2004, production at Pembina was shut-in for approximately six
days for a field-wide pressure survey. Once the Pembina production was
brought back on, it continued to fluctuate due to operational problems
with a sour gas handling compressor, which was replaced in January 2005.
The six days of shut-in production impacted the fourth quarter average
by approximately 150 boe/d (125 bbls/d and 150 mcf/d of associated
solution gas). In addition, temporarily shut-in natural gas production
at Windfall impacted the fourth quarter average by approximately 200
boe/d (1.2 mmcf/d shut-in during October).

Production for the three months ended December 31, 2004 increased by 58%
compared to 1,977 boe/d for the fourth quarter of 2003.



------------------------------------------------------------------------
Three months ended Year ended
December 31 December 31
------------------------------------------------------------------------
2004 2003 % change 2004 2003 % change
------------------------------------------------------------------------
Crude oil & NGLs (bbls/d) 1,797 1,307 37 1,619 896 81
Natural gas (mmcf/d) 7.9 4.0 98 8.2 2.6 215
Total boe/d (6:1) 3,119 1,977 58 2,993 1,328 125
------------------------------------------------------------------------


Crude oil and natural gas liquids production increased by 5% in the
fourth quarter of 2004 to 1,797 bbls/d from 1,711 bbls/d in the third
quarter of 2004. This increase was due to the full effect of the
production increases Vaquero achieved during the third quarter, when the
Company owned (16% interest) 80 kilometre pipeline became operational on
July 22, 2004 and the sour gas handling constraint was removed.

When compared to the fourth quarter of 2003 crude oil and natural gas
liquids production increased by 37% from 1,307 bbls/d. This increase was
due primarily to the production additions in the Pembina area.

Natural gas production decreased by 11% to 7.9 mmcf/d in the fourth
quarter of 2004 from 8.9 mmcf/d in the third quarter and increased by
98% from 4.0 mmcf/d in the fourth quarter of 2003. In October 2004,
Vaquero experienced third party gas handling facility restrictions in
the Windfall area resulting in 1.2 mmcf/d being shut-in during the
month. This was the second time in 2004 that this occurred and therefore
the Company took measures to eliminate the risk of re-occurrence by
acquiring a natural gas pipeline in early 2005. That pipeline has been
tied-in to Vaquero's existing pipeline infrastructure. This will enable
Vaquero to produce all of the Windfall wells to the recently expanded
Alta Gas Windfall plant, where the Company has firm capacity.

Production for the year ended December 31, 2004 increased by 125% to
2,993 boe/d from 1,328 boe/d for the same period in 2003. Similar
comparisons show crude oil and natural gas liquids production increased
by 81% to 1,619 bbls/d from 896 bbls/d and natural gas production
increased by 215% to 8.2 mmcf/d from 2.6 mmcf/d.

Revenue

Revenue from petroleum and natural gas sales was $13,580,427 in the
fourth quarter of 2004, an increase of 5% from $12,939,303 in the third
quarter 2004. The 5% increase in revenue is due to the 27% increase in
natural gas prices, which was offset by the 5% decrease in crude oil and
natural gas liquids prices and the 2% decrease in production.

When compared to the three month period ended December 31, 2003, revenue
increased 106% from $6,595,633. This increase was due to the 58%
increase in production, the 26% increase in crude oil and natural gas
liquids prices and the 40% increase in natural gas prices. During the
fourth quarter 2004, natural gas prices averaged $7.85/mcf and crude oil
and natural gas liquids prices averaged $47.51/bbl, compared with
$6.17/mcf and $50.18/bbl, respectively, in the third quarter of 2004 and
$5.60/mcf and $37.73/bbl, respectively, in the fourth quarter of 2003.

For 2004, revenue from petroleum and natural gas sales was $48,651,502
up 145% from $19,876,626 during 2003. This 145% increase was due
primarily to the 125% increase in production. Prices also contributed to
the increase in revenue. Natural gas prices averaged $6.89/mcf and crude
oil and natural gas liquids prices averaged $47.01/bbl for the year of
2004, compared with $6.73/mcf and $40.57/bbl, respectively, for 2003.

For the three month and twelve months ended December 31, 2004 and 2003
transportation costs were reclassified as a separate expense on the
Statement of Operations and Retained Earnings. All revenue and pricing
comparisons have been reclassified to conform to the presentation
adopted in 2004.

Financial Instruments

Vaquero makes use of commodity hedging instruments to reduce the
variability of cash flows due to fluctuations in crude oil and natural
gas prices and to ensure a source of funding for its capital expenditure
program. The Company will usually use collars as a form of commodity
price protection while maintaining some price upside. The Board of
Directors approves all hedges. Contracts outstanding with respect to
financial instruments are as follows:



------------------------------------------------------------------------
Pricing Cost/
Contract Volume Point Strike Price Premium Term
------------------------------------------------------------------------
Crude Oil
------------------------------------------------------------------------
Costless 500 bbls/d WTI US$37.00 - n/a Jan 1/05 -
Collar $51.30 Mar 31/05
------------------------------------------------------------------------
Costless 500 bbls/d WTI US$42.00 - n/a Apr 1/05 -
Collar $53.50 Jun 30/05
------------------------------------------------------------------------
Costless 200 bbls/d WTI US$47.00 - n/a Apr 1/05 -
Collar $55.84 Jun 30/05
------------------------------------------------------------------------
Costless 700 bbls/d WTI US$45.00 - n/a Jul 1/05 -
Collar $54.50 Sep 30/05
------------------------------------------------------------------------
Natural Gas
------------------------------------------------------------------------
Costless 3,000GJ/d AECO Cdn$5.75 - n/a Apr 1/05 -
Collar $7.45 Oct 31/05
------------------------------------------------------------------------


Vaquero had two costless collar West Texas Intermediate physical crude
oil hedges for the period January 1, 2004 to March 31, 2004. Each hedge
was for 300 bbls/d, the first with a price range of $26.00 US/bbl -
$31.15 US/bbl and the second with a price range of $29.00 US/bbl -
$31.90 US/bbl. Net settlement payments of $280,262 were made for these
hedges during the first half of 2004.

The Company had a costless collar West Texas Intermediate crude oil
hedge for the period July 1, 2004 to December 31, 2004. The hedge was
for 400 bbls/d, with a price range of $36.00 US/bbl - $45.55 US/bbl. The
Company also had a costless collar hedge for the period October 1, 2004
to December 31, 2004 for 200 bbls/d, with a price of $39.50 US/bbl -
$51.00 US/bbl. Net settlement payments of $306,444 were made for these
hedges, of which $300,579 were made during the fourth quarter of 2004.

These payments are included in petroleum and natural gas sales and
reduced the Company's crude oil and natural gas liquids average price by
$1.82/bbl for the fourth quarter of 2004 and by $0.99/bbl for 2004. In
2003, the Company's crude oil and natural gas liquids average price was
reduced by $0.05/bbl as a result of the settlement of hedges.

Vaquero has applied the guidance under AcG-13, documenting all of these
collars as hedges and testing them for effectiveness at the hedges
inception and on an on-going basis. The Company does not have any
outstanding off-balance sheet arrangements.

Royalties

Royalties were 148% higher in the fourth quarter of 2004 compared to the
same period in 2003 increasing to $4,058,271 from $1,635,419. As a
percentage of revenue, royalty rates increased slightly to 30% in the
fourth quarter of 2004, compared to 29% in the third quarter of 2004.
The increase in 2004 (4th quarter of 2003 - 24%) was due to the increase
in production rates in Pembina as a result of Good Production Practice
(GPP) being approved on various pools.

Comparison of the years ended December 31, 2004 and 2003, shows that
royalties increased by 197% to $13,967,069 from $4,703,830. This
increase is due to the 145% increase in petroleum and natural gas sales
and the increase to the royalty rate. During 2004, royalty rates
increased by 21% to 29%, compared to 24% in 2003. Vaquero expects the
royalty rate as a percentage of revenue to continue to fluctuate
throughout 2005. This is due to factors such as the one-year royalty
free production period received by new oil pool discoveries at Pembina.

Production Expenses

Production expenses for the fourth quarter of 2004 were $1,067,311 or a
26% decrease from the $1,438,275 recorded in the third quarter of 2004.
This was due to a 5% decrease in production and a 24% decrease in
operating cost rates on a barrel of oil equivalent basis.
Production costs on a barrel of oil equivalent basis were $3.72/boe in
the fourth quarter of 2004 compared to $4.90/boe in the third quarter of
2004. Operating costs in the third quarter of 2004 were higher than
normal due to additional costs associated with the start-up of the 80
kilometre Brazeau River sour gas pipeline, the start-up of two new wells
in Pembina and increased costs in Chip Lake associated with producing
oil to single well batteries.

Production expenses increased by 12% in the fourth quarter of 2004 from
$953,060 in the same period in 2003 and increased by 95% for the year
ended December 31, 2004 to $4,778,430 from $2,445,000 in the same period
in 2003 due to the increases in production of 58% and 125%, respectively.

Production costs on a barrel of oil equivalent basis averaged $4.36/boe
for 2004 compared to $5.04/boe for 2003. The decrease is attributed to
increases in production rates per well due to GPP being approved in the
Pembina area and Vaquero's commitment to taking an ownership in
facilities where the Company produces significant volumes.

Transportation Expenses

For the three month and 12 month periods ended December 31, 2003,
transportation costs were reclassified as a separate expense on the
Statements of Operations and Retained Earnings. All revenue and pricing
comparisons have been reclassified to conform to the presentation
adopted in 2004.

"Transportation expenses" are defined as expenses incurred by the
Company to transport production volumes to market, where the Company
reserves the transportation in its name and, in most cases, is obligated
to pay for the transportation whether or not it is utilized. Where third
parties carry the future transportation obligation, those costs will not
be included as a transportation expense. Therefore all of Vaquero's
"transportation expenses" are related to natural gas deliveries to
market.

Transportation expenses for the year ended December 31, 2004 were
$495,064 compared to $231,994 in 2003 and on a per unit basis were
$0.16/mcf and $0.25/mcf, respectively. Vaquero had abnormally high
transportation costs in 2003 on a per unit basis, due to unutilized
pipeline capacity as a result of the Hamburg property disposition in
2002. Earlier this year, Vaquero assigned most of this obligation to
another producer in that area.

General and Administrative Expenses

General and administrative expenses for the fourth quarter of 2004 were
$756,040, an increase of 37% from $553,719 for the third quarter of 2004
and an increase of 22% from $621,350 for the fourth quarter in 2003.
General and administrative expenses increased from the third quarter due
to normal year-end related expenses such as audit fees, third party
engineering costs, annual report costs and employee performance bonuses.

In 2004, general and administrative expenses increased by 53% to
$2,463,697 from $1,607,846 recorded in 2003. This increase was due to
increasing the full-time staff to 15 from 12 during 2004 and the
full-year effect of adding four employees in the last half of 2003.

On a unit-of-production basis, general and administrative expenses
increased by 40% in the fourth quarter from the third quarter of 2004 to
$2.64/boe from $1.89/boe. This increase is attributable to both the 37%
increase in general and administrative expenses and the 5% decrease in
production . General and administrative expenses on a unit-of-production
basis decreased by 32% for the year to $2.25/boe from $3.32/boe in 2003.
Vaquero expects general and administrative expenses to increase during
2005 due to further increases to the number of full-time staff, while
remaining fairly constant on a unit-of-production basis as the Company's
production rate increases.

During the year ended December 31, 2004, $1,033,515 of general and
administrative costs relating to exploration and development activities
was capitalized, compared to $650,521 in 2003. As a percentage of total
general and administrative expenses incurred, 30% was capitalized in
2004 compared to 29% in 2003. The increase on a percentage basis is due
to personnel additions to the exploration team in mid-2003, which did
not impact most of the first nine months in 2003, and to the additions
to the exploration team in February, 2004.

During the same period ended December 31, 2004, stock-based compensation
expense of $327,460 was included in general and administrative expenses,
with a corresponding increase to contributed surplus for 2003 and 2004
option grants. Of that amount, $159,237 was capitalized (included in the
$1,033,515 above) as it was related to exploration and development
activities. For the same period in 2003, stock-based compensation
expense of $136,985 was included in the general and administrative
expense, of which $47,000 was capitalized. The impact of stock-based
compensation expense on general and administrative expenses on a
unit-of-production basis was an increase of $0.15/boe resulting in the
2004 average of $2.25/boe.

Interest Expense

Interest expense for the three month period ended December 31, 2004 was
$206,861 compared to $43,206 in 2003. A similar comparison for the
twelve month period shows interest expense increased to $439,142 in 2004
from $122,237 in 2003. During 2004, advances under the Company's
revolving operating demand facility bore interest at a weighted average
rate of 4.1% compared to 5.1% in 2003. Interest expense rose due to the
increase in the average debt level carried by the Company resulting from
the increase in capital expenditures net of the increase to cash flow
during the year. On a unit-of-production basis, interest expense
increased for the year to $0.40/boe from $0.25/boe in 2003.

Depletion, Depreciation and Accretion

Depletion, depreciation and accretion expense for the three month and
the twelve month period ended December 31, 2004 was $3,429,588 and
$11,177,671 compared to $1,681,163 and $4,276,505 for the same periods
in 2003. The 104% increase to the three month period and the 161%
increase to the year was primarily a result of the 58% and 125%
increases in production during the same periods.

On a unit-of-production basis, the depletion, depreciation and accretion
expense increased by 16% to $10.20/boe from $8.82/boe when comparing
2004 to 2003. The depletion, depreciation and accretion rate increased
due to the higher than normal facility expenditures as a percentage of
the total capital expenditures and to generally higher finding and
on-stream costs. During 2004, facility expenditures represented 23% of
the total capital expenditures compared to 14% in 2003.

Income and Capital Taxes

Current capital tax expense for the year ended December 31, 2004 was
$87,480 consisting entirely of Large Corporation Tax compared with an
expense of $69,038 for the same period in 2003. Other than Large
Corporation Tax, the Company does not expect to pay cash taxes in 2005
based on existing tax pools, the budgeted 2005 capital expenditures,
production forecast, commodity price forecast and taxable earnings
estimate. At December 31, 2004 Vaquero had accumulated the following tax
pools:



($000s)
----------
Canadian exploration expense $15,800
Canadian development expense 6,400
Canadian oil and gas property expense 19,400
Undepreciated capital cost 18,300
Share issue costs 1,600
----------
$61,500


The Company also had $22,983,414 of capital losses that will expire in
2009, the benefit of which has not been recorded in these financial
statements.

The future income tax provision was $5,477,536 during the year of 2004
compared to $2,040,542 in 2003. The increase to future income taxes is a
direct result of the increase in petroleum and natural gas sales, which
resulted in higher earnings in 2004.

On March 31, 2004, Bill - 27 Alberta Corporate Tax Amendment Act, 2004
was tabled and received first reading in the Alberta Legislative
Assembly. As a result, Bill 27 is substantively enacted and a
non-recurring benefit of $100,000 was recorded in the first quarter of
2004. There was no similar tax rate adjustment to income tax expense in
the first quarter of 2003.

As at December 31, 2004, Vaquero had renounced $3,002,550 of qualified
expenditures pursuant to the flow-through shares issued in December
2004, and is required to incur $3,002,550 of qualifying expenditures
prior to December 31, 2005 to satisfy its obligations pursuant to the
flow-through share financing. The tax impact of the flow through share
issue will be booked in the first quarter of 2005, when the expenditures
were renounced to investors.

Net Earnings and Cash Flow from Operations

Net earnings during the three and twelve month periods ended December
31, 2004 increased by 67% and 124% to $2,730,913 and $9,804,041,
respectively, from $1,631,374 and $4,381,670 in 2003. Earnings per share
were $0.06 basic and diluted for the fourth quarter of 2004 compared to
$0.04 basic and diluted for the same period in 2003. For 2004, earnings
per share were $0.22 basic and diluted, compared to $0.12 basic and
$0.11 diluted in 2003.

Net earnings increased by 20% to $2,730,913 in the fourth quarter of
2004 from $2,278,077 in the previous quarter. This was due to a 5%
increase in revenue and a 26% decrease in production expenses, offset by
an increase to general and administrative expenses.

Cash flow from operations during the three months ended December 31,
2004 was $7,403,743, an increase of 106% from $3,587,341 for the same
period in 2003. Cash flow per share for the quarter was $0.17 basic and
$0.16 diluted, compared with $0.09 basic and $0.08 diluted in 2003. Cash
flow per share increased in 2004 due mainly to the 58% increase in
production, the 26% increase in crude oil and natural gas liquids prices
and the 40% increase in natural gas prices.

Cash flow from operations increased by 6% in the fourth quarter of 2004
to $7,403,743 from $6,980,242 in the third quarter due to the 5%
increase in revenue and the 26% decrease in production expenses.

Cash flow from operations during the year of 2004 was $26,627,471, an
increase of 146% from $10,835,702 for the year of 2003. For this period,
cash flow per share was $0.61 basic and $0.59 diluted in 2004 compared
to $0.29 basic and $0.28 diluted in 2003.



Cash flow netbacks:

Crude Oil Natural Gas Total
($/bbls) ($/mcf) ($/Boe)
2004 2003 2004 2003 2004 2003
---------------------------------------------------
Revenue $ 47.01 $40.57 6.89 6.73 44.41 40.98
Royalties (12.75) (9.70)
Operating costs (4.36) (5.04)
----------------
Transportation costs (0.45) (0.48)
----------------
Operating netback 26.85 25.76

General & administrative costs(1) (2.10) (3.03)
Interest & capital taxes(2) (0.45) (0.39)
----------------
Cash flow netback $24.30 $22.34

Note:
(1) General and administrative costs exclude stock-based compensation
expenses.
(2) Interest income was netted against interest expenses and capital
taxes.


Liquidity and Capital Resources

At December 31, 2004, the Company had available a $33.0 million
revolving operating demand loan (net of any working capital deficit) and
a $7.5 million non-revolving development demand loan with a Canadian
chartered bank. Subsequent to December 31, 2004 Vaquero had its
revolving operating demand loan increased to $40.0 million and reduced
the non-revolving development demand loan to $5.0 million.

During December 2004, Vaquero issued 541,000 flow through shares at a
price of $5.55 per share for gross proceeds of $3,002,550 and 2,758,700
common shares at a price of $4.35 per share for gross proceeds of
$12,000,345. This financing was completed to aid in funding the
Company's 2005 capital expenditure program.

Vaquero's net debt, including working capital deficiency, was
$24,425,820 at December 31, 2004, which consisted of $19,400,000 drawn
on its credit facility and a working capital deficiency of $5,025,820.
This compares to net debt, including working capital deficit, of
$4,955,640 at December 31, 2003. Vaquero exited 2004 with over $8.5
million unused on its revolving operating demand loan. No amounts were
drawn under the $7.5 million non-revolving demand loan at December 31,
2004. The working capital deficiency will be funded by future cash flow
and by the unused portion of the revolving operating demand loan.
Vaquero has met all covenants pertaining to its loan agreement. The
Company exited the year of 2004 with a net debt to annualized fourth
quarter cash flow from operations ratio of 0.8:1.

Vaquero's fourth quarter 2004 capital expenditures were $21,131,929, an
increase of 45% from the $14,550,328 spent during the third quarter and
a 145% increase from the $8,613,533 spent during the fourth quarter of
2003. These expenditures are summarized as follows:



Three months ended Year ended
December 31 December 31
------------------------------------------------------------------------
2004 2003 2004 2003
------------------------------------------------------------------------
Land $ 7,797,567 $ 2,937,722 $14,134,177 $ 7,707,945
Geological
and geophysical 1,734,196 164,102 4,091,406 2,701,155
Drilling and
completions 7,927,224 3,573,289 27,105,450 16,343,177
Equipment and
facilities 3,382,972 1,633,476 14,042,501 4,413,137
Capitalized G&A(1) 250,002 240,000 874,278 603,521
------------------------------------------------------------------------
Total Exploration
& Development 21,091,961 8,548,589 60,247,812 31,768,935
Corporate assets 39,968 17,964 134,736 34,812
------------------------------------------------------------------------
Net Capital
Expenditures $21,131,929 $ 8,566,553 $60,382,548 $31,803,647
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Capitalized G&A excludes $47,760 and $22,650 for the three month
period ended December 31, 2004 and 2003; and $159,237 and $47,000
for the years 2004 and 2003 (stock-based compensation expense
relating to exploration and development activities).


Funding for the capital expenditures during 2004 was provided by the
following:

($mm)
------
Cash flow from operations 26.6
Increase in bank debt 16.7
Increase in working capital deficit 2.8
Proceeds from issuance of shares 14.3
------
Net capital expenditures 60.4
------
------


At December 31, 2004, Vaquero had 47,007,389 shares outstanding and
3,707,200 outstanding stock options. At March 23, 2005 Vaquero had
shares outstanding of 47,345,775 and outstanding stock options of
2,920,200.

Vaquero offers the following as guidance for capital expenditures for
2005:



($mm)
------
Land & geological and geophysical 20.2
Drilling and completions 29.4
Equipment and facilities 9.2
Capitalized G&A 1.7
------
Total Exploration & Development 60.5
------
------


Vaquero generates a financial model using a production forecast,
commodity price assumptions and cost estimates to predict future cash
flow. This financial model, used in conjunction with a capital
expenditure forecast, allows the Company to maintain acceptable debt
levels.

Vaquero estimates it will generate cash flow of approximately $36 to $38
million in 2005. That estimate is based on an average production rate
ranging between 4,600 and 4,800 boe/d for 2005; a WTI average price of
$42.00 US/bbl; an AECO natural gas price of $6.30/mcf; and a US/Canadian
dollar exchange rate of $0.83. Based on these assumptions the Company
could spend up to $60.5 million in capital expenditures in 2005, exiting
the year at a debt to cash flow ratio of 1:1, based on cash flows
generated by annualizing exit production rates.



($mm)
------
Net debt (at December 31, 2004) (24.5)
Estimated 2005 capital expenditures (60.5)
Estimated 2005 cash flow 38.0
------
Estimated net debt (at December 31, 2005) 47.0
------
------


Contractual Obligations

In the normal course of business Vaquero has obligations which represent
contracts and other commitments for the following:



------------------------------------------------------------------------
------------------------------------------------------------------------
Total
2005 2006-2009 Total
------------------------------------------------------------------------

Operating leases $ 291,399 $ 235,006 $ 526,405
Transportation agreements 320,002 342,219 662,221
------------------------------------------------------------------------
611,401 577,225 1,188,626
Capital expenditure commitments 883,200 2,649,600 3,532,800
Bank Debt 19,400,000 - 19,400,000
------------------------------------------------------------------------
$20,894,601 $ 3,226,825 $24,121,426
------------------------------------------------------------------------
------------------------------------------------------------------------


The Company expects to renew its revolving operating demand loan with a
Canadian chartered bank, when its existing facility expires on April 30,
2005.

Transaction with related parties

Except for those necessary in the normal course of business, there were
no related party transactions during the year ended December 31, 2004.

Selected Summary Financial Information

The following tables summarize selected financial information of the
Company for the periods indicated. Please note that the 2003 figures
below have changed from those previously published due to the adoption
of the ARO and the reclassification of transportation costs.

Vaquero's quarterly growth of revenue net of royalties, net earnings and
total assets is attributed to successful drilling operations leading to
increases in production and the ability to raise capital in public
markets.



2004:

Quarterly First Second Third Fourth
Information ($) Quarter Quarter Quarter Quarter
------------------------------------------------------------------------
Revenue, net of
royalties 7,540,743 8,457,440 9,179,128 9,545,750
Net earnings 2,332,195 2,462,856 2,278,077 2,730,913
Per common share
- basic 0.05 0.06 0.05 0.06
- diluted 0.05 0.05 0.05 0.06
Total assets 61,174,820 70,459,976 83,881,666 105,096,204
Total long-term
liabilities - - - -

2003:
First Second Third Fourth
Quarterly Information Quarter Quarter Quarter Quarter
------------------------------------------------------------------------
Revenue, net of
royalties 3,458,480 3,151,143 3,374,115 5,191,094
Net earnings 1,155,241 723,012 817,679 1,655,239
Per common share
- basic 0.03 0.02 0.02 0.05
- diluted 0.03 0.02 0.02 0.04
Total assets 25,824,247 31,466,417 42,241,397 51,356,646
Total long-term
liabilities - - - -

Annual Information 2004 2003 2002
------------------------------------------------------------------------
Revenue, net of royalties 34,723,061 15,174,832 4,303,225
Net earnings 9,804,041 4,381,670 164,170
Per common share
- basic 0.22 0.12 0.01
- diluted 0.22 0.11 0.01
Total assets 105,096,204 51,356,646 18,834,005
Total long-term liabilities - - -


Critical Accounting Estimates

The significant accounting policies used by Vaquero are disclosed in the
notes to Vaquero's audited financial statements. Certain accounting
policies require that management make appropriate decisions with respect
to the formulation of estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses. The following
discusses such accounting policies and is included in Management's
Discussion and Analysis to aid the reader in assessing the critical
accounting policies and practices of the Company, and the likelihood of
materially different results being reported. Vaquero's management
reviews its estimates regularly. The emergence of new information and
changed circumstances may result in actual results or changes to
estimated amounts that differ materially from current estimates.

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

Proved Oil and Gas Reserves

Under National Instrument 51-101 (NI 51-101), "Proved" reserves are
those reserves that can be estimated with a high degree of certainty to
be recoverable (it is likely that the actual remaining quantities
recovered will exceed the estimated Proved reserves). In accordance with
this definition, the level of certainty targeted by the reporting
company should result in at least a 90% probability that the quantities
actually recovered will equal or exceed the estimated reserves. There
was no such consideration of probability under the former standard, NP
2B. In the case of "Probable" reserves, which are obviously less certain
to be recovered than Proved reserves, NI 51-101 states that it must be
equally likely that the actual remaining quantities recovered will be
greater or less than the sum of the estimated Proved plus Probable
reserves. With respect to the consideration of certainty, in order to
report reserves as Proved plus Probable, the reporting company must
believe that there is at least a 50% probability that the quantities
actually recovered will equal or exceed the sum of the estimated Proved
plus Probable reserves.

The oil and gas reserve estimates are made using all available
geological and reservoir data as well as historical production data.
Estimates are reviewed and revised as appropriate. Revisions occur as a
result of changes in prices, costs, fiscal regimes, reservoir
performance or a change in Company plans. The effect of changes in
proved oil and gas reserves on the financial results and position of the
Company is described under the heading "Full Cost Accounting for Oil and
Gas Activities (Ceiling Test)".

Full Cost Accounting for Oil and Gas Activities (Ceiling Test)

The crude oil and natural gas properties are evaluated in each reporting
period to determine that the carrying value is not impaired. Impairment
occurs when the carrying value of the asset does not exceed the future
undiscounted cash flow and would be charged as additional depletion,
depreciation and accretion expense. The cost recovery ceiling test is
based on estimates of proved reserves, production rates, commodity
pricing, operating costs, royalty rates and taxes and are discounted
using future risk-free interest rates.

Depletion Expense

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

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

Withheld Costs

Certain costs related to unproven properties may be excluded from costs
subject to depletion until proved reserves have been determined or their
value is impaired. These properties are reviewed quarterly and any
impairment is transferred to the costs being depleted.

Impairment of Property, Plant and Equipment

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

Asset Retirement Obligation

The asset retirement obligation is estimated based on existing laws,
contracts or other policies. The fair value of the asset retirement
requires an estimate of future costs to abandon and reclaim wells,
pipelines and facilities discounted to its present value using the
Company's credit adjusted risk-free interest rate. The liability is
adjusted each reporting period to reflect the passage of time, with the
accretion charged to earnings. Revisions to the estimated timing of cash
flows or to the original undiscounted cost could also result in an
increase or decrease to the obligation. By their nature, these estimates
are subject to measurement uncertainty and the impact on the financial
statements could be material.

Legal, Environmental Remediation and Other Contingent Matters

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

Income Tax Accounting

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

Stock-based Compensation

The Company uses the fair value method for valuing stock option grants.
Under this method, compensation cost attributable to all share options
granted is measured at fair value at the grant date and expensed over
the vesting period. The Black-Scholes option pricing model is used to
estimate the fair value of the stock options and it contains such
estimates as expected share price volatility and the Company's risk-free
interest rate. By their nature, these estimates are subject to
measurement uncertainty and the impact on the financial statements could
be material.

New Accounting Standards for 2004

The following are the new and amended standards adopted by Vaquero in
2004:

Accounting for Derivative Instruments and Hedging Activities

Effective January 1, 2004, the Company adopted the new Canadian
guidelines for hedging relationships (Accounting Guideline 13). This
guideline establishes criteria to be satisfied before hedge accounting
may be applied. These accounting standards require that every derivative
instrument, including certain derivative instruments embedded in other
contracts, be recorded on the balance sheet as either an asset or
liability measured at fair value. These standards further establish that
changes in the fair value be recognized currently in earnings unless the
arrangement can meet the "effective hedge" criteria. The adoption of
these guidelines had no impact on earnings or the financial position of
the Company.

Full Cost Accounting for Oil and Gas Activities (Ceiling Test)

Oil and gas assets are evaluated in each reporting period to determine
that the carrying amount of an asset is recoverable and does not exceed
the fair value of the properties.

The carrying amounts are assessed to be recoverable when the sum of the
undiscounted cash flows expected from the production of proved reserves,
the lower of cost and market of unproved properties and the cost of
major development projects exceeds the carrying amount of the asset.
When the carrying amount is not assessed to be recoverable, an
impairment loss is recognized to the extent that the carrying amount of
the asset exceeds the sum of the discounted cash flows expected from the
production of proved and probable reserves, the lower of cost and market
of unproved properties and the cost of major development projects of the
asset. The cash flows are estimated using expected future product prices
and costs and are discounted using a risk-free interest rate.

Prior to January 1, 2004 the ceiling test amount was the sum of the
undiscounted cash flows expected from the production of proved reserves,
the lower of cost or market of unproved properties and the cost of major
development projects less estimated future costs for administration,
financing, site restoration and income taxes. The cash flows were
estimated using constant period end prices and costs.

Business Risks

Vaquero faces a number of business risks with respect to its oil and gas
exploration, development and production activities. Most of these risks
are not within the Company's control. Risks can be categorized as
financial, operational or regulatory.

FINANCIAL RISKS

Financial risks include commodity pricing, exchange and interest rates,
access to equity markets and debt.

Commodity price fluctuations result from market forces completely out of
the Company's control and can significantly affect the Company's
financial results. In addition, fluctuations between the Canadian dollar
and the US dollar can also have a significant impact. Expenses are all
incurred in Canadian dollars while crude oil, and to some extent natural
gas, prices are based on reference prices denominated in US dollars. As
a result of both of these factors Vaquero may enter into derivative
instruments to partially mitigate the effects of downward price
volatility. To evaluate the need for hedging management, with direction
from the Board of Directors, monitors future pricing trends together
with cash flow necessary to fulfill capital expenditure requirements.
Vaquero will only enter into a hedge to reduce downside uncertainty of
pricing, not as a speculative venture.

Vaquero meets regularly with members of the investment community to keep
them fully aware of the Company's progress and plans.

At December 31, 2004, Vaquero had approximately $24.5 million of net
debt. Although the Company is vulnerable to changes in interest rates,
Vaquero endeavours to maintain a conservative approach to debt by not
exceeding an annualized debt to cash flow ratio of 1:1 using a
reasonable commodity price forecast. Vaquero also combines a flexible
capital expenditure program with regular reviews of cash flow and
pricing trends that allow Vaquero to react appropriately if cash flow is
unexpectedly reduced.

OPERATIONAL RISKS

Operational risks include the production performance of producing
properties, the uncertain results of capital expenditure programs, the
competitive nature of the oil and gas business, the uncertainty of
finding new reserves and the uncertainty of the economic viability of
getting production to market. Vaquero endeavors to address these risks
by, among other things, ensuring that its employees are qualified and
motivated. Prior to initiating capital projects the Vaquero technical
team completes an economic analysis, which attempts to reflect the risks
involved in successfully completing the project. In an effort to
mitigate the risk of not finding new reserves, or of finding reserves
that are not economically viable, Vaquero utilizes various technical
tools, such as 2D and 3D seismic data, rock sample analysis and the
latest drilling and completing technology.

Insurance is in place to protect against major asset destruction or
business interruption, including well blow-outs and pollution. In
addition, Vaquero cultivates long-term relationships with its suppliers
in an effort to ensure good service regardless of the current cycle of
oil and gas activity.

REGULATORY RISKS

Regulatory risks include the possibility of changes to royalty, tax,
environmental and safety legislation. Vaquero endeavours to anticipate
the costs related to compliance and budget sensibly for them. Changes to
environmental and safety legislation may also cause delays to Vaquero's
drilling plans, its production efficiencies and may adversely affect its
future earnings. Restrictive new legislation is a risk we cannot control.

Special Note Regarding Forward-Looking Statements

Certain statements in this annual report including those appearing in
the Management's Discussion and Analysis and the "outlook" section, are
forward-looking statements subject to substantial known and unknown
risks and uncertainties, most of which are beyond Vaquero's control.
These risks may cause actual financial and operating results,
performance, levels of activity and achievements to differ materially
from those expressed in, or implied by, such forward-looking statements.

Such factors include, but are not limited to: the impact of general
economic conditions in Canada and the United States; industry conditions
including changes in laws and regulations including adoption of new
environmental laws and regulations and changes in how they are
interpreted and enforced; competition; the lack of availability of
qualified personnel or management; fluctuations in commodity prices; the
results of exploration and development drilling and related activities;
imprecision in reserve estimates; the production and growth potential of
the Company's various assets; fluctuations in foreign exchange or
interest rates; stock market volatility; risks associated with hedging
activities; and obtaining required approvals from regulatory authorities.

Accordingly, there is no assurance that the expectations conveyed by the
forward-looking statements will prove to be correct. All subsequent
forward-looking statements, whether written or orally attributable to
the Company or persons acting on its behalf, are expressly qualified in
their entirely by these cautionary statements. The Company undertakes no
obligation to publicly update or revise any forward-looking statements.

March 23, 2005



VAQUERO ENERGY LTD.
Balance Sheets

------------------------------------------------------------------------
------------------------------------------------------------------------
December 31, December 31,
2004 2003
------------------------------------------------------------------------

Assets

Current assets:
Cash and cash equivalents $ 48,690 $ 2,056,342
Accounts receivable 11,888,924 5,788,734
Prepaid expenses and deposits 207,354 183,104
------------------------------------------------------------------------
12,144,968 8,028,180

Property, plant and equipment (note 3) 92,951,236 43,328,466

------------------------------------------------------------------------
$ 105,096,204 $ 51,356,646
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and
accrued liabilities $ 17,170,788 $ 10,233,820
Bank debt (note 5) 19,400,000 2,750,000
------------------------------------------------------------------------
36,570,788 12,983,820

Asset retirement obligations (note 4) 1,071,886 813,230

Future income taxes (note 7) 10,108,898 5,017,747

Shareholders' equity:
Share capital (note 6) 42,532,931 27,843,249
Contributed surplus (note 6(e)) 446,045 136,985
Retained earnings 14,365,656 4,561,615
------------------------------------------------------------------------
57,344,632 32,541,849

Subsequent event (note 5)
Commitments (note 6(g) and 9)
------------------------------------------------------------------------
$ 105,096,204 $ 51,356,646
------------------------------------------------------------------------
------------------------------------------------------------------------

See accompanying notes to financial statements.

Approved by the Board.



(signed) "Bill Maslechko" (signed) "Robert N. Waldner"
Bill Maslechko Robert N. Waldner
Director Director



VAQUERO ENERGY LTD.
Statements of Operations and Retained Earnings


------------------------------------------------------------------------
------------------------------------------------------------------------
Years Ended December 31,
2004 2003
------------------------------------------------------------------------

Revenue:
Petroleum and natural gas sales $ 48,651,502 $ 19,876,626
Royalties (net of ARTC) (13,967,069) (4,703,830)
Interest income 38,628 2,036
------------------------------------------------------------------------
34,723,061 15,174,832

Expenses:
Production 4,778,430 2,445,000
Transportation 495,064 231,994
General and administration 2,463,697 1,607,846
Depletion, depreciation and accretion 11,177,671 4,276,505
Interest 439,142 122,237
------------------------------------------------------------------------
19,354,004 8,683,582

------------------------------------------------------------------------
Earnings before taxes 15,369,057 6,491,250

Taxes:
Capital taxes 87,480 69,038
Future income taxes (note 7) 5,477,536 2,040,542
------------------------------------------------------------------------
5,565,016 2,109,580

------------------------------------------------------------------------
Net earnings for the year 9,804,041 4,381,670

Retained earnings, beginning of year,
as previously reported 4,561,615 175,240

Retroactive effect of changes
in accounting policy (note 4) - 4,705
------------------------------------------------------------------------

Retained earnings, beginning of year,
as restated 4,561,615 179,945
------------------------------------------------------------------------

Retained earnings, end of year $ 14,365,656 $ 4,561,615
------------------------------------------------------------------------
------------------------------------------------------------------------

Earnings per share (note 8):
Basic $ 0.22 $ 0.12
Diluted $ 0.22 $ 0.11
------------------------------------------------------------------------
------------------------------------------------------------------------

Weighted average common shares
outstanding during the year 43,687,452 37,332,811
------------------------------------------------------------------------
------------------------------------------------------------------------

See accompanying notes to financial statements.



VAQUERO ENERGY LTD.
Statements of Cash Flows


------------------------------------------------------------------------
------------------------------------------------------------------------
Years Ended December 31,
2004 2003
------------------------------------------------------------------------

Cash provided by (used in):

Operations:
Net earnings for the year $ 9,804,041 $ 4,381,670
Items not involving cash:
Stock-based compensation 168,223 136,985
Depletion, depreciation and accretion 11,177,671 4,276,505
Future income taxes 5,477,536 2,040,542
------------------------------------------------------------------------
Funds from operations 26,627,471 10,835,702
Change in non-cash working capital (642,365) (667,841)
------------------------------------------------------------------------
25,985,106 10,167,861

Financing:
Increase in bank debt 16,650,000 2,750,000
Issuance of common shares 15,376,870 19,015,600
Share issue costs (1,091,973) (1,340,699)
------------------------------------------------------------------------
30,934,897 20,424,901

Investing:
Property, plant and
equipment additions (60,382,548) (31,850,647)
Change in non-cash working capital 1,454,893 1,048,840
------------------------------------------------------------------------
(58,927,655) (30,801,807)

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

Change in cash and cash equivalents (2,007,652) (209,045)

Cash and cash equivalents,
beginning of year 2,056,342 2,265,387

------------------------------------------------------------------------
Cash and cash equivalents,
end of year $ 48,690 $ 2,056,342
------------------------------------------------------------------------
------------------------------------------------------------------------

Represented by:
Cash $ 48,690 $ 56,342
Term deposits - 2,000,000
------------------------------------------------------------------------
$ 48,690 $ 2,056,342
------------------------------------------------------------------------
------------------------------------------------------------------------

Payments:
Capital taxes $ 67,311 $ 69,038
Interest $ 439,142 $ 122,237
------------------------------------------------------------------------
------------------------------------------------------------------------

See accompanying notes to financial statements.


VAQUERO ENERGY LTD.

Notes to the Financial Statements

Years ended December 31, 2004 and 2003

1. Nature of operations:

Vaquero Energy Ltd. (the "Corporation") is engaged in the acquisition,
development and production of petroleum and natural gas properties in
the Western Canadian sedimentary basin.

2. Significant accounting policies:

The financial statements of the Corporation have been prepared by
management in accordance with Canadian generally accepted accounting
principles. Since the determination of many assets, liabilities,
revenues and expenses is dependent upon future events, the preparation
of these financial statements requires the use of estimates and
assumptions, which have been made with careful judgment. In the opinion
of management, these financial statements have been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below.

(a) Property, plant and equipment:

The Corporation follows the full cost method of accounting for oil and
gas operations whereby all costs associated with the exploration for and
development of oil and gas reserves, whether productive or unproductive,
are capitalized. Such costs include lease acquisition, drilling,
geological and geophysical, equipment costs, asset retirement costs and
overhead expenses related to exploration and development activities.
Costs of acquiring and evaluating unproved properties are excluded from
depletion calculations until it is determined whether or not proved
reserves are attributable to the properties or impairment occurs.

Proceeds from the sale of oil and gas properties are applied against
capitalized costs, with no gain or loss recognized, unless such a sale
would alter the rate of depletion and depreciation by more than 20%.

Depletion of oil and gas properties and depreciation of production
equipment is provided on accumulated costs using the unit-of-production
method based on estimated proved oil and gas reserves, before royalties,
as determined by independent engineers. Production and reserves of
natural gas are converted to equivalent barrels of crude oil based on
the energy equivalent ratio of six thousand cubic feet of natural gas to
one barrel of crude oil. This conversion ratio is based upon an energy
equivalent conversion method primarily applicable at the burner tip and
does not represent value equivalence at the wellhead.

The depletion and depreciation cost base includes total capitalized
costs, less costs of unproved properties, plus provision for future
development costs of proved undeveloped reserves.

Effective January 1, 2004, the Corporation adopted the new accounting
standard relating to full cost accounting. Under this standard, crude
oil and natural gas properties are evaluated in each reporting period to
determine that the carrying amount in a cost centre is recoverable and
does not exceed the fair value of the properties in the cost centre.

The carrying amounts are assessed to be recoverable when the sum of the
undiscounted cash flows expected from the production of proved reserves,
the lower of cost and market of unproved properties and the cost of
major development projects exceeds the carrying amount of the cost
centre. When the carrying amount is not assessed to be recoverable, an
impairment loss is recognized to the extent that the carrying amount of
the cost centre exceeds the sum of the discounted cash flows expected
from the production of proved and probable reserves, the lower of cost
and market of unproved properties and the cost of major development
projects of the cost centre. The cash flows are estimated using expected
future product prices and costs and are discounted using a risk-free
interest rate.

The adoption of this new policy on January 1, 2004 resulted in no impact
to the carrying value of oil and gas properties. Prior to January 1,
2004 the ceiling test amount was the sum of the undiscounted cash flows
expected from the production of proved reserves, the lower of cost or
market of unproved properties and the cost of major development projects
less estimated future costs for administration, financing, site
restoration and income taxes. The cash flows were estimated using period
end prices and costs.

(b) Office furniture and equipment:

Office furniture and equipment are recorded at cost and are depreciated
on the declining balance basis using rates varying from 15% to 100%.

(c) Leasehold improvements:

Leasehold improvements are recorded at cost and are depreciated on a
straight-line basis over the lease term.

(d) Asset retirement obligations:

The fair value of the liability for the Corporation's asset retirement
obligation is recorded in the period in which it is incurred, discounted
to its present value using the Corporation's credit adjusted risk-free
interest rate and the corresponding amount is recognized by increasing
the carrying amount of property, plant and equipment. The liability
amount is increased each reporting period due to the passage of time and
the amount of accretion is charged to earnings in the period.

Revisions to the estimated timing of cash flows or to the original
estimated undiscounted cost could also result in an increase or decrease
to the obligation. Actual costs incurred upon settlement of the
retirement obligation are charged against the obligation to the extent
of the liability recorded.

(e) Interest in joint ventures:

Substantially all of the Corporation's oil and gas exploration and
development activities are conducted jointly with others and,
accordingly, the financial statements reflect only the Corporation's
proportionate interest in such activities.

(f) Income taxes:

The Corporation uses the liability method of accounting for future
income taxes, under which future income tax assets and liabilities are
determined based on "temporary differences" and are measured using the
current, or substantively enacted, tax rates and laws expected to apply
when these differences reverse. A valuation allowance is recorded
against any future income tax assets if it is more likely than not that
the asset will not be realized.

(g) Foreign currency translation:

Assets and liabilities denominated in foreign currencies are translated
into Canadian dollars at the year-end rates of exchange. Revenues and
expenses are translated at the rates in effect at the time of the
transactions. Foreign currency gains and losses are included in the
determination of net earnings.

(h) Stock-based compensation plan:

The Corporation uses the fair value method for valuing stock option
grants. Under this method, compensation cost attributable to all share
options granted is measured at fair value at the grant date and expensed
over the vesting period with a corresponding increase to contributed
surplus. Upon the exercise of the stock options, consideration received
together with the amount previously recognized in contributed surplus is
recorded as an increase to share capital.

(i) Financial instruments:

The Corporation uses, from time to time, derivative financial
instruments to manage exposure related to changes in oil and natural gas
commodity prices. They are not used for trading or speculative purposes.

The Corporation formally documents all relationships between hedging
instruments and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions. This process
includes linking all derivatives to specific assets and liabilities on
the balance sheet or to specific firm commitments or anticipated
transactions.

The Corporation also formally assesses, both at the hedge's inception
and on a ongoing basis, whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values
or cash flows of hedged items. For cash flow hedges, effectiveness is
achieved if the changes in the cash flows of the derivative
substantially offset the changes in the cash flows of the hedged
position and the timing of the cash flows is similar. Effectiveness for
fair value hedges is achieved if the fair value of the derivative
substantially offsets changes in the fair value attributable to the
hedged item. In the event that a derivative does not meet the
designation or effectiveness criterion, the gain or loss on the
derivative is recognized in income. If a derivative that qualifies as a
hedge is settled early, the gain or loss at settlement is deferred and
recognized when the gain or loss on the hedged transaction is
recognized. Premiums paid or received with respect to derivatives that
are hedges are deferred and amortized to income over the term of the
hedge.

Realized gains or losses on changes in oil and natural gas commodity
prices are recognized in income in the same period and in the same
financial statement category as the income or expense arising from
corresponding commodity swap contracts (see note 10).

(j) Cash and cash equivalents:

Cash and cash equivalents include term deposits and investments with
original maturities of three months or less.

(k) Per share amounts:

Basic per share amounts are calculated using the weighted average common
shares outstanding during the year. Diluted per share amounts are
calculated using the treasury stock method. Diluted calculations reflect
the weighted average incremental common shares that would be issued upon
exercise of dilutive options assuming the proceeds would be used to
repurchase shares at average market prices for the period. Anti-dilutive
options are not included in the calculation.

(l) Measurement uncertainty:

The amounts recorded for depletion and depreciation of property, plant
and equipment and the provision for asset retirement obligations are
based on estimates. The ceiling test is based on estimates of reserves,
production rates, oil and natural gas prices and future costs. By their
nature, these estimates are subject to measurement uncertainty and the
impact on the financial statements of changes in such estimates in
future periods could be significant.

(m) Flow-through shares:

The resource expenditure deductions for income tax purposes related to
exploratory and development activities funded by flow-through share
arrangements are renounced to investors in accordance with tax
legislation. The estimated cost of the renounced tax deductions are
reflected in share capital and future income taxes when the expenditures
are renounced.

(n) Revenue recognition:

Petroleum and natural gas revenues are recognized when the title and
risk pass to the purchaser.



3. Property, plant and equipment:

------------------------------------------------------------------------
------------------------------------------------------------------------
Accumulated
depletion
and Net book
December 31, 2004 Cost depreciation value
------------------------------------------------------------------------

Oil and gas properties $ 97,576,711 $ 23,555,113 $ 74,021,598
Equipment and facilities 21,493,003 3,493,167 17,999,836
Asset retirement cost 904,793 208,512 696,281
Other 890,081 656,560 233,521
------------------------------------------------------------------------
$ 120,864,588 $ 27,913,352 $ 92,951,236
------------------------------------------------------------------------
------------------------------------------------------------------------

December 31, 2003
------------------------------------------------------------------------

Oil and gas properties $ 51,212,165 $ 14,790,887 $ 36,421,278
Equipment and facilities 7,450,502 1,355,306 6,095,196
Asset retirement cost 713,765 96,339 617,426
Other 755,343 560,777 194,566
------------------------------------------------------------------------
$ 60,131,775 $ 16,803,309 $ 43,328,466
------------------------------------------------------------------------
------------------------------------------------------------------------


As at December 31, 2004, costs of $21,444,000 (2003 - $7,092,560) were
excluded from the depletion calculation, and future development costs of
$4,488,000 (2003 - $3,823,000) were included in the depletion
calculation.

During 2004, the Corporation capitalized $1,033,515 (2003 - $650,521) of
stock-based compensation and general and administrative costs relating
to exploration and development activities. Stock-based compensation of
$159,237 (2003 - $47,000) was included in the capitalized costs.

The following table summarizes the future benchmark prices and the
prices the Corporation used in the ceiling test:



------------------------------------------------------------------------
------------------------------------------------------------------------
WTI Foreign WTI Corporation AECO Corporation
Oil Exchange Oil Price Gas Price
(US$/bbl) Rate (C$/bbl) (C$/bbl)Oil (C$/mmbtu) Gas(C$/mcf)
------------------------------------------------------------------------

2005 $ 42.00 0.82 $ 51.22 $ 48.42 $ 6.78 $ 7.52
2006 40.00 0.82 48.78 46.05 6.52 7.22
2007 37.50 0.82 45.73 43.09 6.26 6.90
2008 35.00 0.82 42.68 40.13 6.00 6.59
2009 33.00 0.82 40.24 37.76 5.73 6.27
Annual
escalation
thereafter 1.5% 1.5% 1.5% 2.0% 2.0%
------------------------------------------------------------------------
------------------------------------------------------------------------


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 Corporation estimates
the total undiscounted amount of cash flows required to settle its asset
retirement obligations is approximately $1,812,927 as at December 31,
2004. The majority of the costs will be incurred between 2007 and 2028.
A credit-adjusted risk free rate of 8% was used to calculate the fair
value of the asset retirement obligations.

A reconciliation of the asset retirement obligations is provided below:



------------------------------------------------------------------------
------------------------------------------------------------------------
2004 2003
------------------------------------------------------------------------

Balance, beginning of year $ 813,230 $ 430,398

Accretion expense 67,628 57,486
Liabilities incurred 191,028 325,346

------------------------------------------------------------------------
Balance, end of year $ 1,071,886 $ 813,230
------------------------------------------------------------------------
------------------------------------------------------------------------


As a result of the adoption of the new standard for asset retirement
obligations on January 1, 2003, net earnings for 2003 decreased by
$37,748 and opening 2003 retained earnings increased by $4,705 to
reflect the cumulative impact of accretion and depletion expense, net of
the previously recorded provision for site restoration.

5. Bank debt:

At December 31, 2004, the Corporation had available a $33.0 million
revolving operating demand loan facility and a $7.5 million
non-revolving development demand loan facility from a Canadian chartered
bank. The revolving operating demand loan facility bears interest at the
lender's prime rate, adjusted quarterly based on the Corporations' debt
to cash flow ratio. The loans are secured by a $75.0 million first
floating demand debenture covering all of the Corporation's assets. No
amounts were drawn under the non-revolving development demand loan at
December 31, 2004.

During 2004, advances under the Corporation's revolving operating demand
facility bore interest at a weighted average rate of 4.1% (2003 - 5.1%).

Subsequent to December 31, 2004, the Corporation increased its revolving
operating demand loan facility to $40.0 million and had a $5.0 million
non-revolving development demand loan facility from a Canadian chartered
bank.



6. Share capital:

(a) Authorized:

Unlimited number of common shares without nominal or par value.

Unlimited number of first and second preferred shares, of which none
have been issued.

(b) Issued and outstanding:

------------------------------------------------------------------------
------------------------------------------------------------------------
Number
of Shares Amount
------------------------------------------------------------------------

Balance, December 31, 2002 34,123,439 $ 12,371,215
Issued on exercise of stock options 41,000 38,350
Future income tax effect of 2003
renouncements - (2,704,694)
Issued as private placement (note 6(h)) 6,075,000 9,903,750
Share issuance costs
(net of future taxes of $501,827) - (838,872)
Issued as private placement 3,090,000 9,073,500
------------------------------------------------------------------------
Balance, December 31, 2003 43,329,439 27,843,249

Issued common shares (note 6(g)) 3,299,700 15,002,895
Issued on exercise of stock options 378,250 373,975
Transfer from contributed surplus on
exercise of stock options - 18,400
Share issuance costs
(net of future taxes of $386,385) - (705,588)

------------------------------------------------------------------------
Balance, December 31, 2004 47,007,389 $ 42,532,931
------------------------------------------------------------------------
------------------------------------------------------------------------


(c) Stock options:

The Corporation has a stock option plan to provide options for
directors, officers and employees to purchase up to 4,700,739 common
shares of the Corporation. In accordance with the Corporation's
incentive stock option plan, all options have an exercise price equal to
or greater than the market price at the date of grant. The stock options
have a five year term and vest on a cumulative basis ranging from 25% to
33% per year.



Stock options issued and outstanding are as follows:

------------------------------------------------------------------------
------------------------------------------------------------------------
2004 2003
------------------------------------------------------------------------
Weighted Weighted
Number average Number average
of exercise of exercise
options price options price
------------------------------------------------------------------------
Outstanding, beginning
of year 3,606,300 $ 1.75 2,669,000 $ 1.80
Granted 481,900 2.99 993,300 1.57
Exercised (378,250) 0.99 (41,000) 0.94
Expired or cancelled (2,750) 2.28 (15,000) 3.00
------------------------------------------------------------------------
Outstanding, end of year 3,707,200 $ 1.99 3,606,300 $ 1.75
------------------------------------------------------------------------
------------------------------------------------------------------------

Exercisable, end of year 2,492,450 $ 1.92 2,105,901 $ 2.03
------------------------------------------------------------------------
------------------------------------------------------------------------


The following table summarizes information about stock options
outstanding and exercisable at December 31, 2004:

------------------------------------------------------------------------
------------------------------------------------------------------------
Options Outstanding Options Exercisable
------------------------------------------------------------------------
Weighted-Average
Remaining
Exercise Number Contractual Number Exercise
Price Outstanding Life (years) Exercisable Price
------------------------------------------------------------------------
$0.92 591,000 2.29 591,000 $ 0.92
0.95 545,000 2.05 545,000 0.95
1.30 676,000 3.26 169,000 1.30
2.10 177,500 3.62 44,375 2.10
2.25 124,300 3.81 31,075 2.25
2.70 187,000 4.21 - 2.70
3.00 1,112,000 1.46 1,112,000 3.00
3.10 214,400 4.46 - 3.10
3.35 80,000 4.71 - 3.35
------------------------------------------------------------------------
$0.92 - $3.35 3,707,200 2.63 years 2,492,450 $ 1.92
------------------------------------------------------------------------
------------------------------------------------------------------------


(d) Stock-based compensation:

The weighted average fair value of stock options granted was $2.99 (2003
- $1.05) per option during the year ended December 31, 2004. The
Corporation has used the Black-Scholes option pricing model with the
following assumptions: risk-free interest rate of 4% (2003 - 4%),
expected life of five years (2003 - five years) and expected volatility
of 41% to 45% (2003 - 51% to 94%).

The Corporation has not incorporated an estimated forfeiture rate for
stock options that will not vest, rather, the Corporation accounts for
actual forfeitures as they occur.

The Corporation continues to disclose the pro forma impact of stock
options granted in 2002. Had compensation expense been determined for
options issued during 2002 based upon the fair value at the grant dates
for options awarded under the stock option plan, the Corporation's
earnings for the year ended December 31, 2004 and 2003, and the
Corporation's earnings per share would have been adjusted to the pro
forma amounts indicated below:



------------------------------------------------------------------------
------------------------------------------------------------------------
Years ended December 31, 2004 2003
------------------------------------------------------------------------

Net earnings for the year - as reported $ 9,804,041 $ 4,381,670
Net earnings for the year - pro forma $ 9,569,077 $ 3,958,673

Earnings per share (basic) - as reported $ 0.22 $ 0.12
Earnings per share (diluted) - as reported $ 0.22 $ 0.11
Earnings per share (basic) - pro forma $ 0.22 $ 0.11
Earnings per share (diluted) - pro forma $ 0.21 $ 0.10
------------------------------------------------------------------------
------------------------------------------------------------------------

(e) Contributed surplus:
------------------------------------------------------------------------
------------------------------------------------------------------------
2004 2003
------------------------------------------------------------------------

Balance, beginning of year $ 136,985 $ -

Compensation expense 327,460 136,985
Exercise of share options (18,400) -
------------------------------------------------------------------------
Balance, end of year $ 446,045 $ 136,985
------------------------------------------------------------------------
------------------------------------------------------------------------


(f) Reduction of share capital:

At the Annual and Special Meeting held June 6, 2001 and June 17, 2002,
the shareholders of the Corporation adopted a special resolution to
reduce the stated capital of the common shares by $11,821,171 and
$28,873,039 respectively and, as a result, the deficit of the
Corporation was reduced by the same amount.

(g) Issued common shares in December 2004:

During December 2004, the Corporation issued 541,000 flow-through shares
at a price of $5.55 per share for gross proceeds of $3,002,550 and
2,758,700 common shares at a price of $4.35 per share for gross proceeds
of $12,000,345. At December 31, 2004, the Corporation had renounced
$3,002,550 of qualified expenditures pursuant to the flow-through shares
and is required to incur $3,002,550 of qualifying expenditures prior to
December 31, 2005 to satisfy its obligations pursuant to the
flow-through share financing.

(h) Issued common shares in 2003:

During June and July 2003, the Corporation issued 1,625,000 flow-through
shares at a price of $1.85 per share for gross proceeds of $3,006,250
and 4,450,000 common shares at a price of $1.55 per share for gross
proceeds of $6,897,500. At December 31, 2003, the Corporation had
incurred and renounced $3,006,250 of qualified expenditures pursuant to
the flow-through shares.

During December 2003, the Corporation issued 1,180,000 flow-through
shares at a price of $3.40 per share for gross proceeds of $4,012,000
and 1,910,000 common shares at a price of $2.65 per share for gross
proceeds of $5,061,500. At December 31, 2004 the Corporation had
incurred and renounced $4,012,000 of qualified expenditures pursuant to
the flow-through shares.



7. Income taxes:

The tax provision differs from the expected tax provision obtained by
applying the combined Federal and Provincial statutory tax rates to
earnings before taxes as follows:

------------------------------------------------------------------------
------------------------------------------------------------------------
2004 2003
------------------------------------------------------------------------

Expected tax rates 38.9% 40.6%
------------------------------------------------------------------------
------------------------------------------------------------------------

Expected income tax expense $ 5,781,521 $ 2,636,746

Decrease (increase) in taxes resulting
from:
Non-deductible crown charges,
net of ARTC 3,405,491 1,523,095
Federal resource allowance (2,718,794) (1,302,839)
Change in valuation allowance (229,834) (573,487)
Future tax rate reduction (753,152) (328,338)
Other (7,696) 85,365

------------------------------------------------------------------------
Future income taxes $ 5,477,536 $ 2,040,542
------------------------------------------------------------------------
------------------------------------------------------------------------


The components of the net future income tax liability are as follows:

------------------------------------------------------------------------
------------------------------------------------------------------------
2004 2003
------------------------------------------------------------------------

Future income tax liabilities:
Property, plant and equipment $(11,724,644) $ (6,387,204)

Future income tax assets:
Asset retirement obligations 360,368 281,540
Share issue costs 605,462 424,412
Non-capital losses - 112,075
Capital losses and other 4,398,511 4,529,859
------------------------------------------------------------------------
5,364,341 5,347,886

Valuation allowance (3,748,595) (3,978,429)
------------------------------------------------------------------------
Net future income tax liability $(10,108,898) $ (5,017,747)
------------------------------------------------------------------------
------------------------------------------------------------------------

At December 31, 2004, the Corporation had $22,983,414 of capital losses
that will expire in 2009, the benefit of which has not been recorded in
these financial statements.


8. Per share amounts:

In computing diluted earnings per share, 1,427,564 shares (2003 -
821,609) were added to the 43,687,452 (2003 - 37,332,811) weighted
average number of common shares outstanding during the year for the
dilutive effect of stock options. No adjustments were required to the
reported earnings in computing diluted per share amounts.



9. Commitments:

In the normal course of business Vaquero has obligations which
represent contracts and other commitments for the following:

------------------------------------------------------------------------
------------------------------------------------------------------------
Total
2005 2006-2009 Total
------------------------------------------------------------------------

Operating leases $ 291,399 $ 235,006 $ 526,405
Transportation agreements 320,002 342,219 662,221
------------------------------------------------------------------------
611,401 577,225 1,188,626
Capital expenditure commitments 883,200 2,649,600 3,532,800
------------------------------------------------------------------------
$ 1,494,601 $ 3,226,825 $ 4,721,426
------------------------------------------------------------------------
------------------------------------------------------------------------


10. Financial instruments:

The Corporation is exposed to fluctuations in commodity prices, interest
rates and exchange rates. The Corporation monitors and, when
appropriate, utilizes financial instruments to manage its exposure to
these risks.

(a) Commodity price risk management:

The Corporation periodically enters into oil and gas pricing agreements
to provide it with exposure to a variety of pricing indices.

The Corporation had two costless collar West Texas Intermediate physical
crude oil hedges for the period January 1, 2004 to March 31, 2004. Each
hedge was for 300 barrels of oil per day, the first with a price range
of $26.00 US/bbl - $31.15 US/bbl and the second with a price range of
$29.00 US/bbl - $31.90 US/bbl. Net settlement payments of $280,262 were
made for these hedges and are included in petroleum and natural gas
sales.

The Corporation had a costless collar West Texas Intermediate crude oil
hedge for the period July 1, 2004 to December 31, 2004. The hedge is for
400 barrels of oil per day, with a price range of $36.00 US/bbl - $45.55
US/bbl. The Corporation also had a costless collar hedge for the period
October 1, 2004 to December 31, 2004 for 200 barrels of oil per day,
with a price range of $39.50 US/bbl - $51.00 US/bbl. Net settlement
payments of $306,444 were made for these hedges and are included in
petroleum and natural gas sales.



Subsequent to December 31, 2004, the Corporation entered into the
following hedges:

------------------------------------------------------------------------
Pricing Strike Cost/
Contract Volume Point Price Premium Term
------------------------------------------------------------------------
Crude Oil
------------------------------------------------------------------------
Costless US$37.00
Collar 500 bbls/d WTI - $51.30 n/a Jan 1/05 - Mar 31/05
------------------------------------------------------------------------
Costless US$42.00
Collar 500 bbls/d WTI -- $53.50 n/a Apr 1/05 - Jun 30/05
------------------------------------------------------------------------
Costless US$47.00
Collar 200 bbls/d WTI -- $55.84 n/a Apr 1/05 - Jun 30/05
------------------------------------------------------------------------
Costless US$45.00
Collar 700 bbls/d WTI -- $54.50 n/a Jul 1/05 - Sep 30/05
------------------------------------------------------------------------
Natural
Gas
------------------------------------------------------------------------
Costless Cdn$5.75
Collar 3,000 GJ/d AECO -- $7.45 n/a Apr 1/05 - Oct 31/05
------------------------------------------------------------------------


(b) Foreign currency risk management:

The Corporation is exposed to foreign currency fluctuations. The
Corporation may periodically use financial instruments, including
forward exchange contracts and currency options to manage this exposure.
At December 31, 2004, there were no contracts or options outstanding.

(c) Credit risk management:

Accounts receivable include amounts receivable for oil and gas sales.
These sales are generally made to large, credit-worthy purchasers. The
Corporation views the credit risks on these items as insignificant.
Amounts receivable for joint venture partners included in accounts
receivable are recoverable from production and, accordingly, the
Corporation views the credit risk on these amounts as insignificant.

(d) Interest rate risk:

The Corporation is exposed to interest rate risk to the extent that the
bank debt is at a floating rate of interest.

(e) Fair values of financial instruments:

Cash and cash equivalents, accounts receivable, and accounts payable and
accrued liabilities have carrying values that approximate fair value due
to the near term maturity of these financial instruments. The
Corporation's bank debt bears interest at a floating market rate and
accordingly the fair market value approximates the carrying value.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Vaquero Energy Ltd.
    Mr. Robb Waldner
    President and Chief Executive Officer
    (403) 537-2031
    Website: www.vaquero.ca