News Releases

Pine Cliff Energy Ltd. Announces First Quarter Results

May 28, 2008 - 03:56 PM ET

CALGARY, ALBERTA--(Marketwire - May 28, 2008) - Pine Cliff Energy Ltd. (www.pinecliffenergy.com) (TSX-V:PNE) is pleased to announce its financial and operational results for the three months ended March 31, 2008.



Highlights

For the three months ended March 31 December 31 March 31
2008 2007 2007
-------------------------------------------------------------------------
FINANCIAL ($)
Revenue - oil and gas 143,116 112,685 198,515
Funds Flow from Operations(1) (159,541) (228,913) (165,886)
Per Share - Basic (0.00) (0.01) (0.00)
Per Share - Diluted (0.00) (0.01) (0.00)
Loss (317,113) (381,561) (270,109)
Per Share - Basic (0.01) (0.01) (0.01)
Per Share - Diluted (0.01) (0.01) (0.01)
Capital Expenditures 281,388 193,350 2,196,476
Total Assets 12,221,650 12,445,994 4,211,984
Working Capital 7,937,179 8,378,110 602,650
Shareholders' Equity 12,003,398 12,205,066 4,008,304
-------------------------------------------------------------------------
OPERATIONS
Oil and NGL's - Barrels Per Day 4 2 7
- Average Price
($ per barrel) 56.91 68.33 58.91
Natural Gas - MCF Per Day 168 182 226
- Average Price
($ per MCF) 8.17 6.16 8.05
Total Barrels Per Day(2) 30 40 44

(1) Funds flow from operations is not a recognized measure under GAAP.
Management believes that in addition to cash flow from operations,
funds flow from operations is a useful supplemental measure as it
demonstrates the Company's ability to generate the funds necessary to
fund future growth through capital investment. Investors are
cautioned, however, that this measure should not be construed as an
indication of the Company's performance. The Company's method of
calculating this measure may differ from other issuers and
accordingly, it may not be comparable to that used by other issuers.
For these purposes, the Company defines funds flow from operations as
funds provided by operations before changes in non-cash operating
working capital items excluding foreign exchange loss and asset
retirement expenditures.

(2) BOE's are calculated using a conversion ratio of 6 MCF to 1 barrel of
oil. The conversion is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead and as such may be misleading if
used in isolation.


FORWARD-LOOKING INFORMATION

Certain statements contained in this press release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this press release includes, but is not limited to: expected cash provided by continuing operations; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and natural gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.

All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: the risks of foreign operations; foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive.

Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived therefrom. Except as required by law, Pine Cliff disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

The forward-looking information contained herein is expressly qualified by this cautionary statement.

General

-------

Pine Cliff is pleased to report that during the past quarter it has been successful in advancing some of its projects.

- Three wells have been drilled in the Canadsn Ramirez property in
Argentina. Testing and evaluating has commenced on the first well and
then will move to the second and third wells. It is anticipated that
all tests will be completed in the next six weeks. Results will be
released on a timely basis. Pine Cliff has a 49 percent participating
interest in this property.

- The 3D seismic program has been completed on the Laguna de Piedra
concession in Argentina. The evaluation and processing should be
completed in Q2, 2008 to determine whether there are economic drill
locations. Pine Cliff has a 25 percent participating interest in this
property.

- Pine Cliff has committed to pay 100 percent of costs totaling
$4,620,000 U.S. including value added tax of 21 percent to earn a
60 percent participating interest in a permit in the San Jorge basin
in Argentina. Earn-in for this property is subject to final granting
of the concession for this property by the Provincial government to
the Farmor. The finalization for this large concession is expected to
be completed in Q3, 2008.

- The Company is continuing to assess and evaluate properties in Canada
with the intention of growing its activities in the Western Canadian
Sedimentary Basin.

The company will continue with a more aggressive approach towards participating in domestic and international activities.

Production
----------

Production was approximately 26% less in the first quarter of 2008 than the first quarter of 2007. During the third quarter of 2007 one of the Company's commingled gas wells with various production zones started to produce sand and production fell significantly. The operator of the well performed an unsuccessful workover in December of 2007 to attempt to properly optimize production from all zones. To properly repair the wellbore would involve a procedure whereby the cost currently exceeds the benefits. The operator will therefore leave the wellbore as is. As a result of the workover, production for this commingled gas well decreased again in the first quarter of 2008.

Revenue
-------

Revenue from petroleum and natural gas sales was $143,116 during the first quarter of 2008 compared to $198,515 for the first quarter of 2007. The decrease is primarily attributable to a decrease in production. There was a modest increase in revenue of $30,431 over the fourth quarter of 2007 due to higher natural gas prices.

Royalties
---------

Royalties consist of Crown royalties of $34,130 (Q1 2007 - $30,790 and Q4 2007 - $27,091) paid to the Province of Alberta and gross overriding royalties of $2,738 (Q1 2007 - $6,552 and Q4 2007 - $4,569). Crown royalties were higher in the first quarter of 2008 than the first quarter of 2007 as there were wells on a crown royalty holiday in Q1 2007. Quarter over quarter saw a slight increase in crown royalties due to higher commodity prices. Lower gross overriding royalties in the first quarter of 2008 compared to the first and last quarters of 2007 resulted from lower production on wells subject to these royalties.

Interest Income
---------------

The Company maintains both Canadian and U.S. investment accounts that pay interest at prime less various percentages as long as the Company maintains certain minimum account balances. The Company has increased its cash balance with regard to proceeds received from the rights offering done in the fourth quarter of 2007. The Company was therefore earning interest at higher rates and on an increased cash balance.

Production Costs
----------------

Production costs for the three months ended March 31, 2008 were $26,249 or $9.55 per BOE versus $40,956 or $10.31 per BOE in the first quarter of 2007. Production costs per BOE are lower due to decreased natural gas compression and processing costs. BOE's are calculated using a conversion ratio of 6 MCF to 1 barrel of oil. The conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and as such may be misleading if used in isolation. Q4 2007 production costs of $35,090 or $12.53 per BOE were higher than Q1 2008 due to capacity constraints at the gas plant in the previous quarter. The Company had incurred increased processing fees in relation to its Sundance gas production.

General and Administrative
--------------------------

General and administrative expense for the first three months of 2008 was $282,129 compared to $294,919 for the first three months of 2007 and $329,773 for the fourth quarter of 2007. The decrease of $13,000 in Q1 2008 over Q1 2007 was due primarily to less legal fees and traveling costs with regards to negotiations for its subsidiary CanAmericas Energy Ltd. ("CanAmericas") activities in South America.

The decrease of $47,000 in Q1 2008 from Q4 2007 was also primarily due to decreased legal fees relating to operational development with regard to its subsidiary CanAmericas' activities in South America.

Pine Cliff does not have any employees at the present time but engages the services of consultants on a contract or temporary basis. Pine Cliff's subsidiary CanAmericas has also engaged the services of two individual professionals as senior management and officers of CanAmericas.

Foreign Exchange Gain (Loss)
----------------------------

The Company maintains foreign denominated bank accounts to facilitate its foreign operations. The gain on foreign exchange of $2,310 for the first quarter of 2008 and $6,302 for the last quarter of 2007 relates to the depreciation of the Canadian dollar from December 31, 2007 to March 31, 2008, as apposed to a foreign exchange loss of $8,420 for the first quarter of 2007 as the Canadian dollar appreciated over that quarter.

Stock Based Compensation
------------------------

Stock based compensation for Q1 2008 was $115,445 and $37,276 for Q1 2007 (Q4 2007 - $90,783). The Company has a stock-based compensation plan for Pine Cliff. The Company records a compensation expense over the vesting period based on the fair value of options granted to employees, directors and consultants. The Company issued 1,108,000 stock options in Pine Cliff during 2007 and none in the first quarter of 2008. The Company estimated the 2007 stock options fair value at $547,080 ($0.49 per option) using the Black-Scholes option pricing model, assuming a weighted average risk free interest rate of 4.14 percent, weighted average expected volatility of 64.8 percent, weighted average expected life of 2.5 years and no annual dividend rate. As of March 31, 2008 approximately $385,000 of unamortized stock based compensation exists and will be amortized over two years, approximately $285,000 in 2008 and $100,000 in 2009.

Depletion, Depreciation, and Accretion
--------------------------------------

The Company follows the successful efforts method of accounting for petroleum and natural gas properties and related equipment. Costs of acquiring unproved properties are capitalized. When petroleum and natural gas properties are found to contain proved reserves as determined by Company engineers, the related net book value is depleted on the unit-of-production basis, calculated by field. The costs of dry holes and abandoned properties are charged to operations. Geological costs, lease rentals and carrying costs are charged to income as incurred. Costs of drilling exploratory and development wells that result in additions to proved reserves are capitalized and depleted on the unit-of-production basis. Tangible equipment is depreciated on a straight-line basis over ten years.

During the first quarter of 2008 the Company expensed $65,469 (2007 - $79,606) for depletion, depreciation and accretion of its property and equipment. The decrease is related to reduced production volumes in the first quarter of 2008. The fourth quarter of 2007 had a slightly higher depletion, depreciation and accretion amount of $73,464 due to slightly higher production.

Income Taxes
------------

The Company follows the liability method of accounting for income taxes under which the income tax provision is based on the temporary differences in the accounts calculated using income tax rates expected to apply in the year in which the temporary differences will reverse. The Company has sufficient tax pools such that it is not liable for current income tax. However the Company is subject to a 1% Argentina capital tax on assets in Argentina. These amounts are deductible from future income earned in Argentina.

The Company has the following tax pools which can be used to reduce future taxable income:



Rate of
Utilization
% Amount
-------------------------------------------------------------------------
Undepreciated capital costs 25 $ 347,514
Foreign exploration expenditures 10 2,775,198
Share issue costs 20 121,908
Canadian exploration expenditures 100 392,110
Canadian development expenditures 30 405,397
Canadian oil and gas expenditures 10 699,243
Non-capital loss carry forward(*) 100 1,898,481
-------------------------------------------------------------------------
$ 6,639,851
-------------------------------------------------------------------------
(*) $735,057 expires 2026, $929,726 expires 2027 and $233,698 expires in
2028


Non-Controlling Interest
------------------------

As described above, Foreign Corp. owns seven percent of CanAmericas. The Q1 2008 amount of $23,342 (Q1 2007 - $12,659 and Q4 2007 - $21,296) of loss applicable to non-controlling interest relates to their share of revenues and costs associated with CanAmericas South American activities.

Loss
----

Loss in the first quarter of 2008 was $317,113 ($270,109 in the first quarter of 2007). The increase in the loss was due mainly to increased stockbased compensation expense and a 1% Argentina capital tax of $27,889 (2007 - $Nil).

The decrease in losses of $66,448 in Q1 2008 compared to the Q4 2007 loss was primarily due to higher oil and gas commodity prices, increased interest income, lower general and administrative costs and lower production costs in Q1 2008 over Q4 2007.

Funds Flow From Operations
--------------------------

Negative Funds flow from operations decreased to ($159,541) in the first quarter of 2008 compared to ($228,913) for the last quarter of 2007 from ($165,886) in the first quarter of 2007. The increase compared to Q1 2007 was due primarily to increased interest income and lower production and administration costs. This increase in funds flow was partially offset by lower oil and gas revenue due to lower production levels. The increase in funds flow from Q1 2008 compared to Q4 2007 was due to increased oil and gas sales from higher commodity prices and lower general and administrative costs offset by decreased production.

The following reconciliation compares funds flow for the first three months of 2008 and 2007 to the Company's cash flow from operating activities as calculated according to Canadian generally accepted accounting principles:



For the three month periods ending March 31, 2008 2007
-------------------------------------------------------------------------
Cash flow from operating activities ($204,923) ($115,860)
Items not affecting funds flow
Accounts receivable 34,543 (85,858)
Prepaid expenses 5,059 5,716
Accounts payable and accrued liabilities 3,470 38,536
Foreign exchange gain (loss) 2,310 (8,420)
-------------------------------------------------------------------------
Funds flow for the period ($159,541) ($165,886)
-------------------------------------------------------------------------


Commitments
-----------

The Company has three farm-in agreements in South America which require future expenditure commitments as outlined in Note 9 to the financial statements.

Liquidity and Capital Resources

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

As of March 31, 2008, Pine Cliff had positive working capital of $7,937,179 (December 31, 2007 - $8,378,110). These funds will be used to fund future exploration and development of Canadian and international properties.

The TSX Venture Exchange does not accept responsibility for the adequacy

or accuracy of this release.

Additional information relating to the Company may be found on SEDAR.COM. as well as on the Company's website at www.pinecliffenergy.com or by contacting George F. Fink, President, and CEO or Garth E. Schultz, Vice President - Finance, and CFO at (403) 269-2289 or by fax at (403) 265-7488



PINE CLIFF ENERGY LTD.
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
As at March 31, 2008 (unaudited)
and December 31, 2007

2008 2007
-------------------------------------------------------------------------
Assets
Current
Cash $ 7,978,752 $ 5,769,448
Restricted term investment - 2,689,601
Accounts receivable 106,447 71,904
Prepaid expenditures 33,527 28,468
-------------------------------------------------------------------------
8,118,726 8,559,421
-------------------------------------------------------------------------
Property and Equipment (Note 5)
Property and equipment 4,920,226 4,638,837
Accumulated depletion and depreciation (817,302) (752,264)
-------------------------------------------------------------------------
Net Property and Equipment 4,102,924 3,886,573
-------------------------------------------------------------------------
$12,221,650 $12,445,994
-------------------------------------------------------------------------
Liabilities
Current
Accounts payable and accrued liabilities $ 181,547 $ 181,311

Asset Retirement Obligations 34,868 34,438
Non-Controlling Interests (Note 4) 1,837 25,179
-------------------------------------------------------------------------
218,252 240,928
-------------------------------------------------------------------------
Commitments (Note 9)
Shareholders' Equity
Share capital (Note 7) 14,588,722 14,588,722
Contributed surplus 456,910 341,465
Deficit (3,042,234) (2,725,121)
Accumulated other comprehensive income - -
-------------------------------------------------------------------------
12,003,398 12,205,066
-------------------------------------------------------------------------
$12,221,650 $12,445,994
-------------------------------------------------------------------------



PINE CLIFF ENERGY LTD.
CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
-------------------------------------------------------------------------
For the three months ended March 31 (unaudited)

2008 2007

-------------------------------------------------------------------------
Revenue
Oil and gas sales $ 143,116 $ 198,515
Royalties (36,868) (37,342)
Interest income 68,168 17,236
-------------------------------------------------------------------------
174,416 178,409
-------------------------------------------------------------------------
Expenses
Production costs 26,249 40,956
General and administrative 282,129 294,919
Foreign exchange loss (gain) (2,310) 8,420
Stock based compensation 115,445 37,276
Depletion, depreciation and accretion 65,469 79,606
-------------------------------------------------------------------------
486,982 461,177
-------------------------------------------------------------------------
Loss Before Taxes and Non-Controlling
Interests (312,566) (282,768)
-------------------------------------------------------------------------
Taxes (Note 6)
Current 27,889 -
Future - -
-------------------------------------------------------------------------
27,889 -
-------------------------------------------------------------------------
Loss before Non-Controlling Interests (340,455) (282,768)
Loss applicable to non-controlling interests
(Note 4) 23,342 12,659
-------------------------------------------------------------------------
Loss and Comprehensive Income for the Period (317,113) (270,109)
Deficit, Beginning of Period (2,725,121) (1,343,667)
-------------------------------------------------------------------------
Deficit, End of Period ($3,042,234) ($1,613,776)
-------------------------------------------------------------------------
Loss Per Share - Basic and Diluted ($0.01) ($0.01)
-------------------------------------------------------------------------

Weighted Average Common Shares
Basic 45,275,695 36,532,219
Diluted 46,133,294 37,701,514
-------------------------------------------------------------------------



PINE CLIFF ENERGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
-------------------------------------------------------------------------
For the three months ended March 31 (unaudited)

2008 2007

-------------------------------------------------------------------------
Operating Activities
Loss for the period ($317,113) ($270,109)
Items not affecting cash
Stock based compensation 115,445 37,276
Depletion, depreciation and accretion 65,469 79,606
Foreign exchange loss (gain) (2,310) 8,420
Loss applicable to non-controlling
interests (23,342) (12,659)
-------------------------------------------------------------------------
(161,851) (157,466)
-------------------------------------------------------------------------
Change in non-cash working capital
Accounts receivable (34,543) 85,858
Prepaid expenditures (5,059) (5,716)
Accounts payable and accrued liabilities (3,470) (38,536)
-------------------------------------------------------------------------
(43,072) 41,606
-------------------------------------------------------------------------
Cash Used in Operating Activities (204,923) (115,860)
-------------------------------------------------------------------------
Financing Activities
Issue of shares under stock option plan - 1,500
-------------------------------------------------------------------------
Cash Provided by Financing Activities - 1,500
-------------------------------------------------------------------------
Investing Activities
Property and equipment expenditures (281,388) (2,196,476)
Proceeds on disposal of restricted term
investments 2,689,601 -
Change in non-cash working capital
Accounts payable and accrued liabilities 3,704 -
-------------------------------------------------------------------------
Cash Provided by (Used in) Investing Activities 2,411,917 (2,196,476)
-------------------------------------------------------------------------
Foreign Exchange (Loss) Gain on Cash Held in
Foreign Currency 2,310 (8,420)
-------------------------------------------------------------------------
Net Cash Inflow (Outflow) 2,209,304 (2,319,256)
Cash, Beginning of Period 5,769,448 2,915,020
-------------------------------------------------------------------------
Cash, End of Period $ 7,978,752 $ 595,764
-------------------------------------------------------------------------

Cash interest paid $ - $ -
Cash taxes paid $ - $ -
-------------------------------------------------------------------------


Notes to the Consolidated Financial Statements

Periods ended March 31, 2008 and 2007 (unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and methods of application followed in the
preparation of the interim financial statements other than those
described below are the same as those followed in the preparation
of Pine Cliff Energy Ltd.'s ("the Company" or "Pine Cliff") 2007
annual financial statements. These interim financial statements do
not include all disclosures required for annual financial
statements. The interim financial statements as presented should
be read in conjunction with the 2007 annual financial statements.
The Company adopted Section 1535, "Capital Disclosures", Section
3862, "Financial Instruments - Disclosures" and Section 3863,
"Financial Instruments - Presentation." All the above Sections
were required to be adopted for fiscal years beginning on or after
October 1, 2007. As a result the Company has added note 10
providing the required disclosures regarding the Company's
objectives, policies and processes for managing capital and the
significance of financial instruments for the entity's financial
position and performance; and the nature, extent and management of
risks arising from financial instruments to which the entity is
exposed.

Accounting Changes

In February 2008, the CICA issued Section 3064, "Goodwill and
Intangible Assets," replacing Section 3062, "Goodwill and Other
Intangible Assets" and Section 3450, "Research and Development
Costs." Various changes have been made to other sections of the
CICA Handbook for consistency purposes. The new Section will be
applicable to financial statements relating to fiscal years
beginning on or after October 1, 2008. Accordingly, the Company
will adopt the new standards for its fiscal year beginning
January 1, 2009. This standard establishes standards for the
recognition, measurement, presentation and disclosure of goodwill
subsequent to its initial recognition and of intangible assets by
profit-oriented enterprises. Standards concerning goodwill are
unchanged from the standards included in the previous Section
3062. The Company is currently evaluating the impact of the
adoption of this new Section on its consolidated financial
statements. The Company does not expect that the adoption of this
new Section will have a material impact on its consolidated
financial statements.

2. RESTRICTED TERM INVESTMENT AND BANKING AGREEMENT

The Company has a line of credit through its subsidiary
CanAmericas in the amount of $3,690,000 US, which can be drawn by
means of letters of guarantee and letters of credit. The line of
credit bears interest at US or CDN prime plus 2% per annum
depending on the currency borrowed. The line of credit is
repayable on demand.

The Company had a letter of guarantee to cover its commitment to
spend $2,142,446 US for drilling three wells on the Canadon
Ramirez Concession. The guarantee expired January 31, 2008.
The Company has a performance security agreement whereby a
guarantee to spend $1,120,000 US on the Laguna de Peidra
concession has been reassigned to Export Development Canada for a
fee. The reassignment reduces the Company's requirement to
maintain 1.25 times the letter of guarantee in its bank account.
The guarantee expires June 30, 2008.

3. RELATED PARTY TRANSACTIONS

Bonterra Energy Income Trust ("Bonterra"), an organization with
common directors and management and former parent of the Company,
through its wholly owned subsidiary Bonterra Energy Corp.
("Bonterra Corp.") provides management services and office
administration to the Company. Total fees for the three month
period were $59,400 (2007 - $54,000) plus minimal out of pocket
costs. As of March 31, 2008 Pine Cliff owed Bonterra Corp $276
(December 31, 2007 - $3,976).

Pine Cliff acquired its Canadian oil and gas properties from
Novitas Energy Ltd. ("Novitas"). As of March 31, 2008 Pine Cliff
owed Novitas $18,143 (December 31, 2007 - $Nil) for invoiced
expenditures by the operator of those oil and gas properties.
Novitas is a wholly owned subsidiary of Bonterra.
These transactions are in the normal course of operations and are
measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties.

4. NON-CONTROLLING INTERESTS

The Company has incorporated a subsidiary company, CanAmericas
Energy Ltd. ("CanAmericas") to explore and develop oil and gas
properties primarily in South America. CanAmericas is owned 93
percent by the Company and seven percent by a foreign private
corporation ("Foreign Corp."). CanAmericas was initially financed
by investments of $1,400,000 U.S. for 5,600,000 common shares from
the Company and $100,000 U.S. for 400,000 common shares from
Foreign Corp.

Changes to non-controlling interest were as follows:



March 31, December 31,
2008 2007
------------------------------------------------------------------
Non-controlling interest, January 1 $ 25,179 $ 74,970
Loss applicable to non-controlling
interest (23,342) (49,791)
------------------------------------------------------------------
Non-controlling interest, end of period $ 1,837 $ 25,179
------------------------------------------------------------------


Foreign Corp. has been granted an option to acquire an additional
1,000,000 common shares of CanAmericas at $0.25 U.S. per common
share. Fifty percent of the options vested on January 13, 2007,
and the remaining 50% vested on January 13, 2008, and all the
options will expire on January 13, 2011.



5. PROPERTY AND EQUIPMENT

March 31, 2008 December 31, 2007
Accumulated Accumulated
Depletion and Depletion and
Cost Depreciation Cost Depreciation
---------------------------------------------------------------------
Petroleum and natural
gas properties and
related equipment $4,866,714 797,080 $4,585,325 734,384
Furniture, equipment
and other 53,512 20,222 53,512 17,880
---------------------------------------------------------------------
$4,920,226 $ 817,302 $4,638,837 $ 752,264
---------------------------------------------------------------------
---------------------------------------------------------------------


As of March 31, 2008, the Company spent $2,751,350 for exploration
activities for the Canadon Ramirez Concession and Laguna de Piedra
Concession as discussed in Note 9. These costs presently have been
excluded from costs subject to depletion and depreciation.

6. TAXES

The Company has accrued $27,889 current tax expense related to
Argentina capital tax. A 1% Argentina capital tax is payable in
respect of the exploration costs for the Canadon Ramirez and the
Laguna de Piedra Concessions.

The Company continues to record a full valuation allowance for its
future income tax assets as the recoverability is uncertain.

7. SHARE CAPITAL

Authorized

Unlimited number of Common Shares without nominal or par value.

Unlimited number of Class B Preferred Shares without nominal or

par value which may be issued in one or more series.



Issued Number Amount
------------------------------------------------------------------
Common Shares
Balance, January 1, 2008 45,275,695 $14,588,722
Issued on exercise of options - -
Transfer of contributed surplus to share
capital -
------------------------------------------------------------------
Balance, March 31, 2008 45,275,695 $14,588,722
------------------------------------------------------------------
------------------------------------------------------------------


A summary of the status of the Company's stock option plan as of
March 31, 2008 and December 31, 2007, and changes during the three
month and twelve month periods ending on those dates is presented
below:



March 31, 2008 December 31, 2007
-------------------------------------------------------------------------
Options Weighted- Options Weighted-
Average Average
Exercise Exercise
Price Price
Outstanding at beginning
of period 3,053,000 $ 0.62 2,420,000 $ 0.29
Options granted - - 1,108,000 1.16
Options exercised - - (440,000) 0.17
Options cancelled - - (35,000) 0.40
-------------------------------------------------------------------------
Outstanding at end of
period 3,053,000 $ 0.62 3,053,000 $ 0.62
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Options exercisable at
end of period 1,187,500 $ 0.19 1,162,500 $ 0.18
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The following table summarizes information about stock options
outstanding at March 31, 2008:

Options Outstanding Options Exercisable
----------------------------------- ----------------------
Weighted-
Average Weighted- Weighted-
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices At 3/31/08 Life Price At 3/31/08 Price
---------------------------------------------------------------------
$0.15 1,090,000 1.8 years $0.15 1,090,000 $0.15
0.50 - 0.60 825,000 1.8 years 0.51 57,500 0.57
0.70 - 0.75 80,000 1.8 years 0.72 40,000 0.72
1.10 - 1.20 1,018,000 2.8 years 1.18 - -
1.40 - 1.50 40,000 2.8 years 1.49 - -
---------------------------------------------------------------------
$0.15-$1.50 3,053,000 2.2 years $0.62 1,187,500 $0.19
---------------------------------------------------------------------
---------------------------------------------------------------------


The Company records a compensation expense over the vesting period
based on the fair value of options granted to employees, directors
and consultants. Unvested options as of March 31, 2008 vest
816,000 in 2008, 1,024,500 in 2009 and 25,000 in 2010.

8. SEGMENTED INFORMATION

The Company has operations in Canada and in South America. All
operating activities are related to exploration, development and
production of petroleum and natural gas:



South
($) Canada America Total
March 31, 2008
Revenue, gross 191,226 20,058 211,284
Loss before non-controlling
interest 154,203 186,252 340,455
Capital expenditures 7,426 273,962 281,388
Property and equipment 1,057,233 3,045,691 4,102,924
Total assets 6,479,801 5,685,422 12,165,223

March 31, 2007
Revenue, gross 187,878 27,873 215,751
Loss 92,881 189,887 282,768
Capital expenditures 38,271 2,158,205 2,196,476

December 31, 2007
Property and equipment 1,111,830 2,774,743 3,886,573
Total assets 6,428,371 6,017,623 12,445,994


9. COMMITMENTS

The Company has three farm-in agreements in South America which
require future expenditure commitments as outlined below:

Canadon Ramirez Concession

Pine Cliff, has committed to pay 100% of costs totaling
$5,500,000 US, including the 21% Value Added Tax ("V.A.T."), for
work to be conducted on the concession within two years to earn a
49% participating interest.

As of March 31, 2008, the Company has expended $2,746,194 CDN
($2,399,190 US) including V.A.T of $462,622 CDN ($404,019 US) on
the Canadon Ramirez Concession. The V.A.T amount is recoverable
against V.A.T liabilities generated on the sale of petroleum
production in Argentina. The V.A.T amount has been capitalized to
exploration costs, as its recoverability can not be determined
until a successful producing property is established.



Commitment by Year ($000's US)

Year Amount
---- ------
2008 3,101
------


San Jorge Basin Permit

Pine Cliff, has committed to pay 100% of costs totaling
$4,620,000 US including V.A.T. to earn a 60% participating
interest in the entire permit. As of March 31, 2008, no amounts
have been expended on this permit. The V.A.T amount is recoverable
against V.A.T liabilities generated on the sale of petroleum
production in Argentina. CanAmericas' commitment and earn-in in
this property is subject to final granting of the concession for
this property by the provincial government to the Farmor. The
finalization for this conversion is expected to be completed in
the third quarter of 2008.



Commitment by Year ($000's US)

Year Amount
---- ------
2008 300
2009 2,595
2010 1,725
------
4,620
------


Laguna de Piedra Concession

Pine Cliff through its subsidiaries has committed to pay 40% of
costs totaling $1,120,000 US including V.A.T. to earn a 25%
participating interest in the entire permit.

As of March 31, 2008, the Company has expended $69,908 CDN
($68,083 US) including V.A.T of $10,102 CDN ($9,889 US) on the
Laguna de Piedra Concession. The V.A.T amount is recoverable
against V.A.T liabilities generated on the sale of petroleum
production in Argentina. The V.A.T amount has been capitalized to
exploration costs, as its recoverability can not be determined
until a successful producing property is established.



Commitment by Year ($000's US)

Year Amount
---- ------
2008 1,052
------


The Company issued a letter of guarantee to spend $1,120,000 US
for work to be conducted on this Concession. The guarantee expires
July 1, 2008. Subsequent to March 31, 2008 the Company has spent
sufficient funds to meet its commitment.

The success of the South American operations and recoverability of
the capitalized costs related thereto are dependent upon the
development of successful producing properties. This may require
additional financing in amounts sufficient to continue the on-
going development of the South American operations and to meet the
related obligations as they become due.

10. FINANCIAL AND CAPITAL RISK MANAGEMENT

Financial Risk Factors
----------------------

The Company undertakes transactions in a range of financial
instruments including:

- Cash deposits;

- Receivables;

- Payables;

The Company's activities result in exposure to a number of
financial risks including market risk (commodity price risk,
interest rate risk, foreign exchange risk, credit risk, and
liquidity risk). Financial risk management is carried out by
senior management under the direction of the Directors.
The Company does not enter into risk management contracts. The
Company sells its oil and gas commodities at market prices at the
date of sale in accordance with the Board directive.

Capital Risk Management
-----------------------

The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can continue to provide returns to its Shareholders and benefits
for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Company may issue new shares.
The Company monitors capital on the basis of the ratio of annual
budgeted exploration capital requirements to current working
capital. This ratio is calculated using the projected cash
requirements for nine months to a year in advance and maintaining
a working capital balance of approximately 6 months to satisfy
this requirement on a continuous basis.

The Company believes that maintaining approximately a six month
current working capital balance to the exploration capital budget
requirement is an appropriate basis to allow it to continue its
future development of the Company's largest assets; the "Canadon
Ramirez Concession," "Laguna de Piedra Concession" and the "San
Jorge Basin Concession."

The following section (a) of this note provides a summary of our
underlying economic positions as represented by the carrying
values, fair values and contractual face values of our financial
assets and financial liabilities. The Company's working capital to
capital expenditure requirement ratio is also provided.
The following section (b) addresses in more detail the key
financial risk factors that arise from the Company's activities
including its policies for managing these risks.

a) Financial assets, financial liabilities

The carrying amounts, fair value and face values of the Company's
financial assets and liabilities other than cash are shown in
Table 1.



Table 1
As at March 31, 2008 As at December 31, 2007
Carry- Carry-
ing Fair Face ing Fair Face
($000) Value Value Value Value Value Value
Financial assets
Restricted term
investments - - - 2,689 2,689 2,689
Accounts receivable 106 106 118 72 72 81

Financial
liabilities
Accounts payable
and accrued
liabilities 182 182 182 181 181 181

The budgeted capital expenditure to working capital base figures
for March 31, 2008 and December 31, 2007 are presented below:

March 31, December 31,
($000) 2008 2007
------------------------------------------------------------------
Budgeted capital expenditure
(December 31, 2007) 6,425 6,425
Expenditures 2008 (281) -
Budgeted capital expenditure 6,144 6,425
Number of months budgeted 9 12
Current assets 8,119 8,559
Current liabilities (182) (181)
Working capital 7,937 8,378
Budgeted capital expenditure to working
capital base 0.8 0.8
Working capital to budgeted capital
expenditure (in months) 11.6 15.7


b) Risks and mitigations

Market risk is the risk that the fair value or future cash flow of
the Company's financial instruments will fluctuate because of
changes in market prices. Components of market risk to which
Pine Cliff is exposed are discussed below.

Commodity price risk
--------------------

The Company's principal operation is the exploration and possible
development of its oil and gas properties in Argentina. The
Company also engages to a much lesser extent in the sale of oil
and natural gas properties in Canada. Fluctuations in prices of
these commodities may directly impact the Company's performance
and ability to continue with its operations.

The Company's management, in agreement with the Board of
Directors, currently does not use risk management contracts to set
price parameters for its production.

Sensitivity Analysis
--------------------

The Company is still in the exploration stage of development of
its exploration properties and as such generates nominal cash flow
or earnings from these properties. In addition the Company's
petroleum and natural gas operations provide only moderate cash
flow and as such changes of $1.00 US per barrel in the price of
crude oil, $0.10 per MCF in the price of natural gas and $0.01
change in the Cdn/US exchange rate would have no material impact
on the Company.

Interest rate risk
------------------

Interest rate risk refers to the risk that the value of a
financial instrument or cash flows associated with the instrument
will fluctuate due to changes in market interest rates. Interest
rate risk arises from interest bearing financial assets and
liabilities that Comaplex uses. The principal exposure to the
Company is on its cash balances which have a variable interest
rate which gives rise to a cash flow interest rate risk.
Pine Cliff's cash consists of Canadian, US and Argentina Pesos
investment chequing accounts. Since these funds need to be
accessible for the development of the Company's capital projects,
management does not reduce its exposure to interest rate risk
through entering into term contracts of various lengths. As
discussed above, the Company generally manages its capital such
that its annual budgeted capital requirements to current working
capital ratio are approximately six months. This reduces the
effects of unused funds generating a minimum return on investment.

Sensitivity Analysis

Based on historic movements and volatilities in the interest rate
markets, and management's current assessment of the financial
markets, the Company believes that a one percent variation in the
Canadian prime interest rate is reasonably possible over a 12
month period. No income tax effect has been calculated as the
Company has more than sufficient tax pools to offset against
profit.

The following illustrates the annual impact of a 1% fluctuation in
the Canadian prime interest rate:



As at As at
March 31, 2008 December 31, 2007
Plus 1% Minus 1% Plus 1% Minus 1%
($000) Earnings Equity Earnings Equity Earnings Equity Earnings Equity
Finan-
cial
assets
-------
Cash
deposits 79 79 (79) (79) 58 58 (58) (58)
Restrict-
ed term
invest-
ments - - - - 27 27 (27) (27)
Accounts
receiv-
able - - - - - - - -
Financial
liabili-
ties
---------
Accounts
payable
and
accrued
liabili-
ties - - - - - - - -
-------------------------------------------------------------------------
Total
increase
(de-
crease) 79 79 (79) (79) 85 85 (85) (85)
-------------------------------------------------------------------------


Foreign exchange risk
---------------------

The Company has foreign operations, but no revenue from production
from the foreign properties and currently sells all of its
Canadian product sales in Canadian currency. The Company has a US
cash and Argentina Pesos cash balance and earns an insignificant
amount of interest on its US and Argentina Pesos bank account.
Funds held in foreign denominated accounts are generally held for
short periods of time, as the Company transfers and converts
Canadian funds to foreign currency as payment for foreign currency
denominated payables come due. As such, Pine Cliff does not
mitigate this risk by hedging its CAD/USD/ARG exchange rate.

Credit risk
-----------

Credit risk is the risk that a contracting party will not complete
its obligations under a financial instrument and cause the Company
to incur a financial loss. Pine Cliff is exposed to credit risk on
all financial assets included on the balance sheet. To help
mitigate this risk:

- The Company maintains the majority of its cash balances with a
major Canadian chartered bank.

Of the accounts receivable balance at March 31, 2008 ($50,000) and
December 31, 2007 ($72,000) all relate to product sales with
Canadian oil and gas companies and interest income from major
Canadian chartered banks all of which have always paid within
30 to 60 days.

The Company assesses quarterly if there has been any impairment of
the financial assets of the Company. During the three month period
ended March 31, 2008 there was no impairment provision required on
any of the financial assets of the Company due to historical
success of collecting receivables. The Company does not have any
significant credit risk exposure to any single counterparty or any
group of counterparties having similar characteristics.

The carrying value of accounts receivable approximates their fair
value due to the relatively short periods to maturity on this
instrument. The maximum exposure to credit risk is represented by
the carrying amount on the balance sheet. There are no material
financial assets that the Company considers past due.

Liquidity risk
--------------

Liquidity risk includes the risk that, as a result of Pine Cliff's
operational liquidity requirements:

- The Company will not have sufficient funds to settle a
transaction on the due date,

- Pine Cliff will not have sufficient funds to continue with its
financing of its major exploration projects,

- The Company will be forced to sell assets at a value which is
less than what they are worth, or

- Pine Cliff may be unable to settle or recover a financial asset
at all.

To help reduce these risks, the Company:

- Has a general capital policy of maintaining approximately six
months of annual budgeted capital requirements as its working
capital base.

- Maintain a continuous evaluation approach as to the
requirements for its largest exploration programs; the Canadon
Ramirez Concession, Laguna de Piedra Concession and the
San Jorge Basin Concession.


FOR FURTHER INFORMATION PLEASE CONTACT:

Pine Cliff Energy Ltd.
George F. Fink
President and CEO
(403) 269-2289
Fax: (403) 265-7488

OR

Pine Cliff Energy Ltd.
Randy M. Jarock
COO
(403) 269-2289
Fax: (403) 265-7488

OR

Pine Cliff Energy Ltd.
Kirsten Kulyk
Manager, Investor Relations
(403) 269-2289
Fax: (403) 265-7488
info@pinecliffenergy.com