News Releases

Pine Cliff Energy Ltd. Announces Fourth Quarter and Annual Results

Apr 8, 2008 - 11:59 PM ET

CALGARY, ALBERTA--(Marketwire - April 8, 2008) - Pine Cliff Energy Ltd. (www.pinecliffenergy.com) (TSX VENTURE:PNE) is pleased to announce its financial and operational results for the three months and fiscal year ended December 31, 2007. It has been a challenging year for the Company. As advised in previous releases, Pine Cliff elected to focus most of its activities in South America and a lesser amount in North America. This focus may have to be modified in the future.

Throughout most of 2007 the Company was successful in advancing its assessment and evaluation of its large land position in Argentina (1,165,000 gross acres; 605,000 net acres). However, in November 2007, unannounced and without industry consultation, the Argentina Federal government increased the export tax on crude oil to a rate of 100 percent for all revenue over $42 West Texas Intermediate price.

This increased export tax made it necessary for the Company to reassess the economics for the projects in Argentina. It has been concluded that although the net backs will not be as good, they are still economical but at a lower rate of return. Pine Cliff will therefore continue with its planned drill program in April whereby three anomalies will be drilled and will continue with its aero-magnetic and aero-gravity survey and will acquire 39 square miles of 3D seismic on its largest property in the San Jorge Basin. The Company is currently conducting a 39 square mile 3D seismic program over its property in the Neuquén Basin.

Another reason for continuing in Argentina is that the increased export tax will likely result in a reduction in activity in that country and that may cause the Argentine government to reassess this increased export tax.

The Company also believes because of energy shortages in Argentina, the government will have to make energy policy changes to stimulate investment in the oil and gas sector.

Overall the position in Argentina is still of benefit to Pine Cliff. A land position of this magnitude is difficult to obtain and provides the potential for a large number of drill locations on anomalies that may be large in size.

In 2008 Pine Cliff will also increase its activities in Canada and the United States. The focus will be to acquire production and to participate in more drilling.



HIGHLIGHTS
2007 2006
-------------------------------------------------------------------------
Financial

Revenue - Oil and Gas $ 582,950 $ 661,100
Funds flow from Operations (1) (934,998) (424,248)
Per Share Basic (0.02) (0.01)
Per Share Fully Diluted (0.02) (0.01)
Net Loss (1,381,454) (1,014,605)
Per Share Basic (0.04) (0.03)
Per Share Fully Diluted (0.04) (0.03)
Capital Expenditures and Acquisitions 2,797,763 271,926
Shareholders' Equity 12,205,066 4,239,638
Shares Outstanding (December 31) 45,275,695 36,523,041
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Operations

Oil and Liquids (barrels per day) 4 5
Average Price ($ per barrel) 62.75 63.88
Natural Gas (MCF per day) 198 195
Average Price ($ per MCF) 6.91 7.58
Total Barrels per Day (BOE per day) (2) 37 38
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Reserves (3)

Oil and Liquids (barrels)
Proved Developed Producing (Gross) 4,800 10,200
Proved plus Probable (Gross) 6,900 13,700
Natural Gas (MCF)
Proved Developed Producing (Gross) 251,000 326,000
Proved plus Probable (Gross) 363,000 440,000

Share Trading Statistics

Share Prices (based on daily closing price)
High $1.60 $0.76
Low $0.40 $0.40
Close $0.75 $0.65
Daily Average Trading Volume 6,783 3,754
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(1) Funds flow from operations is not a recognized measure under GAAP.
Management believes that in addition to net earnings, funds flow from
operations is a useful supplemental measure as it demonstrates the
Company's ability to generate the cash 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, 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.

(3) Gross reserves relate to the Company's ownership of reserves before
royalty interests.


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.

REVIEW OF OPERATIONS

Reserves

The Company engaged the services of Sproule Associates Limited to prepare a reserve evaluation with an effective date of December 31, 2007. The reserves are located in the Province of Alberta. The majority of the Company's production is comprised of natural gas. The Company's main gas producing area is located in the Sundance area of West Central Alberta. The gross reserve figure in the following charts represents the Company's ownership interest before royalties and the net figure is after deductions for royalties.



SUMMARY OF OIL AND GAS RESERVES
AS OF DECEMBER 31, 2007
FORECAST PRICES AND COSTS

RESERVES
Natural Natural Gas
Gas Liquids
Gross Net Gross Net
RESERVE CATEGORY (MMcf) (MMcf) (Mbbl) (Mbbl)
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PROVED
Developed Producing 251 199 5 3
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TOTAL PROVED 251 199 5 3
PROBABLE 112 87 2 1
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TOTAL PROVED PLUS PROBABLE 363 286 7 4
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RECONCILIATION OF COMPANY GROSS RESERVES
BY PRINCIPAL PRODUCT TYPE
FORECAST PRICES AND COSTS

Natural
Gas
Gross
Proved
Gross Plus
Gross Prob- Prob-
Proved able able
(MMcf) (MMcf) (MMcf)
-------------------------------------------------------------------------
December 31, 2006 326 114 440
Technical Revisions (7) (3) (10)
Economic factors 5 1 6
Production (73) - (73)
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December 31, 2007 251 112 363
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SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE
AS OF DECEMBER 31, 2007
FORECAST PRICES AND COSTS

NET PRESENT VALUE OF FUTURE NET REVENUE
After Income Taxes
Discounted at (%/year)
0 5 10 15 20
(M$)
RESERVE CATEGORY
-------------------------------------------------------------------------
PROVED
Developed Producing 1,164 1,102 896 805 732
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TOTAL PROVED 1,164 1,102 896 805 732
PROBABLE 602 440 336 267 219
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TOTAL PROVED PLUS PROBABLE 1,766 1,452 1,232 1,072 951
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Alberta Gas
Year Edmonton Par Reference Propane Butane Pentane
Price Price Plantgate
(Cdn $ (Cdn $ (Cdn $ (Cdn $ (Cdn $
per barrel) per MCF) per barrel) per barrel) per barrel)
-------------------------------------------------------------------------
2008 88.17 6.19 52.29 65.72 90.30
2009 84.54 6.94 50.14 63.01 86.58
2010 83.16 7.46 49.32 61.98 85.17
2011 81.26 7.50 48.20 60.57 83.23
2012 80.73 7.41 47.88 60.17 82.68
2013 81.25 7.58 48.19 60.56 83.21
2014 82.88 7.76 49.16 61.78 84.88
2015 84.55 7.94 50.14 63.02 86.59
2016 86.25 8.12 51.15 64.28 88.33
2017 87.98 8.31 52.18 65.58 90.10

Natural gas and liquid prices escalate at 2% thereafter.


The following cautionary statements are specifically required by

NI 51-101.

- It should not be assumed that the estimates of future net revenue
presented in the above tables represent the fair market value of
the reserves. There is no assurance that the forecast prices and
costs assumptions will be attained and variances could be
material.

- Disclosure provided herein in respect of BOE's may be misleading,
particularly if used in isolation. In accordance with NI 51-101, a
BOE conversion ratio of 6mcf:1bbl has been used in all cases in
this disclosure. This BOE conversion ratio is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.

- Estimates of reserves and future net revenues for individual
properties may not reflect the same confidence level as estimates
of reserves and future net revenues for all properties due to the
effects of aggregation.

Land Holdings

The Company's holdings of natural gas leases and rights as of December 31, 2007 and 2006 are as follows:


2007 2006
Gross Net Gross Net
Acres Acres Acres Acres
-------------------------------------------------------------------------
Alberta, Canada 7,360 2,802 7,360 2,802
San Jorge Basin, Argentina 912,810 542,410 - -
Neuquen Basin, Argentina 252,048 63,012 - -
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1,172,218 608,224 7,360 2,802
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Petroleum and Natural Gas Capital Expenditures

The following table summarizes petroleum and natural gas capital expenditures incurred by the Company on acquisitions, land, seismic, exploration and development drilling and production facilities for the years ended December 31:



2007 2006
-------------------------------------------------------------------------
Exploration and development costs $2,790,208 $ 226,193
Acquisitions - -
Land costs - -
-------------------------------------------------------------------------
Net petroleum and natural gas capital
expenditures $2,790,208 $ 226,193
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PROPERTY DISCUSSIONS

Pine Cliff's only producing property is located in the Sundance area of West Central Alberta. The Company has a 13.7% average working interest in 5,280 acres (723 net) of Crown land in the area. There are currently 5 (0.53 net) wells producing. The wells are producing from multiple Cretaceous sands ranging from the Cadomin to the Belly River. Current production from the five wells is approximately 1,550 mcf/day gross, 186 mcf/day net to Pine Cliff. NGL's are produced in association with the natural gas.

There continues to be significant industry activity in the area and the Company continues to monitor and evaluate non-producing properties for additional prospective drilling locations as the information becomes available. The increased activity in the area has caused pipeline pressures to increase as new wells are brought on stream, adversely affecting Pine Cliff's wells periodically. A third party plant expansion completed in November should alleviate this problem.

In 2006 Pine Cliff had decided to pursue oil and gas opportunities in South America. In 2007, the Company was successful in negotiating three separate farm-in agreements to acquire an interest in over 50 gross (26 net) townships of land in Argentina.

Canadon Ramirez Farm-In, Argentina

The Company through its 93 percent owned subsidiary, CanAmericas Energy Ltd. ("CanAmericas") has earned a 49% interest in 47,940 gross acres (23,490 net acres) of an exploitation concession situated in the western part of the San Jorge Basin by committing to fund 100% of exploration costs totaling $US 5,500,000 over the next two years. The commitment includes conducting a 3D seismic program and drilling three wells in the first year at an estimated cost of $US 4,630,000. In the second year of the commitment CanAmericas is committed to spend the remainder of the $US 5,500,000 on drilling.

The acreage is bordered by several producing oil fields. Over 40 separate prospective reservoirs belonging to the Upper-Mid Cretaceous-aged Bajo Barreal and Castillo Formations are known to exist within the farm in area at depths between 600 - 1,500 meters. Additionally, Neocomian aged source rocks within the farm in area have been proven to be oil generating and over pressured.

CanAmericas has completed a 190 square kilometer 3D seismic survey and will be commencing with a three well drilling program in April 2008 which is to be completed by the end of May. An agreement was made with an adjacent operator to trade seismic data providing Pine Cliff with data over a total of 240 square kilometers. This has allowed CanAmericas to tie in its seismic data to seismic conducted over an existing producing oil field.

San Jorge Basin Farm-In, Argentina

The Company through its 93 percent owned subsidiary, CanAmericas, has negotiated exclusive rights to progressively earn a 60% interest in 864,870 gross acres (518,920 net acres) of an exploration permit situated in the north-central San Jorge basin. CanAmericas has the right to become operator of the Permit and will likely decide to do so after it has completed its due diligence.

Subject to completion of the due diligence, the exclusive rights commit CanAmericas to fund 100% of the costs to conduct an aero-magnetic and aero-gravity survey over the entire permit area, acquire 39 square miles of 3D seismic, and drill two exploration wells to earn a 30% participating interest in the entire permit. The surveys are to be completed within one year of the effective date of the agreement and the wells are to be drilled within two years of the effective date.

CanAmericas will earn an additional 30% in the entire permit by drilling two additional wells within three years of the effective date of the agreement. CanAmericas will receive 100 percent of cash flow from this property until it has recovered 100 percent of its costs for the two work programs. The estimated cost for both work programs is $US 4,620,000. After completion of the two work programs costs will be shared on a 60 percent CanAmericas and 40 percent farmor basis.

Principal reservoir objectives are multiple sands of the Upper-Mid Cretaceous Bajo Barreal and Castillo Formations which are known to exist throughout the permit at depths ranging between 300 - 1,500 meters. A producing oil field lies adjacent to the southern border of this permit and existing seismic data and well control suggests the productive trend may extend into the southern portion of this permit. Additionally, numerous oil and gas shows encountered by older wells drilled throughout the permit during the 1960's - 1980's prove that the permit contains an active hydrocarbon system.

CanAmericas will initially acquire the regional aero-gravity and aero-magnetic surveys over the entire permit and with this information, and existing well and 2D seismic coverage, will determine where to best conduct the required 3D seismic survey. The 3D coverage is expected to assist in better understanding strategraphic environments that were previously identified from existing 2D seismic coverage.

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 concession is ongoing and is expected to be completed in the second quarter of 2008. The work commitments are expected to commence shortly thereafter.

Laguna de Piedra Farm-In, Argentina

The Company through its 93 percent owned subsidiary, CanAmericas, has earned a 25 percent interest in 252,944 gross acres (63,236 net acres) of the Laguna de Piedra exploration concession operated by Golden Oil, and is situated on the southeast flank of the prolific Neuquen Basin. The concession is adjacent to the Estacion Fernandex Oro oil field situated to the northwest, and adjacent to Flor de Roca, General Roca, and Don Jose oil fields to the north. These fields collectively produce from the Lower Cretaceous - Jurassic aged Quintuco, Lotena, Los Molles, and Punta Rosada Formations. Additionally, it is believed that the PreCuyo interval may also have significant potential, as it lies on trend with Chevron's La Yassera and Loma Negra fields, and is in a similar deposition setting as Petrolifera's recent Puesto Morales Field discoveries. Expected target depths range from 500 to 2,200 meters. There are 140 kilometers of existing 2D seismic lines, but no well has ever been drilled on the block. Plans include reprocessing the existing seismic date, and acquiring 100 square kilometers of proprietary 3D seismic to mature the inventory of existing leads. The 3D seismic will be shot in April of 2008. CanAmericas share of the 3D program is estimated at $US 1,080,000.



FINANCIAL AND OPERATIONAL

Quarterly Financial and Operational Highlights
----------------------------------------------

2007
----------------------------------------------------
4th 3rd 2nd 1st
Financial

Revenue - Oil and Gas $ 112,685 $ 95,160 $ 176,590 $ 198,515
Funds Flow from
Operations(1) (228,913) (287,764) (252,435) (165,886)
Per Share Basic (0.01) (0.01) (0.01) (0.00)
Per Share Diluted (0.01) (0.01) (0.01) (0.00)
Net Loss (381,561) (383,510) (346,274) (270,109)
Per Share Basic (0.01) (0.01) (0.01) (0.01)
Per Share Diluted (0.01) (0.01) (0.01) (0.01)
Capital Expenditures
and Acquisitions 193,350 174,289 233,648 2,196,476
Total Assets 12,445,994 4,173,333 3,946,888 4,211,984
Working Capital 8,378,110 (314,684) 182,319 602,650
Shareholder's Equity 12,205,066 3,371,089 3,749,025 4,008,304
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Operations
Oil and Liquids
(barrels per day) 2 1 5 7
Natural Gas (MCF per day) 182 163 226 226
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2006
---------------------------------------------------
4th 3rd 2nd 1st
Financial

Revenue - Oil and Gas $ 170,231 $ 90,386 $ 108,413 $ 292,070
Funds Flow from
Operations(1) (51,833) (113,095) (337,020) 77,700
Per Share Basic (0.00) (0.00) (0.01) 0.00
Per Share Diluted (0.00) (0.00) (0.01) 0.00
Net Loss (209,575) (211,784) (526,107) (67,139)
Per Share Basic (0.01) (0.01) (0.01) (0.00)
Per Share Diluted (0.01) (0.01) (0.01) (0.00)
Capital Expenditures
and Acquisitions 19,227 (3,463) 124,236 131,926
Total Assets 4,494,010 4,700,305 4,892,079 5,373,147
Working Capital 2,963,513 3,030,822 3,175,577 3,625,133
Shareholder's Equity 4,239,638 4,411,915 4,589,015 5,093,951
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Operations
Oil and Liquids
(barrels per day) 3 5 4 9
Natural Gas (MCF per day) 226 131 139 284
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(1) Funds flow from operations is not a recognized measure under GAAP.
Management believes that in addition to net earnings, funds flow from
operations is a useful supplemental measure as it demonstrates the
Company's ability to generate the cash 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, foreign exchange loss and asset
retirement expenditures.


Production

----------

The Company has an expected decline rate of approximately 20%. During the third quarter of each year the operator of the gas plant, where approximately 80 percent of the Company's production is processed, performs an annual turnaround resulting in having to shut in wells for lengthy periods of time. In 2007 the wells were shut in for a shorter period than in 2006 resulting in production volumes remaining constant year over year.

Revenue
-------

Revenue from petroleum and natural gas sales for 2007 was $582,950 compared to $661,100 in 2006. The decrease of $78,150 was due to lower commodity prices. Average price received in 2007 for its natural gas was $6.91 (2006 - $7.58) per MCF and $62.75 (2006 - $63.88) per barrel for natural gas liquids. The Company did not have hedging agreements in either 2007 or 2006 and presently does not have any future hedging agreements.

Fourth quarter petroleum and natural gas sales increased to $112,685 from $95,160 in the third quarter. The increase is primarily due to higher production from the Sundance property as well as a 10% increase in natural gas commodity prices.

Royalties
---------

Royalties consist of Crown royalties of $113,257 (2006 - ($1,054)) paid to (recovered from) the Province of Alberta and gross overriding royalties of $23,755 (2006 - $26,723). Crown royalties are significantly higher in 2007 due to the expiry of the Crown royalty holiday on all the Company's gas wells. Gross overriding royalties are down due to lower commodity prices for natural gas.

Royalties for Q4 2007 consist of Crown royalties of $27,090 (Q3 2007 - 13,791) and gross overriding royalties of $4,570 (Q3 2007 - $7,338). The increase in Crown royalties is due to a significant increase in production as wells came back on production from the annual turnaround and the expiry of the Crown royalty holiday. Gross overriding royalties have decreased due to an allocation of a prior year adjustment by the operator in Q3 2007.

Based on information currently available to management, the royalty review will not have a material effect on future Crown royalty payments.

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

Interest income decreased in 2007 to $76,273 from $118,981 in 2006 as the Company's cash balance was higher on average throughout the year in 2006 than in 2007. The Company maintains an investment account with its principal banker that pays interest at prime less 2.25 percent as long as the Company maintains a minimum balance of $1,500,000. The Company in March 2007 drew down on the outstanding cash balance to finance its exploration expenditure commitment in Argentina. Please refer to Commitments Section. This amount was replenished in late October as the Company raised equity through a rights offering. Please refer to the Liquidity and Capital Resources section. Also the Company through its subsidiary CanAmericas purchased a Term deposit (rolling GIC) for $2,678,057 to maintain a minimum cash balance required by one of its Concessions in Argentina. The GIC paid interest at 3.4%.

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

Production costs for the year ended December 31, 2007, were $134,453 (2006 - $132,346) or $10.48 (2006 - $9.62) per BOE (Q4 - $12.53 per BOE, Q3 - $10.90 per BOE). 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. Due to capacity constraints at the gas plant, the Company is incurring increased processing fees in relation to its Sundance gas production.

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

General and administrative expenses for 2007 were $1,294,929 (Q4 - $329,773) compared to $1,043,866 for 2006 and $315,257 for the third quarter of 2007. The primary reason for the increase in 2007 expenses was due to the Company incurring $144,000 in additional professional fees (mostly engineering and consulting fees) and $29,000 in finance fees related to its activities in South America. Also administration costs increased by $23,000, due to increased continuous disclosure costs.

Pine Cliff does not have any employees at the present time but has engaged Bonterra Energy Corp. ("Bonterra Corp") a related party (see Related Party section), to provide management services and engages the services of consultants on a contract or temporary basis. Pine Cliff's subsidiary CanAmericas Energy Ltd. ("CanAmericas") has also engaged the consulting services of two individual professionals as senior management and officers of CanAmericas.

Foreign Exchange Loss
---------------------

In February 2006, the Company incorporated 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 with $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. Further Canadian funds, from Pine Cliff, have also been loaned to CanAmericas and converted to US funds. The funds held in US cash have caused a loss in foreign exchange as the Canadian dollar appreciated against the US dollar in 2007 and 2006. In 2007 the Company had a foreign exchange loss of $27,827 (2006 - $2,448). The fourth quarter saw the Canadian dollar weaken as the Company had a foreign exchange gain of $6,302 compared to a foreign exchange loss of $14,481 in Q3 of 2007.

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

Stock based compensation for the year ended December 31, 2007, was $178,826 (2006 - $128,385). 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. The Company estimated the 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 December 31, 2007 approximately $500,000 of unamortized stock based compensation exists and will be amortized over two years, approximately $400,000 in 2008 and $100,000 in 2009.

Depletion, Depreciation and Amortization
----------------------------------------

The Company through its subsidiary CanAmericas spent $2,575,676 on exploration activities in Argentina to earn an interest in specific properties. If the development of these properties is successful and proved reserves are obtained, this amount will be depleted on the unit of production basis, otherwise this amount will be charged to operations.

At December 31, 2007, the estimated total undiscounted amount required to settle the asset retirement obligations was $69,182 (2006 - $42,796). These obligations will be settled based on the useful lives of the underlying assets, which extend up to 13 years into the future. This amount has been discounted using a credit-adjusted risk-free interest rate of five percent. The discount rate is reviewed annually and adjusted if considered necessary. A change in the rate would not have a significant impact on the amount recorded for asset retirement obligations.

The calculation of the above requires an estimation of the amount of the Company's petroleum reserves by field. This figure is calculated annually by an independent engineering firm and used to calculate depletion. This calculation is to a large extent subjective. Reserve adjustments are affected by economic assumptions as well as estimates of petroleum products in place and methods of recovering those reserves. To the extent reserves are increased or decreased, depletion costs will vary.

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 so it is not liable for current income tax in 2007. Due to the decline in natural gas prices as well as the exploration stage of the Company's Argentina venture, the ability to claim the tax benefits from the following tax pools will likely not happen and as such the Company has eliminated the future tax asset.

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

As described above, Foreign Corp. owns seven percent of CanAmericas. The $49,791 (2006 - $38,701) of loss applicable to non-controlling interest relates to their share of revenues and costs associated with CanAmericas' South American activities.

Loss
----

The loss for the 2007 fiscal year is $1,381,454 ($381,561 in the fourth quarter) compared to $1,014,605 in 2006 and $383,510 in the third quarter of 2007. The 2007 loss was predominantly due to general and administrative costs incurred in respect of the Company's South American operations as well as a decrease in net revenues from oil and gas operations, which was offset by a lower future tax adjustment in 2007. Please see Commitments Section for discussions regarding future activities.

Funds Flow from Operations
--------------------------

Funds flow from operations decreased to negative $934,998 in 2007 from a negative $424,248 in 2006. The decrease from the 2006 amount was mainly due to the Company's increased activities in South America and a reduction in net revenue from oil and gas operations. Quarter over quarter saw a reduction in the funds flow loss due to increased funds flow from the Company's oil and natural gas operations.

The following reconciliation compares funds flow for the fiscal years ended December 31, 2007 and 2006 to the Company's cash flow from operating activities as calculated according to Canadian generally accepted accounting principles:



2007 2006
-------------------------------------------------------------------------
Cash flow from operating activities ($784,938) ($168,809)
Items not affecting funds flow
Accounts receivable (113,097) (170,335)
Prepaid expenses 25,814 (806)
Accounts payable and accrued liabilities (34,950) (116,973)
Asset retirement obligations settled - 35,123
Foreign exchange loss (27,827) (2,448)
-------------------------------------------------------------------------
Funds flow for the period ($934,998) ($424,248)
-------------------------------------------------------------------------


Liquidity and Capital Resources
-------------------------------

As of December 31, 2007, Pine Cliff had positive working capital of $8,378,110 (December 31, 2006 - $2,963,513). These funds will be used to fund financial commitments as discussed under Commitments.

Additional Information
----------------------

Additional information relating to the Company may be found on SEDAR.COM as well as on the Company's web site 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.

The TSX Venture Exchange does not accept responsibility for the adequacy

or accuracy of this release.



Pine Cliff Energy Ltd.
Consolidated Balance Sheets

As at December 31
2007 2006
Assets
Current
Cash $ 5,769,448 $ 2,915,020
Restricted term investment (Note 2) 2,689,601 -
Accounts receivable 71,904 185,001
Prepaid expenditures 28,468 2,654
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8,559,421 3,102,675
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Property and Equipment (Note 6)
Property and equipment 4,638,837 1,848,887
Accumulated depletion and depreciation (752,264) (457,552)
-------------------------------------------------------------------------
3,886,573 1,391,335
-------------------------------------------------------------------------
$12,445,994 $ 4,494,010
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Current
Accounts payable and accrued liabilities $ 181,311 $ 139,162

Asset Retirement Obligations (Note 7) 34,438 40,240
Non-controlling Interests (Note 4) 25,179 74,970
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240,928 254,372
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Commitments (Note 9)
Shareholders' Equity
Share capital (Note 8) 14,588,722 5,377,343
Contributed surplus 341,465 205,962
Deficit (2,725,121) (1,343,667)
Accumulated other comprehensive income
(Note 1) - -
-------------------------------------------------------------------------
12,205,066 4,239,638
-------------------------------------------------------------------------
$12,445,994 $ 4,494,010
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Pine Cliff Energy Ltd.
Consolidated Statements of Loss, Comprehensive Loss and Deficit

For the years ended December 31
2007 2006
Revenue
Oil and gas sales $ 582,950 $ 661,100
Royalties (137,012) (25,669)
Interest income 76,273 118,981
-------------------------------------------------------------------------
522,211 754,412
-------------------------------------------------------------------------
Expenses
Production costs 134,453 132,346
General and administrative 1,294,929 1,043,866
Foreign exchange loss 27,827 2,448
Stock based compensation 178,826 128,385
Dry hole exploration costs - 6,222
Depletion, depreciation and accretion 296,724 278,197
-------------------------------------------------------------------------
1,932,759 1,591,464
-------------------------------------------------------------------------
Loss Before Income Taxes and Non-controlling
Interests (1,410,548) (837,052)
-------------------------------------------------------------------------
Income Taxes (Note 5)
Current - -
Future 20,697 216,254
-------------------------------------------------------------------------
20,697 216,254
-------------------------------------------------------------------------
Loss before Non-Controlling Interests (1,431,245) (1,053,306)
Loss applicable to non-controlling
interests (Note 4) 49,791 38,701
-------------------------------------------------------------------------
Loss and Comprehensive Loss for the Year (1,381,454) (1,014,605)
Deficit, beginning of year (1,343,667) (329,062)
-------------------------------------------------------------------------
Deficit, end of year $(2,725,121) $(1,343,667)
-------------------------------------------------------------------------
Loss Per Share - Basic and Diluted (Note 8) $ (0.04) $ (0.03)
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Pine Cliff Energy Ltd.
Consolidated Statements of Cash Flow

For the years ended December 31
2007 2006
Operating Activities
Loss for the year $(1,381,454) $(1,014,605)
Items not affecting cash
Stock based compensation 178,826 128,385
Dry hole exploration costs - 6,222
Depletion, depreciation and accretion 296,724 278,197
Foreign exchange loss 27,827 2,448
Future income taxes 20,697 216,254
Loss applicable to non-controlling interests (49,791) (38,701)
-------------------------------------------------------------------------
(907,171) (421,800)
-------------------------------------------------------------------------
Change in non-cash working capital
Accounts receivable 113,097 170,335
Prepaid expenditures (25,814) 806
Accounts payable and accrued liabilities 34,950 116,973
Asset retirement obligations settled - (35,123)
-------------------------------------------------------------------------
122,233 252,991
-------------------------------------------------------------------------
Cash Used in Operating Activities (784,938) (168,809)
-------------------------------------------------------------------------
Financing Activities
Issue of shares under employee stock
option plan 74,750 15,450
Issue of shares by subsidiary to
non-controlling interests - 113,670
Issue of shares pursuant to rights offering 9,143,919 -
Issue costs (71,309) -
-------------------------------------------------------------------------
Cash Provided by Financing Activities 9,147,360 129,120
-------------------------------------------------------------------------
Investing Activities
Property and equipment expenditures (2,797,763) (271,926)
Purchase of restricted term investment (2,689,601) -
Change in non-cash working capital
Accounts payable and accrued liabilities 7,197 (105,878)
-------------------------------------------------------------------------
Cash Used In Investing Activities (5,480,167) (377,804)
-------------------------------------------------------------------------
Foreign Exchange Loss on Cash Held in
Foreign Currency (27,827) (2,448)
-------------------------------------------------------------------------
Net Cash Inflow (Outflow) 2,854,428 (419,941)
Cash, Beginning of Year 2,915,020 3,334,961
-------------------------------------------------------------------------
Cash, End of Year $ 5,769,448 $ 2,915,020
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash Interest Paid $ - $ -
Cash Taxes Paid $ - $ -
-------------------------------------------------------------------------



Notes to the Financial Statements

For the Years Ended December 31, 2007 and 2006

1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements have been prepared by
management in accordance with Canadian generally accepted
accounting principles as described below.

Consolidation

These financial statements include the accounts of the Company and
its 93 percent owned subsidiaries CanAmericas Energy Ltd.
("CanAmericas") and CanAmericas (Argentina) Energy Ltd.
("CanAmericas Argentina") (see note 4). Inter-company transactions
and balances are eliminated upon consolidation.

Measurement Uncertainty

The preparation of the consolidated financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated
financial statements and revenues and expenses during the
reporting period. Actual results can differ from those estimates.
In particular, amounts recorded for depreciation and depletion and
amounts used in ceiling test calculations are based on estimates
of petroleum and natural gas reserves and future costs required to
develop those reserves. The Company's reserve estimates are
evaluated annually by an independent engineering firm. By their
nature, these estimates of reserves and the related future cash
flows are subject to measurement uncertainty, and the impact on
the consolidated financial statements of future periods could be
material.

The amounts recorded for asset retirement obligations were
estimated based on the Company's net ownership interest in all
wells and facilities, estimated costs to abandon and reclaim the
wells and facilities and the estimated period during which these
costs will be incurred in the future. Any changes to these
estimates could change the amount recorded for asset retirement
obligations and may materially impact the consolidated financial
statements of future periods.

Financial instruments - recognition and measurement

On January 1, 2007, the Company adopted Section 3855 of the
Canadian Institute of Chartered Accountants' ("CICA") Handbook,
"Financial Instruments - Recognition and Measurement" and Section
3861 "Financial Instruments - Disclosure and Presentation." These
set out the standards for recognizing and measuring financial
instruments in the balance sheet and the standards for reporting
gains and losses in the financial statements. Financial assets
available for sale, assets and liabilities held for trading and
derivative financial instruments, whether part of a hedging
relationship or not, have to be measured at fair value.

The Company has made the following classifications:

- Accounts receivable are classified as loans and receivables and
are recorded at amortized cost using the effective interest
method. Gains and losses are recognized in net earnings when the
asset is no longer recognized.

- Accounts payable and accrued liabilities are classified as
other liabilities and are recorded at amortized cost. Gains and
losses are recognized in net earnings when the liability is no
longer recognized.

The adoption of the Sections is done retrospectively without
restatement of the consolidated financial statements of prior
periods. Further, because the Company does not currently utilize
hedges or other derivative financial instruments, the adoption of
these sections has had no material impact on the Company's
consolidated loss or cash flows in 2007 or retained earnings as at
January 1, 2007 and December 31, 2007.

The Company has reviewed its contracts for embedded derivatives.
An embedded derivative is a component of a financial instrument or
another contract of which the characteristics are similar to a
derivative. This had no impact on the consolidated financial
statements.

Comprehensive income

On January 1, 2007, the Company adopted Section 1530 of the CICA
Handbook, "Comprehensive Income". This section describes reporting
and disclosure recommendations with respect to comprehensive
income and its components. Comprehensive income is the change in
shareholders' equity, which results from transactions and events
from sources other than the Company's shareholders and consists of
net income and other comprehensive income (OCI). OCI comprises
revenues, expenses, gains and losses that are recognized in
comprehensive income but excluded from net income. Such items
include unrealized gains and losses from changes in fair value of
certain financial instruments.

The adoption of this Section had no impact on the Company's
presentation. However, should the Company have transactions
resulting in an impact to other comprehensive income, the Company
will present a separate consolidated statement of comprehensive
income as a part of the consolidated financial statements.

Equity

On January 1, 2007, the Company adopted Section 3251 of the CICA
Handbook "Equity" replacing Section 3250 "Surplus". This section
describes standards for the presentation of equity and changes in
equity during the period as a result of the application of Section
1530 "Comprehensive Income".

Accounting changes

The Company also adopted Section 1506, "Accounting Changes," the
only impact of which is to provide disclosure of when an entity
has not applied a new source of GAAP that has been issued but is
not yet effective. This is the case with Section 1535, "Capital
Disclosures," Section 3862, "Financial Instruments - Disclosures"
and Section 3863, "Financial Instruments - Presentation" which are
required to be adopted for fiscal years beginning on or after
October 1, 2007. The Company will adopt these standards on
January 1, 2008 and it is expected the only effect on the Company
will be incremental 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.

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. These changes establish 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.

Petroleum and Natural Gas Properties and Related Equipment
The Company follows the successful efforts method of accounting
for petroleum and natural gas properties and related equipment.
Costs of exploratory wells are initially capitalized pending
determination of proved reserves. Costs of wells which are
assigned proved reserves remain capitalized, while costs of
unsuccessful wells are charged to earnings. All other exploration
costs including geological and geophysical costs are charged to
earnings as incurred. Development costs, including the cost of all
wells, are capitalized.

Producing properties and significant unproved properties are
assessed annually or as economic events dictate, for potential
impairment. Impairment is assessed by comparing the estimated net
undiscounted future cash flows to the carrying value of the asset.
If required, the impairment recorded is the amount by which the
carrying value of the asset exceeds its fair value.
Depreciation and depletion of capitalized costs of oil and gas
producing properties are calculated using the unit of production
method. Development and exploration drilling and equipment costs
are depleted over the remaining proved developed reserves.
Depreciation of other plant and equipment is provided on the
straight line method. Straight line depreciation is based on the
estimated service lives of the related assets which is estimated
to be ten years.

Furniture, Equipment and Other

These assets are recorded at cost and are depreciated on a
straight line basis over five to ten years.

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 between the amounts reported by the Company
and their respective tax bases calculated using income tax rates
expected to apply in the year in which the temporary differences
will reverse.

Asset Retirement Obligations

The Company recognizes the fair value of obligations associated
with the retirement of long-life assets in the period the asset is
put into use, with a corresponding increase to the carrying amount
of the related asset. The obligations recognized are statutory,
contractual or legal obligations. The liability is adjusted over
time for changes in the value of the liability through accretion
charges which are included in depletion, depreciation and
accretion expense. The costs capitalized to the related assets are
amortized to earnings in a manner consistent with the depletion
and depreciation of the underlying asset.

Stock-based Compensation

The Company has a stock-based compensation plan which is described
in Note 8. The Company records compensation expense over the
vesting period based on the fair value of options granted to
employees, directors and consultants. These amounts are recorded
as contributed surplus. Any consideration paid by employees,
directors or consultants on the exercise of these options is
recorded as share capital together with the related contributed
surplus associated with the exercised options.

Revenue Recognition

Petroleum and natural gas sales are recognized when the
commodities are delivered and title transfers to the purchasers.
Foreign Currency Translation

The Company translates foreign currency denominated monetary
assets and liabilities of its integrated foreign subsidiaries at
the exchange rate in effect at the balance sheet date and
non-monetary assets and liabilities are translated at historical
exchange rates. Revenues and expenses are translated at estimated
transaction date exchange rates except depletion and depreciation
expense, which is translated at the same historical exchange rates
as the related assets. Exchange gains or losses are included in
the determination of net income as foreign exchange gain or loss.

Joint Interest Operations

Significant portions of the Company's oil and gas operations are
conducted with other parties and accordingly the financial
statements reflect only the Company's proportionate interest in
such activities.

Loss Per Share

Basic loss per share is computed by dividing the earnings by the
weighted average number of shares outstanding during the year.
Diluted per share amounts reflect the potential dilution that
could occur if options to purchase common shares were exercised.
The treasury stock method is used to determine the dilutive effect
of common share options, whereby proceeds from the exercise of
common share options or other dilutive instruments are assumed to
be used to purchase common shares at the average market price
during the year.

2. RESTRICTED TERM INVESTMENT AND BANKING AGREEMENT

The Company has secured 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.

CanAmericas has issued letters of guarantee worth $3,262,446 as of
December 31, 2007 (see Note 9).

The Company has entered into 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 quarantee in its bank account.
Restricted term investment is a rolling GIC that accrues interest
at 3.4% per annum.

3. RELATED PARTY TRANSACTIONS

Bonterra Energy Income Trust ("Bonterra Trust"), an organization
with common directors and management and the former parent of the
Company, through its wholly owned subsidiary Bonterra Energy Corp.
("Bonterra Corp") has provided management services to the Company.
Fees paid for management services totalled $216,000
(2006 - $216,000) for the year. The management services agreement
may be cancelled by the Company with 90 days notice. During the
year interest was paid at bank prime rate on a loan from the
President and shareholder in the amount of $5,819 (2006 - $Nil).
No amount was owing on this loan as of year end.

As of December 31, 2007, the Company owed $3,976 (2006 - $Nil) to
Bonterra Corp for operating expenditures paid on its behalf.
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 incorporated subsidiary companies, CanAmericas, to
explore and develop oil and gas properties primarily in South
America. (CanAmericas incorporated a wholly owned subsidiary,
CanAmericas Argentina, to carry on its activities in Argentina).
CanAmericas is owned 93 percent by the Company and 7 percent by a
foreign private Company ("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:



2007 2006
------------------------------------------------------------------
Non-controlling interest, January 1 $74,970 $ -
Acquisition of CanAmericas by
non-controlling interest - 113,671
Loss applicable to non-controlling interest (49,791) (38,701)
------------------------------------------------------------------
Non-controlling interest, December 31 $25,179 $74,970
------------------------------------------------------------------
------------------------------------------------------------------


Foreign Corp. has been granted options to acquire an additional
1,000,000 common shares of CanAmericas at $0.25 U.S. per common
share. The options vest 50 percent on each of January 13, 2007 and
January 13, 2008 and expire on January 13, 2011.

5. INCOME TAXES

The Company has recorded a full valuation allowance for its future
income tax assets as their recoverability is determined not to be
more likely than not.



2007 2006
Amount Amount
------------------------------------------------------------------
Future income tax assets:
Capital assets $182,907 $125,932
Asset retirement obligation 8,610 11,670
Share issue costs 33,627 29,171
Loss carry-forward 421,880 215,798
Valuation allowance (647,024) (382,571)
------------------------------------------------------------------
$ - $ -
------------------------------------------------------------------

Income tax expense differs from the amounts that would be computed
by applying Canadian federal and provincial income tax rates as
follows:

2007 2006
------------------------------------------------------------------
Loss before income taxes and
non-controlling interests $(1,410,548) $(837,052)
Combined federal and provincial income
tax rates 32.1% 34.5%
------------------------------------------------------------------
Income tax provision calculated using
statutory tax rates (452,786) (288,783)
Increase (decrease) in income taxes
resulting from:
Stock based compensation 57,403 44,293
Non-deductible expenditures 7,158 329
Resource allowance - (4,854)
Loss applicable to non-controlling
interests 15,983 13,352
Change in valuation allowance 264,453 382,571
Change in tax rates 126,875 70,843
Other 1,611 (1,497)
------------------------------------------------------------------
Income tax provision $ 20,697 $ 216,254
------------------------------------------------------------------
------------------------------------------------------------------


The Company has the following tax pools, which may be used to
reduce taxable income in future years, limited to the applicable
rates of utilization:



Rate of
Utilization
% Amount
-----------------------------------------------------------------
Undepreciated capital costs 25 $ 351,077
Foreign exploration expenditures 10 2,585,123
Canadian oil and gas property expenditures 10 699,248
Canadian development expenditures 30 438,267
Canadian exploration expenditures 100 392,110
Share issue costs 20 134,506
Non-capital loss carryforward (1) 100 1,687,523
------------------------------------------------------------------
$ 6,287,854
------------------------------------------------------------------
------------------------------------------------------------------
(1) $757,797 expires 2016, $929,726 expires 2027

6. PROPERTY AND EQUIPMENT

2007 2006
Accumulated Accumulated
Depletion and Depletion and
Cost Depreciation Cost Depreciation
------------------------------------------------------------------
Petroleum and
natural gas
properties and
related
equipment $4,585,325 $ 734,384 $1,803,124 $ 450,365
Furniture,
equipment
and other 53,512 17,880 45,763 7,187
------------------------------------------------------------------
$4,638,837 $ 752,264 $1,848,887 $ 457,552
------------------------------------------------------------------
------------------------------------------------------------------


As of December 31, 2007, the Company spent $2,575,676 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.

7. ASSET RETIREMENT OBLIGATIONS

At December 31, 2007, the estimated total undiscounted amount
required to settle the asset retirement obligations was $69,182
(December 31, 2006 - $71,031). Costs for asset retirement have
been calculated assuming a 2 percent inflation rate for 2008 and
thereafter. These obligations will be settled based on the useful
lives of the underlying assets, which extend up to 13 years into
the future. This amount has been discounted using a
credit-adjusted risk-free interest rate of 5 percent.
Changes to asset retirement obligations were as follows:



2007 2006
------------------------------------------------------------------
Asset retirement obligations, January 1 $40,240 $29,513
Adjustment to asset retirement obligation (7,814) 44,375
Liabilities settled during the year - (35,123)
Accretion 2,012 1,475
------------------------------------------------------------------
Asset retirement obligations, December 31 $34,438 $40,240
------------------------------------------------------------------


8. 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.




2007 2006
Issued Number Amount Number Amount
------------------------------------------------------------------
Common Shares
Balance,
beginning of
year 36,523,041 $5,377,343 36,420,041 $5,352,428
Issued pursuant
to rights
offering 8,312,654 9,143,919 - -
Share issue
costs (71,309) - -
Issued on
exercise of
stock options 440,000 74,750 103,000 15,450
Transfer of
contributed
surplus to
share capital 43,322 9,465
Future tax
benefit of share
issue costs 20,697 -
------------------------------------------------------------------
Balance,
end of year 45,275,695 $14,588,722 36,523,041 $5,377,343
------------------------------------------------------------------
------------------------------------------------------------------


The number of common shares used to calculate diluted loss per
share for the year ended December 31, 2007 is 38,291,597 (2006 -
36,477,619). The exercise of outstanding stock options would have
no dilutive effect on per share amounts.

On October 25, 2007, the Company completed a rights offering
whereby the Company shareholders were granted the right to
purchase one common share for every four common shares held with
an exercise price of $1.10 per share. The Company issued
8,312,654 common shares for proceeds of $9,072,610 net of $71,309
of share issue costs.

The Company may grant options for up to 3,605,583 (2006 -
3,605,583) common shares. The exercise price of each option
granted equals the market price of the common share on the date of
grant and the options' maximum term is five years.

A summary of the status of the Company's stock option plan as of
December 31, 2007 and December 31, 2006, and changes during the
years ended on those dates are presented below:




December 31, 2007 December 31, 2006
------------------------------------------------------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Options Price Options Price
------------------------------------------------------------------
Outstanding at
beginning of
year 2,420,000 $0.29 1,686,000 $0.16
Options granted 1,108,000 1.16 895,000 0.52
Options
exercised (440,000) 0.17 (103,000) 0.15
Options cancelled (35,000) 0.40 (58,000) 0.21
------------------------------------------------------------------
Outstanding at
end of year 3,053,000 $0.62 2,420,000 $0.29
------------------------------------------------------------------
------------------------------------------------------------------
Options
exercisable
at end of year 1,162,500 $0.18 740,000 $0.16
------------------------------------------------------------------
------------------------------------------------------------------



Options Outstanding Options Exercisable
------------------------------------------------------------------
Weighted-
Average Weighted- Weighted-
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices At 12/31/07 Life Price At 12/31/07 Price
------------------------------------------------------------------
$0.15 1,090,000 2.1 years $0.15 1,090,000 $0.15
0.50 - 0.60 825,000 2.1 years 0.51 32,500 0.56
0.70 - 0.75 80,000 2.1 years 0.72 40,000 0.72
1.10 - 1.20 1,018,000 3.1 years 1.18 - -
1.40 - 1.50 40,000 3.1 years 1.49 - -
------------------------------------------------------------------
$0.15 - 1.50 3,053,000 2.5 years $0.62 1,162,500 $0.18
------------------------------------------------------------------
------------------------------------------------------------------


The Company records compensation expense over the vesting period
based on the fair value of options granted to employees, directors
and consultants. Unvested options as of December 31, 2007 vest
841,000 in 2008, 1,024,500 in 2009 and 25,000 in 2010.
The Company issued 1,108,000 (2006 - 895,000) stock options with
an estimated fair value of $547,080 (2006 - $191,458) ($0.49 per
option (2006 - $0.21 per option)) using the Black-Scholes option
pricing model with the following key assumptions:




2007 2006
---- ----
Weighted-average risk free interest rate (%) 4.14 4.13
Dividend yield (%) 0.00 0.00
Expected life (years) 2.5 2.5
Weighted-average volatility (%) 64.8 63.1


9. COMMITMENTS

The Company has entered into 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 December 31, 2007, the Company has expended $2,559,698 CDN
($2,213,731 US) including V.A.T of $432,753 CDN ($374,264 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 3,286
---- ------
---- ------


The Company has issued a letter of guarantee to cover its
commitment to spend $2,142,446 US for drilling three wells on this
Concession. The guarantee expired January 31, 2008.
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 December 31, 2007, 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 second 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 December 31, 2007, the Company has expended $59,821 CDN
($58,205 US) including V.A.T of $8,352 CDN ($8,175 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 1,062


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.

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 INSTRUMENTS

Fair Values

The Company's financial instruments included in the balance sheet
are comprised of cash, restricted term investment, accounts
receivable and current liabilities. The fair values of these
financial instruments approximate their carrying value due to the
short-term maturity of those instruments.

Credit Risk

Substantially all of the Company's accounts receivable are due
from customers in the oil and gas industry and are subject to
normal industry credit risks. The carrying value of accounts
receivable reflects management's assessment of associated credit
risks.

Commodity Price Risk

The Company's operations and financial results may be affected by
fluctuations in commodity prices and exchange rates.

Currency Risk

The Company is exposed to fluctuations in foreign currency as a
result of its South American operations. The Company has not
entered into any foreign currency derivatives with respect to this
exposure.

11. 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
Year Ended December 31, 2007
Revenue, gross 631,963 27,260 659,223
Loss before non-controlling
interest 560,826 870,419 1,431,245
Capital expenditures 50,234 2,747,529 2,797,763
Property and equipment 1,111,830 2,774,743 3,886,573
Total assets 6,428,371 6,017,623 12,445,994

Year Ended December 31, 2006
Revenue, gross 729,332 50,749 780,081
Loss before non-controlling
interest 472,797 580,509 1,053,306
Capital expenditures 226,163 45,763 271,926
Property and equipment 1,352,759 38,576 1,391,335
Total assets 3,254,440 1,239,570 4,494,010



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