News Releases

Pine Cliff Energy Ltd. Announces Second Quarter Results

Aug 26, 2010 - 05:10 PM ET

CALGARY, ALBERTA--(Marketwire - Aug. 26, 2010) - 

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Pine Cliff Energy Ltd. (www.pinecliffenergy.com) (TSX VENTURE:PNE) is pleased to announce its financial and operational results for the three months and six months ended June 30, 2010.

/T/

Highlights

                                   Three Months Ended      Six Months Ended
For the periods ended              June 30    June 30    June 30    June 30
($)                                   2010       2009       2010       2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TOTAL OPERATIONS
Cash Flow from Operations          229,181   (241,924)   180,440   (451,090)
 Per Share Basic and Diluted          0.00      (0.01)      0.00      (0.01)
Net Loss                          (177,714)  (325,010)  (366,365)  (823,542)
 Per Share Basic and Diluted         (0.00)     (0.01)     (0.01)     (0.02)
Capital Expenditures and 
 Acquisitions                      165,734      9,581  1,178,911    129,367 
Total Assets                                           2,909,413  4,558,217 
Working Capital (Deficiency)                            (387,016) 1,738,974 
Shareholders' Equity                                   2,129,564  4,341,385
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CONTINUING OPERATIONS
Cash Flow from Continuing 
 Operations                        311,063    (23,450)   330,663     18,400
 Per Share Basic and Diluted          0.01      (0.00)      0.01       0.00
Net Loss from Continuing 
 Operations                        (39,244)   (64,814)   (61,374)  (249,849)
 Per Share Basic and Diluted         (0.00)     (0.00)     (0.00)     (0.01)
Capital Expenditures and 
 Acquisitions                      108,879         69  1,098,129      1,516
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TOTAL AND CONTINUING OPERATIONS
Revenue - Oil and Gas ($)          548,391    111,773    759,188    305,498
Oil and NGLs - Barrels Per Day           4          2          3          2
             -Average Price 
             ($ per barrel)          79.57      62.14      80.21      55.74
Natural Gas -MCF Per Day             1,387        312        914        352
            -Average Price 
            ($ per MCF)               4.13       3.62       4.31       4.56
Total Barrels of Oil Equivalent 
 (BOE) Per Day (1)                     235         51        155         57
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Barrels of oil equivalent (BOE) 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.

/T/

Report to Shareholders

Pine Cliff Energy Ltd. ("Pine Cliff" or "the Company") is pleased to report its operational and financial results for the three months and six months ended June 30, 2010.

Pine Cliff has been successful in realizing promising results on its Sundance properties in Alberta and intends to continue seeking out additional domestic opportunities with the regard to the acquisition of producing and non-producing properties. The Company will be considering the various options that may become available in regard to the divestment of its South American operations.

Operations

Production increased approximately 209 percent in the second quarter of 2010 compared with the first quarter of 2010 and approximately 361 percent compared with the same period in 2009 to average 235 BOE per day. The production increases are mainly attributable to the increased activity in the Company's Sundance properties in Alberta, Canada.

During the first quarter of 2010, Pine Cliff completed and placed on production two gross (0.30 net) natural gas wells. The wells averaged approximately 474 MCF per day net to the Company from March to June, 2010. Pine Cliff continued to pursue additional opportunities in the area and participated in drilling another two gross (0.30 net) natural gas wells. These wells came on production in April 2010 and production from these wells averaged 644 MCF per day net.

Pine Cliff intends to continue increasing its activities in Canada by aggressively pursuing acquisition opportunities and participating in a more active drilling program. The disappointing 2008 drill results in Argentina coupled with the increasingly difficult business and political environment required management and the Board of Directors to reconsider its commitment to Argentina as an area of new exploration and growth. As a result, the Company has committed to selling its South American segment of operations. Once the disposal is completed, the Company will no longer own any South American exploration properties.

Financial

Cash flow from operations increased substantially in the first half of 2010 to $330,663 versus $18,400 in the first half of 2009. The increase was mainly due to a significant increase in oil and gas revenue and decreased general and administrative costs which were partially offset by higher crown royalties and production costs.

As of June 30, 2010, Pine Cliff had a working capital deficiency of $387,016. The deficiency is anticipated to be eliminated by cash flow from the newly completed gas wells and through the possible entering into of a long-term bank facility or equity placement. In the short term, the CEO and director will finance the working capital shortfall by an unsecured loan at an interest rate of bank prime plus one percent.

Outlook

The Board of Directors and management remain optimistic that Pine Cliff will be able to take advantage of the many opportunities available to it to redirect its operations towards a domestic perspective.

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.

DISCONTINUED OPERATIONS

During 2010, Pine Cliff committed to a plan to dispose of its South Americian segment of operations to allow the Company to focus its continuing operations on the development of its Canadian oil and natural gas properties. Accordingly, the South American segment has been reclassified as discontinued operations in the Consolidated Financial Statements. This is further discussed in the MD&A section entitled "Operating results from discontinued operations."

/T/

Quarterly Financial and Operational Highlights
 
                        2010                           2009
----------------------------------------------------------------------------
                   2nd       1st        4th       3rd        2nd        1st
TOTAL 
 OPERATIONS 
 ($)
Cash Flow from 
 Operations    229,181   (48,741)  (125,061)  (37,247)  (241,924)  (209,166)
 Per Share Basic 
  and Diluted     0.00     (0.00)     (0.00)    (0.00)     (0.01)     (0.00)
Net Loss      (177,714) (188,651)(1,734,926) (263,808)  (325,010)  (498,532)
 Per Share 
  Basic and 
  Diluted        (0.00)    (0.00)     (0.04)    (0.01)     (0.01)     (0.01)
Capital 
 Expenditures 
 and 
 Acquisitions  165,734 1,013,177    266,470   600,732      9,581    119,786 
Total Assets 2,909,413 3,768,237  3,475,877 4,900,934  4,558,217  4,966,907 
Working 
 Capital      (387,016) (426,596)   491,064   991,619  1,738,974  1,903,038 
Shareholders' 
 Equity      2,129,564 2,305,659  2,363,915 4,089,767  4,341,385  4,644,004
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CONTINUING 
 OPERATIONS 
 ($)
Cash Flow 
 from 
 Continuing 
 Operations    311,063    19,600     20,450    55,493    (23,450)    41,850 
 Per Share 
  Basic and 
  Diluted         0.01      0.00       0.00      0.00      (0.00)      0.00 
Net Loss from 
 Continuing 
 Operations    (39,244)  (22,130)  (107,735)  (94,552)   (64,814)  (185,035)
 Per Share 
  Basic and 
  Diluted        (0.00)    (0.00)     (0.00)    (0.00)     (0.01)     (0.00)
Capital 
 Expenditures 
 and 
 Acquisitions  108,879   989,250    298,087   571,525         69      1,447
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TOTAL AND 
 CONTINUING 
 OPERATIONS
Revenue - 
 Oil and Gas 
 ($)           548,391   210,797    119,726    93,177    111,773    193,725 
Oil and NGLs 
 (barrels per 
 day)                4         3          1         1          2          1 
Natural Gas 
 (MCF per day)   1,387       435        264       295        312        392
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Continuing Operations

Production

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
                         2010        2010       2009        2010       2009
Crude oil and NGLs 
 (barrels per day)          4           3          2           3          2
Natural gas 
 (MCF per day)          1,387         435        312         914        352
Total BOE per day (1)     235          76         51         155         57
----------------------------------------------------------------------------

(1) Barrels of oil equivalent (BOE) 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.

/T/

During the first quarter of 2010 the Company completed and placed on production two gross (0.30 net) natural gas wells. The wells averaged approximately 474 MCF per day net to the Company from March to June.

During the first quarter of 2010, the Company participated in drilling two (0.3 net, 15 percent working interest in each well) natural gas wells on its Sundance property. These wells came on production in April 2010. Production from these wells averaged 644 MCF per day net.

/T/

Revenue

                            Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Revenue:
 Oil and gas sales    548,391     210,797    111,773     759,188    305,498
Average Realized Prices
 Crude oil and NGLs 
  (per barrel)          79.57       81.19      62.14       80.21      55.74
 Natural gas (per MCF)   4.13        4.91       3.62        4.31       4.56
----------------------------------------------------------------------------

/T/

Revenue from petroleum and natural gas sales for the first half of 2010 increased by $453,690 from the first half of 2009 due to increased production volumes from the four (0.6 net) new wells. An increase in revenue from Q1 2010 to Q2 2010 was primarily due to higher production volumes from the new wells, offset partially by lower commodity prices for natural gas. The Company did not have hedging agreements in either 2010 or 2009 and presently does not have any future hedging agreements.

/T/

Royalties

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Crown royalties        29,404      17,369    (49,052)     46,773     (4,496)
Gross overriding 
 royalties             11,677       5,121      2,533      16,798      7,329 
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Total royalty expense  41,081      22,490    (46,519)     63,571      2,833 
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Percentage of revenue     7.5%       10.7%    (41.6%)        8.4%       0.9%
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$ per BOE                1.92        3.33      (9.04)       2.26       0.26
----------------------------------------------------------------------------

/T/

Crown royalties are higher in the first half of 2010 compared to the first half of 2009 due to a crown royalty holiday on a well drilled late in 2008. The crown royalty adjustment was not received until the second quarter of 2009. Crown royalties increased in Q2 2010 compared to Q1 2010 due to the production from the four (net 0.60) natural gas wells that were on production for the full second quarter of 2010. Gross overriding royalties are also higher for the same reason.

Alberta Government Competitiveness Review

On March 11, 2010, the Government of Alberta announced it will modify conventional oil and natural gas royalties effective January 2011 to increase Alberta's competitiveness in the upstream energy sector. The current five per cent front-end royalty rate on conventional oil and natural gas will become a permanent feature of the royalty system. The maximum royalty rate for conventional oil will be reduced to 40 percent from 50 percent. The maximum royalty rate for conventional and unconventional natural gas will be reduced at higher prices from 50 to 36 percent. Other royalty incentive programs will remain in effect. Management believes these changes to the royalty system should have a positive effect on cash flow.

/T/

Production Costs

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Production costs      146,138      45,978     24,680     192,116     82,489
$ per BOE                6.83        6.81       5.30        6.83       7.94
----------------------------------------------------------------------------

/T/

Production costs were higher in the first six months of 2010 versus the first six months of 2009 due to higher production volumes from the new wells. The increase in production costs in the second quarter of 2010 compared to the first quarter of 2010 was due to increased production volumes from the four (0.6 net) new wells that were on production for the full three months of Q2 2010.

/T/

General and Administrative

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
G&A expense            65,663      41,192     88,901     106,855    160,848
----------------------------------------------------------------------------

/T/

General and administrative (G&A) expenditures from continuing operations decreased by $53,993 in the first half of 2010 compared to the first half of 2009. The decrease in G&A expenses is due to reduced management fees and reduced continuous disclosure costs. The increase in G&A expenditures in Q2 2010 compared to Q1 2010 was due to annual director fees incurred in the second quarter of 2010.

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 engage the services of consultants on a contract or temporary basis.

/T/

Stock-Based Compensation

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Stock-based 
 compensation           1,619       2,895     22,392       4,514    120,226
----------------------------------------------------------------------------

/T/

The Company has a stock-based compensation plan. The Company records a compensation expense over the vesting period based on the fair value of options granted to employees of the management company (see section "Related Party Transactions"), directors and service providers in respect of the Company. No new options were issued in the first half of 2010. Of the options outstanding as of June 30, 2010, $592 of stock-based compensation is remaining to be expensed in 2010 and 2011.

/T/

Depletion, Depreciation, and Accretion

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Depletion, 
 Depreciation, 
 and Accretion        333,134     120,372     87,402     453,506    193,243
----------------------------------------------------------------------------

/T/

During the first six months of 2010, the Company expensed $260,263 more than the first six months of 2009 on its property and equipment. The increase is related to depletion on the natural gas properties as production volumes more than doubled in the first half of 2010 compared to the first half of 2009. The second quarter of 2010 had an increase in depletion, depreciation and accretion amount of $333,134 compared to Q1 2010 of $120,372 due to the flush production from the new wells.

Income Taxes

The Company has sufficient tax pools such that it is not liable for current income tax. However the Company's discontinued operations is subject to a one percent Argentina capital tax on assets in Argentina. These amounts are deductible from future income earned in Argentina.

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

/T/

                                         Rate of Utilization %    Amount ($)
----------------------------------------------------------------------------
Undepreciated capital costs                                 25      324,178
Share issue costs                                           20       24,294
Canadian exploration expenditures                          100      392,110
Canadian development expenditures                           30    2,031,426
Canadian oil and gas expenditures                           10      504,434
Non-capital loss carry forward (i)                         100    2,835,145
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                                                                  6,111,587
----------------------------------------------------------------------------

(i) $597,406 expires 2026, $1,114,518 expires 2027, $675,721 expires in 
    2028  $447,500 expires in 2029.


Loss

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Loss                  (39,244)    (22,130)   (64,814)    (61,374)  (249,849)
Loss per share          (0.00)      (0.00)     (0.00)      (0.00)     (0.01)
----------------------------------------------------------------------------

/T/

The decrease in loss for the first six months of 2010 compared to the first six months of 2009 was predominantly due to increased oil and natural gas revenue and decreased stock based compensation expense, partially offset by an increase in depletion, depreciation and accretion and production costs due to increased production volume. The increase in the Q2 2010 loss compared to Q1 2010 loss was predominantly due to an increase in production costs, depletion and general and administrative costs, offset partially by the increase in oil and gas revenue.

/T/

Cash Flow (Deficiency) from Operations

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
Cash flow (deficiency) 
 from operations      311,063      19,600    (23,450)    330,663     18,400
Cash flow (deficiency) 
 from operations per 
 share                   0.01        0.00      (0.00)       0.01       0.00
----------------------------------------------------------------------------

/T/

Cash flow increased in the first half of 2010 compared to the first half of 2009 as the Company had significantly increased oil and gas revenue and decreased general and administrative costs which were partially offset by higher crown royalties and production costs. The increase in cash flow from Q2 2010 compared to Q1 2010 was primarily due to an increase in oil and gas revenue, which was partially offset by increased production costs and crown royalties.

Related Party Transactions

Pine Cliff has a management agreement with Bonterra, a company with common directors and management with Pine Cliff, to have Bonterra provide executive services (President and CEO, CFO and COO), accounting services, oil and gas administration and office administration. The management fee consists of a monthly fee of $7,500 (2009 - $10,000), three percent of net earnings before income taxes plus minor general and administrative expenses incurred by Bonterra that were specifically attributable to Pine Cliff. Total fees for the first six months of 2010 were $45,000 (2009 - $60,000). As at June 30, 2010, amounts owing to Bonterra were $529 (December 31, 2009 - $448). This agreement with Bonterra can be cancelled by either party giving 90 days notice.

Subsequent to June 30 ,2010 the CEO and director of the Pine Cliff has loaned $100,000 to the Company by an unsecured loan, that bears interest at Canadian chartered bank prime plus one percent and will have no set repayment terms but will be payable on demand. Pine Cliff has repaid the loan amount plus interest.

Liquidity and Capital Resources

As of June 30, 2010, Pine Cliff had a working capital deficiency of $387,016 (December 31, 2009 - working capital of $491,064). Additional funds will be required to cover the Company's current working capital deficiency. Subsequent to June 30, 2010, the CEO and director has loaned the Company $100,000 to cover the short-term working capital shortfall as mentioned above in the related party section.

Operating Results From Discontinued Operations

The following represents results of operations from South America or Argentina assets which have been designated as discontinued operations.

/T/

                             Three months ended            Six months ended
                      June 30,   March 31,   June 30,    June 30,   June 30,
($)                      2010        2010       2009        2010       2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest and other 
 revenue                    -           -         15           -      1,773
----------------------------------------------------------------------------
Expenses
 General and 
  administrative       59,231     138,233    160,337     197,464    413,387
 Foreign exchange 
  (gain) loss           4,356      (6,495)    16,432      (2,139)    23,475
 Depreciation and 
  accretion               448         448        697         896      1,396
 Impairment of oil 
  and gas assets       47,829      32,953          -      80,782          -
 Dry hole costs             -           -     60,036           -     60,036
 Current taxes         26,606       1,382     22,709      27,988     77,172
----------------------------------------------------------------------------
Loss                  138,470     166,521    260,196     304,991    573,693
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

General and Administrative

General and administrative (G&A) expenditures decreased significantly in the first six months of 2010 compared to the first six months of 2009 due to a reduction in the Company's South American activities. With the unsuccessful completion of the three-well drill program on the Canadon Ramirez Concession, the Company's Board of Directors and management reviewed the Company's involvement in Argentina and have reduced its consulting services and other international expenses since Q2 2009. The decrease in G&A expenditures in Q2 2010 compared to Q1 2010 was due to decreased legal costs.

Foreign Exchange Loss (Gain)

The Company maintains foreign denominated bank accounts to facilitate its foreign operations and keeps minimum balances in these accounts. The gain on foreign exchange during the first half of 2010 relates to the depreciation of the Canadian dollar with the Argentine peso. During the second quarter of 2010, the Canadian dollar appreciated versus the Argentine peso for a small foreign exchange loss.

Depletion, Depreciation, and Accretion and Dry Hole Exploration Costs

For the six months ended June 30, 2010, a full impairment provision of $34,626 (2009 - $60,036 as dry hole costs) was taken on the exploration costs related to the Canadon Ramirez Concession as the previous programs were deemed to be unsuccessful.

A full impairment provision for the six months ended June 30, 2010 of $46,156 (2009 - $Nil) was taken on the Laguna de Piedra Concession as access to a portion of the surface to complete programs on the exploration permit is currently under negotiation with the local municipality. Subsequent to the Company earning in on the property, the local municipality designated a portion of the Laguna Concession surface area as a "Nature Area." The operator of the Concession has commenced negotiations with the municipality to have it reinstate the Concession, but negotiations have been unsuccessful at this time.

Loss

The decrease in loss from discontinued operations in the first half of 2010 compared to the first half of 2009 was predominantly due to a decrease in general and administrative expenses. The decrease in the Q2 2010 loss from discontinued operations compared to Q1 2010 was due to the same reasons.

Non-Controlling Interest

A private foreign company (Foreign Corp.) owns seven percent of CanAmericas Energy Ltd. (CanAmericas), a 93 percent owned subsidiary of Pine Cliff. In 2008, losses in CanAmericas exceeded the non-controlling interest investment and therefore none of CanAmericas' loss in 2010 and 2009 was allocated to the non-controlling interest.

Liquidity and Capital Resources

Canadon Ramirez Concession

Pine Cliff through its subsidiaries has paid 100 percent of costs totaling U.S. $5,500,000, including a 21 percent Value Added Tax (V.A.T.) for work to be conducted on the concession to earn a 49 percent participating interest which included a three well drilling program. As of June 30, 2010 all costs relating to this concession have been written off. There are no further material farm-in commitments on this property.

Laguna de Piedra Concession

Pine Cliff through its subsidiaries has paid 40 percent of costs totaling U.S. $1,120,000 including V.A.T. to earn a 25 percent participating interest in the entire permit. The Company had planned to participate in further programs on this project. The certainty of the Farmor having title to the Concession is under review. The Company has therefore taken a full impairment provision on the property.

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 cannot be determined until a successful producing property is established.

The Company is currently in dispute with the operator of the Canadon Ramirez Concession for the 2008 Canon (land rental payments). It is the Company's interpretation that the operator is responsible for the 2008 Canon under the Joint Operating Agreement. Should the Company be unsuccessful, the amount of its share of the Canon is approximately $122,000. If the disputed amount (or a portion of) is settled the Company will capitalize the costs under discontinued operations.

Additional information relating to the Company may be found on www.sedar.com and by visiting its website at www.pinecliffenergy.com.

The following consolidated financial statements and notes to the consolidated financial statements have been provided for further details.

/T/

Consolidated Balance Sheets

As at June 30, 2010 and December 31, 2009
(unaudited)
($)                                                     2010           2009
----------------------------------------------------------------------------
Assets
Current
 Cash                                                      -      1,333,553
 Accounts receivable                                 231,590        129,900
 Prepaid expenditures                                 22,083         16,345
 Discontinued operations (Note 4)                     38,577         39,094
----------------------------------------------------------------------------
                                                     292,250      1,518,892
----------------------------------------------------------------------------
Property and Equipment (Note 7)
 Property and equipment                            4,487,190      3,374,830
 Accumulated depletion and depreciation           (1,870,027)    (1,417,845)
----------------------------------------------------------------------------
Net Property and Equipment                         2,617,163      1,956,985
----------------------------------------------------------------------------
                                                   2,909,413      3,475,877
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current
 Bank indebtedness                                    25,327              -
 Accounts payable and accrued liabilities            322,883        835,010
 Discontinued operations (Note 4)                    331,056        192,818
----------------------------------------------------------------------------
                                                     679,266      1,027,828
----------------------------------------------------------------------------

Asset Retirement Obligations                          63,851         48,298
 Discontinued operations (Note 4)                     36,732         35,836
----------------------------------------------------------------------------
                                                     100,583         84,134
----------------------------------------------------------------------------
                                                     779,849      1,111,962
----------------------------------------------------------------------------
Contingent Liability (Note 11)
Shareholders' Equity (Note 9)
 Share capital                                    14,819,372     14,593,560
 Contributed surplus                                 765,822        859,620
 Deficit                                         (13,455,630)   (13,089,265)
 Accumulated other comprehensive income                    -              -
----------------------------------------------------------------------------
                                                   2,129,564      2,363,915
----------------------------------------------------------------------------
                                                   2,909,413      3,475,877
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Loss, Comprehensive Loss and Deficit

For the periods ended June 30 (unaudited)

                                   Three Months                  Six Months
($)                          2010          2009           2010         2009
----------------------------------------------------------------------------
Revenue
 Oil and gas sales        548,391       111,773        759,188      305,498
 Royalties                (41,081)       46,519        (63,571)      (2,833)
 Interest income                -           269              -        4,292
----------------------------------------------------------------------------
                          507,310       158,561        695,617      306,957
----------------------------------------------------------------------------
Expenses
 Production costs         146,138        24,680        192,116       82,489
 General and
  administrative           65,663        88,901        106,855      160,848
 Stockbased
  compensation              1,619        22,392          4,514      120,226
 Depletion,
  depreciation and
  accretion               333,134        87,402        453,506      193,243
----------------------------------------------------------------------------
                          546,554       223,375        756,991      556,806
----------------------------------------------------------------------------
Loss Before Taxes         (39,244)      (64,814)       (61,374)    (249,849)
----------------------------------------------------------------------------
Taxes (Note 8)
 Current                        -             -              -            -
 Future                         -             -              -            -
----------------------------------------------------------------------------
                                -             -              -            -
----------------------------------------------------------------------------
Loss and
 Comprehensive Loss
 From Continuing
 Operations               (39,244)      (64,814)       (61,374)    (249,849)
Loss and
 Comprehensive Loss
 From Discontinued
 Operations (Note 4)     (138,470)     (260,196)      (304,991)    (573,693)
----------------------------------------------------------------------------
Loss and
 Comprehensive Loss      (177,714)     (325,010)      (366,365)    (823,542)

Deficit, Beginning
 of Period            (13,277,916)  (10,765,521)   (13,089,265) (10,266,989)
----------------------------------------------------------------------------

Deficit, End of
 Period               (13,455,630)  (11,090,531)   (13,455,630) (11,090,531)
----------------------------------------------------------------------------
Loss Per Share
 From Continuing
 Operations - Basic
 and Diluted                (0.00)        (0.00)         (0.00)       (0.01)
Loss Per Share
 From Discontinued
 Operations - 
 Basic and Diluted          (0.00)        (0.01)         (0.01)       (0.01)
Loss Per Share - 
 Basic and Diluted          (0.00)        (0.01)         (0.01)       (0.02)
----------------------------------------------------------------------------


Consolidated Statements of Cash Flow

For the periods ended June 30 (unaudited)

                                   Three Months                  Six Months
($)                          2010          2009           2010         2009
----------------------------------------------------------------------------
Operating Activities
 Loss from continuing
  operations for the
  period                  (39,244)      (64,814)       (61,374)    (249,849)
 Items not affecting
  cash
  Stock-based 
   compensation             1,619        22,392          4,514      120,226
  Depletion,
   depreciation and
   accretion              333,134        87,402        453,506      193,243
----------------------------------------------------------------------------
                          295,509        44,980        396,646       63,620
----------------------------------------------------------------------------
 Change in non-cash
  working capital
  Accounts receivable     (62,205)      (30,102)       (83,274)     (18,834)
  Prepaid expenditures     (3,367)        8,386         (5,738)       2,237
  Accounts payable and
   accrued liabilities     81,126       (46,714)        23,029      (28,623)
----------------------------------------------------------------------------
                           15,554       (68,430)       (65,983)     (45,220)
----------------------------------------------------------------------------
 Cash provided by
  (used in) continuing
  operations              311,063       (23,450)       330,663       18,400
 Cash used in
  discontinued
  operations              (81,882)     (218,474)      (150,223)    (469,490)
----------------------------------------------------------------------------
Cash Provided by 
 (Used in) Operating
 Activities               229,181      (241,924)       180,440     (451,090)
----------------------------------------------------------------------------
Financing Activities
 Share option
  proceeds                      -             -        127,500            -
----------------------------------------------------------------------------
Cash Provided by
 Financing
 Activities                     -             -        127,500            -
----------------------------------------------------------------------------
Investing Activities
 Property and
  equipment
  expenditures           (108,879)          (69)    (1,098,129)      (1,516)
 Change in non-cash
  working capital
  Accounts receivable       3,142             -        (18,416)           -
  Accounts payable
   and accrued
   liabilities           (866,858)            -       (535,158)    (275,419)
----------------------------------------------------------------------------
 Cash used in 
  continuing
  operations             (972,595)          (69)    (1,651,703)    (276,935)
 Cash used in
  discontinued
  operations              (10,171)         (863)       (15,117)    (105,348)
----------------------------------------------------------------------------
Cash Used in
 Investing
 Activities              (982,766)         (932)    (1,666,820)    (382,283)
----------------------------------------------------------------------------
Net Cash Outflow         (753,585)     (242,856)    (1,358,880)    (833,373)

Cash, Beginning
 of Period                728,258     1,894,082      1,333,553    2,484,599
----------------------------------------------------------------------------

Cash (Bank
 Indebtedness), End
 of Period                (25,327)    1,651,226        (25,327)   1,651,226
----------------------------------------------------------------------------

Cash interest paid              -             -              -            -
Cash taxes paid             8,297        47,986         48,394       55,703
----------------------------------------------------------------------------

/T/

Notes to the Consolidated Financial Statements

Periods ended June 30, 2010 and 2009 (unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements for Pine Cliff Energy Ltd. ("Pine Cliff" or "the Company") as at June 30, 2010 and for the three and six months ended June 30, 2010 and 2009 should be read in conjunction with the audited consolidated financial statements as at and for the year ended December 31, 2009. The notes to these interim consolidated financial statements do not conform in all respects to the note disclosure requirements of generally accepted accounting policies (GAAP) for annual consolidated financial statements. These interim consolidated financial statements are prepared using the same accounting policies and methods of computation as disclosed in the annual consolidated financial statements as at and for the year ended December 31, 2009, except as disclosed in Note 3 below. The disclosures provided within are incremental to those included with the annual financial statements.

2. GOING CONCERN

These financial statements have been prepared on a going concern basis which assumes that the Company will be able to discharge its obligations and realize its assets in the normal course of business at the values at which they are carried in these financial statements, and that the Company will be able to continue its business activities.

At June 30, 2010, the Company had working capital deficiency of $387,016 (December 31, 2009 - working capital of $491,064) and cash provided by operations of $180,440 (June 30, 2009 - cash used in operations of $451,090).

The Company has decided to discontinue its South American operations as disclosed in Note 4.

The future funding of the capital program will be funded by the president, chief executive officer (CEO) and director (see note 6). This future funding will enable the company to finance its activities, to successfully explore, develop, produce and market economically viable reserves. As at June 30, 2010 the Company had increased the value of its proven and probable oil and gas reserves by participating in a successful two well (0.3 net) drilling program. The Company has also positive cash flow from operations due to the increased production from the new wells. Management believes that the current reserves also have third party lending value and that the Company may be able to raise additional capital required for the future development of the Company's future projects.

Management and the Board of Directors believe that the going concern assumption is appropriate for these financial statements. If in the future this assumption is not appropriate, adjustments to the carrying values of the assets and liabilities, revenues and expenses and the balance sheet classifications used may be necessary.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In December 2008, the CICA issued Section 1582, "Business Combinations", which will replace former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combinations and related disclosures. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011 with earlier adoption permitted.

In December 2008, the CICA issued Sections 1601, "Consolidated Financial Statements", and 1602, "Non-controlling Interests", which replaces existing Section 1600. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period beginning on or after January 1, 2011 with earlier adoption permitted.

The Canadian Accounting Standards Board has confirmed that IFRS will replace Canadian GAAP effective January 1, 2011, including comparatives for 2010, for Canadian publicly accountable enterprises.

The Company is evaluating the impact of these standards on its consolidated financial statements.

4. DISCONTINUED OPERATIONS

During 2010, Pine Cliff committed to sell its South American segment of operations to allow the Company to focus its continuing operations on the development of its Canadian oil and natural gas operations. Once the disposal is completed, the Company will no longer own any South American exploration properties. These assets meet the criteria for reporting as discontinued operations as at June 1, 2010.

The assets and liabilities of the South American operations have been presented as discontinued operations on the Consolidated Balance Sheets. Operating results related to these assets and liabilities have been included in net income from discontinued operations on the Consolidated Statements of Loss, Comprehensive Loss and Deficit.

/T/

                                                  As at               As at 
($)                                       June 30, 2010   December 31, 2009
----------------------------------------------------------------------------
Assets
Current
 Cash                                            37,246              39,090
 Accounts receivable                              1,331                   4
----------------------------------------------------------------------------
Total assets                                     38,577              39,094
----------------------------------------------------------------------------

Liabilities
Current
 Accounts payable and accrued liabilities       331,056             192,818

Asset Retirement Obligations                     36,732              35,836
----------------------------------------------------------------------------
Total liabilities                               367,788             228,654
----------------------------------------------------------------------------
Non-Controlling Interests                             -                   -
----------------------------------------------------------------------------


                               For the Three Months      For the Six Months
                                      Ended June 30,          Ended June 30,
($)                                2010        2009        2010        2009
----------------------------------------------------------------------------
Revenue                   
 Interest and other income            -          15           -       1,773 
----------------------------------------------------------------------------
Expenses
 General and administrative      59,231     160,337     197,464     413,387 
 Foreign exchange (gain) loss     4,356      16,432      (2,139)     23,475 
 Depletion, depreciation and 
  accretion                         448         697         896       1,396 
 Impairment of oil and gas 
  assets                         47,829           -      80,782           - 
 Dry hole costs                       -      60,036           -      60,036 
----------------------------------------------------------------------------
                                111,864     237,502     277,003     498,294 
----------------------------------------------------------------------------
Discontinued Loss Before 
 Taxes and Non-Controlling 
 Interests                     (111,864)   (237,487)   (277,003)   (496,521)
----------------------------------------------------------------------------
Taxes
 Current                         26,606      22,709      27,988      77,172 
 Future                               -           -           -           - 
----------------------------------------------------------------------------
                                 26,606      22,709      27,988      77,172
----------------------------------------------------------------------------
Discontinued Loss Before 
 Non-Controlling Interests     (138,470)   (260,196)   (304,991)   (573,693)
----------------------------------------------------------------------------
Discontinued loss applicable 
 to non-controlling interest          -           -           -           -
----------------------------------------------------------------------------
Discontinued Loss From 
 Operations                    (138,470)   (260,196)   (304,991)   (573,693)
----------------------------------------------------------------------------

/T/

Impairment of oil and gas assets and dry hole costs

As of June 30, 2010, the Company spent $7,722,808 (December 31, 2009 - $7,642,026) for exploration activities for the Canadon Ramirez Concession and Laguna de Peidra Concesssion (South American Properties). For the six months ended June 30, 2010, a full impairment provision of $34,626 (2009 - $60,036 as dry hole costs) was taken on the exploration costs related to the Canadon Ramirez Concession as the previous programs were deemed to be unsuccessful.

A full impairment provision for the six months ended June 30, 2010 of $46,156 (2009 - $Nil) was taken on the Laguna de Piedra Concession as access to a portion of the surface to complete programs on the exploration permit is currently under negotiation with the local municipality. The operator of the property has advised that the local municipality designated a portion of the Laguna Concession surface area as a "Nature Area." The operator of the Concession has commenced negotiations with the municipality to resolve this issue.

Taxes

The Company has accrued $27,988 current tax expense related to Argentina capital tax. A one percent Argentina capital tax is payable in respect of the exploration costs for the Canadon Ramirez and the Laguna de Piedra Concessions.

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 U.S. $1,400,000 for 5,600,000 common shares from the Company and U.S. $100,000 for 400,000 common shares from Foreign Corp.

There were no changes to non-controlling interests during the six months ended June 30, 2010 and the year ended December 31, 2009.

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

5. BANKING AGREEMENT

The Company has a line of credit through its subsidiary CanAmericas for the lower of its available amount of cash or US $3,690,000, which can be drawn by means of letters of guarantee and letters of credit. The line of credit may be cancelled without notice. No letters of guarantee or credit are currently outstanding.

6. RELATED PARTY TRANSACTIONS

Pine Cliff has a management agreement with Bonterra Energy Corp. (Bonterra) an oil and gas corporation publicly traded on the Toronto Stock Exchange, with common directors and management, to provide executive services, accounting services, oil and gas administration and office administration for Pine Cliff. Total fees for the six month period were $45,000 (2009 - $60,000) plus minimal administrative costs. As of June 30, 2010 Pine Cliff owes Bonterra $529 (December 31, 2009 - $448). This agreement can be cancelled by either party by giving 90 days notice.

Subsequent to June 30, 2010, the president, CEO and director of Pine Cliff has loaned $100,000 to the Company by an unsecured loan, that bears interest at Canadian chartered bank prime plus one percent and will have no set repayment terms but will be payable on demand. Pine Cliff has repaid the loan amount plus interest.

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.

/T/

7. PROPERTY AND EQUIPMENT
   
($)                        June 30, 2010              December 31, 2009
----------------------------------------------------------------------------


                                  Accumulated                   Accumulated 
                                Depletion and                 Depletion and 
                        Cost     Depreciation         Cost     Depreciation
----------------------------------------------------------------------------
Canadian petroleum 
 and natural gas
 properties and 
 related equipment 4,441,233        1,832,681    3,328,873        1,384,807
Furniture, 
 equipment and 
 other                45,957           37,346       45,957           33,038
----------------------------------------------------------------------------
                   4,487,190        1,870,027    3,374,830        1,417,845
----------------------------------------------------------------------------

/T/

8. TAXES

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

9. 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.

/T/

Issued                                              Number        Amount ($)
----------------------------------------------------------------------------
Common Shares  
Balance, January 1, 2010                        45,295,695       14,593,560
Issued on exercise of stock options                850,000          127,500
Transfer of contributed surplus to share capital                     98,312
----------------------------------------------------------------------------
Balance, June 30, 2010                          46,145,695       14,819,372
----------------------------------------------------------------------------


The number of weighted average basic and diluted shares outstanding for the 
three and six months ended June 30:

                                     Three Months             Six Months
                                  2010          2009       2010        2009
----------------------------------------------------------------------------
Basic shares outstanding(1) 46,145,695    45,275,695 46,049,783  45,275,695
Dilutive share options          20,729        67,403     19,819      52,033
----------------------------------------------------------------------------
Diluted shares outstanding  46,166,424    45,343,098 46,069,602  45,327,728
----------------------------------------------------------------------------
(1) Basic shares outstanding is used to calculate basic and diluted loss 
    per share when the Company is in a loss position

A summary of the changes to the Company's contributed surplus is presented
below:

Contributed surplus
   
($)                                                        2010        2009
----------------------------------------------------------------------------
Balance, January 1                                      859,620     722,968
Stock-based compensation expensed (non-cash)              4,514     120,226
Transfer of contributed surplus to share capital        (98,312)          -
----------------------------------------------------------------------------
Balance, June 30                                        765,822     843,194
----------------------------------------------------------------------------

/T/
         
The deficit balance is composed of accumulated losses.

A summary of the status of the Company's stock option plan as of June 30, 2010 and December 31, 2009, and changes during the six month and twelve month periods ending on those dates is presented as follows:

/T/

                                 June 30, 2010           December 31, 2009
----------------------------------------------------------------------------
                                        Weighted-                  Weighted-
                                         Average                    Average 
                                        Exercise                   Exercise 
                           Options         Price      Options         Price
----------------------------------------------------------------------------
Outstanding at 
 beginning of period     3,126,000         $0.63    3,118,000         $0.63

Options granted                  -             -       40,000          0.15
Options exercised         (850,000)         0.15      (20,000)         0.15
Options expired         (1,125,000)         0.45      (12,000)         1.15
----------------------------------------------------------------------------
Outstanding at end 
 of period               1,151,000         $1.15    3,126,000         $0.63
----------------------------------------------------------------------------
Options exercisable 
 at end of period        1,131,000         $1.17    3,028,500         $0.62
----------------------------------------------------------------------------


The following table summarizes information about stock options outstanding
at June 30, 2010:

                     Options Outstanding                Options Exercisable
----------------------------------------------------------------------------
                               Weighted-
                                 Average Weighted-                Weighted-
                     Number    Remaining   Average        Number    Average
Range of        Outstanding  Contractual  Exercise   Exercisable   Exercise 
Exercise Prices  at 6/30/10         Life     Price    at 6/30/10      Price
----------------------------------------------------------------------------
$0.15- $0.30         40,000    1.5 years     $0.15        20,000      $0.15
 1.10 - 1.20      1,071,000    0.1 years      1.18     1,071,000       1.18
 1.40 - 1.50         40,000    0.5 years      1.49        40,000       1.49
----------------------------------------------------------------------------
$0.15 - $1.50     1,151,000    0.2 years     $1.15     1,131,000      $1.17
----------------------------------------------------------------------------

/T/

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 of 20,000 as of June 30, 2010 vest in 2011.

10. FINANCIAL AND CAPITAL RISK MANAGEMENT

Financial Risk Factors

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

- Cash deposits and bank indebtedness;

- Receivables;

- Payables;

The Company's activities result in exposure to a number of financial risks including market risk (commodity price risk, interest rate risk and foreign exchange risk) credit risk and liquidity risk. Financial risk management is carried out by senior management under the direction of the Board of Directors.

The Company does not enter into risk management contracts. The Company sells its oil and natural 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, which the Company defines to include shareholders' equity and working capital balances, are to safeguard the Company's ability to continue as a going concern, to continue providing 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 debt or new shares.

The June 30, 2010 working capital deficiency to the budgeted capital expenditures is currently planned to be eliminated by cash flow from the newly completed gas wells and possible entering into of a bank facility or equity placement. In the short term, the Company's president, CEO and director will provide financing (see Note 2).

The following section (a) of this note provides a summary of the Company's underlying economic positions as represented by the carrying values, fair values and contractual face values of its 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.

/T/

Table 1
Continuing Operations
                                               As at June 30, 2010
($)                              Carrying Value    Fair Value    Face Value
----------------------------------------------------------------------------
Financial assets
Accounts receivable                     231,590       231,590       231,729
Financial liabilities   
Bank indebtedness                        25,327        25,327        25,327
Accounts payable and accrued 
 liabilities                            322,883       322,883       322,883
----------------------------------------------------------------------------

Discontinued Operations                        As at June 30, 2010
($)                              Carrying Value    Fair Value    Face Value
----------------------------------------------------------------------------
Financial assets
Cash                                     37,246        37,246        37,246
Accounts receivable                       1,331         1,331        89,920
Financial liabilities                 
Accounts payable and accrued 
 liabilities                            331,056       331,056       331,056
----------------------------------------------------------------------------

/T/

Financial instruments, consisting of accounts receivable, accounts payable and accrued liabilities carried on the consolidated balance sheet, are carried at amortized cost. Cash is carried at fair value. All of the fair value items are transacted in active markets. Pine Cliff classifies the fair value of these transactions according to the following hierarchy based on the amount of observable inputs used to value the instrument.

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.

Level 3 - Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.

Pine Cliff's cash has been assessed on the fair value hierarchy described above and is considered Level 1.

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 development of oil and natural gas properties in Canada. The Company also has decided to discontinue its exploration and possible development of its South American properties. Fluctuations in prices of these commodities may directly impact the Company's performance and ability to continue its operations.

The Company's management currently does not use risk management contracts to set price parameters for its production.

Interest rate risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flow 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 Pine Cliff 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 dollar, U.S. dollar and Argentinean peso investment chequing accounts on which it earns an insignificant amount of interest. 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.

Foreign exchange risk

The Company has decided to discontinue its foreign operations, which have no revenue or production. The Company's domestic or continuing operations currently sells all of its Canadian production in Canadian currency. The Company has Canadian, U.S. dollar and Argentina peso denominated cash balances. Funds held in foreign currency denominated accounts are generally held for short periods of time, as the Company transfers and converts Canadian funds to foreign currency as payments for foreign currency denominated payables come due. As such, Pine Cliff does not mitigate exchange rate risk by using risk management contracts.

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.

Substantially all of the continuing operations' accounts receivable balance at June 30, 2010 ($231,590) and December 31, 2009 ($129,900) relates to product sales with Canadian oil and gas companies and crown royalty credits with the province of Alberta, all of which have consistently been received within 30 to 60 days. The Company's discontinued operations, through its subsidiary CanAmericas, also has a receivable of $88,589 (2009 - $68,787) for Argentina Value Added Tax (V.A.T.) on non-capital expenditures. The Company has taken a full allowance on the V.A.T., as the Company has no Argentina income subject to V.A.T. against which to claim the receivable.

The Company assesses quarterly if there has been any impairment of the financial assets of the Company. The Company does not have any significant credit risk exposure to any single counterparty.

The carrying value of accounts receivable approximates their fair value due to the relatively short periods to maturity on this instrument. Currently no accounts receivable is greater than 90 days. 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,

- The Company 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

- The Company may be unable to settle or recover a financial asset at all.

To help reduce these liquidity risks, the Company:

- Arranged short-term financing at a reasonable interest rate with its CEO and director.

- Has changed its focus to its Canadian operations and has chosen to discontinue its South American Operations.

11. CONTINGENT LIABILITY

The Company is currently in dispute with the operator of the Argentina Canadon Ramirez Concession for the 2008 Canon (land rental payments). It is the Company's interpretation that the operator is responsible for the 2008 Canon under the Joint Operating Agreement. Should the Company be unsuccessful, the amount of its share of the Canon is $122,000. If the disputed amount (or a portion thereof) is settled the Company will capitalize the costs in discontinued operations.

For further information:

Further information relating to the Company may be found on www.sedar.com as well as on the Company's website at www.pinecliffenergy.com or by contacting persons listed below.


FOR FURTHER INFORMATION PLEASE CONTACT:

Pine Cliff Energy Ltd. George F. Fink President and CEO (403) 269-2289 (403) 265-7488 (FAX) or Pine Cliff Energy Ltd. Garth E. Schultz CFO (403) 269-2289 (403) 265-7488 (FAX) or Pine Cliff Energy Ltd. Kirsten Kulyk Manager, Investor Relations (403) 269-2289 (403) 265-7488 (FAX) info@pinecliffenergy.com www.pinecliffenergy.com