The first quarter of 2009 saw the continued collapse of commodity prices which accelerated as a result of the global financial crisis in the second half of 2008.

“In the current market environment, TriStar Oil & Gas management has been diligent in aggressively managing the company’s financial position by cutting planned capital expenditures in both the fourth quarter of 2008, and the first quarter of 2009. Together with Management’s disciplined hedging strategy and TriStar Oil & Gas’ high quality asset base, the company has maintained strong financial flexibility during these uncertain times – thereby protecting the upside inherent in the company’s significant resource base.”

Revenues:

For the three months ended March 31, 2009, TriStar Oil & Gas recorded CAD69.4 million in crude oil and NGL sales and CAD12.5 million in natural gas sales, a 37% decrease and 49% decrease, respectively, over the first quarter of 2008 when TriStar Oil & Gas recorded CAD110.5 million of crude oil and NGL sales and CAD24.7 million of natural gas sales. These amounts exclude the effects of hedging.

Royalty Expenses:

Royalties for the quarter ended March 31, 2009 were CAD13.2 million or 16.1% of revenue (before effects of hedging) as compared to CAD26.4 million or 19.5% for the corresponding quarter in 2008. Royalties are calculated and paid based on oil and natural gas revenues before any realized hedging gains or losses. Accordingly, royalty expense is directly correlated to changes in revenue (before the effects of hedging).

Commencing in January 2009, the company has been subject to Alberta’s new royalty framework (NRF). In addition to the NRF, the Alberta provincial government has implemented a number of incentive measures intended to stimulate drilling-related spending in the near term. Overall, these additional incentive measures generally have positive economic impacts on the wells that they apply to.

Operating Expenses:

Operating expenses were CAD21.4 million or CAD11.39 per Boe in the quarter ended March 31, 2009 as compared to CAD18.6 million or CAD10.51 per Boe in the first quarter of 2008.

Growing production volumes in southeast Saskatchewan during 2008 and into 2009 have resulted in above average oil emulsion and other trucking costs in the quarter. In 2008, TriStar Oil & Gas completed the construction of several oil processing facilities in the Bakken play which has helped reduce costs of trucking emulsion from single well batteries as wells are tied in directly to the facilities. TriStar Oil & Gas has plans to further implement infrastructure changes in the area in the remainder of 2009 to further reduce operating expenses relating to oil emulsion trucking.

Transportation Expenses

Transportation expenses were CAD1.9 million or CAD1.01 per Boe in the quarter ended March 31, 2009 as compared to CAD2 million or CAD1.10 per Boe in the first quarter of 2008. The initial expansion of the major oil gathering system, Enbridge Pipelines (Saskatchewan), was completed in June 2008 and was expected to alleviate clean oil trucking costs in the near term. However, the continued expansion of the Bakken play led to this additional pipeline capacity being entirely utilized faster than expected. More recently, this situation has been somewhat alleviated due to diminishing new production coming on line as a result of reduced drilling activity in the area because of lower realized oil prices.

TriStar Oil & Gas has significant production in the province of Saskatchewan and production in Alberta that is not subject to crown royalties, mitigating the effect of the NRF on TriStar Oil & Gas’ corporate royalty rates.

As a result of the lower commodity price environment in the quarter ended March 31, 2009, and the fact that the royalties paid under the NRF are sensitive to commodity prices, the overall royalty burden associated with wells affected by the NRF were generally less in the first quarter of 2009 than what they would have been under the royalty framework that was in place prior to 2009. In the event of rising commodity prices, the royalty burden associated with wells affected by the NRF will be generally greater than they would have been under the old royalty framework.

Operating netbacks:

Operating netbacks were CAD33.06 per Boe for the quarter ended March 31, 2009 as compared to CAD45.62 per Boe for the quarter ended March 31, 2008.

General and Administrative Expenses:

During the first quarter of 2009, general and administrative (G&A) expenses, net of recoveries and capitalized amounts, were CAD2.4 million or CAD1.30 per Boe as compared to the quarter ended March 31, 2008 where G&A expenses were CAD2.7 million or CAD1.53 per Boe.

Gross G&A expenses prior to the effects of recoveries and capitalized amounts were CAD7.2 million or CAD2.60 per Boe as compared to the quarter ended March 31, 2008 where gross G&A expenses were CAD5.8 million or CAD2.54 per Boe. This absolute increase in gross G&A expenses reflects the growth of TriStar Oil & Gas. However, increased drilling activity has led to an increase in the G&A that was recovered from partners.

Interest and Bank Expenses:

Interest and bank expenses were CAD2.3 million or CAD1.20 per Boe in the current quarter as compared to CAD3.6 million or CAD2.03 per Boe in the quarter ended March 31, 2008. The absolute amount of interest and bank expenses, for the current quarter, relative to the same quarter in 2008, decreased primarily because of reduced prime and Bankers Acceptance interest rates. It is expected that the company will pay increased interest rate spreads to its bank syndicate on the renewal of its credit facility.

The company’s effective interest rates for the quarters ended March 31, 2009 and 2008 were 2.5% and 5.3% , respectively.

Stock-Based Compensation Expenses:

The company’s stock-based compensation expenses for the quarter ended March 31, 2009 were CAD2.3 million or CAD1.22 per Boe as compared to the quarter ended March 31, 2008 of CAD1.3 million or CAD0.73 per Boe. The stock-based compensation expenses reflect the value ascribed to the non-cash compensation provided by TriStar Oil & Gas, and were calculated utilizing a fair value assessment methodology.

These amounts are net of the portion of stock-based compensation costs capitalized to property and equipment when they are related to drilling, production and acquisitions, which amounted to CAD1.6 million for the quarter ended March 31, 2009 or CAD0.85 per Boe (2008 -CAD0.9 million or CAD0.51 per Boe).

Depletion, Depreciation and Accretion Expenses

Depletion of oil and natural gas properties, including the capitalized portion of the asset retirement obligations, is provided for on a unit of-production basis using estimated proven reserves volumes. Depletion, depreciation and accretion expenses in the quarter ended March 31, 2009 were CAD60.4 million or CAD32.14 per Boe as compared to the quarter ended March 31, 2008 which was CAD57.7 million or CAD32.61 per Boe.

At March 31, 2009, the calculation of the depletion expense excluded unproved property and undeveloped land cost of CAD387.2 million (March 31, 2008: CAD327.6 million). Unused seismic costs of CAD27.5 million (March 31, 2008: CAD32.6 million) were also excluded. Future development costs of CAD372.1 million (March 31, 2008: CAD171.9 million) were included in the depletion calculation. The excluded amounts, which represent costs incurred for unproved properties, will be brought into the depletion pool at varying rates over the next five years.