The first quarter of 2009 saw the industry enter a much tougher market of lower commodity prices, stringent capital availability and a new royalty framework for Alberta. Despite the adverse economic conditions, the steps taken by West Energy in the previous year it has created a number of opportunities for the company in the existing environment.

West Energy has a very strong balance sheet, sufficient cashflow to maintain production and has a capital program that can generate a return at existing commodity prices. During the quarter, West Energy embarked on a two prong strategy to increase its active projects within accessible cashflow and to make use of its cash on-hand and balance sheet for merger and acquisition activities in an effort to create an intermediate energy company.

Production during the quarter averaged 5,214 BOEPD which was below the fourth quarter of 2008 production. In 2008 West Energy focused on maximizing production from its reserve base ahead of the new royalty framework and to take advantage of higher commodity prices. In 2009, the goal is to optimize Nisku reservoir recoveries for which the company has begun a number of projects. For example, Crossfire 9-01-050-6W5 (W.I 67.5%) is at present shut-in awaiting enhanced oil recovery (EOR) consent for an innovative project that will use the same wellbore for both production and injection.

West Energy has decreased production by about 33% at Crossfire 13-02-050-6W5 (W.I. 100%) to optimize the sweep efficiency of the EOR project. Regardless Of the lower levels of production, an importance on cost control saw operating costs remain below CAD10 per Boe with the average cost for the quarter being CAD9.61 per BOE. Production in second quarter is forecasted to be lower than first quarter because of scheduled maintenance at third party sour gas processing facilities.

A strong emphasis on cash preservation with curtailment of the capital expenditure program saw West Energy spend CAD9 million in the first quarter of 2009 which compares to its cashflow from operations of CAD8.4 million. The company is committed to keep capital expenditures on its active projects inline with cashflow. As a result of this emphasis, West Energy had CAD74 million of cash on hand and a working capital of CAD68.9 million for the first quarter of 2009. During the quarter the company was active in the following areas:

Drilled two Nisku oil wells:

— Drilled and concluded Crossfire 3-01-050-06W5 (W.I. (67.5%), a new low rate Nisku reef

— Drilled a Nisku discovery well at Crossfire 14-33-050-05W5 (W.I. 60.0%), a new high-rate Nisku reef

— Crossfire Manville light oil discovery

— Tied-in a discovery well at 11-03-050-6W5M (W.I. 100) with a restricted MRL of 70 BOEPD

— Expanded land coverage on play fairway

— Monias non operated deep gas project

— Tied-in Monias 14-9-082-21W6M (W.I. 40% BPO, 26% APO) production commenced in April 2009

— Drill, complete and tie-in of Monias 16-24-082-21W6M (W.I. 40% BPO, 26% APO); production commenced in April 2009

— Monias Montney gas project

— Completed with six fracs in a horizontal well at Monias 13-30-81-21W6 (W.I. 100%), initial rates 500 mcfd. Completing reservoir study and monitoring other operators activities in the area

— Two Rivers light oil discovery – step-out drilling delayed by archeology study till late second quarter or early third quarter.