UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 40-F
 [Check one]o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934ORþ
    
    ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year endedDecember 31, 2008
    
    Commission File Number001-34100
 Petroflow Energy Ltd.
  
 
 
 
 
 
  Title of each class
    
    Name of each exchange on which registeredCommon Shares, without Par Value
    
    NYSE Amex
  
  
 SEC2285(03-07)
    
    Persons who are to respond to the collection of information
contained in this form are not required to respond unless
the form displays a currently valid OMB control number.
  þ   Annual information form
    
    þ   Audited annual financial statements
    Yes   o 82-
    
    No   þ
  Yes   þ
    
    No   o




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INTRODUCTORY INFORMATION
  
    
    the term Registrant refers to Petroflow Energy Ltd.; and
 
    
    the terms we, us, our or similar terms refer to the Registrant and its
wholly-owned subsidiaries.
  FORWARD-LOOKING STATEMENTS
  
    
    the performance characteristics of our oil and natural gas properties;
 
    
    oil and natural gas production levels;
 
    
    the size of the oil and natural gas reserves;
 
    
    projections of market prices and costs;
 
    
    supply and demand for oil and natural gas;
 
    
    expectations regarding the ability to raise capital and to continually add to
reserves through acquisitions and development;
 
    
    treatment under governmental regulatory regimes and tax laws; and
 
    
    capital expenditure programs.
  
    
    volatility in market prices for oil and natural gas;
 
    
    liabilities inherent in oil and gas operations;
 
    
    uncertainties associated with estimating oil and natural gas reserves;
 
    
    competition for, among other things, capital, acquisitions of reserves, undeveloped
lands and skilled personnel;
 
    
    incorrect assessments of the value of acquisitions;
 
    
    geological, technical, drilling and processing problems;
 
    
    fluctuations in foreign exchange or interest rates and stock market volatility;
 
    
    changes in income tax laws or changes in tax laws and incentive programs relating to
the oil and gas industry; and
 
    
    other risk factors.
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PRINCIPAL DOCUMENTS
  
    
    our Annual Information Form for the year ended December 31, 2008;
 
    
    our Audited Consolidated Financial Statements for the years ended December 31, 2008
and 2007; and
 
    
    our Management Discussion and Analysis for the years ended December 31, 2008 and
2007.
 RESERVES DATA AND OTHER OIL AND GAS INFORMATION
   DIFFERENCES IN UNITED STATES AND CANADA REPORTING PRACTICES
   DISCLOSURE CONTROLS AND PROCEDURES
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MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
  CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  NOTICES PURSUANT TO REGULATION BTR
  CODE OF ETHICS
 Code of Business Conduct and Ethics Code of Conduct and Ethics http://www.petroflowenergy.com Code of Conduct and
Ethics
 IDENTIFICATION OF THE AUDIT COMMITTEE
  AUDIT COMMITTEE FINANCIAL EXPERT
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PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fees in Canadian Dollars
    
    2008
    
    
    2007Audit Fees(1)
    
    $
    205,426
    
    
    $
    95,000Audit-Related Fees(2)
    
    $
    234,245
    
    
    $
    56,500Tax Fees(3)
    
    $
    49,835
    
    
    $
    27,416All Other Fees
    
    
    
    
    
    
    Total
    
    $
    489,506
    
    
    $
    178,916
 
 (1)
    
    Audit fees consist of fees for the audit of the Companys annual financial
statements or services that are normally provided in connection with statutory and
regulatory filings or engagements, including the restatement of the 2007 and 2006
audited financial statements.(2)
    
    Audit-related fees consist of fees for assurance and related services that are
reasonably related to the performance of the audit or review of the Companys financial
statements and are not reported as Audit Fees. During fiscal 2008, the services
provided in this category included audit of the US GAAP reconciliation in connection
with the Form 40-F and Form S-8.(3)
    
    Tax fees consist of fees for tax compliance services, tax advice and tax
planning. During fiscal 2008 and 2007, the services provided in this category include
assistance and advice in relation to the preparation of corporate income tax returns. Pre-Approval Policy for Audit and Non-Audit Services
  OFF-BALANCE SHEET ARRANGEMENTS
  TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
 Contractual Obligations
    
    Total
    
    
    Less than 1  year
    
    
    1-3 years
    
    
    4-5 years
    
    
    More than 5 years$CDN
    
    
    $CDN
    
    
    $CDN
    
    
    $CDN
    
    
    $CDNLong-Term Debt Obligations (1)
    
    
    101,764,599
    
    
    
    
    
    
    
    101,764,599
    
    
    
    
    
    
    
    Capital (Finance) Lease
    
    
    24,297,334
    
    
    
    10,746,665
    
    
    
    13,550,669
    
    
    
    
    
    
    
    Obligations (2)Operating Lease Obligations (3)
    
    
    736,097
    
    
    
    309,784
    
    
    
    392,273
    
    
    
    34,040
    
    
    
    Asset Retirement Obligation (4)
    
    
    1,520,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,520,690Total contractual obligations
    
    
    128,318,720
    
    
    
    11,056,449
    
    
    
    115,707,541
    
    
    
    34,040
    
    
    
    1,520,690
 
 (1)
    
    The Registrants long term debt obligation consists of a revolving credit facility with
a U.S. Based bank. The facility is dependent upon continued yearly reserve additions, with
current availability as of December 31, 2008 of U.S. $110,000,000 made up of a primary A
facility of $US 102 million bearing interest at LIBOR plus 2% to LIBOR plus 2.5% depending
on the percentage of funds actually borrowed or the base rate. The B facility of $US
8,000,000 with an interest rate of LIBOR 5




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plus 4% or the base rate plus 1.5%. At year end the A facility had a maturity date of January 1, 2012 and the B facility had a maturity date of January 1, 2010.
As at December 31, 2008 a total of $101,764,599 (U.S. $83,222,603) was drawn on this facility. Subsequent to December 31, 2008, the Registrant entered into an
amended credit facility agreement (the Amended Facility). The Amended Facility is U.S. $200,000,000 revolving credit facility with a U.S. based bank. This facility is
dependent upon continued yearly reserve additions, with current availability of U.S. $110,000,000 which is all included in the A facility. The B facility which formerly
had a limit of U.S. $8,000,000 has been retired. There is an interest rate floor on the Amended Facility of 5.5%. At present no repayments are due under the Amended Facility
until maturity. The Amended Facility is subject to a semi-annual review and the Registrant must meet certain debt covenants on a quarterly basis. If the Registrant fails to
meet any of its debt covenants, amounts due under the Amended Facility may be declared by the bank to be immediately due and payable. Significant covenants are as follows: a)
    
    The Registrant must maintain a ratio of current assets to current liabilities
equal to or greater than 1:1 with current assets to include any unused availability on
the Amended Facility.
 b)
    
    The Registrant must maintain a Funded Debt to earnings before interest, taxes,
depreciation, and amortization (EBITDA) Ratio meeting the following guidelines. For the
quarter ending (i) December 31, 2008, permit the ratio of Funded Debt to EBITDA for
that preceding quarter to be greater than 4.25:1.00; (ii) March 31, 2009 and the two
successive quarters thereafter, permit the ratio of Funded Debt to EBITDA for the
preceding respective quarters to be greater than 5:50 to 1:00; and (iii) (ii) December
31, 2009 permit the ratio of Funded Debt to EBITDA for the preceding quarter to be
greater than 4:50 to 1:00. For the purpose of calculating the foregoing ratio for (x)
each quarter in the calendar year 2008, EBITDA will be annualized by multiplying the
EBITDA for that period by 4 and (y) the quarter ending March 31, 2009 and each quarter
thereafter, EBITDA calculated on a trailing four-quarter basis.
 c)
    
    The Registrant must not permit the ratio of EBITDA to Interest Expense for the
quarter ending (i) March 31, 2008 for that preceding quarter to be less than 2.50:1.00
(ii) June 30, 2008 for that preceding quarter to be less than 2.75:1.00 and (iii) on the
last day of each quarter thereafter for the immediately preceding quarter to be less
than 3.00:1.00.
 (2)
    
    As part of its Oklahoma farm-in agreement, the Registrant will pay a capital recovery
fee for infrastructure and salt water disposal facilities (the facilities) over a three
year period. This fee is based on the cost of the facilities. Under Canadian GAAP, the
costs attributable to the facilities meet the capital lease criteria and, accordingly, have
been capitalized. A summary of the obligations under the capital lease is as follows: 2009
    
    $
    13,437,9082010
    
    
    10,249,2432011
    
    
    4,635,725Total minimum lease payment
    
    
    28,322,876Less amount representing annual interest at 12.0%
    
    
    (4,025,542
    )24,297,334Less current portion
    
    
    (10,746,665
    )$
    13,550,669
 (3)
    
    The Registrants operating lease obligations mainly consist of office rental agreements
over various terms with third parties. Annual commitments are as follows: 2009
    
    $
    309,7842010
    
    
    230,9562011
    
    
    80,2312012
    
    
    81,0862013
    
    
    34,040$
    736,097
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(4)
    
    The Registrants asset retirement obligations result from net ownership interests in
petroleum and natural gas assets including well sites and processing facilities, all of
which have estimated costs to abandon and reclaim that will be incurred in the future. As
at December 31, 2008, the Registrant estimated that undiscounted cash flows of $9,105,357
(2007  $4,046,077) are required to settle its asset retirement obligations which are
expected to be incurred between 2009 and 2048. An inflation rate of 2% and a
credit-adjusted risk-free rate of 8% were used to calculate the fair value of the asset
retirement obligations as at December 31, 2008. Subsequent adjustments to the initial
asset and liability are recorded to reflect revisions to estimated future cash flow
requirements. The Registrants asset retirement obligation changed as follows:
 December 31,
    
    2008
    
    
    2007Beginning of year
    
    $
    861,488
    
    
    $
    1,199,142Increase in liabilities
    
    
    111,822
    
    
    
    51,853Changes in estimate
    
    
    727,286
    
    
    
    (465,444
    )Disposal of asset and other
    
    
    (125,588
    )
    
    
    Asset retirement costs incurred
    
    
    (117,677
    )
    
    
    Accretion expense
    
    
    63,359
    
    
    
    75,937$
    1,520,690
    
    
    $
    861,488
 NYSE AMEX CORPORATE GOVERNANCE
  Shareholder Meeting Quorum Requirement: The NYSE Amex minimum quorum requirement for a
shareholder meeting is one-third of the outstanding shares of common stock. In addition, a
company listed on the NYSE Amex is required to state its quorum requirement in its bylaws.
The Companys quorum requirement is set forth in its Memorandum and Articles. A quorum for a
meeting of members of the Company is two persons who are, or who represent by proxy,
shareholders who, in the aggregate, hold at least 5% of the shares entitled to be voted at
the meeting.
 Proxy Delivery Requirement: The NYSE Amex requires the solicitation of proxies and delivery
of proxy statements for all shareholder meetings, and requires that these proxies shall be
solicited pursuant to a proxy statement that conforms to SEC proxy rules. The Company is a
foreign private issuer as defined in Rule 3b-4 under the Exchange Act, and the equity
securities of the Company are accordingly exempt from the proxy rules set forth in Sections
14(a), 14(b), 14(c) and 14(f) of the Exchange Act. The Company solicits proxies in accordance
with applicable rules and regulations in Canada.
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UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
 Undertaking
  Consent to Service of Process
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SIGNATURES
  PETROFLOW ENERGY LTD.
RegistrantBy:
    /s/  John A. MeltonName:
    John A. MeltonTitle:
    Chief Executive Officer  9




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EXHIBIT INDEX
  Exhibit Number
    
    Exhibit Description99.1
    
    
    Annual Information Form, dated April 22, 200999.2
    
    
    Managements Discussion and Analysis for the year ended December 31, 200899.3
    
    
    Audited Consolidated Financial Statements as at and for the year ended
December 31, 2008, together with the auditors report thereon99.4
    
    
    Consent of Independent Auditors995
    
    
    Consent of Independent Reserve Engineers99.6
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of
the Exchange Act, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200299.7
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of
the Exchange Act, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200299.8
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of
the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 200299.9
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of
the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 10