----

| (signed) Brian H.Dau                    | (signed) M. Darlene Wong                |
|-----------------------------------------|-----------------------------------------|
|                                    |                                    |
|                                    |                                    |
|                                    |                                    |
| Brian H. Dau                            | M. Darlene Wong                         |
| President & Chief Executive Officer | Vice President, Finance,                |
|                                    | Chief Financial Officer & Secretary |

| 1 | 2011 FINANCIAL STATEMENTS |
|---|---------------------------|

----

|   | ANDERSON ENERGY | 2 |
|--------|-----------------|---|

----

|                                                                       |   | December 31, 2011 |    |   | December 31,2010 |   |     | January 1, 2010 |   |
|----------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|----------|-----------------|--------|
|                                                                       |   |              |    |   | (note 23)        |   |     | (note 23)       |   |
| ASSETS                                                                     |   |              |    |   |             |   |     |            |   |
| Current assets:                                                            |   |              |    |   |             |   |     |            |   |
| Cash and cash equivalents                                                  |   | $                 | 1       |   |             | $      | 4,024    |            |   | $ | 1 |   |
| Accounts receivables and accruals (note 19)                                |   |              | 14,272  |   |             |   | 20,998   |            |   |   | 22,990 |   |
| Prepaid expenses and deposits                                              |   |              | 2,326   |   |             |   | 3,052    |            |   |   | 3,778 |   |
| Unrealized gain on derivative contracts (note 19)                          |   |              | 1,384   |   |             |   | -        |            |   |   | - |   |
|                                                                       |   |              | 17,983  |   |             |   | 28,074   |            |   |   | 26,769 |   |
|                                                                       |   |              |    |   |             |   |     |            |   |   |   |   |
| Deferred tax asset (note 11)                                               |   |              | 35,389  |   |             |   | 29,657   |            |   |   | - |   |
| Property, plant and equipment (note 6)                                     |   |              | 406,947 |   |             |   | 320,673  |            |   |   | 403,207 |   |
|                                                                       |   | $                 | 460,319 |   |             | $      | 378,404  |            |   | $ | 429,976 |   |
|                                                                       |   |              |    |   |             |   |     |            |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                 |   |              |    |   |             |   |     |            |   |   |   |   |
| Current liabilities:                                                       |   |              |    |   |             |   |     |            |   |   |   |   |
| Accounts payable and accruals (note 19)                                    |   | $                 | 60,573  |   |             | $      | 46,862   |            |   | $ | 36,889 |   |
| Unrealized loss on derivative contracts (note 19)                          |   |              | -       |   |             |   | 1,918    |            |   |   | - |   |
|                                                                       |   |              | 60,573  |   |             |   | 48,780   |            |   |   | 36,889 |   |
|                                                                       |   |              |    |   |             |   |     |            |   |   |   |   |
| Bank loans (note 8)                                                        |   |              | 88,682  |   |             |   | 52,719   |            |   |   | 62,404 |   |
| Convertible debentures (note 9)                                            |   |              | 84,796  |   |             |   | 43,460   |            |   |   | - |   |
| Decommissioning obligations (note 10)                                      |   |              | 62,848  |   |             |   | 51,550   |            |   |   | 47,657 |   |
| Deferred tax liability (note 11)                                           |   |              | -       |   |             |   | -        |            |   |   | 10,920 |   |
|                                                                       |   |              | 296,899 |   |             |   | 196,509  |            |   |   | 157,870 |   |
| Shareholders’ equity:                                                |   |              |    |   |             |   |     |            |   |   |   |   |
| Share capital (note 12)                                                    |   |              | 171,460 |   |             |   | 426,925  |            |   |   | 396,524 |   |
| Equity component of convertible debentures (note 9)                        |   |              | 5,019   |   |             |   | 2,592    |            |   |   | - |   |
| Contributed surplus                                                        |   |              | 9,385   |   |             |   | 7,921    |            |   |   | 6,338 |   |
| Deficit (note 12)                                                          |   |              | (22,444 | )      |             |   | (255,543 | )               |   |   | (130,756 | ) |
|                                                                       |   |              | 163,420 |   |             |   | 181,895  |            |   |   | 272,106 |   |
| Commitments and contingencies (note 21)Subsequent events (notes 19 and 22) |   |              |    |   |             |   |     |            |   |   |   |   |
|                                                                       |   | $                 | 460,319 |   |             | $      | 378,404  |            |   | $ | 429,976 |   |

|                     |                         |
|--------------------------|------------------------------|
|                     |                         |
| (signed) David G. Scobie | (signed) Christopher L. Fong |
|                     |                         |
| Director                 | Director                     |

| 3 | 2011 FINANCIAL STATEMENTS |
|---|---------------------------|

----

|                                                  |   | 2011   |    |   | 2010      |   |
|-------------------------------------------------------|--------|--------|---------|--------|-----------|--------|
|                                                  |   |   |    |   | (note 23) |   |
|                                                  |   |   |    |   |      |   |
| Oil and gas sales                                     |   | $      | 118,292 |   |      | $      | 86,457 |   |
| Royalties                                             |   |   | (13,806 | )      |      |   | (9,011 | ) |
| Revenue, net of royalties                             |   |   | 104,486 |   |      |   | 77,446 |   |
| Other income (expenses) (note 14)                     |   |   | 7,388   |   |      |   | (1,660 | ) |
|                                                  |   |   | 111,874 |   |      |   | 75,786 |   |
|                                                  |   |   |    |   |      |   |   |   |
| Operating expenses (note 15)                          |   |   | 29,533  |   |      |   | 28,537 |   |
| Transportation expenses                               |   |   | 1,626   |   |      |   | 611 |   |
| Depletion and depreciation                            |   |   | 52,929  |   |      |   | 45,652 |   |
| Impairment of property, plant and equipment (note 7)  |   |   | 35,230  |   |      |   | 153,165 |   |
| General and administrative expenses (notes 15 and 16) |   |   | 10,405  |   |      |   | 9,417 |   |
| Loss from operating activities                        |   |   | (17,849 | )      |      |   | (161,596 | ) |
|                                                  |   |   |    |   |      |   |   |   |
| Finance income (note 17)                              |   |   | 84      |   |      |   | 96 |   |
| Finance expenses (note 17)                            |   |   | (11,942 | )      |      |   | (5,006 | ) |
| Net finance expenses                                  |   |   | (11,858 | )      |      |   | (4,910 | ) |
|                                                  |   |   |    |   |      |   |   |   |
| Loss before taxes                                     |   |   | (29,707 | )      |      |   | (166,506 | ) |
| Deferred income tax benefit (note 11)                 |   |   | (7,263  | )      |      |   | (41,719 | ) |
| Loss and comprehensive loss for the year              |   |   | (22,444 | )      |      |   | (124,787 | ) |
|                                                  |   |   |    |   |      |   |   |   |
| Basic and diluted loss per share (note 13)            |   | $      | (0.13   | )      |      | $      | (0.73 | ) |

|   | ANDERSON ENERGY | 4 |
|--------|-----------------|---|

----

|                                                                                                                |   |  Number of Common Shares |        |   |  Share capital |   |     | Equity component of convertible debentures |   |   | Contributed surplus |   |   | Deficit |   |   | Total shareholders’ equity |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|---------------------|--------|----------|--------------------------------------------|--------|--------|---------------------|--------|--------|---------|--------|--------|----------------------------------|--------|
| Balance at January 1, 2010 (note 23)                                                                                |   |                          | 150,500,401 |   |                | $      | 396,524  |                                       |   | $      | -                   |   |   | $       | 6,338  |   |                             | $      | (130,756 | ) |   | $ | 272,106 |   |
| Issued pursuant to prospectus (note 12)                                                                             |   |                          | 21,900,000  |   |                |   | 31,755   |                                       |   |   | -                   |   |   |    | -      |   |                             |   | - |   |   |   | 31,755 |   |
| Share issue costs, net of tax of $0.5 million                                                                       |   |                          | -           |   |                |   | (1,456   | )                                          |   |   | -                   |   |   |    | -      |   |                             |   | - |   |   |   | (1,456 | ) |
| Equity component of convertible debentures,       net of tax of $1.7 million (note 9) |   |                          | -           |   |                |   | -        |                                       |   |   | 2,592               |   |   |    | -      |   |                             |   | - |   |   |   | 2,592 |   |
| Share-based payments (note 12)                                                                                      |   |                          | -           |   |                |   | -        |                                       |   |   | -                   |   |   |    | 1,618  |   |                             |   | - |   |   |   | 1,618 |   |
| Options exercised (note 12)                                                                                         |   |                          | 84,900      |   |                |   | 102      |                                       |   |   | -                   |   |   |    | (35    | )      |                             |   | - |   |   |   | 67 |   |
| Loss for the year                                                                                                   |   |                          | -           |   |                |   | -        |                                       |   |   | -                   |   |   |    | -      |   |                             |   | (124,787 | ) |   |   | (124,787 | ) |
| Balance at December 31, 2010 (note 23)                                                                              |   |                          | 172,485,301 |   |                |   | 426,925  |                                       |   |   | 2,592               |   |   |    | 7,921  |   |                             |   | (255,543 | ) |   |   | 181,895 |   |
| Elimination of deficit (note 12)                                                                                    |   |                          | -           |   |                |   | (255,543 | )                                          |   |   | -                   |   |   |    | -      |   |                             |   | 255,543 |   |   |   | - |   |
| Equity component of convertible debentures,       net of tax of $1.5 million (note 9)      |   |                          | -           |   |                |   | -        |                                       |   |   | 2,427               |   |   |    | -      |   |                             |   | - |   |   |   | 2,427 |   |
| Share-based payments (note 12)                                                                                      |   |                          | -           |   |                |   | -        |                                       |   |   | -                   |   |   |    | 1,491  |   |                             |   | - |   |   |   | 1,491 |   |
| Options exercised (note 12)                                                                                         |   |                          | 64,400      |   |                |   | 78       |                                       |   |   | -                   |   |   |    | (27    | )      |                             |   | - |   |   |   | 51 |   |
| Loss for the year                                                                                                   |   |                          | -           |   |                |   | -        |                                       |   |   | -                   |   |   |    | -      |   |                             |   | (22,444 | ) |   |   | (22,444 | ) |
| Balance at December 31, 2011                                                                                        |   |                          | 172,549,701 |   |                | $      | 171,460  |                                       |   | $      | 5,019               |   |   | $       | 9,385  |   |                             | $      | (22,444 | ) |   | $ | 163,420 |   |

| 5 | 2011 FINANCIAL STATEMENTS |
|---|---------------------------|

----

|                                                                       |   | 2011   |     |   | 2010      |   |
|----------------------------------------------------------------------------|--------|--------|----------|--------|-----------|--------|
|                                                                       |   |   |     |   | (note 23) |   |
| CASH PROVIDED BY (USED IN)                                                 |   |   |     |   |      |   |
| OPERATIONS                                                                 |   |   |     |   |      |   |
| Loss for the year                                                          |   | $      | (22,444  | )      |      | $      | (124,787 | ) |
| Adjustments for:                                                           |   |   |     |   |      |   |   |   |
| Unrealized (gain) loss on derivative contracts (note 14)                   |   |   | (3,302   | )      |      |   | 1,918 |   |
| Gain on sale of property, plant and equipment (note 14)                    |   |   | (4,710   | )      |      |   | (389 | ) |
| Depletion and depreciation                                                 |   |   | 52,929   |   |      |   | 45,652 |   |
| Impairment of property, plant and equipment                                |   |   | 35,230   |   |      |   | 153,165 |   |
| Stock-based payments                                                       |   |   | 960      |   |      |   | 1,020 |   |
| Accretion on decommissioning obligations (note 10)                         |   |   | 1,630    |   |      |   | 1,654 |   |
| Accretion on convertible debentures (note 9)                               |   |   | 1,434    |   |      |   | 2 |   |
| Deferred income tax benefit                                                |   |   | (7,263   | )      |      |   | (41,719 | ) |
| Decommissioning expenditures (note 10)                                     |   |   | (249     | )      |      |   | (1,549 | ) |
| Changes in non-cash working capital(note 18)                               |   |   | 94       |   |      |   | 5,365 |   |
|                                                                       |   |   | 54,309   |   |      |   | 40,332 |   |
| FINANCING                                                                  |   |   |     |   |      |   |   |   |
| Increase (decrease) in bank loans                                          |   |   | 35,963   |   |      |   | (9,685 | ) |
| Proceeds from issue of convertible debentures, net of issue costs (note 9) |   |   | 43,860   |   |      |   | 47,700 |   |
| Proceeds from issue of share capital, net of issue costs                   |   |   | -        |   |      |   | 29,792 |   |
| Proceeds from exercise of stock options                                    |   |   | 51       |   |      |   | 67 |   |
| Changes in non-cash working capital (note 18)                              |   |   | (324     | )      |      |   | 384 |   |
|                                                                       |   |   | 79,550   |   |      |   | 68,258 |   |
| INVESTING                                                                  |   |   |     |   |      |   |   |   |
| Property, plant and equipment expenditures                                 |   |   | (170,906 | )      |      |   | (113,976 | ) |
| Proceeds from sale of property, plant and equipment                        |   |   | 11,631   |   |      |   | 2,467 |   |
| Changes in non-cash working capital (note 18)                              |   |   | 21,393   |   |      |   | 6,942 |   |
|                                                                       |   |   | (137,882 | )      |      |   | (104,567 | ) |
|                                                                       |   |   |     |   |      |   |   |   |
| Increase (decrease) in cash and cash equivalents                           |   |   | (4,023   | )      |      |   | 4,023 |   |
| Cash and cash equivalents, beginning of year                               |   |   | 4,024    |   |      |   | 1 |   |
| Cash and cash equivalents, end of year                                     |   | $      | 1        |   |      | $      | 4,024 |   |
|                                                                       |   |   |     |   |      |   |   |   |
| Interest received in cash                                                  |   | $      | 78       |   |      | $      | 90 |   |
| Interest paid in cash                                                      |   | $      | (4,565   | )      |      | $      | (2,256 | ) |

|   | ANDERSON ENERGY | 6 |
|--------|-----------------|---|

----

| 7 | 2011 FINANCIAL STATEMENTS |
|---|---------------------------|

----

|   | ANDERSON ENERGY | 8 |
|--------|-----------------|---|

----

| 9 | 2011 FINANCIAL STATEMENTS |
|---|---------------------------|

----

|   | ANDERSON ENERGY | 10 |
|--------|-----------------|----|

----

| 11 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|   | ANDERSON ENERGY | 12 |
|--------|-----------------|----|

----

| (i)   | Identification of cash generating units.  Cash generating units are defined as the lowest grouping of integrated assets that generate identifiable cash inflows that are largely independent of the cash inflows of other assets or groups of assets.  The classification of assets into cash generating units requires significant judgement and interpretations with respect to shared infrastructure, geographical proximity, petroleum type and similar exposure to market risk and materiality.  See note 7. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | Fair value of derivatives.  The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.  The Company uses its judgement to select a variety of methods and makes assumptions that are primarily based on market conditions existing at the end of each reporting period.  The Company uses directly and indirectly observable inputs in measuring the value of financial instruments that are not traded in active markets, including quoted commodity prices and volatility.  See note 19(d). |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | Estimates of oil and natural gas reserves.  Depletion and depreciation as well as the amounts used in impairment calculations are based on estimates of oil and natural gas reserves.  Reserves estimates are based on engineering data, estimated future prices, expected future rates of production and the timing of future capital expenditures, all of which are subject to many uncertainties and interpretations.  At least once per year, a reserves estimate is prepared by independent qualified reserves evaluators.  The Company expects that, over time, its reserves estimates will be revised upward or downward based on updated information such as the results |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

| (ii)   | Recoverable amounts of CGUs.  The recoverable amount of a CGU used in the assessment of impairment is the greater of its VIU and its FVLCTS. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | Decommissioning obligations.  The total decommissioning obligation is estimated based on the Company’s net ownership interest in all wells and facilities, estimated costs to reclaim and abandon these wells and facilities and the estimated timing of the costs to be incurred in future years, based on current legal and constructive requirements and technology.  The estimated obligations and actual costs may change significantly due to changes in and regulations, technology, timing of the expenditure, and the discount rates used to determine the net present value of the obligations.  See note 10. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | Deferred taxes.  Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates at the reporting date in effect for the period in which the temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized as part of the provision for income taxes in the period that includes the enactment date. The recognition of deferred tax assets is based on the assumption that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v)   | Allowance for doubtful accounts.  The Company maintains an allowance for doubtful accounts to provide for receivables which may ultimately be uncollectible. The allowance is determined in light of a number of factors including company specific conditions, economic events and the Company’s historical loss experience. The allowance is assessed quarterly by a detailed formal review of accounts receivable balances. See note 19(b). |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (vi)   | Stock-based compensation.  The Company uses the Black-Scholes option pricing model in determining stock-based compensation expense, which requires a number of assumptions to be made, including the risk-free interest rate, expected option life, forfeiture rate, and expected share price volatility. Consequently, the actual stock based compensation expense may vary from the amount estimated. See note 12. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ANDERSON ENERGY | 14 |
|--------|-----------------|----|

----

|   | (i)  | net present value of proved plus probable reserves using a pre-tax discount rate of 10% as determined by independent qualified reserves evaluators; |
|--------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii)  | management’s estimate of the fair value of undeveloped land; and |
|--------|------------|------------------------------------------------------------------------|

|   | (iii)  | a review of the values indicated by the metrics of recent market transactions of similar assets within the oil and gas industry. |
|--------|-------------|----------------------------------------------------------------------------------------------------------------------------------|

| ●      | Level 1 – observable inputs such as quoted prices in active markets; |
|---------------------------------------|----------------------------------------------------------------------------|

| ●      | Level 2 – inputs, other than the quoted market prices in active markets, which are observable, either directly and/or indirectly; and |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ●      | Level 3 – unobservable inputs for the asset or liability in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
|---------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                         |   | Oil and naturalgas assets |    |   | Other equipment |   |   | Total  |   |
|------------------------------|--------|---------------------------|---------|--------|-----------------|--------|--------|--------|--------|
| Balance at January 1, 2010   |   | $                         | 469,762 |   |            | $      | 1,713  |   |   | $ | 471,475 |   |
| Additions                    |   |                      | 118,140 |   |            |   | 66     |   |   |   | 118,206 |   |
| Disposals                    |   |                      | (2,407  | )      |            |   | -      |   |   |   | (2,407 | ) |
| Balance at December 31, 2010 |   |                      | 585,495 |   |            |   | 1,779  |   |   |   | 587,274 |   |
| Additions                    |   |                      | 183,182 |   |            |   | 84     |   |   |   | 183,266 |   |
| Disposals                    |   |                      | (14,802 | )      |            |   | -      |   |   |   | (14,802 | ) |
| Balance at December 31, 2011 |   | $                         | 753,875 |   |            | $      | 1,863  |   |   | $ | 755,738 |   |

|                                        |   | Oil and natural gas assets |    |   | Other equipment |   |   | Total  |   |
|---------------------------------------------|--------|----------------------------|---------|--------|-----------------|--------|--------|--------|--------|
| Opening balance at January 1, 2010          |   | $                          | -       |   |            | $      | 1,075  |   |   | $ | 1,075 |   |
| Impairment loss at January 1, 2010 (note 7) |   |                       | 67,193  |   |            |   | -      |   |   |   | 67,193 |   |
| Balance at January 1, 2010                  |   |                       | 67,193  |   |            |   | 1,075  |   |   |   | 68,268 |   |
| Depletion and depreciation for the year     |   |                       | 45,484  |   |            |   | 168    |   |   |   | 45,652 |   |
| Impairment loss (note 7)                    |   |                       | 153,165 |   |            |   | -      |   |   |   | 153,165 |   |
| Disposals                                   |   |                       | (484    | )      |            |   | -      |   |   |   | (484 | ) |
| Balance at December 31, 2010                |   | $                          | 265,358 |   |            | $      | 1,243  |   |   | $ | 266,601 |   |
| Depletion and depreciation for the year     |   |                       | 52,794  |   |            |   | 135    |   |   |   | 52,929 |   |
| Impairment loss (note 7)                    |   |                       | 35,230  |   |            |   | -      |   |   |   | 35,230 |   |
| Disposals                                   |   |                       | (5,969  | )      |            |   | -      |   |   |   | (5,969 | ) |
| Balance at December 31, 2011                |   | $                          | 347,413 |   |            | $      | 1,378  |   |   | $ | 348,791 |   |

|                 |   | Oil and natural gas assets |    |   | Other equipment |   |   | Total  |   |
|----------------------|--------|----------------------------|---------|--------|-----------------|--------|--------|--------|--------|
| At January 1, 2010   |   | $                          | 402,569 |   |            | $      | 638    |   |   | $ | 403,207 |   |
| At December 31, 2010 |   | $                          | 320,137 |   |            | $      | 536    |   |   | $ | 320,673 |   |
| At December 31, 2011 |   | $                          | 406,462 |   |            | $      | 485    |   |   | $ | 406,947 |   |

|   | ANDERSON ENERGY | 16 |
|--------|-----------------|----|

----

|                                                               |   | Horizontal Oil CGU |    |   | DeepGas CGU |   |    | Shallow Gas CGU |   |   | Non-Core CGU |   |   | Total (1) |   |
|--------------------------------------------------------------------|--------|--------------------|---------|--------|-------------|--------|---------|-----------------|--------|--------|--------------|--------|--------|----------------|--------|
| Impairment loss at January 1, 2010                                 |   | $                  | -       |   |        | $      | -       |            |   | $      | 67,193       |   |   | $              | -      |   |   | $ | 67,193 |   |
| Impairment loss for the quarter endedMarch 31, 2010                |   |               | -       |   |        |   | 6,587   |            |   |   | 52,827       |   |   |           | 126    |   |   |   | 59,540 |   |
| Impairment loss for the quarter endedJune 30, 2010                 |   |               | -       |   |        |   | 3,112   |            |   |   | -            |   |   |           | -      |   |   |   | 3,112 |   |
| Impairment loss for the quarter endedSeptember 30, 2010            |   |               | -       |   |        |   | 15,996  |            |   |   | 28,286       |   |   |           | 4,035  |   |   |   | 48,317 |   |
| Impairment loss for the quarter endedDecember 31, 2010             |   |               | -       |   |        |   | 5,384   |            |   |   | 35,033       |   |   |           | 1,779  |   |   |   | 42,196 |   |
| Cumulative impairment loss atDecember 31, 2010                     |   | $                  | -       |   |        | $      | 31,079  |            |   | $      | 183,339      |   |   | $              | 5,940  |   |   | $ | 220,358 |   |
| Impairment loss (reversal) for thequarter ended September 30, 2011 |   |               | -       |   |        |   | (9,725  | )               |   |   | 3,207        |   |   |           | 5,444  |   |   |   | (1,074 | ) |
| Impairment loss for the quarter endedDecember 31, 2011             |   |               | -       |   |        |   | 12,328  |            |   |   | 22,582       |   |   |           | 1,394  |   |   |   | 36,304 |   |
| Cumulative impairment loss atDecember 31, 2011                     |   | $                  | -       |   |        | $      | 33,682  |            |   | $      | 209,128      |   |   | $              | 12,778 |   |   | $ | 255,588 |   |
|                                                               |   |               |    |   |        |   |    |            |   |   |         |   |   |           |   |   |   |   |   |   |
| Carrying amount, January 1, 2010                                   |   | $                  | 5,750   |   |        | $      | 116,993 |            |   | $      | 233,237      |   |   | $              | 44,795 |   |   | $ | 400,775 |   |
| Carrying amount, December 31, 2010                                 |   | $                  | 63,687  |   |        | $      | 94,091  |            |   | $      | 124,836      |   |   | $              | 36,764 |   |   | $ | 319,378 |   |
| Carrying amount, December 31, 2011                                 |   | $                  | 215,556 |   |        | $      | 82,090  |            |   | $      | 83,216       |   |   | $              | 24,608 |   |   | $ | 405,470 |   |

| (1) | Carrying amounts exclude inventory and corporate assets of $2.4 million at January 1, 2010, $1.3 million at December 31, 2010 and $1.5 million at December 31, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | Horizontal Oil CGU |   |   | DeepGas CGU |   |   | Shallow Gas CGU |   |   | Non-Core CGU |   |   | Total |   |
|---------------------------------------------------------|--------|--------------------|--------|--------|-------------|--------|--------|-----------------|--------|--------|--------------|--------|--------|-------|--------|
| Reduction of impairment using an 8percent discount rate |   | $                  | -      |   |        | $      | (6,345 | )               |   | $      | (6,281       | )      |   | $     | (1,891 | ) |   | $ | (14,517 | ) |
| Additional impairment using a 12 percent discount rate  |   | $                  | -      |   |        | $      | 5,408  |            |   | $      | 5,342        |   |   | $     | 1,558  |   |   | $ | 12,308 |   |

| 17 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|   |   | Light, Sweet Crude Edmonton ($Cdn/bbl) |   |   | AECO Gas Price ($Cdn/MMBTU) |   |
|--------|--------|----------------------------------------|--------|--------|-----------------------------|--------|
| Year   |   | December 31, 2011                      |   |   | December 31, 2010           |   |   | Difference |   |   | December 31, 2011 |   |   | December 31, 2010 |   |   | Difference |   |
| 2012   |   |                                   | 97.96  |   |                        |   | 89.29 |   |   |   | 8.67 |   |   |   | 3.49 |   |   |   | 4.74 |   |   |   | (1.25 | ) |
| 2013   |   |                                   | 101.02 |   |                        |   | 90.92 |   |   |   | 10.10 |   |   |   | 4.13 |   |   |   | 5.31 |   |   |   | (1.18 | ) |
| 2014   |   |                                   | 101.02 |   |                        |   | 92.96 |   |   |   | 8.06 |   |   |   | 4.59 |   |   |   | 5.77 |   |   |   | (1.18 | ) |
| 2015   |   |                                   | 101.02 |   |                        |   | 96.19 |   |   |   | 4.83 |   |   |   | 5.05 |   |   |   | 6.22 |   |   |   | (1.17 | ) |
| 2016   |   |                                   | 101.02 |   |                        |   | 98.62 |   |   |   | 2.40 |   |   |   | 5.51 |   |   |   | 6.53 |   |   |   | (1.02 | ) |
| 2017   |   |                                   | 101.02 |   |                        |   | 101.39 |   |   |   | (0.37 | ) |   |   | 5.97 |   |   |   | 6.76 |   |   |   | (0.79 | ) |
| 2018   |   |                                   | 102.40 |   |                        |   | 103.92 |   |   |   | (1.52 | ) |   |   | 6.21 |   |   |   | 6.90 |   |   |   | (0.69 | ) |
| 2019   |   |                                   | 104.47 |   |                        |   | 106.68 |   |   |   | (2.21 | ) |   |   | 6.33 |   |   |   | 7.06 |   |   |   | (0.73 | ) |
| 2020   |   |                                   | 106.58 |   |                        |   | 108.84 |   |   |   | (2.26 | ) |   |   | 6.46 |   |   |   | 7.21 |   |   |   | (0.75 | ) |

|   | ANDERSON ENERGY | 18 |
|--------|-----------------|----|

----

| 19 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                                                                                          |   | Proceeds |   |   | Debtcomponent |   |   | Equitycomponent |   |
|-----------------------------------------------------------------------------------------------|--------|----------|--------|--------|---------------|--------|--------|-----------------|--------|
|                                                                                          |   |     |   |   |          |   |   |            |   |
| Balance, January 1, 2010                                                                      |   | $        | -      |   |          | $      | -      |            |   | $ | - |   |
| Series A Debentures issued pursuant to prospectus,7.5% interest rate, due January 31, 2016(1) |   |     | 50,000 |   |          |   | 45,553 |            |   |   | 4,447 |   |
| Issue costs                                                                                   |   |     | (2,300 | )      |          |   | (2,095 | )               |   |   | (205 | ) |
| Deferred tax                                                                                  |   |     | -      |   |          |   | -      |            |   |   | (1,650 | ) |
| Accretion expense                                                                             |   |     | -      |   |          |   | 2      |            |   |   | - |   |
| Balance, December 31, 2010                                                                    |   | $        | 47,700 |   |          | $      | 43,460 |            |   | $ | 2,592 |   |
| Series B Debentures issued pursuant to prospectus, 7.25% interest rate, due June 30, 2017(2)  |   |     | 46,000 |   |          |   | 41,849 |            |   |   | 4,151 |   |
| Issue costs                                                                                   |   |     | (2,140 | )      |          |   | (1,947 | )               |   |   | (193 | ) |
| Deferred tax                                                                                  |   |     | -      |   |          |   | -      |            |   |   | (1,531 | ) |
| Accretion expense                                                                             |   |     | -      |   |          |   | 1,434  |            |   |   | - |   |
| Balance, December 31, 2011                                                                    |   | $        | 91,560 |   |          | $      | 84,796 |            |   | $ | 5,019 |   |

|                           |   | December 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Balance at January 1           |   | $                 | 51,550 |   |              | $      | 47,657 |   |
| Provisions incurred            |   |              | 4,878  |   |              |   | 2,945 |   |
| Total abandonment expenditures |   |              | (249   | )      |              |   | (1,549 | ) |
| Provisions disposed            |   |              | (1,316 | )      |              |   | (75 | ) |
| Change in estimates            |   |              | 6,355  |   |              |   | 918 |   |
| Accretion expense              |   |              | 1,630  |   |              |   | 1,654 |   |
| Ending balance                 |   | $                 | 62,848 |   |              | $      | 51,550 |   |

|   | ANDERSON ENERGY | 20 |
|--------|-----------------|----|

----

| ­                                    |   | December 31, 2011 |    |   | December 31, 2010 |   |    | January 1, 2010 |   |
|-------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|---------|-----------------|--------|
| Deferred income tax liabilities (assets): |   |              |    |   |              |   |    |            |   |
| Property, plant and equipment             |   | $                 | 1,395   |   |              | $      | (275    | )               |   | $ | 33,296 |   |
| Decommissioning obligations               |   |              | (15,712 | )      |              |   | (12,888 | )               |   |   | (11,914 | ) |
| Derivative contracts                      |   |              | 346     |   |              |   | (508    | )               |   |   | - |   |
| Convertible debentures                    |   |              | 2,820   |   |              |   | 1,650   |            |   |   | - |   |
| Share issue costs                         |   |              | (1,909  | )      |              |   | (2,229  | )               |   |   | (1,985 | ) |
| Non-capital losses                        |   |              | (29,843 | )      |              |   | (18,004 | )               |   |   | (9,289 | ) |
| Current income deferred                   |   |              | 7,514   |   |              |   | 2,597   |            |   |   | 812 |   |
| Ending balance                            |   | $                 | (35,389 | )      |              | $      | (29,657 | )               |   | $ | 10,920 |   |

|                                              |   | December 31, 2011 |    |   | December 31, 2010 |   |
|---------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| Loss before taxes                                 |   | $                 | (29,707 | )      |              | $      | (166,506 | ) |
| Combined federal and provincial tax rates         |   |              | 26.5    | %      |              |   | 28.0 | % |
| Expected deferred income tax benefit              |   |              | (7,872  | )      |              |   | (46,622 | ) |
| Increase in income taxes resulting from:          |   |              |    |   |              |   |   |   |
| Changes in expected deferred tax rates            |   |              | 365     |   |              |   | 4,624 |   |
| Non-deductible stock-based compensation and other |   |              | 244     |   |              |   | 279 |   |
| Deferred income tax benefit                       |   | $                 | (7,263  | )      |              | $      | (41,719 | ) |

| (in thousands of dollars)       |   | Balance   January 1, 2010   |    |   | Recognized in profit or loss |   |    | Recognized in equity |   |   | BalanceDecember 31, 2010 |   |
|---------------------------------|--------|-------------------------------------------------|---------|--------|------------------------------|--------|---------|----------------------|--------|--------|--------------------------|--------|
| Property, plant and equipment   |   | $                                               | 33,296  |   |                         | $      | (33,570 | )                    |   | $      | -                        |   |   | $ | (275 | ) |
| Decommissioning obligations     |   |                                            | (11,914 | )      |                         |   | (974    | )                    |   |   | -                        |   |   |   | (12,888 | ) |
| Derivative contracts            |   |                                            | -       |   |                         |   | (508    | )                    |   |   | -                        |   |   |   | (508 | ) |
| Convertible debentures (note 9) |   |                                            | -       |   |                         |   | -       |                 |   |   | 1,650                    |   |   |   | 1,650 |   |
| Share issue costs (note 12)     |   |                                            | (1,985  | )      |                         |   | 263     |                 |   |   | (507                     | )      |   |   | (2,229 | ) |
| Non-capital losses              |   |                                            | (9,289  | )      |                         |   | (8,715  | )                    |   |   | -                        |   |   |   | (18,004 | ) |
| Current income deferred         |   |                                            | 812     |   |                         |   | 1,785   |                 |   |   | -                        |   |   |   | 2,597 |   |
|                            |   | $                                               | 10,920  |   |                         | $      | (41,719 | )                    |   | $      | 1,143                    |   |   | $ | (29,657 | ) |

| 21 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

| (in thousands of dollars)       |   | Balance   January 1, 2011 |    |   | Recognized in profit or loss |   |    | Recognized in equity |   |   | BalanceDecember 31, 2011 |   |
|---------------------------------|--------|--------------------------------|---------|--------|-----------------------------------|--------|---------|----------------------|--------|--------|--------------------------|--------|
| Property, plant and equipment   |   | $                              | (275    | )      |                              | $      | 1,670   |                 |   | $      | -                        |   |   | $ | 1,395 |   |
| Decommissioning obligations     |   |                           | (12,888 | )      |                              |   | (2,824  | )                    |   |   | -                        |   |   |   | (15,712 | ) |
| Derivative contracts            |   |                           | (508    | )      |                              |   | 854     |                 |   |   | -                        |   |   |   | 346 |   |
| Convertible debentures (note 9) |   |                           | 1,650   |   |                              |   | (361    | )                    |   |   | 1,531                    |   |   |   | 2,820 |   |
| Share issue costs               |   |                           | (2,229  | )      |                              |   | 320     |                 |   |   | -                        |   |   |   | (1,909 | ) |
| Non-capital losses              |   |                           | (18,004 | )      |                              |   | (11,839 | )                    |   |   | -                        |   |   |   | (29,843 | ) |
| Current income deferred         |   |                           | 2,597   |   |                              |   | 4,917   |                 |   |   | -                        |   |   |   | 7,514 |   |
|                            |   | $                              | (29,657 | )      |                              | $      | (7,263  | )                    |   | $      | 1,531                    |   |   | $ | (35,389 | ) |

|                                                          |   | Number of Common Shares |        |   |   Amount |   |
|---------------------------------------------------------------|--------|-------------------------|-------------|--------|---------------|--------|
| Balance at January 1, 2010                                    |   |                    | 150,500,401 |   |          | $      | 396,524 |   |
| Issued pursuant to prospectus(1)                              |   |                    | 21,900,000  |   |          |   | 31,755 |   |
| Share issue costs                                             |   |                    | -           |   |          |   | (1,963 | ) |
| Tax effect of share issue costs                               |   |                    | -           |   |          |   | 507 |   |
| Stock options exercised                                       |   |                    | 84,900      |   |          |   | 67 |   |
| Transferred from contributed surplus on stock option exercise |   |                    | -           |   |          |   | 35 |   |
| Balance at December 31, 2010                                  |   |                    | 172,485,301 |   |          | $      | 426,925 |   |
|                                                          |   |                    |        |   |          |   |   |   |
| Elimination of deficit                                        |   |                    | -           |   |          |   | (255,543 | ) |
| Stock options exercised                                       |   |                    | 64,400      |   |          |   | 51 |   |
| Transferred from contributed surplus on stock option exercise |   |                    | -           |   |          |   | 27 |   |
| Balance at December 31, 2011                                  |   |                    | 172,549,701 |   |          | $      | 171,460 |   |

|   | ANDERSON ENERGY | 22 |
|--------|-----------------|----|

----

|                      |   | December 31, 2011            |       |   | December 31, 2010                          |   |
|---------------------------|--------|------------------------------|------------|--------|--------------------------------------------|--------|
|                      |   | Number of options  |       |   | Weighted average exercise price  |   |   | Number of options  |   |   | Weighted average exercise price  |   |
| Outstanding at January 1  |   |                         | 12,006,232 |   |                                       | $      | 2.32 |   |   |   | 10,258,756 |   |   | $ | 3.22 |   |
| Granted during the year   |   |                         | 4,484,800  |   |                                       |   | 0.74 |   |   |   | 3,950,250 |   |   |   | 1.06 |   |
| Exercised during the year |   |                         | (64,400    | )      |                                       |   | 0.79 |   |   |   | (84,900 | ) |   |   | 0.79 |   |
| Expired during the year   |   |                         | (1,564,150 | )      |                                       |   | 4.27 |   |   |   | (1,430,124 | ) |   |   | 5.78 |   |
| Forfeited during the year |   |                         | (848,300   | )      |                                       |   | 1.01 |   |   |   | (687,750 | ) |   |   | 1.44 |   |
| Ending balance            |   |                         | 14,014,182 |   |                                       | $      | 1.69 |   |   |   | 12,006,232 |   |   | $ | 2.32 |   |
|                      |   |                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable, end of year  |   |                         | 6,764,582  |   |                                       | $      | 2.60 |   |   |   | 6,111,399 |   |   | $ | 3.53 |   |

| Range of exercise prices   |   | Number of options |       |   | Weighted average exercise price |   |   | Weighted average  remaining life (years)  |   |
|----------------------------|--------|-------------------|------------|--------|---------------------------------|--------|--------|-----------------------------------------------------|--------|
|                       |   |              |       |   |                            |   |   |                                                |   |
| $0.45 to $0.67             |   |              | 172,500    |   |                            | $      | 0.48   |                                                |   |   | 4.9 |   |
| $0.68 to $1.02             |   |              | 6,255,100  |   |                            |   | 0.74   |                                                |   |   | 3.8 |   |
| $1.03 to $1.54             |   |              | 3,620,950  |   |                            |   | 1.08   |                                                |   |   | 3.6 |   |
| $2.33 to $3.50             |   |              | 625,950    |   |                            |   | 2.68   |                                                |   |   | 1.6 |   |
| $3.51 to $4.90             |   |              | 3,339,682  |   |                            |   | 4.00   |                                                |   |   | 0.6 |   |
| Total at December 31, 2011 |   |              | 14,014,182 |   |                            | $      | 1.69   |                                                |   |   | 2.9 |   |

|                     |   | December 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Fair value at grant date |   | $                 | 0.38   |   |              | $      | 0.55 |   |
| Common share price       |   | $                 | 0.74   |   |              | $      | 1.06 |   |
| Exercise price           |   | $                 | 0.74   |   |              | $      | 1.06 |   |
| Volatility               |   |              | 59%    |   |              |   | 58% |   |
| Option life              |   | 5 years           |   |   | 5 years           |   |
| Dividends                |   |              | 0%     |   |              |   | 0% |   |
| Risk-free interest rate  |   |              | 1.7%   |   |              |   | 2.3% |   |
| Forfeiture rate          |   |              | 15%    |   |              |   | 15% |   |

| 23 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                                                                     |   | December 31, 2011 |    |   | December 31, 2010 |   |
|--------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| Loss for the year                                                        |   | $                 | (22,444 | )      |              | $      | (124,787 | ) |
| Weighted average number of common shares (basic)(in thousands of shares) |   |              |    |   |              |   |   |   |
| Common shares outstanding at January 1                                   |   |              | 172,485 |   |              |   | 150,500 |   |
| Effect of stock options exercised                                        |   |              | 53      |   |              |   | 17 |   |
| Effect of other shares issued                                            |   |              | -       |   |              |   | 19,782 |   |
| Weighted average number of common shares (basic)                         |   |              | 172,538 |   |              |   | 170,299 |   |
|  Basic and diluted loss per share                                   |   | $                 | (0.13   | )      |              | $      | (0.73 | ) |

|                                                                         |   | December 31, 2011 |    |   | December 31, 2010 |   |
|------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| Revenue from oil and gas sales, net of royalties                             |   | $                 | 104,486 |   |              | $      | 77,446 |   |
|                                                                         |   |              |    |   |              |   |   |   |
| Other income (expense):                                                      |   |              |    |   |              |   |   |   |
| Realized loss on derivative contracts                                        |   | $                 | (624    | )      |              | $      | (131 | ) |
| Unrealized gain (loss) on derivative contracts                               |   |              | 3,302   |   |              |   | (1,918 | ) |
| Gain on sale of property, plant and equipment                                |   |              | 4,710   |   |              |   | 389 |   |
|                                                                         |   | $                 | 7,388   |   |              | $      | (1,660 | ) |
|                                                                    |   |              |    |   |              |   |   |   |
| Expenses recovered from third parties:                                       |   |              |    |   |              |   |   |   |
| Operating expense recoveries for use of transportation and processing assets |   | $                 | 2,864   |   |              | $      | 2,860 |   |
|  General and administrative overhead expense recoveries                 |   |              | 568     |   |              |   | 540 |   |
|                                                                         |   | $                 | 3,432   |   |              | $      | 3,400 |   |

|   | ANDERSON ENERGY | 24 |
|--------|-----------------|----|

----

|                                                    |   | December 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| External services(1)                                    |   | $                 | 9,970  |   |              | $      | 8,093 |   |
| Third-party gathering, processing and treating services |   |              | 8,790  |   |              |   | 9,508 |   |
| Employee benefit expenses (note 16)                     |   |              | 7,229  |   |              |   | 6,640 |   |
| Operating leases and equipment rents(2)                 |   |              | 3,893  |   |              |   | 3,781 |   |
| Repairs and maintenance                                 |   |              | 3,494  |   |              |   | 2,680 |   |
| Materials and supplies                                  |   |              | 2,313  |   |              |   | 1,456 |   |
| Other expenses                                          |   |              | 4,249  |   |              |   | 5,796 |   |
| Expenses by nature                                      |   | $                 | 39,938 |   |              | $      | 37,954 |   |
|                                                    |   |              |   |   |              |   |   |   |
|  Above costs allocated to the following functions: |   |              |   |   |              |   |   |   |
| Operating                                               |   | $                 | 29,533 |   |              | $      | 28,537 |   |
| General and administrative                              |   |              | 10,405 |   |              |   | 9,417 |   |
| Total operating and general and administrative expenses |   | $                 | 39,938 |   |              | $      | 37,954 |   |

|   | (1) | External services include professional fees, contract operators, consulting fees, design fees and other operating and administrative services. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Operating leases and equipment rents include office leases, surface leases, and equipment rents. |
|--------|-----|--------------------------------------------------------------------------------------------------|

|                                         |   | December 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Short-term employee benefits                 |   | $                 | 9,726  |   |              | $      | 9,190 |   |
| Share-based payments                         |   |              | 1,491  |   |              |   | 1,619 |   |
| Total employee remuneration                  |   |              | 11,217 |   |              |   | 10,809 |   |
| Capitalized portion of employee remuneration |   |              | (3,988 | )      |              |   | (4,169 | ) |
|                                         |   | $                 | 7,229  |   |              | $      | 6,640 |   |

|                                       |   | December 31, 2011 |    |   | December 31, 2010 |   |
|--------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| Income:                                    |   |              |    |   |              |   |
| Interest income on cash equivalents        |   | $                 | 6       |   |              | $      | - |   |
| Other                                      |   |              | 78      |   |              |   | 96 |   |
| Expenses:                                  |   |              |    |   |              |   |   |   |
| Interest and financing costs on bank loans |   |              | (3,201  | )      |              |   | (3,306 | ) |
| Interest on convertible debentures         |   |              | (5,631  | )      |              |   | (11 | ) |
| Accretion on convertible debentures        |   |              | (1,434  | )      |              |   | (2 | ) |
| Accretion on decommissioning obligations   |   |              | (1,630  | )      |              |   | (1,654 | ) |
| Other                                      |   |              | (46     | )      |              |   | (33 | ) |
| Net finance expenses                       |   | $                 | (11,858 | )      |              | $      | (4,910 | ) |

| 25 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                                  |   | December 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Source (use) of cash                  |   |              |   |   |              |   |
| Accounts receivable and accruals      |   | $                 | 6,726  |   |              | $      | 1,992 |   |
| Prepaid expenses and deposits         |   |              | 726    |   |              |   | 726 |   |
| Accounts payable and accruals         |   |              | 13,711 |   |              |   | 9,973 |   |
|                                  |   | $                 | 21,163 |   |              | $      | 12,691 |   |
|  Related to operating activities |   | $                 | 94     |   |              | $      | 5,365 |   |
| Related to financing activities       |   | $                 | (324   | )      |              | $      | 384 |   |
| Related to investing activities       |   | $                 | 21,393 |   |              | $      | 6,942 |   |

| –   | credit risk; |
|---------------------|--------------|

| –   | liquidity risk; and |
|---------------------|---------------------|

| –   | market risk. |
|---------------------|--------------|

|                             |   | December 31, 2011 |   |   | December 31, 2010 |   |   | January 1, 2010 |   |
|----------------------------------|--------|------------------------|--------|--------|-------------------|--------|--------|-----------------|--------|
| Cash and cash equivalents        |   | $                      | 1      |   |              | $      | 4,024  |            |   | $ | 1 |   |
| Accounts receivable and accruals |   |                   | 14,272 |   |              |   | 20,998 |            |   |   | 22,990 |   |
|                             |   | $                      | 14,273 |   |              | $      | 25,022 |            |   | $ | 22,991 |   |

|   | ANDERSON ENERGY | 26 |
|--------|-----------------|----|

----

|                          |   | Carrying Amount        |   |
|-------------------------------|--------|------------------------|--------|
|                          |   | December 31, 2011 |   |   | December 31, 2010 |   |   | January 1, 2010 |   |
| Oil and natural gas customers |   | $                      | 10,307 |   |   | $ | 9,286 |   |   | $ | 8,213 |   |
| Joint venture partners        |   |                   | 2,335  |   |   |   | 7,989 |   |   |   | 7,790 |   |
| Other                         |   |                   | 1,630  |   |   |   | 3,723 |   |   |   | 6,987 |   |
|                          |   | $                      | 14,272 |   |   | $ | 20,998 |   |   | $ | 22,990 |   |

| Aging                          |   | December 31, 2011 |   |   | December 31, 2010 |   |   | January 1, 2010 |   |
|--------------------------------|--------|------------------------|--------|--------|-------------------|--------|--------|-----------------|--------|
| Not past due                   |   | $                      | 13,608 |   |              | $      | 18,960 |            |   | $ | 22,402 |   |
| Past due by less than 120 days |   |                   | 163    |   |              |   | 1,706  |            |   |   | 537 |   |
| Past due by more than 120 days |   |                   | 501    |   |              |   | 332    |            |   |   | 51 |   |
| Total                          |   | $                      | 14,272 |   |              | $      | 20,998 |            |   | $ | 22,990 |   |

| 27 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

| Financial Liabilities                |   | Less than one year |   |   | One to two years |   |   | Two to three years |   |   | Three to four years |   |   | Four to five years |   |   | Five to six years |   |
|--------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|--------|------------------------------|--------|--------|--------------------------|--------|--------|-------------------------|--------|--------|------------------------|--------|
| Non-derivative financial liabilities |   |               |   |   |                  |   |   |                         |   |   |                     |   |   |                    |   |   |                   |   |
| Accounts payable and accruals (1)    |   | $                  | 60,573 |   |                  | $      | -      |                         |   | $      | -                        |   |   | $                       | -      |   |                   | $      | - |   |   | $ | - |   |
| Bank loans – principal (2)     |   |               | -      |   |                  |   | 88,682 |                         |   |   | -                        |   |   |                    | -      |   |                   |   | - |   |   |   | - |   |
| Convertible debentures               |   |               |   |   |                  |   |   |                         |   |   |                     |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| - Interest (1)                       |   |               | 5,523  |   |                  |   | 7,085  |                         |   |   | 7,085                    |   |   |                    | 7,085  |   |                   |   | 5,210 |   |   |   | 1,667 |   |
| - Principal                          |   |               | -      |   |                  |   | -      |                         |   |   | -                        |   |   |                    | -      |   |                   |   | 50,000 |   |   |   | 46,000 |   |
| Total                                |   | $                  | 66,096 |   |                  | $      | 95,767 |                         |   | $      | 7,085                    |   |   | $                       | 7,085  |   |                   | $      | 55,210 |   |   | $ | 47,667 |   |

|   | (1)  | Accounts payable and accruals includes $3.4 million of interest relating to convertible debentures.  The total cash interest payable in less than one year on the convertible debentures is $9.0 million. |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2)  | Assumes the credit facilities are not renewed on July 11, 2012. |
|--------|-----------|-----------------------------------------------------------------|

|              |   | Carrying Amount        |   |
|-------------------|--------|------------------------|--------|
|              |   | December 31, 2011 |   |   | December 31, 2010 |   |   | January 1, 2010 |   |
| Trade payables    |   | $                      | 24,188 |   |   | $ | 19,550 |   |   | $ | 19,443 |   |
| Accruals (1) |   |                   | 36,385 |   |   |   | 27,312 |   |   |   | 17,446 |   |
|              |   | $                      | 60,573 |   |   | $ | 46,862 |   |   | $ | 36,889 |   |

|   | ANDERSON ENERGY | 28 |
|--------|-----------------|----|

----

| Type of Contract(1) | Commodity |  Volume   | Weighted Average Fixed Price(NYMEX Canadian $) |  Remaining Period      |
|---------------------|-----------|----------------|-----------------------------------------------------|-----------------------------|
| Financial swap      | Crude oil | 500 bbls/day   | $106.04/bbl                                         | Jan 1, 2012 to Mar 31, 2012 |
| Financial swap      | Crude oil | 1,000 bbls/day | $103.93/bbl                                         | Jan 1, 2012 to Dec 31, 2012 |

| (1)   | Swap indicates fixed price payable to Anderson in exchange for floating price payable to counterparty. |
|-----------------|--------------------------------------------------------------------------------------------------------|

|                           |   | December 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Current asset                  |   | $                 | 1,384  |   |              | $      | - |   |
| Current liability              |   |              | -      |   |              |   | (1,918 | ) |
| Net asset (liability) position |   | $                 | 1,384  |   |              | $      | (1,918 | ) |

|                                               |   | Effect of an increase in price on after-tax earnings |   | Effect of a decrease in price on after-tax earnings |
|----------------------------------------------------|--------|------------------------------------------------------|--------|-----------------------------------------------------|
| Canadian $1.00 per barrel change in the oil prices | $      | (412)                                                | $      | 412                                                 |

| 29 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                                                            |   | December 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
| Bank loans                                                      |   | $                 | 88,682  |   |              | $      | 52,719 |   |
| Current liabilities(1)                                          |   |              | 60,573  |   |              |   | 46,862 |   |
| Current assets(1)                                               |   |              | (16,599 | )      |              |   | (28,074 | ) |
| Net debt before convertible debentures                          |   | $                 | 132,656 |   |              | $      | 71,507 |   |
| Convertible debentures (liability component)                    |   |              | 84,796  |   |              |   | 43,460 |   |
| Total net debt                                                  |   | $                 | 217,452 |   |              | $      | 114,967 |   |
|                                                            |   |              |    |   |              |   |   |   |
| Cash from operating activities in the quarter                   |   | $                 | 16,462  |   |              | $      | 10,488 |   |
| Decommissioning expenditures in the quarter                     |   |              | 146     |   |              |   | 118 |   |
| Changes in non-cash working capital in the quarter              |   |              | 389     |   |              |   | (1,324 | ) |
| Funds from operations in the quarter                            |   | $                 | 16,997  |   |              | $      | 9,282 |   |
| Annualized current quarter funds from operations                |   | $                 | 67,988  |   |              | $      | 37,128 |   |
|                                                            |   |              |    |   |              |   |   |   |
| Net debt before convertible debentures to funds from operations |   |              | 2.0     |   |              |   | 1.9 |   |
| Total net debt to funds from operations                         |   |              | 3.2     |   |              |   | 3.1 |   |

|   | ANDERSON ENERGY | 30 |
|--------|-----------------|----|

----

|                                                         |   | December 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Salaries and other short-term employee benefits              |   | $                 | 2,469  |   |              | $      | 2,058 |   |
| Share-based payments                                         |   |              | 902    |   |              |   | 820 |   |
|                                                         |   | $                 | 3,371  |   |              | $      | 2,878 |   |
| Capitalized portion of key management personnel compensation |   |              | (1,552 | )      |              |   | (1,285 | ) |
|                                                         |   | $                 | 1,819  |   |              | $      | 1,593 |   |

| 31 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                            |   | December 31, 2011 |
|---------------------------------|--------|-------------------|
| Less than one year              | $      | 1,952             |
| Between one year and five years |   | 467               |
| More than five years            |   | -                 |
|                            | $      | 2,419             |

|                                   |   | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015 |   |   | 2016   |   |   | Thereafter |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|--------|--------|--------|--------|------------|--------|
| Firm service commitment                |   | $      | 1,255  |   |   | $      | 871    |   |   | $      | 679  |   |   | $      | 608    |   |       | $      | 95 |   |   | $ | 299 |   |
| Firm service committed volumes (MMcfd) |   |   | 19     |   |   |   | 10     |   |   |   | 5    |   |   |   | 4      |   |       |   | 3 |   |   |   | 9 |   |

|   | ANDERSON ENERGY | 32 |
|--------|-----------------|----|

----

| 33 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

| (in thousands of dollars)                |   | Canadian  GAAP   |    |   | Impairment (note 23b) |   |    | Decommi-ssioning (note 23d) |   |   | Share-based payments (note 23e) |   |   | Flow through shares (note 23f) |   |   | Deferred taxes(note 23h) |   |   | IFRS   |   |
|------------------------------------------|--------|----------------------------|---------|--------|-----------------------|--------|---------|-----------------------------|--------|--------|---------------------------------|--------|--------|------------------------------------------|--------|--------|--------------------------|--------|--------|--------|--------|
| ASSETS                                   |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |
| Current assets:                          |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |
| Cash                                     |   | $                          | 1       |   |                  | $      | -       |                        |   | $      | -                               |   |   | $                                        | -      |   |                     | $      | -      |   |   | $ | - |   |   | $ | 1 |   |
| Accounts receivable and accruals         |   |                       | 22,990  |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   | 22,990 |   |
| Prepaid expenses anddeposits             |   |                       | 3,778   |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   | 3,778 |   |
|                                     |   |                       | 26,769  |   |                  |   | -       |                        |   |   | -                               |   |   |                                     | -      |   |                     |   | -      |   |   |   | - |   |   |   | 26,769 |   |
|                                     |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Property, plant and equipment (note 23a) |   |                       | 470,400 |   |                  |   | (67,193 | )                           |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   | 403,207 |   |
|                                     |   | $                          | 497,169 |   |                  | $      | (67,193 | )                           |   | $      | -                               |   |   | $                                        | -      |   |                     | $      | -      |   |   | $ | - |   |   | $ | 429,976 |   |
|                                     |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                   |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                     |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accruals            |   | $                          | 36,889  |   |                  | $      | -       |                        |   | $      | -                               |   |   | $                                        | -      |   |                     | $      | -      |   |   | $ | - |   |   | $ | 36,889 |   |
|                                     |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Bank loans                               |   |                       | 62,404  |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   | 62,404 |   |
| Decommissioning obligations              |   |                       | 33,879  |   |                  |   |    |                        |   |   | 13,778                          |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   | 47,657 |   |
| Deferred tax liability (note 23h)        |   |                       | 31,278  |   |                  |   | (16,914 | )                           |   |   | (3,444                          | )      |   |                                     |   |   |                     |   |   |   |   |   | - |   |   |   | 10,920 |   |
|                                     |   |                       | 164,450 |   |                  |   | (16,914 | )                           |   |   | 10,334                          |   |   |                                     | -      |   |                     |   | -      |   |   |   | - |   |   |   | 157,870 |   |
| Shareholders’ equity:              |   |                       |    |   |                  |   |    |                        |   |   |                            |   |   |                                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Share capital                            |   |                       | 391,637 |   |                  |   |    |                        |   |   |                            |   |   |                                     | -      |   |                     |   | 5,336  |   |   |   | (449 | ) |   |   | 396,524 |   |
| Contributed surplus                      |   |                       | 6,104   |   |                  |   |    |                        |   |   |                            |   |   |                                     | 234    |   |                     |   |   |   |   |   |   |   |   |   | 6,338 |   |
| Deficit (note 23i)                       |   |                       | (65,022 | )      |                  |   | (50,279 | )                           |   |   | (10,334                         | )      |   |                                     | (234   | )      |                     |   | (5,336 | )      |   |   | 449 |   |   |   | (130,756 | ) |
|                                     |   |                       | 332,719 |   |                  |   | (50,279 | )                           |   |   | (10,334                         | )      |   |                                     | -      |   |                     |   | -      |   |   |   | - |   |   |   | 272,106 |   |
|                                     |   | $                          | 497,169 |   |                  | $      | (67,193 | )                           |   | $      | -                               |   |   | $                                        | -      |   |                     | $      | -      |   |   | $ | - |   |   | $ | 429,976 |   |

|   | ANDERSON ENERGY | 34 |
|--------|-----------------|----|

----

| (in thousands of dollars)                  |   | Canadian   GAAP  |     |   | Impairment (note 23b) |   |     | Decommi-ssioning (note 23d) |   |   | Share-based payments(note 23e) |   |   | Depletionanddepreciation(note 23c) |   |   | Other PP&E adjs(note 23c) |   |   | Flow throughshares (note 23f) |   |   | Convertible debentures (note 23g) |   |   | Deferred taxes (note 23h) |   |   | IFRS   |   |
|--------------------------------------------|--------|---------------------------------|----------|--------|-----------------------|--------|----------|----------------------------------|--------|--------|--------------------------------|--------|--------|------------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------|--------|--------|----------------------------------------|--------|--------|--------------------------------|--------|--------|--------|--------|
| ASSETS                                     |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |
| Current assets:                            |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |
| Cash and cash equivalents                  |   | $                               | 4,024    |   |                  | $      | -        |                             |   | $      | -                              |   |   | $                                  | -      |   |                          | $      | -      |                          |   | $      | -                                      |   |   | $                              | -      |   |   | $      | - |   |   | $ | - |   |   | $ | 4,024 |   |
| Accounts receivable and accruals           |   |                            | 20,998   |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 20,998 |   |
| Prepaid expenses and deposits              |   |                            | 3,052    |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 3,052 |   |
| Deferred tax asset                         |   |                            | 508      |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   | (508 | ) |   |   | - |   |
|                                       |   |                            | 28,582   |   |                  |   | -        |                             |   |   | -                              |   |   |                               | -      |   |                          |   | -      |                          |   |   | -                                      |   |   |                           | -      |   |   |   | - |   |   |   | (508 | ) |   |   | 28,074 |   |
|                                       |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property, plant and equipment (note 23a)   |   |                            | 506,533  |   |                  |   | (220,358 | )                                |   |   | 2,185                          |   |   |                               | (322   | )      |                          |   | 33,071 |                          |   |   | (436                                   | )      |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 320,673 |   |
|                                       |   | $                               | 535,115  |   |                  | $      | (220,358 | )                                |   | $      | 2,185                          |   |   | $                                  | (322   | )      |                          | $      | 33,071 |                          |   | $      | (436                                   | )      |   | $                              | -      |   |   | $      | - |   |   | $ | (508 | ) |   | $ | 348,747 |   |
|                                       |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                     |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                       |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accruals              |   | $                               | 46,862   |   |                  | $      | -        |                             |   | $      | -                              |   |   | $                                  | -      |   |                          | $      | -      |                          |   | $      | -                                      |   |   | $                              | -      |   |   | $      | - |   |   | $ | - |   |   | $ | 46,862 |   |
| Unrealized loss on derivative contracts    |   |                            | 1,918    |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 1,918 |   |
|                                       |   |                            | 48,780   |   |                  |   | -        |                             |   |   | -                              |   |   |                               | -      |   |                          |   | -      |                          |   |   | -                                      |   |   |                           | -      |   |   |   | - |   |   |   | - |   |   |   | 48,780 |   |
|                                       |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank loans                                 |   |                            | 52,719   |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 52,719 |   |
| Convertible debentures                     |   |                            | 43,460   |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 43,460 |   |
| Decommissioning obligations                |   |                            | 36,320   |   |                  |   |     |                             |   |   | 15,075                         |   |   |                               |   |   |                          |   |   |                          |   |   | 155                                    |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 51,550 |   |
| Deferred tax liability (asset) (note 23h)  |   |                            | 20,045   |   |                  |   | (55,407  | )                                |   |   | (3,222                         | )      |   |                               |   |   |                          |   | 8,268  |                          |   |   | (483                                   | )      |   |                           |   |   |   |   | 1,650 |   |   |   | (508 | ) |   |   | (29,657 | ) |
|                                       |   |                            | 201,324  |   |                  |   | (55,407  | )                                |   |   | 11,853                         |   |   |                               | -      |   |                          |   | 8,268  |                          |   |   | (328                                   | )      |   |                           | -      |   |   |   | 1,650 |   |   |   | (508 | ) |   |   | 166,852 |   |
| Shareholders’ equity:                |   |                            |     |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share capital                              |   |                            | 422,038  |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           | 5,336  |   |   |   |   |   |   |   | (449 | ) |   |   | 426,925 |   |
| Equity component of convertible debentures |   |                            | 4,242    |   |                  |   |     |                             |   |   |                           |   |   |                               |   |   |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   | (1,650 | ) |   |   |   |   |   |   | 2,592 |   |
| Contributed surplus                        |   |                            | 8,164    |   |                  |   |     |                             |   |   |                           |   |   |                               | (243   | )      |                          |   |   |                          |   |   |                                   |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   | 7,921 |   |
| Deficit (note 23i)                         |   |                            | (100,653 | )      |                  |   | (164,951 | )                                |   |   | (9,668                         | )      |   |                               | (79    | )      |                          |   | 24,803 |                          |   |   | (108                                   | )      |   |                           | (5,336 | )      |   |   |   |   |   |   | 449 |   |   |   | (255,543 | ) |
|                                       |   |                            | 333,791  |   |                  |   | (164,951 | )                                |   |   | (9,668                         | )      |   |                               | (322   | )      |                          |   | 24,803 |                          |   |   | (108                                   | )      |   |                           | -      |   |   |   | (1,650 | ) |   |   | - |   |   |   | 181,895 |   |
|                                       |   | $                               | 535,115  |   |                  | $      | (220,358 | )                                |   | $      | 2,185                          |   |   | $                                  | (322   | )      |                          | $      | 33,071 |                          |   | $      | (436                                   | )      |   | $                              | -      |   |   | $      | - |   |   | $ | (508 | ) |   | $ | 348,747 |   |

| 35 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

| 23. | RECONCILIATION FROM CANADIAN GAAP TO IFRS (Continued) |
|-----|-------------------------------------------------------|

|                                                                                                  |   |          |    |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-----------------------|--------|----------|----------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------------------|--------|--------|-------------------------------|--------|---------|--------|--------|
| (in thousands of dollars)                                                                             |   | Canadian GAAP |    |   | Impairment (note 23b) |   |     | Decommi-ssioning(note 23d) |   |   | Share-based payments (note 23e) |   |   | Depletion and depreciation(note 23c) |   |   | Other PP&E adjs(note 23c) |   |    | IFRS   |   |
|                                                                                                  |   |          |    |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |
| Oil and gas sales                                                                                     |   | $             | 86,457  |   |                  | $      | -        |                       |   | $      | -                               |   |   | $                                         | -      |   |                          | $      | -       |   |   | $ | - |   |   | $ | 86,457 |   |
| Royalties                                                                                             |   |          | (9,011  | )      |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | (9,011 | ) |
| Revenue                                                                                               |   |          | 77,446  |   |                  |   | -        |                       |   |   | -                               |   |   |                                      | -      |   |                          |   | -       |   |   |   | - |   |   |   | 77,446 |   |
| Realized loss on derivative contracts                                                                 |   |          | (131    | )      |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | (131 | ) |
| Unrealized loss on derivative contracts                                                               |   |          | (1,918  | )      |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | (1,918 | ) |
| Gain on sale of property, plant and equipment                                                         |   |          | -       |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   | 389 |   |   |   | 389 |   |
|                                                                                                  |   |          | 75,397  |   |                  |   | -        |                       |   |   | -                               |   |   |                                      | -      |   |                          |   | -       |   |   |   | 389 |   |   |   | 75,786 |   |
|                                                                                                  |   |          |    |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                                    |   |          | 28,537  |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | 28,537 |   |
| Transportation expenses                                                                               |   |          | 611     |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | 611 |   |
| Depletion and depreciation                                                                            |   |          | 78,723  |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   | (33,071 | )      |   |   |   |   |   |   | 45,652 |   |
| Impairment of property, plant and equipment                                                           |   |          | -       |   |                  |   | 153,165  |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | 153,165 |   |
| General and administrative expenses, including      stock-based compensation |   |          | 8,908   |   |                  |   |     |                       |   |   |                            |   |   |                                      | (155   | )      |                          |   |    |   |   |   | 664 |   |   |   | 9,417 |   |
| Loss from operating activiites                                                                        |   |          | (41,382 | )      |                  |   | (153,165 | )                          |   |   | -                               |   |   |                                      | 155    |   |                          |   | 33,071  |   |   |   | (275 | ) |   |   | (161,596 | ) |
|                                                                                                  |   |          |    |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   |   |   |
| Finance income                                                                                        |   |          | 96      |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | 96 |   |
| Finance expenses, including accretion                                                                 |   |          | (5,894  | )      |                  |   |     |                       |   |   | 888                             |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   | (5,006 | ) |
| Net finance expenses                                                                                  |   |          | (5,798  | )      |                  |   | -        |                       |   |   | 888                             |   |   |                                      | -      |   |                          |   | -       |   |   |   | - |   |   |   | (4,910 | ) |
|                                                                                                  |   |          |    |   |                  |   |     |                       |   |   |                            |   |   |                                      |   |   |                          |   |    |   |   |   |   |   |   |   |   |   |
| Loss before taxes                                                                                     |   |          | (47,180 | )      |                  |   | (153,165 | )                          |   |   | 888                             |   |   |                                      | 155    |   |                          |   | 33,071  |   |   |   | (275 | ) |   |   | (166,506 | ) |
| Deferred income tax reduction                                                                         |   |          | (11,549 | )      |                  |   | (38,493  | )                          |   |   | 222                             |   |   |                                      | -      |   |                          |   | 8,268   |   |   |   | (167 | ) |   |   | (41,719 | ) |
| Loss and comprehensive loss for the year                                                              |   | $             | (35,631 | )      |                  | $      | (114,672 | )                          |   | $      | 666                             |   |   | $                                         | 155    |   |                          | $      | 24,803  |   |   | $ | (108 | ) |   | $ | (124,787 | ) |

|   | ANDERSON ENERGY | 36 |
|--------|-----------------|----|

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| 23. | RECONCILIATION FROM CANADIAN GAAP TO IFRS (Continued) |
|-----|-------------------------------------------------------|

| 37 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|   | ANDERSON ENERGY | 38 |
|--------|-----------------|----|

----

|                                                   |   | December 31, 2010 |    |   | January 1, 2010 |   |
|--------------------------------------------------------|--------|-------------------|---------|--------|-----------------|--------|
| Impairment of plant, property and equipment (note 23b) |   |              | (55,407 | )      |            |   | (16,914 | ) |
| Depletion and depreciation (note 23c)                  |   |              | 8,268   |   |            |   | - |   |
| Decommissioning obligation (note 23d)                  |   |              | (3,222  | )      |            |   | (3,444 | ) |
| Convertible debentures (note 23g)                      |   |              | 1,650   |   |            |   | - |   |
| Other adjustments (note 23c)                           |   |              | (483    | )      |            |   | - |   |
| Decrease in deferred tax liability                     |   | $                 | (49,194 | )      |            | $      | (20,358 | ) |

| 39 | 2011 FINANCIAL STATEMENTS |
|----|---------------------------|

----

|                                                     |   | December 31, 2010   |     |   | January 1, 2010   |   |
|----------------------------------------------------------|--------|-------------------------------|----------|--------|-----------------------------|--------|
| Impairment of plant, property and equipment (note 23b)   |   | $                             | (164,951 | )      |                        | $      | (50,279 | ) |
| Decommissioning obligations (note 23d)                   |   |                          | (9,668   | )      |                        |   | (10,334 | ) |
| Flow through shares (note 23f)                           |   |                          | (5,336   | )      |                        |   | (5,336 | ) |
| Depletion and depreciation (note 23c)                    |   |                          | 24,803   |   |                        |   | - |   |
| General and administrative expenses (note 23c)           |   |                          | (497     | )      |                        |   | - |   |
| Gain on sale of plant, property and equipment (note 23c) |   |                          | 389      |   |                        |   | - |   |
| Deferred taxes on share issue costs (note 23h)           |   |                          | 449      |   |                        |   | 449 |   |
| Stock-based compensation (note 23e)                      |   |                          | (79      | )      |                        |   | (234 | ) |
|    Decrease in retained earnings          |   | $                             | (154,890 | )      |                        | $      | (65,734 | ) |

|   | ANDERSON ENERGY | 40 |
|--------|-----------------|----|

----