Galleon's first quarter 2010 production averaged 15,631 barrels of oil equivalent per day (BOE/d). On June 4, 2010, as part of a strategic alternatives process initiated on March 11, 2010, Galleon agreed to sell a portion of its Puskwa property for approximately $135 million in cash subject to closing adjustments. Closing of this transaction occurred on June 28, 2010. After giving effect to the property disposition, Galleon expects to have average daily production of approximately 14,500 BOE (25% oil and NGLs, 75% natural gas).  Average daily production in Q2 2010 is expected to be approximately 16,000 BOE based on field report estimates, including production for 85 days from the sold Puskwa property.

Galleon's gross proved plus probable reserve life index is 15.8 years based on average Q4 2009 production.

Undeveloped landholdings at December 31, 2009 were 694,466 net acres with an estimated value of $76.8 million based upon an independent evaluation prepared by Seaton-Jordan & Associates Ltd. In March 2010, there are large Crown land postings in the middle of Galleon's landholdings in the Peace River arch area. Galleon's undeveloped land value may increase significantly based on the amounts of the successful bids.

DeGolyer and MacNaughton Canada Ltd. of Calgary serve as Galleon’s reserves engineers.

On June 4, 2010, as part of Galleon's strategic alternatives process initiated on March 11, 2010, Galleon entered into a purchase and sale agreement to sell its wholly-owned subsidiary that holds a portion of its Puskwa property for approximately $135 million in cash subject to closing adjustments. Upon closing of the Puskwa property sale on June 28, 2010, the Corporation's credit facilities have been approved for $250 million, which includes a $225 million revolving facility and a $25 million non-revolving facility. At June 25, 2010, net debt, after the Puskwa property sale, is approximately $120 million.

The Corporation has entered into commodity price contracts in order to realize certain sales prices. All of our hedging activity is outlined in our corporate presentation .

Like most of our growth oriented peers, Galleon does not pay cash dividends. We believe we can accelerate our growth by retaining our earnings in order continue to invest in the exploration and production of oil and natural gas. Although Galleon does not pay dividends, we do, on occasion, take steps to increase the value of our shares, including buying back shares when they’re undervalued. This benefits shareholders by increasing the value of all remaining shares outstanding.

Galleon’s board of directors has approved a 2010 capital expenditure budget of $140 to $150 million. This capital will be directed primarily toward the expansion of Eastern Montney natural gas and Doig light oil resource projects. Funding of the 2010 capital program is expected to be financed from internal cash flow, available bank credit facilities and minor asset sales.
(Updated November 12, 2009)

Galleon believes it’s important to provide the market with guidance. Galleon also believes it’s important to do what we say we’re going to do. Due to the nature of our industry, many factors beyond Galleon’s control affect our performance. These factors can include changing commodity prices, government programs, geological uncertainties and weather.

As noted in our quarterly management’s discussion and analysis, forward-looking statements involve inherent risks and uncertainties, including, but not limited to, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, Galleon's actual results may differ materially from our forecasts.

Our commitment to investors is to forecast conservatively in order to build a reputation for delivering the forecast.

The price of Galleon’s shares on any given day is set by the buyers and sellers of the stock. As such, Galleon does not control the day-to-day fluctuations of the share price, only the underlying value of the Company. To this end, a great deal of value has been created since the Company’s inception and we will continue with the growth strategy that has given us success to date.

On March 11, 2010, Galleon initiated a strategic alternatives process to identify and consider strategic alternatives with a view to enhancing shareholder value. Galleon initiated this process because the Corporation's shares trade at a substantial discount to its net asset value despite having a major land position in the heart of the prolific Peace River area of northwest Alberta, ample resource play drilling opportunities for light oil and Montney gas and ownership of extensive gathering and processing infrastructure. After a review of the depth of its 1,000 well prospect inventory, the spending required to advance these projects and its cost of capital, among other matters, Galleon’s board of directors initiated a process to identify and consider strategic alternatives with a view to enhancing shareholder value.

Strategic alternatives may include, but are not limited to, sale of the corporation, merger or other business combination, a sale of a material portion of Galleon's assets, farmin or farmout or acquisition, among other alternatives.

On June 4, 2010, as part of the strategic alternatives process initiated on March 11, 2010, Galleon entered into a purchase and sale agreement to sell its wholly-owned subsidiary that holds a portion of its Puskwa property for approximately $135 million in cash subject to closing adjustments. These properties represent 100% of Galleon's interest in a portion of its Puskwa property and are currently producing 1.4 Mmcf/d and 1,370 Bbl/d of oil and NGLs (1,600 BOE/d). This transaction closed on June 28, 2010,with an effective date of June 1, 2010.

Reserves at December 31, 2009 on the Puskwa properties as evaluated by DeGolyer and MacNaughton Canada Limited ("DeGolyer") were 2.96 MMBOE proven developed producing, 8.28 MMBOE total proven and 14.76 MMBOE proven and probable. The related future development costs were $32.2 million for total proven and $43.5 million for proven and probable. Approximately 75,408 net acres of land holdings were included in the property disposition. Net proceeds from the sale were used to reduce bank indebtedness.

After giving effect to the property disposition, Galleon expects to have average daily production of approximately 14,500 BOE (25% oil and NGLs, 75% natural gas) based on field report estimates, net debt of approximately $120 million, and tax pools of approximately $630 million. Average daily production in Q2 2010 is expected to be approximately 16,000 BOE based on field report estimates, which includes production for 85 days from the sold Puskwa property.

Galleon's strategic alternatives process announced on March 11, 2010 and updated on June 4, 2010 is continuing with various steps and alternatives being reviewed. Galleon does not intend to disclose further developments with respect to the strategic review process until the board of directors has approved a further definitive transaction or strategic option, unless otherwise determined or required by law. There are no guarantees that the process will result in an additional transaction or, if a transaction is entered into, as to its terms or timing.

Because we trade publicly on the Toronto Stock Exchange and because our year-end is December 31, we will file our financial and operating results by the following deadlines: